NOW BEGINS THE SECOND HALF!

Now that we are back from a long weekend we can begin focusing on what the second half of 2011 will bring us. Last week we saw a reversas of falling interest rates which took the 10 year from 3.70 to 2.85% and the 30 year from 4.80% to 4.10%. And MLPS went from market leader to market follower.

Judging from the mlp chart it appears that 350 has held up beautifully and we have now begun and upleg that has cleared the moving averages..which btw are beginning to cross again to a positive slope. Markets overall seem to want to rally even with all the nonsense with the debt ceiling looming ahead. I guess the market's view is they will raise the debt limit in time to avert any sort of default of US debt. I would have to agree that these political fools will eventually give in on the debt limit and either raise it or kick the can down the road.

The 30 year has held the December low of 4.10-4.15 and at least we are getting a tradable contratrend rally here but so far there is no evidence that its anything more than that. 4.80% is the top and we need to take that out before i would get worried that we are headed into a world of higher rates on the long side. Certainly any debt ceiling worries could cause us to get there in a hurry. And rising rates at lease for now will not produce a headwind for mlps. The other potential headwind is the tax threat which seems to have been laid aside for the time being. But remember that it was the news item that turned the group lower when it hit 390.

News this morning on the Energy Transfer Equity (ETE) Southern Union (SUG) Williams Partners (WPZ) saga as Energy Transfer is raising its bid for Southerin Union that is 4% higher than the Williams offer. ETE is also doing the necessary divesting of assets as it's dropping them into Regency Partners (RGNC). Southern Union is up 1 on the news. Western Gas (WES) is getting assets from Anandarko (APC) and the company is announcing a 4% distribution increase. No premarket moves so far.

Stock futures are basically flat this morning. Rates are a little lower while oil and nat gas start the day higher. The tape has a firm feel to it so my guess its that we should trend higher as the morning moves on.