CIRCLING THE DRAIN!

Perhaps my headline is a bit overstated but markets this morning are down sharply as Europe unravels as the Greek farce continues. Dow is set to open down about 170 or so. The 10 year is at 1.90% as the flight from fear continues in bonds. All of this so far has not really done much to mlps which are holding well above the 320 low from mid August. Back in 2008 when Lehman unraveled we saw yield spreads between mlps and bonds widen to ridiculous levels and ultimately to the buying opportunity of a life time. This time around we're seeing yield spreads widen again but not because of the fall in mlps but due to the collapse in yields. The 10 year was in the mid threes not that many months ago. Now we have the strongest mlps yielding about 4 to 5 points above the 10 year. However i would be careful about coming to the same conclusion that this is another buying opportunity. For one thing mlps were outrageously oversold in 2008. MLPS today are actually not that far from their highs. Money has been flowing to yield and while that can hold us up for awhile, i still contend that if the overall market breaks down below 10,600 mlps will join the sell off. And remember when they get around to selling mlps its usually toward the end of a move and not at the beginning of one.

RBC is raising its target price on EV Energy Partners (EVEP) which is the star performer in mlp land as it has gone from 10 to 75 in the last 2 1/2 years plus you got a rich distribution all the way up. No pre open action there. No other news in the mlp group. Crude oil is down 1 and change. Nat gas is off a few pennies. The dollar is trading lower against the Euro and Euro markets will continue to dictate the pace of our own day...which begins shortly.