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Monday, September 19, 2011


Markets this morning are reacting to what Europe does so well when dealing with their problems which is have a meeting, serve espresso, and then head for vacation resolving nothing. The prospect of a default of Greece looms and with no plan in place on how to deal with it, we have the door opened for the possibility of chaos developing in the markets a-la 2008. If Greece goes in disorder does it spread to Italy and Spain and Ireland and, etc etc etc. And of course this spreads to the European banks which spreads to, well you get the idea. The chart is at a perilous point and i think the real test lies at dow 10,000 (ish). Last week's five day rally bounce was pretty good. Lets see how fast it gets undone.

The mlp index however is in a much different place than it was in 2008 when the Lehman unwind caused a major dislocation of prices, created the buying opportunity of a lifetime and, well we know the rest. The index sits at 348 which is still higher than the old 2007 all time high of 340 and still more than double the 2008 low. Through all of this distributions have continued to increase and holders of mlps have pretty much existed in a different world from the rest of the market. It remains to be seen however if this separate world we live in remains that way if we become victims of a major unwind of a bank or a sovreign nation. Should that happen we could be seeing another major buying opportunity unfold. It will just be a question of where that level is.

Over the weekend the Messiah announced a plan to raise taxes which is probably another non starter however i have been trying to find any mention of them going after the mlp tax structure. I have not seen anything yet but if there is something in there you can bet the mlp market will react and it won't be pretty. I will watch for headlines and the tape action for any indication of this.

MLP news this morning is an upgrade by UBS for Boardwalk Partners (BWP) to a buy. And Targa Natural Resources (NGLS) will be exporting international grade propane as it expands its business. Otherwise its all quiet on the corporate front. Stock futures are sharply lower ahead of the open by 19 S&P points as Europe opened lower and continues to sell off. The 10 year is under 2% again and this is something that sticks in my head. How can markets continue to rally with a 10 year under 2%? I just don't think they can. The Euro is sinking. Gold is higher and we have oil and nat gas lower ahead of the open. So fasten your seatbelts for a rather rocky Monday.


Max said...

Another day, another Obama speech. Comrade Obama has taken narcissism to a new extreme. The guy is truly in love with himself. 2012 won't get here soon enough.

Max said...

Jim Jubak put out a sell on ETP today.