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Sunday, October 30, 2011


Its the last day of an amazing month where we were staring into the abyss on October 4th and since then the MLP index is up 17 out of the last 19 days. We are back to 375 where there is some resistence on the chart and just another 5% or so to 390 which is where the index hit an all time high back a few months ago. And below we have the dow chart on its unrelenting move higher from the October 4th low and we sit now looking at the highs of the year not too far out of reach.

And yet the rally from the standpoint of volume has been very sub standard. And the move of last Thursday looked and felt like an exhaustion spike higher. So many ways one can look at this and call it a rally with holes in it. But in the end its about price. Nothing else really matters. So until proven otherwise, the market seems to want to go up.

Since all of this climaxed with the euro-deal there is some interesting stories about why it won't work. In fact this piece addresses something that i have wondered about. Suppose the banks change their mind and decide its in the best interest of share holders to cause a "credit event" rather than go along with politicians. And Europe won't get a dime of money from China unless they guarantee that China be paid first in a default scenario. Can u imagine trying to sell that to your voters let alone European bond holders? And im no fan of George Soros but he thinks the banks may back out of the deal in short order and be paid rather than take the haircut.

Overnight we had currency intervention by the Japanese to weaken the yen and it has sent the dollar soaring against the yen and the euro. Euro markets open down 1-2% as they follow the euro and the notion that the deal struck last week could unravel. Stock futures here are reacting to that and the death of MF Global as the NY Fed has pretty much shut it down. Not a Lehman moment but you have wonder what else is out there (2008 anyone?).

MLPS this morning are probably going to open down following the tape. News this morning includes earnings from Boardwalk Partners (BWP) which includes a distribution boost. Baird is cutting Legacy Reserves (LGCY) and Genesis (GEL) to market perform based on valuation. No other the news on the tape this morning.

Its the last day of the month which started with us standing over the abyss and ends with the biggest monthly rally since January 1974. One needs to be reminded that the market from there went into a steep decline which did not hit bottom until October of 1974.
The question is whether history (which doesn't repeat exactly the same way)is set to rhyme again.


Max said...

The European financial bailout will fail. It's inevitable. The guarantors of the loans are the same countries and entities that are being bailed out. It's a ponzi scheme with a new name.

Max said...

The big European banks are selling off hard today. Investors are finally waking up to the fact that the latest bailout is a sham.

joewxman said...

As the sham gradually becomes obvious, markets may go down twice or three times as fast as they went up.

Max said...

With MF Global filing for bankruptcy I can't believe we're only down 180. MS, JPM.& GS . . . among others, all have a big exposure to MF Global. It could get really ugly by the close.