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Friday, December 02, 2011


If there was any remaining doubt that Europe is driving this bus, this morning should pretty much dispel that notion. Pre employment number trading was being totally driven by a rumor or made up news story that the ECB was going to lend money to the IMF. That sent euro stocks zooming higher and we of course followed along. The employment data was mixed at best and since a big number was built in to trading this week, anything was bound to sell off. Still we saw prices hold their gains until we got denials on the ECB rumors. And since then we're seeing markets pull back. So in the end its all about Europe. We will sink or swim on what their politicans decide at next Friday's summit where to hold the next summit and who will pay for the espressos. This is not a good place to be.

MLPS however remain a great place to be in all this turmoil. Not many sectors have held up like this one and you get paid 5-7% while you have your money parked here. Yesterday we saw a 4 point gain here, pushed higher by moves in Plains All American (PAA) spending 1.7 billion to expand its presence in the liquid natural gas market.

The stock moved up on the news and it has taken the mlp index ever close to its all time high of 390. It really is pretty much the last group standing in this market. This morning we have RBC raising its price target on Targa Natural Resources (NGLS). And we have a stock offering from Enbridge Energy Partners (EEP) which joins Holly Partners (HEP) who did an offering yesterday. No other news and no upgrades or downgrades. Stock futures are off the highs and we are at the place where the October rally stopped on October 25th. The Euro has come off 1.35 this morning which may be the new ceiling there. Bonds rates were higher but they have now turned a little lower as Europe comes off its highs.

LinkThe chart above is one i found yesterday and i think its worth paying attention to. Its a chart of investment grade corporate bonds. Notice that its been in a solid uptrend until early November when it has been falling. And note that it has pretty much broken its uptrend line. Is this chart sending us a signal that corporate debt is deteriorating? And while it has followed the equity market in general, it has not rallied at all this week with the dow up 900 plus points. I think we should keep an eye on this. Perhaps this is another indicator that stress in the credit markets continues to build.

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