Strong dollar strengthens markets

The dollar has been on a winning steak, up 11 days in a row. This is the longest winning streak in 37 years. The strong dollar sent Dow up 44, advancers were a little ahead of decliners & NAZ was essentially even. NYSE volume continues low at 1B. The S&P 500 Financial Index rose 3 to 285, down from the earlier highs for the day.

Oil is down again, hitting a 3 month low:

CLU08.NYM

Crude Oil Sep08

113.82

1.19 (1.03%)

Oil is not the only commodity to fall in recent weeks. Gold at 787 is down from 950s a few weeks ago. Corn is back down to 5.30. While still high, these prices are far below recent peaks. Money coming out of the commodities seems to be going into stocks. The strong dollar sounds good but it also makes US exports more expensive, exports have been the only bright spot for this year's US economy.

The decline in oil has been a drag on the Alerian MLP index:

Alerian MLP Index

____________ AMZ _____AMZX

6/30/08........278.61..........648.54
7/15/08.........265.52.........618.05
7/31/08.........271.27.........637.40
8/13/08.........264.80........628.00

This comparison for the Alerian MLP Index (AMZ) shows recent dates along with its related index. July 15 was the low for the Dow, today it's 700 points higher. The MLP index did not change in the last month, closing at 264.05 today, sending the yield up to 8%. The AMZX index shows the performance with reinvested distributions. Both began on 12/31/96 at 100, they've done quite well. The 2nd column shows the value of reinvesting high yearly incomes giving an annual compounded growth rate of over 16%. Based on my eyeballs, betas for the indices are low as they have generally had mild price swings.





For the new or nervous, these are limited partnerships which sell units, not shares, and pay distributions, not dividends. However many have yields near or even more than junk bond funds with their 12% yields and 80-90% of the distributions are not taxable in the current year.