Stocks slip at day's end

Dow was down 29, decliners over advancers almost 3-2 while NAZ was up a couple. S&P 500 FINANCIALS INDEX declined only 4 to 270. NYSE volume was weak as eyes were watching DC, awaiting developments on the bailout package.

Oil was down 1.45 to the 105.16, nothing dramatic going on. They, like the stock markets, are watching events play out in DC. The Alerian MLP Index was even while the Dow Jones REIT Index was down 4. After its big run-up last week, it has pulled back over 25 from the high to present level of 242.


Alerian MLP Index - last month




I'll take a break from the big story in DC, since nobody knows how it will turn out, to talk about MLPs. The last month has been unusually wild for the index. The charts show a 60 point drop from the high to low followed by a quick 30 point recovery & retrenching since then. It has settled in the 230's, a multi year low level. It's important to keep in mind that these securities are low beta, difficult to recognize this month.

There has been a lot of liquidation which may be related to the Lehman story. They were big on MLPs. Unwinding those positions may require selling more units (not shares). The unwinding may take time, so the index could be on the defensive for a few weeks, even months, but that should subside when, hopefully, rationale will bring back buyers. Their fundamentals remain strong. The country needs more pipelines to move oil & gas & they need more investment to keep depreciation high so a large portion of the distributions will not be taxed in the current year. This is a good time to keep MLPs on your radar screen & learn more so they can be bought at coming bargain prices.

Many in the country are viewing this bailout package story as a battle between us and them (the rest of the country vs Wall Street). To a point I agree. That's creating problems passing legislation. The $700B recovery package was supposed to be fairly certain, the reason behind the 800 point rally. Now it looks like it's sputtering as Paulson has already conceded one key point. I am reminded of Allen Sherman's thought, a camel is a horse designed by a committee, he probably meant a congressional committee. Stay tuned.

•Bernanke Says U.S. Faces `Grave Threats' as Credit Crisis Hurts Households
•Paulson, Reversing Course, Says Bailout Should Address Excessive Salaries

It's an Outrage! From Main St. to Congress, Bailout Proposal Falls Flat- Tech Ticker