The indices I follow are flattish today. But 2 different stories have emerged in the last month. The Alerian MLP Index is down 2 today to 166½. In the last 2 weeks, it has pulled back 10% & it will probably test the lows around 160. The large distribution cut by Constellation Energy (CEP) last week has done damage to the industry. The reduced distribution yields over 20% if anybody is interested. A good half dozen additional MLPs are selling in single digits signaling investors are expecting more cuts. However high yield (junk) bond funds have found friends. Lehman High Yield Bond ET (JNK), as with other high yield funds, has moved up sharply in the last week. Their yields continue very high for those who want to bet on them & short term traders are looking to make quick profits if more buy these funds.
Alerian MLP Index --- 1 month
Lehman High Yield Bond ET --- 1 month
Oil continues its slide on global recession thoughts, now it's solidly below 40.
| CLG09.NYM | ..Crude Oil Feb 09 | ...37.50 | ... 1.48.......(3.80%) |
Economic statistics continue glum. Consumer spending dropped (0.6%) again in Nov, while the savings rate rose from 2.4% to 2.8%. Orders for durable goods fell 1% in Nov, 4th consecutive monthly decline. Excluding a big decline in transportation, orders went up 1.2% in Nov, the strongest gain in 6 months. However, the recession is expected to drag this number down going forward. New jobless claims jumped to 586K, above expectations. This is the highest figure in 26 years, the recesion is biting hard.
- Consumer spending posts fifth monthly drop, income contracts- Reuters
- Durable goods drop 1 percent in November- AP
- New jobless claims jump to 26-year high- AP
The Mafoff story gets worse as more is revealed. Bank Medici just received an award for the amazing performance on its hedge fund. Now they are trying to determine if there is any money left after the Madoff scandal. Law suits have just begun, there will be more.
•Bank Medici Is Engulfed in Madoff Losses After Winning a Hedge-Fund Award
•New York University Sues Merkin, Hedge Funds Over $24 Million Madoff Loss
The rest of the day (and Fri) should feature low volume with few major changes expected. But I keep worrying about the MLPs, they look like they are facing more head winds. In the meantime:
Happy Holidays to All!!!
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