2015 Starting off Soft – Interest Rates Continue Downward Move

Starting the new year off with a 180 point Dow drop isn’t a great way to start, but generally speaking it doesn’t matter a whole bunch to us.

Crude oil prices are plunging today, but oil stocks are taking it relatively well.  MLP’s are off, but it isn’t a huge bloodbath.  The longer the fits and starts in the crude oil market go on the less reaction will be seen.  Additionally, natural gas is heading higher as a giant cold snap arrives in the U.S..  This tends to balance the crude fall.

Brietburn Energy (ticker:BBEP) cut their distribution today by over 50%–a smart move.  These monthly payers don’t have time to vacillate before chopping the payout as they pay out continually.  BBEP payouts remain at a high 13.88%.  Recall Linn Energy and LinnCo cut their distributions last week–they are also monthly payers.  As we had mentioned last week for those with the risk tolerance maybe it is a good time for a starting position in one of the MLP upstream companies, although we think it is still 30 days too early (but who really knows), but as more data comes in from the oil patch we can define the bottoms more confidently.

The 10 year treasury is also heading lower this morning.  The talk is that the global economy is weakening (no kidding!!). The obvious is now being talked about in the financial news—the cheerleaders finally are waking up.  As we have mentioned 100 times the global situation is the driver of long term rates in the U.S. and the U.S. can’t go it alone forever.