REITs and Utilities Hammered as Stocks Tumble

Utilities and REITs were hammered strongly yesterday even though interest rates moved up only a tiny amount. MLPs hung in there as energy prices moved a bit higher even as crude oil inventories moved up 8.2 million barrels in the last week.

With the DJIA off by 293 points and economic data very soft there seems to be a possibility that we could drift back to almost no growth in GDP during the 1st quarter. Durable goods orders were the soft spot today falling by 1.4% much softer than the gain of .7% that was expected. Data has shown that in the last 5 years the 1st quarter is on average soft, while quarters 2-4 gain momentum and the full year ends up ok.  We shall see if this trend continues—-certainly there is no reason to believe that we will have growth in the economy that will fan the flames of inflation in the year ahead.

So what does this softness mean to us?  Likely nothing, but if we were to move into a period of further softness theoretically we might want to trim some of our common shares.  But a general softening will not set off any alarms for us as investors—anything beyond a modest softening could be meaningful, but our crystal ball isn’t good enough to see beyond what is for supper tonight.  We bought Ares Capital 5.875% Senior Notes (ticker:ARU) as well as adding 400 shares of variable rate MLP Alliance Bernstein (ticker:AB) on Tuesday and that will be the extent of our activity this week.

Sit tight for some rocky trading in stocks again today as Europe was by more than 1% overnight.  Also oil is up strongly on geopolitical events related to Yemen–certainly there are no fundamentals that are supportive of oil prices. Interest rates are stable this morning.