Craziness Continues–Who’s To Blame?
By: Tim McPartland,
Well today we get the craziness to the upside in the equity markets–that makes 3 days straight of very suspicious activity in the markets. Continually brokerage firms, market makers, high frequency traders, banks and others are working very hard to screw the little investor–the NYSE, NASDAQ and SEC are not bringing any solutions to the party either. There were any number of articles today on all the issues with ETF’s and individual stock issues swinging wildly in trading on Monday and not a soul has any answers as to what happened–oh well screw them–we don’t get involved in that craziness, but we will all pay the price someday when trading gets more out of control and we have a 2,000 or 3,000 Dow point plunge.
Ok enough of the rant—for the the 3 crazy days we personally gave up about 1% in valuation and we can live with that loss.
We had mentioned unloading 1/3rd of our hedge against downside moves–but we didn’t get it done today, so maybe tomorrow. While we think that the markets are approaching ‘fair value’ there no doubt will be more silliness to come. On a decent down day we will lighten up the hedge.
Today we had oil inventories fall pretty hard–5 million barrels, but regardless crude prices fell a bit, although oil issues bounced pretty good to the upside. Of course looking at some of the upstream MLP’s I am not certain that it is any comfort to hold LRR Energy (ticker:LRR) which moved up to $3.95 given that it has a 52 week high of over $19.00 or Legacy Reserves (ticker:LGCY) which moved up to $5.27 which is down from the 52 week high of over $31.00. Get a good look at these names because in a year they will be just a memory–bankrupt, sold or liquidated barring a miracle.
You probably noticed that even with the stock market turmoil interest rates have been moving higher–the 10 year closed at 2.17% after hitting 1.90% just a couple days ago. The Chinese have been dumping our junky government paper about as quick as they can. It makes you wonder why the Chinese can dump billions and billions worth of treasuries with only a modest interest rate rise when the FED is scared to death to raise rates. And why does the FED continue to reinvest the proceeds of bonds that mature instead of simply letting them run off the balance sheet? Complete and total bullshit. The FED sits on their hands for years and now rates are rising because the Chinese are selling—what the hell–raise short rates and let’s move on.