Earnings Drive Market Higher – Crude Oil Remains Tenuous

Earnings, which have been pretty good, have driven the equity markets higher, while dragging interest rates higher.  Last weeks panic fall in interest rates to 1.85% (10 year treasury) is in the rear view mirror as the rate now stands around 2.24%.  There has been no real reaction in income issue prices to these moves—no reaction when rates fell equals no reaction when rates come back off the panic low.  ‘High yield’ investors got a gift in large MLP drops which meant they were able to scoop up issues to raise their portfolio yields (at least for now) while more conservative investors such as ourselves have watched portfolio values creep higher–we are perfectly fine with stable, so a creep higher sits very well with us.

Crude oil prices are off a buck this morning, continuing a trend that has been established in the last week, of up a buck and down a buck.  Prices remain precariously close to $80/barrel and may remain in this tight range until next Wednesday when the weekly EIA inventory report is released. The last 2 weeks there have been reported huge inventory builds-is a 3rd week in store for us?  We continue to watch and plan to take a position in an E&P MLP if we get a dive in crude into the $70’s–we listed our prospects for purchase yesterday.

Overnight the NYC ebola case was confirmed, but it looks like it is being received by the markets in a more rational way than cases were last week. Assuming no outbreak of multiple cases it appears that common sense has returned to the markets on this issue.

Europe remains a basket case–but no one cares this week-but it is likely this will come home to roost sometime–can the U.S. grow while large portions of the global economy tank?