Quiet is Fine with Us

October 20, 2014   3:30 pm

After a wild ride last week markets seemed ‘relatively’ quiet today.  The S&P 500 moved up nicely while the Dow didn’t–because of IBM.  The Ebola situation is for the moment on the back burner.  This situation can change in an instant, but like all events as time passes the reactions become more muted.  

Oil prices were pretty tame–West Texas moved just a few cents, while Brent moved down about a percent.  Like the ebola scare the minor moves in oil shouldn’t scare the equity markets so much as time passes.  If we were to get a mega sized drop over the course of a few days MLP’s would get slammed again, but for now buyers are ‘bargain hunting’ and picking up some of the downtrodden E&P issues.  Tesoro Logistics LP got hammered down today by 14% on a large secondary offering.  In a related move QEP Midstream LP was off 15% as QEP has agreed to sell its general partnership interests and 56% limited partnership interest to Tesoro.  We have not studied this situation much and do not plan to try any speculative moves to garner a few profit bucks.

As we scanned the REITs today we were amazed at the amount of movement to the upside that was occurring.  Seldom have we seen a market where only 11 issues were red with the balance (near 200 issues) being green.  Seems to us that there is a movement afoot to park income investing dollars in the REIT’s instead of in preferreds or MLP’s.

Interest rates moved in only a minor way today–a tight 4 or 5 basis point range–before settling at 2.18% on the 10 year.  Looking at the domestic economic release calendar for the week there is nothing that stands out as market moving.  On the other hand it is the European and Asian markets that could rock markets with economic news if it shows further weakness.

All in all we think there is a possibility of a quiet week in all of the markets (of course ‘quiet’ is relative).  We seldom have a quarrel with quiet markets–we are happy to simply collect dividends.