Month: October 2018

Things got out of hand this week all over the equity markets.  Recent relative strength of midstream/MLPs vs broader equity markets failed this week, although month-to-date midstream (AMNA -7.3%) remains ahead of the S&P 500 (-8.8%) and well ahead of the rest of the energy sector (XLE -12.2%).

Midstream had another strong relative performance this week. The MLP Index was flat week over week, on par with the S&P 500 (which also miraculously finished the week virtually unchanged). Broader North American non-MLP midstream outperformed, led by Canada, OKE and KMI. The broader energy sector was hit by lower oil prices and underperformed (XLE -2%).

Midstream sold off along with most things this week, but as a whole did slightly better than the broad stock market, outperforming for a second straight week.  MLPs were the best performing group in midstream, benefitting from their renewed obscurity more than a flight to safety.  Just like when the S&P 500 is going up, the market seems pre-occupied with itself, rather than paying much attention to midstream and certainly not MLPs.

Midstream and MLPs had their best day in a few months on Monday (AMZ +2.2%). They struggled to hold those gains the rest of the week, but did finish +1.8% vs. last week, inline with the utilities. Utilities followed a different path to +1.8%, selling off early in the week and rallying to close out the week. With interest rates shooting higher, price action for both midstream and utilities action went against traditional expectations, while the S&P 500 (-1%) and REITs (-3% this week) experienced a more conventional selloff.