MLPs beat other stocks this week, a welcome change from recent weeks. The Alerian MLP Total Return Index was up 2.3%, but is still 3.6% below its May 22 all-time high. The S&P 500 made a fresh all time high on Wednesday, but retreated in the back half of the week to settle up 1.3%. Stocks were up and interest rates dropped on news that the Fed’s expected tapering will be on hold (i.e. bond purchases will continue). So, yield is back en vogue (for now), but the Fed decision was reportedly close, and certain Fed voting members are still chirping in the media about tapering happening sooner rather than later. The liquidity flow will eventually stop, and yields on treasury notes will rise, and MLPs may feel some blow back when that happens. But for at least two days this week, we all got to enjoy the sweet relief that the gravy train has not yet left the station…
The MLP Index was sharply lower to start the week, and needed back-to-back >2% days to finish the week up 2.3%. MLPs held up considerably better than the broader stock market (represented below by the S&P 500) on Friday, when it seems the Fed-phoria started to wear off.
MLPs were probably helped by a slower week for equity offerings than we saw last week. Perhaps weakness early in the week made issuers gun shy. There were two overnight deals that priced Friday, a day not typically very active for follow-ons, which indicates that price was a factor and the issuers launched their deals only after MLPs had bounced back considerably in the middle of the week. Expect to see more MLP equity issued in the next week, and when that happens, we’ll get to test the mettle of this now two-week-old MLP rally…
Winners & Losers
Random mix of MLPs in the top 5 this week, led by HCLP at 8.1%. EPD’s 5.8% spike was definitely the largest market cap increase of the week. The upstream MLPs on either end of the return spectrum below (LINE and ARP) both saw the bulk of their price movements occur in the last 30 minutes of the trading day Friday, which seems to happen often on option expiration days each month.
Year to Date
MLP year to date winners and losers still in their slots, still many more winners than losers…
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