Nine many years of QE-
Near zero interest rates-
When the effects of these did start to fizzle out, we’ve got tax cuts-
Now, the new spending bill will add $300 BILLION towards the deficit.
This. Is. Insanity!
We’re already running $500 billion deficits each year, and these are good times.
What’s possible when times turn bad?
I’ll explain at my latest Facebook video-
Follow Me on Twitter?@harrydentjr
Chart in the Day
MLPs are a Steal Relative to Bonds
In case you haven’t noticed, it’s gotten ugly to choose from.
Volatility from the bond market has spilled over in to the stock trading game, along with the shares of anything “income oriented” have gotten absolutely slammed.
Real estate investment trusts (REITs) C long favorite among income investors for their high yields C are down 7% in 2018, at the same time the S&P 500 still is up 3%. Mortgage REITs, business development companies, preferred stock, closed-end bond funds- all are on losses year as of yet.
This is what you may expect in the bond-market correction.
When bond yields rise, bond prices fall- thus conduct the prices of virtually something that pays a major yield.
In the low-interest-rate world we’ve lived in since 2008, investors are actually grabbing yield during the pockets with the market that a majority of resemble bonds. So, as goes the link market, so go the high-yield pockets with the stock game.
Harry expects bond yields to go somewhat higher before reversing again in doing what he calls the fixed-income trade with the decade. But already, we’re beginning to see some pockets of real value.
Today, master limited partnerships (MLPs) C which have a tendency to hold oil and coal pipelines with bond-like cash flows C are trading at a few of their cheapest prices compared to bonds historical.
Prior on the 2008 meltdown, the MLP sector yielded about 5.5%, that was fewer than half a percent above the 10-year Treasury. That spread briefly shot up to a lot more than 10% while in the meltdown and again briefly shot up to nearly 8% while in the 2015 crude-oil rout. But for the vast majority of asset class’s history, MLPs have traded in a spread of 2% to 4% within the 10-Year Treasury.
Well, that spread has ballooned to around 5% again.
So, come what may inside the bond market, MLPs feel the need attractive.