WASHINGTON, November 18, 2014 – Markets inexplicably continue to melt up today on low volume after melting down Monday. Stocks don’t really have a reason to go up any more. But they don’t really have a reason to go down either.
Mostly, we suspect, markets are waiting to see if the per barrel price of oil is going to go down dramatically again or stabilize around $75 bbl; if the price of gold—up today—will continue with its general downward trajectory; if shoppers really do head for the malls and Amazon.com next week; if Grubergate produces even more bold proclamations as to the intelligence of any citizen who didn’t graduate from Harvard or Yale; and/or if the Ferguson, St. Louis and/or the entire country goes up in smoke later this week courtesy of radical leftist agitators currently “organizing” the locals and spoiling for nationwide racialist violence.
We haven’t even bothered to cite the ongoing deterioration in the Middle East and Ukraine or our increasingly unscrewed and unhinged President’s unilateral agreement with China to allow them to continue polluting like the dickens while we throttle our own energy-based economy to counter the
global warming climate change that this week’s latest polar vortex says ain’t here and ain’t coming except that it’s getting colder.
Stocks seem to be telling us that we should buy them since nothing else is currently generating any gains or income at all, save for one or two hot real estate markets.
But the traders buying them don’t seem to be doing it with conviction, making it seem as if they’re ready to bail on a nanosecond’s notice or have already set their stop-loss orders on everything.
Things are likely to continue like this until we get some real news on something. Anything. Stay tuned.
Today’s trading tips
The Maven has decided to double down on his current energy nuttiness by picking up some shares of ConocoPhillips (COP) on what’s mostly another down day for the oil biggies. He’s adding those shares to his already iffy positions in Anadarko (APC) and Hess (HES).
He’s even contemplating picking up some shares in that most boring of oil companies, Exxon Mobile (XOM). The latter either smartly or foolishly (pick one) added quite a bit of natural gas to its portfolio a few years back, which didn’t look like a good move in retrospect.
But with the possibility of a second winter-long polar vortex visit looming, all that natural gas surplus we’ve supposedly amassed could get used up in a hurry. Already, speculators are driving up the price of natgas (8% yesterday!), and it could go higher before all is said and done.
We have toyed with the idea of getting into a bit of the natgas ETF (UNG), but have gotten our fingers burned every time we tried that move before. So we’re more likely to get into a little bit of UGI (symbol: UGI) and or Vectren (VVC), both gas-centric utilities with nice though not spectacular yields. They’re both looking nice today, but we’d rather see them slip a bit before we start nibbling.
We’re also tempted to get back into at least a few shares of Calumet (CLMT), a high-yielding MLP that is mostly a refinery owner, with the extra-added attraction of specializing in specialized oil products and by-products including asphalt, which, if we ever get any real infrastructure investment in this country, could prove to be an end-of-rainbow quality profit generator.
We might even try to get back into Kinder Morgan via its corporate stock (KMI). That’s a confusing situation right now, since all Kinder Morgan’s other entities—i.e., their master limited partnerships (MLPs) are being put in the mixmaster and cranked into the mothership stock, KMI, to create a new entity whose exact value is going to be a bit hard to pin down initially.
Suffice it to say, though, that KMI—the final frontier—will be generating a pretty decent dividend still given that it’s got a huge system of oil and gas pipelines that effectively constitute a big energy toll road that will collect those tolls no matter what oil and gas prices do in the short term.
The only other fly in the ointment on this one is Barron’s continuing vendetta on the company’s bookkeeping. For whatever reason, this generally respected periodical loves to hammer on Kinder every time the stock gets traction. Thus, any positive move in the consolidated entity will likely be greeted by another burst of headline risk from Barron’s. Frustrating.
On the other hand, if you’re only in Kinder, and its soon to be gone relative and sibs, for the fat dividends, the predictable Barron’s attacks will likely prove a minor annoyance.
Keep in mind that both the Maven—and you, if you’re tempted to take a similar contrarian bet here—could get pancaked at any second. Indeed, the Maven’s existing HES and APC positions have not been notably successful so far and could get killed if oil heads down to, say, $70 bbl. or less.
But we think that’s moderately unlikely for a variety of reasons, at least long term. So we’ll take our chances for now.
That’s it for today. But be ready to bolt from any number of things if those radical agitators, who seem to be tacitly endorsed by this criminal Administration, uncork when the Ferguson grand jury releases its findings. Any hint of a 1968-style “Burn, baby, burn” scenario will likely give Wall Street’s permabears their most excitingly down day since things bottomed spectacularly back in March of 2009.
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