All posts by Michael Comeau
Trump Pumps Up Pipeline Stocks, and I’m Holding On
Way back on December 11, 2015, I tossed the Kayne Anderson MLP Closed-End Fund (KYN) into my retirement account, back when it was around $14. President Trump signed orders to expedite the goverment’s review of the Keystone XL and Dakota Access pipelines, which is driving up shares of MLP’s, with KYN breaking through $20. KYN’s second biggest holding is Energy Transfer Partners (ETP) (19% of the fund), which is building the Dakota Access pipeline. This is a nice gain, but I’m not selling any. Why? Because KYN’s 4 most recent quarterly dividends have been returns of capital, not actual income. That means KYN has been distributing fund assets back to fund owners. So there are no actual income gains — they’ve all been from price appreciation. Assuming these pipelines go through, and assuming we see more domestic oil production under Trump, KYN could actually start distributing real income back to shareholders. That would be a huge catalyst, possibly breaking KYN out of its 8-month channel. Also, KYN is trading at a mere +0.2% premium to NAV vs. a 3-year average of +3.8%. That premium has actually gone as high as 16.4% over the past 5 years. So I’m going to let it ride. It’s come a long way but I don’t think froth has set in.
Continue Reading -->T3’s Take 3: Yellen Goes Hawk, Spikes the Dollar
1) Yellen Goes Full Hawk Today, Federal Reserve Chair Janet Yellen gave a speech at the Commonwealth Club in San Franscisco, and she swung her hawk hammer. Yellen said the Fed is close to meeting its dual mandate of full employment and price stability, and that Fed officials expect a few rate hikes this year. The US dollar immediately ripped on the news, gaining 1.7% against the yen and 0.7% against the euro. The dollar in strength put a hurting on gold, which fell -0.7%. The ever-volatile gold miners ETF(GDX) dropped -1.5%. 2) Stocks Bounce Yellen’s hawkiskhness drove a rebound in stocks, and the S&P 500 managed to squeeze up 0.2% to 2271.89. That’s not exactly exciting, but there were some signs of strength under the hood. The Russell 2000 rose 0.5%, and the Nasdaq Biotech ETF (IBB) rose 0.8%. Yellen’s hawk talk drove the S&P Financials ETF (XLF) up 0.8%, with Regional Banks (KRE) up 1.1%. Retail, energy, and US Treasuries led the decliners’ column today. After the close today, Netflix (NFLX) reported better-than-expected Q4 earnings and surged over $10. 3) Jeff Cooper on Gold This afternoon, T3 Live’s Jeff Cooper issued the following analysis of gold: Yesterday, GLD gapped up into a shelf of resistance from the spring of 2016 around 115. Today, after treading water in the early going, the bears came out to play. GLD is pulling back into the gap window from yesterday. GLD and the miners have done a lot of work and are entitled to inhale. However, GLD is doing something it hasn’t done for many moon: GLD has delivered a Golden Cross with the 50 week crossing above the 200. Click here to learn more about Jeff Cooper’s Daily Market Report.
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