Stocks Way Up–Interest Rates Way Down

Under normal circumstances I would say “what the hell” in reaction to the current movements in equity and interest rate markets, but with the elections I simply say just another day to ignore and to wait longer before taking any actions whatsoever.

As most all of you know when stocks go sharply higher–for 3 days in a row now–interest rates would generally move higher as well–but this week the 10 year treasury started the week at around .86%–rose to almost .90% yesterday and today plunged to .77%. All I can say is that there are plenty of shenanigans going on with traders and I don’t want to participate in anything for a few days.

For all I know equities will plunge tomorrow and interest rates could spike–it’s a crazy time we live in for sure.

I am not inviting political discussions here–just conveying there is no reason to be involved (beyond current holdings) in these markets for a while.

18 thoughts on “Stocks Way Up–Interest Rates Way Down”

  1. The ride on interest rates was a spectacle to behold…now in Ring Number Three for your entertainment…
    Hey, decided we were probably going to eat everyday and have bills so I added 200 CORR-A as a spec and incremental ‘up-averagerer’ in the IRA. Pays divy mid-month at 12% annual, two recent lease extensions with Ameren and Spire (big MO-IL utilities), as well as Govt-Fort Leonard Wood which has a large expansion project underway. Sold off WY gathering assets, have maintained a common div, have good cash on the books, and is able to hunt for an aquisition in the $200MM range according to the Board.
    Cap Gains?…Me say yes please.

    1. just saw this

      CorEnergy Infrastructure Trust shares are trading lower after Stifel downgraded the stock from Hold to Sell and announced a price target of $1 per share.

      i own the preferred so not happy though i don’t think i will sell

      1. Fasten your seat belts. I traded the stock a few years ago, but dont anymore. I took a peek at 3q results, and that is tough to swallow. 300 mil loss for the last 9 months. Revenue for nine months is 5 mil. If I did own, I would take a deeper look into the future, but a quick 5 minutes, and it looks painful ride for those folks. I would specifically find out if they are only going to generate < 10 mil each year? Will they ever get back to 60+ mil in revenue?

      2. sold around $13 took the cap loss
        could have waited for some recovery
        not worth the risk of suspension
        Some of these recommended by the SA yield chasing clowns are not always winners

      3. bob, Re: Corr-A: That’s on the common, but I just posted a buy that I made. Stifel is a local StL brokerage as is the operating area of CorEnergy, although offices are in KC. Interesting, thanks for the post. Will watch.
        Their stumbling block is a non-pay from Cox Oil. The rents accrue contractually, but still non-pay. Lack of an American Energy policy crashed oil prices so it could be used as a political nuke. Here are the dislocations of distorted, laisse-faire, no-vision, antiquated rehetoric.
        Rents are near the top if there is a bankruptcy. The CEO of Cor is a highly respected and considered conservative manager for many decade who apparently helped introduce REIT strux to energy assets. Has the undestanding from and with this industry’s leaders. Debt is low, of course prefs can be suspended, but cumulative. Problems roll downhill and non-IG , large % clients. I too will roll with my current small 200 share new purchase. Could be a long stagnant winter wait. Some times you have to wonder about a sell out of the company? Apparently not obliged to redeem prefs.

  2. The mantra I keep hearing is that in a world of negative interest rates and nominal rates that are negative everywhere else that there is no place else to go but equities and thus historical P/E ratios and valuations are no longer a good investment guide.
    Though I’m not a big conspiracy fan there was a writer years ago, Robert Anton Wilson that had a clever line:”If you can see Them….its not Them.” So who really controls interest rates and for what purpose as communicated by Mass Media Monotony is an open question and impossible to really fathom by analyzing the obvious. $244 Trillion in debt in the world and a Derivatives market estimated to exceed $1 Quadrillion. Its beyond imagination until the whole thing collapses and suddenly it becomes very real.

  3. I think the key result is that the Dems won’t control the Senate. Morgan Stanley put out some new research yesterday that a Blue Wave could result in ten year treasuries of 140 points by the new year. Relief over dodging that bullet probably depressed rates as well as concern over the second wave of covid.

    The other result is the rapid rebound in oil. A Republican Senate will make it safe to own carbon energy if Biden is elected although his inevitable apology tour with Iran and the Palestinians won’t help.

    None of these moves seem to be an endorsement of the general economy. The selective nature of today’s recovery suggests to me relief from proposed tax and policy changes, not general expansion.

    1. Potter – Yeah, the market does typically like split government which we will have no matter who ultimately is the President. Today’s market was very odd though – more stocks were down than up. I think it was traders acting on what they think may happen if Biden wins.

      As you said, carbon energy was up while renewable energy stocks were down. Reits were down probably based on the expectations of more lockdowns, And the Nasdaq was up big because big tech benefits. A really selective rise

      1. I have refused to drill deep into “what they say/said” about the election. WS snots in their ivory towers have been HARD left for a long time. I saw 1 piece on monday saying chance of blue wave 79%. Now same hammer heads say Biden win and congress going the way projected will result in….wait for it…deflation…..and the tax rate staying the same.

      2. I am agnostic on what kind of energy. CNBC pundits typical line on Energy, giving a whole bunch of Renewables all crashing down urging to buy XOM or Chevron. There are other pundits who would urge you just anything because money sitting on cash or buy US Treasury or Investment grade bond (like the one issued by Apple Computer) gets you nothing. Apparently she has never heard of preferred stocks.

        Brookfield Renewable Energy BEP and BEPC (acquired from TeraFarm about a year ago), kept on going up relative to EPD (presumably the best of fossil fuel). It is true that both of them are going up. AY (Atlantic Renewable with some exposure in Spain) seem to outperform the EPD at least in 1 or 2 year chart. I own BEP, BEPC EPD and MMP and the Preferreds of ET (Pipeline: sold the common at significant net loss). I had MMP for probably over a decade ago (sold XOM and Chevron almost a decade ago). New purchase of MMP in small amount in IRA was a disaster. BTW, some of the pundits in CNBC is no better than Rida Morwa or Jussi Askola (urging people to buy MORE EPR Properties despite bankruptcies in the cinema scene). SA articles urging to buy PEI and PEi preferreds, common shares of LUMN or AMD when it reached record high are also wealth destruction machines. The proforma yield of BEP or even AY seem not so attractive compared to EPD, then it goes down typically considerably less drastic when WTI goes down. I believe that we have just way too much oil/gas because of the COVID. It could get better AND when Putin stops oil war against the Saudis someday. BTW, recently EPD does seem to recover some, not MMP or ET.

        1. My comment on energy was about my thoughts on why certain sectors traded as they did yesterday. I personally own a variety of energy related common stock plays – all dividend payors – Pipelines EPD, OKE, KMI – Big Oil – CVX – Wood Pellets – EVA – Renewables – BEP, BEPC, HASI, NEP

  4. Don’t overread what’s going on. Lots of fast money (are there anything but these days ?) had moved to the sideline/ put hedges on. Nov they have to cover those because…well because the market popped. Most where short nascrack – thats why it’s up the most. Of course eventually the talking heads will come up with some clever explanation of why this (unknown) result is good for tech and bad for small caps – all BS 🙂

    By the way – huge short position in treasuries…

  5. Doing the right thing on interest rates will depend on who’s in the oval office. No fan of Harris/Biden, but I think they will take the shackles off Powell to let the natural thing occur.

  6. It’s worthwhile to note that there is a significant variation in the equity indices today. Currently, the most popular index (SPY) is booming @ 3.1% while the indexes for Mid Caps (MDY @ 0.9%) and equal weight (SPXEW @ 1.3%) are suggesting that things are flat in the equity market.

  7. Futures went up when Trump’s winning chances increased. Now it’s back to Biden as the favorite and a contested election likely. Both of which the markets don’t want. I’m a seller today.

    1. Martin and Peter M ,
      Thanks for keeping a level head and keeping politics out of the comments.
      I tried hard to ignore and just look at the trees for the forest.
      The stocks I want to flip didn’t go up that much and the ones I am keeping I will just let the boat ride the waves.
      Think Martin may be right, might be time to take some profit if your flipping as the ride up has been over done.
      As for everyone here thinking oil and energy related companies have a huge correlation to politics, I suggest you look at demand. All energy companies reporting 3rd qtr. results are down big time on earnings compared to a yr. ago qtr. Belive me with Covid the economy is not going to come roaring back if you look at whats happening in the rest of the world. Expect a slow uneven recovery and this relates to energy. I have one energy stock KNOP and am holding. waiting for them to report last qtr. results

  8. Wonder if any additional state shutdowns are on the horizon with COVID.
    Some states still have out of control infection rates.
    This market seems to be pricing in an economy that is firing on all cylinders, but that likely won’t happen until a vaccine is available and who know when that will occur.

  9. I’m not surprised that interest rates are moving lower. When there is uncertainty, investors tend to buy Treasuries as a safe haven. Other interest rate vehicles then follow in lockstep (or weaker credits fall in value). What I certainly don’t understand is that equity markets are moving dramatically higher in the face of uncertainty. Maybe it’s some kind of relief rally that election day is over. I just don’t get it.

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