A Rare Opportunity for Income and Growth
MLPs are at historically low prices and historically high yields. MLP cashflows are stable with single digit downside Relative to Treasuries, MLP prices are three standard deviations below average. Kayne Anderson closed end funds MLP (KNY) and Midstream Energy (KMF) are bargains KYN yields 39% with a 17% discount to NAV KMF yields 29% with […]
Irrational Pessimism
The Fed Model is a screaming buy–highest levels in three decades. • High yielding investments with good underlying cashflows like KYN and KMF are compelling. • Deep value opportunities exist in MLPs, mortgages and corporate bonds. These asset class experienced intense margin related selling creating unusual oversold conditions and opportunities. • Therapeutic treatments, vaccine development […]
Coronavirus and OPEC Black Swans Create Rare 1987-like Opportunity in MLPs
Market decline of 33% on par with 1987. • MLP Treasury spreads at historic levels. • MLPs have stable cash flows. • KYN looks especially attractive with 41% yield and 21% discount to NAV. The continued worsening news due to COVID-19 and Oil prices have led to generational declines in the stock and oil markets. […]
Coronavirus and OPEC Black Swans Crash Stock Market like 1987
Market decline of 30% over with massive breadth and volume readings VIX, Fed Model and MLP Treasury spreads at historic levels. MLPs have stable cash flows. KYN looks especially attractive with 25% yield and 9% discount to NAV. Stock and oil prices were declining due to the China-centric coronavirus demand shock, when on March 9th, […]
Coronavirus Market Panic and Opportunity
Worsening coronavirus or COVID-19 news drove a 12.4% decline in the Dow Jones Industrial Average, last week, erasing $5 trillion in global equity market value. This COVID-19 market panic was exacerbated by both China’s news suppression and the virus’s suspicious Wuhan lab origin; and further amplified by the news–stock market reaction–feedback loop. Historic market panics like […]
S&P 5905 Target up 88% and the Fed Model’s Flaw
We revised our S&P 500 2020 Fed Model price target up to 5905 (up 88%). This letter reviews how recent decades of extreme Central Bank accommodation has distorted the Fed Risk Premium Model’s credibility when compared to other valuation models which are more cautious. The 2020 Rally: The Federal Reserve is lowering short term rates […]
Investment Trends for the Next Decade
The 2020s will produce important new trends in the global markets which this letter will explore. The new investment themes for the 2020s are: Rising rates will hurt bond performance Energy stocks will rebound Commodity prices will rise Emerging market outperformance will resume The New Cold War: China, Iran, North Korea, Russia and Venezuela S&P […]
How to Invest for S&P 5559 on a Central Bank Bubble
How to Invest for S&P 5559 on a Central Bank Bubble None of the potential black swan events like the Hong Kong riots, the Brexit from the EU, the US-China trade dispute, the US impeachment inquiry, the Saudi Arabian oil refinery attack and the global industrial slowdown materialized to topple the US equity market in […]
Gold and Silver Return as Investment Leaders
The black swan risks of a hard Brexit and a Tiananmen Square type slaughter of Hong Kong protesters by the Chinese Communist Party decreased last week resulting in a stock market rally and a pullback in safe haven assets. This market reprieve, however, has not resolved the risks associated with Britain’s efforts to leave the […]
Is Hong Kong A Black Swan?
Investors should adjust their portfolios to emphasize gold and commodities and reduce their holdings of stocks and bonds. Income Growth Advisors, LLC believes the future performance of bonds over the next decade is likely to be in the low single digits and the benefits of declining interest rates are diminishing. The European and Chinese economies […]