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FYI: (This Morning$3.35 In Chicagoland Southern Suburbs) According to data from AAA, the average price of a gallon of gasoline in the United States currently stands at $2.74, which is up 22.3% so far this year and 35% off the low of $2.03 from late January. Regards, Ted https://www.bespokepremium.com/think-big-blog/gasoline-prices-the-good-and-bad-news/
$2.69 in Southern WI today.Energy price overview: Gasoline prices rose to an average $2.77 per gallon at the pump (-24.5% y/y) last week
WTI crude oil costs eased last week to an average $59.23 per barrel (-42.9% y/y),
Natural gas prices improved to $2.98 per mmbtu last week (-33.7% y/y) but eased to $2.82 yesterday. http://www.haver.com/comment/comment.html?c=150527B.html Unemployment insight: Florida's 5.6% unemployment rate was below the 6.2% rate in the Miami metro area. Both were, however, roughly half the 2010 figure. Michigan's 5.4% unemployment rate also was under the 6.2% figure around Detroit, and both rates recently fell sharply. In 2009, Detroit's rate reached 16.0%. New York state's 5.7% unemployment rate was below the sharply reduced 6.5% in New York City while California's 6.3% rate was under the 7.6% rate around Los Angeles. Also, Ohio's 5.2% rate was below Cleveland's of 5.8%. Working the other way, Washington state's 5.5% jobless rate exceeded Seattle's 4.3%. http://www.haver.com/
Another comparison, Seattle has 4.3%. I don't have the latest number but Tacoma-Pierce County just 30 miles south was 7.1% in March/April. Some parts of WA state still had double digit numbers.
Good article Bee. I think they are right on many aspects. My portfolio is overweighted toward the energy sector however I only hold the major pipeline companies (EPD, MMP, KMI) and have for a long time. Nothing they are doing now would cause me to release them and in fact I expect them to be just the type of companies to be on the prowl for those mis-priced and distressed assets the authors refer to.
HIGHLAND CAPITAL MANAGEMENT | GLOBAL ALLOCATION COMMENTARY As mentioned, we expect a near-term bounce in crude prices as aggregate demand increases in the wake of capex reductions. The dislocation of “energy-related” names that do not have meaningful fundamental correlation with oil prices has created an interesting opportunity set. Opportunistically, we are buying companies at depressed valuations that have been subjected to the broad sector sell-off but have good prospects, even in a depressed commodity environment. While we think a short-term bounce will occur, we do not need oil prices to return to $90-100/barrel for our thesis to play out. Our investments in the airline industry – American Airlines (AAL) and JetBlue (JBLU) – still have strong fundamental upside and should see significant additional earnings tailwinds from lower oil prices. Our expectation is that industry players will enjoy margin expansion by not being required to pass fuel cost savings to consumers, so long as demand remains stable/growing. Another uncovered opportunity that does not have meaningful fundamental correlation to oil prices but has declined as investors have panicked is MLPs. Midstream MLPs in particular operate “toll-road” or fee-based business models that can offer stable and growing fee-based cash flows and low sensitivity to commodity prices and inflation. MLP spreads have significantly increased off of their 3 year average and are over 30% higher than where they traded at the beginning of 2014. Spreads normalizing back to their 3 year average could provide a 12% return. And against the backdrop of global deflation concerns, one could argue that the stable, defensible, and growing cash flow characteristics of midstream MLPs are more appropriately valued at an even tighter spread. HCOAX http://highlandfunds.com/wp-content/uploads/2015/05/Global-Allocation-Commentary-Q1-2015.pdf
From the field: My call Jason on pricing is, I think that there will be a lag on commodity price recovery to sort of drilling completion activity. I think that could take 6 months and then I believe there will also be a lag on services getting pricing discounts off the books and back to sort of pre-collapsed pricing maybe as long as another 6 months. If I'm an operator, I'm going to hold this service guy down as long as I can. So we expect that to happen anything that's a little better than that is upside for us, but that would be my personal expectation on how this kind of plays out May 15, 2015 5:00 PM ET | About: Canadian Energy Services & Technology Corp. (CESDF) http://seekingalpha.com/article/3188506-canadian-energy-services-and-technologys-cesdf-ceo-tom-simons-on-q1-2015-results-earnings-call-transcript?page=6&p=qanda&l=last I own shares of HCOAX and CESDF.
May 28 2015, 18:19 ET | About: Dominion Midstream Partners LP (DM) | By: Carl Surran, SA News Editor Morgan Stanley’s M L P analysts initiate coverage of eight major dropdown M L Ps, citing attractive attributes such as high-quality asset bases, magnitude and sustainability of growth, and strong and supportive sponsorship.Lead analyst Brian Lasky's top pick in the group is Dominion Midstream Partners DM Lasky says these M L Ps and their sponsors also have surprised to the upside, positioning the companies for attractive growth and visibility: AM, CNNX, CPPL, EQM, SUN, TLLP, VLP. http://seekingalpha.com/news/2550276-morgan-stanley-prefers-dominion-midstream-among-dropdown-mlps
Comments
Gasoline prices rose to an average $2.77 per gallon at the pump (-24.5% y/y) last week
WTI crude oil costs eased last week to an average $59.23 per barrel (-42.9% y/y),
Natural gas prices improved to $2.98 per mmbtu last week (-33.7% y/y) but eased to $2.82 yesterday.
http://www.haver.com/comment/comment.html?c=150527B.html
Unemployment insight:
Florida's 5.6% unemployment rate was below the 6.2% rate in the Miami metro area. Both were, however, roughly half the 2010 figure. Michigan's 5.4% unemployment rate also was under the 6.2% figure around Detroit, and both rates recently fell sharply. In 2009, Detroit's rate reached 16.0%. New York state's 5.7% unemployment rate was below the sharply reduced 6.5% in New York City while California's 6.3% rate was under the 7.6% rate around Los Angeles. Also, Ohio's 5.2% rate was below Cleveland's of 5.8%. Working the other way, Washington state's 5.5% jobless rate exceeded Seattle's 4.3%.
http://www.haver.com/
Fund-Manager-Views/Global-Oil-Price-Decline-Creates-Winners-and-Losers?
HIGHLAND CAPITAL MANAGEMENT | GLOBAL ALLOCATION COMMENTARY
As mentioned, we expect a near-term bounce in crude
prices as aggregate demand increases in the wake of capex
reductions. The dislocation of “energy-related” names that
do not have meaningful fundamental correlation with oil
prices has created an interesting opportunity set. Opportunistically,
we are buying companies at depressed valuations
that have been subjected to the broad sector sell-off but
have good prospects, even in a depressed commodity
environment. While we think a short-term bounce will occur,
we do not need oil prices to return to $90-100/barrel for our
thesis to play out. Our investments in the airline industry –
American Airlines (AAL) and JetBlue (JBLU) – still have strong
fundamental upside and should see significant additional
earnings tailwinds from lower oil prices. Our expectation is
that industry players will enjoy margin expansion by not being
required to pass fuel cost savings to consumers, so long
as demand remains stable/growing.
Another uncovered opportunity that does not have
meaningful fundamental correlation to oil prices but has
declined as investors have panicked is MLPs. Midstream
MLPs in particular operate “toll-road” or fee-based business
models that can offer stable and growing fee-based cash
flows and low sensitivity to commodity prices and inflation.
MLP spreads have significantly increased off of their 3 year
average and are over 30% higher than where they traded
at the beginning of 2014. Spreads normalizing back to their
3 year average could provide a 12% return. And against the
backdrop of global deflation concerns, one could argue that
the stable, defensible, and growing cash flow characteristics
of midstream MLPs are more appropriately valued at an even
tighter spread.
HCOAX
http://highlandfunds.com/wp-content/uploads/2015/05/Global-Allocation-Commentary-Q1-2015.pdf
From the field:
My call Jason on pricing is, I think that there will be a lag on commodity price recovery to sort of drilling completion activity. I think that could take 6 months and then I believe there will also be a lag on services getting pricing discounts off the books and back to sort of pre-collapsed pricing maybe as long as another 6 months. If I'm an operator, I'm going to hold this service guy down as long as I can. So we expect that to happen anything that's a little better than that is upside for us, but that would be my personal expectation on how this kind of plays out
May 15, 2015 5:00 PM ET | About: Canadian Energy Services & Technology Corp. (CESDF)
http://seekingalpha.com/article/3188506-canadian-energy-services-and-technologys-cesdf-ceo-tom-simons-on-q1-2015-results-earnings-call-transcript?page=6&p=qanda&l=last
I own shares of HCOAX and CESDF.
May 28 2015, 18:19 ET | About: Dominion Midstream Partners LP (DM) | By: Carl Surran, SA News Editor
Morgan Stanley’s M L P analysts initiate coverage of eight major dropdown M L Ps, citing attractive attributes such as high-quality asset bases, magnitude and sustainability of growth, and strong and supportive sponsorship.Lead analyst Brian Lasky's top pick in the group is Dominion Midstream Partners DM Lasky says these M L Ps and their sponsors also have surprised to the upside, positioning the companies for attractive growth and visibility: AM, CNNX, CPPL, EQM, SUN, TLLP, VLP.
http://seekingalpha.com/news/2550276-morgan-stanley-prefers-dominion-midstream-among-dropdown-mlps