As Yields Move Lower, MLPs May Offer an Attractive Return

By Jim Dondero | April 02, 2015

The US Dollar was again slightly lower on the week, which again helped crude oil bounce. While the greenback is likely in a multi-year bull market, we also believe that it could mark time over the next few months. If so, it could help crude put in a meaningful bottom.
We also continue to believe that MLPs could offer a very attractive alternative for investors, given the potential for a bottom in crude along with the recent decline in yields. Not all MLPs are equal, and we have identified seven names worthy of review in our most recent white paper.
After starting the week strongly stocks struggled to hold into the long weekend. We believe the recent sell-off is likely due to concerns over the (strong) dollar’s negative impact on earnings and/or the recent slow-down in corporate buybacks. We are closely watching 40-week averages as indicators of whether this is another garden variety pullback, or something more serious.
Finally, the action in China last week was quite encouraging; with the FTSE China 25 Index moving to its highest level in nearly 4 years. That being said it is still well below its 2007 highs, and we believe has good potential for further upside from here.