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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (17384)12/1/2015 11:40:08 AM
From: robert b furman1 Recommendation

Recommended By
The Ox

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HI John,

Are not most of these the result of Dodd Frank and / or the basell III requirement of reserves.

I'm of the unprofessional opinion that the banks all had to get out of the commodities business due to Dodd Frank.

It seemed to me that once the 2008 credit crisis occurred - JPM and many other banks got into inventorying copper,gold,lead, and silver as they knew China was on a 5 year building / buying spree.

Now the costs of funding private equity / hedge funds are being driven up by higher reserve requirements .

This ultimately will delever the private equity business and force the use of their own money.

As far as Bond liquidity - does not QE soak up everything but the high yield junk stuff?

I see rates being much talked about but low for a very long time - much like the 50's.

That being the case,real estate will have a nice comeback but with prudent money down.

I think the long term best game in town lies with small growth companies that pay a 4 % dividend witha good blend of dividend aristocrats that pay 5-6% steady.

In this world of low interest rates and dividends being the lowest tax rate available - the get a equivalent after tax return on one's money requires the buying of junk bond high yielders.

I'm very uninformed about that high yield area and have not been motivated to dive into it as I feel very comfortable selling puts on dividend aristocrats - spread out over 90 day increments.

Every once in a while these aristocrats cycle to 3-4 year lows and one can catch a below market acquisition price which also offers 6-8 % dividend yields.

I've recnetly been selling KMI puts and am surprised how low the stock price has gone. They currently are offering up 8 % dividend yields and I believe that the transporting of natural gas (which also is very depressed) will have growth drivers of :

Mexico importing US natural gas.
The continuing displacement of coal electrical generation by natural gas
The many large petro chemical / plastic manufacturing plants being constructed in the USA - ( taking advantage of the cheap natural gas provided by fracing)

Mid stream pipeleines will have many ongoing growth opportunities.

Always good to hear from you !!

Bob
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