- Large-Cap Growth +.09%
- 1) Utilities -1.26% 2) Drugs -1.08% 3) Computer Services -.76%
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- 1) EA 2) MMM 3) BMC 4) XLP 5) GMCR
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On Monday April 6, 2013, Electric Utilities, XLU, traded 1.4% lower, as the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, steepened. A steepening yield curve, seen in the chart of the Steepner ETF, STPP, steepening, is deleterious to electric utility stocks, as they are loaded with debt, especially long term debt.
The electric utilities which had been doing better than their peer group traded strongly lower; these utilities, with their Long Term Debt to Equity Ratio, and yield are presented below:
AEP, 1.0 and 3.8% yield, -1.2%
DTE, 1.0 and 3.5% yield, -1.6%
NEE, 1.4 and 3.3% yield, -1.4%
D, 1.5 and 3.7% yield, -0.7%
PNW, 0.8 and 3.6% yield, -1.3%
WEC, 1.1 and 3.1% yield, -1.7%
CMS, 2.1 and 3.5% yield, -1.4%. This heavily endebted electric utility stock was one of the best performing utility stock in the last six months, as is seen in this ongoing Yahoo Finance chart. Under the development of global ZIRP, seen in the trade higher of the Euro Yen Currency Carry Trade, EUR/JPY, that is FXE:FXY, beginning in August 2012, as well as an ongoing rise of Aggegrate Credit, AGG, investors favored stocks that were debt laden, as the pursuit of yield ensued.
David Fabian, Fabian Capital Management, writes in Seeking Alpha, that the iShares 20+ Yr Treasury Bond Fund TLT traded 2.36%, lower on Friday April 6, 2013, as the yield on the 10-Year Treasury Note, ^TNX, rose 7.42%, to close up at its 200day average of 1.75%.
Financial Times reports US junk debt yield hits historic low.
The trade lower in Electric Utilities, XLU, suggests that chasing yield is over; look for all of these yield bearing equity and debt investments, seen in this Finviz Screener, PSP, UJB, KBWY, ROOF, DRW, AUSE, DBU, XLU, REM, IST, SEA, BRAF, FNIO, REZ, PGF, IYR, KBWD, DTN, TAO, FLOT, to trade lower on the exhaustion of the world central banks’ monetary authority to continue to stimulate global growth and trade and to prevent sovereign default in the Eurozone.
Over the last six months, Leveraged Buyouts, PSP, (yielding 3.7%) Premium Yield Equity REITS, KBWY, (yielding 4.1%), Small Cap Real Estate, ROOF, (yielding 4.1%, and Australian Dividends, AUSE, (yielding 4.1%) , were the the best paying dividend equity investments, as is seen in their combined ongoing Yahoo Finance Chart. Their seigniorage, that is their moneyness, came from Global ZIRP, as well as from the US Fed continuing to buy Morgtage Backed bonds, MBB, which has fallen parabolically lower in value, when World Stocks, VT, blasted higher on Friday May 3, 2013, on excitement that the ECB had lowered its interest rate.
As World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, traded higher, Aggregate Credit, AGG, and Government Bonds, GOVT, World Treasury Bonds, BWX, and all forms of credit traded lower except for Junk Bonds, JNK, Ultra High Yield Bonds, UJB, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Distressed Investments, FAGIX, which trades like those investments, taken in by the US Fed under QE1, and which were exchanged for “money good” US Government Treasuries, GOVT, in order to stimulate the global economy after the 2008 finacial collapse.
The combined policies of the world central banks to pursue debt deflation has finally resulted in a steeping ot the US 10 30 Sovereign Deb Yield Curve, STPP, and a rise in the US Ten Year Interest Rate,^TNX, thereby making “money good” investments, such as Electric Utility Stocks, XLU, bad.
The chasing of yield, that is the pursuit of yield came on ever increasing moral hazard. Soon actual hazard will come of age, as investors derisk out of all forms of fiat wealth, that is out of Stocks, VT, Credit, AGG, Major World Currencies, and Emerging Market Currencies, CEW.
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