As This Country Gets Her Pipeline Game On, Watch Out For TLP

I used to own TLP, and so I’m aware that this and similar businesses could be ground zero for any pipeline brought into operation. TLP runs a rail channeling business which primarily deals in chemicals and petroleum, and in the past I found a nice supply of internal documents from this partnership warning of the impact of an oil pipeline competing with them.

It’s incredible, but Morgan Stanley, who was one of the originators of the partnership and chief stakeholders, literally just closed a sale of their entire position to Russia’s Rosneft on December 20.

What immensely convenient timing, that they exited a position that could experience ranging disruption from the construction of a new pipeline just one month before a study is released that all but seals its construction…

Anyway, I’d keep an eye on TLP and not be surprised if it suddenly take a hit to PE multiples, as the realization dawns that their main terminal is about to be outbid.

If the partnership was still intact, I would possibly consider buying it after it corrects, because lateral movement of goods will still be necessary and TLP is in good position to hold that business. But honestly I personally don’t want to have close dealings with the Russians.

I let go the purchases from Monday. Everything looks ugly and I’m not banking on the rally continuing here without a real correction.

Asia’s markets are settled this evening, in response to Turkey jacking their interest rates to 12% in the dead of night, if such sources as Reuters are to be believed.

Central banks have had such a firm hand on everything for the past few years, it really would not surprise me if we just shrug this off and keep going. But I’m not going to rest my hat on that this time.

Ultimately, jacking interest rates to 12% is really bad for growth. Turkey is an importer, so maybe this helps the rest of the world to up that production a little bit. But my concern has always been that we’d hit the point where the rest of the world couldn’t stand the US’ cheap money policies. I thought we were there with the EU, but they passed the buck somehow.

Where did that buck end up, I wonder?

Alright, the emerging market concerns caught me off guard. I confess, I have not been paying close attention for crises. It doesn’t completely matter as I was intent on raising cash early in 2014 anyway. But, I am grateful to others, especially The Fly for his solid piece yesterday. It shook me awake – I was unaware borrowing costs for the rest of the world were spiking like that.

My problem is that I do not want to sell much. I own what I do because I believe in it. I have a 35% cash position, and can raise that back to 50% easily. But any more than that risks me missing out on the exposure; some of which I’ve held for years. It defies the entire purpose of making these investments.

I do have some downside exposure already – TSLA will be obliterated if emerging markets make it to “Contagion Talk” proportions. I still hold what of those puts didn’t expire in January (2/3rds remain of what I initially bought).

My plan is to transition another 1-2% of my account into PGJ puts with a short maturity date, beginning now. That’s a China specific ETF which took a major shock last week. This thing doesn’t turn into a crisis without talk of China; nowhere else is big enough or critical enough to trigger that kind of fear. And you don’t have talk of China without PGJ getting annihilated.

If this turns into a panic, just looking at the Eurozone blowout in ’11 for guidance, it will probably happen within about 6 months from whence the chatter begins (now-ish). Maybe I’m safer with longer execution dates but that costs extra and I can always add in three months if we’re still bobbing.

In the back of my mind, I actually expect the Fed to rush in and save the day somehow. But this will give me a good bit of cover just in case. And these products still look cheap right now.

I put 10% back into stocks, adding to all positions other than CCJ, UEC, silver and BAS, bringing cash to 35%.

Big push off the bottom.

The early bounce has failed. That does not mean it won’t recover. However, the NASDAQ is bleeding badly and only old man DOW stocks seems to be holding up. Well, that and gold and silver, which is plenty ominous given how they’ve behaved recently.

I’m going to sit back some more and gauge everything closely. Betting against strong upward rallies has been a losing proposition for three years. Yet, there’s no doubt, looking at crap like TW or the recent biotech run, that there are some very bad bets floating around, which are only being made because: “Who cares? It’s free money, I can always get more”.

I’ll check back in Tuesday and see if I want to bet on history repeating itself. My guess is, even if we continue higher from here, there are cheaper prices to be had over the next seventy-two hours.