It’s Official: No Double Dip Recession

Don’t fall into the double-dip trap: Such cycles are exceedingly rare, and the current pattern just doesn’t fit the mold of the 1980-82 double-dip.

 – Elliott Gue, MLP Profits (Dec. 26, 2009)

Over the past few months, I’ve voiced concern that the severe economic slowdown this past spring, the G-20 decision in June to cut deficit spending, and a Hindenburg Omen technical indication in August all spelled problems for the U.S. economy and the stock market.  In fact, I even hinted that a double-dip recession might occur.

Never mind.

No Double-Dip Recession!

The Economic Cycle Research Institute (ECRI), which posts the Weekly Leading Index (WLI, my favorite economic indicator) announced on October 29^th that a double-dip recession would not occur. Saying that the economic indicators are “unmistakably veering away from the recession track,” ECRI’s economists conclude:

After completing an exhaustive review of key drivers of the business cycle, ranging from credit to inventories and measures of labor market conditions, we can forecast with confidence that the economy will avoid a double dip.

A man who lives by the sword, dies by the sword. Since I based my dire economic forecasts on the worsening WLI during the spring, I must now reverse course because the authors of that same WLI say that an double-dip recession is simply not going to happen.

Subscribers to MLP Profits Already Knew No Double-Dip Recession

What’s fascinating is that subscribers of Elliott Gue’s MLP Profits , the authoritative source of investment guidance for the master limited partnership (MLP) universe, didn’t have to wait until October 29^th, 2010 to know that a double-dip recession was not going to happen. Elliott has been telling subscribers not to worry for almost a year now:

December 26, 2009: The Mythical Double-Dip

 July 9, 2010:  No Double-Dip Recession

 August 13, 2010: Still No Double-Dip Recession

MLP Investors Have Outperformed the Market

Anyone who listened to Elliott has profited handsomely, especially those who have invested in the MLP recommendations of his MLP Profits advisory. Let’s take a look at the performance of the S&P 500 and the Alerian MLP index since his first “no double-dip” call last December:

Source: Bloomberg

While the S&P 500 is up 6.8% since last December, the MLP index is up a whopping 28%! The MLP outperformance really took off in late May, right after the scary “Flash Crash” of May 6^th and the string of weak WLI numbers that got me so worried.

My conclusion? – Subscribe to MLP Profits. Not only will you get money-making MLP recommendations that are high-yield and tax-advantaged, but you will also get Elliott’s spot-on macroeconomic forecasting for free! 

MLPs are Still a Good Buy

So much for the past; the burning question many investors are asking now is: “is it too late to buy MLPs now?” Elliott Gue and Roger Conrad, co-editors of MLP Profits, recently answered a resounding “no” to this question. In fact, with the prospect of a double-dip recession no longer in the cards, Roger says it is time to look at the energy MLPs in MLP Profits’ “Aggressive Portfolio.” MLPs that are tied to energy prices will do very well in a non-recessionary economy:

The more an MLP relies on income that’s affected directly by energy prices, the more volatile its distribution will be over time. That can be a very good thing and our Aggressive Holdings–which derive almost all of their income from commodity price-related revenue — offer a lot of upside because of it.

Similarly, Elliott recently told subscribers that MLP fundamentals remain strong:

Strong market performance doesn’t mean a security class is necessarily overvalued. High yields and consistent distribution growth justify the gains posted by MLPs over the long term.

There you have it: MLPs are not overvalued. Economic fundamentals currently favor “aggressive” MLPs tied to energy prices and those MLPs that continue to boost their cash distributions will continue to perform well.

Many MLPs have never cut their distributions, even during the 2008 financial crisis. With the economic recovery now secure, do you think they will start cutting now? Of course not! Continued distribution growth is now more likely than ever. To find out the specific names of these “never cut” MLPs as well as all of the energy MLPs Roger and Elliott like right now, give MLP Profits a try.