- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Why are Utilities down this week?
Posted on 11/7/19 at 11:08 am
Posted on 11/7/19 at 11:08 am
Vanguard Utilities ETF (VPU) has been a great performer this year. It is down about 3.5% this week and I was thinking about adding to my position. A quick google search shows some negative pub around Pacific G&E, but that's not a component of VPU. Natural gas prices are up a little but the curve is generally unchanged. Other defensive sectors (Healthcare, Communications) are up.
I'd like to buy on the dip but not without understanding what is driving it. Any thoughts?
I'd like to buy on the dip but not without understanding what is driving it. Any thoughts?
2
Posted on 11/7/19 at 11:16 am to Negatiger1986
Looks like NextEra (largest holding in the fund at ~10%) is the bad actor. They released earnings earlier this week. Still not seeing any news to explain today's drop off.
Posted on 11/7/19 at 11:31 am to Negatiger1986
Interest rates have shot up over the potential China tariffs deal. Utilities are very interest rate sensitive.
Posted on 11/7/19 at 1:02 pm to LSURussian
REIT's taking a bath too, same deal.
Posted on 11/7/19 at 1:18 pm to UpstairsComputer
Thanks. That makes sense to me - basically they are a yield vehicle that trades up and down with interest rates.
How should I think about interest rates "rising" today vs the fed reducing rates over the last few months?
How should I think about interest rates "rising" today vs the fed reducing rates over the last few months?
Posted on 11/7/19 at 6:39 pm to Negatiger1986
quote:The Fed’s focus is on overnight rates in the fed funds market.
How should I think about interest rates "rising" today vs the fed reducing rates over the last few months?
Utilities usually borrow longer term in order to match their long-term assets (plant, equipment and transmission lines) to longer term debt. Plus the only way utilities can improve their ROE to competitive levels is to leverage its balance sheet.
Longer term rates are what have gone up significantly over the last two weeks.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News