Proof Positive

 | Dec 04, 2013 | 11:55 AM EST  | Comments
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Stock quotes in this article:

nclh

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acmp

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kmi

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ccl

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chk

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de

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mas

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whr

You can always judge a market by its reaction to secondaries, and the market's saying its feeling a little better now after three down days.

That's my read after the pricing and trading of two deals that weren't necessarily all that compelling: 22 million shares of Norwegian Cruise Line (NCLH) priced at $33.25, and 6 million shares of Access Midstream Partners LP (ACMP), a 4% yielder, at $51.45.

What's positive here? While Norwegian's pretty much unchanged from where the deal came, it did trade at $33.50, where anyone could have gotten out at a slight profit. ACMP's a champ, up almost a dollar from the deal, which is amazing given how heavy some of the group, notably the best-of-breed Kinder Morgan (KMI) family of equities, is trading.

Norwegian's been a terrific performer in a tough group -- a group that was formerly led by Carnival (CCL) before its miscues and screw-ups. The stock was in the $20s at the beginning of the year, before its ascent. So the fact that this huge deal didn't go to a discount says something.

Access Midstream is already up 55%, and I regard it as one of the most conservative of the pipeline plays, even as its lineage is from Chesapeake Energy (CHK). It's been a huge hit.

When you see these deals go to a premium, that means we are not burdened with too much supply now, and we must always remember this is a supply-and-demand business. These two deals -- plus the gigantic buyback of Deere (DE), which is basically taking in a quarter of the company -- are very bullish, especially in light of the last three days of soggy trading.

This news on top of new-home sales strength emboldens players to jump the gun ahead of what could be a 3% yield in the 10-year note if the Labor Department's data is as strong as I think it might be. My shrewd observer and co-writer, Matt Horween, is taking the over on 250,000, a number that almost assuredly moves rates to that 3% zone. This home-sale number, which I reiterate is better for the Masco (MAS) and Whirlpool (WHR) than for the homebuilders, makes people feel confident that earnings could be higher down the road, even with higher rates. Remember, it wasn't as if mortgage rates went down a lot after they slid back to almost 2.5% from 2.9%. So, any reassurance that we can get, like we are getting with this home sales number, is positive.

So macro is good; supply/demand is good. These are signs that we could be stabilizing, although we have to remember that the mid-afternoon has produced a swoon lately -- just something to keep in mind.

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