Posts Tagged ‘muni bonds’

Kyle Bass With David Faber: Bernanke’s ZIRP Is An ‘Inescapable Trap;’ Muni Bond Bloodbath Beckons But “States Will NOT Default”

Courtesy of The Daily Bail  

CNBC Video – Kyle Bass with David Faber – Feb. 16, 2011 

Visit msnbc.com for breaking news, world news, and news about the economy

Video – Part 2

Source – CNBC

Municipal bond defaults on the local level are likely and investors would be better off avoiding them, according to Kyle Bass, managing director of Hayman Capital.

Bass said he generally agrees with the call by famed banking analyst Meredith Whitney, who said as many as 100 defaults are likely that will cost more than $100 billion in damage.

Though Whitney’s call has prompted substantial backlash from her colleagues in the industry, Bass said the question is more a matter of degree.

"There are going to be a number of muni defaults, but it’s where you draw the line.  Will states be allowed to default?  Will legislation be introduced to allow states to restructure?  I don’t believe that’s the case.  I believe states will not default." 


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Whitney Whips Up Wall Street as Bear in Heels: Alice Schroeder – Bloomberg

meredith whitney, bear in heelsMeredith Whitney has done it again, turning Wall Street against her with a contrarian call, this time on municipal bonds.

The analyst’s prediction for “50 to 100 sizable defaults” of U.S. municipal bonds totaling “hundreds of billions of dollars” could become her Big Wrong Call. If so, it will knock Whitney from a pedestal, to the satisfaction of her many critics.

She has staked her credibility on this forecast, broadcast Dec. 20 in an interview on CBS’s “60 Minutes.” Her summary of a 600-page report to clients prompted a National League of Cities analyst to say she possessed a “stunning lack of understanding.” Other critics called her prediction “ludicrous,” “irresponsible,” “damaging,” and “overreaching.”

There’s a huge gap between these descriptions and Whitney’s track record as an analyst. The chasm is so big that it is worth exploring. Something interesting is going unexamined or unexplained.

Continue here: Whitney Whips Up Wall Street as Bear in Heels: Alice Schroeder – Bloomberg.

Picture credit by Markusram at Flickr


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MARKETS DEFY GRAVITY

By Surly Trader

Since the beginning of December, the S&P 500 has yet to meaningfully break down below its 10 day moving average.  We just like to blissfully crank upwards in valuations.  The Dow has hit its momentous 12,000 level and the S&P was inches away from 1,300.  Now that we have touched our psychological targets, maybe it is time we reassess how enthusiastic we have gotten.  Instead of looking at P/E ratios on 2011 earnings forecasts, I have seen more and more analysts consider 2012 and 2013 forecasts…

I guess our 10 day moving average is a fixed positive slope

When it comes to the lesser of investment evils, it certainly still looks like equities are more attractive than bonds.  The issue that I have is that most investors have set aside the significant tail risks that are out there.  Not to belabor the point, but there is still significant risk in the Eurozone.  Equity markets have ignored it, as well as concerns with local municipalities and states.  These risks are real and will take quite a long time to resolve.  While the VIX sits around 16 and realized volatility hovers near six year lows, we need to understand that risk flares come quickly and unexpectedly and there are plenty of issues that could precipitate are run.

The default spreads on the PIGS do not appear resolved to me so why is the Euro rallying?

I do not like to be negative, but it does get tiring when the arguments switch so fiercely from bearish to bullish stances.  It seems to be the psychology of not wanting to be miss out when the market is rallying or not wanting to be the last one in when the market is tanking.  Feast or Famine, no in-between.


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Sorry Charlie, Meredith Whitney Lives in a Free Country

Courtesy of Joshua M Brown, The Reformed Broker 

Charlie GasparinoI’ve always been a fan of Charlie Gasparino’s, I like his hard-nosed, old school journalism style and generally have agreed with a lot of his opinions over the years.  But his rant about Meredith Whitney’s municipal bond research is so far off the reservation, he may be in danger of losing his Indian name (Reports With Martinis).

Here’s Gasparino excoriating Whitney for being negative about the prospects for municipal fixed income investing in the Huffington Post:

And yet, as the municipal market is crashing on her prediction, with deals being pulled and slashed in size, with prices falling and taxpayers having to pay extra so cities and states can sell debt, Whitney is refusing to release the actual report that would tell us how she came to such a brash, and unprecedented prediction, on the grounds that her research is proprietary and for the use of the clients of her research firm only.

It’s about time Whitney came clean and released her report to the public so we can determine if it should be given so much credence; and if it shouldn’t, traders and investors can stop a possibly misguided prediction from causing further damage.

Hey Charlie, I don’t exactly agree with Whitney’s assertion that a Munigeddon is imminent, but she has the right to publish her research as publicly or as privately as she likes.  I’ll also note that muni bonds are suffering from limited liquidity as the mutual funds that make up a large portion of their ownership are seeing week after week of redemption.  Little Meredith Whitney may have a decent platform but she hardly moves hundreds of billions of dollars.

No, if anything, the blame here goes to the municipalities themselves for writing checks and making promises that their tax bases couldn’t cash.  The townsfolk won’t get fooled again – they are at the school board meetings and the Town Halls, they know there isn’t any money there.  Whitney’s call has simply been the most vocal expression of this general consensus.

Don’t kill the messenger.

Source:

Meredith Whitney Should Show Her Cards (Huffington Post)

Read Also:

Muni Misunderstandings (TRB)  


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The Shocking Selloff In Muni Bonds That Has Investors Running Scared.

Courtesy of Gregory White at The Business Insider

Today saw a massive selloff in the broader bond market, but the muni bond situation may be the most alarming.

The threat of the end of the Build America Bond program looms large, and it is scaring investors into selling out of the muni market.

It could be the next black swan looming, ready to cause an even larger problem for states already overburdened with debt.

Just check out the down move in the Muni bond ETF today. It may be off its lows of the day, but it still doesn’t look good.

chart of the day, mub, dec 2010

Originally published at The Business Insider, CHART OF THE DAY: The Shocking Selloff In Muni Bonds That Has Investors Running Scared.

 


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Phil's Favorites

Goldman Sachs and JPMorgan Have Flagrantly Flaunted the Volcker Rule for Nine Years: Now It's to Be Gutted by Federal Regulators

Courtesy of Pam Martens

Two of Wall Street’s crony regulators announced today that they are going to “simplify” the Volcker Rule’s ban on proprietary trading at Wall Street banks, providing another big win for Wall Street and another big nightmare for Main Street.

The financial crash on Wall Street in 2008 was the deepest economic upheaval in the U.S. since the Great Depression. Millions of honest, hardworking ...



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Zero Hedge

Famed IPO Analyst Call WeWork Prospectus "Masterpiece Of Obfuscation"

Courtesy of ZeroHedge View original post here.

Last week, when WeWork filed its highly anticipated prospectus for the upcoming IPO that seeks to value the company as much as $50 billion, we shared the one chart that summarized - we thought - all that was wrong with the company: the fact that even as revenue has risen, and it has to rise much, much more for the company to ever grow into its massive valuation - it has burned ever more cash.

...



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Kimble Charting Solutions

Steel About To Breakdown And Send Bearish Economic Message?

Courtesy of Chris Kimble

Is the Steel Industry suggesting that a recession is nearing? In my humble opinion, the jury is still out on this one.

This chart from Marketsmith.com takes a look at the patterns of Steel ETF (SLX).

SLX has spent the majority of the past 3-years inside of trading range (1). The persistent decline over the past year has it testing the bottom of this trading range at (2).

The weakness over the past year has it below long-term moving averages as its relative strength r...



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Insider Scoop

Economic Data Scheduled For Tuesday

Courtesy of Benzinga

  • The Johnson Redbook Retail Sales Index for the latest week is schedule for release at 8:55 a.m. ET.
  • San Francisco Federal Reserve Bank President Mary Daly is set to speak at 4:30 p.m. ET.
  • Federal Reserve Board of Governors Vice Chairman for Supervision Randal Quarles will speak in Salt Lake City, Utah at 6:00 p.m. ET.

Posted-In: Economic DataNews Economics ...



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The Technical Traders

The Next Breakdown And The Setup

Courtesy of Technical Traders

If you’ve been following our research long enough, you’ll remember that we often discuss Fibonacci Price Theory and how we use it to try to identify opportunities and trends in the markets.  The basic premise of Fibonacci Price Theory is that price is always seeking to establish newer highs or newer lows with every rotation on the charts.  The theory is rather simple to understand and learn and it helps easily identify where support, resistance, and the trend is established.  Let’s take a minute to go over the basics of Fibonacci Price Theory before we continue.

This first example of Fibonacci Price Theory trend is a simple example that highlights the basic premise of the the...



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Lee's Free Thinking

The Treasury Supply Drumbeat Has Begun

Courtesy of Lee Adler

The beat goes on. The US Treasury announced a 30 year TIPS issue today, bringing net new Treasury supply for the month so far to $119 billion. 

Here are the details:

Term and Type: 29-Year 6-Month TIPS

Reopening: Yes

Offering Amount: 7 Billion

Announcement Date: 08/15/2019

Auction Date: 08/22/2019

Issue Date: 08/30/2019

Maturity Date: 02/15/2049

PDF | XML

Supply will pound the financial markets to a pulp as far as the eye can see. Those who are currently panicking to buy Treasuries at these ...



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Chart School

Bitcoin 2019 fractal with Gold 2013

Courtesy of Read the Ticker

Funny how price action patterns repeat, double tops, head and shoulders. These are simply market fractals of supply and demand.

More from RTT Tv

Ref: US Crypto Holders Only Have a Few Days to Reply to the IRS 6173 Letter

Today's news from the US IRS has been blamed for the recent price slump, yet the bitcoin fractal like the gold fractal suggest the market players have set bitcoin up for a slump to $9000 USD long before the IRS news hit the wire.

Get the impression some market players missed out on the b...

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Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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