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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ValueWalk

Larry Kudlow Weighs In On The November Jobs Report

By Jacob Wolinsky. Originally published at ValueWalk.

First on CNBC: CNBC Transcript: National Economic Council Director Larry Kudlow Speaks with CNBC’s “Squawk on the Street” today on the November jobs report.

Q3 2020 hedge fund letters, conferences and more

White House Economic Advisor Larry Kudlow Weighs In On The November Jobs Report

CARL QUINTANILLA: The director of the National Economic Council will talk about the November jobs’ number this morning. Larry, good morning. Happy Friday, good to have you back.

LARRY KUDLOW: Thank you. Hello folks, how are...



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Phil's Favorites

OCC Says JPMorgan Chase Has $29.1 Trillion of Custody Assets; That's $8 Trillion More than the Assets of All Banks in the U.S.

Courtesy of Pam Martens

Jamie Dimon, Chairman and CEO of JPMorgan Chase

On November 24 the Office of the Comptroller of the Currency (OCC) fined JPMorgan Chase $250 million for wrongdoing that was apparently too deplorable to be spoken out loud to the public. The specific details were cloaked in this phrase: “failure to maintain adequate internal controls and internal audit over its fiduciary business.”

We went to the OCC’s Consent Order connected to the fine to see if there were the ty...



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Kimble Charting Solutions

Is The US Dollar About To Reach A Melting Point?

Courtesy of Chris Kimble

It’s been 20 years since the last major peak in the US Dollar. Could the greenback’s latest turn lower confirm another peak?

Today’s chart takes a macro view of the US Dollar Index and highlights the long-term down-trend at each point (1). As you can see, the buck is on a topsy turvy ride, bouncing up and down within this down-trend.

The latest bottom formed after the financial crisis and has seen the US Dollar trade within a 9 year up-trend channel marked by each (2). This gave bulls some confidence that the US Dollar may have formed a long-term bottomȂ...



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Politics

Ignoring Warnings His Election Lies Could Get People Killed, Trump Posts 46-Minute Rant Full of 'Unhinged' Falsehoods

 

Ignoring Warnings His Election Lies Could Get People Killed, Trump Posts 46-Minute Rant Full of 'Unhinged' Falsehoods

"Georgia elections director yesterday: Trump's rhetoric is going to get people killed. Trump today: here's 46 minutes of unhinged conspiracy theories."

Courtesy of Jake Johnson, Common Dreams

Activists march through the city of Detroit on November 7, 2020 to denounce President Donald Trump's false claims of voter fraud. (Photo: Adam J. Dewey/NurPhoto via Getty Images)

Just days...



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Zero Hedge

Stocks Plunge After Pfizer Cuts Vaccine Rollout Target By Half Due To "Supply Chain Obstacles"

Courtesy of ZeroHedge

US stocks tumbled during the final hour of trading Thursday as Pfizer revealed that it expects to ship half the number of vaccines this year, raising new questions about the optimistic projections and expectations for the pace of vaccinations.

The company cited supply chain delays tied to the fact that the company has found raw materials in early production that did not meet its standards.

It still expects over 1bln doses rolled out in 2021

"Scaling up the raw material supply chain took longer than expected," a company spokeswoman said. "And it's important to highlight that the outcom...



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Chart School

Gold Chart Review

Courtesy of Read the Ticker

Gold swing trade is due, lets review some charts to see if it is a viable move.

The seasonal period of gold is now upon us, gold should advance for the next 3 months.

Gold Gann Angle Chart ...



Gold Channel Chart .. close up!



 

Gold Channel Chart
 


Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Ang...



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Biotech/COVID-19

Rapid COVID-19 tests can be useful - but there are far too few to put a dent in the pandemic

 

Rapid COVID-19 tests can be useful – but there are far too few to put a dent in the pandemic

Rapid tests for COVID-19 are easy to administer and give fast results. AP Photo/Julio Cortez, File

Courtesy of Bonnie LaFleur, University of Arizona and Katherine Ellingson, University of Ari...



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Digital Currencies

Five Reasons Why Bitcoin is Going Up

 

Five Reasons Why Bitcoin is Going Up

Courtesy of 

Call it the “Respectability Rally”…

A few reasons for Bitcoin’s return to the record highs. It’s about $18,500 as of this writing, matching the previous highs from 2017’s original explosion.

Reason one: It’s going up because it’s going up. Don’t scoff, this is the reason most things in the markets happen and then the explanations are called for afterwards. I’m in financial television, I have literally watched this process occur in real-time. The more something moves in a given direction, the more peop...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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