Summary of Gundlach’s ’13 Outlook Webinar…Millionaires Selling Corporates…No Bubble in Bonds…and more!January 9th, 2013 by Simon G
Barron’s: – DoubleLine’s Gundlach: Watch out for Washington snakes. – In a recent conference call DoubleLine Capital CEO Jeffrey Gundlach says investors shouldn’t expect a continuation of the stability enjoyed in 2012. There are snakes hidden in the grass and they’re coiled to strike.
Millionaire Corner: – Millionaires reduce exposure to individual corporate bonds. – When it comes to corporate debt, risk remains off for most Millionaire investors who prefer bond funds to individual bonds.
CNBC: PIMCO’s Tony Crescenzi on why there is no bubble in bonds - demographics, risk aversion and shortage of AAA rated debt are some reasons.
Learn Bonds: – With global yields stuck, look to profit from currency appreciation. – Yield starved times sometimes require a creative solution. With that in mind Marc Prosser looks at a strategy that uses foreign bonds in order to profit from currency appreciation.
The Street: – Why it pays to own these emerging market bonds. – During the past month, interest rates on 10-year US Treasury bonds rose from 1.60% to 1.93%. In response to the rate move, iShares Core Total U.S. Bond Market ETF, lost 0.6%. Seeing the losses, you may be tempted to dump all your bonds. But a better approach is to diversify your fixed-income portfolio, including some funds that don’t necessarily move in lockstep with the rest of the bond markets.
PIMCO: – Ten acts for chairman Bernanke in January 2013. – PIMCO’s Tony Crescenzi has created Ben Bernanke’s to do list for 2013. Just in case he didn’t have one of his own. High on his agenda, keep volatility low.
Morningstar: – Is high yield overvalued? – With record fund inflows in 2012, investors clearly have an appetite for high-yield bond funds. But after four consecutive years of positive returns, is now the time to allocate money to high yield, or is the sector fully valued and ripe for a fall?
The Economist: – Don’t bet on a huge reallocation from bonds into equities. – The big of 2013 is, will there be a “great rotation” (as strategists like to call it) out of government bonds and into equities?
Minyanville: – The bull trap in bonds has been set! – Investors may be entering a new era of risk in the Treasury markets. The Fed may find itself slowing the QE process and looking for an exit sooner than planned. Finally, our lawmakers may find that low interest rates that enabled them to kick the can down the road are no longer available. Rising interest rates will either force fiscal restraint or default sooner than many have planned.
Public Finance Matters: – 28% Cap Unlikely to trigger wave of municipal bond tax calls. – Even assuming that a 28% cap clearly includes a portion of municipal bond interest in gross income for higher tax bracket holders, it is far from clear that tax call language would apply. Many variations of tax calls distinguish between taxability caused by the issuer/borrower versus by change in law.
Bloomberg: – Illinois lawmakers fail to act on fixing pension deficits. – In failing to deal with a $97 billion unfunded liability that rises by $17 million each day, Illinois risks more downgrades from bond-rating companies, which have urged the state to stem the ballooning deficits.
Barron’s: – Corporate bonds good, government bonds not. – Prudential says its underweight Treasuries and other government-related bond sectors but still overweight high-yield bonds and other corporate credit areas. “Even though that rally has come a long way, we think it still has a way to go,” said Ed Keon, who heads Prudential’s Quantitative Management Associates unit.
Reuters: – Sizing up the US bond market, pre-debt ceiling. – Even with historically low bond yields furthering talk of a “bond bubble,” 2013 may not be the time to abandon the Treasury market.
Artemis: – $16.5 billion catastrophe bond market at year-end 2012 a record. – The catastrophe bond market finished 2012 on a high reaching a record for the total volume of cat bonds outstanding at the end of the year of just over $16.5 billion, according to reinsurance broker Aon Benfield’s figures.
WSJ: – Corporate bonds boom on search for yield. – Corporate bonds look likely to fare better than government bonds this year. But after several bumper years, bond markets are no longer where the big returns are to be found.
Bloomberg: – San Diego bond advisor charged over school bribes. – A California bond underwriter was charged with plying school officials in San Diego County with meals and sports tickets worth thousands of dollars to steer business to his employers.
Gross: Corporate bond spreads so thin that they must be using a corset – or the Fed. Don’t buy them.
— PIMCO (@PIMCO) January 9, 2013
a broker dealer who started out 2013 with a bearish call on munis just changed their mind 8 days in – now “flat” – NY Jet fans not alone..
— Michael Pietronico (@MillerTabak) January 9, 2013
— Tom Graff (@tdgraff) January 4, 2013