Is the Great Rotation Here?…The Other Side of QE…US Bond Stars Bet Big on Equities..and more!January 24th, 2013 by Simon G
Business Insider: – BofA declares: The great rotation is here. – The big theme of 2013 – according to investment strategists at shops across Wall Street – will be the “Great Rotation,” a massive move out of bonds and into stocks. For a while now, BofA Merrill Lynch Chief Investment Strategist Michael Hartnett has been out in front of the rest touting the “Great Rotation” theme for 2013 – and he says it’s already begun. Even though the public data don’t show investors shifting out of bonds and into stocks yet, Hartnett says BofA’s data on client position does show exactly that.
The Economist: – The other side of QE. – What happens when the Fed eventually tightens monetary policy? It will have to pay out more interest for the bonds it owns. To absorb reserves it may have to sell some bonds for less than what it paid, incurring capital losses. In theory, it could end up losing money, a risk that grows the more bonds it buys.
Reuters: – US bond stars bet big on equities revival. – Some of the biggest US bond firms are making aggressive pushes into the $5.17 trillion equity market business, spurred by fears the bull market in fixed income could end and anticipation of growing retail investor interest in stock funds.
Learn Bonds: – 4 Reasons the junk bond rally will continue in 2013. – Earlier this month, the yield on the average junk bond dropped below 6% for the first time ever. Because of this, many investors think that yields can’t go any lower and that interest rates will reverse in 2013. Here are four reasons why they are wrong.
Fidelity: Their 2013 bond market outlook – 5 things to watch.
Investor Daily: – Shock to nominal income likely. – While fixed and relative income assets remain attractive in a climate of falling cash rates, investors should prepare for likely changes to nominal income in the economy, says UBS Global Asset Management.
Financial Standard: – There’s no bubble in bond markets. – Tyndall Asset Management head of fixed income Roger Bridges has stressed that there is definitely not a bubble forming in the bond market.
Investor Daily: – De-leveraging will keep bond markets controlled. – Deleveraging around the world is only going to keep bonds fairly controlled, probably this year and maybe into next year, but at the least we’re going to have a controlled market for around six months,” Said Roger Bridges, head of fixed income at Tyndall AM.
Brenda Jubin: – Philip Fischer’s ‘Investing in Municipal Bonds’ book review. – Municipal bonds can be a tricky lot, but Fischer’s book goes a long way toward making them understandable. Anyone who is thinking about investing in this area or who is advising those who do owes it to himself to become better informed about both the basic principles and the quirks of the municipal bond market.
ETF Database: – Fixed Income ETFs: A Bright Spot in 2013. – As economic uncertainty continues to plague investors’ confidence in the New Year, many have remained understandably leery of the fixed income market as low interest rates continue to deter investors from this asset class. Todd Rosenbluth of S&P Capital IQ recently took the time to discuss which trends investors are likely to see developing in 2013.
Minyanville: – A bargain closed-end income fund. – The BlackRock Enhanced Equity Dividend Trust (BDJ). The closed-end fund’s shares represent a portfolio of high-yield dividend-paying equities.
Bloomberg: – Goldman Sachs’s Cohn says bonds face big risk after record rally. – Debt markets that have seen junk- bond yields drop to record lows may face a ‘‘substantial repricing’’ if interest rates spike or investors begin pulling money out of fixed-income, Goldman Sachs Group Inc. (GS) President Gary Cohn said.
Bloomberg: – Gajah Tunggal offers dollar debt curbing China’s bond dominance. – PT Gajah Tunggal talks to investors about the sale of five-year dollar-denominated bonds, moderating Chinese dominance of regional issuance in the US currency this week.
Barron’s: – Barclays to income investors: Seek electric utility dividends. – Barclays takes pity on the yield-starved bond investor and offers some advice: go buy dividend-paying stocks instead.
WSJ: – Alternative bond funds draw advisers’ attention. – Facing uber-low yields now and the prospect of rising inflation down the road, bond investors might be overlooking an unlikely ally: low-cost funds built to outperform when markets get ugly.
Governing: – How rare are municipal bankruptcies? – With all the talk surrounding municipal bankruptcy in recent years, some might view Chapter 9 as an increasingly common path for cash-strapped local governments. But just how rarely do localities opt for Chapter 9 bankruptcy protection?
Governing: – Municipal bankruptcy map. – An interactive map that shows all municipalities filing for Chapter 9 bankruptcy protection since 2010, along with local governments voting to approve a bankruptcy filing.
Investment News: – Top muni manager says dirt bonds dirt cheap. – John Miller at Nuveen Asset Management LLC, who beat all his US municipal bond-fund peers in 2012, is betting a rebounding housing market will deliver the biggest gains again in the year ahead.
US News: – Why an investment process is critical. – A repeatable process is the key element in investment success. There will always be fluctuations in the performance of various investments whether they are individual stocks or bonds or managed products such as mutual funds and exchange-traded funds. While some investors may disagree, we believe in careful asset allocation and portfolio re-balancing.
Gross: Does Apple’s price action reflect the economy or is it company specific? Market votes for the latter. I have doubts about that.
— PIMCO (@PIMCO) January 24, 2013
Whitney was certainly wrong – Munis were shockingly strong – Was it pure luck?Or new printed bucks?For answers refer to @cate_long
— The Limerick King (@TheLimerickKing) January 24, 2013
One reason why the analysis on Gundlach has always been so terrible,they never understand the assets he’s combining together & their purpose
— David Schawel (@DavidSchawel) January 24, 2013