Jeff Gundlach is a Renewed Bull on Bonds…The Great Rotation? More Like the Great Lie…Bond Yield Divergence Worries Equity Bulls…and more!March 4th, 2013 by Simon G
Reuters: – DoubleLine’s Gundlach buys US Treasuries. – Jeffrey Gundlach, one of the world’s leading bond fund managers, has reversed his stance on government debt, saying he has bought “more long-term Treasuries in the last month” than in the last four years.
The Macro Trader: – The great rotation? More like the great lie. – So far this year I think my most hated new term is “The Great Rotation”. Supposedly stocks are moving higher as money is flowing from the overpriced bond market and into equities. Since the term has gone ballistic, also known as annoying, we decided to look into it.
Trader Planet: – Bond yield divergence worries equity bulls. – There are various methods for us to evaluate the ‘health’ of a rally in stocks. For example, we can look at relative strength among ‘risk on’ and ‘risk off’ asset classes, we can see which sectors have lead the market higher, we can view seasonality trends, and we can also look at the bond market.
Learn Bonds: – Buying convertible bonds with Alan Muschott CFA. – Alan Muschott, CFA has been the portfolio manager of the Franklin Convertible Securities Fund since 2002. Convertible securities are bonds or preferred stock that can, under certain conditions, be converted into common stock. While it’s not a 100% technically correct definition, a convertible can be thought of as a corporate bond combined with a call option to buy common stock.
FT: – Warning signs for US corporate bonds. – Could the bond boom be turning? Warning signs are flashing as investors demand higher yields even on US bonds issued by the world’s largest and safest corporate borrowers.
WSJ: – PIMCO Warns Italian bond market uncertainty to remain. – The current bout of volatility in the Italian government bond market is expected to persist as the fall-out and political stalemate from the recent Italian election continues to hold sway, according to a senior manager at one of the world’s most influential bond investors.
East Valley Tribune: – Lifting bonds’ tax-exempt status could hurt cities. – While much of Washington is focused on the impact of Friday’s “sequestration” cuts, Mesa Mayor Scott Smith is worried that a proposed solution to that problem could end up seriously hurting cities.
Minyanville: – Three bond mutual funds to consider as sequestration begins. – You need to be very careful with the fixed income allocation of your portfolio at the moment. Here are three bond funds which are well positioned for the type of interest rate climate that is coming.
PIMCO: – Forecasting bond returns in the new normal. – PIMCO’s asset allocation process focuses on deriving valuations for numerous risk premia based on both top-down macroeconomic and bottom-up microeconomic considerations. We aim here to detail a framework for deriving a forecast for secular bond returns based on our most current expectations of policy rates and the inflation-adjusted (or real) bond risk premium.
Bloomberg: – Puerto Rico pension fix allays insolvency concern. – Puerto Rico debt is set to extend its longest rally in a year as proposals to fix a pension system on the brink of insolvency encourage investors that the U.S. commonwealth is tackling its biggest fiscal challenges.
WSJ: – Say goodbye to the 4% rule. – If the conventional wisdom no longer holds about spending in retirement, what are the alternatives? Here are three of them.
ETF Trends: – ETFs for Yield: Junk Bonds, preferred stock, MLPs and more. – ETF Trends Web Editor John Spence focuses on ETFs that invest in emerging market bonds, preferred stock, high-yield bonds and master limited partnerships.
Motley Fool: – Cola wars in the bond market. – Coca-Cola and Pepsi served up $2.5 billion each of new notes. Coca-Cola is using the money to redeem about $1.3 billion of higher-coupon paper. The debt service on the new notes will be about $40 million per year less than the old paper, and Coca-Cola should have more than a billion dollars left after redeeming the old paper. If the deal weren’t already sweet enough, the new three-year, floating-rate note is pegged two basis points below LIBOR.
InvestorPlace: – Markets 101: Stocks, bonds, currencies and commodities. – Technical analysis can seem very overwhelming when trying to understand the process and behavior patterns of inter-market relationships and correlations. With technology today, we have the ability to watch every currency, stock market average, commodity, and even the bond markets around the globe. Let’s simplify how commodities, bonds, currencies and stocks all interact and the consequences they have on one another.
NYT: – A stealth tax subsidy for businesses comes under new scrutiny. – The last time the nation’s tax code was overhauled, in 1986, Congress tried to end a big corporate giveaway. But this valuable perk — the ability to finance a variety of business projects cheaply with bonds that are exempt from federal taxes — has not only endured, it has grown, in what amounts to a stealth subsidy for private enterprise.
Barron’s: – Investors’ Dilemma: Fight the Fed, or feed a bubble? – Question — Do you keep pouring money into overbought, risky asset classes like junk bonds, or do you dare turn against them knowing that they still have the full support of the Federal Reserve?
Artemis: – Catastrophe bond price returns jump at end of February. – The index tracking the price return of the outstanding catastrophe bond market has risen again in the last fortnight and at its fastest rate so far in 2013. After a small dip a week ago, likely caused by the large amount of capital invested in catastrophe bonds and ILS as an asset class, the index bounced back sharply in the past week. The market has been seeing steady rises so far this year but at the same time issuance conditions are extremely attractive to sponsors.
Gross: Sequester is small stuff: don’t sweat it. Big stuff is the “continuing resolution” and of course continuing dysfunction of govt.
— PIMCO (@PIMCO) March 3, 2013
Gross: Bernanke speech late Friday was interesting. Projections for 10-year Treasuries showed negative total returns over next few years.
— PIMCO (@PIMCO) March 4, 2013
*** Gundlach says buying 10 year US Treasuries – bought them because “looked cheap” at 2 pct ***
— Chris Adams (@chrisadamsmkts) March 4, 2013