Leon Cooperman Bear on Treasurys…4 Hidden Risks in Bonds…The Myths about Muni Tax Exemption…and more!March 6th, 2013 by Simon G
CNBC: – Buying US government bonds today is like walking in front of a steamroller and picking up a dime. – Chairman and CEO of Omega Advisors, Leon Cooperman, tells CNBC “Buying Treasurys today is like walking in front of a steamroller to pick up dime”; taking the other side of the trade to Jeff Gundlach, who sees good value in the long bond yielding 3.13%.
iShares Blog: – 4 hidden risks in bonds. – Many bond portfolios carry more risks than in the past and more risks than many investors realize. Here are four risks that you may not realize your taking.
Cate Long: – The myths around the municipal bond tax exemption. – It’s hard to believe that completely removing muni tax exemption, which I don’t advocate, would cost issuers an additional 200 basis points in borrowing costs or an additional $495 billion in interest costs over the last 10 years.
Learn Bonds: – Using ETPs to better understand and monitor the bond markets. – You can use ETPs (exchange-traded products) to better understand, and monitor the performance of and sentiment in, the bond markets. This is not the only mechanism I use to monitor the performance of and sentiment in the bond markets, but it is a very useful one.
Investor Daily: – Consider hidden risks in fixed income portfolios. – There are major holes in the “great rotation” theory. Of more pressing concern are the inherent risks lurking in many fixed income portfolios, the bottom line is that interest rate risk in fixed income remains acute, and portfolio mitigation measures are in order.
BusinessWeek: – FAQ: Michigan’s takeover of Detroit. – By the end of this month, Michigan Governor Rick Snyder will name an emergency manager to rescue Detroit’s finances. Whoever lands that unenviable task will face a city saddled with $14 billion in debt obligations and a $327 million operating deficit. The manager will also be granted vast powers to roll over the will of citizens and local elected officials. Here are some answers to questions about what’s happening in Detroit.
Bloomberg: – Closing 12% of Philadelphia schools creates winners. – The nation’s fifth-largest city anticipates saving $24.5 million a year by shutting 29 of its 249 buildings in June. The average building is 64 years old, according to a financial audit. “It’s very likely” more schools would be closed over the next five years, said Fernando Gallard, a district spokesman, who said he couldn’t estimate how many. “We are wasting money maintaining empty seats and empty space in our buildings,” Gallard said. “There is a better use for that money.”
Reuters: – Variable-rate bond market will continue to shrink. – The variable-rate municipal bond market will continue to shrink this year, but at a much slower pace than in the past, Moody’s Investors Service said on Wednesday.
Anthony Valeri: – Corporate bonds keep pace with the Treasury bounce in February. – Corporate bonds managed to keep pace with the Treasury bounce in February.
Politico: – Odd allies fight against taxing municipal bonds. – The push for reliable roads and bridges is bringing together a strange-bedfellows coalition: not only cities and counties whose economies rely on such projects but also soybean farmers, truckers and state transit advocates.
Mike the PhD: – How often do municipal bonds default? – With all of the high profile municipal bond defaults and scares in the last few years from Vallejo, CA to Harrisburg, PA, it is easy to get spooked about the normally staid and safe muni bond market. So with that in mind, I wanted to put some numbers out there regarding municipal bonds, and help to quantify the risks for these securities.
Mike the PhD: – Muni ETFs vs. Bonds: Which is better? – The best answer for most retail investors is to invest in various ETFs or exchange traded funds. These securities can give you easy exposure to muni bonds in a liquid relatively low cost setting compared to individual bonds.
ETF Trends: – Record bets against high-yield bond ETFs. – It’s a familiar refrain: High-yield corporate bonds are in a speculative bubble. Now portfolio managers bearish on junk bonds are putting their money where their mouth is by shorting high-yield bond ETFs.
ETF Trends: – Emerging market bond ETFs for yield. – Investors are taking a harder look across the fixed-income spectrum for alternative sources of yields. While many have branched into other U.S. debt securities such as junk bonds, investors can also browse through emerging market bond exchange traded funds to meet their income needs.
WSJ: – Treasurys extend losses on jobs report. – Treasurys are poised for three-straight losing sessions, as prices tumbled on a report that showed more jobs being created in the U.S. last month than expected.
Index Universe: – PowerShares files for 3 year bond fund. – Invesco PowerShares filed regulatory paperwork to bring to market a short-term global bond fund serving up access to a relatively safe corner of the ETF market that offers protection from potentially large losses that holders of longer-dated bonds would face in the event of a bond-market meltdown.
Gross: Rule Britannia? Nah.Maybe the waves once upon a time but their economy is now a lifeboat.Sell the pound – Aggressive QE ahead.
— PIMCO (@PIMCO) March 6, 2013
pomo ends, bonds hold gains.
— no bid. (@cr3dit) March 6, 2013
— Muni Market Advisors (@Muni_Mkt_Advis) March 6, 2013