Best of the Bond Market for March 23rd, 2012
Tweet by @BondsNewsUpdate Article by Businessweek
Lions Gate Bonds Rise on ‘Hunger Games’: L.A. Mover – Our Take: Lions Gate stock (LGF) is not the only thing that is on a tear this year. ”The company’s $436 million of 10.25 percent notes maturing in November 2016 have risen 8.38 cents to 110 cents on the dollar this year, reducing the yield to 7.63 percent in the last trade yesterday. They traded for 101.6 cents on the dollar on Jan. 9, yielding 9.81 percent.” One could argue that it may be too late to get in but at 7.63% you are still getting more than 6% over treasuries with a similar maturity. While we haven’t done enough research on this one to put out an official buy recommendation, it seems that there is definitely enough here to have a deeper look.
Wall Street Confidence Trick: The Interest Rate Swaps that Are Bankrupting Local Governments - Our Take: In case anyone needed another reason to be angry at the banks and the government bailouts here you go. Before the financial crisis banks convinced a lot of municipalities to enter into interest rate swaps where they traded a fixed rate of interest which they are required to pay to the banks for a variable rate which fluctuated with the market which the banks were required to pay to them in return. Read the article for the middle of the story and how all this happened because its a great overview in laymen’s terms. The end you have probably already guessed is the banks ended up making out like bandits at the expense of the municipalities.
Tweet by @PIMCO
Gross: #Bond bull mkt may be dead but bear mkt remains in the distance. Our Take: When the manager of the world’s largest bond fund speaks we listen, and we listen a lot harder then when all the people who don’t have their money where their mouth is talk about the bond market. We also think its pretty cool that Bill Gross has started to tweet on the company account, or at least pass his direct thoughts to someone who is. For more on Bill Gross and PIMCO visit the PIMCO section of LearnBonds.
Tweet and Article by @blackrock
0.99: The correlation of a traditional 60% stock / 40% bond portfolio to the S&P 500 - Our Take: Today marks their 100th Daily stat so they did a summary of the most interesting up to this point, in which this link was included. We found this pretty fascinating that the “default” allocation for a lot of people between stocks and bonds seems, according to this article, to not provide any diversification at all. Since its one of their daily stats there is not a lot of data there to back it up so we want to do a bit more digging, but on the other hand since its Blackrock we assume they have done their research.