Muni Market Suffers Steepest Monthly Decline Since Whitney Interview….The Financial Lexicon’s Advice for 2013..and more!December 21st, 2012 by Simon G
Bloomberg: – Tax-status threat fuels worst losses since Whitney. – The $3.7 trillion municipal market is poised for its steepest monthly decline since 2010 as investors spooked by threats to the debt’s tax-exempt status withdrew the most money in almost two years.
Financial Lexicon: – Positions for 2013: Limited bond market opportunities mean patience is key. – The Financial Lexicon looks at the bond market going forward into 2013. Investors in individual bonds should hold their positions through 2013 with only three exceptions.
Thompson Reuters: – Bankruptcy judge set to rule against CalPERS on San Bernadino. – A US bankruptcy judge said on Friday that the court would likely deny an attempt by the California Public Employees Retirement System to bypass the bankruptcy court and seek to collect overdue pension payments from the bankrupt city of San Bernardino in state court. This has huge implications for other CA cities in financial distress.
WSJ: – Threat of tax changes rattles muni market. – “Fiscal cliff” jitters are creeping into the muni market. Many investors are worried that budget negotiations in Washington could result in new taxes on interest they receive from municipal bonds.
Bond Buyer: – Bond proposals emerge from California’s democrats. – Newly empowered with supermajorities in both houses of the Legislature, some California Democrats have introduced legislation that would increase borrowing and make taxing easier.
Learn Bonds: – The scrooge takes a look at investing in micro-loans. – What are micro-loans and will you get your money back? Our very own Ebenezer Waring takes a look at micro-loans pros and cons.
CNBC: – PIMCO’s El-Erian: Ugh, recession is now more likely. – Here is a simple way to think about the political calculus of Washington’s latest twists and turns. And — unfortunately — it suggests that economic and market dislocations may be needed to get our politicians to cooperate and govern properly.
Barron’s: – No emerging market bond bubble, Nomura says. – Some investors look at emerging-market bonds and see a bubble waiting to pop. Nomura’s strategists, however, do not–at least not yet.
All About Alpha: – Managing risk in fixed income markets. – Learn more about managing risk in fixed income portfolios with advice from Dr. Kevin Anderson, Global CIO (Fixed Income and Currency) at SSgA (State Street Global Advisors) – a firm with US$23.4 trillion in assets under custody and administration, and US$2.1 trillion under management.
LA Times: – Fairness for fixed-income seniors. – The proposed changes to municipal tax exemtion, will necessitate that seniors continually downgrade their standard of living, eventually to the point that it won’t be a choice between meat and pasta but between dog food and cat food. “Our lawmakers are saving money on the backs of retirees instead of increasing taxes on the wealthy and corporations,” says Judy Wollesen of Bakersfield. CA.
Minyanville: – Despite talk of bond bubble, there’s opportunity in mispriced munis. – For all the talk of a bond bubble, I still see some opportunities in the municipal bond space. Specifically, I think that the short-term high-yield (one- to five-year) and in intermediate-term municipals (three- to 10-year) are attractive.
Bloomberg: – US Corporate bond funds report first cash outflow of the year. – Investors yanked money from US investment-grade bond funds for the first week this year as concern mounts that a four-year rally is losing steam.
Bloomberg: – If you bought Greek bonds in January you earned 80%. – Investors bold enough to buy junk- rated Greek bonds in January have earned twenty times more than owners of top-rated German debt this year even after the biggest ever sovereign restructuring.
Bloomberg: – BlackRock see’s distortions in Country ratings seeking S&P change. – Credit rating companies are distorting capital markets by assigning the same debt ranking to countries from Italy to Thailand and Kazakhstan, according to BlackRock Inc. (BLK), the world’s biggest money manager.
Barron’s: – ‘Shocking’ muni fund outflows: Time to buy? – The $2.8 billion in net investor outflows was the worst since the late 2010/early 2011 period, when tobacco bonds were downgraded. And yet all isn’t lost. Stepping back from the charts, munis still look cheap versus Treasury bonds.
Gross: The #Mayans were right. Increasing political dysfunction puts economy and risk assets at risk.
— PIMCO (@PIMCO) December 21, 2012
Muni Outflows of $2.3bln = the highest since Jan 11. Why? Puerto Rico downgrade, last wk’s $10bln+ calendar & uncertainty abt tax-exemption.
— Daniel Berger (@munimarketmaven) December 21, 2012
— Cate Long (@cate_long) December 21, 2012