Bond market performance has gone from bad to worse. The month of May was bad; June even worse. Prices of longer-term bond funds have plunged, primarily in the past eight weeks, leaving municipal bond dealers and longer-term municipal bond portfolios down about ten percent for the period. (more…)
Municipal Market Newsletter Archive
On The Right Track
In an era of seemingly low to no interest rates, we see an increase in opportunities in municipal bonds. Despite continuing Quantitative Easing by the Federal Reserve, asset prices are weakening, yields are rising and long-term assumptions should be questioned. (more…)
Watch The Markets, Not The Fed
The Federal Reserve, along with most Central Banks around the world, are creating Cash and Credit at an unprecedented pace in the most ambitious economic experiment of all time. Yet despite Central Bankers attempts to create Cash and Credit (and hence inflation), the price of Gold fell from over $1900 to almost $1300. (more…)
A Liability for Every Asset
One of my strengths (and weaknesses) is that I was trained as an accountant. Double entry accounting follows specific rules. The rules of accounting, like other endeavors, do ebb and flow over time but Assets are always the sum of Liabilities and Equity. (more…)
Wash, Rinse, Repeat
Stocks are cheap! Compared to Bonds, Stocks are cheap, but then again, everything is cheap compared to Bonds. This is the narrative driving Stock prices to multi-year and even all-time highs. Enjoy while you can but this narrative has no legs, despite the desires of all the central banks on the planet. (more…)
No, It Won’t Be Like This Forever
Sure short-term interest rates are near zero; nothing new here. But the good news, albeit great news, is we continue to find worthwhile, short-term municipal bonds. In a world of generic, too-big-to-fail, debt by the billions, you can thank a very diverse, too-many-issuers-to-count municipal bond market for these opportunities.
It’s The Fed, Unfortunately
Looking back over the past year the defining point for the markets was Federal Reserve Chairman Ben Bernanke’s missive in September. Asset prices peaked with Ben’s pronouncement. Animal spirits are now dissipating. The reversal eventually sent Municipal Bond prices to their high November 30th, along with my proclamation that Municipal Bonds were in bubble territory, heading for a big fall.
The Madness of Crowds
With the countdown clock to the Fiscal Cliff now inside thirty days one does not need my monthly missive to stir fear, panic and depression. Washington has you covered this month. Therefore, I will take a more optimistic stance: I believe your Cash and Bonds are well positioned for the current and future environment. (more…)
Debt Matters
The narrative of the financial crisis is only beginning to be written. Slowly but surely every one of us will be able to sum up the crisis in two words: Debt Matters. As the Federal Reserve continues its policy of buying treasury and mortgage bonds we can debate whether this will end the crisis or just end badly. We should however already be able to agree: Debt Matters. (more…)
QE3, Municipals and You
Federal Reserve Chairman Ben Bernanke kicked off Year Six of the Financial Crisis by announcing a mortgage bond buyback scheme dubbed historic as the Fed is now focused on the employment woes of the nation. Will it work? One only need look as far as a Federal Reserve Bank president, Charles Plosser, to find a cogent critic. Thank goodness this is America and one can voice dissent. (more…)
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