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Slow Moving Bond Bear To Quicken

October 16th, 2017 by Kurt L. Smith

The trend is indeed your friend and the only friend one has needed these past few years has been the one in stocks. Despite the fact that municipal bonds were the best performing asset class in 2014 (yeah, that long ago), stocks are where the action is. Enjoy it, because trends change.

When it comes to bonds, only two words are needed: low rates. Forget trend change; forget even a price or yield change. When it comes to bonds, low rates is all you need to know. Spoken by stock market pundits, why would anyone be concerned about bonds? Stocks are where the action is.

Rates are indeed low, but they have been lower. The reason we care is because the trend is your friend and when it comes to bonds, the trend has changed. You know it because I keep telling you. Sure it’s a lonely proposition, but the market continues, albeit v-e-r-y slowly, that I am indeed correct.

In June, I believed a 2.13% low on the ten year treasury completed the bond market’s correction of the 1.32% to 2.64% initial move up. Yep, I tried to hurry the market. In September the market hit 2.02%. But last week we were back to 2.40%. I like my proposition!

At rates of 2-this or 2-that, every stock investor will continue to claim the low rate mantra. But after a 1,000 or 5,000 point decline in the Dow, the perspectives will change. The story will change. (more…)

My Daily Travels

November 4th, 2016 by Kurt L. Smith

Working in the municipal markets on a daily basis is like having the opportunity to travel the country each and every day. I visit California and Texas most often as they are big states with numerous debt issuers. But by the end of each day I have generally made a wide swing across many states and then tomorrow I will get up and do it all again.

Change doesn’t occur rapidly across the country but change does occur. Growing areas, primarily the biggest cities along the east and west coasts and in Texas, continue to grow. Everywhere else, and that’s a lot of everywhere else, seems to be doing a lot of nothing.

If municipalities were stocks, odds are you would only buy the top five or so. Think of them as the Apple, Amazon, Facebook or Google of municipalities. That’s how few areas of the country are growing. Not that growth solves all problems, but lack of growth, particularly if you were counting on it, can add unforeseen risk to the situation. (more…)

Over The Top

May 16th, 2016 by Kurt L. Smith

For the past several months we have discussed the manic moves of municipal bonds. As one of the best performing asset classes last year, it looked like we would be poised to experience follow-through this year with additional new money flowing into municipal bonds.

Indeed this has been the case. Money flows into tax free municipal bond funds continues week after week. Not only are new deals like the one’s presented at the bottom of each month’s newsletter selling well in the marketplace, we are also seeing intense competition for bonds in the secondary market. In a word, the market in my opinion is “hot”. But after several months of “hot”, the market seems to me to be “over the top”. (more…)

NEWS FEED

The $247 trillion global debt bomb washingtonpost.com/opinions/the-2…