Archive for the ‘Bonds’ Category

Weekly Recap & Outlook – 06.07.13

Friday, June 7th, 2013

Tower Private Advisors

Below

  • Capital markets recap
  • Why interest rates are NOT going up any big way any time soon

Capital Markets Recap

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Interest Rates (remember those?)

If you don’t want to read the rest of this, here’s the gist of it:

Interest rates aren’t going up because:

  1. There is virtually no inflation
  2. We can’t afford higher rates; too much goes badly if rates rise. Housing ceases its rebound. The US’s debt service will consume an ever larger part of GDP
  3. The Fed said (it’s going to keep rates low; see #2, above). Take it at its word.
  4. Too many people expect rates to go higher.

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Debt Default Insurance

Monday, August 8th, 2011

The Credit Default Swap market is where one goes to buy insurance against a bond default. There is now more than a handful of companies whose default insurance premiums are less than that of the U.S. government. Here is just a sampling–ordered from most safe to least safe, but all safer than the U.S.:

  • Merck
  • Google
  • Coca-Cola
  • Oracle
  • Baxter, Intl.
  • Microsoft
  • Pepsico
  • Colgate
  • United Parcel Service
  • Raytheon (interesting, considering who pays them)
  • Norfolk Southern
  • Wal-Mart Stores
  • Monsanto
  • Nike
  • Consolidated Edison
  • John Deere

Effectively, the market has appraised the risk of default for these companies and has judged them to have less credit risk than the U.S. government, which has the ability to levy taxes, confiscate things–including companies and countries.

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Grandfathered Out-of-state Muni Bonds

Friday, July 8th, 2011

Shown at bottom is the relevant section of the State’s Fiscal Impact Statement (front page shown immediately below) regarding the grandfathering of out-of-state municipal bonds held as of December 31, 2011. I should probably remind you to check with your tax professional. There’s probably something somewhere that says we have to tell you we are not authorized to provide tax advice. Click on the image immediately below to go right to the full document. Once there, use your browser to search for “municipal.” You’ll eventually get to page 10, where the grandfathering is mentioned.

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Weekly Recap & Outlook – 03.11.11

Friday, March 11th, 2011

Tower Private Advisors

Below

  • Correction mode continues
  • Oil dynamics likely to fluctuate (deep thought by Jack Handy, that one)
  • Slow week for economists

Prior Posts

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The King is dead; long live the King

Tuesday, January 11th, 2011

 . . . or rather, municipal bonds are dead; long live municipal bonds.

As usual, I’m a day late and five dollars (inflation) short on this subject.

Meredith Whitney made a splash late in the last decade saying Citigroup was going down the tubes.  Not having made any market-shaking calls since that call when she was employed at Oppenheimer–she left there to start up her own shop–and needing some new clients, she recently showed up in a 60 Minutes interview predicting there would be between 50 and 100 “significant” muni bond defaults in 2011, totalling “hundreds of billions” of dollars.  [Plagiarism police please note:  I lifted everything from “between” to “dollars” verbatim from the Bloomberg synopsis below the video at bottom.  She was not pressed to substantiate those claims and, thus, fear was mongered.  You can watch that video by clicking on the image below, but only if you promise to watch the one below it.

A number of folks have taken umbrage at her claims.  Their umbrage is pretty well summed up in the Bloomberg interview below.  In short, she doesn’t know what she’s talking about.  In long, unfunded pensions have been an issue for several years.

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