Category Archives: Uncategorized

I received a copy of a research newsletter from Brown Brothers Harriman, a prominent private bank based in New York. The piece is titled, "Does G.O. Spell Go?" and makes the valid point that municipalities around the country are under credit stress, and that general obligation ("GO") bonds are not always as secure as they've always been perceived to be. BBH lumps Stockton and San Bernardino, CA with Detroit, MI as "...examples of ...

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This week, a research team from the New York Fed released a report that correctly notes that municipal bond default rates are far higher than normally reported. Moody's counts 71 defaults in the past 40 years; the Fed report counts 2,521 defaults! At first blush, that seems like muni bonds are a lot riskier than we thought. But the report serves to confirm what we have been saying for years. There ...

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The debt crisis that reared its head in 2007 is far from over. Yes, the crisis in the financial markets that peaked in late 2008 has passed, mainly due to hundreds of billions of public dollars being used to bail out the horrible mismanagement of major banks and brokerages. Regarding the billions in bonuses paid out of that bailout money: As the old bumper sticker says, if you're not mad ...

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As I write this, the yield on the 10-year Treasury Bond is 2.04%. Assuming you want a little income left over after taxes and inflation -- say, 1% or so -- then this bond price assumes that inflation over the next decade will average around 0.30%. An inflation rate of 0.30% in a modern developed country is akin to a flat-line economy, with declining standards of living. Looking at this interest ...

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Gentle Ben Bernanke and his friends at the Fed once again reminded us the other day that they will do whatever it takes to rekindle inflation and, one hopes, rekindle hiring. One in 6 adults that want a full time job don't have one right now, and that's gotta stop. The bond market promptly rallied and the stock market is going nuts (and up). Since I spend too much time watching ...

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Corporate earnings have fully recovered back to long-term trendlines, and stock prices have pushed right on through fair value. Any movement upward from here is getting into "exuberant" territory. Regular readers (and clients) know that we are underweight to equities at the moment. Meaning that, if a family has a long-term objective of 60% stocks, we only have about half that exposure to stocks and stock-like assets. We made this tactical ...

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