The municipal bond market can be aptly described as a rollercoaster ride over the past several months. This applies to both the movement of yields and the emotional/mental toll it took upon participants.
This week the markets are bracing for what may be the worst economic news in the country’s history. The grizzly data will show what the shutdown of the U.S. and global economies looks like.
Prepare for the Unstoppable Force and the Immovable Object to battle it out over the next few years. While the equity markets continue to befuddle fundamentalists as to their strength considering the historically poor economic and earning metrics, the credit markets are providing some interesting components to the potential recovery’s shape.
It is easier to view the past with the benefit of hindsight than it is to determine the future through forethought.
Traditional technology may enhance our lifestyles, but biotechnology could directly impact our quality of life.
An abundance of academic research shows the persistence of a value premium over time but that hasn’t brought much solace to investors who prefer undervalued stocks rather than growth stocks in recent years. For over a decade, growth investors have been high fiving each other while value investors have been left behind, scratching their heads.
The past 30 days have seen an unprecedented dislocation in the fixed income markets, especially the municipal bond market. Historically, tax-exempt municipal bond yields have been lower than taxable yields which just makes sense as the investor in tax-exempt municipal bonds is exempt from federal taxes and, in some cases, state income taxes. Over the years, a very general rule of thumb was when tax-exempt yields are 70% of Treasuries, municipal bonds historically are a sell, and when municipal bond yields are 90% of Treasury yields, municipal bonds can be an attractive buy.
Summary: The S&P 500 has had 11 dividend discontinuations and four cuts since 2/19/2020, with another 19 predicted. According to Goldman Sachs, the S&P 500’s dividend payments for 2020 could be 25% lower
Municipal (muni) markets typically turn at the speed of a tanker ship, move at the speed of molasses in January and rarely see daily price swings of more than a few basis points.
This week the markets are bracing for what may be the worst economic news in the country’s history. The grizzly data will show what the shutdown of the U.S. and global economies looks like. To be sure, human life and well-being are the paramount concern.
The current situation is not only unique, but so too is the unprecedented one-sided trend of market reactions. From a medical perspective, the investor is left with but a few ultimate scenarios. While acknowledging the range of opinions vary greatly, they are all ultimately based on our personal reaction to heightened levels of uncertainty.
It seems daily, if not hourly, the global panic surrounding the COVID-19 virus is spiking. Fear has gripped our world and has seemingly taken over. The virus is not the problem, the fear of the virus is the problem. This is a classic case of perception becoming reality.