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Archive for the ‘Bonds’ Category

Current Market Conditions

As volatility has increased in the past 3 weeks, I want to keep you well informed of my thoughts.

Are the past weeks normal, have the fundamentals changed, or is this the canary in the coal mine we’ve been waiting for?

These questions are answered in my video.

Hi, Mike Brady here with Generosity Wealth Management, a comprehensive, full service wealth management firm, headquartered right here in Boulder, Colorado.

I last spoke to you a couple of weeks ago and at that time, I talked about the third quarter… Read More

Pimco Founder Bill Gross

Pimco is a mutual and ETF firm with a huge bond fund that has been the player in that space for the past 40 years.  Bill Gross founded the firm in 1971, and it is now around $2 trillion dollars under management. Bill Bross

Last week Bill Gross decided to leave the fund and move to Janus.  This is important because of the disruption to the bond market as huge sums could (and I say could) move from one firm to another.

The bond market… Read More

Definition: High Yield

2013 12 13 high yield

Defined:

A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds and municipal bonds. Because of the higher risk of default, these bonds pay a higher yield than investment grade bonds.

Based on the two main credit rating agencies, high-yield bonds carry a rating below ‘BBB’ from S&P, and below ‘Baa’ from Moody’s. Bonds with ratings at or above these levels are considered investment grade. Credit ratings can be as low as ‘D’ (currently in… Read More

Federal Reserve Comments in 2013

federal reserve comments in 2013

As I mention in my video, the price of bonds (in general) have decreased causing yields to increase. The above graph shows comments from the Fed which has led so many people to have speculated they’d cut back on the bond buy back.

As of last month, the Fed Chairman has stated the bond buy back will stay in place.

For more graphs and a discussion, here’s the full article.

A Spectator’s Guide to the Euro Crisis

By far the easiest and best chart I’ve seen to explain the European problem was published last weekend in the New York Times.

If you’ve been wondering if you’re the only person confused by what all the hub bub is about, this is your opportunity to get caught up.

Click for an outstanding chart on the European problem

Greek Bond Yields Surge

That might sound good, but what it really means is that the prices are plunging.

Stay away from Greece and watch Europe closely.

Greek Bond Yields Surge – Link

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Who Has AAA Rating?

Now that the US has lost it’s AAA rating, who’s left?

20 countries with AAA Rating – Link

Municipals to be Downgraded?

One of the effects of a US Government downgrade is a municipal downgrade to follow.

If you’ve been following my newsletters over the past few years, you know I’ve advised you to watch your municipal holdings closely if you have any at all.

The free (relatively) capital market ultimately determines the cost municipals will have to pay to borrow money.

Municipals to be Downgraded? – Link

7,000 Muni Bonds at Risk of Automatic Downgrade

If the US Gov’t is downgraded (I argue when not if) then 7,000 municipal bonds will be automatically downgraed as well. At least according to Moody’s.

This really hurts retirees as they’re the largest part of this market.

7,000 Muni Bonds at Risk of Automatic Downgrade — Link

US Government Bonds Downgraded from AAA to AA by German Rating Agency

One of the big drags on the economy in the coming years will be our fiscal deficits and budget problems.

I’ll be writing this summer about the US ability (and struggles) to sell bonds and finance the debt, particularly as QE2 ends and the Chinese bubble bursts (at some point in the future).

This article talks in depth about an issue we may see more of in the future–US debt being downgraded. This is from a German, not US, rating agency, but it could be just the… Read More

It’s not a Banking Problem

This article is good because it talks about Household and Consumer Debt as the underlying problem with our financial problems, not the banking regulations.

I happen to agree personal consumer debt has been a huge problem for our country and will continue to be a major factor in the next crisis.

What can you do?

Get your personal debt under control and as low as possible. If you need help with strategies around this, please let me know me.

LINK TO FULL ARTICLE

Time to Buy Municipals?

I’ve been negative on the finances of state and local governments for some time, and continue to believe it will get worse before it gets better.

This article takes a contrarian view, particularly on the debt, which I want to present to you.

He argues there are “diamonds in the rough”, which is almost always true.

I’m still quite negative on municipals in general, but it’s good to see the other point of view.

 

LINK TO FULL ARTICLE

 

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Bumpy Ride for Treasuries

Bonds go up and down in value based on interest rates, credit quality, and simple supply/demand.

The first quarter was a bumpy ride for US Treasuries (as I mention in my video which you should have listened to already), and essentially ended flat to slightly negative.

Much of what will happen in the next quarter will be dependent on the ending of quantitative easing in June and whether the Federal Reserve increases interest rates.

What to do? Stay tuned and be diversified. Too much of an… Read More

Who Will Buy the Bonds?

You’ll see me in the coming months talk about the bond markets, particularly as the Quantitative Easing (QE2) comes to a close this summer.

We have a huge federal deficit. We need people to buy Federal bonds to lend money to the government.

With the huge influx of money from the Fed in the past few months, foreign investors were squeezed out. Will they come back? The answer is not as simple as you’d think.

I’ll be writing more and more about this as the… Read More

S&P Downgrades Japan from AA to AA-

Japan has been in a continued recession for the past 20 years.

The deficit levels of the Japan government are among the highest of the developed countries, and expected to increase in the coming years.

This is not good news for Japan. As the rating decreases, the extra premium paid to borrow money goes up. So, a 3% cost of borrow might increase to 4%.

Anyway, this is something to watch as the United States deficit to GDP is increasing rapidly.

CLICK FOR FULL ARTICLE

Just When You Thought the Euro Was Out

You’ve been reading my newsletters and saying “boy, that Mike Brady knows everything”. That may be true, but it’s good to remember the markets have a mind of their own.

The Euro has rallied against other currencies recently.

Do I think this is a short term rally? Yes. Do I think the Euro and Europe in general still have long term problems? Yes.

CLICK FOR FULL ARTICLE – JUST WHEN YOU THOUGHT THE EURO WAS OUT

Muni Fund Outflows

If you’ve been listening to my videos and reading my newsletter, you are minimally affected by the Municipal Bond declines over the past 2 months.

Yeah!

Outflows are huge right now and I anticipate they will continue while states determine how to balance their budgets.

To do: Continue to avoid Municipal Bonds unless you’ve really done your homework

 CLICK FOR FULL ARTICLE – MUNI FUND OUTFLOWS

Municipal Revenues Rebound

2008 and 2009 were devastating to state revenue, so in comparison to those hard years, 2010 showed an increase AS A PERCENTAGE from the previous year.

Revenues are still way down, and without the big influx from stimulus money the worst is yet to come.

 

 CLICK FOR FULL ARTICLE – MUNICIPAL REVENUES REBOUND

What is your Interest Rate Sensitivity?

What is your interest rate sensitivity? If you reply “what does that mean”, then you definitely need to listen to my video below.

I talk about a quick and dirty way to estimate how a Rising Interest Rate will negatively effect your particular bonds and/or bond funds… Read More

Predictions Coming True

If you’ve been reading my blog for the past 2 years you’ve been hearing me talk about the slow disaster that is Europe and our municipal governments.

We’re now seeing the worst falls in Municipals since Lehman’s collapse back in September 2008. Ouch! I also say that the worst is before us, not behind.

To do: Watch your municipal holdings and know what your exposure is!

Ireland has a bailout (thank you EU and IMF) and now the yields for Portugal, Spain, and Italy are going… Read More