Did you watch the Meredith Whitney interview on 60 minutes? (muni bonds)

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Dec 21, 2010 10:12 am

What are your reactions to what she said?

In the interview, she says that the huge debt on a national and state level serves as the next threat to our economy particularly for municipal bond holders. She claims that there could be a whopping fifty to a hundred defaults within the next twelves months, I believe.

I have some bond holders with holdings from IL, OH, and CA. I just know my phone is going to start ringing once my clients get back from the holidays. 

Dec 21, 2010 11:43 am

California only uses 5% of its revenue to pay its municipal debt I doubt if they raise it to six or even seven percent it will not break the bank. I'm not to familiar with Ohio or Illinios

Dec 21, 2010 11:46 am

Hey anuh buh kisser, too funny you'd post a muni thread, the same day I did. LOL...

Dec 21, 2010 11:47 am

Hey BuhKisser, gee, have you ever had clients piss moan and complain before? I'm only nervous when they're content... 

Dec 21, 2010 11:48 am

If the US govt bailed out the banks do you think they would let the muni's go down? Not that I am for more bailouts but Meredith is about to become the next Roubini. 60 minutes I thought made a terrible presentation.

Dec 21, 2010 12:47 pm

BFP,

I've gotten so used to this site having very little activity, I neglected to see your topic.

sorry, everyone.

Dec 21, 2010 12:46 pm

@ BFP, by all means, I don't mind complaints if they're within reason and not outlandish "im pooping my pants" reactions. Here's the thing, I'm in the same work environment you're in. Personally, I contact my clients at least once a month to talk with them. I have a couple of clients who call me twice a week. That annoys me. :)

@ Primo:  you hit a nail on the head. In addition, we have Greece, right? The 40th largest economy in the world. didn't go under. What signs are there that the world's 8th largest economy, California, will go under?

What irks me about Meredith's statements, is that she neglected a few things. For one, 100 defaults isn't even a tenth of the muni market. Second, insolvency is not an overnight thing. On the local government bonds I've been selling, there have been next to no material events reported in the past couple of years. She maintained focus, throughout the entire interview, looking at things from a state level when we know that the way the state and local government branches budget are completely different. She wouldn't distinguish any of this information.

Dec 21, 2010 2:07 pm

I think it is also important to distinguish the differences between a corporate default, and a municipal issuers default. They're quite different, read about that a while back. There is much more backing, inability to walk away or refinance against the rights of prior bond holders. Orange County 1994 is probably a good example.

Mr. Buhkisser, I didn't mean that your post was a duplicate. It just shows that we're thinking the same thing, at the same time...

Dec 21, 2010 3:19 pm

Meridith was just on CNBC and said she was specifically not talking about GO's. She was talking more locally. BTW bad interview and her part, appeared unprepared.

Dec 21, 2010 5:27 pm

I think she made a mistake leaving her prior firm when she got famous for being bearish on the banks and now she is trying to keep her name out there.  If she had been correct on the banks last year, many of the big banks would have failed.

Dec 22, 2010 10:42 am

First,  it's hard to believe that Merideth is underweight in anything. She's how should i put this: Well fed. In fact i vote her Most Well Fed Analyst

I concur, she didn't look good in the CNBC interview. She was scattered and did look a bit unprepared. That she wasn't talking GO bonds, well, no shit!!! Using California as but one example: As was stated only 5% of the revenue collected goes to the debt service. Constitutionally, that debt service is paid second only to education. The impact of that is this: Before any California state workers collect a paycheck or retirees get a pension check the debt service get paid.

Essential service bonds water -sewer etc, and GO bonds are basically no worry investments. Opportunities will abound over the coming year or two in these issues as bad news pushes prices down. Get your checkbook ready. This is how you make serious money in the bond market: Knowing something the majority doesn't. That is, while all bonds will suffer in price from bad news, not all bonds are bad news. You can move from cookie cutter investment advisor to valued investment councilor just by educating youself and paying attention.

Dec 22, 2010 9:44 pm

Nice article

Feb 1, 2011 10:13 am

Whoops....................................................

Everyone is buzzing about Max Abelson's big Meredith Whitney piece in Bloomberg, where he discovers that her much vaunted report doesn't match her rhetoric about muni doom.

There are two quotes that everyone is talking about today.

First, regarding the size of her prediction:

"Quantifying is a guesstimate at this point... I was giving an approximation of a magnitude that will bear out to be correct.”

And second, some incomprehensible Wall Street gobbledygook:

"There are fifth-derivative dimensions that I don’t think I need to spell out to my clients,”

Feb 1, 2011 5:23 pm

[quote=BondGuy]

First,  it's hard to believe that Merideth is underweight in anything. She's how should i put this: Well fed. In fact i vote her Most Well Fed Analyst

I concur, she didn't look good in the CNBC interview. She was scattered and did look a bit unprepared. That she wasn't talking GO bonds, well, no shit!!! Using California as but one example: As was stated only 5% of the revenue collected goes to the debt service. Constitutionally, that debt service is paid second only to education. The impact of that is this: Before any California state workers collect a paycheck or retirees get a pension check the debt service get paid.

Essential service bonds water -sewer etc, and GO bonds are basically no worry investments. Opportunities will abound over the coming year or two in these issues as bad news pushes prices down. Get your checkbook ready. This is how you make serious money in the bond market: Knowing something the majority doesn't. That is, while all bonds will suffer in price from bad news, not all bonds are bad news. You can move from cookie cutter investment advisor to valued investment councilor just by educating youself and paying attention.

[/quote]

whitney

perma- bear freak show that gets it right like a broken clock in bear markets.

they need prozac

always bearish.    bear comes and they look like Mensa members

can you say Ealine Gazerelli?

this bimbi ends up in Betty Ford Center also

the important question?

M Whitney  

would ya?

y or n?

Feb 1, 2011 6:12 pm

[quote=Barack Owebama]

[

whitney

perma- bear freak show that gets it right like a broken clock in bear markets.

they need prozac

always bearish.    bear comes and they look like Mensa members

can you say Ealine Gazerelli?

this bimbi ends up in Betty Ford Center also

the important question?

M Whitney  

would ya?

y or n?

[/quote]

"can you say Ealine Gazerelli?"

Cramer just said the same damn thing

check the tape

i was first

(or he reads this thing)

Feb 1, 2011 6:34 pm

I heard him say that....

Was listening on XM on my way home.