Best of the Bond Market for August 1st, 2012
Business Insider: Henry Blodget says Bill Gross has his math wrong on stocks – Why is Gross wrong? Because stocks actually have not “appreciated” at ~7% a year. Again, stocks have not, in fact, “appreciated” at ~7% per year for the past couple hundred years. Stocks have only “appreciated” about 2% per year. The rest is dividends.
CNN Money: If his past stock market calls are any evidence little attention should be paid to Bill Gross’ latest. – chart showing other stock market calls by Gross.
Learn Bonds: Even if Bill Gross really did make $200 Million last year, that still may not be enough. – there is a strong argument to be made that even if Bill Gross made $1 billion per year that he would be undercompensated by several measures.
Money and Markets: Last week’s “weekly outside reversal” could signal trouble for the long bond. – Treasury bonds completed what is known to technicians as a “weekly outside reversal.” That means Treasury bonds made a new, 52-week high last Wednesday, but finished the weeklower thanks to Friday’s big decline.
Reuters MuniLand: Cate Long on why the recent SEC report means the municipal bond market is about to change for the better. – The report recommends that the rules be changed to require these systems to publicly disseminate the bid-offer prices for securities they have on their platforms. Furthermore, the report proposes that the MSRB could compile the bid-offer prices across these alternative trading systems into a quote feed, making the systems more like equity markets.
Felix Salmon: Why there may not be a direct correlation between increases in a company’s CDS price and their perceived risk of default – reporters should be very wary indeed of drawing too many conclusions from movements in the illiquid CDS market. Sometimes, they really don’t mean anything at all.
Bloomberg: Stockton CA’s former Police Chief’s $204,000 pension is a sign of where the problems in many municipalities lie. – He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 — the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.
WSJ: Phil Izzo breaks out his highlighter and shows changes in today’s Fed statement – acknolwedges economy is slowing but does not take new action ie no QE3.
MarketWatch: The Treasury is going to start issuing a new type of debt security for the first time in 15 years. – The Treasury Department announced Wednesday that it plans to sell floating-rate notes, with the first auction estimated to be at least one year away.
Martin Tiller: The traditional relationship between stocks and bonds has broken down. Are things different this time? – If there is an increasing amount of money chasing a steady amount of paper (i.e. stocks and bonds) then the price of all of the paper is pushed up.