To get the Best of the Bond Market delivered to your email daily click here.
During yesterdays State of the Union speech, president Obama promised to use executive action to create a new middle-class savings vehicle that he calls a “myRA”. Which stands for My Retirement Account, as opposed to My Retirement will be Abysmal.
myRA is basically a new simple, safe and affordable “starter” retirement savings account that will be available through employers and help millions of Americans save for retirement. They will be offered through a familiar Roth IRA Account and, like savings bonds, be backed by the U.S. government.”. Here’s a quick primer from BusinessInsider which goes into more details about the individual accounts.
But is myRA the answer to what is essentially a fundamentally flawed U.S. retirement system? The sad fact is that the tax code in the U.S. reinforces inequality in retirement; “its upside-down-pyramid shape offers larger incentives for those at the top to save—even though they are already more likely to do so—and relatively little help for those at the bottom.” Says John F. Wasik, author of Keynes’s Way to Wealth: Timeless Investment Lessons from the Great Economist.
Wasik says the solution to the problem is not more retirement options but less. “The problem isn’t that Americans don’t have enough ways to save for retirement — they have too many. Look at the alphabet soup of plans from 401(k)s, 403(b)s, 457s to Roth IRAs. Why not consolidate them and make the tax breaks uniform through credits? Make a universal plan with low fees accessible to everyone — regardless of where they work. It’s not only a way to address inequality, it will improve retirement security for everyone.”
You can read Wasik’s full article on Forbes.
Todays Other Top Stories
Reuters: – Puerto Rico deserves credit for fiscal reforms. – Puerto Rico finance officials trying to avoid junk bond ratings for the Caribbean island are emphasizing recent tax hikes, spending cuts and other fiscal reforms in meetings with U.S. credit agencies, Puerto Rico’s governor said on Tuesday.
BondBuyer: – Munis’ strength provides eye-catching opportunities for investors. – Municipals have caught the attention of analysts as they outperformed Treasuries and posted their best start to a year since 2009.
ETF Trends: – An ETF for lower risk in municipal bond portfolios. – Municipal bond investors are concerned about default risk following the Detroit fiasco. However, a muni infrastructure exchange traded fund skirts the issue by investing in revenue generating projects.
MoneyNews: – Puerto Rico facing junk threat rises most since ’12. – Puerto Rico debt is rallying the most in two years, even under the threat of a cut to junk, as the commonwealth prepares to sell bonds for the first time since August.
Bloomberg: – Illinois unions sue to block state pension funding shift. – Illinois’ plan for fixing its $100 billion public pension shortfall is unconstitutional, a union coalition said, suing to restore benefits lawmakers cut to narrow the nation’s worst state retirement-plan deficit.
LearnBonds: – Thinking strategically about bonds. – For investors whose prime focus is income, scrutinization of all security options and consideration of one’s time horizon is an absolute necessity in today’s difficult low interest rate environment.
FT: – Pension plan rotation boosts U.S. Treasuries. – U.S. government bonds are on course for their best monthly performance since the summer of 2012 as big pension funds have cashed in their equity gains and moved into long-dated Treasury debt.
WSJ: – Bill Gross: Buy U.S. Treasurys, don’t wait. – Investors are running back into safe havens, including U.S. Treasuries, as they become more concerned about problems in emerging markets.
Kimble Charting: – Bullish pattern in junk bonds! Time to “touch the junk” now? – Its been a tough past 12-months for Junk Bond ETF’s JNK & HYG! Performance is nothing to write home about and has lagged the S&P 500 by almost 20%.
ETF Trends: – Time to jump for junk. – High-yield bonds and the exchange traded funds that hold those bonds are viewed by professional investors and traders as accurate gauges of market risk appetite.
WSJ: – Corporate debt in emerging world shines. – A bright spot is emerging in the gloom that has enveloped developing markets in recent days: dollar-denominated corporate debt. Funds with exposure to these bonds, which investors say are more insulated from political instability than is government debt, have outperformed.
FT: – BlackRock favours emerging markets dollar debt. – Emerging market assets priced in dollars or euros may insulate investors from the turmoil in local currency debt as volatility intensifies in these markets, according to BlackRock, the world’s largest money manager.
Philly.com: – Look to emerging markets for higher bond yields. – For the last 30 years or so investors achieved three things when buying, say, 10-year U.S. Treasury bonds: income, stability, and an offset to stock market volatility in their portfolios.
TheStreet: – Emerging-market bond funds bet on rebound. – At a time when some economies are slowing, the emerging markets face clear headwinds. But there are good reasons to think that the bond funds can deliver single-digit returns this year.
Artemis: – 2014 may be a pivotal year for catastrophe bonds and sidecars. – The coming year of 2014 may prove to be a pivotal one for the catastrophe bond and sidecar market, as the shakeout between traditional and alternative reinsurance capital continues, according to Willis Capital Markets & Advisory.
Millionaire Corner: – Affluent investors are more upbeat in 2014. – Timing is everything. Affluent investors, when surveyed by Spectrem’s Millionaire Corner about how they plan to invest in the coming month, indicated their intention to move off the sidelines and re-engage with the market. And then the market reared its volatile head, most recently posting its worst week since 2011 in the face of lackluster corporate earnings, concerns about an economic slowdown China and anticipation of what actions the Federal Reserve will take this week regarding its stimulus program.
WSJ: – What worries Bill Gross, plus: His market picks. – PIMCO’s Gross explains how much investors can lose if rates rise, plus the dangers of borrowing and what investors should buy now.
Investors.com: – Despite emerging markets slide pros see lots to buy. – That sound of fast-moving feet you’ve been hearing? Those are more investors heading to the exits, adding to the ongoing exodus from key emerging markets.
FT: – Bond markets wrestle with reverse rotation. – After the Great Rotation comes the Reverse Rotation. At least, that is how it looks. Big pension funds are switching out of equities into bonds, in a sharp reversal of last year’s trend when stock-hungry investors powered a rally in shares.
CNBC: – Fight the Fed with these bond exchange-traded funds. – Bond ETF investors have been fighting the Fed since taper headaches began last year, and now the Federal Reserve is prepared to help.
ETF Database: – 4 Yellen-friendly ETFs. – After eight years of serving at the helm of the Federal Reserve, Ben Bernanke’s term will expire on Saturday, when his successor Janet Yellen will take over. Now, all economic eyes will turn to her, as questions of tapering and further quantitative easing have been surrounding the market for years. These questions have created a sense of anxiety on the Street, as investors look to Yellen to keep the bull run alive.
DailyFinance: – The average investor is incredibly boring. – Have you heard about the “great rotation?” It’s the theory that after pulling money out of stock mutual funds and dumping it into bond funds for the last six years, investors are about to change direction, yanking money out of bonds and sending it into stocks. But when you put the great rotation into context of the size of the market, it’s barely a drip.
Gross: Turkey & South Africa flunk currency test – don’t wait around to see who’s next. De-risk, move to Treasuries.
— PIMCO (@PIMCO) January 29, 2014
S&P Says Bond Insurers Can “Handle Potential Credit Deterioration in Puerto Rico” #muniland
— Cate Long (@cate_long) January 29, 2014
First sale of Treasury floating rate notes come with 0.045% yield advantage to 3-mo T-bills (0.05% yield)
— AnthonyValeri (@Anthony_Valeri) January 29, 2014
“Bond Squad is my favorite bond investing newsletter. It combines common sense with deep market knowledge.”
– Marc Prosser, Publisher of Learn Bonds
Bond Squad is more than just an investment newsletter! Paying subscribers can call-up bond market veteran trader and portfolio manager, Tom Byrne, for market advice and have him review their portfolio free of charge.
Get a free two-week, no commitment trial of Bond Squad by emailing Tom at email@example.com
Or learn more about Bond Squad’s clearly written, expert analysis, click here