Survey Shows Risk of U.S. Municipal Defaults – Nicole Bullock, Financial Times
“Some 90 per cent of the 91 bankruptcy lawyers, bankers, fund managers and other turnaround specialists polled earlier this month predicted a US city would default in 2010 or 2011, versus 63 per cent who expected the default of a country in the same time period.”
How to Beat the Bond Market – Brett Arends, Wall Street Journal
“In your day-to-day life you wouldn’t keep lending more money to the people who had already borrowed the most. But that is probably what the manager of your bond fund is doing with your hard-earned dollars…when investing in bonds issued by governments, don’t lend the most to the countries that borrow the most. Instead, lend the most to the countries that rank highest on four key measures: population, land mass (as a proxy for their natural resources), GDP and energy consumption (as a proxy for economic advancement).”
US Equity Market – Lex, Financial Times
“There are three likely paths America’s economy can take from here. Each of them is negative for equity returns…Take the rosiest scenario first…if the Federal Reserve is finally convinced the recovery will stick, policy rates have to be lifted…But raise rates by 1 percentage point and suddenly the market is overvalued by a third…What about a second scenario, one in which growth falters and bond vigilantes increasingly question Washington’s ability to pay down its debts? Look no further than Europe…but the third path is probably the worst. This is the route Japan has taken for the last two decades: minimal growth, ultra low nominal interest rates, and deflation.”
Jeremy Jones, CFA
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