Archive for October, 2012

Municipal Bond Market Stands Tall After Sandy

October 31, 2012

The municipal bond market was able to start trading on Wednesday after the destruction and damage of superstorm Sandy.  Wall Street firms located in the downtown financial district of New York City were particularly hard hit.  However, diseaster recovery (DR) facilities had firms up and running.  “We are working from a remote location and our business is running smoothly,” according to a foreign bank with a major municipal bond presence. “There is no date set for moving back to our offices downtown.”

Rob Purpora, principal at Hartfield, Titus & Donnelly (HTD), reported, “Jersey City fared well during the storm and we were able to open this morning.  The big problem is the lack of mass transit and only one tunnel being open, which makes it difficult for our people to get into work.”

Major Wall Street Syndicate Managers were working from home or remote locations due to the lack of mass transit.  “We are up and running,” a syndicate desk analyst said.

Why the US stock market is out of sync with the real economy: Companies are buying themselves

October 24, 2012

FOMC says Economy Expanding at Moderate Pace, Employment Growth Still Slow

October 24, 2012

In its monthly press release, the Federal Open Market Committee (FOMC) said that economic activity has continued to expand at a moderate pace in recent months. While growth in household spending and the housing sector have both shown promise, the labor market as well as fixed investment by businesses have grown more slowly. A growth in energy prices has also pushed inflation somewhat higher, though long-term inflation expectations have remained stable. The FOMC also said that with the current potential downside risks posed by European financial concerns, economic growth may not be strong enough to generate sustained improvement in labor market conditions without sufficient policy accommodation. In order to continue the support of the recovery, the FOMC will continue purchasing additional agency mortgage-backed securities at a rate of $40 billion a month. The committee also stated that they plan on  maintaining a target Federal Funds rate of 0 to 1/4 percent through mid-2015. If conditions do not improve over the coming months the FOMC will undertake additional asset purchases.  The lone dissenter on the committee was Jeffrey Lacker, President of the Federal Reserve Bank of Richmond, who opposed additional asset purchases and disagreed with the description of the time period over which a highly accommodating stance of monetary policy will remain appropriate. This is the seventh consecutive committee meeting in which Mr. Lacker has dissented.

Bond Dealers Association To Defend Tax-Exemption for Municipal Bonds

October 10, 2012

The Bond Dealers of America believes strongly in the health of the municipal bond market and is concerned about the effect on municipal finance of exaggerated statements about State and local fiscal problems. The BDA has issued statements on the state of the municipal market, published op-eds and comments, been interviewed in the press and is organizing a speakers’ bureau to respond to the need for facts.  Additionally, the BDA expects to place targeted advertising in key regional papers.  We have also briefed congressional staff, in both the House and the Senate, on conditions in the municipal market. The BDA and its members will do everything we can to correct misperceptions and misstatements about the municipal market and to provide accurate information to the public about this critical financial sector.

Smiths Event Risk Gradings: Central United States Shows Severe Drought

October 2, 2012

Smiths Gradings continues to monitor the drought and reevaluate the event risk of particular credits that are in close proximity to D4 drought locations.  Based on recent statistics from the US Drought Monitor, the most severe drought areas are heavily concentrated in the Central United States. The US Drought Monitor rates droughts from a scale of D0 to D4, with D4 being the most severe.  As of data posted 9/25/12 the majority of D4 droughts are in Nebraska, Kansas, and Oklahoma.  These three states are facing drought conditions just about everywhere throughout their respective states.  The only other area with heavily concentrated D4 droughts is northwestern Georgia and some of northern Arkansas.  Smiths believes that the Drought’s concentration in the Central United States will cause corn and wheat prices to continue to rise.  The lower crop yields will most likely negatively affect local agricultural economies which in turn can affect credits located in this area of the country.