Sunday, January 16, 2011

Meredith Whitney: Beware Muni Bonds, Wave of Defaults About To Start

Meredith Whitney was again on CNBC and repeated her call that muni bonds are the worst place to be at the moment. She says the municipalities face a wave of defaults.

"When you have the first group of defaults you will see indiscriminate selling that would be a buying opportunity for some," "Because there has been such complacency in the market and muni investors have been talked down to for so long—'There's nothing to worry about, there's nothing to worry about'—they'll just fly."

We track all bond ETFs live here.

However, she said that investors can still make money in munis, but need to be very careful in how they proceed. "You have to know what you own. You have to really do your homework in terms of knowing what supports your bonds," Whitney said. "There are great municipal investments out there, but on a blanket basis you have to be really careful about knowing what cash flows are supporting your investments."

Watch interview:

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1 comment:

Deming said...

Excerpts from Barrons online and a Reuters article:

"Alexandra Lebenthal has had enough of banking analyst Meredith Whitney’s claims that muni markets are in peril.

"Lebenthal, a long-time expert who has been described as the “Queen of Munis,” says in an interview with Reuters today that she’s very concerned about Whitney’s projections that a huge number of issuers are on the verge of defaulting.

“Her numbers are way off. She’s brilliant when it comes to housing, but I don’t think she has the same expertise or credentials when it comes to munis,” Lebenthal said."


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