Research Papers
Market Review and Outlook 4th Quarter 2011
January 18, 2012The municipal market entered 2011 with significant headwinds as many skeptics anticipated, and in some cases publicly predicted, widespread defaults throughout the sector. The municipal bond market responded to these exaggerated concerns by turning in a stellar year. Limited supply, increased demand, and an absence of widespread defaults helped drive the market.
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High Grade Core Intermediate 4th Quarter 2011
January 24, 2012The Samson High Grade Core Intermediate strategy entered 2011 with a material underweight to Treasuries (which we viewed as overvalued), and considerable non-benchmark allocations to undervalued tax-exempt municipals and Build America Bonds. We also had a modest overweight to corporate bonds, with our emphasis on high quality, transparent industrials. As we explained in our January 2011 commentary, the Treasury curve slope at that time was statistically very steep: at nearly 2 standard deviations away from the mean of the prior 3 decades, it was an appropriate time to employ a barbell curve strategy that would benefit from the flattening we anticipated.
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Multicurrency Commentary 4th Quarter 2011
January 25, 2012The safe haven dollar rally that dominated much of 2011 faded as the world embraced the “risk on” trade with renewed vigor. During the 4th quarter oil surged, equity markets rallied, and the US dollar began to lose value. Though the Federal Reserve Majors Index fell in value for the period, performance varied greatly across the major currencies and reflected the shift in market sentiment towards recovery and growth, and away from decline and global recession.
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Bulletin: Update on Municipal Bankruptcies and Multi-Notch Downgrades
November 29, 2011The municipal market is experiencing a heightened awareness of credit risk in large measure due to high profile bankruptcies such as Jefferson County, Alabama and Harrisburg, Pennsylvania. Pressures on municipal credits have increased over the last several years, manifesting in two notable developments: the rare municipal bankruptcy filing, and the more common multi-notch downgrade. Samson purchases only high quality municipal securities and our strict credit criteria, grounded in our capital preservation approach, means our clients have not been exposed to any municipal bankruptcies. Nonetheless, as these events are shaping public perceptions of broad trends in municipal credit, we thought it timely to review these bankruptcies, the increased trend towards multi-notch downgrades, and how they relate to the realities of municipal investing today.
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Bulletin: Municipal Tax Exemption and the American Jobs Act
September 16, 2011Legislators have been discussing possible changes to the municipal tax exemption for the better part of a year now, but the President’s new American Jobs Act actually brings a formal proposal before Congress. From a taxpaying investor’s perspective, if the proposal were to pass, the municipal market would continue to provide a high quality and uniquely tax-advantaged allocation for income generation and capital preservation, but with new pricing levels relative to taxable bonds due to the new tax rate and potential future uncertainty.
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Bulletin: Update on S&P Downgrade of U.S. Credit Rating
August 08, 2011On August 5th, 2011 S&P downgraded the U.S. credit rating from AAA to AA+. Moody’s had confirmed the U.S.’s Aaa rating prior to S&P’s announcement and the downgrade by S&P should not have been a surprise to the market. Both rating agencies have retained their negative outlook for U.S. Treasuries. Please read on for an update on the market's response and a discussion of the implications for municipals, commodities, and the dollar.
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