Panic in the California Municipal Bonds

Examiner.com ^ | 11/17/2010 | Gil Guignat

[GilGil]

There is a fund called the PIMCO California Municipal Income Fund II symbol PCK on the New York stock exchange.

In the last few days the fund has been going vertical down. Investors can’t get rid of this turkey fast enough. (SEE PICTURE TOP LEFT-DOUBLE CLICK ON CHART TO ENLARGE).

“It might be argued that muni markets are merely reflecting similar declines in Treasuries (TLT). Fair enough. Bond holders, though, are probably are more interested in the fact that their bonds have declined rather than why.

Warren Buffett warned back in June on the muni bond market as local and state municipalities struggle to meet their obligations amid declining tax revenues.

[GilGil]

The muni bond collapse is signaling the fall of the dominoes. Keep an eye on these bond markets. They have no direction to go but down. There is far too much money in the shorts for munis not to go down.

[Frantzie]

I posted this the day after the election.

[Alberta's Child]

I just sold a sizable portion of my holdings in a bond mutual fund within the last couple of days. I wasn’t doing this in anticipation of some kind of catastrophic collapse in the bond market (I’m just re-balancing my funds), but it’s clear to me that the U.S. bond market in general is priced very high right now and doesn’t have much of an upside.

[PGR88]

Just WAIT until Bill Gross starts whining about how IF California defaults, it will be the end of the world, the end of America, etc. etc... ie) he needs a bailout.

coming in 5,4,3,2,1.....

[freespirited]

I cant imagine buying a California muni. Not even a general obligation bond.

[Frantzie]

Apologies - I did not post this story on Wed after the election but the same type of warning.

Obama is shoveling money into CA, NY, IL and other states since he was elected. The party ends in Jan 2011. The market is discounting this.

The bond market also is voting that CA voters are INSANELY delusional by voting for Moonbeam 2, Boxer and the rest of the Dems.

[Frantzie]

“Warren Buffett warned....” Ef him. He has been all for Obama and all for Demo policies that cause this.

[ken5050]

We’re now seeing the equivalent of “junk” muni bond funds...the article also mentions the so called “insured” funds..where we are now finding out that the value of the insurance is ZERO..you’re goign to see lots of securities arbitration/litigation, form investors who were sold the AAA rated funds as absolutely safe..hold them..collect the interest, and you WILL get your principal back...ain’t so..

[kidd]

Where did you transfer your bond mutual funds to?

[The Comedian]

"Economic Holocaust" ping.

Moderate (but increasing) volume ping list watching the slow motion Economic Holocaust.

FReepmail me if you want on or off
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Frowning takes 68 muscles.
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[dynachrome]

Please to put me on the economic holocaust list.

(one scenario here. Pretty good econ blogger: http://johngaltfla.com/blog3/2009/11/18/the-day-the-dollar-died-a-blovel-entire-series-single-thread-not-edited-for-content-yet/ )

[Pan_Yan]

Could someone post the whole article, please? Examiner is not on the excerpt required list. I’ve learned that if I go to that site I have five or ten minutes to go shower while all the pop ups, advertisements and ad-ons load.

[Alberta's Child]

I'm sitting on a lot of cash right now -- and dollar-cost averaging into a bunch of different funds.

I need to protect the cash in anticipation of a major expense in the first half of next year, so I took the opportunity to sell out of the bond fund at a time when the share price is very high.

[RogerWilko]

I’ve had a USAA CA bond fund for a couple of years and it had been doing pretty well. It’s TANKED over the past couple of weeks, and BIGTIME the past couple of days. Like 6%, plus whatever damage from today.

I decided to dump it today, because of all the turmoil in the markets, the good possibility of interest rates starting to go up, and CA being in a TOTAL financial mess, with a MAJOR-LEAGUE LOSER crew just about to take the helm from the LOSERS that have assisted in making this place a socialistic-utopian paradise!

Normally, I would have hung on for a rebound, but I just have a BAD feeling about this. Luckily, I managed to escape with about a 5% annualized tax-free gain for 2 years.

[Pan_Yan]

PCK

November 17, 2009
8.77

November 17, 2010
8.79

[Publius6961]

Here's a link to a version of the chart that you can actually read...

Calif Bond Collapse

When the image appears, click on the image to make it legible.

Enjoy.

[BooBoo1000]

I really don't care what Warren Buffet says, he has always telling those jerks in Washington that they are on the right track. Looks like California Bonds are ready to be used for wall paper.

[Quix]

THX FOR YOUR PINGS.

May not get to responding to all of them.

Dog tired from moving piles of junk in the carport and building a 6’ X 12’ lumber etc. rack.

[Whenifhow]

Thanks for the ping.