April 14, 2014
I am not sure what drove the market gyrations last week other than the Fed seems to not be all that sure of what it is trying to communicate. Tighten – not; Unemployment is the Target – not; Perhaps Inflation – maybe. While the objective is transparency, perhaps the old approach – you figure it out yourself – is just as good! The data last week was limited and, depending which newspaper or broadcaster you listen to was in line with the Fed’s messaging (that is “confounding”). This is exemplified by the employment-related data points highlighted below. From there, I move on to offering a different approach to measuring your performance against the indices. I welcome your thoughts on this part (I actually welcome your thoughts overall).
Before jumping in, however, I offer a quote that I came across in John Mauldin’s Thoughts from the Frontline. Mr. Mauldin offered the following quote from Frédéric Bastiat:
… it is the skilled economist who looks for the effects that are hidden, the surprises that are unseen. It should be the habit to look at the potential second and third-order consequences of what we can see happening before our eyes. That way, we not only avoid the hidden lions, we also turn to what would hunt us and do us harm into the hunted. Sometimes, the dangers themselves can be turned into a very nice trophy indeed – if you can act in time. Emphasis supplied.
More on Employment
As you consider the broad headlines regarding recoveries, unemployment rates and the like, Jobless Claims is a data point that may be worth contemplating. While I selected June 2012 as my point to backtrack to, this analysis can go back much further (and perhaps should). This past week, we saw Weekly Initial Jobless Claims come in below expectations at just under 295,000 (isn’t that still a lot?!). A couple of weeks back, I highlighted (without any political motivation) the fact that the Labor Force increase seemed to coincide with the end of the long-term unemployment benefits (an extension of which recently passed the Senate). I decided to take a look back to June of 2012 and see which States, as of this past week’s data, still have more Weekly Initial and, importantly, Continuing Jobless Claims:
DIVER Data Services; BLS.
While I’m on the subject of employment, last week saw the release of the more detailed county level employment data. Some data points to consider (the denominator or total counties reporting = 3,215):
- 1,897 counties: Employed as a Percent of Population Greater than in February 2013
- 1,899 counties: Number of Employed People Greater than in February 2013
- 1,508 counties: Labor Force Greater than in February 2013
Under the category, “a picture is worth a thousand words” – red is negative! This is “Job Growth” from February 2013 to February 2014.
DIVER Analytics, Map Module; BLS
The point – look more closely at those locations where your bonds live!
Measuring Your Portfolio Management against the Indices
If part of your job is to manage a portfolio, in all likelihood you manage or are judged against a benchmark. Perhaps S&P or Barclays. Below is an interesting way to assess how you compare against your benchmark – a look at economic data that drives the well-being (tax roles, receipts and spending) of the municipalities in your portfolio. The “Portfolio Average” is the weighted average for the positions and values in the respective indices. The center column represents the percent of the portfolio represented by the weighted average (this is due to the infrequency of the reported data from the source – in each of the below where the percentage is less than 100% this is due to the municipality not yet reporting – kind of like those municipalities that are later than others regarding financials).
S&P National AMT-Free Municipal Bond Index Barclays Municipal Index
DIVER Analytics; Portfolio Dashboard. S&P, other data sources. DIVER Analytics; Portfolio Dashboard. S&P, other data sources.
Another measure to contemplate is the geographic or sector breakdown of the index of your choice against your portfolio. Are you more or less concentrated by location, issuer or sector as the index against which you are measured?
DIVER Analytics, Portfolio Dashboard
Foreclosures
Not wanting to leave you totally depressed, I will leave you with some pretty good data regarding Foreclosures (and, given my objective of not leaving you depressed, I will not speculate as to why I think the numbers look so rosy). Only 744 counties (of 3,233) across 10 States had a higher Foreclosure Rate in 2013 than in 2012.
DIVER Analytics, Filter Module; RealtyTrac.
With holidays upon us, minimal road trips this week with Pete visiting the City of Brotherly Love and the Big Apple. Next week you can find us in Denver and Nashville (looking where to go for the best live country music please).
Have a great week,
Gregg L. Bienstock Esq. & Michael Craft
CLICK HERE to Subscribe to the Weekly Commentary
How You Stack Up Against the Indices and Sobering Employment Data
April 14, 2014
I am not sure what drove the market gyrations last week other than the Fed seems to not be all that sure of what it is trying to communicate. Tighten – not; Unemployment is the Target – not; Perhaps Inflation – maybe. While the objective is transparency, perhaps the old approach – you figure it out yourself – is just as good! The data last week was limited and, depending which newspaper or broadcaster you listen to was in line with the Fed’s messaging (that is “confounding”). This is exemplified by the employment-related data points highlighted below. From there, I move on to offering a different approach to measuring your performance against the indices. I welcome your thoughts on this part (I actually welcome your thoughts overall).
Before jumping in, however, I offer a quote that I came across in John Mauldin’s Thoughts from the Frontline. Mr. Mauldin offered the following quote from Frédéric Bastiat:
… it is the skilled economist who looks for the effects that are hidden, the surprises that are unseen. It should be the habit to look at the potential second and third-order consequences of what we can see happening before our eyes. That way, we not only avoid the hidden lions, we also turn to what would hunt us and do us harm into the hunted. Sometimes, the dangers themselves can be turned into a very nice trophy indeed – if you can act in time. Emphasis supplied.
More on Employment
As you consider the broad headlines regarding recoveries, unemployment rates and the like, Jobless Claims is a data point that may be worth contemplating. While I selected June 2012 as my point to backtrack to, this analysis can go back much further (and perhaps should). This past week, we saw Weekly Initial Jobless Claims come in below expectations at just under 295,000 (isn’t that still a lot?!). A couple of weeks back, I highlighted (without any political motivation) the fact that the Labor Force increase seemed to coincide with the end of the long-term unemployment benefits (an extension of which recently passed the Senate). I decided to take a look back to June of 2012 and see which States, as of this past week’s data, still have more Weekly Initial and, importantly, Continuing Jobless Claims:
DIVER Data Services; BLS.
While I’m on the subject of employment, last week saw the release of the more detailed county level employment data. Some data points to consider (the denominator or total counties reporting = 3,215):
Under the category, “a picture is worth a thousand words” – red is negative! This is “Job Growth” from February 2013 to February 2014.
DIVER Analytics, Map Module; BLS
The point – look more closely at those locations where your bonds live!
Measuring Your Portfolio Management against the Indices
If part of your job is to manage a portfolio, in all likelihood you manage or are judged against a benchmark. Perhaps S&P or Barclays. Below is an interesting way to assess how you compare against your benchmark – a look at economic data that drives the well-being (tax roles, receipts and spending) of the municipalities in your portfolio. The “Portfolio Average” is the weighted average for the positions and values in the respective indices. The center column represents the percent of the portfolio represented by the weighted average (this is due to the infrequency of the reported data from the source – in each of the below where the percentage is less than 100% this is due to the municipality not yet reporting – kind of like those municipalities that are later than others regarding financials).
S&P National AMT-Free Municipal Bond Index Barclays Municipal Index
DIVER Analytics; Portfolio Dashboard. S&P, other data sources. DIVER Analytics; Portfolio Dashboard. S&P, other data sources.
Another measure to contemplate is the geographic or sector breakdown of the index of your choice against your portfolio. Are you more or less concentrated by location, issuer or sector as the index against which you are measured?
DIVER Analytics, Portfolio Dashboard
Foreclosures
Not wanting to leave you totally depressed, I will leave you with some pretty good data regarding Foreclosures (and, given my objective of not leaving you depressed, I will not speculate as to why I think the numbers look so rosy). Only 744 counties (of 3,233) across 10 States had a higher Foreclosure Rate in 2013 than in 2012.
DIVER Analytics, Filter Module; RealtyTrac.
With holidays upon us, minimal road trips this week with Pete visiting the City of Brotherly Love and the Big Apple. Next week you can find us in Denver and Nashville (looking where to go for the best live country music please).
Have a great week,
Gregg L. Bienstock Esq. & Michael Craft
CLICK HERE to Subscribe to the Weekly Commentary