It's Official: Whitney's ill-advised Muni Call Cancels-out Her Uncanny 2007 Prediction
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It has been almost 2 years since Meredith Whitney's infamous warning about a municipal bond apocalypse, and so far despite a few high-profile defaults the gloomy prediction hasn't panned out. In fact, overall munis have preformed relatively well.
As of August 20th, the yield on top-rated 10-year benchmark municipals was down 15 percent from a year ago, according to data compiled by Bloomberg, and reports say investors are directing the most cash in tax-exempt bonds since 2009. iShares S&P National AMT-Free Muni Bd ETF(NYSE: MUB) is higher by 4.78 percent in the past 12 months. The ETF tracks an index comprised of the investment grade segment of the U.S. municipal bond market. This segment of the market has performed relatively well, despite a number of defaults in the non-investment grade segment.
The bottom line is that Whitney was wrong. However, she was spot on when she slammed Citigroup in Oct. 2007, so net-net her predictions are probably a wash. That's better than some, but it is clear she is no Oracle of Delphi. Nor is she an Oracle of Omaha, really.
As of August 20th, the yield on top-rated 10-year benchmark municipals was down 15 percent from a year ago, according to data compiled by Bloomberg, and reports say investors are directing the most cash in tax-exempt bonds since 2009. iShares S&P National AMT-Free Muni Bd ETF(NYSE: MUB) is higher by 4.78 percent in the past 12 months. The ETF tracks an index comprised of the investment grade segment of the U.S. municipal bond market. This segment of the market has performed relatively well, despite a number of defaults in the non-investment grade segment.
The bottom line is that Whitney was wrong. However, she was spot on when she slammed Citigroup in Oct. 2007, so net-net her predictions are probably a wash. That's better than some, but it is clear she is no Oracle of Delphi. Nor is she an Oracle of Omaha, really.
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