Investors Withdraw $20.6B in Municipal Bonds Amid Meredith Whitney Apocalyse Prediction
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Six weeks ago, banking analyst Meredith Whitney said that there is no doubt that a "spate" of municipal defaults are on the way, clarifying that a spate in her mind is 50 to 100 sizable defaults or more.
“There’s not a doubt in my mind that you will see a spate of municipal-bond defaults,” Whitney said in her December 19 interview with CBS Corp.'s (NYSE: CBS)"60 Minutes."
“Quantifying is a guesstimate at this point,” Whitney said. “I was giving an approximation of a magnitude that will bear out to be correct.”
Whitney has been unable to give specific numbers to back up her now-infamous prediction, but this has not stopped the mass exodus from the municpal bond market, as investors pulled $4 billion the the muni-bond market in the week ended January 19, according toe Lipper US Fund Flows, the most in a single week since the data started to be tracked.
The movement marked the 10th consecutive week of net redemptions, which have totaled $20.6 billion, according to Lipper.
According to Whitney, her and her colleagues have spent two years and thousands of man hours researching the financial condition of the 15 largest states in the U.S.
“A lot of this is, You know it, but can you prove it?" Whitney said. “There are fifth-derivative dimensions that I don’t think I need to spell out to my clients.”
Whitney has her fair share of opponents in the matter, including PIMCO's Bill Gross, who does not agree with her "theory."
California Treasurer Bill Lockyer said that Whitney's actions are "apocalyptic arm-waving."
Regardless of the opposition (and lack of actual evidence), Whitney's "theories" will continue to be monitored and adhered to, that evidence is clear.
“There’s not a doubt in my mind that you will see a spate of municipal-bond defaults,” Whitney said in her December 19 interview with CBS Corp.'s (NYSE: CBS)"60 Minutes."
“Quantifying is a guesstimate at this point,” Whitney said. “I was giving an approximation of a magnitude that will bear out to be correct.”
Whitney has been unable to give specific numbers to back up her now-infamous prediction, but this has not stopped the mass exodus from the municpal bond market, as investors pulled $4 billion the the muni-bond market in the week ended January 19, according toe Lipper US Fund Flows, the most in a single week since the data started to be tracked.
The movement marked the 10th consecutive week of net redemptions, which have totaled $20.6 billion, according to Lipper.
According to Whitney, her and her colleagues have spent two years and thousands of man hours researching the financial condition of the 15 largest states in the U.S.
“A lot of this is, You know it, but can you prove it?" Whitney said. “There are fifth-derivative dimensions that I don’t think I need to spell out to my clients.”
Whitney has her fair share of opponents in the matter, including PIMCO's Bill Gross, who does not agree with her "theory."
California Treasurer Bill Lockyer said that Whitney's actions are "apocalyptic arm-waving."
Regardless of the opposition (and lack of actual evidence), Whitney's "theories" will continue to be monitored and adhered to, that evidence is clear.
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