BondsOnline Advisor – September, 2011
By Stephen Taub
NEW in BondsOnline.com: – in depth credit rating analysis for Municipal bonds and energy sector corporate bonds. Ratings back to 2008: a must-have tool for income investors. FREE!
The BondsOnline Advisor strives to present you with income investment insights from analysts throughout the United States. Bonds, preferred stocks, real estate investment trusts, or master limited partnerships can be a part of a successful income portfolio – and BondsOnline and PreferredsOnline provide the “Income Investor Tools” to keep you informed.
Equity Strategies
Uh oh. Wall Streeters with a good grasp of stock market history know full well that September is the worst performing month of the year. However, JPMorgan Chase recently told clients that the markets could surprise on the upside. Sure, the European credit markets are still stressed, growth is slowing and investors are reducing risk, the bank acknowledged. Even so, it laid out several reasons September equities performance could wind up pretty well.
Credit Suisse recently told clients the core macro problem these days is $8 trillion of excess leverage in developed markets. Sure, this is offset partly by $3.4 trillion of under-leverage in emerging markets. In any case, it figures global excess leverage is 6% of global GDP.
Citi recently told clients the current S&P 500 price/book ratio already reflects recessionary levels. The bank noted that earnings yield gap analysis shows divergences reminiscent of the 1970s and late 2008/early 2009 environments.
Deutsche Bank put together a list of what it deems to be 25 quality U.S. names that it believes provide good value after the fall.
Master Limited Partnerships
BofA Merrill Lynch: two more reasons it’s not like 4Q08 (for MLPs). The bank lists reasons why it does not expect an MLP pummeling along the lines of 4Q08.
The yield spread between MLPs and BBB bonds is currently around 110 basis points, which Citi asserts is still well above the median spread of 42 basis points, and reaffirms its Buy ratings on five MLPs.
REITs
Barclays recently told clients that now is a good entry point to real estate investment trusts (REITs) given the recent selloff in the broad stock market as well as REITs and the Fed's commitment to low rates through 2013.
Regional Banks
Stifel Nicolaus suggests that the actual growth in loan demand is ultimately is far less important than the profitability of that growth, stating “the ultimate overall returns for our Buy-rated names still remain in double-digit territory.” Twelve are highlighted this month.
Fixed Income & Preferreds
BofA Merrill Lynch states that it still believes that RBS preferreds are on track to start paying dividends again, once the suspensions are lifted. The bank is still over-weight investment grade corporate over Treasuries (the 30 yr Treasury has been the best performer for the month, and most of the year), and expects both investment-grade and high-yield corporates to outperform Treasuries during the next 12 months.
For a list of securities, target prices, and detailed comments, get the current issue of Yield and Income Newsletter through PreferredsOnline.
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