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Gundlach Sees Munis Dropping Another 15-20%, "By The Time All Muni Shoes Drop It Will Look Like Imelda Marcos' Closet"

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Wed, 03/09/2011 - 15:59 | 1033866 Cdad
Cdad's picture

Drag him before Congress and mind wash him...immediately!


Additionally, where is the commentary from the Ministry of Truth [CNBC] about how money is rushing into T bills, and therefore is moving out of equities?

Wed, 03/09/2011 - 16:22 | 1033933 Pladizow
Pladizow's picture

How does the layman play this and short the Muni's?

Is there an ETF?

Wed, 03/09/2011 - 16:28 | 1033946 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

I don't think there is a short muni ETF.  If you want to short muni's just short one of the CEF's with a lot of leverage in it.  The closed end funds will trade way below NAV if people start panic selling.

Wed, 03/09/2011 - 16:52 | 1034019 The Count
The Count's picture

dont play this game at all. they change the rules whenever it suits the big guys. 

Wed, 03/09/2011 - 17:48 | 1034201 Michael
Michael's picture

If we abolish the Federal Reserve Corporation, The federal government can borrow money from itself at 0% interest and pay no fees to Wall Street. Real Winning!

Form now on if everyone on ZH refers to the Fed as the "Federal Reserve Corporation", we will raise public awareness with these simple words and the public will learn to hate them more.

Wed, 03/09/2011 - 22:39 | 1035020 cranky-old-geezer
cranky-old-geezer's picture

If, if, if, if, if. 

I'm so tired of seeing "if", "should", "could", "would" on ZH, a site about financial reality, not fantasy.

Wed, 03/09/2011 - 16:51 | 1034020 The Count
The Count's picture

dont play this game at all. they change the rules whenever it suits the big guys. 

Wed, 03/09/2011 - 17:00 | 1034050 TooBearish
TooBearish's picture

MUB u can short dat

Wed, 03/09/2011 - 17:27 | 1034143 IQ 145
IQ 145's picture

 The layman plays this by buying Silver; fear and bad news are great drivers for the metals. Silver returns more buying power for you than Gold. "Some" leverage is built in, as well. The metals markets will "over-react" to actual news of a series of defaults and haircuts.

Wed, 03/09/2011 - 17:40 | 1034180 Panafrican Funk...
Panafrican Funktron Robot's picture


10% drop seems more reasonable to me, it's already been kinda "crashy" since October.

Wed, 03/09/2011 - 16:01 | 1033871 TradingJoe
TradingJoe's picture

And now "we Know" where QE3 will go, eh?!

Wed, 03/09/2011 - 16:12 | 1033906 serotonindumptruck
serotonindumptruck's picture

QE3 = BABs2

Wed, 03/09/2011 - 16:55 | 1034022 jus_lite_reading
jus_lite_reading's picture

Yes. Two great articles I read recently stated 1) the Fed WILL go ahead with QE3 as the other option if they don't is deflation which they won't have and 2) Greece is 5 minutes away from bankruptcy. I feel bad if your name is Leo Kakalakas or you're Greek living in Greece. When Greece falls, they'll be forced out of the EU and that will send the whole country into chaos IMO. GET YOUR GREEK OLIVE OIL NOW!



Wed, 03/09/2011 - 21:38 | 1034854 Buck Johnson
Buck Johnson's picture

This guy told the truth, their are so many hidden problems in the states that even the Federal govt. doesn't want to bail them out.

Wed, 03/09/2011 - 16:04 | 1033877 DonnieD
DonnieD's picture

Hey Jeff, there's some Jr. Congressman looking to make a name for himself on line 1. He asked if you're available in a couple weeks.

Wed, 03/09/2011 - 16:03 | 1033879 trav7777
trav7777's picture

50-state BKs mean a lot of Wisconsins

Wed, 03/09/2011 - 16:06 | 1033885 bob_dabolina
bob_dabolina's picture


QEIII announced and Munis rally 65% as Ben buys all issuance over par and with reckless abandon.

Nothing goes down ever again....nothing.

Wed, 03/09/2011 - 16:13 | 1033910 InconvenientCou...
InconvenientCounterParty's picture

pimco might have a different view?

Wed, 03/09/2011 - 16:49 | 1034005 EscapeKey
EscapeKey's picture

The US Dollar?

Or will Ben attempt to buy Dollars in the open market using... freshly printed Dollars (!), in an attempt to prop up DXY?

That's such a mad plan... it might just work in today's environment.

Wed, 03/09/2011 - 16:05 | 1033887 LostWages
LostWages's picture

Shoes to drop?  Does this include the Bernank's pumps?

Make sure none of those stiletos pop the stock bubble.


Wed, 03/09/2011 - 16:07 | 1033894 bugs_
bugs_'s picture

Nice quip using Mrs. Marcos like that Gundlach - way to go!

Wed, 03/09/2011 - 16:09 | 1033898 string
string's picture

Nice Imelda Marcos SCUD.

Wed, 03/09/2011 - 16:09 | 1033900 Josh Randall
Josh Randall's picture

State of California = too big to fail, FAIL

City of Detroit = too crappy to save

Bus Drivers, Teachers, Firefighters, Police, Animal Shelters/City pounds, all will get decimated. But you can guarantee the tax assessors office will be adding headcount.

Wed, 03/09/2011 - 16:13 | 1033913 I am a Man I am...
I am a Man I am Forty's picture

my muni bond portfolio was up this past month, anyone know how many defaults we've had this year??  anyone??  a decent muni is yielding a whopping 2.4%.  this guy is clueless on the muni market

Wed, 03/09/2011 - 16:37 | 1033953 Rob Jones
Rob Jones's picture

Assuming an inflation rate of 2% that gives a real interest rate of 0.4%. I personally believe that inflation is higher than 2% so the real interest rate may really be negative. And you have default risk and the risk that interest rates may rise if QE ends. They don't seem like a screaming bargain to me. Just saying...

Wed, 03/09/2011 - 16:33 | 1033962 traderjoe
traderjoe's picture

And Brent Crude is up 2.x% today? Silver/gold up... So, how are your muni's holding their purchasing power? Perhaps against the fraudulent CPI...

And just you wait. Just like the Auction Rate Securities, when the rush to the exits comes the TBTF banks will pull their bids and the market will freeze up. 

Wed, 03/09/2011 - 16:43 | 1033990 Johnny Lawrence
Johnny Lawrence's picture

You can actually get more than 2.4%.  I'm seeing 2.8% to 3.2% from some very high-quality issuers.

Wed, 03/09/2011 - 17:30 | 1034156 IQ 145
IQ 145's picture

 Congratulat ions; you're only losing 3.5% of your capital to inflation; but this year will be worse, of course.

Wed, 03/09/2011 - 16:52 | 1034018 EscapeKey
EscapeKey's picture

We're not stopping you.

Investing in muni bonds? I might be drunk, but not stupid.

Wed, 03/09/2011 - 17:18 | 1034113 tsx500
tsx500's picture

.....patience   .........

Wed, 03/09/2011 - 16:15 | 1033915 JW n FL
JW n FL's picture

Either you are waiting until term.. or crying the whole way until then about income loss.. in most cases.

Wed, 03/09/2011 - 16:15 | 1033918 Mr. Poon
Mr. Poon's picture

Does laughing at the Imelda Marcos reference date me?

Wed, 03/09/2011 - 16:17 | 1033923 william the bastard
william the bastard's picture


Wed, 03/09/2011 - 17:27 | 1034137 youngman
youngman's picture

To move it up a decade or two...he could have used Rue Pauls closet....the transvestite

Wed, 03/09/2011 - 16:17 | 1033919 Cleanclog
Cleanclog's picture

Additional problem in muni's is secondary market liquidity if you're looking for a bid.  About 1K names trade reasonably, and 14K can take a lot of time and no tight spreads.

Word to the wise, watch out for the VRDO resets when their letters of credit don't find renewal at current rates and fees. http://bit.ly/fbuJo3

Wed, 03/09/2011 - 16:19 | 1033927 Rob Jones
Rob Jones's picture

My mother owns a ton of munis and she is getting worried. She complains that they don't pay very much interest (all the high-interest ones have been called) and the risk of default looks to be increasing. And interest rates may soon go up if no QE3 is announced. I think she is very close to pulling the trigger and selling a bunch of them.

Wed, 03/09/2011 - 16:42 | 1033985 43 Steelie
43 Steelie's picture

I honestly don't get what the downside is to selling here. I did the same with all of my parents munis in June of last year. Maybe the yield goes even lower, but on a risk vs. return basis, why take the chance?

Deflationists will argue that in terms of capital preservation, earning 2-3% tax free for the next few years will be a huge win. But as we all know, how the hell will most of these municipalities be able to service their debt in a deflationary environment?

I'm sure many distressed debt hedge funds will make a killing trading munis in the near future...just not a grandma with a 5-10 year time horizon.

Wed, 03/09/2011 - 16:22 | 1033935 GOSPLAN HERO
GOSPLAN HERO's picture

"Purging is at last at hand. Day of Doom is here. All that is evil, all their allies; your bankers, your leaders, those who would call themselves your judges; those who have lied and corrupted the Earth, they shall all be cleansed."  -- Thulsa Doom

Wed, 03/09/2011 - 16:35 | 1033964 Dr. Richard Head
Dr. Richard Head's picture

I have been reading much as it relates to this, not religious texts, and I look forward to that being the case.  At times, I feel so defeated and spent in the fight, but then I get a fresh breath every now and again.

Wed, 03/09/2011 - 22:02 | 1034907 zaknick
zaknick's picture



This will be a spiritual reckoning for the decadent, genocidal scum who rule the world and their lemmings (read: redneck "drug warriors" + assorted buffoons).

Strike them down mighty Thor, make them eat shit for decades with the mark of the bankster on their foreheads: 666

Wed, 03/09/2011 - 16:25 | 1033938 Misean
Misean's picture

"Between here and the endgame lies the valley and the valley is full of fear."

Half a league, half a league,
Half a league onward,
All in the valley of Death
Rode the six hundred.
"Forward, the Light Brigade!
"Charge for the guns!" he said:
Into the valley of Death
Rode the six hundred.

Wed, 03/09/2011 - 16:30 | 1033947 bigking12345
bigking12345's picture

wait until $50 billion in fake state backed tobacco bonds go bust.

Wed, 03/09/2011 - 16:38 | 1033978 Johnny Lawrence
Johnny Lawrence's picture

Man, between ZeroHedge and all the big brokerage firms, are there any reports that are actually bullish on bonds?

Wed, 03/09/2011 - 16:44 | 1033989 Robot Traders Mom
Robot Traders Mom's picture

You're still the ace degenerate!

Wed, 03/09/2011 - 16:43 | 1033993 Johnny Lawrence
Johnny Lawrence's picture


Wed, 03/09/2011 - 17:34 | 1034168 Robot Traders Mom
Robot Traders Mom's picture

On a serious note, David Rosenberg is overall bullish on bonds. David Kotok is overall bullish. There are also many others...Look how many people went after Meredith Whitney! My thought, trading bonds, is that there are very few that are actually bearish. Too many kool-aid drinkers that think bonds, especially munis are the buys of a lifetime right now.

Wed, 03/09/2011 - 16:40 | 1033980 AntiMort
AntiMort's picture

'There's a report out that PIMCO sold all their treasury's.'

This was an exclusive here.  See, they read ZH over there.

Wed, 03/09/2011 - 16:43 | 1033994 Sudden Debt
Sudden Debt's picture

And here in Europe all the countries are looking into moving federal budgets into regional once just like the US states models...

If you see something is doomed from the begining, COPY IT OVER AND OVER AGAIN!


But it does protect the union against defaults just like the US. A state can go bust an get a reset while the rest can carry on.


Wed, 03/09/2011 - 16:46 | 1033999 simon says
simon says's picture

Sorry TD, I don't buy it.  Letting quasi-sovereigns like Munis fail will undo the support that Treasuries and MBSs have received from the Fed.  The Fed/Treasury will support AAA Munis (and maybe lower) for sure - they will just take their time to blink - so maybe we will see rising yields, but no failure.  Will wreak havoc on inflation of course, but that's what real money is for.

Wed, 03/09/2011 - 16:52 | 1034024 43 Steelie
43 Steelie's picture

Dennis Lockhart (Atlanta Fed President) told me directly in a room full of people that they would not be buying Munis...

So in other words, I'm sure you will be right and they will start buying in the near future.

The logistics of it become much more complicated than by buying agency and Federal debt though since each municipality is a completely different profile. I'm guessing it would take another TARP style program.   



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