Earlier today we presented Bill Gross on Bloomberg TV, in a segment which confirmed that while the PIMCO boss is bearish on Europe, even though literally all the world is now involved in backstopping the PIIGS, he is bullish on bankrupt states and municipalities. Per Bloomberg: "Bill Gross, who manages the world’s biggest bond fund at Pacific Investment Management Co., clashed with Meredith Whitney, the banking analyst, when he said he doubted there would be many local-government bankruptcies. “Ultimately, municipal bankruptcies will be at a lower level,” Gross said today on Bloomberg Television’s “InBusiness” program. “I don’t subscribe to the theory that there will be lots of them.” Alas for PIMCO and its billions in Build America Bond holdings, the Muni market at this point couldn't care less. As the charts below demonstrate, the muni carnage is again back front and center. And it will only get worse with every day that a BAB replacement program is not provided. From there, to a full blown domino effect, the line is very, very thin.
Below is the recent performance BlackRock California Fund (MYC), which just hit a one year low...
And the Nuveen New Jersey fund. In freefall.
h/t Mike Krieger