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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (80961)	7/2/2008 2:16:15 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Downward Spiral In Jobs globaleconomicanalysis.blogspot.com A look at some interesting trends in small business employment and an article from the Times as well. Mish

To: Jim McMannis who wrote (80961)	7/2/2008 9:12:03 PM
From: Sr K	Respond to of 116555

Let's say that munis yield 70% of similarly "rated" (real, not by MBIA) taxable bonds of the same maturity. Not quite the full 1 minus top personal or corporate rate. For some states there are "AMT-free" as well as tax-free issues, and other factors. Here's how the rates might look and have looked for rates at different levels: Taxable Tax-Free After-tax (35% and 0%) 3.00% 2.10% ..... 1.95% 2.10% 4.00% 2.80% 5.00% 3.50% 6.00% 4.20% 7.00% 4.90% 8.00% 5.60% I said that if taxable rates go up, the muni rates follow. In the real world, liquidity and discussions about and likelihood of tax rate changes factor into the yield spread. You said >>Back to school for you. <G> If tax [rat]es rise, munis become more desirable vs taxable bonds. The issuing agency has to pay less of a rate. Price of the bond rises.<< So you might think the table should look like: Taxable Tax-Free After-tax (35% and 0%) 3.00% 3.00% ..... 1.95% 3.00% 4.00% 2.90% 5.00% 2.80% 6.00% 2.70% 7.00% 2.60% 8.00% 2.50% Do you stick with your statement?

To: Jim McMannis who wrote (80961)	7/2/2008 9:12:35 PM
From: Sr K	Read Replies (1) \| Respond to of 116555

Let's say that munis yield 70% of similarly "rated" (real, not by MBIA) taxable bonds of the same maturity. Not quite the full 1 minus top personal or corporate rate. For some states there are "AMT-free" as well as tax-free issues, and other factors. Here's how the rates might look and have looked for rates at different levels: Taxable Tax-Free After-tax (35% and 0%) 3.00% 2.10% ..... 1.95% 2.10% 4.00% 2.80% 5.00% 3.50% 6.00% 4.20% 7.00% 4.90% 8.00% 5.60% I said that if taxable rates go up, the muni rates follow. In the real world, liquidity and discussions about and likelihood of tax rate changes factor into the yield spread. You said >>Back to school for you. <G> If tax [rat]es rise, munis become more desirable vs taxable bonds. The issuing agency has to pay less of a rate. Price of the bond rises.<< So you might think the table should look like: Taxable Tax-Free After-tax (35% and 0%) 3.00% 3.00% ..... 1.95% 3.00% 4.00% 2.90% 5.00% 2.80% 6.00% 2.70% 7.00% 2.60% 8.00% 2.50% Do you stick with your statement?