Asset TV: 2020 Municipal Market Strategy – Opportunities And Considerations

Jeff Johnson, Senior Vice President and National Sales Manager, discusses municipal market conditions and portfolio strategy, including liquidity, yield curve structure, relative value and technical factors.

Review and
Outlook

May 2020

“After heavy lobbying by local governments, the Fed expanded eligibility to counties with populations of more than 500,000 and cities with at least 250,000 residents.  The MLF and other Fed programs favor larger issuers over smaller ones . . . This policy aligns well with Appleton’s preference for large, well-established municipal issuers…”

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April 2020

“Federal stimulus aid will provide a bridge over the near-term for many municipal issuers. Nonetheless, we are also stress-testing liquidity and reserves without factoring in extraordinary support from the Federal government. Our goal is to ensure that our holdings can stand on their own even under a prolonged economic downturn scenario…”

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March 2020

“Should Q1 consumption fall significantly it would be off an already weakening base, leading to a critical forward-looking question of whether Coronavirus fears are merely delaying economic activity or displacing it entirely. The bond market is pointing to the latter, while equity bulls are counting on the former…”

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February 2020

“While compressed yields limit income potential, we still see opportunities for active management to generate incremental value…”

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Coronavirus and
the Markets

05.06.2020

Municipal Credit Observations

“At Appleton, we have always managed high quality portfolios comprised of what we feel are credit resilient municipal entities.  We look for municipal and service essentiality, size and breadth, and revenue diversification. . . we expect all your holdings to remain creditworthy.”

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04.28.2020

Healthcare Revenue Bonds

“Appleton’s Healthcare Revenue bond holdings are comprised of larger systems with diverse revenue streams, balance sheet strength and geographic diversity.”

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04.28.2020

Port Revenue Bonds

“Location, operational strengths, strategic importance and contractual provisions must be considered. We are selectively adding exposure to ports where, in our opinion, a disconnect exists between bond prices and credit fundamentals.”

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04.22.2020

General Airport Revenue Bonds

“Stress testing is essential to our evaluation of credit stability during an indefinite sector downturn.  These factors can help differentiate value from undue credit risk.”

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Economic and
Market Commentary

02.05.2020

Operating in a Low Yield Environment

“Riding a multi-decade fixed income bull market, municipal bond yields have fallen to levels not seen since the Eisenhower presidency.  For those not well versed in American political history, that would be the 1950s, a time period that predates the professional experience of nearly all of today’s financial advisors…”

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11.13.2019

Differentiating Credit Vigilance From Complacency

“All too often favorable capital market conditions have generated a degree of investor and analyst complacency.  With municipal credit spreads at near record lows, the margin for safety has been diminished…”

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09.03.2019

Opportunity Zones: A Look at Potentially Winning Models

“Opportunity Zones are fast becoming a real estate development buzzword, as powerful tax incentives unleashed by the 2017 Tax Cuts and Jobs Act sparks a proliferation of private capital investment into economically stressed census tracts…”

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05.28.2019

Opportunity Zones:
An Impetus for Municipal Credit Enhancement

“As capital flows into Opportunity Zones, we are actively looking for localities with the best prospects … Weeding through Opportunity Zone tracts early in their evolution offers our research team an ability to identify municipal issuers with overlooked future credit prospects…”

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Quarterly
Perspectives

Q1 2020

What Investors Can Learn from CEOs, Army Rangers, Pilots and Police

“Stress impacts the brain’s cognitive and emotional intelligence, critical abilities needed to make sound decisions.  Understanding how this occurs can be highly applicable to individual investors…”

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Q4 2019

Forecasting in an Uncertain World

“As we close the door on the 2010s and enter the 2020s, thinking about the risks we know, don’t know, and don’t know we don’t know can help frame market expectations…”

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Q3 2019

Demystifying and Demilitarizing Trade

“In a recent speech concerning risks to the US economy, noted economist Robert Shiller discussed the term “trade war” and how its meaning has evolved over time…”

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Q2 2019

Summer Days: Bright Skies and Hazy Outlooks

“The first six months of the year were, for all the volatility, a period of capital markets strength. It’s far too early to say what the next six will bring, but at a minimum, we see reasons to expect volatility to continue and emphasize the value of sticking to a clear-eyed plan…”

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Video Briefs

May 2020

Asset TV: 2020 Municipal Market Strategy – Opportunities and Considerations

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February 2020

Asset TV: 2020 Municipal Strategies and Considerations

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July 2019

Benefits of a Municipal Crossover Strategy

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June 2019

Opportunity Zones: An Impetus for Municipal Credit Enhancement

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