Coronavirus: Municipal Observations and Portfolio Implications

“In this environment, we feel proprietary credit research and active management have never been more important. At Appleton, we are drawing on both as we seek to add value in client portfolios.”

Review and
Outlook

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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January 2020

“The differential between 2 and 10-year AAA municipals increased meaningfully as Q4 closed, moving from 20 to 40 basis points over the quarter.  We continue to see value in the 6 to 12-year maturity range…”

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Coronavirus and
the Markets

04.01.2020

Municipal Observations and Portfolio Implications

  “In this environment, we feel proprietary credit research and active management have never been more important. At Appleton, we are drawing on both as we seek to add value in client portfolios.”

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03.23.2020

New York Metropolitan Transportation Authority

“The MTA is a highly essential service provider to the most populous and economically vital region in the country. The MTA has approximately $3.86 billion in available liquidity made up of lines of credit, cash, and other readily accessible funds.”

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03.20.2020

Coronavirus and the Corporate Bond Market

“At Appleton, we only invest in investment grade bonds and strongly favor larger, more liquid issuers. Nonetheless, dislocation is widespread and we wanted to address a few common questions while cautioning against unnecessarily selling at current bid levels.”

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03.18.2020

Coronavirus And Municipal Credit

“In times like these, commitment to a conservative credit research process tends to demonstrate its value. While the magnitude and duration of Coronavirus impact is uncertain, we hold a portfolio of large, well-established issuers that we feel possess the high quality credit characteristics needed to successfully manage through economic unknowns.”

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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

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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Q1 2019

Sympathy for the Yield Curve

“The US economy is showing vulnerability to geopolitical risk, but – as Mick Jagger once sang in ‘Sympathy for the Devil’ – “as heads is tails,” a bear reading and a bull reading of the economy may explain the seeming contradiction of the first quarter…”

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Video Briefs

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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March 2019

Portfolio Transition Analysis: Facilitating Informed Decisions

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