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Smith's Research & Gradings
Volume: 
XXVIII
Issue: 
6
Author: 
Terence M. Smith
April 20, 2020

Smith's Research & Gradings

Q3 Ratings Upgrades and Downgrades

The High Grade Municipal Bond Portfolio managers basked in the warm sunshine of steady credit quality while high-yield municipal bond funds saw massive outflows.

Mark Paris, CIO, Head of Municipals at Invesco, hosted an investor call on March 30, 2020. Eddie Bernhardt, head of managed accounts joined him for the presentation.

Invesco purchased Rochester Funds last year and 2019 was a period of consolidation after the acquisition.  The newly combined entity has over $60 bln. in  Municipal Assets Under Management. Mr. Paris heads up a municipal bond team that includes 15 portfolio managers including Jim Phillips, Jack Connelly and Scott Cottier. Invesco's municipal credit research is lead by Mark Gilley, CFA (27 years of experience) and the team includes Angela Uttaro, Mark Stockwell, Mary Jane Minier, and Robert Bertucci.  The Quant Research & Portfolio Analytics are lead by Casey Ryan and Michal Milewski.

Invesco emphasized the demand for tax-exempt municipal bonds had experienced unprecedented growth.  The reasons for the record weekly inflows were due to a myriad of factors, starting with the Trump Tax-Reform's elimination of State and Local Tax Deductions. Falling interest rates and collapsing credit spreads contributed to a strong performance for municipal bond funds.

Take notice

Stay on top of the latest global news that can impact your investment strategy.

Treasury Launches State & Local Recovery Funds

The US Treasury launched the Coronavirus State and Local Fiscal Recovery Funds, established by the American Rescue Plan Act of 2021, to provide $350 billion in emergency funding for state, local, territorial, and Tribal governments.

Jobs Number May Indicate Covid Economy is Over

Wow! The U.S. economy added 467,000 jobs last month, keeping the unemployment rate in the 4.0% area. Also impressive is that there were large upward revisions from previous months. We say 'wow' because there was such negative sentiment prior to the release of the jobs number.

California Confronts the Gap

The state has a long history of closing budget gaps. This time should be no different. The reasons for the gaps vary over time. This time is different due to the delay in tax collections in the state to November of 2023 due to the climate change induced events that had taken place. What is the same factor this time is that capital gains declined appreciably in 2022 into 2023 due to the downturn in the markets. The turnaround for the markets did not take place until late 2023.

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