Municipal Bond Funds May Not Be Safe Haven; Economic Data Reported

Doug Kass at the TheStreet.com has written an insightful article questioning the health and safety of municipal bond funds.  He notes that another area that has been generally ignored thus far in the credit crisis is the ability of local and state governments to continue to fund their operations.  The ratings agencies were painfully slow to reduce the ratings of mortgage-holders and bond insurance, and now they need to catch up on municipal bonds.  Since I have recommended municipal bonds as a safer alternative to the stock market in other posts, I believe Kass’s article is required reading for anyone considering such an investment.  You may link to the article here.

We have some economic news due today, including retail sales numbers and the producer price index [UPDATE:  Retail Sales declined by 1.2 percent in September, much worse than expected, and the sharpest drop in three years; producer prices declined .4 percent, but the core producer price index (ex-food and energy) rose .4 percent, suggesting that inflation may continue to be a problem].  I will report [more] on that tonight, along with some observations about the latest government intervention in the credit markets, including a look at the companies that have been tasked with managing some of the monetary programs.  Meanwhile, stock market futures are down before the opening.  I would guess that the market was not overly thrilled with the earnings reports released yesterday [and the retail sales and PPI numbers will not help].

Have a good day!  And remember the Raw Finance mantra, “preserve capital.”