I’ve always been a fan of Charlie Gasparino‘s, I like his hard-nosed, old school journalism style and generally have agreed with a lot of his opinions over the years. But his rant about Meredith Whitney‘s municipal bond research is so far off the reservation, he may be in danger of losing his Indian name (Reports With Martinis).
Here’s Gasparino excoriating Whitney for being negative about the prospects for municipal fixed income investing in the Huffington Post:
And yet, as the municipal market is crashing on her prediction, with deals being pulled and slashed in size, with prices falling and taxpayers having to pay extra so cities and states can sell debt, Whitney is refusing to release the actual report that would tell us how she came to such a brash, and unprecedented prediction, on the grounds that her research is proprietary and for the use of the clients of her research firm only.
It’s about time Whitney came clean and released her report to the public so we can determine if it should be given so much credence; and if it shouldn’t, traders and investors can stop a possibly misguided prediction from causing further damage.
Hey Charlie, I don’t exactly agree with Whitney’s assertion that a Munigeddon is imminent, but she has the right to publish her research as publicly or as privately as she likes. I’ll also note that muni bonds are suffering from limited liquidity as the mutual funds that make up a large portion of their ownership are seeing week after week of redemption. Little Meredith Whitney may have a decent platform but she hardly moves hundreds of billions of dollars.
No, if anything, the blame here goes to the municipalities themselves for writing checks and making promises that their tax bases couldn’t cash. The townsfolk won’t get fooled again – they are at the school board meetings and the Town Halls, they know there isn’t any money there. Whitney’s call has simply been the most vocal expression of this general consensus.
Don’t kill the messenger.