Mousseau, john

Global Interdependence Center Hamilton, Bermuda October 2013

John R. Mousseau, CFA Executive Vice President & Director of Fixed Income (800) 257-7013 ext. 307 John.Mousseau@Cumber.com Twitter: @CumberlandADV

Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Historical Muni Bond Rates This graph illustrates the performance of the municipal bond market since 2006. Since then, the market has experienced 3 major selloffs: 1) Flight into Treasurys out of risk, 2) Panic selling because of Meredith-Whitney, 3) Fears of Fed tapering.

Source: Bloomberg and Cumberland Advisors.

Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

2 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Bond Buyer 40 vs. 30-yr Treasury

Source: Bloomberg and Cumberland Advisors.

Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

3 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Reduced Muni Calendar

Source: Bloomberg and Cumberland Advisors.

Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

4 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Bond Fund Flows (All Muni) Bond Fund Flows (All Muni) 15,000

10,000

5,000

0

Data Source: -­‐5 ,000

-­‐10,000

-­‐15,000 Jan-­‐09 Apr-­‐09 Jul-­‐09 Oct-­‐0 9 Jan-­‐1 0 Apr-­‐10 Jul-­‐10 Oct-­‐10 Jan-­‐11 Apr-­‐11 Jul-­‐11 Oct-­‐11 Jan-­‐12 Apr-­‐12 Jul-­‐12 Oct-­‐1 2 Jan-­‐1 3 Apr-­‐13 Jul-­‐13 Municipal Bond Fund F lows (All Municipal)

2 per. Mov. A vg. (Municipal Bond Fund Flows (All Municipal))

Source: Morgan Stanley Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

5 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

MMD/Treasury Ratio MMD/Treasury Ratio 1/2/07

MMD/Treasury Ratio 12/29/08

MMD/Treasury Ratio 10/7/13

2.5

2.0

1.5

1.0

0.5

0.0 2

Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

3

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

5

(800) 257-­‐7013

7

10

30

6 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Moody’s Upgrades vs. Downgrades: Revenue Upgrades -­‐ Revenue

Downgrades -­‐ Revenue

200 180 160 140 120 100 80 60 40

0

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

20

Source: Moody’s Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

7 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Moody’s Upgrades vs. Downgrades: Tax-Backed Upgrades -­‐ Tax-­‐backed

Downgrades -­‐ Tax-­‐backed

200 180 160 140 120 100 80 60 40

0

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

20

Source: Moody’s Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

8 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.

Disclosure All material presented is compiled from sources believed to be reliable.

However, accuracy cannot be guaranteed. Past performance is no guarantee of future results.

Florida Office

One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236

New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360

(800) 257-­‐7013

9 ©Copyright 2013 Cumberland Advisors®. Further distribution prohibited without prior permission.