BONDS: Michigan Only State To Lose Population (CXA, SUB, TFI, INY, SHM, VRD, ITM, MLN, PRB, TLT, TBT, TYO, TYD, TMV, TMF)

U.S. Consensus published the population data that they rigorously constructed throughout the summer. Michigan was the only state out of the 50 that had a decrease in population (along with a congressional seat) at a modest .6%, since the last time data was collected. Texas on the other hand, gained the most congressional seats and population. What does this all mean? How to trade it: Bonds, Bonds, & More Bonds… One could anticipate further tax revenue growth collected by the IRS in regions that had population increases. This allows smaller municipalities to have more capital to pay of long-term debts. Thus, muni bond solvency increases and they will maintain or attain higher credit ratings. Meanwhile, smaller municipalities in regions where Michigan received large deviations to the downside in population; will have less tax revenue. With less tax revenue, increased pressure to pay long term muni bond debt will occur if fiscal cuts at local levels does not occur. For example, Pontiac, MI, muni bonds are in the top ten for highest yields to maturity. Indicating that the population is exporting elsewhere to places in coastal regions and southwest states. Along with Pontiac's “rust belt” stigma of fading auto manufacturing aids to the associated risk. Also consider that fact that Michigan has over a 12% unemployment rate, and people have to migrate to achieve work. States in middle America such as Oaklahoma, Nebraska, Kansas, and South Dakota local municipalities have a lower unemployment rate which adds to low bond yields. Ways to trade bonds Easiest way for a retail investor to have exposure to bonds is with the recent upheaval in bond ETF's. SPDR Lehman California Municipal Bond ETF CXA S&P Short-Term National AMT-Free Municipal Bond Fund SUB SPDR Lehman Municipal Bond ETF TFI SPDR Lehman New York Municipal Bond ETF INY SPDR Lehman Short Term Municipal Bond ETF SHM SPDR S&P VRDO Municipal Bond ETF VRD Market Vectors Intermediate Municipal Index ETF ITM Market Vectors AMT-Free Long Municipal Index ETF MLN Pre-Refunded Municipal Bond Index ETF PRB iShares Lehman 20+ Year Treasury Bond Fund TLT Aggressive Leveraged Bond ETF's ProShares Ultra Short 20+ Year Treasury Bond ETF TBT Direxion 10-Year Treasury Bear 3X ETF TYO Direxion 10-Year Treasury Bull 3X ETF TYD Direxion 30-Year Treasury Bear 3X ETF TMV Direxion 30-Year Treasury Bull 3X ETF TMF