The EIA (Energy Information Administration) released last week’s inventory report yesterday morning. Crude oil inventory is down, but gasoline and distillates (diesel, jet A and home heating oil) are up. The lower inventory did not cause a rally in crude prices as one would expect. The larger supply of gasoline and distillates is viewed as a weight holding the price down. Unleaded gasoline was down 2%

Somehow I missed this but that doesn’t mean anything, I miss a lot of things. So if you’re up to speed on the government providing reinsurance for municipal bonds then skip this post.

If not, here is a little blurb I found on Fox Business:

In the fourth quarter of 2008, the municipal bond market collapsed along with the rest of the credit markets. Lately there has been a small revival. Still, depressed bond prices and wide spread credit concerns leave open big opportunities for investors in the new issue and secondary market, if you know where to look.

Long maturity tax exempts on average now yield 130% of comparable Treasury bonds and that’s before the exemption benefit. A portion of that differential may be attributed to what many have termed artificially low Treasury rates. Not that long ago, exempt yields averaged 75% of Treasuries. At no time since the 1930’s, has a full understanding of municipal credit risk been more valuable.

Today is October 31. All Hallow's Eve. Ghosts and goblins. Costumes and candy. And reports—lots and lots of reports. There is the EIA announcing its Weekly Petroleum Status Report, the Fed announcing its latest interest rate move (hint: cut), and of course the third-quarter GDP numbers are due, along with a host of others.

These reports are being released at a time when Oil continues its climb upward, Monday ending at a record $93.53 a barrel. Newspaper editors around the world are rubbing their hands together and prepping the 3 inch tall headlines for when Oil hits that magical psychological threshold of $100, something which months ago seemed like the ending of a Stephen King novel. It is still as scary, but reality is getting closer. Monday's $1.67 jump was likely a reaction to a weaker U.S. dollar and the temporary, weather-induced closure of some Mexican crude production facilities and ports. Of course, as prices rose, there are always those who advise profit taking, and prices have dropped a bit today, probably because people listen, but we don't see that as much more than a minor hiccup in the upward trend. Analysts are expecting today's EIA report to show a small increase in crude stockpiles, the effect of which may have already been accounted for with Monday's drop in price. But they were wrong last week, and could be again.

iShares S&P National Municipal Bond Fund (MUB)
Market Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF (SMB)
Market Vectors-Lehman Brothers AMT-Free Intermediate Continuous Municipal Index (ITM)
Market Vectors-Lehman Brothers AMT-Free Long Continuous Municipal Index (MLN)
PowerShares Insured National Municipal Bond Portfolio (PZA)
SPDR Lehman Municipal Bond ETF (TFI)

Remember that, the dividends may fluctuate, the share price will fluctuate, and the CEFs are not guaranteed by any governmental entity. Also, the dividends from some of these may be only partially tax- free. It is important to contact the company to verify the tax status of dividends before investing, and to contact your tax preparer regarding any tax issues.

The advantages of owning these types of closed end funds over owning individual municipal bonds directly are greater liquidity, no minimum investment, and greater diversification. In addition, the income from some of these may be exempt from state taxes. Ask your accountant about this and all other tax aspects of these CEFs before investing. A disadvantage is that the CEFs may sell above net asset value.

That means a stock can include closed end funds [CEFs], which most of the stocks on this list are, REITs, oil royalty income trusts, Canadian royalty trusts, etc. The dividends are tax free because the closed end funds on this list own municipal bonds in their portfolio.