tede02

Consumer sentiment bottomed in 2022 when inflation previously peaked. Improved and then the trend really went south over the last 18 months. My guess is inflation is driving this. The cost of housing/shelter has risen dramatically not just because of interest rates, but also because of insurance and property taxes. My personal homeowners insurance has doubled over the last 5 years.

What's your read on the economy given a lot of mixed data? Equity markets have been hot in 2025. But oil prices, the labor market, manufacturing and even big retailers suggest underlying softness. Are lofty asset prices really driving continued spending by the top 10-20%? It seems like inflation is really squeezing the bottom 60-80% of income earning households and this is showing up in the consumer sentiment surveys. What's your take?

Somewhat eyebrow raising that rates are up today given the broad equity market decline.

@james22 I have a genuine question to your last post. When you characterize bitcoin as "useful," what do you mean? Is it useful in the sense that it doesn't suffer from some of the shortcomings of precious metals?

This CLO ETF caught my attention as a cash subsititute. Symbol is PAAA. Run by PGIM fixed income. Portfolio is AAA paying a yield >5.5% with basically no duration (floating rate).

Despite the move in nominals, TIPS haven't moved as much.

There's good reporting this morning in the WSJ about how the bond market was a major factor in pushing the White House into a pause. It's pretty clear that Bessent and Lutnick know that if long rates shoot toward 5% (and beyond), that is going to be a huge problem not only for consumers, but indebted governments, commercial real estate and ultimately equities.

Starting to see the impacts in the "hard data" as Walmart and Delta Airlines pull their financial forecasts for 2025. I would not be surprised to see another gap down 5-10%. But what's tough is there could also be a major rally if White House gets gets cold feet, announces a "pause" or some kind of deal. We already saw a preview of that with the erroroneous reporting on Monday. This will be another period for the history books.

This is a very good point. I was thinking about it this morning. It's a totally different situation than 2020. The Fed is not going to act until something really breaks because they are so worried about inflation and still embarrassed for being so late to raise rates in 2022. And I agree, at least for now, there is no appetite for sending checks. If there is a real trade war where the major parties dig their heels in, perhaps we see a pro-longed bear market ala 00-02 or 08-09. The one thing that comes to mind is there will be political pressure in 2026 to clean any mess that lingers otherwise the republicans are likely to get hammered in the mid-terms.

Yields have already popped back up to pre "liberation day." Man, duration just seems really risky. I guess the Fed could always come into the market with QE and push yields lower but no way I'm making that bet.

10-year is inching up a bit. Very different reaction compared to March 2020. It's notable.

What's your read on the current downturn? Friday felt like people were throwing in the towel...sell now and ask questions later. Futures for Monday and global markets look to be continuing that mentality. The rhetoric from the administration only seems to be fanning more negative sentiment. I started this slide with a ton of cash. Finally started adding to some existing positions on Thursday and Friday, haven't bought anything new. I remember having a similar feeling in March of 2020...should I be more patient...or should I be deploying more aggressively? One issue is at the recent high in February, market multiples were rich. Even if the S&P dips into bear market territory tomorrow, it's not going to be cheap. Same issue for my individual holdings. Yeah they are down but nothing is close to the levels in March of 2020 or 08/09. Finally, it is interesting to observe the market rapidly pricing in the tariff impact. It's going to take weeks and months before the effects show up in any hard data. Maybe we're in a new era and growth rates and earnings through Q1 are completely meaningless as the economy resets to some degree? Then again, I wouldn't be surprise to see a 180 to some degree with the tariffs if public pressure builds enough. But at the moment it appears both the Fed and White House are prepared to take a lot more pain. IDK, just a lot of different thoughts.

Tactically, you could be right. Long rates have fallen hard the last two days. But I would be thinking about the next question, that being, if rates fell another 50 to 100bps, when would you get out?

John, I appreciate this context because as a US based investor that hasn't owned a lot of international equities, I've been doing some due-diligence on Rockwool and trying to understand the A/B stock structure with the foundation owning a big chunk of the equity, etc. Not something you see in the US (at least I haven't). Interesting to learn this is somewhat common in Denmark. Thanks.

Yes. I also was going to reference 2022 when TIPS got hit with the rest of fixed income. I didn't own any at the time but I've made a mental note that even though inflation surged in 2022, TIPS took big market losses when the fed finally moved (intuitively one would think TIPS would do well in that type of environment). If you're holding to maturity it's no problem. But making a bet on long duration seems really risky. I worry that long-term rates could move materially higher (5%+) especially if there is some nutty tax-bill that pushes the deficit over $2 trillion or the economy goes into recession and stimulus starts again with borrowed money. Maybe Dalio and Jeffrey Gundlach are rubbing off on me too much but it feels like we're getting perilously close to the bond vigalantes checking the treasury market. Both parties seem to have embraced modern monetary theory whether they say so explicitly or not. I think it's just crazy that we're talking about cutting taxes with a budget deficit that is already over 6% of GDP and you have both Social Security and Medicare unambigously heading off a cliff within 7 years. I mean with Social Security, it literally says right on the statement that the program will not be able to fully fund payments by 2033. It probably is going to take some kind of financial crisis, which could be tipped off by rapidly rising rates, for meaningful budget reform. But the short of it is I'm personally staying away from duration. But of course, that's been the best place to be over the last two days!

I found it really interesting that bitcoin and ethereum rose today. As someone else pointed out, in 2022 especially, crypto traded like a bubble tech stock. Also interesting that gold was down.

I'm not selling anything but it's interesting to see perceived safe-havens like utilities, BRK and even gold decline today. Yesterday, they were holding up in the classical sense. Today seems more like a "sell everything" kind of day.

Two situations I've seen in recent years that proved to be good signals were Greg Abel buying a lot of Berkshire in October 2022 and numerous executives of another favorite company, GGG, selling when the stock surged to the $90-95 per share range in 2024. I added to my Berkshire position shortly after Abel's form 4 hit. Wish I had been more aggressive in hindsight.

That's an interesting point and it reminds me of the history of banks. Banks and custodians formed over time to deal with the problem people face in a hard-money system...what the hell do you do with piles of gold coins that are at risk of theft or damage? ETFs seem to work well to gain exposure to many assets (especially real commodities) in an expedient way. Also, thanks @TwoCitiesCapital for your thoughts. I've been following this subject for 8 or 9 years and have sat on the sidelines. More recently I've been diving into the history of money, banking, currencies, etc. When you realize that every sovereign currency in history has been destroyed, some quickly and some slowly, it gives you another perspective.

Have there been any substantive cases against buying crypto ETFs? I mean this in the context of exposure via an ETF vs. owning tokens directly.

Visited Hilton Head Island in South Carolina in August. Was my first time there. Very nice area.

Well, it looks like the yield party is coming to an end. It has been fun. Glad I locked in some treasuries and CDs north of 5% at a range of maturities. Most will come due over the next 3 years. Bond funds may still offer some opportunities. Total return is working again. Some of the funds I've looked yield over 5% and when you look at the underlying holdings, they average 90-95 of par.

My wife is in a situation presently where she took a "lead" position within the healthcare group she's employed. It pays a little extra but has significantly increased the stress/headaches of her job. I've been trying to convince her to walk away from it even if they offered to double or triple her lead pay. It has drained her mental and emotional energy. Just isn't worth it.

I guess I could have just shortened up my inital post to, "I wonder if the bond vigilantes are going to return soon?" For now, you definitely could be right. But the fiscal situation here is so unsustainable especially with Medicare and Social Security BOTH headed for fiscal crisis within 5-10 years. It seems a market shock may be the only thing that will force some kind of reform. If long rates popped up to 6, 7 or 8%, that would be pretty wild.

Guys, guys, guys, lets not go down the politics rabbit hole. All I'm getting at is if the Democrats were to prevail in November, I think it's likely they wouldn't renew the current tax law which expires at the end of 2025 (they would try to raise revenue). Very hard to see the Republicans letting the tax bill expire. And hard to imagine either party cutting spending in any meaningful way. (Not commenting on the merits of any of this.) I'm just thinking about a situation similar to what occured in the UK in 2022 when Truss proposed tax cuts against an already sizeable deficit and the market wagged its finger as in, "not going to happen." It seems like we just keep marching in that direction.