Bonds!

[Marco Van Basten]

3 minutes ago, dwy000 said:

USAID actual reductions (most of the DOGE stuff) is not all that meaningful.  There's no change in taxation on foundations and endowments (that can't be done by executive order).  Medicaid changes don't kick in for 2-3 years.  

USAID is $75bn I believe, student loans is $100-200bn per annum, change in taxation on foundations and endowments is in the tax bill.  Medicaid changes kick in December of 2026.  

[dwy000]

Just now, Marco Van Basten said:

USAID is $75bn I believe, student loans is $100-200bn per annum, change in taxation on foundations and endowments is in the tax bill.  Medicaid changes kick in December of 2026.  

USAID is $24bn (that includes the amounts the courts have since required to be paid).  The language on endowments is not a blanket - it requires the Treasury Secretary to specify specific endowments due to support of terrorism, detail that evidence and it can be challenged in court.  So years and years if ever.  Medicaid cuts will have zero impact on anything until start of 2027 (if at all).  The student loan payments are already in the budget.  

[Blake Hampton]

This'll cover it:

 

Trump Admin Savings

 

Millions of fake social security recipients: $357 billion

Colombian tranny pageants: $53 billion

Gazan condoms: $151 billion

 

Source: https://gettrumpwatches.com/?srsltid=AfmBOopufnxZeI3d0HNLaeECoPgKS-qR8ZOdxQ2ZHCP0LNguv8xA2uIJ

[Blake Hampton]

Additional source:

[Dalal.Holdings]

 

Euro is up 9% YTD vs dollar. Enjoy your 5% yielding 20 year notes

[Blake Hampton]

20 minutes ago, Dalal.Holdings said:

Euro is up 9% YTD vs dollar. Enjoy your 5% yielding 20 year notes

 

Those dirty dollar dumpers.

[Gregmal]

Well thank goodness not everyone’s a slave to the almighty “ytd” metric 

[Dalal.Holdings]

Other countries’ currencies are rising, dollar is not falling. Follow the party line as comrade Bessent says.

 

GDP and stonk prices (measured in USD) go up, but USD goes down

 

Those Euro stocks are looking better and better

 

 

Edited May 23, 2025 by Dalal.Holdings

[Spekulatius]

1 hour ago, Dalal.Holdings said:

Other countries’ currencies are rising, dollar is not falling. Follow the party line as comrade Bessent says.

 

GDP and stonk prices (measured in USD) go up, but USD goes down

 

Those Euro stocks are looking better and better

 

 

Well almost every other country currency rising and the USD falling is the same thing. To be fair, a weaker currency was one of the goals of this administration to reduce the trade deficit. Of course it will also mean less buying power for most people. Two sides of the same coin,  regardless how you spin it.

[Dalal.Holdings]

2 hours ago, Spekulatius said:

Well almost every other country currency rising and the USD falling is the same thing. To be fair, a weaker currency was one of the goals of this administration to reduce the trade deficit. Of course it will also mean less buying power for most people. Two sides of the same coin,  regardless how you spin it.

 

Given Trump's repeated "Dollar is too strong" statements, it's hard to be surprised by this, similar to oil bulls being rug pulled on oil prices coming down when Trump/Bessent made clear low oil prices are v important to them.

 

A weak dollar is like another layer of Tariffs on all imports in that it makes imports more expensive. It does boost exports (and the reported dollar profits of multinationals that do business in other currencies).

 

As an American investor though, the play was to use strong dollars to purchase overseas assets, especially when the USD was at multiyear highs at the beginning of the year on the eve of the inauguration of this administration (the Euro was near USD parity). Hence, YTD performance matters in this case.

 

Ironically, up until this year, the mantra was "Live in Europe, invest in America"...some of us did the exact opposite.

[gfp]

Not to mention, my USD fairfax went up 1% today while my CAD fairfax was flat at the close and down most of the day.  I feel rich already

[Buckeye]

This is an interesting discussion on TCAF with Richard Bernstein on the current bond set-up. Spoiler alert…Richard Bernstein doesn’t really think there’s much of an issue currently, but he does believe that rates may need to go higher? Josh Brown pushes back with the theory of demand destruction caused by tariffs, forcing the Fed to lower. 

“Real men don’t panic over bonds“ 

 

https://podcasts.apple.com/us/podcast/the-compound-and-friends/id1456467014?i=1000709557087

Edited May 24, 2025 by Buckeye

[Dalal.Holdings]

https://finance.yahoo.com/news/warren-buffett-big-worry-over-161500718.html

 

Quote

“We wouldn't want to be owning anything that we thought was in a currency that was really going to hell, and that's the big thing we worry about with the United States currency,” he said candidly.

 

Quote

“Fiscal policy is what scares me in the U.S.,” Buffett said. “All the motivations are to do things that could cause a lot of trouble.”

 

Wonder why Warren save this theme for his very last AGM...

 

Bah, I'm sure it's nothing

 

[73 Reds]

4 minutes ago, Dalal.Holdings said:

https://finance.yahoo.com/news/warren-buffett-big-worry-over-161500718.html

 

 

 

Wonder why Warren save this theme for his very last AGM...

 

Bah, I'm sure it's nothing

 

Yet he continues to stockpile the same very worrisome currency.  Most of us agree with his sentiment; the issue is what to do about it, and when.  For my $, dominant businesses and real estate make the most sense. 

[Dalal.Holdings]

2 hours ago, 73 Reds said:

Yet he continues to stockpile the same very worrisome currency.  Most of us agree with his sentiment; the issue is what to do about it, and when.  For my $, dominant businesses and real estate make the most sense. 

 

He's only in short term T-bills, notably refuses to go out in duration to get an extra 80 bps of yield unlike some folks

[73 Reds]

18 minutes ago, Dalal.Holdings said:

 

He's only in short term T-bills, notably refuses to go out in duration to get an extra 80 bps of yield unlike some folks

Of course, they're simply a parking lot.  But he's paying up for long-term parking.

[Dalal.Holdings]

56 minutes ago, 73 Reds said:

Of course, they're simply a parking lot.  But he's paying up for long-term parking.

 

He's not paying anything, he's getting paid. And it's very short term parking (not long term parking) whereby he has the optionality to quickly dump the T-bills and move onto something else.

 

And note--he's also been dumping BAC which has long duration assets on its books.

[Munger_Disciple]

16 minutes ago, Dalal.Holdings said:

 

He's not paying anything, he's getting paid. And it's very short term parking (not long term parking) whereby he has the optionality to quickly dump the T-bills and move onto something else.

 

And note--he's also been dumping BAC which has long duration assets on its books.

 

Even the fixed income portion of BRK ($15 Billion) balance sheet has very short duration ($9B under one year maturity, 4.4B in 1-5 year maturities) in addition to large T-bill holding. Buffett is very negative on LT bonds. 

Edited May 24, 2025 by Munger_Disciple

[73 Reds]

1 hour ago, Dalal.Holdings said:

 

He's not paying anything, he's getting paid. And it's very short term parking (not long term parking) whereby he has the optionality to quickly dump the T-bills and move onto something else.

 

And note--he's also been dumping BAC which has long duration assets on its books.

He (we) is (are) getting paid a very subpar return.  Problem is, unless something changes quite dramatically, such returns will continue on that portion of Berkshire's assets.

[Gregmal]

Totally. If you stay in short term parking for too long you’re likely just costing yourself more than if you just did the monthly pass. 
 

Buffett has pretty consistently had tons of cash on hand. There’s been plenty of things he could’ve bought that would’ve done better going back many years now. Some of the things he has bought have done poorly. So the appeal to authority has little value to me. Same as when he was extremely bearish in May 2020. 

[wabuffo]

He (we) is (are) getting paid a very subpar return. 

 

Big cash pools value safety (in terms of their counter-party), then liquidity and lastly, yield.  There are annual polls that prove this.  Its like 80% say safety is the no. 1 priority, 15% value liquidity and only 5% prioritize yield. 

 

When I say big cash pools, I'm talking about corporations, asset managers, forex desks, etc.    As the depositors in SVB learned the hard way, you don't keep billions on deposit at a bank.   That's why Buffett holds BRK's cash in T-Bills almost regardless of the yield he's getting.

 

Bill

[Dalal.Holdings]

Cash is trash...until there's a bear market, of course. Then, those who hold cash (or ST bonds) can scoop up distressed assets at distressed prices as Warren has demonstrated many times during his career. That's why he has alpha and so many don't.

 

Those who were all-in at the top get to ride the bear market all the way down and maybe watch everything they own get cut in half. If they were levered, the damage is much worse.

 

Either way, this is the bonds thread. While T-bills might provide "subpar" returns of 4.2%, 30 year treasury bonds provide a whopping ~5% return for locking your money in for 30 years while taking on massive interest rate risk. I'm sure those extra 80 bp of yield will be worth it...good luck to those who think that's a good deal. I know Warren doesn't and neither do I.

 

Contrary to those who are buying 20, 30 year bonds, I'm taking the opposite position: I still have 26 years left on my mortgage. If the dollar crumbles, a 30 yr fixed mortgage becomes a great position to be in while a 30 year fixed bond an equally atrocious position. Default risk is irrelevant. Act accordingly.

[Munger_Disciple]

10 minutes ago, wabuffo said:

He (we) is (are) getting paid a very subpar return. 

 

Big cash pools value safety (in terms of their counter-party), then liquidity and lastly, yield.  There are annual polls that prove this.  Its like 80% say safety is the no. 1 priority, 15% value liquidity and only 5% prioritize yield. 

 

When I say big cash pools, I'm talking about corporations, asset managers, forex desks, etc.    As the depositors in SVB learned the hard way, you don't keep billions on deposit at a bank.   That's why Buffett holds BRK's cash in T-Bills almost regardless of the yield he's getting.

 

Bill

 

 

In the case of Berkshire, I think Buffett & Abel not only like the safety and zero counter-party risk of T-bills, they like the optionality they provide to acquire practically any asset in the world at any time of their choosing if the opportunity presents itself. Any yield is just icing on the cake. In fact Buffett said at the 2024 annual meeting that they would keep their cash equivalents in treasury bills even if they yield nothing. 

 

The optionality of cash/T-bills is very undervalued IMO.

Edited May 24, 2025 by Munger_Disciple

[Blake Hampton]

1 hour ago, Dalal.Holdings said:

Cash is trash...until there's a bear market, of course. Then, those who hold cash (or ST bonds) can scoop up distressed assets at distressed prices as Warren has demonstrated many times during his career. That's why he has alpha and so many don't.

 

Those who were all-in at the top get to ride the bear market all the way down and maybe watch everything they own get cut in half. If they were levered, the damage is much worse.

 

Either way, this is the bonds thread. While T-bills might provide "subpar" returns of 4.2%, 30 year treasury bonds provide a whopping ~5% return for locking your money in for 30 years while taking on massive interest rate risk. I'm sure those extra 80 bp of yield will be worth it...good luck to those who think that's a good deal. I know Warren doesn't and neither do I.

 

Contrary to those who are buying 20, 30 year bonds, I'm taking the opposite position: I still have 26 years left on my mortgage. If the dollar crumbles, a 30 yr fixed mortgage becomes a great position to be in while a 30 year fixed bond an equally atrocious position. Default risk is irrelevant. Act accordingly.

 

+1

[Red Lion]

3 hours ago, Dalal.Holdings said:

Either way, this is the bonds thread. While T-bills might provide "subpar" returns of 4.2%, 30 year treasury bonds provide a whopping ~5% return for locking your money in for 30 years while taking on massive interest rate risk. I'm sure those extra 80 bp of yield will be worth it.

 

I'd agree with this, but the interest rate risk goes both ways. If we enter a deep bear market, odds are pretty good that interest rates end up going down at the same time stock prices do, and that works out to a large short term gain on the long term bonds. 

 

I agree with most of what you're saying, but I think there's just as much risk to the downside on long term rates as to the upside, and since these are liquid instruments they could certainly make sense as part of an asset allocation strategy that hops between stocks and bonds either opportunistically or intrinsically (like a 60/40 strategy that gets reallocated). 

 

For the record, I don't own any long term bonds, and I do have a chunk in T-bills (mostly just for cash reserves and private investments I plan to make over the next few years). My investments are in real estate/a closely held business/stocks, and I also think 30 year mortgages (of which I have 3) are a good hedge against a weakening dollar. 

 

I just think there could be a very good reason to have 30-40% in long term treasuries if you're a better macro trader than me. It's worked out great in many market collapses of the past.