Did you know that during times of economic uncertainty, safe assets like Treasury bills can provide stability and impressive returns?

As we look at the global market, understanding where to place your investments to create a better future for yourself and your family is crucial.

In this edition of our newsletter, we’ll be looking at these topics :

• Treasury Bills Are The Best Place To Park Your Cash. Just Ask Warren Buffett: First, we’ll examine why investors are flocking to Treasury bills 💰

• How Nvidia, Microsoft And Other Tech Stocks Are Handling High Interest Rates: Next, we’ll learn how major tech companies are thriving despite rising interest rates 📊

• Biden’s Troubles: Finally, we’ll look at the blunders of the current administration and how America seems to be ready for a change 😱

Stay informed and make strategic decisions with our expert insights. Let’s dive in!

Treasury Bills Are The Best Place To Park Your Cash. Just Ask Warren Buffett 💰

Investors large and small are gravitating to Treasury bills, thanks to yields of 5.4%, tax benefits, and sleep-at-night security—and there’s no reason for them to stop.

For a while now, Treasuries with maturities of a year or less, known as T-bills, have offered more yield than other U.S. debt offerings.

That’s due to the so-called inverted yield curve, with short rates higher than long ones 📈

The 10-year treasury, for instance, yields 4.45%, while the three-month yields 5.39%.

Bills have also offered positive returns—about 2% this year, based on popular exchange-traded funds—while long-term Treasuries are in the red.

Buffett called T-bills “the safest investment there is,” saying he takes no chances with Berkshire’s cash.

Individual investors have been following Buffett’s lead 👀

Retail demand has been strong at the Treasury’s regular auctions of T-bills, of which there are $6 trillion outstanding.

Bills have a tax advantage, too 💸

Their interest is exempt from state and local taxes—a nice plus in high-tax states like New York and California, where marginal income-tax tax rates can top 10%.

How Nvidia, Microsoft And Other Tech Stocks Are Handling High Interest Rates 📊

Expectations of higher interest rates haven’t dealt a blow to technology stocks, an unusual occurrence. The reason?

Many tech companies now possess a rare profit potential 🤑

Many of the U.S.’s large technology firms are expected to grow fairly rapidly.

A large chunk of their valuations are comprised of profits that are expected to arrive in the far future, making them especially vulnerable to higher rates.

Normally, rising interest rates dent tech companies’ valuations.

Higher rates make future profits less valuable, thus lowering the multiple of near-term expected earnings that investors are willing to pay to own shares of these companies. 

Recently, rates haven’t ruined the tech stock party.

That gain has led to a rise in the index’s forward price/earnings multiple to about 26 times from roughly 25 times at the end of last year, meaning Wall Street sees these tech companies earnings more, not less, in future profit.

In fact, there has been essentially zero relationship between the federal fund's futures rate and the earnings multiples of growth technology stocks in the past two years ❌

The reason that tech valuations have remained elevated has to do with earnings and artificial intelligence.

The market is assuming a higher valuation for tech companies since earnings of AI-focused companies in particular are growing rapidly and surpassing analyst’s estimates.

The key is that growth is expected to be sustainable, making the total sum of future cash flow that these companies could generate larger, sending their valuations higher 🚀

That’s how these high-tech businesses have overpowered the impact of higher rates.

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Biden’s Troubles 😱

Joe Biden faces an uphill battle heading into the November 5 presidential elections.

Since his presidency began, the accumulated inflation rate is 20%, and US voters are feeling the pinch, no matter how much Biden says the economy is in great shape.

Beyond inflation, the US is in a chaotic state and the President is appeasing the radicals, which only encourages the insanity 🤯

Finally, the Biden Administration is signaling weakness abroad by not standing strong with our most important ally in the Middle East.

US voters seem to be ready for change, and Trump is the beneficiary of widespread disgruntlement 🗳️

Inner Circle Global Macro Update 🔍

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