Elias Stein
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Warren Buffett parks most
Berkshire Hathaway
‘c
money in ultra-safe US Treasuries, and individual investors may consider following Buffett’s lead now that yields are nearing 3%.
Treasury bills, which are U.S. government securities with maturities of less than a year, are a good alternative to money market funds and bank certificates of deposit. Interest is exempt from state and local taxes, unlike CDs. Investors can buy them through the government’s TreasuryDirect program or through banks and brokers.
Buffett, the longtime CEO of Berkshire Hathaway, prefers Treasury bills to other short-term debt such as commercial paper (a corporate IOU) because he never wants to worry about the safety of Berkshire’s cash, which stands at $105 billion at 30 June.
Treasury bills are sold with maturities of three, six, and 12 months, as well as four and eight weeks. The quarterly account now gives 2.5%; the six-month bill, 3.05%; and the one-year bill, 3.2%, according to Bloomberg. The yield rose from just above zero a year ago as the Federal Reserve raised short-term rates, with the main federal funds rate now at 2.25% to 2.5%.
Another way to get exposure to Treasuries is through exchange-traded funds like the $20 Billion
ETF that now yields 2.1%. It has an average maturity of about four months and holds US Treasury bonds maturing in a year or less.
For more yield and low interest rate risk, there is
An ETF that now yields nearly 3% with an average maturity of about two years.
Last week
Winning, interrupted
Minutes of Federal Open Market Committee meetings and speeches by several Federal Reserve presidents underscored that hawks remain in the majority at the central bank. It snapped a four-week winning streak for the
Nasdaq Composite,
and
Russell 2000.
Earnings from
Walmart
and
Home Depot
lifted shares of both retailers, helping lift the
in Tuesday. For the week, the Dow fell 0.2% to 33,706.74; The S&P 500 fell 1.2% to 4,228.48; and the Nasdaq lost 2.6% to 12,705.21.
The law of the land
President Biden signs the Inflation Reduction Act. The legislation, which narrowly passed both houses of Congress with only Democratic support, includes spending hundreds of billions of dollars on climate and health care programs — and raises taxes on big companies. It also includes a 1% excise tax on share buybacks effective January 1, 2023.
More housing problems
Sales of existing homes in the U.S. fell in July for a sixth straight month, another sign of a weakening housing market. Those sales fell to a seasonally adjusted annual rate of 4.81 million, down 5.9 percent from June and down 20.2 percent from a year earlier, according to the National Association of Realtors. Meanwhile, the inventory of unsold existing sales rose to 1.31 million as of July 31.
I’m still shopping
US retail spending in July was unchanged from June levels. Although this was below the previous month’s result, when spending rose 0.8%, there were some encouraging signs. Excluding gasoline and auto sales, retail sales rose 0.7%.
The target is missing
National retailer Target reported disappointing second-quarter results. The Minneapolis-based company blamed the result primarily on a reduction in inventory. On a GAAP basis, the company earned 39 cents per share in the quarter, down sharply from $3.65 in the corresponding period a year earlier.
China Delay
Economic growth in China slowed in July, leading to a cut in interest rates. China, which has the world’s second-largest economy, has suffered in part due to strict Covid-19 lockdowns. In response to the slowdown, the People’s Bank of China cut interest rates on two key interest rates by 0.1 percentage points, according to The Wall Street Journal.
A sonic boom
American Airlines Group
plans to buy up to 20 supersonic jets to speed up air travel. Boom Supersonic is developing the plane, called the Overture, which is designed to carry 65 to 80 passengers. American said the supersonic flights from Los Angeles to Honolulu — one of more than 600 routes worldwide — will take three hours, or “just half the time” of a standard jet, according to a news release this week.
Write to Andrew Barry c [email protected]