As reported by Bloomberg on March 22nd, the bond market is implying that it is now safer to lend to Warren Buffet than the United States of America.
The two-year US Treasury note is currently yielding 1.09%, whereas Berkshire’s notes of the same maturity are yielding 3.5 basis points less. In other words, putting your money into a two-year US note is more of a risk than putting your money in Berkshire Hathaway. Beyond just Berkshire, Proctor and Gamble, Johnson and Johnson, and Lowe’s debt also traded at lower yields in the not so-distant past.
The chief fixed-income officer at Fifth Third Asset Management, which oversees 22 billion dollars dubbed this development as a “slap upside the head of the government.” In our view, America’s budget deficit is now 10% of GDP, thereby making it a perfect time for a wakeup call.
Another very important statistic is that by 2014, 5 of the G7 countries will have debt-to-GDP ratios of more than 100 percent, representing “acute” challenges in tackling high public debt.
With Portugal getting downgraded by Fitch today, and the IMF having to step in to bail out Greece, it won’t be long before our unparalleled leveraging and deficit spending come back to haunt us.
-- GROUP 8
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6 comments:
I have a web site where I give advise on penny stocks and stocks under five dollars. I have many years of experience with these type of stocks. If their is anyone that is interested in these type of stocks you can check ouy my web site by just clicking my name. I would like to comment . I do not think that we will see real improvement in the economy until we see sustainable job growth. Recently the number of jobs created has been running around two hundred thousand a month.The GDP report that just came out recently was only 2% this is not nearly high enough to sustain employment growth of two hundred thousand jobs a month Another factor holding things back is stagnation of wages and benifits. This is good for business owners but terrible news for workers.
I am a astute value investor. I do not believe that warren buffett is the value investor he was years ago if he was he most certainly would have caught the spectacular comeback of ford motor. The stock was trading at just 1 dollar a share two years ago the shares trade at 10 dollars today and the company is well on its way to becoming the leading world automobile company. another example is apple computer the shares traded at just 5 dollars in 1998 today they trade at 440 dollars. He did not see this one either their are numerous other examples. I could go on and on their are dozens of stocks major companies to. Warren tends to concentrate on megacap stocks. Their returns tend to be lower Warren has stated this many times.
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