Ten Reasons To Buy Bonds

Earlier this morning we presented the first quarter investor letter from Broyhill Asset Management’s Affinity hedge fund where we highlighted their contrarian bet on long-term treasuries. In a time when seemingly everyone is betting on inflation, Broyhill has taken a converse stance and thinks caution is warranted. They anticipate an acceleration away from risk assets and into fixed income. They recently posted up the rationale behind this position on their blog View from the Blue Ridge and we wanted to highlight the key takeaways from their deflationary wager. Thus, we continue our impromptu inflation versus deflation debate as we earlier cataloged how hedge fund manager Kyle Bass sees inflation & currency devaluation in store around the globe.

Believe it or not, Broyhill had previously been short treasuries and covered in March. They’ve since gone long and see the 10 year treasury as an effective hedge against deflation. They have been buying here and will continue to do so on any weakness. Investors wishing to jump on this seemingly contrarian bet can buy exchange traded fund IEF for 10 year treasuries, or TLT for 30 year treasuries if you wanted a longer duration. This investment of course is in stark contrast to the myriad of other hedge funds that have been shorting long-term treasuries. Hedge fund Broyhill’s rationale for owning bonds is refreshingly presented with various research found via the financial blogosphere. You can of course keep up with Broyhill’s latest thoughts on their blog, View from the Blue Ridge.

via Ten Reasons To Buy Bonds ~ market folly.

Tax Receipts Plunge … $83 Billion April Record Deficit

US More Bankrupt Than Ever – $83 Billion April Deficit Is Record For The Month, $30 Billion Worse Than Expected As Tax Receipts Plunge

Well, if nothing else, we now know officially just how great those tax receipts were. Good thing too – we can end that whole superficial tax receipt debate and focus on important things. April’s tax deficit of $83 billion was the highest April deficit on record. America is now more bankrupt than ever. Income was $245.3 billion, 8% below the total recorded last April. Spending was $328.0 billion, up 14% year-over-year. A year ago in April the deficit was $20.9 billion. And here is the data: tax receipts down 7.9% YoY, Individual Income Tax down 21.5% YoY, and more importantly, spending: Total spending up 14.2%, National defense up 17%, Medicare up 39.4%, Social Security up 4.2% and General Government up 5.6%. At least interest payments were down 9.5%.

And now back to your regularly scheduled bankrupt country market melt up.

via US More Bankrupt Than Ever – $83 Billion April Deficit Is Record For The Month, $30 Billion Worse Than Expected As Tax Receipts Plunge | zero hedge.