The steady drum beat of federal funding threats totaling billions of dollars is renewing municipal investors’ qualms about lower-rated state and local borrowers https://t.co/9zhOe57p09 ...

Competition is heating up in the rapidly growing arena of municipal-bond ETFs https://t.co/2og0PCqtBR ...

Fixed Income Strategy - The firm favors credit over duration in fixed income, particularly municipal bonds due to strong fundamentals like strong state rainy day funds and high savings rates [2][3] - The firm also likes senior loans and emerging market debt, now that some of the liberation day issues are behind us [3] - The firm prefers higher quality credit, such as senior loans, which have historically performed well during rate cut cycles [4] Economic Outlook - Employment markets are showing signs of economic slowdown [6] - The firm is focused on the government shutdown, the pace of Fed rate cuts, and third-quarter earnings as key factors influencing investment decisions [6] - The potential tail risks of the government shutdown include furlowed jobs becoming eliminated jobs, which could impact the job market [6] - The lack of economic data due to the government shutdown may hinder the Fed's decision-making process regarding rate cuts [7] Equity Market Perspective - Third-quarter earnings are expected to be strong, with consensus estimates of 88% year-over-year growth, potentially led by tech stocks [8] - US markets are trading at a premium versus history, justified by tech and AI [9] - The structural trend of artificial intelligence is alive and well and here to stay and that will drive US stocks higher [16] - AI companies are larger and more profitable this time compared to the late 90s, with corporations integrating AI into their workforce to increase productivity and revenues [15][16] - The S&P year to date is up in the mid-teens, and usually markets end higher by the time the year ends [17]

Investment Flows - Municipal-bond funds experienced the largest cash inflow since at least 2007 [1]

Market Trends & Interest Rates - Municipal bonds experienced a rally following weaker-than-expected job growth [1] - The weaker job growth increased expectations that the Federal Reserve will lower interest rates this year [1] - Lower interest rates are anticipated to help stimulate the economy [1]

Investment Performance - Municipal bonds have outperformed taxable bonds in after-tax returns for most investors over the past 15 years [1]

Welcome back to Worldwide Exchange. We are tracking net ETF lows that are now over $760 billion year to date. We're also tracking the moves above and below the 30-day moving averages for the popular index funds, the SPY and the triple Q's.You see that big spike on Wednesday. Investors apparently buying the dip on mega tech that dominates both ETFs on that day. This week, the Capital Group Municipal High Income ETF, ticker CGHM, that holds municipal bonds, saw the top inflows, the VCIT intermediate bond ETF, ...

Financial Disclosure & Investment Activities - Federal officials, including the president, are required to report purchases of certain asset types such as bonds and stocks [1][2] - The disclosure included over 690 transactions starting the day after inauguration, indicating significant investment activity [6][9] - The report is a snapshot and doesn't show the evolution of holdings over time [8] - The disclosure primarily shows purchases, suggesting a buy-and-hold strategy rather than frequent trading [9] Trump's Business Empire & Income - Trump's business empire, including properties like Mara Lago and golf resorts, likely generates substantial income [5][6] - Trump Media and Technology Group, including Truth Social and crypto ventures, is a significant part of his net wealth [5][7] - Business ventures, including promoting golf courses, indicate financial success during Trump's second term [7] Asset Allocation - The disclosure reveals purchases of corporate bonds, which were not prominent in his first term [3][4] - He held municipal bonds when he ran for president the third time [4]

Market & Rate Cut Expectations - The market anticipates a rate cut in September, with a high probability (96% chance of a 25 basis point cut and a 4% chance of a 50 basis point cut) factored into expectations [2][3] - PPI is expected to align with expectations, similar to CPI, and is unlikely to alter the prevailing narrative of a rate cut [2][3] - The market is primarily focused on the Federal Reserve's actions in September and the potential for a new trade agreement [6] Geopolitical Risk - The meeting between Vladimir Putin and President Trump in Alaska is not expected to pose a direct market risk, despite potential geopolitical and precedent risks [4][5] AI Infrastructure - The discussion highlights the ongoing AI revolution and the investment opportunities within AI infrastructure [6][7] - Companies are announcing tens of billions of dollars of investment into AI infrastructure [9] - AECOM is identified as a potential beneficiary of AI infrastructure spending, providing engineering, consulting, and construction services to data centers [8][9][10] Municipal Bonds - Municipal bonds have faced price struggles year-to-date due to issuers pulling forward new issuance [10][11] - Reduced issuance for the remainder of the year, coupled with consistent demand, is expected to drive prices higher [11] - Tax-free income from municipal bonds is attractive to high net worth investors, making them a favored investment [12] - Investors focused on income potential should prioritize the coupon from bond ETFs and consider buying individual bonds for a dependable income stream and principal protection [13][14]

Portfolio Strategy - Brown Brothers Harryman focuses on finding and growing value for clients managing money on a generational basis [3] - The firm's portfolio construction includes approximately 30% in fixed income, 40-45% in public equities diversified globally, and a significant focus on alternative investments [4] Alternative Investments - The firm is finding value in structured credit within fixed income, including asset-backed securities, CLOs, CNBS, and RMBBS, which are typically accessed privately [6] - Single A rated tranches of structured credit vehicles are delivering 200 basis points (2%) more return than corporate equivalents, with historical capital preservation [8] Municipal Bonds - High-quality municipal bonds with a duration of four to five years, funding America's infrastructure, can generate returns around 7% on a tax-equivalent basis for high-income earners in high-income tax jurisdictions [9][10] Stock Selection - The firm invests in long-term durable businesses with massive competitive advantages, including some of the "Mag Seven" companies [11] - Specific companies mentioned include Microsoft (due to Azure's growth in AI), Mastercard, Visa, and Transdime [11][12] - Transdime, an aerospace aftermarket company that IPOed in 2006, has compounded in excess of 30% since then [13][14]