Latest news with #Yellen
Forbes
7 days ago
- Business
- Forbes
Big, Beautiful Bill Builds Contrarian Case For Bonds
The 'big, beautiful bill' has turned into a bitter pill for bonds. As you've undoubtedly heard, bond buyers aren't exactly thrilled about lending more money to a $36 trillion debtor that's digging itself deeper into a financial ditch. Prior to the proposed 'One Big Beautiful Bill Act' (OBBBA), the Congressional Budget Office (CBO)—famous for crunching numbers through rose-colored glasses—already projected a $1.9 trillion deficit for 2025. Now, the CBO estimates that the current House-passed version of OBBBA will add an extra $3.8 trillion to the national debt over the next decade. This leaves Uncle Sam staring into a $40 trillion hole, deepening by roughly $2 trillion each year. Treasury bond yields spiked recently as buyers vanished. Last Wednesday, a seven-week stock rally reversed midday when the U.S. struggled through a weak $16 billion auction of 20-year bonds. The tepid demand for these long-dated Treasuries confirmed what many already thought—with Uncle Sam spending like a drunken sailor, who'd lend him more? Thus, the popular mainstream conclusion: The U.S. has entered its final 'doom loop' debtor stage. Rates are rising as bond investors demand higher compensation to offset the credit risk posed by Uncle Sam's ugly finances (you know, $40 trillion…). Higher rates increase the country's financing costs, which worsens the debt situation, which leads investors to demand even higher rates, and so forth. This implies we should avoid bonds entirely. To borrow a concept from billionaire investment manager Howard Marks, this is a 'first level' interpretation. It is accurate on paper but misses the nuances. In a truly free market, the 'bond doom loop' narrative would be valid. But in the real world that you and I inhabit, my fellow contrarians, we must elevate our thinking to the second level for more nuanced consideration. Here, we recognize the 'Quiet QE' the U.S. Treasury began under then-Secretary Janet Yellen. She subtly influenced the bond market by issuing short-term debt rather than long-dated Treasuries. This maneuver reduced the supply of long-term bonds, thereby suppressing long-term yields. (The same number of buyers chased fewer long-dated bonds, pushing prices higher and yields lower.) This strategic pivot was significant. At the end of 2019, short-term bills represented just 15% of marketable U.S. debt. By 2024, Yellen funded 75% of the deficit via the short end of the yield curve. Two summers ago at Contrarian Outlook, we identified this Quiet QE interplay between Yellen and Fed Chair Jay Powell. Renowned economist Nouriel Roubini published a paper 12 months later identifying this 'activist Treasury issuance' (ATI) as Uncle Sam's favorite plumbing tweak. Roubini confirmed the U.S. Treasury is, shall we say, finessing debt issuance to nudge longer-term rates lower than they'd naturally be. Without ATI, the 10-year Treasury yield would be 30 to 50 basis points higher—equivalent to up to two rate hikes in the Fed Funds rate. In other words, the 10-year yield would top 5% today if not for Quiet QE. And the cost of borrowing for business (lending rates) and individuals (mortgage rates) would be notably higher. Current Treasury Secretary Scott Bessent publicly criticized this tactic but has quietly continued it. Year-to-date, the Treasury has financed 80% of its funding needs through short-term issuance. If we witness more weak auctions like last week's, Bessent could very well lean even harder into lower cost short-term borrowing. Short-term rates are influenced primarily by the Federal Reserve rather than the broader bond market. And Jay Powell's term ends in less than a year, when President Trump will likely appoint an ally like Kevin Warsh, Kevin Hassett, or Judy Shelton, who will cooperate with the administration to lower the Fed Funds rate. A lower Fed rate will in turn reduce short-term Treasury yields. With 80% of issuance short term, this will significantly lower debt-service costs. In fact, this is already happening. Fellow financial author Mel Mattison notes that total interest on the public debt is declining year-over-year despite a ballooning deficit! Mel reminds us that Powell didn't start cutting the Fed Funds Rate until last September. So, this fall the decline in interest payments will really start showing up in the year-over-year data. More evidence against the case of the 'interest rate doom loopers.' Does this fix the giant US debt problem? Of course not. But Mel's point is that our politicians and central bankers have 'creative options' at their disposal. Vanilla investors tend to glance at the surface and move on. But we careful contrarians appreciate the nuances and gear our income portfolios accordingly. The somewhat-secret swap to short-term debt should bring a ceiling on long-term yields. Bessent, after all, is not going to tolerate a higher 10-year yield that boosts interest on the debt. He wants a cap on long rates, which will provide a floor beneath the bond market. He'll get one by limiting long-dated bond supply. Viewed through this lens, our DoubleLine bond funds look attractive here. If long rates are near a high watermark, then the prices of the paper owned by DoubleLine will enjoy a yield-driven tailwind. DoubleLine Yield Opportunities Fund (DLY) yields 9.1% and trades at a 2% discount to its net asset value (NAV), while DoubleLine Income Solutions Fund (DSL) pays an 11% yield and trades at par. Doubleline CEFs Contrarian Outlook These two bond portfolios are also supported by a strengthening economy. The negative first-quarter GDP print was likely the most bullish development for the real economy. Trump and Bessent will make sure we don't experience negative GDP growth in the second quarter. Consecutive negative quarters would officially signal a recession. They don't want this scarlet letter heading towards the midterms. Trump and Bessent no longer need an economic slowdown to push long-term yields lower—they'll simply work with the short end of the bond market from here. Political pressure on Powell, the 'lame duck' , will ease. As will pressure on the long end of the curve. Let's ignore the mainstream Chicken Littles declaring the end of bonds. These 'first level' thinkers overlook the power of coordinated Treasury and Fed policy. Here at Contrarian Outlook we recognize the monetary 'creativity'—and profit from it. Let's keep enjoying these DoubleLine monthly payers yielding up to 11%. Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever. Disclosure: none
Yahoo
06-05-2025
- Business
- Yahoo
Rags to riches: a local business owner's story
(COLORADO SPRINGS) — Mitchell Yellen was abandoned at the age of 11 by his mother at a Boy Scout camp in New York, and left with a father whom he couldn't rely on. Yellen said, 'I just remember eating Swanson TV dinners every night, which is what we had. We didn't have a lot of money. My father worked very hard, but he was very distant, not very emotional. So I was never connected with him, wasn't really connected with him his whole life. I was on my own, and it made me very independent.' Yellen never graduated from high school or college. However, he went west to California to pursue Hollywood and was even signed by John Travolta's manager. There, he said he was on the wrong path, but after meeting his wife and reconnecting with God started in the investment world. In the early 2000's Yellen moved to Colorado and started with buying his first business, Taylor Fencing. Since then, he has started a wedding event center in Black Forest, The Garden of the Gods Cafe, The Till, and many more businesses. 'What's that old saying, adapt, migrate, or become extinct. And I decided to adapt.' Yellen commented, 'I went through a lot of challenges as a result of that because my childhood was filled with drugs, and I found myself really stumbling through life, never went to college, never went to high school, so I was just trying to figure things out.' His most recent venture is the Courtyard Collective, Opening on Sunday, May 18. Complete with pickle ball courts out front and plenty of patio room– The Courtyard Collective will have Dad's Donuts and The Garden of the God's Cafe for the morning, Campfire Pizza, an event hall, and a restaurant with a menu created by a chef who was trained in Michelin-star restaurants. FOX21 News sat down with the owner and head chef, who walked us through the one-of-a-kind sourcing system they created to ensure the food is fresh, clean, and sustainably sourced as it gets. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
20-04-2025
- Business
- Yahoo
CEO of $3 billion company asks himself one question before bed every single night—and he urges Gen Z to do the same
Like Gen Z, this self-made CEO believes in the power of manifesting success—but he insists that visualization alone isn't enough. It has to be backed by relentless commitment and daily accountability. That's why, every single night, he asks himself this one simple but revealing question. What do you ask yourself before bed? Some list things they're grateful for. Others frantically run through their never-ending to-do list. Sheldon Yellen, CEO of Belfor, rates his productivity for the day—and urges Gen Z career starters to do the same. 'Every night, when I'm getting ready, washing up, brushing my teeth, I look in the mirror—I physically look in the mirror—and answer one question every night,' the $3 billion-a-year disaster recovery chief exec explains his daily high-performance habit to Fortune. 'That question, it's a simple question, but it's a difficult answer: How productive were you today? I ask myself that question every single night and I answer it as honestly as I can.' Yellen then gives himself a score (1% being the worst)—and he says, he wouldn't be able to sleep if he got bottom marks. 'I'd start working,' the self-made billionaire adds. "When I mentor young people, I tell them: 'Every day is your day. Today is your day. But when you look in the mirror tonight, how much of it did you actually make count? Were you productive for 65%? 72%? 81%?' Of course, the evening exercise is easy to cheat—after all, it's not a real exam, and you're the one keeping score. But it serves as a powerful reminder that your success is in your hands. Yellen is a prime example of this: Growing up in poverty, he started working as a dishwasher at just 11 years old in a Coney Island diner before getting a gig at an affluent men's health club, Southfield Athletic Club, in Detroit. 'I started out shining shoes and cleaning toilets, urinals and the shower area, and I did the laundry,' the 67-year-old recalls. 'I took full advantage of these opportunities to do whatever I was doing the best I could do. I believed that if you did it long enough, somebody would notice—and they did, and so more opportunity kept presenting itself to me at a young age.' After dropping out of high school, Yellen says he worked seven days a week—including 'on the streets'—to turn his life around. He shined shoes, washed cars, chauffeured entertainers in limousines, and hustled until he landed in the restoration industry at 26 years old. Since then, he's climbed the ranks at Belfor (then known as Inrecon) from its 19th employee to CEO of around 12,000 employees worldwide. Under his helm, Belfor has become the world's largest disaster recovery company—it receives around 330,000 callouts a year to deal with the fallout from hurricanes, flooding, terrorist attacks, and more. Over the course of four decades at the company, Yellen has overseen the clean-up after 9/11, Hurricane Katrina, and the 2011 Thai floods, to name a few. 'I believe if you lay down at night and you dream it and you visualize it, and then believe it, you can be it—I really do,' Yellen says of his impressive journey to the top. 'I came from a family raised on welfare. There was no guarantee I'd be where I'm at. I dreamt. I visualized it. I hear it in song. I believed it. I still believe it.' But of course, visualizing success—which Yellen describes as mapping out a path forward—is just one piece of the puzzle. 'All that's needed is the commitment,' he adds. Like holding yourself accountable every night and reviewing your productivity with complete honesty. 'Now, you got to have patience. It doesn't happen overnight, but if you're committed and you get others to believe in your commitment, they will help you along.' This story was originally featured on Sign in to access your portfolio
Yahoo
18-04-2025
- Business
- Yahoo
Opinion - Janet Yellen is wrong about US manufacturing — and pretty much everything else
Former Treasury Secretary Janet Yellen told the crew at CNBC this week that President Trump's goal of bringing manufacturing back to the United States was a 'pipedream.' It was an odd remark, given how her former boss, Joe Biden, ran for president on the prospect that he could revive manufacturing in the U.S. — the central pillar of his promise to rebuild the economy 'from the bottom up and middle out.' Did Yellen not believe Biden's campaign pitch? Was she not on board with the CHIPS Act, which threw tens of billions of dollars at semiconductor firms to encourage their shifting production to the U.S.? Yellen also claims she does not understand the rationale for Trump's tariff war, which she calls a 'self-inflicted wound.' When Biden ran for president in 2020, he promised to do away with tariffs President Trump had imposed on China. Not only did he keep those tariffs in place, he added to them in 2024, trying to protect America's industries by putting a 100 percent tariff on imports of Chinese electric vehicles and slapping solar panels with a 50 percent duty, among other assorted products. Did Yellen protest those taxes on imports from China? In short, is Yellen pessimistic about U.S. manufacturing and negative on tariffs because it is Trump at the helm or because she has strongly held convictions that the U.S. cannot compete? If the latter is true, she should have gone public instead of insisting that billions of taxpayer dollars be thrown at an impossible cause. Ironically, Yellen made her disparaging remarks the same day Nvidia announced that, for the first time ever, it planned to manufacture its AI supercomputers entirely in the U.S. In addition, the powerhouse chip maker announced in a blog post that, 'Together with leading manufacturing partners, the company has commissioned more than a million square feet of manufacturing space to build and test NVIDIA Blackwell chips in Arizona and AI supercomputers in Texas.' Overall, the company said it plans, with its partners, to create up to $500 billion of AI infrastructure in the U.S. within the next four years. Nvidia is not the only company that has announced new investments in the U.S. since Trump took over the Oval Office again. Just a few of the other firms that have pledged additional investments include: Johnson & Johnson, promising $55 billion in investment over the next four years; Softbank, which announced a $100 billion investment over the next four years; Novartis, which plans to spend $23 billion to build and expand 10 facilities in the U.S.; Lilly, which will more than double its U.S. manufacturing investment by adding four new pharmaceutical manufacturing sites; and Taiwan Semiconductor Manufacturing Company ,which will invest an additional $100 billion into its U.S. production facilities. There have been (and will be) others. Trump's tariffs have created plenty of incentives for companies deciding that the best way to access U.S. consumers, the biggest global market, is to manufacture here at home. Bringing manufacturing home to the U.S. is clearly not a 'pipedream.' But it will look different than it has in the past. The AI and robotics revolution means that labor is shrinking over time. Rising domestic production will still create jobs, but not as many as would have been the case a decade ago. Historically, American firms had a tough time competing as U.S. wages were (and are still) substantially higher than they are in, say, China or Vietnam. But, as fewer workers are needed to produce goods in highly automated factories, the wage disparity shrinks. The other big change that improves U.S. competitiveness is the importance of cheap energy. Germany, Europe's powerhouse manufacturing hub, has endured two years of recession, as the country struggles with, among other things, high energy costs brought about by unrealistic 'green' policies. In 2024, the average household in Germany paid approximately 40 cents per kilowatt-hour (kWh) for electricity, compared to the U.S. average of about 16 cents per kWh. The price paid by industrial users in Germany has been several times that of the U.S., moving the government to provide subsidies to manufacturers. Meanwhile, the U.S. is sitting pretty. We have almost unlimited fossil fuels available, and thanks to Trump's pro-energy policies, more is on the way. Abundant low-cost power will be an important inducement for foreign countries looking to lower costs. Finally, the Trump White House is committed to providing a low tax and light regulatory regime for businesses. This, too, will attract investment. Because of these advantages, Yellen will likely be proven wrong. This is not a shock. She remains wrong on a host of issues — including inflation, attributing the decades-high price hikes endured during her time in office to supply chain issues rather than the Biden White House jacking up spending way beyond what the economy could handle. She was also dishonest about enforcement of sanctions on Iran when she said in 2023, 'We have not in any way relaxed our sanctions on Iranian oil.' That was false. But her major failing as Treasury secretary was not locking in low interest rates on our soaring national debt by raising money via long-term bonds when she had the chance. Famed investor Stanley Druckenmiller in 2023 called the lapse the 'biggest blunder' in the history of America's Treasury, saying, 'When rates were practically zero, every Tom, Dick and Harry in the U.S. refinanced their mortgage … corporations extended [their debt]. … Unfortunately, we had one entity that did not: the U.S. Treasury.' Druckenmiller added about Yellen: 'She has no right to still be in that job.' He is correct, and American taxpayers are paying the price. Liz Peek is a former partner of major bracket Wall Street firm Wertheim and Company. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
18-04-2025
- Business
- The Hill
Janet Yellen is wrong about US manufacturing — and pretty much everything else
Former Treasury Secretary Janet Yellen told the crew at CNBC this week that President Trump's goal of bringing manufacturing back to the United States was a 'pipedream.' It was an odd remark, given how her former boss, Joe Biden, ran for president on the prospect that he could revive manufacturing in the U.S. — the central pillar of his promise to rebuild the economy 'from the bottom up and middle out.' Did Yellen not believe Biden's campaign pitch? Was she not on board with the CHIPS Act, which threw tens of billions of dollars at semiconductor firms to encourage their shifting production to the U.S.? Yellen also claims she does not understand the rationale for Trump's tariff war, which she calls a 'self-inflicted wound.' When Biden ran for president in 2020, he promised to do away with tariffs President Trump had imposed on China. Not only did he keep those tariffs in place, he added to them in 2024, trying to protect America's industries by putting a 100 percent tariff on imports of Chinese electric vehicles and slapping solar panels with a 50 percent duty, among other assorted products. Did Yellen protest those taxes on imports from China? In short, is Yellen pessimistic about U.S. manufacturing and negative on tariffs because it is Trump at the helm or because she has strongly held convictions that the U.S. cannot compete? If the latter is true, she should have gone public instead of insisting that billions of taxpayer dollars be thrown at an impossible cause. Ironically, Yellen made her disparaging remarks the same day Nvidia announced that, for the first time ever, it planned to manufacture its AI supercomputers entirely in the U.S. In addition, the powerhouse chip maker announced in a blog post that, 'Together with leading manufacturing partners, the company has commissioned more than a million square feet of manufacturing space to build and test NVIDIA Blackwell chips in Arizona and AI supercomputers in Texas.' Overall, the company said it plans, with its partners, to create up to $500 billion of AI infrastructure in the U.S. within the next four years. Nvidia is not the only company that has announced new investments in the U.S. since Trump took over the Oval Office again. Just a few of the other firms that have pledged additional investments include: Johnson & Johnson, promising $55 billion in investment over the next four years; Softbank, which announced a $100 billion investment over the next four years; Novartis, which plans to spend $23 billion to build and expand 10 facilities in the U.S.; Lilly, which will more than double its U.S. manufacturing investment by adding four new pharmaceutical manufacturing sites; and Taiwan Semiconductor Manufacturing Company ,which will invest an additional $100 billion into its U.S. production facilities. There have been (and will be) others. Trump's tariffs have created plenty of incentives for companies deciding that the best way to access U.S. consumers, the biggest global market, is to manufacture here at home. Bringing manufacturing home to the U.S. is clearly not a 'pipedream.' But it will look different than it has in the past. The AI and robotics revolution means that labor is shrinking over time. Rising domestic production will still create jobs, but not as many as would have been the case a decade ago. Historically, American firms had a tough time competing as U.S. wages were (and are still) substantially higher than they are in, say, China or Vietnam. But, as fewer workers are needed to produce goods in highly automated factories, the wage disparity shrinks. The other big change that improves U.S. competitiveness is the importance of cheap energy. Germany, Europe's powerhouse manufacturing hub, has endured two years of recession, as the country struggles with, among other things, high energy costs brought about by unrealistic 'green' policies. In 2024, the average household in Germany paid approximately 40 cents per kilowatt-hour (kWh) for electricity, compared to the U.S. average of about 16 cents per kWh. The price paid by industrial users in Germany has been several times that of the U.S., moving the government to provide subsidies to manufacturers. Meanwhile, the U.S. is sitting pretty. We have almost unlimited fossil fuels available, and thanks to Trump's pro-energy policies, more is on the way. Abundant low-cost power will be an important inducement for foreign countries looking to lower costs. Finally, the Trump White House is committed to providing a low tax and light regulatory regime for businesses. This, too, will attract investment. Because of these advantages, Yellen will likely be proven wrong. This is not a shock. She remains wrong on a host of issues — including inflation, attributing the decades-high price hikes endured during her time in office to supply chain issues rather than the Biden White House jacking up spending way beyond what the economy could handle. She was also dishonest about enforcement of sanctions on Iran when she said in 2023, 'We have not in any way relaxed our sanctions on Iranian oil.' That was false. But her major failing as Treasury secretary was not locking in low interest rates on our soaring national debt by raising money via long-term bonds when she had the chance. Famed investor Stanley Druckenmiller in 2023 called the lapse the 'biggest blunder' in the history of America's Treasury, saying, 'When rates were practically zero, every Tom, Dick and Harry in the U.S. refinanced their mortgage … corporations extended [their debt]. … Unfortunately, we had one entity that did not: the U.S. Treasury.' Druckenmiller added about Yellen: 'She has no right to still be in that job.' He is correct, and American taxpayers are paying the price.
