Tuesday, December 9^th, 2025

Prepare To Monetize Holiday Retail Sales

The holiday rush has now officially kicked off, and many consumer-facing businesses will generate roughly one-fifth of their annual sales between after Thanksgiving and Christmas. The analysts are projecting U.S. spending to INCREASE about 4% over this pivotal stretch – topping the $1 trillion mark for the first time ever!!!

The early results look good, with online shoppers dropping a record-breaking $11.8 billion on Black Friday and even more on Cyber Monday. Total digital sales over the five-day period ROSE by nearly 8% to reach $44 billion.

Keep in mind, that doesn’t include physical brick-and-mortar stores. While mall and strip center foot traffic isn’t what it once was, the analysts estimates indicate about 130 million people braved the crowds for in-store Black Friday promotions, a 3% UPTICK.

Despite flattish volume, per-capita spending across all channels ROSE to $337 over that long weekend.

As you might imagine, Mastercard (MA) had some interesting front-row observations to share, noting that many of its cardholders have been shopping in the FASHION and JEWELRY departments.

Shopify (SHOP), whose software platform powers hundreds of global ecommerce brands, saw its merchants generate peak sales of $5+ million per minute!!!

Taken together, these snapshots paint a fairly clear mosaic of consumer “OPTIMISM”…

Pocketbooks remain wide open, despite stubborn inflation, labor market unease and other macro headwinds.

For now, the near-term outlook for the iShares U.S. Consumer Discretionary ETF (IYC) has brightened.

YOU, ME, WE the ATWWI FAMILY will monetize the ongoing recent INCREASE  RETAIL sales via the positions indicated above AND our other various ATWWI "RETAIL" sector positions.

Considering, the retail consumer accounts for 70% of the U.S. GDP, you can OVERSTAND/UNDERSTAND why individual shoppers are considered the “LOCOMOTIVES” of the U.S. economy.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Saturday, December 6th, 2025

U.S. Markets Expect FED Rate "CUT" Next Week

The Federal Reserve's preferred inflation gauge showed little improvement in September (2025), with overall prices up 0.3% month over month and core prices (excluding food and energy) rising 0.2%. The report, delayed by the government shutdown, reinforces expectations that the FED will move toward a rate "CUT" next week, a development markets have been pricing in ahead of the central bank's decision.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Monday, November 10^th, 2025

How to Invest When Interest Rates Start Falling

After nearly two (2) years of interest rate hikes aimed at cooling inflation, the Federal Reserve (FED) has officially changed course. In September, the FED cut its benchmark rate by a quarter point to a range of 4.00%–4.25%, citing softening labor markets and growing risks to the broader economy. CORE INFLATION is now running near 3%—well below its 2022 peak—and markets are betting on at least two (2) more cuts before the end of the year (2025).

This marks a pivotal moment for YOU, ME, WE the ATWWI FAMILY…

Falling rates can dramatically reshape the financial landscape, particularly for those focused on INCOME GENERATION and CAPITAL PRESERVATION. The early stages of an “EASING” cycle often create both “OPPORTUNITY” and “CONFUSION”—because while lower rates can increase asset prices, they are also a sign of a “SLOWING” economy. The key is knowing where to position yourself as the pendulum swings from “TIGHTENING” to “EASING”.

STOCKS:

Rate “CUTS” are often viewed as “BULLISH” for stocks, and HIStorically they can be—at least at first…

LOWER rates REDUCE BORROWING COST for companies and consumers, while also LIFTING VALUATIONS by LOWERING the DISCOUNT RATE investors use to price FUTURE EARNINGS. That said, the FED doesn't “CUT” rates when the economy is “BOOMING”. It usually does so because GROWTH is “COOLING”, and that can eventually weigh on CORPORATE PROFITS.

In the early stages of a rate ”CUTTING”cycle, some of the best-performing areas tend to be:

• Dividend-paying stocks, particularly in UTILITIES, CONSUMER STAPLES, REAL ESTATE INVESTMENT TRUSTS (REITs), MASTER LIMITED PARTNERSHIPS (MLPs). These sectors benefit from lower financing costs and become more attractive as bond yields decline.
• Growth stocks, especially in TECHNOLOGY, which often rebound sharply as the cost of capital falls. Their future-oriented cash flows become more valuable in a lower-rate environment.
• Small caps, which are typically more sensitive to borrowing costs and domestic growth trends.

However, “SELECTIVITY” is “CRUCIAL”…

Companies with HIGH DEBT LEVELS or “WEAK” PRICING POWER could struggle if the economy slows further. YOU, ME, WE the ATWWI FAMILY should emphasize BALANCE SHEET STRENGTH, CONSISTENT CASH FLOW, and SUSTAINABLE DIVIDENDS rather than simply chasing sectors that "USUALLY” perform well after rate “CUTS”.

BONDS:

For BOND investors, FALLING RATES are generally “GOOD” news. As YIELDS DECLINE, the market value of existing BONDS RISES—especially those with LONGER MATURITIES. After several years of pain for bondholders, duration is finally working in investors' favor again.

Now is a good time to:

• Extend duration. Short-term bonds lose their appeal as YIELDS FALL. Shifting toward INTERMEDIATE and LONG TERM TREASURIES, MUNICIPAL BONDS, or HIGH-GRADE CORPORATES can lock in HIGHER YIELDS before they disappear.
• Use Laddered Bonds. This structure—owning BONDS that mature at staggered intervals—helps smooth out reinvestment “RISK” while maintaining flexibility.
• Explore Credit Spreads. As policy eases, RISK PREMIUMS often tighten, benefiting HIGH-YIELD and PREFERRED SECURITIE. But be “SELECTIVE”—CREDIT QUALITY still matters if the economy weakens.

NOTE: During “EASING” cycles, CORPORATE CREDIT and SECURITIZED PRODUCTS tend to “OUTPERFORM” TREASURIES. That makes “NOW” a good time to reassess your FIXED-INCOME mix and ensure it's aligned with your RISK TOLERANCE.

Income Strategies: The Case for Recalibration

CASH and SHORT-TERM instruments have offered “UNUSUALLY” HIGH YIELDS over the past two (2) years, but that window is starting to close…

MONEY MARKET FUNDS and T-BILLS that once yielded over 5% will drift lower as the FED “CUTS” rates. Investors who have grown comfortable parking “CASH” will soon need to think LONGER TERM again.

Several strategies can help smooth the transition:

• COVER CALL writing can generate additional income from quality dividend stocks while providing a small buffer against volatility.
• REAL ESTATE and INFRASTRUCTURE ASSET especially those with INFLATION LINKED REVENUES—often perform well when borrowing costs decrease and capital flows back into hard assets.
• DIVIDEND GROWTH STOCKS remain a powerful “CORE” holding. Companies with the ability to CONSISTENTLY RAISE PAYOUTS often “OUTPERFORM” in LOWER-RATE environments, providing both INCOME and INFLATION PROTECTION.

The Bottom Line

FALLING rates are not a “MAGIC” bullet, but they do change the math for YOU, ME, WE the ATWWI FAMILY.

The generous yields in “CASH” are fading, and the search for “SUSTAINABLE” income is once again front and center.

The smartest approach right now is a BALANCED approach:

*STAY DIVERSIFIED

*KEEP “DURATION” APPROPRIATE for your goals and, favor HIGH-QUALITY assets that can weather a slowing economy. The FED's pivot may help stabilize markets in the short term—but for long-term investors, this is the moment to “POSITION” for the next phase of the cycle, not the last one.

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.

Friday, October 10^th, 2025

How to “HEDGE” Against the Federal Government “SHUTDOWN”

The “SHUTDOWN” of the federal government last week has deprived investors of the one thing they need the most to make INFORMED decisions: “INFORMATION”.

Until the “SHUTDOWN” is over, data from any of the federal agencies that generate those numbers will NOT be available.

For example, we were supposed to see the EMPLOYMENT figures for September last Friday (October 3^rd, 2025). But since the “SHUTDOWN” began earlier that week, we can only wonder what those numbers produced by the Bureau of Labor Statistics (BLS) might have looked like.

Last week an employment report from outplacement firm Challenger, Gray & Christmas indicated PRIVATE companies are hiring the FEWEST workers since the GREAT RECESSION sixteen (16) years ago. However, those numbers could be quite different from the more substantial survey conducted by the BLS.

If the “SHUTDOWN” ends in a WEEK or two, then the missing data probably won’t matter much.

BUT, if it goes on for more than a MONTH as happened the last time the government “SHUTDOWN” in 2019, by the time we see those numbers the stock market may be far removed from where it otherwise might have been.

For that reason, heightened VOLATILITY should be expected and YOU, ME, WE the ATWWI FAMILY should “GOVERN OURSELVES ACCORDINGLY” as a INTELLIGENT way to protect our portfolios from the possibility of a “MAJOR” stock market move AFTER the government REOPENS.

The problem is, the stock market may MOVE UP or DOWN depending on what the MISSING NUMBERS turn out to be.

One Way or Another

Since we don’t know which DIRECTION the stock market will go, YOU, ME, WE the ATWWI FAMILY can implement our ATWWI “ROTHSCHILD” STRATEGY….

We can do that by employing an OPTIONS STRATEGY known as a “LONG STRADDLE”.

That means we can BUY both a “CALL” and a “PUT” OPTION using the SAME “STRIKE PRICE” and “EXPIRATION DATE” on an underlying security that we believe is likely to react strongly to INCREASED STOCK MARKET VOLATILITY.

An obvious candidate for such a trade is the CBOE Volatility Index (“VIX”), which is sometimes referred to as the “FEAR INDEX” since it reflects the degree to which “PROFESSIONAL” PORTFOLIO MANAGERS think the “RISK” of a stock market “CORRECTION” is IMMINENT.

If you are not familiar with the VIX, it is a RATIO OF SHORT-TERM “PUT” OPTIONS versus “CALL” OPTIONS on the SPDR S&P 500 ETF (SPY). When “PROFESSIONAL” INVESTORS are feeling “ANXIOUS” and BUY more “CALLS” than “PUTS”, the VIX goes UP. The OPPOSITE is also true.

At the start of this week (October 6^th-10^th, 2025), the VIX was trading near $17. That is very close to where it has been trading for the past five (5) months and is also close to its LONGER-TERM HISTORICAL AVERAGE.

In other words, WALL STREET does NOT perceive much NEAR-TERM “RISK” to the stock market despite the lack of ECONOMIC DATA until the “SHUTDOWN” is over.

TIMING Is The “KEY”

To execute a LONG STRADDLE on the VIX, we must identify an EXPIRATION DATE and a STRIKE PRICE for both OPTIONS. For the sake of this example, I will use the $17 STRIKE PRICE that EXPIRES on November 19^th, 2025.

A few days ago, that “CALL” OPTION could be purchased for $4.50 while the “PUT” OPTION was going for $0.25.

That means it would cost $4.75 to purchase both OPTIONS. For this trade to be profitable, the VIX must RISE ABOVE $21.75 or FALL BELOW $12.25 within the next five (5) weeks.

The odds of the VIX FALLING BELOW $12.25 are low. That has not happened in a long time.

BUT, the chances of it RISING ABOVE $21.75 are much better. In April (2025), it briefly SPIKED ABOVE $60 when the Trump administration introduced its “LIBERATION DAY” reciprocal TARIFF plan.

Let’s say the government REOPENS around the end of this month (October 2025) and we learn that the economy is in much WORSE shape than we thought.

In that case, the VIX might RISE ABOVE our “BREAKEVEN” PRICE of $21.75.

If it gets up to $25.50, the combined value of both OPTIONS would be at least TWICE what we paid for them.

Of course, this type of trade is not without “RISK”. If the government does NOT REOPEN by the time these OPTIONS EXPIRE, then INSTITUTIONAL INVESTORS and PROFESSIONAL MONEY MANAGERS may have reason to suddenly LOAD UP on SPY “PUT” OPTIONS.

If the government reopens BEFORE THESE OPTIONS EXPIRE and we discover that the economy is in better shape than we thought, the VIX probably won’t move enough for this trade to be profitable.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Tuesday, September 16^th, 2025

Long Term U.S. Treasury Bonds Could Be The Biggest “WINNER” From Upcoming Rate Cut(s)

Since the conclusion of the “GREAT RECESSION” 18 (eighteen) years ago, the yield of the 30-year U.S. Treasury Bond has mostly traded in a range between 2.5 percent to 5.0 percent. The notable exception occurred five (5) years ago when the FED pursued its ZERO INTEREST RATE POLICY (ZIRP) after the onset of the coronavirus pandemic.

For about a year, those bonds were yielding LESS than 2.0 percent as investors “FEARED” that the global financial markets might collapse. Fortunately, that didn’t happen, and bond yields recovered quickly as the FED allowed rates to RISE.

In May, the yield INCREASED above 5.1 percent as WALL STREET “FRETTED” that the recently enacted import tariffs would be inflationary. Instead of a rate CUT by the FED that the WHITE HOUSE was “DEMANDING”, a rate INCREASE seemed possible if retail prices started soaring to reflect the cost of those tariffs.

So far, that hasn’t happened. In July (2025) the Personal Consumption Expenditures (PCE) price index reflected a 0.3. percent monthly INCREASE in “core” PCE, which excludes FOOD and ENERGY prices. Over the past twelve (12) months it grew by 2.9 percent, higher than the FED’s 2.0 percent “TARGET”t rate but still within tolerance.

Meanwhile, the EMPLOYMENT situation in the U.S. grown considerably “DAMPENED”. The jobs report for July (2025) showed a huge DECREASE in new job openings. At the same time, the numbers for June and May (2025) were revised DOWNWARD by a substantial amount.

Although the national UNEMPLOYMENT rate ROSE only slightly to 4.2 percent, a sudden DOWNTURN in NEW JOB OPENINGS usually presages an INCREASE in UNEMPLOYMENT. That is why everyone on WALL STREET was waiting on “PINS and NEEDLES” for the August (2025) jobs report that was disappointing

Into that fray steps the 30-year T-bond. It is widely viewed as a proxy for the “LONG-TERM HEALTH” of the U.S. economy. A yield BELOW 3 (three) percent is indicative of a “WEAK” economy that requires CENTRAL BANK intervention in the form of LOWER INTEREST RATES to stimulate CONSUMER SPENDING.

A yield ABOVE 5 (five) percent suggests an “OVERHEATED” economy that may require rate INCREASES to cool it off. That’s what happened a few years ago after the ZIRP had its intended effect of stimulating the economy. Despite an unprecedented series of rate INCREASES commencing in March 2022 that RAISED the FED’s POLICY RATE by 500 (five hundred) basis points (5 percentage points), the stock market “RALLIED” strongly the following year.

Now, WALL STREET is “DEMANDING” a series of rate CUTS to justify higher stock prices. If that happens then BOND PRICES should RISE as YIELDS FALL.

If rate CUTS fail to “IGNITE” the economy, then BONDS MAY “OUTPERFORM” STOCKS until a new “EQUILIBRIUM” between the two (2) asset classes has been established.

You don’t need to be an “INSTITUTIONAL” investor with millions of dollars to invest to own U.S. TREASURY SECURITIES. However, it probably makes more “SENSE”/”CENTS” for “INDIVIDUAL” investors to do so via an EXCHANGE-TRADED FUND (ETF) or CLOSED-END FUND (CEF). That way, YOU, ME, WE the ATWWI FAMILY can obtain portfolio “DIVERSIFICATION” and “PROFESSIONAL” MANAGEMENT at a LOW COST.

One such fund is the VANGUARD LOND-TERM TREASURY ETF (VGLT). It currently generates a 30-day SEC annual yield of 4.9 percent, pays DIVIDENDS MONTHLY, and has a very LOW MANAGEMENT FEE of .03 percent.

Five (5) years ago, VGLT’s share price “SOARED” above $100 while the FED was aggressively CUTTING interest rates…

Three (3) years later VGLT’s share price had “FALLEN” below $50 after the FED began INCREASING interest rates.

That is precisely why I think now may be a good time to consider, upon completion of the appropriate ATWWI “DRILL DOWN”, adding VGLT to your/our portfolio(s).

If the FED is once again “FORCED” into the position of CUTTING rates, LONG-TERM U.S. TREASURY BONDS could end up being the biggest “WINNER” of them all.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.