• The Big Beautiful Bill (which we are calling the triple B) passed the house, and the market tanked on the news.
• There’s different philosophies as to why the market tanked.
• One concern is that the triple B is going to cause 3.5 trillion dollars of additional taxes.
• The other concern is that the 20-year auction apparently didn’t go well.
• Why does anyone care about the 20-year? What is an auction anyway?
• Outside of tax revenue, for the government to operate, the US sells treasury bonds to bring dollars in.
• They have an auction to sell the ability to lend us money.
• The auction is calibrating the interest rate we are going to pay.
• If you want to own a 20-year treasury, meaning you are going to lend us money for 20 years, in exchange we give interest for 20 years.
• Usually, these go on and the market doesn’t care at all.
• But, we didn’t sell at as high of a price as we thought we could get.
• Coming off the news of the Moody’s downgrade, there’s concern that the world doesn’t see us as a safe place to invest anymore.
• But, in reality, relative to the last couple ones, it went okay.
• Everybody is just a little bit timid and anxious about what’s to come with inflation, the Fed, trade wars.
• Our bond portfolio, BKAG, is primarily 6 to 10-year treasury bonds.
• As we record this, the price of BKAG is roughly flat, but we are getting a nice dividend of over 4%.
• If the price remains stable for the rest of the year, we’re making a 4% return.
• With all the uncertainty around tariffs, the triple B, it is hard to tell whether we’re going to have inflation, deflation, or none of the above.
• We think the Fed is going to sit on its hands until they have better visibility.
• In our view, the odds of the Fed doing anything outside of keeping status quo is very low in June and potentially July.
• Overall, the economy seems to still be holding strong, with a little bit of a slowdown, which is different than growth being wiped out or shrinking.
• If the Fed lowers interest rates, our bond portfolio will most likely go up.
• On the stock side, we still view through the end of the year that we should be higher than where we are today, even though there is some downside potential.

Hello everyone, and welcome to our Market Alert video for today, which is May, 23 2025. As usual, we hope this video finds you healthy, wealthy and wise. We have a lot to talk about, and not the least of which is the one triple B passed. And if you’re wondering what that is, we branded the one Big Beautiful Bill into one triple B, just to keep it short. And so the market tanked on the news. So we want to talk about why that happened. We had the 20 year auction that apparently didn’t go well, which also contributed to the market falling. Why does anybody care about the 20 year? What is an auction anyway? So we’ll talk about all of that, and then, of course, how does this all tie into our portfolio, and what it means to us with our investments? So we have a lot to talk about. So I’m gonna bring my Chief Investment Officer, Jordan Roach, back onto the screen with me. Jordan, good afternoon. Good morning. Good morning. Good morning. How are you I’m doing good. All as well. All right. Cool, cool. So, yeah, so the triple B, the one triple B, passed, right? That nobody thought first part of passing, yeah. Now it’s got to go to the Senate, and then they got to say, it’s like, what is it? Sausage being made, right? That’s right, very ugly. And so the market tanked. And there’s different philosophies or strains of analysis as to why that happened. One is that the concern is that the one triple B is going to cause three and a half trillion dollars of additional taxes, or some incredible thing like that. But then the other thing was that the 20 year auction did not go well, and so maybe that was a concern, or maybe they’re connected or not. So let’s define our terms. First of all, why do we have these bond auctions anyway? What are they for?
This is how you know, outside of, you know, effectively, of revenue, tax revenue coming in, but the government operate, it has to ask, basically, people, institutions, governments, for money, right? So money is lent to us. How that’s done is US selling treasury bonds, okay? And that brings dollars in that then we can use to fund all sorts of programs. So they they have an auction, they have an auction, and they sell the ability to lend us money to people in the auction, that’s right. And the auction is doing what it’s essentially calibrating what the interest rate we’re going to pay is right, that’s right. So you’re going to have, again, all these major players in there, from commercial banks and hedge funds to international governments, Japanese, Chinese, they’re all coming in there, yeah. And they’re going to sit there and start the bidding price of, say, if you want to own a Treasury for, you know, 20 year treasury, meaning you’re going to lend us money for 20 years. In exchange, we’ll give you interest for 20 years, right? How much are you willing to give me? And in order to give me money, what am I gonna have to pay you to make it, you know, appetizing? So they bid, so they bid against each other, and whoever wins, so theoretically, they’re paying the highest interest rate, right? I was up and up to get to have the privilege of lending us money so we can fund our ever increasing debt.
That’s right. That’s exactly right. Oh, boy, wow. That’s wonderful. Okay, so, so that’s what the auction is for. Now, the other thing that’s kind of interesting is that this was, this was the 20 year auction, right? And this is a new thing. The 20 years like a new kid on the block. We haven’t had a 20 year forever. We don’t think of 20 year auctions usually at all market. Usually these go on. The market doesn’t care at all. Yeah, usually 10 year, 20. It’s a 10, the 30 year, the thirty, maybe even the two year, but the 20 year is very obscure, right? There’s, there’s less. You know, we’re not putting out as much 20 year bonds. In fact, for there was like a 20 year pause until, basically, after COVID, where we weren’t even issuing 20 year bonds. So now we’re putting them back because, you know, we need money to finance things, so why does anybody, why did everybody care so much that? Apparently it didn’t go well, right? We didn’t sell as a high a price as we thought we could get. So now there’s this thing, oh no, maybe foreigners don’t want to invest in America anymore. They’re concerned about, you know, that we’re not a safe place to invest. And it could be that even, you know, we, internally, domestically, are not as keen on our own debt. And certainly foreign players do they want to continue to buy our debt. And so, you know, I would say right now it looks like, on an absolute basis, okay, there wasn’t as much demand for the treasuries they had hoped. But actually, relative to last couple ones, it actually went okay. And I think it just shows the sentiment right now that there is a little bit of a changing tide of shift in how safe truly are US Treasuries, maybe, relative to other, you know, large domestic economies or foreign economies, yeah. So, you know, people buy our debt because they think they’re going to essentially put their money in the safest place in the world, correct? But all of a sudden, maybe we’re not that safe, right? We have the one triple B, which there’s a concern that that’s going to increase our debt significantly. On top of that, you’ve got Moody’s downgrading our debt. So maybe.
All these things swirled around. And that’s why the 20 year, which nobody cares about normally, was like the catalyst. I think that’s right. I think this is just everybody, just a little bit timid, a little bit anxious of what’s to come with inflation, with the Fed, with currency wars, a trade, all these things, okay? And just, you know, you have yields come up a little bit higher, and the market had to react to that. Yeah. Okay, so let’s talk about how that affects us, right? So our bond portfolio,
and we have, the major component of our bond portfolio, is BKAG, right, correct. So tell us a little bit about how that what’s that comprised of? So it’s a mix of treasuries, of mortgage bonds, agency bonds, a little bit of corporate bonds, but primarily it’s six to 10 year treasury bonds, six to 10 so it’s on the it’s, it’s not long term, but it’s on this, you know, it’s, it’s midterm, intermediate bond exposure to treasuries primarily, okay, and so if they’re affected directly by The Fed, but also this auction maybe has some psychologically on absolutely right? I mean, all bond prices and yields will reset based on even just one type of bond and what that auction is doing, right? So, you know, you have 20 year treasury yields kind of come up. 10 year treasuries usually kind of come up with it. 30 years will kind of come up, you know, not one for one, but they all react, okay? And so BKAG, right now for the year, as we record, this is basically flat the price. The price is roughly flat, yeah, but we’re getting a nice dividend. But the dividend on it as of right now is over 4% has been for a while, so in a so you could look at it like, if the price remains stable for the rest of the year, and we got that 4% dividend, we’re making 4% return. That’s right. Basically, prices hold steady. For prices hold steady, you have to have broader and you’d have to have then broader yields kind of hold steady. But that means, effectively, yes, we would be making over, you know, 4% if everything held so let’s look at the likelihood of that. So the Federal Reserve is, who drives interest rates in the end, right? And so
with all the uncertainty around whether tariffs are going to be high, low, whether they’re even inflationary or not, the one triple B, what will it look like when it’s finally passed? With all of that swirling around, it’s really hard to tell whether we’re going to have inflation, deflation or none of the above, and just growth, right? So, if I’m the Fed, I sit on my hands until I have better visibility. I think that’s the most likely. I mean, we have a June Fed meeting, a July one. You know, the odds of the Fed doing anything, you know, outside of just keeping this status quo is very, very low in June, in July, a little bit higher, maybe doing something, but I think it’s unlikely that the Fed is going to pull interest rates down in the short term before it gets more clarity. They have to know more. I think that’s right. I would do the same if I were in their position. Okay, so basically, then that’s the bond side on the stock side. It looks like, you know, again, it’s how do these tariff deals work out? Do we have continued growth? And the economy on the growth side, seems to be holding strong. I think that’s right. I mean, I think there’s, I think the market expected a little bit of slowdown, deceleration in growth, but that is different than growth being wiped out and then actually shrinking, just not growing as quickly. And I think that’s not too much of a surprise of where we are. And in that type of regime slowing growth, you know, the market could hang in there and do just fine this year. Now what we could experience, you know, we talked about this in the last video, when we talked about our buy signal and that we bought, we could see the market go down, yes, and then go back up again, because it had a tremendous run, yes, you know, over the last month or so. And so it wouldn’t be unusual for it to take a breather, or profit taking, and then leg up again after that. Oh, I think, I think that’s exactly right. I mean, I think, in fact, that would almost be healthy for the market to take a little breather, reset, not get so excited about one or two deals and some sort of news catalyst to spark it up, for the market to kind of sit there, digest and say, let’s see what happens. I think that is probably healthy in many respects. Okay, so basically, from the bond side, ladies and gentlemen, the way we feel about it is that most likely, the Fed won’t be doing much, which means that our bond portfolio should remain relatively steady from a price perspective. But we also get a dividend, right? There’s two components to bonds. There’s the dividend, the interest that you get, and then there’s the price, and the combination of both of those gives you your total return. And if the price stays steady, then the dividend becomes our return. If the Fed lowers interest rates, most likely our bond portfolio will go up. If that happens, then we’ll make the dividend and price appreciation so that and on the stock side, there is some downside potential here, but we still view through the end of the year that we should be higher than where we are today. Yes, all right, so that’s our market alert video for today. Hope you again. Hope it finds you healthy, wealthy and wise, all you SCWPerS out there, I hope. And for those of you who don’t know what SCWPerS stands for, SCWPerS is the acronym for second childhood without parental supervision. If you’re a SCWperS, you know who you are. For those of you who are not, our goal is to get you there, and all you SCWperS Go out there and SCWPer your little tails off. Enjoy your second childhood. Go have fun. Let us worry about all this for you so that you don’t have to and thanks for watching. We’ll talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023