Your Weekly Edge



The following audio episode  provides an in depth discussion of this weeks news from "The Edge".

 

 
 

The Weekly Edge – Up to 25th February 2025 

​ Brought to you by the team at Gilt Investments

Welcome to The Weekly Edge, your definitive source for expert insights into the major financial and economic events shaping global and Australian fixed-income markets. Each day, we publish The Edge, an exclusive market update offering real-time analysis of critical developments. This weekly recap consolidates those insights, highlighting key themes, market trends, and strategic considerations for investors.

Buffett Hoards Cash, Musk’s Conflicts, and the Death of the Penny

At Gilt Investments, we specialize in fixed-income markets, helping investors navigate the ever-changing world of bonds, rates, and macroeconomic trends. As a premier fixed income broker, we don’t just watch the news—we break it down with a touch of humor so you can make informed decisions without the jargon overload.

Now, let’s dive into this week’s economic madness, where Warren Buffett is acting like a doomsday prepper, Elon Musk is playing both sides of the government handout game, and the U.S. Mint has finally put the penny out of its misery.

Buffett’s Mystery: Is the Oracle of Omaha Seeing Ghosts?

Warren Buffett, everyone’s favorite billionaire grandpa, is playing defense. Berkshire Hathaway’s cash pile has ballooned to a record $334 billion, and he’s been dumping stocks like they’re going out of style. But don’t worry—he assures us he still loves equities. Just... from a safe distance.

Why is he hoarding cash? Maybe he knows something we don’t. Maybe it’s the ever-tightening Federal Reserve policy. Maybe it’s the unnerving global economic landscape. Or maybe, just maybe, he’s waiting for an absolute fire sale when the next recession kicks in. Whatever the case, when Buffett stops buying, it’s worth paying attention.

Elon Musk: Anti-Government Spending, Pro-Government Contracts

Elon Musk has been on a crusade against wasteful government spending, calling for fiscal responsibility and a reduction in government bloat. Very noble—except when it comes to his own businesses. SpaceX has racked up nearly $20.7 billion in government contracts, with the potential to hit $56.4 billion if all options are exercised.

Musk has conveniently left this part out while pointing fingers at government inefficiencies. It turns out, being the guy who gets to decide whether you have a conflict of interest is quite a handy position. Maybe Musk should change the name of his efficiency department from DOGE to “Don’t Overlook Government Earnings.”

The U.S. Mint Finally Kills the Penny—Nobody Cares

After years of debate, the U.S. Mint has decided to stop producing pennies. This shocking development has left exactly zero people emotionally devastated, apart from perhaps a few nostalgic coin collectors. Producing a penny costs 3.7 cents, meaning the government has been burning millions of dollars annually to make currency nobody even bothers to pick up from the ground.

What will happen to the estimated 240 billion pennies currently sitting in jars across America? Probably nothing. But hey, maybe they’ll become collector’s items.

But wait—there's a plot twist! It turns out that eliminating the penny means more nickels will need to be produced to make up for rounding adjustments in cash transactions. The problem? Nickels already cost over 8 cents each to produce, and with their higher metal content (including nickel and copper), there’s a real concern they’ll become even more expensive. The government may have just replaced one money-losing coin with another. Talk about unintended consequences! At this rate, we’ll soon be debating whether we need to ditch nickels, dimes, and quarters altogether and just go full digital.

Global Markets: Oil, Inflation, and European Drama

  • Oil Prices: U.S. sanctions on Iranian oil have pushed Brent crude above $75 a barrel, adding another layer of fun for energy traders.
  • Inflation Watch: The Federal Reserve’s favorite inflation metric is cooling slightly, but policymakers remain hesitant to cut rates too quickly.
  • European Defense Spending: The once-taboo industry is booming, with defense-themed funds popping up like mushrooms. With tickers like WAR and NATO, they’re not exactly subtle.
  • Germany's Next Chancellor: Friedrich Merz promises that Netanyahu can visit Germany without being arrested under his watch. Because nothing says “diplomatic immunity” like ignoring international arrest warrants.

What Does This Mean for Fixed Income Investors?

For those looking to navigate these economic uncertainties, Gilt Investments has some key fixed-income recommendations:

  • Short-Term Australian Bonds: With markets jittery and central banks reluctant to cut rates aggressively, short-duration bonds can help investors stay nimble.
  • Inflation-Linked Securities: If the Fed drags its feet on rate cuts and inflation lingers, linkers offer a hedge against stubborn price pressures.
  • Corporate Debt (Investment-Grade): Companies with strong balance sheets will continue to attract capital, especially as economic uncertainty rises.
  • Defensive High-Yield Bonds: If you’ve got the stomach for some risk, select high-yield issuances in stable industries could provide a yield premium.
  • Floating-Rate Notes (FRNs): As central banks waver on policy, FRNs help investors benefit from rate adjustments without locking into a fixed rate.

For more details on how to position your portfolio, reach out to Gilt Investments. We promise no pennies (or nickels) will be harmed in the process.

That’s a wrap for this week! Stay tuned for more economic lunacy, unexpected market moves, and a little bit of humor to keep things interesting. See you next week!

— Brought to you by the team at Gilt Investments


Disclaimer

This publication has been prepared by Gilt Investments Pty Ltd and is for informational purposes only. It contains general financial product advice that does not take into account your personal objectives, financial situation, or needs.

Before acting on any information contained herein, you should consider whether it is appropriate for your circumstances and seek independent professional advice.

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Gilt Investments disclaims all liability for any loss or damage arising from reliance on the information contained in this report. Past performance is not indicative of future results, and all investments involve risk.