Ideas
Equities high valuations, recession risks rising.
Equities are in a very heightened period of high valuations, with recession signs including a stressed consumer and rising unemployment, making risk/reward unattractive.
Real estate valuations are over the top.
Real estate and home prices are at high valuations and over the top, so investors are not being compensated for the risk.
Investment-grade spreads tight, poor compensation.
Investment-grade corporate spreads over Treasuries are tight, meaning investors are not getting paid much for credit risk.
Favor steeper curve, avoid duration.
The Fed is in a difficult spot where rate cuts risk inflation and holding rates risks choking the economy; the curve has normalized for months, term premiums should exist, and he expects short rates to fall while the long/mid curve is uncertain, favoring a steeper curve and avoiding duration.
Tax lien ABS offer quality spread.
Off-the-beaten-path asset-backed securities such as tax liens are high quality because most people do not want to lose their home or land; with good underwriting and a top-of-capital-structure, low-duration securitization, investors can earn 175-200 bps off the curve for three-year AA credit.
Bally's secured debt offers event upside.
Bally's secured debt is an attractive high-yield example: the secured debt benefits from a restricted group of casinos, the company is selling assets or merging, and the bonds are likely to be refinanced before maturity; buying below face yields well, and even if the deal fails the paper is money-good with high yields.
Floating-rate securities still pay well.
Floating-rate securities remain attractive because the front end of the curve is steep and forward rates have to come down, so investors are still paid for floating-rate exposure.
Fed rate cuts drive dollar devaluation.
If the Fed and government get their way and lower rates, the likely result is continued US dollar devaluation, which also has inflationary effects for overseas purchases and travel.
Ultra-short duration beats money markets.
An ultra-short duration strategy provides a spread to six-month T-bills or one-to-two-year Treasuries and can yield 50-100 bps net of fees over a money market fund, though it has slightly more volatility and is suited for horizons beyond 90 days.
High yield preferred over duration risk.
He would rather take spread, credit, or underwriting risk than duration risk, which makes high yield an attractive asset class because it is a hybrid between high-quality debt and equities.
SPAC arbitrage yields premium over T-bills.
Pre-merger SPAC arbitrage is a fixed-income-like opportunity: buy SPACs at a discount to trust value, redeem if the deal is unattractive or no deal occurs, and keep upside if a deal is liked; the strategy is very short duration and has historically provided a significant premium over three-to-twelve-month T-bills.
MicroStrategy is levered Bitcoin risk.
MicroStrategy has no operating business and uses debt to buy Bitcoin, creating a levered bet; if Bitcoin fell to around $43,000 and stayed there, MicroStrategy would have difficulty paying off its debt, though it can survive if Bitcoin stays at current levels or rises.
This The David Lin Report video, published July 15, 2025,
features David Sherman
discussing Equities, XLRE, LQD, TLT, Tax lien asset-backed securities, Bally's secured debt, FLOT, USD, Ultra short duration bond funds, HYG, Pre-merger SPAC arbitrage, MSTR.
12 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
David Sherman
· Tickers:
Equities,
XLRE,
LQD,
TLT,
Tax lien asset-backed securities,
Bally's secured debt,
FLOT,
USD,
Ultra short duration bond funds,
HYG,
Pre-merger SPAC arbitrage,
MSTR
