June 19, 2025
Dear Investors and Friends,
Last month’s letter generated more feedback than anything we’ve written in years. We heard from business owners, retirees, professionals, and policy-minded readers across the country. Many told us it was the first time they truly understood how the U.S. dollar functions in the global system, and why that matters for everyday Americans.
Because of that response, we’re going to pause our “Why Bonds, What Bonds, and How Bonds” series for one more month to address some of the most common questions we received. At the center of them was this:
1. The Question. If India runs trade deficits too, why do their deficits seem to make them stronger, while ours make us weaker?2. The Simple Answer. It’s a smart and timely question. And the answer boils down to this: on balance, India imports capital goods. The U.S. imports consumer goods.
India uses trade deficits to import machines, tools, and components that fuel long-term growth. The foreign capital it attracts often goes into factories, roads, startups, and innovation.
In contrast, the U.S. imports goods that satisfy short-term needs - clothes, electronics, appliances - and the capital that flows back in often buys stocks, bonds, or real estate. Our deficit subsidizes comfort more than capacity.
3. A Historic Moment. Bloomberg recently put it this way: “U.S. tariff rates are the highest since World War II, and the global economy is feeling the impact.” As of this writing, the average U.S. tariff has risen by 10 percentage points to 13.5%, and China’s effective exposure is nearing 40%. Talks continue, but the costs could be historic.4. This Isn't About Politics. This letter isn’t about partisan politics. Our perspective is grounded in economic stewardship, long-term competitiveness, and broad-based opportunity, goals we believe all Americans can rally around.
5. What Really Matters: Mindset. Policy matters, but so does mindset. If we want to run a smarter trade deficit, we need to think like long-term investors, not short-term consumers. The best case scenario? A country buys capital goods and receives productive investment. The worst case? It buys consumer goods and receives only passive investment.
6. What Needs to Change
Policy:
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- Reward long-term investment, not short-term spending.
- Encourage capital inflows into infrastructure and innovation.
- Promote saving, ownership, and financial independence.
Culture:
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- Celebrate entrepreneurship, not just consumption.
- Teach financial literacy early and often.
- Aspire to live not just well, but wisely.
8. Why This Matters to Your Liquidity and Bonds. At Roosevelt Capital Management, our core mission is helping clients manage their liquidity: wisely and with intention. In times of global uncertainty, strong liquidity and thoughtful bond allocation aren’t just defensive, they’re strategic.
If the U.S. is entering a period of structural change - rising tariffs, tighter capital flows, increased inflation volatility - then how you manage your cash, your duration, and your credit exposure becomes even more critical. These aren’t just technical details; they’re how you protect purchasing power, preserve flexibility, and build long-term resilience.
We don’t try to predict the future, but we do prepare for it. That means aligning each client’s liquidity strategy with their unique objectives and constraints. Depending on the situation, that might include taxable or tax-exempt solutions, high-quality or higher-yielding bonds, and thoughtful laddering. Especially during periods of structural change like this one, these choices matter more than ever.
We expect to return to our bond series next month, but we’re grateful for the opportunity to explore these broader questions with you in the meantime.
Warm regards,
David and Mike
Disclaimer
Roosevelt Capital Management LLC is a registered investment adviser. The information presented is for educational purposes only and is not intended to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
Past performance is not indicative of future performance. Principal value and investment return will fluctuate. No guarantees or assurances that the target returns will be achieved, or objectives will be met are implied. Future returns may differ significantly from past returns due to many different factors. Investments involve risk and the possibility of loss of principal.
While all the values used in this report were obtained from sources believed to be reliable, all calculations that underly numbers shown in this report believed to be accurate, and all assumptions made in this report believed to be reasonable, Roosevelt Capital Management LLC neither represents nor warrants the values, calculations or assumptions and encourages each prospective investor to conduct their own review of the audits, values, calculations and assumptions.