Evergreen

IMO 2020 has contributed to higher shipping rates.

A “boatload” of news this week suggests that the shipping industry continues to look very attractive from an investing point of view. Global cargo carriers are estimated to have recorded $150 billion in profits in 2021, the first time they’ve collectively reached that figure in a single year.

January market trends historically set the direction for the full year per his title “As January Goes”. Well, so far, not so good!

I hope everyone had a wonderful Thanksgiving full of family, love and laughter! Even if that wasn’t your experience, there’s still much to be grateful for.

As is the case with Evergreen, our partner firm Gavekal encourages an environment of “opinion exchanges”. In the latter case, much of that stems from the inherent philosophical divergences regarding economics and politics between its three co-founders.

Domestic business travel is well on its way to recovery. Forty percent of poll respondents said that business travel within the country where their firm is based has already resumed, while a third said that their company has either decided on a start date or is working toward a date.

Economic uncertainty has spiked given the escalating U.S.-China trade war; with increasing risk it weakens the dividing line between the manufacturing and consumer sectors.

For the most part, the second quarter saw a continuation of the first quarter’s positive performance across many asset classes. This furthered a reversal of the dismal 2018 when every primary asset class was negative.

Recent comments from Fed Chairman Powell with respect to corporate debt echoes what Bernanke said in 2007 about subprime mortgage debt.

The inversion of the 10y-3m yield curve unleashed a sharp pullback in stocks; but the Fed’s “preferred” curve first inverted in early January.

I want to tackle a more evergreen topic, which is the implications on the economy of a high and ever-rising burden of debt. But I want to first differentiate between the deficit and debt.

Recession chatter is abundant lately. It’s increasingly the focus of Q&A sessions at investor events at which I’ve been speaking. I also received a series of questions last week about recessions from a Schwab colleague who has many younger Schwabbies on his team, most of whom have not lived as working adults through a recession.

A look at Private Debt and Direct Lending in regard to funding small and medium-size enterprises (SMEs). An overview of current practices in the marketplace and how these debt funds either supplant bank lending and/or take debt financing to a “next level” providing flexibilities that didn’t exist pre-crisis.

Rising equity prices and bond yields pose a puzzle for investors. Given equity valuations, some investors question whether the rally is peaking. This month, we examine the fundamental underpinnings of a steady economy, growth of company earnings and revenue, and pent-up consumer spending.