Daily Commentary

MarketMinder’s View: With the increase in “alternative consumer lending” powered by nonbank lenders (aka private credit), this article worries unseen risks may be brewing. The concern is understandable, but a passage here helps debunk the fear: “Thus far, though, even broader measures of consumers’ health aren’t showing major weakness. Researchers at the Bank of America Institute, which analyzes anonymized bank data, found that while spending in October was growing more slowly year-over-year for lower-income households than wealthier ones, their checking and savings deposit balances remain above inflation-adjusted 2019 levels. Many consumers could also start seeing additional tax savings next year.” Though nontraditional lending may be less visible, private credit shops are still incentivized to do their due diligence when extending loans—after all, they don’t profit if loans aren’t repaid. Now, some bigger banks fund private lending, and those exposures could conceivably channel risks into the broader financial system. (As the article lists some specific names, please keep in mind MarketMinder doesn’t make individual security recommendations.) But while this introduces some uncertainty, markets seem to be taking this into account, too. “Even with limited or mixed signs of consumer weakness or broad credit weakening, shares of many companies in the lending business have trailed large banks this year, as measured by the KBW Nasdaq Bank index. ... Large managers of private-credit vehicles that could fund consumer lending ... have also lagged behind.” Private credit may be more opaque, but markets—and other interested parties—are aware of the credit dynamics driving their bottom lines.

MarketMinder’s View: “Chinese exports to the six largest economies in south-east Asia—Indonesia, Singapore, Thailand, the Philippines, Vietnam and Malaysia—rose 23.5 per cent from $330bn to $407bn in the first nine months of the year compared with the same period last year, according to official import data from those countries collated for the Financial Times by ISI Markets. Chinese exports to those countries have doubled over the past five years, while China’s trade surplus with the region hit an all-time high this year. The 2025 increase is nearly twice as high as the 13 per cent compound annual growth rate in the previous four years.” (As the article mentions some specific export manufacturers, we remind readers MarketMinder doesn’t make individual security recommendations.) Now, this does suggest world trade is proving more resilient than feared, but there are some caveats. As the piece discusses, those headline increases likely include a whole lot of transshipping—goods exported from China to other nations but destined for the US, capitalizing on their lower tariff rates. And some of the growth may easily be exaggerated by tariff frontrunning. So it isn’t as simple as saying, “no tariff impact here—move on.” But regardless, all this suggests global trade is holding up better than expected following April’s Liberation Day announcements. Exemptions, workarounds and trade deals render the dire forecasts and expectations from then faulty.

MarketMinder’s View: Houses are great to live in, but tougher to flip for a profit, as related here. Don’t get us wrong, we have nothing against investing in real estate. But for those considering it, give this a read. A snippet: “Yes, you can make a killing. But also, lots could go wrong: Repairs can take longer than you predicted. The house has bigger, hidden problems that you missed. You misjudged the market, or it simply turned sour while you were renovating. We’re in one of those tricky times now. Despite Fed interest-rate cuts, mortgage rates are still high. ... Meanwhile, housing inventory is low, and costs are rising for material, labor and home insurance.” All investments have their time in the sun as well as the rain. Residential real estate is no different. But given its idiosyncrasies—many of which this article delves into—investors should approach it with eyes wide open. This is doubly true with any illiquid asset-like property. Liquidity is key to manage for all investors. But that is arguably even more true for retirees. Ultimately, we find this—plus the so-called “sweat equity” it takes to be successful long term—isn’t for everyone.