Daily Commentary

MarketMinder’s View: So alongside record private equity self-dealing, “Private credit firms sold a record amount of debt to themselves last year as the buyout sector’s slowdown pushed them to find new ways to generate cash from loans to companies owned by private equity. ... The boom in private credit continuation deals is the latest hangover from a years-long drought in private equity exits, with buyout firms instead holding on to businesses for longer and delaying repayment of those companies’ loans.” As the article names specific firms involved, please note MarketMinder doesn’t make individual security recommendations and their inclusion is incidental to the broader investment theme we wish to discuss. That is, private credit investors—like with private equity—must carefully consider the liquidity of their stakes given they can take “longer than expected to be repaid due to a lack of deals.” And, without a liquid market for them, investors must also understand the pricing mechanisms private credit firms employ with “managers selling to themselves.” Because of the potential conflicts of interest, due diligence is critical. Now, the sums involved here remain relatively small: “Private lenders struck so-called continuation deals worth $15bn globally in 2025, up from almost $4bn the previous year, according to investment bank Jefferies. Such deals involve fund managers establishing new vehicles to buy loans from their old funds.” We don’t see any big spillover into public markets from this at the moment, but this activity’s more than tripling in a year should give those contemplating the space reason to pause. For more on private markets’ stretch, please see our commentary, “Inside Wall Street’s Private Equity Push.”

MarketMinder’s View: In our experience, stocks are the ultimate leading indicator, so with the S&P 500’s new high yesterday, we are partial to the view expressed here: “The most convincing bull case for U.S. stocks is that geopolitics and international relations are, as so far this year, just noise. The signal that matters comes from earnings. Since earnings have been great, and are forecast to be greater still, all’s good so long as the economy stays strong—as it has. ... The consensus of analysts is for S&P 500 earnings to rise 15% this year and another 15% next year, after 13% last year, which would be the first three-year run of double-digit earnings growth since before the financial crisis in 2008.” But a couple caveats. While forward-looking stocks lead, they can also be volatile short term for any or no reason. New highs are great, but like all past prices, irrelevant for the future. More important for stocks’ directional trend: reality versus expectations 3 to 30 months ahead. On this score, as the article acknowledges, “The obvious problem with the bull case is that it is already a common view.” If everyone is bullish, the wall of worry stocks climb wouldn’t have much of the titular “room to run.” But sentiment on its own isn’t predictive. What matters is sentiment relative to reality. Expectations can be warmer without overshooting, which we think is the case today and visible in things like economic and consensus S&P 500 forecasts. Also, sentiment isn’t universally optimistic—with the list of risks and worries closing out the piece a case in point. We would also add that when looking overseas, sentiment is generally more tempered (especially in the UK and Europe)—indicating a higher wall of worry and a reason we think non-US stocks likely lead again this year.

MarketMinder’s View: Need more evidence of non-US trade’s resilience? “This month Prime Minister Mark Carney visited Beijing, where he touted ‘building a new strategic partnership’ with China. Speaking at Davos last week, he warned of a ‘rupture’ in transatlantic relations and promoted Canada as an ‘energy superpower’. Carney is due to visit India shortly. Oil production hit a record 5.19mn barrels per day in the first six months of 2025, up from 5.13mn b/d in 2024, according to Canada’s energy regulator. Sales to China more than quadrupled to 88.7mn barrels last year, according to shipping data analysed by the Baltic and International Maritime Council; US oil exports to China fell 61 per cent in the same period to 39mn. The surge comes after the opening of the Trans Mountain Extension pipeline in May 2024, which enabled Canadian crude to flow from Alberta’s oilfields to the west coast for export to Asia.” (Note here, as always, MarketMinder is nonpartisan, preferring no party nor any politician, and seeking only to discuss political developments’ potential market ramifications.) In global trade, when one door closes, others often open. Surging Canadian oil exports to Asia show businesses find a way when one market (in this case, the US) makes it more difficult to trade—a better-than-appreciated reality few fathomed last year in the wake of Liberation Day.