Green Matters – August 31, 2020

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greenmatters

Insights for the conscious investor.

August 31, 2020

 
Markets & Economy: The dismal science. 

  • The financialization of all the things (Medium) 

  • China’s days as world’s factory are over, iPhone maker says (MSN)

  • Going public circa 2020; Door #3: the SPAC (AboveTheCrowd) 

 
Trends by Generation: Greatest transfer of wealth, happening before our eyes. 

  • Coming population & demographic changes (BBC)

  • The workforce is about to change dramatically (Atlantic)

  • The city, an exodus (JamesAltucher)

  • The pandemic poised to have biggest long-term impact on Millennials’ wealth than other generations. (Wall Street Journal)

 
Small Business: The life blood of our economy. 

  • Why are local governments paying Amazon to destroy Main Street? (Fortune)

  • Small businesses are dying by the thousands — and no one Is tracking the carnage (Bloomberg)

  • Retail stores reborn as micro-e-commerce warehouses (WSJ)

  • More businesses were lost in the last 3 months than all of the Great Recession, disproportionally affecting blacks, latinx, and immigrant owned (Axios)

 
Cryptocurrency: A digital revolution.

  • Bitcoin and Ethereum are a new paradigm for how humans organize and coordinate (Bankless)

  • US Postal Service, blockchain patent (USPS) 

  • Total value locked in decentralized finance tripled in a month (CodeFi)

  • Stablecoin (backed by reserve currency) Index: $16 Billion  (StableCoinIndex)

 
Carbon, Climate & the Environment: The not so silent crisis.

  • The plan to turn half the world into a reserve for nature (BBC)

  • The simple economics of saving the Amazon rainforest (Freakonomics)

  • AI to track world’s emissions in almost real-time (Fast Company)

  • Climate Change poses ‘systemic threat’ to the economy, big investors warn (NYT)

  • How and why systemic racism harms the environment (TRF)

 
Solutions: Don’t doubt human ingenuity.

  • Though forests burn, trees retake farmland globally as agroforestry advances (MongaBay) 

  • Repairing the world in 10 years with $10 trillion global stimulus (World Economic Forum study & proposal) (TriplePundit)

  • Confronting the Climate Crisis.“It’s about the inherent conflict between capitalism and environmentalism–and how we must de-couple corporate self-interest from the public good.” (Richroll)

 
Odd Lots: A little bit of this, a little bit of that, a little bit of ohhh that’s interesting… 
  • ‘Beeing’ in the city (ScienceDaily)

  • Innovation by Design awards for social good (FastCompany)

  • It’s time to redefine what sustainable fishing means: Hundreds of thousands of marine mammals are killed each year by fishing gear. Is this “sustainable?” (Oceans)

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About this newsletter:
This newsletter is curated by professional financial advisors, wealth managers and market researchers at Willow Investments for Loving Change. We sift through the daily noise to find nuggets of emerging trends and developments in our ever-changing world, focusing on the intersection of capitalism, consciousness and social & environmental justice. How these worlds converge directs the course of our future. One way we can make loving change is to share what we are discovering. www.investwithwillow.com
 
          

Disclaimer: Neither the information nor any opinion expressed herein constitutes an offer or a solicitation of an offer to buy or sell securities. This newsletter is for general informational purposes only. All information is provided in good faith, however we make no guarantee regarding the accuracy of any information contained herein. Please review our Privacy Policy, Disclaimer and Terms of Use & Conditions for more information. 

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Market Update August 2020

August 2020

Alexandra and Paul reflect on the market and economy over the last month and share highlights, analysis and outlook of market risk indicators and economic conditions.

Play Video

Market Update Summary (August 2020):

  • The US Dollar continues to following our long-term prediction losing its strength as the reserve currency. 
  • The trend is moving towards digital currency, which is being accelerated by the current climate of COVID-19 hygiene practices as we are discouraged from passing paper money from hand to hand.
  • Gold has broken out to a place with no overhead, which means gold has never seen these prices before. This is a significantly bullish trend and indicates instability plus more evidence of an inflationary environment. 
  • GDP is down by 32%, which is a record-level.
  • The news is reporting that 90% of companies have reported beating their earning estimates. We want to point out that this is only after reducing estimates drastically. The true growth rate in the S&P is actually down 33% and revenues are down significantly.
  • Small business revenue is not just flat, it’s actually declining.  As small businesses make up a majority of our economy, this is concerning. 
  • The S&P 500 is showing a V-shaped recovery despite poor earnings this year. This current run-up generally comes with a pull-back, which could happen in September when liquidity tightens. 
  • We are currently keeping some cash available to make strategic moves when they opportunities arise, as well as exposure in markets as they continue to defy current economic indicators. We have also taken some hedge positions to the US dollar in assets such as gold.

We hope everyone is enjoying the summer. We are diligently tracking current market conditions and future economic outlooks so we can position our clients as strategically as possible.  To set up a meeting to discuss your portfolio, please click here or give us a call.

Best regards,

The Willow Team
+1 413 236 2980

Willow Risk Monitor – Aug 2020

The Willow Risk Monitor July 2020
Willow Risk Monitor August 2020

Welcome to the August 2020 overview edition of the Willow Risk Monitor, where we share our analysis of the level of risk in the current market across a variety of metrics. We also explain our thinking on how we look at and assess overall market risk, and we will often highlight what the data shows compared to what you might be hearing in the news.

Please contact us if you have any questions or if there is something you’d like more detail about. We welcome your feedback!

To learn more about the premium version of the Willow Risk Monitor, click here.

Consumer Health (proprietary algorithm)
looking at consumer health

While there clearly was a rebound from the lows, our indicators are pointing to a “recovery” that is not nearly as strong as main stream news would have you believe. This is mostly due to a lack of recovery in metrics tracking consumer confidence and a leveling of unemployment data at high levels than expected.especially small businesses, are not expecting to rehire everyone they lost.

Manufacturing Health (proprietary algorithm)
looking at manufacturing
how we look at manufacturing

While the bounce back in manufacturing looks impressive and as if there has been a return to normal, it’s important to dig into the data on this one. As expected, prints on manufacturing data that took a huge hit in March have rebounded sharply. But when looking at the individual metrics, capacity utilization is lagging in a noticeable way. We believe this will take some time to play out but the reduction in capacity utilization (which tracks the amount of national production capacity that is currently being used) will begin impacting things like factory orders, this data can take some time to show up. We recommend watching this closely to see how broad the recovery actually is, and if the big number rebound prints where just the natural response to the preceding massive drop off.increased automation… the list of items poking this sector is long…

Market Volatility (proprietary algorithm)
looking at volatility

Volatility, or the implied move in market prices for the next 30 days has found a support level in our Willow Volatility Average chart around the 27-29 level. A break lower would signify less implied risk in markets, while a move high, the opposite. We consider this a key area to watch as since April, volatility has tightened at a rapid pace but has appeared to bottom out since June.   Again, we value the velocity of the curve more than the actual number and this curve is telling us that uncertainty remains.

Bond Spreads
looking at bond spreads
how we look at bonds

Overall bond spreads have tightened which is in general a sign of lower overall risk. While early, and potentially still forming, what is noteworthy this month is that on the investment grade side, spreads have flattened and returned to pre-corona virus levels. At the same time high yield bond spreads still remain elevated comparatively. What does it mean? There are a few conclusions that can be drawn:

Investment grade bond markets believe that having backing of the Federal Reserve removes a large portion of risk from this tranche, and;
High yield bonds, while receiving some support from the Fed, are still more prone to bankruptcies, which is why spreads remain elevated compared to longer term averages.

Watch the investment grade bond spreads side closely – while levels have flattened, small upticks in A rated bonds may be signaling concerns over bankruptcies impacting these bonds.

As always, be well and please feel free to reach out with any questions, comments or concerns.

Best regards,

The Willow Team
+1 413 236 2980

ADCM, LLC dba Willow does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed.  Neither the information nor any opinion expressed herein constitutes an offer or a solicitation of an offer to buy or sell securities.