In this week’s EVA, we are putting aside our concerns about excessive debt levels, reckless central bank policies, inflated asset prices, and widespread investor complacency to focus on the long-term promise offered by America’s technology sector. As you will read, there is a lot to be excited about over the next five to ten years and, in some cases, the future is now.
In the financial newsletter industry, John Mauldin is like LeBron James. No one stands taller or is more popular than John with his million-plus circulation of Thoughts from the Frontline. Candidly, John’s work inspired me to start writing the Evergreen Virtual Adviser back in 2006 (so now you know who to blame!).
In March, Evergreen outlined our near- and long-term concern for an escalating trade war in The Trump Trade Tirade. Well, ladies and gentlemen, it seems as if the worst
has come is coming to fruition.
First, please accept my apologies that this EVA issue, based on my in-progress book titled “Bubble 3.0”, is out of sequence. My intent was to run it as a later chapter in the actual book, but I was concerned that if I didn’t run it soon as part of our newsletter, I might miss my chance to create this on a before-the-fact basis. If you are wondering what that “fact” might be, it relates to my suspicion that we might in the final act of what I have formerly referred to as “The Great Levitation”.
Over the last year, it has been a challenging environment for bond investors as interest rates continue to grind higher. Inflation readings registering multi-year highs are certainly one factor causing higher borrowing costs. However, perhaps the biggest influence on higher rates is the shifting supply and demand dynamic from fiscal and monetary policy changes. On the fiscal side, the tax overhaul, along with increased military and domestic spending, is expected to significantly widen our budget deficit, which means a surge in treasury borrowing.