Daily Commentary

MarketMinder’s View: This longish article provides an in-depth look at some of the lengths companies will go to get around sanctions. We have written before about how Western sanctions on Russian oil are mostly symbolic—the focus here is on fellow OPEC+ member Iran. It details how a dark fleet of “Aging ships, often operating under flags of convenience and without insurance,” can transfer billions of dollars of sanctioned Iranian oil to China, “even though the country, officially, hasn’t imported a drop in more than two years.” Per this investigative piece’s findings, “It’s impossible to gauge precisely how much oil is moving via this channel. But even making conservative assumptions about tanker size, the data suggest some 350 million barrels of oil changed hands in this hotspot in the first nine months of this year. Taking into account the average oil price for 2024 and the discount applied to sanctioned crude, that amounts to more than $20 billion. The true value is likely far higher.” While these subversions may carry geopolitical ramifications—some of them detailed in the article’s second half—from a market perspective, we think these developments undercut fears that sanctions and other trade barriers disrupt global commerce. Though it may be less visible below board, that doesn’t make it less real. And stocks deal in separating reality from perceptions. Something for investors to keep in mind given the prevalence of third-party countries not bound by Western trade restrictions. Where there is incentive, trade usually finds a way around seeming obstacles.

MarketMinder’s View: This article touches on politics, so as a reminder, we are nonpartisan and don’t favor one party or politician over any other—our focus is on election outcomes’ potential market effects only. Also, please remember MarketMinder doesn’t make individual security recommendations. Specific companies cited serve solely to highlight the broader theme: so-called insider sales, i.e., executives selling shares of their own companies. This article speculates that some of these sales could be tied to President-elect Trump’s return to the White House (e.g., uncertainty about Trump’s economic policies are prompting selling), yet that seems like a bridge too far to us. As pointed out here, “The rate of so-called insider sales has hit a record high for any quarter in two decades, according to VerityData. The sales, by executives at companies in the Wilshire 5000 index, include one-off profit-taking transactions as well as regular sales triggered by executives’ automatic trading plans.” That latter point means this selling would have happened regardless of who won the White House. Also, as the chart here shows, past insider selling spikes all occurred in the middle of bull markets—selling then just because execs did would have carried a big opportunity cost. As the article sensibly points out, “insider selling is routine,” which we would add is often to diversify executives’ concentrated positions when lock-up periods expire—it may be that many just happen to coincide. Meanwhile, insider sales data don’t say where the proceeds go. For more on why C-suite selling isn’t anything to go by, please see our 2020 commentary, “Don’t Let Insider Sales Lead You Astray.”

MarketMinder’s View: Ominous-sounding title aside, this shows aggregate household finances are in fine fettle. “By many measures, Americans are hardly gorging on debt right now, as they are often thought to be doing. Moody’s Ratings pointed out that household debt in the third quarter grew slower than nominal gross-domestic product, at 3.8% debt growth from a year earlier versus 4.9% nominal GDP growth. On an inflation-adjusted basis, total household debt remains more than a trillion dollars below the record high hit at the end of 2008, according to figures calculated by WalletHub. With population growth factored in, it is even relatively lower. Credit-card debt for the average household, for example, is almost 13% off its peak level.” But the article focuses on the potential negative consequences, pointing out that too little lending is bad because it starves the economy of credit. That could limit economic growth while also raising the risk banks chase less creditworthy borrowers in pursuit of profits—which could store up potential future trouble. But look at the data. Although relatively slow by historical standards, total bank lending is growing 2.5% y/y (per the St. Louis Fed). People may not be clamoring for credit, but it remains accessible. And worrying about eroding credit quality seems off base when the latest Q3 Senior Loan Officer Opinion Survey shows banks still mostly reporting tighter lending standards (per the Fed). In our view, the fears here are misplaced. The silver lining for investors is the abundance of caution on display suggests pockets of skepticism persist—worth keeping in mind from a sentiment perspective.