Market Perspectives

5G Rising

At this point, you have likely heard the term “5G” thrown around in sim­i­lar fash­ion to AI (arti­fi­cial intel­li­gence), autonomous dri­ving, and IoT (inter­net of things). The evo­lu­tion of fifth-​generation (hence, 5G) cellular/​mobile net­works will pro­vide a host of oppor­tu­ni­ties for busi­nesses, con­sumers, pub­lic enti­ties, and investors alike in the years ahead as the new mobile com­mu­ni­ca­tion super­high­way will facil­i­tate the faster trans­mis­sion of increas­ingly large data vol­umes. While increased data flow brings with it incre­men­tal cyber­se­cu­rity and per­sonal infor­ma­tion shar­ing chal­lenges, if man­aged respon­si­bly the ben­e­fits of 5G stand to out­weigh the risks.

Deficits and Mar­ket Churn

As we pro­ceed through the fourth quar­ter of 2018 we are expe­ri­enc­ing one of the most intense peri­ods of equity volatil­ity since this long bull mar­ket began in 2009. There are mul­ti­ple con­tribut­ing fac­tors at play includ­ing geopo­lit­i­cal ten­sions, expen­sive stock val­u­a­tions, ris­ing inter­est rates, and trade dis­putes. Region­ally, the Euro­pean Union exper­i­ment is start­ing to crum­ble with BREXIT sched­uled to hap­pen (or maybe not?) on March 29, 2019. The Euro­pean Cen­tral Bank is on the verge of revers­ing their unprece­dented mon­e­tary eas­ing pol­icy. Emerg­ing mar­kets are expe­ri­enc­ing their worst period of insta­bil­ity since the cur­rency crises of 1997. Chi­nese growth is decel­er­at­ing as author­i­ties strive to achieve a consumption-​based econ­omy. And in the U.S. eco­nomic and polit­i­cal uncer­tain­ties abound. As a result, we here at Zevin Asset Man­age­ment rec­og­nize that the out­look for global equity mar­kets has become increas­ingly risky through­out 2018 and par­tic­u­larly so in the third and fourth quar­ters of the year.

Auto­mo­bile Indus­try & the Elec­tric Vehi­cle Revolution

The growth of the global auto­mo­bile indus­try over the past cen­tury has been intrin­si­cally tied to the inter­nal com­bus­tion engine. Rapid advances in bat­tery tech­nol­ogy rep­re­sent a sea change for the indus­try that has fueled the accel­er­at­ing global roll­out of elec­tri­fied vehi­cles that will dis­place demand for con­ven­tional vehi­cles. The elec­tri­fi­ca­tion of vehi­cles, both pas­sen­ger and com­mer­cial, is a game changer that will dis­rupt the staid indus­try. Tra­di­tional man­u­fac­tur­ers, sup­pli­ers, and dis­trib­u­tors will be forced to con­front the new elec­tric car real­ity and the dif­fer­ent com­peti­tors, eco­nom­ics, and reg­u­la­tions that accom­pany it. If done right, this impor­tant shift can have a sig­nif­i­cant pos­i­tive effect on car­bon emissions.

War! What Is It Good For?

The clas­sic anti-​war song of the 1960s “War” per­formed by Edwin Starr for Motown records was intended as a protest against mil­i­tary con­flict dur­ing the war in Viet­nam. The singer’s bold and defin­i­tive con­clu­sion that war is good for “absolutely noth­ing” is equally applic­a­ble to the mis­guided pol­icy of trade wars. Yet here we are in the early days of this exact pol­icy blun­der, which has been con­demned as short­sighted and destruc­tive by vir­tu­ally every econ­o­mist, polit­i­cal sci­en­tist, busi­ness leader, and elected offi­cial — save one: Pres­i­dent Trump.