Best Renewable Energy Stocks in 2021: A Survey by Paul Harmaan

June 20th, 2021 Maria Jones Leave a comment

The global economy nowadays is pivoting towards renewable energy, leaving fossil fuels behind. According to Paul Haarman, the economy is evolving and finding ways to adapt to modern technology, changing the whole world and making it more efficient. The various green energy sources that it was planning to adopt vary from solar energy to geothermal energy, from wind to biomass, and many more.

For the economy to convert to clean renewable, there will be a need for a strong financial back which is possible only when we use the economic prowess of renewable energy, and this is only possible through their stocks. So let us go in-depth to understand a few of those energy stocks.

Stocks for Top Renewable Energy

According to Paul Harmaan, various energy stocks like biomass, wind, solar, geothermal, etc., are present, which could support fast-forwarding the clean energy conversion for the economy. First, however, we will look for two of the best stocks where you should invest your money to get the best returns

First Solar

First Solar is one of the top leaders responsible for developing efficient thin-film solar panels. The company produces low-cost electricity per watt compared to the traditional silicon-based panels. Their solar panels are efficient mainly because they work well in extreme hotness and humidity conditions and work efficiently in shedding snow and debris quickly. These few features make them the most ideally used solar panels for utility-scale applications.

Moreover, the panel manufacturing sector of the first solar acts like a strong balance sheet responsible for making First Solar the number one choice and making it stand out.

NextEra Energy

NextEra Energy is responsible for two businesses which it runs efficiently. One business shows the efficient use of the competitive energy segment and is responsible for generating electricity. Besides this, it also transports natural gas under fix-free agreements that are beneficial for the long run. At the same time, the other one revolves around the rate-regulated electric utilities that NextEra Energy takes responsibility for and distributes that power to various businesses and consumers.

One of the highest credit ratings with the support of the largest electric utilities makes the NextEra Energy-efficient in working its stable operations responsibly. The two efficient businesses conducted by NextEra Energy are solely credited, and why shouldn’t they? The combined powers of both businesses help produce extra units of energy from natural resources like that of the wind and the sun, which any other company in the world is incapable of, making it a unique company.

Future of the Top Renewable Energy stocks

The effective and efficient shift by the world economy from fossil fuels to renewable energy sources or clean energy sources has created a massive opportunity for a variety of investors to look into the profits. At the same time, they understand the concept of how these sources can change the world and turn it into a better place. Suppose there is a need to find the future of these top renewable energy stocks. In that case, the most important thing to look for is the balance sheet of the company and the solar energy-focused growth profile, as these two main factors are highly responsible for generating higher returns in the future both for the world and the investors.

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CHINA IS GIVING ANCIENT SILK ROAD TRADE ROUTES A DIGITAL MAKEOVER

July 27th, 2020 Leigh Wedell Leave a comment

The New Silk Road is Paved by Bits and Bytes

In 2015, China launched its Digital Silk Road (DSR) initiative. The DSR is the digital backbone for China’s modern reconstruction of the ancient silk trade routes. Against the backdrop of heightened U.S.-China tensions and the COVID-19 pandemic, the DSR is how China is creating new trade ecosystems and deepening its trade relations across the developing world.

The pandemic has propelled us all faster toward a digital world as we adapt to distance learning, working from home, telehealth, and online shopping, putting technology at the center of economic life.

The pandemic has also shone a spotlight on reliance on China for imports of critical products like personal protective equipment and pharmaceuticals.

These dynamics are fueling China to accelerate its global tech drive – embodied by the DSR – as well the backlash against it, primarily led by the United States. We are entering a “tech cold war” with China’s Digital Silk Road at the epicenter.

The DSR is neither well defined nor understood, but it will re-shape the global economy. Here’s what you need to know.

What the Digital Silk Road and McDonald’s Have in Common

Paul Triolo, a leading U.S.-based China tech analyst, compares the structure of the DSR to the groundbreaking business model of McDonald’s: In a word — it’s about franchising. China’s publicly traded tech giants establish technological outposts or “franchises” that receive political, financial, and branding benefits under the DSR marketing umbrella from the state, which China’s competitors claim tilts the playing field against other international players.

The Digital Heart of China’s Belt and Road

China’s Belt & Road Initiative (BRI) was announced by President Xi Jinping in 2013. It’s an ambitious plan to rebuild the land (belt) and maritime (road) trade routes of the ancient silk trade routes, extending throughout the developing world from central Asia to the Middle East, and to Latin America and the Caribbean. To date, 137 countries have signed onto the program. All in, BRI is estimated to be a trillion-dollar infrastructure build, but the BRI is already showing signs of shifting global trade flows.

As the signature foreign policy of President Xi, activities to advance the BRI are a top priority across Chinese government and business sector. The Digital Silk Road is a key part of the BRI vision. So far, 30 countries have MOUs with China for DSR projects – spanning from Laos up to Kazakhstan, across to Egypt, Saudi Arabia, and the UAE and stretching to Peru and the Dominican Republic.

The DSR encompasses a vast array of tech projects: building the physical infrastructure for 5G networks, laying fiber optic cable, and constructing and equipping data centers. By design, it also includes promoting China’s standards for telecom, satellite navigation, artificial intelligence, quantum computing, and electronic payment systems throughout the countries where DSR projects are underway.

DSR projects combine the hard and soft infrastructure that enable the trade efficiencies promised by this next generation of technology. Under the so-called “franchise” model, public and private Chinese tech companies leverage state funding, political support, and the China brand to compete effectively for major projects around the world. The growing network of BRI trade hubs are connected through smart ports and digital free trade zones.

Tech-Fueled Competition

Many developing countries are attracted to China’s investments that enable technological leapfrogging and the deployment of next-generation technologies in manufacturing and service-delivery. But China’s aggressive strategy has led to mounting concerns about the security implications of China’s potential dominance in the technology that drives the global economy, but that could also be used in more concerning ways.

Chinese tech products, particularly in telecommunications, are alleged to enable cyber espionage, providing the Chinese Communist Party access to sensitive data. China’s push to conform international standards to Chinese tech products could effectively shut out competition in third markets. The Trump administration initiated an investigation into unfair trade practices such as state funding to companies like Huawei that enable them to undercut Western competitors on price. The international community is also raising concerns about China’s use of facial surveillance products to target and suppress political, religious, or ethnic minorities, amounting to fears that a techno-authoritarianism governance model could also be exported.

Some of these concerns may be overstated, but the lines between private competition and state security are blurred when it comes to emerging technologies in China. Chinese companies are capable of producing high-quality 5G telecom products. China’s satellite navigation system, known as Beidou, went fully operational in June, and stands as a competitor to the U.S. GPS system and Europe’s Galileo system. China dominates the financial technology space, largely leapfrogging credit cards and offering solutions to global financial inclusion. China is also launching a digital currency that will be piloted domestically and along the BRI. Most controversially, China is the global leader in surveillance and facial recognition technology, offering these products at a much lower cost without the significant export controls used by other countries.

How a Tech War Could Affect Trade

The DSR is part of a larger tech race which could divide the world into at least two systems: one operating with Chinese products and standards, the other with Western products and standards. Separate systems could face interoperability issues and challenges with cross border data flows or become subject to geopolitical fractures that force countries to choose political sides when they choose tech systems. Or, countries may have to build infrastructure to accommodate both systems, at great expense, which could undermine many of the trade efficiencies that would otherwise be achieved by these technologies.

The opening battles of the tech race are already producing trade disruptions. After years of pressure by the United States, the UK announced last week that Huawei products are barred from their telecom networks, citing national security concerns. British telecom companies are prohibited from buying Huawei products after this year and will have seven years to remove all Huawei products from current networks. The United States placed Huawei on its Entity List, limiting U.S. exports to Huawei that will severely restrict the company’s access to the semiconductors needed to make their products. That lack of access will also factor in countries’ decisions about the viability of Huawei systems in the long run. And last week, U.S. Secretary of State Mike Pompeo announced that employees of Huawei and other Chinese tech firms will not be eligible for U.S. visas, citing complicity in human rights violations.

Despite the international response, China’s biggest challenge may arise from its internal policies restricting cross border data flows, as well as from conflicts between its domestic practices and other country’s requirements to secure data and protect privacy.

Where the Fault Lines May Emerge

Even as it works to overcome these hurdles, China’s tech drive into developing countries will continue. Many developing countries are reeling from the pandemic and falling behind on building digital infrastructure.

The Chinese government offers an attractive lifeline to developing countries, packaging hard infrastructure and software at good prices and high quality. It can build a new port and digitize traditional port operations while investing in the development of smart cities around those smart ports. China’s offer may prove to be more consequential in practical and political terms than ever before. Without strong alternatives, the tech competition could create fault lines in developing countries, further fracturing global trade.

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Leigh Wedell is a Founder and COO of Basilinna and Senior Fellow at the Paulson Institute. A veteran facilitator of U.S.-China business relations, she has advised leading multinational firms across all major business sectors on China market entry and expansion, crisis management, and corporate social responsibility programs. She began her career working on political development projects traveling to more than half of China’s provinces.

This article originally appeared on TradeVistas.org. Republished with permission.

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Delta-LATAM Airlines Partnership Increases Connectivity and Options for Customers

September 27th, 2019 GT Staff Leave a comment

Delta and LATAM Airlines confirmed a strategic partnership this week, ultimately combining strengths and bringing an increase in overall connectivity between in North America and Latin America. This partnership represents added opportunities within the existing partnerships such as extending networks and each company’s global presence. By adding value and optionality to their Americas customer base, both Delta and LATAM are enabled to increase customer destinations while combining strategies for top-notch passenger service.

“This transformative partnership with LATAM will bring together our leading global brands, enabling us to provide the very best service and reliability for travelers to, from and throughout the Americas,” said Ed Bastian, Delta’s chief executive officer. “Our people, customers, owners and communities will all benefit from this exciting platform for future growth.”

Beyond the customer impact the partnership creates, opportunities for investment and savings will also play a key role in offering support, free cash flow, forecasted debt reduction, aircraft acquisitions and more. Delta confirmed a $350 million establishment investment in addition to a $1.9 billion investment for a 20 percent stake in LATAM through a public tender offer at $16 per share.

“This alliance with Delta strengthens our company and enhances our leadership in Latin America by providing the best connectivity through our highly complementary route networks,” said Enrique Cueto Plaza, chief executive officer of LATAM. “We look forward to working alongside one of the world’s best airlines to enhance the travel experience for our passengers.”

To learn more about this strategic partnership, please visit ir.delta.com OR www.latamairlinesgroup.net/investor-overview for webcasts recapping partnership details.

Source: Delta Airlines

Archives, Global Trade Daily, International Trade

SMALL AND MEDIUM-SIZED GLOBAL TRADERS ARE BANKING ON BLOCKCHAIN

July 22nd, 2019 Christine McDaniel Leave a comment

This is the second in a three-part series by Christine McDaniel for TradeVistas on how blockchain technologies will play an increasing role in international trade.

Give Me Some Credit

Every business requires capital to operate. To sell products to customers overseas, many companies also need trade financing and insurance from third-party lenders. About 80 percent of all global trade is transacted through third-party lenders and cargo insurers, but the process is complex, can be costly and many banks find it too risky to support small and medium-sized enterprises (SMEs).

Blockchain has the potential to increase transparency, speed and accuracy in assessing risk across the trade finance process, which in turn could expand the supply of credit available for international trade transactions – good news especially for SMEs that face significant hurdles accessing credit. Here’s how.

Pay Me Now or Pay Me Later

Buyers who import goods from sellers in other countries generally want to pay upon receiving the merchandise so they can verify its physical integrity on arrival. Exporters, on the other hand, generally prefer to be paid as soon as they ship the goods. Trade finance can bridge this gap.

Exporters and importers engage third-party lenders and insurers who will guarantee payments on the basis of collateral and indemnify the exporter, importer and related parties in the event that the merchandise is damaged, stolen or lost while in transit. In this way, trade finance provides the credit, payment guarantee and insurance needed to facilitate an international trade transaction on terms that will satisfy all parties.

Steps on the Trade Journey

Intermediaries such as freight forwarders typically manage the physical journey of merchandise, from the original producer to the border, across the border (maybe several borders), and to the final buyer.

Each step must be verified: when was the merchandise transported from the factory or farm to a warehouse, when was it moved from the warehouse to a container, when was the container loaded onto a ship, when did the ship get underway, when was the container unloaded from the ship at port, and when was the merchandise transported from the port to the end consumer.

Different trade finance instruments, such as lending, letters of credit, factoring and cargo insurance cover legs of the journey. A letter of credit is a guarantee from a bank that a buyer’s payment will be received and be on time or else the bank will take responsibility for the payment. Factoring is accounts receivable financing to accelerate cash flow. Cargo insurance insures the merchandise while en route.

Without Finance, Trade Would Sink

The World Trade Organization estimates that 80 percent of global trade relies on trade finance or credit insurance. The global trade finance sector (i.e., the global volume of letters of credit) is worth roughly $2.8 trillion. Demand for trade financing exceeds availability, resulting in the underutilization of existing capital. According to the Asian Development Bank, the global trade finance gap — the difference between the demand for and supply of trade finance — has reached $1.6 trillion.

SMEs Face a 50 Percent Rejection Rate

The shortfall in supply reflects the complex and risky nature of trade finance which often involves multiple parties. Before banks will issue letters of credit in trade finance, they require potential customers to present a solid credit history and a strong balance sheet, conditions that tend to favor larger institutions.

SMEs typically experience more difficulty navigating the trade finance process and dealing with the cost and complexity of banking regulations than larger companies. In 2014, SMEs had trade finance requests before financial institutions rejected at a rate of over 50 percent. In comparison, the rejection rate for multinational corporations was only seven percent.

Links in the Trade Finance Chain

According to the United Nations, there are typically eight major steps required to obtain a letter of credit, although in practice the Credit Research Foundation lists more than twenty. Each step of the process is dependent on the previous steps, and some steps involve sending the same document back and forth for verification purposes. The administrative burden is greater for SMEs than for large firms.

A survey of 2,350 SMEs and 850 large firms conducted by the U.S. International Trade Commission in 2010 showed that lack of access to credit is the major constraint for SME manufacturing firms seeking to export or expand into new markets and it is one of the top three constraints for SME services firms.

How Blockchain Can Help Ease Trade Finance

Requirements to authenticate each transaction in the trade finance and insurance process can engender large amounts of paperwork and cause delays at each step. Every handoff must be approved and verified.

Instead, blockchain uses digital tokens that are issued by each participant in the supply chain to authenticate the movement of goods. Every time the item changes hands, the token moves in lockstep. The real-world chain of custody is mirrored by a chain of transactions recorded in the blockchain.

The token acts as a virtual “certificate of authenticity” that is much harder to steal, forge or hack than a piece of paper, barcode or digital file. The records can be trusted and greatly improve the information available to assure supply-chain quality.

Using blockchain as a digital ledger for these handoffs would allow involved parties to instantly track and receive secure information about the traded goods. Parties can monitor the entire shipping process and verify the completion of each step in real time. This increased transparency and ease of monitoring reduces the risk that a borrower presents to a potential lender or insurer.

Banking on Blockchain

A number of financial institutions are piloting the use of blockchain-enabled trade finance platforms.

Bank of America, HSBC, and the Infocomm Development Authority of Singapore collaborated in 2016 to develop a trade finance application designed “to streamline the manual processing of import/export documentation, improve security by reducing errors, increase convenience for all parties through mobile interaction, and make companies’ working capital more predictable.” Using the application, each action in the workflow is captured in a distributed ledger and all parties (the exporter, the importer, and their respective banks) can visualize data in real time, offering transparency to authorized participants while ensuring confidential data is protected through encryption.

Barclays used blockchain in 2017 to issue letter of credit that reportedly guaranteed the export of $100,000 worth of agricultural products from Irish cooperative Ornua to the Seychelles Trading Company, noting the parties were able to execute a deal in four hours that would usually take up to 10 days to complete.

A group of European banks launched a trade finance blockchain platform in July 2018, initially focused on facilitating small and medium-sized businesses trading within Europe. In September 2018, the Hong Kong Monetary Authority announced plans to launch a trade finance blockchain platform. Twenty-one banks are participating in the platform, including large institutions such as HSBC and Standard Chartered. The Hong Kong Monetary Authority is also reportedly working with its counterpart in Singapore to develop a blockchain-based trade finance network to settle cross-border transactions.

Lessons for Trade Policymakers

As the trade finance industry begins to utilize blockchain technology, there are some potential implications worthy of policymakers’ attention.

First, the large number of intermediaries and corresponding administrative costs in trade finance tend to fall particularly hard on SMEs and the relatively higher cost of each transaction makes SME financing less attractive to banks. If blockchain can reduce the costs of trade finance, more small and medium-sized businesses could trade globally.

Second, although blockchain technology does not alter the fundamental credit risk of borrowers, the increased transparency and access to information it delivers could improve the accuracy of banks’ risk assessments. If perceived risk is greater than actual risk, a nontrivial number of loan applications may be denied even though those loans have the potential to be successful. If blockchain brings greater confidence and issuance of good loans — that is, those that are paid back — the transactions they support would bring value to the economy.

In these important ways, blockchain can increase transparency across the trade finance process and decrease risk for all parties, in turn expanding the supply of credit available for international trade transactions.

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

This article originally appeared on TradeVistas.org. Republished with permission.

Archives, Global Logistics, Global Trade Daily

Smart Logistics: Catalysts Changing the Logistics Sector

June 11th, 2019 Paul Asel Leave a comment

The logistics industry is watching closely as United States and China negotiate to resolve their trade war amidst the threat of higher tariffs starting March 1. At stake is $635 billion in annual trade – China exports $505 billion and imports $130 billion with the US^[i]. These negotiations have repercussions for the global economy well beyond the US and China. Many industries engage vast trade networks that span myriad countries leaving few markets or nations exempt from these talks. For the US alone, which imports $2.3 trillion and exports $1.5 trillion annually^[ii], its entire trade regime is now in play.

Countries are not alone in broiling trade disputes. This month XPO issued a profit warning citing the expected loss of $600M^[iii], or 3.5%, of revenue from an unnamed customer. Amazon, widely believed to be XPO’s unidentified customer, is expanding its own logistics capacity. The expansion of e-commerce has been a boon for the logistics industry and bane for traditional retailers. Now as Amazon develops its own distribution capability, logistics providers and retailers alike are threatened.

Global Logistics – an Industry in Transition

Ecommerce has been a key growth driver for the global logistics industry, which is expected to grow 7.5% annually from $8.1 trillion in 2015 to $15.5 trillion in 2023^[iv]. The logistics of delivering directly to consumers is far more intensive than distributing in bulk to big box retailers. Long haul full truckload remains the largest market segment in logistics with a 70% share, yet less than truckload, parcel and intermodal – which together comprise 15% share of the logistics market – are fastest growing.

The politics of logistics extends beyond trade disputes. US freight employs over three million truck drivers. As the graph below indicates, trucking is the largest employer in 29 of 50 states across the US. The American Trucking Association estimates a need for an additional 900,000 truckers^[v] over the next ten years to keep up with demand. The industry already faces a shortage of over 50,000 drivers^[vi]amidst the need to replace an aging workforce: 57% of US truckers are over 45 years old and 37% are over 55^[vii]. Given the backlash over Amazon’s recent pullback of a second headquarters in New York City for 25,000 jobs^[viii], one might imagine the political stakes involved with four million truck drivers across the US in the coming decade.

Logistics – a Magnet for Venture Capital Investment

Venture capital has poured into the logistics sector in recent years. In 2018, global venture investment in logistics reached nearly $14 billion, more than the three previous years combined. Funding for supply chain, logistics and shipping businesses continues to grow in 2019. In February alone, investors have committed over $5 billion to the logistics sector. Major financings include a $1 billion investment in Flexport for intermodal logistics, $940 million in Nuro for its self-driving delivery vans, $700 million in Rivian for electric delivery vehicles, $400 million in DoorDash for local food delivery, and $300 million in Hong Kong-based Lalamove for last mile delivery.

Five catalysts are driving innovation and investment in the logistics sector:

Ecommerce: Online retail continues to cannibalize physical retail. Ecommerce in the US reached 9.8% of total US retail in 2018, nearly triple the share of retail ten years earlier^[ix]. Ecommerce is growing even faster in Asia, Europe and the Middle East. Traditional retailers are embracing omnichannel marketing as ecommerce extends to more retailing categories. The physical landscape will change dramatically in the decade as ecommerce players build more warehousing capacity replacing stores due to overcapacity in the traditional retail sector.

Crowdsourcing: Much as Uber, Lyft and Didi among others have disrupted the taxi industry through crowdsourced drivers, the gig economy is infiltrating the logistics sector enabling new services. Consumers are the biggest beneficiary through the rise of the concierge economy. Crowdsourcing has lowered delivery costs making home deliveries available for a broader range of items. Food delivery has received most funding with the rise of Uber Eats globally, Doordash and Postmates in the US, Just Eat and Deliveroo in Europe, Swiggy in India, and Meituan in China.

Intelligent Automation: The securities brokerage industry has gone digital in the past two decades. The logistics brokerage industry still runs on phone calls and fax machines with limited price transparency and inefficiencies borne by limited supply chain visibility. Digital brokerage is now coming to the logistics sector through the confluence of sensors, cloud and intelligent automation. ELD and camera technology now monitor drivers reducing wait times, reducing accident risk, and helping to adjudicate cases when accidents occur. Venture backed companies that have raised $100 million or more in the US alone include Convoy, Flexport, Nauto, Next Trucking and Transfix, amongst others.

Electric Vehicles: The prospect of replacing diesel trucks is as welcome as replacing gas vehicles in the consumer sector. Tesla is now tackling the challenges of transporting large trucking payloads. Others are as well including the recently funded Rivian Automotive and Thor Trucks.

Autonomous Technology: End-to-end autonomous trucking may still be decades away yet the use of autonomous technology in logistics is already live in the warehouse with pilots underway for first and last mile as well as interstate long-haul deliveries. Autonomous delivery startups announced over $1.5 billion in February alone, including Endeavor Robotics, Ike and Nuro in the US and AutoAI, Mogu Zhixing and TuSimple in China.

Logistics is a vast sector ripe for innovation across the supply chain. Entrepreneurs and investors have flocked to logistics seeking to disrupt an industry representing over 5% of the US economy. While investment in logistics has increased substantially, funding has focused on major sectors. We believe many opportunities remain for further innovation across the supply chain as new technologies such as robotics, autonomous vehicles and machine learning develop for the logistics sector.

^[i] Stifel analyst report

^[ii] Stifel analyst report

^[iii] https://www.thestreet.com/investing/xpo-plummets-on-earnings-miss-and-warning-about-2019-14868169

^[iv] https://www.prnewswire.com/news-releases/global-logistics-market-to-reach-us155-trillion-by-2023-research-report-published-by-transparency-market-research-597595561.html.

^[v] May 2018 Techcrunch article

^[vi] May 2018 Techcrunch article

^[vii] Stifel analyst report

^[viii] https://www.nytimes.com/2019/02/14/opinion/amazon-new-york.html

^[ix] https://ycharts.com/indicators/ecommerce_sales_as_percent_retail_sales

Archives, Commentary, Global Trade Daily

If The Bull Market Turns Bear, Is Your Portfolio On The Right Cycle?

May 1st, 2019 Dr. Joseph Belmonte Leave a comment

The current bull market – at 10 years and counting – is the longest in the nation’s history. But instead of celebrating that longevity, plenty of people are worried about how much longer the good times can last, and whether we could be headed for a recession.

What does that mean for investors fretting that the next bear market will devastate their investment portfolios?

For one thing, those investors might want to ask themselves whether the stocks they are invested in are cyclical or non-cyclical, says Dr. Joseph Belmonte, an investment strategist and author of Buffett and Beyond: Uncovering the Secret Ratio for Superior Stock Selection (www.buffettandbeyond.com).

The answer could be critical, he says, because cyclical stocks perform well when the economy is humming along, but struggle when things turn sour. That’s largely because cyclical stocks are companies that provide something that’s not essential to daily living or that consumers can at least postpone purchasing.

“Sometimes a cyclical stock will begin to decline nine months before the market begins to weaken because of a pending recession,” Dr. Belmonte says.

Examples are stocks for companies such as car manufacturers, higher-end retail stores, and mortgage companies. Specific examples are Ford, General Motors, Caterpillar and Macy’s.

Non-cyclical stocks, on the other hand, are the stores or companies people flock to for bargains when times grow tough. Some of these stocks are Dollar Tree, Costco and Ross Stores.

But for investors, just knowing the answer to the cyclical, non-cyclical question is not enough, Dr. Belmonte says. They still need to review a company’s numbers.

“If properly used, the numbers will tell us almost everything we need to know about a company,” he says. “If we use the correct numbers in the correct way, the bottom-line results will tell us which companies we want in our portfolio.”

The problem, Dr. Belmonte says, is that most analysts and investors use the wrong numbers when trying to decide whether a stock is a good or not-so-good option.

A comparable method of measuring the efficiency of a company’s operations. That’s why Dr. Belmonte is a proponent of what’s known as clean surplus accounting. He says the most prominent investor who uses this method is Warren Buffett. Here’s a quick overview of how clean surplus accounting works:

-Traditional accounting determines the return on equity (ROE) by using earnings from the income statement divided by the book value (owners’ equity) from the accounting balance sheet. “This is not a good measure of comparing one company to another because that’s not what it was meant to do,” Dr. Belmonte says.

-Clean surplus instead uses net income from operations as the “return” portion of the ROE. It then constructs its own “owners’ equity” as the “equity” portion of ROE. The return on equity, as configured by clean surplus accounting, is truly a comparable method of measuring the efficiency of a company’s operations, Dr. Belmonte says.

-Net income minus dividends, of course, will net a different owners’ equity than will earnings minus dividends. It is this new calculation of owners’ equity (net income minus dividends) that allows a truly comparable return-on-equity ratio to be developed. And it is this comparable ROE ratio that is the foundation of the success of clean surplus, Dr. Belmonte says.

With a potential recession looming on the horizon, Dr. Belmonte says, it’s vital that you review your portfolio, examine whether you have cyclical or non-cyclical stocks, and then put those companies to the clean surplus accounting test.

About Dr. Joseph Belmonte

Dr. Joseph Belmonte, author of Buffett and Beyond: Uncovering the Secret Ratio for Superior Stock Selection (www.buffettandbeyond.com), is an investment strategist and stock market consultant. He is fond of saying, “If you want to live on the beach like Jimmy Buffett, you’ve got to learn how to invest like Warren Buffett.” Dr. Belmonte has developed hedged growth income strategies for family offices, and has lectured to numerous professional and investment groups throughout the country. His weekly video newsletter is sent to thousands of investors, money managers, and academics both nationally and internationally.

Archives, Global Trade Daily, Special Reports

3 Keys to Become More Resilient: How Mindset, Skillset, and Ability to Reset Empowers Leaders

April 29th, 2019 Anne Grady Leave a comment

Building resilient organizations requires resilient leaders. Being resilient enables you to overcome setbacks, build effective teams, and stay focused on what really matters in your life and company.

Resilience is our ability to recover when we are faced with obstacles, difficulties, and setbacks. It allows you to tap into your strength and courage so you can persevere when things don’t go as you had planned.

Research finds that resilient people excel in problem solving, positive communication, emotional intelligence, and emotional regulation. They are also more hopeful and optimistic, and have higher levels of self-esteem. These are vital skills for leaders, both for their own health and happiness and to inspire their teams.

The people who work for you pay close attention to how you deal with challenges. Resilient leaders look at failures not as crushing defeats but as opportunities to grow and move forward. Resilience allows you to set a powerful, positive, effective example.

When I speak to groups, I sometimes begin by asking: “How many of you have survived the worst thing that has ever happened to you?” It’s a way of demonstrating that we are all, by our very nature, strong and resilient.

At the same time, resilience is not static. It is a set of habits, beliefs, and behaviors we can cultivate and practice proactively, so they are there when we need them. And whether we like it or not, life gives us plenty of opportunities to practice!

Fortunately, you don’t have to wait for a major setback or traumatic event to begin building your resilience. You can start today by focusing on three areas: your mindset, skillset, and your ability to reset:

Mindset includes your habits, emotional intelligence, and beliefs. Your mindset is the story you tell yourself about yourself, including how you think about stress. When we are under stress, the emotional center of our brain lights up, shooting the stress hormones cortisol and adrenaline through our brain and body. This was originally intended to help us freeze, run away, or fight an impending attacker; the same process happens when we face an emotional setback or threat. Your brain doesn’t know the difference between a real or perceived threat. When you identify how you respond to stress, you can begin to proactively manage it. The bottom line: Our beliefs drive behavior. And beliefs can be changed.

Skillset includes our ability to cultivate gratitude, optimism, and other positive emotions; to manage stress; to mitigate negative self-talk; and to engage in activities that are good for us like humor, social connection, mindfulness, and self-care. Some skills you can start practicing today include:

–Gratitude. Numerous scientific studies have shown that practicing being grateful on a regular basis lowers blood pressure, reduces inflammation, improves heart health and sleep, and lowers our levels of stress. People who practice gratitude have improved sleep, mood, decision-making, and relationships along with fewer aches, pains, and bouts of depression. The benefits are almost immediate. You don’t even have to find anything to be grateful for. The simple act of looking releases the feel-good neurochemicals serotonin and dopamine and lowers the stress hormone cortisol by 23%.

–Optimism also lowers cortisol and increases dopamine and serotonin. People who practice optimism have fewer aches and pains, along with better physical and mental health. It has also been linked with higher income and more successful relationships.

–Mindfulness is simply being where you are when you’re there. Mindfulness trains your mind to focus on the moment instead of worrying about what occurred in the past or what might happen in the future. This makes you less likely to hit the panic button, and reverses stress-related changes in the brain.

–Laughter is good for your soul and your brain. Studies show a genuine smile (one that involves facial muscles around the eyes) sparks a change in brain activity related to a good mood.

–Social connection is the greatest predictor of longevity. Surround yourself with people that lift you up, celebrate, and laugh with you.

Reset is getting out of being busy, being deliberate about where you invest your energy, and making sure that your actions are in line with your intentions in terms of your priorities. Taking the time to reset is imperative for leaders to keep their focus on what matters most. For instance, it can help you identify your high-payoff activities.

A high-payoff activity is an activity that brings the greatest result for the time invested. Twenty percent of the tasks that we do on any given day generate 80 percent of our results. By identifying the tasks and responsibilities that bring the greatest return for time invested, you can focus on planning and prioritizing these activities.

What do you wish you had more time for? Where is it scheduled in your calendar? If you tracked your time would it be representative of what you say is most important to you? Take the time to make sure your actions match your intentions. It’s all about focusing on what’s important.

About the Author: Resilience expert Anne Grady is an internationally recognized speaker and author. Anne shares humor, humility, refreshing honesty, and practical strategies anyone can use to triumph over adversity and master change. She is the author of “Strong Enough: Choosing Courage, Resilience, and Triumph” and “52 Strategies for Life, Love, & Work.” For more information, please visit www.AnneGradyGroup.com.

Archives, Global Trade Daily, Top Ports

PORT OF VANCOUVER USA’S BOARD GREENLIGHTS 2018 STRATEGIC PLAN

November 12th, 2018 Haylle Sok Leave a comment

The Port of Vancouver USA Board of Commissioners on Sept. 11 unanimously approved the port’s 2018 Strategic Plan, which includes a new vision statement and outlines 20 goals and 66 strategies to guide the port’s activities and budget for the next decade.

The plan was developed over 11 months with broad public and stakeholder input, including advisory panels, public open houses, commission meetings, public workshops and hundreds of public comments.

“We appreciate all the time and energy our community has put in as we’ve created our new strategic plan,” says CEO Julianna Marler. “We heard from hundreds of people, both within the port and across our community. Their perspectives helped us develop a balanced plan so we can continue to advance as an organization while achieving our state-directed purpose and our mission of creating economic benefit through leadership, stewardship and partnership in marine, industrial and waterfront development.”

The port first developed a strategic plan in the early 2000s and updated it each year as necessary. By 2017, the port needed a new plan to address organizational change, including completion of many key initiatives; marine and industrial business growth; identification of new projects; and changes in staff and elected leadership.

The 2018 Strategic Plan is available at www.portvanusa.com/key-projects/strategic-plan.

Archives, Commentary, Global Trade Daily

How US tax overhaul has led to increased international investment and M&A activity

October 1st, 2018 GT Staff Leave a comment

The limit on interest deductibility is impacting the way that firms finance domestic mergers and acquisitions which is fueling the existing trend for US companies to pursue foreign M&A.

Why invest in foreign companies?

Growing a business internationally has always been attractive to US companies. Businesses are still structuring for tax purposes, however the main reasons for going abroad are now; the desire to find new markets with more customers, access fresh talent and technology and optimize international supply chains. Foreign markets can be an attractive destination for leading US brands given that if you can succeed in the world’s most competitive consumer market you may find you thrive in less developed economies.

Deduction changes

With the recent tax reforms in the US, there have been some changes in the way deductions can be applied affecting the financing of domestic mergers and acquisitions. Often mergers are at least partially funded with debt which would be paid off in the form of a dividend. The dividend would be deductible making it a tax efficient way of financing the acquisition.

This deduction has been reduced greatly in the 2018 US tax reform. Companies were previously unrestricted in the amount of interest they could deduct before tax, but now there is a cap deduction of 30% of their 12-month earnings before interest, taxes, depreciation, and amortization (EBITDA). After 2021, the limitation becomes even more constraining by switching to 30% of EBIT only – that is, the deductions for depreciation and amortization are removed from the calculation, lowering the cap even further.

The deduction applies only when acquiring domestically, so not when buying a foreign company. You can still get the full deduction on dividends for a foreign owned corporation. Based on the current interpretation of the legislation, if you are looking to finance via debt, buying a foreign company will still allow you to benefit from this type of funding mechanism.

Why foreign M&A is more attractive

For insights and an introduction to M&A and carve-outs, take a look at the “M&A and Carve Outs from A to Z” eBook.

Other elements of the tax reform are also likely to drive further M&A and make it more likely that US firms look abroad for these acquisitions:

The tax reform was structured to incentivise businesses to bring money back to the US if they are holding historic earnings off-shore. This windfall of foreign held monies will enable some companies to invest more, with a portion of this spending likely to fuel M&A.
Related incentives to bring money back to the US have also reduced the tax on repatriation of future foreign earnings. Meaning that the return of investment for these foreign assets is improved.

What we are hearing from our clients is that US companies will continue to look to the global market as a way of leveraging faster growth and diversifying their business.

TMF Group

TMF USA are experts when it comes to M&A and international expansion, supported by a strong global presence in more than 80 countries worldwide. While there are always challenges when it comes to foreign investment the recent tax reform has introduced a whole new set of considerations. Please get in touch to find out how we can support your business achieve its global ambitions.

Find out how our services allow our international clients to maintain focus on what matters most to them.

Archives, Global Trade Daily, News

Klein Tools Targets UK, Ireland Markets

December 31st, 2014 Haylle Sok Leave a comment

Lincolnshire, IL – Tool manufacturer Klein Tools has expanded initiatives in the UK and Ireland markets through a significant financial investment and strategic partnership with Super Rod, a leader in wire installation tools.

Klein offers a full range of electrical products from hand tools to test and measurement devices.

Super Rod will serve as a master distributor ensuring that the highest quality products reach the people who rely on them.

The agreement with Super Rod also brings Klein Tools into City Electric, the United Kingdom’s leading electrical wholesale network.

Starting January 2, Klein Tools will be available through the electrical distribution channel exclusively at 411 City Electric stores located in the United Kingdom and Ireland.

Klein Tools, founded in 1857, manufacturers its tool inventory at seven plants in the U.S.

12/31/2014