The Bear Market Is Still on the Prowl

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To the Editor:
There is definitely further to go (“The Stock Market Has Avoided a Bear. But the Selloff Isn’t Over,” The Trader, May 20). The Federal Reserve goosed the economy from 2009 to now by increasing its balance sheet from $500 billion to $9 trillion, and the money supply from $1.5 trillion to $20.7 trillion, over three administrations. That’s a lot to unpack, and the Fed hasn’t yet started to reduce the balance sheet. Two federal-funds interest-rate hikes are only a start.

William Baldwin, On Barrons.com

Global Trade

To the Editor:
I have little argument with “12 Ways to Play the Upheaval in Global Trade” (May 20), but I suggest that recent events have reinforced the idea of globalization as an unstoppable economic force that does in fact “engender geopolitical harmony.” Russia will find itself mistrusted (if not hated) and ostracized for decades after its war in Ukraine, and its economy will be in shambles. China cannot be so stupid as to risk the same over Taiwan. Obviously, we need to diversify to more-secure sources, and that will indeed “lead to higher costs,” but hopefully only marginally. And globalization will continue for the simple reason that it leads to lower costs and higher profits for everyone, and hence higher standards of living. As you point out, “Global trade hit a record $28.5 trillion last year.”

Thomas W. Schoene, La Jolla, Calif.

To the Editor:
Global trade will indeed be rerouted and primarily for one reason—China. Despite several decades of openness from the free world to integrate China into the world marketplace, China has repeatedly shown itself to be a questionable business partner. Things have only gotten worse with the failure of the zero-Covid policy resulting in mass lockdowns and supply disruptions.

As we have learned the hard way, whether it’s face masks or microchips, we simply can’t rely on China to be an honest vendor. Indeed, it has become an issue of national security, not simply trade. Moving production back to the U.S. or to countries that we can trust is no longer optional.

Yes, there are companies that will have to endure some short-term pain to relocate production, but the long-term gain of increased self-sufficiency is more than worth it in a world laden with danger and unpredictability.

Arthur M. Shatz, Astoria, N.Y.

Closed-End Bond Funds

To the Editor:
In “The Debt Time Bomb Facing Closed-End Bond Funds” (Funds, May 18), Lewis Braham does a fine job outlining some of the risks of investing in closed-end bond funds. I would like to add that leveraging an asset class with such an asymmetrical return profile (much more downside than upside from both rate and spread duration) will inevitably end in tears for the investor holding the fund when the market support ends.

Todd Youngberg, N. Barrington, Ill.

Red Flag

To the Editor:
Companies that are fond of creating their own accounting outside of GAAP are a huge warning signal (“Warning to Bargain Hunters: 6 Stocks That Aren’t as Cheap as They Look,” May 20). Best-in-the-world companies don’t need to do that (take a look at Apple’s financials, for example). Of particular note, Ebitda is a red flag for companies thinking they can fool themselves and others that depreciation/obsolescence can be wished away—and typically, they are highly capital intensive, often with low returns on invested capital.

Gerald Smith,On Barrons.com

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