Entries by residco

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2020 – The Challenge

Parsing 2020: restated, third-quarter real gross domestic product increased at an annual rate of 2.1%. As well, consensus economic forecasts predict growth at a moderate pace. Inflation, as measured by the CPI, is expected to edge up. And unemployment is anticipated to remain below 4%. The business fixed investment will continue to slow due to […]

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Managing the Components of Risk

With more volatility likely, what’s the maximum level of risk you are willing to take in next year’s markets?  The answer requires knowledge of the impact changing traffic levels will have on the values of specific equipment types and portfolio credits. Values that will be driven by the economic, financial, and political environment over the […]

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Adapting To Declining Traffic

Weak international trade is hurting international airfreight. Global airfreight volume has fallen for 10 consecutive months year over year (the longest losing streak since 2008). In the three months ended August, North American airlines’ U.S. dollar revenue from air-cargo between China and the U.S. fell 26% relative to the same period in 2018. While transportation […]

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Globalism Retreat Reduces Freight Traffic

“Economic Nationalism” The President’s September 24th address to the United Nations promoted ‘sovereignty’ above international relations.  “The future belongs to sovereign and independent nations, who protect their citizens, respect their neighbors and honor the differences that make each country special and unique.”  His favorite themes?  Unfair trade, imbalanced defense spending, illegal immigration, creeping socialism, and […]

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Implementing ASC 842 New Lease Accounting Proves Complex & Significant

A new leasing standard The Financial Accounting Standards Board (FASB) issued its new leasing standard, Accounting Standards Update (ASU) No. 2016-02, Leases (ASC 842), in February 2016. It’s bringing $2 trillion of operating leases onto public company balance sheets, affecting the entities that enter into lease arrangements or sign contracts containing service agreements that support […]

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Storms on the Horizon – Navigating Uncertainty

Mounting Trade Concerns Slow Supply Chains Brace for slower economic growth. Freight volumes in the United States and around the World are falling due to escalating trade tensions and an uncertain future. Most recessions have been brought on by mistakes in some combination of fiscal, monetary or financial supervision. Former Fed Chairman Ben Bernanke once […]

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Precision Scheduled Railroading (“PSR”) – A Freight Transportation Disruptor

Precision Scheduled Railroading’s Various Effects The S&P 500 posted its best first half in 22 years.  US Job openings outnumber the unemployed by widest gap ever.  The U.S. economy continues to expand (2.1% in the Second Quarter).  Yet U.S. Domestic rail freight volumes are down.  Chinese challenges to the Western Global Trading System certainly are […]

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Growth Impediments Top Mid-Year Market Concerns

Signs are evident in politics and trade negotiations that economic and geopolitical rivalries are creating global uncertainties.  Avoiding turbulent weather is a combination of art and science. With cues from weather charts, radar returns, and real time reports from other aircraft, Pilots are trained to avoid thunderstorms and slow to ‘turbulence penetration speed’ to avoid […]

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Creating Air and Rail Portfolio Alpha

In an environment where uncertainty is commonplace, investment in transportation equipment is often driven by residual value estimates as lenders and lessors compete for market share. Many factors influence the future value of equipment. Most are not very predictable. All require an active aftermarket for the asset under consideration. Physical factors include wear and tear […]