Global Market Commentary

The new secret weapon against superbugs: dirt.

//
Posted By
/
Comment0
/
Categories
New Antibiotics Revealed In Humble Soil This week we’re taking a break from commenting extensively on the market’s gyrations, and looking a little more long-term at some new developments in biotechnology. What Really Boosts the Longevity of Human Populations? Some cutting edge biosciences, such as novel cancer therapies, get a lot of attention from investors, including us.  However, the real drivers of health and longevity over the past century have been more humble: better nutrition, better sanitation, and perhaps most important, the discovery of antibiotics. In many ways, as far as longevity and quality of life go, agriculture was a...
Read More →

Will Ramping Inflation Cause More Problems For Markets?

//
Posted By
/
Comment0
/
Categories
Will Ramping Inflation Cause More Problems For Markets?  The correction that began on January 30, and which may not yet be over, was triggered by several events.  The fundamental events were first, the release of new data showing rising wages; and second, increasing acceleration in the rise of long-term interest rates.  Obviously these are related.  The sharp correction indicates that investors are at long last really settling into the realization that the strong economy and the Fed’s first steps to normalize monetary policy mean that inflation will appear, rates will rise, and the boost that years of ultra-low rates have...
Read More →

What is the secret sauce for banks, U.S. corporates, and pension funds?

//
Posted By
/
Comment0
/
Categories
Leveraged Loans Are a Secret Sauce For Banks, U.S. Corporates, and Pension Funds Modern bull markets are fundamentally credit-driven.  They are also credit-ended, when the spread between long-term and short-term rates goes negative and chokes off the supply of credit.  This is why watching that spread — the “yield curve” — is one element of an effective strategy to protect investment capital from bear markets.  The current bull market is no different (and yes, it is still a bull market in spite of the normal and healthy correction we’ve been experiencing for the past week and a half).  It has...
Read More →

Riding the Vietnamese Tiger

//
Posted By
/
Comment0
/
We’ve been expressing our positive view about Vietnam as a favored investment destination in emerging markets since last June.  Since then, the Ho Chi Minh Index has appreciated more than 50% in U.S. dollar terms. Source:  Bloomberg Stock market rallies require a combination of economic and financial fundamentals followed by demand from investors.  Both precursors have been present in Vietnam over the past year, and the momentum appears to be sustainable.  (Of course, we caution readers that any market which has moved as far and as fast as Vietnam’s is vulnerable to a normal, healthy correction, and there is no...
Read More →

Get Ready For Self-Driving Everything

//
Posted By
/
Comment0
/
Categories
Toyota’s Self-Driving Boxes and the Future of Retail We commented last week on Toyota’s [NYSE:  TM] presentation at the Consumer Electronics Show (CES) — an expo that has become so auto-centric in recent years that a running joke dubs it the Car Electronics Show.  TM calls its new concept the “e-Palette,” and it is essentially a self-driving transparent box on wheels which can by internally configured to be a mobile almost-anything.  In short, it is a mobility-as-a-service ecosystem which will be able to move everything from people, to accommodations, to light manufacturing facilities, to retail storefronts.  If the direction of...
Read More →

Robots, Robots Everywhere

//
Posted By
/
Comment0
/
Categories
Robots, Robots Everywhere Robots in Food Service With the Consumer Electronics Show (CES) just past, it might be a good time to mention two developments in robotics that we’ve recently noted.  Sage analyst Larry Jeddeloh at The Institutional Strategist noted that this year’s CES was the occasion for Pizza Hut [NYSE: YUM] to unveil a driverless delivery service, partnering with Toyota [NYSE:  TM] in the development of autonomous electric vehicles. Autonomous food delivery systems will represent a major savings in labor and insurance costs for the companies that adopt them.  Automation in fast food businesses will not be restricted to...
Read More →

This Week’s Market Summary

U.S. Economics Economic data continue to impress, with wages finally moving higher by about 3% year over year, and S&P 500 profits expected to rise by 15–16%. More positive news is that the U.S. has become a net natural gas exporter, and with the creation of several new gasification and export terminals expected to come online in Texas and Louisiana in the next two years, U.S. natural gas exports will increase.  Clean-burning natural gas is the bridge fuel that is helping India and China diminish the massive pollution and huge carbon footprint that they are creating with their inexpensive domestic...
Read More →

Manufacturing PMIs Increase — Is Inflation Coming?

//
Posted By
/
Comment0
/
Categories
Manufacturing PMIs Increase — Is Inflation Coming? The current uptick in global GDP growth means that manufacturers in many countries are experiencing higher demand.  As purchasing manager index (PMI) reports come in from around the world, they are showing supply constraints beginning to emerge.  Manufacturing PMIs are surveys which ask industrial managers about various aspects of business conditions.  While they are soft rather than hard data, they can be valuable for constructing a current picture — since the hard data typically aren’t available for several months. The December manufacturing PMI for the U.S. continued to strengthen.  The chart below shows...
Read More →

What the Tax Bill Means For Taxpayers, For Businesses, and For Investors

//
Posted By
/
Comment0
/
Categories
The tax bill has passed and has been signed into law, the dust is settling.  Accountants and tax lawyers report that it will be moderately beneficial for most individual income tax payers.  Ambitious reformers had hoped the tax code would be so simplified that most filers could use a post-card, but that wasn’t to be.  Enough complexities remain that there will be plenty of fodder for tax professionals and enough unique situations that we can’t do more than sketch the overall effects for the majority of taxpayers, which we’ll do below. On the other hand, we believe the bill will...
Read More →

The U.S. Economy – The Tax Bill good for U.S. Economy and Good for U.S. Stock Market

//
Posted By
/
Comment0
/
Market Summary The U.S. Economy – The Tax Bill good for U.S. Economy and Good for U.S. Stock Market Readers know that we are bullish on the U.S. economic outlook.  The passage of the tax bill will create further impetus for economic growth in the U.S.  We will not be surprised to see quarterly growth at 4% or above within a few quarters.  Such strong economic growth, which will be a welcome relief from years of slow growth in the U.S., will provide a base upon which corporate profits can continue to grow. The U.S. Stock Market Will Continue To...
Read More →

The U.S. Economy

//
Posted By
/
Comment0
/
Categories
The U.S. Economy:  Good Performance On Many Fronts U.S. employment data from the Labor department corroborates the evidence that non-farm payrolls rose for the 86th straight month in November, with 228,000 new jobs created.  Because of the steady hiring, the unemployment rate has been at 4.1% for two months, holding at a 17-year low. What has become of all this talk about the U.S. economy being stuck for the long term at a growth rate of 1 to 1.5% per year? As recently as a year ago, several well-known economists were making that claim.  These economists should be embarrassed by...
Read More →

What is the most important aspect of the tax bill for investors?

//
Posted By
/
Comment0
/
Categories
For Investors, Corporate Taxes Are the Most Important Part of the Tax Bill The administration is close to notching its first major policy success with the passage of a sprawling tax cut.  We will wait until the legislation is finalized before commenting on its consequences in detail.  However, for many investors, the most significant effects of the tax bill will be on the value of the stocks in their investment portfolios. That’s another way of saying that despite all the wrangling about the specifics of the tax bill that will affect individual income taxes, the lowering of corporate taxes will...
Read More →

A Tale of Two Chinas

//
Posted By
/
Comment0
/
Categories
The skeptics and haters of the current bull market have spent the last eight years finding reasons and justifications for their skepticism.  One of the favorite reasons for pessimism has been China. Sometimes China has been a geopolitical boogeyman, with journalists fretting about China’s rise on the world stage and its potential to surpass the U.S. in military or economic power.  We have thought those fears to be baseless and have said so for years.  China has a long, long way to go before it will be able to challenge the hegemony of the U.S. either militarily or economically, even...
Read More →

U.S. Markets, Japan, and Europe

//
Posted By
/
Comment0
/
Categories
Market Summary U.S. Markets, Japan, and Europe U.S. markets continue ahead, logging one of their longest-ever periods without a 5% correction.  We do not know what the catalyst for such a correction will be, and neither does anyone else, but there are plenty of potential culprits that everyone continues to watch, from geopolitics to the Fed to U.S. tax policy.  In any event, as we have been observing throughout 2017, such a correction will be a buying opportunity, barring an unexpected deterioration in economic or financial fundamentals.  Those fundamentals remain solid.  U.S. growth is accelerating beyond the disappointing levels that...
Read More →

What Will Push Stocks Higher?

//
Posted By
/
Comment0
/
Categories
Productivity Growth Will Push Stocks Higher After a long slump, productivity growth is accelerating again — and the reasons for the acceleration further reinforce our view that we are in a late, bullish phase of the economic and market cycle, with more upside to come for stocks.  As we have said many times in recent months, “This bull market is not dead” — and this is further evidence to support our thesis. We’ve written a lot about productivity growth and the reasons for the slowdown of the last several years.  That slowdown has been a key component of the lackluster...
Read More →

Big Tech’s Regulatory Reckoning Coming Soon?

//
Posted By
/
Comment0
/
Categories
Big Tech’s Regulatory Reckoning Coming Soon?  Probably Not 2017 has been a year for the big, dominant U.S. technology companies: the advertising duopoly of Alphabet [NASDAQ:  GOOG] and Facebook [NASDAQ:  FB]; the e-commerce juggernaut of Amazon [NASDAQ:  AMZN]; and the most valuable consumer products brand on the planet, Apple [NASDAQ:  AAPL].   It’s been their year in several senses.  From an investor’s perspective, their stocks have been outstanding performers.  While other parts of the stock market have also driven the rally, big tech have been the headliners — particularly as hopes for tax reform and infrastructure spending dimmed, and with them...
Read More →

Who Is Going To Be The Leading Global Power by 2050?

//
Posted By
/
Comment0
/
Categories
Chinese As A “Leading Global Power” by 2050 — And How China’s Tech Giants Feature In That Equation With Chinese internet stocks “as hot as the sun” according to one commentator, companies such as Alibaba [NYSE:  BABA], Baidu [NASDAQ:  BIDU], Tencent [Hong Kong:  700], JD.com [NASDAQ:  JD], and TAL Education Group [NYSE:  TAL] have received a lot of attention in financial media. Headlines about China have also focused on the recent Communist Party Congress in Beijing.  This congress, held every five years, is the venue for leadership changes and for review and recalibration of party policy at the highest levels. ...
Read More →

Why The World Is Buying Japanese Stocks

//
Posted By
/
Comment0
/
Categories
Japan’s Prime Minister Cements Power and Drives Japanese Stocks Higher On September 28, Japan’s main political opposition announced that it wouldn’t be fielding any candidates in the snap election that had been called by Prime Minister Abe.  The Japanese stock market had been having an unexceptional year, lagging other global indices but helped by a rise in the value of the yen.  It accelerated sharply after that announcement. Source: Bloomberg Abe’s popularity has recovered from allegations of insider dealing earlier in the year; his party maintained its two-thirds majority in the lower house of parliament, and his economic and financial...
Read More →

Are Markets “Efficient”?

//
Posted By
/
Comment0
/
Categories
What Richard Thaler Has Taught Us About Economics… and Markets On October 9, this year’s economics Nobel winner was announced: Richard Thaler of the University of Chicago.   Mostly, the advances made by economists who win the Nobel can seem a little abstruse, but Mr Thaler’s contribution is different.  To understand why needs a little history.  Forgive us for this digression — we promise you’ll understand its relevance to the markets by the time we’re through. Chicago’s Richard Thaler:  Making the Dismal Science Less Dismal Source:  Xinhua Economics: Where It Came From The discipline we know as “economics” began as a...
Read More →

Is Internet Marketing Going Away?

//
Posted By
/
Comment0
/
Categories
Internet Marketing’s Growth Story Is Still Strong   Last week we commented on some of the social and political pressure that has recently been building against the giants of U.S. internet tech: primarily Amazon [NASDAQ:  AMZN], Facebook [NASDAQ:  FB], and Alphabet [NASDAQ:  GOOG].  Regulators are accusing them of using opaque financial engineering to avoid taxes; politicians and pundits are accusing them of being poor corporate citizens by destroying jobs; and the public is wondering about their role in creating an increasingly polarized electorate. Add in concerns about election advertising paid for by foreign interests, and you have a potentially toxic brew...
Read More →

Is E-Commerce an Employment Wrecking Ball?

//
Posted By
/
Comment0
/
Categories
Is E-Commerce an Employment Wrecking Ball?  Nope: It Creates More, Better-Paying Jobs and Boosts Productivity After strong stock-market performance in the year to date, several big U.S. tech firms have begun to receive some negative attention from the public, as well as from regulators and politicians.  Alphabet [NASDAQ: GOOG] and Facebook [NASDAQ:  FB] have gotten the most scrutiny, with European regulators leveling accusations of unfair search advantages against GOOG, and U.S. lawmakers drawing FB into the controversy surrounding alleged Russian efforts to influence the outcome of last year’s election. Amazon [NASDAQ:  AMZN] has not been above the fray.  The company’s...
Read More →

Which market could more than double before the bull is over?

//
Posted By
/
Comment0
/
Why Emerging Markets Could More Than Double Before the Bull Is Over Back in April, we drew attention to the ongoing rally in emerging markets that began early in 2016, corrected sharply at the time of the U.S. election last November, and then took off again as fears of a global trade war receded. Our observation in April was primarily about the relative valuations of the U.S. and emerging markets.  Although the gap has narrowed slightly since we wrote, the valuation premium commanded by the S&P 500 over the MSCI Emerging Markets index remains high compared to its historical norm. ...
Read More →

Is brick-and-mortar retail doomed?

//
Posted By
/
Comment0
/
Is Pure E-Commerce Really An Unstoppable Juggernaut?  Why the Future May Be Different Than You Expect The narrative of the total and relentless dominance of e-commerce over brick-and-mortar retail is beginning to break down. Above, we wrote about the big Chinese tech firms, and how they’re leveraging consumer data to build out holistic ecosystems where those consumers will want to spend more and more of their time.  One of the most interesting recent developments has been Alibaba’s [NYSE:  BABA] embrace of brick and mortar.  BABA founder and chief Jack Ma said it directly: “With new retail satisfying increasing consumer expectations… you...
Read More →

Videogames:  A Theme That’s Just Beginning

//
Posted By
/
Comment0
/
Categories
We’ve written several times this year on themes related to videogames — trends we believe show that the 2017 outperformance of many domestic and foreign videogame companies are not a flash in the pan, but the beginning of a period of secular growth.  This week we’ll provide a brief summary of these trends.  Videogames remain one of our favored industries. As the current bull market continues to mature, many investors of our mindset have found it more and more difficult to locate “growth at a reasonable price.”  One industry where we see such inexpensive growth is biotechnology, where several major...
Read More →

Guild Investment Management

Fully discretionary investment portfolio management

LEARN MORE