Global Market Commentary

Second-Quarter U.S. Earnings Come In Strong

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Second-Quarter U.S. Earnings Come In Strong 93% of S&P 500 companies have reported second-quarter earnings; the remainder will continue into early September.  As of this writing, bottom-up earnings for the S&P stand at $32.63, representing a 5.9% quarter-over-quarter increase and a 10.6% year-over-year increase.  In short, earnings are strong — and with four quarters of earnings growth under our belts, we can say that the 2015–2016 “earnings recession” is firmly behind us.  Data Source:  Bloomberg Earnings growth has been led by energy, technology, financials, and healthcare; the sectors with the most companies beating estimates have been tech, healthcare, industrials, and...
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Is China Doomed?

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Is China Doomed?  Don’t Hold Your Breath  Bitcoin’s from time to time, coverage of China rises to a crescendo in the popular media.  China coverage reflects some of the same schizophrenia that afflicts much of the media’s output.  At many points in the past several years, according to the media, China has been a tottering giant whose economy is a bubble fantasy that threatens to pop and take the rest of the world with it.  At other points, China has been an unstoppable economic powerhouse with ravenous geopolitical appetites, ready to take down the current global hegemons, fill Africa with...
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The Bitcoin Fork

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The Bitcoin Fork Bitcoin’s wild gyrations have this year become even wilder, driven largely by an ongoing “civil war” within the community of coders and miners who make up the cryptocurrency’s ecosystem.   Source:  Bloomberg So what’s the nature of this civil war, what are the stakes, and what might the consequences be?  On the surface, the conflict is pragmatic; underneath, it reveals two divergent visions of what bitcoin is and what its purpose should be. The central issue is the speed at which the bitcoin network is able to handle transactions.  Readers may be aware that one of the...
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Yes, Higher GDP Growth Is Possible In the U.S. — and Here’s How It Can Be Achieved

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Yes, Higher GDP Growth Is Possible In the U.S. — and Here’s How It Can Be Achieved Sometimes, academic economists are worth paying attention to.  A recent paper published by the Hoover Institution provided one of the best summaries we have read of the current state of the U.S. economy, its recent history, its troubles and the reasons behind them, its future prospects, and the policy changes that will be necessary to realize them.  Interested readers can find the complete paper here. The authors include three economists linked to Stanford University and its associated Hoover Institution — Hoover fellow John...
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Markets Get a Short Correction

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The world stock and metals markets got a correction earlier this week. We knew a correction was coming because the markets had a big run   without much of a pullback. On Tuesday, we recommended selling the Vanguard Emerging Market Fund (NYSE: VWO) as we thought the pull-back in emerging markets was going to last longer. There were reports of slower GDP growth data from China and Brazil, and talk of a more ob-structive government in India’s most populous state, Uttar Pradesh. How-ever, the emerging markets are proving to be resilient, and today we are re-recommending that investors buy VWO....
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Guild’s Premium Global Market Commentary

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It’s hard to believe, but the Republican campaign circus has been in full swing for almost six months already — remember the Iowa straw poll in August? It’s been wildly entertaining, and has narrowed from ten rings to   four. But in the past two weeks, with the unveiling of the 2013 budget plan, we got a taste of the show that’s really in store for us. Unfortunately, it’s one that we have become all too familiar with after these past few years. When the great and powerful Oz asks “all Americans to shoulder   their fair share”, we can...
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The Market Wave & How We’re Riding It

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As we explained in detail last week, the global markets are being flood-ed with expanded liquidity. The sources of this liquidity are the usual   suspects: quantitative easing (QE), interest rate declines, bond purchases, equity purchases, and other means. As the number of countries all over the world that are lowering their interest rates and printing money climbs, QE continues full steam ahead. With tongue in cheek we call this phenomenon QE-E, or QE everywhere.   This liquidity expansion is the underlying driver for our bullish posture. We remain bullish on U.S. and emerging market stocks, technology stocks, gold, wheat,...
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The Logic Behind Our Open Commodity Recommendations

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Our open positions include positions in two commodities: gold and wheat.     Gold   Gold is in a very attractive position for a host of reasons. Many governments are acquiring gold to be held in their national reserves. Worldwide, many countries are working to expand liquidity and lower interest rates in order to stimulate economic activity and shepherd their banks through a very difficult deleveraging process. This is being done largely through what we like to call “QE-E”: QE Everywhere.     In the U.S., the current administration wants to raise taxes on investment income, and the wealthy are...
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Our Opinion on the Markets Remains…

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Overall, we remain bullish on our previous recommendations. As we discussed last week, everybody around the world seems to be working together to create massive liquidity for the markets and to raise   asset prices. We do expect corrections in the markets between now and mid-March, but we expect them to be brief and shallow. Bonds have been the safe and secure assets, and as the risk profile of the market grows, we expect they will stop rising. This should give way to even more appreciation in stocks and commodities with higher beta (higher positive market correlation). If the market...
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All Aboard! The Train is Leaving the Station

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It’s time to make money! Get on the train and invest while the market is in an uptrend.   Guild Investment Management strives to provide the best institutional-grade analysis. In order to fulfill our objective, we constantly scan the globe for political, social, and economic trends, events — and especially changes, as they occur.   The first important skill of a successful investor is to clearly see de-velopments and trends before others get on the bandwagon. Secondly, it’s about timing sales getting off the bandwagon in time to take good profits. Observing the global markets is like sitting atop a...
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We Are Bullish, We Are Invested, and Here’s Why

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  In last week’s letter we recommended investors buy the U.S. S&P 500 for a rally. Here are some of the reasons behind our recommen-   dation:   The U.S. labor market is gaining some traction. Job creation is slowly turning up. We aren’t getting overexcited because once again the government is playing loose with statistics by failing to count those who have been unemployed for longer periods and classifying them as so-called “discouraged”. If we were to speak with those discouraged folks, we’re sure they would likely classify themselves as unemployed.   These individuals should be counted among the...
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Professional Analysis at a Fraction of the Professional Cost

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See It Here Early   We believe our continuous research and our ever-refreshing analy-sis of global economics helps us to see trends earlier than many   other economists and money managers — and that’s what we strive for at Guild Investment. We want to give you a leg up in the business of money management by highlighting what we see on the road ahead through our Global Market Commentary. Helping you is our focus and goal. As we become aware of coming social, political and economic events, we relate them to the markets, always with the objective of increasing profits...
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Retail Tremors Shake the Payment Ecosystem

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Retail Tremors Shake the Payment Ecosystem  Consumers who use credit and debit cards are typically aware only of the card they’re using and the merchant they’re buying from; the payment process is a “black box” from a consumer’s perspective. But as the first image below shows, the black box hides a complex ecosystem of firms with different specialized functions — including many publicly traded firms with exposure to specific trends in the technology, finance, and retail sectors.   A still-simple, but more comprehensive picture of the payment ecosystem looks something like the second image.  Source: Federal Reserve Bank of Atlanta  ...
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U.S. Market: Volatility With An Upward Flourish In Early 2012

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In last week’s letter we recommended investors buy the U.S. S&P 500 for a rally. Here are some of the reasons behind our recommendations:   The U.S. labor market is gaining some traction. Job creation is slowly turning up. We aren’t getting overexcited because once again the government is playing loose with statistics by failing to count those who have been unemployed for longer periods and classifying them as so-called “discouraged”. If we were to speak with those discouraged folks, we’re sure they would likely classify themselves as unemployed.   These individuals should be counted among the unemployed, and not...
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Digital Currency “ICOs” and the Regulators

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Digital Currency “ICOs” and the Regulators Two weeks ago, we wrote an introduction to digital currencies in which we pointed out how fast these new instruments have proliferated. Nearly a thousand are currently available — and almost a hundred more are now listed on coinmarketcap.com than when we ran the article. (A lot of readers found the piece helpful; if you haven’t seen it, please feel free to request a copy.) As we’ve discussed in recent weeks, these various forms of “gold for the digital age” take the basic innovations of bitcoin — encryption and a decentralized ledger system —...
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Sparking Growth Without Congressional Action  

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Sparking Growth Without Congressional Action   After last year’s U.S. presidential election, small business optimism spiked at the fastest pace since the Reagan administration.  Whatever the personal political views of American small business owners, they saw a silver lining in the election result: a likely turn from the previous administration’s regulatory strategy that could make their lives easier.  While the inflection in optimism has moderated, it’s still strong, in spite of the new administration’s outsider methods and sometimes confrontational style.  Like everyone else, small business owners see the current difficulties in Congress and are reassessing their views of how quickly actual...
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What is Beyond Bitcoin?

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Beyond Bitcoin  Last week we wrote a simple introduction to digital currencies, describing the motivation of their creators, the technologies that underlie them, and some of the pitfalls that may be waiting for speculators.  A lot of readers found the piece helpful; if you haven’t seen it, please feel free to request a free copy. Bitcoin and other digital currencies were designed as forms of “digital gold” that would meld characteristics of physical gold with those of electronic money.  They may or may not ever become viable media for storing and exchanging value.  For now, they remain highly speculative, highly volatile,...
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What Are Digital Currencies — And What Do They Mean For Gold? 

What Are Digital Currencies — And What Do They Mean For Gold? Bitcoin is in the news, once again driven by a price spike that makes speculators and would-be speculators start counting their unhatched chickens.  This time, the granddaddy digital currency has competitors — “altcoins” — which are also attracting attention.  Ripple, ether, dash, monero, and hundreds of other currencies have sprung up (as of this writing, a total of 888, with a combined market capitalization of about $115 billion).  Some promise technical refinements and improvements to the bitcoin system; others offer institutionally friendly features that leverage bitcoin-derived technologies for...
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Chip Wars and the Race for Artificial Intelligence

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Chip Wars and the Race for Artificial Intelligence Radical transformation is coming in many fields of human culture and endeavor.  No, this is not just boilerplate praise of ongoing incremental technological innovation.  The only way to grasp the magnitude and significance of these incipient changes is to imagine yourself living during the time when steam and then electricity opened continents, shrank the world, destroyed and rebuilt entire societies and ways of life.  With that imaginative endeavor we can at least get a glimpse of the transformation that has already begun, but has not yet become fully apparent. We’ve written about...
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Saudi Arabia’s Bid for Transformation: Can It Work?

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Saudi Arabia’s Bid for Transformation:  Can It Work? Saudi Arabia has troubles.  Our regular readers have heard us discuss them often, especially in the wake of the dramatic decline in the price of oil between mid-2014 and the beginning of 2016. Countries whose economy relies predominantly on oil and other hydrocarbons are often said to suffer from “the resource curse” — a tendency for that reliance to stunt the development of other productive sectors of the economy.  This leads to an economy which is highly vulnerable to price shocks in the commodity on which it depends.  It also tends to...
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Social Commerce, Live Streaming, and Virtual Goods: Chinese E-Commerce Innovation Pulls Ahead

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Social Commerce, Live Streaming, and Virtual Goods: Chinese E-Commerce Innovation Pulls Ahead Since its economy began to be opened in earnest in the 1990s, China has undergone a transformation so radical that it defies easy description — one we’ve often written about in these pages. From many perspectives, the Chinese achievement is astonishing: China’s embrace of major elements of market-based economics has lifted hundreds of millions of people out of poverty, even though it has been accompanied by a political regime that shuns Western notions of democratic governance. (Economic and political liberty don’t always occur together as they have in...
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Video Games Rocket Ahead in 2017

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Video Games Rocket Ahead in 2017 The four largest “pure-play” video game companies have been star stock-market performers in 2017: Activision Blizzard [NASDAQ: ATVI], Electronic Arts [NASDAQ: EA], Take Two Interactive [NASDAQ:  TTWO], and Tencent [Hong Kong: 700HK].  (Tencent is not technically a pure play, but does earn about half its revenue from gaming, and uses its social communication platforms to drive business to that segment.)  For the moment, we’re leaving out other larger companies with significant video game components to their business, such as console-makers Microsoft [NASDAQ: MSFT] and Sony [Tokyo: 6758JP]).   To some investors, outperformance by this...
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Money Keeps Flowing Into European and Emerging-Market Stocks — Here’s Why

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Money Keeps Flowing Into European and Emerging-Market Stocks — Here’s Why We began to get bullish on European and emerging-market stocks a few months ago.  Now major financial media are joining us, citing the same data we’ve observed: a broad uptick in global growth and economic vitality is suggesting that markets which have lagged the U.S. for years may begin to close the gap.  Analysts continue to debate whether or not there is a disconnect between “soft data” (sentiment indicators) and the “hard data” (economic indicators), but from our perspective, earnings are the proof of the pudding, and both earnings...
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They Want to Be the Greatest World Power

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China Has a Grand Strategy — They Want to Be the Greatest World Power China Has a Grand Strategy — They Want to Be the Greatest World Power Next week, the Chinese government will host 28 heads of state, as well as many senior government and NGO officials, at the 2017 “Belt and Road Forum.”   Western countries will be underrepresented; the only Western head of state present will be Italy’s Prime Minister.  Vladimir Putin will be there, as will Christine Lagarde, head of the International Monetary Fund.  In spite of the thin presence from the developed West, the event...
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