Global Market Commentary

Is brick-and-mortar retail doomed?

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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...
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Videogames:  A Theme That’s Just Beginning

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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...
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The Bitcoin Fork

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  Bitcoin’s wild gyrations have this year become even wilder, driven largely by an ongoing “civil war” within the commu-nity of coders and miners who make up the cryptocurrency’s ecosystem.   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 two fundamental technolo-gies...
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Is Bitcoin a Bubble?  Probably Not

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Digital assets such as Bitcoin, Ether, and others have appreciated so much in 2017 that their interest and appeal are irresistible — not just to speculators, but increasingly to institutional investors.  Anyone who has not participated in the rally is faced with a conundrum.  At every step of the way, after every enormous move, potential speculators have found themselves lamenting that they missed it — and yet afraid that it was too late.  So as Bitcoin nears $5,000, many are asking themselves the same question — “Is this where the bubble pops?  Or will I feel like a fool when it...
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A Trade War With China? That’s Already Been Happening For Decades

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A Trade War With China? That’s Already Been Happening For Decades   During last year’s U.S. presidential campaign, we began reading discus-sions about the possible effects of a trade war with China. Since the new administration took office, such dis-cussions have become ubiquitous. But even last year, we were left scratch-ing our heads: the risks of a trade war with China? Do these pundits really not know that the U.S. and China have been in a trade war for the better part of a generation?   (The answer is, no, they probably don’t, which is no small part of the...
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Business Spending and Consumer Spending Are Strong

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Market Summary The U.S. Economy U.S. economic data for the second calendar quarter came out yesterday, and they were very strong. According to the latest revision, U.S. GDP grew by 3% in the quarter, and was far above the estimates of almost all economists. For the third quarter, the most accurate predictor of U.S. economic growth, the Atlanta Fed’s Nowcast, is calling for 3.4% GDP growth in the third quarter. In spite of Hurricane Harvey, we anticipate strong growth in Q3 2017. Business spending and consumer spending are strong, and this bodes well for corporate profits and for stock prices....
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When Investing, We Must Keep the Big Picture In Mind

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The U.S. and many global stock markets have continued to move ahead. Even rising tensions on the Korean peninsula, and the theoretical prospect of nuclear war, were met by markets with a brief shrug — and this during a seasonal period when markets are often unsteady and experience corrections. As we write, the S&P 500 index is just 2.4% down from its all-time high of 2490.87 set on August 8.   Markets are showing resilience in the face of geopolitical concerns, turmoil and gridlock in U.S. politics, and poor seasonals. That resilience is leading many market participants, analysts, and observers...
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What You Need To Know About Bitcoin And Digital Currencies

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What Are Digital Currencies — And What Do They Mean For Gold? Guild Investment Management June 22, 2017 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...
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What Kills Bull Markets?

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When Investing, We Must Keep the Big Picture In Mind The U.S. and many global stock markets have continued to move ahead.  Even rising tensions on the Korean peninsula, and the theoretical prospect of nuclear war, were met by markets with a brief shrug — and this during a seasonal period when markets are often unsteady and experience corrections.  As we write, the S&P 500 index is just 2.4% down from its all-time high of 2490.87 set on August 8. Markets are showing resilience in the face of geopolitical concerns, turmoil and gridlock in U.S. politics, and poor seasonals.  That...
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Second-Quarter U.S. Earnings Come In Strong

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93% of S&P 500 companies have reported second-quarter earnings; the remainder will continue into early Sep-tember. As of this writing, bottom-up earnings for the S&P stand at $32.63, representing a 5.9% quarter-over-quar-   ter 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 “earn-ings recession” is firmly behind us.   Earnings growth has been led by energy, technol-ogy, financials, and healthcare; the sectors with the most companies beating estimates have been tech, healthcare, industrials, and financials. On average, operating margins have...
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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? Breath

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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, accord-ing to the media, China has been a tot-tering 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 military bases, conquer the South China Sea, 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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Sometimes, academic economists are worth paying attention to. A recent paper published by the Hoover Insti-tution provided one of the best sum-maries 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 neces-sary to realize them. Interested read-ers can find the complete paper here.   The authors include three econo-mists linked to Stanford University and its associated Hoover Institution   Hoover fellow John Cogan, Stanford professor John Taylor, and Hoover fellow and former Fed governor Kevin Warsh — as...
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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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Retail Tremors Shake the Payment Ecosystem

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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 pro-cess is a “black box” from a consumer’s perspective.   But as the first image below shows, the black box hides a complex ecosys-tem of firms with different specialized functions — including many publicly traded firms with exposure to specific trends in the technology, finance, and   retail sectors.   still-simple, but more comprehen-sive picture of the payment ecosystem looks something like the second im-age.   (There are some variations to this outline; when it comes...
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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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