Guild’s Basic Needs Index
The Robot Baristas Are Coming
We’ve commented a few times in recent letters on one of the pandemic’s most noteworthy effects: what’s come to be known as “the Great Resignation.” It’s visible economy-wide, as it includes both early retirements and reassessment of family lifestyles — care for children and elderly relatives. It is making geographic
Market Summary — 24 November 2021
As we move into the final weeks of the year, some typical seasonal dynamics are likely to begin coming into play. After a tumultuous year, tax-loss harvesting may cause significant volatility. Some names that have performed very poorly over the year may come in for additional volatile selling, and the
We Warned You It Would Be Hot — Guild Basic Needs Index Up 30.7% Year-on-Year
We noted last week that we’d provide you with October data on our in-house real-world inflation measure, the Guild Basic Needs Index (GBNI). Here it is: up 30.7% year-on-year. (The GBNI is constructed to reflect the price of essential living expenditures, without statistical manipulation or adjustment. For more details about
Market Summary — 18 November 2021
Statistics argue that a year as strong as this one has been will finish strongly. The crop of 2022 projections is beginning to arrive, with some holding forth for a muted or negative performance by the broad market, and others more optimistic, in the face of what will likely be
Wage Inflation and Poor Productivity Growth — and the Industries They Will Challenge
Another week brings another set of inflation-related data to report on. In the past few days, we have seen consumer (CPI) and producer (PPI) inflation data from the U.S., Europe, and China. (When our October data are complete next week, we’ll give you an update on our in-house real-world inflation
Market Summary — 11 November 2021
If only everything were linear and two-dimensional, the investor’s task would be a lot simpler. The inflation, margin, and productivity trends noted above would be easier to translate into predictions. Unfortunately there are confounding factors which make the problem multidimensional, non-linear, and much more unpredictable. Among the most significant of
Inflation, the Cost of Doing Business, and Labor Flexing Its Muscles
Businesses are facing rising costs, and it remains to be seen how “transitory” those will be. The consensus among analysts and officials has been gradually coming to the point of view we have had since early in 2021 — that inflation would be much stickier than their earlier hopeful (and
Market Summary — 4 November 2021
The Federal Reserve, as expected, announced its intention to begin tapering its $120-billion-per-month asset purchase program, by $15 billion per month. The market’s response — with the S&P 500 closing the day at an all-time high — shows that the move was already largely priced and anticipated. Investors will still
Inflation, Chaos, and Regime Change
Last week, on the occasion of the 50th anniversary of our firm, we reflected on the many ways in which current events and trends “rhyme” with the events and trends of the early 70s — from war and energy convulsions, to political turmoil and demographic transformation, to monetary chaos and
Market Summary — 28 October 2021
Spot uranium marches on. Source: Business Insider Although the current price spike is likely to be an unsustainable artifact of labor and supply chain disruption, uranium is an unavoidable necessity in the drive for decarbonization. It is relatively abundant and extremely energy-dense. Fission power plants have microscopic footprints compared to
Happy 50th Birthday, Guild Investment Management!
On October 16, 1971, after years of investing for himself and working as an analyst at a hedge fund and in bank management, our founder, Monty Guild, established his own private investment portfolio management practice. That practice continues today as Guild Investment Management, Inc. For 50 years, Monty, and all
Market Summary — 21 October 2021
With earnings season underway in earnest this week, we continue to see consumer-facing businesses facing mounting cost pressures from labor shortages and supply-chain constraints. A direct case in point came from Brinker International [EAT], the parent company of the Chili’s and Maggiano chain restaurants, in its recent sharply disappointing earnings
“Transitory Inflation” Gets Less Plausible, “Stagflation” Gets More Plausible: Guild Basic Needs Index Set to Top 32% Year-on-Year Rise
Yesterday, the Bureau of Labor Statistics released monthly inflation data, showing the consumer price index (CPI) for all urban consumers rising at a 5.4% year-on-year pace. In the world of official CPI reporting in recent decades, that is hot. At the same time, retirees got a reminder of their vulnerability
Market Summary — 14 October 2021
As noted above, more durable inflation is becoming clearer on the horizon, driven by hard-to-resolve supply chain issues and rising labor costs in particular. Wages are rising, particularly at the lower end of the spectrum of hourly workers, and we suspect many companies, as they report earnings, will be reporting
Erosion of the Fed’s Cred
In recent weeks, a piece of news and a piece of commentary, which we show you below, crossed our desk — items which were interesting enough taken in isolation, but which became even more interesting when taken together. Source: Wall Street Journal, Barrons The first was a report about the
Market Summary — 7 October 2021
The broad U.S. stock indices remain close to their all-time highs. However, those indices are constructed in a way that heavily over-emphasizes the largest listed companies. A different way of looking at U.S. stocks takes the average stock performance irrespective of a company’s size – and by that measure, stocks
