Guild’s Basic Needs Index
The Bubble Has To Pop… Doesn’t It?
Last week, we discussed the “liquidity supernova” that has helped drive global stock market indices to new highs, even in the face of many potential challenges — new covid variants, dislocated labor markets, supply chain disruptions, ominous geopolitical events, growing cybersecurity risks, uneven growth recovery, fragile internal market technicals, mounting
Market Summary — 2 September 2021
It was a great Q2 2021 earnings reporting season, as anticipated, with U.S. firms as a whole beating estimates by 19% (versus a 2% average beat over the period of 2000-2019). From this point forward, the hurdles get higher. Supply chain issues, inflation, labor problems, and consumer sentiment are all
Why Your Market Instincts May Be Wrong
If you are a market participant who can’t shake the feeling that you have lost your touch for anticipating market behavior, you are not alone. We have taken to simply reminding investors that corrections can come at any time, which has always been true but has never been more important
Market Summary — 26 August 2021
While listening to the recent round of quarterly conference calls, we noted that most managements were still discussing supply-chain issues — and saying that these were problems that have not yet been resolved. Trans-Pacific spot shipping rates remain elevated. The Port of Los Angeles, which receives a third of all
Why Afghanistan Matters — and Why the Market Doesn’t Care
Does the collapse of the U.S.-backed Afghan government matter? It certainly matters to many Afghani individuals who hitched themselves to the American star, and seem to have been unceremoniously abandoned in the chaotic rout that passed for an American withdrawal. It matters to the population of young urban Afghanis who
Market Summary — 19 August 2021
The message from earnings season is clear: the negative earnings impact of the pandemic, index-wide, is over. The chart below shows annualized two-year EPS growth. Source: Deutsche Bank Research What remains for investors is first, not to be prematurely spooked out of a market in which sentiment and liquidity are
The Pandemic Boost to Education Technology Will Accelerate
Last week, we commented on the likely persistence of the post-pandemic “new normal” in technology, mentioning specifically remote work and e-commerce. In both cases, covid pulled forward years of technological change in the space of a few months. We believe that even though new covid variants will pose challenges, humanity
Market Summary — 12 August 2021
Two weeks remain until the Federal Reserve’s annual policy meeting at Jackson Hole, from which we may well learn more about the Fed’s intentions on monetary policy. In the meantime, we note that via various technical mechanisms, the Fed and other central banks continue to control and gradually reduce liquidity,
The New Abnormal
Really, there is only one long-term question facing investors at this juncture. Will the “new normal” that has emerged from the pandemic be enduring? Or will it prove a temporary aberration that, with however much ease or difficulty, passes and yields to the return of something more akin to the
Market Summary — 5 August 2021
We believe that inflation will hover from 3–5% for the next several years, even as it falls from June’s CPI print: 5.4% over the previous 12 months, and 0.9% month-on-month. Five Areas That Merit Your Attention Tech growth at a reasonable price: hardware, services, and software. We would be buyers
How Much China Is In Your Index Fund?
In early June, Chinese ride-hailing giant Didi Chuxing [DIDI] filed for a public stock offering on the New York Stock Exchange. To call DIDI “the Chinese Uber” [UBER] would be an understatement; in fact it might be more accurate to call Uber “the American Didi.” In the past 12 months,
Market Summary — 29 July 2021
Earnings season is underway, and market leadership has passed once again, for now, to the big-cap growth stalwarts. We’ll be listening to earnings calls across many sectors and industries to gain some intelligence about how managements are looking at the future — at virus resurgence and the policy response; at
Pandemic Drives Lasting Productivity Improvements — In Some Surprising Places
Productivity growth is one the critical economic variables for investors to watch. For the economy as a whole, it is a key driver of GDP growth, and therefore of broad earnings growth. But within particular sectors and industries, and within particular companies, it drives margin improvements in a way that
Guild Basic Needs Index — Update
Joseph Carson, former chief economist of AllianceBernstein, recently observed on his blog: “CPI inflation of 2021 is not as high as that of the 1970s—False. It’s not possible to only compare inflation numbers across several decades because of significant changes in measurement. The CPI of the 1970s included house price
Market Summary — 22 July 2021
Although the market averages are not far from all-time highs, the market’s tone leaves something to be desired. In part this is due to the narrowing of market performance to a handful of the old mega-cap pandemic winners, as the recovery theme has paled before poor seasonals, the Delta variant,
For Central Bankers, Inflation Isn’t a Worry — It’s Their Fondest Wish
Last week, the European Central Bank joined the U.S. Federal Reserve in moving toward a policy regime that’s more tolerant of inflation. Rather than a 2% ceiling, the ECB will now target an average rate of 2%, tolerating overshoots to compensate for periods of lower inflation. (The Fed’s move to
