Guild’s Basic Needs Index
Some Likely Winners In the Post-Covid World (Part One: E-Commerce and Fintech)
Since the pandemic broke, it’s been apparent to us — as it has to many other investors — that the virus would bring significant social and economic change in its wake. The post-covid world would be different from the pre-covid world, and those changes would benefit some sectors, industries, and
Market Summary — 25 June 2020
Most of our thoughts about the overall market landscape are contained in this week’s headline piece. Obviously, the market is rewarding perceived beneficiaries of covid-related changes, and punishing companies that are believed to be challenged by them. This week we discussed some of the tech beneficiaries, especially in the e-commerce
Reasons For Second Wave Skepticism
Two weeks ago, the worst single-day decline since March was blamed in part on emerging signs of a second wave of coronavirus illness in some reopening states, particularly Florida, Arizona, and Texas. That nervousness in turn raised fears that in some locations, authorities might need to re-institute lockdowns or tighten
Why We’re Not Worried About Inflation… Yet
Two weeks ago, we briefly mentioned the worry some investors have that the Fed’s response to the coronacrisis could result in uncontrollable inflation, or even hyperinflation. At first blush, the expansion of M2 visible since the Fed’s crisis stimulus seems to justify the concern: However, while the broad money supply
Market Summary — 11 June 2020
Time To Look To Cyclicals? Much of the heavy lifting in the markets’ breathless recovery from March’s lows has been performed by the mega-cap growth companies such as Microsoft [NASDAQ: MSFT], Facebook [NASDAQ: FB], Apple [NASDAQ: AAPL], Amazon [NASDAQ: AMZN], and Alphabet [NASDAQ: GOOG]. We believe that the overall
Yield Curve Control: Coming Soon To a Fed Near You
Even as the recovery of stock markets from the March and April decline continues and broadens, investors’ attention remains focused on Federal Reserve policy. As we described last week, Fed policy has been instrumental in preserving financial stability, not only in the U.S., but globally. With the initial crisis past,
Market Summary — 4 June 2020
The U.S. economy is reopening across many states: While after the sharp snapback rally, a 5 or 10% market correction in June or July remains a distinct possibility, we believe that monetary and fiscal support have taken many “worst case” scenarios off the table. Last week we mentioned data from
The Fed Can’t Stop Foreigners’ Addiction to Dollars
Since March, unprecedented monetary and fiscal support for the U.S. economy has rolled out in waves from the Federal Reserve and from the U.S. government. Fed Chair Jerome Powell’s determination to do “whatever it takes” to ensure the stability of the U.S. financial system, and to avert a financial crisis,
Market Summary — 28 May 2020
In the past month, the aggressive growth industries — primarily tech hardware and software, internet, cloud, cybersecurity, and biopharma — saw their stocks rebound and move ahead, dramatically outpacing the rest of the market. The rally from the pandemic bottom was thus rather narrowly based, with technology megacaps responsible for
Europe: Back From the Brink
Often in the years since the European sovereign debt crisis, we’ve noted that the European banking system has remained a weak link in the global financial system. In our view, this trouble spot was a likely epicenter of a future crisis. The coronavirus pandemic looked like it could have been
Market Summary — 21 May 2020
The United States Perhaps the most important Federal Reserve actions in response to the crisis have been the establishment of facilities to support corporate credit – by buying both investment-grade debt, and the debt of “fallen angel” corporates driven into junk status by the effects of the pandemic. That announced
India: Manufacturing Destination
Last week we reported about two large stakes taken in Indian telecom giant Reliance Jio by U.S. investors. Their interest focused particularly on the Indian consumer, one of the world’s great untapped consumer markets. Jio’s aggressive rollout of cheap internet service and mobile devices to currently unconnected Indians attracted a
Market Summary — 14 May 2020
With markets apparently becoming tired in their post-COVID-crash reality, confusion reigns in many investors’ minds. The market has, according to many observers, become detached from underlying economic realities. Many companies have withdrawn their guidance for the second quarter and often for the rest of 2020. That absence of visibility, coupled
Market Summary — 7 May 2020
In a recent conference call, Canaccord’s Tony Dwyer ably summarized the current market situation in a single graph: According to Dwyer, the market remains in a no-man’s-land between unprecedented economic events and unprecedented fiscal and monetary stimulus. In this “frustration” phase, we remain focused on our task at hand. Put
U.S. Firms See Opportunity in India
India continues to attract investment from U.S. tech and e-commerce firms. In 2018, Walmart [NYSE: WMT] acquired India’s biggest domestic e-commerce firm, Flipkart. Amazon [NASDAQ: AMZN] has said that it is investing $5 billion in India. Now two U.S. entities — Facebook [NASDAQ: FB] and Silver Lake, a private equity
Will COVID Mean That Big Wins Over Small? Not Necessarily
Part of the emerging narrative about the long-term economic effects of the COVID-19 pandemic and the business closures ordered in response to it suggests that it will lead to the ascendancy of the Big. The reasoning goes that big companies will be able to survive the downturn and will eat
