Guild’s Basic Needs Index
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
Healthcare: Haven In the Storm?
The COVID crisis is first and foremost a healthcare crisis, although it is having deep economic effects. Predictably, in the market volatility caused by the pandemic, the healthcare sector has broadly outperformed; and within healthcare, biotechnology has performed even more strongly. Of course healthcare is a broad sector, comprising many
An Eye Towards the Post-COVID World
Parts of the United States and the rest of the world are tentatively moving towards re-opening their economies. Many unknowns remain about the path forward, including the timeline for developing treatments and producing vaccines, as well as many other issues. Those unknowns collectively are making it impossible for many companies
COVID: The Global Response
We’ve been concentrating on the fiscal and monetary response to the coronavirus pandemic. The responses are similar to the playbook developed in the wake of the Great Recession, but in scope and size, they are unprecedented. Our coverage has been primarily of the response of U.S. authorities so far. This
What Comes Next
Over the past several weeks, we have kept you informed about the monetary and fiscal stimulus being enacted in the United States in response to the coronavirus pandemic and the economic dislocation associated with it. The nature and extent of the economic slowdown caused by measures to combat the virus
