Guild’s Basic Needs Index
China’s Out of Sync… In A Good Way
But First: What’s That Up There, A Ceiling? Before we get to today’s main topic, a comment on the debt ceiling. It started innocently as a piece of World War I-era legislation intended to remove the threat of the Federal government running out of cash. But it was weaponized during
Monty’s 2023 Economic Overview, Part 2: Japan, Commodities, and General Market Outlook
Japan The Bank of Japan has surprised global investors by widening the band of interest rates for its benchmark 10-year bond — something that hadn’t been expected until next year’s departure of its governor, Haruhiko Kuroda. The adjustment itself was slight, but it has outsized significance, because it suggests that
2023 Year Ahead: Monty’s Economic Overview and Outlook, Part 1
We believe the beginning of 2023 will likely bring a recession and more stock-market declines — perhaps beginning between now and the end of January. Since this recession will likely end in late 2023 or early 2024, and the market will discount the economic upturn by 6–12 months, we think
China: Trading Opportunity Emerging… Rest of World: Too Late To Be Bearish, Too Early To Be Bullish
China Recently, developments in China indicate an almost chaotic exit to the country’s “zero covid” policy, suggesting potential opportunities in Chinese equities — which are still highly under-owned by global investors. In our view, as a brief, counter-trend technical euphoria in U.S. markets fades, a recession continues to loom over
Markets This Week: Powell Tells Markets It’s Not His Plan To Break Them
A few significant events and data releases helped propel a relief rally yesterday. First, the release of Q3 GDP for the U.S., which was revised up to 2.9%. Second, JOLTS jobs data, which showed that the Fed’s tightening is having some impact on the labor market, but far from a
Wishing All Our American Readers A Happy Thanksgiving Holiday
As we enjoy the Thanksgiving holiday and the usually quiet half-day of trading that follows on Friday, a few notes on current events of potential significance that we are watching. First, China. Due to China’s central role as an engine of global commodity demand, sentiment in world stock markets can
FTX Collapse Signals the End of Crypto’s Wild West
The ripples continue to spread from the collapse of what has now been revealed as an epochal fraud at FTX, formerly the world’s third-largest crypto exchange. The first blow came with revelations on the CoinDesk website, which had obtained a balance-sheet of FTX’s crypto hedge fund, Alameda Research, suggesting it
Markets This Week
More Evidence the Inflation Spike Is In the Rear View Mirror PPI (producer price inflation) data yesterday showed slowing inflation impulses, as we have discussed. Even our own index of basic essential needs (representing food, clothing, shelter, and energy components) reflect a sharp slow down in price increases from this
Markets This Week: Fed Messaging Leaves Market Guessing
The Fed “We still have some ways to go, and incoming data since our last meeting suggest that the ultimate level of interest rates will be higher than previously expected.” Jerome Powell, Nov 2 2022 By one significant measure, the Fed has succeeded. In the wake of the pandemic fiscal
Xi Jinping’s Grip On Power, the Future of China, and What It Means For the Rest of the World
Last weekend concluded the 20th National Congress of the Communist Party of China, at which a new slate of Chinese leaders were presented: the Politburo, and most significantly, the Politburo’s seven-member Standing Committee. As had been widely expected, President Xi Jinping broke with the precedent established by his predecessors which
Markets This Week — 27 October
Accelerating GDP data (annualized quarter-over-quarter at 2.6%, with the real-time “GDP Now” estimate running over 3%) and cooling PCE inflation data (4.5%) in the U.S. that were just released suggest that some of the most bearish economic prognostications have had the wind taken out of their sails. Earnings season is
Inflation, Changing Regimes, and the End of Green Conceits
With the S&P 500 bouncing off very long support at the 200-week moving average, the stage may be set for the bear market to get a breather. Inflation remains a clear problem, but as we have been telling you for some time, inflation will eventually begin to settle back from
Market Cracks and the Rocky Return to What Used to Be Normal
Investors with eyes riveted on upcoming CPI data have had to make a few glances across the Atlantic to the financial (and perhaps soon-to-be-political) trainwreck in the UK. The wreck has centered on UK pension funds that had leveraged themselves in order to meet actuarial targets rendered impossible by a
Maybe the End Is Not Nigh
We commented in a recent letter that a change in investor sentiment from “catastrophically bad” to “merely bad” could occasion a strong rally. It seems that the end of the third quarter saw sentiment decline to a recent nadir, and the stock market with it. (September is a notoriously difficult
How Much Longer Before This Bear Hibernates?
Fed Chair Powell tried to channel Paul Volcker at Jackson Hole. Insiders report that the market’s reaction to his July press conference was to assume that a pivot to easier policy was coming — so he scrapped his prepared remarks for Jackson Hole and instead delivered a short, blunt message
Currencies: The Last Piece of the Puzzle
First we reviewed the great bull/bear debate; then we gave a rundown of global stocks; last week we described our view of the positioning of the high-level asset classes. Today we’ll round out the high-level tour with some analysis of global currencies. Cash is of course one of the main
