Guild’s Basic Needs Index
Water: This Most Basic Necessity Makes for an Exciting Theme, But Not For Exciting Investing
In recent letters, we’ve commented on the new prominence of real assets of all kinds in the new, inflationary, deglobalizing post-pandemic world, where “just in time” logistics have reverted to “just in case” — and where for many investors and speculators “return of capital” is remembered to be worth just
Markets This Week — July 21 2022
So Bad, It’s Good? We highlighted Bank of America’s 0.0 bull/bear ratio several weeks ago — noting that the absolute nadir of bearish sentiment is not a sell indicator.The global fund manager survey (above) from the same analytical team, showing managers to be even more pessimistic than they were the
The First Pillars of Civilization: Hot Water and Affordable Food
Inflation Bites Another month, another sky-high CPI print: at 9.1%, the highest year-over-year inflation since 1981. Of course, the methodology of constructing this index has changed over the decades; if the methodology employed in 1990 were used today, the reported rate would be 17.3%, according to ShadowStats. Even this is
Manic Psychology: From Fears of Overheating to Fears of Collapsing In Just A Few Months
The U.S. is likely already in recession. The first quarter saw a real GDP decline of 1.6%; the Atlanta Fed’s GDP now tracker suggests that the second quarter may come in at a decline of 2.1%. Two consecutive quarters of decline meets the technical definition of a recession. The question
Your Expense Receipts Are Giving You More Information Than the Fed, the Government, or the Financial Media
Although we manage investment portfolios for our clients, we also view part of our vocation as being financial educators — something which, through our writing and our media appearances, we’ve been doing for almost as long as our firm has been in existence. We believe investors have a right to
Sometimes, Things Really Are Different: Why Bond Allocations Are Now Radioactive For Investors, and Why You Need To Think Differently About Stocks
As expected, the Fed hiked rates by 75 basis points on Wednesday, with a 50 or 75-basis point hike on deck as well for July. Whatever the very temporary immediate response of the market, it focuses attention very clearly on the inflation and interest rate trajectory. For the majority of
Markets This Week — 16 June 2022
As we write, the U.S. stock market is undoing the momentary relief that followed yesterday’s hawkish Fed announcement. The proximate cause was perhaps the overnight announcement that the Swiss National Bank would consider selling down its $177 billion worth of U.S. equity holdings as it defends the Swiss franc. Perhaps
The Bear Case
Last month we told you that it was “time for a bear market playbook.” We noted that even though there are many extraordinary geopolitical, economic, and financial events unfolding in the world, the central fact was simpler. The Fed is tightening financial conditions, raising rates and draining liquidity by allowing
Jobs & Robots
Yesterday, Wednesday, June 1, saw the publication of April JOLTS data – “job openings and labor turnover” — by the Bureau of Labor Statistics. This report is one of the key data sources evaluated by the Fed as it monitors the U.S. employment situation; remember that its dual mandate is
Markets This Week — 2 June 2022
Of course, all eyes are on the Fed, inflation, and employment, so much of what we wrote above fills out our general view of where markets are and what is most important to pay attention to. We’ve commented many times in the past about the rise of ESG investing —
Market Desperately Seeking Reason To Bounce
First, let’s touch on the inflation level revealed by the Guild Basic Needs Index [GBNI] — our in-house, real-world inflation measure which we compile from a simple set of data series covering consumer expenses for food, shelter, clothing, and transportation. We had to adjust the x-axis on our graph: year-on-year,
Investor Sentiment Plumbs the Depths
In this second quarter of 2022, individual investors’ sentiment hit levels not seen since 2009. History suggests that periods with historically low investor sentiment (1) usually precede a large tradeable rally, and (2) can create an attractive entry opportunity for longer-term investors. Market tops do not announce themselves beforehand, or even
Time For a Bear-Market Playbook: Some Cash, Some Patience, And Vigilance For the Coming Opportunities
After a brief moment of optimism (intoxication?) after Fed Chair Powell took 75-basis-point rises in the Fed funds rate off the table, stock markets accelerated their decline. The damage to stocks is more evident internally than externally. On the surface, the correction has only started getting to the broad indices.
Inflation, Interest Rates, Currencies, and the Fed’s Blink
At the end of March, we noted about the dollar: “In [the context] of a very likely European recession, regardless of the cessation of hostilities in Ukraine, we would expect the U.S. dollar to stage a stronger rally, particularly against the euro. Why isn’t it? And perhaps a question equally
Markets This Week — 28 April 2022
As earnings season unfolds, we are hearing many company managements mentioning foreign exchange issues as headwinds — when you hear “currency neutral” numbers being reported, it is likely that under the hood, there are negative foreign-exchange effects to be found. A strong dollar will hurt many companies which are reliant
Food Markets Signaling: Red Alert
Last week, we wrote that commodity markets were signaling that “This Is Not a Drill,” and discussed events driving energy and industrial and precious metals. We deliberately didn’t discuss soft commodities — i.e., foods. Below are some thoughts about foods, food inflation, fertilizers, the potential consequences for food and beverage
