Guild’s Basic Needs Index
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
The Asset Class Quilt
After our review of the great bull/bear debate, and last week’s rundown of global stocks, we thought it would be useful this week to zoom out even further to the asset class level. We’ll briefly examine where various asset classes stand in the context of current global developments; what sort
Summer Travel Over… Here Comes September
Our editor, Rudi von Abele, is taking a much-deserved week off. We apologize in advance that instead of polished, well written research analysis, this week you will get the musings of a portfolio manager. Do not despair, Rudi will return next week, and we will all be more intelligent for
The Bull vs Bear Battle
We’ve been planning for a few weeks to write a brief rundown of the case to be made on each side of the market, bull vs. bear. The market’s pullback from its recent high, though, which began on August 16, is strengthening the bears’ case. The remarks of Fed Chair
Markets This Week — 25 August 2022
All ears are waiting to hear what Fed Chair Powell has to say at Jackson Hole tomorrow. Much of the recent rally was predicated on a tacit assumption by market participants that Powell has hinted at a “pivot” in his remarks after July’s FOMC meeting. We don’t believe that a
Productivity Crash: What May Be Happening, and Why It Matters
Last week the Bureau of Labor Statistics published its preliminary second-quarter report on labor productivity and labor costs. The headline numbers were worrisome — showing the second quarter in a row of sharp declines in non-farm labor productivity. The decline improved a little month-over-month, but year-over-year it was the sharpest
Markets This Week — 18 August 2022
Is it a top yet for the bear market rally? It has continued to march on into the teeth of skepticism from many professional money managers, who according to surveys, remain at the peak of bearishness even as they are almost fully invested (yes, again the phenomenon of the “fully
Jobs, Inflation, and Gaslighting
While some economic data — notably year-over-year GDP growth — are flashing “recession,” some other important data are contributing to positive investor and trader psychology, and helping maintain the current counter-trend stock market rally. It can be awhile before reality comes calling… and that means that we wouldn’t want to
Markets This Week
In spite of its questionable fundamental foundations, the current rally continues, demonstrating clearly that psychology, not fundamentals, is often the most powerful near-term factor governing market action. There is certainly an element of short-covering at work, besides relief, wishful thinking, and the anticipation — misplaced, we believe — of an
Earnings and the Recession Trajectory
In keeping with our perpetual motto, that “earnings are the mother’s milk of stock prices,” we are listening to a lot of earnings calls and digesting a lot of companies’ commentary about their current environment and their anticipation of future developments. We are also looking more broadly at market- and
Markets This Week
It was a head-scratcher for us that Fed Chair Powell indicated in last week’s press conference that he believes the Fed funds rate is near a “neutral” level. Looking across the inflation landscape, that seems a quixotic view and not one with which we agree. We believe the Fed funds
Why There’s No Health Care In the Guild Basic Needs Index
You have probably seen many graphs like the one below, illustrating the inexorable rising cost of healthcare to the American consumer. Given how much healthcare has outstripped the price increases for other categories, how much it has outstripped wage gains, and how important health care is as a necessity of
ESG Raises A White Flag?
On our ongoing theme of the revenge of the real, the most recent edition of The Economist was devoted to a critique of “big ESG” — the use of “environmental, social, and governance” metrics to grade and construct investment portfolios and indexes. It’s not a condemnation — the magazine is
Markets This Week
The Federal Reserve, as expected, delivered another 0.75% rate increase, bringing the Fed funds rate to 2.5%. Markets were buoyant in response — perhaps concluding that a Fed pivot or declaration of victory is closer than feared, or that too much pessimism had been baked in about the likelihood, and
