Guild’s Basic Needs Index
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
Markets This Week — 21 April 2022
What is Happening In China? Shanghai, and many other Chinese cities, are once again under extreme covid lockdown conditions — the most stringent since April 2020, as China pursues its apparent “zero covid” policy. The images and videos percolating through to western social media are profoundly disturbing, and prompt a
Commodity Markets Signaling: This Is Not A Drill (Although Drilling Might Help)
Agustin Carstens, the General Manager of the Bank of International Settlements (BIS), spoke in Geneva a week ago — offering some soul-searching reflection on how the world’s financial authorities got the inflation story so terribly wrong. (The Bank of International Settlements is essentially “the central bank of central banks.”) We
Markets This Week — 14 April 2022
Earnings season is underway. As we wrote last week, we expect a down quarter for real earnings; of most interest to us will be the tone of management forward guidance. We are already hearing a lot of talk about rising costs and ongoing supply chain issues. We’ll be listening closely
The Earnings Recession Has Arrived: Is the Economic Recession Coming Next?
We say it often and we will say it again: earnings are the mother’s milk of stock prices. On a market-wide basis, a flat or declining earnings trend almost invariably accompanies a flat or declining trend in stock prices. This doesn’t mean that investors should go completely to cash (particularly
The Markets This Week — 7 April 2022
The points raised in our main post this week all suggest to us that the shelf-life of the traditional, indexed, 60/40 portfolio is close to expiration. Bonds were long thought to be — and long functioned as — counterweights to the equities in a portfolio, and would blunt volatility, since
The Fed, Inflation, and the Future of the Dollar
Many thanks to those who joined us on our periodic conference call on March 24. We will be editing the call into bite-sized thematic sections and providing the links to you in coming days, to watch or rewatch. If you would like a copy of the slide deck that accompanied
Markets This Week — 31 March 2022
Markets have staged a strong rally following the volatility that accompanied the start of the war in Ukraine. The S&P 500 has rallied 10% from its bottom, and the NASDAQ 15%. (The NASDAQ is still 10% down from its peak, and the S&P is down about 4% from its peak.)
When the Spectrum of Potential Outcomes Is Wide… Maintain Optionality
The tumult of countervailing forces at work in the global economy, and besetting investors, increases in strength day by day. Last week we wrote extensively on Russia’s invasion of Ukraine, and its implications for a host of global financial and commodity markets. The invasion itself surprised many seasoned analysts who
The Markets This Week — 17 March 2022
Our Upcoming Conference Call: Optionality Is King We have written before that the investment climate has changed dramatically. The cost of money is rising, and the risks of illiquidity episodes are rising. This is probably not the time to be locking yourself into anything, unless you absolutely must (e.g., you
Got Nickel? Asking For A Friend
There are years when nothing happens and years in which centuries happen. Carlos Fuentes We’ve seen a whirlwind of events in the past week. Here are some thoughts on the most important themes. Ukraine and the Fed Unfolding events in Ukraine of course represent a humanitarian catastrophe — and we
Markets This Week — 10 March 2022
Stay liquid. This is not the time to be locking yourself into anything unless you absolutely must (e.g., you need to make a 1031 exchange). In our view, current conditions and the speed of current developments indicate a cardinal truth for investing in 2022: liquidity and optionality are king. This
Reality Bites — With a Vengeance
The broad markets have registered significant, but constrained, volatility thus far in 2022, with the S&P 500 down about 8% from last year’s highs as of this writing, and the NASDAQ 100 down about 14%. Those figures mask a different, deeper, and more systemically important reality that mark the current
