Guild’s Basic Needs Index
Commodities: Crosscurrents and Undertow
Another month, another blistering inflation report; the consumer price index rose at a 7% annual rate in December. Of course, as our regular readers have heard us say often, the methodology used to calculate that rate has changed often over the decades — invariably in a way that understates the
The Markets This Week — 13 January
Looming higher rates — and now, the looming run-off of the Fed balance sheet — have finally begun to penetrate market consciousness, with the result that the sell-off which had been happening “under the hood” spread more widely and visibly to the major indices. As usual, the median stock has
Energy Chaos In Europe and the Transition to a Green Economy
Current events in Europe show that even if it’s inexorable, the decarbonization of the global economy is unlikely to be smooth. The latest drama swirls around natural gas and the new German government elected in November, which includes more powerful representation from the Green Party than ever before. The Greens
Crypto Comments: Chainlink
While bitcoin launched crypto as an asset class, its primary function is simply that of a digital currency. Currently it seems to be displacing gold in the minds of a generation of investors newly concerned about irresponsible monetary policy and fiat debasement — though of course it is for the
The Markets This Week — 6 January 2022
Current events in Kazakhstan underscore the significance of uranium, as nuclear energy enjoys a renaissance. Of course, although Kazakhstan accounts for roughly 40% of world uranium production, it is unlikely that unrest there will be an enduring problem for uranium supplies, although it may be unfortunate for ordinary Kazakhs. The
S&P Tech Dominance, Why It’s Unlikely to Change, and How It Can Help You Combat Inflation
With all the ups and downs that have accompanied the pandemic — stay-at-home stocks duking it out with reopening stocks in rounds that have tracked the virus anxiety cycles — mega-cap technology stocks have continued to outperform the broad market. This is a trend visible since early 2020 (top graph),
Market Summary — 30 Dec 2021
Two days before year-end, the S&P 500 is once again near all-time highs. In hindsight (as far as the US stock market is concerned), 2021 was a year where it would have been a good idea to: tune out all of the political haranguing and off-the-charts debt spending, ignore the
How Inflation Can Persist… Even If Supply Issues Moderate
Inflation remains in the front of everyone’s minds — the Fed, investors, business owners, and consumers. It’s interesting to note that inflation was much less in everyone’s mind during the long period of unusually low inflation that followed the Great Financial Crisis. This psychological fact explains a key difficulty faced
Market Summary — 23 December 2021
With all the reflection and analysis we’ve been offering about inflation over the past year, we should emphasize again that we do not believe the U.S. is headed for hyperinflation or any imminent financial catastrophe. While we think the very long-term trends of spending, unfunded liabilities, and corporate and government
The Coming Crypto War
The post-pandemic bull market is now getting choppy as it encounters a number of real-world headwinds — the reduction of monetary stimulus, growing conflicts over further fiscal stimulus, slowing liquidity growth, official acknowledgment of persistent inflation, and the growing concern of market participants that a Fed “policy mistake” is unfolding.
Market Summary — 16 Dec 2021
We do not regard current market action as favorable; it is likely the harbinger of a possible near-term correction. As we indicated in our last letter, we believe that 2022 will be a year marked by volatility; the inflation landscape, the Fed’s evolving response, and potential political turmoil surrounding mid-term
2022: Shifting Risks and Opportunities
As we come closer to year end, U.S. markets remain, as of this writing, within a percentage point or two of their all-time highs. We have come a long way since the first reports of a new SARS-like virus began to percolate into public awareness in January 2020. The world
Will the Fed Be Too Late?
We started banging the drum on inflation early this year; over the course of the year, more analysts and observers began to join us in identifying the rising risk of more troublesome and persistent inflation. By late summer, the consensus had firmly shifted to the “persistent” camp, but the Federal
Market Summary — 2 December 2021
We are not bullish on high-P/E ratio stocks. At this stage of the market, we expect more volatility, and we move away from companies which will not earn money during the period of rising interest rates that we expect for the next several years. Currently, having a large concentration of
The Robot Baristas Are Coming
We’ve commented a few times in recent letters on one of the pandemic’s most noteworthy effects: what’s come to be known as “the Great Resignation.” It’s visible economy-wide, as it includes both early retirements and reassessment of family lifestyles — care for children and elderly relatives. It is making geographic
Market Summary — 24 November 2021
As we move into the final weeks of the year, some typical seasonal dynamics are likely to begin coming into play. After a tumultuous year, tax-loss harvesting may cause significant volatility. Some names that have performed very poorly over the year may come in for additional volatile selling, and the
