Guild’s Basic Needs Index
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
We Warned You It Would Be Hot — Guild Basic Needs Index Up 30.7% Year-on-Year
We noted last week that we’d provide you with October data on our in-house real-world inflation measure, the Guild Basic Needs Index (GBNI). Here it is: up 30.7% year-on-year. (The GBNI is constructed to reflect the price of essential living expenditures, without statistical manipulation or adjustment. For more details about
Market Summary — 18 November 2021
Statistics argue that a year as strong as this one has been will finish strongly. The crop of 2022 projections is beginning to arrive, with some holding forth for a muted or negative performance by the broad market, and others more optimistic, in the face of what will likely be
Wage Inflation and Poor Productivity Growth — and the Industries They Will Challenge
Another week brings another set of inflation-related data to report on. In the past few days, we have seen consumer (CPI) and producer (PPI) inflation data from the U.S., Europe, and China. (When our October data are complete next week, we’ll give you an update on our in-house real-world inflation
Market Summary — 11 November 2021
If only everything were linear and two-dimensional, the investor’s task would be a lot simpler. The inflation, margin, and productivity trends noted above would be easier to translate into predictions. Unfortunately there are confounding factors which make the problem multidimensional, non-linear, and much more unpredictable. Among the most significant of
Inflation, the Cost of Doing Business, and Labor Flexing Its Muscles
Businesses are facing rising costs, and it remains to be seen how “transitory” those will be. The consensus among analysts and officials has been gradually coming to the point of view we have had since early in 2021 — that inflation would be much stickier than their earlier hopeful (and
Market Summary — 4 November 2021
The Federal Reserve, as expected, announced its intention to begin tapering its $120-billion-per-month asset purchase program, by $15 billion per month. The market’s response — with the S&P 500 closing the day at an all-time high — shows that the move was already largely priced and anticipated. Investors will still
Inflation, Chaos, and Regime Change
Last week, on the occasion of the 50th anniversary of our firm, we reflected on the many ways in which current events and trends “rhyme” with the events and trends of the early 70s — from war and energy convulsions, to political turmoil and demographic transformation, to monetary chaos and
