Guild’s Basic Needs Index
Market Summary — 29 July 2021
Earnings season is underway, and market leadership has passed once again, for now, to the big-cap growth stalwarts. We’ll be listening to earnings calls across many sectors and industries to gain some intelligence about how managements are looking at the future — at virus resurgence and the policy response; at
Pandemic Drives Lasting Productivity Improvements — In Some Surprising Places
Productivity growth is one the critical economic variables for investors to watch. For the economy as a whole, it is a key driver of GDP growth, and therefore of broad earnings growth. But within particular sectors and industries, and within particular companies, it drives margin improvements in a way that
Guild Basic Needs Index — Update
Joseph Carson, former chief economist of AllianceBernstein, recently observed on his blog: “CPI inflation of 2021 is not as high as that of the 1970s—False. It’s not possible to only compare inflation numbers across several decades because of significant changes in measurement. The CPI of the 1970s included house price
Market Summary — 22 July 2021
Although the market averages are not far from all-time highs, the market’s tone leaves something to be desired. In part this is due to the narrowing of market performance to a handful of the old mega-cap pandemic winners, as the recovery theme has paled before poor seasonals, the Delta variant,
For Central Bankers, Inflation Isn’t a Worry — It’s Their Fondest Wish
Last week, the European Central Bank joined the U.S. Federal Reserve in moving toward a policy regime that’s more tolerant of inflation. Rather than a 2% ceiling, the ECB will now target an average rate of 2%, tolerating overshoots to compensate for periods of lower inflation. (The Fed’s move to
Guild Basic Needs Index — Update
All-item consumer prices rose 0.9% in June, and 5.4% in the 12-month period, the Bureau of Labor Statistics announced on Tuesday, capping a string of high monthly readings: Final data are not yet in on all the components tracked by our in-house real-world inflation gauge, the Guild Basic Needs Index.
Market Summary — 15 July 2021
Any time markets recover from panic lows and recession, there is a powerful upward movement that is eventually followed by a period of digestion. It may come as a surprise to watchers of the broad indices to hear us say that the U.S. stock market has been in such a
Blistering Small Business Formation Bodes Well For Creative Destruction
Unexpectedly poor job numbers for April caused a moment of consternation that the economic recovery was stalling. May and June’s reports were also misses, coming in below analyst estimates, although less sharply than for April. The concern served to highlight a topic of enduring interest for us — new business
Market Summary — 8 July 2021
Tightening By Any Other Name Two weeks ago, we observed that peak liquidity growth had already passed: “There is an important sense in which the taper already began in the first quarter. The Fed may not be withdrawing liquidity from the system, but the rate at which liquidity is increasing (that is, the ‘second
Pandemic Dividends: Growth Driven By Digitization (and the Beneficiaries)
The extraordinary pandemic support measures enacted last year by the Federal Reserve and the Treasury were a critical component of the U.S.’ so-far successful navigation of pandemic disruption. Still, those support measures would have had little to work with if the U.S. economy had not already undergone substantial digitization in
Rising Employment and the Coming Taper
As many states have now ended the additional pandemic unemployment benefits provided by the Federal government, we are seeing in real time that those benefits were in fact serving to suppress employment and encourage workers to stay home; unemployment is falling faster there than in states that have maintained the
Entitlements and Economic Growth
Electorates, Be Careful What You Wish For The chaotic wake of the pandemic and the ever-more-bitter partisan spirit that has taken hold in Washington has made the neutral examination of policy proposals increasingly difficult for analysts. Yet it remains a particularly critical exercise to contextualize the nearer-term dynamics of the
Market Summary — 1 July 2021
July 1 marks the start of the third quarter, which is traditionally the worst quarter for the U.S. and other global stock markets. Of course we don’t know what this year will bring, but as we noted above, we see some reason for caution when we look forward to fall,
Peak Liquidity and a Strong Economy Augur Volatility, Not Disaster
Since the initial supernova of Federal Reserve and Treasury pandemic support for financial markets occurred last April, we have argued that this description-beggaring liquidity explosion was the single most important phenomenon for market participants to see and understand. Correct views and analysis of economic recovery trends and market theme and
Guild Basic Needs Index — Update
With May data complete, the Guild Basic Needs Index (GBNI), our proprietary real-world inflation gauge measuring the price of a basket of four essential consumer goods, has backed slightly off April’s 25% year-over-year pace. (You can click here for a more detailed description of how we compile this measure of
Market Summary — 24 June 2021
Without getting technical, let’s just say that because of its impact on markets and pricing, liquidity measures (whether from the Fed, China, or other central banks) must be monitored. Much has been reported in the past week about recent Federal Reserve operations, such as increasing interest rates offered on excess
