Guild’s Basic Needs Index
Market Summary — 11 March 2021
We believe that 10-year rates will rise above 2% over the course of 2021; U.S. core inflation will move towards 3%, and total inflation (including the more volatile food and energy) towards 4%. In the context of a rising dollar, we are not bullish on emerging markets as a group.
Waiting For “The Great Reset”? It’s Already Here
The year since the advent of the covid pandemic has been unprecedented — to such an extent that the word “unprecedented” has become a cliché. Some readers may remember Alvin Toffler’s 1970 book Future Shock, which diagnosed the cultural disorientation that he identified and predicted would be a side-effect of
Market Summary — 4 March 2021
A lot of “bubble talk” is making the rounds. We concur with the recently published opinion of Ray Dalio, who sees bubbles in certain areas of emerging technology stocks, but not in the market as a whole. Market valuations are getting elevated, but are not in a bubble; stock prices
Russia Poisons Europe’s Future
In the judgment of history, the most significant shift inaugurated by the Trump administration may prove to be a shift in the relationship between the United States and China — a shift with profound potential ramifications on global trade, regional power balances, many developing-market economies, and many global industries. The
No Wasted Crisis? European Banks Tinker With Restructuring
One slightly bright spot in Europe has been the use made of the pandemic crisis by some European banks. European banks are still laden with bad debts from the bloc’s sovereign debt crisis, and unlike U.S. banks, still not adequately recapitalized, and still struggling under depressed rates. All these woes
Market Summary — 18 February 2021
Fourth-quarter earnings continue to come in very strong. As of now, the fourth quarter of 2020 is coming in positive — 2% up from the final quarter of 2019, when analysts had expected an 11% decline. Consensus now expects a 22% rise in S&P 500 earnings in 2021, and a
Watch Those Curves
Until the pandemic broke last spring, all eyes were on the yield curve — the spread between short and long-term interest rates. The inversion of that curve is thought to augur the approaching end of a period of economic expansion. When long term (usually ten-year) rates drop below short term
Market Summary — 11 Feb 2021
In our view the appropriate strategy is to be optimistic, be invested, but be careful as you build your buy list. As we said two weeks ago, there are ways to approach an elevated market in an intelligent way: As stocks rise, move your stops up. Take some profits in
Inflation, Financial Repression, and the Rubicon We’ve Crossed
Our first note of 2021 made the case that the events of 2020 heralded the return of inflation. We made two main observations. First, the Fed’s adoption of average inflation targeting, which would give the central bank cover to tolerate persistent inflation above the 2% to make up for the
Market Summary — February 4
Earnings season is underway. Earnings growth has turned positive for the first time since the last quarter of 2019, before the pandemic: Barring unforeseen developments on the vaccine front, which we can’t rule out but which seem unlikely, the 2021 playbook is going as expected so far: pandemic recovery, gradual
Market Summary — 28 Jan 2021
To many experienced investors, the U.S. stock market appears dangerously high. While investor and trader enthusiasm is taking the major stock averages higher, there is also an uncomfortable level of euphoria in certain types of stocks, themes, and groups, such as: Environmental themes: Global electrification, battery storage, electric vehicles, solar
Governments Aren’t the Only Ones With Money To Spend
The remarkable market rally since last year’s pandemic lows can be attributed in large part to the very large and rapid increase in real liquidity in the financial system — that is, “readily available money above and beyond what is needed for economic growth,” as Canaccord Genuity strategist Tony Dwyer
Capex and Robots
We mentioned above the robotics companies could be key beneficiaries of accelerated capex spending made by U.S. corporates flush with cash from bond and equity raises last year. A Bain Capital reports notes that between now and 2030, American companies are expected to invest some $10 trillion into automation. The
Market Summary — 21 January 2021
Yesterday passed and saw the arrival of another new U.S. presidential administration and a new Congressional majority. Our attention remains focused on the two trends mentioned above: the beneficiaries of the new administration’s policy priorities, and the technology trends which, beyond the troubled limelight of big tech, are riding the
Rethinking Investment Portfolios In Light Of the Coming Inflation
Of the critical macro variables for investors to watch, inflation is one of the most important. Current inflation, as well as prospective changes in inflation levels and direction can result in very different outlooks for asset classes, sectors and industries, and entire economies. In the post-2008 era, broad inflation has
Market Summary — 14 January 2021
If inflation is coming, as we described above, those investors who remember the inflation of the 1970s should know that it will not necessarily look like it did back then. The economy is radically different in sectoral composition and weighting; industries are radically different technologically; people’s appetites and needs for
