Guild’s Basic Needs Index
Xi Jinping’s Grip On Power, the Future of China, and What It Means For the Rest of the World
Last weekend concluded the 20th National Congress of the Communist Party of China, at which a new slate of Chinese leaders were presented: the Politburo, and most significantly, the Politburo’s seven-member Standing Committee. As had been widely expected, President Xi Jinping broke with the precedent established by his predecessors which
Markets This Week — 27 October
Accelerating GDP data (annualized quarter-over-quarter at 2.6%, with the real-time “GDP Now” estimate running over 3%) and cooling PCE inflation data (4.5%) in the U.S. that were just released suggest that some of the most bearish economic prognostications have had the wind taken out of their sails. Earnings season is
Inflation, Changing Regimes, and the End of Green Conceits
With the S&P 500 bouncing off very long support at the 200-week moving average, the stage may be set for the bear market to get a breather. Inflation remains a clear problem, but as we have been telling you for some time, inflation will eventually begin to settle back from
Market Cracks and the Rocky Return to What Used to Be Normal
Investors with eyes riveted on upcoming CPI data have had to make a few glances across the Atlantic to the financial (and perhaps soon-to-be-political) trainwreck in the UK. The wreck has centered on UK pension funds that had leveraged themselves in order to meet actuarial targets rendered impossible by a
Maybe the End Is Not Nigh
We commented in a recent letter that a change in investor sentiment from “catastrophically bad” to “merely bad” could occasion a strong rally. It seems that the end of the third quarter saw sentiment decline to a recent nadir, and the stock market with it. (September is a notoriously difficult
How Much Longer Before This Bear Hibernates?
Fed Chair Powell tried to channel Paul Volcker at Jackson Hole. Insiders report that the market’s reaction to his July press conference was to assume that a pivot to easier policy was coming — so he scrapped his prepared remarks for Jackson Hole and instead delivered a short, blunt message
Currencies: The Last Piece of the Puzzle
First we reviewed the great bull/bear debate; then we gave a rundown of global stocks; last week we described our view of the positioning of the high-level asset classes. Today we’ll round out the high-level tour with some analysis of global currencies. Cash is of course one of the main
The Asset Class Quilt
After our review of the great bull/bear debate, and last week’s rundown of global stocks, we thought it would be useful this week to zoom out even further to the asset class level. We’ll briefly examine where various asset classes stand in the context of current global developments; what sort
Summer Travel Over… Here Comes September
Our editor, Rudi von Abele, is taking a much-deserved week off. We apologize in advance that instead of polished, well written research analysis, this week you will get the musings of a portfolio manager. Do not despair, Rudi will return next week, and we will all be more intelligent for
The Bull vs Bear Battle
We’ve been planning for a few weeks to write a brief rundown of the case to be made on each side of the market, bull vs. bear. The market’s pullback from its recent high, though, which began on August 16, is strengthening the bears’ case. The remarks of Fed Chair
Markets This Week — 25 August 2022
All ears are waiting to hear what Fed Chair Powell has to say at Jackson Hole tomorrow. Much of the recent rally was predicated on a tacit assumption by market participants that Powell has hinted at a “pivot” in his remarks after July’s FOMC meeting. We don’t believe that a
Productivity Crash: What May Be Happening, and Why It Matters
Last week the Bureau of Labor Statistics published its preliminary second-quarter report on labor productivity and labor costs. The headline numbers were worrisome — showing the second quarter in a row of sharp declines in non-farm labor productivity. The decline improved a little month-over-month, but year-over-year it was the sharpest
Markets This Week — 18 August 2022
Is it a top yet for the bear market rally? It has continued to march on into the teeth of skepticism from many professional money managers, who according to surveys, remain at the peak of bearishness even as they are almost fully invested (yes, again the phenomenon of the “fully
Jobs, Inflation, and Gaslighting
While some economic data — notably year-over-year GDP growth — are flashing “recession,” some other important data are contributing to positive investor and trader psychology, and helping maintain the current counter-trend stock market rally. It can be awhile before reality comes calling… and that means that we wouldn’t want to
Markets This Week
In spite of its questionable fundamental foundations, the current rally continues, demonstrating clearly that psychology, not fundamentals, is often the most powerful near-term factor governing market action. There is certainly an element of short-covering at work, besides relief, wishful thinking, and the anticipation — misplaced, we believe — of an
Earnings and the Recession Trajectory
In keeping with our perpetual motto, that “earnings are the mother’s milk of stock prices,” we are listening to a lot of earnings calls and digesting a lot of companies’ commentary about their current environment and their anticipation of future developments. We are also looking more broadly at market- and
