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November 8, 2012

November 8, 2012

President Obama Wins and Congress Maintains Many of the Same Characteristics that We Have Seen in the Last Four Years

What does this mean to the investment markets?  The investment environment reflects the economic environment, which will be a continuation of the same slow growth trends that we have seen over the last few years.  The only major fly in the ointment is that potential for a fiscal cliff.

In this week’s Premium Global Market Commentary we talk about:

1) The Fiscal Cliff

2) The Federal Reserve…

To read the full analysis, upgrade your complimentary subscription to a Gold Subscription.

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Nowhere to Hide… From the Effects of QE

We have talked about Quantitative Easing-Everywhere (QE-E) more than a few times in our letters.  To clarify, we are not saying that all countries have instituted QE programs…

Can Central Banks be Conservative… and Still Foster Growth?

The global economy and banking systems are highly interconnected…

What is Hong Kong’s Choice?

As we all know, capital flows around the world looking for a positive real return.  


BoE to Consider More QE — Before Their Current Program Finishes

This week, the Bank of England is set to consider more rounds of QE at this week’s monetary policy meeting.  Mervyn King, the chairman of the BOE, cites his assessment that a slowing global economic outlook opens the door to further monetary stimulus, saying that “all developed countries still need to make adjustments to help ensure an economic recovery.”

The Central Bankers Hope is That it Will Manifest in Payrolls

The effectiveness of QE is often debated.  Tracking a newly printed British pound in the UK economy to determine how effective it will be in supporting domestic employment is not a science.  Nonetheless, the BoE will keep trying… as will the U.S. Fed, the ECB, and the BoJ...


Claiming Demographic Dividends

Demographics and the “Asian Miracle”

Over the past generation, many Asian economies have exhibited dramatic levels of economic growth.  This growth is attributable to many factors, but can be broadly viewed as growth in a few key areas:

1.  Overall improvement in the use of technology;

2.  Accumulation of physical capital;

3.  Improvement in human capital, i.e., education, legal structures, transparency;

4.  The size of the labor force relative to the total population.

Demographic Transitions & Demographic Dividends

Industrial development gradually moves economies from high birth and death rates to low birth and death rates.  Death rates are the first to fall, driven down by improved nutrition, public hygiene, and access to effective medical care.  For a while, a nation will have a falling death rate and yet still have a high birth rate, leading to high population growth and a “bubble” of working-age adults.  Some nations that are currently in this demographic stage are:…

Which Economies Have the Institutional Infrastructure to Benefit?

As we have observed, the capacity of a nation to benefit from the promise of its demographic dividends depends largely upon the degree of support its institutions provide for commerce and investment, and how much it supports the development of human capital through education…

Investors Should Look for Opportunities Where the Business Climate is Good

Developing markets continue to provide opportunities for strong growth and good returns.  Their positive demographic profiles are a big part of that strength, but function to support growth only in the context of the right political and business climate.

To read the full analysis on Claiming Demographic Dividends
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Speaking of Food, Clothing, & Shelter…

We will continue to track the effects of monetary debasement in the prices of essential, basic needs in our Guild Basic Needs Index™.  Our premise is that increased liquidity caused by QE and other means will continue to buoy the prices of food, clothing, shelter, and the energy needed for cooking, heating, and transportation.  Please check the GBNI website for our archives on the subject www.gbni.info.

In our opinion, the bottom line is that hiding from the effects of increased liquidity will be very difficult to do.  We believe that it is highly probable that the cost of basic needs will rise globally.  The GBNI and charts below only pertain to prices in the U.S., but as we discussed above, the effects of QE can cross national boundaries and oceans.

Guild Basic Needs Index
(September 2012)

GBNI Graph Sept 2012
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GBNI
Numbers
Sept 2012 x 400.jpg

Click to enlarge

Track the price of your basic needs today, go to www.gbni.info


In this week’s Premium Global Market Commentary available for Gold Subscribers, we also discuss:

  • Guild’s Weekly Global Market Summary
    Find out which investment areas are attractive

To get the full content and much more, become a Gold Subscriber today to receive our weekly Premium Global Market Commentary, where we discuss our formulated plans and investing strategies.

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