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December 06, 2012

December 06, 2012

The Future of the UK Economy: Slightly Better than Europe, yet Still Expecting Low Growth and Stagnation

The most recent inflation report from the Bank of England (BoE) can be found here. Once again, the Bank’s report revises near-term UK growth predictions downwards, and inflation predictions upwards. At the same time, BoE analysts hold out the opinion that the medium-term future is most likely to be “a sustained, but slow, recovery as some of the headwinds holding back output in recent years dissipate.” And what, in their estimation, are those headwinds? “The future path of GDP will depend critically on developments in the global environment, with strains in the euro area posing the greatest risk to a sustained recovery.”

In fact, the UK, Europe, and Japan face many headwinds, not just the challenges posed by near-term, crisis-driven demand sluggishness of primary trading partners. For these developed economies, a situation of very low growth, persistent inflation, and high unemployment may be the “new normal.”…


Municipal Bonds

  • After Decades of Promising Big Pensions and Early Retirement for Public Employees, Many Municipalities Will Not be Able to Keep Them
  • Municipal Bonds May be a Bubble Facing Some Potential Pin Pricks
  • Bankruptcy? What bankruptcy?
  • Courts Could be the Ones to Deflate the Bubble
  • Be Cautious and Do Your Homework if you are Investing in Municipal Bonds

    To read the full analysis on Municipal Bonds upgrade your subscription to a Gold Subscription. To learn more, click the button below.

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

  • Good News…The Fed Prepares to Strengthen Rules for Foreign Banks Operating in the U.S.
    In response to Dodd-Frank, several foreign banks have restructured their U.S. arms to avoid more stringent capital requirements…

  • Natural Gas Prices May be Forming a Bottom
    Our long-time readers know that natural gas prices differ widely in different parts of the world, due to the fact that gas is not easily transportable, except by pipeline.

  • Guild’s Weekly Global Market Summary
  • China
  • Japan and other foreign markets
  • Gold

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.

Please click the button below to learn about the benefits of Gold Subscription, or contact our office at (310) 826-8600.

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Guild Basic Needs IndexTM

The Prices of Basic Needs Do Not Wait for the Fiscal Cliff Resolution

Nervousness and uncertainty have hurt demand for certain assets and investments. While the fight in Washington can cause price (and demand) deflation in some things, other items are immune. Throughout the economy, there are many business, investment, commercial, and financial decisions and transactions that are ‘on hold’ until the President and Congress are able to iron out some sort of deal that gives clarity to tax rates, and government spending levels, going forward.

Then, there are some financial decisions and transactions that cannot wait. Necessities like food, clothing, shelter, and energy used for cooking, heating, and transportation need to be consumed by every American regardless of the income tax rate, dividend tax rate, capital gains rate, or whether the government plans to address its deficit-spending ways.

People are predicting a significant drop in economic activity in 2013 if the fiscal cliff (a combination of automatic tax increases and government spending cuts) is not averted in the next few weeks. Some say the economy could slip back into recession as workers across America all of a sudden have less take-home pay. Not to mention that a recession would likely cost the economy millions of jobs. In this scenario, demand for goods and services would drop, and therefore one would expect prices of goods and services could also drop. Even in this scenario, we do not expect the public’s need for basic, essential items like those that we are tracking in the Guild Basic Needs IndexTM(GBNI) to drop much… after all, they are basic needs.

We expect inflation to rise in coming years. In the event that 2013 brings a decline in economic activity, the Government’s traditional measure of price inflation (the CPI — Consumer Price Index), may reflect the falloff in economic demand because it includes many non-essential purchases that are dependent on consumer spending patterns. In other words, the CPI represents the things that people buy when they have money to spend, and if they have less money to spend…

The GBNI, on the other hand, represents what people NEED to spend their money on. We expect the prices for food, clothing, shelter, and energy to continue their more rapid trajectory higher, relative to the prices of a basket of goods that includes many non-necessities. You will be able to track the prices of these basic needs in these letters, and at www.gbni.info.

Guild Basic Needs Index (October 2012)

GBNI
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Click to Enlarge

To track your basic needs go to www.gbni.info


Guild Recommendation Tracker

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