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October 31, 2013

October 31, 2013

Conference Call Announcement

We will be hosting our periodic conference call Friday, November 15th, 2013.  The conference call. Where Should You Be Invested Today?” is scheduled for 10:00AM PST.  On the call, Monty Guild and Anthony Danaher will discuss the current macro investment environment and will also answer questions from participants attending the call.  Sign up for the call today by upgrading your current subscription to a Gold Subscription.  To upgrade, please click the button below. 

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Guild’s Premium Global Market Commentary: Helping You To Be a Better Investor

The purpose of this Guild’s Premium Global Market Commentary is to help you become a better investor.

The web and the airwaves are full of people who may have a similar goal for their listeners, readers, and customers.  But if you’ve read other newsletters or spent time listening to the talk on financial TV, you may have noticed that the information we bring you each week is often different.

This week we’d like to tell you a little about our philosophy, and the years of market experience and analysis that have shaped it.  That way, we hope you’ll better understand our goal of bringing information to your attention to help you identify trends of investment importance now and in the future.  We believe this is critical in helping you make better investment decisions.

The Forest and the Trees

A recent survey conducted by Farleigh Dickinson University suggested that those Americans who listen to and read the most news are actually among the most poorly informed when it comes to foreign affairs.  It’s our conviction that this overload of information and misinformation can also become an adverse factor in investment decision-making.  Our goal in researching the topics that we present each week is to direct your attention to the trends that we believe are of great significance.

Out of the clamor and noise of political and financial news that surrounds you, we want to offer you the ideas that we consider most important to help you identify a trend before it goes mainstream and becomes the talk of the town.

It’s All About the Trends

Many significant trends have been successfully outlined by our newsletter in advance.  Our subscribers have had the opportunity to take advantage of this knowledge.

In the present investing environment, the market’s daily movements often reflect the actions of government, high-speed trading firms, and powerful financial institutions.  For investors outside Wall Street and other corridors of power, it’s next to impossible to beat these market movers at their own game.  Where it is possible to secure an advantage, we believe, is in the ability to spot important emerging trends in significant economic, industrial, and business sectors before mainstream analysts and media talking heads seize on them.

In short, although we do provide specific investment recommendations to our subscribers, our primary purpose is not to give mechanical instructions to buy this security or sell that one, nor is it to offer the technicalities of particular trading strategies.  Those opinions are available in abundance.

What We’re Watching — Top-Down and Bottom-Up Research

Our views about the investments we recommend are formed both by broad observation in analyzing the significance of emerging trends and by attention to detail in finding the companies that may benefit most from these trends.

From a broad top-down perspective, we monitor global social, political, and economic trends.  We begin by monitoring economic and political events in a number of countries.  From there we move to watching national-level trends — for example, supply and demand in various industries, and the political and economic events shaping the growth of GDP.  We identify trends that are shaping industries as they grow, shrink, and morph into new industries.

Next, from a bottom-up perspective, we watch companies in industries that may benefit from the trends we identified, visiting with management, customers, and competitors.  Gradually, we get an analytic and intuitive grasp of how an industry — and the companies within that industry — function.  We do this to gain an appreciation of the tone and outlook of their business — how well various companies can grow and meet the challenges of their industry.  We analyze a company’s past performance, and try to predict what type of revenues and earnings a company might achieve.  After estimating earnings and growth, we analyze the potential reward from the investment and the risk that we are willing to undertake in buying the stock.  We always try to balance risk and reward so that, in our analysis, the reward is substantially greater than the risk.  In addition, we want to understand the company’s position in the industry and the industry’s position in the economy as a whole.

Our performance is a record of how we’ve done in the past, but as you’ve heard many times, we would caution that past performance is not a guarantee of future results.

To view a sample of the Premium Global Market Commentary, please click the following link.  Premium Sample


Why Are We Optimistic? 

Historically, uptrends in durable goods orders and capital expenditure suggest stronger job growth ahead. 

We follow the work of many economists and strategists, and among the best is the John Hook of Hook Analytics.  We were recently pleased to see the following points of analysis from John about the correlation between durable goods orders and capex spending plans, and their correlation with job growth.  His conclusions are bullish for job creation throughout the next two or three years.  Stronger jobs growth will be correlated with stronger GDP growth, and as our readers know, stronger GDP growth leads to stronger corporate profits, while increasing corporate profits lead to higher stock prices.

What do these correlations tell us and what does it mean for the markets?


Is Food Inflation A Persistent Problem?  

Over the past weeks, we’ve noted several reports in financial media commenting on high food inflation in the emerging markets, especially in India and China.  Since in these economies, food expenditures comprise a much more significant portion of the overall consumer basket, food price pressures can be much more significant than they are in the developed world.  (Note that much of the unrest that produced the Arab Spring can be ultimately traced to food prices.)

Here are CPI increases for all food and for cereals for India and China in September:

 

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Source: GIM, National Bureau of Statistics of China, Indian Ministry of Commerce and Industry

For more on EM Agriculture Investment Should Ease Fears of Food Inflation, please visit www.howtoinvestglobally.com.


Are Commodities Building A Bottom?

We highlight five main variables that will affect commodities and discuss a strategy on how to invest in Gold and Silver.  Upgrade today to get your full report.

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Are U.S. Consumers Worried about the Government?

According to consumer sentiment poll data from the University of Michigan, Americans are not feeling the love — both with regard to current conditions and their future expectations; they are negative, and sentiment is at a 10-month low.

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Source: Credit Suisse

And Gallup polling shows that after a strong showing in August, consumer spending backed off in September:

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Source: Gallup

What are the two countervailing trends?

 


Is There Hope For Europe?

When Spain’s real estate bubble burst in 2008, the country went into a recession.  The country was returning to growth in 2010, just in time to be taken down by the continent’s emerging banking and sovereign debt crisis.

Since then, concerns about the stability of European banks have been at the center of the Eurozone’s malaise.  The crisis revealed one of the central contradictions of the European project — a continent-wide currency without a continent-wide banking authority or continent-wide fiscal policies.

The catch-phrase for the immediate policy response of European governments was “austerity.”  Despite fierce resistance from the public in the peripheral countries of Greece, Portugal, Spain, and Ireland, and in the languishing larger economies of France and Italy, austerity went forward primarily via the route of drastic cuts to bloated public service sectors.  We argue that over-staffed government payrolls have created many impediments to entrepreneurial growth in Europe, and that economic and job growth will be benefitted by reducing bureaucratic red tape.

What Does This Mean For Europe?

 


Guild Basic Needs IndexTM

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Track our analysis in these letters and at www.gbni.info.


In Last Week’s Global Market Commentary We Discussed:

  • Markets Ignore Congress
  • U.S. Energy Renaissance: The Next Stage in Fracking

Gold Subscribers have full access to all Premium content.  In addition, Gold Subscribers can participate on Guild’s periodic conference calls where participants can ask direct questions to acclaimed Guild’s portfolio managers and research team.  We will be announcing our conference call date and time in the coming weeks.  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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