| Spreads are the differences that financial institutions | | | | · Rapid economic growth |
| get between their cost of money and the price they | | | | · Rapid growth in corporate profits |
| demand for loans. Spreads in effect reflect evaluations | | | | · Availability of low cost labor |
| of current and expected risk. Clearly, the current bond | | | | · Availability of raw materials and energy |
| market problems are due to a very over-optimistic | | | | · Availability of capital in the local markets |
| evaluation of risk by many lenders. The lenders have | | | | Those in the positive category are: China, India, |
| realized their mistakes and are rapidly adjusting their | | | | Norway, Canada, Brazil, Hong Kong, Singapore, and |
| risk premiums back to the historical levels of risk | | | | Korea. Much of Latin America and Eastern Europe are |
| premium that have prevailed for the better part of 30 | | | | on the fence with some positives, but they also have |
| years. As we wrote recently, every type of loan from | | | | some negatives. |
| government paper to all types of mortgages and | | | | NEGATIVES |
| corporate and consumer credit will become more | | | | SOME COUNTRIES SUFFER FROM: |
| expensive. This will reverberate through the U. S. and | | | | · Rising interest rates |
| global debt markets and raise the cost of borrowing | | | | · Lowering of P/E ratios as interest rates rise |
| for everyone. | | | | · Slower economic growth |
| GOOD FOR STOCKS AND COMMODITIES | | | | · Weakness of the financial system |
| This will also make investors more cautious about | | | | · Lack of availability of capital in some markets |
| future commitments to debt. Historically, when interest | | | | · Threats to corporate profits from tax policy |
| rates were rising, investors shunned long-term debt in | | | | after 2008 [U.S.] |
| favor of short-term debt and moved more into equities | | | | · Increasing restrictions on global trade (potentially |
| (stocks). | | | | the biggest problem) |
| Many aggressive investors have been using leveraged | | | | GLOBAL INVESTING EXPERTISE A MUST |
| debt instead of equities to maximize returns..We | | | | In our opinion investing solely with a U. S. (or for that |
| believe that many of those seeking high returns will | | | | matter any one country centric) strategy will become |
| return to stocks and commodities in order to maximize | | | | more difficult in coming years. We further believe that |
| returns. | | | | expertise in global investing will become an important |
| In this area, there are statistics suggesting why base | | | | attribute for investment success in a increasingly |
| metals and energy remain in demand. We have stated | | | | globalizing world. We have worked very hard over the |
| these things before in different ways in hopes of | | | | past few decades developing such expertise. We look |
| capturing your attention. | | | | forward to the changes taking place in the global |
| From an economic point of view, world economic | | | | economy as we expect they will create some very |
| growth determines the demand for raw materials to | | | | profitable opportunities in coming years. |
| build economies. | | | | Thanks for listening. |
| The estimated GDP growth for the last four years | | | | Guild Investment Management, Inc., a registered |
| and the coming four years is as follows: | | | | investment advisor. All material presented herein is |
| · India 8-9% | | | | believed to be reliable. Investment recommendations |
| · China 10 % + | | | | and opinions expressed in these reports may change |
| · Developing world other than India and China | | | | without prior notice. |
| 6-8% | | | | You can also read our past periodic market and |
| · Developed world 2-3% | | | | economic commentary articles by going to the |
| If the developing world contributes about 40% of the | | | | Commentary Archive on our web site |
| global GDP as many economists think, and the | | | | These articles are for informational purposes only and |
| developed world is contributing about 60%, then the | | | | are not intended to be a solicitation, offering or |
| blended world growth rate is roughly 5% per annum. | | | | recommendation of any security. Guild Investment |
| We believe, based upon the research of economists | | | | Management does not represent that the securities, |
| from many parts of the world, that global GDP growth | | | | products, or services discussed in this web site are |
| has been about 5% a year for the past few years, | | | | suitable or appropriate for all investors. Any market |
| and will probably continue at about that rate for the | | | | analysis constitutes an opinion that may not be correct. |
| next few years. | | | | Readers must make their own independent investment |
| LONGER TERM GLOBAL ECONOMIC GROWTH | | | | decisions. |
| LIKELY TO BE STRONG | | | | The information in this article is not intended for |
| We further believe that world economic growth will | | | | distribution to, or use by, any person or entity in any |
| remain strong for two or more decades as the current | | | | jurisdiction or country where such distribution or use |
| 6.5 billion world population grows by more than 50% by | | | | would be contrary to law or regulation, or which would |
| 2050. | | | | subject Guild Investment Management to any |
| TO GROW A WORLD ECONOMY BY 5% PER | | | | registration requirement within such jurisdiction or |
| YEAR..you must consume resources at the rate of | | | | country. |
| about 3% per year. | | | | Any opinions expressed herein, are subject to change |
| In today's tight markets for oil and minerals, the supply | | | | without notice. In addition, there are many market, |
| of many commodities is growing at about 1% a year | | | | currency, economic, political, business, technological and |
| or less. If demand is growing at 3% per year PRICES | | | | other risks that are beyond our control. We make |
| MUST RISE SUBSTANTIALLY for energy and for | | | | reasonable efforts to provide accurate content in |
| many other commodities. | | | | these articles; however, some content and some of |
| AS WE HAVE SAID, WE ARE OPTIMISTIC ABOUT | | | | the assumptions, formulas, algorithms and other data |
| THE OUTLOOK FOR SOME STOCK MARKETS | | | | that impact the content may be inaccurate, outdated, |
| AND THE MARKETS FOR ENERGY, BASE | | | | or otherwise inappropriate. In addition, we may have |
| METALS AND PRECIOUS METALS | | | | conflicts of interest with respect to any investments |
| LET'S MAKE A LIST OF WORLD NEGATIVES AND | | | | mentioned. Our principals and our clients may hold |
| POSITIVES..THEN LET'S DECIDE WHO IS HURT BY | | | | positions in investments mentioned on the site or we |
| THE NEGATIVES AND WHO IS HELPED BY THE | | | | may take positions contrary to investments mentioned. |
| POSITIVES..THIS WAY WE CAN DETERMINE | | | | Guild's current and past market commentaries are |
| WHERE TO INVEST AND WHERE TO AVOID | | | | protected by copyright. Apart from any use permitted |
| INVESTING. | | | | under the Copyright Act, you must not copy, frame, |
| POSITIVES | | | | modify, transmit or distribute the market commentaries, |
| SOME COUNTRIES ENJOY: | | | | without seeking the prior consent of Guild. |