Economic Analysis

Life on the Edge, Continued

Thoughts from the Frontline

May 28, 2016

At the conclusion of my conference yesterday, I did a number of interviews and then made my way a few miles home, collapsed into my favorite chair, and thought back over the myriad of ideas, the whirlwind of friends, and the just general all-around fabulous time I had experienced over the past four days.

Report from Abu Dhabi ... and Dallas

Thoughts from the Frontline

May 21, 2016

This week’s letter is going to be a little bit different in that, due to the pressures of time, the worst jet lag I’ve ever experienced, and working on my speech for next week’s conference, I really have not been able to do the proper research for a letter. So what I will do is send you a slightly expanded version of a letter that I have already sent to those who will be attending next week’s Strategic Investment Conference in Dallas. It covers the agenda in detail and will give you an idea of...

At Last, Someone Apologizes for Deflation

Outside the Box

May 18, 2016

Much of the world is in the grip of deflation and negative interest rates, with all kinds of negative consequences. Yet no one takes responsibility. Who do we blame? How do we get them to change their ways?

I’m happy to report that someone is finally stepping up. The New York Times reported this morning that Akagi Nyugyo, a Japanese ice cream company, is airing a televised apology for raising its prices. Grim-faced executives and workers face the camera as a subtly humorous folk song plays and...

Life on the Edge

Thoughts from the Frontline

May 14, 2016

“Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.”

– Frederick Douglass

“I am for doing good to the poor, but I differ in opinion about the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it.”

– Benjamin Franklin...

Central Banks and the Rise of Extremism

Outside the Box

May 11, 2016

Do you feel as if you’re the rope in a tug of war? That’s the closest analogy I can come up with to describe what’s going on inside my own head – and in the world. And at the last few conferences where I’ve spoken, talking with the participants afterwards, I’ve found that my feeling is widely shared. Our sense of direction, the sense of knowing where we’re going, is gone. To analogize some more, I told a friend last night that I feel as if we have slipped our anchor and are adrift on the ocean...

Sell in May and Go Away?

Thoughts from the Frontline

May 9, 2016

The prevailing market lore is that one should sell in May and go away, returning in October. And over the last 65 years, that axiom has on average held true. Unfortunately, we can’t live on averages in the short term, and so we have to decide what to do today. Thus – just like the Fed – we are data-dependent.

Where’s the Beef? “Lies, Damned Lies, and Statistics”

Outside the Box

May 4, 2016

I have long been a critic of government inflation statistics. Not so much with regard to the methodology they use, but because the measure of “average” inflation across the broad economy doesn’t really describe the inflation that the majority of Americans experience. I’ve written about that at length in several letters.

Now my good friend Rob Arnott, along with his associate Lillian Wu, presents us with a research paper that lays out what inflation actually looks like for most Americans – and...

Delta Force

Thoughts from the Frontline

May 1, 2016

Last week we looked at the world’s demographic destiny for the coming decades. I imagine most readers perused the information and said, “Yes, we already know the world’s population is getting older. Everybody keeps saying demographics are important, but I’d like to know how slowly changing demographics actually affect the economy here and now.

Welcome to the Pale Gray Dot

Thoughts from the Frontline

April 26, 2016

“The afternoon knows what the morning never suspected.” 
Robert Frost

“It's paradoxical that the idea of living a long life appeals to everyone, but the idea of getting old doesn't appeal to anyone.” 
Andy Rooney

“Deng Xiaoping made a calculation. He bet on demographics. What he knew was that China had this enormous population of young, underemployed people, people who he could move from the farms to the coast and put them to work in factories, and that would be the lifeblood of China's...

Flawed Assumptions and Grand Experiments

Outside the Box

April 20, 2016

Over the last few years, I have from time to time had the real pleasure of being in the presence of Lakshman Achuthan, Chief Operations Officer for the Economic Cycle Research Institute, a rather serious team of economists who spend their time researching economic cycles, especially those around recessions. They are known for having forward-looking models rather than always looking in the rearview mirror.

Every time I get around Lakshman I walk away impressed. And I always make a mental note...