Economic Analysis


Outside the Box

May 20, 2015

Ian Bremmer’s new book on the future of the US and geopolitics, Superpower, just hit the streets yesterday, and it’s already creating quite a buzz. It draws on Bremmer’s remarkable understanding of politics, America, and the world. I first ran into Ian at a conference about four years ago, where he was the after-dinner keynote speaker. It was one of those dinners where I had to go (I had spoken earlier), and I confess I had no knowledge of Ian other than his official bio. A professor of...

Secular Versus Cyclical: Notes from SIC 2015

Thoughts from the Frontline

May 16, 2015

The consensus I’m hearing and reading from the 500+ attendees at the recent Strategic Investment Conference is that this was the best ever. It was certainly intense, with more divergent views presented this year than at previous conferences. Plus, the range of topics was rather dramatic. This year I was able to listen to all but one of the presentations, and I want to share with you my notes and takeaway thoughts. (In addition to my own notes as a source for this letter, my associate Pat...

How to Dress for a Rainy Day

Outside the Box

May 8, 2015

Valuations are quite high and could spur financial instability, Janet Yellen told us yesterday. The question on the lips of the attendees at my recent Strategic Investment Conference was how to hedge their portfolios in a world of increasing volatility. For the last two years, my associate Worth Wray and I have been examining ways to design core strategic portfolios that are both robust and insulated. The challenge is that designing portfolios using backward-looking tools in a world that will...

The Third and Final Transformation of Monetary Policy

Thoughts from the Frontline

April 26, 2015

The law of unintended consequences is becoming ever more prominent in the economic sphere, as the world becomes exponentially more complex with every passing year. Just as a network grows in complexity and value as the number of connections in that network grows, the global economy becomes more complex, interesting, and hard to manage as the number of individuals, businesses, governmental bodies, and other institutions swells, all of them interconnected by contracts and security instruments,...

Half a Bubble Off Dead Center

Thoughts from the Frontline

April 20, 2015

I can sense a growing unease as I talk with investors and other friends, from professional market watchers and traders to casual observers. What in the Wide World of Sports is going on? It is not just that markets are behaving in an unusual and volatile manner (see chart below showing multiple double-digit moves in the last few months); it’s that the data seems to be so conflicting. One day we get data that shows the economies of the developed world to be slowing, and the next day we get...

Hoisington Quarterly Review and Outlook – First Quarter 2015

Outside the Box

April 17, 2015

I think it was almost two years ago that I was in Cyprus. Cyprus had just come through its crisis and was still in shell shock. I was there to get a feel for what it was like, and a number of my readers had courteously arranged for me to meet with all sorts of people and do a few presentations. A local group arranged for me to speak at the lecture hall of the Central Bank of Cyprus in Nicosia.

There were about 50 people in the room. I was busily working on Code Red at the time and had money...

Germany’s Trade Surplus Is a Problem

Outside the Box

April 9, 2015

In Code Red I wrote a great deal about trade imbalances among the various European countries, which were at the heart of the European sovereign debt problem. As the peripheral countries have tried to rebalance their trade deficits with Northern Europe and especially with Germany, they have seen their relative wages fall and deflation become a problem. Greece is the poster child.

The north-south imbalance in the Eurozone is still a problem today. In this week’s Outside the Box, I highlight a...

Economists in Glass Houses

Thoughts from the Frontline

April 7, 2015

For many economists, the chicken and egg question is, which came first, consumption or production? What drives growth? Let’s continue with our series on debt, in which I have been contrasting my views with those of Paul Krugman.

Central Banks, Credit Expansion, and the Importance of Being Impatient

Outside the Box

April 3, 2015

We live in a time of unprecedented financial repression. As I have continued writing about this, I have become increasingly angry about the fact that central banks almost everywhere have decided to address the economic woes of the world by driving down the returns on the savings of those who can least afford it – retirees and pensioners.

This week’s Outside the Box, from my good friend Chris Whalen of Kroll Bond Rating Agency, goes farther and outlines how a low-interest-rate and massive QE...

Living in a Free-Lunch World

Thoughts from the Frontline

March 28, 2015

“Everyone is a prisoner of his own experiences. No one can eliminate prejudices – just recognize them.”

– Edward R. Murrow, US broadcast journalist & newscaster (1908 – 1965), television broadcast, December 31, 1955

“High debt levels, whether in the public or private sector, have historically placed a drag on growth and raised the risk of financial crises that spark deep economic recessions.”

– The McKinsey Institute, “Debt and (not much) Deleveraging”...