Economic Analysis

$100 Trillion Up in Smoke

Thoughts from the Frontline

February 6, 2016

“We aren’t addicted to oil, but our cars are.”
– James Woolsey

“The greatest asset, even in this country, is not oil and gas. It’s integrity.”
– George Foreman

A Little Chaos Is a Good Thing

Thoughts from the Frontline

February 3, 2016

A Special Edition of Thoughts from the Frontline

Longtime readers know that I rarely delve into partisan politics. That’s not the usual focus of this letter. While I am sure that most readers suspect that I generally lean Republican, I try not to let that enter into our macroeconomic and investment discussions. And I’m not really going to change that policy today. What I do want to talk about are the rather arcane topics of how the delegates to a national convention are chosen and what a...

Tokyo Doubles Down

Thoughts from the Frontline

February 1, 2016

“When it becomes serious, you have to lie.”

“I'm ready to be insulted as being insufficiently democratic, but I want to be serious... I am for secret, dark debates.”

“Of course there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?”

“If it's a Yes, we will say ‘on we go,’ and if it’s a No we will say ‘we continue.’”

“We all know what to do, we just don't know how to get re-elected after we’ve done it.”

– All quotes from...

The Debate Over Renminbi Policy

Outside the Box

January 27, 2016

Longtime readers know how much I respect and rely on the Gavekal group for thought-provoking research. They have a truly unique organization, one in which even junior analysts can question conventional wisdom and ask uncomfortable questions. Moreover, they aren’t afraid to let the world (or at least their clients) see their disagreements.

Today I have a recent piece in which Louis Gave jumps into the team’s debate over renminbi policy. In true Gavekal style, he openly questions what others in...

China’s Year of the Monkees

Thoughts from the Frontline

January 24, 2016

“It does not matter how slowly you go as long as you do not stop.”

– Confucius

“Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.”

– Sun Tzu

Hoisington Quarterly Review and Outlook – 4Q2015

Outside the Box

January 20, 2016

Recession or no recession for the US in 2016? I’m looking at what a lot of people think about that question, and my good friend Lacy Hunt’s take on it has really added to the clarity of my own thinking. In today’s Outside the Box, Lacy focuses first on the factors that made 2015 a disappointing year for the economy, and he points out that we were losing momentum as the year closed.

At this point we have to ask, “Why?” Why, after seven years of post-recession central bank stimulus, a doubling...

2016: Surprises & Scenarios

Thoughts from the Frontline

January 17, 2016

“The expected rarely occurs and never in the expected manner.”

– Vernon A. Walters

“The fundamental nature of exploration is that we don't know what’s there. We can guess and hope and aim to find out certain things, but we have to expect surprises.”

– Charles H. Townes

Chinese Sunset

Outside the Box

January 13, 2016

The jet lag from flying back from Hong Kong on Sunday is just about gone, but I’m still deep in thought about what I learned. As I said in last week’s letter, the overall tone on China was bearish for the group of very sophisticated investors I met with. There was particular mention of the quantity of currency flowing out of China and lots discussion about how that was happening. Suffice it to say that the wealthy in China have ways to move money.

I mentioned that fact at lunch today with a...

Economicus Terra Incognita

Thoughts from the Frontline

January 10, 2016

“The most reliable way to forecast the future is to try to understand the present.”

– John Naisbitt

“We really can’t forecast all that well, and yet we pretend that we can, but we really can’t.”

– Alan Greenspan

What Is Really Bugging the Market

Outside the Box

January 6, 2016

My good friend David Rosenberg, Chief Economist at Gluskin Sheff, has long been one of the biggest draws at my annual Strategic Investment Conference. I had always taken him for a “permabear.” Then three years ago, Dave shocked us by announcing in no uncertain terms – in his usual fire-hose delivery of hard data and brilliant analysis – that he had turned decidedly bullish. His call was of course spot on.  

Dave will once again kick things off at this year’s SIC, and you’ll want to be there to...