Economic Analysis

What Condition My Condition Is In

Thoughts from the Frontline

April 16, 2016

I woke up this morning with the sundown shining in
I found my mind in a brown paper bag but then
I tripped on a cloud and fell-a eight miles high
I tore my mind on a jagged sky 
I just dropped in to see what condition my condition was in

Yeah, yeah, oh-yeah, what condition my condition was in

– Made famous by Kenny Rogers and the First Edition, 1968

Hoisington Quarterly Review and Outlook – 1Q2016

Outside the Box

April 13, 2016

You often hear me harping on the dangers of too much debt, and I keep my eyes peeled for significant work that backs up my concerns. In today’s Outside the Box good friend Dr. Lacy Hunt of Hoisington Investment Management gives us more ammunition to take on those who just don’t seem to get that the endless piling up of debt is not a sustainable way to run an economy.

The most striking feature of the US economy’s performance in 2015, according to Lacy, was a massive advance in nonfinancial debt...

Open Letter to the President, Part Five

Thoughts from the Frontline

April 10, 2016

When the next president of the United States walks into the Oval Office on Saturday, January 22, after the heady experience of Inauguration Day followed by numerous balls, he or she will be confronted with significant economic challenges. This is the fifth and I hope final installment in a series of letters I’ve written to the next president on those challenges. The first three letters in the series dealt mostly with the realities of the economic landscape beyond the the United States. The...

Thrivers and Strugglers: A Growing Economic Divide

Outside the Box

April 6, 2016

I am on yet another plane and reading an analysis of the growing wealth and income divide. The data in this week’s Outside the Box is fascinating – but sobering. I can kind of go along with some of the author’s ideas, but the Progressive cheerleader thing is a little disconcerting. That being said, the data squares with other work I have seen. The wealth and income divide is not 1%-99% but more like 25-75. There is a link to a book at the end for those who want a really deep dive.

This essay...

Open Letter to the Next President, Part 4

Thoughts from the Frontline

April 2, 2016

For the past three weeks I’ve been discussing the economic realities the new president will face when he or she takes office next January, using the device of an “open letter to the next president.” Mostly, we’ve been dealing with the economic realities that other countries face and with how difficult the global economic climate is going to be during the next president’s first four years. I briefly outlined last week the stark reality of what will happen to the deficit and national debt in the...

Can “Smart Beta” Get You in Trouble?

Outside the Box

March 30, 2016

I have been doing a fairly deep study of portfolio construction for the past two years, trying to figure out how to solve some of the most perplexing problems of the day: dealing with risk, volatility, performance chasing, and the ever-elusive challenge of actually figuring out where to find performance. One of the hottest topics in the literature and at conferences I attend is the concept of “smart beta.”

Smart beta is a rather elusive term in modern finance. It lacks a strict definition and...

Open Letter to the Next President, Part 3

Thoughts from the Frontline

March 27, 2016

“The liberating army we need in the Americas today is one of leaders who come together in peace, in the spirit of cooperation.”

– Oscar Arias

“There are two Americas – separate, unequal, and no longer even acknowledging each other except on the barest cultural terms.”

– David Simon

Peter’s Perspective on Chinese Real Estate

Outside the Box

March 23, 2016

My doctor and good friend Michael Roizen (head of the wellness center and a director at the Cleveland Clinic) has some 23 million books in print in scores of different languages around the world. He called me on Monday remarkably enthusiastic (even for him) about his recent trip to China.

While there, he was the weekend guest of an extraordinarily rich businessperson who read one of Michael’s books and credits the lifestyle and diet that Mike advocates with turning his life around, if not...

Open Letter to the Next President, Part 2

Thoughts from the Frontline

March 21, 2016

“Europe was created by history. America was created by philosophy.”

– Margaret Thatcher

“Nobody in Europe will be abandoned. Nobody in Europe will be excluded. Europe only succeeds if we work together.”

– Angela Merkel

Whatever Happened to the Invisible Hand of Capitalism?

Outside the Box

March 18, 2016

It has been an interesting week for Fed observers and markets. There is an odd disconnect between the data that we are told the Fed depends on and the press release and follow-on press conference that the FOMC conducts after its meetings. But clearly the market likes it that way. This week’s Outside the Box deals with the philosophical issue of the Federal Reserve setting the price of money. My friend and well-known value investor Vitaliy Katsenelson goes back to his youth in Russia, where some...