Economic Analysis
Are Earnings Expectations Realistic?
Outside the Box
April 17, 2013
In today’s Outside the Box, Sheraz Mian, Director of Research for Zacks Investment Research, gives us a thorough overview of corporate earnings trends for the past several quarters, along with consensus expectations for this year and next. Then he asks, “How realistic are these expectations?”
Not very, he says, and proceeds to tell us why. If we accept his analysis – and he admits right up front that it runs counter to the consensus – then we should be asking ourselves, how does a potential...
Bit Happens
Things That Make You Go Hmmm...
April 15, 2013
Let's begin at the end.
Why? Well, because all anybody wants to know these days, it seems, is where you stand on the Bitcoin phenomenon.
The virtual currency has spawned a whole new label to bestow upon people who have bought in: 'bitbug'. And whether you are a believer or more prone to pooh-pooh the hottest topic in global finance right now, people are happy to stick a nice, tidy label on you and move on.
Assume a Perfect World
Thoughts from the Frontline
April 13, 2013
An engineer, a chemist, and an economist are stranded on a deserted island. They are starving, when miraculously they find a box filled with canned food. What to do? They consider the problem, bringing their collective lifetimes of study and discipline to the task.
Being the practical, straightforward sort, the engineer suggests that they simply find a rock and hit the cans until they break open. “No, no!” cry the chemist and economist, “we would spill too much food and the birds would get...
Taking Distortion at Face Value
Outside the Box
April 9, 2013
Last Friday I was in Sonoma, California, for Mike Shedlock’s investment conference. The weather was grey and gloomy, but the conversation was animated and bright. I was fully engaged the whole day and never more than when John Hussman was speaking, commenting, or asking tough questions. John and I have talked on the phone and corresponded for years but had never met. What a consummate gentleman and scholar. We felt like we had been old friends for years and committed to finding opportunities...
A Date Which Will Live in Yenfamy
Things That Make You Go Hmmm...
April 8, 2013
April 4 is a day when things tend to happen. Big things.
April 4, 1841 saw President William Henry Harrison, the ninth President of the United States, die of pneumonia after only 31 days in office. Twenty-four years later to the day, President Abraham Lincoln would be haunted by a disturbing dream. As Lincoln's close friend Ward Hill Lamon recollected:
... the President had dreams on this night in 1865 of "the subdued sobs of mourners" and a corpse lying on a catafalque in the White House...
The Theology of Inflation
Thoughts from the Frontline
April 6, 2013
We begin this week with a simple pop quiz. Is inflation good or bad? Answer quickly. I’m sorry – your answer is wrong. Or rather, we can’t know if your answer is right or wrong because we are not sure what is meant by the question. We may think we know – and we may be right – but we can’t be sure, because the word inflation has different meanings for different people in different places and different times. In fact, even the same people in the same place and time can’t agree on a precise...
Delay Of Game. Five (point eight) Yards.
Things That Make You Go Hmmm...
April 1, 2013
Yard, n: Yard is derived from the term 'milliard' which is used in some European languages and is equivalent to the number one billion used in American English. It is equal to 10y (10 to the ninth power), or the number one followed by nine zeros: 1,000,000,000. If someone were to purchase one billion U.S. dollars, he or she could refer to the purchase as 'a yard of U.S. dollars'. (Investopedia)
Section 6 of the NFL official rulebook contains five articles, all of which deal with...
Cyprus Has Finally Killed Myth That EMU Is Benign
Outside the Box
March 29, 2013
This piece from Ambrose Evans-Pritchard is about as hard-hitting an analysis of Cyprus as I have read and really makes an interesting introduction to this week’s Outside the Box. No messing around:
Capital controls have shattered the monetary unity of EMU. A Cypriot euro is no longer a core euro….
The complicity of EU authorities in the original plan to violate insured bank savings – halted only by the revolt of the Cypriot parliament – leaves the suspicion that they will steal anybody’s...
You Can’t Be Serious
Thoughts from the Frontline
March 27, 2013
I admit to being surprised by Cyprus. Oh, not the banking crisis or the sovereign debt crisis or the fact that its banks were eight times larger than the country itself or even the fact that the banks were bloated with Greek debt that had been written down. I wrote about all that a long time ago. What surprised me was that all the above was apparently a surprise to European leaders.
While there is much to not like about what European leaders have done since the onset of their crisis some...
Is The Government Lying To Us About Inflation? Yes!
Outside the Box
March 22, 2013
In today’s Outside the Box, Gary D. Halbert (my old and very dear friend and former business partner of many years) reminds us about a few significant facts concerning the Consumer Price Index (CPI) that mainstream economists and the media tend to ignore. The central question is whether the CPI is really indicative of the actual inflation rate. Not likely, says Gary, since the US Bureau of Labor Statistics (BLS), which compiles the CPI, has engaged in methodological shenanigans over the past...