Economic Analysis

The World Is Flat

Thoughts from the Frontline

August 5, 2005

I got home late last night from two weeks with the kids in Europe, and jet lag is kicking in. Since I should not be allowed to make any investment observations in this state, I am going to do something for which I constantly get requests and that I have wanted to do for quite some time. This week I give you my list of recommended books along with a little commentary on them, starting with a few new ones. Let's jump right in.

The World Ain’t What It Used To Be

Outside the Box

August 1, 2005

Once again we take a look at some comments from the HCM Market Letter written by Michael Lewitt of Harch Capital in Florida. This is a private letter for his clients and we are excited to have permission to share it with you. Michael is one smart guy with a deep understanding of the markets, especially the credit markets, and how they work. The firm manages domestic and offshore debt and equity hedge funds and separate accounts.

I really look forward each month to getting...

India - The Next Big Player

Thoughts from the Frontline

July 29, 2005

Last week we looked at China, and this week we look at India, the next rising superpower in Asia. I have asked my friend (and fellow Texan) George Friedman of Stratfor to give us his insights on the political implications of what appears to be a closer US-India relationship. Stratfor has been described by folks like Barron's as being a private CIA. I find their daily letters plus his in-depth analysis to be as solid as anything I read. When George writes, I listen. George now thinks we...

What We Don’t See - July 2005

Outside the Box

July 25, 2005

This week we will turn once again to a group headquartered in Hong Kong with offices in Stockholm and New York called GaveKal Research Limited. They did a long piece on What We See And What We Don't See and we have edited it down to the What We Don't See portion of the research. I really enjoy reading the guys from GaveKal, as they challenge my thinking.

(Incidentally, Louis Gave was in my office last week, coming down to watch a game [Those Yankees beat us again]. He is married...

Those Clever Chinese

Thoughts from the Frontline

July 22, 2005

Last week I said that for this week's letter we would look at the US trade deficit and China, and in particular the possible revaluation of the currency and its effect upon the trade deficit. China obliged by revaluing the yuan (Renminbi). This is both more, and less, than it seems. There is a lot to cover, so let's jump right in.

Let's first look at what China did. They allowed the yuan to rise by 2%, with a daily 0.3% trading band based on the price of the previous day. While in...

Quarterly Review and Outlook 2005

Outside the Box

July 18, 2005

This week's letter is once again from two of my favorite economists, Van Hoisington and Dr. Lacy Hunt of Hoisington Investment Management Company in Austin, Texas. They specialize in management of fixed income portfolios for large institutional clients by setting long-term investment strategies based on economic analysis. They have been one of the most successful of bond managers in the country. (I have no affiliation with them.) I eagerly read all of their writing and analysis, and...

Mid-Year Forecast - More See-Saw Fed

Thoughts from the Frontline

July 15, 2005

Where will Treasury rates go? What about inflation/deflation? The dollar? The stock markets? Gold? We cover all this and more in this week's letter.

I normally do an annual forecast at the beginning of each year. In conversations with a number of clients and readers, I've come to realize it might be helpful to do a midyear forecast as well.

In January, I suggested that 2005 would be the year of the See-Saw Economy. So far, with one major exception, my forecast is in the middle of the...

The New Carry Trade

Outside the Box

July 11, 2005

This week we will turn once again to a group headquartered in Hong Kong with offices in Stockholm and New York called GaveKal Research Limited. We pull together three one page commentaries from last week that focused on the carry trade.

They make the point is that over the last ten years the carry trade has moved from the Yen to the US Dollar and is now moving to the Euro. This is a short concise piece that gets right to the point and brings a lot of ideas. Most economists are...

Are There Too Many Hedge Funds?

Thoughts from the Frontline

July 8, 2005

At precisely what point can we say that there are too many hedge funds? Are too many funds the reason hedge fund returns were down in 2004? What does the answer say about the potential for future returns? And how large might the industry grow in the next ten years? We deal with this and more in this week's E-Letter.

This letter was originally sent to those who have subscribed to my free Accredited Investor Letter a few months ago. The Financial Times recently ran an edited version as...

Pictures of a mania? - US Housing

Outside the Box

July 4, 2005

Once again we look at one of my favorite analysts and behavioral finance thinker, James Montier of Dresdner Kleinwort Wasserstein in London. James wrote a fascinating book several years ago called "Behavioural Finance: A User's Guide" and puts out ongoing research like the one we will enjoy today. Long time readers will recognize the name because I have discussed many of his ideas in my weekly letter "Thoughts From the Frontline," my book "Bull's Eye Investing" and in "Outside the...