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Economic Analysis

Hoisington Investment Management – Quarterly Review and Outlook, Second Quarter 2014

Outside the Box

July 15, 2014

This week’s Outside the Box is from an old friend to regular readers. It’s time for our Quarterly Review & Outlook from Lacy Hunt of Hoisington Investment Management, who leads off this month with a helpful explanation of the relationship between the US GDP growth rate and 30-year treasury yields. That’s an important relationship, because long-term interest rates above nominal GDP growth (as they are now) tend to retard economic activity and vice versa.

The author adds that the average...

Poverty Matters for Capitalists

Outside the Box

July 9, 2014

Having taken Thomas Piketty to the cleaners a few weeks back (see “Gave & Gave … and Hay”), Charles Gave now redresses the balance with regard to the issue of economic inequality in today’s Outside the Box. He makes a forceful case that “poverty matters for capitalists”:

Every US recession that I can recall was preceded by a fall in long rates, and I doubt the next will be much different. As such, do not expect the next US downturn to arise from the Federal Reserve pushing rates higher, an...

Vision Quest

Things That Make You Go Hmmm...

July 7, 2014

It started out as something of a pilgrimage... but we’ll get to that a little later.

One of the best things about writing Things That Make You Go Hmmm... is the number of incredibly bright people all around the world that I get to interact with on a regular basis.

The world is full of smart, engaged, experienced people from all walks of life — all of whom have stories to tell and wisdom to impart.

Perhaps nowhere is this more evident than in the world of finance.
 

Central Bank Smackdown

Thoughts from the Frontline

July 5, 2014

Smackdown: smack·down, ˈsmakˌdoun/, noun, US informal
1.  a bitter contest or confrontation.
"the age-old man versus Nature smackdown"
2.  a decisive or humiliating defeat or setback.

The term “smackdown” was first used by professional wrestler Dwayne Johnson (AKA The Rock) in 1997. Ten years later its use had become so ubiquitous that Merriam-Webster felt compelled to add it to their lexicon. It may be Dwayne Johnson’s enduring contribution to Western civilization, notwithstanding and...

The Delusion of Perpetual Motion

Outside the Box

July 2, 2014

In the club where all stock market investors meet every morning when they wake up, the room occupied by those who “don’t understand what is going on” is not as crowded as you might expect. I admit I’m not lonesome – I have plenty of fellow “confusees” to talk with – but I am told they are having to add some more space for the growing crowd in the “it’s a bull market and those stupid old bears just don’t get it” section of the club.

This week’s Outside the Box is a selection from two essays...

The New Normal of Healthcare Spending

Thoughts from the Frontline

June 28, 2014

A rather interesting shockwave came across the newsfeeds this week. I was actually doing a TV interview when the host announced that GDP was down 2.9% for the first quarter. There was not much else I could do but note that that was a really bad, ugly, terrible, not very good number. But I had no real basis, without any facts in front of me, by which to understand why the revision was so extreme. Sure, we were all expecting a pretty large revision, but what we got was the worst decline in five...

The Four Horsemen of the Geopolitical Apocalypse

Outside the Box

June 25, 2014

Ian Bremmer, NYU professor and head of the geopolitical consulting powerhouse Eurasia Group, consults at the highest levels with both governments and companies because he brings to the table robust geopolitical analysis and a compelling thesis: that we are witnessing “the creative destruction of the old geopolitical order.” We live, as his last book told us, in a “G-0” world. In today’s Outside the Box, Ian spells out what that creative destruction means in terms of events on the ground...

The Slip ‘n’ Fail Mutts

Things That Make You Go Hmmm...

June 23, 2014

Theodore Seuss Geisel was a master of anapestic meter.

An anapest is a metrical foot used in poetry which comprises two short syllables, followed by a long one. More familiarly (particularly in the world created by Seuss), it consisted of two unstressed syllables followed by a stressed one:

"Twas the night before Christmas and all through the house..."

Italy: When Hope Is a Strategy

Thoughts from the Frontline

June 22, 2014

I came back from Italy this week, and one of my guilty pleasures was being able to sit down and watch the last three episodes, including the season finale, of Game of Thrones. For those readers who are not enthralled with the fantasy epic from HBO or have not read the first five books (will he ever finish?), author George R.R. Martin has written one of the most complex fantasy series ever, about a world where everyone is occupied with who will sit on the Iron Throne.

Musical Chairs at the FOMC

Outside the Box

June 18, 2014

“You can’t tell the players without a program. Get your program here!” yelled the stadium vendors of my youth. In today’s Outside the Box I bring you an excellent piece of Fed watching by Nouriel Roubini and colleagues, a “program” of the new Fed members and where they rank on the hawk-dove scale. They point out that, with a new chairperson (Janet Yellen) and vice-chair (Stanley Fischer), and with higher than normal turnover on the Federal Open Market Committee (FOMC) – over the past year,...