Economic Analysis

Life on the Edge

Thoughts from the Frontline

May 14, 2016

“Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.”

– Frederick Douglass

“I am for doing good to the poor, but I differ in opinion about the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it.”

– Benjamin Franklin...

Central Banks and the Rise of Extremism

Outside the Box

May 11, 2016

Do you feel as if you’re the rope in a tug of war? That’s the closest analogy I can come up with to describe what’s going on inside my own head – and in the world. And at the last few conferences where I’ve spoken, talking with the participants afterwards, I’ve found that my feeling is widely shared. Our sense of direction, the sense of knowing where we’re going, is gone. To analogize some more, I told a friend last night that I feel as if we have slipped our anchor and are adrift on the ocean...

Sell in May and Go Away?

Thoughts from the Frontline

May 9, 2016

The prevailing market lore is that one should sell in May and go away, returning in October. And over the last 65 years, that axiom has on average held true. Unfortunately, we can’t live on averages in the short term, and so we have to decide what to do today. Thus – just like the Fed – we are data-dependent.

Where’s the Beef? “Lies, Damned Lies, and Statistics”

Outside the Box

May 4, 2016

I have long been a critic of government inflation statistics. Not so much with regard to the methodology they use, but because the measure of “average” inflation across the broad economy doesn’t really describe the inflation that the majority of Americans experience. I’ve written about that at length in several letters.

Now my good friend Rob Arnott, along with his associate Lillian Wu, presents us with a research paper that lays out what inflation actually looks like for most Americans – and...

Delta Force

Thoughts from the Frontline

May 1, 2016

Last week we looked at the world’s demographic destiny for the coming decades. I imagine most readers perused the information and said, “Yes, we already know the world’s population is getting older. Everybody keeps saying demographics are important, but I’d like to know how slowly changing demographics actually affect the economy here and now.

Welcome to the Pale Gray Dot

Thoughts from the Frontline

April 26, 2016

“The afternoon knows what the morning never suspected.” 
Robert Frost

“It's paradoxical that the idea of living a long life appeals to everyone, but the idea of getting old doesn't appeal to anyone.” 
Andy Rooney

“Deng Xiaoping made a calculation. He bet on demographics. What he knew was that China had this enormous population of young, underemployed people, people who he could move from the farms to the coast and put them to work in factories, and that would be the lifeblood of China's...

Flawed Assumptions and Grand Experiments

Outside the Box

April 20, 2016

Over the last few years, I have from time to time had the real pleasure of being in the presence of Lakshman Achuthan, Chief Operations Officer for the Economic Cycle Research Institute, a rather serious team of economists who spend their time researching economic cycles, especially those around recessions. They are known for having forward-looking models rather than always looking in the rearview mirror.

Every time I get around Lakshman I walk away impressed. And I always make a mental note...

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...