Outside the Box, August 2013

Exit, Schmexit

August 27, 2013

In last week's Outside the Box, which included a paper from the San Francisco Federal Reserve on the effectiveness of quantitative easing, I wrote, "What [authors] Cúrdia and Ferrero are really saying is that the latest round of QE, massive as it has been, has not had all that much effect on the economy, and that other factors should be taken into account. I'm sure this thesis is somewhat controversial, and I look forward to seeing what QE proponents like David Zervos over at Jefferies have...

What Has QE Actually Accomplished?

August 20, 2013

The market is obsessed with “tapering.” The assumption is that all the “juice” in the economy is somehow the product of the Federal Reserve's actions. The headline on the front page of the Wall Street Journal today reads “Fear of Fed Retreat Roils India.” I suppose one has to come up with some kind of reason to explain the convergence of emerging equity markets and those of the US. My friend Dan Greenhaus over at BTIG sent out this ugly graph (if you are an emerging-market investor) this...

The New Normal—Some Expensive Consequences

August 13, 2013

Everybody talks about the weather, but there's not much we can do about it except make plans that take into account what mother nature may throw at us. For most of us that means planning for the next few days, but we should all be aware of climate patterns that are going to affect us for the next 20 to 30 years. And those patterns are changing not just because of global climate change but also due to long-term periodic changes in the Atlantic and Pacific oceans.

Look at what my friend and...

Mind the (Expectations) Gap: Demographic Trends and GDP

August 7, 2013

For today's Outside the Box we have a very special research piece by Rob Arnott of Research Associates and his colleague Denis Chaves. Rob was with us at Leen's Lodge last week, and in the final evening discussion session he asked an interesting question having to do with demography and GDP growth. I was intrigued by it, but the group soon moved on without fully exploring Rob's idea; so I mentioned it to him again later, and he was good enough to send along the following paper.

Rob's...