Economic Analysis

A Mass of Alpha

Thoughts from the Frontline

May 7, 2004

While there has been a lot happening in the markets, sometimes it is important to drop back and look at larger issues. This week we are going to explore a new way to look at (and perhaps find!) that most mysterious of all the creatures among the flora and fauna of the investment world - the elusive Alpha. This is a think-piece, so settle in for some new ideas. Plus, a Bull's Eye Investing update, as the book hits #10 on the New York Times Business Best-seller list.

The Yield Curve,  Part 7

Thoughts from the Frontline

April 30, 2004

This week we look at the probability of a future recession raining on the current economic parade, looking at two indicators which offer insight into our future. I further explore the interest rate environment and the risks associated with Fed policy. There is a lot to cover, and it should be interesting reading.

But first, let me modestly note that my book, Bull's Eye Investing , debuted this week at #13 on the New York Times Miscellaneous List (investment, business and how to books) and...

Will They Raise or Will They Stay?

Thoughts from the Frontline

April 23, 2004

With the theme song (circa 1979) from The Clash as our background music - Should I Stay or Should I Go? - we explore whether the Fed will raise interest rates this summer or postpone any actions until after the election. We look at a prediction by bond maven Jim Bianco, whose track record on these matters is quite good. He believes the Fed may raise rates as early as the June meeting. This seemingly arcane topic has important implications for your portfolio and the economy. It should make for...

Bull’s Eye Investing

Thoughts from the Frontline

April 16, 2004

This week, I am going to depart from the regular format, as my book, "Bull's Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market" is in the trucks on the way to a bookstore near you, as well as Amazon.com and Barnes and Noble.com. I have arranged for a nice 30% discount on the book for you courtesy of Barnes and Noble.com, a different and excellent source for bulk orders and I launch a special letter just for readers of my book.

Employment Games and Other Silly Statistics

Thoughts from the Frontline

April 9, 2004

This week we take a look at what value really means, and I offer a few thoughts on the recent employment numbers. They may not be what you think.

I am taking a little R&R this weekend, and have asked my friend Lynn Carpenter who is the editor of the Fleet Street Letter and The Optionist to give us her thoughts on value investing. It is a wise and witty essay, and I commend it to you.

The Coming Generational Storm

Thoughts from the Frontline

April 2, 2004

Today, we are going to look at a very important study by the always insightful James Montier on the Echo Bubble? Can we look at past bubbles and see a pattern? But first, we are going to look at a (frankly disturbing) new book, which I am going to encourage you to get and read.

"In 2030, as 77 million baby boomers hobble into old age, walkers will outnumber strollers; there will be twice as many retirees as there are today but only 18 percent more workers. How will America handle this...

China Syndromes

Thoughts from the Frontline

March 27, 2004

This week I have been struck by a wide variety of articles on China. Is it a boom getting ready to change the face of the global economic landscape, or is it a bubble looking for a pin? The answer may be a little bit of both, and as with everything Chinese, at least seen from our shores, can be confusing. Plus, we deal with the issue surrounding the revaluation of the renminbi.

The London Financial Times gives us this bold headline (in 72 point type): "The Chinese boom is bound to end in...

Peace in Our Time

Thoughts from the Frontline

March 19, 2004

This week's letter is going to be a little shorter than normal, for which some of you are probably grateful. We are moving our offices back into the Ballpark in Arlington overlooking right center field (see more below). With the normal list of things to do, plus packing plus moving decisions, time is just short.

We almost have to start with the events in Spain. There are economic implications that are less than subtle. When coupled with other stories from the US they reveal a deep-seated...

Is Someone Ringing A Bell?

Thoughts from the Frontline

March 12, 2004

This week we address the question of whether the stock market is forming a top, take further looks at Fed policy and the unemployment rate and see if there is a connection. I think there is. The relationship is less subtle than it might appear. At the end of the letter, I ask for some help from those in the media (or who have friends in the media) in arranging reviews (and interviews!) for my upcoming book. And in response to readers, I start the process of putting a gold information site and...

Those Magic Unemployment Numbers

Thoughts from the Frontline

March 5, 2004

That loud boom you heard Friday morning coming from the futures pits was the job report imploding the dollar and sending interest rates tumbling. The consensus estimate was for 125,000 new jobs and it came in at a meager 21,000. Most economists think that we need 150,000 new jobs created per month to actually gain ground with population growth.

This signals the potential for a weaker economy in the future, thus interest rates drop. A weaker economy also hurts the dollar, and thus the market...