Thoughts From the Frontline, January 2006

Ahead of the Curve

January 27, 2006

The economy grew at a much slower pace last quarter, with GDP only moving forward by 1.1%. This week we look at why and see if we can mine the consumer spending data to give us clues about future growth. We are going to start a two part series inspired by a remarkable new book I am reading called "Ahead of the Curve," sub-titled "A Commonsense Guide to Forecasting Business and Market Cycles."

Joe Ellis was a partner at Goldman Sachs and was ranked as Wall Street's #1 retail analyst...

The Rules of Trading

January 20, 2006

The economy created 215,000 new jobs in November. A paltry 11,000 were manufacturing. Is that good enough? In previous recoveries we would have been seeing jobs created at a much higher level. But that number is not quite the story. Actually, we saw 4,586,000 new hires in November. That is not a typo. The reality of employment in the US is quite a bit different than the employment numbers often suggest. We look at a relatively new database that sheds some very interesting light on how...

The Sacrifice Ratio

January 13, 2006

This week we will look at a few very interesting items that did not make it into last week's forecast, as that letter was already overly long. Bernanke's arrival, the importance of the housing market to the economy, the length of the recent rally and a note from good friend James Montier on why it both pays, and is painful, to be a contrarian. I include a quick note to some of my fellow brokers at the end of the letter along with a few places to visit on the web for fun. I think we will...

Forecast 2006: On the Gripping Hand

January 6, 2006

Once again it's time for me to demonstrate the foolhardy part of my nature by putting to electronic pen my forecast for 2006. I spend more research time on this one letter than on any four or five combined, simply reading hundreds of pages of research, looking at mountains of data all in an effort to try and catch the gist of the markets. It is a daunting task, but one to which I actually look forward, as it challenges the mind like few other endeavors.

If I go into as much detail as...