John Mauldin's Outside the Box

John Mauldin reads hundreds of articles, reports, books, newsletters, etc. and each week he brings one essay from another analyst that should stimulate your thinking. John will not agree with all the essays, and some will make us uncomfortable, but the varied subject matter will offer thoughtful analysis that will challenge our minds to think Outside The Box.

John Mauldin's Outside the Box

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  • The Blip

    Dr. Robert Gordon is a professor of economics who has held a named chair at Northwestern University for decades; but as the author of this piece says, "[T]he scope of his bleakness has given him, over the past year, a newfound public profile." Gordon offers us two key predictions, both discomfiting. The first pertains to the near future, when, he says, our economy will grow at less than half its average rate over the last century because of a whole raft of structural headwinds.

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  • Hoisington Investment Management - Quarterly Review and Outlook, Second Quarter 2013

    Lacy Hunt and Van Hoisington kick off their second-quarter Review and Outlook with a contrarian view: "The secular low in bond yields has yet to be recorded." And as usual, they have their reasons; but unlike most of the blabbermouth economic talking heads out there, they aren't interested in endlessly parsing the fitful utterances of Ben Bernanke and friends. Rather, they zero in on the fundamental reasons why long-term Treasury yields have probably not hit their low. Those reasons fall, they say, into four categories: (a) diminished inflation pressures, (b) slowing GDP growth, (c) weakening consumer fundamentals, and (d) anti-growth monetary and fiscal policies.

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  • The Mirror Cracks

    Michael Lewitt is one of my favorite credit analysts. If I want to know what is happening in the credit markets, one of my first calls is to Michael. He has been doing deep dives into some rather esoteric markets as well as traditional bonds over the course of his career, and he really understands what is happening under the surface.

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  • Bad Omens

    We have clearly been in a recent run of higher interest rates, with a looming "threat" that there might be less quantitative easing before the end of the year. It would appear now that Bernanke wants to leave his successor to implement what everyone knows must be coming at some point: a return to a normal interest-rate environment. While rising interest rates are bad for me personally (for another four months), a return to normalcy would be good for our future – though the transition is likely to be bumpy.

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  • How Gold Lost Its Luster, How the All-Weather Fund Got Wet, and Other Just-So Stories

    We have not revisited the topic of gold in Outside the Box recently, mostly due to the fact that nearly everything I read on the subject is derivative of what I have been reading for years. There hasn't been much that would cause me to think about gold in a different way, and that is the purpose of Outside the Box: to present new perspectives and make us think.

    I have recently started to read the work of Ben Hunt at Epsilon Theory. His ideas are interesting in that he examines markets from a behavioral economics perspective, with ample doses of game theory and history, a combination that few people can bring to the table. (In a random but pleasant development, I will get to have lunch with him next week in Dallas when he visits my town. I look forward to it.)

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  • A Message from Lord Vader

    As long-time readers know, I have a very eclectic group of friends and associates. Colorful, opinionated, generally both fun and funny, they make for interesting times and discussions wherever I go. I am not certain why they associate with such a mild-mannered, soft-spoken, Muddle-Through Texan like me, but most agree that I am at least good for comic relief. Next week I will be in the midst of some unabashed bulls, but today I offer up for your reading pleasure a note from a friend who is on the Dark Side of the fence, though he is hardly what you could call a conventional bear. He is Rich Yamarone, Chief Economist for Bloomberg.

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  • Whither China?

    All weekend long and this morning as I wake up in Monaco, the number of disparate publications screaming at me about problems in China is just overwhelming. Then I get myself up early to hear a speech by the esteemed British economist Charles Dumas of Lombard Street fame, and I am confronted with even more China. I have been watching China for a long time, expecting a crisis, as I readily admit I simply do not understand a country that has defied so many of the economic laws of gravity for so long. Some kind of return to normal economic paradigms seems almost mandated, but the question has always been when. Have the Chinese discovered some new control mechanism, found some different levers to pull that they should share with the rest of the world, or will we see them revert to something that looks more like whatever it is that passes for "normal" these days? My bet has always been the latter.

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  • The Risk of Government Policies and the Rationing of Retirement

    In addition to our own, there is another conference I normally go to every spring; but sadly, I missed it this year. Rob Arnott of Research Affiliates indulges me and lets me attend the annual Research Affiliates Advisory Panel he conducts at some exclusive location (usually but not always) in Southern California, in close proximity to one or more fabulous gourmet establishments. And he is an oenophile of the first rank, a pastime that at one time in my life was a huge attraction. I now just live vicariously when he orders wine.

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  • Following the Fed to 50% Flops

    John Hussman is one of the savviest investing minds I know, and so I never miss his Weekly Market Comment. This week he wrote about an interesting disconnect between what investors believe about "fighting the Fed" (i.e., don't do it) and the reality of S&P 500 returns, and I've made that piece today's Outside the Box.

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  • Are We There Yet?

    Vitaliy Katsenelson is a modern-day American success story, the kind we need more of. He grew up in Murmansk, in the extreme northwest corner of Russia, north of the Arctic Circle and close to the Finnish border. He says he barely escaped a career in the engine rooms of Russian Navy vessels when his family wrangled a visa to emigrate to the US in 1991.

    He finished high school here, knocked out a BA in finance at the University of Colorado at Denver, and followed up with an MS in finance and his CFA.  At that point, a local Denver firm, Investment Management Associates, snapped him up; and before long he was one of the two principals in the company, alongside Michael Conn.

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  • Can Two Senators End “Too Big to Fail?”

    I am often on a panel or at dinner with Barry Ritholtz (The Big Picture), and he will remark, "I am going to have to rethink my position – I agree with John, and that can't be right." While I don't share that bias, I do agree with Barry about his recent take on legislation – which might actually pass – that would deal with too-big-to-fail banks in the US. Barry's latest take on that issue is this week's Outside the Box.

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  • Is Abenomics Going to Put Japan Back on the Map?

    In a special Outside the Box today, Keith Fitz-Gerald, Chief Investment Strategist for Money Morning, dissects "Abenomics," the radical, not to say outlandish, fiscal moves that the newly installed government of Japan is making. And Keith has a ringside seat: he spends much of each year in Japan.

    In an attempt to cut the Japanese a little slack, Keith comes up with four things that will have to happen for Abenomics to work – but when all is said and done, he says, Abenomics is a recipe for disaster. That does not mean, however, that there is not plenty of opportunity here for short-term profit, and Keith offers a play that is a potential money maker in this volatile Japanese environment.

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  • Debt, Growth, and the Austerity Debate

    Two weeks ago I wrote about the current debate over the 2010 paper by Ken Rogoff and Carmen Reinhart (hereinafter referred to as RR) on the correlation between debt and GDP growth. I said that the most important part of their work, which is the construction of an enormous database on debt and financial crises over the last few hundred years, was to be found in their book This Time Is Different and elsewhere. And their fundamental conclusion: debt is not a problem until it becomes one. And then it reaches a critical mass and you have what they called the Bang! moment.

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  • Hoisington Investment Management-Quarterly Review and Outlook, First Quarter 2013

    Lacy Hunt and Van Hoisington launch into their first-quarter "Review and Outlook," this week's Outside the Box, with a statement that some may find eye-opening: "The Federal Reserve (Fed) is not, and has not been, 'printing money'…" But given the facts of life about how money is really created (and destroyed), they are of course right: it's all about the acceleration – or deceleration – in the M2 money supply.

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  • Are Earnings Expectations Realistic?

    In today’s Outside the Box, Sheraz Mian, Director of Research for Zacks Investment Research, gives us a thorough overview of corporate earnings trends for the past several quarters, along with consensus expectations for this year and next. Then he asks,How realistic are these expectations?”

    Not very, he says, and proceeds to tell us why. If we accept his analysis – and he admits right up front that it runs counter to the consensus – then we should be asking ourselves, how does a potential falloff in earnings vs. expectations matter, and why is it important at this particular juncture? I’ll let Sheraz answer those questions, too – he does so convincingly – but I’ll just add that his analysis is a significant piece in the puzzle we’re all putting together here in this tipping-point year of 2013.

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