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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  • AI, Robotics, and the Future of Jobs

    This past week several reports came across my desk highlighting both the good news and the bad news about the future of automation and robotics. There are those who think that automation and robotics are going to be a massive destroyer of jobs and others who think that in general humans respond to shifts in employment opportunities by creating new opportunities.

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  • Geopolitics and Markets

    Growing geopolitical risk is on everyone’s mind right now, but in today’s Outside the Box, Michael Cembalest of J.P. Morgan Asset Management leads off with a helpful reminder: the only time since WWII that a violent conflict has had a medium-term negative effect on markets was in 1973, when the Israeli-Arab war led to a Saudi oil embargo against the US and a quadrupling of oil prices. And he backs up that assertion with an interesting table of facts labeled “War zone countries as a percentage of total world… [population, oil production, GDP, etc.].”

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  • Hoisington Investment Management: Quarterly Review and Outlook, Second Quarter 2014

    This week’s Outside the Box is from an old friend to regular readers. It’s time for our Quarterly Review & Outlook from Lacy Hunt of Hoisington Investment Management, who leads off this month with a helpful explanation of the relationship between the US GDP growth rate and 30-year treasury yields. That’s an important relationship, because long-term interest rates above nominal GDP growth (as they are now) tend to retard economic activity and vice versa.

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  • Poverty Matters for Capitalists

    Every US recession that I can recall was preceded by a fall in long rates, and I doubt the next will be much different. As such, do not expect the next US downturn to arise from the Federal Reserve pushing rates higher, an overvalued dollar or even mal-investments. Expect it to result from a decline in the income of the working poor. Early warning signs are likely to show up in the shopping aisles of stores such as Walmart, average driving miles, and the price of houses at the cheaper end of the market. I suspect the lesson that will eventually be learnt is that in a modern industrialized economy there are few worse things a central bank can do than deliberately attack the spending power of the poor.

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  • Musical Chairs at the FOMC

    “You can’t tell the players without a program. Get your program here!” yelled the stadium vendors of my youth. In today’s Outside the Box I bring you an excellent piece of Fed watching by Nouriel Roubini and colleagues, a “program” of the new Fed members and where they rank on the hawk-dove scale. They point out that, with a new chairperson (Janet Yellen) and vice-chair (Stanley Fischer), and with higher than normal turnover on the Federal Open Market Committee (FOMC) – over the past year, 75% of the FOMC’s membership has changed – the Fed’s need for clear communications with regard to monetary policy and forward guidance is greater than ever.

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  • Networks and Hierarchies

    I have a big-picture piece for you today from a big-time thinker, my good friend Niall Ferguson. This is a little bit different for Outside the Box, but then isn’t that what this letter is supposed to be? Something to make us think and to come at a problem with a little bit different viewpoint?

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  • Breakfast with Dave

    David Rosenberg and I have been friends and colleagues for years, but he never ceases to amaze me. I mean, a 10- to 15-page letter covering every significant development in global markets, delivered to clients’ mailboxes every single morning of the work week?! Breakfast with Dave is legendary in our business.

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  • Gave & Gave … and Hay

    I am back in Dallas trying to absorb what I learned at the conference. There were a very wide range and an overwhelming number of new and newly conjoined ideas. I hope to be able to get into a few of the more prominent themes in this week’s Thoughts from the Frontline. Every year we say it can’t get any better, and every year it seems to. And those who have attended for many years have been emphatic in saying that this year’s conference was the best ever. They wonder, along with me, how we can possibly make it better next year. We’ll have to see. I have a few ideas, and I expect to solicit a few more.

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  • Don’t Ignore the Anecdotes

    Whenever I'm in New York I make a point of calling a number of my economist and investor friends and arranging a “dinner with interesting people.” Thankfully, Rich Yamarone is almost always at the table, because his insights into what's happening in the real economy, beyond Wall Street, are unrivaled.

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  • Is There a Biotech Bubble?

    I’m bringing you a special Outside the Box today to address a very specific question that is on many investor’s minds: is there a bubble in biotech? To answer that question, Patrick Cox, editor of Mauldin Economics’ Transformational Technology Alert, teases apart the data on stock performance in the biotech space and then goes beyond the data to show us how the unique characteristics of the sector bear on the question of bubble or no bubble.

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  • Why Are So Many Boomers Working Longer?

    There has been quite a lot of controversy in recent years around the idea that older workers – whose numbers are growing – have been taking jobs away from younger ones. Their numbers have certainly increased dramatically: the percentage of the labor force that is 55 or older grew from 29.4% in 1993 to 40.3% in 2013. And the unemployment rates of those 55 and older have dropped much faster than for younger cohorts; in fact we have seen those who are older than 55 take “market share” from the youngest. These are trends I’ve written about over the past year.

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  • Hoisington Investment Management – Quarterly Review and Outlook, First Quarter 2014

    In today’s Outside the Box, Lacy Hunt and Van Hoisington of Hoisington Investment have the temerity to point out that since the Great Recession officially ended in 2009, the Federal Open Market Committee (FOMC) has been consistently overoptimistic in its projections of US growth. They simply expected QE to be more stimulative than it has been, to the tune of about 6% over the past four years – a total of about $1 trillion that never materialized.

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  • Dare to Be Great II

    I can’t tell you how many thousands of hours I have spent, over the years, thinking about, reading about, and talking about how to be a consistently successful investor; but I can tell you this: I’m still working at it. And once in a while – less frequently as the years pass, it seems – I come across investment advice that strikes me as fundamentally strong, innovative, and worth assimilating.

    I feel that way about today’s Outside the Box. It’s a client memo sent last week by Howard Marks, founder and chairman of Oaktree Capital Management. He calls it “Dare to Be Great II,” since it’s a follow-up to the famous memo by that name he wrote in 2006.

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  • Risk On, Regardless

    In today’s excerpt from Gary’s quarterly INSIGHT letter, he tackles head-on the shift in sentiment and economic performance that has ensued since then. He steps us through the ebullient headlines and forecasts that dominated at year-end, and then remarks...

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  • Hollow Men, Hollow Markets, Hollow World

    I’m sitting in the British Airways lounge at Heathrow terminal 5, or in other words in my usual office, and trying to catch up on my reading. I was particularly intrigued by my good friend and economic philosopher Ben Hunt’s latest Epsilon Theory post, which he calls “Hollow Men, Hollow Markets, Hollow World.” As he points out, an increasingly smaller portion of trading in the markets is between individuals looking to actually own a fractional portion of a public company for the long term. Instead, trading is gravitating to machines competing with each other in milliseconds and for a profit of milli-cents.

    In today’s OTB, Ben Hunt doesn’t really focus all that much on high-frequency trading but rather on the fact that so much of economics and investing itself is hollow. Our job, he says, is to find the signal amidst all the noise. This is an Outside the Box that you will need to think through as opposed to merely read.

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