Two nays and a yea. There’s little doubt that the two most important developments in the financial markets over the last six months have been the stunning rise in the US dollar and the equally shocking collapse by oil prices. In this month’s edition of the Evergreen Exchange, we are taking a closer look at the former and debating whether the buck’s bolt might be coming to an end. We’re treating readers by incorporating GaveKal’s co-founder Anatole Kaletsky, one of Europe’s most influential financial commentators, in this debate. As you will soon see, Anatole is very much of the belief that the dollar’s sprint is nearing the finish line, at least versus the euro. In my section, I argue the case for why it may also be petering out against a number of other currencies as well, based on how expensive it is on a purchasing power parity basis. However, I do concede that a further overshoot is possible. Tyler, on the other hand, contends that there’s more upside for the greenback than just a final blow-off. That’s certainly a distinct possibility, considering how expensive the dollar got during its two previous upside explosions during the mid-1980s and the late-1990s. (However, notice that, per my charts, the bigger the spike, the sharper the decline—a pattern eerily similar to the stock market’s past behavior.) Read More

Japanese blue chips trade at steep discounts vs. their US comps. Also, many are working to improve profitability. Read More

This cycle unemployment and the population % not in workforce have diverged, the latter will hinder future growth. Read More

Lower gas prices have certainly stimulated driving, clearly indicating rising demand. Read More

The degree to which speculators are betting against oil may mean a rally is looming. Read More

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25 years in Sibera. In the late 1980s, I became convinced the Japanese stock and real estate markets were engulfed in one of the biggest speculative manias in world history. It was the first time I started using the B-word—as in "bubble"—in my conversations with clients. Some readers may remember that the most egregious example of that era’s insanity was the alleged valuation of the Imperial Palace in Tokyo being worth more than all the property in California. Now that’s a bubble! As is almost always the case, the red giant that was Japan’s asset markets continued to expand, even as renowned investors like GMO’s Jeremy Grantham outlined the persuasive case on why a future disaster was coming. In fact, Mr. Grantham began to warn about Japan in 1986—a full four years before the planet’s star market became the ultimate black hole. By the time Japanese stocks and real estate began to crack in 1990, the alarm-sounders were thoroughly discredited and ignored (some things never change!). Read More

25 years in Sibera.  In the late 1980s, I became convinced the Japanese stock and real estate markets were engulfed in one of the biggest speculative manias in world history. It was the first time I started using the B-word—as in "bubble"—in my conversations with clients. Some readers may remember that the most egregious example of that era’s insanity was the alleged valuation of the Imperial Palace in Tokyo being worth more than all the property in California. Now that’s a bubble! As is almost always the case, the red giant that was Japan’s asset markets continued to expand, even as renowned investors like GMO’s Jeremy Grantham outlined the persuasive case on why a future disaster was coming. In fact, Mr. Grantham began to warn about Japan in 1986—a full four years before the planet’s star market became the ultimate black hole. By the time Japanese stocks and real estate began to crack in 1990, the alarm-sounders were thoroughly discredited and ignored (some things never change!). Read More

In US dollars, CAD REITs have lagged US REITs by 42% since 2012. With a 2% yield pickup, REITs up north look attractive. Read More

At our 2015 Annual Outlook event, we announced Grant Williams as a new member of our firm as Strategic Advsior. There, Grant explained what compelled him to join Evergreen GaveKal. Read More