“However beautiful the strategy, you should occasionally look at the results.” – Winston Churchill When I was growing up, it was almost a rite of passage to read Joseph Heller’s iconoclastic novel about a war-weary WWII bombardier, Catch-22. For those unfamiliar with the story, the… Read More

When I was growing up, it was almost a rite of passage to read Joseph Heller’s iconoclastic novel about a war-weary WWII bombardier, Catch-22. For those unfamiliar with the story, the book’s protagonist finds himself in a classic no-win situation—a condition that may have direct applicability to the current investment environment. This edition of our monthly Guest EVA will be the first introduction for many of you to one of the financial world’s most talented writers, Ben Hunt. In addition to his skills of authorship, he’s also a penetrating thinker about the unprecedented forces that are shaping both the global economy and asset prices. Like me, he believes we are in the dying days of the "Golden Age of the Central Banker" or what I have called the era of "Central Banks Uber Alles." Read More

“Sir: The next financial apocalypse is imminent. I know this to be true because the House and Home section is now assuming the epic proportions last seen before the great crash. 24 pages chock full of adverts for mansions and wicker tea trays for $1,000. You’re all mad. Read More

It’s fair to say that repeated warnings in this newsletter about the overvaluation of the US stock market have been, to say the least, "premature." However, our cautions about the junkier reaches of the high yield market, as well as leveraged bank loans, were quite timely. As is so often the case, extreme inflows into these asset classes in recent years provided an excellent heads-up. Read More

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“The only function of economic forecasting is to make astrology look respectable.” – John Kenneth Galbraith, one of the 20th Century’s most venerated economists Another year, another blur. Every year I’m struck by how quickly it’s time… Read More

“The only function of economic forecasting is to make astrology look respectable.” - John Kenneth Galbraith, one of the 20th Century’s most venerated economists Another year, another blur.  Every year I’m struck by how quickly it’s time to write our annual forecast EVA, and this year is no exception. It continues to be my belief that there is a theory of relativity at work as you get older: When you are 10, a year is 10% of your life but, when you’re pushing 60, it’s less than 2%. As a result, the passage of time does seem to shift gears from leisurely to head-snapping as we become “mature”—chronologically, if not emotionally. (Some of you may have heard the old joke: What’s the difference between a bond and a man? The bond eventually matures.) As is our custom in this issue, we will first review our forecasts from last year and then make a few brief comments before focusing on what we see unfolding in 2015. Read More

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“Safety’ is a tricky and paradoxical concept. The safe assets are often the ones most people regard as hopelessly risky.” – Jim Grant, acclaimed author of Grant’s Interest Rate Observer POINTS TO PONDER 1. The chart shown below, courtesy of the financial blog… Read More

“Safety’ is a tricky and paradoxical concept. The safe assets are often the ones most people regard as hopelessly risky.” - Jim Grant, acclaimed author of Grant’s Interest Rate Observer POINTS TO PONDER 1. The chart shown below, courtesy of the financial blog Hedgopia, vividly illustrates the incongruity between US capacity utilization (essentially tracking how "maxed out" the economy is) and the Fed’s key overnight rate. Despite this presumably unsustainable difference, equity investors seem convinced the Fed’s Big Easy will continue indefinitely. (See Figure 1.) Read More