Podcasts

Evergreen Exchange's pilot episode focuses on Gavekal partner Louis Gave, as CEO Tyler Hay sits down with him to discuss the current economic climate, how to say his last name, and much more. Read More

Click here to view PDF. “Hubris is one of the world’s greatest renewable resources.” -Humorist P. J. O’Rourke INTRODUCTION As indicated last week, this is the second installment of a two-part Evergreen Virtual Advisor (EVA)—Exchange version—dedicated to the Mauldin Economics’ Strategic Investment Conference (SIC). It was held in Dallas at the end of last month and for the three days we were there, the sun wasn’t. The clouds were thick, the air was heavy, and, on the last night, we experienced the worst thunderstorms this Left Coast boy has ever seen. Inside, as relayed in the June 3rd EVA, the conditions were largely the same. Gloom was the dominant sentiment, despite the fact that the financial markets have been on a roll over the past three months. It’s been a long time since I felt like the token bull but my brief speech on why I felt the corporate bond market would now be supported by central banks gave me a bit of a Pollyanna sensation. My short talk also generated a mild amount of controversy. Former Dallas Fed President Dick Fisher told the crowd on the final day that there was zero chance the Fed would emulate the ECB in buying corporate debt to lower credit spreads. Though I have the utmost respect for Mr. Fisher, I would love to take that wager (what would the odds be when the probability is zero?) However, we won’t know until the next crisis strikes which one of us is right. According to the majority of speakers we heard, we won’t have to wait very long. As Mark Nicoletti expressed last week, perhaps that should be viewed as bullish indicator. Typically, such intense negativity means a bottom is close at hand. Yet, again, we are at record high prices for real estate, stocks, and high-grade bonds. Consequently, like so many things these days, it’s a most confusing state of affairs. Besides my talk, there were certainly some other occasional rays of optimism, as Jeff Dicks noted last week in his piece on Mexico. And, as I will explain below, our esteemed colleague Anatole Kalestky was also a lonely—though eloquent voice—of bullishness. On the other hand, his partner Charles Gave, was every bit as persuasive that the façade of prosperity central banks have created is beginning to crack. In addition to having my first chance to speak at the SIC, I was also given the honor of interviewing Charles, as you will soon read. But, before we get to that, Jeff Eulberg summarizes his perception of one of the most important factors in the investment world today: the future path of the US dollar. Like all of us, Jeff came away a bit bemused by all the contradictory opinions on the greenback he heard at the SIC. It’s possible, though, based on last week’s stunningly weak US jobs release, that we now have a clearer sense of the path of least resistance. (Hint: it isn’t up!) David Hay Read More