The Liquidation of Government Debt Carmen Reinhart and M. Belen Sbrancia A version of the paper can be found here A video of Prof. Reinhart discussing financial crises Note: this is an updated version of [...]
Earlier this month, McKinsey published a remarkable report on trends in global debt, and concludes that the world's debt, rather than decreasing, is in fact increasing worldwide. So much for deleveraging. The report breaks down [...]
As "everyone" seems to know, the US 10-year Treasury bond has a low relative yield and is "inevitably going to rise at some point in the future." We have no strong feelings one way or [...]
The blogosphere is spammed with commentary related to the current high market valuations and the inevitable crash that "must" ensue. We've even been involved in the conversation at different points, trying to add some depth [...]
Investors are enamored with various investment houses and personalities who claim insight into the prospects for long-term expected market returns. Some classic examples include Nouriel Roubini, John Hussman, David Rosenberg, or Jeremy Grantham. All really smart people. But have you ever asked "How" these folks came to their conclusions? In most cases, the answer is probably "No" and the reason is because there is a lack of transparency from the author(s) and/or a lack of knowledge/understanding on behalf of the reader. We also want to highlight that one can develop incredibly complex return forecasting models -- super sexy, super interesting, super compelling, etc. -- but that still doesn't mean they are any good at forecasting much of anything.
When Walmart Comes to Town: Always Low Housing Prices? Always? Devin Pope and Jaren Pope A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our Academic Research [...]
Fulcrum Asset Management has an interesting overview piece related to some recent research that attempts to predict bubbles: http://www.fulcrumasset.com/files/frn201401.pdf The source article is below: http://cowles.econ.yale.edu/P/cd/d19a/d1914.pdf Absract: Recent work on econometric detection mechanisms has shown the [...]
Financial news TV shows are a great place to wage philosophical battles, particularly with respect to investing, which tends to gets people’s juices flowing. Warren Buffett went on CNBC back in May of 2013, and [...]
The famous (perhaps infamous to some folks) John Maynard Keynes has a great quote related to technological unemployment from his essay, "Economic Possibilities for our Grandchildren:" [Technological unemployment] means unemployment due to our discovery of [...]
China's banks are being buffeted by the winds of change. Earlier this month, the Shanghai Composite had its longest losing streak in 19 years, which many believe was related not just to a struggling economy [...]
QE forever certainly makes me think that I should put my entire net worth (all $5 dollars in my piggy bank) into gold bars. Q: Who would own treasury bonds at 2.7% when the Fed [...]
As the Indian Rupee hit a fresh all-time low today against the US dollar, we wondered about the factors that could have caused this recent massive revaluation. There are several powerful factors at work: The [...]
In early August, Wharton finance professor Jeremy Siegel went on CNBC’s “Futures Now” and announced, "my target [for the DOW] is 16,000 to 17,000 for the end of this year…and I think 18,000 is definitely [...]
Do-It-Yourself tactical macro modules for August are posted. Create a free account here if you want to access the site directly. Macro Chart of the Month: Equity/bond risk premiums are mid range on a historical scale... Disclosures: Performance [...]
It appears Japanese monetary policy is beginning to resemble Kabuki. Kabuki is a form of Japanese theater that involves stylized performances that can appear positively bizarre to the uninitiated. So it goes with the Bank [...]
Depends on the time period analyzed... Positive correlation between rates and REIT returns prior to 2000 Negative correlation post 2000. Extreme positive interest rate moves have historically been associated with extreme positive AND negative returns. [...]
Are Stocks Cheap? A Review of the Evidence Fernando Duarte and Carlo Rosa A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our free Academic Alpha Database! [...]
Prediction stock market returns--a fascinating concept. A true magical talent. Of course, we've put some of our brainpower (a limited resource!) on the subject and come up with a few observations on the subject: [...]
A bit off topic, but definitely should play into macroeconomic themes and theses. The 2011 highest income counties in 2011 from the WP. http://www.washingtonpost.com/wp-srv/special/local/highest-income-counties/ The beast has been fed--good luck taking away its food! Not [...]
Reinhart (and another Reinhart) and Rogoff have another paper in their series about "Why debt sucks."The title of their newest work is "Debt Overhangs: Past and Present." Headline: We identify the major public debt overhang [...]