I understand. I really do. I too look at cash as a legitimate asset – at times a very valuable asset. Cash is also a hedge. I hedge and I completely understand the importance of hedging. Plus, there’s no arguing with success. Look at the table below – returns [...]
Scale? Scalability? What if our whole concept of how big we have to be to be successful needs revising? What if success in this economy is about small things that can grow larger, faster, with fewer resources rather than big things that need to stay big or grow bigger to [...]
OK. The Election’s over. One uncertainty gone. Real clear politics behind us. Now we can look at real clear problems. Undistracted. Like our old friend the Fiscal Cliff, for example. But haven’t we heard everything we’d ever want to know about it, 10 times over? Yes we have. But that’s [...]
You are not in Michigan. The two charts below, produced by Patrick Artus of Natixis (the French investment banking firm), are amazing and tell a simple story. The chart on the left shows manufacturing going steadily downhill since 1999 in most of Europe as a % of GDP – moving [...]
A simple difference. There is a simple difference in the relationship between banks and companies in Europe and the US – namely the difference that, in Europe, companies borrow lots from banks, little from the bond market while, in the US, companies borrow lots from the bond market, little from [...]
MEMORANDUM To: Angela Merkel and Selected Heads of State & Central Banks From: Alexander Hamilton (with edits and additions) Re: The importance of centralized public credit (if you want to build a unified state) Date: January 9, 1790 Resent: October 22, 2012 If you’re a leader – read this! [...]
The gap. As the two charts below show copper – the world’s most important and economically sensitive metal – is delinking from and underperforming and the S&P 500. The upper chart (in green) shows that the correlation between the S&P 500 and copper is falling – toward the zero line. [...]
QE for iPhones. What was strange were not all the people lined around the block waiting to buy their iPhone 5 at the Verizon store. The strange thing were the two crisp bills each one of them was holding. You were curious. And you became more curious still when, as [...]
I wrote a BLOG post on August 9, 2012, called “No Chinese Wall” – and then was asked by a good friend, who has lots of Far-East experience, to expand on it. This is the expanded version. To skip what was already published, go to the new portion below whose [...]
The insult. Imagine! You’re in your high-powered job. You’re producing more and more and more for the company you work for. I mean, a good chunk of its profits are going up because of you, year after year. And yet your pay – relative to those profits – is going [...]
The closer we get, the closer we want to get. Despite the world’s shrinking over the past 100 years with air travel and better rail and highway systems; over past 25 years through the physical build-out of the Internet and its first communications applications like computer networking and email; and [...]
Questions. Charts are pictures, not predictions. They may be worth a thousand words but even a thousand words can’t tell you what the future will be. For me, charts raise questions. And questions help you take more into account when sizing up the inherently indeterminate future. A worm in the [...]
Pervasive. This is one of the shortest pieces I will write and it boils down to this: China’s global economic impact is pervasive. We’ve known its impact in good times – for example, when China’s stimulus in 2008-9 gave a shot of adrenalin to the world economy. The three charts [...]
Divergence. It’s usually a fool’s errand. Why markets go up. Why markets go down. Typically a headline reason is slapped on by an editor to explain the often-inexplicable. But on Friday, August 3rd, I couldn’t help but note a divergence between the primary reason headlined for the S&P 500 going [...]
Deliver. The point is simple: if you’re a business, deliver value. Value is what the customer experiences – what he or she gets. The better the value – not the just price – but the totality of the experience (with price just one of the factors) the more delighted the [...]
One and only one. If Evolution tried and tried, it could not make another copy of Barton Biggs who died this past Saturday, July 14th. He was a Wall Street one-of-a-kinder – my first boss at Morgan Stanley – with an identity that was unmistakably his and only his, as [...]
The beat goes on. The tom-toms are beating again. Weakness in the economy. Slowing corporate profits. Tepid growth in employment. The call is going out. From bond managers. Investment banks. Central bankers themselves. The Fed may have to do more. QE3. More of anything to put liquidity into the system [...]
On the highway, in the twilight… …At 70 miles per hour. Taillights ahead. Headlights behind. Curves right, curves left. And the windshield fogging up. So much so, that patches of the scene ahead suddenly disappear behind condensation and what you can see now is through irregular, small openings in the [...]
In synch? The charts may look a bit busy. But they raise a simple set of questions. Will inflation, gold and oil move together upwards? Will they move together downwards? Or will they de-link? If you look at the first chart – 2007-2012 – you see inflation (yellow), gold (orange) [...]
The thesis. Mr. Market has been replaced by Mr. Macro. Mr. Macro pulls the strings. Mr. Market is on the other end of the strings. Mr. Market has become a marionette controlled by the master, Mr. Macro, who jerks Mr. Market up and down before our eyes as he did [...]
The categorical necessity. Human beings need categories. We feel lost, anxious when we don’t have a mental box to put things in. We feel secure, calm – knowledgeable – when we do. Categorization enhances our mastery of the confusing, the unknown or the complex. Just naming something is enough to [...]
Recap of Part 1 Strategic ability – Ability X – is very rare. Most heads of companies and states have Abilities 1, 2, and 3 – setting goals, advocating them, and executing them — abilities which have to do with what they can do. Strategic Ability X is about discerning [...]
Strategic ability is extremely rare. Very, very few people – whether in business or politics – have true strategic ability. Defined. “Strategic ability” is the ability to deeply understand the obvious and non-obvious forces shaping one’s world and the true scope of resources required to deal with those forces so [...]
Observation #1: $120 million on May 2nd. To be exact, Edvard Munch’s 1895 “The Scream” sold for $119.9 million at Sotheby’s three Wednesdays ago.1 It hit the top of the all-time art-auction charts. More remarkable: it was a drawing. Crayon on board. Perhaps to compensate, the artist also painted the [...]
Déjà vu all over again? Haven’t I seen this movie before? The storm? The gathering storm in Europe? Haven’t I seen headlines before like those today – May 17th, 2012? “Spanish borrowing costs soar”1 “Rajoy says Madrid faces being shut out.”2 “Greek euro exit looms closer as banks crumble.”3 “Flight [...]