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December 13, 2013, Vol. 31, No. 24

The price is wrong

Investors, financiers and financial analysts do business in a governmentally constructed funhouse. The interior décor features unconventional mirrors. Concave and convex, they can make a short yield look taller but they can’t make that illusion pay cash. Which fact brings us back to the universal thirst for income and to the corporate structures that exist to slake it.

Just say no

After delivering a 50% gain in 2012, the Nasdaq Biotechnology Index has leapt by 60% in the 11 1/3 months of 2013. In November, 75% of the respondents to a poll said they expected another banner showing in 2014. Herewith a dissenting opinion and a short-sale candidate.

Preferred by more

Just how inclusive is the global stock-market rally? Inclusive enough to levitate South Korean preferreds. Following is an update to our analysis of this value-laden, hard-to-buy and chronically underachieving asset class.

European antique show

Converting mutual thrifts into profit-seeking commercial banks has been one of the most lucrative callings in American finance. We now turn to a similar kind of conversion, albeit with a very different kind of bank.

Problem child redux

It’s a funny thing about the liquidation of gold mining shares or about the pullback, let us call it, in gold itself. Selling gold, the world is saying in so many words, “The central banks have the situation well in hand.”

QE, we hardly knew ye

Monday brought tidings of a $1.92 trillion jump in household net worth between the second and third quarters. What else has quantitative easing wrought? Whether or not the Fed chooses to announce the start of tapering next week, it’s high time to ask.

November 29, 2013, Vol. 31, No. 23

A personal message for Larry Summers

From one disappointed non-central banker to another. How to restore America's once and future economic vitality?

Plugging for 9%

At America's big banks, the live-in regulators seem almost to outnumber the paid help. A risk-averse cadre are these government overseers. Good, safe loans are what they want. Enter here a new real estate finance company with designs on the lunch that banks no longer seem to have permission to eat.

Sell the painting

Christopher Wool's "Apocalypse Now" fetched $26,485,000, including commission, on Nov. 12. Within days of the Wool sale, a copy of George Washington's first presidential Thanksgiving proclamation failed to clear its $7 million reserve price. How to compare the two?

Borrowing trouble

Investors lack income, the economy lacks oomph and businesses lack growth. Solution? More corporate bonds and higher corporate leverage. Hearing the ducks quack, Wall Street is busily providing sustenance.

Fuel least popular

The Environmental Protection Agency makes war on it, people of any shade of green despise it, and the advent of cheap natural gas threatens to marginalize it. Coal--and a certain attractive small-cap miner--are the topics under discussion.

Now with helipad

"How many condo units are necessary in this town?" an especially exuberant Miami builder was recently quoted as posing. The answer? "Unlimited. Because we are selling to the world."

It wasn’t an ATM after all

If borrowing to wretched excess were an Olympic event, America might or might not take the gold, or bitcoin.

November 15, 2013, Vol. 31, No. 22

Introducing the Grant's Story Stock Index

No bull stock market is complete before the debut of the kind of equity that's valued on the quality of its narrative. "The road is better than the inn," wrote the immortal Cervantes centuries before the Twitter IPO. Herewith, a review of the new crop of story stocks.

Okay to inhale

We write to extol the speculative merits of certain municipal revenue bonds, exempt from taxes and protected from inflation. Complex and controversial, these securities are high-yielding for a reason.

All you can eat

One could almost say that if this multiple-sprouting specialty retailer of natural and organic food didn't exist, Wall Street would have to invent it.

'Abundance of caution'

Open before us is a letter from a Swiss bank to an American client; "Zurich, October 2013" is the dateline. The security of one's funds is the subject of the letter--and the subject of this essay, too.

Deficits in self-awareness

"Regulators need to do more to create incentives to force banks to act sooner to steer away from impending icebergs," New York Fed President William C. Dudley tweeted on Oct. 18. Dudley may devote a second tweet to exploring the source of the icebergs.

November 1, 2013, Vol. 31, No. 21

Not so fast, Joseph Schumpeter

We accept as fact that the 21st century is a time of wonders and prodigies--don't you wish you could show them to Benjamin Franklin? Yet in certain intellectual and policy-making circles, inflation today is courted like an old flame.

Lessons unlearned

In equity valuations, what's old is new again, James. S. Chanos observed at the Grant's conference. And what once was discredited is today being rehabilitated.

2014 rates preview

James Aitken told the crowd that "being less wrong on rates, in particular, is the key to making money" in the coming year. And how might one do so?

Yields on illiquidity

Paul Isaac, who has guided Arbiter Partners to a 10-year average annual return of 24%, held forth on fetching opportunities for those in a position to avail themselves of overlooked securities.

Crisis accelerant

Reading up on "risk parity" brought to mind an ant colony, Paul Singer told the conference comers. The investment strategy is not portfolio insurance, but there are similarities.

Long and short

Steve Galbraith channeled the spirit of Alfred Winslow Jones, progenitor of the American hedge fund, with one to buy and one to sell.

Free punch line

Martin Leibowitz, lead author of "Inside the Yield Book" (the third revised edition was recently published) told the audience that he was prepared to do something no author should ever do.

Klarman returns cash

When came his turn to speak, the president of The Baupost Group held forth on monetary policy, the search for cheap optionality, and his obligation to protect his clients' purchasing power.

For a lucky 13

If gold finishes the year above $1,675 an ounce, Trey Reik reminded the conference, 2013 would mark the 13th consecutive year of a bull market that many have chosen to forget. What caused it? Lipstick on the collar It's been a bumper year for private equity and the bank debt that finances it. The Fed leaves its telltale mark.

Lipstick on the collar

It’s been a bumper year for private equity and the bank debt that finances it. The Fed leaves its telltale mark.

October 18, 2013, Vol. 31, No. 20

Speculative debt at a speculative price

Troubled borrowers are a dime a dozen in the leveraged world we live in. Vanishingly rare, however, are bonds priced to compensate an investor for the risks associated with that fact. Enter here a certain beleaguered credit.

Investing in Yellen

By the looks of things, the post-Bernanke Federal Reserve will be much like the Bernanke Federal Reserve, except, perhaps, more open-handed. The ideal hedge against the possible consequences of an overly aggressive monetary policy would be a value-laden equity that could prosper in any macroeconomic setting but could shine in an inflationary one. Herewith, candidates to fill the bill.

Warranty not included

From zero to 60 miles per hour was once the test of a thoroughbred-racing machine. From the original sticker price to the tens of millions of dollars is the new standard for the age of QE. As most everyone knows, the prices of tangible assets have taken flight. Why? is the question before the house.

A smaller world than you thought

Last month, McKinsey & Co. published results of a survey of 29 fashion and apparel chief purchasing officers responsible for sourcing $39 billion of goods each year. Is the world running out of cheap labor?

Credit Creation • Cause & Effect

October 4, 2013, Vol. 31, No. 19

Land of the mostly free

The more vexingly slow the rate of economic growth, the greater the pressure to legislate, regulate and stimulate. And the more heavy-handed the federal response to unsatisfactory growth, the smaller the scope for markets to operate, including the all-important markets in money and credit. Free interest rates, we say; suppress the central bankers.

Bullish on tumult

To judge by the market in volatility, a warm glow of hope is suffusing the stock market. Exchange-traded notes that appreciate when stock-market volatility subsides have returned 71% in the year to date. However, we think, tranquility is not for this era of threatened government defaults and actual government monetary manipulation.

Assets less crummy

On Sept. 19, a survey of investor sentiment uncovered a rare meeting of the minds: Everyone was bullish on stocks. This arresting fact we take as our cue to update an old theme. Sell bonds, buy blue chips, this publication counseled at intervals in 2010-11. An answer to the timely question, "What now?"

Raising the roof again

Over the past three months, the Bank of England, the Swiss National Bank and the European Central Bank have reduced their assets by a grand total of $128.2 billion. But the Fed and the Bank of Japan have more than compensated. Thanks to low interest rates, home prices are rising wherever English is spoken and even some places where it isn't.

September 20, 2013, Vol. 31, No. 18

Memo to Morgan Stanley

On the occasion of the fifth anniversary of the 2008 financial upheaval, the CEO of Morgan Stanley, James P. Gorman, told the TV cameras, "I would say the probability of it happening again in our lifetime is as close to zero as I can imagine." We write to dispute that contention.

We said, he said

A new Hedgeye report on a midstream energy behemoth says "sell." A 2012 Grant's article on the same business said "buy." What do the bears just say? And what do we say now?

Forest and trees

Earlier this month, Jason Kidd bought $500,000 worth of the team of which he's the head coach, the Brooklyn Nets of the National Basketball Association. How different things might have been had he invested in the company that owns a portion of the team rather than the team itself.

Not so golden

Grant's draws the veil of charity over a certain exploration company.

Thin gruel for the yield-starved

On September 11, Verizon Communications issued $49 billion of debt, the most ever sold by any company in one fell swoop. Records keep falling in the corporate bond market, though--this is a forecast--investors will one day wish they hadn't.

September 6, 2013, Vol. 31, No. 17

Short Koons, long Lincoln

For the price of a few dozen pounds’ worth of a contemporary steel sculpture, the value-minded collector can own a rare American historical document. An excursion into the broad intersection of art, value and vanity—and of history, central banking and fashion, too.

Ruble and a dream

When this publication dropped tools to head to the beach last month, emerging equity markets were still standing. Returning to the office, we find that they—and their currencies and bonds—are recumbent. Some are prostrate. Herewith, a survey of one near perfectly flattened branch.

Floor to ceiling

Since May, when the updraft in mortgage interest rates began, home-building stocks have fallen by as much as 30%. Sales of new, single-family homes have dropped off, and the rate of rise in house prices has leveled off. All of which frames the continued rise in the share price of a certain specialty retailer.

What they do

Insiders have been heavy net buyers at three of the mortgage real estate investment trusts that this publication has had under surveillance. A buy signal? Or just an expression of confidence?

File purge

A new ETF tracking the latest Chinese Five-Year Plan may be five years late given the signs of a purge of the leaders who would consummate the plan. In financial counterpoint: mounting evidence of a new liquidity surge.

August 23, 2013, Vol. 31, No. SB

Vacation delectation

To the readers (and potential readers) of Grant’s:
The attached anthology of Grant’s pieces, both ancient and modern, is not only for you, but also for your friends—and co-workers, clients, classmates, shipmates, brothers-in-law and maids-of-honor, too. Please pass it along, with our compliments, to any and all prospective members of the greater Grant’s family.
We resume publication with the issue dated Sept. 6, 2013.

Sincerely yours,

James Grant

August 9, 2013, Vol. 31, No. 16

Central bank to the world, perhaps

It isn’t just the American economy that’s hooked on ultra-easy money. Europe and Asia are, too. Which is to say, Paris and Seoul are rooting as hard for the continued nonstop printing of dollars as the leveraged speculators on Wall Street are.

Special situation redux

In its fair and balanced coverage of U.S. monetary policy, this publication censures the Fed for its downward suppression of interest rates. Yet, equally, we extoll the prudent exploitation of that public-policy blunder for private gain. Enter—or rather, re-enter—a certain value-laden real estate finance company.

Quartered and drawn

Mortgage REITs are the subject under discussion, and a timely topic it is. MBS--mortgage-backed securities—are hard enough to manage in ordinary times. They are extra rambunctious in interesting ones.

Hit by a truck

Revisiting a bullish analysis of a certain cyclical manufacturer.

Your pain was statistically unwarranted

From the research department of the Federal Reserve Bank of New York comes the welcome news that the 45 trading-day interest-rate levitation ending on July 5 wasn’t much to worry about, after all.

July 26, 2013, Vol. 31, No. 15

Demobilizing the reserves

One day soon, banks will have on deposit at the Federal Reserve $2 trillion more than the rules require them to hold, a mountain of excess reserves that could, at the outer limit of what is theoretically possible in money and banking, support $20 trillion of new lending. What is the meaning of this imminent fact?

Inflation for bulls

The Nasdaq Biotechnology Index has levitated by 10.9% so far in July. And we mean levitated.

Elephants for sale

Herewith a survey of the “white elephant” branch of the otherwise prospering American house market—the mansions, countryseats, Newport cottages, cattle ranches or city penthouses that one generation prizes but another may shun.

Oz catches cold

China sneezed.

Interest rates 101

We humans want what we want when we want it. To salve the pain of delayed gratification, we ask for compensation, and we got it too, until ZIRP came along. It would be nice to know where interest rates are going. It would even be nice to know what they mean—a humbler, attainable aspiration.

Paper vs. rock

Disagreement is the motive force of every financial market—if everybody saw exactly eye to eye, prices would move straight up, straight down or not at all. In gold, there’s a conflict within a conflict.

July 12, 2013, Vol. 31, No. 14

Events climb into the driver’s seat

Today’s central bankers are lionized because they seem to be in control of events. Unless we miss our mark, the new interest-rate narrative will turn things around. Events will be shown to be in control of central bankers.

Ask the governor

Governor Jeremy C. Stein of the Federal Reserve Board invited questions following his prepared remarks at the Council on Foreign Relations in New York on June 28. Your editor, who was in the audience, stuck up a hand. “Help us understand . . . ,” his question began.

Stormy weather

The interest-rate environment may be cruel, but it’s sweetness and light compared to the North Atlantic E&P environment. Concerning the upside (widows and orphans should now avert their eyes) of a highly leveraged special situation.

Cheap and cheaper

A certain development-stage owner of a world-famous gold deposit derives its value from the monetary asset that’s lately been losing its value. Which facts make the stock doubly cheap.

Unsafe havens

You can hardly beat a Canadian bank for safety and profitability. And for the cleverest system of mortgage finance, look no farther than Denmark. So the world believes, but the world may presently have to change its mind.

Anything but bonds

Rising interest rates left a $27.3 billion dent in the held-for-sale portion of the composite American banking industry securities portfolio last quarter. A good thing for the banks that they lend as well as invest.

June 28, 2013, Vol. 31, No. 13

Revenge of the invisible hand

Only last month, stocks and real estate and other income-producing assets were capitalized for a 2% 10-year Treasury yield. But if 2% was a fake rate of interest, the valuations deriving from 2% were likewise ersatz. Thus, the world is making adjustments. Interest rates, causes and consequences, is the subject at hand. Subsidiary points of focus include monetary management and—a somewhat lengthier topic—monetary mismanagement. For the sake of his always fragile mental health, Mr. Market might recall a relevant precedent to today’s bond upheaval. Our plan of action is to place today’s turmoil in historical context, to review the dramatic events of recent weeks and, most important, to propose a course of investment action suitable for the occasion.

If accountants ruled the world

In the second quarter, the net asset value of the portfolio that Ben S. Bernanke manages declined by one-third of 1%. In contrast, the net asset value of the portfolio that Bill Gross manages declined by 5.2%. How did the chairman outperform Gross? Footnotes to the Fed’s H.4.1 report reveal Bernanke’s secret.

June 14, 2013, Vol. 31, No. 12

On the authority of Bill Gross

The 32-year-old bull market in bonds is kaput, the founder of Pimco tweeted the other day. The implications of this seismic shift in interest rates (if such a shift has, in fact, occurred) is the subject at hand.

Rooting rates higher

Many a financial institution has been rooting for a normalized yield curve. The ZIRP-y structure of rates in place punishes them on both sides of the balance sheet. Low rates mean that assets yield less and liabilities cost more. Rising rates deliver a double measure of relief. Who stands to benefit?

Beijing to Sydney

Herewith an update on China (sinking), Australia (sympathetically sinking), and a handful of Grant's short-sale names (also sinking, except for the one that soared). Our longstanding China backstory has lately moved front and center. China's banking and credit structures are evidently cracking.


As we go to press, India is going out of business, or so it might appear. The rupee is quoted at 58.4 to the dollar, cheapest on record. India's current account deficit is swelling, inflation is raging, and car sales are dwindling. What to do?

May 31, 2013, Vol. 31, No. 11

Welcome to the revolution

You need gray hair or a library card (or a subscription to Grant's) to know that the gold value of the dollar was fixed as recently as 1971. You need a good memory to recall the uproar that greeted Chairman Ben S. Bernanke's helicopter-money manifesto in 2002. We live in the midst of a monetary revolution, though few seem to know it.

'Inherently' unsafe

Government bond yields are higher than they used to be. We do not say they are "going up," because that would imply that we are predicting that they will continue to go up. But though we do not choose to forecast, we will take license to comment.

'Weird' is the word

According to data from Green Street Advisors, average office nominal cap rates stand at 5.6%, down from 8.8% in April 2009. The current average nominal cap rate is lower than any seen before the fatally optimistic era of 2006-2007. Herewith a comparative tale of weird, ZIRP-induced cap rates in thriving Austin and not-so-thriving northern New Jersey.

Sticks and stocks

The internal rate of return on hearth and home. Here's hoping the kids don't take the conclusion to heart.

Billiard balls scatter

Measured against the dollar over the past eight months, the yen has fallen by 24% while the renminbi has appreciated by 3% and the won has depreciated by 1%. The Ph.D. standard surely has no finer friends than the monetary elite in the world's No.3 economy. Evidently, money printing is the cross-cultural cure-all.

May 17, 2013, Vol. 31, No. 10

Desperately seeking income

A certain trust, priced to deliver a very temporary double-digit dividend yield is Exhibit A. Junk bonds, sovereign debt and a certain financial institution comprise Exhibits B through one-loses-count. Now begins a new installment in the chronicles of the great yield famine.

First beach book

You'll be finished before you get home.

Puts on Ph.D.s

Let's say that the agents of financial repression misplay their hands and print the fatal redundant unit of scrip. Come the day of disillusionment, plenty will change, including, perhaps, the prices of the following trio of corporate equities.

Pole-vault yields

In the first quarter, falling mortgage-backed securities prices dented the book value of two of the biggest mortgage REITs, while a third mortgage REIT, tiny by comparison, sailed through almost un-dinged. Which of the three is the best candidate to continue to deliver yields in the low to mid-double digits is the topic at hand.

Alan Abelson, RIP

Remembering the progenitor of "Up and Down Wall Street."

Premonitions of a stock operator

The sound you hear isn't a snowbound driver futilely spinning his wheels (it's May in the Northern Hemisphere, after all), but the Fed performing its QE. Reflation, as this publication was not the first to perceive, is sometimes more easily said than done--in the Occident, at least.

May 3, 2013, Vol. 31, No. 09

Memo to the bubble police

Federal Reserve investigators can't seem to detect more than a few market excesses traceable to the monetary policy of the Bank of Bernanke. To fill the void, this publication contributes the results of its own search for grievous distortions of asset values not unrelated to the availability of money.

Nuclear option

Having built the boilers for Teddy Roosevelt's Great White Fleet, a certain company grew and grew--only, much later, to file for bankruptcy protection and suffer from the plunging price of natural gas. Herewith, a bullish analysis of an underachieving stock.

Didn’t take long

Margin debt is back to the 2007 highs, while the price of implied volatility of the S&P 500 Index is back near its lows. In credit as well as in equities, fearlessness is in flower.

Read books, get rich

Where do ideas come from? Why, from books, sometimes. Three new (or newish) titles are well worth perusal.

Physical fever

Last month's 16% swoon in the price of gold instigated a worldwide countervailing up-swoon. "It's bizarre that the price has come back so quickly," Bloomberg quoted a market strategist as saying on Monday. Or as we propose, not so bizarre.

Cooperstown of yield

On April 18, the editor of Grant's was inducted into the Fixed Income Analysts Society Hall of Fame. Herewith is the edited text of his remarks on that festive occasion.

A difficult subject is the future

Macroeconomic forecasts aren't very useful except at short time horizons, and when the future closely resembles the present, is the breaking news from the research department of the European Central Bank. Still, every investor must guess about tomorrow.

April 19, 2013, Vol. 31, No. 08

Break ball in billiards

Two weeks ago, Haruhiko Kuroda set markets in motion with a powerfully struck break shot. Where the caroming monetary, interest-rate, and volatility balls will come to rest is the subject at hand.

Onward and upward

On panic Monday, the year-to-date loss in gold came to 19%, that of gold-mining equities, 38%. Small wonder, then, that respectable people want nothing to do with producers of the barbarous relic.

Mr. Blackstone speaks

Stephen Schwarzman on the 2012 presidential election, due diligence, and the prospects of a certain publicly traded equity.

Japan for the money

For years, an appreciating yen has punished Japanese business (that is, the export-focused kind). Now, Mark Yusko told the conference, comes deliverance.

Japan at your peril

We humans tend to shut our ears to bad news, Kyle Bass explained, even in the face of overwhelming negative evidence.

Complexity made simple

Presented to the Grant’s throng as a specialist in abstruse and illiquid—or at the least, misunderstood—securities, Jody LaNasa did not disappoint.

For the long run

Timothy Walsh, chief fiduciary of the $70 billion New Jersey Pension Fund, oversees an investment portfolio that should not be confused with a hedge fund.

Debt drives inflation

John Cochrane explained to the conference comers that debt ultimately drives inflation, regardless of monetary policy. And what drives debt?

Friedman was wrong

Though the observed rate of monetary expansion is large, the measured rate of inflation is small. Blame the collapse in the rate of turnover of money, said James Rickards.

The ‘elegant’ solution

“A problem that is too big to be solved, won’t be solved,” Sean Egan proposed. “The parameters will simply be changed.”

Good old days

America’s fiscal, financial, and economic woes are intractable on their face, contended David Stockman. They look even worse in the light of America’s pre-Keynesian past.

It’s incredible

Chinese authorities claim that March exports registered year-over-year growth of 10% despite trade with the United States falling by 7% and that with the European Union by 14%.

April 5, 2013, Vol. 31, No. 07

On the true meaning of Cyprus

In the first quarter, European peripheral states issued more debt than in any three months since the first period of 2010. In America, BB-minus-rated H.J. Heinz raised $3.1 billion through a sale of seven-year notes at the lowest interest cost ever attached to any public LBO-related debt in America. The message of the market is that Cyprus is a blip, or news particle. We write to contend that it is no such thing.

Concerning the one with the hair

Revisiting the prospects of a certain American automaker.

Tropical storm

In the municipal bond market, eyes today are locked on the city of Stockton, California, which is in bankruptcy proceedings, or on the state of Illinois, which perhaps deserves to be. We write to urge a refocusing. On a disaster long ago made but—somehow—forever new and worse.

Bullish on Greer, S.C.

Finance is the servant—the handmaiden—of commerce, not the other way around, as the ancients used to say. The whole point of stocks and bonds is production, not “carry” or commissions or bonuses. Recalling this truth, Grant’s redirects its gaze from the fleshpots of Wall Street to the future home of the South Carolina Inland Port.

In economists we trust

Does it not seem incongruous to chase after low-yielding fixed income securities denominated in the currency that a central bank is vowing to inflate and is taking concrete steps to inflate? To most—even, or especially, to the experts—it does not.

March 22, 2013, Vol. 31, No. 06

The hardy flower of trust

Ideas are hard to contain. A governmental skimming of bank deposits, imposed from afar on a Saturday morning and presented to the victims as a “stability levy,” will, we think, be impossible to contain. The event will fade but the fact that it happened is indelible. Central banks cry out to be mistrusted.

Nuke ‘em

“Think of all the benefits that nuclear energy can bring to bear on a growing civilization.” The author of those words, which appeared on March 7, was none other than Patrick Moore, the Canadian co-founder of Greenpeace. Herewith, a bullish appraisal of the element that the greens once loved to hate.

Just looking

It’s nobody’s idea of news that Sears Holdings Co. and J.C. Penney Co. are on their uppers or that smart phones facilitate price comparisons or that you don’t have to go to the mall to go shopping. Yet, since the stock market took off four years ago, the Bloomberg REIT Regional Mall Index has out-returned the S&P 500 by 568% to 121%, counting reinvested dividends. To this anomaly we now turn.

Banking on China

Sitting in 126 crates on the Melbourne docks is a prefabricated, six-story hotel in which workers on BHP Billiton’s projected $22 billion harbor expansion project in Port Hedland, Western Australia, would lay their weary heads at night. But the project has been scrubbed, and the hotel-maker is broke. The resource-led investment cycle that has fed Australia’s growth is fading. What to do about it is the question before the house.

Markets get the last word

The Federal Reserve, which is on course to buy 60% of net Treasury issuance this year, is investigating any fund holding $2 billion or more in 10-year Treasurys on suspicion of price manipulation. “Holding large positions in Treasury bonds isn’t illegal,” a March 16 Wall Street Journal dispatch helpfully notes. Neither is price manipulation—if you happen to be Ben S. Bernanke.

March 8, 2013, Vol. 31, No. 05

Shot clock for capitalism

The Federal Reserve's toy interest rates give economic actors too much time to stall and dither. Zero-percent rates institutionalize delay in everyday business and investment transactions. They lead to postponement of needed adjustments. It’s as if basketball never got the shot clock.

Rain of grain

In constant dollars, reports the February edition of the AgLetter published by the Federal Reserve Bank of Chicago, Seventh District land prices—i.e., Illinois, Indiana, Iowa, Michigan and Wisconsin—leapt by 52% over the past three years, the most since the mid-1970s. On cropland values, money printing and wheat.

Odd couple speaks

Herewith, Grant’s compares two recent interest-rate commentaries: The first by Ben S. Bernanke himself, the second by John Hathaway, co-portfolio manager of the Tocqueville Gold Fund. Interestingly, the manager of the country’s top gold fund by assets agrees with much of what Bernanke said. But the substance of Hathaway’s remarks differs in radical and revealing ways from Bernanke’s

China sneezes

Lesley Stahl, anchor of the eternal weekly American TV news program “Sixty Minutes,” asked Wang Shi, chairman of China Vanke Co., the mainland’s largest homebuilder and developer, if there’s a real estate bubble in China. “Yes, of course,” replied Wang. So the capitalists caught on to the China bubble before the Communists did. But, we think, the capitalists have not fully exploited every short-on-China trade.

Metals redux

Revisiting bullish calls on precious metal exploration companies, as well as a certain industrial metal producer.

From Harare to Tokyo

Buying long-dated Japanese Government Bonds, as Shinzo Abe’s pick for the next governor of the Bank of Japan suggested on Monday, may not save the Japanese economy, but it would allow Japanese banks to jettison their holdings of government securities, which amount to 900% of Tier-1 capital. Walking the path so famously trod by the Reserve Bank of Zimbabwe.

February 22, 2013, Vol. 31, No. 04

Yellen from the heart

The facts of the dismal labor market "are not just statistics to me," the Vice Chairman of the Federal Reserve Board told the AFL-CIO on Feb. 11. Indeed, they constitute a terrible indictment of something or other in the management of American economic and financial affairs. But what might that something be?

Oases of income

Try as it might, the Fed can’t seem to stomp out every last source of interest income in America. Mortgage REITs and business development companies, for instance, still yield enough to sustain the body and spirit of your favorite charity, retiree or lay-about heir. An update on the risks and rewards of yield hunting.

Martin Zweig, RIP

Remembering the progenitor of the Zweig Forecast.

'Burbs go begging

At year-end 2012, the average price of income-producing real estate in the United States was 20% below the peak, according to Moody’s/RCA Commercial Property Price indices. It was, however—let the inflationary glass be half full—33% higher than the January 2010 trough. Herewith a survey of value, non-value and leverage.

For the unrepressed

Of the 25 largest global buyout transactions executed in the golden age of 2002-2007, only two failed. The largest private equity funds survived, and the limited partners met their financial commitments. So the world loves the big public purveyors of private equity and so-called alternative assets?

Money most hated

Most of the world’s major central banks are resting on their oars, but investors seem willing to bet that the lull in money printing is temporary. The yen is now the most shorted currency in the world, according to Tuesday’s Financial Times, followed by sterling. Gold must figure in the most-hated list, too.

February 8, 2013, Vol. 31, No. 03

The man with the perfect resumé

Neither by his looks nor by his credentials would you take the imminent governor of the Bank of England to be a monetary radical. That's because the unconventional policies he advocates today seem almost conventional.

Standing pat

In which we update, and reiterate, our views on a pair of familiar Grant's names

As if it never left

Credit must be older than Methuselah, but it heals like a youngster. Left for dead in 2009, it's back and almost as frisky as it was on the eve of its life-threatening accident. In a macroeconomic sense, it is a very good thing. But in a microeconomic sense?

In dusty corners

In pursuit of the yields formerly known as "high," investors winged $254.2 billion into taxable bond mutual funds in 2012. The influx worked its bullish magic on prices and yields of the larger, more liquid names. But it hardly nudged the prices of issues in the minnow class of speculative-grade debt.

'A totally bankrupt state'

What would "normalcy"--Warren G. Harding's word--look like in monetary affairs? Some central bankers are beginning to demonstrate. However, not all of Europe is content to watch Ben Bernanke or Masaaki Shirakawa's replacement print until the cows come home while Mario Draghi sits on his hands.

January 25, 2013, Vol. 31, No. 02

In case the music stops

Institutionally sponsored bearbaiting arrived on Wall Street with the Jan. 3 debut of a financial instrument created to punish the short sellers. Probably, Deutsche Bank wouldn't have marketed its creation unless its clients asked, and its clients wouldn't have asked unless they were very bullish. Never go unhedged.

Gold by the share

Gold goes up, the gold-mining stocks down, even the ones that don't deserve to. Herewith an investigation into the whys and wherefores of the great divergence, along with a friendly look at a project that Robert Redford despises.

Call on prosperity

A well-financed company once beloved for its growth is now shrinking--its share count. But maybe growth is not such a forlorn hope, either for the company or for the country.

Never mind the side effects

"The greatest investing lesson for you during the past five years?" To this query of the CFA Institute, 59% of respondents recently replied: "Central banks and governments will continue to bail out troubled creditors." Lesson learned--and not just in America.

January 11, 2013, Vol. 31, No. 01

Lower the debt ceiling

On Dec. 31, the national debt bumped its head against the statutory ceiling that never seems to contain it. That would be $16.394 trillion, or the cash equivalent of 360.7 million pounds of $100 bills. In possession of paper money and the reserve-currency privilege, a nation of saints might resist the urge to overdo it. As for us mortals, the debt ceiling speaks for itself.

Too much gas

When we published our analysis on a certain royalty trust dated Oct. 15, 2010, the stock fetched $22.64 a share. Today, it’s quoted at $17.20. Did a cheap stock get cheaper?

Returns to illiquidity

In this Fed-centric world, people are spending less time reading corporate filings and more time parsing the deliberations of their monetary masters in Washington, D.C. So much the better for the inefficiency of markets, we say. Herewith, an exercise in security analysis.

Stop trading

In trying to knock down recent unsigned allegations in Ming Pao Daily of Hong Kong, China’s No. 2 producer of construction equipment professed its fidelity to normal Chinese accounting conventions. Little enough comfort in that.

At ease

The old year closed with a slower gait of money printing in Europe, Britain and the People’s Republic. The pace of dollar creation, too, has slackened from the white-hot days of early QE, though there seem to be plenty of greenbacks to go around: Foreign exchange swaps between the Fed and other central banks plunged to $8.9 billion on Jan. 2 from $109.1 billion as recently as Feb. 15, 2012.

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