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John Mauldin's Outside the Box

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  • Breakfast with Dave

    The question we will ask ourselves in 20 years is, “Where were you when they downgraded the US and the Fed?” This week’s Outside the Box is from David Rosenberg. He has made his letter public and graciously given me permission (at 34,000 feet ) to send it to you.

    I thought about writing an immediate response to this weekend’s events but decided to wait and meditate on what has transpired. Clearly, we are at the beginning of the Endgame. And that saddens me. The events of the weekend were hotly discussed at the Shadow Fed meeting in Maine. My youngest son, Trey, was paying attention this year. Last night he said, “Dad, it is good for you that you are right with your book, but I don’t think it’s good for the rest of us.” Out of the mouths of babes.

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  • Germany's Choice: Part 2

    For today's special edition OTB, let's turn our fiscal eye across the pond to all that's going haywire in Europe. But not the continent's banking crisis, per se. Today's piece takes a broad look at who's really running the show. I'll give you a hint - they've done it before, and it wasn't too long ago. The folks at STRATFOR (a global intelligence publication) have spent the better part of two years saying that Germany will run Europe. The newly redesigned EFSF (European Financial Security Facility) can be considered concrete evidence of such.

    From Berlin's point of view, the Eurozone is its sphere of influence, and its preservation is in Germany's national security interest. It's a new Europe, where Germany's not just the checkbook anymore, but holds some reins.

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  • Converging On The Horizon

    This week’s Outside the Box is with an old friend to long-time readers, Ed Easterling of Crestmont Research. Ed is usually on the bullish side, but his research of late points to a few warning signs that say some cycle convergences may be pointing to problems. And that coincides with my macro concerns. As usual, lots of charts and data, but easy to read and understand. And, for those with stock market investments, very thought-provoking and timely.

    I write this at 34,000 feet on the way back to Dallas. I met with a few Congressmen this morning and then ten Senators (!) this afternoon. It seems that some of them had read Endgame and rounded up a rather impressive group to come hear me speak for about 90 minutes. No Powerpoint, just off the cuff, with lots of very pointed questions, and they were taking notes (mostly). Some have been my long-time readers (go figure). It was bipartisan. Actually tripartisan, as independent Joe Lieberman was there, and asked some very hard questions. They cut me no slack and I gave no quarter. It was a very frank discussion. This is a group that is quite worried (I should say seriously worried) about our future, and they let me know there were more like them. On both sides of the aisle. It was actually somewhat encouraging, except that they are not optimistic. There was a sense of palpable concern that nothing might be done until we have a crisis, and so they realize the need to act. They are working to get their fellow Senators on board. Maybe there is hope. Without naming names, I was particularly impressed with the questions from a “Tea Party” Senator when I talked about the “glide-path option” and what going too fast would mean – as in a depression. I think he got it. We’ll see. He took the most notes, although Portman (who ran OMB so has a serious resumé and credibility on budgets) was going through paper rather fast as well.

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  • Restoring Fiscal Sanity in the United States: A Way Forward

    One of the great privileges of traveling and speaking as I do is getting to meet a wide variety of very interesting people. Of late, I have become friends with David Walker, former Comptroller General of the US, who is now crisscrossing the country warning of the deficit crisis. It is a message that my book Endgame resonates with. If we do not bring the deficit down below the growth rate of nominal GDP, we become Greece. We hit an economic wall and everything collapses. It will be a real and true Depression 2.0. Fixing this is the single most important topic and task of our generation. If we do not, worrying about P/E ratios, moving averages, long-term investments – anything else, in fact – is secondary. Solve this and we can go back to the usual issues.

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  • What Happened to the American Declaration of War?

    You're probably aware by now that I'm an avid reader of the global intelligence company STRATFOR. But this piece by their founder George Friedman is truly exceptional.  If you're an American voter, interested in politics, or anyone interested in or affected by U.S. military actions (in other words, everyone), you should read this article. Why has no one else asked this question? And, as George points out, if this one part of the Constitution can be so repeatedly and publicly ignored by Congress and the president, what's next?

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  • Game Changer

    This week we look at another except from Ed Easterling's gonzo book on stock market return projections called Probable Outcomes. This section is entitled Game Changer, and it is that and more. (Again thanks to Ed for letting us read his work!)

    Game Changer is a thought-provoking, somewhat detailed, analysis with two major surprises.  The first is that GDP growth was well-below average last decade (a trend that could continue this decade)…and second, slowing growth has a substantial negative effect on valuations (P/E).  This ties well into my own Endgame and provides "implications" about slower growth, etc.  (which is what I project from work of my own). Slower growth drives lower P/Es (even without higher inflation or deflation) and could drop the market by a third or so relative to "normal" cycles.

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