Browse by Tags

John Mauldin's Outside the Box

Blog Subscription Form

  • Email Notifications
    Go

Archives

  • Hoisington Quarterly Review and Outlook

    Dr. Lacy Hunt and Van Hoisington of Hoisington Investment Management write a “Quarterly Review and Outlook” that is a must-read for me. This quarter they focus on US monetary policy, noting that “After peaking at 1.69 in the second quarter of 2010, M2 velocity declined for four consecutive quarters, and we estimate that a major contraction in velocity to 1.59 is likely for the third quarter.” (I mentioned the importance of the velocity of money in judging inflation vs. deflation prospects in this week’s e-letter, too.)

    They say, “If our analysis of a new contraction in GDP is correct, the U.S. economy should be viewed as operating in the midst of a long-term slump, regardless of terminology.”

    ...
  • Absolute Zero

    It was Gary Shilling – way back in the last century – who first woke me up to the real whys and wherefores of deflation, with his 1998 best-seller, Deflation: Why it's coming, whether it's good or bad, and how it will affect your investments, business, and personal affairs. I had read various works on deflation, but nowhere was it put together as well as Gary did it. He followed it up the next year with Deflation: How to survive and thrive in the coming wave of deflation, and in that one he strongly urged his readers out of the stock market – just ahead of the 2000 dot-com bubble burst. But Gary has been so right over the past three decades. (He recently updated Deflation with The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation. It’s on Amazon at http://www.amazon.com/Age-Deleveraging.

    ...
  • Obama’s Dilemma: U.S. Foreign Policy and Electoral Realities

    Folks, this piece from STRATFOR has compelled me to focus on the US for one more day before I head off to Europe. You've seen the articles and other insights I send on occasion from George Friedman, my friend and prophetic author of The Next 100 Years and The Next Decade, both bestsellers. Well, this article takes the cake. George is the founder of a geopolitical intelligence company called STRATFOR, whose focus is international affairs. But on the rare occasion when domestic politics and international affairs intersect, it's always a treat to get George's insight.

    I don't even want to give away any spoilers here. It's better to let you follow first-hand, as George builds his argument and arrives at a profound final conclusion. Let me just say: In Endgame, as you know, I predict that we will deal with the deficit in a controlled manner, or face disastrous consequences. Here, we learn how the realities of the next 14 months before the presidential election present some potential global consequences of their own.

    ...
  • Is the US Monetary System on the Verge of Collapse?

    This week we take in a piece that is somewhat outside my own box. There are a number of people who feel strongly that the US (and world governments in general) cannot pull out of the downward spiral they are in, that monetary policy is fixed on printing ever more money, and that the problems of fiat currencies are now coming to the fore.

    I was interviewed last week by David Galland and Doug Casey of Casey Research. Those of you familiar with them know they (and especially Doug) have a strong libertarian bent and a distrust of government. Not all that unusual, of course, except that they work at finding ways to invest based on their philosophy. That has meant a lot of gold and natural resources, plus new tech, which has worked at rather well overall.

    ...
  • Things That Make You Go Hmmm…

    I love Grant Williams and his writing in his letter Things That Make You Go Hmmm... And this week's Outside the Box is the first section from his recent post, where he starts with a brief history of Gadhafi and ends up giving us a tutorial on oil pricing. This may be "inside baseball" (too much detail) for some of you; but these details are important, as the very ground of oil pricing is shifting away from the traditional sources. What will the mainstream media do? Wonder when they will shift, which will result in a LOT higher costs for most of the world. Besides, this is a fun read, and Grant is a great writer.

    ...
  • Some Problems With Banks

    This week your Outside the Box offers two views, one from the US and one from Europe, both dealing with banks and financing. First, back in July, my friend Chris Whalen at Institutional Risk Analytics wrote an important comment about how the situation in the housing market is blocking efforts by the Fed to stabilize the US economy. IRA is a rating agency that follows every US bank and consults for a number of large commercial and governmental institutions on bank performance and risk.

    ...
  • The Geopolitics of the United States, Part 1: The Inevitable Empire

    We all remember junior high geography (well, some of it, anyway). But somehow it didn't cover how critical geography is in the development of a nation... and that it is, for example, the primary reason the United States became a global power. The territory of the U.S. simply comprises all the right geographic elements to make its occupants an inevitable global force. Yesterday, STRATFOR, my favorite source for geopolitical analysis of world affairs, published The Inevitable Empire, part I of a fascinating assessment of the United States. In it you'll learn how geography shaped the nation's behavior throughout history, and what it means for U.S. foreign policy today. It's a perfect example of the kind of insight STRATFOR provides that you won't find anywhere else.

    ...
  • Dynamic Economic Decision Making

    This week’s Outside the Box is from my good friend John Silvia, the Chief Economist at Wells Fargo and fishing buddy in Maine. He has written a powerhouse book called Dynamic Economic Decision Making: Strategies for Financial Risk, Capital Markets, and Monetary Policy.

    Combining three intellectual disciplines – economics, business, and decision making– that have traditionally been taught separately, Dynamic Economic Decision Making forges a new path that redefines how we view business choices. And that is the main point of the book. So many business leaders and investors make decisions based on static factors, historical patterns, or straight-line assumptions that it is no wonder that all too many bad decisions are made. And worse, we train our MBAs to approach decision making with outmoded tools that have proved themselves worthless in the real world.

    ...
  • You Need This Dirty Word, Euro Bonds

    This week's Outside the Box is in the tradition of showing the other side of the argument. Normally, anything George Soros says or does politically has my blood pressure up about 20 points. Yet, I posted another piece of his today in Over My Shoulder – and then ran across this longer piece from Der Spiegel. Note this is from a dedicated Europhile wanting to save the euro. He succintly outlines what must be done if it is to be saved, and does it as well as anyone. (I know that among my readers there are both likers and haters of Soros, but as an observer of markets he is to be respected. And this is an article in which his acumen is in evidence.

    ...
  • The Geopolitics of Brazil: An Emergent Power's Struggle with Geography

    Just last week in Thoughts from the Frontline, we discussed the relative valuations of emerging markets. Any discussion of an emerging market is incomplete without understanding the underlying geopolitical forces that guide behaviors of countries and often predetermine the outcome of events. Today I'm sending you STRATFOR's geopolitical analysis of Brazil, a much-discussed emerging market. This is a long read, but it's the most thorough and enlightening analysis I've seen thus far on how the continent's geography has shaped Brazil's history to date, and the major challenges the the country faces today. Hint: Brazil's biggest problems are an overvalued "real," Mercosur, and an Asian giant (you guess which one...).

    ...
    Filed under: , ,
  • Entitlement Bandits

    This week’s Outside the Box is guaranteed to upset you. It is about Medicare fraud. Warning: it was written by a very conservative analyst and is “pro” the Ryan plan. I want you to read it not because I am trying to get you to support the Ryan plan but to get a handle on the size of Medicare and Medicaid fraud and just how easy it is to perpetrate.

    There may well be better ways than the Ryan plan as advocated here, but something must be done. Want to cut spending by $1 trillion in ten years? Eliminate the fraud. If American Express can hold fraud to 0.3%, maybe we should outsource our Medicare fraud detection to them. I say that only slightly tongue in cheek.

    ...
  • 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.

    ...
  • 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.

    ...
  • Three Competing Theories

    Long-time readers are familiar with the wisdom of Lacy Hunt. He is a regular feature of Outside the Box. He writes a quarterly piece for Hoisington Asset Management in Austin, and this is one of his better ones. Read it twice.

    “While the massive budget deficits and the buildup of federal debt, if not addressed, may someday result in a substantial increase in interest rates, that day is not at hand. The U.S. economy is too fragile to sustain higher interest rates except for interim, transitory periods that have been recurring in recent years. As it stands, deflation is our largest concern …”

    As I write, Europe is starting to unravel. This is going to be much worse than 2008, at least as far as Europe is concerned, and odds are high that it will be very bad for the US. And the markets are still acting as if the problems in Europe can be resolved. The recent bank stress tests were a joke, as they assumed no Greek or Irish defaults. This simply can’t be. There is a banking crisis of massive proportions in our future.

    ...
  • China Security Memo: Looking into 'Reverse Mergers' on Wall Street

    The saying goes that you can learn something new every day. If you're paying attention that is - and more importantly if you know where to look. Today I was getting my morning fill of geopolitical intel from my friends over at STRATFOR (on everything from personal security to country economic profiles) and stumbled onto their weekly China Security Memo, this particular edition on Looking into Reverse Mergers on Wall Street. Is this another head-scratcher in the less-than-conventional foreign policy coming from China or a regulatory end-around by some enterprising Chinese companies?  Take a few minutes to read this report, which also goes through everything that happened in China this week that matters.

    This article discusses the SEC's ongoing investigation of the "reverse mergers" where questionable Chinese auditing allowed companies to list on U.S. stock exchanges despite their fraudulent accounts. The report is a superb example of the detail and insight STRATFOR gives its customers. If you're into the idea of learning something new on a daily basis (the desire grows with age, I believe...) you'll enjoy learning about the current state of Chinese regulations (or lack thereof) for companies that list on US stock markets, State-Owned Enterprises (SOEs) that compete with American businesses, recent bank robberies, tensions with the Catholic church, and bottled water contaminated with E.coli. In other words, you'll definitely meet your novel knowledge quota for the day, all while getting the deepest insight on the security situation in China.

    ...