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John Mauldin's Outside the Box

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  • Obama's Challenge

    With the election of a new US President, everyone is focused on the 'First 100 Days.' How Obama transitions into the presidency impacts not just the U.S. but the entire global system. What happens to U.S. relations with Iraq, Iran, and Afghanistan? What's going to happen at Treasury and to all the programs addressing the financial crisis? What's going to emerge from the next G20 summit? You need to read the analysis below, written by my good friend George Friedman at Stratfor. He details the immediate issues facing the president-elect, including one of the stickiest: Europe's desire for a global banking regulatory regimen. How will Obama respond to European pressure? George has built his company Stratfor and its reputation on forecasting the future, and I'm amazed at how often he's right -- on broad themes and specific events....
  • Fourth Quarter Forecast 2008

    Really hear what I'm about to tell you. The center of gravity of the world economic system has moved from New York to Washington. Let me illustrate what I mean so you understand just how profound this is. Banks used to compete against banks. US carmakers competed against each other and the Japanese. And the New York financial markets told you how they're doing against each other. Understand what's happening now. The US Treasury has become the only "customer" that matters. The Treasury is now the customer—and investor -- with the $750+ billion checkbook. The Treasury is now the "investment banker" of last resort, arranging and financing mergers. Banks are competing against insurance companies for their slice of the bailout pie. Chrysler and GM (and the Michigan Congressional delegation) are looking to Washington, not Goldman or Merrill, to facilitate a merger. This is a seismic shift....
  • The New President and the Global Landscape

    In times of crisis, those with psychological fortitude discover opportunities that most people miss. A friend of mine in Houston tells me of unending piles of tree limbs broken down by the hurricane. The homeowner laments his disaster; the tree trimmer and the roofer order a new Mercedes. Most of the world sees a Wall St. meltdown. Buffett takes the opening to deploy billions from his cash hoard. They're all seeing the same thing, but they're reacting differently based on different visions of the future. I've included a piece today from my friend George Friedman over at Stratfor about the landscape the next US President will face. This article is a perfect example of why I rely on Stratfor for my geopolitical intelligence. The newspapers and other media do better or lesser jobs of telling me about what's happening right now. But that's not what an investor needs. What I need - and I recommend for you - is an analysis of what we're going to be facing. That's where George and his team absolutely excel. For at least the next month, the public conversation is going to be completely dominated by the November election and the political maneuvering to address the financial crisis. There will be tremendous drama. There will be dizzying swings back and forth in emotions, expectations, and more than likely the markets. And if you focus on it, you'll miss the real opportunities to position yourself for the emergence....
  • The Russian Resurgence and the New-Old Front

    It's been a hell of a few weeks, so let's start with a little much-needed levity. Two friends, a Trader and an Investor, walk up to the roulette wheel in a casino. They watch a guy hogging the table hit on his first spin. Then his second. Third, boom. Four in a row! The guy has an enormous stack of chips which he lets ride again on a fifth spin. 00. He's wiped out and skulks off to the bar. The two friends are excited because now it's their turn. The Trader says he's going to follow exactly the same pattern as the guy they just watched, BUT he's going to pocket his money after four spins. The Investor tells him to hold off for a minute. He wants to first buy stock in the casino.... Like most good jokes, there's a kernel of truth. When everything is in turmoil, you can't focus on the instances; you have to focus on the underlying foundations. Roulette isn't about guessing red or black; it's about understanding statistics. Today in a Special Outside the Box, we look at some potential problems from Russia that could impact the US and Latin America. It comes from George Friedman's company, Stratfor, the source I rely on for my geopolitical analysis. Peter Zeihan is one of the very sharpest thinkers in George's shop, as you'll see. The basic definition of public capital markets in the US and Europe is fundamentally different than in a country like Russia. If you don't understand the geopolitical lens through which a state views its capital markets, then you're making roulette bets instead of investments....
  • Solzhenitsyn and the Struggle for Russia's Soul

    As we search for "the" driver of financial markets, we look at all kinds of things. We pore over government statistics, company financial statements, and analyst research, trying to find that one nugget that will give us a glimpse of the future. Today, though, we're going to turn to literature. Because it's in Solzhenitsyn's vision of Mother Russia that we find an almost chillingly accurate roadmap of how Russia is likely to reemerge onto the global stage. When President Bush famously looked into Putin's eyes and saw his soul, what he saw - whether he knew it or not - was Solzhenitsyn's depiction of a true Russian leader. Read this obituary essay from my friend George Friedman over at Stratfor. George puts Solzhenitsyn in historical context, using his life and writings to illustrate not just the evolution of the Russian/Soviet/Russian system but also the Western perception of Russia and what it says about future relations. It's uncannily ironic that Solzhenitsyn died just days before Russia forcefully punctuated its geopolitical prominence in going to war with Georgia. You can almost imagine Solzhenitsyn shrugging and asking, "What did you expect?" Over the Labor Day weekend, Russian President Medvedev used a press interview to lay out five points that will define Russian foreign policy going forward. Allow me to translate (loosely) from the Russian: "We're back."...
  • The Real World Order

    Today I'm passing along a piece from George Friedman, Chief Intelligence Officer at Stratfor. He makes the absolutely compelling argument that issues of war and peace follow these same guidelines. There are ebbs and flows, but war between countries is an inevitable part of history, and it's driven by simple geography. The recent war between Russia and Georgia was precisely such a "reversion to the mean," double-entendre fully intended. Navigating financial markets requires an understanding of the geopolitical issues - the war & peace - that drive them. What does this war mean for Russian gas supplies to Europe? What does this war mean for the future of the BTC pipeline? Does this war make Iranian inclusion in global markets more or less likely? Is Russia just "vertically integrating" its control of energy flows with less-than-subtle tools?...
  • A New Step in the Ethanol Revolution?

    Introduction This week in a Special Outside the Box we look at the discussion of alternative energy sources, specifically, ethanol derived from corn or sugarcane. The Stratfor piece discusses the economic implications of ethanol usage; geopolitical ramifications...
  • Serbia's Choice

    Introduction This week's Special Edition of Outside the Box is written by Peter Zeihan and highlights the looming indecisiveness of Serbia's political parties. Going back over the past decade, Kosovo and Serbia used to be a couple of hotspots...
  • MACRO-MARKETS: Gold Trading Boot Camp

    Introduction I probably get as many questions about gold as I do any subject. The fascination with the yellow metal permeates all levels of investors, and opinions can be quite strong. But few are more informed than those of good friend and trader extraordinaire...
  • Two Busted Flushes: The U.S. and Iranian Negotiations

    Introduction This week's special edition of Outside the Box touches on the strained relationship between the U.S. and Iran as the war in Iraq continues to loom. Bush is nearing the end of his tenure as President and is (as well as has been) seeking...
  • Life after Debt - Russia's New Millennium

    Introduction I got a lot of response from my recent letter on South Africa. Today we turn to another emerging market country. Since the late 90's, what country's equity market has performed the best? At first thought, many might say China or India...
  • Russia's Great-Power Strategy

    Introduction Today's special edition Outside the Box discusses the long-term strategy that Russian President Vladimir Putin is setting in place. Stratfor President George Friedman has written an intriguing article on what he sees as some motives,...
  • Russia's Interest in Litvinenko

    Introduction Today's Special Edition of "Outside the Box" by my friends at Stratfor gives us a very insightful analysis or Russia, using the recent poisoning of a former Russian as a jumping off point. George Friedman, President of Stratfor...