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  • The Chances of a Double Dip

    I am on a plane (yet again) from Zurich to Mallorca, where I will meet with my European and South American partners, have some fun, and relax before heading to Denmark and London. With the mad rush to finish my book (more on that later) and a hectic schedule this week, I have not had time to write a letter. But never fear, I leave you in the best of hands. Dr. Gary Shilling graciously agreed to condense his September letter, where he looks at the risk of another recession in the US.

    I look forward at the beginning of each month to getting Gary's latest letter. I often print it out and walk away from my desk to spend some quality time reading his thoughts. He is one of my "must-read" analysts. I always learn something quite useful and insightful. I am grateful that he has let me share this with you.

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  • Some Thoughts on Deflation

    The debate over whether we are in for inflation or deflation was alive and well at the Agora Symposium in Vancouver this this week. It seems that not everyone is ready to join the deflation-first, then-inflation camp I am currently resident in. So in this week's letter we look at some of the causes of deflation, the elements of deflation, if you will, and see if they are in ascendancy. For equity investors, this is an important question because, historically, periods of deflation have not been kind to stock markets. Let's come at this week's letter from the side, and see if we can sneak up on some answers.

    Even on the road (and maybe especially on the road, as I get more free time on airplanes) I keep up with my rather large reading habit. This week, the theme in various publications was the lack of available credit for small businesses, with plenty of anecdotal evidence. This goes along with the surveys by the National Federation of Independent Businesses, which continue to show a difficult credit market.

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  • Is This a Recovery?

    Last week I wrote a letter to my kids trying to explain what Greece meant to them. Reader Ken V wrote: 'Great letter, John. Now you should write one for the adults who are retired and don't have the long future your kids do. If the US becomes Greece, things won't recover in time for much of the rest of my life to be more than one grim, dreary period. What is your investment advice for those with roughly a 10 year horizon, not 30-40-50 years?'

    A very good question Ken, and one that was asked more than a few times. So today, I will touch on that thorny issue, as well as look at the employment numbers for what we see about the potential for an actual recovery.

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  • The Glide Path Option

    The present contains all possible futures. But not all futures are good ones. Some can be quite cruel. The one we actually get is dictated by the choices we make. For the last few months I have been addressing the choices in front of us, economically speaking. Today I am going to summarize them, and maybe we can look for some signposts that will tell us which way we are headed as we walk down the path. For those who are new readers and who would like a more in depth analysis, you can go to the archives and search for terms I am writing about. And I will start out briefly touching on today’s ugly unemployment numbers with data you did not get in the mainstream media.

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  • Killing the Goose

    Peggy Noonan, maybe the most gifted essayist of our time, wrote a few weeks ago about the vague concern that many of us have that the current path we are on has the potential (my interpretation) for not just plucking a few feathers from the goose that lays the golden egg (the US free market economy), or taking a few more of the valuable eggs but of actually killing the goose. Today we look at the possibility that the fiscal path of the enormous US government deficits we are on could indeed kill the goose, or harm it so that it will make the lost decades that Japan has suffered seem like a walk in the park.

    And while I do not think we will get to that point (although I can’t deny the possibility) , for reasons I will go into, there is the very real prospect that the upheavals created by not dealing proactively with the problems (or denying they exist) will be as bad as or worse than the credit crisis we have gone through. This is not going to be something that happens overnight, and the seeming return to normalcy that so many predict has the rather alarming aspect of creating a sense of complacency that will only serve to 'kick the can' down the road.

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  • The Statistical Recovery

    A lot of bullish commentators are talking about a recovery being in the works, and they may very well be right. But it is not going to look like any recovery worthy of the name. This week we look at what I will call The Statistical Recovery. But first, we take a look at what China is doing, as we continue our look at the rest of the world and ponder if it is time to brace ourselves for an extended bout of the Muddle Through Economy*. (And yes, there is an asterisk.)

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