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Economic Analysis

$100 Oil is the Solution

Thoughts from the Frontline

April 1, 2005

How can we go from oil priced in the low teens only a few years ago to oil now holding steady in the mid-50s? This week we have seen a projected price spike of $105 from Goldman Sachs. Can you say $4 a gallon gasoline, boys and girls? $100 to fill up the tank of your SUV? This week we look at the price of oil and why $100 oil is the solution and not the problem.

Since I'm writing this on April 1, I was tempted to start out the letter as an April Fools joke. My topic would have been why...

Bargain Hunter

Outside the Box

March 28, 2005

Once again we look at one of my favorite analysts and behavioral finance thinker, James Montier of Dresdner Kleinwort Wasserstein in London. James wrote a fascinating book two years ago called "Behavioural Finance: A User's Guide" and puts out ongoing research like the one we will enjoy today. Long time readers will recognize the name because I have discussed many of his ideas in my weekly letter "Thoughts From the Frontline," my book "Bull's Eye Investing" and in "Outside the Box."

This report...

Of Bonds & Zombies

Outside the Box

March 21, 2005

This week's research comes once again from the GaveKal Ad Hoc Comment publication, however this piece was done by Anatole Kaletsky, a different analyst than the previous reports we have highlighted. This group is located in Hong Kong and I always find their comments on Asia very insightful.

The report takes a look at some of the structural players in the U.S. bond market and why their actions may be causing the longer term bond rates to stay low. The largest catalyst surprisingly is Japanese...

The New Retirement Model

Thoughts from the Frontline

March 18, 2005

It seems like every week I get a letter from a reader asking questions along the following line: "How can I make a lot of money so I can retire early and/or live the lifestyle I want to live when I do retire?" Most of them are phrased far more eloquently and with accompanying questions and comments, but the bottom line is, "How can I get rich?"

I'm especially touched by the very sincere letters from young people who ask this most basic of questions about accumulating wealth. They are...

Making the Bull’s Case and the Bear’s Case

Outside the Box

March 14, 2005

This week's analysis comes to us from Steve Leuthold of The Leuthold Group. They are located in Minneapolis and put out lots of financial analysis including the monthly Perception for the Professional.

In the publication is Steve's monthly commentary called "View from the North Country" and this month's topic takes a look at the bull and bear arguments for the markets. Bullet points of some of the top arguments for a bull and a bear market are presented followed by Steve's viewpoint on the...

The Trade Deficit End-Game

Thoughts from the Frontline

March 11, 2005

This week we finish with our series on the US trade deficit. When will we see a real problem? What are the likely results from a balancing of global trade? Where are the investment opportunities, and where are the pitfalls? It should make for an interesting conclusion and hopefully an interesting letter.

Let's start this letter by noting that this week is the anniversary of the all- time high of the NASDAQ. Five years ago this week the NASDAQ topped at 5,048. It eventually dropped to...

The Mystery of the Awful Economists

Outside the Box

March 7, 2005

This week's letter comes to use from Barry Ritholtz, Chief Market Strategist of the Maxim Group and a frequent guest on CNBC. I have been reading his commentary for several years and this special report takes a look at the employment numbers.

Ten possible explanations as to why this is the jobless recovery are explored. The first two are the ones most cited by Wall Street economist, but the last eight dig deeper into the data and give us an Outside the Box look at what is going on with the...

Why Trade Deficits Matter

Thoughts from the Frontline

March 4, 2005

We have been looking at the US trade deficit and the global trade imbalance for the past two weeks. It is currently an unsustainable trend, and thus will stop at some point. The questions are when and how? We will conclude this series today, looking at several ways the trade deficit could come back into line.

First, a very quick review. For those who remember, you can skip to the next heading. (And for those who would like to read the previous letters, you can go to www.2000wave.com...

The BoK’s Announcement & the US$

Outside the Box

February 28, 2005

This week we will turn once again to a group headquartered in Hong Kong called GaveKal Research Limited. Louis Vincent Gave's GaveKal Ad Hoc Comments for Wednesday, February 23, 2005 looks at the possible implications of the recent announcement by the Bank of Korea to diversify their holding away from the US dollar.

He uses the term "sterilize" a lot, and it is important to understand this process. Countries sterilize their currency to maintain fixed exchange rates and Investopedia.com defines...

The Dollar as the Old Maid

Thoughts from the Frontline

February 25, 2005

This week we continue to look at the imbalance in global trade and the US trade deficit. What are the ramifications for the dollar? I am going to weave together several different lines of thoughts from analysts all over the world and see if we can see a pattern emerge. While I give a brief synopsis of last week's letter below, for those interested you can read the full letter at http://www.2000wave.com.

As I wrote last week, the first Bretton Woods system came about when...