Let's peel our eyes away from the eurozone disaster momentarily and take a look at another crisis – one with just as much potential to impact our global financial system.
As we've discussed in Outside the Box before, Iran's trump card is not its nuclear capability but rather its opportune location next to the very narrow, very important Strait of Hormuz ... through which no less than 40% of the world's seaborne oil passes.
As the US leaves Iraq, Iran is ready and waiting to fill the void and extend its regional influence. So where's the next turf war? A shaky Syria, where the Iranian-Saudi-US balance of power will continue to play out.
If you haven't been following the newest developing crisis in the Middle East, I recommend you spend some time with this piece by my friend George Friedman, CEO of STRATFOR. I'm also including a great background video from STRATFOR on the history of the Sunni/Shia divide. It's something you hear referenced all the time, but you may not know how it got started ... or what it really means.
If you're interested in more than the infrequent freebie from me, you should consider subscribing to their service. As an OTB reader you get a great discount and a free book when you join. There's nothing quite so enriching as getting a daily dose of what's really going on in the world. It's the intellectual equivalent of a Thanksgiving meal.
Your thinking about the turkey-mashed-potatoes-and-gravy balance of power analyst,
I always look forward the beginning of a new quarter, because it gives me a chance to read STRATFOR's update of their annual forecast, which I shared with you in January. Their quarterly forecast explores developing geopolitical trends in each region of the world. In recent months and quarters I've noticed a much wider recognition in published discussions of "geopolitical risk" as it relates to investments. Of course geopolitical risk is nothing new to my long-time readers who've been plugged into STRATFOR for years.
This Q2 forecast is a long read, but it addresses everything from China's battle with inflation, to Russia's economic opportunity, to the stalemate in Libya's civil war. They do a fantastic, and usually spot-on, job of telling you what to look out for. (And when they aren't spot-on, they're up-front about what they missed and why).
I hope you enjoy the forecast below, and take advantage of STRATFOR's current special offer – a free copy of my book, Endgame, to any of my readers who <<subscribe to their intelligence service here>> at a steeply discounted price. I suggest you check it out.
While the world's attention was (and still is) on the fighting in Libya, George Friedman – founder of a global intelligence company called STRATFOR – told his employees to watch the tiny island of Bahrain. Libya's protests are more violent, but the unrest in Bahrain, he said, will have much stronger strategic implications.
It's easy to look at the news event that makes the most noise (and makes for good television). It's much more critical to pay attention to the event that, depending on its outcome, could disrupt the world economy. If unrest in Bahrain gets out of hand, Saudi Arabia's Shiite minority could follow suit with protests of their own, and the Iranian-Saudi balance in the Persian Gulf could teeter heavily toward Iran. Imagine if Iran fully controlled the area through which 40% of the world's seaborne oil must pass daily. Does Bahrain have your attention now?
You can <<click here to watch a video>> on this very subject from STRATFOR. If you have an older browser, you may not be able to see the video – but in that case you can simply read the transcript below it. I strongly recommend you also follow the link to sign up for their free intelligence reports. Their paid subscription is well worth the investment, but the free product is a good way to get your feet wet.
As you know, I'm an avid researcher when it comes to my own annual forecast, which you saw a couple of weeks ago. One of my favorite resources is STRATFOR, a global intelligence company founded by my friend George Friedman. Their focus is geopolitics, which means they cover political, economic and military developments all around the world. They have an annual forecast of their own, and George has been gracious enough to allow me to share it with you. As long-time OTB readers may know, STRATFOR's annual forecast can be very provocative.
Here are some examples of this year's themes:
- The U.S. is unlikely to withdraw from Iraq as promised in 2011.
- The U.S. economy will grow.
- In Europe, more countries will need bailouts. (A couple of names might surprise you.)
- Russian-German relations will strengthen.
- Japan will rot, but it will rot in seclusion.
Some of you may have seen STRATFOR's forecast if you took advantage of the deal I sent a couple weeks ago. For those that haven't, George's book, The Next Decade, comes out next week, so there's still time to <<buy it here for $16>>, and get a free three-month subscription to STRATFOR. For those of you already enjoying a subscription and wondering about your book: they start shipping next Tuesday. So finish up whatever you're reading now and get ready for a great read.
I've been in this business a long time. Some days it feels like a very long time. But never in all the years that I've been in the financial markets have I felt like business per se has less impact on my investment decisions. Let me explain.
GM shares have gone from being a claim on earnings from car sales to being a call option on whether the US government will extend another lifeline. Banks' capital structures have gone from being the province of Boards of Directors and CFOs to the "expertise" of Congressional committees and appointed regulators. Used to be when I thought about Financial Centers New York and London came to mind. Instead now I have to think about Washington and Brussels.
My friend George Friedman and his team at STRATFOR are where I turn when I need help thinking about these new realities. George's team provides me context and understanding of the environment in which financial developments are going to take place. I may tweak him about his ties, but if you saw George speak at my conference in La Jolla, you know that he's an absolutely compelling speaker. And it's small wonder that his latest book spent those weeks on the New York Times bestseller list too.
Below you'll find STRATFOR's 2Q Forecast. I hope you find it as helpful as I do in formulating my plans. What I can tell you with certainty is that if you're not taking into account the impact of geopolitical events on the markets, it's no different than trading agricultural futures without a weather forecast. George and his team provide their Members - myself included - with forecasts and on-going analysis that's invaluable in understanding the seachange in the global economy. And in exchange for me not teasing him any more, he's offering my readers a special rate on a STRATFOR Membership. Click here to join STRATFOR at this special rate and get access to a full year of the same geopolitical intelligence I use in my strategic planning. You'll be glad you did.
The hottest media topic of the New Year is the Israeli-Palestinian conflict in Gaza. And as I was reading the New York Times on Tuesday, I came across this sentence in one of the articles that was staggeringly truthful and more than a little unsettling in its implications for me as an investor.
"There are other ways to construe the context of this conflict of course. But no matter what, Israel's diplomats know that if journalists are given a choice between covering death and covering context, death wins."
Now, I'm NOT trying to get into a debate about the rights and wrongs of either side, but if you're an investor, and you're trying to make decisions about where this conflict might drive oil prices, for example, then context is everything. And according to the New York Times, if you're relying on journalists for context, forget it.
But you do have an alternative: my friend George Friedman's company, Stratfor, is the unbiased source for insightful analysis of global events. George and his team are all about context - and they provide it without bias or an agenda. If you're my age, you remember "Just the facts, ma'am." Whether it's the conflict in Gaza, the war between Georgia and Russia, or the mayhem and violence in Nigeria, when I need to know how geopolitics is going to hit energy prices, I turn to Stratfor.
I'm including today one of their analyses on the conflict: Iran: Using Oil as a Weapon, But Only Rhetorically. In it, Stratfor showcases its strengths: unbiased analysis--and in this case, of a situation mainstream media has barely even registered. George has kindly arranged a special offer for my readers. Click here, and you'll get 2 years of Membership for the price of 1 for just $349. Plus George is including a free copy of his new book coming out later this month (I'll be reviewing it for you in a couple weeks.)
Your all-about-context analyst,
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 customerâ€”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.
As investors, we have to start looking at the world in a completely different way, and getting our information from different sources. A company's 10-K is almost irrelevant if all it includes is financial statements and market outlooks. What matters now are the "exogenous" factors: government guarantees of the commercial paper market, currency interventions, direct capital infusions, etc. And how does a company describe in its Management Outlook that "Yes, our company is too big to fail."
In this environment, it's more important than ever to read unbiased geopolitical intelligence and analysis of government moves, and that's what my friend George Friedman at Stratfor offers. I'm enclosing below his team's Fourth Quarter Forecast. George's team analyzes US government policy as well as the moves that are being taken by central banks and governments around the world as the private sector gets taken public all across the globe. You will not be able to understand market moves if you don't understand who the real movers are now.
I'm sending you Stratfor's Fourth Quarter Forecast, and I strongly encourage you to join Stratfor and get access to all their daily intelligence. George has arranged a special offer on a Stratfor Membership for my readers: click here to take advantage of this opportunity. In this new era, I use Stratfor daily to give me a wide-lens, global view of politics and economics. I know you'll gain as much from reading Stratfor as I do.
"But this time it's different!!!" Any time you hear that from a financial analyst, you should run. Or better still, take the other side of his trade! If you're numerically oriented, you know that patterns tend to revert to the mean. If you're historically oriented, you know that the more things change, the more they remain the same. Can companies really make money selling a product for less than it costs to make - even in volume? Ask Buffett why he sat out the tech boom....
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?
You may have seen Stratfor quotations recently in the New York Times, Bloomberg, and Barron's. But personally I need more than just snippets. Quite simply, George's team is the best out there, and I encourage you to take advantage of the special offer that George makes available for my readers. The old Cold War is heating up, and this is no time to be without intelligence on what's coming next and analysis of what it means.
Read the analysis below and get a solid reminder that it's not different this time - or any other.
This is a Special Edition of Outside the Box from my friend George Friedman and Stratfor. You've heard me say before that these guys see the world in a different way, but this piece just makes it crystal clear. There are serious rumblings about a major war coming between Israel and its neighbors, and George has put what seems like innocent dots on the board and wonders if there is not a pattern emerging. I am especially looking forward to seeing George and his wife and partner Meredith at my conference this weekend.
The newspapers will do a wonderful job of telling you the bombs started falling yesterday, but that's like trading on yesterday's quotes. George's team is focused on what's coming, and their geopolitical insights are uncannily accurate.
If you've been reading my letters for a while, you know that George has offered a special rate to my readers. George and his colleague Fred Burton both have new books coming out soon, and they've very kindly extended a special offer on a Stratfor membership that includes autographed copies. Like all of us, I hope there's not going to be a new war in Israel, but hope is no more a geopolitical strategy than it is an investment strategy, so I encourage you to stay aware of what's coming by reading Stratfor.
I wouldn't recommend to you - via my emails or at my conference - someone that I didn't feel was the absolute best in the world at providing geopolitical insights to the private sector. If global events shape your investment decisions, and that's everyone these days, you need to complement your financial awareness with geopolitical intelligence. I hope you click here to take advantage of George's very kind offer.
This week in our Special Outside the Box, George Friedman of Stratfor addresses what many believe to be the looming war with Iran, the potential wars' strategic futility, the underlying geopolitical implications, and the inherent threats that abound on account of Iran's defensive measures and offensive capabilities; the latter consisting of terrorist organizations that can harm US interests, be they domestic or foreign.
Stratfor continues to provide insightful and pertinent research on economic and geopolitical events and their respective ramifications. I depend on Stratfor to keep me abreast of such events and strongly recommend it to all wanting knowledgeable, reputable, analytical commentary discerning through the complexity of world affairs. Stratfor continues to generously provide significant savings to readers of Outside the Box who subscribe to their service, for further information please click here.
One of the things I found out in my recent survey of readers is that many of you really like the special Outside the Box I send every now and then from George Friedman and Stratfor. I share your enthusiasm for the really unique world view that George and his team bring to us. This week's special Outside the Box is no exception to the quality and uniqueness of analysis that George brings to us.
I have found it very strange that no government is talking about the air strike that Israel did a few weeks ago into Syria. Why isn't Syria screaming? Israel bragging? Turkey's air space was used. It now seems that there were more than a few planes. Something happened, and as George points out, it is serious. But at what level. This whole thing needs to examined carefully for its implications, but I will let George do that.
I talked with George just before sending this out, and he said that the country that seems the most nervous is Israel. They have scrambled jets several times for simple Syrian helicopters poking their noses up on the border. In his diary that will go out tomorrow George will ask the question "Did Israel get what they went after in Syria?" If they missed it, is that why we see the elevated tension? The secret meetings that are denied but that George's sources know for a fact happened?
Stratfor has been called an independent CIA. They have staff and sources all over the world providing a wealth of information to their clients and readers. It is part of my must read material every morning. If you would like to get his daily reports and access to their extensive web site, you can subscribe at a significant discount by clicking here.
This week in a Special Outside the Box good friend George Friedman addresses the Byzantine geopolitical ramifications of recent three party discussions between the Americans, Iraqis, and Iranians. With no obvious reason to trust one another and a good deal of reasons not to, why are we seeing evidence of more discussions. As George tells it, there is more than meets the eye to these talks. The different parties all strive to extract the most favorable concessions from the Iraq War befitting their respective, and divergent interests; alas, both Iran and the US have come to the realization, albeit belated, that neither party can achieve their objective and the even far more politically grievous realization that no single party can aspire to control or stability in Iraq without the explicit cooperation of all parties, working in unison toward collective initiatives. Further, the risk that everything spins out of control is forcing negotiations among enemies.
This Stratfor piece is an objective, thought provoking assessment of the geopolitical ramifications of the American, Iraqi, Iranian three party talks that will have drastic implications on our political landscape, Middle Eastern stability, and the ubiquitous "War on Terrorism." Stratfor always provides insightful and pertinent research on economic and geopolitical events and their respective ramifications and is my favorite source for geo-political information. Stratfor continues to generously provide significant savings to readers of Outside the Box, for further information please clicking here.
I hope you find this article enlightening and thought provoking.
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 a solution for America's involvement in the Middle East. Diplomats from each country recently met up to begin discussion on the subject.
In his article "Two Busted Flushes: The U.S. and Iranian Negotiations," Stratfor President George Friedman discusses the U.S. / Iran relationship as well as the potential roles of other major world powers like Russia. He goes on to explain the agendas of both governments followed by some possible scenarios that may begin to play out soon.
For those of you unfamiliar with George's company Stratfor, they are a leading information and analytics agency on geopolitical affairs. Kind of what I like to label as a "private CIA" of sorts. George has continued to offer my readers a special discount on his service that can be obtained by clicking through the following link: https://www.stratfor.com/offers/061130-50OFFa/?ref=061130-50OFFa
My hope is that you will continue to find these special editions of Outside the Box to be both a comprehensive and enlightening view on global affairs and geopolitical events.
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, opportunities and scenarios that the Russian leadership faces in a complex set of maneuvers involving the United States and the Middle East.
For those of you unfamiliar with Stratfor, it is the closest thing to a "private CIA" as the organization provides in-depth analysis on geopolitical events spanning the globe. George has continued to offer my readers a special 50% discount off his normal subscription rate. You can receive the offer by clicking here. I have used his service for my views on emerging markets as well as my personal curiosity of global affairs.
I hope you continue to find Stratfor's analysis to be both thought provoking and "outside the box."
Today's Special Edition of "Outside the Box" by my friends at Stratfor gives us a very insightful analysis of the difference between the rhetoric of Iran and the reality of the world they face. George Friedman, President of Stratfor, dispassionately gives us a look at the world from Iran's point of view. Given the reality of today's political climate, it is important to understand what is going on inside a nation that is giving much of the world so many concerns.
Stratfor is the closest thing to a "private CIA" as the organization provides in-depth analysis on geopolitical events spanning the globe. As always, George has decided to give my readers a special 50% discount off his normal subscription rate. You can receive the offer by clicking here. Current readers will soon be getting their 2007 forecast. New subscribers will get it as well.
If you're interested in the mindset of Iran or maybe just want to stay up-to-date on current events of the world, I believe that you will find George's article to be both very insightful and thought provoking.