Even while here in Tuscany I go on reading my email, albeit at a pace that is somewhat less maniacal than usual. I can't help myself; I find it fascinating to "surf" my emails and other sources. I get several hundred emails a day and about 40-50 that get more than a cursory notice. (I always try to read emails sent to me personally!) Today, for your Outside the Box, I am going to do something rather different. Rather than posting one or two essays, I am going to cut and paste snippets that I have found interesting in the past 24 hours.
There's no theme at all, but this will give you a sense of what I am giving at least passing thought to. While we may have been focused on Europe in my recent writings, I do try to remain aware of the broader world and markets. I still actually read research on the equity markets, and read analysis of various alternative investments and their markets. I have a number of friends who gather information, and when they send me something, even if it's somewhat lengthy, I really do try to read it. And there are so many links to follow and searches to perform. This retreat to Tuscany has made me realize that I need to focus a little less on the immediate and urgent, as fascinating as it is in today's world, and more on the deeper, importantideas.
I am going to force myself to stop at five pages, so I don't know yet how many sources there will be. My Chinese translators are anxiously awaiting this note, even though I am somewhat ahead of my US editor's day here.
I will also go deeper into what I learned this week from the lengthy and stimulating conversations here in Trequanda, and share a few impressions of Italy. The villa is getting somewhat quieter and more relaxed, as there are only a few couples (Rob Arnott and his family, among others) for the next few days; and I have promised Tiffani I will actually leave the villa this week and explore during the day, rather than just making the evening forays to dinner; so there will be even more downtime, which I am finding I need more than I thought I did. And while my partners have all told me to actually take some time off, I am sure they will be glad to see me back in the saddle, which will happen on Monday. Speaking of which, I did go to Siena yesterday to watch that horse race (Il Palio) around the town square. It has been run for over 600 years, and there is an enormous amount of ceremony and pageantry associated with it. Google it.
This morning we saw Newt Gingrich and his wife Callista off. He has been here the last week, along with Neil Howe and David Tice, who brought their daughters (daughters seem to be the general theme this season). Steven Diggle dropped by on a few occasions. Steven ran what ended up being the largest hedge fund in Asia, turning what started out as a few hundred million into more than a few billion, although he modestly says that he simply had a few very good years during the recent crisis, while everyone else lost half (or more). He closed his fund at 'the top' and now runs his own family office. But his range of knowledge and insight is quite broad. He was of particular use in explaining the nuances of Italian football during the Eurocup games.
The conversations ran far into the wee hours most nights and were picked up the following mornings. I actually find such times more relaxing and invigorating than simply 'checking out.' And having a variety of views on numerous topics and subjects from people with widely varying backgrounds has been a real delight. The only downside from the past ten days is that my must-read book list was expanded by about 30 volumes. Listening to Newt and Neil expound on Roman history, a topic about which I realized I have no more than cursory knowledge, has inspired me to try to delve from time to time into the history classics.
So with that, let's jump into my inbox and explore some more or less random notes from today's reading. Again, the only criterion is that it arrived within the last 24 hours – and I promise to stop at around five pages. My comments are italicized or [in brackets].
Your living on Italian country time analyst,
There is the strong possibility that policy makers in the US and UK will not time the transition from the current quantitative easing to a more tightened monetary policy. That is not because they are no competent. It is because the task is very tricky and there is no play book outlining the steps. This is not Tom Landry (former Dallas Cowboy coach) pacing the field with a play for every situation already planned and practiced well in advance.
The odds favor they will either be too late or too early. Getting it "just right." The Goldilocks play, would be more than fortunate. In fact, there may be no right play to call. They may be forced to choose between a slower economy and/or inflation/deflation. And as this week's Outside the Box authors note, there is also the possibility of yet another asset bubble, making the choices even more risky.
Those who are absolutely positive about which of a variety of outcomes will emerge have a level of clairvoyance with which I am not familiar. It makes risk asset (like stocks) investing particularly tricky right now. This is a time to be nimble and avoid creating opportunities for large losses if you are wrong.
We will start this week's OTB with a few paragraphs from the Bank Credit Analyst about the Great Depression and then move on to a piece from the London office of Morgan Stanley on the problems facing central bankers.
And on a less ominous but more important note, the Muscular Dystrophy Association (MDA) has issued a warrant for my arrest which goes into effect on August 26th! I will be held at the PM Lounge in the Joule Hotel from 3-6. My bail is set at $2,400, which will benefit local families living with neuromuscular disease. No one person can set me free. It will take a little help from all of my friends, family, colleagues and enemies! Please use the link below to visit my Bail Page and help me post my bond by contributing in any way that you can. Thank you for having a big heart! And come see me in jail!
And now, the thoughts from BCA.