Outside the Box, May 2006


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Breaking Point in Iraq

May 29, 2006

As this letter is going out on Memorial Day, our thoughts are with our military that are stationed in harm's way around the world, and especially to those who over the years have sacrificed so that we can live in liberty. In keeping with that theme, last week, I read a very prescient essay by George Friedman of Stratfor.com. George is the closest thing to a private CIA that I know of. His firm does analysis and forecasts of world-wide political and economic trends, in both global and country...

Why Imbalances Matter

May 22, 2006

Two weeks ago in my "Thoughts from the Frontline" E-letter I wrote about trade imbalances. I quoted a significant portion of a speech by Anatole Kaletsky from GaveKal. It was part of a debate he had with Stephen Roach. Last week's "Outside of the Box" contained some very insightful and timely remarks on the current market conditions by the well known economist Stephen Roach.

The team at GaveKal sent me Roach's side of the debate which addresses Anatole's point of view on the subject of trade...

Commodity Bubble and The Dollar Spin

May 15, 2006

We are almost half way through the year and the markets are providing us with plenty of trends and issues which we must take into account. From 6 year market highs to the cooling of the housing market, from the energy bonanza to China's effects upon globalization, there is no shortage of topics of interest in the financial press. But as of late, I have been receiving several questions from my subscribers focusing special attention towards the recent commodity boom and the dollar with respect to...

What We Missed: Japanese Liquidity Flows

May 8, 2006

About a month or so back I wrote about some of my thoughts regarding interest rates and monetary policy being affected by both velocity and the money supply (see When Will the Fed Stop?). In my letter, I highlighted some exceptional research performed by my good friends at GaveKal. Well they have done it again, this time turning their attention towards Japan and the global economy.

Founded in 1999 by Charles and Louis-Vincent Gave and Anatole Kaletsky, GaveKal is a global investment research...

The Calm Before The Storm

May 1, 2006

"The current state of volatility is an indicator of a potentially sharp stock market decline based upon (i) the currently low level of volatility, (ii) the tendency for upward spikes to follow extreme low volatility, (iii) the relationship of market direction to volatility trends, and (iv) the propensity for downside volatility during secular bear markets. Volatility could decline further and could remain low for some time longer; however, based upon history, it has not stayed low without...