John Mauldin – Page 2 – The Burning Platform

Paris, Sharm el-Sheikh, and the Resurrection of Old Europe

Outside the Box: Paris, Sharm el-Sheikh, and the Resurrection of Old Europe

By John Mauldin

Soon after the Paris attacks, I picked up the phone to talk over the situation with my friend George Friedman. George is one of the truly world-class thought leaders on geopolitics. We had an animated 20-minute conversation. I didn’t particularly like what I heard.

George thinks we face big difficulties in dealing realistically with the ISIS threat. The more I read—and the more I listen to people like George who have worked these issues for decades—the more I think that we, as a culture, need to face reality.

I asked George to distill his thoughts into a short essay I could publish in Outside the Box, and he agreed.

This is a very thought-provoking piece with a different conclusion—which is what you can always expect from George.

Paris, Sharm el-Sheikh, and the Resurrection of Old Europe

John Mauldin, Editor
Outside the Box[email protected]

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By George Friedman

The attacks in Paris last Friday night were part of a long-term pattern of occasional terrorist attacks by jihadists on targets in Europe. In the European context, this stood out for two reasons. First, the scale of the attack was substantially larger than other attacks in recent years, both in the number of participants and the number of casualties. Second, it was different in the level of sophistication and planning. Securing weapons and explosives, gathering at least three teams, identifying the targets and the manner in which these targets were to be attacked involved fairly complex logistics, intelligence and above all coordination. Most impressive was their counter-intelligence and security. There were at least seven attackers and additional support personnel to secure weapons, gather information and help them hide out in preparation for the attack. No one detected them.

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Thoughts from the Frontline: The Gig Economy Is the New Normal

By John Mauldin

An already-confusing employment environment grew even more complicated this past week. Many readers responded to my “Crime in the Jobs Report” letter with their own stories. Some confirmed what I wrote, while others disputed it. Some of the stories I read from readers who are stuck far from where they want to be in this job market were very moving. I think everyone agrees the labor outlook is uncertain. I sense a lot of nervousness, even from those who have secure jobs that pay well. In today’s letter, I’m going to respond to some of the observations and data that came in this week on employment.

As we will see, we have a right to be nervous. Big changes in the employment world are happening, and we don’t yet know how they will affect us individually. Analysts like me can say we’ll muddle through, but we must remember that not everyone will muddle at the same pace.

We will also take a look today at a growing new phenomenon: the gig economy. (I should note that today’s letter is a little shorter. I am trying to reduce the word length of Thoughts from the Frontline.)

Employers Want Gray Hair

We talked last week about employers’ reluctance to hire older workers. Reader Steve Lange from Denver pointed me to a ZeroHedge article that questions this premise.

If you look at the BLS age breakdown for new jobs (Table A-9), you’ll see that workers aged 55 and over accounted for virtually all of October’s strong gains. That group added 378,000 jobs last month.

Meanwhile, the number of workers aged 25-54 actually declined by 35,000. That’s supposed to be “prime working age,” so any decline should ring alarm bells. And the numbers are more alarming if you are male: men aged 25-54 lost 119,000 jobs in October.

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Inspiration from the World of Sports

Outside the Box: Inspiration from the World of Sports

By John Mauldin

One of the most successful investors in the world is Howard Marks of Oaktree Capital Management. One of the things I look forward to every quarter is the letter he writes to his clients – it goes right to the top of my reading list. Not only is it always full of generally brilliant investment counsel, Howard is also a really great writer. He has an easy style that pulls you through his letter effortlessly.

I have never sent his letter to you as an Outside the Box, as the copies I get are clearly watermarked and copyrighted. So I was surprised and delighted to learn that the letter is free when I listened to a speech by Howard in which he encouraged everyone to get it. Unlike another hundred-billion-dollar hedge fund company that shall go unnamed, Oaktree evidently thinks that brilliance should be shared.

I am especially pleased to be able to pass on this latest issue, in which Howard returns to a theme he has used in the past, which is the parallels between investing and sports. He recounts the career of Yogi Berra, who sadly passed away in September. Yogi was always a fan favorite, and he was certainly one of mine; but it was his consistency, both on offense and defense, that made him great.

Marks goes on to defend the seemingly indefensible: in last year’s Super Bowl, Pete Carroll, coach of the Seattle Seahawks, called for a passing play on the one-yard line as time was running out, which as anyone who watched that game would remember, was one of the most spectacularly unsuccessful decisions of all time. But Howard asks us, “His decision was unsuccessful, but was it wrong?”

Can we judge a career on one play? I am grateful that my investment and writing careers are not judged solely by my many mistakes.

This past weekend at the T3 Conference in Miami was enlightening. Todd Harrison put together a great lineup of speakers who represented a wide range of investment styles and strategies. Perhaps because I have been looking at alternative income strategies in a world of low interest rates, I was particularly intrigued by how investors are finding reasonable yield income. I wrote seven years ago that I thought private credit would become a very large part of the investment spectrum in the future, and it is certainly turning out that way. The whole burgeoning world of “shadow banks” has been an unintended consequence of Dodd-Frank. That overreaching regulation, coupled with enhanced liquidity requirements, has severely limited the ability of small banks to lend. Private-credit funds are being set up to go where banks can’t or won’t, and frankly they have a natural advantage. Their cost of money is lower than banks’, and their overhead is even less. They typically don’t leverage as much as banks do, but they can still produce returns that any bank would be happy with. There is more and more interest in making these investment vehicles more accessible to the public, and I applaud anyone who tries.

Plus, it was just good to see so many friends, then sit by the pool for an afternoon after the conference was over. It was supposed to rain, but we got lucky and caught some sunshine in Florida.

Now I’m back in Dallas and working away on the new book. I am told we have all the volunteer research assistants we need, so if you haven’t contacted us yet, my staff has asked me to suggest that we are full up.

Have a great week, and go to your favorite spot to read and think as you enjoy Howard Marks’ latest memo.

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Breakfast Inflation is Either Wonderful or Terrible

By John Mauldin

By John F. Mauldin, Chairman, Mauldin Economics

Is inflation making breakfast more or less affordable? It depends on what you order.

Recently my Mauldin Economics colleague, Tony Sagami, showed how basic grocery staples are rising in price. His evidence: the Wisconsin Farm Bureau’s semiannual “Marketbasket” survey.

The survey shows prices for a basic grocery list rising 2.7% in the last year.

Not every item rose, however. The full breakdown since last spring is tells us more.

The six-month price changes span a wide range. Eggs jumped 72% and milk dropped 13%. Several other items had double-digit percentage changes.

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Outside the Box: The Financialization of the Economy

By John Mauldin

Roger Bootle once wrote:

The whole of economic life is a mixture of creative and distributive activities. Some of what we ‘‘earn’’ derives from what is created out of nothing and adds to the total available for all to enjoy. But some of it merely takes what would otherwise be available to others and therefore comes at their expense.

Successful societies maximise the creative and minimise the distributive. Societies where everyone can achieve gains only at the expense of others are by definition impoverished. They are also usually intensely violent….

Much of what goes on in financial markets belongs at the distributive end. The gains to one party reflect the losses to another, and the fees and charges racked up are paid by Joe Public, since even if he is not directly involved in the deals, he is indirectly through costs and charges for goods and services.

The genius of the great speculative investors is to see what others do not, or to see it earlier. This is a skill. But so is the ability to stand on tip toe, balancing on one leg, while holding a pot of tea above your head, without spillage. But I am not convinced of the social worth of such a skill.

This distinction between creative and distributive goes some way to explain why the financial sector has become so big in relation to gross domestic product – and why those working in it get paid so much.

Roger Bootle has written several books, notably The Trouble with Markets: Saving Capitalism from Itself.

I came across this quote while reading today’s Outside the Box, which comes from my friend Joan McCullough. She didn’t actually cite it but mentioned Bootle in passing, and I googled him, which took me down an alley full of interesting ideas. I had heard of him, of course, but not really read him, which I think may be a mistake I should correct.

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Thoughts from the Frontline: Someone is Spending Your Pension Money

Thoughts from the Frontline: Someone Is Spending Your Pension Money

By John Mauldin

“Retirement is like a long vacation in Las Vegas. The goal is to enjoy it to the fullest, but not so fully that you run out of money.”

– Jonathan Clements

“In retirement, only money and symptoms are consequential.”

– Mason Cooley

Retirement is every worker’s dream, even if your dream would have you keep doing the work you love. You still want the financial freedom that lets you work for love instead of money.

This is a relatively new dream. The notion of spending the last years of your life in relative relaxation came about only in the last century or two. Before then, the overwhelming number of people had little choice but to work as long as they physically could. Then they died, usually in short order. That’s still how it is in many places in the world.

Retirement is a new phenomenon because it is expensive. Our various labor-saving machines make it possible at least to aspire to having a long, happy retirement. Plenty of us still won’t reach the goal. The data on those who have actually saved enough to maintain their lifestyle without having to work is truly depressing reading. Living on Social Security and possibly income from a reverse mortgage is limited living at best.

In this issue, I’ll build on what we said in the last two weeks on affordable healthcare and potentially longer lifespans. Retirement is not nearly as attractive if all we can look forward to is years of sickness and penury. We are going to talk about the slow-motion train wreck now taking shape in pension funds that is going to put pressure on many people who think they have retirement covered. Please feel free to forward this to those who might be expecting their pension funds to cover them for the next 30 or 40 years. Cutting to the chase, US pension funds are seriously underfunded and may need an extra $10 trillion in 20 years. This is a somewhat controversial letter, but I like to think I’m being realistic. Or at least I’m trying.

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Thoughts from the Frontline: The “Age” Age

By John Mauldin

As I mentioned in last week’s letter, I traveled to San Francisco last Monday with my friend Patrick Cox, who writes our Transformational Technology Alert newsletter. We had dinner with Dr. Mike West of Biotime and then spent the next morning at the Buck Institute for Research on Aging. Pat and I decided we would jointly report on what we learned. He has already written his part, which was published last week. I am going to reproduce portions of that letter, which highlight the conversation with Brian Kennedy and his team at the Buck Institute, and then add my own thoughts about our conversation with Mike West the previous night.

(Note that I am excerpting Patrick’s paid letter, which includes comments on companies in his portfolio, rather than his free weekly Transformational Technologies Tech Digest service. We agreed that it was important to do so in this one case, given the huge significance of the research involved and the Buck Institute’s relationship to it.)

Essentially, we looked at two aspects of aging. The Buck Institute is focused on how to slow down the aging process and reduce the symptoms (such as chronic diseases) that come with aging. Dr. Mike West and his colleagues, as well as a few other firms and researchers, are focused on using our own pluripotent stem cells in ways that would allow us to repair organs in our bodies, thus giving us the opportunity to “grow younger” again. (It’s not quite that simple, as I’ll try to explain later.)

The very good news is that progress is being made. The bad news is that the regulatory environment is impeding progress, as the regulators don’t quite know what to do about the advances that are coming; but even there things may be changing. I recognize this letter will be a little far afield from my usual scribblings on economics and finance, but aging and health are things that concern us all. And if there are a few things you can do to increase your healthspan (not just your lifespan), then the attention you pay to optimizing your health will make all the work you do on your investments even more important and useful. So let’s turn to Pat’s letter, and because I can’t resist, I will insert personal comments in brackets until we get to the end of his letter.

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Thoughts from the Frontline: Unhealthy, Not Wealthy, and Far from Wise

By John Mauldin

“The first wealth is health.”
– Ralph Waldo Emerson

“Man needs difficulties. They are necessary for health.”
– Carl Jung

Decisions, decisions. Many Americans will have to make a big one in the next 60 days or so. How you decide will affect both your health and your wallet. Hospital management and doctors are seeing significant differences in the trends of patient care and are moving to adapt. Some of the changes they implement are going to create significant economic impacts on households and local communities.

In this week’s letter we’re going to take another look at healthcare trends. Healthcare is roughly 20% of the economy and every bit as impactful as the energy and food sectors.

Two years ago this week I wrote “The Road to a New Medical Order” with my friend and personal physician, Dr. Mike Roizen of the Cleveland Clinic. That letter was an attempt to calmly discuss the Obamacare launch and the changes it would bring. Rereading it now, I see that we missed some points but were on target with others. (Mike is the Chief Wellness Officer and head of The Wellness Institute at the Cleveland Clinic. He is one of the premier antiaging doctors of the world. He has sold over 12 million books (including numerous bestsellers), has written 165 peer-reviewed publications, holds 14 patents, and serves on all sorts of FDA committees and boards. His awards are numerous. He has often appeared on the Oprah Winfrey Show with “Dr. Oz.”)

Mike and I have had an ongoing conversation about the changes in the healthcare world, and we visited at length as I was preparing this letter. Some of the changes that are coming are very positive, and others are downright remarkable, creating trends that no one seems to have even guessed at. Others are not so salutary. We’ll examine the great and not so great trends. Plus, I’ll offer some practical healthcare-related personal-finance tips for those of us of a certain generation. I was actually pretty excited to find some of this information, and so I’m going to enjoy passing it on to you. This week’s letter should be fun. Let’s dive right in.

The Changing Healthcare World

We are approaching “open enrollment” time for Medicare, Obamacare, and many employer health insurance plans. You can keep what you have – maybe. You can change plans, too. Should you change? No one really knows. Even if you manage to decipher what a plan does or doesn’t cover and at what cost, the realities of your coverage and costs can change very quickly.

Readers outside the United States often tell me they can’t understand why we tolerate such a dysfunctional health care system and seemingly do our best to make it a little worse each year. I don’t understand, either. There are at least a dozen potential “fixes” to the Affordable Care Act (ACA, aka Obamacare) that 90% on both sides of the political aisle agree on, but there seems to be little willingness on either side to bring up a bill in Congress to accomplish those changes. One side wants to make wholesale changes in the system, and the other side wants no changes unless we go further down the road to a single-payer system.

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Thoughts from the Frontline: Recession Watch

By John Mauldin

“Growth is never by mere chance; it is the result of forces working together.”

– J.C. Penney

“Strength and growth come only through continuous effort and struggle.”

– Napoleon Hill

“We’re lost, but we’re making good time.”

– Yogi Berra, 1925-2015, RIP (For a most moving and memory-laden tribute to Yogi, see The Lefsetz Letter.)

The Yogi Berra quote above, which was brought to my attention this week, seems an apt description of where the markets and the economy are today. Nobody is quite sure where we are or where we’re going, but we all seem to think we’re going to get there soon.

I think it’s pretty much a given that we’re in for a cyclical bear market in the coming quarters. The question is, will it be 1998 or 2001/2007? Will the recovery look V-shaped, or will it drag out? Remember, there is always a recovery. But at the same time, there is always a recession out in front of us; and that fact of life is what makes for long and difficult recoveries, not to mention very deep bear markets.

The problem is that our most reliable indicator for a recession is no longer available to us. The Federal Reserve did a study, which has been replicated. They looked at 26 indicators with regard to their reliability in predicting a recession. There was only one that was accurate all the time, and that was an inverted yield curve of a particular length and depth. Interestingly, it worked almost a year in advance. The inverted yield curve indicator worked very well the last two recessions; but now, with the Federal Reserve holding interest rates at the zero bound, it is simply impossible to get a negative yield curve.

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Thoughts from the Frontline: Balloons in Search of Needles

By John Mauldin

I love waterfalls. I’ve seen some of the world’s best, and they always have an impact. The big ones leave me awestruck at nature’s power. It was about 20 years ago that I did a boat trip on the upper Zambezi, ending at Victoria Falls. Such a placid river, full of game and hippopotamuses (and the occasional croc); and then you begin to hear the roar of the falls from miles away. Unbelievably majestic. From there the Zambezi River turns into a whitewater rafting dream, offering numerous class 5 thrills. Of course, you wouldn’t want to run them without a serious professional at the helm. When you’re looking at an 8-foot-high wall of water in front of you that you are going to have to go up (because it’s in the way); well, let’s just say it’s a rush.

If there were rapids like this in the United States, it’s doubtful professional outfits could get enough liability insurance to make a business of running them. In Zimbabwe we just signed a piece of paper. Our guides swore nobody had ever been lost – well, except for a few people who disobeyed the rules and leaped in the water in the calm sections because it was 100° out. That’s where the crocs are. They promised we wouldn’t run into any in the rapids, which was good. More than a few of us got dumped in the water trying to run the rapids, but they had teams of kayakers who got you out quickly. The canyon below the falls is unbelievable, and below that is the even more impressive Bakota Gorge. And yes, you then had to walk to the top of the canyon up a switchback trail to get home. I would do it all over again in a heartbeat, but I would spend at least three months training for the hike out. That was most definitely not in the full-disclosure-of-risks one-page piece of paper.

It would be hard to miss an analogy to the stock market. Everything’s peaceful and calm, you’re drinking some fabulous wine, eating some fantastic fresh game and fish, looking at all the beautiful animals as you drift easily with the current. Anybody can steer the boat in a bull market. Until the rapids hit and the bottom falls out.

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Thoughts from the Frontline: Merkel Opens the Gates

By John Mauldin

“The European Project has very little economic and political capital left to defend it if anything goes wrong now. As Mr Juncker says, the bell tolls.”
– Ambrose Evans-Pritchard

Perhaps I should issue a storm warning for this letter. Maybe it’s because I had major gum surgery on my entire lower jaw this week and am in a bit of discomfort, but as I read the news coming through my inbox, it’s not helping my mood. This week’s letter will focus on the immigration crisis in Europe – after I muse on what I think is the very disturbing aftermath of this week’s Federal Reserve meeting.

It wasn’t a shock that the Federal Reserve did not raise rates. Even the most inside of insiders said the odds were at most 50-50. Those Wall Street Journal reporters who have an “inside ear” at the Federal Reserve all indicated there would be no rate increase. The IMF and the World Bank were pounding the table, declaring that it was inappropriate to raise rates now, and although most FOMC members give lip service to the fact that Federal Reserve policy is to be based solely on domestic considerations, global concerns may well have played a role in their decision.

What surprised me was the aggressively dovish stance taken by Yellen in her press conference and in the press release. It would have been one thing to come out and say, “We’re not going to raise rates at this meeting, but conditions are getting better, so get ready,” so that the market could have a little certainty. The statement we got instead, combined with early data from the quarter, is making me rethink my entire view on the timing of an interest rate increase.

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Thoughts from the Frontline: Muddling Through Shanghai

By John Mauldin

“He who knows when he can fight and when he cannot, will be victorious.”

– Sun Tzu

A couple of weeks ago I was complaining about 47,000 China reports clogging my e-mail. The number now feels like it is well into six figures (perhaps a slight exaggeration). Maybe my memory is going, but there wasn’t nearly as much China talk on the way up. Funny how that works.

Is China collapsing? I think parts of China are under severe pressure if not outright recession, and clearly the stock market is a disaster. Anyone who bought Shanghai or Shenzhen stocks on margin this year is probably on the brink.

That said, China itself is not collapsing. There are parts of China that are doing just fine, thank you very much. It does have serious problems, though. The Pollyannas and the Cassandras are both wrong. The change in tone in the Financial Times is quite amusing. Their recent hyperbolic, bearish section called “China Tremors” is a case in point. Of the last 30 articles on China on their website, I found less than a handful that were positive on China. My take? China will muddle through, at least for the near term.

China is in transition, a transition that was clearly telegraphed if you have been paying attention. Our recent book on China (A Great Leap Forward?) clearly laid out this new path. Today we are going to talk about this precarious, difficult transition, which may impose profound impacts on much of the rest of the world. This transition is going to change the way global trade has worked in the past. There will be winners and losers.

But first, a brief comment on today’s employment report and how it impacts the need for a rate hike by the Federal Reserve in September. I offer a little different perspective on the coming decision.

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Thoughts from the Frontline: Weapons of Economic Destruction

Thoughts from the Frontline: Weapons of Economic Misdirection

By John Mauldin

“Measurement theory shows that strong assumptions are required for certain statistics to provide meaningful information about reality. Measurement theory encourages people to think about the meaning of their data. It encourages critical assessment of the assumptions behind the analysis.

“In ‘pure’ science, we can form a better, more coherent, and objective picture of the world, based on the information measurement provides. The information allows us to create models of (parts of) the world and formulate laws and theorems. We must then determine (again) by measuring whether these models, hypotheses, theorems, and laws are a valid representation of the world.”

– Gauri Shankar Shrestha

“In science, the term observer effect refers to changes that the act of observation will make on a phenomenon being observed. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner.

“It was, perhaps, the most unusual episode in the long running duel between the two giants of twentieth century economic thought. During World War Two, John Maynard Keynes and Friedrich Hayek spent all night together, alone, on the roof of the chapel of King’s College, Cambridge. Their task was to gaze at the skies and watch for German bombers aiming to pour incendiary bombs upon the picturesque small cities of England….

“Night after night the faculty and students of King’s, armed with shovels, took it in turns to man the roof of the ornate Gothic chapel, whose foundation stone was laid by Henry VI in 1441. The fire watchmen of St. Paul’s Cathedral in London had discovered that there was no recourse against an exploding bomb, but if an incendiary could be tipped over the edge of the parapet before it set fire to the roof, damage could be kept to a minimum. And so Keynes, just short of sixty years old, and Hayek, aged forty-one, sat and waited for the impending German onslaught, their shovels propped against the limestone balustrade. They were joined by a common fear that they would not emerge brave nor nimble enough to save their venerable stone charge.”

– Nicholas Wapshot in Keynes Hayek: The Clash That Defined Modern Economics

“I picked the wrong week to stop sniffing glue.”

– Lloyd Bridges in Airplane!

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True Believers

Guest Post by Jim Kunstler

There is a special species of idiot at large in the financial media space who believe absolutely in the desperate and tragic public relations bullshit that this society churns out to convince itself that the techno-industrial high life can continue indefinitely, despite the mandates of reality — in particular, the fairy tales about oil: we’re cruising to energy independence… the shale oil “miracle” will keep us driving to WalMart forever… our wells doth overflow as if this were Saudi America… don’t worry, be happy…!

Such a true believer is John Mauldin, the investment hustler and writer of the newsletter Thoughts From the Frontline, who called me out for obloquy in his latest edition. After dissing me, he said:

“I have written for years that Peak Oil is nonsense. Longtime readers know that I’m a believer in ever-accelerating technological transformation, but I have to admit I did not see the exponential transformation of the drilling business as it is currently unfolding. The changes are truly breathtaking and have gone largely unnoticed.”

Mauldin is going to be very disappointed when he discovers that the vaunted efficiencies in shale drilling and fracking he’s hyping will only accelerate the depletion of wells which, at best, produce a few hundred barrels of oil a day, and only for the first year, after which they deplete by at least half that rate, and after four years are little better than “stripper” wells. The PR shills at Cambridge Energy Research (Dan Yergin’s propaganda mill for the oil industry) must have pumped a five-gallon jug of Kool-Aid down poor John’s craw. He believes every whopper they spin out — e.g. that “Right now, some US shale operators can break even at $10/barrel.”

The truth is the shale oil industry couldn’t make a profit at $100/barrel. The drilling and fracking boom that began around 2005 was paid for with high-risk, high-yield junk bond financing and other sketchy, poorly collateralized financing. Most of the earnings in the early years of shale oil came from flipping land leases to greater fools. Now that the price of oil has fallen by more than 50 percent in the past year, the prospect dims for that junk financing to be repaid. Since that was “bottom-of-the-barrel” financing, the odds are that the shale producers will have a very hard time finding more borrowed money to keep up the relentless pace of drilling needed to stay ahead of the short depletion rates. They are also running out “sweet spots” that are worth drilling.

Continue reading “True Believers”

Commodity Weakness Persists

Outside the Box: Commodity Weakness Persists

By John Mauldin

In today’s Outside the Box, good friend Gary Shilling gives us deeper insight into the global economic trends that have led to China’s headline-making, market-shaking devaluation of the renminbi. He reminds us that today’s currency moves and lagging growth are the (perhaps inevitable) outcome of China massive expansion of output for many products that started more than a decade ago. China was at the epicenter of a commodity bubble that got underway in 2002, soon after China joined the World Trade Organization.

As manufacturing shifted from North America and Europe to China –with China now consuming more than 40% of annual global output of copper, tin, lead, zinc and other nonferrous metal while stockpiling increased quantities of iron ore, petroleum and other commodities – many thought a permanent commodity boom was here.

Think again, Australia; not so fast, Brazil. Copper prices, for instance, have been cut nearly in half as world growth, and Chinese internal demand, have weakened. Coal is another commodity that is taking a huge hit: China’s imports of coking coal used in steel production are down almost 50% from a year ago, and of course coal is being hammered here in the US, too.

And the litany continues. Grain prices, sugar prices, and – the biggee – oil prices have all cratered in a world where the spectre of deflation has persistently loomed in the lingering shadow of the Great Recession. (They just released grain estimates for the US, and apparently we’re going to be inundated with corn and soybeans. The yield figures are almost staggeringly higher than the highest previous estimates. Very bearish for grain prices.)

Also, most major commodities are priced in dollars; and now, as the US dollar soars and the Fed prepares to turn off the spigot, says Gary, “raw materials are more expensive and therefore less desirable to overseas users as well as foreign investors.” As investors flee commodities in favor of the US dollar and treasuries, there is bound to be a profound shakeout among commodity producers and their markets

See the conclusion of the article for a special offer to OTB readers for Gary Shilling’s INSIGHT. Gary’s letter really does provide exceptional value to his readers and clients. It’s packed with well-reasoned, outside-the-consensus analysis. He has consistently been one of the best investors and analysts out there.

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