The Unintended Empire

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By John Mauldin - December 23rd, 2011, 5:30PM

The Unintended Empire
John Mauldin
December 22, 2011

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A new year is almost upon us, so now seems like a perfect time to step back from the (many) crises at hand and take stock of the big picture. According to my friend & fellow thinker George Friedman, the big picture of the next 10 years is this: America will dominate, and the American president will have to figure out how to act as global emperor without admitting that’s what he is.George’s newest book, The Next Decade, comes out in paperback in January; and he’s graciously agreed to let me send you the first chapter, which backs up the bold statements above. We don’t always agree, but I have to give George credit. He’s an expert at constructing an argument.

If the first chapter whets your appetite, you can <<get a free copy of the book>> when you subscribe to STRATFOR, a geopolitical intelligence company founded and led by George. It is the publication to read if you’re interested in foreign affairs. Plus, OTB readers can get a hefty discount.

Your really glad I’m not a global emperor analyst,

John Mauldin, Editor
Outside the Box

JohnMauldin@2000wave.com

The Unintended Empire

By George Friedman, STRATFOR

The American president is the most important political leader in the world. The reason is simple: he governs a nation whose economic and military policies shape the lives of people in every country on every continent. The president can and does order invasions, embargos, and sanctions. The economic policies he shapes will resonate in billions of lives, perhaps over many generations. During the next decade, who the president is and what he (or she) chooses to do will often affect the lives of non-Americans more than the decisions of their own governments.

This was driven home to me on the night of the most recent U.S. presidential election, when I tried to phone one of my staff in Brussels and reached her at a bar filled with Belgians celebrating Barack Obama’s victory. I later found that such Obama parties had taken place in dozens of cities around the world. People everywhere seemed to feel that the outcome of the American election mattered greatly to them, and many appeared personally moved by Obama’s rise to power.

Before the end of Obama’s first year in office, five Norwegian politicians awarded him the Nobel Peace Prize, to the consternation of many who thought that he had not yet done anything to earn it. But according to the committee’s chair, Obama had immediately and dramatically changed the world’s perception of the United States, and this change alone merited the prize. George W. Bush had been hated because he was seen as an imperialist bully. Obama was being celebrated because he signaled that he would not be an imperialist bully.

From the Nobel Prize committee to the bars of Singapore and São Paolo, what was being unintentionally acknowledged was the uniqueness of the American presidency itself, as well as a new reality that Americans are reluctant to admit. The new American regime mattered so much to the Norwegians and to the Belgians and to the Poles and to the Chileans and to the billions of other people around the globe because the American president is now in the sometimes awkward (and never explicitly stated) role of global emperor, a reality that the world—and the president—will struggle with in the decade to come.

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Succinct summation of week’s events (12.23.11)

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By Peter Boockvar - December 23rd, 2011, 3:00PM

Succinct summation of week’s events:

Positives:

1) ECB lends 489b euros to 523 banks. Weak or healthy, what bank wouldn’t take 1% funding for 3 years?
2) German IFO business confidence unexpectedly rises a touch
3) Multi family construction in the US rises to the most since Sept ’08
4) NAHB index up at best since May ’10 at 21 (though still well below 50)
5) Months supply of new homes for sale falls to lowest since Mar ’06 as absolute # for sale falls to lowest since at least 1963
6) Initial Jobless Claims at 364k, 16k less than expected at lowest since Apr ’08
7) UoM confidence rises to best since June, led by the Outlook. One yr inflation expectations drop to lowest of yr at 3.1% likely due to lowest gasoline prices since Feb
8) Looking ahead, two 3 day weekends in a row for those of us working

Negatives:

1) Italian 10 yr back to 7% as doubts remain with Monti budget
2) Italian consumer confidence at lowest since at least 1996
3) Shanghai index ends the week down for a 6th straight week
4) US Q3 GDP revised down to a punk 1.8% growth, follows 1.3% in Q2 and .4% in Q1
5) Existing Home Sales revised sharply lower back to ’07 but months supply falls to 7.0
6) Non defense cap goods ex aircraft unexpectedly declines, where is the kick start from the 100% 1st yr depreciation expense tax credit expiring next week?
7) MBA said even with mortgage rates falling to 4.08% on avg, a multi decade low, purchase apps fall to 5 week low
8) Nov Spending and Income light, savings rate falls to 3.5%, matching lowest since Dec ’07

HAPPY EVERYTHING!

Powerful Australian Anti-DWI Advert

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By Barry Ritholtz - December 23rd, 2011, 2:00PM

Please be safe this holiday season

Very strong stuff.

On December 10th 1989 the first TAC commercial went to air. In that year the road toll was 776; by last year 2008 it had fallen to 303.
A five minute retrospective of the road safety campaigns produced by the TAC over the last 20 years has been compiled. The montage features iconic scenes and images from commercials that have helped change they way we drive, all edited to the moving song Everybody Hurts by REM.

This campaign is a chance to revisit some of the images that have been engraved on our memories, remember the many thousands of people who have been affected by road trauma and remind us all that for everyones sake; please, drive safely.
Transport Accident Commission Victoria.

http://www.tac.vic.gov.au

Logistics of the Holiday Season

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By Barry Ritholtz - December 23rd, 2011, 1:30PM

full graphic after the jump

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Santa Rally or Grinch in Disguise?

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By Guest Author - December 23rd, 2011, 1:00PM

If the crisis is resolved and the rally is real, then why is it that:

1) Treasury yields in the U.S. are still at panic levels and NOT confirming the collapse in the VIX?

2) Bear sectors (Utilities, Consumer Staples, and Healthcare) are have not significantly underperformed?

3) Bullish Sectors (Technology, Consumer Discretionary) have underperformed?

4) European long bonds yields have NOT budged, with Italy’s 10 year-yield reaching 7% again?

5) Emerging Markets have FAILED to rally in a convincing way

6) Gold and Silver are NOT rallying on a reflation trade

While the whole world is excited about the coming of Santa, be careful that underneath his beard is Mr. Grinch. Market internals are not fully convinced.

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Michael A. Gayed, CFA is Chief Investment Strategist at Pension Partners, where he structures portfolios. Prior to this role, Michael served as a Portfolio Manager for a large international investment group, trading long/short investment ideas in an effort to capture excess returns. In 2007, he launched his own long/short hedge fund, using various trading strategies focused on taking advantage of stock market anomalies. Michael earned his B.S. from New York University, and is a CFA Charterholder.

Shopping Ideas Round Up

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By Barry Ritholtz - December 23rd, 2011, 11:00AM

Those of you who are still shopping — you are fast running out of time. If you order anything online today, you are unlikely to get it shipped in time (and at Best Buy — you may never get it!).

For those of you still with some jingle burning holes in your pockets, have a looksee at our holiday shopping ideas.

Holiday Shopping Ideas!

Holiday Gifts for Traders

More Holiday Shopping Ideas!

Last Minute Holiday Gift Ideas

Thank you for the many kind comments and emails you have sent. I find doing these things a therapeutic break from my usual venom-laden, spittle-soaked missives.

Unlike most people, I still have time to shop — we exchange presents at home on New Year’s Eve. Its a lovely way to ring in the New Year, and avoid the holiday crush as well. One day, I will have to explain the origins of that family tradition. Meanwhile, feel free to send a bauble from this exercise in excess.

Barry Ritholtz’s Outlook for 2012

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By Barry Ritholtz - December 23rd, 2011, 10:30AM

Fusion IQ CEO Barry Ritholz discusses the upcoming election year, the outlook for the U.S. economy and what may be in store for Europe in 2012.

This is the full 11 minute video

12/21/2011 1:36:43 PM

10 Friday AM Reads

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By Barry Ritholtz - December 23rd, 2011, 9:30AM

Some interesting reading material to end your week:

Advice from a financial insider: Spend on season tickets, treasury bills, and charity auctions, not $20M for 4% of the Mets (Mets Online)
• Fed May Signal Low Rates Into 2014 (WSJ) see also Fed’s Once-Secret Data Released to Public (Bloomberg
Tough year: Finance on the Ropes (Businessweek)
• Retailers Are Slashing Prices Ahead of Holiday (NYT) see also Retailers Try to Thwart Price Apps (WSJ)
• Congress’s Inside Dope for Investors (Columbia Journalism Review)
• Muni Bonds: A Disaster That Wasn’t (WSJ) see also Here’s Hoping for More Lousy Forecasts in 2012 (Bloomberg)
• It’s Always Sunny in Silicon Valley (Businessweek)
• Debts Go Bad, Then It Gets Worse (WSJ) see also Consumers Cry Foul Over Debt Collectors (WSJ)
• Is America At A Digital Turning Point? (USC Annenberg)
• The Year in Volcanic Activity (The Atlantic)

Who’s left on your shopping list?

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What Muni Collapse? Is Whitney a One Hit Wonder?

Source: WSJ

Q1 2012 GTAA Presentation: Equities

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By Guest Author - December 23rd, 2011, 8:30AM

The 5th short term tax rebate since ’01 agreed to

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By Peter Boockvar - December 23rd, 2011, 8:22AM

I’m not sure if an agreement in Washington over the payroll tax cut is the reason why the market is looking higher again but to put it in perspective, it’s the 5th short term tax cut/rebate check agreement since 2001. Bush had his in ’01 and ’08 followed by Obama in ’09 and this year and next. As with any short term policy, whether fiscal or monetary, the economy is left back at square 1 when it wears off. Show me one employer that has or will hire someone new because of these 5 rebates. I’m all for getting our hard earned money back from the clutches of DC but we need long term economic thinking and unfortunately it’s a lesson never learned, even following the aftermath of the past 10+ yrs of short term monetary and fiscal largesse. In Europe, Italian consumer confidence in Dec fell to the lowest on record dating back to this survey’s start date in 1996. While little changed today, the Italian 10 yr yield is just 8 bps below 7% as the market has shown little confidence that the fiscal steps taken by the Monti gov’t will have a meaningful impact. In Asia, the Shanghai index rallied for the 1st time this week.

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