Breakfast with Dave
John Mauldin
August 8, 2011
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The question we will ask ourselves in
20 years is, “Where were you when they downgraded the US and the Fed?” This
week’s Outside the Box is from David Rosenberg. He has made his letter public
and graciously given me permission (at 34,000 feet ) to send it to you.
I thought about writing an immediate
response to this weekend’s events but decided to wait and meditate on what has
transpired. Clearly, we are at the beginning of the Endgame. And that saddens
me. The events of the weekend were hotly discussed at the Shadow Fed meeting in
Maine. My youngest son, Trey, was paying attention this year. Last night he said, “Dad, it is good
for you that you are right with your book, but I don’t think it’s good for the
rest of us.” Out of the mouths of babes.
The takeaway here is that this is just
the beginning. We are in for a very bumpy ride. And the flight attendant is
telling me to turn off the computer, so I will hit the send button.
Your sad that he
called this analyst,
John Mauldin, Editor
Outside the Box
JohnMauldin@2000wave.com
Breakfast with Dave
David A. Rosenberg
Chief Economist & Strategist, Gluskin Sheff
WHILE
YOU WERE SLEEPING
As we had suggested in recent weeks, a U.S. downgrade
was going to likely be more negative for the equity market than Treasuries, and
that is exactly how the week is starting off. The reason is that history shows
that downgrades light a fire under policymakers and the belt-tightening budget
cuts ensue, taking a big chunk out of demand growth and hence profits. It is
not just the...
Comments
Brent Leonard
Aug. 10, 2011, 9 a.m.
Thanks for the valuable D.R. insights covering many facets. I look to him as a top seer of fundamental data, but when it comes to Technical, I do my own cooking. I got my CMT in 1995 on Sentiment and write a blog under mktsentiment.blogspot.com. The Inv.Intell. is comprised of Wire House letters which are about 50/50 in accuracy, per Amer Inst. of Econ Res. The AAII (shoe clerks) has been inverted with Bears leading Bulls for over a week. Much more accurate. If we drop below 1100 -Katie bar the door!
BrentLeonard.com
Steve Figliozzi
Aug. 9, 2011, 1:33 p.m.
John,
I read your column as I waited to hear the FOMC statement. (Thanks for access to David’s letter.) As the market reacts to the Feds comments I find myself ever more frustrated and angry as an American at the leadership vacuum in this country, at all levels. Why isn’t the President calling Congress back into session to address these daunting issues? Of course that is a rhetorical question. I’ve been in the financial business for 35 years and seen alot but never thought I would see the incompetence we are exhibiting thru our elected leaders.
The answers to our problems, we all know, are to make the tough decisions that have to be made; adjust the social security and medicare programs to reflect current realities. We are all going to be losers in that solution so lets get on with it.
Fixing this tax system and the getting tort reform are other initiatives as you have stated previously.
I submit that, while these decisions will be tough, those actions will bring confidence back into the markets the likes of which we haven’t seen since post WWII. I also urge you and other financial experts to continue your efforts to educate and influence our elected officials so they will understand “Endgame”, if and when they read it.
Todd Werden
Aug. 9, 2011, 10:20 a.m.
This depressed me, until I realized he is too optimistic. We are in for a bumpy ride, if by “bumpy” you mean “crash and burn”. I think we have gone from kicking the can down the road to picking up the can and throwing it at the other party’s head in Congress & the Senate. Has the whole world gone mad? Does nobody at all understand that everyone can’t get stuff for free from the government? Since when is making people and companies pay taxes that they SHOULD be paying considered a tax INCREASE? Wouldn’t it be better if everyone got a little less and paid a little more than getting nothing at all and paying a lot for it? I could go on but I need a drink….
Nathan Wray
Aug. 9, 2011, 5:41 a.m.
Of course you meant Herbert Stein, not Ben Stein, when you referred to “Herbert Stein’s Law”. http://en.wikipedia.org/wiki/Herbert_Stein