[Posted 7:00 AM ET]
Wall Street
As the equity markets slumped for a second straight week after
reaching multi-year highs in the case of the Dow Jones and S&P
500, a number of big issues dominated discussion. First the
current account deficit.
What is this and why do so many make such a big fuss over it?
Simply, it’s a measurement of all capital flows, into and out of
the country, including items such as tourism, and it was
announced this week that the deficit for 2004 was a whopping
$666 billion, a new world record! More importantly, it now
represents about 6.3% of GDP, another high-water mark.
Wasn’t the weaker U.S. dollar supposed to help both this figure
and the U.S. trade deficit, the latter itself $58 billion in the hole
for January? Yes, theoretically, since a weaker dollar makes our
exports cheaper.
So why then isn’t it? The U.S. likes to consume, all manner of
things, and with oil prices at record highs we are importing oil
and other items at levels far exceeding what the rest of the world
is buying with the American label. That’s because while we
have been consuming, consumers in the other nations are saving
and not spending at a rate anywhere near ours. So the weak
dollar hasn’t meant squat despite everything we were told the
past 12 months in particular. In other words, it also doesn’t
really matter where the dollar is trading as long as we spend and
they save.
Sure, the above is grossly simplistic but we like to keep things
that way around here. And one fellow who also can simplify
matters is economist Robert Samuelson. Mr. Samuelson spelled
out some of the risks in an op-ed for the Washington Post (as
well as a more intensive piece for Newsweek).
“What’s the problem? Foreign exporters receive dollars for what
they ship to the United States. If those dollars aren’t reinvested
in American assets – say, U.S. stocks, bonds or Treasury
securities – they’ll be sold on foreign exchange markets for other
currencies: the euro, the yen, the pound. As dollar sales drive
down its value, foreigners note that their existing U.S. stocks and
bonds are worth less in their own currencies. So they may sell
U.S. securities to limit losses. At the end of 2003, foreigners
owned $1.5 trillion in U.S. stocks; widespread sales could trigger
steep market declines.
“The risk is an economic implosion. A sinking stock market
could damage American consumer confidence and spending.
Higher currencies for Europe and Japan could weaken their
export competitiveness. [A higher currency tends to make a
country’s exports more expensive and its imports cheaper.]
Together, the United States, Europe and Japan are half the global
economy. If they went into recession, other countries might
follow.”
But going back to the $600 billion plus current account deficit,
Ethan Harris, chief economist at Lehman Brothers, called the
numbers “abysmal.”
“The counterpart to this is that we’re asking foreigners, ‘Don’t
just lend us $600 billion this year. We’re asking for $700
billion.’ So it creates this funding problem. Maybe they love to
give us $300 billion or $400 billion, but you’re really stretching
the boundaries.” [USA Today]
But all was not gloomy this week. The Treasury Department
reported that foreigners purchased a net $91 billion in U.S.
securities in January, the largest monthly total since May 2003
and far higher than the $58 billion trade deficit for the same
month.
So is a currency crisis in the cards or not? It is, in 2006 as I’ve
been writing, but how it will occur is anyone’s guess. It may not
be as Samuelson describes above and I’ve been noting recently
that it could easily come about for political reasons. Take China,
for example.
Washington and Beijing will have a major tiff, most likely over
the fate of Taiwan, and on top of any military mischief China
could use its dollar reserves to hit us hard, roiling the currency
markets. As I’ve said before, yes, this would also hurt China as
U.S. consumers pulled in their horns and didn’t buy as many
Chinese goods, but for reasons of “nationalism” and protecting
its communist roots, Beijing may opt to take that risk. Just one
man’s opinion, you understand.
And while we’re talking about China and currencies, I have also
written that should China finally decide to float the yuan, or
“reform” it as some Chinese leaders have been saying; it won’t
necessarily equate to a boon for the U.S. Economists Frank and
Dan Newman spelled it out this week in an op-ed for the Wall
Street Journal.
“Stronger Asian currencies would be no more likely to
significantly reduce the trade deficit, given the large differences
in wage costs. American manufacturers might find that a 20%
decline in the dollar wouldn’t lead them to switch purchase of
parts from Asian to U.S. suppliers, if the ones from Asia cost
40% less today. The cost of U.S. imports, and U.S. exports using
those same parts, would just rise.”
Finally, on this whole topic in general, how does it all play into
the federal budget deficit? If we have a crisis, the U.S. won’t be
able to spend its way out of it. As Ross Perot would say, it’s just
that simple.
That’s enough of this for now. Here’s another issue. More
corporate malfeasance amidst soaring profits.
First, there was the conviction of former WorldCom CEO Bernie
Ebbers on all nine counts of conspiracy and securities fraud; a
great day for the rest of us, albeit a bittersweet one if you were a
victim of his. We hope Mr. Ebbers spends his remaining years
rotting in some dank hole, eating weeds. [I’m assuming we can
‘render’ him to Cuba if we so desire.]
But at the same time, J.P. Morgan Chase was coughing up $2
billion in penalties for its role in underwriting WorldCom bonds,
2000-01. The total take on this end is now $6 billion. [11 former
WorldCom directors are also kicking in $20 million in a
controversial settlement on that end.]
And throw in another instance of abuse in the telecom industry as
the SEC sued former Qwest CEO Joseph Nacchio and eight of
his underlings for his company’s “massive financial fraud”
during the Bubble. All of the above even as Wall Street firms
reported record profits thanks to surging mergers and
acquisitions activity and trading gains from both bonds and
equities at most shops. But wait, there’s more.
The government is alleging further instances where mortgage
giant Fannie Mae may have cooked the books, following
discovery of falsified signatures on various reports. [Wall Street
Journal] As I’ve been writing this means one thing. We still
don’t have a clue as to Fannie’s true financial condition. It’s
target #1 in my accounting ‘accident’ scenario that could send us
all crashing to the floor.
And then you have AIG. New York Attorney General Eliot
Spitzer has worked his magic yet again, forcing longtime CEO
Hank Greenberg to give up his perch amidst a growing
investigation into some of AIG’s insurance products.
Oh, but all manner of Wall Street apologists rushed to defend
Greenberg and his company. He is a captain of industry, after
all, a la Sandy Weill. Yet look where the stock ended up on the
week. [$59.75…off its 52-week high of $77.] You know why?
Because a few smart folks are catching on to the fact this story
has legs. There could be a major restatement of AIG’s earnings
down the road, I imagine. I wonder what they’ll say of Hank
Greenberg then?
But now let’s switch gears again and turn to energy.
OPEC has opted to raise its production quota from 27 to 27.5
million barrels per day (ex-Iraq which is producing roughly
another 2mmbd) in a meager attempt to reduce oil prices.
[OPEC is currently estimated to be producing 27.2mmbd.] But
while I have argued the price of oil (now $56) is way out of
whack, especially when one considers U.S. inventories of both
oil and gasoline are 8-11% above a year ago levels, and that it is
speculators and hedge funds fueling the price rise, I also cannot
dispute the fundamentals on supply and demand. There simply is
little spare capacity (including on the refinery front) and there is
every reason to believe that if the global economy continues to
chug along, demand will be greater than supply at some point in
the not too distant future, like next winter.
At least the U.S. Senate took a small step in addressing future
needs by finally approving drilling in the Arctic National
Wildlife Refuge, something I’ve long called for. True, this is far
from a panacea, and for starters we won’t see any actual oil from
the region for 7-10 years, but it’s further insurance against supply
disruptions and reliance on OPEC (including our ornery
neighbor, and key supplier, Venezuela).
Of course ANWR needs to be but one piece of a broad-based
national energy policy that includes innovation away from crude
oil, but us Americans have no one but ourselves to blame for the
predicament we’re in; both from the standpoint of our own
wasteful habits as well as the inability to get our elected officials
to sit down and come up with a comprehensive program once
and for all.
Lastly, there is a disturbing development going on in Asia’s
shipping lanes, including the critical Malacca Strait I visited last
spring. Piracy is on the rise and last week, for example, 35
pirates with rocket launchers boarded an Indonesian gas tanker,
taking the captain and chief engineer hostage for ransom. But
should a tanker be sunk in one or two critical spots in this narrow
body of water it could shut down virtually all the oil and gas
shipments for not just Asia but also the west coast of the U.S.
And the Philippine government weighed in that it, too, has learned
of plans from various terrorist groups to target shipping.
Street Bytes
–It was the second straight sloppy week for equities as the Dow
Jones lost 1.3% to close at 10629. The S&P 500 retreated 0.9%
to the 1189 level and Nasdaq now sits at its lowest level of the
year, 2007, off another 1.7%.
–U.S. Treasury Yields
6-mo. 3.10% 2-yr. 3.70% 10-yr. 4.50% 30-yr. 4.81%
The Federal Reserve meets next week. I’ll go with another 25
basis point hike in rates, but as to the language accompanying the
move your guess is as good as mine whether they’ll choose this
meeting or May’s to remove the “measured” pace wording.
That’s the real key for the bond market. One thing the Fed will
have before making its decision is the latest data on producer and
consumer prices before the rest of us get it.
As for this past week’s economic releases, the most recent
readings on industrial production and retail sales were solid, if
unspectacular, while housing starts were stronger than expected.
Interest rates were little changed on the week after the previous
week’s sharp spike upward.
–The Los Angeles Times had a good story on China’s GDP
figures, long suspected by some of us to be, shall we say,
calculated on the back of a beer coaster. But while I’ve
considered competition between various cities as a factor before,
the Times piece noted that Beijing is increasingly concerned that
the numbers being supplied them by local authorities are simply
fictitious. It’s certainly a way to curry favor when you’re a
relatively low-level bureaucrat who has a chance to help make
his boss look good.
–According to PFC Energy consulting firm, at least OPEC is
spending some of its oil dollars as imports from the 11 members
are estimated to have hit a record in 2004, up 13% over ’03 to
$220 billion. Exports, principally of oil and natural gas, soared
$79 billion over the same period to $316 billion. [Wall Street
Journal] Well, it’s a start. In 1979, after oil prices had doubled,
OPEC’s imports from industrial countries actually fell.
–It appears that the Gazprom-Rosneft merger will be completed
after a lot of infighting between the executives running both
companies and the Kremlin, though Rosneft is now setting its
sights on stealing more of Yukos’ assets as it’s filed a suit for
$11 billion against the one-time giant. But in an item that
received little press, authorities in Spain say that some Yukos
officials (unnamed as yet) were involved in the largest money-
laundering operation ever on the continent. Funds were either
siphoned off or diverted through various Spanish locales known
for harboring such activity.
–In a huge, positive development (we needed one this week), the
National Institute of Health announced that Genentech’s Avastin
drug prolongs the lives of lung cancer patients. Thus far it has
been used in the treatment of colon cancer. Shares in Genentech
soared over 20% on the news.
–Back on 2/26/05, I wrote in this space “Toyota will be building
two new plants in the U.S. by the end of the decade. With GM
and Ford’s huge pension and healthcare costs, does Toyota’s
move help spell the death knell for two of Detroit’s Big Three?
It’s down the road, but I think so.” GM, in particular, despite a
large current cash hoard, has healthcare expenses in excess of $5
billion annually. [Under the labor agreements, retirees do not
pay a cent for their own healthcare.]
So this week GM announced it was drastically lowering its
earnings forecast for 2005 and its bonds are one notch above
junk status. In the next recession, this company is capable of
losing humongous amounts of money.
–The Wall Street Journal reported that J.P Morgan Chase’s $2
billion penalty in the WorldCom case wiped out six years of fees
on investment-grade bond underwriting.
–A few tidbits on the real estate front. Jon Birger of Money
magazine wrote of the Las Vegas market and the wild
speculation going on there, as 7% of all homes sold in 2004 were
owned less than six months, just your basic “flipping.”
[The anecdotal stories in Florida are similar. Some very shrewd
investors are making a fortune flipping new condos as they come
on the market. The only question is who will be the last one
holding the properties when we hit the peak?]
And in Southern California, despite signs in some areas of recent
moderation (the actual level of home sales is falling), year-over-
year the appreciation figures are still staggering, with the median
price in ‘Southland’ up 21%…17% in Orange County,
specifically. [Los Angeles Times]
Finally, in New Jersey, it’s amazing how many year-round shore
residents are selling out as real estate along the coast (the second-
home market in this case) has doubled in four years.
–An international real estate note; Las Vegas Sands announced
another $1.8 billion project for the China gambling mecca of
Macau. With exploding traffic from the mainland as China builds
a middle class, it is estimated that in 10 years Macau will draw
40 million tourists a year vs. last year’s 17 million.
–Disney’s Michael Eisner is being forced out a year earlier than
initially thought, on 9/30, with Bob Iger replacing him. Meg
Whitman, eBay’s current CEO, evidently was in the running for
the top slot here; Ms. Whitman recognizing eBay’s best days are
behind it.
–The Port of NY / NJ handled a record $110 billion in cargo last
year. Hope it’s all monitored. [It isn’t, but they’ve made some
good strides towards that end.]
–A Senate report revealed that the money-laundering activities
of former Chilean strongman Augusto Pinochet exceeded $15
million and extended beyond Riggs National Bank to Citigroup,
with Pinochet family members being granted lines of credit and
help in setting up offshore holding companies. Citigroup
counters the accounts were shut down 10 years ago.
–But it was the Federal Reserve that really came down hard on
Citi, saying it cannot pursue any major acquisitions until it cleans
up its own house first, citing numerous ethical lapses including
the Parmalat dairy scandal in Europe as well as various trading
abuses.
[And to top it all off, a former head of emerging markets at
Citigroup, Victor Menezes, is facing insider trading charges
going back to the days of the Argentina debt crisis. All part of
Sandy Weill’s legacy.]
–Georgia, Illinois and North Dakota are considering legalizing
online gambling despite a 1961 federal law prohibiting use of
‘telephones’ to place sports bets. [This obviously needs to be
updated, don’t you think?] And across the pond, Britain’s
parliament is expected to allow 137 land-based casinos to take
online wagers from U.S. citizens. Americans bet some $200
million on online poker daily. For the entire NCAA basketball
tournament, the estimate is $1- $1.5 billion, double that of the
Super Bowl. [USA Today]
–The only mutual fund offering I have ever recommended is the
PIMCO Total Return Fund managed by Bill Gross. But back
when I was at PIMCO, one of the money managers I had the
pleasure of working with was NFJ out of Dallas, TX, a PIMCO
subsidiary. So I was pleased to see principals Ben Fischer and
Cliff Hoover featured in the 3/14 issue of Barron’s. They are a
class act.
–Michael Wines had a terrific story in the New York Times on
the impact the falling dollar has had on textile exports from some
African nations such as Lesotho. The very people we sought to
help with trade agreements are now suffering. It’s sad, because
in Lesotho’s case it has a squeaky clean record on human rights
and the issue of sweatshops, yet of course it’s losing out to the
likes of China.
–Toys ‘R’ Us is being bought out by the triumvirate KKR, Bain
Capital and Vornado Realty Trust. Like similar acquisitions by
the revamped Kmart Holdings, the new investors are eyeing
Toys’ vast real estate interests, many owned free and clear.
–Did you know that frequent flyers have accumulated 9 trillion
miles, enough for 36 million free tickets? [NY Times] Of course
the airlines are making it increasingly difficult to obtain your
rewards.
–Harry Stonecipher’s wife filed for divorce after 50 years,
following the revelation that the disgraced Boeing CEO was
messing around with a female Boeing executive.
–Now that new U.S. food guidelines recommend whole grains,
sales of wheat breads were up 7% in 2004 and that of brown rice
a whopping 18%. I’m heading out back to build a rice paddy.
–Members of the NYSE are in an uproar over the pay packages
accorded co-#2s Robert Britz and Catherine Kinney, both of
whom received a cool $1.95 million in 2004 despite the tough
times at the Exchange. Of course in the case of Ms. Kinney, I
fail to see just what she does except when she appears at the
closing bell with her guests you can see her mouth “You hit it so
hard!”
–My portfolio: I sold out of the final software play out of three I
initially purchased about a year ago. Two ended up being
substantial losers (including this one), the other a decent winner.
Not a good experience, sports fans. And I sold another small guy
in which I broke even. So I’m down to roughly 15% equities,
85% cash. I have two major positions left, an oil stock and a
carbon fiber play. Plus I still have some crappola, as Archie
Bunker would say.
Foreign Affairs
Iraq: No doubt it’s been disappointing that little has transpired in
the formation of a new government since the January 30 vote.
The schedule the rest of the year is daunting as initially it was
hoped a referendum on a new constitution would be held in
October with general elections for a permanent government in
December. Instead, this week the 275 members of the interim
national assembly met to congratulate each other on their new
positions and then adjourned without setting a firm date to
reconvene. However, on Friday both Shia and Kurdish leaders
said progress was being made and Iraq’s new leadership structure
would be announced next week.
The biggest issue of the moment concerns the Kurds, the Kurdish
fighters and oil-rich Kirkuk. Back in the 1960s, Saddam’s
Baathists expelled the Kurds from Kirkuk and they have been
returning since his fall to reclaim their property. So you can
imagine the chaos that’s leading to. As for the militia, it should
be dismantled…but highly unlikely.
Despite the problems, in the latest survey of the Iraqi people, by
a 62 / 23 margin they believe the country is headed in the right
direction. It was 42 / 45 last September.
[By comparison, in a Washington Post / ABC News poll, 56% of
Americans are confident the Iraqis can create a stable
government. But here’s what drives me crazy. 53% said the war
was not worth fighting and 70% said the casualties were
unacceptable. In other words, the majority still doesn’t get the
point of it all; that a stable government in Iraq will help
transform the entire region and that the war (and the human toll)
would indeed be worth it if this proves to be the case.]
Separately, the Bush administration has to deal with Italy and
Bulgaria being the latest to abandon the coalition and in both
cases it is friendly fire incidents that tipped the leaders into the
exit camp. Frankly, in the case of Italy’s Prime Minister
Berlusconi he has given us as much support as we could have
possibly hoped for and is to be admired.
But in another case of Abu Ghraib-like news that does the cause
zero good, U.S. Army and Navy investigators have identified 26
prisoners in Iraq and Afghanistan who died in U.S. custody; most
likely meeting their fate as a result of criminal homicide.
Syria / Lebanon: The pro-democracy forces trumped Hizbollah’s
demonstration of two weeks ago in turning out their own rally of
at least 800,000. What exhilarating pictures the scene in Beirut
made for. The White House continues to desire to steer
Hizbollah into politics and away from terror and as I noted last
week, President Bush doesn’t want to pick a fight before the May
elections in Lebanon. [For his part, Hizbollah’s Sheikh
Nasrallah is refusing to disarm his militia, Bush’s ultimate goal.]
Meanwhile, UN Secretary General Kofi Annan told Syrian
President Bashar Assad that Syria’s troop withdrawal must be
completed before the vote. Then on Friday, France, Germany,
Russia and Spain piled on. Assad is frantically trying to
consolidate his power before he is forced out.
Iran: Secretary of State Condoleezza Rice said over the weekend
the U.S. was adamant it was choosing the diplomatic path in
working with our European allies to get Iran to back down on its
quest for nuclear weapons. Of course Iran has no such plans as
it’s just months away from having the bomb, in my opinion, and
this week Ukraine reiterated it had sold 12 long-range, nuclear-
capable cruise missiles to Iran a few years ago (as well as the six
to China). [Why this was treated as a ‘new’ story on Friday I’ll
never know. We had it here at least two weeks ago.]
China: The government continues to jerk the United States
around, using North Korea, Taiwan and its flourishing
relationship with Iran on both the energy and weapons fronts to
make Washington’s job that much more difficult. But let’s look
at Premier Wen Jiabao’s comments at a news conference this
week.
When asked by a U.S. reporter whether China’s increased
military spending would enable it to win a war against Taiwan,
Mr. Wen said: “We have pursued a defensive military strategy.
If you compare China’s military spending with that of the U.S.,
we are lagging far behind.” [So why then do you have over 600
missiles targeting Taiwan?]
But then Wen said: “In the past hundred years the Chinese
people were subjected to bullying and humiliation, but to date we
haven’t sent any army to invade even an inch of another
country.”
You know, that’s pretty good propaganda, I have to admit, and
clearly directed at not just the United States, but primarily Japan.
So Wen weighed in on the new Japan / U.S. alliance for the
region’s security and Japan’s intention to help protect Taiwan.
“We in China are concerned because it touches on the question
of Taiwan….Taiwan is China’s internal affair and it brooks no
direct or indirect interference by any foreign forces.”
Then Wen discussed the pipeline project between Russia and
Japan, at least that’s what it was supposed to be before Russia
gave into pressure from Beijing to add a line to the mainland.
“The Russian government and President Putin have made it very
clear that first consideration will be given to China when they
build the pipeline.”
That’s not how I remember it, but then I wasn’t there. [Sources:
South China Morning Post / Financial Times]
The Wall Street Journal’s George Melloan wrote this week of the
increasingly restive population in China, particularly when it
comes to issues of corruption “and trespasses against their legal
rights.” It’s the old game of rising expectations, you could say,
and the peasants are ticked off. As Melloan added, the situation
is reaching the boiling point, which means the Communists have
to come up with the right level of reforms, quickly, before the lid
is blown off.
Which bring me to my last point, a favorite of mine when it
comes to China. As noted above, it will play the “nationalism”
card when the leaders’ backs are up against the wall, on this you
can be certain. That’s when Taiwan goes down, and the U.S.
dollar gets crushed. But I also used to think China had to wait
until after the 2008 Olympics. I no longer believe that. 2006
would give them plenty of time to get back into the good graces
of the vast majority of its trading partners. Heck, it would be
more like 3 or 4 months.
Israel: Hamas, Islamic Jihad and other Palestinian terrorist
groups announced a conditional truce or “calm,” as they put it, as
long as Israel releases more prisoners and withdraws its military
from key areas. Hamas also said it will take part in Palestinian
legislative elections slated for July, a victory for President
Mahmoud Abbas.
Israeli Prime Minister Ariel Sharon called it a positive step but
adds the militias must still disarm. On the issue of Hizbollah,
though, Sharon is warning the European Union not to divide it
into political and military wings, thus making the organization
legitimate.
But as I noted earlier, President Bush is taking the stance of
France and Spain on the above matter. In a meeting with
Jordan’s King Abdullah, Bush said “We view Hizbollah as a
terrorist organization. (But) I would hope that Hizbollah would
prove that they are not by laying down arms and not threatening
peace.” [Jerusalem Post]
Russia: The world’s leading chess player, Garry Kasparov,
announced he is quitting the sport to go into politics and “fight
Putin’s dictatorship.” Kasparov is far from universally liked,
even among the reform set in Russia, but he makes for good copy
and has some thoughtful ideas as I’ll show later in “random
musings.” Meanwhile, one of Boris Yeltsin’s leaders in his
privatization drive, Anatoly Chubais, miraculously escaped an
assassination attempt. Chubais is not a popular figure either due
to his role in feeding corruption and today he heads the state-
owned electricity monopoly.
There were also some poll numbers to report. The Duma has a
64% disapproval rating, its worst such number since surveys
were first conducted in 1995. And, on the 20th anniversary of
Mikhail Gorbachev’s ascension to power (time flies, doesn’t it?),
56% of Russians think the changes under his leadership led to
mainly negative results, while only 22% approve. [Moscow
Times]
Finally, there is growing talk Vladimir Putin will opt to go
against the constitution and run for a 3rd term in 2008. Back on
3/20/04 in this space I wrote the following after Putin had been
reelected.
“But now we focus on parliament as there will undoubtedly be an
attempt at some point to allow Putin a 3rd term in another four
years. He has said he has no interest, but I doubt this.”
Putin will attempt to assuage Western criticism when the right
time comes by claiming Russia is in danger of falling under the
control of an ultra-nationalist unless he is there to save the
nation.
India / Pakistan: As Secretary of State Rice tours the region, the
U.S. now desires to sell F-16s to both India and Pakistan; to the
former to begin tapping into a huge potential market, and to the
latter as a reward for Pakistan’s support post-9/11. I don’t
necessarily have a problem with this, but one must understand
the United States is guilty of a double standard in wanting to sell
advanced weapons to two nuclear powers while scolding Europe
for its own desire to lift the arms embargo on China.
Venezuela: Finally, President Bush has requested a report on
how best to contain President Hugo Chavez, as El Loco fans the
flames of anti-Americanism in Latin America.
Britain: As Tony Blair runs for reelection, and despite his own
attempt to focus on the terror threat, to the British people crime
has become the #1 issue and while Blair will win the race, he is
being hurt by soaring crime rates. For example, muggings and
assaults in London are up 37% in one year, though it doesn’t help
that London has a worthless mayor in Ken Livingstone.
Random Musings
–House Majority Leader Tom DeLay’s ethics problems are
clearly snowballing. I’ve been a supporter of his in the past (and
no one writes better speeches, incidentally), yet to this
Republican he is simply corrupt.
–In the latest poll on the president’s Social Security proposal,
only 35% approve of his handling of the issue. [Washington
Post / ABC News]
–Condoleezza Rice told the Sunday talk shows she was not
running for president in 2008. She will be.
–Bird flu broke out at a large chicken plant in Pyongyang, North
Korea, killing thousands of birds. Meanwhile, researchers
believe the threat of the virus mutating is far greater than
currently thought because authorities in Laos and Cambodia
appear to be drastically underreporting their own cases.
–OK…here’s the deal. Nothing frustrates me more than the
spelling of some key names. In the past the press couldn’t seem
to decide on Yassir, Yasir, or Yasser. Now it’s Hizbollah. Or
rather, Hezbollah, or Hizbullah (Jerusalem Post, Newsweek), or
Hizballah (CIA). But except in the three cited exceptions, it
would appear I didn’t receive the memo last week from all the
other news organizations that Hezbollah is once again the
accepted choice. Well, I have used Hizbollah as much as
Hezbollah over the years and it’s important for one reason….my
archives. So now I don’t know what to do. I’d use the CIA’s
spelling, but since no one else does I’d feel compelled to explain
myself every week. I need a beer.
–At first I thought the congressional hearings into baseball’s
steroid problem would be a farce, but while few congressmen
asked hard questions this week, and while good answers were not
forthcoming from the athletes or baseball’s management
hierarchy, the process served a worthy purpose in shining a
spotlight on the sport’s many hypocrites. I, for one, thought I
understood the new drug policy but it was Congress that dug
down and realized players would not necessarily be suspended
with the first offense as we were led to believe by Major League
Baseball. So now we finally have Commissioner Bud Selig on
record as saying he would, indeed, suspend a first-time offender.
That’s good.
But what was truly pitiful was watching Mark McGwire
stonewall. “I’m not here to talk about the past” he repeatedly
said in declining to comment on his own steroid use. As the
New York Times’ George Vecsey wrote “a man once hailed as a
hero and a role model has become a sudden hunk of aged and
post-verbal sadness…McGwire became as open to parody as
gangland dons who in the past regretted that they could not
respond to questions.” McGwire may yet be elected to
Baseball’s Hall of Fame but it won’t be in his first year of
eligibility as once commonly accepted, of this I’m certain.
–Big victory in the war against gangs as the Feds cracked the
notorious MS-13 organization (Central American roots),
arresting 103 in a nationwide operation. Meanwhile, the
Gangster Disciples and the Vice Lords had a rumble at a state
basketball tournament in Chicago. Just put these guys in prison
for life and be done with it. 95% of them would never make a
positive contribution to society anyway.
–Former Connecticut Governor John Rowland was sentenced to
one year in prison for his conviction on corruption charges.
What a fraud this guy was.
–Actor Robert Blake was acquitted of murder, meaning Blake
and O.J. can now share a game of golf.
–Just when you think you’ve heard everything when it comes to
former New York City Police Commissioner Bernard Kerik,
there was a story this week that Kerik received $76,000 in
royalties for writing an 11-sentence intro to a book for the Police
& Fire, Widows & Children’s Benefit Fund, negotiated while he
was sleeping with the book’s publisher. [But a man I’ve
criticized in the past, former Fire Commissioner Thomas Van
Essen, wrote his intro and took zero money.] I can’t decide if
Kerik is a “dirtball” or “slimeball.” Rules say you can only be
one or the other. We’ll go with slimeball.
–According to Bloomberg News, there are 15 applicants for
every spot available in Manhattan’s 200 preschools. By
comparison, Harvard receives 11 applicants for each of its slots.
You’ll recall it was Citigroup’s telecom analyst Jack Grubman
who was so concerned about getting his own kids into a
preschool he had Chairman Sandy Weill write a letter of
recommendation, in exchange for Grubman issuing a favorable
rating on AT&T shares back during the Bubble.
–The aforementioned Garry Kasparov had an interesting
observation in an op-ed for the Journal.
“…the topic of intuition is intriguing. When I analyzed an 1894
world championship game between Lasker and Wilhelm Steinitz,
I also looked at their post-game analysis and the comments of
other top players of the day. They all made more mistakes in
analysis than the players had made during the game! The
intuitive decisions of the players during the game were correct in
most cases, and more often so than when they had all the time in
the world to analyze later.”
Always go with your gut.
–For the first time in the 108-year history of the New Jersey
Audubon Society, it is recommending my home state drastically
reduce the white-tailed deer population that currently stands at
200,000. From the Star-Ledger:
“In the report, the Audubon Society underscores the voracious
foraging habits of the white-tail. For decades, deer have
munched away at New Jersey’s plant life, leaving other creatures
that depend upon it to disappear.” [The state has lost 14 bird
species.]
So look for lots of venison at a supermarket near you.
Well now, this wasn’t exactly where I planned to end this week’s
piece, at least not on this note….but it appears that will be the
last word. Then again, how about Vermont’s win over
Syracuse, or Bucknell’s over Kansas?! Goodness gracious.
—
God bless the men and women of our armed forces.
God bless America.
—
Gold closed at $439
Oil, $56.72
Returns for the week 3/14/-3/18
Dow Jones -1.3% [10629]
S&P 500 -0.9% [1189]
S&P MidCap -0.8%
Russell 2000 -0.7%
Nasdaq -1.7% [2007]
Returns for the period 1/1/05-3/18/05
Dow Jones -1.4%
S&P 500 -1.8%
S&P MidCap +0.01%
Russell 2000 -4.5%
Nasdaq -7.7%
Bulls 54.5
Bears 24.3 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Go Deacs!
Brian Trumbore
