[Posted 7:00 AM ET]
Wall Street…Duck!
Year-to-date returns thru April 15
Dow Jones -6.4%
S&P 500 -5.7%
Nasdaq -12.3%
10-year Treasury
4.24%
I can’t help but muse, gee, I wish the year was already over
because then I could pick up my toys and declare victory; as in
the 12/31/04 “Week in Review” where my forecast for 2005
contained these nuggets.
“The American consumer will finally lighten up on the spending
front as we begin to more closely examine our debt burdens,
especially given the fact our leading asset, our home, has stopped
going up (in value).”
“After a brief flurry early in the year, the rate of capital spending
will slow…”
“Corporate profit growth, already decelerating, will be less than
expected.”
“Visible signs of a slowdown, owing to a rapidly deteriorating
global economic outlook, will appear by the summer and by
yearend most will admit the world economy is entering a
recession. Deflation, not inflation, will become the watchword,
though we could have one last inflation scare beforehand.”
I also said the Dow, S&P 500 and Nasdaq would all be down 5%
and:
“I am sanguine on interest rates, particularly the long end of the
curve because of my projected softness in the economy. This
would of course ameliorate any problems in the housing market
at the same time, thus my forecast of stagnation rather than
actual significant price declines. The 10-year could hit 5% at
some point but it will finish the year below that, say 4.30%.”
But, alas, we have almost 3/4s of the year still ahead of us and as
I noted recently there will be many times when I’ll look
incredibly foolish. However, even though I allow myself to
change an opinion, not an actual forecast (as everyone else does),
there isn’t any part of the above I would alter today, including
another opinion I laid out in December that the China bubble
would burst this year. It will. Maybe it already is beginning to.
One other item. I did say in December that the price of oil would
trade in the mid-$30s and despite the current trend I could be
way off here.
Nonetheless, why do most of my other yearend targets and
forecasts line up at least for today?
Aside from the sudden overall feeling the economy could be
slowing, and we’re talking globally, not just in the U.S., this
week you had a far weaker than expected number for March
retail sales, an extremely weak reading on manufacturing in the
New York area, another drop in a key reading of consumer
confidence, a record trade deficit, and all manner of dour
corporate forecasts.
Regarding the latter, it started with Ford’s announcement after
the close on Friday the 8th that it was lowering guidance for both
the rest of 2005 as well as ’06. Then Harley-Davidson gave a
bleak outlook. Then General Motors had a meeting with the
UAW where the union clearly stated it wasn’t interested in
reopening the existing labor contract, that runs another two years,
for the purposes of exacting concessions on the healthcare front.
Then IBM missed on its earnings for the first quarter as revenues
rose a putrid 3%, while halfway around the world, South Korea’s
giant chipmaker Samsung (#2 to Intel) said its revenues were
down 4% and the outlook was murky at best. [Both IBM and
Samsung cited a sudden slowdown at quarter end.]
The only rays of sunshine were provided by decent earnings
reports out of General Electric and Citigroup, but in the case of
the former I am one cynical scribe. I mean no one is more expert
at, err, playing with the numbers than G.E.
The Federal Reserve also had an impact on this week’s action by
releasing the minutes from its March 22 meeting. Yes, the board
members had some inflation concerns but “an accelerated pace of
policy tightening did not appear necessary at this time,” i.e.,
expect no more than a 25 basis point increase on May 3.
This was enough to propel a little rally on Tuesday but then it
was followed by triple digit losses for the Dow the next three
sessions on the slowdown fears.
There are also some Big Picture items to bring to the table. For
starters, between the U.S. / E.U. squabble over subsidies for
Boeing and Airbus, as well as the U.S. / E.U. / China debate on
renewing textile quotas against China, there is the very real risk
of a trade war and that, sports fans, benefits no one, least of all
investors.
And then you have this issue of derivatives I keep bringing up, as
in the guys throwing these around aren’t always as smart as they
make themselves out to be. John Plender had the following
information in a story for the Financial Times.
Five U.S. banks account for 96% of the $88 trillion in notional
value [don’t worry about this figure….about $1 trillion is the best
estimate of true risk, still more than enough I think you’d agree]
for U.S. derivatives. 93% is traded in the non-transparent over-
the-counter market in which banks deal with each other. Which
leads me to an op-ed piece by former Federal Reserve Chairman
Paul Volcker from last Sunday’s Washington Post. Volcker
focuses on the need for monetary and fiscal discipline.
“The U.S. expansion appears on track…
“Yet, under the placid surface, there are disturbing trends: huge
imbalances, disequilibria, risks – call them what you will.
Altogether the circumstances seem to me as dangerous and
intractable as any I can remember, and I can remember quite a
lot. What really concerns me is that there seems to be so little
willingness or capacity to do much about it.
“We sit here absorbed in a debate about how to maintain Social
Security – and, more important, Medicare – when the baby
boomers retire. But right now, those same boomers are spending
like there’s no tomorrow. If we can believe the numbers,
personal savings in the United States have practically
disappeared….
“We are buying a lot of housing at rising prices, but home
ownership has become a vehicle for borrowing as much as a
source of financial security. As a nation we are consuming and
investing about 6 percent more than we are producing….
“Most of the time, it has been private capital that has freely
flowed into our markets from abroad – where better to invest in
an uncertain world, the refrain has gone, than the United States?
“More recently, we’ve become more dependent on foreign
central banks, particularly in China and Japan and elsewhere in
East Asia.
“It’s all quite comfortable for us. We fill our shops and our
garages with goods from abroad, and the competition has been a
powerful restraint on our internal prices. It’s surely helped keep
interest rates exceptionally low despite our vanishing savings and
rapid growth.
“And it’s comfortable for our trading partners and for those
supplying the capital….
“The difficulty is that this seemingly comfortable pattern can’t
go on indefinitely. I don’t know of any country that has
managed to consume and invest 6 percent more than it produces
for long. The United States is absorbing about 80 percent of the
net flow of international capital. And at some point, both central
banks and private institutions will have their fill of dollars.
“I don’t know whether change will come with a bang or a
whimper, whether sooner or later. But as things stand, it is more
likely than not that it will be financial crises rather than policy
foresight that will force the change.”
I would just add that on the issue of the dollar, the crisis comes
next year and it will be the result of politics, not necessarily
because of the fundamental picture. Look east, my friends, to a
China that will need a scapegoat to soothe an increasingly
anxious, and angry, population. Rising expectations, you
understand. The dollar could be the victim and while China
understands the risks to its own economy should this come to
pass, the Communists may have no other option.
Street Bytes
–Correction off recent index highs
Dow Jones -7.8%
S&P 500 -6.8%
Nasdaq -12.4%
Russell 2000 -11.3%
Boy, it was a sloppy week, to say the least. For the Dow the
worst in two years as the index plunged 3.6% to 10087. Seems
like just yesterday we were talking about exceeding 11000 and
marching on to new all-time highs. Nasdaq declined 4.6% to
1908 and the S&P 3.3% to 1142. World markets didn’t fare
much better. Tokyo’s Nikkei was off 4%, for example.
The economically sensitive issues took it on the chin, including
basic materials and energy, while historically defensive sectors
such as the pharmaceuticals fared better. No doubt among the
hedge fund set, some got caught with their pants down, though it
normally takes at least a week before these stories begin to come
out.
–U.S. Treasury Yields
6-mo. 3.09% 2-yr. 3.49% 10-yr. 4.24% 30-yr. 4.59%
Huge rally in the bond pits on the theory of a slowing economy
and expectations the Fed may be closer to being finished with its
tightening regime than once thought. PIMCO’s Bill Gross
believes the Fed raises the federal funds rate just a few more
times, stopping at 3.5% from its current 2.75%. ISI’s Ed Hyman,
a noted economist, says GDP growth will slow to 2% in the
second half.
But this coming week we see the April data on both producer
prices (Tues.) and consumer prices (Wed.), plus the Fed’s report
on regional economic activity (the Beige Book, also on Wed.).
Is there one last inflation scare in the cards? Stay tuned.
–The price of crude, as measured by W. Texas Intermediate, has
declined almost 12% in just two weeks. As I’ve noted for
months, inventories are just fine and now concerns over yearend
supply are nowhere near as great as they once were. Crude
inventories, for example, have risen 9 straight weeks and while
gasoline stocks haven’t been nearly as strong the price at the
wholesale level has fallen from a high of $1.74 on April 4 to
$1.48.
–Foreign direct investment in China has declined 7%, year-over-
year, in both February and March. But exports still rose 35% in
the first quarter (imports 15%). Elsewhere, Singapore’s GDP fell
a whopping 5.8% in the quarter, while France’s industrial
production figure was down in February primarily due to high oil
prices. Finally, India registered its 2nd smallest gain in industrial
production in two years as exports slowed to a pace not seen in
16 months. Global slowdown? One or two more months of data
and we should be able to confirm whether we’re headed for real
trouble as I’m projecting.
–AIG: This week we learned former CEO Hank Greenberg
shifted $2.2 billion in stock, about 96% of his overall holdings,
to his wife four days before he was forced to resign in a clear
attempt to shield his assets from future lawsuits…assuming his
wife would still want to live with the guy. [Run!] And when
called to testify under oath before New York Attorney General
Eliot Spitzer, Greenberg took the 5th, while Warren Buffett,
called merely as a witness, chirped like a bird, but as is the case
with most avian creatures didn’t really say anything.
Thanks to the reporting of the Financial Times, the Journal, and
the New York Times’ Gretchen Morgenson, we also learned
more about AIG’s charity ties (there we go again) between board
members and their pet projects. For example, the President of
the Museum of Natural History is an AIG director and was
awarded $10s of millions. In other words, this is a case of
conflicts of interest run wild.
Separately, the New York Post’s Christopher Byron commented
on the AIG scandal, beginning with the passage of Sarbanes-
Oxley in 2002.
“(It) seems a safe enough bet that when President Bush said in an
East Room signing ceremony for the act on July 30, 2002 that it
would usher in a new era of ‘no more easy money for corporate
criminals, just hard time,’ neither he nor anyone else in the room
imagined that its passage might eventually lead to an indictment
and perp-walk for the founder and head of one of the world’s
largest insurance conglomerates.
“So far, the government has brought only a handful of cases
under Sarbanes-Oxley, and nearly all have been small-beer
affairs….
“By contrast, a Sarbanes-Oxley prosecution of Greenberg would
prove a thousand times more momentous than all these other
cases put together, sending the clearest and most salutary
message imaginable to Wall Street that using Erector sets of
financial engineering to conjure earnings and revenue growth out
of thin air is automatically suspect and can easily wind up getting
a scheming CEO measured for an orange jumpsuit.”
As to the issue of AIG and its non-traditional insurance contracts,
Byron writes:
“Sometimes AIG would even issue the fake insurance after the
fact through so-called ‘retroactive’ insurance policies.
“AIG even set up an entire business subsidiary – called its ‘Loss
Mitigation Unit,’ which functioned as a unit within one of its
major general insurance companies, National Union Fire
Insurance of Pittsburgh – to market the fake insurance
worldwide.”
Bottom line, I concur with Byron that AIG is nothing more than
a “fraud factory.”
As for the criticism Eliot Spitzer is taking in some circles (see
the Wall Street Journal’s editorial board) for not formally
indicting Greenberg (and others before him), choosing instead to
try the cases in the media, all I have to say is ‘Thank goodness
we have him.’ Can you imagine what would have happened had
Spitzer not been pursuing these creeps the last few years? I’ll
tell you what would have happened. Nothing.
The real issue at this point is ‘how far is Spitzer willing to go
before he has to spend all his time on running for governor in
2006?’ An indictment of Greenberg would be the culmination of
his work on cleaning up Wall Street (not that it would mean
more corruption didn’t exist). But it seems to me he needs to be
finished by this fall. Here’s hoping he goes for it full tilt in a last
flurry of activity that ensnares all the dirtballs.
–Pay raises did not exceed inflation in 2004 thanks to the
increasing exposure of the United States to globalization as well
as soaring healthcare costs. Morgan Stanley economist Stephen
Roach added, “We’re in for a long period where inflation-
adjusted wages will be under acute pressure.” [Stephen
Greenhouse / New York Times] Others, however, say if oil falls,
wages will pick up.
–Russia: Economists here have been talking of the investment
paralysis in the nation, despite President Vladimir Putin’s recent
assurances to the business community that they need not worry.
Some are talking of the “Venezuelan Disease,” which was when
that country embarked on excessive privatization in the 1950s,
thus dooming it to underperformance ever since despite its huge
oil wealth. In Russia’s case, aside from the fact foreign investors
are increasingly looking elsewhere, Russia itself is not spending
enough internally on items like infrastructure. Fixed investment
was 16% of GDP in 2004 compared to 25% in much of Asia.
[Moscow Times]
And just this week the Kremlin took the following steps.
German engineering giant Siemens AG was turned down in its
acquisition of a Russian company on monopoly concerns, while
a British Petroleum joint venture, TKN-BP, was hit with a $1
billion back tax bill. BP’s Lord Browne is going to Moscow this
coming week to learn from Putin firsthand just what the rules
are.
But, when it suits the Kremlin deals can still get done. For
example:
Royal Dutch Shell formed a joint venture with gas behemoth
Gazprom, 50/50, for development of the latter’s largest property
in Siberia. In exchange Gazprom gets 25% of a Royal Dutch
project.
And Russia and Germany, despite the above issue with Siemens,
agreed to build a gas pipeline under the Baltic Sea (another
Gazprom deal), thus bypassing Ukraine and Belarus. Gazprom
supplies 32% of Germany’s energy needs.
Add it all up, though, and there is zero consistency; so while
Germany and Royal Dutch may be happy over their new
arrangements, who’s to say the Kremlin won’t pull them back at
some point in time? In the case of oil, they wouldn’t be the first
to use it as a weapon.
In the end, for today’s businessman it’s all about the perception
of political risk. You’d be a fool to take any given the current
environment here.
–Last week I commented that the SEC’s adoption of the ‘trade-
through’ rule, which requires brokers to find the best price on a
trade, was overrated in terms of saving investors because any
time delay in looking for the best possible execution could result
in big losses, i.e., a stock could go from $28 to $27 in a volatile
market while your broker is looking to save a penny because he’s
afraid of breaking a rule if he doesn’t.
But for those who are not as familiar with the ways of Wall
Street, don’t confuse the above with the indictment this week of
15 traders on securities-fraud charges (plus others for civil-fraud)
for improperly trading ahead of customer orders.
While this criminal probe was an offshoot of an earlier civil case
in which seven specialist firms ponied up $247 million to settle,
the new charges are even more severe as in most instances a
trader was improperly placing himself between the ‘buyer’ and
the ‘seller,’ as many as a thousand different times in order to clip
a penny here, a penny there. This added up to a collective profit
of about $20 million. It’s fraud of the worst kind and a big black
eye for the New York Stock Exchange.
And by the way, few seem to want to mention the fact that the
period in question, 1999-2003, was also the time when Dick
Grasso was running the Exchange. But as the NYSE
compensation board said when they were awarding him his
outrageous pay packages, ‘He’s doing a great job and deserves to
be rewarded for it.’ Gag me.
–For the first time a Chinese energy company has purchased a
stake in Canada’s oil fields, specifically investing in the
potentially lucrative oil-sands deposits. Let’s hope our geniuses
in Washington are paying attention. [There is risk here in that
the costs of exploration are far higher, that is until technology
catches up, and thus you need higher oil prices to make it work.]
–I wrote a few weeks ago that Aussie natural resources giant
BHP Billiton is as good a single proxy as any for looking at
trends in China’s economy and shares in BHP have been falling
sharply. Part of the reason is China refused to accept a surcharge
BHP wanted to levy on some of its raw materials but this is also
part of my overall China slowdown story.
–Newsweek’s Fareed Zakaria observes that the cost of
healthcare is the single biggest reason for jobs going overseas.
American workers are simply going to have to shoulder a greater
share of the burden or risk losing their jobs, i.e., General Motors,
where Canada produces more of its cars than Detroit.
–Inflation update: Related to the above, wholesale drug prices
were up 7% in 2004 according to an AARP study.
–Real estate bubble watch: A Brooklyn Heights townhome is on
the market for $20 million, the highest price ever in the borough.
The owners paid just $2 million in 1999.
–Some analysts give Citigroup CEO Charles Prince until the end
of the year to turn things around. After all, Citi shares have
lagged the industry badly since he took over, October 2003. And
Citigroup has big issues with regulators in every major market it
operates in. Prince’s supporters, though, would say this is unfair
given the fact he inherited all the problems left over by former
CEO Sandy Weill. But on the other hand, Prince was at Weill’s
side for years while the overly aggressive Citigroup style of
conducting business was being cultivated.
–China is expected to import a record 24 million metric tons of
soybeans for the year ending September 30, up from 17 million
tons the previous period. The U.S., Brazil and Argentina make
up about half of this demand. Always knew I should have been a
soybean grower. That or a frankenfish farmer.
–Southwest Airlines continues to buck the trend in posting solid
earnings, though the company said revenue growth is softening.
The main reason why Southwest is doing well when the others
are losing $hundreds of millions is through the hedging of its fuel
bet.
–In a poll done for USA Today / CNN / Gallup, just 25% of
people ages 45 to 54 had individual retirement accounts as of
2003 and the median balance was only $13,000. The Financial
Planning Association says Americans should be able to save at
least 6% of their pre-tax income every year and the current
average is 1.2%. We spend too much at the same time we’re
dealing with soaring healthcare and other costs that don’t show
up in the official inflation figures.
–Ad spending was down 8% at the Wall Street Journal in the
recent quarter with similar results reported at the other large
newspaper outlets. Interestingly, the Journal is now earning
more with its online operation than at either the hard copy or its
sister publication Barron’s. A big reason? An online
subscription to both is about ¼ the cost of the hard copy
versions.
–Back on February 5, I labeled eBay a “dead stock.” From a
high of $59 on 12/31/04 it has collapsed to $32. [It was $37.50
when I made my comment.]
–Morgan Stanley continues to bleed profusely. This week its top
two investment bankers fled.
–After 13 years of being off the market, the FDA voted 5-4 to
deny Inamed the right to market its silicone breast implants. But
the next day the same panel voted 7-2 to approve rival Mentor’s
product. Meanwhile, Pamela Anderson’s new series, “Stacked,”
premiered on Fox.
–Exxon Mobil CEO Lee Raymond was paid about $38 million
last year. You know, seeing as the company earned $25 billion in
profits, in all honesty this is one instance where I don’t find the
pay that outrageous.
–You would have thought that after Tiger Woods’s spectacular
chip shot at the Masters on Sunday (featuring the Nike swoosh as
his golf ball precariously sat on the edge before diving into the
cup) shares in Nike would have soared this week, but they fell
along with the rest of the market.
More importantly, Nike deserves credit for issuing a long-
awaited corporate responsibility report wherein it became the
first major apparel manufacturer to voluntarily disclose its entire
700 factory supply chain. 124 are in China with 73 in Thailand,
35 in South Korea, and 34 in Vietnam. Nike has vowed to do all
it can to improve the working conditions in these locations,
which is far more than others have done.
–Data provider LexisNexis admitted that its previously
announced security breach was far worse, like 10 times worse,
and is now estimated to have impacted in excess of 300,000.
Then HSBC announced 180,000 were at risk of identity theft
after its charge cards were accessed through Polo Ralph Lauren.
Phew…I don’t shop there. This is one case where it pays not to
be hip, know what I’m sayin’?
–The April 25 issue of Business Week reports that Eliot Spitzer
has his guns trained on spyware king Intermix Media of Los
Angeles. You go Eliot! Nail ‘em. These dirtballs deserve jail
time and nothing less.
–Will this MCI / Verizon / Qwest fiasco ever end? Verizon paid
MCI’s largest shareholder, Carlos Slim, a nice premium over the
existing share price for his 13% stake, thus making it tougher for
Qwest to muster shareholder support in going after MCI itself.
–After this week, private accounts, anyone?
–Beer consumption was up only 0.7% in 2004, while spirits and
wine were up 4.1% and 3.4%, respectively. Recently Anheuser-
Busch announced its domestic consumption was down 2.7% in
the first quarter. I haven’t had a chance to tally up my own
consumption but I suspect it was flat.
–Pakistan’s stock market was up 4.3% this week!
–More articles this week on the asteroid that has a projected 1 in
38 chance of hitting the U.S. on Friday April 13, 2029.
Remember to go to cash on Tuesday or Wednesday, April 10-11.
–My portfolio: No changes. Still roughly 15% equities, 85%
cash…and kind of smug about it.
Foreign Affairs
Iraq: The level of violence picked up considerably this week and
aside from getting an effective Iraqi security force in place as
soon as possible, the people themselves need to see their new
government in action and thus far the jury is still out on its
effectiveness. Secretary of Defense Donald Rumsfeld paid a
visit to strongly encourage the leadership to stick to the timetable
of a constitution by end of August and elections in December. [It
was more than a bit disingenuous, though, of Rumsfeld to lecture
the Iraqis on corruption when the prior two years have shown
that the seemingly non-existent rebuilding effort has been rife
with kickbacks and bribery, much of it through U.S. contractors.]
And while there is talk of reducing the level of U.S. troops, any
rational observer has to conclude this could be years away…that
is unless the American people turn on the president, my chief
concern.
[Related to the Iraqi theater, Turkish forces killed at least 20
Kurdish rebels on the Iraqi border in the largest such operation
since a ceasefire was called in 2004.]
Israel: President Bush met with Israeli Prime Minister Sharon
and warned against “any activity that contravenes the roadmap or
prejudices final status obligations,” i.e., stop the settlements.
Sharon said Israel would “meet all its obligations under the
roadmap;” at least that was his position while standing next to
the president at his ranch. Later, however, he told reporters it
was really no big deal and Israel would continue to extend its
communities for the purposes of consolidating its holdings. As
he basically admitted, we’ve had our way with Washington since
1967 and we merely ignore the occasional entreaties to act
otherwise.
Of course he’s right. Regardless of who is in power, America’s
leaders are afraid to do the politically courageous thing; suspend
aid to Israel unless it does our bidding.
Where Sharon is also right is in the belief Israel could be on the
verge of civil war, as he told NBC News, and he is fearful for his
life. Separately, Sharon is demanding that Palestinian leaders
disarm the terrorists before serious negotiations take place.
Syria / Lebanon: Former Lebanese Prime Minister Rafik Hariri
was assassinated back on February 14 and since Feb. 28 Lebanon
has effectively been without a government as Syrian-backed
Prime Minister Karami failed for a second time to form a new
one. But then on Friday, a moderate pro-Syrian member of
parliament, Najib Mikati, was named the new prime minister and
what’s significant here is the fact he had the support of the
opposition. So I guess there is still a shot at May elections. If
they come off it’s a huge positive for the entire region.
China / Japan: Well, I must say my comments last week were
rather timely, as in less than 24 hours after posting them there
were large anti-Japanese demonstrations in the streets of Beijing
and elsewhere in China, the biggest of any kind since Tiananmen
Square in 1989. Japan’s embassy was pelted with rocks and
bottles as police looked on. After all, the communist leadership
encouraged the protests, using the new history textbook in Japan
as a pretext towards violence.
So Japan demanded an apology and remuneration for the
damage, but the next day, Monday, it sought to resolve the issue
diplomatically.
On Tuesday, Chinese Premier Wen Jiabao echoed his foreign
minister from the previous week.
“Only a country that respects history, takes responsibility for past
history and wins over the trust of people in Asia and the world at
large can take greater responsibility in the international
community.” [BBC News]
Then on Wednesday, Japan announced it would allocate
exploration rights for oil and gas in a disputed area of the East
China Sea, thus riling China further.
Meanwhile, China was spearheading a group of six nations
(along with Italy, South Korea, Pakistan, Argentina and Mexico)
to block Japan and India from UN Security Council membership.
This is really the key issue to focus on for now. Talk of product
boycotts of Japanese goods in China are, thus far, just that…talk.
And while one day the entire region will erupt over energy, it’s
not now. But the UN debate cuts across all lines and everyone is
gearing up for September’s General Assembly, at which time
Secretary General Kofi Annan is hoping for approval of his
grand plan to expand the Council. Certainly looks doubtful
today.
Finally, as I go to post this column anti-Japanese demonstrations
have started up again across China and this time the authorities
are concerned they will get out of control.
India / China: While China seeks to block India from permanent
Security Council membership, the two countries did solidify a
“strategic partnership” in pledging to resolve border disputes as
well as cooperate on high tech issues. Economically, most
believe China has a 15-year head start on India but the latter can
catch up quickly. In the meantime, though, China is more
concerned with seeing that India stay out of Washington’s
clutches.
Singapore: Aside from the shaky economy, as noted above,
longer-term Singapore must address its 1.25 birthrate (2.1 being
the replacement level). While it’s not alone in this regard,
Singapore is one of the few that is aggressively attempting to do
something about it. For example the government offers various
incentives including the baby bonus; now $1,800 for the first
child and working up to $10,000 for a 4th.
Britain: As the country prepares to go to the polls on May 5, it
should be noted that during the tenure of Tony Blair’s Labour
Party, 1997-2005, median income is up a solid 17%, while home
prices have soared 176%. [Business Week] Bubble bubble.
Random Musings
–Last week I wrote that illegal immigrants contributed $7 billion
a year to Social Security and Medicare. I was remiss in not
giving the source (the New York Times, April 5) and I have to
thank Bryan W. in San Diego for pointing this out. It was
careless on my part. Bryan and I proceeded to have a good
dialogue on the subject of illegal immigration in general and you
know what a touchy topic it is out his way. We have our own
problems with immigration here in New Jersey, but I liked what
Bryan had to say on his state’s situation.
“One of the biggest problems we face in California is the
hardened Mexican criminals that are here illegally and end up in
our prisons. That, along with the free bilingual education, free
schooling and free health care is too much for us to afford. [By
the way, bilingual is an absolute failure and in reality limits those
kids’ chances of having any opportunity for advancement
whatsoever.] Governor Arnold has his hands tied with most of
the spending because it is state law that these things be provided
free at taxpayer expense. Bottom line, illegal immigration is
sucking us dry.”
–I always get a kick out of those who don’t understand how
bloated government is, at both the federal and state level. For
example, I’ve had a call into a New Jersey authority for two
weeks now on an important corporate issue and he has yet to
return it.
–Al Sharpton was supposedly videotaped taking illegal
campaign contributions which he then failed to report. Sharpton
claimed racism. Never did figure out why we ever gave this guy
the time of day in the first place.
–Kofi Annan is attempting to turn the tables on the U.S. and
Britain for their alleged failure to police UN sanctions against
Iraq. You know what? Kofi’s right. I said long ago that we
really don’t want the oil-for-food investigation going much
further. Everyone is dirty. You can just imagine how a program
like “60 Minutes” is ready to pounce if only someone will turn
state’s witness.
–I was watching Bill Clinton do an interview wherein he said “I
have no idea if Hillary is running for president.” Of course he
has every idea. More importantly, Hillary is NOT running for
reelection to the Senate in 2006. At least that’s been my opinion.
–If you were excited by the nationwide dragnet of fugitives that
reeled in some 10,000 of the creeps, just understand this is only
1% of the total out there. But, it’s a start and shows what can be
accomplished when different levels of law enforcement
cooperate.
–The New England Journal of Medicine has a story that drinking
too many fluids during exercise poses a health risk. I
commented on this over a year ago elsewhere on this site and the
fact is the bottled water / sports drink craze is one of the great
scams ever perpetrated on the public. Here’s the bottom line
…drink when you’re thirsty.
–I graduated from high school in 1976 and thus didn’t serve in
Vietnam so I have no personal experience of what it must have
been like to be over there when Jane Fonda was doing her thing.
But the other night on “Hardball,” Chris Matthews was trying to
goad Senator John McCain (former POW) into saying something
awful about Fonda now that she is running around promoting her
book and doing pseudo-mea-culpas.
“Holding a grudge against her is a waste of time,” he replied.
There are far more important issues at this point. What I want to
know is who’s buying her book?
–Also on the same “Hardball,” Matthews had Senator Jim
Bunning who opened up on his emotional trip to attend John Paul
the Great’s funeral. Bunning said he walked away from it
determined to be more tolerant and forgiving. I know I’m trying
to be. But it isn’t easy.
–I was watching former Senator Bob Dole on “Meet the Press”
and Tim Russert offered up this quote from Dole’s new book, “A
Soldier’s Story.”
“One of life’s greatest milestones is when a person can look back
and be almost as thankful for the setbacks as for the victories.
Gradually, it dawns on us that success and failure are not polar
opposites. They are part of the same picture – the picture of a
full life, where you have your ups and downs. After all, none of
us can ever lose unless we find the courage to try. Losing means
that at least you were in the race. It means that when the whistle
sounded, life did not find you watching from the sidelines.”
Just do it.
—
God bless the men and women of our armed forces.
God bless America.
—
Gold closed at $426
Oil, $50.49…$57.27 two weeks ago.
Returns for the week 4/11-4/15
Dow Jones -3.6% [10087]
S&P 500 -3.3% [1142]
S&P MidCap -4.3%
Russell 2000 -4.9%
Nasdaq -4.6% [1908]
Returns for the period 1/1/05-4/15/05
Dow Jones -6.4%
S&P 500 -5.7%
S&P MidCap -5.4%
Russell 2000 -10.9%
Nasdaq -12.3%
Bulls 46.2
Bears 29.0 [Source: Chartcraft / Investors Intelligence…I’d like
to see the ‘bull’ figure down a bit more before calling it a true
contrarian bottom.]
Have a great week. I appreciate your support.
Brian Trumbore
