For the week 4/13-4/17

Fundamentals vs. Sentiment 

The above is what investors wrestle with every day and this past week was one in which the fundamentals, globally, were with one or two exceptions horrid, yet U.S. equity markets registered gains for a sixth consecutive week. 

The week started with a report on retail sales for the month of March that came in down 1.1% when a small gain was expected. Industrial production for March was off 1.5%, also worse than expected, and capacity utilization at 69.7% is the worst since they started keeping records for this back in 1967. Additionally, March housing starts were worse than expected, at 510,000, while foreclosures soared 46% for the month over year ago levels and up 17% from February. We also learned that state and local tax revenues had their steepest decline in the 4th quarter in 50 years. 

The inflation data was negative, literally, as the March producer price index fell 1.2% when an unchanged reading was forecast, while consumer prices declined 0.1% when a positive reading was expected. Year-over-year, consumer prices are now down 0.4% [though up 1.8%, excluding food and energy], the first annualized decline since 1955. I’ve long argued inflation is not an issue, and obviously these figures bear this out, but it’s not good news for those looking for significant gains in earnings in the near future. It doesn’t exactly appear there is a lot of pricing power out there, sports fans. 

Fed Chairman Ben Bernanke weighed in that the collapse in U.S. lending will have a “long-lasting” impact on home prices and household wealth. 

“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be. The damage from this turn in the credit cycle – in terms of lost wealth, lost homes, and blemished credit histories – is likely to be long-lasting.” [Bloomberg] 

Adding to the weight of the evidence on the credit front, Brian Shniderman, an analyst at Deloitte, said: 

“You can estimate that for every person directly facing unemployment, at least five other people will be impacted secondarily, and change their payments-related behaviors. So while there has clearly been a direct correlation between unemployment and defaults, its impact actually increases due to the increasing role of the secondary ripple effect.” [Financial Times] 

Globally, industrial production in the eurozone declined a whopping 18% in February over year ago levels, and Russia’s was down 13.7%, specifically, in March. In Asia, Singapore’s GDP plunged an eye-popping 19.7% in the first quarter from the previous three months, the worst performance since at least 1975, with exports dropping a further 17% in March. 

But then you had China, where the picture remains mixed but optimism seems to win out over pessimism. The negatives for China are that GDP rose 6.1% in the first quarter, the slowest rate in 10 years, exports dropped 19.7% for the quarter and, while property sales seem to have stabilized by some indicators, others believe prices for both residential and commercial will see another big decline over the coming year. 

The positives for China lie in industrial production for March rising 8%, while retail sales rose 15% in the quarter, both further signs the government’s $585 billion stimulus program is flowing through municipalities and down to the consumer. Beijing is very much aware that with global demand for its products having dried up, China must stimulate domestic demand and here, while a 15% rise in retail sales is solid, they need to do far better to make up the export shortfall. 

Meanwhile, South Korea added to the better tone on some fronts as it appears this is one nation that may avoid recession altogether, though barely. 

[Re inflation, Japan’s wholesale rate is now reflecting an annualized decline of 2.2%, and China’s CPI was down 1.6% in March. Deflation is not good, pure and simple.] 

Aside from some encouraging news out of China, though, what else was positive? A Bank of England official said “the worst of the recession may well be behind us.” That’s good. While earlier in the week, Fed Chairman Bernanke said “there are tentative signs that the sharp decline in economic activity may be slowing,” this as the Fed’s report on regional economic activity showed that for the first time in ages, 5 of 12 regions “noted a moderation in the pace of decline.” That’s been a consistent theme for the past month. We’ve seen on many fronts a moderation in the rate of contraction, though this is hardly actual growth. Even the weekly jobless claims figure was down to 610,000 from 660,000+. Still incredibly ugly, and disheartening for those impacted, but moderation nonetheless. 

“Mild signs that the rate of economic contraction is slowing in the United States, China and other parts of the world, have led many economists to forecast that positive growth will return to the U.S. in the second half of the year, and that a similar recovery will follow in other advanced economies…. 

“Investors are talking of ‘green shoots’ of recovery and of positive ‘second half derivatives of economic activity’ (continuing economic contraction is the first, negative, derivative, but the slower rate suggests that the bottom is near). Stock markets have started to rally in the U.S. and around the world. Markets seem to believe there is light at the end of the tunnel for the economy and for the battered profits of corporations and financial firms. 

“This consensus optimism is, I believe, not supported by the facts…. 

“In the eurozone and Japan, the outlook for 2009 and 2010 is even worse, with growth close to zero next year…. 

“Losses by banks and other financial institutions will continue to grow: my latest estimates are U.S. $3.6 trillion in losses for loans and securities issued by U.S. institutions, and U.S. $1 trillion for the rest of the world…. 

“The stock market’s latest ‘dead cat bounce’ may last a while longer, but three factors will lead it to turn south again. First, macroeconomic indicators will be worse than expected, with growth failing to recover as fast as the consensus expects. 

“Second, the profits and earnings of corporations and financial institutions will not rebound as fast as the consensus predicts, as weak economic growth, deflationary pressures, and surging defaults on corporate bonds will keep profit margins low. 

“Third, financial shocks will be worse than expected. At some point, investors will realize bank losses are massive, and that some banks are insolvent. Deleveraging by highly leveraged firms – such as hedge funds – will lead them to sell illiquid assets in illiquid markets. Some emerging market economies – despite massive IMF support – will suffer a severe financial crisis with contagious effects on other economies.” [South China Morning Post] 

“Here are four reasons to be cautious about the economic outlook. 

“1. Things are still getting worse. Industrial production just hit a 10-year low. Housing starts remain incredibly weak. Foreclosures, which dipped as mortgage companies waited for details of the Obama administration’s housing plans, are surging again…. 

“2. Some of the good news isn’t convincing. The biggest positive news in recent days has come from banks…But some of those earnings reports look a little – funny…. 

“4. Even when it’s over, it won’t be over….Don’t be surprised if unemployment keeps rising right through 2010…. 

“History shows that one of the great policy dangers, in the face of a severe economic slump, is premature optimism. FDR responded to signs of recovery by cutting the Works Progress Administration in half and raising taxes; the Great Depression promptly returned in full force. Japan slackened its efforts halfway through its lost decade, ensuring another five years of stagnation. 

“The Obama administration’s economists understand this. They say all the right things about staying the course. But there’s a real risk that all the talk of green shoots and glimmers will breed a dangerous complacency.” 

But the above aside, again, stocks rallied. Why? Many, such as moi, would say we already knew all the above. Heck, I’ve been writing it up for years now, beginning with my prescient calls on housing. But I’ve been looking for reasons to get bullish and staying the course, even amidst the incredible gloom of March 6 and 9, has panned out thus far. 

As I noted last week, though, I do wish we’d take a little breather and consolidate the gains some. My own portfolio of 2008 garbage is up substantially thus far in ’09, but these are companies that for the most part still need another round of financing to survive and the prospects on that front remain iffy at best. 

I’ll tell you what did help this week. Earnings. Over the weekend I look through Barron’s and jot down some key companies to look out for in the coming week and this past one I wrote down seven names…Johnson & Johnson, Intel, Goldman Sachs, JPMorgan, Google, Citigroup, and General Electric. On the headline number, all seven exceeded expectations. Granted, there was some poor news hidden within, such as revenues disappointing, greater charge-offs for consumer loans, or gross margins not as strong as anticipated, but no matter how you slice it, at least in terms of the bottom line they beat. Yes, when it comes to the banks, who the heck knows just how good or bad their books really are at this point? But ask me if there is a systemic crisis on our hands like we had last September? The answer is no. You can bang your head against the wall if you’re still ‘short’ the names at this point, but while they may not extend their already considerable rallies for a spell, the odds of any actually going out of business have fallen dramatically. The government will do its utmost not to let that happen. And you can complain all you want about the coming bank stress test results (May 4), with one or two perhaps requiring a further dose of Vitamin Fed or 600,000 I.U.s of TARP-II, but at least the days of worrying about whether you could withdraw cash from your ATM, a real concern last fall, are history. 

–Six straight up weeks for the Dow Jones and the other broader averages, the longest such streak since April/May 2007, though the Dow, with just a 0.6% advance to 8131, was the weakest performer of the lot as the S&P 500 rose 1.5% and Nasdaq 1.2%. Nasdaq is now up 6% on the year. Tech got a boost when Intel said it felt the PC sector had bottomed. As for Citigroup, revenue doubled to $25 billion owing to success in trading fixed income and equities, while JPMorgan Chase CEO Jamie Dimon indignantly said he wanted nothing to do with the government’s toxic assets plan, and further, Dimon offered that JPMorgan could repay the $25 billion in federal aid “tomorrow” if it wanted. 

–U.S. Treasury Yields 

–Real Estate: 60% of the above noted foreclosures are coming in five states; California, Arizona, Illinois, Florida and Nevada. But, significantly, an index of homebuilder sentiment took a big jump, a most positive barometer. 

And I continue to believe that when we look back months from now, housing will have bottomed, nationwide, in the April-May time period when looking at median home values. To buttress this, the six-county Southern California region, one of the four or five ground zeroes for real estate (some others being Arizona, Florida, Las Vegas and Northern California) saw the median price holding steady for a third consecutive month in March, $250,000, or less than half the peak in 2007. It could yet dip down a bit over the coming months, and obviously still rising unemployment doesn’t help, but it’s nonetheless very encouraging. 

On the downside, you had the bankruptcy filing of General Growth Properties, the 2nd-largest U.S. shopping-mall owner, but the largest real estate related bankruptcy in U.S. history. This is yet another example of the surge in bad news on the commercial real estate front that has been long forecast. 

–California’s unemployment rate hit 11.2% in March, the highest for the state since 1941. Michigan tops the nation at 12.6%, followed by Oregon, 12.1%, and South Carolina at 11.4%. 

–Oil continued to meander around the $50 level as volatility in the sector has all but dried up (though the stocks have rallied nicely). OPEC joined the chorus forecasting further drops in global demand, while inventories remain high and, for its part, natural gas touched a six-year low. 

–In reporting stronger-than-expected earnings, Goldman Sachs signaled it wants to repay the $10 billion it owes the federal government in TARP funds as quickly as possible, and took the first steps in doing so by raising $5 billion in a stock sale; seeking to free itself of any restrictions on compensation and business activities. Goldman’s CFO, David Viniar, spoke of a $164 billion war chest in cash and liquid assets that could be used to buy distressed assets. 

But then in the same breath, Viniar said he’s “mystified” by the interest investors and government officials have shown in Goldman’s relationship with AIG. “They’re one of thousands and thousands and thousands of counterparties and the results of any trading with AIG are completely immaterial to what we do.” 

Frankly, many of us are really sick of this act. Goldman says it didn’t benefit from the government’s rescue of AIG, yet the Treasury Department’s inspector general feels differently; or so a current investigation would indicate. The prime issue is whether AIG, or those representing the government at the time, attempted to reduce the payments on various contracts between AIG and Goldman. 

William D. Cohan, author of the best-seller “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street,” wrote in an op-ed for the New York Times: 

“In a conference call he held last month, Mr. Viniar made the shocking claim that Goldman ‘had no material exposure to AIG’ because the firm had ‘collateral and market hedges in order to protect ourselves.’ If so, then why did Goldman need the government’s help in the first place? During yesterday’s [April 14] conference call, Guy Moskowski, an analyst from Merrill Lynch, asked Mr. Viniar what role the $13 billion Goldman has collected from AIG had on its first-quarter showing. But Mr. Viniar would have none of it: Profits ‘related to AIG in the first quarter rounded to zero.’ Hmm, how then did Goldman make so much money if that multi-billion dollar gift from you and me had nothing to do with it?” 

Well, there are all manner of reasons, as Cohan points out, including the fact Goldman has been cleaning up from so many of its competitors, such as Lehman and Bear Stearns, falling by the wayside. 

“Goldman isn’t exactly swearing off all Beltway help [at this point.] The firm has benefited enormously from the federal bailout, and many of our sources believe Goldman would have failed without it…. 

“Goldman is getting the same terms as AIG’s other counterparties, but the partnership of AIG and the Federal Reserve has been a lot nicer to Goldman than AIG was as an independent firm. Without a functioning AIG able to post additional collateral, Goldman might have struggled to hedge its AIG exposure. Instead, government-owned AIG, in cooperation with the Fed, has removed almost all of Goldman’s risk on its contracts with AIG…. 

“The point is that Goldman and other banks can’t have it both ways. If they want taxpayers to save them, then they have to take fewer risks and become smaller. Either that or we need a new financial resolution or bankruptcy process that lets these companies fail while protecting the larger banking system. We’re glad Goldman wants to flee Barney Frank’s embrace, but it’s still only half way back to the promised land of capitalism – which includes the freedom to fail.” 

But wait…there’s more! Not that this was unexpected, seeing as how I broached the topic a few weeks ago, but the New York Times reported that AIG CEO Ed Liddy holds shares in Goldman Sachs worth about $3 million; shares acquired through serving on Goldman’s board. There’s nothing wrong or illegal about this, mind you, just that as you put all the pieces of the puzzle together, what comes into focus is a rotting fish. 

–While Wells Fargo issued a rosy forecast in releasing preliminary results for its first quarter the other day, according to a KBW analyst, assuming the recession continues through the first quarter of 2010, and unemployment reaches 12%, Wells Fargo would need to raise $25 billion in additional capital on top of the $25 billion it already owes the U.S. Treasury. I’m guessing the guy is wrong. 

–It appears that MGM Mirage and Dubai World have reached an agreement that would ensure completion of the mammoth $8.6 billion City Center project in Las Vegas, a big positive for the city. [Better to have it finished, even if it means further vacancies and lower room rates elsewhere, than to have a huge pile of rusting steel in the heart of the Strip.] 

–For the first time in its history, Google’s revenues for the first quarter were below the previous one. CEO Eric Schmidt said “No company is recession proof, Google is feeling the impact.” The shares, which closed at $388 before the announcement, finished the week at $392. However, at the market bottom on March 9, Google closed at $290. 

–GM CEO Fritz Henderson said on Friday that the company was planning for Chapter 11, even though this is not the preferred option. Bankruptcy would be long and messy, it would seem. 

–British Telecom (BT) is set to lay off 10,000 after axing a similar number last year. 

–But if you think those figures are large check out Russian Railways. Last year it turned a profit of about $400 million but this year is expected to lose $1.5 billion. So it now plans on shedding a whopping 53,700 jobs, as the railway is being particularly hard hit by falloffs in mining and construction.  

–Qantas is scrapping 1,750 jobs in forecasting a major drop in profit expectations. Capacity is being reduced a further 5%. 

–Mobile phone king Sony Ericsson, in posting a $387 million net loss for the first quarter on a huge 36% drop in revenues, said it was laying off a further 2,000 employees on top of an earlier 2,000 hit. 

–It’s tough to keep up with some of the job losses in the financial sector, as in when you see an announcement today, how many positions were slated for elimination in earlier statements. But in the case of Swiss banking giant UBS, the bottom line is the headcount is being cut to 67,500 from a peak of 83,800 a year ago. 

–For all the talk of a green revolution, there are some major gaps in the broader plans; such as in Britain, where investment in the wind energy sector is down a whopping 80%. The industry needs government support, it would seem, as large projects are cancelled. 

–Good news! Rosetta Stone Inc., the maker of language-training software, saw its IPO rise over 40% the first day of trading as the company raised $112.5 million. It was the first IPO in a year to price above the initial range. 

–Bad news! According to a large advertising group, ZenithOptimedia, worldwide advertising spending will fall 7% in 2009, compared with 1% growth in ’08. For newspapers, spending is forecast to fall 12%, while radio and magazines also face double-digit declines. 

In the U.S., newspaper advertising fell a staggering 30% in the first quarter, though exact figures have been tough to come by since many of the larger papers have been loath to discuss the issue publicly. In its bankruptcy filing, the publisher of the Chicago Sun-Times revised its anticipated slide from 18% this year to the 30% level, while Gannett also forecast 30. Small papers are faring somewhat better, in relative terms. Magazine advertising fell 26% in the first quarter. 

–The Port Authority of New York and New Jersey is paying developer Larry Silverstein $21.5 million to develop the Freedom Tower, even though he has zero role in building the structure, according to the Daily News. 

“The giveaway – $15.25 million so far and an additional $6.25 million in the pipeline – is costing bridge and tunnel commuters the equivalent of 2.7 million George Washington Bridge tolls or 12.3 million PATH fares.” Absurd. 

–Surprisingly, a record number of foreigners visited the U.S. in 2008. At least that was the headline in USA TODAY. Half came from Canada and Mexico, which is a change of sorts. In 2000, 60% of the visitors were from overseas. There is no doubt that some Europeans and Asians avoid America these days because of visa and security clearance hassles.  

–John Madden is retiring after 30 years in the NFL broadcast booth. But his reach extended beyond games on Sundays and Monday nights. Over 65 million copies of “Madden NFL Football” have been sold, the best-selling sports video game in history. And he’s been a prolific spokesperson for the likes of Ace Hardware. 

–Viagra and Cialis don’t damage your eyesight, so concludes a Lilly-funded study; Lilly being the maker of Cialis. “Exams turned up no cases of a rare optic nerve disease that can cause vision loss in one eye,” the authors note. And that’s your erection drug update for April 18, 2009. 

–Corona Extra is the top-selling imported beer in the U.S., though sales were down 4.6% in 2008. No. 2 Heineken’s were off 5.5%. But sales of Dos Equis were up 27.6%, owing to one of the great advertising campaigns of all time. “Stay thirsty, my friends.” 

–Barter is making a comeback in Russia. A construction company, in need of a new bulldozer but lacking the required $106,000, is exchanging a like amount of condensed milk for the vehicle. The company had in turn received the milk for modernizing a dairy. 

So I’m looking around and I have about 8 boxes of instant oatmeal I bought a while back on sale. Should anyone desire this in exchange for a new car, I’ll gladly take delivery and send you the oatmeal first class.  

Somalia: Upon returning home, Captain Richard Phillips said, “I’m not a hero, the military is.” No, Captain, you are indeed a hero, as well as the Seals. But if ever there was a case of ‘waiting 24 hours,’ it was here, which is why I said so little last week. Many in the media were running off their mouths, ‘Why isn’t the president saying anything? Why isn’t he doing anything?’ Yet all along Obama had given the standing orders to take the pirates out if the commanders on the scene felt this was the appropriate course of action. 

But then we saw how it was necessary to temper enthusiasm some because within 48 hours the pirates had taken four more ships and then they attacked another U.S. one, unsuccessfully. 

In less than four months this year, the pirates have already attacked at least 80 ships in the Gulf of Aden after the total for all of 2008 was 111. At least the French have joined us in fighting back. 

“The Easter Sunday rescue of cargo ship Captain Richard Phillips from Somali pirates is a tribute to his personal bravery and the skill and steel nerves of the U.S. Navy. Now the Obama administration has an obligation to punish and deter these lawless raiders so they’ll never again risk taking a U.S.-flagged ship or an American crew…. 

“White House and Navy officials say President Obama had issued a general authorization to use force in these circumstances, and that is to his credit. With all the world watching, the U.S. Navy couldn’t afford to be long stymied by sea-faring kidnappers…. 

“Somali pirates are turning the high seas into a state of anarchy not seen in a century or more. They’ll continue to terrorize innocents until what we call the ‘civilized world’ demonstrates that they will suffer the same fate as the pirates who made the mistake of kidnapping Captain Phillips.” 

I’m convinced you will see an attack on the pirates’ land bases within 4 weeks. Special Ops Forces have been gearing up for this for months, awaiting the green light. I’ll be shocked if Obama doesn’t give it to them and if our president needs further inspiration, he ought to just read a speech from FDR on freedom of the seas that I posted for my Wall Street History link. 

North Korea: Kim Jong-il booted the remaining UN inspectors as the North said it would expand its nuclear program and restart activities at Yongbyon, as well as ending its participation in the six-party talks. The UN Security Council issued a condemnation for Pyongyang’s recent ballistic missile test, while voting to tighten existing sanctions that were part of previous resolutions. No telling where we go from here. As the Wall Street Journal opined, it’s “Groundhog Day.” 

Pakistan: PBS’ “Frontline” program had a chilling segment on the Taliban and how they have taken over the Swat Valley. 200 schools have been blow up and girls are banned from attending schools of any kind. Thanks to Pakistani President Ali Zardari ratifying a deal the government cut with the Taliban that allows for Sharia law in Swat, thousands of terrorists are streaming into this once resort land, thus giving both al-Qaeda and the Taliban a government-sanctioned base, in essence. At least 6,000 to 8,000 are now calling this place home. It’s the Devil’s brigade. 

So is it any wonder then that counter-insurgency expert David Kilcullen, a former Australian Army officer who was an adviser to the Bush administration and is now a consultant to the Obama White House, told the Sydney Morning Herald: 

“We have to face the fact that if Pakistan collapses it will dwarf anything we have seen so far in whatever we’re calling the war on terror now….The safety of people ‘round the world is at stake…. 

“In a sense there is no Pakistan – no single set of opinion. Pakistan has a military and intelligence establishment that refuses to follow the directions of its civilian leadership. They have a tradition of using regional extremist groups as unconventional counterweights against India’s regional influence.” 

Israel / Egypt / Iran: Israel is caught in the middle of a major tiff between Hizbullah and Egypt, the latter claiming Hizbullah was putting in place terror cells designed to take down the government of Egyptian President Hosni Mubarak. Hizbullah leader Sheikh Nasrallah denied he is trying to spread Shia ideology in Sunni dominated Egypt, but he admitted to smuggling weapons to Hamas in Gaza through Egypt. Egypt arrested 49 accused of being part of a terror cell that was going to launch attacks in Sinai, where many Israelis vacation. Egyptian parliament leaders want Nasrallah arrested. 

Meanwhile, this really has everything to do with Iran and Israel, seeing as how the former finances Hizbullah, while Israel needs Egypt to stay vigilant. All the while, the nuclear weapons program clock is ticking in both Tehran and Tel Aviv, this as the Obama administration prepares to sit down at the table on a formal basis over the coming months, buying Iran more time. 

In Tehran itself, an Iranian spokesman announced that a jailed American journalist charged with treason stood trial behind closed doors with a verdict expected within weeks. Undoubtedly, the name Roxana Saberi, 31, will become more familiar to Americans shortly. The State Department has called charges against Saberi “baseless” and Sec. of State Clinton has demanded the mullahs release her. Just refuse to sit down with the bastards until they do, Hillary. 

Afghanistan: Talk about the Stone Age, a new law here allows a husband to demand sex with his wife every four days, unless she is ill or would be harmed by intercourse. So dozens of young women bravely protested in Kabul and some men pelted the women with small stones. Of course were it not for al-Qaeda, I think 99% of Americans would just let this hellhole rot. 

Russia: On Thursday, the Kremlin officially declared that the war in Chechnya was over, thus bolstering the standing of Chechen President Kadyrov, a sadistic killer who Vladimir Putin took under his wing a few years back. 

President Medvedev gave an interview to the newspaper Novaya Gazeta, a frequent critic that has seen two of its journalists gunned down, as a way, it would seem, of differentiating himself from Putin. Putin, after all, once said democracy needed to be adapted to Russian conditions, but Medvedev said “Stability and a prosperous life cannot in any way be set off against a set of political rights and freedoms. The institution of democracy cannot be set off against prosperity.” Medvedev, who did not mention Putin in the interview, said senior officials needed to spend more time listening to the people. 

But if Medvedev wants to be seen as a true reformer, he should take a first step and free Mikhail Khodorkovsky, the former Yukos oil chief now in the midst of a second trial, but Medvedev said he wouldn’t intervene in the judicial process. 

[As an aside, the Kremlin’s tentacles, already into Georgia and Ukraine, are inside Europe’s poorest country, Moldova, which has seen major protests against the communist government. Moldova is 80% Romanian, and virulently anti-communist, so it should be no surprise that the commies said they had proof Romania’s government was involved in the demonstrations. It could have been…Moldova was part of Romania, after all, before the Soviets annexed it. And on the issue of Georgia, President Saakashvili blamed Russia for recent protests in his country, and we all know the Kremlin is indeed deeply involved. Saakashvili accused Russia of building up its forces in the breakaway republics of South Ossetia and Abkhazia the last few weeks. Russia was to have pulled all its forces out by now.] 

Lebanon: Two weeks ago I wrote of how the government took the gutty step of taking out two drug kingpins operating out of Hizbullah controlled land in the Bekaa Valley. This week the clan that was targeted ambushed and killed four Lebanese soldiers. Critical parliamentary elections here take place in June and there is a good chance Hizbullah will emerge the winner. 

Thailand: What a mess. Billionaire and former Prime Minister Thaksin, popular amongst the rural poor, has been the driving force behind the recent unrest here three years after his removal from office in a military coup. He is now urging the revered king to step in and heal the divisions, though it’s clear he wants to lead a revolution and return to power. 

Four days of anti-government protests, which shut down a key ASEAN summit in Bangkok, a huge embarrassment for the government, ended peacefully as the leaders, the “yellow shirts,” surrendered. The protesters were demanding the resignation of Prime Minister Abhisit, but the rebels had zero support among the majority of politicians and, importantly, the newspapers. 

Then on Friday, the leader of the protesters was shot in an assassination attempt, though he is expected to survive. So much for easing tensions, however, and a state of emergency remains in place. 

In the past, protests have not impacted the economy, or foreign investment, but this time could be different. 

China: The government has unveiled plans to vastly expand the capabilities of the navy to turn it into a true blue-water force capable of operating far from its own shores. Of most immediate concern to the U.S. should be China’s development of long-range missiles that could take out our own vessels in the region. 

India: The largest democracy in the world began a month-long national election and 17 died in various attacks the first day, as voters decide who can best handle the economy and the growing terror threat. Maoist insurgents were blamed for the deaths at polling stations. 

Cuba: President Obama, fulfilling a campaign promise, began to lift restrictions on travel and money sent to Cuba by Americans with relations there, as well as giving the green light to U.S. telecom companies to open up communications between the two countries; all significant steps but not far enough for Cuba, seeing as the trade embargo remained in effect. To which Obama said he’d be willing to take further measures once Cuba lifted its own restrictions on Cubans’ ability to travel and to voice their opinions. Later, on Friday night, Obama remarked at a regional summit in Trinidad that the “United States seeks a new beginning with Cuba.” Obama also shook a beaming President Hugo Chavez’s hand. 

Mexico: Appearing in Mexico City with President Felipe Calderon, Barack Obama said he would not seek a U.S. ban on assault-weapons, but would instead enforce the laws already on the books. Calderon wants the U.S. to reinstate the ban that expired in 2004, but Obama says it would be too difficult politically. 

Separately, Obama offered little hope the idiotic cross-border trucking spat will be solved anytime soon. The illegal trucking ban, I hasten to add. Hours before Obama arrived, a shoot out between a drug gang and Mexican troops left 16 dead. 

Bolivia: Bizarre story here. Little Evo Morales, commie/socialist president, said he ordered police to kill three international mercenaries who were planning to assassinate him, along with the vice president.  

South Africa: So you know all my talk about Jacob Zuma and the coming crisis here, and how he likes to sing Zulu war songs? [Granted, “Zulu” is one of the great movies of all time…but I digress.] 

Sunday’s London Times had the headline: “Zuma to rule South Africa like Zulu king” 

The article actually sings Zuma’s praises, though reporter Rian Malan asked Zuma what he planned to do about the inept civil service. “There is no magic bullet, but I am a great admirer of King Shaka Zulu, who could be ruthless.” I would suggest Malan focus on this last sentence. 

Canada: Goodness gracious. The government launched a major crackdown on the Hell’s Angels. Over 150 were arrested, including some suspects in France and the Dominican Republic. Something about drug rings and murder. Personally, when I see one of them, I always tip my cap and offer a hearty “G’day!” 

–Editorial / Washington Post…on the release of memos providing guidance to the interrogation of terror suspects during the Bush administration. 

“The Obama administration acted courageously and wisely yesterday with its dual actions on interrogation policy. The pair of decisions – one essentially forgiving government agents who may have committed heinous acts they were told were legal, the other signaling that such acts must never again be condoned by the United States – struck exactly the right balance. 

“The administration announced that it would not seek to press criminal charges against CIA operatives who participated in enhanced interrogations of terrorism suspects during the Bush administration. ‘It would be unfair to prosecute dedicated men and women working to protect America for conduct that was sanctioned in advance by the Justice Department,’ Attorney General Eric H. Holder Jr. said in a statement. 

“At the same time, the Justice Department released and repudiated four more Bush-era memos….that provided the legal justification for such extreme interrogations.” 

The Post goes on to say that the administration decisions helped “restore confidence that this country will not torture, but…also strengthened the nation’s moral authority in condemning these heinous acts wherever they occur.” 

But former CIA director Michael Hayden said allies will be more reluctant now to share sensitive intelligence with the release of these memos, because the message has been sent the United States can’t keep anything secret. Other officials in the Bush administration said the release of the material gave terrorists a huge advantage because we were divulging our methods and terrorists could then prepare for them. 

–Then you have this issue of the Department of Homeland Security’s report that not only singles out right-wing extremists as threats to our nation’s security, but also that some military veterans could be susceptible to extremist recruiters or commit lone acts of violence. DHS Secretary Janet Napolitano defended the report but said the description of right-wing extremism should be changed. Needless to say organizations such as the VFW and American Legion were none too pleased. Some of the explanations I saw from Napolitano were beyond lame. Republican Congressman Pete Hoekstra said the release of the report should be investigated for “unsubstantiated conclusions and political bias.” 

–I hate to say it, but speaking as a Republican it’s time for Minnesota Senator Norm Coleman to give it up and allow the unfunny Al Franken to take his seat. 

–New York Attorney General Andrew Cuomo, a Democrat, has been winning kudos from both sides of the political aisle, including the opinion page of the conservative New York Post, for his crackdown on corruption that this week saw the arrest of the head of the Liberal Party, Raymond Harding, for collecting $800,000 “in illegal fees as part of a sham pension-fund transaction in return for political fixes favoring both [former state comptroller Alan] Hevesi and his son.” Last month, two top aides to Hevesi were indicted for other “pay-to-play” shenanigans. 

[Cuomo’s investigation is also looking into Steven Rattner, who is heading up the Obama administration’s auto task force, and whether he or representatives of his private-equity firm, Quadrangle Group, also participated in related pay-to-play schemes.] 

–Some Texans, appearing at an anti-tax “tea party,” spoke of secession and Gov. Rick Perry didn’t exactly pooh-pooh the talk. But it would make for a strange map, so may I humbly suggest that Texas grant the Panhandle to Oklahoma, allowing for symmetry from the Mississippi westward.  

–It’s pitiful that states across the country are paring back access to national parks amidst the budget crisis and not seeking to make further cuts elsewhere. Most are cutting park budgets 20%, meaning reduced hours, for starters. Don’t mess with the parks and our park rangers! 

–So I’m reading another article on ice loss and global warming, this one from the Financial Times, when it concludes: 

“One factor that could help to slow the melting of the Arctic, but which has not yet received serious consideration internationally, would be to cut the amount of ‘black carbon’ – soot – that we spew into the air. Black carbon darkens ice when it falls, causing it to absorb more heat, and may be responsible for half of the warming effect in the Arctic, according to research. Cutting soot would not only remove large amounts of air pollution, but, say some scientists, could be quicker and easier than cutting carbon dioxide emissions.” 

What have I been saying for years now? Re-label the darn debate as one over Global Pollution, not Global Warming! 

[And on Friday, the Environmental Protection Agency issued a landmark ruling that carbon dioxide and other greenhouse gases pose a danger to the public. Now we’ll see how Congress and the administration approach it.] 

–I got a kick out of some of the notes I received following my mention of home values in Stockton, California. I will never speak ill of those living in any American city, but I do have to note that, yes, Stockton is No. 6 in auto-thefts. Modesto, Calif., has the No. 1 rate, edging out Laredo, Texas. 

–Every time I see 86-year-old Rachel Robinson, Jackie’s widow, I feel compelled to say there is no classier, and remarkable, woman in the country today. The New York Mets have a Jackie Robinson rotunda in their new stadium and she gave a terrific speech at the opening ceremony for it. 

–Gotta admit…Bo, the new First Dog, is a cute one. And it came housebroken! Some of the readers for another column I write have seen this story before, but I’ll never forget how when I brought home my first, and only, dog, Ralph, we were watching Denny McLain win his 30th game (1968) and Ralph proceeded to relieve himself on my leg. He just couldn’t bear the excitement, I guess, though I never really asked the mutt about the incident. 

–Lastly, former co-worker Jeff B. and I have the same schedule; at our desks at 5:00 a.m., and we normally write each other with a comment or two on overnight developments, or the latest Calvin & Hobbes strip. [If you aren’t receiving this one by e-mail you’re missing out.]  

But on Friday, Jeff forwarded a “Breaking News” story that was a further sign of the apocalypse. 

“Ashton Kutcher is first to reach 1 million followers in Twitter contest.” 

To which I replied to Jeff, “Please shoot me if I ever start Twittering.” 

In Sports Illustrated, Oregon football coach Chip Kelly had his own thoughts on using Twitter to contact players: 

“Who cares what I had for breakfast? You think a recruit’s going to come to Oregon because I ate Oreos?” 

I’ve suddenly become a closet Oregon Ducks fan. Coach Kelly rocks. 

And not for nothing, but if all the technology of the past 10-15 years was supposed to make us more productive, then why is it the world is in the midst of its worst financial crisis since the Great Depression?  Seems to me we did just fine without it all.  I\’ve also yet to see the real Next Big Thing.  If it\’s the likes of Twitter, God help us.

Pray for the men and women of our armed forces, and those who have fallen. 

Gold closed at $867
Oil, $50.33 

Returns for the week 4/13-4/17 

Dow Jones +0.6% [8131]
S&P 500 +1.5% [869]
S&P MidCap +2.6%
Russell 2000 +2.4%
Nasdaq +1.2% [1673] 

Returns for the period 1/1/09-4/17/09 

**Next time from Reykjavik…ground zero for the financial crisis.