[Posted Sunday, Noon ET]
Wall Street
The stock market rocketed higher this week as investors chose to
focus on the positives; low inflation, future economic growth and
the presumption that corporate earnings will be just fine, thank
you. Both the Dow Jones and S&P 500 had their best weekly
performances since November, up 3.3% and 3.1%, respectively,
to 10471 and 1189. Nasdaq, which has begun to outperform the
other two, rose 3.5% to 2046, it’s best percentage gain since last
August.
A major reason for the optimism, at least in the eyes of your
scribe, was the latest missive from bond king Bill Gross of
PIMCO. PIMCO recently wrapped up its secular forum from
which it establishes its latest 3-5 year outlook, and Gross and Co.
are now firmly in the disinflation camp after sitting on the fence
at the beginning of the year. Because inflation will remain tame,
PIMCO now forecasts the 10-year Treasury will trade in the 3-
4.5% range through 2010.
Of course this kind of rate outlook coming from a man without
peer in this regard (I used to work at PIMCO, if you’re new to
the site) has broad implications. Certainly the housing bubble
could continue for a spell and in the competition for the
investment dollar you’d expect stocks to get their fair share of
the money flows.
But this week federal banking regulators urged America’s
lenders to cool it when it comes to handing out home equity
loans and lines of credit. The former, for example, has risen
from $492 billion at the end of 2000 to $881 billion, 12/04, a
79% increase. And comments from various Federal Reserve
officials, including Chairman Alan Greenspan, certainly lead to
only one conclusion; no matter how they couch their statements,
we’re in the midst of a bubble.
The Fed is focusing on facts such as 23% of all homes purchased
in 2004 were for investment and another 13% were vacation
homes. And of course a large percentage of these are of the
interest-only variety. For example, 61% of California’s new
home mortgages were interest-only in the first two months of this
year vs. 47% for all of 2004 and a mere 2% just three years ago.
It’s all about the affordability issue in many parts of the country
and the banks can be a most creative lot. Nonetheless, the bubble
continues and housing starts rebounded in April, up 11% (25% in
the South). But it will end one day; thanks to the humongous
debt loads many of us are taking on.
The other day my fiancé and I were exploring some of the hotter
residential areas here in New Jersey and as you pass one $multi-
million mansion after another you can’t help but think, “The
homeowners can’t all be making seven figures and meeting their
monstrous mortgage obligations is just not that simple.”
And then my friend Jimbo passed along a terrific tidbit from his
place of residence, Chatham, NJ, where the art of the teardown
has been taken to a new level. Homeowners have to contract out
for garbage pickup here and in talking with the owner of the
waste management company, Jimbo learned over 10% are 60-
days overdue on their bills. When the owner of the business calls
on some to collect, the same ones living in homes priced at $1.5-
$2 million, most just tell him they are stretched too thin to pay.
It’s amazing.
Let’s face it. I was talking of the housing bubble popping before
most others were and I’ve been wrong on the timing. But I’ve also
written the past year that with interest rates as low as they are I
can’t see an imminent collapse in prices, but rather a prolonged
period of stagnation is just around the corner and it will result
in a slowdown in consumer spending, the flip side of the ‘wealth
effect.’ When your #1 asset isn’t rising in price anymore, most
folks don’t do cartwheels and instead delay purchasing that new
car, shorten their vacation plans and maybe go out to dinner one
or two times less each month. Of course this then ripples
through the entire economy. It’s for this reason I remain slightly
bearish on equities for 2004 (with the major indices finishing off
about 5%) and why I also believe we’ll be talking of recession
and possible deflation by year end. Plus “Week in Review” is as
much about global hot spots as financial news and until we get a
resolution on many of the fronts discussed in this space on a
regular basis, let alone our long-term structural issues on the
deficit front, I can’t help but be cautious.
Street Bytes
–U.S. Treasury Yields
6-mo. 3.16% 2-yr. 3.66% 10-yr. 4.12% 30-yr. 4.44%
The short end of the yield curve saw a tick up in rates while the
long end was essentially unchanged on the week. Is the Federal
Reserve close to being finished? Many now believe there are
just one or two more increases in the offing, taking the funds rate
to 3.25-3.5% from its current 3% instead of the once assumed
4% by year end. I’ll have more on this next week, but you would
expect the Fed wasn’t as ecstatic as some market players made
them out to be with a core producer price index up 0.3%, even as
the CPI’s was unchanged. [The raw numbers, up 0.6% and 0.5%,
weren’t exactly bullish either.] But I maintain official inflation
is not a big issue and obviously the numbers continue to be
skewed on a monthly basis by the whims of the energy markets.
As for a forecast on the 10-year Treasury, I said back on
12/31/04 that we’d be at 4.30% by year end and I’m confident on
this one. Three readings on manufacturing, by the way, were
less than impressive this week; industrial production and regional
data for the New York and Philadelphia areas.
Finally, the U.S. dollar continues to hit 7-month highs vs. the
euro and most other major currencies on the heels of a narrowing
trade deficit (at least for one month) and the simple truth; where
else are you going to put your money these days? That said, the
world’s central banks were net sellers of U.S. assets in March for
the first time since Sept. 2002, but private sector inflows remain
strong.
–Despite the huge rally this week, the Dow Jones and S&P 500
basically remain locked in trading ranges. If you are a buyer of
tech and small and mid-cap stocks, however, you have to be
heartened by the strong gains of the past three weeks in
particular.
–The Washington Post floated a story that President Bush may
ask Alan Greenspan to stay beyond his retirement date next
January. More likely Greenspan will remain a few months
longer until a successor is approved.
–China’s industrial production for April was up a whopping
16%, year over year, and Japan reported that first quarter GDP
rose 5.3% on an annualized basis, providing solid evidence that
this nation’s latest recession may be history. Australia also
reported better news on its economy.
But France’s performance remains putrid and South Korea and
Taiwan’s economies are slowing.
–As Congress and the Bush administration threaten protectionist
measures, China refused to remove the peg on its currency but
did relent, somewhat, on the clothing and textile front in slapping
additional export tariffs on selected products. But when the
Treasury Department issued a report on China and perceived
currency manipulation, one Chinese official said the U.S. should
“put its own house in order before slamming others.”
–Many issued the ‘all-clear’ signal on the hedge fund front this
past week. No way. We won’t have a real good idea on the
recent damage for another few weeks.
–Energy: Crude oil inventories in the U.S. continued to rise to
new six-year highs while OPEC’s president said $40 oil is
acceptable. But the key is OPEC’s upcoming meeting set for
June 15 when the cartel establishes production policy for the rest
of the year. Should the price continue to slide look for an
attempt to rein in the amount produced.
Lost in the oil talk, though, has been natural gas. My friends at
Pritchard Capital tell me total natural gas storage is at the high
end of the 5-year average here and “weak natural gas price fears
may now also become an issue for the energy bear case.” But,
Pritchard adds…
“We remind investors of several points: 1) No matter what the
price of natural gas, storage always finishes the refill season full;
2) Long-term natural gas fundamentals are still healthy based on
declining deliverability, increased demand and likely delays of a
meaningful ramp up of LNG imports before 2009; and 3) Overall
storage capacity should be closer to 5 trillion cubic feet (versus 3
trillion presently) to meet system needs in the case of a colder
than normal winter or other issues.”
–The Gazprom – Rosneft merger has been officially scrapped,
but the Kremlin vows to purchase enough shares of Gazprom to
bring state ownership to 51%, with the balance then available for
foreign investment as a means of broadening the capital structure
as well as its total value.
Meanwhile, the farce that is the Mikhail Khodorkovsky / Yukos
trial only got worse this past week. The story two weeks ago
was that a verdict may be delayed while new charges are
prepared. But then the court opted to read the verdict after
all…and it read and read and read…all week long. The process
will continue this coming week. Both Khodorkovsky and co-
defendant Platon Lebedev are sitting in court doing crossword
puzzles.
Former Prime Minister Mikhail Kasyanov stepped up his
criticism of the Putin regime and vowed to form a united
democratic front. Regarding the trial he added, “The
Khodorkovsky case has brought Russia to a turning point, while
the verdict could mean that the point of no return will be passed.”
Kasyanov is warning that the nation is close to reverting to “a
Soviet system with elements of state capitalism.”
–Pakistan makes this segment of the column based on its plan to
increase its privatization efforts, a good sign, as the state looks to
sell off stakes in its telecom and energy concerns as part of
President Musharraf’s 5-year economic plan. But many voices
in Pakistan and elsewhere are upset that Musharraf is now
planning on staying beyond the stated end of his term, 2007. For
its part the U.S. can complain this stifles any democratic reform
in the country but at the same time you know the White House is
going “phew.” We desperately need Musharraf to not only stay
alive but stay in power to add stability to the region; particularly
if bin Laden is caught, because a majority of the Pakistani people
will blame Musharraf at that point for cooperating with the
United States.
–Morgan Stanley was ordered to pay investor Ronald Perelman
$1.45 billion (including $850 million in punitive damages) for
advising Perelman on the Coleman / Sunbeam deal back in 1998.
At the time Morgan Stanley told Perelman to take back Sunbeam
stock that was later worthless due to Morgan’s having cooked the
books.
–General Motors finally announced a major restructuring on the
product development and sales front as the automaker will have
only two full lines in the future, those being Chevrolet and
Cadillac, while its other six brands will narrow their focus to
specific segments. Mark LaNeve, GM’s new marketing director,
said “Our complementary brands won’t succeed as ‘Little
Chevrolets’ or less-expensive Cadillacs. They have to be
distinctive, differentiated products,” adding, “I’d rather have four
great Pontiacs that are really distinct and stand for athletic design
and performance, than seven or eight capable but
undistinguishable Pontiacs that fail to fully deliver on the brand’s
promise.” [New York Times]
Of course this also means that production will have to be slashed
and / or plants closed in the coming years and that presents the
company with another union issue.
–Bloomberg News is reporting that a New York grand jury is
hearing evidence of criminal conduct at AIG, with New York
Attorney General Eliot Spitzer presenting much of it himself.
Indictments should be forthcoming and it also increases the
pressure on senior executives to testify against current and
former colleagues.
–Gretchen Morgenson had a good piece in the Sunday New
York Times on the aggressive sales practices that are employed
when recommending annuity investments to the elderly.
Personally, I have never been a fan of this investment vehicle
and would urge those with elderly parents who are still in control
of their finances to make sure they don’t wrap themselves up in
products where “guaranteed returns” sound juicy but the pain in
the backend can be sharp due to excessive surrender charges.
–The U.S. Supreme Court overturned laws barring out-of-state
wineries from shipping directly to customers in two states, New
York and Michigan. By another 5-4 margin, the Court said states
can’t discriminate against out-of-state business. This ruling
should also apply to 22 other states that currently ban the practice
and in general has to benefit small wineries.
–If you have Internet-based phone service, make sure your
network is providing full-featured 911 service. Many do not and
the FCC has just mandated that the VoIP providers address the
issue.
–The Senate passed a $295 billion highway bill – or $11 billion
more than the president said he’d sign – and now the final
legislation will be decided in conference between the House and
Senate. But will Bush veto this legislation, as threatened, which
would be the first of his entire presidency?
Doubtful, as it passed the Senate 89-11, or well above the 2/3s
needed to override the president. As the Wall Street Journal
opined, if Congress defies Bush “you can paint ‘lame duck’ in
bright red letters on the White House.”
–For the first four months of 2005, advertising revenues were off
14% at Time, 20% at Newsweek and 4% at U.S. News & World
Report due mainly to the drop in spending from the
pharmaceutical and auto industries. [Crain’s New York
Business]
–The following is for CNBC viewers, but don’t you find it a bit
unsettling that Yellow Roadway CEO Bill Zollars seems to pop
up on screen almost daily? You don’t think he has a severe ego
issue, do you?
–Maytag is being taken private for $1.1 billion by a private
investment group, continuing a recent trend of removing
companies from the public spotlight. In this case, Maytag is
losing out big time to foreign competition and better positioned
U.S. rivals such as Whirlpool and General Electric. For starters,
Maytag’s repairmen, at least according to the commercials,
aren’t making house calls…but they’re still being paid!
–I forgot to mention last week that I had a nasty little episode
involving my corporate account and someone writing counterfeit
checks off it. [They used the # but changed the name.] I was
quickly made whole and I just wanted to put in a good word for
Wachovia which at various levels was most helpful and
professional. What was funny about this episode was that when I
received the canceled checks that weren’t mine, I returned them
to the printed address, only to have them sent back twice because
the person (or ring) was obviously using false ones. Altogether
now….doh!
–My portfolio: I held onto my lone energy position through the
recent turmoil and it’s performed relatively well, though at about
7% of my overall portfolio I’m still underweight the sector
versus market averages. I also remain roughly 15% equities and
85% cash. But I’m wrestling with my other decent-sized holding
and I may address this further following a quick trip to the
southwest this week to visit a manufacturing facility.
Foreign Affairs
Iraq: Radical Sunnis want more of a voice in the new
government but the Sunnis overall hold 7 of 35 cabinet seats, a
proportional representation. Where the Sunnis have a case is that
they currently have just one of 55 slated to work on the new
constitution. But on Saturday, moderate and radical Sunnis
vowed to cooperate with the new government in an attempt to
return to the mainstream for both the purposes of writing the
constitution as well as future elections. Meanwhile, the
government, in a concession to the Sunnis, ordered a ban on raids
of mosques, but of course this is where insurgents hide out.
One figure that can still be a real force for positive change is
Ayatollah al-Sistani who this week urged that Sunnis and Shiites
work together, but this was the first we’ve heard from him in a
long while and it’s not as if the man is in good health. He could
be fading from the scene at a most inopportune time.
What is also clear is that U.S. military leaders are increasingly
frustrated at their inability to put down the violence. The
insurgency itself has no real goal other than to destabilize the
government. They clearly are not winning over the hearts and
minds. So then the question becomes, “What do the Iraqi people
want?” General John Abizaid told the New York Times’ John
Burns that an ongoing problem is obviously the lack of a
coherent Iraqi security force, this after two years of trying to put
one together. And the much talked about offensive in the west,
on the Syrian border, was not a wild success for U.S. forces as
it’s come to light we were undermanned.
Secretary of State Condoleezza Rice paid a visit to the region and
reiterated the government must stick to the deadlines of having a
constitution written by August and a referendum on same in
December. Otherwise, this entire mission is at risk.
And as Senator John McCain added, when it comes to public
opinion in the United States and the still dwindling support, it’s
all about casualties. Americans will support their government as
long as our men and women aren’t being killed in large numbers,
to put it bluntly. Separately, NBC’s Tim Russert echoed what I
have been saying for months now, that being the White House is
very concerned over the declining poll numbers.
North Korea: Last week I mused the Bush administration had
nothing to lose in holding direct talks with Pyongyang. On
Wednesday we learned that such discussions were indeed held
recently in New York and that the North Koreans were told
President Bush recognizes the country as a sovereign state and
doesn’t intend to attack it. Otherwise, South Korea held
extensive talks with its neighbor in an attempt to get them back
to the six-party bargaining table, but North Korea said no.
Iran: The mullahs insist they will go ahead with enriching
uranium and want 10 nuclear reactors as an incentive to scrap a
weapons program in negotiations with the Euro-3; Britain,
France and Germany. The presidential election here is June 17.
Lebanon: Rafik Hariri’s son predicted an opposition landslide in
the coming elections as an anti-Syrian coalition, including a
Hizbollah candidate, believe it or not, attempts to capture a
majority in parliament. As of this writing it has been relatively
quiet in these critical weeks before the vote, May 29.
Afghanistan: The lone female V-Jay on Afghanistan’s
equivalent to MTV was murdered, shot dead in her home.
Shaima Rezayee appeared on the nation’s most watched
television program among the young, but as you can imagine a
station featuring videos of Madonna didn’t go over real well with
the mullahs, who have been trying to get women removed from
the television screens.
Israel: Palestinian President Mahmoud Abbas is coming to
Washington this week to meet with President Bush; a very
significant event where every word will be parsed.
But the big story in Israel these days is the battle between the top
two diplomats, Foreign Minister Silvan Shalom and Israel’s
ambassador to the U.S. Danny Ayalon. Or perhaps I should say
the battle is between their wives. According to the BBC:
“Israeli media suggests the situation became heated when the
foreign minister’s wife, Judy Shalom, blamed the embassy in
Washington for not securing a photo opportunity with Madonna
during the U.S. pop star’s Kabbalah pilgrimage to Israel last
September.
“Mrs. Shalom, a TV presenter, was said to be so outraged at the
perceived slight that she demanded the ambassador’s personal
secretary…be sacked.
“After Mr. Ayalon refused, Mr. Shalom’s foreign ministry
canceled the aide’s position entirely, reports say.
“The ambassador accused Mr. Shalom of interference and is
reported to possess taped telephone conversations with foreign
ministry staff allegedly proving Mrs. Shalom’s role in the affair.”
Meanwhile, Mr. Ayalon’s wife is alleged to have verbally abused
embassy staff.
Kuwait: Parliament approved a bill granting women the right to
vote and stand in elections. [Women are still denied this in Saudi
Arabia and other nations in the region.]
Russia: In addition to the above comments in “Street Bytes,”
President Vladimir Putin, in an attempt to appease the leaders of
Europe and the U.S., said all political parties will have “equal
access” to state media and that the opposition would have a say
in the selection of regional governors, the latter currently
handpicked by Putin. As always, though, details were lacking.
Meanwhile, Ukraine’s #2, Prime Minister Tymoshenko,
complained that Russia’s oil companies, such as Lukoil, are
creating an artificial crisis in denying Ukraine fuel oil. Russia
supplies 80% of Ukraine’s needs in this area, i.e., just one
example of how Putin can use energy as a political weapon as
I’ve long warned.
And then there is the oil-for-food scandal where a U.S. Senate
subcommittee is alleging senior members of Putin’s council were
major beneficiaries, along with ultranationalist Vladimir
Zhirinovsky.
So in line with a discussion on corruption, Russian-based
entrepreneur Bernie Sucher had the following thoughts as part of
an op-ed in the Moscow Times.
“The challenge of 60 years ago demanded from ordinary people
the sacrifice of everything that humanity holds dear. The values
of courage, loyalty and patriotism inspired individuals and were
the bedrocks of the moral strength that helped them endure and
fight back, for the sake of their children and their country. The
challenge of the 21st century is nothing so dreadful. But to build
a prosperous, competitive and just country, Russians will have to
embrace values that are different, yet in their own way, noble and
certainly vital….
“As individuals – and increasingly, collectively in grassroots
organizations – entrepreneurs in Russia are fighting back against
the mediocrity and parasitism that is endemic in the country’s
public and commercial life. They are ideal fighters because
entrepreneurs are the first to feel the true cost of the grasping
hand of a predatory bureaucracy, because their experience tells
them that even daunting obstacles can be overcome and because
the values that they hold dear offer no choice but to fight….
“In Russia, corruption has become a habit for people who are
comfortable taking cash in one hand while stabbing their nation
in the back with the other. Russians who truly love their country
will recognize this evil for what it is. Like their grandparents
once did, they will draw strength from noble values, including
courage, patriotism and self-sacrifice. They will act to defend
themselves and the future for their children. Those less capable
or less brave will at least acknowledge with pride those who have
stepped forward, like Russia’s entrepreneurs. The people who do
these things will be Russia’s next generation of heroes.”
Uzbekistan: President Islam Karimov put down the revolt though
his government is not allowing the foreign press access to many
of the key sites. Rebel leaders here have vowed to establish an
Islamist state.
China / Taiwan: Aside from talk on the Chinese yuan, in
Taiwan, President Chen Shui-bian did win a key vote for a
special assembly that will work to amend the constitution, this
after the two opposition leaders had traveled to the mainland to
make nice and talk of reconciliation, so Chen’s independence
movement is still alive. On a different front, China said it would
consider allowing mainlanders to travel to Taiwan on tourist
visas for the first time, but Taiwan has obvious security
concerns.
And then you have this bizarre case where a Philippine oil
executive and his daughter were stabbed to death in broad
daylight in Tiananmen Square (the wife was severely injured).
While neither government was talking, at first blush it appears
the family may have been mistaken for Japanese, following the
wave of anti-Japanese protests the government allowed to take
place about a month ago.
Italy: Matthew Lynn of Bloomberg News had some interesting
comments on Italy and how it could actually abandon the euro at
some point because of how severely its economy has suffered
from the restrictions placed on those using the currency. The
budget deficit, for example, may reach 5.7% of GDP in 2006,
well above the Euro mandated target, but Italy’s economy is now
in recession and getting the country back on a growth path
should be the first priority. As one economist told Lynn, “Tax
cuts would be a good thing, but really it is more of a disease of
the supply side. It is a structural problem.”
Lynn observes, “Italy specialized too much in low-growth
traditional consumer and capital goods, while slipping behind in
areas such as electronics, chemicals and pharmaceuticals.”
Italy’s next prime minister following Silvio Berlusconi is likely
to be Romano Prodi, the former president of the European
Commission, who thus carries a lot of credibility on this front in
removing his nation from the euro club should he choose to do
so.
Chile: In a developing tragedy, up to 100 soldiers were on
maneuvers in the Andes when they were pounded by a blizzard.
At last word at least sixteen froze to the death and another 30 are
missing. This could turn into a real political firestorm because
families are already saying the soldiers were unprepared and ill-
equipped.
Mexico: President Vicente Fox expressed outrage at legislation
passed in the U.S. that makes it far tougher for Mexicans
working in the U.S. to get a driver’s license. President Bush
didn’t support this either but the move was part of a bill funding
operations in Iraq and Afghanistan. Then Fox said “There’s no
doubt that the Mexican men and women – full of dignity,
willpower and a capacity for work – are doing the work that not
even blacks want to do in the United States.” Uh oh. Well, you
can imagine this gave Jesse Jackson and Al Sharpton something
to do that day and Fox belatedly apologized to both. Jackson met
with Fox directly in Mexico and Sharpton is heading down
shortly. Super use of their foundation dollars, mused the editor.
Canada: Prime Minister Paul Martin survived a no confidence
vote by one measly vote, the Speaker’s, who was forced to break
a 152-152 tie in parliament. Martin’s Liberal Party has been
embroiled in a lengthy scandal involving bribes and kickbacks
from advertising firms in exchange for government contracts.
Martin himself has not been implicated but senior members of
his party have.
Random Musings
–I’m the one who first said years ago that in this war on terror,
America has to be perfect, as frustrating as that is. Tragic
mistakes such as Abu Ghraib have deadly consequences.
And then there is Newsweek. Like a lot of folks in my position,
I wish I had given the Koran story another 48 hours but I was
trying to give a heads-up on the pending violence since the major
U.S. networks were not as yet picking up on it like some of the
foreign media outlets were. But I certainly left a clue or two in
my comments that I was also leery of the story. Unfortunately,
the terrorists and related extremists already have what they want
and the damage won’t be easily repaired.
From New York Times columnist David Brooks:
“Maybe we should all focus on what’s important. Newsweek’s
little item was seized and exploited by America’s enemies in a
way that was characteristically cynical, delusional and fascistic.
“The people who seized upon this item, like the radical clerics in
Afghanistan, are cynical in the way they manipulate episodes
like this to whip up hatred and so magnify their own standing.
“At the same time, they believe everything that could be alleged
about America – and more. They’ve spent so many years
inhabiting a delusional mental landscape filled with conspiracy
theories and paranoia that you could drill deep into their minds
without ever touching reality.”
And on the broader issue of the use of suicide bombers in Iraq,
the Times’ Thomas Friedman weighed in on the difference
between the Newsweek story, and the protests it generated, and
the suicide bombers in Iraq.
“(These) mass murders – this desecration and dismemberment of
real Muslims by other Muslims – have not prompted a single
protest march anywhere in the Muslim world. And I have not
read of a single fatwa issued by any Muslim cleric outside Iraq
condemning these indiscriminate mass murders of Iraqi Shiites
and Kurds by these jihadist suicide bombers, many of whom,
according to a Washington Post report, are coming from Saudi
Arabia.
“The Muslim world’s silence about the real desecration of Iraqis,
coupled with its outrage over the alleged desecration of a Koran,
highlights what we are up against in trying to stabilize Iraq – as
well as the only workable strategy going forward.”
[As to the Saddam photos, first splashed on the cover of the
British tabloid The Sun, enough has already been said. Suffice it
to say it represents another mistake and the new revelations on
Afghan prisoner abuse will be even more harmful.]
–Bill Gates, perhaps the greatest philanthropist of all time, and
one who doesn’t hide behind his charity as many of the others do
that I write of, hiked to $450 million from $200 million the total
that he will dole out in grants to scientists developing inventions
to help global health.
–I obviously haven’t been a Donald Rumsfeld fan, but I concur
with his base closing efforts. No one likes to see anyone lose
their job or a community be so disrupted, but at the same time
the excuses used by some politicians to keep various facilities
alive are downright laughable.
On the other hand, the big issue of immediate concern is
manpower (which the base issue has nothing to do with) and
until we have a resolution in North Korea, in particular, heaven
help us if Pyongyang, or later Tehran, crosses the line.
–Despite improvements on the technological front, the Journal of
the American Medical Association maintains that about 98,000
Americans still die each year because of medical errors.
–Los Angeles elected its first Hispanic mayor since 1872, or the
year President U.S. Grant won his reelection over Horace
Greeley.
–I went to see U2 on Tuesday and I have to repeat what I’ve
mentioned in this space before. I respect the heck out of Bono
and don’t mind his preaching (and he preached a bit during the
act) because, unlike most of his Entertainment World brethren,
he has truly studied the issues and is often better versed than
those charged with the task. And it’s true; we (the developed
nations) waste so much money in other areas that it’s a crime
when we don’t try to do more for the poor, assuming the
governments receiving such aid are not pilfering it for their own
personal benefit. As for the concert, the band puts on an awesome
show.
–You just can’t make this up. On the local NBC affiliate they
had a story of an oil tanker that had flipped over, causing big
delays on a major highway. The graphic that was put up behind
the news anchor was of an oil tanker, alright…the seafaring
variety. Our society is doomed.
–But to follow up on a story I had from last week that 81% of
New York City’s 8th-graders failed a basic social studies test, and
in the interests of fairness, this week we learned that reading
scores for the Big Apple’s 4th-graders were up a solid 10% in just
one year. However…reading scores were down for those same
flunky 8th-graders. Note to area employers. In 4-8 years these
8th-graders are going to be hitting the job market. Wait another
four years if you can for the current 4th-graders to move up.
–Congratulations to my brother for winning another award for
political cartooning as a result of his work at The Item of
Millburn, New Jersey.
–Finally, there isn’t an exciting story behind the delay in posting
the column this week. I was at a reunion of my old poker
buddies from high school. So again I say to the parents, don’t
worry about your kids playing cards at an early age. Over 30
years later these remain some of the best friends I have.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $417
Oil, $48.65 [new contract…old one closed at $46.80]
Returns for the week 5/16-5/20
Dow Jones +3.3% [10471]
S&P 500 +3.1% [1189]
S&P MidCap +4.2%
Russell 2000 +4.7%
Nasdaq +3.5% [2046]
Returns for the period 1/1/05-5/20/05
Dow Jones -2.9%
S&P 500 -1.9%
S&P MidCap -0.1%
Russell 2000 -6.5%
Nasdaq -5.9%
Bulls 46.2 (unchanged)
Bears 28.6 [Source: Chartcraft / Investors Intelligence]
I’ll resume the normal schedule of posting on Saturday mornings
next week. Thanks for your patience this time.
Brian Trumbore
