[Posted 7:00 AM ET]
Wall Street
It’s really pitiful when the chairman of the Federal Reserve
Board doesn’t have a clue, but that is the sense Alan Greenspan
conveyed this week in both congressional testimony and a China
forum. Oh sure, he believes the U.S. economy is on “reasonably
firm footing” and that any soft patch is history. And he believes
“underlying inflation is contained” and that we don’t have a
broad-based housing bubble, only “froth” in selected local
markets.
Then again, he also said this week that “bond markets are
signaling economic weakness,” yet he doesn’t understand why
the yield on the 10-year Treasury continues to fall as the Fed
raises short interest rates.
There are four basic reasons why the long end of the yield curve
has responded as it has to the Fed’s tightening regimen. The
global slowdown (albeit a slight one thus far), foreign buyers
because they have no better place to turn, pension fund buying,
and falling inflation expectations worldwide. PIMCO’s Bill
Gross offers that the primary reason is the recycling of Asian
reserves.
But while Alan Greenspan scratches his head in his best Butch
and Sundance imitation when he thinks about the machinations
of the bond market….Who are those guys?….I’m just sitting back
with the rest of you, observing, and frankly bored to tears. There
isn’t any reason to be wildly bullish, nor is there reason just yet
to be super bearish. It’s summer, after all. Chill out.
Ah, but there’s oil. Now here’s something exciting, at least from
a volatility standpoint, and this coming week OPEC gathers to
raise official production to 28 million barrels per day from
27.5mmbd, even as the cartel produces about 30mmbd, or barely
enough to satisfy future demand as forecast by the International
Energy Agency. The reason why oil remains above $50 despite
multi-year highs in inventories, however, is because the market is
not convinced supplies will be adequate come next winter. And
as much as I personally believe the price of crude declines over
the second half of the year due to my forecast for slower growth,
I certainly can’t dismiss the many longer-term issues. To wit:
Refineries in America are running at 96% of capacity so we are
highly vulnerable to supply disruptions, which is why the
hurricane season is so important. Production in Russia is
declining and it’s petering out at Prudhoe Bay, Alaska as well.
In fact regarding the latter the Washington Post had a piece
talking of how production of both oil and natural gas is down
36% in Alaska since 1970, not a great sign when looking at the
level of imports our economy will require.
So there’s only one thing to do…drill. And at least here there are
signs the major integrateds, like BP and Exxon Mobil, are
becoming increasingly convinced higher oil prices just may stick,
thus making investment in large projects more palatable. Lord
Browne of BP, for instance, said this week he is now looking for
oil to average $40, not his earlier forecast of $20; a level that,
again, is more conducive to exploration and taking an occasional
flyer on a suspect field. Lastly, you have the Saudis, who
through a spokesman offered that the Kingdom has more oil than
the world will ever need. What? You don’t trust the Saudis?
Street Bytes
–The markets finished mixed with the Dow Jones and S&P 500
registering slight gains to 10512 and 1198, respectively, while
Nasdaq declined just a bit for a second straight week, only 0.4%
to 2063. The chip sector reported a number of positive
developments, such as bullish mid-quarter updates from Texas
Instruments and Intel, and the Semiconductor Industry
Association forecast chip growth of 6% in 2005, up from an
earlier ‘flat’ estimate for the year. But in the end tech and chip
issues went nowhere following solid advances ahead of the news.
Stocks were also primarily looking for a further hint from Fed
Chairman Greenspan that there was but one more rate increase in
the cards, a la Dallas Fed President Peter Fisher’s comments of a
week earlier, and instead Greenspan appeared to put a kibosh to
such talk. Ergo…
–U.S. Treasury Yields
6-mo. 3.14% 2-yr. 3.69% 10-yr. 4.04% 30-yr. 4.32%
Rates rose across the spectrum as the bond market, interpreting
Greenspan’s comments in similar fashion to their equity
brethren, believes there is at minimum another rate increase in
the picture (June 29-30) and possibly two. The spread between
the 2- and 10-year continues to narrow.
–The European Union meets this week to try and figure out
where it goes next following defeat of the proposed constitution
in separate referendums in France and the Netherlands. The
United Kingdom suspended plans for its own vote while France
and Germany insist the process proceed despite the setbacks.
[Kind of like, “Hit me. Doh! Hit me. Doh!] And a big battle
royal is looming over Britain’s EU budget rebate, won 20 years
ago, while for its part Germany is tired of being responsible for
over 20% of the budget. Representatives are beginning to hash
out the fiscal plans for 2007-2013 amidst all the turmoil.
–I forgot to give the world economic roundup last week so the
following covers the past two.
China’s government estimated growth of 9.1% for the second
quarter (there’s that ‘9’ handle again), while slamming proposed
U.S. / Euro textile quotas as “groundless.” China thus scrapped
plans to levy an excise tax it had initially intended as a way to
placate their two largest trading partners, though late Friday it
appears to have reached some kind of understanding with
Europe.
China also reported a $9 billion trade surplus for May. For the
first five months of 2005, incidentally, China’s trade with the
EU grew 24.2% to $81.8 billion from the same period in 2004,
was up 24.6% to $77.7 billion with the U.S., and grew 10.1% to
$70.7 billion with Japan. Total exports are up 37.8% over this
period, but imports grew only 7%.
[The U.S. ‘deficit’ with China is now running at an annualized
rate of $170 billion.]
Elsewhere, Euro manufacturing is at a two-year low and down in
the UK, while the European Central Bank lowered its 2005
forecast for GDP to 1.4%.
But Japan continues to deliver generally positive news with
industrial production up and unemployment at a six-year low.
Australia and Thailand, however, have lowered their forecasts
with the latter struggling to recover from the tsunami.
–New reports appear to confirm Russian energy outfit Rosneft
was able to acquire Yukos’ main production unit, Yugansk, only
by borrowing money directly from the Kremlin. Yukos’ leading
shareholder said it was “stolen.”
–General Motors announced it will close a number of plants in
North America by 2008, resulting in the loss of some 25,000
jobs. The contract with the United Autoworkers expires in 2007,
but there were signs on Friday the UAW is finally willing to at
least look at the issue of healthcare which is costing GM $5
billion a year. In response GM shares rose over $2.
–The CEO of MassMutual Financial Group was fired for
improper conduct and on Friday the Wall Street Journal reported
that Robert B. O’Connell “inflated the value of a special
retirement account by tens of millions of dollars, bought a
company-owned condominium at a below-market price and
interfered in efforts to discipline his son and son-in-law, who
worked at MassMutual.” Allies of Mr. O’Connell described the
board’s move as a power grab.
–John Houldsworth, a General Reinsurance executive in Dublin,
pleaded guilty to a charge of criminal conspiracy in helping Gen
Re and AIG mislead investors. Phone transcripts show that
Houldsworth told the CFO of Gen Re, in speaking of AIG,
“They’ll find ways to cook the books, won’t they?”
[A second Gen Re executive pleaded guilty in the AIG case on
Friday.]
–The consumer-finance division of Citigroup, with help from
UPS, lost a box containing personal information on 3.9 million
people, including Social Security #s and loan histories. UPS lost
it in transit to a credit bureau, thereby shedding new light on the
slogan “What can Brown do for you?”
Separately, Citigroup agreed to a final settlement of $2 billion for
its extensive role in the Enron debacle. Investors who purchased
publicly traded debt and equity securities issued by Enron
between 9/9/97 and 12/2/01, when the company sought
bankruptcy protection, will be eligible for some remuneration.
Citigroup had already reserved for this rather hefty sum, thus
further cementing the legacy of Sandy Weill.
–Scott P., reader and accountant, had misgivings about the
conviction in the Arthur Andersen / Enron case being overturned
by the U.S. Supreme Court. “Someone should ‘hang’ for the
damage done and it’s regrettable it was the majority of AA’s
innocent employees who will carry the experience on their
resumes. The truly guilty parties not only escaped prosecution
but are likely to be chairing the Board of Director’s audit
committees of the very companies you and I invest in. That’s
just wrong.”
–Gretchen Morgenson of the New York Times had an extensive
piece in last week’s Sunday Magazine on mergers and
acquisitions, the lion’s share of which do not work. Here is but a
snippet.
“Robert F. Bruner, professor of business administration at the
Darden School of Business at the University of Virginia, has
compiled a list of colossal merger failures in a new book, ‘Deals
From Hell.’ High up on his roster is the Sony-Columbia Pictures
merger in 1989, which cost $4.8 billion initially but ultimately
resulted in a $2.7 billion write-off in 1994. Also on the list is the
1991 deal in which AT&T bought National Cash Register for
$7.5 billion. Five years later, AT&T spun off NCR for $3.4
billion, for a loss of $4.1 billion. Another entry is the December
1994 purchase of Snapple Beverage by Quaker Oats for $1.7
billion; a deal that eventually produced a $1.5 billion loss. In
late 1998 Mattel acquired the Learning Company, an educational
software firm, for $3.8 billion in stock. Just over a year later,
Mattel sold it for a loss.”
Of course the king of failures was the 2000 deal between AOL
and Time Warner. Morgenson writes, “Time Warner’s chief
executive, Jerry Levin, called the deal a ‘transforming
transaction’ – an accurate assessment, as it would turn out, if not
precisely in the way he hoped. The deal resulted in a $200
billion loss in stock-market value and a $54 billion write-down in
the worth of the combined company’s assets.”
So why do the deals in the first place? “There are people for
whom they make perfect sense: the executives and the Wall
Street bankers behind them, (with) the most compelling case for
mergers (being) the immense wealth that they generate.”
Case in point James Kilts, the chief executive of Gillette
Company, who stands to make $165 million from merging his
company with Procter & Gamble.
–As some analysts pump Google with price targets of $350 (the
stock closed Friday at $282), there was another Journal article on
click fraud; the act by which online advertisers are charged for
hits that are often generated by bogus software or dirtball
competitors. I’ve told you in the past how I know from personal
experience that this is a far more prevalent problem in the
industry than is known and there will come a time when the
customers suddenly realize they are getting nowhere near the
bang for their buck that they were initially led to believe. I don’t
know when that is and I’m not good enough to know when to
‘short’ a stock like Google, but that day is coming.
–Just when you think it is safe to invest in troubled telecom-
equipment maker Nortel, something else comes up to dash
expectations. This time it was the resignation of the president /
COO and the chief technology officer who are leaving over
disagreements with the CEO. Both were in their positions for
just three months following the reshuffling of the deck in the
wake of Nortel’s massive accounting scandal.
–UAL is finally abandoning its $250 million baggage system at
Denver International Airport and is switching to a more
traditional method. It was way back in 1994-95 that this well-
publicized disaster delayed the opening of the new airport for
months. Boy, time flies even as the baggage stands still.
–Apple Computer announced it will start using Intel processor
chips, thus replacing IBM.
–Microsoft and the European Union have reached a tentative
agreement in the contentious antitrust battle but it could still
unravel over the coming weeks.
–All China-based web sites must register with the government or
face a $120,000 fine. Just another reason for yours truly to stay
local.
–The benchmark Shanghai stock index hit an 8-year low this
week before rallying on news the government was taking steps to
clean up its scandal-ridden brokerage sector. Yes, an 8-year low,
in spite of the booming economy.
–Authorities in Singapore arrested five executives of China
Aviation Oil, the jet fuel importer, over the oil-derivatives
blowup of last year. CAO bet wrong against rising prices for
crude.
–Todd Eberhard, former investment advisor and media darling
on CNN, was sentenced to 13 years for stealing $20 million from
clients. We have a new inductee to the “Dirtball Hall of Fame.”
–Here is my take on the case of broker Ted Sihpol, who was
acquitted this week in the mutual fund “late trading” issue.
Knowing a lot about this business, I repeat what I wrote when
this whole scandal broke.
Market timing is not illegal, but you obviously have to follow the
guidelines established in the prospectus. [I helped write the
language when I was in my former position.] And the actual
shareholder losses, industry wide, were pennies. Don’t listen to
Jack Bogle of Vanguard in this regard.
But what Sihpol and others did, in blatantly trading after the
close and when the prospectus prohibited it, was wrong. It’s
fraud. He should have gone down.
Defenders of Sihpol, such as the editorial board of the Wall
Street Journal, failed to mention that one of the jurors, Jeannette
T., was a holdout. She happens to work for a law firm,
Proskauer, with whom I am familiar. Evidently she was livid at
her fellow jurors because they couldn’t see how guilty Sihpol
was and she has refused to talk to the press. I can imagine what
she’s thinking. “These people were idiots.” The jury blew it.
So Eliot Spitzer lost a case. You can’t win them all. I just hope
he keeps at it (though the clock is running out…it’s almost
campaign time), because without Spitzer the fraudulent and
criminal behavior he has exposed would have gone largely
unchecked. The Street is dirty, but thank goodness Mr. Spitzer
took a run at it.
Foreign Affairs
Iraq: It’s no secret that I have been disgusted with the postwar
phase since day one but on last week’s “Meet the Press” Tim
Russert perhaps crystallized it far better than I have in pointing
out that over 1,500 Americans have died since President Bush
declared “major combat operations are over.”
So is it any wonder then that a recent Washington Post – ABC
News poll summed it up as follows (and as other surveys have
concluded). 2/3s of Americans believe the military is bogged
down, 6 in 10 say the war was not worth fighting and 52%
believe the war has not contributed to the long-term security of
the United States.
I keep pointing out that our military leadership deserves its share
of the blame as well as the White House. And as one who
favored removing Saddam even before 9/11, I admit to growing
increasingly cynical about all phases of the operation today. For
example, I see the story of the discovery of the giant bunker
complex outside Baghdad that was being used by insurgents and
I can’t help but wonder why the heck we didn’t find it before? I
know one of the big reasons; from the start we didn’t have
enough troops.
I do agree with the view held by the administration and leading
members of Congress that the deadlines we have insisted on with
regards to the writing of a new constitution, a referendum on
same and parliamentary elections must be adhered to. But when
you realize there is but two months to write it and there is still
jockeying for influence on the committee, you can see the
problem.
And what worries many experts is the increase in sectarian
violence, despite the talk of reconciliation at week’s end. Earlier,
the new government came out in favor of militias like the Badr
Brigades, hardly a good thing, as Shia and Kurdish leaders (some
of whom are war lords themselves) reached an agreement to keep
them in place. The Bush administration said it was an “Iraqi
issue.” You can imagine the Sunnis’ reaction.
Richard Beeston commented on the “sectarian bug” in a report
for the London Times.
“Western correspondents in Baghdad rely heavily on local staff
for reporting. Even a few months ago it did not matter whom
you sent on an assignment. Shias and Sunnis felt free to travel
the country and speak to representatives of all communities.
Now Sunni reporters insist on covering only Sunni areas and
Sunni issues, and the same applies for the Shias. When a
reporter returns with details of the latest sectarian outrage, there
is a distinct tension in the office between the two sides.
“This is repeated across society. Baghdad University has always
been one of the few havens in the capital where young people
from every background have managed to coexist peacefully. But
the calm was shattered recently when Masar Sarhan, a Shia
student, was murdered after he threw a party to celebrate the
election of the new Government. The killing sparked unrest on
the campus and some Sunni professors are too afraid to return.”
Finally, the following is typical of my friends on the right, this
being from an op-ed by columnist Max Boot in the Los Angeles
Times.
“It would be nice if the global Islamic community, the news
media and assorted human rights agitators could display the same
level of outrage about the real atrocities perpetrated by our
enemies as they do about the imaginary horrors of the American
Gulag.”
Of course it would, Mr. Boot. But that’s not the real world we
live in. What we have been lacking is leadership from our
president. It is astounding to me how Bush has been AWOL.
When was the last time he addressed the American people, in
prime time, to remind them why we are in Iraq and the
importance of the mission for shaking up the stasis in a region
that otherwise threatens the free world? There is a reason for the
plummeting poll numbers and the dwindling support, but
incredibly Bush doesn’t respond. The president has merely
offered a few sound bites and expects that to resonate in the
world community. It’s discouraging and the consequences are
unthinkable.
Lebanon: Round two of the parliamentary elections saw the pro-
Syria / anti-Israel, Hizbollah-Amal bloc take all 23 seats
available and there has been sporadic violence between the
Hizbollah coalition and anti-Syrian forces. In addition, the U.S.
believes there is a Syrian “hit list” on major Lebanese political
figures. In other words, my earlier lack of enthusiasm for the
process here is well-founded.
Separately, a piece in Defense News spelled out the sad state of
the Lebanese Army. The U.S. provided 24 helicopters in the
mid-1990s and only 14 remain operational. There are also just
six attack helicopters available. While the article didn’t address
it, you read something like this and it’s no wonder Hizbollah
feels little pressure to disarm.
Syria: The Baath Party convention resulted in little real news,
outside the resignation of the vice president, as there were just a
few hints of political and economic reform. The Baathists, a
minority here, have been in power since 1963 and they aren’t
about to give it up.
China: I was remiss in not pointing out a piece I did for my “Hott
Spotts” link, 6/2, that summarizes the position of noted
international affairs strategist Robert Kaplan. Last weekend
Secretary of Defense Donald Rumsfeld appeared to echo much
of what Kaplan wrote in a recent piece for The Atlantic Monthly.
Rumsfeld, in addressing a gathering in Singapore, warned of a
rapidly expanding Chinese military. Kaplan called the situation
between the U.S. and China our new Cold War. Rumsfeld also
weighed in on another issue:
“Though China’s economic growth has kept pace with its
military spending, it is to be noted that a growth in political
freedom has not followed suit.” [Los Angeles Times]
And the United States used the anniversary of the 1989
Tiananmen Square massacre to call for a re-examination of the
crackdown. China’s foreign ministry spokesman Kong Quan
instead suggested Washington “Pay more attention to activities
which severely violated human rights in its own country. The
Chinese side has had clear conclusion on the political disturbance
that occurred in China…In the last 16 years, China witnessed
great achievements in social and economic development and the
Chinese people enjoy all the human rights in line with the laws.
It has proved that stability is very vital.” [South China Morning
Post] Depends on who you’re talking to, Mr. Kong.
Back to the military threat, it’s all about China’s burgeoning
missile force and as Kaplan points out, while for the next few
decades the United States military will remain in many ways
superior, China’s gains in the area of cruise missile technology
can easily negate any competitive advantage the U.S. has. For
example, picture the uproar in this country if a Chinese missile
took out or disabled a U.S. aircraft carrier as it rushed to defend
Taiwan in the event of an attack. China may reach a point in the
not too distant future where they will no longer fear escalation.
Speaking of cruise missiles, Taiwan evidently test-fired a
homegrown version capable of hitting the Chinese mainland.
Taiwan also amended its constitution to give more power
to the top two parties. China took this to mean that Taipei could
hold a referendum on independence but the fact is it will be
extremely difficult to pass such an act due to the severe voting
restrictions placed on the process.
Lastly, reports from defectors in Australia appear to confirm that
there are about 1,000 Chinese spies plying their trade there.
North Korea: Early in the week there were signs Pyongyang may
finally return to the negotiating table, it having been almost a
year since talks were last held, but by week’s end the usual
rhetoric had returned with the vice foreign minister telling ABC
News his nation was merrily building up its nuclear force to meet
the growing threat posed by the imperialists.
Iran: The election is this Thursday amidst new stories Iran is
harboring all manner of terrorists. NBC’s Tom Brokaw filed a
report from here and he seemed surprised that the young people,
while shunning the political process out of disgust over the lack
of reforms, nonetheless all seem to favor the government
proceeding with the development of nuclear weapons. Frankly,
long-time readers of this space shouldn’t be surprised at all. As
I’ve written it’s all about national pride and living in a most
dangerous neighborhood.
Israel: Palestinian President Mahmoud Abbas has received
assurances from terrorist groups such as Hamas that the ceasefire
will hold, even as Hamas complains about the postponement of
the parliamentary elections. Abbas is placating Hamas, for now,
by bringing it into the Gaza withdrawal / takeover process.
Russia: Former dissident Alexander Solzhenitsyn, now 86, gave
his first television interview in three years to Rossiya, a state-run
channel. He didn’t mince words.
“It is often said that democracy is being taken away from us and
that there is a threat to our democracy. What democracy is
threatened? Power of the people? We don’t have it.
“We have nothing that resembles democracy. We are trying to
build democracy without self-governance. Before anything, we
must begin to build a system so that the people can manage their
own destinies.”
Solzhenitsyn offered that the State Duma, peopled with Kremlin
cronies, was acting “as if it were drunk” and the country was
susceptible to an Orange Revolution of its own, a la Ukraine,
unless the government changed course.
So in case you’re wondering like I was, ‘Why did the Kremlin
allow these thoughts to be aired?’ it’s because the former Nobel
laureate also supported some of President Vladimir Putin’s
reforms and he has never been a backer of the oligarchs.
Addressing the subject of Yukos’ former chairman Mikhail
Khodorkovsky and others of his ilk, Solzhenitsyn said:
“The world has never seen such rapid privatization. The world
has never seen such idiots. They gave away our God-given
resources at lightning speed – oil, nonferrous metals, coal,
production. They fully robbed Russia. From scratch, from
nothing we bred billionaires who have done nothing for Russia.”
[London Times]
Turkey: Gerard Baker of the London Times had the following
thoughts on the plight of Turkey and its E.U. candidacy.
“For years they have been told to get their house in order if they
want to belong to a rich Western club: entrench their fledgling
democracy with civilizing laws and legal codes; withdraw the
military from public life; be nice to the Greek Cypriots; promote
economic liberalization.
“They have met these demands more than halfway….Their
economy has, since the last crisis of 2001, been among the
zippiest in Europe, with growth of about 9 percent annually. In
short, the Sick Man of Europe is up and about, performing
acrobatic feats to demonstrate its fitness to be a true European.
“But the rewards do not seem forthcoming. French voters last
month extended a Gallic middle finger to the prospect of Turkish
EU membership. In Germany, a new government likely to take
office this autumn will add the index finger to make it a full
European V sign. Though accession negotiations will
presumably start on October 3, no one seems to think they are
likely to proceed quickly to EU membership.
“Relations with the US are no better. The Bush Administration
still blames the Erdogan Government for failing to get Turkish
parliamentary support to help in the invasion of Iraq two years
ago. The Turks are deeply unhappy that the PKK, the Kurdish
terrorist group, is intensifying its campaign against the Turkish
military with apparent impunity, or (in a conspiracy-theory-rich
country) even with American connivance, from inside US-
patrolled Iraq.”
Turkey is increasingly looking elsewhere and in case you forgot
its neighbors include Syria, Iraq and Iran.
Bolivia: What a mess. The president was forced out and
replaced by the chief justice of the Supreme Court as protesters
railed against the government’s plans for the oil and gas industry.
Bolivia has invested $3.5 billion in it yet the peasants (of whom
there are many here) want the energy industry nationalized.
Bolivia’s leaders, though, recognize this would halt the flow of
foreign investment at the worst possible time. This kind of
people power will get this country nowhere.
Mexico: The drug-related violence on the U.S. – Mexico border
is totally out of control. A city police chief and federal agent
were among the latest victims this week. It’s so easy to see how
much of the rest of Central and South America can fall prey to
the narco-terrorists. Said one professor at a college in Tijuana:
“The corrupting power of drug trafficking has allowed it to
penetrate almost all areas of the social fabric.”
70 to 90 percent of the cocaine sold in the U.S. is smuggled
through Mexico.
But it also needs to be pointed out that the latest surge in
violence is partly in response to a crackdown by President
Vicente Fox. [Source: Bloomberg News]
Philippines: There is open talk of a coup here as President Gloria
Arroyo’s popularity has plunged to a new low (26%) as a result
of corruption charges involving family members and alleged
cheating in last year’s election.
Sudan / Darfur: It’s too late for up to 200,000, but NATO vows
to help the African Union police Darfur by contributing up to
5,000 troops to a unified force there.
Random Musings
–The following is from last Sunday’s “Meet the Press,” with
Tim Russert interviewing Republican National Committee
Chairman Ken Mehlman.
Russert: Let me turn to Social Security. NBC News and The
Wall Street Journal has gone out and asked voters what they
think of the president’s plan for personal private accounts. Good
idea, 36 percent; bad idea, 56 percent. This is after the president
has embarked on a campaign across 26 states….People are
simply not buying the president’s prescription to deal with Social
Security.
Mehlman: Well, Tim, there are a number of polls that have
shown other things as well. I would respectfully disagree with
those numbers.
Stop! This is what sickens so many of us these days. I realize
Mr. Mehlman is one of the great spinmeisters of this or any era,
but stop playing us for chumps. You, sir, have not seen one
poll that is different from the one Russert quoted. You know
why some of us like John McCain? Because more often than not
at least you get a straight answer.
–Randy Boyagoda reviewed Thomas Friedman’s new book,
“The World Is Flat: A Brief History of the Twenty-First
Century,” for The Weekly Standard.
“Thesis: ‘Clearly, it is now possible for more people than ever to
collaborate and compete in real time with more other people on
more different kinds of work from more different corners of the
planet and on a more equal footing than at any previous time in
the history of the world – using computers, email, networks,
teleconferencing, and dynamic new software.’ Source: A social
studies paper from a middling high school student, or a
scintillating study from the New York Times’s most prominent
columnist?
“In its sloppy jalopy cadence and stunning banality, this sentence
suggests a tenth-grader’s efforts. But to Thomas Friedman’s
embarrassment, this statement fuels his car-wreck of a new book,
‘The World Is Flat’….this nearly 500-page tome is a testament to
our age along the lines of London’s Millennium Dome – a
monstrosity of poor design, cloudy thinking, and rank hubris.”
Oh well, Friedman is laughing all the way to the bank as he has
another best-seller.
–Geraldine Fabrikant had a terrific piece on the hyper-rich of
Nantucket in last Sunday’s New York Times. Here’s an
example, as Ms. Fabrikant quotes a fellow, Mr. Kittredge, who is
a self-made man with a large fortune in the neighborhood of
$500 million.
“Money makes a lifestyle,” he said. “It creates a division
between the old money and the new. It is a little bit of class
jealousy. We go to a cocktail party and a guy is telling my wife
about his airplane. So finally the question comes up: ‘How do
you get over to the island?’ and she says, ‘We come by plane.’
And he says, ‘What kind of plane? and she says, ‘A G-IV.’ And
so the wind comes out of the guy’s sails.”
“The old money guy has a twin-prop airplane and that is pretty
incredible,” Mr. Kittredge continued. “For his time, that is pretty
great. Now he is talking to a guy who is half his age who has a
transcontinental jet. That is the end of the conversation.
“Or you meet someone and they start telling you about their boat.
He has a 45-foot boat and he is very happy with it. Then he’ll
say, ‘Do you have a boat?’ And you say, ‘Yes.’ ‘Well, what kind
of boat do you have?’ And you say, ‘A Fed Ship.’ And he says,
‘How big is it?’ That’s how people rank them. So I have to say,
‘It’s 200 feet.’ It’s the end of the conversation. Is there envy?
Yes, could be. Was he a wealthy guy in his day? Absolutely,
but relative to today – no. The two worlds can mix as long as
they don’t talk too much.”
Just shoot me.
–America’s murder rate fell 3.6% in 2004, thanks in no small
part to a big decline in Chicago from 598 to 448. So we toast the
Windy City.
–In the race for governor here in New Jersey, it will be
Republican Doug Forrester vs. Democratic Senator Jon Corzine.
I have to admit I didn’t feel like voting in last Tuesday’s primary,
being totally unimpressed with the Republican candidates, but at
the last minute I remembered there might be a bake sale. Alas, I
was too late for that. Actually, while I have previously said
Corzine would romp in the fall, the first poll has him ahead by
only 47-40. [In the interest of full disclosure, I voted for
Forrester.]
–According to the latest information from the Census Bureau,
the Hispanic population is up to 41.3 million out of 293.7
million, or 14%. From 2000-2004, Hispanics represented 49%
of the total population growth.
–The Bush administration just cracks me up when it comes to
global warming, as in the president telling Britain’s Tony Blair
the other day that “the jury is still out.” I have a pretty simple
philosophy. If it looks like crap and smells like crap, it’s
probably not good for us.
–So John Kerry finally released his grades and he had 5 Ds at
Yale, including 4 his freshman year. Ha! I got him beat. I
didn’t have any my first year but boy did I make up for lost time
afterwards. I was developing my social skills, you understand.
–The Mars rover Opportunity was stuck in the sand for five
weeks before NASA engineers finally figured out how to get it
moving again. Of course this wouldn’t have been an issue if the
rover had had some carpet swatches handy.
–An Aussie woman was caught at Melbourne’s airport
attempting to bring in 51 tropical fish in plastic bags hidden
inside her specially outfitted apron. Security detected “flipping
noises.” Must have been an unruly school of them.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $429
Oil, $53.54
Returns for the week 6/6-6/10
Dow Jones +0.5% [10512]
S&P 500 +0.2% [1198]
S&P MidCap +0.7%
Russell 2000 +1.0%
Nasdaq -0.4% [2063]
Returns for the period 1/1/05-6/10/05
Dow Jones -2.5%
S&P 500 -1.1%
S&P MidCap +2.4%
Russell 2000 -3.9%
Nasdaq -5.2%
Bulls 50.6
Bears 20.9 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
🙂 _]
