[Posted 7:00 AM ET]
The War on Terror
This week some of our worst fears came true as we learned
suicide bombers are now amongst us all and they aren’t
necessarily poor, impoverished souls. For its part, Europe is
finally recognizing it needs to confront its own home-grown
threat but as the years go by the level of success will be
determined by the steely determination, or lack thereof, of the
leaders of the free world. In other words, every election going
forward is vitally important for those of us who truly ‘get it.’
In Britain, Prime Minister Tony Blair, faced with the aftermath
of 7/7, said security measures alone are not enough. Instead, the
threat “is an extreme and evil ideology whose roots lie in a
perverted and poisonous misinterpretation of the religion of
Islam…In the end, this can only be taken on and defeated by the
community itself.” [BBC News]
Columnist Charles Krauthammer, in an op-ed for the Washington
Post, wrote of the evil exhibited in the current trial in the murder
of Dutch filmmaker Theo van Gogh.
“Last Nov. 2 (van Gogh) was cycling through Amsterdam. He
was accosted by Mohammed Bouyeri, who shot him six times as
van Gogh pleaded, ‘We can still talk about it! Don’t do it!’
Bouyeri then cut his throat with a kitchen knife, practically
severing his head. Bouyeri was not done. He then took a five-
page Islamist manifesto and with his knife impaled it on van
Gogh’s chest.
“On trial now in the Netherlands, Bouyeri is unrepentant. In
court he turned to van Gogh’s grieving mother and with infinite
cruelty said to her, ‘I do not feel your pain.’ …
“Where are the fatwas issued against Osama bin Laden? Where
are the denunciations of the very idea of suicide bombing?
Europeans must demand this of all their Muslim leaders. They
must also dismantle and destroy all ‘known’ Islamist cells before
trains and buses are blown up.
“A modest beginning might be removing the likes of Bouyeri…
from the teat of the infidel taxpayer: ‘He [Bouyeri] had the time
to plan this,’ van Gogh’s mother told the court, ‘because for three
years he was on unemployment benefits.’ Decadence is defined
not by a civilization’s art or music but ultimately by its
willingness to simply defend itself.”
Iraq: According to the latest NBC News / Wall Street Journal
poll, by a 57/42 margin the American people remain committed
to the principle of the United States staying militarily until Iraq
can govern and control itself. 61% agree Iraq is part of the
broader war on terrorism.
But while President Bush can take some heart from these figures,
overall only 39% approve of his handling of the war (vs. 55%
opposed) and, tellingly, only 41% say he is being honest and
straightforward. This last item is potentially devastating.
This week saw one of the war’s worst tragedies in a conflict of
unending horror as a group of children, gathered around some
U.S. personnel handing out candy, became the primary victims
of a car bomb. While there were different accounts, anywhere
from 18 to 30 children were killed. With each act of this kind,
the insurgents are losing any remote semblance of support they
had among the people, but at the same time tens of thousands are
simply fleeing the country while sectarian violence between
Sunni and Shia only seems to worsen. In at least three instances
this week, groups of 10 or more bodies were found, the victims
of one or the other sect.
Eliot Cohen, a Professor of Strategic Studies at Johns Hopkins,
was a leading proponent of the war in the days leading up to
it. Cohen, who has a son that is an officer and himself headed to
Iraq, penned an op-ed in the Post that sums up what I’ve been
writing for the better part of two years now.
“A variety of emotions wash over me as I reflect on our Iraq war.
Disbelief at the length of time it took to call an insurgency by its
name. Alarm at our continuing failure to promote at wartime
speed the colonels and generals who have a talent for fighting it,
while also failing to sweep aside those who do not. Incredulity at
seeing decorations pinned on the chests and promotions on the
shoulders of senior leaders – both civilians and military – who
had the helm when things went badly wrong. Disdain for the
general who thinks Job One is simply whacking the bad guys and
who, ever conscious of public relations, cannot admit that
American soldiers have tortured prisoners or, in panic, killed
innocent civilians. Contempt for the ghoulish glee of some who
think they were right in opposing the war, and for the blithe
disregard of the bungles by some who think they were right in
favoring it. A desire – barely controlled – to slap the highly
educated fool who, having no soldier friends or family, once
explained to me that mistakes happen in all wars, and that the
casualties are not really all that high and that I really shouldn’t
get exercised about them.
“There is a lot of talk these days about shaky public support for
the war. That is not really the issue. Nor should cheerleading, as
opposed to truth-telling, be our leaders’ chief concern. If we fail
in Iraq – and I don’t think we will – it won’t be because the
American people lack heart, but because leaders and institutions
have failed. Rather than fretting about support at home, let them
show themselves dedicated to waging and winning a strange kind
of war and describing it as it is, candidly and in detail. Then the
American people will give them all the support they need. The
scholar in me is not surprised when our leaders blunder, although
the pundit in me is dismayed when they do. What the father in
me expects from our leaders is, simply, the truth – an end to
happy talk and denials of error, and a seriousness equal to that of
the men and women our country sends into the fight.”
Homeland Security: It is utterly disgraceful that our nation not
only is not committed to fighting the war appropriately on the
home front, but that politics continues to carry the day. While no
one can possibly assert that it’s possible to secure our nation’s
mass transit system, funding on a broad scale is nonetheless
required, particularly in our crucial urban areas that also act as
key centers of economic activity. But the U.S. Senate just
approved a spending bill that cut funding for urban transit
security by $50 million, to $100 million. I couldn’t agree more
with the reaction of New York Mayor Michael Bloomberg.
“People are going to try to make pork out of this,” said
Bloomberg, who argued that New York City’s transit system
could use additional funds even for cameras like those used in
London.
“Anybody who voted for the Collins bill (Sen. Susan Collins of
Maine) voted to make America less safe, that’s the truth of the
matter.” [Crain’s New York Business]
Not only are the priorities so screwed up, the president is not
being honest with the American people. To just begin to secure
the transit system, chemical plants, ports, nuclear facilities and
the rest costs $10s of billions. The president’s number one job is
to protect the people. A catastrophic attack sends our nation
spiraling into Depression. Resiliency only takes you so far.
Finally, much is being made of a Global Pew Research poll that
shows more and more Muslims upset with the violence exhibited
by some members of the religion. I, however, picked out some
incredibly distressing facts. In Jordan, for example, confidence
in Osama bin Laden has grown to 60%, while in Pakistan it is up
to 51%. And in Lebanon, where Hizbollah rules the area
bordering Israel, 99% of Muslims and Christians held a very
unfavorable view of Jews. In Jordan, it’s 100%. This is what
we’re up against. It will take a generation or more to begin to
turn this around. I’ll likely be long gone by that time. I just hope
I pass as a result of natural causes.
Wall Street
It was a great week on the economic front and another solid one
for equities. Figures for June retail sales and industrial
production were up more than expected and the inflation data, as
measured by the consumer and producer price indexes, was tame,
as in unchanged on both. It also helped that energy prices
tapered off, thanks in large part to Hurricane Dennis missing the
key production areas in the Gulf. And then you had earnings,
which were solid.
So where does that leave the fate of our three-legged stool; the
consumer, housing, and capital spending? While some of us,
especially yours truly, have counted out the consumer on more
than one occasion over the last few years, Mr. and Mrs. Plastic
just keep whipping out the cards, or signing up for another home
equity loan. But to be fair, improvement in the labor market has
been broad-based, and with better-paying jobs, so the degree of
job security has risen. In other words, despite what we’re telling
the pollsters, when it comes to the economy most must feel
pretty good.
Of course housing has a lot to do with this, the wealth effect.
But here I think we are seeing the peak. The sector is slowing
down, though it may take a bit longer to recognize this. You
never actually see the peak, after all; you only figure it out in
hindsight. But its stagnation I’ve long called for, not a crash, as
yet, and it will be enough to slow consumer spending, finally.
Remember, by most measures housing represents 16% of GDP
and when it finally backs off there will be a ripple effect across
the spectrum. [Econmy.com, New York Times.] As for capital
spending, it’s been all over the board the past year and despite an
apparent up-tick recently, I do not see it carrying its share of the
load over the second half.
We did have some terrific news on the budget front as the federal
budget deficit is now projected to decline to $333 billion in 2005
vs. an initial estimate of $427 billion and an actual ’04 figure of
$412 billion. I have been for the tax cuts and they’ve generated
economic growth and increased revenues. The problem is we
must do a better job of controlling spending, and the traditional
items in the budget, because we also have to spend more on
homeland security than we currently are, even as the structural
deficits from Social Security and Medicare hit us harder and
harder in the coming years, let alone the costs of the war in Iraq
and Afghanistan and a fix to an Alternative Minimum Tax that
is crushing increasing numbers of America’s middle class. In
other words, now is not the time to let our guard down, both
fiscally and with our security.
As for energy, while we caught a break with Dennis, Hurricane
Emily now bears watching, particularly since a vital Mexican oil
field responsible for 2.5% of the world’s production of crude is
projected to be in her path. Separately, the International Energy
Agency cut its estimated demand figure for 2005 slightly but
raised the 2006 number 2.1% to 85.6 million barrels per day.
And while you’ve received your fill of information from me over
the years on this front, the following comments from Paul
Roberts and an op-ed piece in the Washington Post represent a
good refresher course on the current state of energy pricing.
“Even if $60 oil isn’t high by inflation-adjusted historical
standards, it’s plenty high enough to indicate a global supply
system that is dangerously overheated. And the fact that
consumers can afford to ignore these problems isn’t necessarily a
sign of economic rationality but evidence that markets may not
be so brilliant when it comes to building our energy future.
“There are three big reasons oil prices have more than doubled
since 2000, and none of them offers any reason to have
confidence in the market.
“First, demand for oil, in the United States but also in China and
India, is rising faster than anyone expected. Indeed, it is rising
despite higher prices, in part because we have no easy alternative
to oil in the transportation sector.
“Second, even as demand rises, supply is restrained. The OPEC
countries, Russia and other big exporters are already pumping oil
at near maximum capacity. The Saudis try to blame high prices
on America’s lack of refineries to turn crude into gasoline. But
the real problem is a lack of crude to put in those refineries.
That’s why, when OPEC promised recently to pump more oil,
the market called the bluff and oil prices rose still higher.
“Third, in a market this tight, there is no spare capacity – no
extra oil wells, pipelines or tankers that could be brought online
quickly in case of disruptions in world supply. And such
disruptions become more probable every day. With few
exceptions, nearly every major oil exporter, from Saudi Arabia to
Russia to Venezuela, is less politically stable now than it was
five years ago – and thus more likely to suffer a crisis that cuts
off exports.
“At $60 a barrel, oil traders are essentially betting that a
disruption is more likely than it was four years ago, when oil was
at $24. They’re also betting that such a disruption would be
more severe, because we lack much spare capacity to cushion the
blow. In fact, almost any disturbance – new unrest in Venezuela
or continued deterioration in Iraq – could easily send prices
above $100 a barrel.”
So what did I do with my own last holding in the sector? I sold it
this week. I’ve told you that despite the latest happy talk on the
economy, I stick by my year end forecast of a big slowdown by
then and in that environment, oil will fall. I also had a 100%
profit on this particular issue and just decided to cash in.
However, if the energy sector corrects much further, I could be a
buyer yet again.
Finally, as a follow-up to my harsh discussion of last week on
how Wall Street really works, I just want to add that for most of
us it is simply a new world. Experts I respect like Laszlo Birinyi
have been saying for the better part of a year now that the market
has an extremely short-term focus, as much as many of us would
like to take a longer-term view. Call it ‘swing-trading,’ ‘trend
following,’ or the term du jour, today’s Wall Street has little to
do with fundamentals as much as it does momentum and hot
money flows. I get a kick out of the majority of mutual fund
managers who in a seminar would tout their strict investment
discipline and buying stocks for the long term, when all you need
to do is ask them a simple question. ‘What is your portfolio
turnover ratio?’ For most it’s probably at least 100%, meaning
they are flipping the portfolio over once a year; not holding for 3,
5, and 10 years like many of these same guys say they are.
As for today’s market and valuation, I would argue that earnings
deceleration will continue over the coming quarters and by 2006
you’ll be talking about earnings gains on the order of a mere 6%,
if that. [Far less if my 2006 recession forecast is correct.]
But to figure out a fair valuation, let’s say, for example, the S&P
500 earns $75 in 2005, the current forecast. Given a current S&P
of around 1225 you then have a p/e of 16.3. [If you wanted to
hike earnings to $77, it would still be about 16.] That’s a fairly
valued market, historically. Not super rich, but far from cheap.
Then there is the Fed model, wherein you divide $75 by the S&P
and as long as it’s greater than the yield on the 10-year Treasury,
the market is undervalued. So take your pick. [In the above
example, $75 / 1225 is 6.12% which is greater than a 10-year
Treasury of 4.17%.] As for me, I just continue to believe upside
is limited, though I’m also not forecasting a big downdraft.
Street Bytes
–The major averages rose for a third consecutive week with the
Dow Jones closing at 10640, up 1.8%, while the S&P 500 tacked
on 1.3% to finish at a 4-year high, 1227. Nasdaq, meanwhile,
gained 2.1% to 2156. But broadly speaking, the three remain
more or less unchanged for 2005.
Earnings were the highlight this week as the likes of Pepsi,
Advanced Micro, Genentech, and McDonalds all beat estimates.
But on Friday, General Electric issued a rather middling report
with revenues from operations not associated with acquisitions
up only 8% and guidance for the rest of the year nothing to write
home about. Seeing as G.E. is a bellwether for the global
economy, I’d give it a ‘C’. I’d also add it’s trading at about a 20
multiple on ’05 earnings estimates.
But kudos to Apple Computer which reported its best quarter
ever with revenues up 75%. While sales of PCs increased
significantly, the star remains the iPod. 6.16 million of these
little tune players were sold in the quarter vs. 5.31 million in the
previous one. Not too shabby and putting to rest the theory that
it was just a fad.
–U.S. Treasury Yields
6-mo. 3.47% 2-yr. 3.85% 10-yr. 4.17% 30-yr. 4.40%
Rates rose across the board as the data on a strong economy
trumped the tame inflation news. In other words, the bond
market just figures the Federal Reserve is not finished tightening,
even if official inflation is virtually non-existent. [If you’re new
to the site, I only go with the government data. It is totally
useless to argue otherwise because the markets don’t react to
complaints of 8% increases in one’s property taxes or college
tuition. Should it be factored into one’s overall economic
outlook? Absolutely, and I do. But otherwise it’s a waste of
time to beat your head against the wall.]
–It appears that Unocal’s board will be rejecting CNOOC’s bid
because the actual cash offer wasn’t raised any further.
Following are two comments on the controversy surrounding
China’s efforts to buy into U.S. energy interests. First from an
editorial in the Washington Post.
“Many members of Congress appear to believe that Chinese
acquisition of this small oil company could threaten U.S. energy
security. But it makes no difference whether China buys its oil
on the open market, making oil more scarce and more expensive
for the United States, or from companies that it controls, which
has the same effect. Meanwhile China’s leadership has lectured
Congress on the evils of political intervention in business
transactions, a hypocritical stance given that a political decision
to buy up oil assets lies behind China’s bid for Unocal and the
Chinese have asserted that the state-owned company making the
bid operates independently of the government – a claim that
convinces nobody. Both sides should see this deal for what it is:
a politically motivated Chinese offer that the United States
should feel free to accept in the absence of a clear national
security reason to do otherwise.”
And this, from a Post article.
“No matter if it’s rogue’s oil or a friend’s oil, we don’t care,”
said an energy adviser to the central government who spoke on
the condition he not be identified, citing the threat of government
disciplinary action. “Human rights? We don’t care. We care
about oil. Whether Iran would have nuclear weapons or not is
not our business. America cares, but Iran is not our neighbor.
Anyone who helps China with energy is our friend.”
As for my own opinion, frankly I can’t do better than what I
wrote two weeks ago and in light of the debate since then it bears
repeating.
While I believe in free trade with China, “on some issues we
have to draw the line and energy and CNOOC is one such case.
Not because a CNOOC / Unocal merger impacts national security.
It doesn’t due to the makeup and volume of UCL’s reserves. But
if we let this one go through we make it far harder to prevent the
next offer. Where I have a real problem is China should have
been told in no uncertain terms long ago this is an area that is off
limits. CNOOC is a government-owned company, after all. Where
the heck was the State Department and the White House, this
being far more than a mere commercial issue? All we’ve done,
instead, is give China another propaganda weapon.”
But as I also noted when this issue first hit, Congress would
never allow it, especially as an NBC News / Wall Street Journal
poll now reveals 73% of the people oppose the proposed deal.
–I will continue to report developments on the bird flu front in
this space because it has everything to do with the potential for
economic disruption on a global scale. The latest scare involves
the death of three Indonesians who are suspected of having
contracted the virus without any evident contact with sickened
poultry, thus fueling the concern over the spread of human-to-
human transmission.
–The estimate for growth in the 12-nation Euro zone has been
lowered again to 1.3% for 2005 with high energy prices the main
culprit. But you know how I question China’s amazingly
consistent growth figures of 9-9.5%, quarter to quarter?
Singapore, which saw GDP decline on an annualized basis 5.5%
in the first quarter, just reported a stunning 12.3% increase in the
second. No manipulating or smoothing these numbers out. For
the year, by the way, the government still estimates growth of 4-
5%. A big reason for the increase was a large rebound in tourism
following the initial post-tsunami decline.
Back to China, once they report a growth figure of 8.5% or
lower, it’s Katy bar the door. That will be the admission a
slowdown is upon us. As much as growth like this still seems to
be more than solid, remember, China needs at least 8% to
generate jobs for displaced workers…and to prevent civil unrest.
–Former WorldCom CEO Bernie Ebbers was sentenced to death
…well, at age 63 his 25-year sentence with no chance of parole
for 22 (if he behaves) amounts to one. And in September the
courts will announce a final financial settlement in this record
fraud case that will leave him with $50,000 and a “modest” home
in Jackson, MS.
–Per my item of last week, Morgan Stanley’s Steven Crawford
did decide to take his $32 million and run, plus he automatically
vested in shares worth another $15 million. Meanwhile, former
CEO Philip Purcell sold out of about $40 million in Morgan
Stanley stock. Shareholders are now targeting the board that is
responsible for such outlandish arrangements.
–Citigroup’s #2, Robert Willumstad, resigned to pursue another
opportunity. What hurts here is he was a key to their investment
banking operation.
–Shona Seifert, an executive at Ogilvy & Mather, was sentenced
to 18 months in prison for her role in a scheme to over bill the
government on its national anti-drug ad account, a case I
discussed a while back. Her co-defendant received 14 months.
The judge ordered Seifert to develop a written code of conduct
for the advertising industry. No word on whether she will bill
double for this one too.
–Oracle’s Larry Ellison has gone on a $180 million buying spree
in acquiring a dozen Malibu properties, 10 of which are
residential including $15 million for a home only 1,600 square
feet but with 65 feet of beach frontage. [Los Angeles Times]
–Southwest Airlines, in continuing to buck the industry trend,
saw its profits rise 41% in the 2nd quarter, thanks in no small part
to some strategic hedging of its fuel needs vs. skyrocketing oil
prices. Southwest has now seen 57 consecutive quarters of
profitability, but the hedges aren’t as strong in the coming
quarters and years.
–In an ongoing effort to keep you abreast of what Disney will be
serving at banquets at Hong Kong Disneyland, since activists
have put a stop to thoughts of shark fin soup, Disney is now
opting for lobster bisque and another dish named sea whelk, “a
bouillon with bamboo fungus and crab roe.” Remember, kids,
sprinkle some bamboo fungus each morning on your cereal, just
like the panda bears do.
–No one seems to be commenting on the fact SEC chairman-
designate Rep. Christopher Cox has roughly 28% of his financial
assets in gold stocks, according to his financial disclosure form.
At least I find that somewhat interesting. What does Cox know
that the rest of us don’t?
–Concert attendance is off 12% the first six months of 2005,
while movie ticket sales have now declined 20 weeks in a row.
But regarding the latter, while many point to the fact revenues
from DVDs are 60% of the industry’s totals these days, some see
this trend declining as well.
–Search engine usage for the month of June: Google, 52%;
Yahoo, 25%; MSN, 10%. [Smith Barney]
–40 years ago this week, 7-Eleven introduced the Slurpee.
Actually, the chain ripped off the idea for it from a Kansas Dairy
Queen operator, but it was 7-Eleven that developed it to its full
potential.
–Baseball card maker Fleer has gone out of business. As one
owner of a sports collectibles operation told the AP, “Today, kids
want ‘of-the-moment.’ They want autographs. They want
autographed rookie cards.” Trying to fill this need became too
expensive for the company.
Foreign Affairs
North Korea: After 13 months of silence, the six-party talks will
resume as Kim Jong-il told a Chinese official that he sought a
denuclearization of the Korean Peninsula. Officials for the other
five sides (U.S., China, Russia, South Korea and Japan) all
expressed a certain level of optimism with the U.S. backing
Seoul’s offer of electrical power for the North if Pyongyang
abandoned its nuclear ambitions. Of course the devil will be in
the details of any coming agreements.
But I can’t help but refer you to my current “Hott Spotts” column
and the thoughts of foreign policy expert Nicholas Eberstadt, a
few of which follow.
“For half a century, and more, U.S. security policy has been
charged with imposing ‘deterrence’ upon Pyongyang. Shouldn’t
we expect that Pyongyang has also been thinking about how to
‘deter’ the United States over those same long decades?”
Eberstadt referred to a report by former Secretary of Defense
William Perry in 1999.
“Faced with the risk of nuclear attack on the U.S. mainland,
(Perry) warned, Washington might hesitate at a time of crisis in
the Korean Peninsula. But if Washington’s security commitment
to South Korea were not credible in a crisis, the military alliance
would be hollow and vulnerable to collapse under the weight of
its own internal contradictions. North Korea’s WMD program,
in short, may be the regime’s best hope for achieving its long-
cherished objectives of breaking the U.S-South Korean military
alliance and forcing American troops out of the Korean
Peninsula.”
Israel: Islamic Jihad was responsible for the first suicide
bombing in Israel since Feb. 25, killing four, and Israel launched
an immediate crackdown, sealing off the Palestinian territories.
Prime Minister Ariel Sharon is seeking to prevent further
setbacks and protests before the scheduled mid-August
withdrawal from Gaza, but on Friday there were intense clashes
between Hamas and Palestinian security forces, a bad sign for
stability and the leadership of Palestinian President Mahmoud
Abbas. [Hamas got the better of the fight.] Then later, Israel
killed seven terrorists and the conflict could spiral out of control
all over again.
Iran: We already know negotiations on the nuclear front here
will go nowhere, particularly after the election of a hardliner as
president, thus filling out the hardline troika….the presidency,
parliament and the ultimate decision-makers, the Supreme
Council. But we mustn’t forget that Israel is a most interested
bystander and this week finance minister, and former prime
minister, Benjamin Netanyahu, told a London audience that
concerted action was required to rein Tehran in, especially
because of its links to terrorism. It’s nothing you haven’t heard
before but there will come a time within possibly the next year
that Israel will be forced to act unilaterally.
China: In case you missed it, General Zhu Chenghu, a key figure
in the People’s Liberation Army, briefed foreign journalists and
said the following.
“If the Americans draw their missiles and position-guided
ammunition on to the target zone on China’s territory, I think we
will have to respond with nuclear weapons….We Chinese will
prepare ourselves for the destruction of all of the cities east of
Xian. [Ed. opposite Taiwan] Of course the Americans will have
to be prepared that hundreds of cities will be destroyed by the
Chinese.”
Now General Zhu is a well-known hawk and his comments did
not represent the “policy of the Government,” as he, himself,
admitted, but it is rather disconcerting, isn’t it?
Separately, Japan announced it was proceeding with test-drilling
for gas in a disputed area of the China Sea that Beijing claims as
its own. One must read this and realize that the six-party talks on
North Korea are not just about the North’s missiles. Can the
others sitting at the table get along themselves?
Russia: Former Prime Minister Mikhail Kasyanov is under
investigation for his purchases of government-owned real estate.
Since Kasyanov has political ambitions to run for president one
day, it’s easy to see this probe as but another attempt by
President Putin to quash any future opponents. [I still see Putin
changing the constitution to allow a run for a third term.]
But there were two reports on the socio-political front that speak
to the awful shape Russian society finds itself in. The death rate
for June was an estimated 16.9 per 1,000…or a level found only
in African nations suffering from AIDS. Drinking is the biggest
culprit, specifically vodka, while regarding AIDS, it is rampant
in the Russian military. Combine the two and it’s a national
security crisis.
Lebanon: Another car bomb, this one in a Beirut suburb, targeted
a leading politician; killing two though the pol survived. But
what made this one different from the others is the fact the
intended victim, the outgoing deputy prime minister, is pro-
Syria; all the earlier targets being anti-Syria. In other words, not
a good sign as old wounds in this tribal nation are re-opened.
But I also can’t help but comment on tourism statistics here since
I was in Beirut myself less than three months ago. Tourism in
June fell 9% over a year ago due to the sharp increase in political
violence and the head of the hotel industry said “not one single
hotel is full.” Foreign risk assessments are rising. Turks, for
one, have been canceling reservations in droves. It’s sad. The
people I met here were terrific and a lot of jobs will be lost
unless it turns around quickly. [The Daily Star]
Turkey: The PKK (the Kurds’ militia) kidnapped a Turk soldier,
thinking this will force Ankara to negotiate with the group but
Turkey refuses to. Washington take heed.
Kenya: The following is from a Reuters report. It’s sickening.
“Sixty-five people, including four children, were shot or hacked
to death in violence that began with a deadly cattle-rustling raid
on a remote northern Kenyan village, the police said Wednesday.
“Up to 400 rustlers carrying assault rifles and machetes killed 45
people and wounded 18 early Tuesday…
“A police statement said that in revenge, people from the Gabra
clan attacked a truck full of people from the rival Borana, which
they accused of the raid, and killed 10, including four children.
“Police officers killed four bandits at the village and shot dead
another six as they fled across the border to Ethiopia.”
Remind me not to go to northern Kenya, or Ethiopia for that
matter.
Random Musings
–California Governor Arnold Schwarzenegger has a clear
conflict of interest in an arrangement with a publisher of health
and body building magazines that pays him in excess of $1
million a year. While California law allows governors and other
elected officials to keep outside jobs, the problem is
Schwarzenegger vetoed legislation that would have imposed
government regulation of the supplement industry; which it turns
out helps pay his contract for writing some monthly columns.
[Late Friday, the governor announced he had severed his
relationship with the publications.]
–New York Governor George Pataki is in Iowa this weekend to
test the presidential waters. I only mention this because it is
incredible to me that this guy thinks he even deserves to be
considered. He has been an absolutely awful governor.
–New York City Mayor Mike Bloomberg has a 61% approval
rating, even after the disastrous 2012 Olympic bid effort, and is
comfortably ahead of his Democratic challengers, who as I noted
over a year ago are a truly pitiful bunch.
–According to figures for the state of Pennsylvania there were
1,500 preventable deaths from infection in 2004. The two big
issues for the hospitals are hand-washing and shaving the skin
before surgery. [Washington Post]
–A study for the Insurance Institute for Highway Safety reveals
that cellphone users, even hands free ones, are four times more
likely to have an accident.
–China had another major mining accident this week that killed
at least 70. Unofficial estimates of the death toll in 2004 from
such mishaps range as high as 20,000. [Officially, the
government says 6,000. This year’s carnage is of a similar
nature thus far.]
–No one has more disdain for Karl Rove than I do, but as to the
outing of Valerie Plame we all need to wait 24 hours and I’m not
commenting further myself until we hear what else prosecutor
Patrick Fitzgerald has.
–Brian Lavery had a good piece in the New York Times on
Ireland’s trash problem. Speaking from extensive experience
traveling over there, as beautiful as Ireland is, it’s despicable just
how much garbage is lying around, let alone the amount of raw
sewage being pumped out to sea. [Of course much of it doesn’t
make it all the way out, either.] The nation simply hasn’t learned
to control its growth.
–Victor Conte, the key figure in the BALCO steroids scandal,
cut a deal with prosecutors and will receive four months in prison
and four months house detention in admitting to one count of
conspiracy and money-laundering. The reason why it’s
important is he will not be required to assist in the prosecution of
anyone else, such as track star Marion Jones or Barry Bonds, he
of the illegitimate chase for baseball’s all-time home run record.
–I loved the Weather Channel last weekend. When Hurricane
Dennis first crossed Cuba and its maximum winds fell to 90 mph
before it re-strengthened, I heard one of the weather girls say,
“Bad news, Dennis is weakening…….rather good news!”
–A USA Today / CNN / Gallup survey on funding a trip to Mars
revealed that only 40% approve of spending for such a project,
while 58% oppose. This issue may say as much about the future
of our society as the war on terror…assuming we survive the
latter. Unmanned exploration and scientific expeditions such as
Voyager and Deep Impact have immense value, no doubt, but
man must keep going forth himself. I see the Chinese announced
plans for their second manned mission. You can be sure they
will be heading to Mars as soon as they deem it feasible. Even
the Russians have said they would try. But the United States?
Nooooooo. Oh well, it won’t be my generation’s problem. The
rest of you deal with it.
–Finally, back to the sport of golf, it was a truly great moment
on Friday as Jack Nicklaus played his last round of competitive
golf at the British Open. What an amazing and classy
ambassador for the sport. But the final scene, and the
camaraderie exhibited between Jack’s playing partners, which
included long-time rival Tom Watson, also best exemplified why
to some of us golf as a sport is without peer.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $421
Oil, $58.05
Returns for the week 7/11-7/15
Dow Jones +1.8% [10640]
S&P 500 +1.3% [1227]
S&P MidCap +0.5%
Russell 2000 +0.2%
Nasdaq +2.1% [2156]
Returns for the period 1/1/05-7/15/05
Dow Jones -1.3%
S&P 500 +1.3%
S&P MidCap +6.5%
Russell 2000 +1.9%
Nasdaq -0.9%
Bulls 54.5
Bears 22.2 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
