[Posted 7:00 AM ET]
“I’ve got an idea for our Pentagon planners. The day I can land
at the airport in Baghdad and ride in an unarmored car down the
highway to the Green Zone is the day I’ll start considering
withdrawal from Iraq.”
–Senator John McCain / Fox News Sunday
Of course McCain’s further opinion, shared by myself, that we
not only can’t withdraw from Iraq but that we need more troops
there wouldn’t fly with the American people without presidential
leadership. Don’t hold your breath.
It’s easy to see why the White House desires to lower
expectations when it comes to the outcome here. You don’t need
me to tell you it’s been a disaster. But we keep praying for good
news, like a positive development on the political front, because
the alternative is unthinkable.
I’m not one to go crazy that the deadline for drafting a
constitution slipped a week, but as I go to post it’s clear that to
hear of a further extension by Monday would not be good. It’s
the same issues being haggled over by the majority Shiites and
the minority Sunnis and Kurds. Self-determination for the Kurds
in the north and the Shia in the south, the allocation of oil
revenues, women’s rights and the role of Islam. Tangential
issues such as Iran’s influence over the country, while not part of
a formal document, are even more important, potentially, over
the long run. Until we get some clarity, however, we’ve been
beating the same dead donkey, week after week. Now we need
results.
But a word to the apologists for the war, the sycophants. Men
like Republican Governor Mike Huckabee of Arkansas, who I
saw on one of the talk shows a while back making a total fool of
himself as he went on and on about how well things were going.
Or General Casey in Iraq, interviewed the other day by “Today”
anchor Matt Lauer in Baghdad, who treated us viewers like
chumps. “Well, you know the history of insurgencies is they last
an average of nine years.”
You didn’t say that in the summer of 2003, general, when the
insurgency was first taking hold. And you sure as heck weren’t
pounding the table for more troops then, either.
Wall Street
I thought $40 oil would start to bite. Then it was $50. Yeah, that
had to be the figure. But instead we all kept acting like it didn’t
mean anything. “In today’s dollars, oil really isn’t that high.”
“Oil isn’t nearly as important to the overall economy as it was
20-30 years ago.” But finally, at $60+ and $3 a gallon in many
spots ($6.00 overseas), it’s having an impact and attitudes appear
to have flipped on a dime. Whether it’s $35, $45, or $55 to fill
your tank, it’s real money; and the cost to cool one’s home this
summer, along with the projected cost to heat it this coming
winter, is more than a bit disconcerting.
I’ve been writing of this economy flipping by year end and I see
no reason to change my opinion. I wrote last week I’m wrestling
with one issue, though; that being whether or not others like
Japan can bail out the U.S. and China before it’s too late, but it
will take a lot of convincing in this regard to get me to switch to
the bull camp.
The World Bank issued a curious statement this week on China’s
prospects, calling for growth to slow here to the 8% level in
2006. Well you should know by now after all I’ve written that
this is a magic figure. China needs at least 8% to create jobs for
those entering the labor force each year. Yet I read the whole
report from the WB and there is no mention of this rather
important fact. Regardless, the World Bank is in essence saying
China will reach its own tipping point over the coming year.
As for the here and now in the United States, various
measurements of regional manufacturing activity showed
continued strength this week, but industrial production,
nationwide, rose a mere 0.1%, the same figure as the index on
leading economic indicators.
Meanwhile, earnings released this week were less than stellar
(more below) and I couldn’t help but notice that Merrill Lynch
chief strategist Richard Bernstein said that the game played by
Corporate America when it comes to earnings estimates is as
prevalent as ever. [Tom Petruno / Los Angeles Times] But
whereas the earnings forecasts for the second half of the year are
looking increasingly robust, remember that much of this is due to
the stupendous numbers being reported by the energy sector and
I now predict Q3 and Q4 results will fall short, overall, despite
the pleas of CEOs to gussie ‘em up a bit so they can sell their
stock options as part of, ahem, “prudent estate planning.”
It’s also not as if the Federal Reserve isn’t going to be right in
the middle of the mix. The core consumer and producer price
indexes may have been more or less in line, but the gross PPI at
up 1.0% for July was a headline grabber, even if it was heavily
influenced by soaring oil. In other words, the Fed is going to
keep raising short-term rates and it’s going to have a bigger and
bigger impact on consumers and homeowners whose credit and
home equity lines rise in kind.
[I stand by my deflation outlook, however, as part of my ‘flip’
scenario.]
But we’ll end this segment on a positive note. The
Congressional Budget Office said the federal budget deficit for
2005 will be $331 billion and $314 billion for fiscal ’06. I
supported the tax cuts and they’ve been the reason for the surge
in revenues and falling deficit projections. No one can deny this.
But the improvement could be short-lived, especially because the
White House has failed miserably on the spending front. If I’m
right on my economic forecast, the deficit will soar anew and as
revenues come in at a slower pace, the spotlight will once again
return to outflows… and it’s not going to be pretty. Also
remember that while eventually the costs for the war in Iraq and
Afghanistan may drop as we reduce our presence – not that this
is necessarily the right thing to do but there is a 2006 mid-term
election, after all – any ‘savings’ should be allocated to fixing
problems such as the alternative minimum tax.
Street Bytes
–The major averages all lost ground with the Dow Jones
declining 0.4% to 10559, the S&P 500 losing 0.9% to 1219 and
Nasdaq another 1% to 2135. Nasdaq has now fallen three
straight weeks, just as everyone was singing tech’s praises.
Among the big earnings reports, the most influential was that of
Wal-Mart which beat on earnings but warned that higher
gasoline prices were impacting prospects in the second half. It
was a stark reminder that a majority of Americans are feeling the
pinch.
Meanwhile, Home Depot raised its earnings outlook but the
shares declined because revenues were punk. Other retailers,
such as Dick’s Sporting Goods (nice call Jim Cramer…not!),
warned, as did Gateway and John Deere. Hewlett-Packard and
Applied Materials, on the other hand, not only beat estimates but
were optimistic about the future.
–U.S. Treasury Yields
6-mo. 3.80% 2-yr. 4.01% 10-yr. 4.21% 30-yr. 4.42%
Interest rates were unchanged on the week despite the less than
bullish inflation data. While the Fed is clearly going to be
tightening further (next meeting is Sept. 20), some market
players are guessing the long end won’t necessarily respond in a
negative manner to future increases on the short end.
Separately, the latest figures on foreign buying of U.S. assets was
bullish, with net inflows of $71 billion in June (handily covering
the U.S. trade deficit of $58 billion, incidentally) compared to
$56 billion in May. But, the foreign cash was flooding into
corporate bonds, not Treasuries.
–Part of the reason for the decline in the Dow Jones on the week
can be laid at the feet of component Merck, which suffered a
defeat in the first case involving its painkiller Vioxx. A Texas
court awarded $24.4 million in actual damages to one victim’s
family plus another $229 million in punitive damages. While the
figures are certain to be reduced, the problem is Merck faces
thousands of other cases and it’s no mystery why the share price
fell 8% on the news.
I also have to note something I wrote in this space on 10/9/04:
“Barron’s…offered up this incredibly stupid advice regarding
shares in Merck, post-Vioxx. ‘(It) looks poised for a big
rebound.’ You know I steer away from individual stock advice,
but if you’re a trader, well, you can take your shot getting a dead-
pharm bounce, but the lawsuits, many legitimate in this instance,
will inundate Merck for years, a subject the Barron’s piece tossed
away with a casualness that simply belies the facts.”
–Mechanics and ground staff at Northwest Airlines went on
strike, though the airline is saying it will run a normal schedule.
Fat chance of that happening, despite Northwest’s preparation in
advance.
— Housing data for the second quarter was strong…but that is
April – June, sports fans, not today, and the evidence of a
slowdown mounts. In Orange County, California, for example,
the median price fell in July from June [Los Angeles Times]
while here in New Jersey we had a front page headline in the
Star-Ledger… “Jersey’s hot home market is a bit cooler.”
–More thoughts on real estate:
“Take a look at the hot San Diego condo market. In Park Place,
one of the many sleek towers of condominiums recently slung up
around Petco Park, a one-bedroom condo is offered for
$719,000. Someone buying it would expect to make mortgage
payments of about $3,775 a month, plus monthly maintenance
fees.
“But someone really wanting to live in the high-rise, with
hardwood floors, granite countertops and city views for a lot less,
could rent a nearly identical unit in the same building for $2,400
a month. That is clear evidence prices have to move down.”
[Damon Darlin / New York Times]
Op-Ed from John Makin, American Enterprise Institute:
“A mere leveling of housing prices…would be sufficient to
remove the boost from housing that is worth about 1 percentage
point of growth. With that impetus eliminated and the drag from
higher oil prices continuing, the U.S. growth rate could easily
drop to 2.5% or lower, depending upon the future path of energy
prices, the persistence of the negative impact of past energy price
increases, and the sharpness of the drop in house prices….
“The notion that world growth is sustainable given oil at $65 a
barrel because the U.S. can shrug off the implied energy drag
depends almost entirely on a continued U.S. housing boom….
The Fed needs to keep moving cautiously on tightening over the
year because the housing slowdown will probably arrive
suddenly as speculative sentiment dies. Further, the drag from
higher energy prices has risen sharply in recent weeks.” [Wall
Street Journal]
–Crude oil fell to the $63 level earlier in the week on the belief
that inventories were more than adequate to take us into winter,
along with word demand for gasoline this summer was actually
below last year’s level. But then OPEC warned on non-OPEC
production going forward, the market had some supply
disruptions from the likes of Ecuador, and presto! Oil rallied
back over $65 by the close on Friday.
–A few weeks ago I pointed out two key indexes for the energy
sector, the OSX (oil service / drillers) and XOI (majors such as
Exxon Mobil). Here’s another update.
OSX…123 (12/31/04)…122 (5/16-I)…170 (8/11)…162 (8/19)
XOI…721 (12/31/04)…772 (5/16-I)…1005 (8/12)…964 (8/19)
[The index values for 5/16 are intraday, all others closing prices.
All-time highs were reached 8/11 and 8/12, respectively.]
What the numbers above mask are wild swings in between the
listed periods, including just this past week.
–We’ve been talking about the potential for Canada’s oil sands,
which the Bush administration is belatedly discovering after
China signed a number of deals. Here’s a tidbit from TD
Economics, courtesy of Harry K.
“With concerns about the adequacy of global supplies of crude
oil and refined products pushing prices for West Texas
Intermediate to record highs in recent months, Canada’s vast oil
reserves situated in the Alberta oil sands have been capturing
growing worldwide attention. Indeed, current estimates of
established reserves in the oil sands rank second to only Saudi
Arabia in terms of size. And, given the industry’s recent track
record of impressive innovation, the ultimate potential of the
region could be considerably larger. Meanwhile, major oil and
gas players have not been wasting any time forging ahead with
multi-year plans to develop the oil sands resource, with the list of
projects on the rise.”
Together, total direct and indirect employment in the oil and gas
sector in Canada is estimated to be more than 365,000.
–On Thursday, half of Indonesia’s 120 million citizens lost their
power for up to five hours in perhaps the largest single blackout
in history in terms of the number affected. The culprit is surging
electricity demand, a huge issue across much of Asia.
–Copper hit an all-time high this week due to the supply /
demand equation. Housing, worldwide, is a big part of the story
here, especially in China. Of course it bears watching on the flip
side.
–The political crisis in Brazil deepened on Friday with the
revelation that the popular finance minister was being linked to a
bribery scandal that could yet entrap President Luiz Lula da
Silva. Both the currency and equity markets took big hits on the
news.
–Loopholes exist in U.S. fuel economy regulations for Hummers
and other large sport utility vehicles as a protection for the
domestic auto industry, while at the same time various reports
(including a series on NBC News) reveal that hybrids, taken as a
group, do not save drivers money and also might not deliver the
fuel efficiency advertised.
–Bird flu has crossed the Ural Mountains and is heading west.
Russia is attempting to slow it down by slaughtering domestic
stock (poultry). But here’s another disgusting food story from
China. Both the mainland and Hong Kong have banned the
selling of eels (except live ones) after discovery of a cancer-
causing preservative. One could say that it’s all just another
attack on our morays.
–If you’re a Dell shareholder you can’t be happy. On the heels
of a disappointing earnings report the prior week that led to a
10% or so hit in the stock, a customer satisfaction survey favors
Apple over Dell, with Dell’s awful help desk being the major
culprit.
–Last Sunday’s New York Times had the story of hedge fund
KL Group out of West Palm Beach, Florida. KL recently
collapsed, with up to $200 million having disappeared according
to authorities investigating the operation. The fund was
established by three Korean-born Americans and investors
included golfers Raymond Floyd and Nick Price.
–The SEC sued a day trader and four brokers from Merrill
Lynch, Citigroup and Lehman for trading on confidential
information carried over internal “squawk box” calls. For
example, the day trader was hooked into the communications
lines. “Joe Blow is looking to buy 100,000 XYZ” so the day
trader would get his orders in before J.B.’s trade was executed,
thus giving himself a chance to cash in on the inevitable uptick
such a large buy order produces. The brokers then received
compensation from the day trader.
–According to KPMG, 1 in 10 tech products sold worldwide are
fake costing some $100 billion in lost revenue. “No other area
comes close to what the market is in China,” said one analyst.
[Financial Times]
–The former president of Conrad Black’s Hollinger
International, the media giant, along with the company’s top
lawyer were indicted for taking part in a scheme whereby $32
million was funneled to themselves. Black himself was ousted in
2003 as Hollinger’s board alleged he and his cronies plundered
the company to the tune of $425 million.
–Google filed to sell an additional 14 million shares; raising over
$4 billion at today’s levels. Everyone has a theory as to what the
company will do with the extra cash…infrastructure,
acquisitions? But a funny thing happened on the way to $350…
the stock has stalled at the $280 level.
–Chinese Internet player Baidu.com went public on July 22 at
$27 and closed that Friday at $122. I wrote on 7/23, “Just a
guess, but shares in this one will collapse shortly.” Two weeks
later it’s $79.
–George Foreman won’t say just what products he’ll be
marketing, but he’s forming a new venture in the health and
fitness area and no one is doubting he’ll be successful. Foreman,
after all, earned $127 million in the first four years from hawking
his Lean Mean Grilling Machine…a fixture at the home of your
editor.
–HBO (owned by Time Warner) is betting big on its upcoming
series “Rome” that airs August 28. At $100 million it is the most
expensive first year production ever. [I’m getting kind of
psyched for it myself.]
–According to Bloomberg News, Major League baseball
franchises are having difficulty leasing up their luxury boxes.
There’s simply too much competition from other sports as cities
build one new stadium or arena after another. And a Bank of
America official noted “Many companies are starting to ask, ‘Is
there value to having these suites?’” In the case of baseball,
which has 81 home games a year, many corporations are now
opting to lease a box for just half a season, while some franchises
aggressively market single game suites. Bottom line, it’s a pain
in the neck trying to find 12-20 people who want to take time out
of an already crammed schedule to sit around with other people
they don’t even like.
–From a story in USA Today:
“An advance in nanotechnology may lead to the creation of
artificial muscles, superstrong electric cars and wallpaper-thin
electronics, researchers report.”
Yup, something else Major League Baseball will have to test for.
I wonder what Rafael Palmeiro’s excuse will be then? “I had
absolutely no idea these artificial muscles were planted on my
body.”
–OK, last week I blasted a settlement whereby Merrill Lynch
was forced to compensate some of its brokers for overtime. So
it’s only fair that I note a University of Massachusetts study that
found those working more than 12 hours a day raised the risk of
suffering injury or illness by 23%.
–My portfolio: Rough week for my carbon fiber play as a minor
accounting issue (having nothing to do with the reporting of
operating results) is temporarily clouding the picture. It’s also
probably an appropriate time to ask, “Have you taken your
carbon fiber today?”
Foreign Affairs
Israel: The process of evicting 8,000 settlers from Gaza, along
with thousands of extremists who entered the territory, proceeded
on schedule as Israeli troops exhibited tremendous courage in the
face of intense pressure. And so now it’s up to Palestinian
President Mahmoud Abbas to rein in Hamas and the other
terrorist organizations as they flood the land. But Abbas’s
impotent, corrupt security forces are not up to the task and Israeli
Prime Minister Ariel Sharon’s “unilateral separation” will not be
a peaceful one, though Sharon made the right move.
A report from the Jaffee Center for Strategic Studies, affiliated
with Tel Aviv University, concluded:
“Gaza (will) serve as a training area and as the terrorists’ rear
echelon and support base for weapons smuggling and local
production; and will offer safe harbor for wanted terrorists and
senior commanders.”
The report also said the Palestinian leadership would ultimately
“fail the test” of running the Gaza Strip responsibly. The first
indication will be how they handle what would appear to be an
uncontrolled land grab following the Israelis’ exit. [Jerusalem
Post]
Lebanon: And then there’s Hizbullah, not exactly a pleasant next
door neighbor to Israel though with increasing political clout in
Lebanon’s new government. According to Baalbek-based leader
Hussein Hajj Hassan, a member of parliament, “Hizbullah will
not hand in its weapons as long as Israel possesses 400 nuclear
missiles.” Hassan points to Lebanon’s army not being able to
defend the nation against outside threats, and on this point he is
correct. The military desperately needs new equipment and
armaments and the United States has been helping some in this
regard. But it’s also clear UN Security Council Resolution 1559,
which called for the disarming of Hizbullah, will not be carried
out. [Daily Star]
Iran: New President Ahmadinejad selected a fellow hardliner to
head up Iran’s delegation to nuclear talks with the Euro-3 as
President Bush told Israeli television that “all options are on the
table.” At which point German Chancellor Schroeder, embroiled
in a heated election campaign, said “We have seen (the military
option) doesn’t work.” Britain’s foreign secretary Jack Straw
also distanced himself. “We don’t think there are any
circumstances where military action would be justified against
Iran.”
But Bush was just talking about the reality of the situation on the
ground. Of course our military planners are working on options,
but there’s one problem. Just as in the case of North Korea, it’s
not a matter of taking out one reactor or plant. Both Iran’s and
North Korea’s programs are scattered all about and our
intelligence is sketchy at best in tracking down the key sites, let
alone the progress being made at each.
Separately, Iran has an issue with its Kurdish population, 6
million out of a total 67 million, as unrest has led to deadly
protests. Iran’s Kurds (mostly Sunnis) see what’s been
happening in Iraq and they want their own autonomy from Iran’s
ruling Shia.
North Korea: Pyongyang has been demanding that before six-
party talks resume the United States guarantee there are no nukes
in the South, so the U.S. commander of forces there did just that.
[While the U.S. never admitted to it, at one point it supposedly
had some in South Korea but they were removed in 1992.]
China: Eric Teo Chu Cheow wrote an opinion piece for the
International Herald Tribune that noted three recent
developments “provide subtle signals that a major debate has
started within the Beijing leadership on China’s social,
economic, cultural and political future.”
“On July 28, the People’s Daily ran a front-page commentary
warning Chinese citizens to obey the law, saying that any threats
to social stability would not be tolerated by the authorities….the
editorial surprised many by its stance that widening inequality is
an inevitable phase of development.
“On Aug. 3, the Culture Ministry’s Web site announced that
Beijing would bar new foreign television channels from entering
China and step up censorship of imported programming, in order
to ‘safeguard national cultural safety.’ …
“Then on Aug. 5, Health Minister Gao Qiang was quoted in the
China Daily criticizing China’s hospitals for being greedy and
putting profit ahead of their social function.”
All are an indication that China is concerned with growing
instability; the danger of rising expectations.
On a different topic, the Chinese people have to be concerned
about the devastation being wreaked on their environment. Acid
rain falls on one-third of the country thanks to power plants that
burn high-sulphur coal without emissions controls. In addition,
six of the world’s 10 most polluted cities lie in China and 80% of
China’s sewage flows untreated into its waterways.
Contaminated water is estimated to kill more than 30,000
children annually. [Business Week]
Finally, Taiwan has begun deploying its home-made cruise
missiles capable of hitting targets in Southeast China.
Japan and WW II: The war in the Pacific ended 60 years ago,
Aug. 15, 1945. To commemorate the event, Japanese Prime
Minister Koizumi issued an apology.
“On the 60th anniversary of the end of the war, I affirm that the
peace and prosperity with which we are blessed today is built on
the sacrifices of the many who lost their lives in the war against
their will…I renew my determination that Japan will never again
follow the path to war… Japan caused huge damage and
suffering to many countries, especially the people of Asia, with
its colonization and aggression.”
But some said another statement of Koizumi’s, designed for
domestic consumption, watered down the self-criticism. An
editorial in the state-controlled China Daily declared Japan has
yet to face up to the past.
“Only with an honest attitude towards history can a nation win
reconciliation and then integrate into the global community.
Actions speak louder than words… [Mr. Koizumi’s] words
appeared faint and his sincerity is also in doubt.”
Koizumi did not go to the controversial war shrine, giving up
potential political benefit from conservatives as he faces the snap
election next month. But, “Right-wing ultra-nationalists on
black lorries blared out slogans through loudspeakers angrily
denouncing anti-Japanese demonstrations in China. In one
extraordinary scene, student demonstrators who unveiled anti-
war banners were punched, kicked and spat on by a mob of right-
wingers under the noses of the police.” [Times of London …also
BBC News and Financial Times]
Afghanistan: 17 Spanish troops were killed in a helicopter crash
during exercises, just days after Spain’s defense minister took
heat for saying his country’s forces (about 650) would likely be
there for years to guarantee stability.
Russia: A 3rd Polish citizen, a journalist, was beaten in Moscow
as presidents Putin and Kwasniewski talked of diffusing tensions.
As for the first-ever joint Russian-Chinese military exercises, an
8-day affair, it’s troubling for Washington but may help in efforts
to get Japan to re-arm and take on a bigger role in sharing the
security burden in the region….just my opinion.
Saudi Arabia: We’re all sick of hearing how a “top” al Qaeda
figure has been captured or killed, only to see another head (or
six) pop up. But there is no doubt Saudi Arabia’s killing of the
#1 figure in the nation was significant.
Indonesia: The government has reached agreement with the Free
Aceh movement on a peace plan after three decades of strife.
Zimbabwe: As if the people don’t have enough problems, the
broke government is hiking taxes on drinks and cigarettes by
50%.
Guatemala: At least 31 inmates died in a series of coordinated
attacks at seven prisons as the Mara Salvatrucha gang fought
rival MS-18. Remind me not to visit here anytime soon.
Random Musings
–Two opinions on war protester Cindy Sheehan and the
president.
Jim Hoagland / Washington Post:
“What is disturbing is that the national political discourse is
increasingly detached from reality. The emotionalism and
character assassination practiced by both sides – the clamor in
the echo chamber around Sheehan is only one example – is
mistaken for ‘politics.’
“Instead of turning out more engineers or scientists, American
society seems at times more geared to forming consumers,
producers and critics of a particularly bombastic kind of political
theater, which comes in entertainment and information flows that
are increasingly hard to distinguish….
“Bush neither needs nor deserves defending on this score. He,
too, has contributed to the national political discourse becoming
more superficial, more coarse, and more driven by images and
drama. That he is now hoist – in opinion polls at least – by the
conditions he helped create at home also seems a metaphor for
his dilemma in Iraq.
“There the president gropes his way uncertainly through a
nightmarish period in which he is necessarily a seeker rather than
a provider of the answers that, in reality, only Iraqis will be able
to provide for their country.
“The shock-and-awe tactics of the speedy battlefield victory in
Iraq created changed conditions there that the Bush team failed
to perceive and to master in time. It is possible to see a parallel
in his uncompromising approach to political campaigns and
legislative fights at home and the plunge his standing has taken
in the polls.
“A vigil by a war victim’s mother should be an act of devotion
that transcends political theater. Bush owes Sheehan the respect
of the meeting she seeks – if she demonstrates that she will show
him the respect any elected president deserves.”
David Ignatius / Washington Post:
“I have no doubt that Bush grieves for every fallen soldier. But
he undercuts his leadership role with his seeming insensitivity to
Cindy Sheehan. Whatever her personal quirks, this grieving
mother had become a symbol for the families who are paying the
real cost of the war. Once she began her vigil in Crawford, a
presidential listening mission would have seemed like a no-
brainer – except at this White House, which appears to regard
any concession to a critic as a mistake. Bush reinforced this
appearance of insensitivity in a comment Saturday that was
quoted by Cox News Service. He said that while he wants to be
‘thoughtful and sensitive’ to people who want to talk to him, ‘I
think it’s also important for me to go on with my life.’
“A clear sign of Bush’s failure to communicate effectively about
Iraq comes from the pollsters. Newsweek and Associated Press
polls taken in early August measured his job approval rating at
42 percent, the lowest level ever. Approval of his handling of
Iraq was even lower – 34 percent in Newsweek’s sampling, 38
percent in the AP’s. Anyone who doesn’t think Vietnam when
he sees those numbers doesn’t have a good memory.
“The measure of leadership isn’t dealing with success but dealing
with difficulty. Bush is now in that bitter cockpit. Somehow the
president must find a way to level with the country and build
support for a sustainable policy that puts more of the burden on
Iraqis. A good start for Bush would be to come back to
Washington early from Texas and start thinking how the nation
as a whole can share in the sacrifices required by this long, hard
slog.”
Now here’s my take. In my years on Wall Street I was involved
in a lot of troubleshooting. Lesson #1 is tackle the problem as
soon as it pops up. Let them know you care and it’s almost
always immediately diffused. [There is no Lesson #2, by the
way.]
All you need to know about President Bush’s response to Cindy
Sheehan is to see how he handled Donald Rumsfeld. I called for
his removal back in 2003. I correctly called him a liar in May of
that year. But guess who’s still running the Defense
Department? I noted as calls came in for Rumsfeld to be fired in
the summer of ’04 that it was too late. Bush couldn’t send
Rumsfeld into retirement right before the election because it
would be perceived as a sign of weakness.
In the same respect, if Bush had just invited Sheehan over to the
Crawford ranch for a sit down, despite her previous audience
with him, this would have been over. If a still bitter Sheehan had
then sought out the microphones, no one would have given her
the time of day. “What else does the woman want?” would have
been the cry from a vast majority of Americans. She wouldn’t
have had a leg to stand on. And to those such as Joe
Scarborough who say Bush would have been setting a dangerous
precedent for future protests, that’s just not correct. Again, the
people would have no patience for such displays, understanding
the demands of the presidency.
But then I’m not the brilliant Karl Rove. What the hell do I
know?
–Back on 7/23 in this space, I commented on the dangers of the
“choking game,” where young kids, say 9-12, choke themselves,
or have a friend do it to them, to induce a ‘high.’ By way of
follow-up, this was the focus of a “Today” show segment on
Thursday as a couple came on to speak of how their daughter had
died the week before. It’s real….and parents need to find out if
their children participate in this deadly craze.
–The case of the Helios Airlines crash should give every flyer a
jolt. For starters, I may actually listen to the preflight
instructions about depressurization and oxygen masks next time.
I mean did you know that you have as little as one second, and
no more than 30, to get it on? Think about it. You start to feel
pain in your ears, get a vicious headache, and poof, you’re dead.
So much for taking care of the child next to you, first…..fend for
yourself, kid.
–It’s been an awful stretch for the air transportation business,
with the other big incident this week being the crash of the
Colombian charter plane that as of this writing could be a result
of bad fuel. Speaking of bad stuff, for those of you in the New
York area who are doing heroin while reading this column, you
may want to think twice. Six have died in the past few weeks
from a bad batch that is circulating around.
–I never mix commentary on this column with that of other
articles I happen to write, but I need to make an exception here
as it involves golfer Phil Mickelson and his PGA triumph.
Specifically, the fact that he was the only tour pro to ask the local
pro at Baltusrol, Doug Steffen, for advice on playing a course
that the vast majority of participants hadn’t seen before, the last
big event here having taken place in 1993. There is no doubt in
my mind that had Phil not done this he wouldn’t be sitting on his
second major. I know a thing or two about the PGA Tour and
the arrogance that’s often on display amazes me….even though it
probably shouldn’t.
–I stayed up last night to watch Bill Maher’s show on HBO. It
was simply dreadful. But one of his guest’s was Major Paul
Hackett, the democratic congressional candidate who lost a
narrow election in Ohio recently and is thought of as a new
darling in the party. Let me tell you, if the Dems are relying on
this primo jerk to help inject enthusiasm into the electorate, they
are sadly mistaken.
–So the other day I heard a commercial for Bravo Smokes, “The
safest way to stop smoking.” I can’t say I previously knew of
this product so I checked out Bravosmokes.com. It’s a non-
nicotine cigarette made from lettuce. So I’m thinking all this
time we thought Bugs Bunny was harming his body when he lit
up and the joke was on us. Or perhaps I’m reading too much into
it.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $442
Oil, $65.35
Returns for the week 8/15-8/19
Dow Jones -0.4% [10559]
S&P 500 -0.9% [1219.71]
S&P MidCap -1.2%
Russell 2000 -1.1%
Nasdaq -1.0% [2135]
Returns for the period 1/1/05-8/19/05
Dow Jones -2.1%
S&P 500 +0.6%
S&P MidCap +6.0%
Russell 2000 +0.1%
Nasdaq -1.8%
Bulls 57.3
Bears 22.5 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
