[Posted 7:00 AM ET]
Wall Street
Gloom, despair, and agony on me
Deep, dark depression, excessive misery
If it weren’t for bad luck, I’d have no luck at all
Gloom, despair, and agony on me
–Buck Owens and Roy Clark, “Hee-Haw”
There are a number of potentially titanic events this week. The
Federal Reserve’s Open Market Committee meets on Tuesday
and Wednesday, at which point it is now expected they will
lower the short-term funds rate another ¼-point to 2.00%, and
then issue language strongly hinting at a pause. There is also
another key reading on home prices from S&P/Case-Shiller,
Tuesday, and Friday’s employment report for the month of
April.
But to me the biggest figure will be released on Wednesday; the
first look at gross domestic product for the first quarter. Have
some of us been right in our gloom and doom for the economy?
What if the number comes out positive, even if by a fraction, as
some economists are now projecting? What does that do to
forecasts for the rest of the year, or to sentiment; the latter being
the key variable in any market environment? All I know is if
GDP comes out with a ‘+’ sign, I’ll be spinning away with the
best of them come my next review.
Of course I’ll be shocked if the economy didn’t take a negative
turn in the quarter. It’s become an environment where three
things matter…housing, food and energy…and you can say that
for just about anywhere in the world these days, particularly in
the developed markets. You might be thinking, though, what
about the global credit crisis? That’s always been a subset of
housing (and now increasingly commercial real estate). Without
the bursting of the real estate bubble, obviously we have no
credit crunch.
Food and energy prices, on the other hand, we all have to deal
with, every darn place in the world. Gasoline futures, for
example, finished the week over $3.00, meaning the day of $4.00
at the pump on a nationwide basis is just around the corner
should the futures price rise another 20-30 cents from this level.
Here in New Jersey, we’ve been somewhat sheltered thus far,
unlike those of you in California, for example. We have the
refineries that the rest of you like to crack jokes about, after all.
Plus we skim it off our rivers, a right of passage for the little
ones.
But what of this food bubble we’re in, and if you don’t think it’s
a bubble, take a glance at my “Wall Street History” piece on
tulipmania that I dusted off. The price of rice tripling in a year?
C’mon. That’s just stupid. Don’t panic and go rushing to hoard
the stuff, at least here in America (recognizing I have
international readers who may be in a little different
predicament).
Energy is a different story, and an often told one. Inventories are
low in some categories, you’ve had outages of one kind or
another, and you have a key producer like the Saudis saying they
don’t need to increase their capacity (assuming they can in any
big way) because there is enough oil already out on the market.
So much for all those high-level meetings in Riyadh, at Camp
David, or Crawford, Texas, over the years, asking the Saudis for
their cooperation on supply.
But talk about gloom, despair, and agony, look no further than
the airline industry as the cost of jet fuel soars beyond the
heavens.
And what of housing? Existing home sales for the month of
March were off 2%, about in line with expectations, though the
median price rose slightly year over year, but then new home
sales came in at their lowest level since 1991, with the median
price down 13%. Plus inventories in both categories are still in
the 10-11 month range, not good. You can’t call a bottom in this
market until much of it is worked off, plus as Mike Morgan, a
real estate broker in Florida, wrote in Barron’s, the inventory
problem is migrating from builders to the lenders these days and
the lenders are clueless as to how to best dispose of properties
without making the problem worse. It also doesn’t help matters
that mortgage rates have been rising, even as the Federal Reserve
has been lowering its own target rate, opposite of what the Fed
hoped would happen. In this instance it’s simply about much
tighter lending standards and the bond market’s fear of inflation,
thus the rise in the 10-year Treasury off which conventional
mortgages are pegged.
So you put it all together and it’s no surprise defaults and
foreclosures continue to rise. Jeff S. passed along a piece from
the Arizona Republic that addressed the growing issue of people
just walking away from their homes when the value falls below
the amount left on the mortgage. In the Phoenix area in March
alone, 2,365 homeowners pursued this path, quadruple the
number a year ago.
But what’s happening overseas, you might ask? More of the
same. The Bank of England announced a plan to restore
confidence in its financial system in an attempt to jumpstart a
sliding housing market there, offering to take in assets of all
kinds, including those exceedingly hard to trade these days, in
return for government-backed bonds. U.K. banks have a year to
repay the loans and in most cases could renew after that. This is
what happens when mortgage approvals plummet 50% as they
have in Britain in the past month.
Meanwhile, business confidence in France and Germany is
tumbling and Japan’s inflation rate is suddenly running at its
hottest rate in a decade.
Add it all up and it’s not the best economic environment out
there today. It’s also no surprise that consumer sentiment, as
measured by the Univ. of Michigan survey, is at a 26-year low,
73% in a USA Today/Gallup poll cite higher energy prices as a
major concern, Whirlpool said it hasn’t witnessed such a poor
environment for selling appliances in decades, UPS reported a
“dramatic slowing in the economy,” and Starbuck’s CEO
Howard Schultz said “The current economic environment is the
weakest in our company’s history.”
Nor is it any wonder, then, that exit polling in Pennsylvania on
Tuesday showed the economy is the top concern of voters at
55%, followed by Iraq, 27%, and healthcare, 14%.
Yup, gloom, despair, and agony on me, err, us.
Street Bytes
–But, recall my mantra around here. Gloom in the economy
doesn’t mean stocks totally crater. After their spectacular
performance the week of 4/14, stocks edged higher again as
earnings from the likes of Amazon, Apple, McDonald’s,
Microsoft, DuPont, and AT&T weren’t that bad, though they
weren’t en fuego either. For the week the Dow Jones added
0.3% to 12891, while the S&P 500 advanced 0.5% and Nasdaq
picked up 0.8%.
–U.S. Treasury Yields
6-mo. 1.70% 2-yr. 2.42% 10-yr. 3.86% 30-yr. 4.59%
Yields continued to rise on inflation fears and the growing
realization the Fed is about finished in cutting the funds rate. In
just two weeks, the 2-year’s yield has risen from 1.74% to
2.42%. It hasn’t been a great stretch for bond funds, as you can
imagine.
–Two weeks ago the Journal exposed a problem involving the
London interbank offered rate, or Libor, one of the more
important financial indicators in the world. Libor serves as the
basis for interest rates on trillions of dollars in derivatives
contracts and loans of all sorts, including subprime mortgages.
But as the Journal pointed out there has been a growing gap
between Libor and other key rates and it called into question the
process by which the rate is tabulated. Every morning, banks
submit what it costs them to borrow money to Reuters, which
then comes up with a rate that is dispatched globally.
The issue, though, is whether the banks have been manipulating
the rate to prevent their own borrowing costs from escalating.
Have they thus been hiding the actual rates they are paying for
fear this would focus attention on their own cash needs? What
has developed is a far larger than normal gap between rates
reported by European and U.S. banks, though this is narrowing
some. The British Bankers’ Association is investigating.
Of course this means borrowing costs for all manner of players
have risen and one sector that could be particularly hard hit is
commercial real estate, where builders take out huge loans using
floating-rate debt tied to Libor. More later as warranted.
–Bank of America set aside $3.3 billion in reserves for problem
loans, such as for home equity lines, credit cards, and small
business, all tied to the health of the consumer. National City,
the nation’s 10th-largest bank, raised $8 billion in capital, while
Oppenheimer analyst Meredith Whitney said Citigroup’s future
earnings power is “seriously constrained” due to a broken model.
–If you’d like to find a secure job, assuming that’s possible these
days, forget state and municipal government work as tax
revenues plummet, forcing severe budget cuts. California, which
is facing a $16 billion shortfall over the next two years, has seen
its unemployment rate rise to 6.2%.
–It appears Congress’ prime fix for the housing crisis will focus
on tax credits, though agreement on a final package is still a
ways off.
–Ken Bensinger of the L.A. Times had a story on the growing
number of folks who are setting fire to their homes or autos to
collect on insurance if they are behind on their payments. A
spokesman for Mercury Insurance said “We’ve seen a dramatic
increase in this kind of fraud.” The actual numbers may be
small, but the percentage increase in suspected cases is soaring.
–Ford Motor Co. surprised the Street with a profit rather than an
anticipated loss for the first quarter thanks to strong results from
Europe and South America.
–Delta and Northwest reported a combined $10.5 billion in
losses for the first quarter. However, a more accurate measure
for Delta, excluding a $6.1 billion non-cash charge, is an
operating loss of $274 million, due to a $585 million year-
over-year increase in the cost of fuel. Separately, Continental
and UAL are closer to a merger agreement.
[UAL is raising the fee to change one’s ticket from $100 to
$150]
–Under new rules announced by the Transportation Department,
fuel economy standards would rise to 35.7 miles per gallon for
cars and 28.6 mpg for trucks by 2015. Whoopty-damn-do.
–New York Times columnist Roger Cohen on the ethanol
debate.
“Right now, the biofuel market is being grossly distorted by
subsidies and trade barriers in the United States and the
European Union. These make it rewarding to produce ethanol
from corn or grains that are far less productive than sugarcane
ethanol, divert land from food production (unlike sugarcane), and
have dubious environmental credentials.
“What sense does it make to have a surplus of environmentally
friendly Brazilian sugar-based ethanol with a yield eight times
higher than U.S. corn ethanol and zero impact on food prices
being kept from an American market by a tariff of 54 cents on a
gallon while Iowan corn ethanol gets a subsidy?
“ ‘It would make a lot more sense to drop the tariff, drop the
subsidy, and allow Brazilian ethanol into the United States,’ said
Philippe Reichstul, the chief executive of a biofuel company in
Sao Paulo. ‘Pressure on U.S. land will be slashed.’…
“The real scam lies in developed world protectionism and
skewed subsidies, not the biofuel idea.”
–The U.S. Food and Drug Administration says the
contamination of the widely used blood thinner, heparin, is now
“a world-wide problem.” The FDA says it can link 81 deaths to
the drug, manufactured by 12 companies in China.
–China now has 221 million Internet users, tying the U.S. for
most people online. The percentage of Chinese online is 16
percent, below the world average of 19, though usage jumped 61
percent in just one year.
–I grow weary of the Microsoft / Yahoo potential deal. Yahoo
reported better than expected earnings, saying in effect that
Microsoft’s hostile bid for the company was too low. Microsoft
scoffed, but in issuing its own so-so earnings, offered that
chances for a deal were diminished by Yahoo’s intransigence.
–Credit Suisse is slashing 500 investment banking jobs.
–The number of class-action suits centering around the auction-
rate securities market debacle continues to explode.
–According to various sources, including the Congressional
Budget Office and the Bureau of Economic Analysis, the median
household income, in 2006 dollars, has dropped from $49,447 in
2000 to $48,223 in ’06. Separately, the personal savings rate
was 7.3% in 1988 and is zero today.
–Wendy’s agreed to a takeover by billionaire investor Nelson
Peltz’s Triarc, which owns the Arby’s chain. Wendy’s has been
struggling, with revenues declining in the first quarter.
–Talk about a struggling company, look no further than
Motorola, where handset sales plummeted 39% in Q1.
–My portfolio: Out of nowhere, my China biodiesel company
stopped manufacturing biodiesel, as it turns out for a very good
reason….it isn’t profitable with the government holding the line
on diesel prices at a time when foodstuffs are rising. The stock
didn’t react well, as you might imagine, though the company
reaffirmed earnings potential for 2009 when the new plant is
fully operational. How, you might ask? By switching to
specialty chemicals, which is where the company has its roots
and is 74% of revenues today. Having seen the existing plant
one year ago (it seems like five years), I know it’s an easy
transition and since a number of you are investing in the stock
alongside me, understand I am not selling one share. I would
have bought more on Friday, actually, but I want to wait to see
the new auditor’s report on first quarter operations. I will keep
you apprised of any future insight within reason, but I’m fully
confident this one will work out and by this time next year I’ll
be back drinking premium beer.
–One year ago, the average money market fund yielded 4.70%.
As Ronald Reagan said, ‘Not bad, not bad at all.’ Today, it’s
more like 2.50% and falling. Not good, not good at all, for those
of us holding a substantial cash position.
Foreign Affairs
Iraq: One day Moqtada al-Sadr threatened “open war” against the
Iraqi government, and by extension the U.S., and then on Friday
he was back to being conciliatory and urging calm. I got a kick
out of Secretary of State Condoleezza Rice this week for
ridiculing Sadr, even as some U.S. generals were calling for calm
and lowering the rhetoric. My opinion was ‘let sleeping dogs
lie.’
Meanwhile, Gen. David Petraeus was promoted to lead U.S.
Central Command, which means he oversees the wars in both
Iraq and Afghanistan, though regarding the latter NATO still
calls many of the shots. Petraeus’ current right-hand man in Iraq,
Lt. Gen. Odierno, moves up. President Bush, as many have
commented, has finally gotten it right when it comes to his
commanders.
Israel: There were a slew of reports that Israel was willing to
negotiate away the Golan Heights if Syria would make a number
of moves, including cessation of its alliance with Iran and cutting
off support to terrorists, read Hamas and Hizbullah, in Lebanon
and the Palestinian territories. Turkey has been acting as
mediator between Israel and Syria.
Egypt continues to mediate between Hamas and Israel and a
potential ceasefire, though Hamas says it must be extended to the
West Bank while Israel says no. At the same time, Israeli Prime
Minister Ehud Olmert is claiming a letter from President Bush to
then-Israeli Prime Minister Ariel Sharon four years ago gave
Israel permission to expand West Bank settlements that it hoped
to then retain in a final peace deal, even as Bush’s roadmap for
peace calls for a freeze on settlement construction, which has
turned out to be a joke.
Separately, a New Jersey resident was charged with espionage
for passing on nuclear secrets to Israel in the 1980s (1979 to
1985, at least).
As for former president Jimmy Carter and his trip to the region,
including two days of talks with exiled Hamas leader Khaled
Meshaal in Damascus, he claims he had tacit approval from the
State Department, which of course counters he’s nuts if he
believes that. Carter says Hamas now offers it could “live as a
neighbor next door in peace” with Israel, provided Palestinians
get their independent state on all the territories seized by Israel in
the 1967 six-day war. At the same time, 2/3s of Israelis say that
if there is ever to be a peace deal, Hamas has to be part of it.
But Bernard-Henri Levy wrote the following in a Journal op-ed.
“The problem is not that (Carter) is, or is not, talking to the
Syrians – everyone does it to some degree. It isn’t that he went
to Damascus to meet with the exiled head of Hamas – everyone,
including the Israelis, will one day have to do that too, in
accordance with that old rule which says that in the end it is with
your enemies not your friends that you have to come to an
understanding and make peace.
“No. The problem is how Jimmy Carter went about it.
“The problem is the spectacular and useless embrace he
exchanged with the senior Hamas dignitary, Nasser Shaer, in
Ramallah.
“The problem is the wreath he laid piously at the grave of Yasser
Arafat, who, as Mr. Carter knows better than anyone else, was a
real obstacle to peace.
“It is that, in Cairo, if we are to believe another Hamas leader,
Mahmoud Zahar, whose statement has so far not been denied,
Mr. Carter apparently described Hamas as a ‘national liberation
movement’ – this party which has made a cult of death, a
mythology of blood and race, and an anti-Semitism along the
lines of the Protocols of the Elders of Zion into the linchpin of its
ideology.
“The problem is also the formidable nose thumbing he got
from…Khaled Meshaal, who, at the very moment he was
receiving Mr. Carter, also triggered the first car bombing in
several months…on the Gaza strip – and that this event elicited
from poor Mr. Carter, all tangled up in his small-time mediator
calculations, not one disapproving or empathetic word….
“So what happened to this man, a Nobel Peace Prize laureate? …
“All hypotheses are permitted. Whatever the reason, Mr. Carter
has demonstrated an unusual capacity to transform a political
error into a disastrous moral mistake.”
Iran: The U.S. is vehemently opposed to a potential gas pipeline
between India and Iran. India said it didn’t need our advice, but
the pipeline definitely imperils current U.S.-India negotiations
over a comprehensive nuclear technology deal.
[The incident in the Gulf between a U.S. ship and Iranian
gunboats does not appear to have been a big deal.]
Pakistan: A top Taliban commander, who allegedly ordered the
hit on Benazir Bhutto, has told his followers to cease all attacks
in the country (though there was one on Friday). Pakistan’s new
government had earlier announced it would deal with the
militants through dialogue, much to the chagrin of the U.S. It
obviously just gives the Taliban a safe haven to plan and launch
further attacks in Afghanistan, as well as providing a base for al
Qaeda. Such a move on behalf of the Pakistani government is
tantamount to disaster.
North Korea: The White House and CIA presented evidence to
Congress that supposedly shows Syria building a nuclear reactor,
with Pyongyang’s help, that was not intended for “peaceful
purposes.” This is the same facility taken out by Israel seven
months ago, so even some congressional Republicans
complained that if this was truly the case, why didn’t the White
House come forward earlier? The administration counters that
the public acknowledgement of North Korea’s complicity in the
plant will pressure the North into living up to its previous six-
party agreement to fully declare its nuclear weapons program,
per the Dec. 31, 2007, deadline.
Once again, this is pitiful. Earlier, President Bush, who met with
new South Korean President Lee, said of the state of talks with
North Korea, “Why don’t we just wait and see what they say
before people go out there and start giving their opinions.”
Meanwhile, you still have Iran defying the United Nations in
failing to stop enriching uranium. North Korea and Iran, two
members of the Axis of Evil, continue to just toy with the West
and this administration. [By the way, because of the preceding,
any talk of Condi Rice being McCain’s running mate is
outrageous.]
Re the North Koreans, the Wall Street Journal opined:
“So: Israel had to risk war with Syria to destroy a nuclear facility
built with the help of lying North Koreans. But no worries, the
U.S. says it can still trust North Korea to tell the truth about its
current programs. This makes us wonder if the unofficial U.S.
nonproliferation policy is to have Israel bomb every plutonium
facility that the North Koreans decide to sell.
“If a Democratic president were pursuing the Bush
administration’s North Korean diplomacy, Republicans would
hoot him out of town. Mr. Bush should beware of diplomats
dangling ‘legacies’ before him. Otherwise, his real legacy on
North Korea may be turning nuclear nonproliferation into a
global farce.”
China: The government appears to have tamped down a backlash
against the West over the Tibet protests. Retailers such as
France’s Carrefour were being targeted in generally peaceful
demonstrations. At the same time, China has said it will meet
with representatives of the Dalai Lama.
Zimbabwe: As I go to post, there are stories of yet another severe
crackdown on opposition forces, this as a Chinese ship, loaded
with weapons for Zimbabwe, was denied the ability to offload its
cargo in South Africa though is now reportedly docking in
Angola. South African leader Jacob Zuma, who will eventually
take over for current President Thabo Mbeki, said the violence in
Zimbabwe was unacceptable, but he refused to criticize Mbeki
for his meager response to Robert Mugabe’s rein of terror.
[As an aside, recall that Zuma is a polygamist with at least 18
children by five women who was also acquitted of raping an
HIV-positive young woman with whom he had unprotected sex.
A terrific role model for young South African males.]
Russia: Georgia accused Russia of shooting down an unmanned
reconnaissance plane as it flew over the breakaway republic of
Abkhazia. Moscow said the claim was “nonsense,” but Georgia
produced video evidence of the downing over Georgian territory.
Previously, President Putin ordered his government to establish
closer ties with the separatists in Abkhazia and South Ossetia.
Mart (sic) Laar commented in an op-ed for the Moscow Times.
“In 1937, Hitler agitated for the rights of the Sudeten Germans in
Czechoslovakia; in 1938, he annexed Sudetenland into the Reich,
purging it of non-Germans. In Abkhazia, most Georgians,
Armenians, Estonians, Greeks and Russians – perhaps 500,000 in
all – are already gone. The Kremlin recognizes Georgia’s
international boundaries, but its actions belie its words…
“Meanwhile, the West appears deaf and dumb to Georgian
President Mikhail Saakashvili’s offer on March 28 of
unprecedented autonomy for Abkhazia. Georgia’s proposal of a
new negotiating format for South Ossetia fares no better.
Western political autism is irresponsible. The West must awake
and unite – not to oppose Russia or support Georgia, but to
stand up for its ideals….
“ ‘The belief that security can be obtained by throwing a small
state to the wolves is a fatal delusion,’ said Winston Churchill
just before Munich. We should have learned the lesson 70 years
ago.”
Paraguay: A populist Roman Catholic Bishop, Fernando Lugo,
won the election for the presidency here, ending over 60 years of
rule by the Colorado Party. Back in 2006, Lugo resigned the
priesthood when he helped organize protests, but the Vatican
refused to accept the resignation, saying Lugo had a “freely
accepted lifetime commitment” to continue serving. Canon Law
prohibits priests from participating in political parties or labor
unions, according to the Cardinal overseeing Latin America at
that time. So now it’s up to the pope to formally defrock him.
Lugo, a leftist, is best known for his advocacy of land reform.
Said the current president, Nicanor Duarte, “For the first time in
our history, one party will transfer power to another without a
coup, without bloodshed and without fighting among brothers.”
Mexico: Following up on my comment last week about the
soaring violence in the border town of Juarez, across from El
Paso, Josh P. passed along some local articles and comments. In
Tijuana, for example, doctors staged a walkout to protest
rampant kidnappings; one doctor a week for ransom, according
to the doctors’ leader.
Americans in large numbers have been reconsidering trips to
Mexico. The U.S. State Department issued its own Travel Alert
update on April 14.
“Violent criminal activity fueled by a war between criminal
organizations struggling for control of the lucrative narcotics
trade continues along the U.S.-Mexico border. Attacks are
aimed primarily at members of drug trafficking organizations,
Mexican police forces, criminal justice officials, and journalists.
However, foreign visitors and residents, including Americans,
have been among the victims of homicides and kidnappings in
the border region.”
Random Musings
–Sen. Hillary Clinton did what she had to do, win the
Pennsylvania primary and by a sizable margin; as it turned out,
9 percent. Of particular worry to the Obama camp, though, are
some of the exit poll results, such as Hillary winning the white
vote by 32 points, Catholics by 38, and women overall by 14.
Plus she won the age 60 and over crowd, both male and female,
by 24 points, this being a critical segment of the electorate come
November.
So while Obama still leads handily in committed delegates,
should Hillary split the next two big primaries, North Carolina
and Indiana, May 6, the Dems have a dilemma, and race, like it
or not, is part of the equation.
Commentator Robert Novak also notes, “For the first time,
Democratic loyalists not necessarily committed to Clinton are
wondering whether the party’s system for picking a nominee is
the problem. If all caucuses were eliminated and only primaries
used in picking nominees, Obama’s130 delegate lead would
become a Clinton advantage of 45….
“But Democratic politicians today see no viable alternative to
Obama as their nominee. Their hard assessment is that Clinton’s
clawing her way to the nomination might give McCain 25
percent of a radically depleted African-American turnout – a
prescription for disaster.”
Columnist Charles Krauthammer / Washington Post
[Quoting Obama on Pennsylvania primary night]
“Real change has never been easy…The status quo in
Washington will fight. They will fight harder than ever to divide
us and distract us with ads and attacks from now until
November.”
[Krauthammer]
“Obama (has) identified the new public enemy: the ‘distractions’
foisted upon a pliable electorate by the malevolent forces of the
status quo, i.e., those who might wish to see someone else
become president next January. ‘It’s easy to get caught up in the
distractions and the silliness and the tit for tat that consumes our
politics’ and ‘trivializes the profound issues’ that face our
country, he warned sternly. These must be resisted….
“Take (William) Ayers. Obama makes it sound as if the
relationship consists of having run into each other at the DMV.
In fact, Obama’s political career was launched in a 1995 meeting
at Ayers’ home. Obama’s own campaign says that they maintain
‘friendly’ relations.
“Obama’s defense is that he was 8 when Ayers and his Weather
Underground comrades were planting bombs at the Pentagon, the
U.S. Capitol and other buildings. True. But Obama was 40
when Ayers said publicly that he doesn’t regret setting bombs.
Indeed, he said, ‘I feel we didn’t do enough.’
“Would you maintain friendly relations with an unrepentant
terrorist? Would you even shake his hand? To ask why Obama
does is perfectly legitimate and perfectly relevant to
understanding what manner of man he is.
“Obamaphiles are even more exercised about the debate question
regarding the flag pin. Now, I have never worn one. Whether
anyone does is a matter of total indifference to me. [Ed. note: I
feel exactly the same way as Mr. Krauthammer.] But apparently
not to Obama. He’s taken three affirmative steps in regard to
flag pins. After Sept. 11, he began wearing one. At a later point,
he stopped wearing it. Then last year he explained why: because
it ‘became a substitute for, I think, true patriotism, which is
speaking out on issues that are of importance to our national
security.’
“Apart from the self-congratulatory fatuousness of that statement
– as if in this freest of all countries, political self-expression is
somehow scarce or dangerous or a sign of patriotic outrage – to
speak of pin-wearing as a sign of inauthentic patriotism is to
make an issue of it yourself. For Obamaphiles to now protest the
very asking of the question requires a fine mix of cynicism and
self-righteousness.
“But Obama needs to cast out such questions as illegitimate
distractions because they are seriously damaging his candidacy.
As people begin to learn about this just-arrived pretender, the
magic dissipates. He spent six weeks in Pennsylvania. Outspent
Hillary more than 2 to 1. Ran close to 10,000 television ads –
spending more than anyone in any race in the history of the state
– and lost by 10 points.
“And not because he insufficiently demagogued NAFTA or the
other ‘issues.’ It was because of those ‘distractions’ – i.e., the
things that most reveal character and core beliefs.”
–In Newsweek’s “Dignity Index,” they cite President Bush for
being mildly tacky.
“After the pope’s remarks at the White House, President Bush
tells him he gave an ‘awesome speech.’ Awesome? You’re
talking to the pope, not Mylie Cyrus.”
Agreed. But Newsweek should have mentioned that Bush says
this after every freakin’ speech or joint press conference with a
dignitary. There are times when our president is flat out
embarrassing.
–In the latest USA Today/Gallup Poll, President Bush registered
the highest disapproval rating of any president in the 70-year
history of the Gallup survey, 69%. [28% approve.] Bush also
has the highest approval rating of any president, 90% in the days
after 9/11. Since September 2006, however, his approval
number has been below 40%.
–John McCain went right after President Bush while on a trip to
New Orleans and the lower Ninth Ward. When asked by a
reporter if he drew a line to the top when it came to the failures
of leadership, McCain answered “yes.” The senator is going to
have to increasingly draw a distinction between the current
occupant of the White House and a McCain presidency. If I
were McCain, I wouldn’t do one joint campaign appearance with
Bush.
–Peggy Noonan, in a Wall Street Journal op-ed, on the McCain
candidacy.
“(John) McCain makes daily, small, incremental gains. He
happily watches the Democrats fight and happily advances his
cause. Did you see him on ‘Hardball’ the other night with the
college students of Villanova? They were beside themselves at
the sight of him. It seems to me it would be a brilliant thing for
him to announce he means to be a one-term president, that he
means to have a clean, serious, one-term presidency in which he
will do things those under pressure of re-election do not and
cannot do. This would be received as a refreshment, a way out
for the voters in a year they seem to want a way out. For many
in the middle it would be a twofer. You get a good man, for only
four years, and Mr. Obama gets to grow and deepen. He’ll be
better older.
“The downside? Americans like knowing they can fire a
president. It’s how they keep them in line. And lame-duckness
from day one would not be empowering.”
[The only way Noonan’s idea works is if McCain finds himself
down 10 percent in mid-October…his October surprise.]
–“60 Minutes” had a terrific piece on a Green Beret unit in
Afghanistan that fought heroically against all odds in a 2006
battle. Those interviewed, including the captain, were easily the
best this nation has to offer. You felt proud just watching these
amazing soldiers.
So with this in mind, it’s particularly distressing to learn the
number of convicted felons enlisted by the Army and Marines
has doubled in the last year. Over 800 enlistees have been
convicted of felony assault, burglary, possession of hard drugs
and sex crimes. All such recruits, though, are subject to a waiver
process and only generals can grant them.
–What an awful stretch for urban America, with the totally
senseless violence in Chicago that killed nine last weekend, and a
renewal of violence in Newark and neighboring Irvington (a total
hellhole, by the way), which left at least four dead in the span of
36 hours. It’s just sickening.
I’m about to come off as an Obama elitist, ahem, but I belong to
a golf club and one of my favorite people is Bobby, a caddy who
lives in Irvington. So this week as Bobby and I were walking the
course, I asked him how he was dealing with all the stuff that
takes place in his neighborhood; like having been in a bodega
one moment, only to hear of someone shot to death there an hour
later. Bobby is about my age and as he put it, “Man, when I was
in school I got in a few fights, but the next day we might have
lunch together. Today, it’s crazy. Just shooting each other for
no reason.”
They just don’t value life in the least. I felt safer walking
through a slum in Istanbul than I do driving through some towns
around here.
–I’m invoking my 24-hour rule in not commenting on the Sean
Bell verdict, except to say Judge Arthur Cooperman is one brave
American.
–In roughly 1,000 counties, covering much of the Deep South,
Appalachia, and the lower Midwest, representing about 12
percent of the nation’s women, the life expectancy among them
has fallen for the first time since the 1918 influenza. In
southwestern Virginia, the life expectancy among women has
decreased by more than five years since 1983.
It’s all about obesity, diabetes, smoking, lung cancer and other
conditions such as emphysema. [David Brown / Washington
Post]
–Needless to say, Pope Benedict XVI’s trip to Washington and
New York received a ton of attention. I’ll admit to watching all
the major events last weekend.
In a survey for Crain’s New York Business, 35% said the pope’s
visit reminded them of their spiritual values and found his
message inspirational. 47% said “No. I respect his position, but
the church’s values don’t sync with mine.” 18% said “No, I’m
an atheist.”
I was inspired by Benedict, particularly his time with the
handicapped. If you weren’t touched by that, you don’t have a
pulse. I was distressed, on the other hand, that there are some
9/11 victims’ families who were unhappy the pope didn’t use
their own particular prayer when he went to Ground Zero, and
that he spent too little time there. Sometimes you can’t win.
I do have to quote an editorial from the Wall Street Journal,
however.
“To Lou Dobbs, another (Cong. Tom) Tancredo-like compulsive,
all of [the pope’s support for immigration] amounted to the pope
‘insulting our country.’ The CNN anchor said, ‘I really don’t
appreciate the bad manners of a guest telling me in this country
and my fellow citizens what to do.’ You know the restrictionists
have gone head-first into the fever swamps when they denounce
a Christian religious leader for sounding like a Christian.
“The pope welcomes immigrants because he’s Catholic, not
because they are. He isn’t ‘marketing’ his faith. He’s practicing
it.”
Lastly, some Muslim leaders complained about a recent
conversion from Islam to Catholicism on Easter Sunday at the
Vatican. [I question the timing myself.] Yet some Muslim
countries prohibit Muslims from converting and punishment can
include death. To which the Rev. Thomas Reese, a theologian at
Georgetown University, responds, “The whole idea of having civil
laws against people converting – and threatening them with death
– is totally abhorrent to our view of religious liberty.”
–At a lecture on Monday, astrophysicist Stephen Hawking said
that there are three options when it comes to the possibility of
alien life. One, there is none. Two, if it’s smart enough to send
signals in space, it’s probably smart enough to make destructive
weapons. Three, his personal preference, “Primitive life is very
common and intelligent life is fairly rare,” but then he quickly
added: “Some would say it has yet to occur on earth.”
Hawking also notes that should we come in contact with an alien,
“Watch out…You could be infected with a disease with which
you have no resistance.”
That’s why here at StocksandNews, we always advise that you
wash your hands as soon as possible when you come in contact
with a stranger, or touch a railing in a subway station.
–Lastly, did you happen to catch the National Geographic
special that was ostensibly about our plummeting fish counts, but
had the segment on the marauding baboons of Ghana? Goodness
gracious. They’re taking over and we’re powerless. Plus we
can’t fall back on Charlton Heston anymore.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $889
Oil, $118.51
Returns for the week 4/21-4/25
Dow Jones +0.3% [12891]
S&P 500 +0.5% [1397]
S&P MidCap +1.1%
Russell 2000 +0.1%
Nasdaq +0.8% [2422]
Returns for the period 1/1/08-4/25/08
Dow Jones -2.8%
S&P 500 -4.8%
S&P MidCap -1.7%
Russell 2000 -5.8%
Nasdaq -8.6%
Bulls 39.1
Bears 35.6 [Source: Chartcraft / Investors Intelligence]
I’ll be coming to you from Washington, D.C., next time. Have a
great week. I appreciate your support.
Brian Trumbore
