Saturday, September 21, 2002

9/21/02 "We Are At War"

This remark was uttered by George Tenet, head of the CIA, in December 1998! He wasn't referring to the West Nile virus. I know next to nothing about politics. Rationally, however, it would appear that Russia has plutonium and uranium. As such, why shouldn't the US buy that uranium and plutonium from Russia and place it in a "vault", so to speak? In order to open the vault it would require two keys. The US could hold one and Russia the other. This, I would think, could prevent the building of a nuclear weapon. Maybe a naiive thought.

Yesterday I was wrong. Triple witching did not bring volatility upon expiration. It was a nice quiet day.

According to IDC Worldwide, spending on outsourcing services amounted to $712 billion in 2001 and will rise to $1.2 trillion in 2006.

Duke Energy warned for 2002 and 2003.

The president of Harvard said that he sees a rise of anti-semitism on the campus. That was in today's N.Y. Times.

Friday, September 20, 2002

9/20/02 Futures And Options Expire Today. It Spells Increased Volatility

Government officials may not be worried in Japan; however, their $14.8 billion 10 year government bond auction was a bust. For the first time the bonds failed to receive enough buyers. Could that happen in the US? Land prices fell in Japan for the 11th straight year. Could that happen in the US?

Yesterday the Dow ended below 8000, and it was the first such close since July 23.

I feel so relieved! In the Journal of Science 19 prominent nuclear experts concluded that our nuclear plants could easily withstand a jetliner crash.

Alcatel to layoff 39,000 by the end of 2003.

Morgan Stanley reported its 8th consecutive quarterly decline in profits, and Knight Ridder reduced its earnings forecast.

The airline industry is getting a needed boost- the UN is sending weapons inspectors to Iraq on Oct 15. The last time I checked the US was getting 9% of its oil imports from Iraq.

Thursday, September 19, 2002

9/19/02 Japan's Houdini

The Bank of Japan must have lost it. They believe hundreds of billions of dollars of bank undercapitalization can disappear by buying listed shares of stocks directly from the banks. I know the Nikkei has lost 30,000 points over the past 13 or so years but an individual would go to jail for stock manipulation. The Bank of Japan believes this action will reduce risk exposure for banks. Japan has billions of dollars of bad loans and a multitude of unprofitable companies. Houdini would make the Bank of Japan disappear.

What can you say about the management of EDS? A month ago they were upbeat and yesterday the earnings warning was so severe the stock dropped by one third. These guys were depending on business from US Airways. The stockholders need to deliver the tooth fairy to the boardroom.

Jobless claims have hit a 4 month high.

Single family home starts have fallen three months in a row, and had their sharpest drop since March.

Crude oil prices are up 40% this year. Hopefully heating oil prices will rise a lesser amount.

Wednesday, September 18, 2002

9/18/02 Posting #2 Earnings After Expensing Stock Options

In their latest fiscal year which ended 7/27/02 Cisco would have earned just $373 million and not $1.9 billion had stock options been expensed. You still think CSCO is cheap at $12 per share?

Tuesday, September 17, 2002

Posting for 9/18/02 You Thought The News Couldn't Get Worse? Forget About It!

If I were a shareholder in Hershey, I'd never eat another Reese's again. Ten of the 17 board members turned down an $89 offer or $12.5 billion from Wm Wrigley. The corporate governance world has gone completely nuts. Maybe they didn't like the proposed Wrigley Hershey name. To end the auction after a bid of that magnitude leaves me with one thought- I wouldn't want to be a stockholder in a public company incorporated in Pennsylvania. There aren't enough philly steak sandwiches to entice me.

Yesterday was a big day for profit warnings for the third quarter- McDonald's, JP Morgan, Charles Schwab, and Alcatel to name a few. These are leading companies in their respective industries. It's about time the earnings estimates got sharply reduced for the Dow and the S&P. The market will drop to reflect lower estimates. It's only a matter of time until a big down day occurs.

We had the first drop in industrial output since December 2001. Capacity utilization dropped to 76%. You still question whether we're in a recession?

It must of been an awful blow to Larry Ellison to be cautious about the outlook going forward. They're knocking their brains out at Oracle and still can't meet revenue numbers. He has plenty of company. Look at Seibel.

We're almost through the third quarter. Fall starts next week. Costco has all their Christmas merchandise out. Does that mean they have given up on Fall and are going straight to Christmas? Based on that, October and November should make for bleak reading. By the time Christmas comes around there should be great discounts on all the stale stocking stuffers, such as, Janet Reno crying towels.
9/17/02 Shift The Headlines

The headlines have now shifted from the jobless economy to changing the regime in Iraq. The weapon inspectors left in 1998. Four years later they are invited back. The reunion should keep the media busy. The markets will rally at the opening, oil will drop in price, bonds will drop in price along with gold. The theory put forth is the lack of justification for the Bush administration to initiate a war in Iraq. They just want a regime change. We have a good many politicians to send to Iraq to run against Saddam. If only we could get the voting booths to work.

It would be wise to keep one's eye on the ball- the economy. Earnings or the lack of move stocks day in and day out. Saddam was news a decade or so ago. Reruns hardly ever have legs at the box office.

Monday, September 16, 2002

9/16/02 Dividend Yields

The average return on stocks is about 1.6%, and this is slighly above the inflation rate and slighly below the fed funds rate. The yield is extremely low and requires that one depend on a predictable and generous earning growth rate to buffer the downside on stocks. In other words, you are not currently getting paid much to hold on to stocks and the risks are great without earnings visibility. I again caution everyone to stay on the sidelines until the risks are lessened and the risk/reward ratio turns in your favor. Unless a miracle takes place, that could be quite some time in the future.

Sunday, September 15, 2002

this is a test to see whether the software for posting is working
9/15/02 Posting #2 Boeing

At 6:30 this morning I tried to post a blog on Boeing and a strike being averted; however, there was a message stating error 503 and that the problem was being worked on. At this time it still is not solved. Basically 62% of the 19,000 machinists voted to strike but it took a two thirds vote to initiate the strike. The machinists get pais $62,000 a year and if on strike only $100 per week. We will revisit this subject another day.
9/15/2002 6:33:52 AM | michael buchsbaum]
9/15/02 The Cost For Averting A Boeing Strike

Friday evening the strike was settled. Only 62% of the 19,000 machinists voted to strike. To pass a vote to strike required two-thirds of the union members. The average machinist gets a salary of $62,000. On strike they receive $100 a week. In these times you'd expect a no strike vote would have been very one sided.

The remarks of Boeing's CEO could not have been received warmly: "It's a horrible time for all of us, and everybody at Boeing is feeling the same pain ... because our industry is in turmoil," he said. "The positive thing is we can go forward now."

In answer to a question about whether the new contract promises job security, Mulally said: "Nobody can guarantee job security in market-based economies."

Maybe the CEO could have mentioned that Airbus has taken the lead in aircraft production. Maybe the problem at Boeing starts with the management. Maybe the directors should consider management job security Boeing's troubles started way before 9/11.
[9/15/2002 6:33:52 AM | michael buchsbaum]
9/15/02 The Cost For Averting A Boeing Strike

Friday evening the strike was settled. Only 62% of the 19,000 machinists voted to strike. To pass a vote to strike required two-thirds of the union members. The average machinist gets a salary of $62,000. On strike they receive $100 a week. In these times you'd expect a no strike vote would have been very one sided.

The remarks of Boeing's CEO could not have been received warmly: "It's a horrible time for all of us, and everybody at Boeing is feeling the same pain ... because our industry is in turmoil," he said. "The positive thing is we can go forward now."

In answer to a question about whether the new contract promises job security, Mulally said: "Nobody can guarantee job security in market-based economies."

Maybe the CEO could have mentioned that Airbus has taken the lead in aircraft production. Maybe the problem at Boeing starts with the management. Maybe the directors should consider management job security Boeing's troubles started way before 9/11.
9/15/02 The Cost For Averting A Boeing Strike

Friday evening the strike was settled. Only 62% of the 19,000 machinists voted to strike. To pass a vote to strike required two-thirds of the union members. The average machinist gets a salary of $62,000. On strike they receive $100 a week. In these times you'd expect a no strike vote would have been very one sided.

The remarks of Boeing's CEO could not have been received warmly: "It's a horrible time for all of us, and everybody at Boeing is feeling the same pain ... because our industry is in turmoil," he said. "The positive thing is we can go forward now."

In answer to a question about whether the new contract promises job security, Mulally said: "Nobody can guarantee job security in market-based economies."

Maybe the CEO could have mentioned that Airbus has taken the lead in aircraft production. Maybe the problem at Boeing starts with the management. Maybe the directors should consider management job security Boeing's troubles started way before 9/11.