Saturday, December 21, 2002

12/22/02 An Early Posting For Sunday

In Europe shoppers are spending less on holiday presents, and visits to shopping centers are down from a year ago. The reasons given for consumers curbing their spending- a lack of confidence in economic growth and job security. Sound familiar?

The British pound has risen in value for 3 consecutive weeks. This year it is up 10% vs the dollar but is down 4 1/2% vs the Euro.

WalMart employs 1.4 million people. The second largest private employer is McDonald's, and they employ only 400,000.
12/21/02 "Every Investor Deserves Honest Investment Advice"

During my career on Wall Street I ran two successful brokerage firms. The settlement announced yesterday is both unjust and predictable. Jack Grubman agreed to a lifetime ban and a $15 million fine. His salary in one year- 2001- was $20 million. Grubman's employer, Citibank, paid a fine of only $400 million. Citibank made untold hundreds of millions of dollars in investment banking fees. Citibank agreed to no wrongdoing. They, along with 9 other firms who paid a total of $4.4 billion in fines, neither admitted nor denied charges that they had misled investors. With a settlement like this how could Spitzer then say "every investor deserves honest investment advice"? Spitzer then said "this has been only about one thing- ensuring retail investors get a fair shake." I think a good stocking stuffer for Spitzer would be a "Dow 10,000" cap.

November was the first month since May that investors were net buyers of stock funds. Since the major indexes rallied about 20%, that should come as no surprise.

Fourth quarter GDP growth is estimated at 1.4%.

Accounting irregularities must be viral. $9.1 million in accounting errors were discovered in the Des Moines, Iowa school district.

Retailers should have seen slow holiday sales coming. Consumer credit grew at a slim annual rate of 1% in October. In the 3rd quarter ended September the pace was 3 1/2%.

There are 37,000 U.S. troops in S. Korea.

Gucci's profits were down 14 1/2% for the latest quarter, and the company partially blamed poor sales in Hawaii.

The median price of existing homes in California in November increased 21 1/2% compared to the same period a year ago.

In the Silicon Valley 61% say their company is not hosting a holiday party; 75% are not giving any paid time off; and 60% plan less holiday spending in their households.

As noted in a previous blog, it was now officially announced that Medicare will cut payments to doctors by 4.4%.

Scientists at the National Climatic Data Center found that 2002 is likely to be the second warmest year on record for the globe.

The Philadelphia Inquirer posted a story saying that Al Hakam, 60 miles south of Baghdad, produced anthrax and other biological poisons between 1992 and 1996 when the plant was destroyed. This is according to someone who worked at that facility.

Friday, December 20, 2002

12/20/02 LIBERTY

"Experience teaches us to be most on our guard to
protect liberty when the government's purpose is
beneficent. Men born to freedom are naturally alert to
repel invasion of their liberty by evil-minded rulers.
The greatest dangers to liberty lurk in insidious
encroachment by men of zeal, well-meaning but without
understanding."
- Louis Dembitz Brandeis

Please get familiar with Bush's Total Information Unit. Hw wants the ISPs to facilitate the monitoring and surveillance of internet users thru this unit.

Approximately 10 securities firms will announce a $1 billion settlement with the SEC. This shall acknowledge misleading investors thru research recommendations aimed at winning investment banking business. Since the beginning of the bear market, $7 trillion has been lost. Does a $1 billion settlement sound just? How about ousting the firms from doing business with the public? It may not be the same, but Pete Rose has been banished from baseball for betting. Please think about it.

Greenspan sees no risk of deflation. He must not be familiar with over-supply overwhelming too little demand mixed with decreasing prices being exported by China. Just like he questions the ability to detect bubbles in real-time(which in fact he did), I question his willingness to acknowledge deflation in real-time(although Fed minutes clearly talk of deflation dangers). He does accept the fact that companies have trouble raising prices. That is some consolation.

In its 18th day the Venezuelan oil strike has resulted in daily production plunging from 3 million barrels to 400,000.

Home Depot has just opened its 1500th location.

Property taxes are rising by as much as 25% for N.Y.C. homeowners.

Gold hits a 6 year high, and is up 25% in 2002.

Weekly jobless claims at 433,000 and the 4 week moving average at 400,000.

Barnes & Noble announce weak holiday sales, and warn for their 4th quarter.

The economic downturn has erased 62,000 jobs in Georgia. Bankruptcies in that state are up 16%, and their GDP has grown only 1% in 2002.

Rupert Murdoch makes new approach to GM to buy DirecTV.

Thursday, December 19, 2002

12/19/02 Nikkei Hits 20 Year Low

As can be seen in Japan, bear markets can have a long life- just like bull markets.

Crude oil trades over $31 per barrel and is up 55% in 2002.

Conseco files for bankruptcy. It is the third largest company to do so.

GM's Doraville, Ga. plant to cut production and have layoffs. This is GM's sole producer of minivans.

United cutting leisure class airfares by up to 40%. Will it be enough?

Sales fall short at Micron.

Activision cites poor holiday sales.

Blockbuster slashed it's 2002 profit outlook. The shortfall is a big one. So much for nesting.

Winnebago is not optimistic about 2003. Maybe high gas prices will keep folks off the roads.

It is hard to swallow that Iraq speculates it might destroy its own oil fields, food supplies, and power plants. Scorched earth has never been a successful policy.

Business owners are permitted to depreciate SUVs and pickups more quickly than cars. Why? SUVs are classified as light trucks. The SUV must weigh over 6000 pounds. That doesn't sound light to me. I find this matter upsetting, and isn't fair for couples without children or singles. In addition, suppose a mother doesn't want to be a soccer mom? Maybe Trent Lott should take this up as a new popular cause and make people forget the current furor.

Wednesday, December 18, 2002

12/18/02 Gold Trading Over $342 Per Ounce

The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.

Delta plans 3000 more layoffs in 2003.

For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.

Best Buy cut their 4th quarter earnings estimates.

Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.

December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.

In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.

California is looking at a $35 billion deficit over the next 18 months.
12/18/02 Gold Trading Over $342 Per Ounce

The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.

Delta plans 3000 more layoffs in 2003.

For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.

Best Buy cut their 4th quarter earnings estimates.

Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.

December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.

In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.

California is looking at a $35 billion deficit over the next 18 months.

Tuesday, December 17, 2002

12/17/02 KMart

Kmart to be delisted this week from the NYSE.

Factories and other industrial operations are running at 75% of their capacity in the U.S.

Ernst and Young says employers lose an estimated 20% of every dollar to workplace fraud. That is difficult to imagine.

Some Fed members are concerned further tax cuts "would likely take effect too late to foster much added spending in the year ahead."

The Congressional Budget Office forecasts a $145 billion deficit in 2003. I would be very surprised if the figure were that low.

McDonald's warns of a 4th quarter earnings disappointment.

Albert Einstein: "Insanity is doing the same thing over and over again and expecting different results."

Monday, December 16, 2002

12/16/02 The S&P

Since 1950 the S&P has only fallen 12 times in December. So far this month the index is down 5%.

An increasing number of households experience home payments of 35% or more of their before-tax income. For most people that would mean their house payments cost half or more of their take-home income. That's including property taxes and insurance, but not maintenance and utilities.

Two-thirds of Americans desire to be vaccinatined against smallpox. According to studies done by the CDC in the 1960s, for every million vaccinations given, there will be one to two deaths; from 14 to 52 life-threatening reactions uncluding gangrene, encephalitis, and severe skin reactions; and from 500 to 900 other side effects such as rashes, fevers, and viral eruptions far from the vaccination site. Anyone harmed by the vaccine will have to sue the gov't.

According to a November survey of 852 companies, nearly 45% of New York area companies laid off employees in 2002 compared to 39% in the rest of the country. Nearly 28% of New York companies plan more layoffs in 2003, and 31% will continue with hiring freezes.

Chrysler says they no longer exp[ect 2003 to be a bit easier but rather that "competition will stay tough also next year."

Sunday, December 15, 2002

12/15/02 Tom Ridge And A Promise

When Tom Ridge was governor of Pennsylvania he promised that higher taxes would not result from increases in school pensions and easier eligibility standards for future retirees. So much for that promise. The Pennsylvania Public School Employees' Retirement System dropped $12 million per day or $4.4 billion in its latest budget year. Now trustees of the retirement system want to triple subsidies from Pennsylvania districts. In sum, that means homeowners will pay higher property taxes. I hope the money managers for the retirement system did not charge a fee for this fiasco. The stock market can be a costly venue.

In November there was a 2.3% gain in sales in furniture and other home-furnishings stores. The reason was simple- no money down, no interest, no payments for at least one year and, in most cases, 2 years. It's a page out of auto discounts. It's less the consumer buying but rather the retailer dumping inventory on a heavily discounted basis.

Accel Partners, a California-based venture capital firm, has waived its mangement fee until 2004. Typically, such a fee runs 2-2 1/2% of the assets managed.

An increasing number of drug companies have plants which no longer meet current sterility standards. This is part of the reason for persistent shortages of injected medications in hospitals.