Saturday, February 15, 2003

2/15/03 February Consumer Confidence Fell To A 9 Year Low

The expectations index fell to a 10 year low.

In a recent poll 59% said they'd rather win the lottery than fall in love.

Workers paid 27% more for healthcare in 2002 than they did in 2001.

Since 1970, no sustainable U.S. economic recovery has begun with $30+ crude oil prices. We're now above $35.

China is the second largest user of energy in the world, and is a growing net importer of oil. This places added upward pressure on prices.

The Fed is considering injecting cash into the global economy by buying foreign securities and 30 year bonds. They had better check the calendar first. In five days the U.S. government will not be able to spend any more money. The debt ceiling will need to be raised.

1140 more individuals at Boeing are warned of pending layoffs.

On-line magazine publisher Salon is close to folding.

Floyd E. Bloom, president of the American Association for the Advancement of Science: "the American health system today is in serious crisis. It is failing before our eyes, depite consuming a very significant percentage of our GDP and representing perhaps the biggest employer for most communities. The current system can scarcely meet today's needs, let alone the cost of transition to post-genomic medicine. We are now approaching $700 billion for Medicare and $500 billion for Medicaid. Those mandated entitlements are now approaching 15% of our GDP."

Friday, February 14, 2003

2/14/03 Happy Valentine's Day To My Gang

While I'm on the subject, sex experts say one in five couples are living in a "sexless" marriage and that the numbers are worse in the Silicon Valley. As for the latter, it's possible that too many men invested in stocks when they were $200 per share and now those same stocks are selling for 20 cents per share. That loss may be impinging on performance. If I ever were that greedy, I'd feel pretty inadequate.

In this Harris murder trial she was convicted for running over her husband. When was the last time you watched a truly Jewish woman at work? They do it all the time. They only receive a lifetime of misery.

I was wondering. Do you think the run on duct tape and plastic sheeting will help Home Depot's business?The stock is selling at 15 times duct tape sales.

You have to love Dell. Their storage and server business is going great guns.

Talking about guns, let's get real here. Colin Powell was whining about the Iraqi missiles. The ones they have been describing go 90 miles. The ones they discovered go 113 miles. Are we going to war over 23 miles? That's $1.60. I don't know about Powell but Iraqi missiles get 23 miles to the gallon. At $1.60 per gallon, we're talking war about $1.60. I'll ante up the $1.60 as a good American. We'll call it even.

Japan's economy grew at 0.5%. We have a lot in common with Japan. Hopefully it's not the stock market. Theirs is at or near a 20 year low. If that happens to us, the Dow would be 800. That couldn't happen here. Right?

Bethlehem Steel will layoff 4000 and Ericsson 1200.

Because of lousy January auto sales, overall retail sales were off 0.9%

Thursday, February 13, 2003

2/13/03 If The Queen Had.....

N.Korea said that, if provoked, the country is capable of striking U.S. targets anywhere in the world. My response to that is, if the Queen had balls, she'd be king.

Gerald Loeb: "Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival." In other words, wait until profit potential greatly outweighs the risks.

Crude oil supplies dropped to their lowest levels since 1975, and prices for crude reached their highest point since November 2000. Meanwhile, our strategic oil reserves remain at their highest point while Americans suffer with higher fuel bills.

Healthcare insurance costs jumped 14% in 2002 and are expected to rise 16% this year. 2003 would be the fourth consecutive year of double digit cost increases. The costs in and of themselves reduce hiring. If the costs continue to rise, the extent of layoffs will rise as well.

The Pentagon activated another 40,000 reservists to active duty, bringing the total to 150,252. The Washington Post reports that the U.S. special operations forces were operating in Iraq.

The office of Management & Budget(OMB) claims that the amount of wasteful IT spending in the federal governement is as high as 20% of totsl spending on systems or services, or close to $60 billion. I feel confident that waste in the federal government runs considerably higher than that amount.

Greenspan considers fiscal stimulus premature. He finds it difficult to gauge the health of the economy because of the Iraqi war fears. A field trip to a Wichita bread line might clarify his thinking.

It was like the old days of the cold war with Russia. Now anti-aircraft missiles guard the skies in DC and there police carry gas masks. Americans stockpile, food, water, and medical supplies. All we need now is some bunker building. Linking al-Qaida with Iraq is not in my view a "nightmare" or an "unholy partnership" as decribed by Ari Fleischer. For me it's just a convenient business arrangement. I suggest we get the players to this conflict together at a temple, break some bread, and partake in some chicken soup. It's good for the soul.

Wednesday, February 12, 2003

2/12/03 The Bread Line

Alan Greenspan tells you what you want to hear. I tell you the unfiltered facts- in your face and down your throat. Wichita, Kansas has 544,000 people in its metropolitan area. It is called the "air capital of the world." There are four major airplane-manufacturing plants plus a wing design facility for Airbus. In the past year and a half 14,200 Wichita aircraft workers have been laid off. An additional 1500 job cuts are expected at Cessna this year due to the fact that Cessna only figures to deliver 220 Citation jets this year, and that's down sharply from the 307 built in 2002. Raytheon laid off 600 last week. Manufacturing accounts for 24% of the jobs in Wichita and aviation makes up about 70% of manufacturing. Bread lines are taking place in Wichita. Just last week 1500 of the jobless stood in line for a loaf of bread at the Bread of Line food bank. These are workers who were making $52,000 a year. They have almost no chance to get another job in Wichita. This is not a soft patch. This is economic devastation. There is not an airplane made in the U.S. that does not have at least one part manufactured in Wichita.

Goldman Sachs sees IT spending dropping 10% this year. Merrill Lynch says it could stay weak well into 2004.

In 2002 the VC industry raised the least amount of funds since 1981.

Nokia to cut 550 jobs.

Cadbury warns of disappointing earnings due to their U.S. operations.

Greenspan: "Signals on the trajectory of the economy as we enter 2003 remain mixed. The few data in hand suggest that the economy has not yet broken out of the pattern of subpar performance experienced over the past year." I guess he knew all along the subpar performance provided signals on the trajectory. As for data, maybe if they were issued with honesty, he wouldn't have trouble reading the economic tea leaves.

Qualcomm announced a stock buyback and a five cent quarterly dividend. It's quite late for the stockholders who have been burned in this stock for the past three years. What a disaster.

Tuesday, February 11, 2003

2/11/03 Civil Liberties

"Now it is a funny thing about life. If you refuse to accept anything but the best you very often get it. If you utterly decline to make do with what you can get, then somehow or other you are likely to get what you want."
- Somerset Maugham

The 87-page document, "Domestic Security Enhancement Act of 2003," marked "CONFIDENTIAL- NOT FOR DISTRIBUTION" is dated January 9, 2003 and was sent to VP Cheney and House Speaker Hastert. In this document are recommendations to further erode our civil liberties, liberties for which our proud fighting men perished. The war on terrorism is being used as the excuse for the reduction in our civil liberties. The tragedy of 9/11 continues daily. Testing the waters on constitutional guarantees can produce serious ramifications.

Fed Vice Chairman Roger Ferguson: "The impact of war on the U.S. economy is unpredictable. A war is one of those things one simply can't model."

Nobel-prize winning economist Joseph Stieglitz said of the Bush tax plan: "It is inadequate stimulus. It leads to higher deficits and it worsens the problems of inequity."

Consumer confidence in a February poll fell to its lowest level in 25 months. 25% of Americans think the economy will go into a recession. 42% think the economy will slow down, but not go into a recession. At the present time there is no growth. How can it slow down more without going into a recession? Maybe soft patch Greenspan will provide the answer and tell us we are in a goldilocks economy where everything is sugar and nice.

Moody's lowered its ratings yesterday on more than $27 billion of outstanding state of Claifornia bonds. Moody's expects state deficits to persist beyond fiscal 2004. That's a safe prediction. Even a busted clock is right twice a day.

Monday, February 10, 2003

2/10/03 The New Playing Field

As Rumsfeld is busy trash talking and calling Iraq a disgusting enemy, other forces are changing the landscape. The Aministration may talk tough, but Hussein is laughing all the way to the bank. The number one investment over the past year has been the old Iraqi currency, the Dinar. A year ago the exchange rate was 17 to the U.S. dollar, and now it is only 8 to the dollar. In other words, its value vs the dollar has risen over 100%. As the average U.S. driver pays $1.60 per gallon for regular unleaded gasoline, Iraq is coining money with crude at $35 per barrel, and Hussein collects about 10% of those oil receipts for himself. The playing field has turned very green for Iraq. Meanwhile, our dollar continues to fall in value along with the stock market, and our budget deficits get larger and larger. All of this talk of war has enriched Iraq while we get poorer. We are losing a war before the fighting has begun or if it begins at all.

The largest Iraqi exile community in the U.S. is in Detroit. Recreating Iraq will be a daunting mission. As one exile said, "we'll have more than a billion Muslims watching us. Winning the war will be easy. Nation-building is harder. If we mess up, the extremists will come."

WalMart said its sales were soft at the beginning and at the end of the first week of February, and revenue was below plan. Federated Dept Stores sees February same-store sales down 4-5%, and March is expected to drop 3-4%. As I have mentioned in prior blogs, the first quarter will be worse than the Christmas season, and the other shoe may drop going further out.

There have been 7 consecutive negative returns for VC firms. That's what happens when greed works against you, and you have to think to earn a living. The sheep are going to slaughter, and a good percentage of the VC firms will disappear from view. As Robert Ardrie would say, that's the way of life for the survival of the fittest.

Greenspan and his soft patch will go before the Senate tomorrow. He will talk about geo-political risks and other gobbly gook. Most of the networks will carry his talk live. It's a mistake. They should be out there generating ad revenue and doing something productive for their shareowners. It's really too bad. Greenspan is 74, and Ayn Rand would not recognize her disciple.

Sunday, February 09, 2003

2/9/03 The Pliability Of Curves

Many have inquired why the U.S. upgraded to an orange alert on Friday. The answer can be found in the curvy and secretive section of the Hajj, the huge annual pilgrimage of two million Muslims to Islam's holy city of Mecca. This religious journey has taken on ominous overtones in most recent years. It was during the 1999 Hajj that bin Laden's mother and brother made it unto Afganistan's state-owned airline in order to visit him while he was sick. To state it bluntly, tracking the movements of terrorists around curvy sections is almost impossible during the Hajj. Hence, the orange alert. It is prudent to be safe rather than sorry.

The same is true for the stock market. Today's consumer debt is higher than at any other point in history. With visibility so dim, it is wise to remain cautious and to pay off margin debt and to invest in only the cream of the crop, and that means not very often.

Consumer spending is slowing dramatically, and saving is more in vogue. This had to come to pass. In December credit card companies wrote off 7 1/2% of credit card receivables. This charge-off level is the second highest ever. So spending must slow down in the future, and this will have a very near-term negative impact on the economy. Over the long-term saving more is a positive.

This is a time to avoid rigidity and to be pliable in one's attitudes. There are so many daily hurdles which, on the surface, may appear impassable. That's almost never true. Unfortunately, depression, feeling scared, and being overwhelmed only magnify the hurdles. As we all know, life can take its toll. The three year bear market has not helped, and has destroyed trillions of dollars of wealth and generated a feeling of fiscal quicksand. I wish I could say that feeling is imagined but it's quite real - with or without threats of war. Today is a day of rest. We can all use it. Our energies need to be rejuvenated for next week's daily battles.