Saturday, September 17, 2005

Surveys

9/17/05 Surveys
A new Wall Street Journal Online/Harris Interactive Personal Finance Poll finds that nearly one in five(19%) U.S. adults who purchased a home within the last three years for their primary residence say they spent above their suggested price range, while two-thirds (67%) stayed within their price range and 12% were below their price range. When obtaining a mortgage for their new home, recent homebuyers who used a mortgage broker, direct lender or another source were nearly three times more likely to obtain a fixed-rate mortgage (72%) than an adjustable-rate mortgage (26%), and fully a third (34%) opted for a creative or option mortgage.

The third quarter "CFO Outlook Survey" of 315 CFOs revealed that 46% stated their companies are absorbing most or all of the additional energy costs, while 7% are passing along most of the increased cost to their customers. Interestingly, the predominantly service companies that make up 29% of the survey stated they are not directly affected by the high oil prices. The survey indicated that hardest hit by the rising oil prices are the manufacturing companies where 60% stated they are absorbing the cost and another 28% are absorbing half and raising prices to cover the other half. Burton Rothberg, assistant professor of accounting at Baruch College, observed "as a result, we can expect corporate earnings or capital spending to be affected, at least until prices to customers are increased. Consumers, who are already bearing the brunt of high oil prices at the gas pump and bracing for higher home heating costs, will have more bad news down the road if and when companies decide to pass along more of the costs."

Google, the most-used Internet search engine, may consider making a bid for America Online to keep the company from switching to Microsoft Corp.'s search technology, a Merrill Lynch & Co. analyst said Friday. Google, which receives 12 percent of its sales from advertising and other fees generated by America Online, may make a bid to preserve that income, Merrill's Lauren Rich Fine wrote in a note to clients Friday. Losing AOL as a client would cut Google's earnings per share by 5 percent to 10 percent, she said.

Less than half of the Hurricane Katrina evacuees living in shelters in the Houston area want to go home again, according to a poll by the Washington Post and the Henry J. Kaiser Family Foundation. Forty-three percent said they want to move back home when they can. About the same number of evacuees -- 44 percent -- said they want to relocate, and most of them wanted to stay in Houston, said the poll published Friday.

The fifth round of tariff talks between the U.S. and China are scheduled in DC for 9/26 and 9/27. Meanwhile, Deputy Secretary of State Zoellick will give a major policy address on trade with China on Wednesday, Sept. 21.

Bill Bonner: "A more perfect 'nothing' is gold. It is a sort of anti-asset. It pays no interest. It issues no press releases. It offers no guidance on quarterly earnings; it has no earnings. It does no mergers, no acquisitions and it never restructures. It hires no celebrity CEOs. It offers no discounts. It makes no excuses. But it is the thing that goes up when other assets, including dollars, go down. Gold is as close to 'nothing' as you can get. Buy it."

I would like to come back to a discussion I initiated in 1998. Between then and 2001, you probably got tired of me writing about naked puts. Naturally, I couldn’t give a crap whether you got tired or not. Companies like Microsoft took billions into their income statement by selling naked puts. As the stock rose, the company booked the put premium as income. If the stock declined, then the company would be put those shares and use the shares for their stock option program. As long as the market didn’t get creamed, everything was just dandy. As we know, in 2000 the Nasdaq got decimated. This brings me to today. A very dangerous problem is developing. The markets have been range-bound for quite some time. This pancake-like look has been a picnic for those naked put sellers, and this time it is not being effectuated by the Microsofts of the world. It’s the hedge funds. Should an unforeseen jolt take place to the markets, the pancake would crumble. Who would stand ready to purchase what had been put? When it was Microsoft, there was no worry. They had over $20 billion in cash at all times. You had better hope that the "IHOP Market" continues. As an innocent bystander, you could get creamed.

Doug Noland: "Yet, fundamentally, it is the perception of relative safety and liquidity - with respect to the new financial instruments, financing arrangements and evolving markets - that is most culpable for the proclivity of securitization issuance to go to gross excess. This dynamic is, today, in extraordinary force throughout Wall Street "structured finance." As I have noted many times previously, The Moneyness of Credit – the capacity for creating Credit instruments with the perceived attributes of safety, stores of nominal value, and near-absolute liquidity – is an invaluable analytical tool, as we grasp for clearer understanding of the current peculiar inflationary boom. The "Moneyness" dynamic is especially precarious with regard to Wall Street finance. The greater the inflation of issuance, the seemingly more stable the underlying (inflated) collateral values, the more abundant general marketplace liquidity, and the more ingrained the market’s perception of the safety, soundness and liquidity of "structured finance." Yet, fundamentally, it is the perception of relative safety and liquidity - with respect to the new financial instruments, financing arrangements and evolving markets - that is most culpable for the proclivity of securitization issuance to go to gross excess. This dynamic is, today, in extraordinary force throughout Wall Street "structured finance."

Confucius: "The superior man, when resting in safety, does not forget that danger may come. When in a state of security he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Thus his person is not endangered, and his States and all their clans are preserved."
The University of Michigan September Consumer Sentiment Survey plunged 14% from August to a 13-year low, while consumers’ inflation expectations rose to a 4-year high. It was not surprising that, with those fears of rising inflation, that gold would rise to a 17-year high of $463.30 an ounce. As thoughts of inflation imbued the grey matter of the Fed members, the yield on the 10-year treasury bonds rose to 4.27% and the spread with the 2-year widened to 30 basis points.

On the week, crude declined a dollar a barrel to $63.

At $43.87, shares of Wal-Mart hit a 3-year low, and they are approaching a 5-year low. Between 1999 and the present, the stock has traded in a range of $40 to $70, while the sales and earnings have been rising. Of the stocks in the Dow, can you give me a better long-term risk/reward?

China already accounts for 6% of world exports and its potential to supply the globe with low-cost manufactured goods has caused tensions in the global trading system, exemplified by the recent "bra wars" row. The OECD said China's share was on course to rise to 10% by 2010, by which time it would overtake the US. Despite 25 years of gross domestic product (GDP) growth at an annual rate of more than 9%, China is not expected to slow in the near future. The thinktank predicted that the world's most populous nation would overtake Britain, France and Italy to become the fourth largest economy within five years.

Lenny Bruce: " Take away the right to say "f**k" and you take away the right to say "f**k the government!"

Thursday, September 15, 2005

The Outlook

9/16/05 The Outlook

Federal Reserve Bank of Philadelphia yesterday issued the following:
"The pace of activity in the region's manufacturing sector slowed in
September, according to firms polled for this month's survey. Indicators for
general activity and new orders fell substantially from their readings in
August and suggest little to no growth this month. Shipments increased but at
a slower pace, manufacturing employment and work hours were virtually steady, and firms again reported an increase in industrial prices. The region's
manufacturing executives were significantly less optimistic about future
activity than in August."

George Carlin: "Fighting for peace is like screwing for virginity"

With home affordability historically high, an oversupply of housing units and lack of rental demand have combined to weaken the REITs market on a fundamental level, says Standard & Poor's in a special report to be published on Monday, September 19. However, rising interest rates and/or a decline in housing prices could dramatically improve the REIT outlook as new households and even some existing homeowners gravitate toward rental housing. The report is the cover story in CreditWeek, the
investment research leader's weekly magazine on credit risk.

Andrew Liveris, Chief Executive Officer of The Dow Chemical Company, warned today that the persistently high price of oil and natural gas, exacerbated in the wake of Hurricane Katrina, poses a severe threat to the long-term health of the chemical industry in the United States. "For two and a half years or more our industry has done all that it can to mitigate the impact of escalating feedstock and energy costs, which have been particularly severe in relation to US natural gas," said Liveris.
"We've been sharply focused on reducing operating expenses, improving
energy efficiency, increasing productivity and generally controlling those
things we are able to control in an effort to address this unprecedented
challenge."But right now, with oil and natural gas prices at astronomically high levels and showing no signs of receding, the US chemical industry faces the very real risk of being unable to invest in its own future in this country."

Rep. Ron Paul: "Many reasons have been given for why we fight and our youth must die in Iraq. The reasons now given for why we must continue this war bear no resemblance to the reasons given to gain the support of the American people and the United States Congress prior to our invasion in March of 2003. Before the war, we were told we faced an imminent threat to our national security from Saddam Hussein. This rationale, now proven grossly mistaken, has been changed. Now we’re told we must honor the fallen by "completing the mission."

9/16 BusinessWeek: "Microsoft has lost several key executives in recent months, many to upstart rivals. Google has picked off 100 former Microsofties alone. Why? Because employees say the software giant has slowed as it's moved into middle age. The challenges: morale, bureaucracy and impediments to innovation. If Microsoft can't fix the problem, it could find itself in the same situation as IBM did when Microsoft was the hot upstart on the scene two decades ago."

Ken Simonson, chief economist of the Associated General Contractors of America: "There are 700,000 construction businesses in the U.S., which employ 7.2 million. The value of construction, measuring payroll and materials, is $1.1 trillion, or 8.5% of annual gross domestic product."

The agency that insures pensions for millions of workers may have a shortfall of almost $87 billion during the next 10 years, the Congressional Budget Office (CBO) said. The deficit at the Pension Benefit Guaranty Corp. (PBGC) raises "the specter of a sharply reduced pension for some insured workers or the need to provide taxpayers' dollars to the PBGC," the budget office said in a report yesterday. When was the last time a government agency correctly forecast a deficit?

Wilbur L. Ross Jr. Ross has bought a majority of the $750 million in bank debt of Collins & Aikman, a bankrupt maker of carpets, consoles and other interior parts. That debt could be converted to stock and a significant ownership of the company when it emerges from bankruptcy protection.
Ross said Thursday that he is interested in buying Delphi Corp., the nation's largest auto supplier, if it were put up for sale or files for bankruptcy, which it has said repeatedly that it might do.

Real average weekly earnings fell by 0.5 percent from July to August after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. A 0.1 percent increase in average hourly earnings was more than offset by a 0.6 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Average weekly hours were unchanged. If you believe the consumer will continue his/her spending ways way into the future, forget it. When the equity line of credit on the home runs out, the spending spiggot will be turned off.

Swiss scientists have developed a vaccine that blocks the pleasure factor in smoking leaving the smoker with no kick, reports news portal Annanova.The anti-nicotine injection, CYT002 - NicQb, patented by Swiss pharmaceutical firm Cytos, works by building antibodies in the blood that stop nicotine from getting to the brain, it said. The vaccine has so far proved to be successful as it has already passed one preliminary test. Forty percent of the participating smokers quit within nine months since being injected with the drug. University of Lausanne professor Jacques Cornuz, who helped develop the anti-nicotine injection, said: "The results have exceeded our expectations." Before the injection the participants had all smoked between 10 and 40 cigarettes a day. The vaccine is expected to be in the market by 2010. There are about 1.3 billion smokers worldwide.

The FTSEurofirst 300 index of leading European shares rose 0.6 percent to 1,214.35 points, its highest intra-day level since May 2002, and the DJ Stoxx basic resources index rose 1.9 percent to a new all-time high of 355.9. At $459 an ounce, gold closed at a 17-year high and Goldcorp at $20+ closed at a new all-time high.

Northwest Airlines will cut 400 pilots.

Jon Stewart: "This is inarguably a failure of leadership from the top of the federal government. Remember when Bill Clinton went out with Monica Lewinsky. That was inarguably a failure of judgment at the top. Democrats had to come out and risk losing credibility if they did not condemn Bill Clinton for his behavior. I believe Republicans are in the same position right now. And I will say this: Hurricane Katrina is George Bush's Monica Lewinsky. The only difference is that tens of thousands of people weren't stranded in Monica Lewinsky's vagina."
9/15/05 Uncommon Value
After four consecutive years of double-digit increases, Starbucks expects to spend about $200 million this year for health care for its 80,000 U.S. employees — more than the total amount it spends on green coffee from Africa, Indonesia and other countries. It’s no wonder theses costs are described by the company’s chairman as "unsustainable."
It’s not every day that two airlines (Delta and Northwest) file for bankruptcy on the same day. If that were not enough, Newell Rubbermaid stated it would close 1/3 of its factories and eliminate 5,000 jobs.
In 1966 Greenspan wrote: "The excess credit which the Fed pumped into the economy spilled over into the stock market - triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed."
Crude is trading at $65+ a barrel. It’s still to early to say that the price of gasoline has peaked on a long-term basis. As for returning to $35 a barrel as predicted by Steve Forbes, anything is possible; however, he has a better chance of being elected president than his prediction coming true—in my view.
Sears Canada announced Wednesday that it intends to cut $100 million in costs by next year by eliminating jobs, closing merchandise-buying offices and making other "operating efficiency improvements."
On a year-over-year basis, producer prices have increased 5.1%, the fastest pace since December 1990.
China has edged out Canada for the first time, taking top spot in exports to the United States in July, according to international trade data released this week.
China will not adjust its currency's exchange rate through another revaluation, a senior central bank official said Thursday, responding to questions about speculation over such a move. Yi Gang, an assistant to the governor of the People's Bank of China, Zhou Xiaochuan, said Beijing was confident it can keep the yuan stable while allowing it to adjust gradually to market pressures under what it calls a "managed floating regime."
"The exchange rate would continue to be set by the managed floating regime rather than by official revaluation," Yi told Dow Jones News.
Gary Lammert, The Economic Fractalist, written on Sept. 13: "Tuesday September 13 was day 26 of a 28 day ideal second fractal decay pattern. Wednesday and Thursday, 14 and 15 September 2005 should ideally be down days for the Wilshire ending the second decay fractal of 28 days of a three sequence : 11/(28 of 28)/ 28 ideal daily decay fractal
pattern. An ideal next high for the third and final decay fractal would be on day 104 of a 52/130/96(day 96 =Tuesday13 September) of a 104 day sequence. The ideal final high of this nearly identical 1929 decay fractal pattern would be on day 7 of a 11/28/(7 of 28 )day sequence. If the fractal pattern identification is correct the last 28 days representing the third decay fractal will be the major primary crash sequence equivalent to the final third
fractal of 27 days seen in the fall and Fall of 1929."
Most people believe their government does not act according to their wishes, a worldwide opinion survey shows. Lack of confidence in governments is highest in the former Soviet bloc, where 75% say their country is not governed by the will of the people, but similar views are held by most Europeans (64%) and North Americans (60%).
The findings come from one of the largest international polls ever undertaken. Commissioned by the BBC World Service, Gallup interviewed more than 50,000 people in 68 countries, representative of the views of 1.3 billion people worldwide.
Google initiated its blogsearch service. In my view, it is far superior to that of Technorati.
China's fixed-asset investment grew 27.4 percent in the first eight months of 2005.
Yesterday’s Palatin conference call was quite illuminating. The company stated it would receive $20 million in milestone payments in their 2006 fiscal year, and the 40% fourth quarter growth rate for NeutroSpec indicates that $8 million from its share of the revenue for NeutroSpec in 2006 is a reasonable expectation. The company is placing increasing focus on the molecule-end of the business, the pipeline for obesity and congestive heart treatment products. In 2006, the annual loss should be reduced to approximately $6 million, and that is without a licensing deal with an international pharmaceutical company for these pipeline products. I believe by April-June 2006 such a deal is quite possible. Using a minimum of a 3-year holding period, I believe PTN is an uncommon value. At a market cap of $100 million, the stock does not, in my view, come close to approaching the current value for the company. In this case, patience is a virtue and the smart thing to have.

Wednesday, September 14, 2005

Increased Risk

9/14/05 Increased Risk
Mike Shedlock: "Rapidly decreasing margins on sub-prime loans in the face of rising delinquencies sure suggests evidence of increasing complacency and excessive risk taking in the mortgage loan industry."
U.S. employers are likely to increase hiring at a steady pace next quarter, but low optimism about hiring at retail and manufacturing companies could make for a bleak holiday season, according to the latest hiring outlook survey from Manpower Inc.
Two and one half years ago Fortune Magazine reported that Rumsfeld was instrumental in providing North Korea with "the design and key components of two light-weight nuclear reactors."
"Their(China's) prices are below our cost of production," said Octavio Pozo, spokesman for Mexico's National Council of Chili Producers. "We're worried." They should be worried. Look at what happened to the garlic industry in Gilroy, California. Chinese garlic was significantly cheaper and the quality did not suffer.
With nearly a billion dollars appropriated by Congress for the task last year, the United States still lacks uniform systems that can keep all emergency responders in touch.
"We're no better off than we were then," Louisiana State Sen. Robert Barham said last week.
George Bush: "We need an energy bill that encourages consumption."
China’s Hu Jintao: "What I would like to stress here is that China does not pursue a huge trade surplus with the United States and we’re willing to work with the United States to take effective measures to increase China’s imports from the United States."
As of yesterday’s close, 50% of the DJIA stocks were above their 30-dy moving average, 46+% above their 10-day moving average, and 33% above their 5-day moving average.
The IBD/TIPP Economic Optimism Index plummeted in September, dropping 9.7 points, or 19%, to reach 41.2, a new all-time low for the index. Over 50 means optimism; below 50 indicates pessimism. IBD/TIPP conducted the national poll of 909 adults from September 6 to September 11. The margin of error is +/-3.3 percentage points.
The Six-Month Economic Outlook, plunged 16.3 points, or 39%, to reach 29.0. This is 9.7 points below this component's previous all-time low reached in April of 2005.
The Personal Financial Outlook declined 12% from 57.7 to 50.8 – an all-time low for this component.
Confidence in Federal Economic Policies fell 5.6 points, or 11%, to 44.0 – another all-time low.
The nation's employers are anticipating close to a 10% increase in health-care costs in 2006, and consequently will be shifting more of that burden to their employees, according to a new Mercer Human Resource Consulting survey of more than 1,800 firms. That 10% increase would be if they leave benefits unchanged.
George Bush: "Katrina exposed serious problems in our response capability at all levels of government." With all due respect, 9/11 illustrated serious problems. During the past four years, billions have been expended on homeland security and several individual rights have perished. New Orleans proved that lack of leadership is at the forefront of our nation’s readiness problems.
Interior Secretary Gail Norton said 58 percent of Gulf oil production remains shut down, as does 38 percent of the region's natural gas production.
Peoples Energy told its customers to expect winter heating bills to be 39% higher than they were last year.
Approximately 350,000 gallons of oil spilled into the residential heart of Chalmette, La.
China's sales of luxurious products are expected to grow 20 pct annually till 2008, Xinhua news agency reported, citing a research report by Ernst & Young.
After 2008, the increase in luxurious products sales is expected to slow to about 10 pct until 2015. "By 2015, China will replace the US to become the world's second largest consumer of luxurious products," stated Kongwai Lee, a partner and industry leader of retail and consumer products of Ernst Young.
Latin America has become one of the top business partners of India in 2004-05 with the two-way trade growing by 77.66 percent to $3.5 billion, according the industry body Assocham.
Lenox Inc. plans to close 31 of its retail stores and end production of fine china at its Pomona, N.J., plant on Nov. 14, and stated the closings will result in the loss of 530 jobs, including 290 at the Pomona plant and 240 at the retail stores.
Ford President James Padilla: "We will align our capacity with demand and see how that falls.'' In other words, more plants may be on the chopping block.

The nationwide average price for self-serve regular gasoline has dropped 10.1 cents per gallon since reaching a new record high of $3.057 on Labor Day, September 5, 2005. Today's nationwide average price of $2.956 is 51.6 cents more expensive than it was one month ago and $1.115 higher than last year at this time.

Zhang Guobao, China's deputy director of the National Development and Reform Commission, stated China is expected to produce 180 million tons of crude in 2005, up from 175 million tons in 2004. In addition, last year China imported 117 million tons of crude. Zhang did not state how many tons would be imported in 2005.

Through July, the trade deficit is 18% larger than one year ago and 40% higher than 2 years ago.

What would the U.S. Federal deficit in 2005 be if the cost of the Iraq war and the cost for FEMA were included?

Palatin Technologies, Inc. announced today results for its fourth quarter and fiscal year ended June 30, 2005. Total revenues in the quarter ended June 30, 2005 were $5.8 million, compared to less than $0.1 million for the same period in 2004. Palatin reported a net loss of $5.1 million, or ($0.09) per basic and diluted share, for the quarter ended June 30, 2005, compared to a net loss of $7.0 million, or ($0.13) per basic and diluted share, for the same period in 2004. At June 30, 2005, the Company had cash, cash equivalents and investments totaling $18.1 million, compared with 20.4 million one year ago.
The decrease in the net loss for the quarter ended June 30, 2005 versus the quarter ended June 30, 2004 was primarily attributable to revenue recognized in the current period under the Company's collaboration agreement with King Pharmaceuticals, Inc. (King) related to PT-141, a drug under development to treat male and female sexual dysfunction, and product revenue from NeutroSpec(TM), approved by the FDA in July 2004 for the imaging of patients with equivocal signs and symptoms of appendicitis. These revenues offset higher development costs and other operating expenses.
For the years ended June 30, 2005 and 2004, total revenues were $18.0 million and $2.3 million, respectively. Palatin's net loss for the year ended June 30, 2005 was $14.4 million, or ($0.27) per basic and diluted share, compared to a net loss of $26.3 million, or ($0.55) per basic and diluted share, for the year ended June 30, 2004.
"We are pleased with the quarter and our progress to date," said Stephen T. Wills, chief financial officer of Palatin. "Commercial sales of NeutroSpec continue to gain momentum with the quarter ended June 30, 2005 showing a 40% increase over the preceding quarter. In addition, we recently commenced our definitive Phase 2B clinical trial to evaluate PT-141 in patients suffering from erectile dysfunction."
One should note that the company has spent $48 million on R&D over the last two years and the market cap for Palatin stock is only $100 million.

Tuesday, September 13, 2005

Stretched Thin

9/13/05 Stretched Thin

According to the AARP Bulletin, U.S. Census Bureau statistics for the year ending in 2004 show that property tax collections grew by 24 percent nationwide, while sales tax revenue grew by 12 percent—income tax collections actually shrank by a percentage point. Increased property taxes are taking a toll on the fixed income of seniors. More and more are being forced to sell the homes they have owned for decades. How would you like to have a home with no mortgage and still not be able t afford the escalating
property taxes?

Currently, four major refineries, owned by Chevron, Exxon Mobil, ConocoPhillips and Murphy Oil, are either flooded or without power, and are likely to be off line for several weeks, perhaps months. Together, these refine 880,000 barrels a day, or 5 percent of domestic capacity. "It's very significant," said Colm McDermott, an oil analyst at John S. Herold Inc. The loss is equal to 1 percent of the world's refining capacity. "It's a global market and that's certainly enough to have an impact on a global level."

The Big Picture: "I am starting to think that Economists are the new corrupt Analysts on Wall Street."

We must keep in mind that the market historically hits a significant low in the second year of a president’s second term. In other words, 2006 should not present rosy stock returns for investors. With 3 ½ months left until the start of 2006, how long do you want to wait to take some money off the table? Don’t stretch your luck too thin. A puerco does not live high on the hog forever.

Gary Lammert, The Economic Fractalist: "Just like in 1929 it will most likely be the third decay fractal of 27-28 days that will witness the profound drop that will be the equivalent of avery slow moving category 5 hurricane moving across the entire nationwithout benefit of a dissipating landfall. The civil and social chaos witnessed in New Orleans may well be a representative microcosm of thegeneral unrest that could follow."

India will receive crude oil from the Caspian Sea region in October, the first shipment from the region, as part of diversifying its sources of energy supplies. The 1,764-km Baku (Azerbaijan)-Tblisi (Georgia)-Ceyhan (turkey) pipeline would pour Caspian crude on the Mediterranean Sea port next month.
The first oil for the outside world from the Caspian region has been taken by Bharat Petroleum Corporation Ltd (BPCL), which would ship it from the Mediterranean Sea through Suez Canal to its Mumbai refinery.

Foreign companies in China are facing a future of slimmer profit margins as their number multiplies and competition gets fiercer, the American Chamber of Commerce president, Charles Martin, said "This place is getting more competitive," Martin told reporters "There's more foreign companies coming in, there's more Chinese companies getting stronger," he said A survey of member companies of the chamber suggested that about 30 pct were seeing better profits in China than in the world as a whole, down from 40 pct in previous years, he said "(China) is acting more like a normal competitive market and we would expect that to continue to happen over the coming years," he said. "You're going to get more competition, you're going to get pressure on the margins." The tougher competition is coming about not just as more foreign enterprises enter China but also as new local competitors emerge, typically in service industries such as media and law, according to Martin "They say -- we can't do the offshore investment but we can do everything else you need done here at one half the price or one third the price," he said.

EnCana Corp. said it's agreed to sell all of its Ecuador oil and pipeline interests for $1.42 billion. Andes Petroleum Co., a joint venture of Chinese oil companies, will pay Calgary-based EnCana cash under terms of the deal, which is expected to close before the end of 2005.

More than 25,000 Japanese will be aged over 100 by the end of the month, compared with just 153 four decades ago, the government said on Tuesday.
Of the 25,606 people aged over 100 -- about one in every 5,000 Japanese -- more than 80 percent of are women.

Mobile phone maker Nokia raised its third quarter sales and profit forecasts on Tuesday, saying demand was strong and average sale prices of its handsets were holding up better than expected. Nokia said it expected third quarter net sales to be in the range of 8.4-8.5 billion euros, compared to its previous guidance of 7.9-8.2 billion.

Between August 1, 2004 and September 1, 2005 our National Debt increased by $575 billion. The folks who have their head in an unpleasant place will tell you that it's of no concern because the increase is only about 5% of our GDP. Let's look at it another way. That same 5% is approximately 40+% higher than the growth rate of our GDP. Such a relationship can only lead to the breech of an economic levee.

Bernard Baruch: "Gold has worked down from Alexander's time... When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."

Monday, September 12, 2005

Taking Precaution

9/12/05 Taking Precaution

Have you ever considered the possibility of an exit strategy for youur portfolio? Some folks will reply that selling during times of an emergency will be selling at the bottom. A good example would be selling after 9/11. I am not suggesting that the selling be done aftera horrible event occurs. My plan requires some thinking on the part of an investor. When a situation doesn't feel right or 2+2 doesn't equal 4, then begain by taking money off the table. It doesn't mean selling 100% of an individual holding at a single time. You might begin by selling 25%. If the stock continues to rise, and it makes no sense to you, sell some more. Do not listen to the media. It's your money. A good example is the 5000 level on the Nasdaq. It's five years later and that index is still down 60%. Don't wait for an investing disaster to strike. So many people have a stock portfolio and know nothing about their holdings and take no responsibility for knowing. However, their retirement often depends on that portfolio.
Would you rather begin thinking about selling when the S&P is at a 4-year high or a 4-year low?
Since 1946, the U.S. economy has experienced a recession every 57 months and the recession has had an average duration of 11 months. The current economic expansion has lasted 46 months. In other words, to be on the safe side and prepare for the future economic storm, one should begin to prepare the portfolio
today and take the necessary steps. In sum, initiate an action plan and cut back on your weak holdings.
There is one possible economic variable that needs to be taken seriously. This country has amassed unprecedented government and household debt levels. To keep the ballgame going, the Fed has been using its printing press. Just suppose that economic storm hits in a year and inflation turns into deflation.
The fail-safe levees could easily be breeched. What happens to the equity build up in the asset-class sector of the economy? It's hard to imagine but yoyr home might drop 20-25% in value- or worse. Are
you prepared for that? Bottled water and a flashlight won't be help.

Sunday, September 11, 2005

September 11, 2001- September 11, 2005

Sept. 11, 2001- Sept. 11, 2005

Have you been to Ground Zero? What do you think has taken place over the last four years? Bill Doyle’s son Joseph died at the Trade Center. Bill stated “it’s astounding to me that the only thing they have up there after 4 years are a couple of posters.” To be precise, there are names of 2,749 victims on panels attached to a fence. That’s what the site has to show for itself after 4 years.

Bush remarked “and in the days and weeks that followed, America answered history’s call to bring justice to our enemies and to ensure the survival and success of liberty.” Maybe Bush needs a lesson in reality. Osama bin Laden and Abu Musab al-Zarqawi are still at large. Do you think that would be the case had Ross Perot been president?
As for ensuring the survival and success of liberty, no other president in the history of the United States has trampled on the individual constitutional rights and liberties of American citizens as has Bush. In 2001, I predicted that Bush would go down as the worst president we have ever had. The misery and blight he has brought on this nation far exceeds my worst fears.

Jon Stewart: "If the events of September 11th have proven anything, it's that the terrorists can attack us, but they can't take away what makes us American - our freedom, our liberty, our civil rights. No, only Attorney General John Ashcroft can do that.”

President George W. Bush's approval ratings have fallen across the board in the wake of Hurricane Katrina and a seemingly flawed government response to the disaster, according to the latest Newsweek Poll. Bush's job-approval rating dropped to 38 percent, the lowest
ever in the Newsweek Poll. Sixty-six percent of those polled say they are dissatisfied with the way things are going in the United States at this time; just 28 percent are satisfied, another record low in the poll.
A 52-percent majority of Americans say they do not trust President Bush to
make the right decisions during a domestic crisis, 45 percent do. The same
number-52 percent-do not trust him to make the right decisions during an
international crisis, again, 45 percent do. In addition, 57 percent of
Americans say the slow response in New Orleans has caused them to lose
confidence in the government to deal with another major natural disaster, 41
percent say it has not; 47 percent say it has made them lose confidence in
government to prevent another 9/11-type attack; half (50%) say it has not, the
poll shows.
The president's ratings on issues having little if anything to do with
domestic disasters also declined. Bush's approval on handling terrorism and
homeland security is 46 percent, a five-point drop from the August 2-4, 2005
Newsweek Poll. For the first time in the Newsweek Poll, more Americans
disapprove of Bush's handling of terrorism and homeland security (48%). And
almost half (49%) of all those polled say taking military action against Iraq
two years ago was not the right thing to do; 46 percent say it was. This is
the first time ever in the Newsweek Poll that more Americans have said going
to war was not the right thing to do than said it was.
A plurality of Americans also rates the federal government's response to
the problems caused by Hurricane Katrina as poor (40%). Thirty-two percent say
the Feds' response was "only fair;" and 21 percent believe the response has
been "good," the poll shows. State and local governments did not fare better.
35 percent say they did a poor job and 34 percent say they did a fair job.
However, views are starkly different when examined by political party.
Fifty-three percent of Democrats polled say the federal government did a poor
job vs. just 19 percent of Republicans. Thirty-seven percent of Republicans
believe the federal government did a good job and 11 percent believe it did an
excellent job. The Democrats are more forgiving of local and state
governments, though not as forgiving as the Republicans are of the Feds.
Twenty-four percent of Democrats believe the state and local governments did a
good job and four percent say an excellent job. Thirty percent of Democrats
believe the local and state governments did a poor job, vs. 43 percent of
Republicans; 35 percent of Dems and 29 percent of Republicans say they did a
fair job.
While 66 percent of all those polled say a "major reason" for the
government's slow response to the disaster was because of poor communication
between federal, state and local government officials, 57 percent say a major
reason was that the amount of destruction was unexpected and overwhelming.
Fifty-five percent believe that incompetence of federal officials whose job is
to prepare and deal with natural disasters is to blame and 57 percent believe
state and local officials incompetence is to blame.

Every day I am astounded by the level of ineptness in this administration. They might consider revamping their HR department. It is normal procedure to check on the resume of an applicant. Obviously, that did not take place with Brown of FEMA. In addition, evacuees were told they would be receiving a $2,000 debit card and then that promise is rescinded. Why? The administration maintains they don’t have sufficient staff to hand out the cards. If they were handing them out to Congress, state, local, and municipal government workers, would they have found the means to hand out the cards? So they will mail checks to people who don’t have a home, a permanent mailing address, and don’t have access to a checking account.

Ross Perot: "If someone is blessed as I am is not willing to clean out the barn, who will?"

September 11, 2001 was avoidable. The Iraq war was avoidable. The levees breaking in New Orleans – that too was avoidable. Electing George Bush twice was avoidable. I hope Reverend Parsley is pleased with himself.

Kurt Vonnegut, Jr.: "True terror is to wake up one morning and discover that your high school class is running the country."