Saturday, October 08, 2005

If Only

10/8/05 If Only

If it is possible that Bush truly gets his directions from God, I wish he'd request having earnings from jobs exceed inflation. Do you really care whether there are more or less leisure and hspitality workers, food employees, or amusement and gambling jobs? If the factory workweek and overtime remains unchanged and wages can't even rise a plug nickel, isn't that more vital. Year over year average hourly earnings rose 2.6%. This compares with a Consumer Price Index that rose 3.6% for the 12 months ended August. How come that doesn't bother Bush?
During the 12 months ended August, the year-over-year gain in the CPI exceeded the year-over-year growth in average hourly earnings in all but one of those months. The average worker, the man or woman on Main Street, busts their ass at work and gets little reward and certainly little appreciation. An increasing number cannot afford health care. Every day the media focuses on the price of gas, heating oil, and the housing bubble. I too am guilty of this. More attention needs to paid to take-home pay versus the inflation rate.

Do you think those shopping at Tiffany's also shop at Big Lots or even have heard of Big Lots? The latter is closing 126 underperforming stores and all 41 of its freestanding furniture outlets.

In the most recent AP-Ipsos poll, the number of people who strongly approve of Bush's job performance has eroded over the last year, most notably among key groups like evangelical voters, down from 49 percent who strongly approved in January to 33 percent now; Republican men, down from 57 percent to 42 percent; Protestants, down from 36 percent to 25 percent; and Southerners, down from 32 percent to 22 percent.
While four of five Republicans say they approve of Bush's job performance, enthusiasm in that support has dipped over the last year.
In December 2004, soon after his re-election, nearly two-thirds of Republicans strongly approved of his job performance. The AP-Ipsos survey found that just half in his own party feel that way now. Where is Pastor Parsley now?

"I think we've hit the tipping point, and think that in many areas you're seeing a leveling off of prices," Countrywide CEO Angelo Mozilo told Reuters at this week's meeting of the Business Council, which includes chief executives of various companies.
Mozilo said he thinks housing prices will especially moderate in areas where there has been speculative buying in condominiums such as South Florida.
"Wherever you see speculators, no matter where it is in the country, that's trouble, because as soon as there's a little blip, they're gone," Mozilo said.

Media reports from India maintain that, after a failed attempt at buying PetroKazakhstan, theLN Mittal group and Oil and Natural Gas Corporation(ONGC) are now exploring investment opportunities inNigeria. Nigerian President Olusegun Obasabjo has written to the Mittals seeking investments in export-oriented refineries, liquefied natural gas projects and railways. The Indian government is using the opportunity to seek exploration and production (E&P)contracts in the African nation. The Mittal group is now facilitating meetings in Indiafor a ministerial delegation from Nigeria, which is expected to arrive on Monday. The delegation will hold discussions with ONGC regarding E&P projects on Tuesday. Only recently, ONGC was outbid for some oil exploration sites in Nigeria.

Adelaide's housing market has recorded its first fall in house prices in five years. A 1.09 per cent fall in the September quarter ends the run of 19 consecutive quarters in Adelaide in which prices had grown or remained constant. The last time house prices fell was in the September 2000 quarter.
State Government figures released to The Advertiser show the Adelaide median house price fell from $275,000 to $272,000 in the September quarter. For the year, prices grew 3.82 per cent. The Real Estate Institute of SA said the latest figures were "nothing to be alarmed about". "I am not distressed by this at all," president Robin Turner said. "The market is getting some normality back and there is more buyers' resistance. "We don't want to drive homeowners out of the market with never-ending increases in prices. "We are coming off an incredible high which has been sustained for five years and this is a very small change in value and a very soft landing." Robin Turner sounds like he could sell manure in farming country.

At $477.70 per ounce, gold had the highest close since late 1987, and silver at $7.77 had its highest close since March 2005.

When the BLS reported the latest nonfarm payrolls, for some reason the headlines did not mention that the number of unemployed rose by 270,000 in September. It must have been an oversight.

Last year, the British-based Hong Kong and Shanghai Banking Corporation (HSBC) bought 19.9 percent of the Bank of Communications for $2.25 billion. In June, the Bank of America invested $3 billion for a 10 percent stake in the Bank of China (BOC). In July, the Royal Bank of Scotland bought another 10 percent of the BOC for $3.1 billion, while Singapore’s Temasek committed $2.5 billion to the China Construction Bank. In August, Goldman Sachs paid out $3 billion for a 10 percent stake in the Industrial & Commercial Bank of China.
By 2007, it is estimated that foreign financial groups will control one sixth of China’s banking system.

The evolving reason for war in Iraq has gone through stages. First, Bush stated there were WMD. Then there were no WMD so the reason became getting rid of the tyrant Saddam Hussein. Now Hussein is in jail and the new reasoning, states Bush, is "would the United States and other free nations be more safe, or less safe, with Zarqawi and bin Laden in control of Iraq, its people, and its resources?" Maybe we should just get bin Laden and Zarqawi and dispense with the war in Iraq where 1,950 U.S. service personnel have died. We've had over 4 years to get bin Laden. How many more do we need? If only Ross Perot had been president. The results would have been quite different.

Friday, October 07, 2005

Affordability

10/7/05 Affordability

In the Bay Area, the CAR estimates only 12 percent could afford a median priced home, which it pegs at $730,360. That's down from 14 percent last August when the median home there went for $644,920.
Of course, you can always take a trip to Las Vegas and try your luck. Maybe you can win the home of your dreams like the lady with $4 in quarters. In the meantime, the lack of affordability will be the downfall to the housing market in California.

A tax benefit added 4 cents to Costco's per-share earnings in the last quarter, while lower state taxes contributed 3 cents. That helped lower the company's tax rate to 28.9 percent from 37 percent a year ago. In reading the third quarter earnings reports coming out, it would be wise to check the comparative tax rates for 2005 and 2004.

According to the Detroit Free Press, Delphi Corp. has demanded such drastic cuts in wages and benefits for workers that, according to one UAW local, its members would no longer be able to afford the cars they help build. According to a flyer sent to at least two UAW locals Thursday, the company is asking for wage cuts of as much as 63%, to $10 an hour, and for workers to pay 27% of their health care costs versus 7% currently. Rather than generate more animosity, maybe Delphi would be better advised and just shut up and file for bankruptcy.

Federated CEO Terry Lundgren blamed weaker-than-expected sales in September on Hurricanes Katrina and Rita, high gasoline prices, dampened consumer confidence and poor sales of Bloomingdale's and Macy's furniture and home furnishings. Other than that, everything was coming up roses. One more thing, the CFO stated they had challenges in turning around May. No one forced them to buy May.

Strong Sino-Kazakh ties are likely to ensure that China's state oil company CNPC wins its $4.2 billion Kazakh oil prize, even as signs emerge that the Kazakhstan government wants a piece of the action. Tong Xiaoguang, a senior adviser to CNPC's overseas operations, said the company had an understanding with the Kazakh government ahead of the deal.
"Before we decided to acquire it, we had notified the Kazakh government and they agreed to the plan," he said I have never doubted that. It's unfortunate though that ONGC/Mittal did not walk the talk. In the future, I will remember that. Fool me once....According to the India Times, it is understood that the Indian Government has failed to make a “substantive” bid approach for PetroKazakhstan, despite its many declarations that it may scupper Chinese plans to buy the oil company.

U.S. nonfarm payrolls fell by an estimated 35,000 in September, the first decline in more than two years, the Labor Department said Friday. The drop was much less than the 150,000 expected. Payrolls in July and August were revised higher by a total of 77,000 jobs. The unemployment rate rose as expected to 5.1% from 4.9%. The government would not precisely quantify the impact of Hurricane Katrina, but gave a rough estimate of 230,000 lost jobs based on the assumption hiring was normal elsewhere. Job losses were concentrated in manufacturing, retail and leisure. Don't look now but the 10-year Treasury yield has jumped to 4.42%. Are you starting to feel the interest rate pinch on your ARM? You can always file for bankruptcy. That's the American way.

China's trade surplus from January to August reached $60 billion, already far exceeding the $32 billion recorded for all of 2004. By year's end, the surplus is expected to balloon to $90 billion to $100 billion, the Commerce Ministry said, according to a report in the official China Daily newspaper.

Rodman & Renshaw, LLC initiated research coverage of Palatin Technologies PTN with a Market Outperform Rating and a 12-month price target $5. Ilya Kravets, Senior Specialty Pharmaceuticals Analyst, issued the report. It's a little like chicken soup. It can't hurt.

Almost one third (31%) of Americans say they are using more credit to pay the higher prices for energy and other consumer goods resulting from Hurricane Katrina, according to the Cambridge Consumer Credit Index. 19% say they are using less credit, while 50% say they are using the same amount of credit as they did a year ago. "The results of the Cambridge Consumer Credit Index wildcard question show that higher prices for energy and other consumer items brought on by the aftermath of Hurricane Katrina are causing a large amount of Americans to use more credit than they did a year ago because they just don't have enough income to pay these higher costs. Lower income Americans are feeling the pinch most, since they have little discretionary income to start with," says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

Wednesday, October 05, 2005

Never A Dull Moment

10/6/05 Never A Dull Moment

The American Petroleum Institute said crude inventories fell by 4.2 million barrels for the week ended Sept. 30. The government data showed a 300,000-barrel decline. Motor gasoline inventories dropped 4.8 million barrels. Distillate stocks were down 4.9 million barrels, the API said.

Planned job reductions by major U.S. corporations rose 1.8% in September to 71,836, according to Challenger, Gray & Christmas. Layoffs were down 33% from September 2004. Layoffs in the third quarter were down 2.5% from the third quarter of 2004. It was the smallest number of layoffs in five quarters. However, layoffs are up 8.2% year-to-date

The U.S. ISM Services Index for September tumbled to 53.3% from 65% in August, the lowest level in 2 ½ years.

Kazakh lawmakers voted in the lower house to allow the state to intervene in sales of oil firms, adding uncertainty to PetroKazkahstan's takeover by China's CNPC.
The bill becomes law only after it wins approval by Kazakhstan's upper house and President Nursultan Nazarbayev -- and that is not assured. There is never a dull moment in risk arbitrage.

The Energy Information Administration (EIA) reported that the average price truckers paid for diesel fuel had soared 34.6 cents over the last week to a record $3.14 a gallon.

Motorola is cutting 1,900 jobs.

The Dow, S&P 500, and the Nasdaq had one of their worst days in quite a while. My portfolio didn't
ring the register either.

India's ONGC Videsh Ltd and Kazakhstan's KazMunaiGaz will jointly develop oil and gas properties in the Caspian sea region, Kazakhstan's Energy Minister V Shkolnik said on Tuesday.
"We have agreed to have strategic energy cooperation. KazMunaiGaz and OVL will work together in the Caspian Sea." The arrangement concerns two medium sized blocks. Importantly, it indicates to me that this strategic cooperation is no different than the long-standing relationship between PKZ, the Kazakh government, and LUKOIL. It is one more indication that the deal with CNPC will go forward on October 18.

Tuesday, October 04, 2005

What A Bad Joke

10/5/05 What A Bad Joke

Dallas Fed President Fisher: "If the Federal Reserve were to resist the upward pressure on interest rates, it would in effect monetize the burgeoning fiscal deficits. The Federal Reserve has staunchly resisted monetizing deficits for more than a quarter century, and I feel strongly that it can ill afford to monetize them today." With twin tower deficits looming larger by the day, who is printing the money to cover the bills? Just remember that, over the last 92 years, the dollar has lost 95% of its purchasing power. There is a reason investors are purchasing gold and Goldcorp common stock.


90% of daily Gulf oil output offline vs 93% Monday and 72% of daily natural gas output offline vs 75% on Monday, according to the MMS.

Hugo Chavez: "We've had to move the international reserves from U.S. banks because of the threats from the U.S."

Sun will include the Google Toolbar as an option in its consumer downloads of the Java Runtime Environment. In addition, the companies have agreed to explore opportunities to promote and enhance Sun technologies, like the Java Runtime Environment and theOpenOffice.org productivity suite.

PetroKazakhstan said Tuesday that its planned sale of the company for $4.2 billion US to China's largest state-owned energy firm will continue regardless of Kazakh intentions to gain control of parts of the company. PetroKazakhstan officials said it will go ahead with a special shareholders meeting in Calgary on Oct. 18 to vote on the takeover deal by China National Petroleum Corp. And the company said that because it is Canadian-based and the deal is a corporate transaction rather than an asset sale, Kazakh approvals are not required. The takeover will be finalized with two-thirds of shareholder support and approval by an Alberta court, said spokesman Ihor Wasylkiw. "Comments coming out of Kazakhstan don't have any impact in terms of us holding that meeting," Wasylkiw said from Calgary Tuesday. "All we need to do is follow the laws of the land and the laws of Kazakhstan do not come into play here," he said. "Once we have the transaction done, the government of Kazakhstan has every right to review its asset base and do what it feels is right." Energy analyst Wilf Gobert of Calgary-based Peters & Co. said he expected the takeover to proceed. "It kind of looks like that the sale of the company is going ahead and subsequently the Chinese will be negotiating with Kazakhstan over portions of the company," he said Tuesday. It should be noted that Peters & Co. have had an investment banking relationship with PKZ and Gobert probably knows the management of PKZ better than any one else in the investment community.

La-Z-Boy Incorporated announced that one of its key suppliers of polyurethane
foam has put its customers, including La-Z-Boy, on notice of allocation, due
to the lack of availability of TDI (toluene diisocyanate), a key chemical
component of polyurethane foam which is used throughout the upholstery and
bedding industry. The company also said that this situation, coupled with the
continued soft retail environment and damage to one of its plants by a tornado
spawned from Hurricane Rita, will have a significant adverse impact on its
results for the fiscal 2006 second quarter and potentially beyond.
Kurt Darrow, President and CEO of La-Z-Boy said, "Several TDI suppliers
have communicated that because of the effects of Hurricanes Katrina and Rita
they have had to declare Force Majeure, a condition which allows companies to
depart from the strict terms of a contract because of an event that cannot be
reasonably controlled. As a result they will be limiting the amount of TDI
they will be supplying which will limit the amount of polyurethane that can be
produced. We have been advised by one of our significant polyurethane
suppliers to the La-Z-Boy(R) branded product of their industry-wide notice of
an allocation of 50% of normal polyurethane supply. This situation will have
a greater impact on us relative to the rest of the furniture industry given
the higher percentage of upholstery in our overall product mix."
Darrow noted, "Polyurethane foam, because of the volume of storage space
it requires, is shipped on a just in time inventory basis and therefore our
inventories of this raw material are very minimal. Each of our divisions has
a different mix of polyurethane suppliers and finished goods inventories and
thus will be individually impacted. We anticipate that the price of
polyurethane will increase and that our production schedules at various plants
will also be modified according to availability of supply. We will therefore
work judiciously to minimize the potential interruption to our customers in
all effected divisions by closely communicating with them to assess and
balance their product needs to the degree possible."

Lexmark and Clorox issued profit warnings.

Although crude dipped to $63.90 a barrel, natural gas closed at a record high
of $14.224.

Georgia Pacific will cut 1,100 jobs.

At least 1,941 U.S. service personnel have died in Iraq.
On Iraq, Bush said that "more and more Iraqis are able to take the fight to the
enemy." Maybe they didn't teach math in Texas.

Mayor Ray Nagin said Tuesday that New Orleans has to lay off as many as 3,000 workers, about 40% of its total
payroll, because of the damage done to the city's finances by Hurricane Katrina.

The FDIC stated
only seven California markets (Bakersfield, Merced, Stockton, Visalia,
Modesto, Yuba City, and Fresno) ranked among the nation's top 20 for home price appreciation during the second quarter,
down from 14 in the first quarter.

Weyerhaeuser will close its Prince Albert pulp and paper mill in Saskatchewan as a result of poor market
conditions, eliminating the jobs of 690 employees.

"Although royalty revenues were better than expected, it was not enough
to offset a disappointing contract revenue shortfall," said John
Bourgoin, MIPS president and CEO, in a prepared release. "A number of
our customers delayed their investment decisions, especially for deal
values in excess of $1 million. This slowdown has reduced the number
and the corresponding dollar value of agreements completed in the
quarter."

Futures-market predictions that the Federal Reserve will raise its target interest rate by a half- percentage point over two remaining meetings this year are ``reasonable,'' St. Louis Fed Bank President William Poole said.
``I think that the market's expectation is reasonable. That is not the same thing as saying we have a commitment to produce exactly that outcome.''

Two hurricanes, one of them particularly intense, are expected to develop this month in the Atlantic, says William Gray, a leading hurricane forecaster.

Uzakbai Karabalin, head of Kazakh state oil and gas firm KazMunaiGas, said fast-growing output would make it possible to export natural gas for a trans-China pipeline. "The Chinese side has been offered several routes of Kazakh natural gas shipments for the East-West pipeline (within China)," Karabalin said.
Chinese President Hu Jintao and his Kazakh counterpart Nursultan Nazarbayev signed a feasibility study project in July after reaching understanding on future investment in a gas pipeline that would run from Kazakhstan to energy-hungry China. Do you really think the Kazakh government is going to disrupt a long-term relationship over PKZ? What country wants to puke on its future bread and butter? In the end, money talks and so does graft.

For the second consecutive month, U.S. worker confidence fell to an historic low, as the Hudson
Employment Index(SM) declined 1.4 points to 96.8. The aftermath of Hurricanes
Katrina and Rita contributed to a steep decline in workers' optimism about
their personal finances, which were previously impacted by high energy prices.
Additionally, hiring plans stalled slightly. This month's Index is ten points
lower than one year ago as well as the start of 2005.
While there was virtually no change in how workers rated their finances
this month, 47 percent indicated their financial situation is getting worse.
This is the highest figure on record and seven points higher than the 2005
yearly average of 40 percent. Just 36 percent of the workforce claimed that
their finances were improving in September, compared to this year's average of
41 percent.
Hiring expectations also suffered another slight setback as only 29
percent of employees reported their firms expected to hire in the coming
months. After holding steady at about 31 percent for nine successive months,
this was the second month in a row where hiring outlook dropped by one point.
The percent of workers anticipating layoffs remained at 17 percent.

McNeil Nutritionals, LLC, the maker of SPLENDA(R) Brand retail products,
announced the all-new SPLENDA(R) Brown Sugar Blend, just in time for
the popular fall baking season. A first-of-its-kind reduced calorie brown
sugar product, SPLENDA(R) Brown Sugar Blend is a proprietary blend of brown
sugar and SPLENDA(R) Brand Sweetener, or sucralose.

The volume of mortgage applications slipped 1.1% in the week ended Sept. 30 compared to the prior week,
data compiled by the Mortgage Bankers Association show. Also on a seasonally adjusted basis, applications for mortgages to
purchase homes dropped 1.9%, while refinancing applications nosed 0.1% higher on a week-to-week basis.

According to the Detroit News, the UAW and GM are near a deal on healthcare that would save GM $1 billion
annually, while
impacting active UAW members as well as the hundreds
of thousands of retirees nationwide by increasing co-pays for
prescription drugs and perhaps instituting cost-sharing of monthly premiums.

Will Rogers:
"The trouble with practical jokes is that very often they get elected."













Based On The Past

10/4/05 Based On The Past

John Challenger: “According to the our analysis, employers cut 10,149,381 jobs from 1993 through 2004. Of those, 38 percent occurred between September 1 and December 31. In 2004, 41 percent of the year’s job cuts were announced in the last four months. This year, the jump may not be as large, simply due to the fact that layoff announcements were heavier than normal during the summer months, but we are still likely to see an increase. The last part of the year is crunch time for many organizations in terms of meeting earnings goals, as well as establishing budget levels for the coming year.”

Small business statistics highlighted in the 2005 Small Business FAQ
include:

* Small businesses represent 99.7 percent of all employer firms.
* Over the past decade, small business net job creation fluctuated between
60 and 80 percent.
* Small businesses generate more than 50 percent of the nonfarm private
gross domestic product (GDP).
* Two-thirds of new employer establishments survive at least two years
after start-up, and 44 percent survive at least four years.
* Small businesses employ half of all private sector employees.
* Very small firms with fewer than 20 employees spend 45 percent more per
employee than the largest firms to comply with federal regulations.
* Minorities own 4.1 million firms that generate $694.1 billion in
revenues and employ 4.8 million workers.
* Women own 6.5 million businesses that generate $950.6 billion in
revenues, and employ 7.2 million workers.
* In 2004, an estimated 580,900 employer firms opened while an estimated
576,200 closed.

The Institute for Supply Management's national factory index rose to 59.4% in September from 53.6% in August. The 5.8-point increase was the biggest monthly gain since March 1991 and a big surprise. How much of this gain can be attributed to rebuilding in the Gulf? The prices paid index surged to 78 from August’s 56.4, the biggest jump in 15 years. This jump spooked the bond market and the yield on the 10-year Treasury increased to 4.39%.

The NY Times reported that more sellers are putting their homes on the market, houses are selling less quickly and prices are increasing less rapidly.

In September, truck and SUV sales plunged at Ford and GM. Overall vehicle sales for Ford declined 19% and for GM 24%; however, Toyota’s sales increased 10.3%.

A 30-year study finds that most adults -- nine out of 10 men, seven out of 10 women -- are likely to be or become overweight as they grow older. The report, published today in the Annals of Internal Medicine, was based on the experience of more than 4,000 white adults who were the second generation of a long-term study of heart disease sponsored by the National Heart, Lung and Blood Institute. Participants were the offspring of the original Framingham Heart Study subjects, and were 30 to 59 years old when the next-generation study began. They were followed from 1971 to 2001.

Kazakh Oil Minister Vladimir Shkolnik said Tuesday that Kazakhstan would seek to acquire a portion of Canadian-based oil producer PetroKazakhstan Inc., which had reached a takeover deal in August with China's largest state oil company. China National Petroleum Corp. agreed to pay $4.2 billion US for Calgary-based PetroKazakhstan (TSX:PKZ). An agreement by CNPC to sell part of PetroKazakhstan to a Kazakh state company could help to smooth approval of its agreement to buy the Canadian firm. It might be wise to remember that Kazakhstan has only 3 oil refineries, and PKZ’s is by far the best of the 3. In addition, the new pipeline carrying oil from Kazakhstan to China, and paid for by China, will begin flowing on Jan1, 2006. PKZ will transport its oil to China through this pipeline and transportation costs will be reduced by $7 a barrel. This fact has not been lost on the Kazakh government, China, or ONGC/Mittal.

Royal Ahold NV, the owner of Stop & Shop and Giant stores, might be interested in buying parts of Albertson's Inc., Chief Executive Anders Moberg said. He ruled out buying all of Albertson's, the second-largest U.S. supermarket company.

The latest world investment report by UNCTAD has rated India as an attractive destination for pharma and clinical research for companies looking at faster and efficient ways to test drugs. The report said that drug firms could reduce costs 20-30 percent by moving R&D activities to India while they save from hiring clinical researchers, nurses and IT staff at less than a third of the wages in the West. The findings also said India has really skilled R&D personnel.

Kazakhstan’s President said oil production from Kazakhstan's share of the Caspian Sea could reach "oil production levels of 100-150 million tons (per year) by 2015. When completed, this National Program will allow us to export 2 million barrels (of oil) a day in 2010 and 3 million barrels (a day) in 2015. The natural gas output will reach 100 billion cubic meters a year.”
According to the Energy Information Administration of the U.S. government, in 2004 Kuwait and Nigeria both produced 2.51 million barrels per day and Iraq produced 2.03 million bpd. Only two nations in the world, Saudi Arabia and Russia, exported more than 3 million bpd each in 2004: Saudi Arabia exported 8.73 million bpd and Russia exported 6.67 million bpd.

A new study in the New England Journal of Medicine says China's health-care problems "make those of the United States seem almost trivial by comparison and ... constitute a major potential threat to China's domestic tranquility."

Gary Lammert, The Economic Fractalist: “By using day 288 as the ideal third fractal top, using 72 days (fromSeptember 30) to an expected low and 72 days as an expected low with the 52/130/104/day 5 of 78 to an expected low, the first decay base most likely started 31 August 2005. The initial decay fractal base
was 16 days. This ideally would be followed by second and third decay fractals of 40 days for a total of 79 trading days from 22 September 2005. This is in exact agreement to a day of the major 144/360/288/72
daily fractal sequence and the final third fractal 52/130/104/78 day sequence both which end within one day of each other.”

The West Amazon rain forest is in severe drought with rainfall down 70% from 2004.

Sears Canada is cutting 1,200 jobs across Canada.

Monday, October 03, 2005

Should We Worry?

10/3/05 Should We Worry?

Up to 150 million people could die in a global avian flu pandemic if action is not taken to prevent it being transferred from human to human, the United Nations has warned.
Dr David Nabarro of the Geneva-based World Health Organisation said preparations for an expected mutation of the virus enabling it to spread from human to human must be carried out. "I am almost certain there will be another pandemic soon," Mr Nabarro added.

The U.S. government reported that GM’s pension deficit is $31 billion. That’s the bad news. The good news is that government figures are rarely correct.

The PBGC had a $23 billion deficit prior to bankruptcy filings by Delta and Northwest, and both have requested up to 25 years to make up their pension shortfalls. The PBGC stated that corporate defined benefit pension plans were underfunded by $450 billion one year ago. The good news is that these defined benefit pension plans are voluntary. That’s also the bad news.

Napoleon Bonaparte: “The torment of precautions often exceeds the dangers to be avoided.”

How important have company stock buy backs been to the resiliency of the equity markets? Companies in the S&P 500 repurchased $82 billion of their shares in the second quarter. When the third quarter numbers are released, I would expect a continuance of this activity.

Jay Leno: “They had to let Judith Miller out of jail. They had to make room for DeLay.”

Wal-Mart’s September same-store sales rose about 3.8%.

With 3-month Treasury bills yielding about 3.5%, is it prudent to buy a 10-year Ttreasury bond yielding only 4.32%? For such a small pick up in yield, why take the risk. You are not getting paid to take that risk.

Bush, according to a media report, will nominate Harriet Miers, currently counsel to the president, to succeed Sandra Day O'Connor as an associate justice of the Supreme Court. Miers, 60, was the first woman president of the Texas state bar. Bush named her White House counsel in November 2004. This may be Bush's idea for diversity on the court. Miers has had no prior experience as a judge.

Three days ago, we unleashed “Iron Fist” in Iraq. Two and one half years ago we unleashed “Shock and Awe.” We have yet to announce the capture of Osama bin Laden or Zarqawi. However, since we invaded Iraq in March 2003, at least 1,920 U.S. military personnel have been killed in that country.

David Letterman: “Al Gore has gained a lot of weight lately. Of course, unlike his former boss he only has to worry about getting into his own pants.”

Sunday, October 02, 2005

Coming Up Roses In Fall Weather

10/2/05 Coming Up Roses In Fall Weather

San Francisco has more than 20,000 one million dollar homes and another 46,000 or so are in Orange County, Calif. The average price for an apartment in all but Harlem and the borough's northern tip climbed above $1.2 million in the second quarter of 2005, said Gregory Heym, chief economist for Terra Holdings, an owner of real estate brokerages in the city. "For a million dollars, you couldn't get a two-bedroom on the East Side," Heym said. The Census Bureau's 2004 American Community Survey found 1,034,386 homes worth at least $1 million in 2004, compared with 595,441 in 2002 and only 394,878 in 2000.

"When you're living in a place with home values up 50 percent, you have what Alan Greenspan calls a piggy bank," said Elizabeth Warren, a Harvard law professor and an author of "The Fragile Middle Class" (Yale University Press, 2000), a study of bankruptcy. "The bubble has operated like wreckage from the Titanic - you could climb on and float along for a while. The question is for how long."

According to the Houston Chronicle, in the wake of Katrina and Rita, Houston's apartment market has made one of the quickest turnarounds in history. More than 17,600 apartments have been absorbed since Labor Day, according to preliminary estimates from O'Connor & Associates, a real estate research firm. They also show that Houston landlords will absorb more than 10 times the normal level of apartments in September.

U.S. bankruptcy courts, like the one for Northern California, in San Francisco, have been inundated with cases. In San Francisco, Chapter 7 filings increased 32 percent in August and 125 percent in September from the same months last year. Chapter 13 filings dipped a bit in August but rose 24 percent in September compared with the same months last year. The new bankruptcy law takes effect at 12:01 a.m. on Monday, Oct. 17.

Seneca: "The greatest loss of time is delay and expectation, which depend upon the future. We let go the present, which we have in our power, and look forward to that which depends upon chance, and so relinquish a certainty for an uncertainty."

According to a separate study released last month by Boston-based Ceres, a coalition of institutional investors and environmental groups, insured and total property losses are already rising more quickly than premiums, population and economic growth.
"It's unclear how the insurance industry is going to survive in the sort of world that we're expecting," said Andrew Logan, an insurance analyst with Ceres.
"For obvious reasons, people really focus on the huge catastrophic events like hurricanes and earthquakes," he said. "But the damage from smaller events is also expected to rise, from hailstorms to forest fires to lightning strikes to floods to heat waves to droughts."

Ford Motor Co. took over 23 plants and facilities from auto supplier Visteon Corp. on Saturday in a deal designed to make Visteon profitable while assuring a supply of parts to Ford.

The consensus forecast for third-quarter profit growth now stands at 17.8 percent, up from 15.1 percent at the start of the quarter, according to Thomson Financial. Fourth-quarter estimates have also risen - to 16.5 percent from 12.2 percent in July. Now let’s take out earnings from the energy sector. That’s only fair since the government looks at inflation ex- food and energy. If you eliminate the earnings of energy companies, earnings growth would not be much higher than the inflation rate. Maybe everything is not coming up roses in the Fall weather.

Stephen Roach: “According to the Greenspan-Kennedy framework, US homeowners tapped the ever-expanding home equity till to the tune of about $600 billion in 2004 -- equivalent to about 7% of disposable personal income, or more than double the 3% share recorded in 2000. In a companion speech, Greenspan goes on to concede that this equity extraction from ever rising property values was large enough to have accounted for all of the decline in the personal saving rate since 1995 (see his 26 September speech, “Mortgage Banking”).”

In a major endorsement of India’s IT capability, a survey by the Santa Clara University revealed on Friday that 53% of the jobs being outsourced by Silicon Valley companies are going to India.

Foreigners control 52% of our U.S. debt. Those who control the debt ultimately control the equity.

Housing prices in San Francisco are in need of a good dose of reality. Approximately, only one in ten people living in that city can afford to buy a home. Equally important, the population in San Francisco is declining. According to the Census Bureau, between 2000 and 2004, the population declined from 776,733 to 744,230. I feel comfortable in stating the population will be even lower on December 31, 2005. The picture is not a pretty one for those trying to cash in on million dollar homes in 2006.

Confucius: “Life is really simple, but we insist on making it more complicated.”