Saturday, December 03, 2005

Looking Beyond Your Nose

12/4/05 Looking Beyond Your Nose

John Dugan, Controller of the Currency: "Many payment-option-ARM borrowers calculate that they will be able to sell their property or refinance the mortgage by year six. But if real estate prices decline – and there already is evidence of softening in some markets – these borrowers could face the bleak prospect of loan balances that exceed the value of the underlying properties. In that case, selling the property or refinancing the loan would not be a viable escape valve for avoiding huge payment shocks.
In these circumstances, do consumers really understand the potential consequences of the neg am feature inherent in a payment-option ARM? Is this an appropriate product to mass market to customers who may be looking at the less than fully amortizing minimum payment as the only way to afford a larger mortgage – at least for the five years before the onset of payment shock?"

Robert Frost: " He burned his house down for the fire insurance and spent the proceeds on a telescope. "

Is Bush aware that, since his taking office in Jan. 2001, total government purchases (Federal, state, and local) have risen by 16.15%, while Federal government purchases have increased by 29.68%? Bush has not vetoed one spending bill.

Henry David Thoreau: "The question is not what you look at, but what you see."

Since we invaded Iraq in March 2003, at least 2,120 of our fighting men and women have been killed.

The aging of our population is one of the most important trends in today's U.S. society. According to a new report from the Congressional Research Service, "Income and Poverty Among Older Americans in 2004," one senior in 10 lives in poverty. The bad news is that the poverty threshold for a single person 65 or older is $9,060 a year. For a couple, the figure is $11,418.
The Current Population Survey done by the Census Bureau reports income of individuals, not households. It states a person 65 or older is in the top 25 percent of all seniors with an income of only $26,777. They're in the top 50 percent with an income of only $15,199. That news should make everyone sit up and take notice.

Japan's NEC Electronics Corp. has developed a technology to make advanced microchips with circuitry width of 55-nanometres, or billionths of a meter, the Nihon Keizai Shimbun business daily said on Sunday.
Intel stated on Thursday it would build a 45-nanometre chip factory, which would cost more than $3.5 billion, in Israel -- its second such plant after one being built in Arizona.

How do we know that the recent large purchases of U.S. treasury bonds by the UK and the Caribbean do not mask, at least in part, the Federal Reserve making a portion of these buys?

Aristotle: "The soul never thinks without a mental picture."

Get Real

12/3/05 Get Real

On November 8, Palatin released its sales and earnings for the quarter ended 9/30. Due to less than anticipated revenue generation from NeutraSpec, some analysts and shareholders were disappointed and the shares fell back towards the $2 level where my purchase of stock occurred nine months prior. (The market cap was $100 million.) I mentioned that I never invested in Palatin because of NeutraSpec. I invested for the company's potential in male and female sexual dysfunction with PT-141 and in the field of weight control. In theNov. 8 release, Palatin stated "For the quarter ended September 30, 2005, royalty revenue on Mallinckrodt's commercial sales of NeutroSpec amounted to $916,000, compared to $578,000 in the quarter ended June 30, 2005 and $327,000 in the quarter ended September 30, 2004. In the current period, the Company recorded no product sales revenue from shipments of NeutroSpec to Mallinckrodt, compared to $416,000 for the quarter ended September 30, 2004."
In the prior quarter that ended June 30, Palatin reported 0.8 million in product sales and 0.6 million of royalty revenues related to NeutraSpec, a proprietary radiolabeled monoclonal antibody approved by the FDA for imaging and diagnosing equivocal appendicitis in patients five years and older. "A NeutroSpec® image allows a physician to more rapidly obtain diagnostic information that supports patient management decisions. In Phase 3 clinical trials, 90% of positive appendicitis cases were diagnosed within just one hour. The preparation is simple to produce and can be done by any qualified radiopharmacy." The product is distributed by TycoHealthcareMallincrodt. Yesterday afternoon at 3:28 EST the two companies released the following information:
"The companies have received reports of several patients with severe underlying cardiopulmonary co-morbidities who experienced life-threatening or fatal reactions soon after NeutroSpec was administered. No causal relationship has been established. The occurrence of these reactions is rare and has only been observed in patients receiving NeutroSpec for off-label indications."(Off-label uses are uses not approved by the Food and Drug Administration.) Within the next half-hour of trading the stock declined about 20% or almost $40 million in market value. Let's get real. For the last two quarters, product and royalty income of NeutraSpec only amounted to $2.3 million. I can't make it any clearer.

Year-to-date, M3 has expanded at a 7.4% rate and now exceeds a record $10.1 trillion. Meanwhile, real estate loans have surged to almost $2.9 trillion, or close to twice the Fed foreign holdings of Treasury, Agency debt.

You think inflation is under control? Copper is at a record high. Gold is at a 22-year high, silver at an 18-year high, aluminum at a 16-year high, zinc is at a 15-year high, and my old favorite sugar is at a 10-year high. These highs have helped the Goldman Sachs Commodities Index to rise 40% in 2005. Get real. Inflation is alive and well. The core inflation rate is for economists only. They don't pay the bills. They are too busy making speeches. Their wives pay the bills.

Barry Ritholtz: "The structural problems are quite real. Whether its Gold at $505, or the incredible minus 1.5% savings rate for Q3, or any one of a dozen other problems out there, we have a developing situation. Understanding it, preparing for what will eventually come, looking for signs that the cracks in the foundation are getting worse is the only prudent thing to do."

Friday, December 02, 2005

Changing Landscape

12/2/05 Changing Landscape

Toyota's November sales rose 5.6% to 169,665, its best-ever for the month of November.
Year-to-date comp sales are up 10.3%. Meanwhile, for the month of November, Ford's U.S.
sales declined 15%, GM's 11%, and Daimler Chrysler's 3%.

Equity options volume for November reached 136,197,319 contracts, 29.18% higher than November last year and also the second highest month on record for equity options following October. Year-to-date equity options trading volume is up 25.9% over the same period a year ago.

Gold closed at $502.50 an ounce.

In viewing the employment numbers this morning, it is a good idea to compare apples with apples. In other words, comp hiring gives a better look at the trend. For example, Coach opened about 25 new stores in 2005. Last year the company hired 3,000 holiday seasonal workers. This year Coach added 3,500 seasonal workers. We can visit the numbers at Wal-Mart, Target, Best Buy, etc. and it would provide a similar comparison. Therefore, it's important to look beyond the headline number. In addition, attention should be addressed towards the average hourly earnings, hours worked, and overtime hours, and compare those results with the current inflation rate, and not just the core rate.

People wonder where the money is coming to spur holiday spending. It results from refinancing cash-outs, home equity lines of credit, and credit card debt. The money is not coming from current savings, which is running in negative numbers.

Eric Hoffer: "The hardest arithmetic to master is that which enables us to count our blessings."

Home Depot announced the purchase of Petaluma, California's Yardbirds Home Center and its 10 Bay Area stores, ending 30 years of independent ownership for the local chain.

In November, nonfarm payrolls rose by 215,000, of which 165,000 were service jobs. Before you get too excited, total hours worked fell 0.1%, the average workweek fell by 0.1% of an hour to 33.7 hours, and average hourly earnings rose by 3 cents or 0.2% to $16.32. That means earnings continue to trail inflation. In addition, the average workweek in manufacturing declined
to 40.8 hours from 41 hours.

The Financial Times reports that three groups of bidders are this weekend expected to put the final touches on offers to take over Albertson’s. The paper stated the consortia, which mostly include private equity firms, are facing a deadline of Tuesday to enter bids for the entire company. At yesterday's closing price of $23.71, the risk/reward looks like an excellent one to me.

The Nikkei is trading at a 5-year high.

The WSJ reported that Ford Motor Co. is likely to close five plants that employ about 7,500 workers, or about 6 percent of the company's North American workforce.

Calpine Corp. stated yesterday it might consider filing for bankruptcy and there was a "substantial risk" it might not have enough money to pay its debts or keep operating.

This morning light, sweet crude for January delivery gained 35 cents to $58.82 a barrel in electronic trading. This level remains 17% below th high reached in late August.

Yesterday was the first time that shares of Hughes Supply ever closed at $39 or above.

Christine Khemis, a nationally ranked long-term care specialist and Partner
of LTC Financial Partners LLC, the nation's leading long-term care insurance
brokerage, observed as the population ages, homeowners
and real estate professionals face a challenge: meeting the special needs of
people who can't take care of themselves--things like making bathrooms
wheelchair-accessible, or creating space for hired care workers.

Walgreen's November same-store sales rose 7.8%. This company just keeps churning out
numbers-- month after month,year after year,and decade after decade.

GM estimated that it would build 1.25 million vehicles in North
America during the first quarter of 2006,up 6% from the same period
this year.

Robert Louis Stevenson: "To know what you prefer instead of humbly saying Amen to what the world tells you ought to prefer, is to have kept your soul alive."

Thursday, December 01, 2005

Make My Day

12/1/05 Make My Day

Scott Krugman, a spokesman for the National Federation of Retailers, said, "it wouldn't be terribly surprising, given the deep discounts that retailers are running this year," if the amount spent on self-giving were to "go up a little bit" this year. A new trend may be developing where consumers are buying more for themselves during the holiday season.

Joel Kier, interim CEO at Fortunoff, a NYC jewelry and home furnishings chain, stated "a lot of people are saying, 'I earned it, baby,' " Mr. Kier said. "Women are better shoppers at this time of year. They're more skilled at identifying value. So they're saving money and spending it on themselves."

According to the WSJ, three private equity firms have formed an alliance to consider buying newspaper publisher Knight Ridder Inc. I'll sit by the sidelines.

"The weather that's coming at us now is earlier than we'd anticipated," said Ed Silliere, vice president of risk management at Energy Merchant.

Yesterday, the build in distillate inventories — which include heating oil and diesel — was greater than traders had anticipated, but the decreases in crude and gasoline inventories were unexpected.

Even though the Dow got clipped yesterday, the Russell 2000 Small Cap Index rose 3 1/2%
on heavy volume.

The Commerce Department stated the GDP rose at a 4.3 percent annual rate in the July-September quarter. Unfortunately, the folks on Main Street continued to see their wages trail the inflation rate. Something is wrong with this picture. The personal savings rate in October was a negative 0.7%. In September it was a negative 0.8%.

Fannie Mae and Freddie Mac have raised the size of single-family home loans they will buy next year by $57,350, or 16 percent, to $417,000. That's not chicken feed. China may place an order for Airbus A320 planes during Wen's visit to France.
Airbus has recorded orders for 66 planes this year in China valued at $8.3 billion, compared with 122 aircraft valued at $11.7 billion by Boeing.

Alan Greenspan: "History has not dealt kindly with the aftermath of protracted periods of low risk premiums."

The U.S. dollar is above 120 yen for first time since August 2003. That sure makes me look stupid and poorer. That places it in the same league as my Dell/HP hedge.

European interest rates rose by 1/4% to 2.25%, the first hike in 5 years.

Yesterday morning Albertsons was trading firmly at $24+ and then an article was released by Reuters written by Michael Flaherty. He wrote that "private equity firms Bain Capital, Thomas H. Lee Partners and Warburg Pincus are losing interest in their joint bid for grocer Albertsons Inc. with the deal's price tag among their worries, according to three people ivolved in the auction... As for Albertsons, CIBC analyst Perry Caicco estimates the struggling chain, which is under serious pressure from discounters, could sell at 7.15 times EBITDA, assuming a $30-per-share price tag. The stock was trading at $23.84 at midday on Wednesday.
Other analysts say the overall price for Albertsons could be around $16.5 billion, including $6.5 billion in debt, which would make it the second-largest leveraged buyout ever."
It has been pointed out in many articles that there are many potential interested parties for Albertsons. From the beginning, I felt a fair price for the buyers and sellers was at least $31. If that level or another level scares off a buyer or two, so be it. After the article came out, Albertsons declinedto $23.50. In my opinion, it offers an outstanding risk/reward value. If others disagree, they should cut and run. I believe Albertsons will accomplish its mission to deliver optimum returns to its shareholders. Their exit plan, handled by Goldman Sachs and the Blackstone Group, should have a pleasing outcome.

Abercrombie & Fitch Co. today reported net sales of $251.2 million for the four-week period ended November 26, 2005, a 34% increase over last year's November sales of $188.0 million. November comparable store sales increased 23% compared with the four-week period ended November 27, 2004. Year-to-date, the Company reported a net sales increase of 36% to $2.075 billion from $1.522 billion last year. Comparable store sales increased 24% for the year-to-date period. WOW!!!!

On a year-to-date basis, for the ten months ended November 26, 2005 compared to the ten months ended November 27, 2004, company-owned comp sales for the Saks Fifth Avenue division of Saks rose 4.2%. For the four weeks ended November 26, 2005 compared to the four weeks ended November 27, 2004 they declined 2.3%. Categories with the best sales performances for SFAE in November were women's and men's contemporary sportswear, women's "gold range" apparel, and men's shoes. Categories with the softest performances for SFAE in November were private brand, women's bridge apparel, evening dresses, and Salon Z (women's large sizes).

Make My Day

12/1/05 Make My Day

Scott Krugman, a spokesman for the National Federation of Retailers, said, "it wouldn't be terribly surprising, given the deep discounts that retailers are running this year," if the amount spent on self-giving were to "go up a little bit" this year. A new trend may be developing where consumers are buying more for themselves during the holiday season.

Joel Kier, interim CEO at Fortunoff, a NYC jewelry and home furnishings chain, stated "a lot of people are saying, 'I earned it, baby,' " Mr. Kier said. "Women are better shoppers at this time of year. They're more skilled at identifying value. So they're saving money and spending it on themselves."

According to the WSJ, three private equity firms have formed an alliance to consider buying newspaper publisher Knight Ridder Inc. I'll sit by the sidelines.

"The weather that's coming at us now is earlier than we'd anticipated," said Ed Silliere, vice president of risk management at Energy Merchant.

Yesterday, the build in distillate inventories — which include heating oil and diesel — was greater than traders had anticipated, but the decreases in crude and gasoline inventories were unexpected.

Even though the Dow got clipped yesterday, the Russell 2000 Small Cap Index rose 3 1/2%
on heavy volume.

The Commerce Department stated the GDP rose at a 4.3 percent annual rate in the July-September quarter. Unfortunately, the folks on Main Street continued to see their wages
trail the inflation rate. Something is wrong with this picture. The personal savings rate in October was a negative 0.7%. In September it was a negative 0.8%.

Fannie Mae and Freddie Mac have raised the size of single-family home loans they will buy next year by $57,350, or 16 percent, to $417,000. That's not chicken feed.

China may place an order for Airbus A320 planes during Wen's visit to France.
Airbus has recorded orders for 66 planes this year in China valued at $8.3 billion, compared with 122 aircraft valued at $11.7 billion by Boeing.

Alan Greenspan: "History has not dealt kindly with the aftermath of protracted periods of low risk premiums."

The U.S. dollar is above 120 yen for first time since August 2003. That sure makes me look stupid and poorer. That places it in the same league as my Dell/HP hedge.

European interest rates rose by 1/4% to 2.25%, the first hike in 5 years.

Yesterday morning Albertsons was trading firmly at $24+ and then an article was released by Reuters written by Michael Flaherty. He wrote that "private equity firms Bain Capital, Thomas H. Lee Partners and Warburg Pincus are losing interest in their joint bid for grocer Albertsons Inc. with the deal's price tag among their worries, according to three people involved in the auction... As for Albertsons, CIBC analyst Perry Caicco estimates the struggling chain, which is under serious pressure from discounters, could sell at 7.15 times EBITDA, assuming a $30-per-share price tag. The stock was trading at $23.84 at midday on Wednesday.
Other analysts say the overall price for Albertsons could be around $16.5 billion, including $6.5 billion in debt, which would make it the second-largest leveraged buyout ever."
It has been pointed out in many articles that there are many potential interested parties for Albertsons. From the beginning, I felt a fair price for the buyers and sellers was at least $31. If that level or another level scares off a buyer or two, so be it. After the article came out, Albertsons declinedto $23.50. In my opinion, it offers an outstanding risk/reward value. If others disagree, they should cut and run. I believe Albertsons will accomplish its mission to deliver optimum returns to its shareholders. Their exit plan, handled by Goldman Sachs and the Blackstone Group, should have a pleasing outcome.

Abercrombie & Fitch Co. today reported net sales of $251.2 million for the four-week period ended November 26, 2005, a 34% increase over last year's November sales of $188.0 million. November comparable store sales increased 23% compared with the four-week period ended November 27, 2004. Year-to-date, the Company reported a net sales increase of 36% to $2.075 billion from $1.522 billion last year. Comparable store sales increased 24% for the year-to-date period. WOW!!!!

On a year-to-date basis, for the ten months ended November 26, 2005 compared to the ten months ended November 27, 2004, company-owned comp sales for the Saks Fifth Avenue division of Saks rose 4.2%. For the four weeks ended November 26, 2005 compared to the four weeks ended November 27, 2004 they declined 2.3%. Categories with the best sales performances for SFAE in November were women's and men's contemporary sportswear, women's "gold range" apparel, and men's shoes. Categories with the softest performances for SFAE in November were private brand, women's bridge apparel, evening dresses, and Salon Z (women's large sizes).

Tuesday, November 29, 2005

Let's Take A Close Look

11/30/05 Let's Take A Close Look

The Commerce Department reported that new home sales rose by 13 percent in October to a record 1.424 million annual rate, but the report also showed that home prices were not rising at quite the same pace -- up 1.6 percent -- and the number of homes still on the market reached a record 496,000.

New orders for durable goods in October rose by 3.4 percent. The main reasons for the upswing were transportation orders, including a 140.4-percent increase in defense aircraft orders, and a 50.4-percent rise in nondefense aircraft orders, although orders for motor vehicles fell by 2.2 percent. October orders outside the transportation sector rose by just 0.3 percent, falling short of forecasts for 1.0 percent increase.

Palatin Technologies, Inc. announced that it will present at the Lazard Capital Annual Life Sciences Conference at 1:00 p.m. Eastern Time on Wednesday, November 30, 2005 at The New York Palace Hotel in New York City. Carl Spana, Ph.D., President and Chief Executive Officer of Palatin Technologies, will provide an update on the Company's commercial and development programs.

Lao Tzu: "Be gentle and you can be bold. Be frugal and you can be liberal. Avoid putting yourself before others and you can become leader among men."

U.S. consumer confidence rebounded strongly in November as gasoline prices retreated, the Conference Board said Tuesday. The consumer confidence index jumped 13.7 points to 98.9 in November from 85.2 in October. It was the largest jump since just after the invasion of Iraq in 2003. "The shock of the hurricanes and subsequent leap in gas prices has begun wearing off just in time for the holiday season," said Lynn Franco, director of consumer research at the private research organization. The present situation index rose to 114.0 in November from 107.8 in October. The expectations index surged to 88.8 in November from 70.1 in October.

Frontier Airlines stated it may not be able to secure financing for new aircraft, meet debt payments or follow through with expansion plans.

January crude settled down 86 cents at $56.60, the lowest close for that contract since June 8. The price has lost 6.3% since the end of October and 19% since the end of September.

The Postal Service will deliver 20 billion letters, packages and cards
between Thanksgiving and Christmas, with the busiest mailing day expected to
be Monday, Dec. 19, with more than 280 million cards and letters being
cancelled -- more than twice that of an average day. Total mail volume on Dec.
19 is expected to rise to 900 million pieces of mail, up from 670 million
pieces on an average day.

Joseph Phelps Vineyards' 2002 Insignia has been ranked the #1 Wine of the Year in the Wine Spectator's year-
end review of the top 100 wines tasted in 2005. Marvin R. Shanken, Wine
Spectator's editor and publisher, explains that 12,400 wines from around the
world are blind tasted and narrowed down to a thousand, then a hundred, then
the top 10. The honor is well deserved. If you are in the Napa Valley, I strongly
suggest you visit this winery. The setting is truly beautiful and incredibly
peaceful. Even though I do not drink, I appreciate the quality of the
staff and their talents.

Temple-Inland Inc. said late Tuesday it plans to further reposition the mortgage origination activities
within its Guaranty Bank subsidiary, cutting 250 jobs.

President Bush: "
This country must never forget the
lessons of September the 11th, 2001. And a victory in Iraq will deny the
terrorists their stated goal." I never thought there was a direct connection between
9/11 and Iraq. Did terrorists from Iraq fly into the Twin Towers?

Benjamin Disraeli: "Never apologize for showing feeling. When you do so, you
apologize for the truth."










Winter Has Arrived

11/29/05 Winter Has Arrived

Temperatures are dropping, and the housing market is cooling. October’s existing-home sales fell 2.7% to an annual rate of 7.09 million from Sept.'s revised 7.29 million, despite heavy selling in areas hit by Hurricane Katrina, the National Association of Realtors said. Without storm-related sales, the drop would have been 3.2%. The inventory of unsold homes rose 3.5% to 2.87 million, the most in 19 years. It amounted to a supply of 4.9 months and 16.3% higher than a year ago.

Ameriquest Mortgage is cutting 1,500 employees from its payroll or about 10% of its workforce.

Gold topped $500 an ounce and platinum traded over $1,000.

As of Monday, at least 2,107 members of the U.S. military had died since the beginning of the Iraq war in March 2003, according to an Associated Press count.

Delphi postponed a plan to petition bankruptcy court to void labor contracts.

Ford is cutting the workforce at Volvo Cars by 5.3%.

One of the top-selling items this holiday season is cashmere. That spells good news for walmart.com (the company sells its cashmere sweaters etc. online only) and for Saks Fifth Avenue. The latter has featured cashmere for the holidays. Comp sales at
Saks Fifth Avenue could comfortably exceed analyst expectations. For anyone in NYC over this Thanksgiving weekend, you would have seen incredible crowds jamming into the company’s flagship store on Fifth Avenue.

After the weekend article in Barron’s, Palatin rose to $4.03 on record daily trading volume exceeding 6 million shares. A short mention was made of the company’s efforts
in the management of weight control. It might have been helpful to note the findings in the Nov. 4, 2005 issue of the journal Cell. The findings demonstrate for the first time that the neuronal pathways that help to keep body weight stable diverge at the melanocortin-4 receptor (MC4R) to regulate either food intake or energy expenditure. The link is
http://www.researchmatters.harvard.edu/story.php?article_id=968.

A big beneficiary of the post-hurricane rebuilding effort will be Hughes Supply. Their recent 8-K filing reflects benefits for 18 top officers in the case there is a change of control. I believe the company’s shares offer an unusual value for holiday shoppers. There is no question in my mind that the recently-formed Special Committee of the Board will use its efforts to maximize value for the shareholders.

Inc. Magazine has chosen Ms. Ping Fu as the entrepreneur of the year. Ms. Fu is the President and CEO of Raindrop Geomagic.

Stephen Roach: “The capitalization of the Dubai and Abu Dhabi equity markets, combined, is now around US$200 billion -- up dramatically from less than $15 billion in 2000.”

Nouriel Roubini: “In 2006 the structural medium term factor that will tend to weaken the dollar - the large and growing US current account deficit - will reassert its role while the short term cyclical factors that have lifted the dollar this year will tend to weaken their effect. So, at the end you cannot fight the laws of gravity as the cyclical forces that have defied such gravity are temporary while the forces that will cause a gravitational fall of the US dollar are as strong as ever.”

More than 330-miles of Interstate 70 was closed Monday because of poor visibility due to blowing snow from the Denver area east to Russell, Kansas. The South Dakota Highway Patrol shut down a 175-mile stretch of I-90 on Monday from Kadoka to Mitchell. In central Nebraska, a 60-mile stretch of I-80 was closed Monday from North Platte east to Lexington. Numerous other highways were closed across the Plains.
The National Weather Service posted blizzard warnings for parts of Colorado, Kansas, Nebraska and South Dakota. A winter storm warning was issued for parts of North Dakota and Minnesota. One can expect many future winter storms for a good portion of the United States. We will have to wait and see what impact those storms will have on energy supplies and heating bills. Prudence dictates that this will be a highly variable winter capable of some major storms from time to time.

Chain store sales fell 0.7 percent in the week ended November 26, compared with 1.0 percent rise the previous week, the International Council of Shopping Centers and UBS said in a joint report. But compared with the same week a year ago, sales grew to 5.1 percent.

Victor Hugo: “Laughter is the sun that drives winter from the human face.”

Monday, November 28, 2005

Holiday Specials

11/28/05 Holiday Specials

With 145 million shoppers hitting the stores over the Thanksgiving holiday weekend, and with heavy promotions offered by many stores, weekend sales rose 22% to $27.8 billion, up from $22.8 billion spent in 2004, according to a National Retail Federation survey released Sunday. The group had projected that 130 million consumers would be out shopping. The average shopper spent $302.81 last weekend, according to a telephone survey done for the NRF by BIGresearch. The federation has projected average total spending for the holidays at $738.11, or a total of $439.5 billion.

John Hussman: “The current market condition is extremely overbought, and the constellation of internal divergences and interest-rate action has “whipsaw” written all over it.”

Today is the 60th trading day since Albertsons announced seeking strategic alternatives. Basically, the stock has traded between $23 and $26 a share. About 40% of the time, the stock traded between $25 and $26 and almost 40% of the time between $24 and $25. On Friday the stock closed at $23.99. In sum, the stock has been marking time. We are approaching the cut-off date for bids from interested parties. At current levels, I believe the shares offer an unusual holiday value. I’d rather do my shopping here than in the malls.

Gold last traded above $500 an ounce on Dec. 11, 1987. Newmont’s CEO predicted that gold may rise to more than $1,000 an ounce in the next five to seven years.

Monetary and credit growth continue to exceed GDP growth. That powerful one-two punch has done wonders for asset prices—in particular, housing and equities. It is rather interesting that the monetary presses remain revved while no attempt is made at repair and maintenance. That operating policy can only lead to the machinery breaking down. The longer it goes the greater the feeling that the machinery is indestructible. The last time I checked the machinery did not carry a warranty.

After hurricanes Katrina and Rita, some PVC production plants in the Gulf Coast area remained off-line, which sent prices skyrocketing, construction industry officials stated. In the last two months, contractors have reported that prices for PVC have jumped between 20 percent and 100 percent higher than pre-hurricane levels.

From today’s Newsday on Palatin: “PT-141 will not just fix the plumbing as vascular drugs do, it promises to renovate the entire kitchen. Based on the compound Melanotan II, PT-141 has the ability to light up the nervous system like a Christmas tree in December, and it may be available as soon as 2007…PT-141 conjures up an image of a grinning, love-stunned population wandering around in a haze of desire. The hundreds of rats and the 300 men who have already participated in the clinical trials are reportedly over the moon. They say it makes them hum. It's a 21st century Love Potion No. 9.” You gotta love this!

Merck announced the elimination of 7,000 jobs by the end of 2008 and the close or sale of 5 of its 31 manufacturing plants.

The dollar hit a 27-month high against the yen and two-year high versus sterling today.