Saturday, November 25, 2006

The Narrowing Exit

11/26/06 The Narrowing Exit

Alfred Hitchcock: "There is no terror in a bang, only in the anticipation of it."

While shoppers focus on holiday bargains, it might be wise to focus on leftovers. Think of your dollars as leftovers-- what's left after depreciating against other major
currencies and hard assets, such as, gold, and what remains after decades of excessive gov't spending and the Fed printing excessive amounts of dollars, which helps to create inflation as well as depreciating the value of our currency.

Brett Steenbarger: "Investors Intelligence shows us as having 58.5% bulls, 22.3 bears. That's the most bullish sentiment ratio we've seen during 2006. Meanwhile, the dollar is just plain ugly. Equity investors don't seem too worried about the dollar at this point. Not with a VIX that recently hit decade-level lows.
With the massive amount of dollars held in reserves around the world, will countries want to be invested in a depreciating asset? And what happens if there's a sudden rush for the doors and the dollar goes into freefall? "

Wal-Mart estimated that November sales fell 0.1 percent at its U.S. stores open at least a year. The company had expected same-store sales to be flat compared with the same period last year.

Doug Noland: "Total Money Market Fund Assets, as reported by the Investment Company Institute, jumped $23.2 billion last week to $2.311 Trillion. Money Fund Assets have increased $254 billion y-t-d, or 13.7% annualized, with a one-year gain of $281 billion (13.8%). It is also worth noting that Money Fund Assets have expanded at a 22.7% rate over the past five months."

Peter Schiff: "While Americans were busy digesting their Thanksgiving feasts, the rest of the world was barfing up dollars. As a result of our massive trade deficits, foreigners certainly have their bellies full of them. This week's action in the Forex markets indicates that they may have finally eaten their fill. Unfortunately, the bad taste will likely linger as the dollar's rout has only just begun."

Stock market gains year to date: Mexico 39%, India 46%, Russia 53%, China 76%.
Meanwhile, platinum is up 33% and copper 68%.

Dr. Janice Dorn: " Life is not about what happens to you. It is about who you are."

The Bank of Korea raised reserve requirements on banks for short-term deposits for the first time in almost 17 years. The move was aimed at curbing lending. Can you
see our Fed doing this?

Benjamin Disraeli: "What we anticipate seldom occurs; what we least expected generally happens."

Venezuelan state oil company PDVSA on Saturday said an "operational event" had affected a unit of the 640,000 barrel per day (bpd) Amuay refinery. A Venezuelan newspaper on Saturday reported there had been an explosion at the facility.

Mike Shedlock: "Eventually, overall credit will start contracting, regardless of what the Fed says or does, and the wizards behind the curtain will be exposed for the frauds that they are. This means that the Fed is going to be as out of control of the upcoming credit contraction as it was of the preceding credit expansion. It is the end of the line for the Fed, and contrary to popular belief, open market operations are not going to hold things together."

Friday, November 24, 2006

The Dollar

11/25/06 The Dollar

The euro topped 1.30 for the first time since April 2005. With the weak dollar, it is not surprising for gold to rally to $639 and for oil to find support just below the $60 a barrel level. The dollar made a 3-month low versus the yen, 5-month low versus the Swiss franc, and almost a 2-year low versus the pound. This is occurring with rates rising in euroland, Japan, and England. That's what makes the dollar weakness all the more significant. Will it shake the complacency in the U.S. equity market? Much depends on the risk factor and the appetite for derivatives. Just don't get stuck with too many turkeys in your portfolio.

Hong Kong's Orient Overseas International has agreed to sell its four North American container terminals to a consortium led by the Ontario Teachers' Pension Fund for $2.4bn cash, in a deal that creates a new high in valuations in the suddenly fashionable ports sector.
The price values the four terminals – two in the port of New York/New Jersey and two in the Canadian Pacific coast port of Vancouver – at 20 times annual earnings before interest, tax, depreciation and amortisation.

Wal-Mart won approval for offering bank accounts in Mexico.

Oil rose after a report that Eni SpA halted delivery of some Nigerian crude because of a militant attack. Rome-based Eni declared force majeure at the Okono/Okpoho offshore oil field, Dow Jones Newswires reported,

On a very slow and shortened Friday trading day I found a few items of note.
BJ Services, which closed around $32, has an open interest on the January
$35 calls of 11,000 contracts. On Friday, 3045 contracts traded and they closed
at 80 cents.
A few standouts were Apple, Research-in-Motion, and Gamestop as they powered to new highs in a weak market.

I have one further thought. While the dollar index was breaking down to the 83.60 level, treasury bond yields continued to decline with the yield curve heavily inverted.
It is difficult for me to imagine how a falling dollar can be accompanied by lower treasury yields. To me, this is ass backwards-- especially with global rates moving higher.

"The evidence is very persuasive that lowering homocysteine with folic acid will lower your risk of heart attack and stroke by about 10-20 percent," David Wald, of the Wolfson Institute for Preventive Medicine, Barts and the London, Queen Mary School of Medicine and Dentistry in London, said in an interview.
Folic acid is a synthetic compound of folate, a B vitamin found in green leafy vegetables and liver. Women are advised to take folic acid before conceiving and during the early months of pregnancy to prevent neural tube disorders such as spina bifida.
Homocysteine is thought to increase the risk of cardiovascular disease by damaging the inner lining of arteries.

Thursday, November 23, 2006

Further Developments

11/24/06 Further Developments

Jerry Colangelo, chairman of the NBA's Phoenix Suns and former owner of both the Suns and baseball's Arizona Diamondbacks, said Wednesday he has had preliminary discussions with unspecified other people who share his interest in buying the Cubs, whose owner is the Tribune Co. Make no mistake, in my view, the parts of Tribune are worth significantly more than selling this company as a whole. If tax strategies can be worked out, that's the way to go for the shareowners.

RTX introduced DUALphone 3088 which can be used as a normal telephone as well
as for calling via Skype(TM) - without a PC. The new DUALphone helps people
to save money on their phone bill and gives them more flexibility when
using Skype.

From Daily Reckoning: "So, let’s look at Google as a publishing business. Roughly, it has a market cap of more than $150 billion, revenues of $10 billion, and profits of $2.8 billion. A very nice company...but what is it worth? If you project recent rates of growth into the future, it could be worth $500. If profits were to double...and double would be trading at a reasonable multiple of earnings. But if earnings don’t go up 300%, it is over-priced.
What’s more, as a publishing business, Google has a major flaw - it has no firm connection with its readers. People do not think of themselves as ‘Google customers,’ the way they often identify themselves with a local paper, a newsletter, a magazine, or even a website. For example, many people are actually proud to be New York Times readers (if you can believe it). Google is largely invisible, like a pane of glass. It does not ‘own’ its customers. Instead, customers will desert it - as they did Yahoo - as soon as something newer, better, and faster comes along. Then, Google will be yesterday’s news."

Gedex is a private company incorporated in 1999 and headquartered in Toronto, Canada. Gedex's next generation gravity gradiometer system provides images of subsurface density that, independently and in conjunction with other data, provide valuable information in exploring for and delineating subsurface resources.
The 170 year old Mining Journal's first-ever award for mining research was given to Gedex for building groundbreaking airborne surveying systems capable of "seeing" 12 kilometres (eight miles) beneath the earth's surface to identify oil, gas, minerals and precious metals invisible to current systems.
The award to Gedex Inc. was adjudicated by an international panel of
experts, who cited Gedex for "primary research that is expected to have the
most significance for mining and mining equipment in the future."

Chinese President Hu Jintao is in Pakistan for a four-day visit expected to re-inforce ties between the two long-time friends.

Jim Rodgers: "And let me remind you of one more important difference between commodities and stocks: Commodities cannot go to zero, while shares in Enron can (and did)."

Air France-KLM is in exploratory talks with Alitalia that could lead to an eventual takeover of the loss-making, partly state-owned Italian flag carrier.

Kirk Kerkorian made a really smart move by selling part of his GM stake at $33. The buyers must be looking for a tax loss.

John Mauldin: "The average hedge fund is no different from the average stock. On a good day, it will probably lose money for its owners. On a bad one, it will wipe them out.”

US President George W Bush's special "fast-track" authority to negotiate trade deals expires next year. After 30 June 2007, the US Congress will once more have the right to change or veto any agreement that Mr Bush signs.

Bill Bonner: “So, we give you our first general rule: you will do better investing privately than you will investing along with the public. Why is that? Because, a private investor is more likely to know what he knows and what he doesn’t. And by getting close to his investments - by really knowing the industry and the business - he is able to eliminate some of the unknowns and make a better decision. Generally, that means he pays less for his investments and works harder to get them.
“And now, another rule - the further you get from the facts and from the consequences of any action, the worse the results. This is true for individuals as it is for groups."

The euro hit a five-and-a-half month high against the dollar on Thursday after a strong German business sentiment reading gave the single currency a boost. In addition, the dollar hit a 2-month low versus the yen.

Members of the Organization of Petroleum Exporting Countries are leaning towards a further output cut when the group next meets Dec. 14 in Nigeria, Iran's OPEC governor said Wednesday.

Wednesday, November 22, 2006


11/23/06 Risk

We have been extremely fortunate in 2006. Unlike the horrific hurricane season in 2005, this year the storms have been relatively benign. This has not been lost on the insurance industry. Does that mean that risk has disappeared and that complacency is our meal ticket?
Risk Management Solutions (RMS) reaffirmed its medium-term five-year view of landfalling hurricane risk for the period of 2007-2011. The company is projecting higher modeled annualized insurance losses by 40% on average across the Gulf Coast,
Florida, and the Southeast, and by 25-30% in the Mid-Atlantic and Northeast
coastal regions relative to those derived using long-term 1900-2006
historical average hurricane frequencies. A key driver of the current elevated view of landfalling hurricane risk is an increase of more than 30% in the modeled frequency of major (Saffir-Simpson Category 3-5) hurricanes making landfall in the U.S., to
account for current elevated levels of hurricane activity in the Atlantic basin that are expected to persist for at least the next five years. The increased frequency and intensity of hurricane activity in the Atlantic Ocean Basin, as observed since 1995, are driven by higher sea surface temperatures in the tropical North Atlantic and by associated changes in atmospheric circulation. In addition, the experts also reaffirmed that the "increase in activity of the most severe Category 3-5 hurricanes will be higher than the increase in Category 1-2 storms, based on the high likelihood of warmer
than normal sea surface temperatures in the tropical Atlantic."

The major market indices have been ignoring the inverted yield curve for the majority of 2006. Cheap money has fueled speculative borrowing and the equity market has chowed down on this meal. Is it a meal for the long-term? If you look at the VIX trading under $10, it is quite apparent complacency rules the day.

Then there are the massive amounts of buyouts. The private equity crowd is coining it.
Financial engineering works best when money is really cheap- like now. Will that continue? No one rings a bell.

comScore Networks released the first in a series of reports that measure consumers' online non-travel (retail) spending during the 2006 holiday season, which began November 1, 2006. During the first 19 days of November this year, total online retail spending reached $6.35 billion, marking a 23-percent increase versus the corresponding days in 2005.

The dollar tumbled to a three-month low against the euro and a three-week low versus the yen Wednesday.

The number of people collecting unemployment benefits climbed by 14,000 in the week ending Nov. 11, to 2.45 million, the Labor Department said.

The Consumer Federation of America and the Credit Union National Association found 32 percent of shoppers want to spend less than they did during the 2005 holidays. About half of the survey's roughly 1,000 respondents said they would like to spend about the same. Only 15 percent intended to spend more. Maybe lower prices at Wal-Mart will open the pocketbooks of these consumers.

Mark McMillan: "Many traders seem to try to predict tops and bottoms from the level of the VIX or the VXN. We don't believe that it is possible to predict the bottoms or tops from the levels. We do believe that they are a useful indicator that should be monitored at extremes and for patterns. It is the reversals from when these indicators are overextended that tops or bottoms can be successfully traded, and all traders should be aware of their usefulness as an auxiliary indicator."

Richard Daughty: "But if you want to see something really, really eye-popping, then Savings/Other Deposits in the banks is the place to go, as they were up an astonishing $228 billion last week! In one week! This is huuuUUUuuuuge! A quarter of a trillion bucks appeared like magic in accounts at the banks! In one week! I guess this must be the arrival of the temporary Treasury accounts money that was recently authorized. But wow!
My breath comes in ragged gasps and my heart spasms involuntarily at the potential ramifications of the banks instantly having another huge $228 billion glob of deposits to tap into, to make new loans, enrich themselves, cause price inflation and increase indebtedness to finance a boom.
And I am positively woozy at the thought of this money multiplied by the almost-zero fractional reserve requirement of banks, as they now are required to hold less than one-percent of the total of bank deposits or marked-to-market assets as reserves against any new loans. Truly, I am aghast and terrified at this astonishing, astonishing, and (did I say "astonishing"?) astonishing amount of money flooding the banks."

JFK: "As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them."

Tuesday, November 21, 2006


11/22/06 Developments

U.S. Military Migrating to Stratos Optical Fiber Optic Connectors for Communications Applications. For those still not familiar with Stratos
International, I suggest it would be worth your while to peruse the situation.

Nasdaq Stock Market Inc. may consider raising its bid for the London Stock Exchange if the LSE recommends an offer at a higher price or a rival bid emerges, the president of Nasdaq International said on Tuesday.

Bad weather forced a loading halt at Alaska's main export terminal.

Indonesia's Finance Minister Sri Mulyani Indrawati has scrapped import taxes levied on capital goods used in the upstream oil and gas sector, according to a ministry statement.

Brett Steenbarger: "When volume is concentrated in winning stocks, profit taking seems to take hold over the next four days."

Martin Weiss: "The total inventory of new and used homes waiting for buyers is still the largest of all time. The number of investors and speculators dumping their properties on the market is just beginning to swell. But if you think the housing bust is severe nationally, look at what's happening in California: Housing permits were down by a whopping 47 percent in September, many times worse than the national average, according to the California Building Industry Association and the Construction Industry Research Board. For single-family homes statewide, it was even more severe: Down 57 percent from the same time last year. And in certain formerly hot areas -- like San Francisco, San Mateo and Marin counties -- new housing starts have dropped by an unbelievable 71 percent!"

Mike Shedlock:"While overall employment increased by less than 22 percent from the 1993 to 2006, employment in the construction of residential buildings increased by almost 70 percent. Employment in real estate agencies increased by almost 30 percent over this period. Employment in residential specialty trade contractors increased by almost 28 percent in just the years from 2001 to 2006. When the bubble deflates, employment levels in these sectors will fall back in line with their historic patterns, as construction and sales levels move to more normal levels. If employment in housing-related sectors were to fall back to levels consistent with their share of their labor force in the mid-1990s, it would lead a loss of close to 1 million jobs. If the construction sector temporarily falls below its normal level of activity as inventories of unsold homes adjust to normal levels, the job loss would be even greater."

Champion Enterprises Inc. said Tuesday it's terminated its previous agreement to sell the retail operations of its Advantage Homes unit as a result of the buyer's failure to secure financing to complete the purchase. "While the previously announced sale was an attractive financial opportunity for Champion at the time, the current slowdown in the California housing market has made completing the financing a challenge for our buyer," said William Griffiths, Champion CEO, in a statement.

The leaders of India and China set a goal Tuesday to double their bilateral trade in four years to 40 billion dollars, highlighting Chinese President Hu Jintao's visit to a country China once faced on the battlefield.

Federal spending in fiscal year 2006 increased by 9 percent, the largest increase since 1990. Discretionary federal spending has increased year after year, up more than 40 percent since President Bush took office. Instead of turkey, they should be serving pork at the White House on Thanksgiving.

Deere expects sales in the US and Canada to be flat next year, and will cut production of agricultural equipment by 4 per cent to trim excess supply. Global sales of agricultural equipment are expected to rise 4 per cent in fiscal 2007 after a 3 per cent increase this year, with demand in Europe countering the relative weakness in other markets.The company is projecting earnings at roughly $5.69 for 2007. In my view, that is on the low side.

The White House estimates that real GDP will grow by about 2.9% from the fourth quarter of 2006 until the fourth quarter of 2007, down from the 3.3% estimated by the Office of Management and Budget in June. The White House raised its forecast for inflation to 2.6% from 2.4%. The administration forecasts the unemployment rate to tick higher to 4.6% from 4.4% in October.

According to the United States Department of Agriculture, the
average American family of four spends at least $632 each month on

The New York Employee Confidence Index increased 7.5 points to 60.4 in October as more workers reported
optimism in the economy and their personal employment prospects, according
to the Spherion(R) Employment Report, a monthly survey conducted by Harris
Interactive(R) on behalf of Spherion Corporation.

December gold climbed $6.60 to close at $628.70 an ounce, near the day's high of $629, while December silver added 34.5 cents to close at $13.085 an ounce.

January crude closed at $60.17 a barrel, up $1.37.

For the past several months I have been massively wrong about the VIX, which on Monday closed below 10 for the first time since 1994 and is at its
lowest levels in 13 years. On Tuesday the VIX again closed
below 10. However, with patience going into April and May, I
still believe the VIX will be at least double its current

As part of the review of its overall downstream operations, Alcoa also
plans a targeted restructuring program in order to further increase
efficiency and profitability. The restructuring will encompass plant
closings and consolidations that will affect approximately 6,700
positions across the company's global businesses during the next year.
Ths program is expected to save approximately $125 million before taxes.
onan annualized basis.

It was a great day for Google and Apple- both trading at
all-time highs.

Monday, November 20, 2006


11/21/06 Forecasts

In the third quarter, Lowe's sales at stores open at least a year fell 4 percent, the first decline in this measure since the first quarter of 2001. Lowe's said same-store sales would fall 4 percent to 6 percent in the fourth quarter. Lowe's said declining U.S. home sales and construction, lower hurricane-related sales and higher materials costs hurt third-quarter results. Lowe's cut its full-year profit forecast to a range of $1.95 to $1.97 a share, and said it expects fourth-quarter profit of 36 cents to 38 cents a share. Lowe's said both the fourth quarter and full year would include one less week than the year earlier because of a calendar shift. In September, Lowe's had said annual earnings would be near the low end of a range of $2 to $2.07 a share.

The day after Thanksgiving did not even rank as one of the top five busiest holiday shopping days last year, according to a report released by MasterCard Worldwide.The Sunday following Thanksgiving has been the least busy day of the holiday shopping season for the past two years.

TD Bank Financial Group said Monday it will take TD Banknorth Inc. private in a transaction valued at about $3.2 billion, or $32.33 a share in cash.

The Nasdaq Stock Market said it's offered 2.7 billion pounds ($5.1 billion), or 1,243 pence a share, for the London Stock Exchange, and the offer was rejected.

According to a Mastercard survey, nearly three out of four people plan to shop online during the holidays, with 26 percent saying they will shop online more this year than they did last year. On average, these consumers will plan to
spend 41 percent of their total holiday expenditures online.
Consumers said they planned on spending an average of nearly $700 this
season with nearly $300 of that amount to be spent online for holiday
gifts. While consumers will spend the majority of their in-store holiday
budgets this year on clothing and related accessories, gift cards are
moving past many traditional items on shopping lists. For example,
nearly 60 percent of those surveyed anticipate buying gift cards or
gift certificates, while only 42 percent plan to purchase toys, games,
or sporting goods.

"The drop in the rate of consumers opening new accounts in 2006 may
give the appearance that they are being more conservative with regard to
using credit, however this may not be the case when combined with other
results from our study," said Ty Taylor, president of Experian Consumer
Direct. "Although our data shows a drop in the rate of consumers opening
bank credit card accounts, it also shows that their balances on other types
of loans, such as installment loans, are increasing."
The rate at which consumers were 90 days or more late in
payments increased 12.6 percent from 2001 (39.6 percent) to 2006 (44.6

Gary Lammert: "The 398th day for the Wilshire is 22 November 2006. The 16th day of the concurrent and final 8/20/16 day growth fractals for the ten year note,
30 year bond, and CRB is 22 Novembr 2006. The 58th day of the 29/73/58
day fractal for GM is 22 November 2006. 22 November 2006 is the ideal
final saturation day for the Wilshire secondary to its March 2000."
alltime high.

Oregon Steel is being acquired for $63.25 per share by Russian Evraz.

The Conference Board reported that the Composite Index of Leading Economic Indicators increased 0.2% in October, following a 0.4% increase in September and a 0.3% decrease in August. Says Ken Goldstein, Labor Economist at The Conference Board: "In sum, the impact of a slower housing market on consumers and slower profit growth on business isn't completely offset by lower gas prices and a rising stock
market. This suggests that the economy is unlikely either to reheat or to
get significantly cooler. Instead, the kind of slow growth now being
experienced could continue right through the winter and into the spring."
The Conference Board reported that the Coincident Index, a major
barometer of current economic activity, increased 0.1% in October,
following a 0.2% increase in September and August. The lagging index
increased 0.2% in October and September, following no change in August.

South Korea's currency won hit a new high against Japanese
yen on Monday at 792.38 won to 100 yen, the highest in 9 years.

The National Association of Realtors reported that sales dipped to a
seasonally adjusted annual rate of 6.27 million units nationwide, down
by 12.7 percent from the same period a year ago.
According to the NAR, home sales fell by 38 percent in Nevada, 36 percent in Arizona; 34.2 percent in Florida and 28.6 percent in California.

John Hussman: "In richly valued markets, the primary source of sustainable returns is good stock selection that is hedged against general market fluctuations, plus the implied interest earned on those hedges."

According to a report from the research firm Nielsen/NetRatings, Microsoft Corp.'s MSN unit was the only one of the top five search providers to see its traffic fall, dropping 8% from a year earlier. MSN's search market share in October was 8.8%, according the report released Monday.

Fresh Del Monte Produce Inc. is ceasing its Hawaii production, operations and shipments effective immediately, putting 700 employees out of work, far ahead of its original 2008 schedule, the company said.

Medtronic Inc. posted a drop in fiscal second-quarter profit due to higher costs. Net income fell 16.6% to $681 million, or59 cents a share, from $817 million, or 67 cents a share, in the same period last year. Revenue for the quarter jumped more than 11% to $3.08billion from $2.77 billion in 2005. A poll of analysts by Thomson First Call had been looking for the diversified medical device maker to postrevenue of $2.97 billion for the period ended Oct. 27. Sales of thecompany's cardiac rhythm management products, which includesimplantable heart defibrillators and pacemakers, rose 6% to $1.36 billion. Sales of its implantable defibrillators, which have seenslowed growth in recent quarters, rose 4% to $764 million.

BCA Research: "There was a record-breaking overshoot in residential construction andit will be a long time before the next rebound in activity and pricesdevelops. In the interim, affordability must improve considerably, viaa combination of lower borrowing rates and lower house prices."

Sunday, November 19, 2006


11/120/06 Tidbits

"If you mean by clear military victory an Iraqi government that can be established and whose writ runs across the whole country, that gets the civil war under control and sectarian violence under control . . . I don't believe that is possible," Mr Kissinger told BBC television.

eBay's Meg Whitman: "Skype today is adding in excess of 300,000 new users a day."

China is now our country's 4th largest export market behind Canada, Mexico, and Japan. It should not take very more years untilit reaches first place. Between 2000 and 2005 our exports to China grew 157 percent.

Algeria's energy minister said OPEC may call for deeper production cuts at a December meeting in Nigeria, according to published reports.
"We may decide on a new reduction during our meeting in Abuja Dec. 15, to further ensure oil price stability," AFP reported Energy Minister Chakib Khelil said on Algerian public radio Sunday.
Qatar's energy minister also indicated OPEC could increase oil output cuts beyond the 1.2 million barrels a day agreed upon at an October meeting in Doha.

Medtronic and Lowe's will report quarterly results on Monday.

A senior U.S. official tells Newsweek that some inside the administration believe it may be too late to stop Tehran from continuing its nuclear program. Should diplomacy fail, Washington might have to accept Iran as a "virtual nuclear-weapons state" if President Bush gets help on Iraq and other issues, this official says. That means Tehran might be permitted to develop the technology for making nuclear fuel -- and potentially a bomb -- as long as it holds to its pledge to limit its program to peaceful purposes. But this is still seen as a remote fallback position. In Newsweek's November 27 issue (on newsstands Monday, November 20), Senior Editor Michael Hirsh and National Security Correspondent John Barry report on new, public signals that Washington is edging closer to Tehran's terms for talks.

Bush addressing China's Hu: "I strongly support your vision, Mr. President, of encouraging your country to become a nation of consumers and not savers, which will inure to the benefit of our manufacturers, both large and small, and our farmers, as well."

Freeport-McMoRan said it will pay a total of $126.46 per Phelps Dodge share, a premium of 33 percent to Phelps Dodge's closing price on November 17 of $95.02. Each Phelps Dodge shareholder would receive $88 per share in cash plus 0.67 of a common share of Freeport-McMoRan. The cash portion of $18 billion represents 70 percent of the deal. Freeport-McMoRan said the combined company will be the largest North American-based mining firm.

Private equity firm Blackstone Group is set to announce a takeover plan for Equity Office Properties Trust , The Wall Street Journal reported on Sunday.
Citing people familiar with the matter, the newspaper said Blackstone is expected to pay about $48.50 for each share of Equity Office, the largest publicly traded office building owner in the United States.

The auction of Boston-based money manager Putnam Investments will move into its latter stages this week with final offers due from three bidders before the Thanksgiving holiday in the United States, The Wall Street Journal reported on its Web site on Sunday.

Democratic Representative Charles Rangel said he will again introduce legislation to revive a US military draft when his party takes control of Congress in January.

David Ogilvy: "I always said that mega-mergers were for megalomaniacs."


11/19/06 Observations

Gary Shilling: "I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it's the key to the global economic outlook...The 25% or greater decline in house prices we foresee will sire considerable consumer spending retrenchment that almost guarantee a major recession. Note the close link between the Homebuilders' Sentiment Index, which has collapsed, and real consumer spending."

In analyzing California's state finances, Elizabeth Hill observed that, based on past housing cycles, it is expected that prices will drop for several years, but it is unclear how deep the slump will be.

The total commercial paper market is approaching $2 trillion!

Doug Noland: "Today, the unfolding Derivatives "Insurance" Bubble is creating one additional troubling facet to what has developed into a full-fledged global Credit Bubble comprising U.S. household, government and corporate finance, along with Credit systems and asset markets around the world. Global imbalances and associated liquidity excess are unprecedented, and the dollar vulnerable. Despite the recent energy price decline, the domestic and global backdrop remains inflationary as opposed to dis-inflationary. Here at home, productivity is waning and wage pressures are rising... unlimited Credit/"finance" and unchecked leveraged speculation are the bane of free market Capitalism. Yet it's amazing how recent Monetary Disorder (inflating stock markets) has the "free market" bullish crowd filling the airwaves with flawed analysis and wishful thinking."

RealtyTrac(R) (, the leading online marketplace for foreclosure properties, released its October 2006 U.S. Foreclosure Market Report, which shows that 115,568 properties nationwide entered some stage of foreclosure during the month, the most reported in any month so far this year and an increase of 42 percent from October 2005. The report also shows a national foreclosure rate of one new foreclosure filing for every 1,001 U.S. households, the highest monthly foreclosure rate reported so far this year.

Dubai launched the Gulf region's first fuel oil futures contracts last month that could mark the beginning of the emirate's transformation into a new energy derivatives trading centre.
The year-old Dubai Gold and Commodities Exchange began trading the Fujairah 380 CST high sulphur fuel oil futures contracts on October 29 to add to its other products - gold, silver and currency futures.

Imports from China to the dozen euro nations rose to 88.3bn euros in the first eight months of the year, up 21% from the year-earlier period. That put China ahead of the US, with 84.3bn euros of imports into the euro area, and behind only the UK, with 109.7bn euros in the latest period.

The US trade deficits with Canada and Mexico, America's top two trading partners, have grown from US$52 billion and $41 billion in 2003 to an estimated $85 billion and $60 billion in 2006, respectively. The US trade deficit with the European Union has increased from $97 billion in 2003 to an estimated $135 billion in 2006. Finally, the US trade deficits with China and Japan have soared from $124 billion and $66 billion in 2003 to an estimated $250 billion and $90 billion in 2006, respectively.

Mike Burk: "Over the past 50 years the annualized return of the SPX, excluding dividends has been about 7%. From its low in October 2002 the annualized return of the SPX excluding dividends has been about 15%. The chart below shows the SPX from its October 2002 low to the present...From its low last June the annualized return of the SPX excluding dividends has been 36%...The rise in the SPX from its June lows has been at a rate equivalent to the best Presidential Year 3 rate and a little over twice the average return for the period."

Harlow Shapley:"Theories crumble, but good observations never fade."