Friday, December 08, 2006


12/9/06 Expectations

In early Friday trading, January crude oil futures were last up 92 cent at $63.41 a barrel on expectations that the Organization of Petroleum Exporting Countries would cut production at the oil cartels meeting on Dec. 14. A report in The Wall Street Journal on Friday suggested that OPEC won't call for an output reduction.The economy added 132,000 jobs in November, above Wall Street expectations of a 112,000 rise. The Labor Department also revised its October and Septbember employment estimates, adding 42,000 payrolls to its original count over the two months period. The unemployment rate ticked higher to 4.5% in November from 4.4% in October. The increase in the unemployment rate was expected. Average hourly earnings increased 3 cents, or 0.2% to $16.94. Economists had been expecting a 0.3% gain.
Heelys (HLYS) priced 6.425 million shares at $21 a share -- well above its $16-$18 range -- for its stock market debut on Friday. Speculation is alive and well with the opening bid of $35!

Bank of America is "very interested" in buying U.K. bank Barclays, according to a Merrill Lynch research report.

The Financial Times reported that Chinese company Wanxiang Group, China's top auto parts supplier, is in talks about buying some of Ford's component businesses.

The University of Michigan said its preliminary reading on consumer sentiment in December was 90.2, down from November's reading of 92.1. The index had been expected to dip slightly to 92.0, according to a median forecast of Wall Street economists polled by Reuters.

Nouriel Roubini: "the coming housing bust may lead to a more severe financial and banking crisis than the S&L crisis of the 1980s. The recent increased financial problems of H&R Block and other sub-prime lending institutions may thus be the proverbial canary in the mine – or tip of the iceberg - and signal the more severe financial distress that many housing lenders will face when the current housing slump turns into a broader and uglier housing bust that will be associated with a broader economic recession. You can then have millions of households with falling wealth, reduced real incomes and lost jobs being unable to service their mortgages and defaulting on them; mortgage delinquencies and foreclosures sharply rising; the beginning of a credit crunch as lending standards are suddenly and sharply tightened with the increased probability of defaults; and finally mortgage lending institutions - with increased losses and saddled with foreclosed properties whose value is falling and that are worth much less than the initial mortgages – that increasingly experience financial distress and risk going bust."

The Financial Times reported "Ownit Mortgage Solutions, in which Merrill Lynch has a 15 per cent stake, closed its doors. Its failure is the latest in a series of ominous developments in the market for subprime mortgages – higher interest loans made to borrowers who are seen as risky because of payment problems or large debt burdens. There has been a sharp rise in the number of borrowers behind on their payments."

“OPEC needs to restrict output further because a plunging dollar has cut the value of oil,” said OPEC president Edmund Daukoru.

Bloomberg reported tankers will load 158,065 barrels a day of Brent in January, down from 267,742 in December, according to the loading program of Royal Dutch Shell Plc.

The busiest shopping season
of the year is well underway and retailers have dollar signs dancing in
their heads, but Americans' economic enthusiasm has cooled. According to
the most recent results of the RBC CASH (Consumer Attitudes and Spending by
Household) Index, which measured the attitudes of 1,000 Americans earlier
this week, consumer confidence dropped more than five points this month.
Although Americans' assessments of job security rose slightly, overall
consumer sentiment dropped, as consumers expressed concern about current
and future economic conditions, as well as investing. As a result, the RBC
CASH Index for December released today by RBC Financial Group, stands at
86.9, compared to 92.4 in November.

Devon Energy expects to produce approximately 57 million oil-equivalent
barrels (Boe) in the fourth quarter of 2006. This represents a seven
percent increase over Devon's fourth-quarter 2005 production of 53.3
million Boe. On a sequential quarter basis, estimated fourth-quarter
production would be three percent greater than third-quarter 2006
production of 55.4 million Boe.
For the full year 2006, Devon expects to produce approximately 216
million Boe. This includes approximately two million Boe (500,000 Boe in
the fourth quarter of 2006) of production from Devon's Egyptian assets. At
year-end Egypt will be reported as a discontinued operation and these
volumes will be excluded from reported production for all periods
presented. Devon announced its plans to sell all of its interests in Egypt
on November 14, 2006.

Nigerian gunman attacked an export terminal belonging to the Italian company ENI S.p.A taking hostages and killing at least one person.

Justice Litle: "The smart money is buying with abandon because it knows the paper bits floating around today will be worth less than the paper bits floating around tomorrow.
How long can this go on? No one really knows. It's sort of like a game of musical chairs. As long as a veneer of psychological stability is maintained - i.e., as long as cash doesn't become trash too quickly - we could continue to see an upward trend in nominal values, even as real values stall out, or even decline.
Sooner or later, gold is going to break its 1980 highs in nominal terms. (This could easily happen in 2007.) After that, it will break its 1980 highs in inflation-adjusted terms -- which will prove a much more noteworthy feat."

February gold closed at $631 an ounce Friday, down $6 for the session. March silver fell 14 cents to close at $13.895 an ounce. March copper closed at $3.112 a pound, up 1 cent Friday.

The 10 OPEC members bound by the cartel's output agreements produced an average 27.07 million barrels per day (b/d) in November, down 660,000 b/d from October, but still well above the group's new 26.3 million b/d output target, a Platts survey
showed December 8.
Based on Platts' figure for OPEC's November production, the group
exceeded its 26.3 million b/d target by 770,000 b/d.
"Despite the fact that OPEC's cuts are nowhere near what was targeted,
the market still remains solidly above $60," said John Kingston, Platts
global director of oil. "But the group does face a supply/demand equation
that is significantly out of whack, to its possible detriment, as the first
quarter progresses and goes into the second quarter," he explained.
For this reason, it appears that there is significant support among
OPEC ministers to cut crude production again at talks in the Nigerian
capital Abuja when the organization meets December 14.
"Statistics and the marketplace continue to signal hefty inventory
levels for the immediate future and that's bound to concern OPEC a great
deal," Kingston said. said Friday it plans to repurchase 9.8% of its common stock at a per share price of between $18.50 and $22. The tender offer is expected to begin on Monday.

Fueled by a more optimistic outlook on the strength of the economy and number of jobs
available, U.S. workers' confidence hit new highs in November, according to
a recent survey of 3,654 adults. The Spherion(R) Employee Confidence Index,
a monthly gauge of overall worker confidence, climbed 0.9 points to 60.1 in
November, the third consecutive monthly increase. The survey, conducted by
Harris Interactive(R) on behalf of Spherion Corporation (NYSE: SFN), shows
that 66 percent of workers believe the economy is strengthening or
stabilized, compared to 63 percent in October and 29 percent believe more
jobs are available, versus 27 percent in October.

In October, Eli Lilly and Company announced that it had signed a definitive merger agreement to acquire ICOS Corporation in a cash transaction. Under the terms of the agreement, Lilly will acquire all of the outstanding shares of ICOS common stock at a price of $32 per share, for a total of approximately $2.1 billion. In approximately 2 weeks, ICOS shareholders will vote on the transaction; however, the proxy material fails to mention that last week ICOS initiated an early-stage clinical trial in Europe of an experimental drug for psoriasis. At the very least, in my view, new proxy material should be mailed with this information.

Zillow will allow homeowners and real estate agents to advertise for-sale properties on its website at no cost.

The yield on the 10-year Treasury rose from 4.50% to 4.56%.

January crude fell 46 cents to close at $62.03 a barrel Friday. January natural gas fell 11 cents to close at $7.561 per million British thermal units.

Thursday, December 07, 2006


12/8/06 Happenings

From the BJ Services 2006 report: "Based on our forecasted increase in rig activity and improved pricing, we expect continued improvement in our results of operations in fiscal 2007. We expect revenue improvement from all of our business segments." The stock, at $32+, is selling at 10 times projected earnings for 2007.

Tribune Co. said that sales edged higher last month despite a continued slowdown in publishing revenue as the media company's broadcasting and entertainment group delivered a 6.9 percent revenue increase to $106.9 million.

European Central Bank President Jean-Claude Trichet said in a prepared statement that the central bank will "very closely" monitor risks to price stability after making a rate hike to 3.5%. He also revised up 2007 and 2008 economic growth forecasts due to lower energy prices.

Chevron Corp.will buy back up to $5 billion worth of its common stock over a period of up to three years. The new program follows a $5 billion program initiated in April 2004 and another $5 billion program launched in December 2005, which has been completed. The company set its 2007 capital and exploratory spending program at $19.6 billion. That represents a 20% increase from an expected $16 billion in 2006.

The Monster Employment Index rose three points to 175 in November from October, its highest reading since the online recruiter launched the benchmark in October 2003. The November reading, which is up from 149 in November 2005, reflects employers increasing holiday-season and year-end hiring, Monster said.

The Bank of England on Thursday left its key interest rate unchanged after two increases in the last four months have taken the cost of borrowing to a five-year high. The bank held its rate at 5% -- in line with market expectations.

Fears that a slowing U.S. economywill drag the global economy downward are unlikely to materialize,according to PIERS Trade Horizons. Based on second-quarter container trade statistics, the latestavailable, as well as its analysis of key economic indicators andunderlying economic fundamentals, PIERS Trade Horizons expects global realGDP growth will average some 3.25% over the second half of this year,resulting in full-year growth of at least 3.5% for 2006 as a whole, up aquarter-percentage-point from last year. Further out, PIERS forecasts anexpansion in real GDP of 3.3% in 2007. "In other words, growth will moderate but remain solid," says MichaelAndrews, PIERS chief global economist. "This despite a U.S. slowdown." One reason the U.S. slowdown seems to be having limited impact onglobal growth is that it has so far been largely confined to theresidential sector, with few spillover effects to the rest of the economyor to most foreign countries. "We can see the impact of the slowdown in the housing sector on growthin imports of furniture, for example," notes Andrews. Thus, the annualgrowth rate for furniture imports from Northeast Asia, the top source forAmerica's top import, nearly halved to 9.6% in the first half of this year,from the same period a year earlier, after expanding a robust 16.6% in2005. The rate of growth in furniture imports from Southeast Asia fell from8.4% in 2005 to negative 5.3% in the first half of 2006. "However, the slowdown in sales to the U.S. by these countries is beingoffset by growth in business with other countries within their regions -and, in several cases, by growing domestic consumption," explains Andrews. "Generally speaking, exports from the rest of the world to the U.S.relative to total exports for most nations have been declining for sometime, making the U.S. relatively less important as a driver of growth forother nations than has been the case in the past."There is much speculation as to the nonfarm payroll number for November.Inasmuch as the number will be revised at least twice, my interest is passingat best. Rather, I have my eye on the Bank of Japan meeting on Dec. 19.Most believe there will not be a change in rates. I think there is at least a 30% chance of a modest rate increase.
OPEC meets on Dec. 14. MAN Energy analyst Edward Meir stated"We think OPEC's inclination would still be to go for another cut, notso much on concern that prices are low, but more because of the factthat the November cut seems to have fallen short."
Outstanding consumer credit fell by $1.2 billion or an annual rate of 0.6% in October.
January natural gas fell 5.6 cents to close at $7.671 per million British thermal units. January crude was up 30 cents to close at $62.49 a barrel.
ConocoPhillips said it plans to divest about 830 retail outlets, and the company approved 2007 cash capital expenditures of about $11.8 billion.
February gold rose $1.10 to close at $637 an ounce. March silver added 24 cents to $14.035 an ounce, and March copper continued lower to close at $3.102 a pound, down 5.8 cents.
An initial public offering from wheeled sneaker maker Heely's Inc. (HLYS) is expected to price above its $16-$18 range for its stock market debut on Friday, an analyst said Thursday.

Wednesday, December 06, 2006


12/7/06 Reality

Meritage Homes Corp.CEO Steven Hilton said Wednesday he expects the housing market to remain "tough for at least the next couple of quarters." He said expansion plans "are on hold now," but that the company next year could buy land or pursue acquisitions. If Meritage's stock goes down and it doesn't see opportunities for M&A or land purchases, it will buy back shares, the CEO added.

Addison Wiggin: "The fall of the dollar is like a car can cover your eyes, but you can’t help but watch it with a sense of amazement. Throughout history, all printed money eventually ends up the same way: practically worthless."

Andrew Parnes, CFO at Standard Pacific Corp., said the spring selling season will be a better gauge than the winter months of whether the slumping housing market has bottomed out. "It's going to take more than a few months of improved or stable [home] order activity to say things have gotten better," the CFO said

A Citigroup analyst said he expects home-order trends to turn around by the first quarter of 2007, therefore "the time to buy the stocks is now" even if profit estimates continue to decline.
"The rally thus far has already occurred sooner than many expected, and we believe the group is about to accelerate its ascent," Kim wrote.
He raised his target prices on several home builders he rates buy: including Beazer Homes and Centex. Maybe the analyst is correct; however, I pointed out in mid-July that the homebuilding group had stopped going down and, in fact, rallied on four consecutive days while the rest of the market was trying to get back on its feet. I remarked the best idea I had was selling puts on Centex. Yes, it was conservative, but the $30 and $35 puts expired worthless- as did the ones on Beazer. I would be selling at least half of my positions in homebuilder stocks- that is, had I been a buyer in mid-July. At the very least, I'd be selling in the money calls.

Richard Daughty: "The bad news, which is what I fixate upon because that is the pitifully miserable way I am, is that slower wage growth means that "consumers don't have as much money as everyone thought they did ... $100 billion less on an annual basis." A hundred billion bucks less income than they figured! Whew! Viewed in another light, "The new data show that, instead of growing at a 7.4% annual rate in the second quarter, employee compensation actually grew just 1.4%." Apparently, those are nominal gains, and are not adjusted for inflation. A sneer of contempt crossed the handsome face of The Mogambo (played by, if you recall, Brad Pitt), and they instantly knew that they had made a mistake! Quickly they added "The new data shows that real disposable incomes fell in the second quarter by 1.5%, rather than rising by 1.7%."

The American Petroleum Institute reported a drop of 4.1 million barrels in crude supplies for the week ended Dec. 1. The Energy Department had reported a fall of 1.1 million. Motor gasoline supplies were up 674,000 barrels, the API said, contrary to the government's reported fall of 1.1 million. Distillate supplies were down 1.5 million barrels, the API said, vs. the 400,000-barrel fall reported by the government.

Ara Hovnanian, CEO of home builder Hovnanian Enterprises Inc., said the company is not overly optimistic on the housing market's recovery and is not managing as if "everything will be hunky-dory in 2007." He stated buyers don't want to purchase a home "that may be cheaper a month later."

Liz Ann Sonders: "December has historically been the weakest month for the dollar against the euro since the European currency began trading at the beginning of 1999. On average, the dollar has lost 2.7% in Decembers since then, with the biggest decline (-7.4%) coming in December 2000. Given that this year-end weakness (caused by holidays and closing-of-books) is well-documented, many traders like to short the dollar in anticipation thereof."

Ford Motor Co. said its $4.5 billion of unsecured senior convertible notes due 2036 will pay interest semiannually at a rate of 4.25% per annum. The principal amount has been increased from $3 billion.

January crude fell 24 cents to close at $62.19 a barrel after trading as high as $63 earlier. January natural gas gained 4.2 cents to close at $7.727 per million British thermal units after a four-session decline.

February gold dropped $12 to close at $635.90 an ounce. March silver closed at a one-week low of $13.795 an ounce, down 23 cents. March copper fell to $3.16 a pound, closing down 8.7 cents, or 2.7%.

The European Central Bank is expected to increase its benchmark interest rate Thursday.

Gannett Co. Inc. said that advertising at would rise by 18 percent to 20 percent this year.

Weyerhaeuser Company announced that challenging market conditions
necessitate further actions, which could include closures, curtailments and
restricted operating postures at softwood lumber, engineered lumber and
structural panels operations across North America. Downtime and restricted operating postures have already been undertaken at about 70 percent of Weyerhaeuser residential wood products facilities.These curtailments have led to significant fourth quarter production
decreases across all product lines."Demand for wood products is very weak," said Steven R. Rogel, chairman, president and chief executive officer. "We continue to analyze
our operating postures and portfolio and expect additional capacity adjustments in the near term."
While many analysts are talking about the worst is over in the housing industry, I suggest they heed the words of the Weyerhaeuser CEO.

Tuesday, December 05, 2006

Revisions Revisions Revisions

12/6/06 Revisions Revisions Revisions

The Labor Department said unit labor costs were revised much lower in both the second and third quarters. Instead of rising at a 5.3% pace in the past year, unit labor costs in the nonfarm business sector were revised to a 2.9% annual pace. Productivity in the nonfarm business sector rose at a 0.2% annual pace in the third quarter, revised from no gain previously reported. Unit labor costs, meanwhile, were revised to a 2.3% annualized from 3.6% previously. The markets key on these government numbers. Why I don't know. They become moving targets.

Here is a sample of the revisions and the nonsense surrounding them:
"Measures for the nonfinancial corporate sector also were revised to reflect updated information on output and employee compensation during the second quarter of 2006. Productivity was revised down along with output, as hours grew at the same rate reported Nov 2. Hourly compensation was revised down from a 6.5-percent gain to 0.7-percent decline in the second quarter. Because hourly compensation was revised down more than productivity, the increase in unit labor costs also was revised down, from 6.4 percent to 3.7 percent."

The dollar fell to a fresh four-month low vs. the yen. Meanwhile, the U.S. dollar index is approaching 82 on the downside.

Chain store sales for the week ended Dec. 2 rose 3.1% from the year-ago period, according to a survey by the International Council of Shopping Centers, Inc. and UBS Securities released Tuesday. On a week-over-week basis, sales slipped 2.6%. "Through this past Sunday, consumers shopped less and completed less of their total expected holiday spending than even last year," said Michael Niemira, ICSC's chief economist.

Toll Brothers, the luxury home builder, said next year fiscal year's profit may fall 62% but also said it may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above.

Reckson Associates Realty Corp. affirmed its backing of a takeover proposal from S.L. Green and said a takeover proposal from American Real Estate Partners LP, controlled by the investor Carl Icahn, "does not meet the standard" set out in the SL Green merger agreement "to permit discussions or negotiations with AREP."

Bridgestone Corp. , will buy Bandag Corp. , a maker of tire retreading materials and equipment, for $1.05 billion in cash or $50.75 per share.

Tim Iacono: "To most Americans, what the dollar can be exchanged for overseas matters little - only about ten percent of the U.S. population has passports and most of those people never leave the country. As for import prices, recent studies have shown that only a very small amount of exchange rate movements are passed through via manufactured products. Oil however is another matter. A steep decline in the dollar means that oil prices for Americans will go up, all else being equal - this reality may become more significant after next week's OPEC meeting where the subject of prices is sure to come up."

New orders at U.S. factories fell 4.7 percent in October, the biggest fall in more than six years and marking the third drop in four months, while inventories rose again. However, excluding transportation, factory orders fell just 0.8 percent.

The Institute for Supply Management's services index rose to 58.9 in November from 57.1 in October. Employment, prices paid and new orders also rose, according to a report on Tuesday.

Palatin Technologies, Inc presented results from two Phase 2B trials evaluating bremelanotide for the treatment of male erectile dysfunction (ED) at the 9th European Society for Sexual Medicine (ESSM) Congress at the Hofburg Convention Center, Vienna on December 5, 2006. This presentation received "The European Society for Sexual Medicine 2006 Award for Best Presentation on Male Sexual Dysfunction (Clinical)."

February gold fell $3 to close at $647.90 an ounce in New York. March silver fell 22 cents, or 1.5%, to end at $14.025 an ounce. March copper closed at $3.247 a pound, up 7.1 cents.

Shares of McDonald's traded above the $43 mark for the first time in seven years. It was a long road back from the 12 1/8 hit only a few years ago.

Shares of Walt Disney reached a high of $34.08 in intraday trading, the highest price seen since May 23, 2001.

Announced layoffs totaled 76,773 in November, up from 69,177 in October but down from 99,279 a year earlier, according to Challenger, Gray & Christmas Inc.

The Conference Board reported that the leading index for Japan increased 0.5 percent and the coincident index increased 0.6 percent in October.

Mayo Clinic announced last
week that it has developed a new medical device that will help patients
control their breathing (respiratory motion) when undergoing computed
tomographic (CT) fluoroscopy-guided biopsies. The Interactive Breath-hold
Control will be the first medical device of its kind in the world. The
device will allow physicians to more rapidly and accurately diagnose
patients reducing the need for a more invasive surgical biopsy.

I'd like to take a moment to discuss the holiday season, which is abnormally stressful for many individuals. Learning to manage stress levels is one of the most important functions to master. I cannot say enough of the negative impact from high stress levels, which can produce high levels of cortisol in the body.
Cortisol is an important hormone in the body, secreted by the adrenal glands and involved in the following functions and more:

Proper glucose metabolism
Regulation of blood pressure
Insulin release for blood sugar maintanence
Immune function
Inflammatory response
Higher and more prolonged levels of cortisol in the bloodstream (like those associated with chronic stress) have been shown to have negative effects, such as:

Impaired cognitive performance
Suppressed thyroid function
Blood sugar imbalances such as hyperglycemia
Decreased bone density
Decrease in muscle tissue
Higher blood pressure
Lowered immunity and inflammatory responses in the body, as well as other health consequences
Increased abdominal fat, which is associated with a greater amount of health problems than fat deposited in other areas of the body. Some of the health problems associated with increased stomach fat are heart attacks, strokes, the development of , higher levels of “bad” cholesterol (LDL) and lower levels of “good” cholesterol (HDL), which can lead to other health problems!

Monday, December 04, 2006

The Horizon

12/5/06 The Horizon

From Abnormal Returns: "Closely monitoring the holdings of fund managers, hedge or mutual, is not unlike tailgating. That is following the car in front of you too closely, as opposed to the pre-game meal served prior to a football game. Tailgating behind a great driver could get you to your destination a little faster. However, tailgating is also a large contributor to auto accidents. Tailgating deprives the trailing driver with vital information on the road ahead. Relying on the driver in front of you is at best an iffy proposition."

On the Tribune Company, the January 2008 $35 calls have an open interest of 1096. I found it interesting that 241 of these calls traded at $1.00 on Monday.

Mining Weekly: "Chinese gold consumption is expected to rise 17% this year, news service Bloomberg quoted China Gold Association chair Cheng Fumin as saying. China is the world's third biggest consumer of the precious metal and is expected to use 350 metric tons this year, up from 300 tons in 2005, owing to an increase in demand for bullion as an investment, Fumin said.
This was despite a fall-off in demand for gold jewelry, caused by high prices.
China is the world's fourth-biggest gold producer and plans to attract foreign investment to the sector.
Fumin indicated that China's gold production may rise more than 10% next year, Bloomberg reported."

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in October, fell to 107.2 from 109.1 in September.The October level was 13.2 percent below the year-earlier level.

Rep. Ron Paul: "Politicians often manage to fool voters and the media, but they rarely fool the financial markets over time. When investors lack faith in the U.S. dollar, they really lack faith in the economic policies of the U.S. government."

Phil Davis: "There is a 10% fantasy built into everything you own because you are under the illusion that the dollars you have in your pocket and the dollars you see in your bank statements are worth 100 pennies -- but they are not! And I'm not just talking about the fact that a dollar buys 50% less copper than it did last year -- just try leaving the country with that funny money of yours and see what you can buy in any of the 50 economies around the world that are outperforming us!"

In line with recent upbeat data from the euro zone, the Sentix index on Monday showed that investor sentiment improved in early December, with the current situation judged to be at its best since the survey began in February 2003.

Yesterday crude declined by 99 cents a barrel; however, ExxonMobil rose 57 cents in price. Meanwhile, January natural gas dropped 61.6 cents, or 7.3%, to finish the day at $7.806 per million British thermal units.


12/4/06 Events

President Evo Morales signed into law Sunday contracts giving the government control over foreign energy companies' operations, completing a process begun May 1 with the nationalization of Bolivia's petroleum industry.

Pfizer Inc. said Saturday it has cut off all clinical trials and development for a cholesterol drug that was supposed to be the star of its pipeline because of an unexpected number of deaths and cardiovascular problems in patients who used it.

Robert McHugh: "Now the punch line: This is the exact pattern we see currently in the Dow Industrials from 2002 through 2006. The entire rally from October 2002 has in effect been one very large Broadening Top, Megaphone pattern, identical to the patterns that led to the 1929, 1957, 1986, 1987 and 2000 stock market clobberings. And we sit very close to point e. The upper boundary of the 2002-2006 pattern suggests a top around 12,300 +/- if it completes this month, as high as 12,500 if it finishes in early 2007. Point e came after prices crawled along the upper boundary for a short while in 1929, so we could see the 2002 to 2006 pattern do likewise, meaning point e could top as late as early 2007."

BCA Research: "The yen is very pro-cyclical and almost always weakens during periods of slowing global growth. Currently, the world economy is still in a softening phase that could last well into 2007. Bottom line: the conditions are not in place to bet against the yen or yen carry trades."

Tiger Woods and Tatweer, a member of Dubai Holding, a leading UAE holding Company, announced
plans for 'Al Ruwaya,' the first-ever course designed by Woods in "The Tiger Woods - Dubai."

Tracinda Corp., which is controlled by Kirk Kerkorian, Monday filed a tender offer with the Securities and Exchange Commission for the purchase of 15 million shares of MGM Mirage for $55 each. Tracinda said it presently owns about 158.4 million MGM Mirage common shares, or 55.8% of the company's outstanding stock.

FedEx Corp. said it will raise its FedEx Ground and FedEx Home Delivery rates by an average of 4.9%, effective Jan. 1.

To see Shamu at Orlando SeaWorld will now cost $54 for a child's ticket and $70 for an adult.

Marshall & Ilsley Corp. agreed to acquire United Heritage Bankshares of Florida Inc. for about $217 million in stock. The deal calls for Marshall to swap 0.8740 of a share of its common stock for each United Heritage common share.

Poultry producers Pilgrim's Pride Corp. and Gold Kist Inc. entered into a merger agreement under which the former will acquire the latter for $21 a share in cash.

Station Casinos Inc. said it's received an acquisition proposal that values its common shares at $82 each from Fertitta Colony Partners LLC, an entity that includes members of its senior management team.

Bank of New York Co. and Mellon Financial Corp. agreed to merge, forming the world's No. 1 securities-servicing and asset-management firm. Under terms, Bank of New York's holders will get 0.9434 share of the new company for each of their shares. Mellon holders will receive one share of the new company for each of their shares.

Chipmaker LSI Logic Corp. has agreed to buy Agere Systems Inc. in an all-stock deal worth around $4 billion. LSI said Agere shareholders will receive 2.16 LSI shares for each Agere share they hold.

John Hussman: "If profit margins were at their usual norms, the current P/E ratio for the S&P 500 would be about 23 times earnings...For the Large 500 data series, capital expenditures as a percent of revenue has fallen from 7.5 percent in 2000 to 5.6 percent today...In the few times margins have reached a level of 7.5 percent or above, subsequent 3-year earnings growth has been flat or steeply negative...Investors consistently overpay for stocks during periods of high margins. The median P/E during the 20 percent of the highest margin periods is 25. During the 40 percent of periods with the lowest margins, the median P/E has been less than 13...Earnings will grow at about 5.9 percent a year if we assume profit margins remain near their current record levels. Assuming a decline in margins toward the long-term average of 6.5 percent, earnings will grow at one-third of a percent a year. If profit margins dropped to 5.5 percent, the level they reached in 1975 and 1983, earnings would decline 3 percent a year. Remember, this assumes a continuation of healthy top-line sales growth. Those are the headwinds that result from high profit margins."

Be Patient. Taking an overall view, in my opinion, better buying opportunities will present themselves.