4/9/03 Your Neighborhood Cockroach May Cause SARS
N.Y.C. to lay off 2000 education workers. Qantas Airways to let 1000 go. Tecumseh Products gives pink slip notices to 550. Barra to cut 9% of their workforce.
The war on Iraq has produced 95 dead, 155 wounded, and 8 MIAs.
The Philip Morris judge says the company may not have to post a $12 billion bond to appeal a $10 billion damage suit. They may have to post the damaged lungs of the company's top brass. Just a joke.
Japanese companies plan to cut back on capital spending in 2003 by 2.2% for the third straight year.
Global airlines body IATA warned that SARS could hurt the industry more than the Iraq war. For example, Cathay says SARS has "annihilated" passenger bookings.
Due to SARS, Malaysia bars visitors from China and Hong Kong.
In Chinatowns around the U.S. people are scared. For many, business is down 50% in the last two weeks. People are afraid of SARS, and aren't coming to Chinatown. On the other hand, family medical practices are seeing more patients as they arrive with cold symptoms and want to be checked for SARS.
The dollar is already about two cents weaker vs the euro from its strongest level since the war started. This is a good clue that the war rally on Wall St. has come to a close.
The Federal government gave San Francisco $10 million for the fight on terrorism. I guess the fight is expected to go only a few rounds.
Gartner, Inc. said for the second consecutive year worldwide semionductor manufacturing sales declined by more than 30%.
Sales at major U.S. chain stores fell 2.5% in the week ended April 5 compared with the same week a year ago.
Disney's stock is selling at about 30 times estimated 2003 earnings. Where's the value?
Between 1995 and 2010 the 45+ age bracket will grow 3 times as quickly as the rest of the population. Baby boomers now control 43% of the nation's disposable income.
Joseph DeRisi is a researcher at UCSF and he created a computer "virus chip" which identified SARS as a type of coronavirus which, he said, "is not a simple mutation of a human virus." Despite anything you might read or hear about SARS, DeRisi's statement indicates trouble ahead.
Cockroaches may carry the SARS virus. Everyone needs to be extra careful about the people with whom they associate.
Here's a no brainer. Which economy is more important to you- that of the U.S. or post-war Iraq?
Tuesday, April 08, 2003
4/8/03 Selling On The News
The weekend war news was so encouraging that the amateurs pounced on the markets in the early going yesterday, and then they got pounded. Before the day was over a significant reversal had taken place. After being up 242 points, The Dow staggered to a meager 21 point gain. The Nasdaq had gained over 3% and barely could hold a plus side of 7 points. The S&P 500 had been at 904 and ended almost unchanged at 880. When your entry point is poor, lessons from Wall Street can be expensive. Follow the leader doesn't hack it on the corner of Broad and Wall streets. In Iraq they take prisoners of war. The stock market doesn't take prisoners.
Another potentially lethal venue is SARS. We know over 100 people have now been killed, 2700 have been infected, and it has found its way into 16 countries. SARS targets the world.Yesterday India reported its first SARS case. We are aware that the disease is spread easily from person to person. It may have multiple ways to spread. It also originated in a part of the world that sees a great many travelers. There is no cure for SARS nor a vaccine. Fast recognition appears the only possible solution. The director of the CDC said yesterday "we may see further spread of the disease in this country...we don't know where this is going to go." It was suggested to avoid travel to Hong Kong, Hanoi, Singapore, and China. Hopefully, SARS will not be like the 1918 flu when more than 20 million people died.
Recently, retail sales have dropped 50% in Hong Kong.
Consumer credit for February increased $1.5 billion vs consensus of $3 billion. Total consumer debt is $1.74 trillion.
N.Y.C. will lay off 3400 workers in the next 30 days.
Citigroup will lay off additional traders and salesmen in its global equities business.
March consumer confidence in Tokyo worsened, and fell 1.5 points to 38.8. This reveals a serious level of pessimism.
U.K. retail sales last month fell the most in 11 years.
Our states are suffering their worst budget crises since WW II.
U.S. movie ticket sales have dropped 8% from last year.
When the Iraqi war started, consumer confidence picked up. More job cuts, disappointing earnings, and growing deaths from SARS will take consumer confidence down again, and to new lows.
The Fed's top monetary policy staffer said "the best policy for dealing with deflation is to avoid it strenuously by acting preemptively." Does preemptively mean waiting from 2001 to do something about deflation?
The weekend war news was so encouraging that the amateurs pounced on the markets in the early going yesterday, and then they got pounded. Before the day was over a significant reversal had taken place. After being up 242 points, The Dow staggered to a meager 21 point gain. The Nasdaq had gained over 3% and barely could hold a plus side of 7 points. The S&P 500 had been at 904 and ended almost unchanged at 880. When your entry point is poor, lessons from Wall Street can be expensive. Follow the leader doesn't hack it on the corner of Broad and Wall streets. In Iraq they take prisoners of war. The stock market doesn't take prisoners.
Another potentially lethal venue is SARS. We know over 100 people have now been killed, 2700 have been infected, and it has found its way into 16 countries. SARS targets the world.Yesterday India reported its first SARS case. We are aware that the disease is spread easily from person to person. It may have multiple ways to spread. It also originated in a part of the world that sees a great many travelers. There is no cure for SARS nor a vaccine. Fast recognition appears the only possible solution. The director of the CDC said yesterday "we may see further spread of the disease in this country...we don't know where this is going to go." It was suggested to avoid travel to Hong Kong, Hanoi, Singapore, and China. Hopefully, SARS will not be like the 1918 flu when more than 20 million people died.
Recently, retail sales have dropped 50% in Hong Kong.
Consumer credit for February increased $1.5 billion vs consensus of $3 billion. Total consumer debt is $1.74 trillion.
N.Y.C. will lay off 3400 workers in the next 30 days.
Citigroup will lay off additional traders and salesmen in its global equities business.
March consumer confidence in Tokyo worsened, and fell 1.5 points to 38.8. This reveals a serious level of pessimism.
U.K. retail sales last month fell the most in 11 years.
Our states are suffering their worst budget crises since WW II.
U.S. movie ticket sales have dropped 8% from last year.
When the Iraqi war started, consumer confidence picked up. More job cuts, disappointing earnings, and growing deaths from SARS will take consumer confidence down again, and to new lows.
The Fed's top monetary policy staffer said "the best policy for dealing with deflation is to avoid it strenuously by acting preemptively." Does preemptively mean waiting from 2001 to do something about deflation?
Monday, April 07, 2003
4/7/03 The Labor "Underutilization" Rate
There are about 5 million workers who have taken part-time jobs because they couldn't get full-time work. If you add them to the country's 8.5 million unemployed, plus discouraged job-seekers who have stopped looking for work, you have just under a 11% labor "underutilization" rate in February.
The labor pool is growing in substitute teaching. In the Chicago public schools the number of substitutes has about doubled in the past year to over 8000.
New York City has lost 223,000 jobs in the past two years. Local unemployment stands at a five year high of 8.6%. Last year applications for food stamps rose 20%. However, business is booming at pawnshops. People want cash rather than Rolex watches.
In 1997 William Strauss and Neil Howe wrote "The Fourth Turning:An American Prophecy". They predicted "a global terrorist group blows up an aircraft and announces it possesses portable nuclear weapons. The United States and its allies launch a preemptive strike. The terrorists threaten to retaliate against an American city. Congress declares war and authorizes unlimited house-to-house searches. Opponents charge the president concocted the emergency for political purposes." The authors predicted an era with 20 years of global crisis.
The Washington Times reports that 14 al Qaeda members are in Mexico working with Mexican crime organizations in an attempt to enter the U.S. covertly and conduct a terrorist attack.
Chemical Ali is dead.
Gordon Brown will deliver the UK's annual budget. The country's growth prospects will be cut.
The Pentagon says the U.S. military will govern Iraq for at least six months. Will that be a situation that pleases Tony Blair? He is our best friend on the global landscape.
Roger Clemens is five wins from the 300 club.
North Sea Brent crude oil declined to $23.50 per barrel. Gas at the pump is not coming down fast enough. It is way too high given current crude pricing.
For the first time the number of people in U.S. prisons and jails exceeds 2 million. That excludes juvenile offenders. This means that one in every 142 U.S. residents is imprisoned or in jail.
The Illinois legislative pension plan provides those with 20 years of government service to collect a pension based on 85% of the salary of their choosing, and they receive a 3% increase in their pensions after that. Pensions grow by 3% annually once an individual turns 60. Still this is not enough of a reward, in my view, for working a government job for 20 years. At the end of each day your soul pays too stiff a price.
Alan Greenspan: "Ownership of physical property is capable of being defended by police, the militia, or private mercenaries. Ownership of ideas is far less easily protected."
Some experts have linked SARS to a new form of coronavirus, other types are usually found in animals. Chinese specialists, however, link many SARS deaths to a rare form of the virus chlamydia, usually transmitted thru sexual contact.
In Texas Cash Today as well as Harrigans have filed for chapter 11.
This morning witnessed stocks soaring on the international markets; government bonds plunged in price and yields increased; the dollar rose to a 2-week high against the euro, yen, and Swiss franc; the Nikkei was up over 2%; and gold hit a 4-month low around $320.50 per ounce in Asia.
When the shelling in Baghdad ceases, stocks will plunge with fervor. Peace will not produce prosperity. Only jobs ring cash registers. The "underutilized" can tell you all about that.
There are about 5 million workers who have taken part-time jobs because they couldn't get full-time work. If you add them to the country's 8.5 million unemployed, plus discouraged job-seekers who have stopped looking for work, you have just under a 11% labor "underutilization" rate in February.
The labor pool is growing in substitute teaching. In the Chicago public schools the number of substitutes has about doubled in the past year to over 8000.
New York City has lost 223,000 jobs in the past two years. Local unemployment stands at a five year high of 8.6%. Last year applications for food stamps rose 20%. However, business is booming at pawnshops. People want cash rather than Rolex watches.
In 1997 William Strauss and Neil Howe wrote "The Fourth Turning:An American Prophecy". They predicted "a global terrorist group blows up an aircraft and announces it possesses portable nuclear weapons. The United States and its allies launch a preemptive strike. The terrorists threaten to retaliate against an American city. Congress declares war and authorizes unlimited house-to-house searches. Opponents charge the president concocted the emergency for political purposes." The authors predicted an era with 20 years of global crisis.
The Washington Times reports that 14 al Qaeda members are in Mexico working with Mexican crime organizations in an attempt to enter the U.S. covertly and conduct a terrorist attack.
Chemical Ali is dead.
Gordon Brown will deliver the UK's annual budget. The country's growth prospects will be cut.
The Pentagon says the U.S. military will govern Iraq for at least six months. Will that be a situation that pleases Tony Blair? He is our best friend on the global landscape.
Roger Clemens is five wins from the 300 club.
North Sea Brent crude oil declined to $23.50 per barrel. Gas at the pump is not coming down fast enough. It is way too high given current crude pricing.
For the first time the number of people in U.S. prisons and jails exceeds 2 million. That excludes juvenile offenders. This means that one in every 142 U.S. residents is imprisoned or in jail.
The Illinois legislative pension plan provides those with 20 years of government service to collect a pension based on 85% of the salary of their choosing, and they receive a 3% increase in their pensions after that. Pensions grow by 3% annually once an individual turns 60. Still this is not enough of a reward, in my view, for working a government job for 20 years. At the end of each day your soul pays too stiff a price.
Alan Greenspan: "Ownership of physical property is capable of being defended by police, the militia, or private mercenaries. Ownership of ideas is far less easily protected."
Some experts have linked SARS to a new form of coronavirus, other types are usually found in animals. Chinese specialists, however, link many SARS deaths to a rare form of the virus chlamydia, usually transmitted thru sexual contact.
In Texas Cash Today as well as Harrigans have filed for chapter 11.
This morning witnessed stocks soaring on the international markets; government bonds plunged in price and yields increased; the dollar rose to a 2-week high against the euro, yen, and Swiss franc; the Nikkei was up over 2%; and gold hit a 4-month low around $320.50 per ounce in Asia.
When the shelling in Baghdad ceases, stocks will plunge with fervor. Peace will not produce prosperity. Only jobs ring cash registers. The "underutilized" can tell you all about that.
Sunday, April 06, 2003
4/6/03 AdJusted For Inflation The GDP Has Declined For The Past Six Months
The average per capita GDP in the whole of China is $900, but it's $5000 in Shanghai.
The latest survey by Investors Intelligence reveals that 47% of investment-newsletter writers are bullish on U.S. stocks and 35% are bearish.
China is Washington state's third-largest trading partner.
Paul Wolfowitz, the U.S. deputy defense secretary, said today that it would take more than six months to create a new Iraqi government after the Hussein regime is defeated. More than six months may mean years. It should also be noted that we still have soldiers in Germany after almost six decades.
With our consumers retrenching, imports are beginning to decline.
The end of the war will not unleash corporate spending. Businesses require confidence in the future, and that is lacking due to contaction in many sectors.
Fed officials continue with heightened surveillance about the economy's "soft patch." Their time might be better spent considering their lack of performance.
Our Treasury secretary does not think a recession is likely. He would were he out of a job, couldn't find a new one for 19 months, and had his unemployment benefits run out. Snow's abilities might make him a good candidate for serving double-dip cones at the local Baskins and Robbins.
Syracuse freshman Carmelo Anthony is something special.
Sumitomo Mitsui warns of a big loss.
The death toll in Iraq keeps rising and the SARS disease continues to topple more as well.
In a few years California's population will amount to 20% of the people in the U.S. The state's budget deficit has a firm strangle hold, and will not let go. California, in my view, has seen its best days. If N.Y.C. can declare bankruptcy in the mid-1970s, so California can do so in the early 21st century.
Our armed forces came home from WW II with what scientists called GWVI. In the Gulf War soldiers returned home with "Gulf War Syndrome," and between 15,000 and 20,000 veterans reported a variety of illnesses when they returned. Maybe it was the smoke from burning oil wells, desert parasites, or other causes which have created on-going health problems these past dozen years. What will our troops bring home from Iraq? It won't be limited to liberating Iraq.
The average per capita GDP in the whole of China is $900, but it's $5000 in Shanghai.
The latest survey by Investors Intelligence reveals that 47% of investment-newsletter writers are bullish on U.S. stocks and 35% are bearish.
China is Washington state's third-largest trading partner.
Paul Wolfowitz, the U.S. deputy defense secretary, said today that it would take more than six months to create a new Iraqi government after the Hussein regime is defeated. More than six months may mean years. It should also be noted that we still have soldiers in Germany after almost six decades.
With our consumers retrenching, imports are beginning to decline.
The end of the war will not unleash corporate spending. Businesses require confidence in the future, and that is lacking due to contaction in many sectors.
Fed officials continue with heightened surveillance about the economy's "soft patch." Their time might be better spent considering their lack of performance.
Our Treasury secretary does not think a recession is likely. He would were he out of a job, couldn't find a new one for 19 months, and had his unemployment benefits run out. Snow's abilities might make him a good candidate for serving double-dip cones at the local Baskins and Robbins.
Syracuse freshman Carmelo Anthony is something special.
Sumitomo Mitsui warns of a big loss.
The death toll in Iraq keeps rising and the SARS disease continues to topple more as well.
In a few years California's population will amount to 20% of the people in the U.S. The state's budget deficit has a firm strangle hold, and will not let go. California, in my view, has seen its best days. If N.Y.C. can declare bankruptcy in the mid-1970s, so California can do so in the early 21st century.
Our armed forces came home from WW II with what scientists called GWVI. In the Gulf War soldiers returned home with "Gulf War Syndrome," and between 15,000 and 20,000 veterans reported a variety of illnesses when they returned. Maybe it was the smoke from burning oil wells, desert parasites, or other causes which have created on-going health problems these past dozen years. What will our troops bring home from Iraq? It won't be limited to liberating Iraq.
Saturday, April 05, 2003
4/5/03 The Bigger The Boom The Bigger The Bust
Over the past few years I have discussed the growing health care crisis, our ever-increasing unemployment, declining retirement pensions, an overpriced stock market, an international economy which is in the midst of a contraction, this country’s over consumption and extended debt position, the federal government’s unwillingness to reduce spending as tax revenues plummet, deficits at the state and local levels, and the potential for a global big D, just to name a few items. It no longer is a matter of looking at a glass being half full or half empty. Now it’s a matter of the glass being empty. Accounting gimmicks won’t work; revising monthly numbers won’t help; the spinmeisters can no longer make it happen. It’s time to swallow the bitter medicine, retrench, and rebuild. That will mean plenty of hardships for everyone. No one will be spared.
At the September 1996 Federal Open Market Committee Alan Greenspan said “ I recognize that this is a stock market bubble problem at this point.” He remarked that the solution was “the possibility of increasing margin requirements… if you want to get rid of the bubble, whatever it is, that will do it.” In my view, many of the present problems might have been avoided with those increased margin requirements.
The Pension Benefit Guaranty Corp, a federal agency, is $3.5 billion in debt. That agency now controls the $7.8 billion Bethlehem Steel pension plan which covers 95,000 workers. Those workers will receive monthly pension payments which are roughly 50% less than they had originally expected. There are examples after examples like this. Yesterday I described the U.S. Airways pension plan.
Close to two dozen software companies have issued warnings about the quarter not living up to prior expectations.
Georgia Pacific is laying off another 300 workers, Infospace fired 115, GE is cutting 56, and Trendwest is eliminating 111 call centers.
J. Paul Getty: “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
The year-to-year net change in private payrolls has been negative for 21 straight months, the longest stretch since WW II. Over the past two years 2.5 million jobs have been lost in the private sector. Morgan Stanley’s chief economist, Richard Berner, said the unemployment rate in the first quarter should have been at least 6.3% and not what has been reported. I totally agree, and have said just that many times in my blog.
Since February 20 I have often inquired how the government was operating with no money. Today we found out. The Treasury has been forced to suspend investing in the Civil Service Retirement and Disability Fund in order to meet spending needs. The government is already at the debt ceiling limit. This action will provide the government with $12 billion in funds thru July 11.
Europe’s biggest chip maker STMicroelectronics issued disappointing results.
The February job loss was revised from 308,000 to 357,000 jobs lost.
Daniel Carp, Eastman Kodak CEO: “It remains to be seen how demand recovers after the war, because I don’t think the slowdown we’re in is all due to the war in Iraq.”
The U.S. economy lost 108,00 jobs in March- three times the amount expected. The percentage of the U.S population holding jobs fell to 62.3% in March, the lowest level in nine years.
Crude oil fell to a two week low of $24.40 a barrel.
For the week ending April 2, funds invested in U.S. stocks had outflows of $1.6 billion.
Over the past few years I have discussed the growing health care crisis, our ever-increasing unemployment, declining retirement pensions, an overpriced stock market, an international economy which is in the midst of a contraction, this country’s over consumption and extended debt position, the federal government’s unwillingness to reduce spending as tax revenues plummet, deficits at the state and local levels, and the potential for a global big D, just to name a few items. It no longer is a matter of looking at a glass being half full or half empty. Now it’s a matter of the glass being empty. Accounting gimmicks won’t work; revising monthly numbers won’t help; the spinmeisters can no longer make it happen. It’s time to swallow the bitter medicine, retrench, and rebuild. That will mean plenty of hardships for everyone. No one will be spared.
At the September 1996 Federal Open Market Committee Alan Greenspan said “ I recognize that this is a stock market bubble problem at this point.” He remarked that the solution was “the possibility of increasing margin requirements… if you want to get rid of the bubble, whatever it is, that will do it.” In my view, many of the present problems might have been avoided with those increased margin requirements.
The Pension Benefit Guaranty Corp, a federal agency, is $3.5 billion in debt. That agency now controls the $7.8 billion Bethlehem Steel pension plan which covers 95,000 workers. Those workers will receive monthly pension payments which are roughly 50% less than they had originally expected. There are examples after examples like this. Yesterday I described the U.S. Airways pension plan.
Close to two dozen software companies have issued warnings about the quarter not living up to prior expectations.
Georgia Pacific is laying off another 300 workers, Infospace fired 115, GE is cutting 56, and Trendwest is eliminating 111 call centers.
J. Paul Getty: “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
The year-to-year net change in private payrolls has been negative for 21 straight months, the longest stretch since WW II. Over the past two years 2.5 million jobs have been lost in the private sector. Morgan Stanley’s chief economist, Richard Berner, said the unemployment rate in the first quarter should have been at least 6.3% and not what has been reported. I totally agree, and have said just that many times in my blog.
Since February 20 I have often inquired how the government was operating with no money. Today we found out. The Treasury has been forced to suspend investing in the Civil Service Retirement and Disability Fund in order to meet spending needs. The government is already at the debt ceiling limit. This action will provide the government with $12 billion in funds thru July 11.
Europe’s biggest chip maker STMicroelectronics issued disappointing results.
The February job loss was revised from 308,000 to 357,000 jobs lost.
Daniel Carp, Eastman Kodak CEO: “It remains to be seen how demand recovers after the war, because I don’t think the slowdown we’re in is all due to the war in Iraq.”
The U.S. economy lost 108,00 jobs in March- three times the amount expected. The percentage of the U.S population holding jobs fell to 62.3% in March, the lowest level in nine years.
Crude oil fell to a two week low of $24.40 a barrel.
For the week ending April 2, funds invested in U.S. stocks had outflows of $1.6 billion.
Friday, April 04, 2003
4/4/03 A Pandemic
In Canada a seventh SARS patient died yesterday. "Unfortunately, it's an epidemic now that will become a pandemic," predicted Donald Low, chief microbiologist at Toronto's Mt. Sinai Hospital. Denis Maki, a University of Wisconsin-Madison infectious diseases expert, spoke about SARS on Thursday at an American College of Physicians meeting in San Diego. He said "when you get a new strain that everyone's susceptible to, you have pandemic disease. There's a very good likelihood this is going to continue to spread."
Federal tax revenues as a percentage of GDP have averaged about 17% over the last four decades. With growing unemployment, less business growth, and our country getting poorer due to massive government spending reflected in the $2.2 trillion proposed budget, I expect tax revenues to be less than 15% of GDP this year.
Altria, parent of Philip Morris, will not be able to make their April 15 payment to 46 states, under the 1998 tobacco settlement agreement, if the company is required to post a $12 billion bond. Some states have issued bonds supported by those yearly payments, which are projected as $206 billion over 25 years. This could be a very messy matter for many parties. The states fought for this day of reckoning, and now they will wish they never opened the lid to this rancid creation.
We have 8.5 million unemployed Americans, and more lose their jobs daily. Yesterday Monaco Coach announced cutting 850 jobs, HealthSouth 165 jobs, and Georgia Pacific 170 jobs. Seven trillion dollars have been lost in the stock market since 2000. Obviously, the lesson of following the trend has been lost on many money managers, most of whom remain bullish. You'll know the lesson has been learned when, at Broad and Wall Street, your love one or someone close to you is left standing without his shirt, so to speak.
Vickers Insiders Weekly noted that the one-week ratio of insider sales to purchases recently surged to 2.95. This is decidedly negative.
In a study entitled "When Bubbles Burst", The IMF states "housing price busts on average occurred about once every 20 years, lasted about 4 years, and involved price declines of about 30%. There has been a 70% rise in U.K. housing prices since 1994 and 27% in the U.S. since 1996. A housing bust in one country will have spillovers in the rest of the world... the risks of a bust in the U.K. are greater than in the U.S."
The June eurodollar futures contract reflects a yield of 1.13% which is lower than the present Fed overnight target rate, and the latter could be cut at any time to 1%.
The spread between a two year and ten year Treasury bond is the widest since November 1992. It approximates 2.38 points.
A house panel is proposing a bill which would let workers choose between paid time off or overtime pay- both at the rate of time and one half. The bill, however, would allow employers to decide when the time could be taken.
Uruguay is set to default on as much as $6.5 billion in bonds.
Alan Greenspan: "Reports of nonbusiness bankruptcy filings reaching record highs in 2002 reveal that many consumers are experiencing significant financial crises." He needed bankruptcy filings to realize this?
There are about 150 major tribes in Iraq. A British official states "the tribes play a long game. For them, the real currency is not just money but privileges and the promise of roles and influence in the post-Saddam government, whatever the UN or the Iraqi exile groups may say."
The ISM for non-manufacturing businesses fell to 47.9 from 53.9 in February. The median forecast of 49 economists was for a reading of 52. The index contracted the most since October 2001. These figures were compiled prior to the start of the war. The services sector accounts for over 75% of the U.S. economy.
The number of U.S. workers filing new claims for state unemployment benefits rose by 38,000 to 445,000, the highest in almost one year. The number of Americans who continue to collect benefits each week surged 107,000 to 3.61 million.
Michael Moskow, president of the Federal Reserve Bank of Chicago, said "my own sense is that in early to mid-February is when things started to slow." He should tell that to the 8.5 million Americans who are unemployed.and can't find a job. Moskow lacks a sense of reality.
The services sector in the euro zone and in the U.K. slowed sharply last month, and Germany's unemployment rose to a 5 year high with about 4.5 million Germans out of work.
Iranian President Khatami: "The result of this war is the death of innocent people and circulating and strengthening extremism and violence...to answer back your violence with violence."
In Canada a seventh SARS patient died yesterday. "Unfortunately, it's an epidemic now that will become a pandemic," predicted Donald Low, chief microbiologist at Toronto's Mt. Sinai Hospital. Denis Maki, a University of Wisconsin-Madison infectious diseases expert, spoke about SARS on Thursday at an American College of Physicians meeting in San Diego. He said "when you get a new strain that everyone's susceptible to, you have pandemic disease. There's a very good likelihood this is going to continue to spread."
Federal tax revenues as a percentage of GDP have averaged about 17% over the last four decades. With growing unemployment, less business growth, and our country getting poorer due to massive government spending reflected in the $2.2 trillion proposed budget, I expect tax revenues to be less than 15% of GDP this year.
Altria, parent of Philip Morris, will not be able to make their April 15 payment to 46 states, under the 1998 tobacco settlement agreement, if the company is required to post a $12 billion bond. Some states have issued bonds supported by those yearly payments, which are projected as $206 billion over 25 years. This could be a very messy matter for many parties. The states fought for this day of reckoning, and now they will wish they never opened the lid to this rancid creation.
We have 8.5 million unemployed Americans, and more lose their jobs daily. Yesterday Monaco Coach announced cutting 850 jobs, HealthSouth 165 jobs, and Georgia Pacific 170 jobs. Seven trillion dollars have been lost in the stock market since 2000. Obviously, the lesson of following the trend has been lost on many money managers, most of whom remain bullish. You'll know the lesson has been learned when, at Broad and Wall Street, your love one or someone close to you is left standing without his shirt, so to speak.
Vickers Insiders Weekly noted that the one-week ratio of insider sales to purchases recently surged to 2.95. This is decidedly negative.
In a study entitled "When Bubbles Burst", The IMF states "housing price busts on average occurred about once every 20 years, lasted about 4 years, and involved price declines of about 30%. There has been a 70% rise in U.K. housing prices since 1994 and 27% in the U.S. since 1996. A housing bust in one country will have spillovers in the rest of the world... the risks of a bust in the U.K. are greater than in the U.S."
The June eurodollar futures contract reflects a yield of 1.13% which is lower than the present Fed overnight target rate, and the latter could be cut at any time to 1%.
The spread between a two year and ten year Treasury bond is the widest since November 1992. It approximates 2.38 points.
A house panel is proposing a bill which would let workers choose between paid time off or overtime pay- both at the rate of time and one half. The bill, however, would allow employers to decide when the time could be taken.
Uruguay is set to default on as much as $6.5 billion in bonds.
Alan Greenspan: "Reports of nonbusiness bankruptcy filings reaching record highs in 2002 reveal that many consumers are experiencing significant financial crises." He needed bankruptcy filings to realize this?
There are about 150 major tribes in Iraq. A British official states "the tribes play a long game. For them, the real currency is not just money but privileges and the promise of roles and influence in the post-Saddam government, whatever the UN or the Iraqi exile groups may say."
The ISM for non-manufacturing businesses fell to 47.9 from 53.9 in February. The median forecast of 49 economists was for a reading of 52. The index contracted the most since October 2001. These figures were compiled prior to the start of the war. The services sector accounts for over 75% of the U.S. economy.
The number of U.S. workers filing new claims for state unemployment benefits rose by 38,000 to 445,000, the highest in almost one year. The number of Americans who continue to collect benefits each week surged 107,000 to 3.61 million.
Michael Moskow, president of the Federal Reserve Bank of Chicago, said "my own sense is that in early to mid-February is when things started to slow." He should tell that to the 8.5 million Americans who are unemployed.and can't find a job. Moskow lacks a sense of reality.
The services sector in the euro zone and in the U.K. slowed sharply last month, and Germany's unemployment rose to a 5 year high with about 4.5 million Germans out of work.
Iranian President Khatami: "The result of this war is the death of innocent people and circulating and strengthening extremism and violence...to answer back your violence with violence."
Thursday, April 03, 2003
4/3/03 Leon Levy: "People Typically Discount The Risks On Stocks They Own"
Stephen Roach, Morgan Stanley's chief economist, will advise clients on Friday that he is forecasting a world recession in 2003. In my view, as expressed over and over again, that is already taking place. The question I believe is whether we are facing a global big D.
The WHO has confirmed 2,223 cases of SARS with 1898 of them in China and Hong Kong. In the U.S. 27 states have reported suspected SARS cases. There is a growing fear that, because of SARS, companies exposed to China and Hong Kong will see their earnings take a hit.
There have been at least 78 confirmed coalition deaths in the war. In addition, there are 22 soldiers listed as either POWs or MIA.
Mizuho, the world's largest bank by assets, has slid about 11% in the last three trading sessions in Japan and closed at a record low.
Telia Sonera AB, the largest Nordic phone company, will cut 400 jobs in Finland; KLM will cut several thousand jobs; Finnair OYJ will cut 1200 jobs; AMR will furlough 2500 more pilots; and Aloha Airlines is in arrears on about $1 million in airport fees to the state of Hawaii.
Yesterday the FBI issued an alert to all field agents for terrorists trying to make chemical weapons such as ricin.
Factory orders dropped 1.5% in February, the biggest decline in 5 months. These numbers took place prior to the start of the war.
World Bank: "A worrisome characteristic of the current economic environment is that macroeconomic policies maybe running up against their limits... the global trend toward deflation poses new challenges for policy makers."
GM is offering 5-year no interest loans. Ford offers $5 a day lease deals. However, the consumer appears still inclined towards the attractive incentives for a Camry, Corolla, and a Civic. The top Japanese carmakers sold more cars and trucks in the U.S. this March than they did a year earlier.
Applications for mortgages in the U.S. fell 17% from the previous week.
The President's overall budget for fiscal 2004 amounts to $2.2 trillion. Where will the money come from to fight the war as well as to offer seniors a Medicare drug plan which will offset the present high cost for prescription drugs? When will the debt ceiling be increased, and by how much?
The U.S Airways pilots' pension plan was underfunded by $2.5 billion but the Pension Benefit Guaranty Corp. will only fund about $600 million. Federal law sets a minimum benefit of about $44,000 for retirees enrolled in pension plans that terminate this year and are taken over by the government program. In sum, government protection and guaranty are misnomers. That goes for just about all government programs offering such proposed benefits. For example, if many banks go belly up, do you think the FDIC will have the money for complete insured reimbursement? Maybe the saying "let's sleep on it" should have a greater meaning.
Due to a projected $8 million budget deficit, the Scottsdale Arizona Unified School District notified 163 teachers(10% of the teaching staff) that their jobs will be eliminated next year. These teaching pink slips are being delivered all over the U.S.
Jose Narosky: "In war, there are no unwounded soldiers."
Gunnery SGT Bill Hale of Pennsauken, N.J.: "This battle (near Nassiriya) was only supposed to last six hours. We were fighting five days straight, 24 hours a day." Hale is in a wheelchair. He suffered a concussion, nerve damage and injuries to his lower back and knee as a result of being ambushed by Iraqi fire.
First LT James Uwins of South Pasadena, Ca fought alongside Bill Hale. He said they were unable to sleep more than a couple of hours in a time in 36-40 hour periods. He said "that's the thing that really gets you- it's the slow burn." He has shrapnel in his legs and left arm from the ambush of rocket-propelled grenades.
Barbara W. Tuchman: "War is the unfolding of miscalculations."
In the U.S. about one out of every seven jobs is either directly or indirectly linked to the airline and travel sector.
San Francisco's downtown office vacancies rose to a record high 20.3% in the first quarter. Rents fell for the ninth straight quarter to levels, adjusted for inflation, below 1992 levels. The vacancy rate is expected to rise further.
20 years ago the per capita GDP in Iraq was $9000. Now it's $1000.
Stephen Roach, Morgan Stanley's chief economist, will advise clients on Friday that he is forecasting a world recession in 2003. In my view, as expressed over and over again, that is already taking place. The question I believe is whether we are facing a global big D.
The WHO has confirmed 2,223 cases of SARS with 1898 of them in China and Hong Kong. In the U.S. 27 states have reported suspected SARS cases. There is a growing fear that, because of SARS, companies exposed to China and Hong Kong will see their earnings take a hit.
There have been at least 78 confirmed coalition deaths in the war. In addition, there are 22 soldiers listed as either POWs or MIA.
Mizuho, the world's largest bank by assets, has slid about 11% in the last three trading sessions in Japan and closed at a record low.
Telia Sonera AB, the largest Nordic phone company, will cut 400 jobs in Finland; KLM will cut several thousand jobs; Finnair OYJ will cut 1200 jobs; AMR will furlough 2500 more pilots; and Aloha Airlines is in arrears on about $1 million in airport fees to the state of Hawaii.
Yesterday the FBI issued an alert to all field agents for terrorists trying to make chemical weapons such as ricin.
Factory orders dropped 1.5% in February, the biggest decline in 5 months. These numbers took place prior to the start of the war.
World Bank: "A worrisome characteristic of the current economic environment is that macroeconomic policies maybe running up against their limits... the global trend toward deflation poses new challenges for policy makers."
GM is offering 5-year no interest loans. Ford offers $5 a day lease deals. However, the consumer appears still inclined towards the attractive incentives for a Camry, Corolla, and a Civic. The top Japanese carmakers sold more cars and trucks in the U.S. this March than they did a year earlier.
Applications for mortgages in the U.S. fell 17% from the previous week.
The President's overall budget for fiscal 2004 amounts to $2.2 trillion. Where will the money come from to fight the war as well as to offer seniors a Medicare drug plan which will offset the present high cost for prescription drugs? When will the debt ceiling be increased, and by how much?
The U.S Airways pilots' pension plan was underfunded by $2.5 billion but the Pension Benefit Guaranty Corp. will only fund about $600 million. Federal law sets a minimum benefit of about $44,000 for retirees enrolled in pension plans that terminate this year and are taken over by the government program. In sum, government protection and guaranty are misnomers. That goes for just about all government programs offering such proposed benefits. For example, if many banks go belly up, do you think the FDIC will have the money for complete insured reimbursement? Maybe the saying "let's sleep on it" should have a greater meaning.
Due to a projected $8 million budget deficit, the Scottsdale Arizona Unified School District notified 163 teachers(10% of the teaching staff) that their jobs will be eliminated next year. These teaching pink slips are being delivered all over the U.S.
Jose Narosky: "In war, there are no unwounded soldiers."
Gunnery SGT Bill Hale of Pennsauken, N.J.: "This battle (near Nassiriya) was only supposed to last six hours. We were fighting five days straight, 24 hours a day." Hale is in a wheelchair. He suffered a concussion, nerve damage and injuries to his lower back and knee as a result of being ambushed by Iraqi fire.
First LT James Uwins of South Pasadena, Ca fought alongside Bill Hale. He said they were unable to sleep more than a couple of hours in a time in 36-40 hour periods. He said "that's the thing that really gets you- it's the slow burn." He has shrapnel in his legs and left arm from the ambush of rocket-propelled grenades.
Barbara W. Tuchman: "War is the unfolding of miscalculations."
In the U.S. about one out of every seven jobs is either directly or indirectly linked to the airline and travel sector.
San Francisco's downtown office vacancies rose to a record high 20.3% in the first quarter. Rents fell for the ninth straight quarter to levels, adjusted for inflation, below 1992 levels. The vacancy rate is expected to rise further.
20 years ago the per capita GDP in Iraq was $9000. Now it's $1000.
Wednesday, April 02, 2003
4/2/03 The Push Into Baghdad Overwhelms The Economy And SARS
Yesterday and again overnight and this morning the markets have been focusing on our troops marching towards Baghdad, and trying to figure out the time required to take control of that city. After all, it's much more pleasurable to think about potential good news and to push the bad into the background. The markets might be well served to listen to Boston Fed President Cathy Minchan who said that issues other than just the war- like the overhang from excessive investment of the 1990s- were also restraining growth and suggested another rate cut might be forthcoming.
U.S. retail sales this year are expected to rise at their slowest rate in at least a decade. I am not so sure they will increase at all. Retail chain sales were down 1.4% in the week ending March 29.
Merrill Lynch: "The equity market is becoming less attractive."
The U.S. March ISM manufacturing index fell for the first time since October to 46.2 from 50.5. Economists had been predicting a reading of 49. European manufacturing shrank for the sixth month in seven in March and dropped to 48.4. Construction spending fell 0.2%. In March new orders fell sharply to 46.2 from 52.3 in February. The ISM employment reading fell to 42.1(a really low number). Industry-wide vehicle inventories reached a record of 4 million units in March as auto sales dropped for the third month in a row.
Fleming, Air Canada, and DNA Sciences filed for Chapter 11.
The average unemployed worker already receiving unemployment insurance is out of a job for 19 months, the highest level in eight years.
Berkshire Hathaway to buy Clayton Homes for $1.7 billion in cash, and First Data to buy Concord EFS for $6.75 billion.
After the market closed yesterday, Asyst Technologies issued a serious revenue warning. The revenue shortfall for the quarter would exceed 20%. They make chip manufacturing equipment and cited "continued weakness in the semiconductor industry." They did not mention the war as the culprit.
The Marines of the 3rd Battalion, 7th infantry are short on supplies of cigarettes and smoking tobacco. 34% of servicement smoke. It is permitted in wartime. Farmers in the countryside have helped to ease the shortage. We ask our soldiers to go into battle and can't even supply them adequately. Something is wrong here.
SARS is having a very negative impact on many Asian economies, and growth estimates are being reduced on a daily basis. I certainly pray that this illness will be brought under control. Right now that does not look like a reality.
Yesterday and again overnight and this morning the markets have been focusing on our troops marching towards Baghdad, and trying to figure out the time required to take control of that city. After all, it's much more pleasurable to think about potential good news and to push the bad into the background. The markets might be well served to listen to Boston Fed President Cathy Minchan who said that issues other than just the war- like the overhang from excessive investment of the 1990s- were also restraining growth and suggested another rate cut might be forthcoming.
U.S. retail sales this year are expected to rise at their slowest rate in at least a decade. I am not so sure they will increase at all. Retail chain sales were down 1.4% in the week ending March 29.
Merrill Lynch: "The equity market is becoming less attractive."
The U.S. March ISM manufacturing index fell for the first time since October to 46.2 from 50.5. Economists had been predicting a reading of 49. European manufacturing shrank for the sixth month in seven in March and dropped to 48.4. Construction spending fell 0.2%. In March new orders fell sharply to 46.2 from 52.3 in February. The ISM employment reading fell to 42.1(a really low number). Industry-wide vehicle inventories reached a record of 4 million units in March as auto sales dropped for the third month in a row.
Fleming, Air Canada, and DNA Sciences filed for Chapter 11.
The average unemployed worker already receiving unemployment insurance is out of a job for 19 months, the highest level in eight years.
Berkshire Hathaway to buy Clayton Homes for $1.7 billion in cash, and First Data to buy Concord EFS for $6.75 billion.
After the market closed yesterday, Asyst Technologies issued a serious revenue warning. The revenue shortfall for the quarter would exceed 20%. They make chip manufacturing equipment and cited "continued weakness in the semiconductor industry." They did not mention the war as the culprit.
The Marines of the 3rd Battalion, 7th infantry are short on supplies of cigarettes and smoking tobacco. 34% of servicement smoke. It is permitted in wartime. Farmers in the countryside have helped to ease the shortage. We ask our soldiers to go into battle and can't even supply them adequately. Something is wrong here.
SARS is having a very negative impact on many Asian economies, and growth estimates are being reduced on a daily basis. I certainly pray that this illness will be brought under control. Right now that does not look like a reality.
Tuesday, April 01, 2003
4/1/03 I'm Not Foolin. This Is For Real
The consumer is slowly changing. The difficult economic times coupled with the Iraqi war are teaching consumers they can and will do with less. This phenomenon will change the consumer spending landscape and it shall have a profound long term impact on the U.S. economy as well as those economies dependent on our importing appetite. The net result will be, in part, less tax revenues for state and local governments; less service and manufacturing jobs which also translates into reduced tax revenues for the government in Washington; a higher personal savings rate; reduced credit card debt balances; and more price sensitivity when making a purchase. I would expect companies to reduce employment further, to carry lower inventories, to cut cap spending, and to pressure suppliers for price reductions. Deflation will be the by-product of the above environment, and it will be with us for a long period of time.
The percentage of job seekers who said they believe there will be fewer jobs available in six months rose to 40.7%.
David Ogilvy: "The consumer isn't a moron. She is your wife."
Howard Jerome: "We can no longer have everything we want, but we can be more than we imagined."
A Watson Wyatt study shows the percentage of employees nationwide with fully funded pension plans dropped from 84% in 1998 to 37% in 2002, and continues to decline.
The government can print more dollars but they can't manufacture consumer confidence. The consumer will, over time, leave home without their plastic.
Two months ago the inventory of unsold homes was a 3.8 month supply. In February the inventory was up to 5 months, and I expect that to increase and for the median price of a house to decline. The bubble has burst.
The employment component of the Chicago PMI index fell to 45.1 from an already weak 46.6 in February. The new orders index slumped to 52.5 from 59 in February. I expect the March number to be even lower.
WalMart expects sales at stores open for more than a year to be at the low end of its previous estimate for March. Federated, JC Penney, Pier I, and Nordstrom said March sales were below expectations.
March manufacturing activity in the Chicago region plunged sharply to 48.4 from 54.9. Economists had predicted a drop to 51. Economic activity in NYC was reported as weak too.
There were only 5 IPOs in the first quarter, the lowest number in 25 years.
KMart cut their staff by 660. They still employ 170,000. Edgar Online reduced employment by 17%.
Global semiconductor chip sales dropped 3.3% in January. They continue weak.
Violence in Nigeria has slashed crude output by 40% or 800,000 barrels per day, and further reductions are expected.
Saudi Arabia's March oil output was its highest monthly production in 21 years.
Edward Sweda, Jr, senior attorney for the Tobacco Products Liability Project in Boston: "When Philip Morris is talking about the impact of the lawsuits with friends and investors from Wall Street, everything is rosy and the bottom line is fine. When they're talking about the issue with state governments, there's the threat of bankruptcy and their inability to continue paying the settlement and they say they need protection."
China's Huawei Technologies has been selling tech hardware to Iraq. Russia, France, and Jordan are believed to be suppliers to Iraq too.
Japan's biggest manufacturers are pessimistic on their economy for a ninth straight quarter. Large business confidence falls to -10. Sentiment had been expected to rise. Companies with more than 1000 workers will reduce cap spending by 0.8%.
For years the U.S. consumer has been overwhelmed by elevated indebtedness in relation to take-home pay. That won't change overnight, but it will change for the better over time as consumption patterns become increasingly rational.
The consumer is slowly changing. The difficult economic times coupled with the Iraqi war are teaching consumers they can and will do with less. This phenomenon will change the consumer spending landscape and it shall have a profound long term impact on the U.S. economy as well as those economies dependent on our importing appetite. The net result will be, in part, less tax revenues for state and local governments; less service and manufacturing jobs which also translates into reduced tax revenues for the government in Washington; a higher personal savings rate; reduced credit card debt balances; and more price sensitivity when making a purchase. I would expect companies to reduce employment further, to carry lower inventories, to cut cap spending, and to pressure suppliers for price reductions. Deflation will be the by-product of the above environment, and it will be with us for a long period of time.
The percentage of job seekers who said they believe there will be fewer jobs available in six months rose to 40.7%.
David Ogilvy: "The consumer isn't a moron. She is your wife."
Howard Jerome: "We can no longer have everything we want, but we can be more than we imagined."
A Watson Wyatt study shows the percentage of employees nationwide with fully funded pension plans dropped from 84% in 1998 to 37% in 2002, and continues to decline.
The government can print more dollars but they can't manufacture consumer confidence. The consumer will, over time, leave home without their plastic.
Two months ago the inventory of unsold homes was a 3.8 month supply. In February the inventory was up to 5 months, and I expect that to increase and for the median price of a house to decline. The bubble has burst.
The employment component of the Chicago PMI index fell to 45.1 from an already weak 46.6 in February. The new orders index slumped to 52.5 from 59 in February. I expect the March number to be even lower.
WalMart expects sales at stores open for more than a year to be at the low end of its previous estimate for March. Federated, JC Penney, Pier I, and Nordstrom said March sales were below expectations.
March manufacturing activity in the Chicago region plunged sharply to 48.4 from 54.9. Economists had predicted a drop to 51. Economic activity in NYC was reported as weak too.
There were only 5 IPOs in the first quarter, the lowest number in 25 years.
KMart cut their staff by 660. They still employ 170,000. Edgar Online reduced employment by 17%.
Global semiconductor chip sales dropped 3.3% in January. They continue weak.
Violence in Nigeria has slashed crude output by 40% or 800,000 barrels per day, and further reductions are expected.
Saudi Arabia's March oil output was its highest monthly production in 21 years.
Edward Sweda, Jr, senior attorney for the Tobacco Products Liability Project in Boston: "When Philip Morris is talking about the impact of the lawsuits with friends and investors from Wall Street, everything is rosy and the bottom line is fine. When they're talking about the issue with state governments, there's the threat of bankruptcy and their inability to continue paying the settlement and they say they need protection."
China's Huawei Technologies has been selling tech hardware to Iraq. Russia, France, and Jordan are believed to be suppliers to Iraq too.
Japan's biggest manufacturers are pessimistic on their economy for a ninth straight quarter. Large business confidence falls to -10. Sentiment had been expected to rise. Companies with more than 1000 workers will reduce cap spending by 0.8%.
For years the U.S. consumer has been overwhelmed by elevated indebtedness in relation to take-home pay. That won't change overnight, but it will change for the better over time as consumption patterns become increasingly rational.
4/1/03 I'm Not Foolin. This Is For Real
The consumer is slowly changing. The difficult economic times coupled with the Iraqi war are teaching consumers they can and will do with less. This phenomenon will change the consumer spending landscape and it shall have a profound long term impact on the U.S. economy as well as those economies dependent on our importing appetite. The net result will be, in part, less tax revenues for state and local governments; less service and manufacturing jobs which also translates into less tax revenues for the government in Washington; a higher personal savings rate; reduced credit card debt balances; and more price sensitivity when making a purchase. I would expect companies to reduce employment further, to carry lower inventories, to cut cap spending, and to pressure suppliers for price reductions. Deflation will be the by-product of the above environment, and it will be with us for an extended period of time.
The percentage of job seekers who said they believe there will be fewer jobs available in six months rose to 40.7%.
David Ogilvy: "The consumer isn't a moron. She is your wife."
Howard Jerome: "We can no longer have everything we want, but we can be more than we imagined."
A Watson Wyatt study shows the percentage of employees nationwide with fully funded pension plans dropped from 84% in 1998 to 37% in 2002, and continues to decline.
The government can print more dollars but they can't manufacture consumer confidence. The consumer will, over time, leave home without their plastic.
Two months ago the inventory of unsold homes was a 3.8 month supply. In February the inventory was up to 5 months, and I expect that to increase and for the median price of a house to decline. The bubble has burst.
The employment component of the Chicago PMI index fell to 45.1 from an already weak 46.6 in February. The new orders index slumped to 52.5 from 59 in February. I expect the March number to be even lower.
WalMart expects sales at stores open for more than a year to be at the low end of its previous estimate for March. Federated, JC Penney, Pier I, and Nordstrom said March sales were below expectations.
March manufacturing activity in the Chicago region plunged sharply to 48.4 from 54.9. Economists had predicted a drop to 51. Economic activity in NYC was reported as weak too.
There were only 5 IPOs in the first quarter, the lowest number in 25 years.
KMart cut their staff by 660. They still employ 170,000. Edgar Online reduced employment by 17%.
Global semiconductor chip sales dropped 3.3% in January. They continue weak.
Violence in Nigeria has slashed crude output by 40% or 800,000 barrels per day, and further reductions are expected.
Saudi Arabia's March oil output was its highest monthly production in 21 years.
Edward Sweda, Jr, senior attorney for the Tobacco Products Liability Project in Boston: "When Philip Morris is talking about the impact of the lawsuits with friends and investors from Wall Street, everything is rosy and the bottom line is fine. When they're talking about the issue with state governments, there's the threat of bankruptcy and their inability to continue paying the settlement and they say they need protection."
China's Huawei Technologies has been selling tech hardware to Iraq. Russia, France, and Jordan are believed to be suppliers to Iraq too.
Japan's biggest manufacturers are pessimistic on their economy for a ninth straight quarter. Large business confidence falls to -10. Sentiment had been expected to rise. Companies with more than 1000 workers will reduce cap spending by 0.8%.
For years the U.S. consumer has been overwhelmed by elevated indebtedness in relation to take-home pay. That won't change overnight, but it will change for the better over time as consumption patterns become increasingly rational.
The consumer is slowly changing. The difficult economic times coupled with the Iraqi war are teaching consumers they can and will do with less. This phenomenon will change the consumer spending landscape and it shall have a profound long term impact on the U.S. economy as well as those economies dependent on our importing appetite. The net result will be, in part, less tax revenues for state and local governments; less service and manufacturing jobs which also translates into less tax revenues for the government in Washington; a higher personal savings rate; reduced credit card debt balances; and more price sensitivity when making a purchase. I would expect companies to reduce employment further, to carry lower inventories, to cut cap spending, and to pressure suppliers for price reductions. Deflation will be the by-product of the above environment, and it will be with us for an extended period of time.
The percentage of job seekers who said they believe there will be fewer jobs available in six months rose to 40.7%.
David Ogilvy: "The consumer isn't a moron. She is your wife."
Howard Jerome: "We can no longer have everything we want, but we can be more than we imagined."
A Watson Wyatt study shows the percentage of employees nationwide with fully funded pension plans dropped from 84% in 1998 to 37% in 2002, and continues to decline.
The government can print more dollars but they can't manufacture consumer confidence. The consumer will, over time, leave home without their plastic.
Two months ago the inventory of unsold homes was a 3.8 month supply. In February the inventory was up to 5 months, and I expect that to increase and for the median price of a house to decline. The bubble has burst.
The employment component of the Chicago PMI index fell to 45.1 from an already weak 46.6 in February. The new orders index slumped to 52.5 from 59 in February. I expect the March number to be even lower.
WalMart expects sales at stores open for more than a year to be at the low end of its previous estimate for March. Federated, JC Penney, Pier I, and Nordstrom said March sales were below expectations.
March manufacturing activity in the Chicago region plunged sharply to 48.4 from 54.9. Economists had predicted a drop to 51. Economic activity in NYC was reported as weak too.
There were only 5 IPOs in the first quarter, the lowest number in 25 years.
KMart cut their staff by 660. They still employ 170,000. Edgar Online reduced employment by 17%.
Global semiconductor chip sales dropped 3.3% in January. They continue weak.
Violence in Nigeria has slashed crude output by 40% or 800,000 barrels per day, and further reductions are expected.
Saudi Arabia's March oil output was its highest monthly production in 21 years.
Edward Sweda, Jr, senior attorney for the Tobacco Products Liability Project in Boston: "When Philip Morris is talking about the impact of the lawsuits with friends and investors from Wall Street, everything is rosy and the bottom line is fine. When they're talking about the issue with state governments, there's the threat of bankruptcy and their inability to continue paying the settlement and they say they need protection."
China's Huawei Technologies has been selling tech hardware to Iraq. Russia, France, and Jordan are believed to be suppliers to Iraq too.
Japan's biggest manufacturers are pessimistic on their economy for a ninth straight quarter. Large business confidence falls to -10. Sentiment had been expected to rise. Companies with more than 1000 workers will reduce cap spending by 0.8%.
For years the U.S. consumer has been overwhelmed by elevated indebtedness in relation to take-home pay. That won't change overnight, but it will change for the better over time as consumption patterns become increasingly rational.
Monday, March 31, 2003
3/31/03 Goethe: "The Condition of Freedom Is Risk"
It is the 12th day of the war. We have at least 46 casualties and another 17 soldiers are missing. Britain has lost 25 with 5 of those killed in action. According to yesterday's poll, 55% of Americans believe the U.S. government was too optimistic in assessing the course of the war in Iraq (Cheney certainly was) and one-third would not support the war if more than 500 U.S. troops were to die.
With an extended war now expected, second quarter earnings estimates will be revised downward. They were too high for starters.
Japan's industrial production declined 1.7%, and was the fifth decline in the past six months and twice the drop economists had anticipated. Inventories declined 2.3% to the lowest levels since 1988.
The Nikkei ended the year off 28%. Mitsui Chemicals and Sumitomo Chemical eneded their merger plans. It is anticipated that all of Japan's top seven banks will report losses.
European March consumer confidence dropped to the lowest level since August 1993. I am confident that it can decline further.
Over the past 12 months the euro has risen 23% against the dollar. That's some jump.
The NY Times reports that an Iraqi general says 4000 volunteers from 23 Arab countries stand ready to carry out suicide attacks against U.S. troops.( I need to return to school. I didn't know there were 23 Arab countries.) Tariq Aziz says "when you fight an invader by whatever means available to you, you are not a terrorist, you are a hero." I say you are a hero when you kill a terrorist who is mistaken for a hero.
Between now and 2015 the interest on our public debt is about $3.5 trillion.
Egyptian President Mubarek said the Iraqi war would produce "one hundred new bin Ladens." How would he know? Is Egypt harboring terrorists?
In Northeastern Iraq at the Ansar al-Islam compound, there is a complex of underground tunnels and bunkers. It is possible that, at this location, Muslim guerilla groups and al-Qaeda have been making ricin.
Banning smoking in bars and restaurants in NYC has created quite a debate. They are banning a product which is legal. Then again, this country lived thru Prohibition. I notice that Anheuser Busch's cash flow is growing quite nicely. It should be noted that I do not drink or smoke. However, I do cherish freedom. As Goethe said, the condition of freedom is risk.
It is the 12th day of the war. We have at least 46 casualties and another 17 soldiers are missing. Britain has lost 25 with 5 of those killed in action. According to yesterday's poll, 55% of Americans believe the U.S. government was too optimistic in assessing the course of the war in Iraq (Cheney certainly was) and one-third would not support the war if more than 500 U.S. troops were to die.
With an extended war now expected, second quarter earnings estimates will be revised downward. They were too high for starters.
Japan's industrial production declined 1.7%, and was the fifth decline in the past six months and twice the drop economists had anticipated. Inventories declined 2.3% to the lowest levels since 1988.
The Nikkei ended the year off 28%. Mitsui Chemicals and Sumitomo Chemical eneded their merger plans. It is anticipated that all of Japan's top seven banks will report losses.
European March consumer confidence dropped to the lowest level since August 1993. I am confident that it can decline further.
Over the past 12 months the euro has risen 23% against the dollar. That's some jump.
The NY Times reports that an Iraqi general says 4000 volunteers from 23 Arab countries stand ready to carry out suicide attacks against U.S. troops.( I need to return to school. I didn't know there were 23 Arab countries.) Tariq Aziz says "when you fight an invader by whatever means available to you, you are not a terrorist, you are a hero." I say you are a hero when you kill a terrorist who is mistaken for a hero.
Between now and 2015 the interest on our public debt is about $3.5 trillion.
Egyptian President Mubarek said the Iraqi war would produce "one hundred new bin Ladens." How would he know? Is Egypt harboring terrorists?
In Northeastern Iraq at the Ansar al-Islam compound, there is a complex of underground tunnels and bunkers. It is possible that, at this location, Muslim guerilla groups and al-Qaeda have been making ricin.
Banning smoking in bars and restaurants in NYC has created quite a debate. They are banning a product which is legal. Then again, this country lived thru Prohibition. I notice that Anheuser Busch's cash flow is growing quite nicely. It should be noted that I do not drink or smoke. However, I do cherish freedom. As Goethe said, the condition of freedom is risk.
Sunday, March 30, 2003
3/30/03 Human Illusions
Robert Lynde, an Irish author who wrote in the early 20th century: "The belief in the possibility of a short decisive war appears to be one of the most ancient and dangerous of human illusions."
Assets in money market funds and bank savings accounts total more than $5 trillion, and this amount continues to grow. American investors have been taught a stark gambling lesson from the go-go bubble times of only a few years back. There is a disconnect between the average investor and the professional money managers who remain bullish to the core. It's not surprising because the latter are losing other people's money. It's also not surprising that last year a record $140.5 billion was invested in bond funds. One should remember that money market funds limit risk while bond funds do carry risk-maybe not nearly as much as stock funds, but capital can be lost.
In today's economic environment it is wise to avoid a gamble. I am reminded by a statement made by Field Marshall Erwin Rommel. He referred to the battlefield but it is also true of investing: "A gamble is a chance taken; if it fails, recovery is impossible." Today there is little room for error much less a gamble. In 2002 Americans consumed $435 billion more in goods and services than the U.S. produced. As trade and account deficits continue to mount, the dollar has begun to fall, and that fall is picking up speed. We must reduce private and government spending, and increase savings- war or no war. A weak currency reflects a faltering economy, and the latter produces a declining stock market. People will be rewarded for keeping their savings in money market funds. It won't be lost chasing so-called values which are a reflection of human illusions.
When looking at the great companies, such as, WalMart, it is interesting to note their key suppliers. A growing percentage of the business P&G and Clorox put on their books is with WalMart. It is not surprising, therefore, that these two companies are performing better in this harsh economic environment. They have been able to reduce warehousing costs, inventory management, and shipping expenses.
Ali Hassan Majid is Hussein's cousin and known as Chemical Ali. He is leading the enemy troops in southern Iraq. Over the years Ali has killed and maimed several hundred thousand Iraqi and Kurd civilians with chemical weapons. He too must be eliminated. His words reflect horror: "I will kill them all with chemical weapons. Who is going to say anything? The international community? F--- them. The international community and those who listen to them."
Napoleon: "The battlefield is a scene of constant chaos. The winner will be the one who controls that chaos, both his own and the enemies."
N. Korea wants to issue bonds for the first time. They will be called "People's Life Bonds." Maybe Saddam Hussein will purchase some bonds with the money he stole from the Iraqi people.
Commerzbank may announce 2800 layoffs tomorrow.
Kansas topped Arizona in a thriller. That leaves Kansas the favorite among the final four.
One final word about stock market scrutiny. The long term trend is much more significant than the 50 day or 200 day moving average. If the economy were to turn upward, you would have plenty of time to invest your savings. In the meantime the trend is down, and it has been down for three years and it will stay down for a much longer period of time. Greed can be very real but it is often cemented in human illusion. Investing requires discipline and study. Vince Lombardi said that practice does not make perfect- only perfect practice makes perfect. The stock market as a whole is not priced to perfection. Stocks are wondering down the yellow brick road, and after three years of a bear market, they are still priced to reflect good times being just around the corner. It might be wise to take the enemy into account- the pervasive spending habits in the U.S. We are living beyond our means, and tragedy will be the consequence.
Robert Lynde, an Irish author who wrote in the early 20th century: "The belief in the possibility of a short decisive war appears to be one of the most ancient and dangerous of human illusions."
Assets in money market funds and bank savings accounts total more than $5 trillion, and this amount continues to grow. American investors have been taught a stark gambling lesson from the go-go bubble times of only a few years back. There is a disconnect between the average investor and the professional money managers who remain bullish to the core. It's not surprising because the latter are losing other people's money. It's also not surprising that last year a record $140.5 billion was invested in bond funds. One should remember that money market funds limit risk while bond funds do carry risk-maybe not nearly as much as stock funds, but capital can be lost.
In today's economic environment it is wise to avoid a gamble. I am reminded by a statement made by Field Marshall Erwin Rommel. He referred to the battlefield but it is also true of investing: "A gamble is a chance taken; if it fails, recovery is impossible." Today there is little room for error much less a gamble. In 2002 Americans consumed $435 billion more in goods and services than the U.S. produced. As trade and account deficits continue to mount, the dollar has begun to fall, and that fall is picking up speed. We must reduce private and government spending, and increase savings- war or no war. A weak currency reflects a faltering economy, and the latter produces a declining stock market. People will be rewarded for keeping their savings in money market funds. It won't be lost chasing so-called values which are a reflection of human illusions.
When looking at the great companies, such as, WalMart, it is interesting to note their key suppliers. A growing percentage of the business P&G and Clorox put on their books is with WalMart. It is not surprising, therefore, that these two companies are performing better in this harsh economic environment. They have been able to reduce warehousing costs, inventory management, and shipping expenses.
Ali Hassan Majid is Hussein's cousin and known as Chemical Ali. He is leading the enemy troops in southern Iraq. Over the years Ali has killed and maimed several hundred thousand Iraqi and Kurd civilians with chemical weapons. He too must be eliminated. His words reflect horror: "I will kill them all with chemical weapons. Who is going to say anything? The international community? F--- them. The international community and those who listen to them."
Napoleon: "The battlefield is a scene of constant chaos. The winner will be the one who controls that chaos, both his own and the enemies."
N. Korea wants to issue bonds for the first time. They will be called "People's Life Bonds." Maybe Saddam Hussein will purchase some bonds with the money he stole from the Iraqi people.
Commerzbank may announce 2800 layoffs tomorrow.
Kansas topped Arizona in a thriller. That leaves Kansas the favorite among the final four.
One final word about stock market scrutiny. The long term trend is much more significant than the 50 day or 200 day moving average. If the economy were to turn upward, you would have plenty of time to invest your savings. In the meantime the trend is down, and it has been down for three years and it will stay down for a much longer period of time. Greed can be very real but it is often cemented in human illusion. Investing requires discipline and study. Vince Lombardi said that practice does not make perfect- only perfect practice makes perfect. The stock market as a whole is not priced to perfection. Stocks are wondering down the yellow brick road, and after three years of a bear market, they are still priced to reflect good times being just around the corner. It might be wise to take the enemy into account- the pervasive spending habits in the U.S. We are living beyond our means, and tragedy will be the consequence.
Saturday, March 29, 2003
3/29/03 Missing In Action Part Two
Marine Lance CPL. Mike Williams is no longer missing in action. I just received word that Mike is now a casualty of this war. When informed, I was totally stunned and immediately filled with grief. I am not a family member. In fact, I did not know Mike Williams. I know him now. I grieve for his family, and pray for our other soldiers to return home safely. I somehow feel I can do more.
Marine Lance CPL. Mike Williams is no longer missing in action. I just received word that Mike is now a casualty of this war. When informed, I was totally stunned and immediately filled with grief. I am not a family member. In fact, I did not know Mike Williams. I know him now. I grieve for his family, and pray for our other soldiers to return home safely. I somehow feel I can do more.
3/29/03 Missing In Action
On Wednesday 31 year old Marine Lance CPL. Mike Williams of Phoenix was listed as missing in action during fighting near Nasiriyah. Marine officers went to his mother's home to notify her of the news, but they knew nothing more than her son was missing in action. Each day Americans read the newspapers, listen to the radio, watch television, and surf the web for the latest information on the war. We should always remember that often the day-to-day horror of this war does not change for those waiting on their missing in action love ones.
Yesterday was not a good day for chapter 11 and layoff announcements. Streambox, Olympic Pipe Line, and Antex all filed for Chapter 11. Fleming warned its status as an on-going entity is in doubt.
Manugistics plans on eliminating 130 jobs; Terayon Communication Systems 100 jobs; Midway Games West 113; Smith and Nephew 159; Space Systems/Loral 150; Emery Forwarding 104; and ElPaso Corp. 70 jobs.
Consumer spending in January and February was flat. However, when adjusted for inflation, consumer spending dropped 0.4%, the largest decrease since last September.
The University of Michigan's index of consumer sentiment fell in March to its lowest level since September 1993.
Japan's Finance Ministry sold a total of 1.2 trillion yen ($10 billion) in January and February. It is likely that March will show another round of yen sales.
Unless Monday produces large market losses, the Dow and the S&P 500 will post their first winning month since November, and it would mark the second winning month in a row for the Nasdaq.
Justice Louis D. Brandeis: "We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both."
"The book-to-bill ratio put out by SEMI is an illusion of growth, as there is none," stated Dr. Robert N. Castellano, President of the Information Network. "Bookings have been flat for six months. But due to 20,000 layoffs in the industry, companies don't have sufficient manpower to build processing tools so that the billings have essentially been dropping for the past six months, which raises the book-to-bill ratio," Castellano said.
On Wednesday 31 year old Marine Lance CPL. Mike Williams of Phoenix was listed as missing in action during fighting near Nasiriyah. Marine officers went to his mother's home to notify her of the news, but they knew nothing more than her son was missing in action. Each day Americans read the newspapers, listen to the radio, watch television, and surf the web for the latest information on the war. We should always remember that often the day-to-day horror of this war does not change for those waiting on their missing in action love ones.
Yesterday was not a good day for chapter 11 and layoff announcements. Streambox, Olympic Pipe Line, and Antex all filed for Chapter 11. Fleming warned its status as an on-going entity is in doubt.
Manugistics plans on eliminating 130 jobs; Terayon Communication Systems 100 jobs; Midway Games West 113; Smith and Nephew 159; Space Systems/Loral 150; Emery Forwarding 104; and ElPaso Corp. 70 jobs.
Consumer spending in January and February was flat. However, when adjusted for inflation, consumer spending dropped 0.4%, the largest decrease since last September.
The University of Michigan's index of consumer sentiment fell in March to its lowest level since September 1993.
Japan's Finance Ministry sold a total of 1.2 trillion yen ($10 billion) in January and February. It is likely that March will show another round of yen sales.
Unless Monday produces large market losses, the Dow and the S&P 500 will post their first winning month since November, and it would mark the second winning month in a row for the Nasdaq.
Justice Louis D. Brandeis: "We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both."
"The book-to-bill ratio put out by SEMI is an illusion of growth, as there is none," stated Dr. Robert N. Castellano, President of the Information Network. "Bookings have been flat for six months. But due to 20,000 layoffs in the industry, companies don't have sufficient manpower to build processing tools so that the billings have essentially been dropping for the past six months, which raises the book-to-bill ratio," Castellano said.
Friday, March 28, 2003
3/28/03 Waiting For Supply Lines In Baghdad And On Wall Street
Our troops do not descend on Baghdad. They wait on supplies to catch up prior to completing their mission. Meanwhile, we drop two 4,700 pound bunker busters to soften up the enemy forces. Wall Street is not so fortunate. The buyers rushed in and pushed the Dow some 1000 points ahead only one week ago. There was a net inflow of $3.7 billion into U.S. stocks. The rally stalled. There aren't any supply lines for reinforcement. Corporate earnings are disappointing at best. Corporate spending is a misnomer. Consumer confidence drops month by month to decade lows. The employment arena offers no job security and little or no job opportunity. Companies are not hiring. They are laying off. Three months ago I warned of companies missing first quarter earnings estimates. You will be hearing about those misses day in and day out. This is the earnings quicksand season. It will be repeated in the June quarter. Wall Street bulls have once again run into an ambush. They are surrounded by lower than expected profits and cash flow. Hope springs eternal. Watching the blood spurt on money managers is never a pretty sight.
UK and German consumer confidence slumps to the lowest level since 1995. France lowers its estimate for economic growth to 0.3%. These three countries comprise 58% of the Economic Union's $9.5 trillion economy, which equates to the size of the GDP in the U.S. There is rising unemployment throughout the EU, spending remains weak, and the latter will be undermined further by the rise in oil prices. Quite conceivably, the EU had negative growth in the first quarter which ends in a few days. In other words, it is in the midst of a recession.
Unemployment hit a 3 1/2 year high in Denmark.
Auto sales will show a drop in March.
Total spending in the U.S. will show a decline for last month, and it will be the first back-to-back decline since December 1990-January 1991, when the economy was in a recession.
It is doubtful that our economy will show any growth in the first quarter after you remove government spending for the war effort.
Robert Mondavi said it would post a loss in the current quarter and they are laying off 10% of the workforce.
The IMF warned of "the potential for sizable losses" from significant unhedged fixed-income positions as a result of the very steep yield curve.
The Federal Reserve Bank of Chicago said its National Activity Index for February was -0.62, the 6th negative reading in the last 7 months.
AMR may file for bankruptcy next week. It's a good thing the Mojave can accomodate the growing number of unused airplanes.
Gold bullion will start trading in Australia. Investors can own a specific portion of a gold bar. I'll take the hindquarter.
Bad weather has resulted in the Ukraine losing half its winter crops.
Rudy Tomjanovich, the Houston Rockets coach, is taking an indefinite leave to receive treatment for bladder cancer.
Thirty marines were injured in a terrible friendly fire accident around Nassiriya.
Our troops do not descend on Baghdad. They wait on supplies to catch up prior to completing their mission. Meanwhile, we drop two 4,700 pound bunker busters to soften up the enemy forces. Wall Street is not so fortunate. The buyers rushed in and pushed the Dow some 1000 points ahead only one week ago. There was a net inflow of $3.7 billion into U.S. stocks. The rally stalled. There aren't any supply lines for reinforcement. Corporate earnings are disappointing at best. Corporate spending is a misnomer. Consumer confidence drops month by month to decade lows. The employment arena offers no job security and little or no job opportunity. Companies are not hiring. They are laying off. Three months ago I warned of companies missing first quarter earnings estimates. You will be hearing about those misses day in and day out. This is the earnings quicksand season. It will be repeated in the June quarter. Wall Street bulls have once again run into an ambush. They are surrounded by lower than expected profits and cash flow. Hope springs eternal. Watching the blood spurt on money managers is never a pretty sight.
UK and German consumer confidence slumps to the lowest level since 1995. France lowers its estimate for economic growth to 0.3%. These three countries comprise 58% of the Economic Union's $9.5 trillion economy, which equates to the size of the GDP in the U.S. There is rising unemployment throughout the EU, spending remains weak, and the latter will be undermined further by the rise in oil prices. Quite conceivably, the EU had negative growth in the first quarter which ends in a few days. In other words, it is in the midst of a recession.
Unemployment hit a 3 1/2 year high in Denmark.
Auto sales will show a drop in March.
Total spending in the U.S. will show a decline for last month, and it will be the first back-to-back decline since December 1990-January 1991, when the economy was in a recession.
It is doubtful that our economy will show any growth in the first quarter after you remove government spending for the war effort.
Robert Mondavi said it would post a loss in the current quarter and they are laying off 10% of the workforce.
The IMF warned of "the potential for sizable losses" from significant unhedged fixed-income positions as a result of the very steep yield curve.
The Federal Reserve Bank of Chicago said its National Activity Index for February was -0.62, the 6th negative reading in the last 7 months.
AMR may file for bankruptcy next week. It's a good thing the Mojave can accomodate the growing number of unused airplanes.
Gold bullion will start trading in Australia. Investors can own a specific portion of a gold bar. I'll take the hindquarter.
Bad weather has resulted in the Ukraine losing half its winter crops.
Rudy Tomjanovich, the Houston Rockets coach, is taking an indefinite leave to receive treatment for bladder cancer.
Thirty marines were injured in a terrible friendly fire accident around Nassiriya.
Thursday, March 27, 2003
3/27/03 Boob Bait For Bubbas
Yesterday our country lost a man who rose from poverty to be a shoeshine boy, a dockworker, and a bartender. Those job skills were honed sufficiently to enable him to become a UN ambassador (that organization could use him now), a Harvard professor (he must be forgiven), an author of 19 books (George Will said he wrote more books than most senators read), and a distinguished U.S. Senator from N.Y. for a quarter of a century (the Senate Finance Committee of which he was chairman certainly does miss him). He was married for 47 years. It is seldom that I have a good word for a politician, and even rarer that I praise a politician. Daniel Patrick Moynihan graced New York, the Senate, and our United States. As George Will said, "Daniel Patrick Moynihan is the finest Senator ever."
Senator Daniel Patrick Moynihan: "Citizen participation is a device whereby public officials induce nonpublic individuals to act in a way the officials desire."
"Everyone is entitled to his own opinion but not his own facts."
Talking about the proposed Clinton healthcare plan, he said it was "boob bait for bubbas."
U.S. new home sales fell 8.1% in February. New homes for sale at the end of the month rose to 352,000, the most since June 1996.
According to a recent Salomon Smith Barney survey, 60% of portfolio managers are bullish and only 2% are bearish. That's just one more reason for the market to continue its downward trend.
Sony Music will issue 400 pink slips today.
President Abraham Lincoln: "Politicians are a set of men who have interests aside from the interests of the people, and who, to say the most of them, are, taken as a mass, at least one long step removed from honest men."
Credit card delinquencies in the final quarter of 2002 rose to the highest level since the record highs of 1990.
Albert Schweitzer: "The tragedy of life is what dies inside a man when he lives."
Anheuser-Busch has nearly completed a 100 million share repurchase program authorized two years ago. As such, directors approved another 100 million share repurchase program, and the latter approximates 12% of the outstanding common shares. The company's objective for 2003 is to increase earnings by 12% and to achieve double digit growth over the long term.
Will Rogers: "I don't make jokes- I just watch the government and report the facts."
France's March business confidence index dipped to 94 from 97, and was much weaker than anticipated. Maybe they should concentrate less on their flawed Iraqi policy and more on their economy, which is headed into a recession. Now we'll see how smart that country really thinks they are. France and Germany are in for rough economic times, and that will not be for just another quarter.
Emmitt Smith signed a two year contract with the Arizona Cardinals.
The war in Iraq has cost the U.S. airline industry 10,000 jobs.
The war in Iraq has cost the lives of 24 soldiers. We have 7 POWs-unless they have been killed by the Iraqis. Ten soldiers are missing in action. Supposedly 28 soldiers have been wounded, but that number sounds low. As the sun rises and sets each day, the price of war increases. Let's pray the battle soon ends. Maybe a decapitated Hussein would speed things along, and return our troops to their homes.
Yesterday our country lost a man who rose from poverty to be a shoeshine boy, a dockworker, and a bartender. Those job skills were honed sufficiently to enable him to become a UN ambassador (that organization could use him now), a Harvard professor (he must be forgiven), an author of 19 books (George Will said he wrote more books than most senators read), and a distinguished U.S. Senator from N.Y. for a quarter of a century (the Senate Finance Committee of which he was chairman certainly does miss him). He was married for 47 years. It is seldom that I have a good word for a politician, and even rarer that I praise a politician. Daniel Patrick Moynihan graced New York, the Senate, and our United States. As George Will said, "Daniel Patrick Moynihan is the finest Senator ever."
Senator Daniel Patrick Moynihan: "Citizen participation is a device whereby public officials induce nonpublic individuals to act in a way the officials desire."
"Everyone is entitled to his own opinion but not his own facts."
Talking about the proposed Clinton healthcare plan, he said it was "boob bait for bubbas."
U.S. new home sales fell 8.1% in February. New homes for sale at the end of the month rose to 352,000, the most since June 1996.
According to a recent Salomon Smith Barney survey, 60% of portfolio managers are bullish and only 2% are bearish. That's just one more reason for the market to continue its downward trend.
Sony Music will issue 400 pink slips today.
President Abraham Lincoln: "Politicians are a set of men who have interests aside from the interests of the people, and who, to say the most of them, are, taken as a mass, at least one long step removed from honest men."
Credit card delinquencies in the final quarter of 2002 rose to the highest level since the record highs of 1990.
Albert Schweitzer: "The tragedy of life is what dies inside a man when he lives."
Anheuser-Busch has nearly completed a 100 million share repurchase program authorized two years ago. As such, directors approved another 100 million share repurchase program, and the latter approximates 12% of the outstanding common shares. The company's objective for 2003 is to increase earnings by 12% and to achieve double digit growth over the long term.
Will Rogers: "I don't make jokes- I just watch the government and report the facts."
France's March business confidence index dipped to 94 from 97, and was much weaker than anticipated. Maybe they should concentrate less on their flawed Iraqi policy and more on their economy, which is headed into a recession. Now we'll see how smart that country really thinks they are. France and Germany are in for rough economic times, and that will not be for just another quarter.
Emmitt Smith signed a two year contract with the Arizona Cardinals.
The war in Iraq has cost the U.S. airline industry 10,000 jobs.
The war in Iraq has cost the lives of 24 soldiers. We have 7 POWs-unless they have been killed by the Iraqis. Ten soldiers are missing in action. Supposedly 28 soldiers have been wounded, but that number sounds low. As the sun rises and sets each day, the price of war increases. Let's pray the battle soon ends. Maybe a decapitated Hussein would speed things along, and return our troops to their homes.
Wednesday, March 26, 2003
3/26/03 At Risk
The next government officials who discuss the rebuilding of Iraq should find their jobs at risk. We have soldiers in body bags, prisoners of war, and many wounded and there are idiots giving out contracts for the rebuilding of Iraq. That type of behavior is a great deal more than insensitive, non-feeling, and uncaring. It reflects the stupity of some of our governmental working force. Clearly they are not an elite corps. Talking about elite, what makes the 76,000 soldiers comprising the republican guard elite? These people torture, terrorize, rape, and destroy.
The Army is "considering incorporating blogging into its secure network where troops communicate with each other and their families." If done right, it would be a great idea.
According to a Merrill Lynch survey, "about 17% of large U.S. and European companies said they would slow their information technology spending because of the war." The rate of spending was slow before the war began.
The Congressional Budget Office concluded Pres. Bush's $726 billion tax-plan would virtually add little or nothing to the country's economic growth. 'The proposals, on net would probably increase labor supply but decrease investment and the stock of capital." You don't need the CBO to make this proclamation. Government is not an economic growth engine. They are a tax and spend engine, a lethal weapon that does a great deal more harm than Iraq's republican guard. Others in government must agree with the CBO because Senate Finance Committee Chairman Chuck Grassley says the dividend tax cut may be "out the window" and the Senate yesterday cut the tax plan by more than half. By the time they're thru fiddling with the tax cut plan, taxes will be increased.
If families that mourn their fallen soldiers wear red, white, and blue instead of black, then maybe other Americans should consider their lead and dress in the same fashion. This makes an impressive statement of support for our troops.
McDonald's plans a shake-up. Several hundred jobs are at risk. Maybe the hamburgers should be at risk.
Durable goods orders from U.S. manufacturers declined 1.2% in February. The drop in March should be even steeper.
The UK says the war will last many months. Wall Street, and more importantly, Main Street are not prepared for a long war.
Sears may leave the credit card business after boosting reserves on unpaid accounts. They hope to receive $6 billion for this unit. Maybe there is a company out there ready to pay for a can of worms.
Starbucks expects earnings per share growth of 20 to 25% over the next three to five years. The great ones just keep rolling along in good and bad times. We see the same with WalMart, Colgate, Dell, Lowe's, Pfizer, P&G, Sysco, J&J, Pepsico, and Harley-Davidson. Customer loyalty is at the core with each one of theses companies.
The next government officials who discuss the rebuilding of Iraq should find their jobs at risk. We have soldiers in body bags, prisoners of war, and many wounded and there are idiots giving out contracts for the rebuilding of Iraq. That type of behavior is a great deal more than insensitive, non-feeling, and uncaring. It reflects the stupity of some of our governmental working force. Clearly they are not an elite corps. Talking about elite, what makes the 76,000 soldiers comprising the republican guard elite? These people torture, terrorize, rape, and destroy.
The Army is "considering incorporating blogging into its secure network where troops communicate with each other and their families." If done right, it would be a great idea.
According to a Merrill Lynch survey, "about 17% of large U.S. and European companies said they would slow their information technology spending because of the war." The rate of spending was slow before the war began.
The Congressional Budget Office concluded Pres. Bush's $726 billion tax-plan would virtually add little or nothing to the country's economic growth. 'The proposals, on net would probably increase labor supply but decrease investment and the stock of capital." You don't need the CBO to make this proclamation. Government is not an economic growth engine. They are a tax and spend engine, a lethal weapon that does a great deal more harm than Iraq's republican guard. Others in government must agree with the CBO because Senate Finance Committee Chairman Chuck Grassley says the dividend tax cut may be "out the window" and the Senate yesterday cut the tax plan by more than half. By the time they're thru fiddling with the tax cut plan, taxes will be increased.
If families that mourn their fallen soldiers wear red, white, and blue instead of black, then maybe other Americans should consider their lead and dress in the same fashion. This makes an impressive statement of support for our troops.
McDonald's plans a shake-up. Several hundred jobs are at risk. Maybe the hamburgers should be at risk.
Durable goods orders from U.S. manufacturers declined 1.2% in February. The drop in March should be even steeper.
The UK says the war will last many months. Wall Street, and more importantly, Main Street are not prepared for a long war.
Sears may leave the credit card business after boosting reserves on unpaid accounts. They hope to receive $6 billion for this unit. Maybe there is a company out there ready to pay for a can of worms.
Starbucks expects earnings per share growth of 20 to 25% over the next three to five years. The great ones just keep rolling along in good and bad times. We see the same with WalMart, Colgate, Dell, Lowe's, Pfizer, P&G, Sysco, J&J, Pepsico, and Harley-Davidson. Customer loyalty is at the core with each one of theses companies.
Tuesday, March 25, 2003
3/25/03 Anxiety Of The Consumer
The Administration sought to achieve peace in Iraq. That did not happen. The consumer seeks peace of mind, and that too, does not take place. There is anxiety here at home and amidst the Iraqi sandstorms. Prior to the war starting, consumer confidence continued to fall. In mid-March it fell to 62.5 from 64.8 in the prior month. As of yesterday, we had 27 dead soldiers and 7 prisoners of war. The fallen and those inhumanely held will, and should, weigh heavily on the psyches of all Americans. I would be very surprised to see families rushing out to buy a new car or a new home or to make any major purchase. Sales of existing homes fell in February prior to the war's start and new home construction fell sharply too. I expect this trend to continue. Despite what some believe, war is not good for this staggering economy and the unrest in the Muslim world can only bring greater uncertainty to Wall Street. Uncertainty will delay any chance of business investment picking up. In other words, the legs holding up the economy are buckling and anxiety reigns supreme.
Sears will cut another 300-400 jobs at its headquarters. About 5300 are employed there. Hardest hit will be the IT department.
The little town of Schwaebisch Hall in Germany is replacing Microsoft software on all city computers with open-source Linux software. There will be a one-time savings of $121,000. With world-wide economies struggling, I would expect the shift to Linux to become more commonplace.
The Administration sought to achieve peace in Iraq. That did not happen. The consumer seeks peace of mind, and that too, does not take place. There is anxiety here at home and amidst the Iraqi sandstorms. Prior to the war starting, consumer confidence continued to fall. In mid-March it fell to 62.5 from 64.8 in the prior month. As of yesterday, we had 27 dead soldiers and 7 prisoners of war. The fallen and those inhumanely held will, and should, weigh heavily on the psyches of all Americans. I would be very surprised to see families rushing out to buy a new car or a new home or to make any major purchase. Sales of existing homes fell in February prior to the war's start and new home construction fell sharply too. I expect this trend to continue. Despite what some believe, war is not good for this staggering economy and the unrest in the Muslim world can only bring greater uncertainty to Wall Street. Uncertainty will delay any chance of business investment picking up. In other words, the legs holding up the economy are buckling and anxiety reigns supreme.
Sears will cut another 300-400 jobs at its headquarters. About 5300 are employed there. Hardest hit will be the IT department.
The little town of Schwaebisch Hall in Germany is replacing Microsoft software on all city computers with open-source Linux software. There will be a one-time savings of $121,000. With world-wide economies struggling, I would expect the shift to Linux to become more commonplace.
Monday, March 24, 2003
3/24/03 Booby-traps In Iraq And On Wall Street
I am certain that soldiers are trained in all matters of war, but faked surrender is something which is difficult to comprehend and retain. It cost 9 Marines their lives yesterday. In addition, we witnessed the atrocity surrounding the handling of our POWs. In all, yesterday over 50 soldiers were injured. War is bloody and brutal and de-humanizing. On the other hand, booby-traps are of a different nature on Wall Street- they are manufactured out of greed and the on-going need to perform in a hostile environment. Many were gloating over the huge market rally during the past week. Many proclaimed the end to the bear market. Soldiers get their heads handed to them, and so do traders on Wall Street. I said traders and not investors. The latter are a different dying breed. Warren Buffett is one of the few successful and still remaining.
Three years ago Michael O'Higgins, a Miami money manager, had sold all stocks and had moved into zero-coupon Treasury bonds. A year ago he moved into gold and Newmont Mining. Otherwise he owns no stocks. The reason is he too is looking for a depression to begin soon- not a recession. O'Higgins is best known for his Dogs of the Dow theory. He has been an astute investor for twenty years. I am not mentioning O'Higgins because I agree with him. The reason is simple. I believe we are both correct, and have acted accordingly as investors, and not out of greed. If you want to be a casualty on Wall Street, then follow the crowd. There is a burial ground only a block from the New York Stock Exchange. You' ll need to take a number. Currently, there is a waiting list.
Wrigley supplied the gum during WW II, and it was placed in the GI's MREs (Meals Ready-To-Eat). The gum had a shelf life of one year. Today the government requires the latter to be three years. Wrigley's gum doesn't meet such specifications, and thus, Ford Gum and Machine Co. of Akron, N.Y. supplies the defense department with $600,000 in gum each year.
N.Korea is, in my view, a proxy for China. There has been increasing provocation with the testing of Tepodong 2 missiles. More disturbing is the N. Korean production of sarin gas which can kill more people than a nuclear bomb. For example, 500 tons of sarin gas can kill one trillion people. Just 0.5 milligrams can kill a person. N.Korea has eight plants capable of producing chemical weapons and six places to store them. This information comes directly from the South Korean Defense Institute. Japan is particularly concerned about an attack from N. Korea.
Prime Minister Junichiro Koizumi: "The U.S. is the only ally providing Tokyo with deterrent power against any foreign country that could threaten regional security, such as N. Korea, and the Japanese people should never forget it."
Lastly, in discussing chemical and biological weapons, I should hasten to mention the chemical facility found some eighty miles from Baghdad. Overseeing this plant were two Iraqi generals. I doubt it is a chewing gum factory- not because it rests on 100 acres but because it is surrounded by an electric fence and is adjacent to a military barracks. It must have been so well-camouflaged that the weapons inspectors missed it for the past dozen years. You get what you pay for.
I am certain that soldiers are trained in all matters of war, but faked surrender is something which is difficult to comprehend and retain. It cost 9 Marines their lives yesterday. In addition, we witnessed the atrocity surrounding the handling of our POWs. In all, yesterday over 50 soldiers were injured. War is bloody and brutal and de-humanizing. On the other hand, booby-traps are of a different nature on Wall Street- they are manufactured out of greed and the on-going need to perform in a hostile environment. Many were gloating over the huge market rally during the past week. Many proclaimed the end to the bear market. Soldiers get their heads handed to them, and so do traders on Wall Street. I said traders and not investors. The latter are a different dying breed. Warren Buffett is one of the few successful and still remaining.
Three years ago Michael O'Higgins, a Miami money manager, had sold all stocks and had moved into zero-coupon Treasury bonds. A year ago he moved into gold and Newmont Mining. Otherwise he owns no stocks. The reason is he too is looking for a depression to begin soon- not a recession. O'Higgins is best known for his Dogs of the Dow theory. He has been an astute investor for twenty years. I am not mentioning O'Higgins because I agree with him. The reason is simple. I believe we are both correct, and have acted accordingly as investors, and not out of greed. If you want to be a casualty on Wall Street, then follow the crowd. There is a burial ground only a block from the New York Stock Exchange. You' ll need to take a number. Currently, there is a waiting list.
Wrigley supplied the gum during WW II, and it was placed in the GI's MREs (Meals Ready-To-Eat). The gum had a shelf life of one year. Today the government requires the latter to be three years. Wrigley's gum doesn't meet such specifications, and thus, Ford Gum and Machine Co. of Akron, N.Y. supplies the defense department with $600,000 in gum each year.
N.Korea is, in my view, a proxy for China. There has been increasing provocation with the testing of Tepodong 2 missiles. More disturbing is the N. Korean production of sarin gas which can kill more people than a nuclear bomb. For example, 500 tons of sarin gas can kill one trillion people. Just 0.5 milligrams can kill a person. N.Korea has eight plants capable of producing chemical weapons and six places to store them. This information comes directly from the South Korean Defense Institute. Japan is particularly concerned about an attack from N. Korea.
Prime Minister Junichiro Koizumi: "The U.S. is the only ally providing Tokyo with deterrent power against any foreign country that could threaten regional security, such as N. Korea, and the Japanese people should never forget it."
Lastly, in discussing chemical and biological weapons, I should hasten to mention the chemical facility found some eighty miles from Baghdad. Overseeing this plant were two Iraqi generals. I doubt it is a chewing gum factory- not because it rests on 100 acres but because it is surrounded by an electric fence and is adjacent to a military barracks. It must have been so well-camouflaged that the weapons inspectors missed it for the past dozen years. You get what you pay for.
Sunday, March 23, 2003
3/23/03 Goodwill Industries And The Iraqi War
Goodwill Industries is a non-profit social-services organization which provides employment to over 3000 people with disabilities. Goodwill is also a major military contractor, and is a significant supplier of camouflage fatigue trousers, military fleece jackets and coveralls, and internment flags for the armed forces. General Tommy Franks directs the U.S. Army invasion of Iraq wearing a flak jacket made by the workers at Goodwill.
The International Air Transport Association said the war in Iraq could easily add $10 billion to world airline losses. Airlines have lost a combined $18 billion since 9/11.
Outstanding mortgage debt for single family homes stood at record highs of $6.5 trillion at 12/31/2002. In my view mortgage rates have bottomed out and rates have already begun to rise in the last two weeks. Such an increase in rates will undermine the ability to purchase a new home. Construction will slow, and more homes will come on to the market. Prices will fall. In addition, consumer spending will greatly suffer as the excess cash from refinancing at lower rates comes to a halt. This will result in another nail in the coffin for the economy, and it shall shove the economy over the cliff.
With 800 sorties in one night, it is not surprising that human error will occur. As such, a U.S. Patriot missile downed an RAF plane. Additionally, other accidents have killed at least five American soldiers while three have been killed at the hands of Iraqi forces. The war may not be on American soil but the deaths of our soldiers places their blood on all of our souls.
Pat Gelsinger, CTO of Intel: "Maybe our downsizing in the U.S. tech industry is permanent downsizing, and we are headed toward being a second-class industrial citizen of the world."
Rob Glaser, CEO of RealNetworks: "The tech industry is in danger of looking like Japan; it's down and out for a long time."
If Gelsinger and Glaser are just partially correct, tech stocks are overpriced, and they will remain an unattractive avenue for investment for some time to come.
The largest anti-war protest on Saturday took place in NYC where 200,000 marched on Broadway. I'm glad I wasn't in NYC to witness that as it must have made the families of the fallen American soldiers puke.
Larry Brilliant: "The irrational exuberance of the 1990s has been replaced by an irrational lethargy."
Goodwill Industries is a non-profit social-services organization which provides employment to over 3000 people with disabilities. Goodwill is also a major military contractor, and is a significant supplier of camouflage fatigue trousers, military fleece jackets and coveralls, and internment flags for the armed forces. General Tommy Franks directs the U.S. Army invasion of Iraq wearing a flak jacket made by the workers at Goodwill.
The International Air Transport Association said the war in Iraq could easily add $10 billion to world airline losses. Airlines have lost a combined $18 billion since 9/11.
Outstanding mortgage debt for single family homes stood at record highs of $6.5 trillion at 12/31/2002. In my view mortgage rates have bottomed out and rates have already begun to rise in the last two weeks. Such an increase in rates will undermine the ability to purchase a new home. Construction will slow, and more homes will come on to the market. Prices will fall. In addition, consumer spending will greatly suffer as the excess cash from refinancing at lower rates comes to a halt. This will result in another nail in the coffin for the economy, and it shall shove the economy over the cliff.
With 800 sorties in one night, it is not surprising that human error will occur. As such, a U.S. Patriot missile downed an RAF plane. Additionally, other accidents have killed at least five American soldiers while three have been killed at the hands of Iraqi forces. The war may not be on American soil but the deaths of our soldiers places their blood on all of our souls.
Pat Gelsinger, CTO of Intel: "Maybe our downsizing in the U.S. tech industry is permanent downsizing, and we are headed toward being a second-class industrial citizen of the world."
Rob Glaser, CEO of RealNetworks: "The tech industry is in danger of looking like Japan; it's down and out for a long time."
If Gelsinger and Glaser are just partially correct, tech stocks are overpriced, and they will remain an unattractive avenue for investment for some time to come.
The largest anti-war protest on Saturday took place in NYC where 200,000 marched on Broadway. I'm glad I wasn't in NYC to witness that as it must have made the families of the fallen American soldiers puke.
Larry Brilliant: "The irrational exuberance of the 1990s has been replaced by an irrational lethargy."
Subscribe to:
Posts (Atom)