12/14/02 My Sigma Nu Experience

The Trent Lott furor brought up a memory. In my college sophomore year I joined Sigma Nu. I was foolishly unaware that the national charter prohibited allowing blacks into our chapter. Many weeks later this fact was brought out. I immediately called a meeting of all our brothers. It was late in the evening. I discussed my feelings on this discrimination, and pointed out that, had I known of this policy, I would not have joined in the first place. I said my alternatives were to resign or to implore the others here in the room to vote to have our chapter go local and leave the national Sigma Nu organization. The meeting went on for some time. Each person had the opportunity to voice his views. A vote was taken. We withdrew from the national organization. From that point onward our local fraternity( no longer called Sigma Nu) invited all minorities to join, and they did.

Michigan Governor-elect Jennifer Granholm said the state's financial picture is more bleak than she had thought, and deep budget cuts will be required. A $1.8 budget deficit looms in the coming fiscal year. Only school funding will be frozen. Caifornia's Davis would do well to learn from Granholm.

As N.YC. moves closer to a transit strike, a judge barred the transit workers from striking.

China has 8 million new urban job-seekers each year. It's a good thing China's economy is growing 7-8%. Their unemployment rate is 4%.

U.S. producer prices declined 0.4% in November. This was the largest drop since a similar decline in May. Deflation is not a rumor.

12/13/02 A Weak Dollar and New Highs For Gold And Natural Gas

Yesterday the dollar dropped to its lowest level vs the Euro since January 2000. If you have been reading this blog, you know I believe this weakness will persist.

Gold is approaching a 3 year high. It is exactly 2 1/2 years since I turned bearish on the stock market and bullish on gold.

Natural Gas is at a 19 month high with the lowest supplies since June 2001. This too has been forecast by me.

Jobless claims in the latest week rose 83,000 to 441,000, and represents a return to April layoff levels. That's quite a "soft spot".

AOL is laying off 300. You can expect more to come.

At the end of November GM, Ford, and Chrysler had an unsold inventory of 2 1/2 million cars. I feel confident that this figure can reach 3 million. We just have to be believers in their inept management. The Mojave desert awaits autos. The planes parked there need some company.

Western European car sales declined 6.2% in November.

The ECB lowered its forecast for growth in the dozen nations sharing the Euro to about 1% in 2003. That is a downward revision of 50%! Nexans, the world's largest maker of cables, had lower sales and will idle factories and layoff workers. Alcatel to do the same. Gemplus Int'l, the world's largest maker of smart cards. to layoff about 500 workers in France. Speaking of France, their industrial production dropped 0.6%, the most in a year.

Our money supply is growing but assets are falling(due to lower stock market values and rising personal and corporate bankruptcies). The adjusted monetary base has grown rapidly over the past two years. Upon further analysis, almost all of that growth is in cash! What has happened to those dollars- about 100 billion of them? They have for the most part left the U.S. and reside where the dollar is king. Even though the money supply has risen, the money has been exported and therefore inflation was not created. Should the Fed either monetize the U.S. debt and/or change bank reserve requirements, I suggest it would be a last resort move and not a solution.

I keep wondering. How many of those aforementioned dollars have gone to fund terrorist organizations?

12/12/02 The Trojan

I believe the LA Times had a poor choice of words when characterizing USC's history of sometimes alienating Jews. It was entitled "Day of the Jewish Trojan." As a Jew, I find that an insult. I've never been a party to a trojan.

The LA Times also reports that CSX, of which John Snow has been chairman, didn't pay taxes in 2 out of the last 4 years. If I were a CSX stockholder, I'd be complaining about the 2 years where they did pay taxes.

The state of Washington complains that their tax structure wasn't designed for today's economy because the state doesn't tax groceries, medicine, airplane tickets, legal services, and electronic commerce. The state lawmakers are considering taxing legal, accounting, and engineering services. The Washington constitution bars all but a 1% flat income tax.

More layoffs on the way: Sarah Lee, Aetna Health, Charter Communications,Sprint, Netscape, Yahoo, Inhale Therapeutic, and the University of Illinois.

KMart to close 200-300 stores in January.

Intel's Andy Grove said it would be too optimistic to forecast a semiconductor rebound. What does he know? He only has been running the company for about 35 years!

Kimberly-Clark issued a 4th quarter profit warning due to diaper price wars. The company plans to cut costs by $175-200 million in 2003. Layoffs coming?

There are about 100 million individuals in North America who require cholesterol-lowering products. A recently published study in the British Journal of Nutrition stated that individuals who consume foods containing plant phytosterols enriched with chocolate had their LDL cholesterol reduced by 10%. Sounds good to me. Make mine Lindt orange chocolate.

The foreclosure rate in Northern California is rising.

In 1979 Paul Volcker, the new Fed chairman, decided on a different policy- no longer having the Fed target interest rates, but rather target a level of money supply growth consistent with price stability. The markets would determine the interest rates. As I have said so often, I believe the market does determine interest rates and not the Fed. Greenspan would not agree. In my view, with inflation and deflation in current balance, it would serve the economy well to focus on the optimum level of money supply growth and that focus could jumpstart our dismal economy.

The wagons are circling Trent Lott because he backed Bob Jones University despite its racial policy. Our problems are much bigger than that. Asa Hutchinson, the number 2 person behind Governor Ridge in our Homeland Security department, GRADUATED from Bob Jones University. I know about that university's policies thru the experience my son, Edward, had there. He didn't stay but a day or two.

12/11/02 77% Of Americans Expect Unemployment To Rise In 2003

A quarterly survey by Philadelphia -based Right Management Consultants says one in five employees beleives there is a chance he or she will be laid off in 2003. In addition, laid-off workers believe it shall be difficult to find similar paying jobs.

Snow and ice are blamed for the 2.3% decline in retail sales last week. I always thought where there's a will there's a way. Maybe the will to shop is not overwhelming this holiday season.

Britain posted their biggest ever trade deficit. Falling exports created a deficit for October which was 30% larger than had been forecast.

According to a poll taken by the world's largest organization of CEOs, this country's small business CEOs say the economic forecast is unclear.

Kroger warns of a flat 2003. Schlumberger to lay off 3300 workers.

After more than 7 years of charging some of its customers $3 to talk to a human teller, Bank One Corp. is getting rid of this fee. Maybe the tellers are tongue-tied.

On the same day Jimmy Carter received the Nobel Peace Prize, scud missiles were found on a North Korean ship.

12/10/02 In November Insiders Sold $14 Worth Of Stock For Every $1 Purchased

This season is turning ugly and certainly not green. As expected, the market has topped out and there are few buyers for stocks at these overvalued levels. However, there are plenty of insiders selling. That selling is at a six month high. You can listen to the pundits who tell you to buy buy buy. Should you pay attention to the trend you will see lower highs and lower lows. This tells the story for the past 3 years. Stand in the way and blood will appear amongst your portfolio. Occasionally, opportunities will appear, and I will attempt to point out their potential for your review. Such was the case not so long ago with Merck at 39. It's now at 59. It is necessary to be patient and to pick your spots.

So far this month consumer sentiment has slumped to its lowest level of the year.

Nokia has lowered its sales forecast for the 4th quarter.

There are loudmouths who have stated that Paul O'Neill stayed in the way of economic growth. Those remarks reflect stupidity and irrationality. O'Neill is a capitalist and the vast proportion of his wealth was found in shares of Alcoa, the company he ran.

John Snow in 1995: "The budget deficit puts a hole in the pocket of every American, every day of our lives." Today the budget deficit resembles the size in 1995 but now Snow has elected to focus on tax cuts and job creation- in true salesman fashion. You get what you pay for.

More layoffs: at MCI, KPMG, Ashford.com, and Service Corp. The explanation for Service Corp is that they used to do the work in-house but now outsource it. The company is in the funeral business and operates cemetaries! Terminations take on a whole other meaning at Service Corp.

12/9/02 John Snow

He was named the new Secretary of the Treasury. His background: Ph.D in economics; lawyer; Chairman of CSX; former Chairman of the Business Roundtable; and Ass't Secretary of Transportation in the Ford Administration when VP Cheney was chief of staff. Paul O'Neill may not have gotten along with the press and possibly he shot his mouth off when he shouldn't, but he is a straight shooter and not a politician. In addition, he was a very successful businessman. I hardly see where Mr. Snow is in Mr. O'Neill's league.

12/8/02 Tis The Season To Cut Costs

Starting Monday for 20 business days HP is laying off contractors in its internal computer systems dept.

American Air asks employees for pay freeze and to cancel pay raises amounting to $130 million.

SunTrust Banks will freeze the salaries of, and won't pay annual bonuses to 130 senior executives. Additionally, a bonus program for 11,000 non-management employees will be permanently eliminated.

Microsoft VP Jim Allchin says that sharing information with competitors could damage national security. He should be a stand-up comic.

Used car prices continue to drop due to a glut of previously owned vehicles.

Will all this talk about further tax cuts make the cut or will it fail to materialize?

Landrieu wins Senate runoff in Louisiana.