1/04/03 Jose Jesus Jimenez
He's not a comedian. His full name is Capt Jose Jesus Jimenez. On December 4 he dropped anchor on his Venezuelan oil tanker and has not budged since. He is running short of food and water, and continues to defie President Chavez. If he stays on board, he will die. The strike is in its 34th day. He remains committed: "in six months there won't be a Venezuela. We'll all be broken, in civil war and bathed in blood." He maybe very right.
According to the Bond Buyer, states and municipalities sold $356 billion of bonds in 2002 and that's a record. States and local governments are bathed in deficits.
The Labor Department(I use that description loosely) will cease issuing reports which track the number of U.S. companies laying off 50 or more workers at a time. The reason given: the report does not generate jobs. I guess the spinmeisters have been bathed in too much daily bad news.
The hamburger war is upon us. The Whopper is on sale until Jan. 20 for 99 cents. Maybe we should use our national defense resources and liberate the hamburger rather than Iraq.
96% of all individual funds ended 2002 with losses. Gold funds did the best. As I said in June 2000, we'll see how good the so-called professionals really are at making money.
Congress reconvenes Tuesday. The President presents his "stimulus package" (I just love to be stimulated) the same day. The Democrats will push for an extension of unemployment benefits. That's comforting and caring since Congress managed to give themselves a pay raise before recessing. I always thought performance counted. No wonder the world over wants to live here. You can do nothing and get a raise.
Airbus recorded contracts for 309 planes in 2002 and Boeing only 231. As I've said before, Boeing's management is a figment of their own imagination.
Hollywood box office receipts were up 11% in 2002. Were the movies more entertaining and/or was it an escape from depressing times bathed in low consumer confidence?
Friday, January 03, 2003
1/3/03 A Mirage Or A Miracle?
What a great first trading day! There was joy in mudville. The good times were back. Or was it wishful thinking devoid of intelligence? Downbeat purchasing management surveys were released on Tuesday for N.Y and Cincinnati. The day before there was a similar poor report for Chicago. Yesterday the ISM reported that order backlogs declined for the 6th consecutive month. That supplier deliveries slowed for the 12th consecutive month. That manufacturing employment continued to decline and with it that index remained below 50% for the 27th consecutive month. Out of Crawford, TX came the genius statement that "the economy is pretty darn strong." Home Depot doesn't think so but they only have 1500 stores and they will experience same-store sales down 10% for the November thru January period. Goldman Sachs now predicts a decline in tech spending for 2003. Two-thirds of CIOs expect continued budget tightening in 2003. Auto executives don't see a recovery in their industry until 2005.
In light of the above, how did the ISM report for December a surge in the new order index from 50 to 63%? Of the 20 manufacturing sectors only 11 gained. The man who compiled the survey should know. His name is Norbert Ore and he heads up the ISM. He made it all clear and stated "the magnitude of the improvement is somewhat difficult to explain at this point." That's right. The market rallied on unexplained news. I'll splain it for you. It's simple. Anyone who ran a business could explain it. Christmas and New Year's day both fell on a Wednesday. Most manufacturing businesses either closed early the day before or didn't open at all. In fact, many businesses were closed after December 23 and didn't open until January 2nd, yesterday. Consequently, with supplier deliveries already slow, new orders needed to be placed no later than December 20th for delivery some time in January. The good news was not a miracle- just a mirage. That's what happens when you read just the headlines. How often have I said don't trade with the news coming from the media?
There is an old saying on Wall Street: so goes the first trading day of the year, so goes the first week, so goes the year. The saying fails to mention stupidity.
What a great first trading day! There was joy in mudville. The good times were back. Or was it wishful thinking devoid of intelligence? Downbeat purchasing management surveys were released on Tuesday for N.Y and Cincinnati. The day before there was a similar poor report for Chicago. Yesterday the ISM reported that order backlogs declined for the 6th consecutive month. That supplier deliveries slowed for the 12th consecutive month. That manufacturing employment continued to decline and with it that index remained below 50% for the 27th consecutive month. Out of Crawford, TX came the genius statement that "the economy is pretty darn strong." Home Depot doesn't think so but they only have 1500 stores and they will experience same-store sales down 10% for the November thru January period. Goldman Sachs now predicts a decline in tech spending for 2003. Two-thirds of CIOs expect continued budget tightening in 2003. Auto executives don't see a recovery in their industry until 2005.
In light of the above, how did the ISM report for December a surge in the new order index from 50 to 63%? Of the 20 manufacturing sectors only 11 gained. The man who compiled the survey should know. His name is Norbert Ore and he heads up the ISM. He made it all clear and stated "the magnitude of the improvement is somewhat difficult to explain at this point." That's right. The market rallied on unexplained news. I'll splain it for you. It's simple. Anyone who ran a business could explain it. Christmas and New Year's day both fell on a Wednesday. Most manufacturing businesses either closed early the day before or didn't open at all. In fact, many businesses were closed after December 23 and didn't open until January 2nd, yesterday. Consequently, with supplier deliveries already slow, new orders needed to be placed no later than December 20th for delivery some time in January. The good news was not a miracle- just a mirage. That's what happens when you read just the headlines. How often have I said don't trade with the news coming from the media?
There is an old saying on Wall Street: so goes the first trading day of the year, so goes the first week, so goes the year. The saying fails to mention stupidity.
Thursday, January 02, 2003
1/2/03 Fireworks In January
GE is asking for employees to shoulder higher healthcare co-payments. Such a request may result in GE's first strike in 30 years. The company is touching on a subject which can only cause fireworks. They are making a huge mistake in judgment. Even if employees swallow and accept the conditions due to the poor job market, underlying hatred for management will stay with the employees thru every increased co-payment.
The last time the market dropped 4 years in a row was during the depression.
Due to falling stock prices, IBM just contributed about $4 billion to its U.S. pension plan.
U.S. crude oil inventories are at a 26 year low.
How many of UAL's 80,000 employees will be fired? What a way to begin the new year.
I predict the next real hot spot will be Taiwan- not Iraq and not N.Korea. The Chinese are making growing military threats to recapture Taiwan. China is mighty with plenty of money and plenty of weaponry and plenty of technology. They are the force for this decade and beyond. Iraq and N.Korea are but a small nightmare compared with the China-Taiwan struggle.
Daniel Kahneman is the first psychologist to win the Nobel prize in economics. He said "the main mistake people make is they churn their accounts too much. They just do too much. And so, the advice to be diversified and not do too much is standard advice that people do not spontaneously follow. But not taking that advice is costly...it's just not going to happen that investors will beat the market." I'm an optimist compared to Kahneman.
GE is asking for employees to shoulder higher healthcare co-payments. Such a request may result in GE's first strike in 30 years. The company is touching on a subject which can only cause fireworks. They are making a huge mistake in judgment. Even if employees swallow and accept the conditions due to the poor job market, underlying hatred for management will stay with the employees thru every increased co-payment.
The last time the market dropped 4 years in a row was during the depression.
Due to falling stock prices, IBM just contributed about $4 billion to its U.S. pension plan.
U.S. crude oil inventories are at a 26 year low.
How many of UAL's 80,000 employees will be fired? What a way to begin the new year.
I predict the next real hot spot will be Taiwan- not Iraq and not N.Korea. The Chinese are making growing military threats to recapture Taiwan. China is mighty with plenty of money and plenty of weaponry and plenty of technology. They are the force for this decade and beyond. Iraq and N.Korea are but a small nightmare compared with the China-Taiwan struggle.
Daniel Kahneman is the first psychologist to win the Nobel prize in economics. He said "the main mistake people make is they churn their accounts too much. They just do too much. And so, the advice to be diversified and not do too much is standard advice that people do not spontaneously follow. But not taking that advice is costly...it's just not going to happen that investors will beat the market." I'm an optimist compared to Kahneman.
Wednesday, January 01, 2003
1/1/03 Happy New Year
We start 2003 with a clean slate- no hits, no runs, no errors. Yesterday is history. Thursday is our first trading day of the new year. A few things have changed. The New York Stock Exchange announced new circuit breakers. As of Thursday, there will be revised circuit-breaker trigger levels for the first quarter of 2003, the NYSE announced.
Circuit-breaker points are the thresholds at which trading halts marketwide for single-day declines in the Dow Jones industrial average. During the first quarter, the 10-, 20- and 30-percent decline levels, respectively, in the Dow will be:
-- An 850-point drop in the Dow before 2 p.m. (all times Eastern) will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later.
-- A 1,700-point drop in the Dow before 1 p.m. will halt trading for two hours; for one hour if between 1 p.m. and 2 p.m.; and for the remainder of the day if at 2 p.m. or later.
-- A 2,550-point drop will halt trading for the remainder of the day regardless of when the decline occurs.
The second change is that consumers have even less confidence going forward than originally anticipated. The reasons are quite clear: a grim job market, little expectation for incomes to rise, and increasing fuel and healthcare costs. In sum, consumers view conditions in the New Year in a poor light. Unfortunately, terrorism continues to occupy the vast majority of focus in Washington. Obviously, protecting our safety and freedoms is vital. Nevertheless, our CEO needs to walk and chew gum at the same time and so does the Congress. We are on a very dangerous path. Confidence in the U.S. is waning, and that is reflected in the falling dollar. We need to import at least $1.5 billion per day to fund our budget deficit and our current account shortfall. That is becoming a daunting task. Those deficits undermine our safety and freedoms. Americans must remember that. All the more reason to spend less and save more. Only you can keep your family in food, shelter, and clothing. Not the government.
We start 2003 with a clean slate- no hits, no runs, no errors. Yesterday is history. Thursday is our first trading day of the new year. A few things have changed. The New York Stock Exchange announced new circuit breakers. As of Thursday, there will be revised circuit-breaker trigger levels for the first quarter of 2003, the NYSE announced.
Circuit-breaker points are the thresholds at which trading halts marketwide for single-day declines in the Dow Jones industrial average. During the first quarter, the 10-, 20- and 30-percent decline levels, respectively, in the Dow will be:
-- An 850-point drop in the Dow before 2 p.m. (all times Eastern) will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later.
-- A 1,700-point drop in the Dow before 1 p.m. will halt trading for two hours; for one hour if between 1 p.m. and 2 p.m.; and for the remainder of the day if at 2 p.m. or later.
-- A 2,550-point drop will halt trading for the remainder of the day regardless of when the decline occurs.
The second change is that consumers have even less confidence going forward than originally anticipated. The reasons are quite clear: a grim job market, little expectation for incomes to rise, and increasing fuel and healthcare costs. In sum, consumers view conditions in the New Year in a poor light. Unfortunately, terrorism continues to occupy the vast majority of focus in Washington. Obviously, protecting our safety and freedoms is vital. Nevertheless, our CEO needs to walk and chew gum at the same time and so does the Congress. We are on a very dangerous path. Confidence in the U.S. is waning, and that is reflected in the falling dollar. We need to import at least $1.5 billion per day to fund our budget deficit and our current account shortfall. That is becoming a daunting task. Those deficits undermine our safety and freedoms. Americans must remember that. All the more reason to spend less and save more. Only you can keep your family in food, shelter, and clothing. Not the government.
Tuesday, December 31, 2002
12/31/02 Sell The Rallies, Buy The Dips, Stay On The Sidelines?
As 2002 comes to a close, it appears that the market will have the worst December since 1931. At the present time, the S&P 500 is down over 20% this year and the Nasdaq has declined 30%. Where do we go from here?
1. Keep the trend your friend. For the past three years the trend has been down. It is still down. Do not buck the trend.
2. Fourth quarter results have not been released; however, the quarter is over today. I'm not interested in warnings for the 4th quarter. That's history. I am concerned about expectations for the March quarter and beyond. With minimal topline growth and little pricing power, what should a P/E ratio be for cost-cutting? Not very high in my view. You can't grow a company thru cost cutting.
3. The dollar is, in my opinion, still overvalued against the Yen and the Swiss franc.
4. The budget deficits at the local and state levels are a drag on the economy and will continue to be in 2003.
5. The federal government's budget deficit continues to exceed expectations by wide margins. The debt level will need to be raised in February. This indebtedness hampers economic flexibility.
6. It's not just that 41 million Americans don't have healthcare insurance. The rest of the story is the rapidly rising cost of healthcare for the rest of Americans who do have insurance. This problem is raging out of control.
7. The cold winter is creating higher heating bills, and the latter are exacerbated by the rising cost of heating oil, natural gas, and propane.
8. Despite what the Fed proclaims, this institution plays second fiddle to amrket forces. Do you really believe the Fed can print money and inflate the country out of its economic malaise? The dollar is weak and getting weaker. China will continue to export deflation into the U.S. India will continue to be an outsourcing IT force. Our country will not win an economic battle with a guns and butter arsenal. That's a losing proposition.
9. Despite what the media might indicate, the U.S. has weak economic leadership and focus. Ross Perot knew what it took to run a business. We need a chief executive who can make tough business decisions. On both sides of the aisle I don't see such a person.
10. Before you buy or sell, place yourself where the risk/reward is clearly in your favor. If you make a mistake, cut your losses short. There is no room for indecision. When not comfortable, do nothing. When unable to sleep, sell to the sleeping point. Look for potential value and concentrate on companies with repeat business. Such a stock could be Coca Cola. It's on the new low list. I don't make recommendations. I suggest investigating individual situations. Other examples might be Starbucks, McDonald's, Home Depot, and Micron Technology. Maybe one of these companies will merit your attention. At this writing, I don't own any of these stocks.
11. When it comes to a war or a potential war, I worry about Americans being injured and the possible loss of life. I don't concern myself with the impact of war on the stock market. Wars, thank goodness, end. The need for positive cash flow is on-going.
12. Investing is a long-term proposition. To be successful one must think like an owner. As a shareowner, you are a owner of the business. Ask yourself. Do you want to own a stake in that business?
13. The New Year begins tomorrow. It's a fresh slate. The fact that I have been right on the market for the last three years means nothing. That's history. We're in the present and looking out on the horizon. Maybe the economy will grow at 1 or 2% in 2003. Maybe there will be no growth. Maybe there will be a recession. Maybe, bite my tongue, a depression. Maybe deflation. Maybe inflation. Maybe stagflation. Take your pick. It matters but not entirely. In every economy and in every market opportunities are there for the picking. Remain alert. Please remember. You cannot buy at the low and sell at the high. Unlike your spouse, you are not married to an individual stock. It's only business.
I wish all of my readers a happy and healthy New Year.
As 2002 comes to a close, it appears that the market will have the worst December since 1931. At the present time, the S&P 500 is down over 20% this year and the Nasdaq has declined 30%. Where do we go from here?
1. Keep the trend your friend. For the past three years the trend has been down. It is still down. Do not buck the trend.
2. Fourth quarter results have not been released; however, the quarter is over today. I'm not interested in warnings for the 4th quarter. That's history. I am concerned about expectations for the March quarter and beyond. With minimal topline growth and little pricing power, what should a P/E ratio be for cost-cutting? Not very high in my view. You can't grow a company thru cost cutting.
3. The dollar is, in my opinion, still overvalued against the Yen and the Swiss franc.
4. The budget deficits at the local and state levels are a drag on the economy and will continue to be in 2003.
5. The federal government's budget deficit continues to exceed expectations by wide margins. The debt level will need to be raised in February. This indebtedness hampers economic flexibility.
6. It's not just that 41 million Americans don't have healthcare insurance. The rest of the story is the rapidly rising cost of healthcare for the rest of Americans who do have insurance. This problem is raging out of control.
7. The cold winter is creating higher heating bills, and the latter are exacerbated by the rising cost of heating oil, natural gas, and propane.
8. Despite what the Fed proclaims, this institution plays second fiddle to amrket forces. Do you really believe the Fed can print money and inflate the country out of its economic malaise? The dollar is weak and getting weaker. China will continue to export deflation into the U.S. India will continue to be an outsourcing IT force. Our country will not win an economic battle with a guns and butter arsenal. That's a losing proposition.
9. Despite what the media might indicate, the U.S. has weak economic leadership and focus. Ross Perot knew what it took to run a business. We need a chief executive who can make tough business decisions. On both sides of the aisle I don't see such a person.
10. Before you buy or sell, place yourself where the risk/reward is clearly in your favor. If you make a mistake, cut your losses short. There is no room for indecision. When not comfortable, do nothing. When unable to sleep, sell to the sleeping point. Look for potential value and concentrate on companies with repeat business. Such a stock could be Coca Cola. It's on the new low list. I don't make recommendations. I suggest investigating individual situations. Other examples might be Starbucks, McDonald's, Home Depot, and Micron Technology. Maybe one of these companies will merit your attention. At this writing, I don't own any of these stocks.
11. When it comes to a war or a potential war, I worry about Americans being injured and the possible loss of life. I don't concern myself with the impact of war on the stock market. Wars, thank goodness, end. The need for positive cash flow is on-going.
12. Investing is a long-term proposition. To be successful one must think like an owner. As a shareowner, you are a owner of the business. Ask yourself. Do you want to own a stake in that business?
13. The New Year begins tomorrow. It's a fresh slate. The fact that I have been right on the market for the last three years means nothing. That's history. We're in the present and looking out on the horizon. Maybe the economy will grow at 1 or 2% in 2003. Maybe there will be no growth. Maybe there will be a recession. Maybe, bite my tongue, a depression. Maybe deflation. Maybe inflation. Maybe stagflation. Take your pick. It matters but not entirely. In every economy and in every market opportunities are there for the picking. Remain alert. Please remember. You cannot buy at the low and sell at the high. Unlike your spouse, you are not married to an individual stock. It's only business.
I wish all of my readers a happy and healthy New Year.
Monday, December 30, 2002
12/30/02 Michael's
As a youngster, I always got my haircuts at Michael's Barbershop on N.Y.C.'s upper eastside. It was a few blocks walk from where I lived. After 92 years, Michael's has closed its doors.
The yield on stocks is higher than that of short-term treasury bills. Both are slim pickens.
Israel is battling its worst recession in 50 years.
The Nikkei is down 19% in 2002, and at its lowest level in 20 years.
Crude oil is trading at a 2 year high of $33 per barrel.
The dollar is at 6 week lows vs the yen.
Since 9/11, loayoffs in the financial services sector have exceeded 6%. Expect more in 2003.
In the past year TV political ads amounted to $1 billion. In my view, there isn't much to show for it.
The Energy Information Agency( we have agencies for agencies) recently forecast that U.S. households will spend 31% more for natural gas compared with last year, 41% more for heating oil, 17% more for propane, and 13% more for electricity. That amouints to a tax increase. When added to the rising cost of healthcare, it's no wonder you are seeing grimmer faces.
Now for the good news. For the first time since 1986, the Giants and the Jets are in the NFL playoffs at the same time.
A question for 2003- do you buy the dips, sell the rallies, or stand on the sidelines? Let's visit that subject tomorrow and possibly the day after.
Happy birthday wishes to Brittany and Maggie's mother.
As a youngster, I always got my haircuts at Michael's Barbershop on N.Y.C.'s upper eastside. It was a few blocks walk from where I lived. After 92 years, Michael's has closed its doors.
The yield on stocks is higher than that of short-term treasury bills. Both are slim pickens.
Israel is battling its worst recession in 50 years.
The Nikkei is down 19% in 2002, and at its lowest level in 20 years.
Crude oil is trading at a 2 year high of $33 per barrel.
The dollar is at 6 week lows vs the yen.
Since 9/11, loayoffs in the financial services sector have exceeded 6%. Expect more in 2003.
In the past year TV political ads amounted to $1 billion. In my view, there isn't much to show for it.
The Energy Information Agency( we have agencies for agencies) recently forecast that U.S. households will spend 31% more for natural gas compared with last year, 41% more for heating oil, 17% more for propane, and 13% more for electricity. That amouints to a tax increase. When added to the rising cost of healthcare, it's no wonder you are seeing grimmer faces.
Now for the good news. For the first time since 1986, the Giants and the Jets are in the NFL playoffs at the same time.
A question for 2003- do you buy the dips, sell the rallies, or stand on the sidelines? Let's visit that subject tomorrow and possibly the day after.
Happy birthday wishes to Brittany and Maggie's mother.
Sunday, December 29, 2002
12/29/02 The Commodity Research Bureau Index
The 17-commodity CRB last week reached a 5 year high. Natural gas, wheat, cocoa, and coffee are all on the rise and higher consumer prices could be the result.
Venezuela is now importing gasoline.
The dollar is at its lowest level against the Swiss franc in nearly 4 years.
For the month of December, the Dow is down 6.7%, the S&P 500 6.5%, and the Nasdaq 8.8%. As I stated at the end of November, the year-end rally had already taken place.
According to a N.Y. Daily News poll, 50% of the respondents gave Mayor Bllomberg an F.
Robert Menendez is now the number 3 Democrat in the House. As a possible VP running mate, he could help ensure the Hispanic vote in 2004.
In a letter to JP Morgan Chase employees the CEO wrote "give yourself an attitude check." At the same time, the rank and file employees had their stock bonuses slashed by more than 50%. Maybe the CEO should be cut.
Japan's economic minister said Japan's top priority in 2003 will be to end deflation.
The 17-commodity CRB last week reached a 5 year high. Natural gas, wheat, cocoa, and coffee are all on the rise and higher consumer prices could be the result.
Venezuela is now importing gasoline.
The dollar is at its lowest level against the Swiss franc in nearly 4 years.
For the month of December, the Dow is down 6.7%, the S&P 500 6.5%, and the Nasdaq 8.8%. As I stated at the end of November, the year-end rally had already taken place.
According to a N.Y. Daily News poll, 50% of the respondents gave Mayor Bllomberg an F.
Robert Menendez is now the number 3 Democrat in the House. As a possible VP running mate, he could help ensure the Hispanic vote in 2004.
In a letter to JP Morgan Chase employees the CEO wrote "give yourself an attitude check." At the same time, the rank and file employees had their stock bonuses slashed by more than 50%. Maybe the CEO should be cut.
Japan's economic minister said Japan's top priority in 2003 will be to end deflation.
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