6/7/03 Government Revisions And Genghis Kahn’s “Sociopath Company”
This is the sixth reference I have made about data revisions over the past year. Each time I complained about the government revising numbers and creating bogus data. I even went so far as to do the proper math in this blog. For all those who count, I was proven at a later date to be correct in all such instances. Such will be the case this time. The government revised the April job loss number from 48,000 to zero and devised a May job loss number of 17,000. They hid behind fully phasing in changes to how the information is gathered. They switched, they said, how they calculate adjustments for seasonal variations in employment. Then, to make the charade worse, they included Defense Department civilian employees not previously counted in the payroll numbers. The icing was stating they were now using more complete information from the unemployment insurance tax filings. The government can lubricate the numbers all they wish. I have personally checked with each of our states. I stand by the numbers I said yesterday- April had 146,399 job cuts and May had 68,623. The theory behind the revisions is to place greater emphasis on the service industries. The government said service-producing industries created 55,000 jobs in April and 12,000 in May. Meanwhile, those 55,000 jobs were negated by 53,000 jobs lost in manufacturing in April, they pointed out. In the whole payrolls report one number was correct- about 22% of the unemployed have been jobless for 27 weeks, and this is up from April’s 19%.
Today is the 1 ½ mile running of the Belmont Stakes. Even if it rains, about 125,000 spectators are expected to see the six horses entered in the race. Funny Cide makes his home at Belmont Park. This is his house. I’m rooting for the big guy. It would be great to have a triple crown champion. The world is lacking in champions, and, as for heroes, we’ll have to wait for the Hulk movie to be released.
Let’s turn our attention to Oracle’s hostile tender offer for PeopleSoft which commences on June 9. This offer does not, as some analysts have described, signal a revival in the tech industry. It is about Oracle’s self-preservation. From 1985 to 1993 Chuck Conway, PeopleSoft’s CEO, was an executive at Oracle, a firm he since, on one occasion, called a “sociopath company.” Within the past year Conway approached Oracle’s Ellison about buying his company’s applications software business, a division which hasnot lived up to Oracle’s expectations. Ellison gave a different version and said “we didn’t come to an agreement so we made the offer.” Obviously, the latter statement will be disputed in the courts, and proven to be inaccurate. So why did Oracle make the offer for PeopleSoft? Conway said “I think Larry saw a wedding and he showed up with a shotgun because he didn’t get invited. It’s a page straight out of Genghis Kahn…there is no condition that I can even remotely imagine where PeopleSoft would be sold to Oracle.” Oracle’s Executive VP, Phillips, said “ we need to bulk up and gain market share against SAP and Microsoft.” Conway says “the single intent of this atrociously bad behavior by Oracle is to distract and disrupt.” PeopleSoft’s acquisition of JD Edwards makes a good deal of sense. Conway says there are three attractions: “One was a market distribution advantage. PeopleSoft had become a leader in large enterprise apps. JD Edwards is a leader in midmarket enterprise apps. Advantage No.2 is to steal product advantages from each company and propagate them in each company’s traditional markets. The third advantage is industry as customers wind up with stronger products on more hardware and operating systems and databases and Web servers than any other software company had.” In sum, the combined company will have revenues of $2.8 billion, 13,000 employees, 11,000+ customers in 150 countries and have a 28% market share compared to SAP’s 35%. That new strength was and is a threat to Oracle, and it is a winning combination with Conway at the helm. Ellison started Oracle in 1977 and he has built it into a successful company. He is the world’s sixth richest person. However, Oracle’s top line is declining. He does not have a successor. Ellison is 58. Conway had a good idea to buy Oracle’s application software business. Tthat would have left Ellison with his crown jewel- the database business. Splitting Oracle into two and selling the parts would generate a good return to the shareowners, with Ellison owning 25% of the stock, above the closing price of $13. IBM and Microsoft are eating into Oracle’s database business and Oracle is not about to compete successfully with SAP. He might think again. Rather than be foolish with his present ill-founded tender, go to the bank. You don’t need the headaches. Cash out while on top.
About 77% of all human cases of the West Nile Virus in the U.S. occurred in either August or September of 2002. On Wednesday North Carolina’s State Health Director issued a public health warning about the virus which was found in two counties. The virus has an incubation period of 5 to 15 days.
In the Detroit Free Press there is a story about Chrysler’s new overtime policy. For those working more than 40 hours a week, to get overtime you must work at least an extra 4 hours, and in some cases, 10 hours of overtime, before extra pay kicks in for more than the 10,000 salaried workers.
Friday, June 06, 2003
6/6/03 WalMart 101
WalMart's May same store sales were up 2.1%. Costco's domestic experience was almost up the same at +2%. A spokesperson for WalMart said "consumers were having liquity issues between pay periods." When the Fed wants to know what is going on with the consumer, they call WalMart. Now they have the answer. Michael Potter, Big Lots chairman, said it a bit differently: "the softness of the value of the average basket continues to suggest customers remain cautious and are spending closer to need in this challenging economic environment." The latter statement sounds like something Greenspan could have said. I might add one more statement to the mix-- it's difficult to envision stronger consumer demand when there are liquidity problems combined with a weak labor market which undermine the potential for confidence. Growth has not begun. With a seasonally adjusted 442,000 initial weekly jobless claims, the four week average again moved higher to 430,500 and remained above 400,000 for the 16th consecutive week. The May unemployment rate is the highest in about 9 years. April factory orders fell by 2.9%, and it was the biggest drop since 9/11.
On Tuesday La-Z-Boy, our nation's largest home furniture maker, announced cutting 405 jobs. Cable and Wireless plans to pull out of the U.S.. They employ 2,774 in the U.S. It's possible they might be able to sell these operations, but layoffs can still be expected.
When I go to stores and visit companies, I talk with employees as well as customers and often the suppliers. I have come away with the following: most people have little or no cushion of money; those with money are spending less and more carefully; consumer and business confidence are shaky; the outlook is clouded; and most importantly, I sense a growing uneasiness and skittishness. I know the Dow is just over 9000 and that the Nasdaq has topped 1600. I know 10 year treasuries are at 3.24%. I also know the state of Illinois was able to sell a $10 billion tavaxble pension bond issue maturing in 30 years. Finally I know what I know best- there is an interesting risk arb deal- it's Tinker to Evers to Chance or JD Edwards to Peoplesoft to Oracle. JD Edwards has a signed merger agreement with Peoplesoft. It's a friendly deal between two competitors. Oracle could use Peoplesoft, and especially could use a good manager. Ray Lane left some time ago. Peoplesoft has a good manager. It will be interesting to see how Larry Ellison can misplay his hand. He already has said he won't actively sell Peoplesoft products to new customers. What a way to begin an unfriendly discussion!
Jobless claims are not a Fed issue. The private sector creates jobs. For the most part, I see jobs being cut and not being created. Tthis is the sign of a contracting environment. WalMart is hiring. They continue to expand. Starbucks is hiring. Krispy Kreme is hiring. GM is not hiring. American Airlines is not hiring. Even though 146,399 job cuts were announced in April, there was only a drop of 48,000 in payrolls in the U.S. in that month. As I'm writing, the actual number of the payroll decline in May has not been released. Job cuts of 68,623 were announced in May. Now Greenspan may call this a resilient economy but I do not. We are well on our way to having 3 million jobs lost since Bush was elected.
I'm not picking on the U.S. Service industries account for 50% of Europe's economy. They shrank for a 4th month in May. In the euro region manufacturing contracted for a 3rd month in May.
I must admit an inability to comprehend a negative bond yield. In Japan a 10 year government bond is yielding about .50%. With the on-going capital deficiency ratios in the big Japanese banks, investors seem willing to accept almost a zero return for safety. I guess it's a bit like a government safety deposit box for which you pay a small fee. The Japanese must not have faith in the old mattress.
For the past several years pundits keep predicting a better second half in the economy. We see in May polls that consumer confidence has risen. That does not necessarily translate into spending. On Tuesday Greenspan said the U.S. labor market was "exceptionally weak." The June Investor's Business Daily poll indicates 1 in 5 Americans say its likely someone at home will lose a job in the coming year. Two thirds say Bush is partly to blame. Three quarters say finding a job is hard in their area. The government wants you to rush out and spend your tax credit dollars. I suggest waiting. Auto inventories are enormous, and increased incentives are on the way. High inventories can be seen at chain stores, and even WalMart's Williams remarked that "we have some work to do to bring inventories down to more appropriate levels. We feel we have some exposure to markdowns." Going from autos to retail to Wall St., we might ask ourselves- if joblessness is a problem, if finding a job is a problem, if inventories are high in key industries, then shouldn't we question the intelligence data surrounding profit projections for this year's second half and for 2004? These projections have been too high for 3 years. If they are too high, then equities as a whole are too high. A bull market should begin with reliable information. For that matter, so should a war.
WalMart's May same store sales were up 2.1%. Costco's domestic experience was almost up the same at +2%. A spokesperson for WalMart said "consumers were having liquity issues between pay periods." When the Fed wants to know what is going on with the consumer, they call WalMart. Now they have the answer. Michael Potter, Big Lots chairman, said it a bit differently: "the softness of the value of the average basket continues to suggest customers remain cautious and are spending closer to need in this challenging economic environment." The latter statement sounds like something Greenspan could have said. I might add one more statement to the mix-- it's difficult to envision stronger consumer demand when there are liquidity problems combined with a weak labor market which undermine the potential for confidence. Growth has not begun. With a seasonally adjusted 442,000 initial weekly jobless claims, the four week average again moved higher to 430,500 and remained above 400,000 for the 16th consecutive week. The May unemployment rate is the highest in about 9 years. April factory orders fell by 2.9%, and it was the biggest drop since 9/11.
On Tuesday La-Z-Boy, our nation's largest home furniture maker, announced cutting 405 jobs. Cable and Wireless plans to pull out of the U.S.. They employ 2,774 in the U.S. It's possible they might be able to sell these operations, but layoffs can still be expected.
When I go to stores and visit companies, I talk with employees as well as customers and often the suppliers. I have come away with the following: most people have little or no cushion of money; those with money are spending less and more carefully; consumer and business confidence are shaky; the outlook is clouded; and most importantly, I sense a growing uneasiness and skittishness. I know the Dow is just over 9000 and that the Nasdaq has topped 1600. I know 10 year treasuries are at 3.24%. I also know the state of Illinois was able to sell a $10 billion tavaxble pension bond issue maturing in 30 years. Finally I know what I know best- there is an interesting risk arb deal- it's Tinker to Evers to Chance or JD Edwards to Peoplesoft to Oracle. JD Edwards has a signed merger agreement with Peoplesoft. It's a friendly deal between two competitors. Oracle could use Peoplesoft, and especially could use a good manager. Ray Lane left some time ago. Peoplesoft has a good manager. It will be interesting to see how Larry Ellison can misplay his hand. He already has said he won't actively sell Peoplesoft products to new customers. What a way to begin an unfriendly discussion!
Jobless claims are not a Fed issue. The private sector creates jobs. For the most part, I see jobs being cut and not being created. Tthis is the sign of a contracting environment. WalMart is hiring. They continue to expand. Starbucks is hiring. Krispy Kreme is hiring. GM is not hiring. American Airlines is not hiring. Even though 146,399 job cuts were announced in April, there was only a drop of 48,000 in payrolls in the U.S. in that month. As I'm writing, the actual number of the payroll decline in May has not been released. Job cuts of 68,623 were announced in May. Now Greenspan may call this a resilient economy but I do not. We are well on our way to having 3 million jobs lost since Bush was elected.
I'm not picking on the U.S. Service industries account for 50% of Europe's economy. They shrank for a 4th month in May. In the euro region manufacturing contracted for a 3rd month in May.
I must admit an inability to comprehend a negative bond yield. In Japan a 10 year government bond is yielding about .50%. With the on-going capital deficiency ratios in the big Japanese banks, investors seem willing to accept almost a zero return for safety. I guess it's a bit like a government safety deposit box for which you pay a small fee. The Japanese must not have faith in the old mattress.
For the past several years pundits keep predicting a better second half in the economy. We see in May polls that consumer confidence has risen. That does not necessarily translate into spending. On Tuesday Greenspan said the U.S. labor market was "exceptionally weak." The June Investor's Business Daily poll indicates 1 in 5 Americans say its likely someone at home will lose a job in the coming year. Two thirds say Bush is partly to blame. Three quarters say finding a job is hard in their area. The government wants you to rush out and spend your tax credit dollars. I suggest waiting. Auto inventories are enormous, and increased incentives are on the way. High inventories can be seen at chain stores, and even WalMart's Williams remarked that "we have some work to do to bring inventories down to more appropriate levels. We feel we have some exposure to markdowns." Going from autos to retail to Wall St., we might ask ourselves- if joblessness is a problem, if finding a job is a problem, if inventories are high in key industries, then shouldn't we question the intelligence data surrounding profit projections for this year's second half and for 2004? These projections have been too high for 3 years. If they are too high, then equities as a whole are too high. A bull market should begin with reliable information. For that matter, so should a war.
Thursday, June 05, 2003
6/5/03 Key Insider Selling Can Create A Valuable Road Map
Within the last couple of weeks I mentioned Steve Ballmer's insider selling on three separate occasions. I felt it was significant. Last night I read Ballmer's email to all Microsoft employees. I strongly suggest investors in technology stocks read the passages I am presenting. Steve Bllmer, CEO of Microsoft: "Over the long term, I'm optimistic about our growth opportunities. But we face significant challenges in the near-and mid-term. The overall state of the economy is an issue. As I talk with business customers, there is less passion and enthusiasm for technology, and greater focus on doing more for less...the reality is there is no 'center of gravity', or central body, investing in the health and growth of non-commercial software or innovating in critical areas like engineering, manageability, compatability and security... Longhorn is our bet on galvanizing the next breakthrough-even bigger, perhaps, then the first generation Windows release." It should be noted that Longhorn is about two years from release. About Linux Ballmer said: "In this environment of lean IT budgets and concerns about Microsoft's attention to customers. non-commercial software such as Linux and OpenOffice is seen as interesting 'good enough' or 'free' alternatives...IBM's endorsement of Linux has added credibility and an illusion of support and services for its high-end corporate computers." I have said this many times. Microsoft is the leading software company in the world, and, in my view, the most successful technology company in the world. No public company throws off more free cash flow than Microsoft. Maybe you have laughed at Ballmer's insider selling as the Nasdaq has continued to rise for the past two weeks. Maybe you'll laugh off the remarks in the email he sent to all Microsoft employees. If you do and you read Ballmer's words months from today, the market will have wiped the smile from your face in the interim. Ballmer has plenty of Microsoft stock left. He just cashed in over $1 billion worth. He went to the bank. Ignore his selling and his email, and, in my opinion, you won't join him at the bank.
Last night Carole Baum wrote a piece in Bloomberg entitled "Evidence Builds That Bond Market Is Bubbling." She quotes Jim Bianco and what he told his clients in his conference call with them yesterday: "The bond market is over-bought, over-valued, over-levergaed, and is breaking old relationships with other markets. " However, as David Ging pointed out, rich markets "can stay rich for a long period of time." Bill Fleckenstein, who I quoted just the other day, says "the bond market is an absolute bubble, leading to a misallocation of capital into housing. It's helped people to leverage up and live beyond their means." I think there are a great many money managers who are long bonds and who also realize a bubble is here. At the same time, they figure why sell now. The trend is with us, we're making money, and the market can stay rich for a long time. The bond buyer is at one disadvantage. With Microsoft, you can see Ballmer selling stock and selling more stock. When the Fed sells bonds, they raise money for the Treasury. They have no choice. The government runs big deficits. Bond buyers have ignored the deficits and focused solely on the declining rates. It's not a matter of calling the glass half empty or half full. It's looking at the glass clearly. I suggest you read Greenspan's words that were uttered in Berlin this week: "The marked moves of the stock market in recent weeks, and especially in the credit markets, are suggesting a fairly marked turnaround." Maybe we should look at the extent of the rise in the stock and credit markets after Greenspan just happened to announce his concern with 'deflation'. Who engineered the rises? Who was fool enough to listen to someone so clever as to move from 'deflation' to 'corrosive deflation' in just a matter of weeks? I discussed this yesterday in my blog.
Hsi-Tang: "Although gold dust is precious, when it gets in our eyes, it obstructs your vision."
Within the last couple of weeks I mentioned Steve Ballmer's insider selling on three separate occasions. I felt it was significant. Last night I read Ballmer's email to all Microsoft employees. I strongly suggest investors in technology stocks read the passages I am presenting. Steve Bllmer, CEO of Microsoft: "Over the long term, I'm optimistic about our growth opportunities. But we face significant challenges in the near-and mid-term. The overall state of the economy is an issue. As I talk with business customers, there is less passion and enthusiasm for technology, and greater focus on doing more for less...the reality is there is no 'center of gravity', or central body, investing in the health and growth of non-commercial software or innovating in critical areas like engineering, manageability, compatability and security... Longhorn is our bet on galvanizing the next breakthrough-even bigger, perhaps, then the first generation Windows release." It should be noted that Longhorn is about two years from release. About Linux Ballmer said: "In this environment of lean IT budgets and concerns about Microsoft's attention to customers. non-commercial software such as Linux and OpenOffice is seen as interesting 'good enough' or 'free' alternatives...IBM's endorsement of Linux has added credibility and an illusion of support and services for its high-end corporate computers." I have said this many times. Microsoft is the leading software company in the world, and, in my view, the most successful technology company in the world. No public company throws off more free cash flow than Microsoft. Maybe you have laughed at Ballmer's insider selling as the Nasdaq has continued to rise for the past two weeks. Maybe you'll laugh off the remarks in the email he sent to all Microsoft employees. If you do and you read Ballmer's words months from today, the market will have wiped the smile from your face in the interim. Ballmer has plenty of Microsoft stock left. He just cashed in over $1 billion worth. He went to the bank. Ignore his selling and his email, and, in my opinion, you won't join him at the bank.
Last night Carole Baum wrote a piece in Bloomberg entitled "Evidence Builds That Bond Market Is Bubbling." She quotes Jim Bianco and what he told his clients in his conference call with them yesterday: "The bond market is over-bought, over-valued, over-levergaed, and is breaking old relationships with other markets. " However, as David Ging pointed out, rich markets "can stay rich for a long period of time." Bill Fleckenstein, who I quoted just the other day, says "the bond market is an absolute bubble, leading to a misallocation of capital into housing. It's helped people to leverage up and live beyond their means." I think there are a great many money managers who are long bonds and who also realize a bubble is here. At the same time, they figure why sell now. The trend is with us, we're making money, and the market can stay rich for a long time. The bond buyer is at one disadvantage. With Microsoft, you can see Ballmer selling stock and selling more stock. When the Fed sells bonds, they raise money for the Treasury. They have no choice. The government runs big deficits. Bond buyers have ignored the deficits and focused solely on the declining rates. It's not a matter of calling the glass half empty or half full. It's looking at the glass clearly. I suggest you read Greenspan's words that were uttered in Berlin this week: "The marked moves of the stock market in recent weeks, and especially in the credit markets, are suggesting a fairly marked turnaround." Maybe we should look at the extent of the rise in the stock and credit markets after Greenspan just happened to announce his concern with 'deflation'. Who engineered the rises? Who was fool enough to listen to someone so clever as to move from 'deflation' to 'corrosive deflation' in just a matter of weeks? I discussed this yesterday in my blog.
Hsi-Tang: "Although gold dust is precious, when it gets in our eyes, it obstructs your vision."
Wednesday, June 04, 2003
6/4/03 Exfoliate And Lubricate
I have said this many times. There are too many
companies making too many of the same and/or similar
thing. How many auto companies are needed? Chrysler
answered that question last night. They are
forecasting a $1.17 billion operating loss in the
second quarter. The company blamed the loss on the
price war in the U.S. and selling incentives. Just as
important, the company said "the result is primarily
attributable to a revaluation of dealer stocks and
residual values." Basically, after you exfoliate the
jargon, they're telling you management can't get out
of its own way. It comes as no surprise that S&P cut
its rating outlook on the company to "negative". Is
Chrysler the next KMart? I only know Toyota is in the
same business. Last year they captured 10% of the
global auto market and reported $11.3 billion in
operating income in the fiscal year ended 3/31/03, the
most ever by a car company. Toyota U.S. has been in
this country for 46 years. May was their best-ever
month. You can talk about p/e ratios and all other
measures for supposedly rational valuation; however,
for me, the top priority is management, management,
management. Toyota is the perfect example. Ford and GM
announced they would cut third quarter auto production
as a result of disappointing May sales. This means
there will be "temporary" layoffs on the horizon.
The most successful business in San Francisco is Visa
USA. Over the past 12 months they recorded in excess
of $1 trillion in transactions. Stating it simply, an
average of $32,000 went through their Visa systems
every second during the 12 month period ending
3/31/03. That exceeds 10% of this country's GDP. For
every $100 consumers spent over the past 12 months,
$12 was expended on a Visa card. That $1 trillion
volume figure is greater than the combined volume of
Master Card, American Express, and Discover. Yesterday
central bankers exhaled in Berlin. We're going to
exfoliate the proclamations and come away with some
reprehensible goings-on. Free speech is a great right
in our country. It's not ok to malign free speech. Let
there be no misunderstandings. This is not about
agreeing or disagreeing with the words and thoughts
spoken. This is not about the Fed easing. I said a
month or so ago it doesn't matter exactly which
meeting the Fed decided to ease. Greenspan proclaimed
yesterday that “acceleration has not yet begun.” Any
man on the street can look at the current data and see
that. Greenspan has told us that the data suggests May
stabilized but "it's too early yet to get any real fix
on the American economy in the period immediately
ahead." That's obvious. The man on the street could
tell you that. Greenspan went over the line though. He
lubricated the treasury and equity markets. That's the
nicest way I can put it. As Greenspan said, something
is happening. What's happening are his purposeful
words. No longer is he concerned about "deflation in
the sense of falling prices per se, but the issue of
what I would call corrosive deflation. That is
deflation that essentially feeds on itself, creates
falling asset prices, which in turn brings down levels
of economic activity through the wealth effect,
contracting profit margins and a type of weakness
which we all...conclude is far more of a concern than
inflation." I think he might mean VA Linux falling
from $350+ to $1. It was ok for the bubble to burst on
the Nasdaq. The Fed was still fighting inflation
during that period. He wants me to believe that a 13th
rate cut will be insurance against deflation? He says
"We are learning as we are going. But one thing is
certain, we are going to learn as much about it as
possible." Are you for real here? In the space of a
month or so we have gone from a concern with price
deflation, and that concern is "a low probability" to
a concern with "corrosive deflation." I have said for
months on end that the Fed is out of ammo. I was
wrong. I was terribly wrong. I didn't realize they
could lubricate. And it's Ivory soap time because 99
44/100% of the people are buying the act. They are
buying a sage Fed chairman saying "we are far more
unclear on the issue of deflation and as a consequence
in one sense we need a much wider firebreak, in
logging and foresting terms, because we know so little
about it, so we lean over backwards to make certain we
contain deflationary forces." It sounds to me like we
need a proctologist. Greenspan has done his selling.
He pushed two year notes to an all-time low yield and
below the Fed funds rate. The economists will tell you
it's all because Greenspan uttered the "D" word. They
can blame themselves for buying the act. They'll be
lubricated all the way to another "D" word. That one
they won't hear from Greenspan.
When the stock market stopped rising three years ago,
the Fed turned their attention to housing and the
mortgage market. Yesterday the National Association of
Realtors predicted a third consecutive year of
record-breaking sales. According to the Mortgage
Bankers Association of America applications for home
loans rose over 13% last week as 30 year mortgage
rates fell to 5.13%. It was, according to
Bankrate.com, the lowest rate since 1958. Greenspan
talks about the resiliency of the American economy. I
think he should give himself more of the credit. No
one can lubricate the system better. I hope I'm wrong.
I think the price for the lubrication will be severe.
I have said this many times. There are too many
companies making too many of the same and/or similar
thing. How many auto companies are needed? Chrysler
answered that question last night. They are
forecasting a $1.17 billion operating loss in the
second quarter. The company blamed the loss on the
price war in the U.S. and selling incentives. Just as
important, the company said "the result is primarily
attributable to a revaluation of dealer stocks and
residual values." Basically, after you exfoliate the
jargon, they're telling you management can't get out
of its own way. It comes as no surprise that S&P cut
its rating outlook on the company to "negative". Is
Chrysler the next KMart? I only know Toyota is in the
same business. Last year they captured 10% of the
global auto market and reported $11.3 billion in
operating income in the fiscal year ended 3/31/03, the
most ever by a car company. Toyota U.S. has been in
this country for 46 years. May was their best-ever
month. You can talk about p/e ratios and all other
measures for supposedly rational valuation; however,
for me, the top priority is management, management,
management. Toyota is the perfect example. Ford and GM
announced they would cut third quarter auto production
as a result of disappointing May sales. This means
there will be "temporary" layoffs on the horizon.
The most successful business in San Francisco is Visa
USA. Over the past 12 months they recorded in excess
of $1 trillion in transactions. Stating it simply, an
average of $32,000 went through their Visa systems
every second during the 12 month period ending
3/31/03. That exceeds 10% of this country's GDP. For
every $100 consumers spent over the past 12 months,
$12 was expended on a Visa card. That $1 trillion
volume figure is greater than the combined volume of
Master Card, American Express, and Discover. Yesterday
central bankers exhaled in Berlin. We're going to
exfoliate the proclamations and come away with some
reprehensible goings-on. Free speech is a great right
in our country. It's not ok to malign free speech. Let
there be no misunderstandings. This is not about
agreeing or disagreeing with the words and thoughts
spoken. This is not about the Fed easing. I said a
month or so ago it doesn't matter exactly which
meeting the Fed decided to ease. Greenspan proclaimed
yesterday that “acceleration has not yet begun.” Any
man on the street can look at the current data and see
that. Greenspan has told us that the data suggests May
stabilized but "it's too early yet to get any real fix
on the American economy in the period immediately
ahead." That's obvious. The man on the street could
tell you that. Greenspan went over the line though. He
lubricated the treasury and equity markets. That's the
nicest way I can put it. As Greenspan said, something
is happening. What's happening are his purposeful
words. No longer is he concerned about "deflation in
the sense of falling prices per se, but the issue of
what I would call corrosive deflation. That is
deflation that essentially feeds on itself, creates
falling asset prices, which in turn brings down levels
of economic activity through the wealth effect,
contracting profit margins and a type of weakness
which we all...conclude is far more of a concern than
inflation." I think he might mean VA Linux falling
from $350+ to $1. It was ok for the bubble to burst on
the Nasdaq. The Fed was still fighting inflation
during that period. He wants me to believe that a 13th
rate cut will be insurance against deflation? He says
"We are learning as we are going. But one thing is
certain, we are going to learn as much about it as
possible." Are you for real here? In the space of a
month or so we have gone from a concern with price
deflation, and that concern is "a low probability" to
a concern with "corrosive deflation." I have said for
months on end that the Fed is out of ammo. I was
wrong. I was terribly wrong. I didn't realize they
could lubricate. And it's Ivory soap time because 99
44/100% of the people are buying the act. They are
buying a sage Fed chairman saying "we are far more
unclear on the issue of deflation and as a consequence
in one sense we need a much wider firebreak, in
logging and foresting terms, because we know so little
about it, so we lean over backwards to make certain we
contain deflationary forces." It sounds to me like we
need a proctologist. Greenspan has done his selling.
He pushed two year notes to an all-time low yield and
below the Fed funds rate. The economists will tell you
it's all because Greenspan uttered the "D" word. They
can blame themselves for buying the act. They'll be
lubricated all the way to another "D" word. That one
they won't hear from Greenspan.
When the stock market stopped rising three years ago,
the Fed turned their attention to housing and the
mortgage market. Yesterday the National Association of
Realtors predicted a third consecutive year of
record-breaking sales. According to the Mortgage
Bankers Association of America applications for home
loans rose over 13% last week as 30 year mortgage
rates fell to 5.13%. It was, according to
Bankrate.com, the lowest rate since 1958. Greenspan
talks about the resiliency of the American economy. I
think he should give himself more of the credit. No
one can lubricate the system better. I hope I'm wrong.
I think the price for the lubrication will be severe.
Tuesday, June 03, 2003
6/3/03 FedEx
Over the years FedEx has been one of my favorite companies. It is, in my view, a great company along with WalMart and some others I have mentioned over time. Yesterday FedEx announced that they would be laying off 14,000 workers. This is a company that employs 116,000 people. My first reaction was of complete surprise. The economy has hit a "soft patch" but they have grown revenue 10% and earnings per share by 17% for the first three quarters of their 2003 fiscal year. The problem is situated at FedEx Express where "domestic growth rates have declined in recent periods." In order to improve the profitability of its FedEx Express unit, the company will offer voluntary early retirement and severance programs, and the company stated that the net cost will be $130 million to $160 million in 2004. FedEx expects to experience "significant increases in pension and health care costs in 2004." During 2003 FedEx has contributed in excess of $1 billion "to fully fund the accumulated benefit obligations of the company's qualified U.S. pension plans." Because of sluggish U.S. economic growth, FedEx had reduced its 2003 capital expenditure plans to $1.6 billion. The company has remained cash flow positive. However, due to the higher pension and health care expenses, the company expects to miss its fourth quarter estimates as well as its projections for all of 2004. At the same time, management stated that "during fiscal 2004, the company expects the U.S. economy to remain sluggish in its first fiscal quarter. Year-over-year economic improvement is expected to be evident in the second half of fiscal 2004, although sequential improvement may come earlier." For the second consecutive year, FedEx ranked 8th on Fortune magazine's "America's Most Admired Companies" annual survey. I have gone into the aforementioned detail for the same reason I discussed WalMart, my favorite company, in the early fall of last year. When the great companies begin to experience slower growth, when the industry leaders point to specific on-going problems, such as rising pension expenses and health care costs, I ask myself what's the story with other companies in the industry as well as companies which depend on them for their well-being. We have seen what's taken place in the past nine months within the retail industry. WalMart has nudged ahead but very slowly for them. The same will be true for FedEx in the near future. There is one important similarity between WalMart and FedEx. In recent years, their greatest growth has been internationally. U.S. FedEX Express and Sam's Club have both suffered by comparison. I again ask the question- when the great ones are experiencing a slowdown, isn't that a reason for concern? Is this concern reflected in the Dow at almost 9000 and the Nasdaq at about 1600? It's your money. For my money, the concern has created risks for which I am not being adequately compensated. I trust in the management at FedEx. They stay ahead of the curve. I certainly can't say the same for too many other companies.
On Friday Steve Ballmer, Microsoft's CEO, sold 4.1 million shares. He still owns 410 million shares. Is anyone concerned that he has sold about $1.6 billion in Microsoft stock in the past two weeks? It's interesting. At the beginning of June last year the Nasdaq dropped below 1600. Then, yesterday the Nasdaq for the first time in a year, stuck its head through 1600. In all, over the past 12 months the Nasdaq is unchanged. Not much has happened with Microsoft stock either in that time.
The Financial Times reports that the semiconductor industry group has lowered sales forecasts on chip growth for 2003 and 2004 due to SARS. I noticed yesterday where Intel cut prices for some mobile products, including some Centrino packages. Price cuts ranged up to 34%. I was surprised. Centrino was recently introduced with much publicity. Maybe Intel overestimated their industry pricing power.
Colin Powell recently stated "There were weapons of mass destruction in Iraq. It wasn't a figment of anyone's imagination." Powell did not touch on a subject which has created much debate in the British press- the September 24 published British intelligence finding which claimed that Iraq had WPM that could be deployed within 45 minutes of an order being given.
Edward Laird, head of Air Cargo Management Group, said freight forwarders in Hong Kong are having trouble moving cargo as a result of Cathay Pacific and Dragonair and others having canceled flights. International freight and express shipments were down 1.7% in April, and this was the first time such a decline had taken place for U.S. carriers in a year.
Paul McCulley, managing director of Pimco, said in November 2002 "the time has come for America to stick a lower dollar into the deflationary ears of the European and Japanese monetary authorities, until they scream reflationary Keynesian aggregate demand uncle." This past week we have begun to hear such screams.
I received a wonderful present from my family yesterday. It's a tee shirt which says in bold lettering: "I stand up to incredible intellectual scrutiny." I got a great laugh and it will make me smile when wearing it. Others will scream. That's what makes horse racing. The Belmont Stakes is fast approaching.
Over the years FedEx has been one of my favorite companies. It is, in my view, a great company along with WalMart and some others I have mentioned over time. Yesterday FedEx announced that they would be laying off 14,000 workers. This is a company that employs 116,000 people. My first reaction was of complete surprise. The economy has hit a "soft patch" but they have grown revenue 10% and earnings per share by 17% for the first three quarters of their 2003 fiscal year. The problem is situated at FedEx Express where "domestic growth rates have declined in recent periods." In order to improve the profitability of its FedEx Express unit, the company will offer voluntary early retirement and severance programs, and the company stated that the net cost will be $130 million to $160 million in 2004. FedEx expects to experience "significant increases in pension and health care costs in 2004." During 2003 FedEx has contributed in excess of $1 billion "to fully fund the accumulated benefit obligations of the company's qualified U.S. pension plans." Because of sluggish U.S. economic growth, FedEx had reduced its 2003 capital expenditure plans to $1.6 billion. The company has remained cash flow positive. However, due to the higher pension and health care expenses, the company expects to miss its fourth quarter estimates as well as its projections for all of 2004. At the same time, management stated that "during fiscal 2004, the company expects the U.S. economy to remain sluggish in its first fiscal quarter. Year-over-year economic improvement is expected to be evident in the second half of fiscal 2004, although sequential improvement may come earlier." For the second consecutive year, FedEx ranked 8th on Fortune magazine's "America's Most Admired Companies" annual survey. I have gone into the aforementioned detail for the same reason I discussed WalMart, my favorite company, in the early fall of last year. When the great companies begin to experience slower growth, when the industry leaders point to specific on-going problems, such as rising pension expenses and health care costs, I ask myself what's the story with other companies in the industry as well as companies which depend on them for their well-being. We have seen what's taken place in the past nine months within the retail industry. WalMart has nudged ahead but very slowly for them. The same will be true for FedEx in the near future. There is one important similarity between WalMart and FedEx. In recent years, their greatest growth has been internationally. U.S. FedEX Express and Sam's Club have both suffered by comparison. I again ask the question- when the great ones are experiencing a slowdown, isn't that a reason for concern? Is this concern reflected in the Dow at almost 9000 and the Nasdaq at about 1600? It's your money. For my money, the concern has created risks for which I am not being adequately compensated. I trust in the management at FedEx. They stay ahead of the curve. I certainly can't say the same for too many other companies.
On Friday Steve Ballmer, Microsoft's CEO, sold 4.1 million shares. He still owns 410 million shares. Is anyone concerned that he has sold about $1.6 billion in Microsoft stock in the past two weeks? It's interesting. At the beginning of June last year the Nasdaq dropped below 1600. Then, yesterday the Nasdaq for the first time in a year, stuck its head through 1600. In all, over the past 12 months the Nasdaq is unchanged. Not much has happened with Microsoft stock either in that time.
The Financial Times reports that the semiconductor industry group has lowered sales forecasts on chip growth for 2003 and 2004 due to SARS. I noticed yesterday where Intel cut prices for some mobile products, including some Centrino packages. Price cuts ranged up to 34%. I was surprised. Centrino was recently introduced with much publicity. Maybe Intel overestimated their industry pricing power.
Colin Powell recently stated "There were weapons of mass destruction in Iraq. It wasn't a figment of anyone's imagination." Powell did not touch on a subject which has created much debate in the British press- the September 24 published British intelligence finding which claimed that Iraq had WPM that could be deployed within 45 minutes of an order being given.
Edward Laird, head of Air Cargo Management Group, said freight forwarders in Hong Kong are having trouble moving cargo as a result of Cathay Pacific and Dragonair and others having canceled flights. International freight and express shipments were down 1.7% in April, and this was the first time such a decline had taken place for U.S. carriers in a year.
Paul McCulley, managing director of Pimco, said in November 2002 "the time has come for America to stick a lower dollar into the deflationary ears of the European and Japanese monetary authorities, until they scream reflationary Keynesian aggregate demand uncle." This past week we have begun to hear such screams.
I received a wonderful present from my family yesterday. It's a tee shirt which says in bold lettering: "I stand up to incredible intellectual scrutiny." I got a great laugh and it will make me smile when wearing it. Others will scream. That's what makes horse racing. The Belmont Stakes is fast approaching.
Monday, June 02, 2003
6/2/03 Driving Through Potholes Impacts Wheel Alignments
Everywhere you look there are tolls or some use tax. You pay them and know it's the current cost of driving through life. Over the years I have said that the risk taker should be compensated for assuming risk. When the risk rises, the compensation should be larger and vice versa. Assessing the risk and the proper compensation are matters for each individual's consideration. It's not my personal interest whether my thoughts influence your thinking. I only hope you think rationally and are successful.
I found it interesting that Bill Fleckenstein, a very bright guy, happened yesterday in his Contrarian Chronicles to outline items I have been analyzing as well. He states "a precarious economy, rotten fundamentals, a debt-ridden government that says 'sell our currency' are a recipe for disaster...I think fixed-income is a bubble that is destined to end in an ugly mess...but it's a given that we face financial and economic turmoil." Hopefully, Bill's thoughts will not prove too disturbing. They, too, are meant to serve investors well.
Before I touch once again on the tax cuts, I would like to revisit what took place yesterday in Texas where a $117 billion budget was officially passed. Some might consider it progress. Some might consider it disaster. Maybe it's somewhere in-between. They "saved" $800 million by delaying payment for public schools by 5 days. They "saved" $524 million by assuming lower caseload projections for Medicaid! They drained the "rainy day fund" for the Medicaid shortfall etc. They "shifted burdens for indigent health care to county district hospitals," said Republican Sen. Whitworth of San Antonio. Hundreds of thousands of children were removed from the Children's Health Insurance Program. Teachers lost health benefits and must pay more for their retirement. I don't believe the aforementioned budget process is a recipe for success. It is going on in most of our states. According to the National Conference of State Legislatures, states face revenue shortfalls totalling $21.5 billion for the fiscal year ending this month, and this amount is 23% more than what was projected in November. "This year's budget crisis will feel like 'The Perfect Storm',"said Governor Bob Taft of Ohio, a Republican. Gov. Dirk Kempthorne of Idaho, a Republican, calls it "the worst budget crisis among the states since World War II."
I have mentioned the state budget process and the state budget crisis for an important reason. In my view, a discussion of the recent tax cuts cannot be effective without bringing up the impact the budget crisis among the states is having on its state citizens. Let me say I do not feel there is a belief or opinion which can be proven today with respect to the recent tax cuts and their impact on stock market performance. It will be proven in hindsight only. Historically, budget cuts do have a positive impact on the stock market; however, today does not resemble history. We are setting new records, and those records have disaster written on them. I am talking about the size of the federal budget deficit, the size of the federal trade account deficit, the size of the federal debt, the size of the state budget shortfalls, the size of the cost of Medicare and Medicaid, the number of Americans without health insurance, the ever-increasing cost of health insurance-- put them together and you do have a recipe for disaster. The latter, in my view, far outweighs the benefits from the tax cuts.
May eurozone manufacturing Purchasing Manufacturers Index dipped to 46.8 from 47.8 in April. This was a surprise, The consensus was that the PMI would rise to 48.2. Overall, European manufacturing has fallen for three straight months and orders have fallen to their lowest level in 18 months.
As I have said so often with glee, I am not an economist. At the same time, I do keep my eyes open. Over this past weekend there was the biggest social event of the year in San Francisco- the Black and White Ball. Two years ago 10,000 tickets were sold for the Ball. The tickets are not inexpensive. This weekend 5000 tickets were purchased. In the environs of Seattle there are two areas where the extremely wealthy live. The top area is the Medina section of Bellevue. That's where Bill Gates has his home. The other is an island not far from where Bill Gates lives. The island is located in a beautiful setting with magnificent coves and much privacy. Ttwo years ago there was hardly a home for sale. Now there are for sale signs on almost every block. These are signs in both newer as well as very established neighborhoods. Whether its San Francisco or the aformentioned island on the outskirts of the Seattle skyline, the economic downturn continues to impact the wealthy. In my view, the wealthy will need more than a reduction in the taxes on the dividends received to provide a path to recovery. Whether its the $2.65 budget shortfall in Washington state or the staggering multi billion dollar budget shortfall in California, the fallout from the growing state budget crises will dwarf the positive impacts from the tax cuts coming out of Washington DC. Given the recent run-ups in the stock market and the bond market, I believe investors might reassess the current and future risks.
Everywhere you look there are tolls or some use tax. You pay them and know it's the current cost of driving through life. Over the years I have said that the risk taker should be compensated for assuming risk. When the risk rises, the compensation should be larger and vice versa. Assessing the risk and the proper compensation are matters for each individual's consideration. It's not my personal interest whether my thoughts influence your thinking. I only hope you think rationally and are successful.
I found it interesting that Bill Fleckenstein, a very bright guy, happened yesterday in his Contrarian Chronicles to outline items I have been analyzing as well. He states "a precarious economy, rotten fundamentals, a debt-ridden government that says 'sell our currency' are a recipe for disaster...I think fixed-income is a bubble that is destined to end in an ugly mess...but it's a given that we face financial and economic turmoil." Hopefully, Bill's thoughts will not prove too disturbing. They, too, are meant to serve investors well.
Before I touch once again on the tax cuts, I would like to revisit what took place yesterday in Texas where a $117 billion budget was officially passed. Some might consider it progress. Some might consider it disaster. Maybe it's somewhere in-between. They "saved" $800 million by delaying payment for public schools by 5 days. They "saved" $524 million by assuming lower caseload projections for Medicaid! They drained the "rainy day fund" for the Medicaid shortfall etc. They "shifted burdens for indigent health care to county district hospitals," said Republican Sen. Whitworth of San Antonio. Hundreds of thousands of children were removed from the Children's Health Insurance Program. Teachers lost health benefits and must pay more for their retirement. I don't believe the aforementioned budget process is a recipe for success. It is going on in most of our states. According to the National Conference of State Legislatures, states face revenue shortfalls totalling $21.5 billion for the fiscal year ending this month, and this amount is 23% more than what was projected in November. "This year's budget crisis will feel like 'The Perfect Storm',"said Governor Bob Taft of Ohio, a Republican. Gov. Dirk Kempthorne of Idaho, a Republican, calls it "the worst budget crisis among the states since World War II."
I have mentioned the state budget process and the state budget crisis for an important reason. In my view, a discussion of the recent tax cuts cannot be effective without bringing up the impact the budget crisis among the states is having on its state citizens. Let me say I do not feel there is a belief or opinion which can be proven today with respect to the recent tax cuts and their impact on stock market performance. It will be proven in hindsight only. Historically, budget cuts do have a positive impact on the stock market; however, today does not resemble history. We are setting new records, and those records have disaster written on them. I am talking about the size of the federal budget deficit, the size of the federal trade account deficit, the size of the federal debt, the size of the state budget shortfalls, the size of the cost of Medicare and Medicaid, the number of Americans without health insurance, the ever-increasing cost of health insurance-- put them together and you do have a recipe for disaster. The latter, in my view, far outweighs the benefits from the tax cuts.
May eurozone manufacturing Purchasing Manufacturers Index dipped to 46.8 from 47.8 in April. This was a surprise, The consensus was that the PMI would rise to 48.2. Overall, European manufacturing has fallen for three straight months and orders have fallen to their lowest level in 18 months.
As I have said so often with glee, I am not an economist. At the same time, I do keep my eyes open. Over this past weekend there was the biggest social event of the year in San Francisco- the Black and White Ball. Two years ago 10,000 tickets were sold for the Ball. The tickets are not inexpensive. This weekend 5000 tickets were purchased. In the environs of Seattle there are two areas where the extremely wealthy live. The top area is the Medina section of Bellevue. That's where Bill Gates has his home. The other is an island not far from where Bill Gates lives. The island is located in a beautiful setting with magnificent coves and much privacy. Ttwo years ago there was hardly a home for sale. Now there are for sale signs on almost every block. These are signs in both newer as well as very established neighborhoods. Whether its San Francisco or the aformentioned island on the outskirts of the Seattle skyline, the economic downturn continues to impact the wealthy. In my view, the wealthy will need more than a reduction in the taxes on the dividends received to provide a path to recovery. Whether its the $2.65 budget shortfall in Washington state or the staggering multi billion dollar budget shortfall in California, the fallout from the growing state budget crises will dwarf the positive impacts from the tax cuts coming out of Washington DC. Given the recent run-ups in the stock market and the bond market, I believe investors might reassess the current and future risks.
Sunday, June 01, 2003
6/1/03 Systemic Mold
We have a growing mold problem in this country. As such. homeowner insurance rates have been increasing, and, in some states, dramatically. Texas has the biggest problem with mold claims, and the average premium has risen 45% over the past two years.
"As I tell my students, this is a great time to be studying governmental accounting, because the bigger the fiscal problems, the more they resort to gimmicks," said Michael Granof, a University of Texas public finance professor. "These gimmicks are basically off-the-balance sheet debt. It's what Enron did."
Over the past two years California, Colorado, Illinois, Kentucky, New Jersey, North Carolina, and Wisconsin have had their credit rating lowered. S&P has issued credit outlooks for 11 other states, and it is highly likely one or more of those 11 will join the credit downgrade list.
According to Jared Bernstein, a researcher for the Economic Policy Institute in Washington, the average length of unemployment is now 19.6 weeks, the longest since 1983; 21% of jobless workers have been unemployed for more than 6 months. Manpower's Chairman Jeffey Joerries said "the survey results are clearly showing a dominating sense of uncertainty, as hiring intentions have dropped for the first time in over a year."
William Clay Ford Jr., Ford's chairman, told the Detroit Regional Chamber on Friday "healthcare is just out of control. It's a system that's broke. It really scares me enormously...If we had three up years in the stock market, the pension issue would be ameliorated. The health issue is more intractable. I don't see a good solution." Mr. Ford should put his fears to rest. The Congress will be reconvening and shall tackle the healthcare problem.
According to a study by A.T. Kearney, over the next five years, financial services companies nationwide are planning to relocate more than 500,000 jobs overseas, reducing annual operating costs by more than $30 billion.
Frank Navarette, Arizona's homeland security director, said his state is considering not following the federal alert moves in the future. He said "I believe that, based on our own intelligence, I'm of the mind-set that we don't have to follow suit. It creates incredible problems- overtime, financial, functional."
According to new forecasts by House Budget Committee Democrats, the federal budget deficit will be nearly $500 billion next year and could help to drive up the federal debt by $3.6 trillion through 2011. In my view, that's not too enlightening. Citigroup has already forecast a federal budget deficit of $500 billion for 2003, and Goldman Sachs doesn't believe the tax cuts will improve GDP growth. It is worth remembering that, in 2001, the Administration predicted a $5.6 trillion surplus between 2002 and 2011.
In January 2003 we experienced eight 100+ point loss days in the Dow; 5 in March; 3 in April; and 1 in May. Traditionally, the ensuing summer months produce more challenging results. Maybe this year will be different. Given the recent insider selling, I see no reason to expect a change for the positive.
In the June 9 issue of Newsweek, the Princeton Survey Research Associates poll indicates Bush's approval rating is 61%, down from the prior month's 65%, and 46% view the President's handling of the economy in a favorable light.
"We've discovered a weapons system -- biological labs that Iraq denied she had and labs that were prohibited under the U.N. resolutions," Bush told reporters after talks with Russian President Vladimir Putin.
"My opinion is that we must work together to improve the lives of the Iraqi citizens, that we must cooperate closely to make sure that the Iraqi infrastructure is in place so that Iraqi citizens can live decently," Bush said
We have a growing mold problem in this country. As such. homeowner insurance rates have been increasing, and, in some states, dramatically. Texas has the biggest problem with mold claims, and the average premium has risen 45% over the past two years.
"As I tell my students, this is a great time to be studying governmental accounting, because the bigger the fiscal problems, the more they resort to gimmicks," said Michael Granof, a University of Texas public finance professor. "These gimmicks are basically off-the-balance sheet debt. It's what Enron did."
Over the past two years California, Colorado, Illinois, Kentucky, New Jersey, North Carolina, and Wisconsin have had their credit rating lowered. S&P has issued credit outlooks for 11 other states, and it is highly likely one or more of those 11 will join the credit downgrade list.
According to Jared Bernstein, a researcher for the Economic Policy Institute in Washington, the average length of unemployment is now 19.6 weeks, the longest since 1983; 21% of jobless workers have been unemployed for more than 6 months. Manpower's Chairman Jeffey Joerries said "the survey results are clearly showing a dominating sense of uncertainty, as hiring intentions have dropped for the first time in over a year."
William Clay Ford Jr., Ford's chairman, told the Detroit Regional Chamber on Friday "healthcare is just out of control. It's a system that's broke. It really scares me enormously...If we had three up years in the stock market, the pension issue would be ameliorated. The health issue is more intractable. I don't see a good solution." Mr. Ford should put his fears to rest. The Congress will be reconvening and shall tackle the healthcare problem.
According to a study by A.T. Kearney, over the next five years, financial services companies nationwide are planning to relocate more than 500,000 jobs overseas, reducing annual operating costs by more than $30 billion.
Frank Navarette, Arizona's homeland security director, said his state is considering not following the federal alert moves in the future. He said "I believe that, based on our own intelligence, I'm of the mind-set that we don't have to follow suit. It creates incredible problems- overtime, financial, functional."
According to new forecasts by House Budget Committee Democrats, the federal budget deficit will be nearly $500 billion next year and could help to drive up the federal debt by $3.6 trillion through 2011. In my view, that's not too enlightening. Citigroup has already forecast a federal budget deficit of $500 billion for 2003, and Goldman Sachs doesn't believe the tax cuts will improve GDP growth. It is worth remembering that, in 2001, the Administration predicted a $5.6 trillion surplus between 2002 and 2011.
In January 2003 we experienced eight 100+ point loss days in the Dow; 5 in March; 3 in April; and 1 in May. Traditionally, the ensuing summer months produce more challenging results. Maybe this year will be different. Given the recent insider selling, I see no reason to expect a change for the positive.
In the June 9 issue of Newsweek, the Princeton Survey Research Associates poll indicates Bush's approval rating is 61%, down from the prior month's 65%, and 46% view the President's handling of the economy in a favorable light.
"We've discovered a weapons system -- biological labs that Iraq denied she had and labs that were prohibited under the U.N. resolutions," Bush told reporters after talks with Russian President Vladimir Putin.
"My opinion is that we must work together to improve the lives of the Iraqi citizens, that we must cooperate closely to make sure that the Iraqi infrastructure is in place so that Iraqi citizens can live decently," Bush said
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