7/12/03 DC Leechfields And Cesspools Require Septic Treatment
Next week the Snowman goes to England and Germany to meet with European finance officials. He shall create more anti-American sentiment as he spreads his message of blaming other countries for the economic ills in the U.S. He said “I want to talk to them about their consequences of their weak growth rates on us, on our (overall trade) deficit, and the importance to us of their having stronger domestic economies so they can buy more. We’d like Europe to take countermeasures appropriate to the circumstances of the individual economies.” Here is a Treasury Secretary demeaning other countries and he couldn’t even run a railroad properly. The man is inept and is perfect for the job. He believes our $400+ billion budget deficit for 2003 and $500 billion for next year are manageable. That’s just what Bush wants to hear. Like others in the Administration, he blames others and takes no responsibilities for failings. He is ideal for the job. His words fill up the leechfields and cesspools in DC. He has stated that the financial markets are not affected by the budget deficits. He must think everyone in the bond market is brain dead. He says the White House insists on tight spending discipline going forward. That is such BS. The fact is the Bush budget endorses a 4% increase in discretionary government spending levels at the same time the economy has grown by about 1 ½% in each of the last three quarters. That is hardly discipline. It reflects a CEO who is unwilling and incapable of making the tough decisions- like saying “read my lips. No more spending exceeding anticipated revenues.”
It’s been five months since I wrote about an interim WTO ruling concerning various tariffs imposed by the U.S. Yesterday, in Brussels, in a formal finding, the panel said that our steel tariffs had been introduced without proper justification and had broken trade rules. The European Commission has drawn up a list of $2 billion in goods that could face sanctions. There was no reason to have this matter carried to such lengths. The U.S. has had more than enough time to lift the steel tariffs, and the latter will not save this industry from foreign competition. It will only delay the funeral procession. In the meantime, the Administration has created additional ill-feelings at a time when we most need foreign capital to fund our deficit. It’s another case of biting the hand that supports our governmental spending habits.
WalMart opened its first store in Beijing and the company plans to open another 35 stores in China. They just keep making the smart moves.
Henry Boye: “The most important trip you may take in life is meeting people halfway.”
Penn State to raise tuition by 9.8% and Rutgers by 9%. Service sector prices rose 3.4% from a year ago in May but core wholesale prices fell 0.1% from May and 0.3% from a year ago as prices for autos, computers, and appliances declined. Core consumer prices in May rose just 1.6% from a year ago and slightly more than April’s 1 ½% rise which was the smallest since 1966. Core import prices rose 1.1% from a year ago in June due to the falling dollar.
Iraq’s purchase of 200 tons of uranium from Niger took place in the 1980s. Over a 20 year span I presume that information must have been known to several administrations.
A former Federal Reserve economist calls this the “manana forecast”- an economy that always will get better tomorrow.
Laura Chappelle, chairwoman of the Michigan Public Service Commission, warned that the state’s home owners will pay between $53 and $172 more each month this winter for gas heat.
The recent Washington Post-ABC News poll showed Bush’s overall job approval rating dropped to 59%, down 9% percentage points in the past 18 days. 52% believe there has been an “unacceptable” level of U.S. casualties in Iraq.
James Pike, 41, an auto mechanic from Ogdensburg, N.Y. : “If we have the capability of finding out that Joe Blow No-Name has dodged his taxes for the past 10 years, why don’t we have the capability of…finding a foolproof method of finding out whether the intelligence we gather is accurate and making it rock-solid before we jump into another situation?”
On Monday the Justice Department must decide whether to issue a second request for additional information on the proposed PeopleSoft/J.D. Edwards merger. In my view, there aren’t significant antitrust issues, and the combination could be completed in about a week.
In Korea the number of credit card delinquents has soared to 3 million.
Imports in May rose to the second highest level in two years, and contributed to a widening of the U.S. May trade gap to almost $42 billion. Maybe the Snowman should give a lecture to the American consumer on how to save. That would be the pot calling the kettle black.
The unemployment rate has risen for four consecutive months, and in June stood at 8.5%, the highest rate in nearly 17 years. It equals the jobless rate in California’s Santa Clara County.
Next week Tony Blair will be speaking to our Congress. Hopefully, the discussion will move past the uranium buy from Africa issue and hopefully focus on the ineptness of the occupation plans for post-war Iraq. A former senior official who left our government recently said “there was no real planning for post-war Iraq.” Said a former senior Pentagon official who is still a Defense Department advisor, “we could have done so much better.” The responsibility for this ineptness rests with Rumsfeld, Condoleeza Rice, Undersecretary of Defense for Policy Douglas Feith, William Luti, and ultimately, VP Cheney and Pres. Bush. It has been described that the work of the “Future of Iraq” project, which involved 17 U.S. agencies, was ignored and not utilized after Hussein’s regime fell. In a speech on Tuesday, Feith stated “we are facing some of the problems brought on by our very success in the war.” Inept planning has nothing to do with the initial success of this war. In the hands of Gen. Schwartzkopf this nightmare would not have taken place. A former senior White House official said “You let him (Bush) go into this without a serious plan…for the endgame. It was staggeringly negligent on their part.” The “their” should be canned, and promptly. They have risked the lives of our fighting troops and this has led to casualties and wounded soldiers. It is time to protect our troops and our American families. Let’s get rid of the sewage in DC. Our environment must meet minimum ISDS regulations.
Saturday, July 12, 2003
7/12/03 DC Leechfields And Cesspools Require Septic Treatment
Next week the Snowman goes to England and Germany to meet with European finance officials. He shall create more anti-American sentiment as he spreads his message of blaming other countries for the economic ills in the U.S. He said “I want to talk to them about their consequences of their weak growth rates on us, on our (overall trade) deficit, and the importance to us of their having stronger domestic economies so they can buy more. We’d like Europe to take countermeasures appropriate to the circumstances of the individual economies.” Here is a Treasury Secretary demeaning other countries and he couldn’t even run a railroad properly. The man is inept and is perfect for the job. He believes our $400+ billion budget deficit for 2003 and $500 billion for next year are manageable. That’s just what Bush wants to hear. Like others in the Administration, he blames others and takes no responsibilities for failings. He is ideal for the job. His words fill up the leechfields and cesspools in DC. He has stated that the financial markets are not affected by the budget deficits. He must think everyone in the bond market is brain dead. He says the White House insists on tight spending discipline going forward. That is such BS. The fact is the Bush budget endorses a 4% increase in discretionary government spending levels at the same time the economy has grown by about 1 ½% in each of the last three quarters. That is hardly discipline. It reflects a CEO who is unwilling and incapable of making the tough decisions- like saying “read my lips. No more spending exceeding anticipated revenues.”
It’s been five months since I wrote about an interim WTO ruling concerning various tariffs imposed by the U.S. Yesterday, in Brussels, in a formal finding, the panel said that our steel tariffs had been introduced without proper justification and had broken trade rules. The European Commission has drawn up a list of $2 billion in goods that could face sanctions. There was no reason to have this matter carried to such lengths. The U.S. has had more than enough time to lift the steel tariffs, and the latter will not save this industry from foreign competition. It will only delay the funeral procession. In the meantime, the Administration has created additional ill-feelings at a time when we most need foreign capital to fund our deficit. It’s another case of biting the hand that supports our governmental spending habits.
WalMart opened its first store in Beijing and the company plans to open another 35 stores in China. They just keep making the smart moves.
Henry Boye: “The most important trip you may take in life is meeting people halfway.”
Penn State to raise tuition by 9.8% and Rutgers by 9%. Service sector prices rose 3.4% from a year ago in May but core wholesale prices fell 0.1% from May and 0.3% from a year ago as prices for autos, computers, and appliances declined. Core consumer prices in May rose just 1.6% from a year ago and slightly more than April’s 1 ½% rise which was the smallest since 1966. Core import prices rose 1.1% from a year ago in June due to the falling dollar.
Iraq’s purchase of 200 tons of uranium from Niger took place in the 1980s. Over a 20 year span I presume that information must have been known to several administrations.
A former Federal Reserve economist calls this the “manana forecast”- an economy that always will get better tomorrow.
Laura Chappelle, chairwoman of the Michigan Public Service Commission, warned that the state’s home owners will pay between $53 and $172 more each month this winter for gas heat.
The recent Washington Post-ABC News poll showed Bush’s overall job approval rating dropped to 59%, down 9% percentage points in the past 18 days. 52% believe there has been an “unacceptable” level of U.S. casualties in Iraq.
James Pike, 41, an auto mechanic from Ogdensburg, N.Y. : “If we have the capability of finding out that Joe Blow No-Name has dodged his taxes for the past 10 years, why don’t we have the capability of…finding a foolproof method of finding out whether the intelligence we gather is accurate and making it rock-solid before we jump into another situation?”
On Monday the Justice Department must decide whether to issue a second request for additional information on the proposed PeopleSoft/J.D. Edwards merger. In my view, there aren’t significant antitrust issues, and the combination could be completed in about a week.
In Korea the number of credit card delinquents has soared to 3 million.
Imports in May rose to the second highest level in two years, and contributed to a widening of the U.S. May trade gap to almost $42 billion. Maybe the Snowman should give a lecture to the American consumer on how to save. That would be the pot calling the kettle black.
The unemployment rate has risen for four consecutive months, and in June stood at 8.5%, the highest rate in nearly 17 years. It equals the jobless rate in California’s Santa Clara County.
Next week Tony Blair will be speaking to our Congress. Hopefully, the discussion will move past the uranium buy from Africa issue and hopefully focus on the ineptness of the occupation plans for post-war Iraq. A former senior official who left our government recently said “there was no real planning for post-war Iraq.” Said a former senior Pentagon official who is still a Defense Department advisor, “we could have done so much better.” The responsibility for this ineptness rests with Rumsfeld, Condoleeza Rice, Undersecretary of Defense for Policy Douglas Feith, William Luti, and ultimately, VP Cheney and Pres. Bush. It has been described that the work of the “Future of Iraq” project, which involved 17 U.S. agencies, was ignored and not utilized after Hussein’s regime fell. In a speech on Tuesday, Feith stated “we are facing some of the problems brought on by our very success in the war.” Inept planning has nothing to do with the initial success of this war. In the hands of Gen. Schwartzkopf this nightmare would not have taken place. A former senior White House official said “You let him (Bush) go into this without a serious plan…for the endgame. It was staggeringly negligent on their part.” The “their” should be canned, and promptly. They have risked the lives of our fighting troops and this has led to casualties and wounded soldiers. It is time to protect our troops and our American families. Let’s get rid of the sewage in DC. Our environment must meet minimum ISDS regulations.
Next week the Snowman goes to England and Germany to meet with European finance officials. He shall create more anti-American sentiment as he spreads his message of blaming other countries for the economic ills in the U.S. He said “I want to talk to them about their consequences of their weak growth rates on us, on our (overall trade) deficit, and the importance to us of their having stronger domestic economies so they can buy more. We’d like Europe to take countermeasures appropriate to the circumstances of the individual economies.” Here is a Treasury Secretary demeaning other countries and he couldn’t even run a railroad properly. The man is inept and is perfect for the job. He believes our $400+ billion budget deficit for 2003 and $500 billion for next year are manageable. That’s just what Bush wants to hear. Like others in the Administration, he blames others and takes no responsibilities for failings. He is ideal for the job. His words fill up the leechfields and cesspools in DC. He has stated that the financial markets are not affected by the budget deficits. He must think everyone in the bond market is brain dead. He says the White House insists on tight spending discipline going forward. That is such BS. The fact is the Bush budget endorses a 4% increase in discretionary government spending levels at the same time the economy has grown by about 1 ½% in each of the last three quarters. That is hardly discipline. It reflects a CEO who is unwilling and incapable of making the tough decisions- like saying “read my lips. No more spending exceeding anticipated revenues.”
It’s been five months since I wrote about an interim WTO ruling concerning various tariffs imposed by the U.S. Yesterday, in Brussels, in a formal finding, the panel said that our steel tariffs had been introduced without proper justification and had broken trade rules. The European Commission has drawn up a list of $2 billion in goods that could face sanctions. There was no reason to have this matter carried to such lengths. The U.S. has had more than enough time to lift the steel tariffs, and the latter will not save this industry from foreign competition. It will only delay the funeral procession. In the meantime, the Administration has created additional ill-feelings at a time when we most need foreign capital to fund our deficit. It’s another case of biting the hand that supports our governmental spending habits.
WalMart opened its first store in Beijing and the company plans to open another 35 stores in China. They just keep making the smart moves.
Henry Boye: “The most important trip you may take in life is meeting people halfway.”
Penn State to raise tuition by 9.8% and Rutgers by 9%. Service sector prices rose 3.4% from a year ago in May but core wholesale prices fell 0.1% from May and 0.3% from a year ago as prices for autos, computers, and appliances declined. Core consumer prices in May rose just 1.6% from a year ago and slightly more than April’s 1 ½% rise which was the smallest since 1966. Core import prices rose 1.1% from a year ago in June due to the falling dollar.
Iraq’s purchase of 200 tons of uranium from Niger took place in the 1980s. Over a 20 year span I presume that information must have been known to several administrations.
A former Federal Reserve economist calls this the “manana forecast”- an economy that always will get better tomorrow.
Laura Chappelle, chairwoman of the Michigan Public Service Commission, warned that the state’s home owners will pay between $53 and $172 more each month this winter for gas heat.
The recent Washington Post-ABC News poll showed Bush’s overall job approval rating dropped to 59%, down 9% percentage points in the past 18 days. 52% believe there has been an “unacceptable” level of U.S. casualties in Iraq.
James Pike, 41, an auto mechanic from Ogdensburg, N.Y. : “If we have the capability of finding out that Joe Blow No-Name has dodged his taxes for the past 10 years, why don’t we have the capability of…finding a foolproof method of finding out whether the intelligence we gather is accurate and making it rock-solid before we jump into another situation?”
On Monday the Justice Department must decide whether to issue a second request for additional information on the proposed PeopleSoft/J.D. Edwards merger. In my view, there aren’t significant antitrust issues, and the combination could be completed in about a week.
In Korea the number of credit card delinquents has soared to 3 million.
Imports in May rose to the second highest level in two years, and contributed to a widening of the U.S. May trade gap to almost $42 billion. Maybe the Snowman should give a lecture to the American consumer on how to save. That would be the pot calling the kettle black.
The unemployment rate has risen for four consecutive months, and in June stood at 8.5%, the highest rate in nearly 17 years. It equals the jobless rate in California’s Santa Clara County.
Next week Tony Blair will be speaking to our Congress. Hopefully, the discussion will move past the uranium buy from Africa issue and hopefully focus on the ineptness of the occupation plans for post-war Iraq. A former senior official who left our government recently said “there was no real planning for post-war Iraq.” Said a former senior Pentagon official who is still a Defense Department advisor, “we could have done so much better.” The responsibility for this ineptness rests with Rumsfeld, Condoleeza Rice, Undersecretary of Defense for Policy Douglas Feith, William Luti, and ultimately, VP Cheney and Pres. Bush. It has been described that the work of the “Future of Iraq” project, which involved 17 U.S. agencies, was ignored and not utilized after Hussein’s regime fell. In a speech on Tuesday, Feith stated “we are facing some of the problems brought on by our very success in the war.” Inept planning has nothing to do with the initial success of this war. In the hands of Gen. Schwartzkopf this nightmare would not have taken place. A former senior White House official said “You let him (Bush) go into this without a serious plan…for the endgame. It was staggeringly negligent on their part.” The “their” should be canned, and promptly. They have risked the lives of our fighting troops and this has led to casualties and wounded soldiers. It is time to protect our troops and our American families. Let’s get rid of the sewage in DC. Our environment must meet minimum ISDS regulations.
7/12/03 DC Leechfields And Cesspools Require Septic Treatment
Next week the Snowman goes to England and Germany to meet with European finance officials. He shall create more anti-American sentiment as he spreads his message of blaming other countries for the economic ills in the U.S. He said “I want to talk to them about their consequences of their weak growth rates on us, on our (overall trade) deficit, and the importance to us of their having stronger domestic economies so they can buy more. We’d like Europe to take countermeasures appropriate to the circumstances of the individual economies.” Here is a Treasury Secretary demeaning other countries and he couldn’t even run a railroad properly. The man is inept and is perfect for the job. He believes our $400+ billion budget deficit for 2003 and $500 billion for next year are manageable. That’s just what Bush wants to hear. Like others in the Administration, he blames others and takes no responsibilities for failings. He is ideal for the job. His words fill up the leechfields and cesspools in DC. He has stated that the financial markets are not affected by the budget deficits. He must think everyone in the bond market is brain dead. He says the White House insists on tight spending discipline going forward. That is such BS. The fact is the Bush budget endorses a 4% increase in discretionary government spending levels at the same time the economy has grown by about 1 ½% in each of the last three quarters. That is hardly discipline. It reflects a CEO who is unwilling and incapable of making the tough decisions- like saying “read my lips. No more spending exceeding anticipated revenues.”
It’s been five months since I wrote about an interim WTO ruling concerning various tariffs imposed by the U.S. Yesterday, in Brussels, in a formal finding, the panel said that our steel tariffs had been introduced without proper justification and had broken trade rules. The European Commission has drawn up a list of $2 billion in goods that could face sanctions. There was no reason to have this matter carried to such lengths. The U.S. has had more than enough time to lift the steel tariffs, and the latter will not save this industry from foreign competition. It will only delay the funeral procession. In the meantime, the Administration has created additional ill-feelings at a time when we most need foreign capital to fund our deficit. It’s another case of biting the hand that supports our governmental spending habits.
WalMart opened its first store in Beijing and the company plans to open another 35 stores in China. They just keep making the smart moves.
Henry Boye: “The most important trip you may take in life is meeting people halfway.”
Penn State to raise tuition by 9.8% and Rutgers by 9%. Service sector prices rose 3.4% from a year ago in May but core wholesale prices fell 0.1% from May and 0.3% from a year ago as prices for autos, computers, and appliances declined. Core consumer prices in May rose just 1.6% from a year ago and slightly more than April’s 1 ½% rise which was the smallest since 1966. Core import prices rose 1.1% from a year ago in June due to the falling dollar.
Iraq’s purchase of 200 tons of uranium from Niger took place in the 1980s. Over a 20 year span I presume that information must have been known to several administrations.
A former Federal Reserve economist calls this the “manana forecast”- an economy that always will get better tomorrow.
Laura Chappelle, chairwoman of the Michigan Public Service Commission, warned that the state’s home owners will pay between $53 and $172 more each month this winter for gas heat.
The recent Washington Post-ABC News poll showed Bush’s overall job approval rating dropped to 59%, down 9% percentage points in the past 18 days. 52% believe there has been an “unacceptable” level of U.S. casualties in Iraq.
James Pike, 41, an auto mechanic from Ogdensburg, N.Y. : “If we have the capability of finding out that Joe Blow No-Name has dodged his taxes for the past 10 years, why don’t we have the capability of…finding a foolproof method of finding out whether the intelligence we gather is accurate and making it rock-solid before we jump into another situation?”
On Monday the Justice Department must decide whether to issue a second request for additional information on the proposed PeopleSoft/J.D. Edwards merger. In my view, there aren’t significant antitrust issues, and the combination could be completed in about a week.
In Korea the number of credit card delinquents has soared to 3 million.
Imports in May rose to the second highest level in two years, and contributed to a widening of the U.S. May trade gap to almost $42 billion. Maybe the Snowman should give a lecture to the American consumer on how to save. That would be the pot calling the kettle black.
The unemployment rate has risen for four consecutive months, and in June stood at 8.5%, the highest rate in nearly 17 years. It equals the jobless rate in California’s Santa Clara County.
Next week Tony Blair will be speaking to our Congress. Hopefully, the discussion will move past the uranium buy from Africa issue and hopefully focus on the ineptness of the occupation plans for post-war Iraq. A former senior official who left our government recently said “there was no real planning for post-war Iraq.” Said a former senior Pentagon official who is still a Defense Department advisor, “we could have done so much better.” The responsibility for this ineptness rests with Rumsfeld, Condoleeza Rice, Undersecretary of Defense for Policy Douglas Feith, William Luti, and ultimately, VP Cheney and Pres. Bush. It has been described that the work of the “Future of Iraq” project, which involved 17 U.S. agencies, was ignored and not utilized after Hussein’s regime fell. In a speech on Tuesday, Feith stated “we are facing some of the problems brought on by our very success in the war.” Inept planning has nothing to do with the initial success of this war. In the hands of Gen. Schwartzkopf this nightmare would not have taken place. A former senior White House official said “You let him (Bush) go into this without a serious plan…for the endgame. It was staggeringly negligent on their part.” The “their” should be canned, and promptly. They have risked the lives of our fighting troops and this has led to casualties and wounded soldiers. It is time to protect our troops and our American families. Let’s get rid of the sewage in DC. Our environment must meet minimum ISDS regulations.
Next week the Snowman goes to England and Germany to meet with European finance officials. He shall create more anti-American sentiment as he spreads his message of blaming other countries for the economic ills in the U.S. He said “I want to talk to them about their consequences of their weak growth rates on us, on our (overall trade) deficit, and the importance to us of their having stronger domestic economies so they can buy more. We’d like Europe to take countermeasures appropriate to the circumstances of the individual economies.” Here is a Treasury Secretary demeaning other countries and he couldn’t even run a railroad properly. The man is inept and is perfect for the job. He believes our $400+ billion budget deficit for 2003 and $500 billion for next year are manageable. That’s just what Bush wants to hear. Like others in the Administration, he blames others and takes no responsibilities for failings. He is ideal for the job. His words fill up the leechfields and cesspools in DC. He has stated that the financial markets are not affected by the budget deficits. He must think everyone in the bond market is brain dead. He says the White House insists on tight spending discipline going forward. That is such BS. The fact is the Bush budget endorses a 4% increase in discretionary government spending levels at the same time the economy has grown by about 1 ½% in each of the last three quarters. That is hardly discipline. It reflects a CEO who is unwilling and incapable of making the tough decisions- like saying “read my lips. No more spending exceeding anticipated revenues.”
It’s been five months since I wrote about an interim WTO ruling concerning various tariffs imposed by the U.S. Yesterday, in Brussels, in a formal finding, the panel said that our steel tariffs had been introduced without proper justification and had broken trade rules. The European Commission has drawn up a list of $2 billion in goods that could face sanctions. There was no reason to have this matter carried to such lengths. The U.S. has had more than enough time to lift the steel tariffs, and the latter will not save this industry from foreign competition. It will only delay the funeral procession. In the meantime, the Administration has created additional ill-feelings at a time when we most need foreign capital to fund our deficit. It’s another case of biting the hand that supports our governmental spending habits.
WalMart opened its first store in Beijing and the company plans to open another 35 stores in China. They just keep making the smart moves.
Henry Boye: “The most important trip you may take in life is meeting people halfway.”
Penn State to raise tuition by 9.8% and Rutgers by 9%. Service sector prices rose 3.4% from a year ago in May but core wholesale prices fell 0.1% from May and 0.3% from a year ago as prices for autos, computers, and appliances declined. Core consumer prices in May rose just 1.6% from a year ago and slightly more than April’s 1 ½% rise which was the smallest since 1966. Core import prices rose 1.1% from a year ago in June due to the falling dollar.
Iraq’s purchase of 200 tons of uranium from Niger took place in the 1980s. Over a 20 year span I presume that information must have been known to several administrations.
A former Federal Reserve economist calls this the “manana forecast”- an economy that always will get better tomorrow.
Laura Chappelle, chairwoman of the Michigan Public Service Commission, warned that the state’s home owners will pay between $53 and $172 more each month this winter for gas heat.
The recent Washington Post-ABC News poll showed Bush’s overall job approval rating dropped to 59%, down 9% percentage points in the past 18 days. 52% believe there has been an “unacceptable” level of U.S. casualties in Iraq.
James Pike, 41, an auto mechanic from Ogdensburg, N.Y. : “If we have the capability of finding out that Joe Blow No-Name has dodged his taxes for the past 10 years, why don’t we have the capability of…finding a foolproof method of finding out whether the intelligence we gather is accurate and making it rock-solid before we jump into another situation?”
On Monday the Justice Department must decide whether to issue a second request for additional information on the proposed PeopleSoft/J.D. Edwards merger. In my view, there aren’t significant antitrust issues, and the combination could be completed in about a week.
In Korea the number of credit card delinquents has soared to 3 million.
Imports in May rose to the second highest level in two years, and contributed to a widening of the U.S. May trade gap to almost $42 billion. Maybe the Snowman should give a lecture to the American consumer on how to save. That would be the pot calling the kettle black.
The unemployment rate has risen for four consecutive months, and in June stood at 8.5%, the highest rate in nearly 17 years. It equals the jobless rate in California’s Santa Clara County.
Next week Tony Blair will be speaking to our Congress. Hopefully, the discussion will move past the uranium buy from Africa issue and hopefully focus on the ineptness of the occupation plans for post-war Iraq. A former senior official who left our government recently said “there was no real planning for post-war Iraq.” Said a former senior Pentagon official who is still a Defense Department advisor, “we could have done so much better.” The responsibility for this ineptness rests with Rumsfeld, Condoleeza Rice, Undersecretary of Defense for Policy Douglas Feith, William Luti, and ultimately, VP Cheney and Pres. Bush. It has been described that the work of the “Future of Iraq” project, which involved 17 U.S. agencies, was ignored and not utilized after Hussein’s regime fell. In a speech on Tuesday, Feith stated “we are facing some of the problems brought on by our very success in the war.” Inept planning has nothing to do with the initial success of this war. In the hands of Gen. Schwartzkopf this nightmare would not have taken place. A former senior White House official said “You let him (Bush) go into this without a serious plan…for the endgame. It was staggeringly negligent on their part.” The “their” should be canned, and promptly. They have risked the lives of our fighting troops and this has led to casualties and wounded soldiers. It is time to protect our troops and our American families. Let’s get rid of the sewage in DC. Our environment must meet minimum ISDS regulations.
Friday, July 11, 2003
7/11/03 False Pretenses
I am sure President Bush is a humanitarian. There is an earnest effort to provide AIDS relief for Botswana and to assist Liberians. The interest in those areas, however, pales in comparison to the focus on oil and natural gas. According to the World Market Research Center in London, Africa already supplies between 15% and 18% of the oil the U.S. imports, and that is projected to increase to 25% by 2015. Daniel Yergin, chairman of Cambridge Energy Research Associates, says “African oil is going to be of increasing importance to the world oil market, and topping the list are Nigeria and Angola.” Nigeria produces 2 million barrels of crude a day, and that’s a third of Africa’s total output. Of that, Nigeria exports 742,000 barrels a day to the U.S. or 8% of the total U.S crude oil imports of 9.2 million barrels a day. Angola accounts for 5.4% of U.S. oil imports. Nigeria also holds the world’s ninth largest storehouse of natural gas. According to the U.S. Geological Survey, there are 1.2 trillion barrels of proven oil reserves in the world. Of that, 77 billion are in Africa, about three times as much as in the U.S. In a recent analysis, James Burkhart of Cambridge Energy Research Associates stated “one out of every five barrels of growth in global oil production capacity to 2010 could come from West Africa.” The real purpose of the trip was quite transparent. The Johannesburg daily, the Mail & Guardian wrote about Bush’s trip that it “must be seen for what it is- hard-eyed self-service posing as a mercy mission…Bush’s primary concerns, as they were before the invasion of Iraq, are domestic security, the advancement of corporate America and the securing of strategic assets, mainly oil.” I have no problem with those concerns. Just say it up front. West Africans might be more appreciative and not have anti-Bush riots as they did in Pretoria earlier in the week.
The budget crisis is coming to a head in California. Sen. Tom Torlakson, D-Antioch, said Thursday “the reality is we’re heading toward insolvency. We are heading toward fiscal harm of a very significant nature.” The plan ,which will be signed, shall involve shifting taxes rather than imposing new ones. For example, there shall be a transfer of a half cent of the current sales tax from local government to a state fund dedicated to paying off a $10.7 billion loan over five years. To offset this loss, the state would shift to local governments property tax money that currently funds schools. To compensate the schools, money would come from the state general fund, and this plan would reduce the general fund during each of the next five years by $2.3 billion. Californians will need to adjust to musical tax chairs. Make no mistake. California is running out of funds. The state will quit paying contractors working on construction projects after July 20 due to the lack of funds in the state highway account.
If the Euronations talk down the euro, Japan sells the yen, and our Treasury department welcomes a weak dollar, who will be the long-term buyers of the respective currencies? German Chancellor Schroeder suggested the ECB should weaken its currency to help the region’s exports. Domestic demand remains weak. The European Commission said this week that Europe’s economy may fail to grow in the second and third quarters. The Bank of Japan sold significant amounts of yen in June after a record 4 trillion yen in May. Japan’s Ministry of Finance wants to limit yen appreciation in an effort to spur exports. The United States, unlike Germany and Japan, has a current account deficit and therefore has a need to attract about $2 billion a day to offset the deficit. As such, the U.S. is limited in its efforts to support a weak dollar policy. Nevertheless, our Treasury has suggested that our exports would be helped by a weaker dollar exhange rate vs the euro, pound, and yen. In sum, the Euronations, Japan, and the U.S. want to export themselves out of economic weakness. There is limited reality in this plan.
The landmark bilateral agreement between New Delhi and Beijing opens border trade through the northeastern state of Sikkim and its ancient trade pass at Nathula and China’s Tibet Autonomous Region. It is hoped that this agreement will lead to $10 billion in bilateral trade with India. Right now trade between the two countries is only $5 billion a year. The two governments also signed an agreement liberalizing issuing visas, and the latter would be six-month multiple entry visas with multiple stays of less than 90 days each to promote short-term travel.
In the headlines in the U.S. I read about a jobless recovery, a sluggish job market, and a spiritless economic start. Just like Bush’s trip to Africa is under false pretenses, so are the headlines about our economy misleading. The Labor Department said the number of unemployed workers who remained on the benefit rolls after filing an initial claim jumped by 87,000 to 3.82 million in the June 28 week, and this was the highest level since February 1983. This is not a sluggish job market. The job market sucks. There is no recovery. As for spiritless, it would be accurate to state we are still in a recession. There’s enough BS to fertilize all of the farmland in this country.
Penn Companies plans to close its manufacturing facility in Atlanta and will layoff 123 employees. They make and distribute embroidered emblems and their primary market is the uniform service and industrial laundry industries.
Since May 1, 77 of our soldiers have died in Iraq. Bush said there is a “security issue” in Iraq but vowed to “remain tough.” Gen. Tommy Franks told Congress “I anticipate we’ll be involved in Iraq in the future. Whether that means two years or four years, I don’t know.” We do know that this military campaign is costing at least one soldier’s life per day and $4 billion per month. If our cause is truly a just one, then we should have no trouble arranging for UN and NATO troops to join our efforts. If they balk, we should walk. A senior British official said Thursday it would be “extremely difficult” to find banned weapons whch justified the war. The British Broadcasting Corporation said on Thursday senior figures in London no longer believed banned missiles or chemical weapons would be found in Iraq. Rep. Ike Skelton, D-MO, the senior Democrat on the House Armed Services Committee, said “we cannot leave Iraq. This must be a success.” War and Wall Street have one thing definitely in common. Buy and hold strategies work in very few instances. To be truly successful, one must have an adroit exit strategy mapped out prior to entry. With respect to the latter, the U.S failed our troops miserably. Smart generals and smart investors know the first loss is the best loss. Americans recognize the joys of freedom and the responsibilities that come with freedom. Let’s keep it real. Iraq is not Nazi Germany.
Lastly, I get daily emails with respect to my bearish leanings. I take full responsibility. Readers don’t know me very well. I can be bullish on the Nikkei and bearish on the Nasdaq. I can be bearish on the U.S. dollar and bullish on the New Zealand Dollar. I always find good supportive evidence to be bearish in an area and bullish somewhere else. My timing is rarely on the mark, and probably never will be. Timing is an immense challenge. I will get the timing right on the money when it comes to risk arbitrage but not as it pertains to movements in the Dow or the Nasdaq, for example. In sum, I am never simply bullish or bearish.
I am sure President Bush is a humanitarian. There is an earnest effort to provide AIDS relief for Botswana and to assist Liberians. The interest in those areas, however, pales in comparison to the focus on oil and natural gas. According to the World Market Research Center in London, Africa already supplies between 15% and 18% of the oil the U.S. imports, and that is projected to increase to 25% by 2015. Daniel Yergin, chairman of Cambridge Energy Research Associates, says “African oil is going to be of increasing importance to the world oil market, and topping the list are Nigeria and Angola.” Nigeria produces 2 million barrels of crude a day, and that’s a third of Africa’s total output. Of that, Nigeria exports 742,000 barrels a day to the U.S. or 8% of the total U.S crude oil imports of 9.2 million barrels a day. Angola accounts for 5.4% of U.S. oil imports. Nigeria also holds the world’s ninth largest storehouse of natural gas. According to the U.S. Geological Survey, there are 1.2 trillion barrels of proven oil reserves in the world. Of that, 77 billion are in Africa, about three times as much as in the U.S. In a recent analysis, James Burkhart of Cambridge Energy Research Associates stated “one out of every five barrels of growth in global oil production capacity to 2010 could come from West Africa.” The real purpose of the trip was quite transparent. The Johannesburg daily, the Mail & Guardian wrote about Bush’s trip that it “must be seen for what it is- hard-eyed self-service posing as a mercy mission…Bush’s primary concerns, as they were before the invasion of Iraq, are domestic security, the advancement of corporate America and the securing of strategic assets, mainly oil.” I have no problem with those concerns. Just say it up front. West Africans might be more appreciative and not have anti-Bush riots as they did in Pretoria earlier in the week.
The budget crisis is coming to a head in California. Sen. Tom Torlakson, D-Antioch, said Thursday “the reality is we’re heading toward insolvency. We are heading toward fiscal harm of a very significant nature.” The plan ,which will be signed, shall involve shifting taxes rather than imposing new ones. For example, there shall be a transfer of a half cent of the current sales tax from local government to a state fund dedicated to paying off a $10.7 billion loan over five years. To offset this loss, the state would shift to local governments property tax money that currently funds schools. To compensate the schools, money would come from the state general fund, and this plan would reduce the general fund during each of the next five years by $2.3 billion. Californians will need to adjust to musical tax chairs. Make no mistake. California is running out of funds. The state will quit paying contractors working on construction projects after July 20 due to the lack of funds in the state highway account.
If the Euronations talk down the euro, Japan sells the yen, and our Treasury department welcomes a weak dollar, who will be the long-term buyers of the respective currencies? German Chancellor Schroeder suggested the ECB should weaken its currency to help the region’s exports. Domestic demand remains weak. The European Commission said this week that Europe’s economy may fail to grow in the second and third quarters. The Bank of Japan sold significant amounts of yen in June after a record 4 trillion yen in May. Japan’s Ministry of Finance wants to limit yen appreciation in an effort to spur exports. The United States, unlike Germany and Japan, has a current account deficit and therefore has a need to attract about $2 billion a day to offset the deficit. As such, the U.S. is limited in its efforts to support a weak dollar policy. Nevertheless, our Treasury has suggested that our exports would be helped by a weaker dollar exhange rate vs the euro, pound, and yen. In sum, the Euronations, Japan, and the U.S. want to export themselves out of economic weakness. There is limited reality in this plan.
The landmark bilateral agreement between New Delhi and Beijing opens border trade through the northeastern state of Sikkim and its ancient trade pass at Nathula and China’s Tibet Autonomous Region. It is hoped that this agreement will lead to $10 billion in bilateral trade with India. Right now trade between the two countries is only $5 billion a year. The two governments also signed an agreement liberalizing issuing visas, and the latter would be six-month multiple entry visas with multiple stays of less than 90 days each to promote short-term travel.
In the headlines in the U.S. I read about a jobless recovery, a sluggish job market, and a spiritless economic start. Just like Bush’s trip to Africa is under false pretenses, so are the headlines about our economy misleading. The Labor Department said the number of unemployed workers who remained on the benefit rolls after filing an initial claim jumped by 87,000 to 3.82 million in the June 28 week, and this was the highest level since February 1983. This is not a sluggish job market. The job market sucks. There is no recovery. As for spiritless, it would be accurate to state we are still in a recession. There’s enough BS to fertilize all of the farmland in this country.
Penn Companies plans to close its manufacturing facility in Atlanta and will layoff 123 employees. They make and distribute embroidered emblems and their primary market is the uniform service and industrial laundry industries.
Since May 1, 77 of our soldiers have died in Iraq. Bush said there is a “security issue” in Iraq but vowed to “remain tough.” Gen. Tommy Franks told Congress “I anticipate we’ll be involved in Iraq in the future. Whether that means two years or four years, I don’t know.” We do know that this military campaign is costing at least one soldier’s life per day and $4 billion per month. If our cause is truly a just one, then we should have no trouble arranging for UN and NATO troops to join our efforts. If they balk, we should walk. A senior British official said Thursday it would be “extremely difficult” to find banned weapons whch justified the war. The British Broadcasting Corporation said on Thursday senior figures in London no longer believed banned missiles or chemical weapons would be found in Iraq. Rep. Ike Skelton, D-MO, the senior Democrat on the House Armed Services Committee, said “we cannot leave Iraq. This must be a success.” War and Wall Street have one thing definitely in common. Buy and hold strategies work in very few instances. To be truly successful, one must have an adroit exit strategy mapped out prior to entry. With respect to the latter, the U.S failed our troops miserably. Smart generals and smart investors know the first loss is the best loss. Americans recognize the joys of freedom and the responsibilities that come with freedom. Let’s keep it real. Iraq is not Nazi Germany.
Lastly, I get daily emails with respect to my bearish leanings. I take full responsibility. Readers don’t know me very well. I can be bullish on the Nikkei and bearish on the Nasdaq. I can be bearish on the U.S. dollar and bullish on the New Zealand Dollar. I always find good supportive evidence to be bearish in an area and bullish somewhere else. My timing is rarely on the mark, and probably never will be. Timing is an immense challenge. I will get the timing right on the money when it comes to risk arbitrage but not as it pertains to movements in the Dow or the Nasdaq, for example. In sum, I am never simply bullish or bearish.
Thursday, July 10, 2003
7/10/03 Twenty One Consecutive Weeks
Filings for unemployment benefits have exceeded 400,000 for 21 consecutive weeks. That’s the longest since a near 2 year period which ended in July 1992. The average number of jobless workers filing for initial state unemployment benefits over the past four weeks rose by 1,000 to 426,750 in the week ending July 5. The number filing in the most recent week increased 5,000 to 439,000, the most in five weeks.
William Cheney, chief economist at John Hancock Financial Services, “unless the labor market starts growing again soon, the odds of another recession will rise.”
The Bank of England cut its benchmark interest rate a quarter of a point to 3.5%. Interest rates were last lower in 1954. The bank said in a statement: “the global economy recovery has remained hesitant. Although the preconditions for recovery remain in place, the prospects for external demand for U.K. output is weaker than previously expected.” That is a sage observation, and one which, in my view, is an apt description of the current conditions for external demand for U.S. output. The U.K.’s GDP grew at its slowest pace in a decade in the first quarter, falling short of the bank’s forecasts. I believe the same thing will be stated for the second quarter. The bank will release new quarterly forecasts next month.
In the current CFO they discussed a subject which I had just touched on the other day in my blog. It is a matter which disturbs me greatly. CFO states: “the Administration may extend the current 2002 law that allows employers to use a slightly higher discount rate to value their pension liabilities-which shrinks the mandatory funding obligations. Or it may issue a proposal for long term funding changes, including use of a yield curve.” In 2002 companies faced pension shortfalls of $220 billion. They are obligations. Fund the obligations promptly. There is already enough unrest in the workplace.
Springs Industries will close plants and layoff 630 employees. DuPont Photomasks will cut 5% of the workforce or about 100 jobs.
WalMart said June same-store sales rose 2.7%; however, inventory levels remained higher than expected.
China has set a target for 7% annual economic growth for the current 10th Five-Year Plan (FYP, 2001-2005). China’s GDP growth rates for 2001 and 2002 were 7.3% and 8.1%, respectively, according to the National Bureau of Statistics.
The monthly Western Washington report from the NAPM showed the regional index falling to 49.8 in June from May’s 51.8. For the past three months this index has been around the 50 level. Importantly, only 9% of survey respondents currently expect to add employees while 60% expect employment levels to remain the same.
For the second straight month U.S. wholesale inventories decreased 0.3%. Wholesale sales for the month of May declined 0.5%, and this was an improvement from April’s drop of 2.5%. It should be noted that wholesale inventories account for 25% of business inventories while retail and factory stockpiles make up the rest.
It was reported that Moody’s delinquency index on credit card payments 30 days late rose to 5.20% in May from 4.86% a year earlier.. May’s charge-offs rose to 7.05% from 6.46% a year ago and from 7% in April. In addition, May bankruptcy filings were up 10% from year-ago levels.
The consumer group, FAMILIES USA, reported that the price of the 50 prescription drugs most commonly prescribed to senior citizens in the U.S. rose nearly 3.5 times faster than inflation in 2002. They said: “for seniors on fixed incomes with no drug coverage, increases at that level make it impossible to continue purchasing the medications they need…more and more are being forced to go without much-needed medication.”
In Europe, the May unemployment rate rose to 8.8%, and it remains higher than that of other major industrial economies. South Korea reported that its economy shrank into a recession as its economy continues to have difficulty. Hyundai’s Choi K. Seon said “we have a strong won, high labor cost, and the uncertainty of the U.S. economic rebound.”
J.P. Morgan airline analyst Jamie Baker said “we see little evidence to suggest that the overall demand for air travel is increasing.” Cost-cutting remains a major focus for the airlines, and this means lower wages and more layoffs.
Oracle’s Ellison in talking about PeopleSoft’s Conway: “at one point Craigey thought I was going to shoot his dog. I love animals. If Craigey and Bear (Conway’s dog) were standing next to each other and I had one bullet, trust me, it wouldn’t be for the dog.” Actually, he wouldn’t have one bullet left. Ellison already shot himself in the foot when he started his hostile offer. But there is good news on the way for Ellison. Kimberly-Clark is introducing a jumbo roll of toilet paper with a filled-in hole. He can be the first on his block to use it after PeopleSoft completes the acquisition of J.D. Edwards and after receiving bad news from the Justice department as well as the courts.
President Bush: “Look, there is no doubt in my mind that Saddam Hussein was a threat to world peace.” Iraq did not have a nuclear warhead and wasn’t buying uranium to make one. No one has found any WMD. Hussein may have been a threat to his own people. That doesn’t make him a threat to world peace.
Filings for unemployment benefits have exceeded 400,000 for 21 consecutive weeks. That’s the longest since a near 2 year period which ended in July 1992. The average number of jobless workers filing for initial state unemployment benefits over the past four weeks rose by 1,000 to 426,750 in the week ending July 5. The number filing in the most recent week increased 5,000 to 439,000, the most in five weeks.
William Cheney, chief economist at John Hancock Financial Services, “unless the labor market starts growing again soon, the odds of another recession will rise.”
The Bank of England cut its benchmark interest rate a quarter of a point to 3.5%. Interest rates were last lower in 1954. The bank said in a statement: “the global economy recovery has remained hesitant. Although the preconditions for recovery remain in place, the prospects for external demand for U.K. output is weaker than previously expected.” That is a sage observation, and one which, in my view, is an apt description of the current conditions for external demand for U.S. output. The U.K.’s GDP grew at its slowest pace in a decade in the first quarter, falling short of the bank’s forecasts. I believe the same thing will be stated for the second quarter. The bank will release new quarterly forecasts next month.
In the current CFO they discussed a subject which I had just touched on the other day in my blog. It is a matter which disturbs me greatly. CFO states: “the Administration may extend the current 2002 law that allows employers to use a slightly higher discount rate to value their pension liabilities-which shrinks the mandatory funding obligations. Or it may issue a proposal for long term funding changes, including use of a yield curve.” In 2002 companies faced pension shortfalls of $220 billion. They are obligations. Fund the obligations promptly. There is already enough unrest in the workplace.
Springs Industries will close plants and layoff 630 employees. DuPont Photomasks will cut 5% of the workforce or about 100 jobs.
WalMart said June same-store sales rose 2.7%; however, inventory levels remained higher than expected.
China has set a target for 7% annual economic growth for the current 10th Five-Year Plan (FYP, 2001-2005). China’s GDP growth rates for 2001 and 2002 were 7.3% and 8.1%, respectively, according to the National Bureau of Statistics.
The monthly Western Washington report from the NAPM showed the regional index falling to 49.8 in June from May’s 51.8. For the past three months this index has been around the 50 level. Importantly, only 9% of survey respondents currently expect to add employees while 60% expect employment levels to remain the same.
For the second straight month U.S. wholesale inventories decreased 0.3%. Wholesale sales for the month of May declined 0.5%, and this was an improvement from April’s drop of 2.5%. It should be noted that wholesale inventories account for 25% of business inventories while retail and factory stockpiles make up the rest.
It was reported that Moody’s delinquency index on credit card payments 30 days late rose to 5.20% in May from 4.86% a year earlier.. May’s charge-offs rose to 7.05% from 6.46% a year ago and from 7% in April. In addition, May bankruptcy filings were up 10% from year-ago levels.
The consumer group, FAMILIES USA, reported that the price of the 50 prescription drugs most commonly prescribed to senior citizens in the U.S. rose nearly 3.5 times faster than inflation in 2002. They said: “for seniors on fixed incomes with no drug coverage, increases at that level make it impossible to continue purchasing the medications they need…more and more are being forced to go without much-needed medication.”
In Europe, the May unemployment rate rose to 8.8%, and it remains higher than that of other major industrial economies. South Korea reported that its economy shrank into a recession as its economy continues to have difficulty. Hyundai’s Choi K. Seon said “we have a strong won, high labor cost, and the uncertainty of the U.S. economic rebound.”
J.P. Morgan airline analyst Jamie Baker said “we see little evidence to suggest that the overall demand for air travel is increasing.” Cost-cutting remains a major focus for the airlines, and this means lower wages and more layoffs.
Oracle’s Ellison in talking about PeopleSoft’s Conway: “at one point Craigey thought I was going to shoot his dog. I love animals. If Craigey and Bear (Conway’s dog) were standing next to each other and I had one bullet, trust me, it wouldn’t be for the dog.” Actually, he wouldn’t have one bullet left. Ellison already shot himself in the foot when he started his hostile offer. But there is good news on the way for Ellison. Kimberly-Clark is introducing a jumbo roll of toilet paper with a filled-in hole. He can be the first on his block to use it after PeopleSoft completes the acquisition of J.D. Edwards and after receiving bad news from the Justice department as well as the courts.
President Bush: “Look, there is no doubt in my mind that Saddam Hussein was a threat to world peace.” Iraq did not have a nuclear warhead and wasn’t buying uranium to make one. No one has found any WMD. Hussein may have been a threat to his own people. That doesn’t make him a threat to world peace.
Wednesday, July 09, 2003
7/09/03 Intelligence+Fraudulent Information=Refuse
As Al Pacino said in Scent of a Woman, “I’ve been around you know.” Yesterday, I received an email stating I like to argue. On the contrary, I do not like to argue. There are just so many hours in the day, and I don’t have the temperament or patience to sift through garbage. I don’t collect garbage, and I refuse to clean up after it. On Wall Street, to be successful, one must diligently mine thru the information released to the investing public. A good deal of information is worthless and some is fraudulent. We’re not trying to reinvent the wheel. We’re simply trying to make money the old-fashioned way- we earn it.
Risk arbitrage is one avenue for making a living. In the last few days several M&A deals have been announced. That has gotten the media all excited. They have a story which has been in moth balls. Don’t get too worked up. Most big acquisitions don’t work, and most of these announced deals are flawed from the start- just like Oracle’s bid for PeopleSoft, which will become a textbook example at Harvard Business School of how not to make a hostile merger offer. The best of the four deals just announced is Alcan’s offer for Pechiney. Alcan has been around the block before with this company. They want to buy Pechiney and will pay the necessary price to get Pechiney’s board of directors on board. Eventually, after much postering, the European government officials will approve the deal. It will be a bit like Nestle’s takeover of Dreyers in the U.S. There might be some scares along the way. If so, take advantage of the scares and I believe the rewards will come your way. Ignore reading the papers and listening to the media and ignore analysts. They haven’t a clue about risk arbitrage.
Next is EMC’s acquisition of Legato. It’s straightforward. There won’t be another bidder. You get 0.9 of a share of EMC for each Legato share, and that’s generous. The deal will close in the fourth quarter. Legato employs 1500 people, and maybe 150 shall be let go. The deal makes some sense for EMC as Legato’s software analyzes, backs up, and recovers data on computers.
Yellow Corp. is buying the larger Roadway Corp. At the outset I tell you I do not like trucking deals. I try to stay away from the Teamsters. Why do I need to go looking for trouble? Roadway deals with the retail customer and Yellow more to the manufacturing end. This deal involves and centers around lowering costs. These two companies have not grown their revenues for years. Their profit margins are an embarrassment.
Roadway has already told analysts that earnings would be disappointing. This deal will be done with part cash and part stock. You get $48 for the cash portion. The remainder you get 1.924 shares of Yellow common and there is a collar of plus or minus 15% from the $24.95 per Yellow share.
The last deal to be discussed is the smaller ArvinMeritor hostile $15 tender for Dana. Arvin has made prior overtures to no avail. Dana employs 60,000 people and has revenues of almost $10 billion. Arvin’s workforce is half the size and revenues are about 45% less. Arvin will pay more for Dana but the latter will sell to another party more to its liking. If successful, the combination of Arvin and Dana would have a highly leveraged balance sheet in an industry, auto parts, which offers limited growth potential. Full year earnings for Dana will approximate $1.15 per share. The industry is marked by poor ROI and suppliers like Dana are under pressure to provide cost reductions to customers. Dana has a respected name. Maybe another company will pay $19 for Dana. There is some upside but not much. The stock traded at $17+ yesterday. You might consider pulling the trigger on a Dana put- as a seller.
All of the above acquisitions involve consolidation and not growth. They involve layoffs and not hiring. They are a sign of the times and not an indication that business is about to turn the corner. I’ve been a buyer of companies. I did not lay off people. I expanded facilities I purchased. I didn’t consolidate. I aggressively expanded the presence in the marketplace. These acquisitions are not moneymakers for shareholders. They leave too many questions unanswered. For me it’s simple. The people making the buying decisions have trouble running their own show. Making the show larger just creates more opportunities for disappointment down the line.
Yesterday GM announced their cash rebates and interest-free loans would be extended through July 31. The company said customers had developed “incentive burnout,” a term that refers to customers taking incentives for granted and for the failure of those incentives to draw customers into the showroom. Significantly, GM’s inventories are about 21% above normal at the end of June.
Consumer debt in May increased by 5% or $7.3 billion to $1.76 trillion. That’s a pile of debt.
I would like to turn the attention to a very important area. The thinking about a weak dollar helping our exports is flawed. Yes, there will be some improvement but not a great deal. It took me some time to realize why that is. In 2002, for the first time since 1961, Japan imported more from China than the U.S. Taiwan and South Korea, along with other ASEAN countries, all reported 50% increases in their exports to China in 2002 while their exports to the U.S remained flat. The economies in Asia, which are seeing above average growth rates, are becoming less reliant on the U.S. market and focusing more on regional trade throughout Asia. It is highly important to note that, in 2001, 25% of the United States’ total exports went to the Pacific Rim. Their value amounted to $182 billion, and equated to the same percentage and same dollar value as our exports to Europe. In 2002 the percentages changed slightly to 26% and 24%, respectively. More than a third of our exports in 2002 went to Canada and Mexico. The U.S. share of world exports is roughly 12-13%. The economies in Europe are weak. Mexico is showing limited growth. The Pacific Rim nations are emphasizing regional transactions, and this is not a short-run situation. The growth potential for our exports is not expanding. Our horizon is shrinking. This is just one more reason why GDP estimates for the second half of 2003 and for next year are way too high.
A U.S. federal appeals court yesterday rejected Vice President Cheney’s request that it block a lawsuit seeking papers from his energy task force. U.S. District Court Sullivan said “carefully focused discovery will fully protect the vice president.” It will, hopefully, provide some transparency to the American people.
The new Pew Research Center poll shows increasing criticism for Bush’s handling of the economy and health care problems. His overall approval rating slipped to 60%. On April 9 it was 74%.
As Al Pacino said in Scent of a Woman, “I’ve been around you know.” Yesterday, I received an email stating I like to argue. On the contrary, I do not like to argue. There are just so many hours in the day, and I don’t have the temperament or patience to sift through garbage. I don’t collect garbage, and I refuse to clean up after it. On Wall Street, to be successful, one must diligently mine thru the information released to the investing public. A good deal of information is worthless and some is fraudulent. We’re not trying to reinvent the wheel. We’re simply trying to make money the old-fashioned way- we earn it.
Risk arbitrage is one avenue for making a living. In the last few days several M&A deals have been announced. That has gotten the media all excited. They have a story which has been in moth balls. Don’t get too worked up. Most big acquisitions don’t work, and most of these announced deals are flawed from the start- just like Oracle’s bid for PeopleSoft, which will become a textbook example at Harvard Business School of how not to make a hostile merger offer. The best of the four deals just announced is Alcan’s offer for Pechiney. Alcan has been around the block before with this company. They want to buy Pechiney and will pay the necessary price to get Pechiney’s board of directors on board. Eventually, after much postering, the European government officials will approve the deal. It will be a bit like Nestle’s takeover of Dreyers in the U.S. There might be some scares along the way. If so, take advantage of the scares and I believe the rewards will come your way. Ignore reading the papers and listening to the media and ignore analysts. They haven’t a clue about risk arbitrage.
Next is EMC’s acquisition of Legato. It’s straightforward. There won’t be another bidder. You get 0.9 of a share of EMC for each Legato share, and that’s generous. The deal will close in the fourth quarter. Legato employs 1500 people, and maybe 150 shall be let go. The deal makes some sense for EMC as Legato’s software analyzes, backs up, and recovers data on computers.
Yellow Corp. is buying the larger Roadway Corp. At the outset I tell you I do not like trucking deals. I try to stay away from the Teamsters. Why do I need to go looking for trouble? Roadway deals with the retail customer and Yellow more to the manufacturing end. This deal involves and centers around lowering costs. These two companies have not grown their revenues for years. Their profit margins are an embarrassment.
Roadway has already told analysts that earnings would be disappointing. This deal will be done with part cash and part stock. You get $48 for the cash portion. The remainder you get 1.924 shares of Yellow common and there is a collar of plus or minus 15% from the $24.95 per Yellow share.
The last deal to be discussed is the smaller ArvinMeritor hostile $15 tender for Dana. Arvin has made prior overtures to no avail. Dana employs 60,000 people and has revenues of almost $10 billion. Arvin’s workforce is half the size and revenues are about 45% less. Arvin will pay more for Dana but the latter will sell to another party more to its liking. If successful, the combination of Arvin and Dana would have a highly leveraged balance sheet in an industry, auto parts, which offers limited growth potential. Full year earnings for Dana will approximate $1.15 per share. The industry is marked by poor ROI and suppliers like Dana are under pressure to provide cost reductions to customers. Dana has a respected name. Maybe another company will pay $19 for Dana. There is some upside but not much. The stock traded at $17+ yesterday. You might consider pulling the trigger on a Dana put- as a seller.
All of the above acquisitions involve consolidation and not growth. They involve layoffs and not hiring. They are a sign of the times and not an indication that business is about to turn the corner. I’ve been a buyer of companies. I did not lay off people. I expanded facilities I purchased. I didn’t consolidate. I aggressively expanded the presence in the marketplace. These acquisitions are not moneymakers for shareholders. They leave too many questions unanswered. For me it’s simple. The people making the buying decisions have trouble running their own show. Making the show larger just creates more opportunities for disappointment down the line.
Yesterday GM announced their cash rebates and interest-free loans would be extended through July 31. The company said customers had developed “incentive burnout,” a term that refers to customers taking incentives for granted and for the failure of those incentives to draw customers into the showroom. Significantly, GM’s inventories are about 21% above normal at the end of June.
Consumer debt in May increased by 5% or $7.3 billion to $1.76 trillion. That’s a pile of debt.
I would like to turn the attention to a very important area. The thinking about a weak dollar helping our exports is flawed. Yes, there will be some improvement but not a great deal. It took me some time to realize why that is. In 2002, for the first time since 1961, Japan imported more from China than the U.S. Taiwan and South Korea, along with other ASEAN countries, all reported 50% increases in their exports to China in 2002 while their exports to the U.S remained flat. The economies in Asia, which are seeing above average growth rates, are becoming less reliant on the U.S. market and focusing more on regional trade throughout Asia. It is highly important to note that, in 2001, 25% of the United States’ total exports went to the Pacific Rim. Their value amounted to $182 billion, and equated to the same percentage and same dollar value as our exports to Europe. In 2002 the percentages changed slightly to 26% and 24%, respectively. More than a third of our exports in 2002 went to Canada and Mexico. The U.S. share of world exports is roughly 12-13%. The economies in Europe are weak. Mexico is showing limited growth. The Pacific Rim nations are emphasizing regional transactions, and this is not a short-run situation. The growth potential for our exports is not expanding. Our horizon is shrinking. This is just one more reason why GDP estimates for the second half of 2003 and for next year are way too high.
A U.S. federal appeals court yesterday rejected Vice President Cheney’s request that it block a lawsuit seeking papers from his energy task force. U.S. District Court Sullivan said “carefully focused discovery will fully protect the vice president.” It will, hopefully, provide some transparency to the American people.
The new Pew Research Center poll shows increasing criticism for Bush’s handling of the economy and health care problems. His overall approval rating slipped to 60%. On April 9 it was 74%.
Tuesday, July 08, 2003
7/08/03 Sun Valley
Wall Street started the week with a big fireworks display. By week’s end, my feeling is the big news will come out of Sun Valley, Idaho. This week is the Allen & Co. conference in Sun Valley. Most investors have never heard of Allen &Co. I have. It has been my pleasure to have a relationship with that firm going back 30 years. The company was started by Charlie Allen, and his nephew now runs the business. Charlie started as a runner in the 1920s and rose to become the most successful venture capitalist of his time. He helped start Syntex, which provided the birth control pill, and the precursor toWorldComm, among others. WorldComm had quite an uphill battle against the then all-powerful AT&T. This conference brings key businessmen together for one week, and that includes Bill Gates and Warren Buffett. From this conference has come various deals- Capitol Cities/ABC, Viacom and Blockbuster, Disney and the Fox Family Channel, and many others. This year a deal for Vivendi Universal could be finalized.
In the June 2003 volume of The Journal of Finance there is an important paper entitled “The Impact of Jumps in Volatility and Returns” by Eraker, Johannes, and Polson. Normally I don’t make reference to such studies for fear that my readers could get the idea I have the potential to be erudite. God forbid. These writers have been quite meticulous, and have left me with the feeling they know something about this subject matter. That is refreshing. Some of their findings: “Jumps in returns can generate large movements such as the crash of 1987, but the impact of a jump is transient. A jump in returns today has no impact on the future distribution of returns.” Another thought is “jumps in volatility fill the gap between jumps in returns and diffusive volatility by providing a rapidly moving but persistent factor that drives the conditional volatility of returns.” Importantly, they state, “jump risk, either in returns or in volatility, cannot typically be hedged away, and investors may demand a large premia to carry these risks.” Lastly, the writers point out the persistent effect of jumps in volatility on the distribution of returns; however, they state, “the presence of jumps in volatility does not eliminate the need for jumps in returns.” They provide formal evidence that jumps in volatility may remove the misspecification documented in models with diffusive stochastic volatility.
In 2002 our trade deficit with Japan was $70 billion. If Japan’s economy is to improve and GNP to expand by 1%, the major beneficiary will be the shipping industry as 90% of Japan’s cargo moves by ocean. During the past five years Japan’s big three ocean carriers- “K” Line, MOL, and NYK Line- reported increased sales and earnings. In a country slightly smaller than California, there are 127 million people. According to Bloomberg, 10 year U.S. treasury yields have tracked the Nikkei in the past year with a correlation of 0.77. Ten year U.S. treasuries are yielding about 3 ¾% and 10 year Japanese government bonds yield 1.17%. The latter were yielding 0.43% on June 11.
For months and months I have been describing the future fallout from state deficits. Yesterday you witnessed an example in realtime. Wendy’s lowered its projections for the second quarter and for the full year. New Ohio laws will make Wendy’s effective tax rate for the second quarter 39.5% and in the second half about 37%. Wendy’s is headquartered in Ohio, and that state has increased the rate at which it taxes franchise companies such as Wendy’s.
Investor Intelligence sentiment data indicates no bear market since 1964 has ended without at least 55% of newsletter writers turning bearish at or near the bottom. Over the past three years such bearishness has not exceeded 45%.
Yesterday A June survey by Goldman Sachs showed that 2003 IT spending outlaws are likely to remain little changed from a year earlier. That survey did not help BMC Software, as they said earnings and revenues would miss second quarter estimates. They blamed the disappointment on delays in purchasing decisions by larger customers. We have heard that refrain from others. Goldman Sachs expects IT spending to increase by 3.5% in 2004. That was a major reason for tech stocks to do better yesterday. In my view, a pick-up of 3.5% would make the Nasdaq overvalued by a significant amount. Today EMC announced buying Legato for .9 share of EMC. Consolidation will continue as growth prospects are limited, in my view.
Madness is in the works over this FT article on Microsoft possibly paying out a dividend of $10 billion. Can everybody be this stupid? It’s not going to happen. Listen to John Connors, Microsoft’s CFO: “But the most important thing that shareholders really have to understand is we’ve got to get our legal situation resolved and things behind us in terms of what those situations could have on our product development strategy, our licensing strategy, and our distribution strategy.” The company will continue to buyback shares and raise the dividend which is now a “starter dividend.” The increase will not knock your socks off.
According to Bloomberg, WalMart and Target account for 48% of the billions in products the 50 largest retailers sold in the U.S. last year. As such, it is wise to focus mainly on those two companies when assessing the retail industry and the consumer. Until they say differently, retail sales can be expected to grow at a very modest level.
The White House acknowledged that Bush (isn’t he the White House?) was incorrect in his State of the Union address to say that Iraq recently sought significant quantities of uranium. The blame was placed on incorrect intelligence. In my view, a smart leader takes full responsibilities for mistakes, and doesn’t place blame on others.
In the June 24 Ha’aretz there is a Bush quote related by Palestinian Prime Minister Mahmoud Abbas: God told me to strike al Qaida and I struck them, and then he instructed me to strike at Saddam, which I did, and now I am determined to solve the problem in the Middle East. If you can help me I will act, and if not, the elections will come and I will have to focus on them. I trust Bush has not received instructions from Above to change the pension rules and the contributions to those pensions. I trust this is his own doing. Let me indicate how strongly I feel on this subject. In Deleon Springs, Fla. a motorist drove home about a mile with the legless body of a pedestrian in his front windshield before calling authorities that he hit the man with his car. Investigators believe the legs were severed by the impact with the car. The driver didn’t stop to report the accident because he didn’t have a cell phone. Let me make this absolutely clear. There are strict pension laws in this nation. I have pointed out that corporations are severely in arrears in their pension contributions. They must make up those arrearages which are in the hundreds of billions of dollars. Bush wants to make it possible for corporations to alleviate this problem by reducing contributions. This will cut the legs out from those in the pension plans, and endanger their well-being. I know they have phones in the White House. Hopefully, Bush will make the calls necessary to take his idea off the table. That way it won’t be dead on arrival.
Wall Street started the week with a big fireworks display. By week’s end, my feeling is the big news will come out of Sun Valley, Idaho. This week is the Allen & Co. conference in Sun Valley. Most investors have never heard of Allen &Co. I have. It has been my pleasure to have a relationship with that firm going back 30 years. The company was started by Charlie Allen, and his nephew now runs the business. Charlie started as a runner in the 1920s and rose to become the most successful venture capitalist of his time. He helped start Syntex, which provided the birth control pill, and the precursor toWorldComm, among others. WorldComm had quite an uphill battle against the then all-powerful AT&T. This conference brings key businessmen together for one week, and that includes Bill Gates and Warren Buffett. From this conference has come various deals- Capitol Cities/ABC, Viacom and Blockbuster, Disney and the Fox Family Channel, and many others. This year a deal for Vivendi Universal could be finalized.
In the June 2003 volume of The Journal of Finance there is an important paper entitled “The Impact of Jumps in Volatility and Returns” by Eraker, Johannes, and Polson. Normally I don’t make reference to such studies for fear that my readers could get the idea I have the potential to be erudite. God forbid. These writers have been quite meticulous, and have left me with the feeling they know something about this subject matter. That is refreshing. Some of their findings: “Jumps in returns can generate large movements such as the crash of 1987, but the impact of a jump is transient. A jump in returns today has no impact on the future distribution of returns.” Another thought is “jumps in volatility fill the gap between jumps in returns and diffusive volatility by providing a rapidly moving but persistent factor that drives the conditional volatility of returns.” Importantly, they state, “jump risk, either in returns or in volatility, cannot typically be hedged away, and investors may demand a large premia to carry these risks.” Lastly, the writers point out the persistent effect of jumps in volatility on the distribution of returns; however, they state, “the presence of jumps in volatility does not eliminate the need for jumps in returns.” They provide formal evidence that jumps in volatility may remove the misspecification documented in models with diffusive stochastic volatility.
In 2002 our trade deficit with Japan was $70 billion. If Japan’s economy is to improve and GNP to expand by 1%, the major beneficiary will be the shipping industry as 90% of Japan’s cargo moves by ocean. During the past five years Japan’s big three ocean carriers- “K” Line, MOL, and NYK Line- reported increased sales and earnings. In a country slightly smaller than California, there are 127 million people. According to Bloomberg, 10 year U.S. treasury yields have tracked the Nikkei in the past year with a correlation of 0.77. Ten year U.S. treasuries are yielding about 3 ¾% and 10 year Japanese government bonds yield 1.17%. The latter were yielding 0.43% on June 11.
For months and months I have been describing the future fallout from state deficits. Yesterday you witnessed an example in realtime. Wendy’s lowered its projections for the second quarter and for the full year. New Ohio laws will make Wendy’s effective tax rate for the second quarter 39.5% and in the second half about 37%. Wendy’s is headquartered in Ohio, and that state has increased the rate at which it taxes franchise companies such as Wendy’s.
Investor Intelligence sentiment data indicates no bear market since 1964 has ended without at least 55% of newsletter writers turning bearish at or near the bottom. Over the past three years such bearishness has not exceeded 45%.
Yesterday A June survey by Goldman Sachs showed that 2003 IT spending outlaws are likely to remain little changed from a year earlier. That survey did not help BMC Software, as they said earnings and revenues would miss second quarter estimates. They blamed the disappointment on delays in purchasing decisions by larger customers. We have heard that refrain from others. Goldman Sachs expects IT spending to increase by 3.5% in 2004. That was a major reason for tech stocks to do better yesterday. In my view, a pick-up of 3.5% would make the Nasdaq overvalued by a significant amount. Today EMC announced buying Legato for .9 share of EMC. Consolidation will continue as growth prospects are limited, in my view.
Madness is in the works over this FT article on Microsoft possibly paying out a dividend of $10 billion. Can everybody be this stupid? It’s not going to happen. Listen to John Connors, Microsoft’s CFO: “But the most important thing that shareholders really have to understand is we’ve got to get our legal situation resolved and things behind us in terms of what those situations could have on our product development strategy, our licensing strategy, and our distribution strategy.” The company will continue to buyback shares and raise the dividend which is now a “starter dividend.” The increase will not knock your socks off.
According to Bloomberg, WalMart and Target account for 48% of the billions in products the 50 largest retailers sold in the U.S. last year. As such, it is wise to focus mainly on those two companies when assessing the retail industry and the consumer. Until they say differently, retail sales can be expected to grow at a very modest level.
The White House acknowledged that Bush (isn’t he the White House?) was incorrect in his State of the Union address to say that Iraq recently sought significant quantities of uranium. The blame was placed on incorrect intelligence. In my view, a smart leader takes full responsibilities for mistakes, and doesn’t place blame on others.
In the June 24 Ha’aretz there is a Bush quote related by Palestinian Prime Minister Mahmoud Abbas: God told me to strike al Qaida and I struck them, and then he instructed me to strike at Saddam, which I did, and now I am determined to solve the problem in the Middle East. If you can help me I will act, and if not, the elections will come and I will have to focus on them. I trust Bush has not received instructions from Above to change the pension rules and the contributions to those pensions. I trust this is his own doing. Let me indicate how strongly I feel on this subject. In Deleon Springs, Fla. a motorist drove home about a mile with the legless body of a pedestrian in his front windshield before calling authorities that he hit the man with his car. Investigators believe the legs were severed by the impact with the car. The driver didn’t stop to report the accident because he didn’t have a cell phone. Let me make this absolutely clear. There are strict pension laws in this nation. I have pointed out that corporations are severely in arrears in their pension contributions. They must make up those arrearages which are in the hundreds of billions of dollars. Bush wants to make it possible for corporations to alleviate this problem by reducing contributions. This will cut the legs out from those in the pension plans, and endanger their well-being. I know they have phones in the White House. Hopefully, Bush will make the calls necessary to take his idea off the table. That way it won’t be dead on arrival.
Monday, July 07, 2003
7/7/03 A Programmed Cyborg Meets Its Terminator: Productivity
I thought I might use a catchy heading to get your attention. I know Wall Street as a whole is ignoring this no-spin blog. Let me set the table in neat fashion. The average workweek of 33.7 hours is the lowest level since the government began keeping records in 1964. The number of part-time workers is 4.6 million, and that's up from 3.3 million only three years ago. No one can get an exact handle on the number of people who have stopped their job search. These are folks who have given up after 21 months of trying to find a job. Maybe the number is 3 million, as the Labor Department suggests. From my research I would estimate a more accurate number to be about five million. When you total those who are unemployed, those who are part-timers, and those who no longer are looking for a job, you arrive at a total of about 16 million people. That is approximately 6% of this nation's population, and that includes children and youngsters not yet eligible for the workforce, retirees, infirmed, etc. Erica Groshen, an economist with the Federal Reserve Bank of N.Y., says jobs are scarce and work hours limited because of increased productivity. In other words, advances in computers, telecommunications, and the internet have helped to make job cuts permanent and enabled service-sector jobs to be accomplished overseas. That may tell part of the story. Another part is the absence of top-line growth in industry. It should be noted that June was the 35th consecutive month of job losses in the manufacturing area. I do not believe for one second that an economic recovery will take place while this job picture is present. We should remember that, according to Thomson Financial, earnings increases for the third and fourth quarters of last year fell short of analysts' average midyear estimates by at least 60%. Analysts estimate that profit for companies in the S&P 500 will increase 12.8% this quarter and 21.4% next quarter. Last year analysts forecast that earnings would increase 16.6% in the third quarter and 28.5% in the fourth quarter. The actual numbers were 6.8% and 9.7%. Now you know why I don't read any reports by analysts. By the way, this wasn't a one-time mental error. Two years ago the estimate was for a profit decline of 6.2% and 5.3% in the third and fourth quarters. Actual earnings dropped 22% in both quarters.
Operation Sidewinder began a week ago. We have seen more of our soldiers wounded and killed in Iraq than before this offensive took place. We might rethink our plan of attack in this region.
The Nikkei closed at its highest level since August 27, 2002, and it was the 28th consecutive day where over 1 billion shares traded. The last time that happened was in February, 1989, the height of Japan's market bubble. Ten year Japanese government bond yields rose to 1.08%.
VF to acquire Nautica for $17 per share in cash., a 28% premium over the closing price on July 3. The dissident shareholders pushed and got a nice ROI.
At age 46 Martina Navratilova won her 20th Wimbleton title. This one was in mixed doubles with Leander Paes of India.
Finding Nemo will soon become the top grossing animated film of all time.
Yesterday's elections in Mexico were devastating to Vincente Fox, and the results were much worse than anticipated. The National Action Party lost 44 seats, the Party of the Democratic Revolution gained 37 seats, and the PRI added 20 seats. Lopez Obrador, with a popularity of over 80%, will become the prime mover in Mexico's political arena.
Alcan Inc. made a hostile offer for Pechiney SA. They made an offer of 123 euros and three Alcan shares for five Pechiney shares. That works out to about 41 euros per share. If successful, this would make Alcan the world's largest aluminum company. They are currently number two behind Alcoa. Alcan is being advised by Morgan Stanley and Lazard LLC, a good combination for a hostile offer. Last week Pechiney rose almost 9% in price. In August 1999 Alcan agreed to buy Pechiney and the aluminum and packaging units of Algroup. European regulators objected to the deal. Since then, Alcoa and Norsk have made large acquisitions. Thus, Alcan will have a better regulatory reception this time. I believe the deal will be completed but at a higher price.
I thought I might use a catchy heading to get your attention. I know Wall Street as a whole is ignoring this no-spin blog. Let me set the table in neat fashion. The average workweek of 33.7 hours is the lowest level since the government began keeping records in 1964. The number of part-time workers is 4.6 million, and that's up from 3.3 million only three years ago. No one can get an exact handle on the number of people who have stopped their job search. These are folks who have given up after 21 months of trying to find a job. Maybe the number is 3 million, as the Labor Department suggests. From my research I would estimate a more accurate number to be about five million. When you total those who are unemployed, those who are part-timers, and those who no longer are looking for a job, you arrive at a total of about 16 million people. That is approximately 6% of this nation's population, and that includes children and youngsters not yet eligible for the workforce, retirees, infirmed, etc. Erica Groshen, an economist with the Federal Reserve Bank of N.Y., says jobs are scarce and work hours limited because of increased productivity. In other words, advances in computers, telecommunications, and the internet have helped to make job cuts permanent and enabled service-sector jobs to be accomplished overseas. That may tell part of the story. Another part is the absence of top-line growth in industry. It should be noted that June was the 35th consecutive month of job losses in the manufacturing area. I do not believe for one second that an economic recovery will take place while this job picture is present. We should remember that, according to Thomson Financial, earnings increases for the third and fourth quarters of last year fell short of analysts' average midyear estimates by at least 60%. Analysts estimate that profit for companies in the S&P 500 will increase 12.8% this quarter and 21.4% next quarter. Last year analysts forecast that earnings would increase 16.6% in the third quarter and 28.5% in the fourth quarter. The actual numbers were 6.8% and 9.7%. Now you know why I don't read any reports by analysts. By the way, this wasn't a one-time mental error. Two years ago the estimate was for a profit decline of 6.2% and 5.3% in the third and fourth quarters. Actual earnings dropped 22% in both quarters.
Operation Sidewinder began a week ago. We have seen more of our soldiers wounded and killed in Iraq than before this offensive took place. We might rethink our plan of attack in this region.
The Nikkei closed at its highest level since August 27, 2002, and it was the 28th consecutive day where over 1 billion shares traded. The last time that happened was in February, 1989, the height of Japan's market bubble. Ten year Japanese government bond yields rose to 1.08%.
VF to acquire Nautica for $17 per share in cash., a 28% premium over the closing price on July 3. The dissident shareholders pushed and got a nice ROI.
At age 46 Martina Navratilova won her 20th Wimbleton title. This one was in mixed doubles with Leander Paes of India.
Finding Nemo will soon become the top grossing animated film of all time.
Yesterday's elections in Mexico were devastating to Vincente Fox, and the results were much worse than anticipated. The National Action Party lost 44 seats, the Party of the Democratic Revolution gained 37 seats, and the PRI added 20 seats. Lopez Obrador, with a popularity of over 80%, will become the prime mover in Mexico's political arena.
Alcan Inc. made a hostile offer for Pechiney SA. They made an offer of 123 euros and three Alcan shares for five Pechiney shares. That works out to about 41 euros per share. If successful, this would make Alcan the world's largest aluminum company. They are currently number two behind Alcoa. Alcan is being advised by Morgan Stanley and Lazard LLC, a good combination for a hostile offer. Last week Pechiney rose almost 9% in price. In August 1999 Alcan agreed to buy Pechiney and the aluminum and packaging units of Algroup. European regulators objected to the deal. Since then, Alcoa and Norsk have made large acquisitions. Thus, Alcan will have a better regulatory reception this time. I believe the deal will be completed but at a higher price.
Sunday, July 06, 2003
7/06/03 Decompression
When one goes diving without scuba gear, it can get a bit scary in the depths of the ocean. Should your upward return to the water’s surface be too fast, the nitrogen in your blood, compressed by the depths of the ocean, would not have time to decompress. Instead, it can expand like soda bubbles when a bottle is first opened. The result can be a brain embolism, a cardiopulmonary embolism, and a heart attack. The laws of physics are different on Wall Street. There you have the Fed, economists, and analysts of all kinds willing to provide navigational forecasts which, unfortunately, have often led to wealth embolisms.
Forty nine of fifty four economists recently surveyed by the Wall Street Journal expect the Dow to finish above 9000 this year. Even though these economists expect annualized growth of 3.5% in this year’s third quarter, 3.8% in the fourth quarter, and 3.8% in the first half of 2004, growth is not expected to be strong enough to create many new jobs. In fact, the unemployment rate, they say, is expected to remain unchanged through the end of this year and to only decline slightly by June 2004. Why do economists feel comfortable with a growth rate of 3.5%? Since 1930, that’s been the average GNP growth rate. Therefore, the average has produced a comfort level for the future. I prefer to be guided by the facts and not by the average. Additionally, forecasts are often clothed in errors of omission. For example, I can state the Nasdaq has just risen 25% in price since mid-March. That is true. Let’s take another view. The Wilshire 5000 Total Market Index tracks more than 5700 U.S.-based companies. It ended the week at 9,462, and this represents a rise of 1.6% from the prior year’s level. This too is true but gives a different picture. Over this period of time the Wilshire does not provide the same decompression dangers as the Nasdaq poses from the recent three month spurt. We are talking about the same market but different time references.
Decompression can happen in various venues. We had the tax act of 1986. It killed many tax deduction loopholes. One impacted the Arabian horse industry. Prior to the enactment of this tax act a top Arabian might have sold for $250,000. After the passage of the new tax act that same horse sold for $6,000. I know. I made such a purchase at that time. Over the past few years the Fed has made a concerted effort to bring down interest rates and this has produced record low mortgage rates. The latter have spurred the rise in home prices. Real estate in Carmel, CA has always been pricey- especially along the beach. A 2000 square foot home with two bedrooms might have fetched about $2.75 million at that location ten years ago. With no improvements, that same house was listed not too long ago at $16 million. The price has since been reduced. Inflation in this country is about 2%, and that’s only because of health care costs, and the price of natural gas, jet fuel, and gasoline. There is no economic justification for the house in Carmel to have that price tag. Supply and demand is not different from past circumstances. There was little economic justification for the price of Arabian horses either in the early 1980s- only as a tax shelter. Mortgage rates, according to the head of the MBA, have seen their lows. As they begin to rise, and they have in the last two weeks, then prices will decline.
The sole justification for present stock prices is the higher forecast for GNP growth. At the present time we are in a recession. The entity, which has described this economic situation, has not deemed current conditions favorable enough to warrant a change in this description. If the optimistic economists fail to envision better employment conditions, it is difficult to see where business will be expanding and business spending accelerating. Consumers will accept rebates and concessions and almost free money. When the cost of money begins to rise, and it has begun, the consumer will become a more fragile commodity. Short and long term interest rates are not sustainable at these levels. The same can appropriately be said about current stock prices. They reflect profit levels which will not be met, and that is not different from the condition which has existed since the recession began.
More than 25 million people rely on the Colorado River. The Imperial Irrigation District in southern California holds the rights to more water than any single user on the river, more than the states of Arizona, Nevada, Wyoming, and New Mexico. Nevada has exhausted its legal allocation of the river, and is searching for alternatives. Tim Barnett, a researcher at Scripps Institution of Oceanography, says warming temperatures will shorten the snow-melting season in the West’s high country and will reduce runoff by 17% to one-third on the Colorado River and other systems, leaving them unable to meet demands for the foreseeable future. The Fed can print money. They can’t produce water. Economists can produce forecasts for GNP growth. They can’t produce water to maintain the current growth patterns in Nevada, Phoenix, and other parts of the West. President Bush can cut taxes but he can’t restore water to overtaxed rivers. The laws of nature outlive the experts and the politicians.
I do have a bit of good news on this Sunday. Last night no one won the Powerball jackpot. That means on Wednesday the payoff rises to $240 million. There will be about 75 million tickets sold, maybe more, for that jackpot. A winner is anticipated. It could be you. What do you think the chances are that a Fed member, an economist, a stock analyst, or a politician will correctly match all six numbers in the drawing?
When one goes diving without scuba gear, it can get a bit scary in the depths of the ocean. Should your upward return to the water’s surface be too fast, the nitrogen in your blood, compressed by the depths of the ocean, would not have time to decompress. Instead, it can expand like soda bubbles when a bottle is first opened. The result can be a brain embolism, a cardiopulmonary embolism, and a heart attack. The laws of physics are different on Wall Street. There you have the Fed, economists, and analysts of all kinds willing to provide navigational forecasts which, unfortunately, have often led to wealth embolisms.
Forty nine of fifty four economists recently surveyed by the Wall Street Journal expect the Dow to finish above 9000 this year. Even though these economists expect annualized growth of 3.5% in this year’s third quarter, 3.8% in the fourth quarter, and 3.8% in the first half of 2004, growth is not expected to be strong enough to create many new jobs. In fact, the unemployment rate, they say, is expected to remain unchanged through the end of this year and to only decline slightly by June 2004. Why do economists feel comfortable with a growth rate of 3.5%? Since 1930, that’s been the average GNP growth rate. Therefore, the average has produced a comfort level for the future. I prefer to be guided by the facts and not by the average. Additionally, forecasts are often clothed in errors of omission. For example, I can state the Nasdaq has just risen 25% in price since mid-March. That is true. Let’s take another view. The Wilshire 5000 Total Market Index tracks more than 5700 U.S.-based companies. It ended the week at 9,462, and this represents a rise of 1.6% from the prior year’s level. This too is true but gives a different picture. Over this period of time the Wilshire does not provide the same decompression dangers as the Nasdaq poses from the recent three month spurt. We are talking about the same market but different time references.
Decompression can happen in various venues. We had the tax act of 1986. It killed many tax deduction loopholes. One impacted the Arabian horse industry. Prior to the enactment of this tax act a top Arabian might have sold for $250,000. After the passage of the new tax act that same horse sold for $6,000. I know. I made such a purchase at that time. Over the past few years the Fed has made a concerted effort to bring down interest rates and this has produced record low mortgage rates. The latter have spurred the rise in home prices. Real estate in Carmel, CA has always been pricey- especially along the beach. A 2000 square foot home with two bedrooms might have fetched about $2.75 million at that location ten years ago. With no improvements, that same house was listed not too long ago at $16 million. The price has since been reduced. Inflation in this country is about 2%, and that’s only because of health care costs, and the price of natural gas, jet fuel, and gasoline. There is no economic justification for the house in Carmel to have that price tag. Supply and demand is not different from past circumstances. There was little economic justification for the price of Arabian horses either in the early 1980s- only as a tax shelter. Mortgage rates, according to the head of the MBA, have seen their lows. As they begin to rise, and they have in the last two weeks, then prices will decline.
The sole justification for present stock prices is the higher forecast for GNP growth. At the present time we are in a recession. The entity, which has described this economic situation, has not deemed current conditions favorable enough to warrant a change in this description. If the optimistic economists fail to envision better employment conditions, it is difficult to see where business will be expanding and business spending accelerating. Consumers will accept rebates and concessions and almost free money. When the cost of money begins to rise, and it has begun, the consumer will become a more fragile commodity. Short and long term interest rates are not sustainable at these levels. The same can appropriately be said about current stock prices. They reflect profit levels which will not be met, and that is not different from the condition which has existed since the recession began.
More than 25 million people rely on the Colorado River. The Imperial Irrigation District in southern California holds the rights to more water than any single user on the river, more than the states of Arizona, Nevada, Wyoming, and New Mexico. Nevada has exhausted its legal allocation of the river, and is searching for alternatives. Tim Barnett, a researcher at Scripps Institution of Oceanography, says warming temperatures will shorten the snow-melting season in the West’s high country and will reduce runoff by 17% to one-third on the Colorado River and other systems, leaving them unable to meet demands for the foreseeable future. The Fed can print money. They can’t produce water. Economists can produce forecasts for GNP growth. They can’t produce water to maintain the current growth patterns in Nevada, Phoenix, and other parts of the West. President Bush can cut taxes but he can’t restore water to overtaxed rivers. The laws of nature outlive the experts and the politicians.
I do have a bit of good news on this Sunday. Last night no one won the Powerball jackpot. That means on Wednesday the payoff rises to $240 million. There will be about 75 million tickets sold, maybe more, for that jackpot. A winner is anticipated. It could be you. What do you think the chances are that a Fed member, an economist, a stock analyst, or a politician will correctly match all six numbers in the drawing?
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