1/12/03 Pension Fund Managers Are Panicked

The corporate pension fund shortfalls are rising. For example, Ford's has risen to $14.5 billion. Rather than decrease their risk exposure, the managers feel pressured to make a 9% return, and believe they must increase their equity positions at the expense of bonds. The problem is not the markets. It's the managers themselves and those entrusted to oversee the pension fund assets. Most are inept and not qualified to manage a portfolio through a bear market- especially when it's OPM.

The U.S. now has 150,000 troops in the Gulf. Another 225,000 and we'll have as many folks as are in Wyoming.

According to a national Knight Ridder poll, Americans are overwhelmingly against a unilateral war in Iraq.

In 2002 a total of 10 million people received unemployment benefits. Unemployment among women has increased as much as it has for men. In recessions this is usually not the case.

Merrill Lynch says the budget deficit may increase to $300 million. I mentioned this a week ago.

Foreigners are shifting from dollar deposit accounts to Euro deposits.

IC equipment vendors are offering discounts up to 40%.

To reiterate, eliminating taxes on dividends will not stimulate the economy in 2003. The assistance comes with the filing of tax returns in April, 2004.

Economists are concerned that continuing job losses will stall the recovery. I'm concerned for economists. We don't have a recovery.

Economists are concerned that the poor holiday season reflects a spending hiatus for the consumer. I'm concerned for economists. They have missed the change in trend. Spending is out and savings is in.

1/11/03 The Bogus Unemployment Rate Part 2

Here we go again. Six months ago I took out all the statistics and proved that the reported unemployment rate was bogus and much higher than reported. I received a good deal of how dare you emails, and in return sent a picture of Pavlov's dog. The following month my number was issued as the correct unemployment rate. Let's make this short and to the point. It's Saturday and the follower pathetics are probably asleep from too much booze. In the past sixty days the jobless number has risen by approximately 200,000. If the unemployment rate was 6% before the increased numbers, it can't remain the same now. It's so simple. The correct unemployment rate is 6.3%. If you think business conditions are improving, then there is little hope for your intelligence level.

The Cheesecake Factory had disappointing results. Maybe they should consider improving their food and lowering their prices. Maybe they should merge with Hooter's and serve cheesecake with cheesecake.

At least 5 GOP senators have voiced concerns over Bush's stimulus package. Bush said the plan would deliver an average tax cut of $1083 to 92 million Americans. The liberal Tax Policy Center said the average cut for middle income tax payers would be $265. Maybe we should ask H&R Block.

In 2002 companies with assets of $375 billion sought bankruptcy protection.

The Mexican Foreign Minister quit and is replaced by a critic of Nafta.

Bloomberg Personal Finance magazine shuts down after the February issue.

JC Penney to lay off 2000 and Delta 4000.

Germany lowers its economic forecast for 2003- again.

VC spending recedes to pre-bubble levels- around the mid-90's trendline.

Ashland Oil to miss 1st quarter 2003 earnings expectations. Ashland will be followed by many others.

Voltaire said "it is dangerous to be right in matters on which the established authorities are wrong." A good deal depends on your acceptance of anyone as an authority.

1/10/03 December Payrolls Plummet 101,000. Worker Hours Decline Too

The payroll number was the largest drop in 10 months. I promise the real number is worse than that. The gov't will revise the number downward just like November was revised from down 40,000 to down 88,000. The latter is a revision of over 100%. Those are not just mistakes. I have been writing for over one year about this reporting problem. No one in the press appears to be troubled nor does the public. Inaction welcomes incompetence and possible manipulative behavior.

For two months I have written that there would not be a war in Iraq or N. Korea. It's a bit like the stock market. Just think for yourselves and not be forced fed by what Washington wants you to believe. Independent thought based in rationality will get you a long way towards your goals. Follow the leader will get you to your nearest proctologist.

A missing pilot is being held by Iraq. Let's get that pilot back.

GM expects their profit in 2003 to drop by 25%. I think it will be larger than that. Too many vehicles and not enough buyers. The GM pension fund ended 2002 underfunded by $19.3. It's not easy to accomplish this feat.

California's Davis wants to increase taxes by 8.3 billion. He's such a poor excuse for a governor. Then again, gov't employment is the employment of last resort.

There are at least 3 1/2 million Americans drawing a week's unemployment benefits.

Fleet Boston took an $800 million charge for bad loans. I wonder if the loans were to Washington agencies.

Schering Plough issued a profit warning. It should have been expected with Claritin no longer just available via prescription.

The famed Interpreter of the Hopi prophecies crossed the Big Mountain on Black Mesa and explained "the Purifiers are coming! We don't want these weapons made up of the uranium you take from our land. If you take the uranium, the lightning won't come and bring the rains. The uranium attracts the lightning. You have no right to take the lightning from us! Our Prophecies tell of white people. They were once our brothers who went away to the East. They were supposed to come back here with inventions and help us to a better life. They would complete our spiritual circle. Instead they brought the symbol of a cross. The cross is a divider. They want to hang us- on a cross of uranium!"

1/9/03 The Peace Pipe

Noble Red Man, the Lakota chief, said " I've got Red Cloud's peace pipe. I also have Black Bear's pipe. The Peace Pipe is our only weapon. It's our holy power. It's God's power. The Pipe mediates between man and God. To receive the Pipe, to receive God's gift, you've got to be pure in your heart, mind, body, and soul. And never forget, that after the prayers, you've got to live that life, a life with God. That's the hardest part."

Wegman's Food Markets was founded in 1916. They now employ 27,700 workers, and no one has ever been laid off.

In a poll the top two resolutions for the new year were paying off debt and losing weight.

Alcoa really missed the estimates for the 4th quarter, and will lay off 8000 workers.

The dollar sank to its lowest level vs the euro since November 1999. Gold rallied to a new six year high.

Pimco's Bill Gross said that a weaker dollar was key to preventing global deflationary pressures. In my view, he has nothing to worry about. The dollar will stay weak and get weaker.

WalMart's December same store sales rose 2.3%.

AOL to take several billion dollar write-off. Maybe it should be more than that.

Last year, for the first time since 1988, there was an equity outflow from mutual funds- about $25 billion. If the dollar stays weak, that outflow could increase as foreign investors leave our market.

There were only 19 venture-backed IPOs in 2002.

Unemployment in Uruguay hits 20%.

Taiwan's exports exceed its imports by a record $18 billion.

Our healthcare spending is up to $1.5 trillion. We must be either very sick or very health conscious or hypochondriacs or a combination of all three.

In 2002 the world airline industry lost $13 billion and in 2001 $18 billion. Those combined losses exceed the total profits made over the previous 45 years.

Tom Arnold says he's been married in 3 weight categories.

1/8/03 Poverty And Stimulus Plans

As my readers know, my mantra is something Chief Justice Marshall said 167 years ago- "the power to tax is the power to destroy." I have been writing for years urging the elimination of all taxes on dividends- not because it will be a great stimulus but because it's not right to tax anything twice. The fact is only 1/5 of U.S. households hold stocks outside of individual retirement plans. Under this Bush plan a typical family of four with both parents working to earn $39,000 in yearly income get $1100 in tax relief. The top individual tax rate drops to 35% from the current 38.6%. This is a joke. Families will still be working the first four months of every year just to pay taxes. This is criminal. This is bondage. Where do these taxes go? If we investigated Enron and the like with great scrutiny, let's look behind the budget numbers and look at receipts at every agency. If we want to talk real, a household income of $18,100 or less for a family of four is considered the poverty level and translates into 1 out of every 8 people, 1 out of every 10 families, and 1 out of every 6 children. Somewhere along the line the American people need to get control of their own money. We do not need to have the government control our money. Control will be the death of democracy.

John Challenger, CEO Challenger, Gray, and Christmas: "we see no evidence of a significant increase in job creation in 2003."

There are 2 million farmers and ranchers in the U.S. and 50% are severely impacted by this country's drought which has created tremendous financial loss and the small surrounding towns are also impacted.

Cigna laying off 3000+ workers.

I wrote on Jan 1 about GE and the potential union trouble. Their largest union announced going out on strike on Jan 14. Good for them. It's about time workers took a stand on healthcare costs. No one else comes to their assistance.

WalMart to offer basic discount financial services for U.S. customers. Eventually, this will change the financial services industry.

Intel sees little improvement in tech spending in the next 6 months.

The largest short position exists in the dollar since 1999.

Here is the problem with the market-valuation. EMC came out with better numbers than expected and the eps for 2003 was raised to 12 cents. With the stock at 7 1/2 it's already at 60 times earnings. I'd rather go to a 99 cents only store for a bargain.

Treasury bond prices had their worst early January since 1982- thanks to the stimulus package and all the debt supply which will result.

Factory orders continue to drop.

U.S. home loans in foreclosure at a record level.

Romance takes another hit. Tiffany's holiday sales were worst than expected.

Before I sign off, let me say that the Bush stimulus plan is presented in good faith. Unfortunately, it will not stimulate the results now. If you want to stimulate the economy, send out a check for $1000 to every American 18 and over. That should amount to about $200 billion. To offset that expenditure eliminate a like amount in fat from the budget. Start with the bloated congressional staffs.

[1/7/2003 3:49:57 AM | michael buchsbaum]
1/7/03 Got Water?

As some of my readers might recall, about 15 years ago I was the largest stockholder in the East's second biggest water company. I have been interested in water for quite some time. The Colorado River is the main water source for much of Arizona, Southern California, and southern Nevada. Millions of people eat vegetables grown with this water. Timothy Brick, a member of the Metropolitan Water District of Southern California, said "it's really one of the most massive pollution problems the water industry has ever seen." He is referring to the hazardous chemical perchlorate. The cleanup is estimated to take decades. The 20 million people who drink this water don't have decades.

Soaring property taxes and skyrocketing building insurance rates slam co-op and condo owners in N.Y.C. with monthly maintenance increaes of up to 20%.

AT&T and GM to cut jobs.

Romance takes a hit. 1-800-Flowers delivers a profit warning.

Forrester Research forecasts that the N.Y.C. metroplitan area is in danger of losing at least 300,000 service jobs over time- IT, back-office, customer service, and sales operations- to India, Russia, China, Vietnam, Uruguay, and the Philippines. In total, Forrester estimates that 3.3 million U.S. service-industry jobs and $136 billion in wages will move offshore. It would take 300,000 jobs to fill 6 World Trade Centers.

As the population continues to age, a major fear is outliving one's money. That alone is a reason for the savings rate to increase and for consumer spending to be on the decline for years to come. This trend cannot be bucked.

This is the fourth time that the different market sectors have rallied to current levels. Each time I have advised lightening up on holdings which don't meet your needs and expectations. There may not be another opportunity like this for some time to come.

1/7/03 Got Water?

As some of my readers might recall, about 15 years ago I was the largest stockholder in the East's biggest water company. I have been interested in water for quite some time. The Colorado River is the main water source for much of Arizona, Southern California, and southern Nevada. Millions of people eat vegetables grown with this water. Timothy Brick, a member of the Metropolitan Water District of Southern California, said "it's really one of the most massive pollution problems the water industry has ever seen." He is referring to the hazardous chemical perchlorate. The cleanup is estimated to take decades. The 20 million people who drink this water don't have decades.

Soaring property taxes and skyrocketing building insurance rates slam co-op and condo owners in N.Y.C. with monthly maintenance increaes of up to 20%.

AT&T and GM to cut jobs.

Romance takes a hit. 1-800-Flowers delivers a profit warning.

Forrester Research forecasts that the N.Y.C. metroplitan area is in danger of losing at least 300,000 service jobs over time- IT, back-office, customer service, and sales operations- to India, Russia, China, Vietnam, Uruguay, and the Philippines. In total, Forrester estimates that 3.3 million U.S. service-industry jobs and $136 billion in wages will move offshore. It would take 300,000 jobs to fill 6 World Trade Centers.

As the population continues to age, a major fear is outliving one's money. That alone is a reason for the savings rate to increase and for consumer spending to be on the decline for years to come. This trend cannot be bucked.

This is the fourth time that the different market sectors have rallied to current levels. Each time I have advised lightening up on holdings which don't meet your needs and expectations. There may not be another opportunity like this for some time to come.

1/6/03 Got Dirt

Sigmund Freud: "Money is brought into the most intimate relationship with dirt."

Dr. Elisabeth Engelberg from the Stockholm Center for Economic Psychology: "For women, money makes possible a state of equality. Conversely, men value money as an expression of power."

Mohandas Gandhi: "Happines is when you think, what you say, and what you do are in harmony."

Mel Gibson from Payback: "If I had been a little dumber, I would have joined the force myself."

California accounts for one-seventh of our country's GDP. High Tech rents in the Silicon Valley dropped 30% in 2002.

Gold at a 6 year high, oil at a 2 year high, and the dollar at a 3 year low against the pound.

The new dep't of homeland security brings together 22 different agencies in an effort to prevent terrorism. There is at least one major flaw- none of the merging agencies owns a computer system that can speak to the others, and there is no funding to make this happen. So much for "connecting the dots". The homeland security law is about 500 pages! Who's on first?

The majority of Americans are stockholders- thru pension plans, IRAs, and 410Ks, and therefore, do not receive dividends directly and don't benefit from the proposed dividend tax cut.

Pres. Bush to push for the extension of unemployment benefits, an increase in the child care tax credit, and a quicker phase out of the marriage penalty for two-income couples. Will the proposed package be too late to overcome unemployment, anemic wage growth, and dreary consumer confidence?

1/5/03 Got Milk

Having run a Fortune 500 agricultural processing company for many years, I think I have enough knowledge and experience to comment on the milk industry. It's pretty basic. Milk prices are so low that dairy farmers aren't making money. They are trying to hang on and stay in business. The problem begins with the federal government setting the price for milk. Farmers are unable to pass along increased costs for gasoline or other items to the consumer.

For every 100 pounds there are about 12 gallons of milk. A year ago the price was $17 per 100 pounds and now approximates $10.85. The federal floor price is $10.10, and that is the price at which the government buybacks begin. The supply of milk in this country exceeds demand. The U.S. government has more than a year's supply of dried milk in storage.

In November in Maine, dairy farmers dumped 10,000 gallons of milk in protest of low prices. They want a minimum contract level of $15 per 100 pounds or about $1.10 per gallon. This weekend Safeway had milk ads running at $1.69 per gallon.

I would be very interested to see what part of the new stimulus package helps our farmers. No group works longer hours, takes more risks, and receives less for their efforts.

Craig Columbus, president of Thomas Wealth Management, and probably the leading expert on insider buying and selling, said "insider buying is just anemic-there's been a buyer's strike." If insiders are unwilling to buy stock in their own companies, doesn't it tell you that current trading levels are too high?

1/04/03 Jose Jesus Jimenez

He's not a comedian. His full name is Capt Jose Jesus Jimenez. On December 4 he dropped anchor on his Venezuelan oil tanker and has not budged since. He is running short of food and water, and continues to defie President Chavez. If he stays on board, he will die. The strike is in its 34th day. He remains committed: "in six months there won't be a Venezuela. We'll all be broken, in civil war and bathed in blood." He maybe very right.

According to the Bond Buyer, states and municipalities sold $356 billion of bonds in 2002 and that's a record. States and local governments are bathed in deficits.

The Labor Department(I use that description loosely) will cease issuing reports which track the number of U.S. companies laying off 50 or more workers at a time. The reason given: the report does not generate jobs. I guess the spinmeisters have been bathed in too much daily bad news.

The hamburger war is upon us. The Whopper is on sale until Jan. 20 for 99 cents. Maybe we should use our national defense resources and liberate the hamburger rather than Iraq.

96% of all individual funds ended 2002 with losses. Gold funds did the best. As I said in June 2000, we'll see how good the so-called professionals really are at making money.

Congress reconvenes Tuesday. The President presents his "stimulus package" (I just love to be stimulated) the same day. The Democrats will push for an extension of unemployment benefits. That's comforting and caring since Congress managed to give themselves a pay raise before recessing. I always thought performance counted. No wonder the world over wants to live here. You can do nothing and get a raise.

Airbus recorded contracts for 309 planes in 2002 and Boeing only 231. As I've said before, Boeing's management is a figment of their own imagination.

Hollywood box office receipts were up 11% in 2002. Were the movies more entertaining and/or was it an escape from depressing times bathed in low consumer confidence?

1/3/03 A Mirage Or A Miracle?

What a great first trading day! There was joy in mudville. The good times were back. Or was it wishful thinking devoid of intelligence? Downbeat purchasing management surveys were released on Tuesday for N.Y and Cincinnati. The day before there was a similar poor report for Chicago. Yesterday the ISM reported that order backlogs declined for the 6th consecutive month. That supplier deliveries slowed for the 12th consecutive month. That manufacturing employment continued to decline and with it that index remained below 50% for the 27th consecutive month. Out of Crawford, TX came the genius statement that "the economy is pretty darn strong." Home Depot doesn't think so but they only have 1500 stores and they will experience same-store sales down 10% for the November thru January period. Goldman Sachs now predicts a decline in tech spending for 2003. Two-thirds of CIOs expect continued budget tightening in 2003. Auto executives don't see a recovery in their industry until 2005.

In light of the above, how did the ISM report for December a surge in the new order index from 50 to 63%? Of the 20 manufacturing sectors only 11 gained. The man who compiled the survey should know. His name is Norbert Ore and he heads up the ISM. He made it all clear and stated "the magnitude of the improvement is somewhat difficult to explain at this point." That's right. The market rallied on unexplained news. I'll splain it for you. It's simple. Anyone who ran a business could explain it. Christmas and New Year's day both fell on a Wednesday. Most manufacturing businesses either closed early the day before or didn't open at all. In fact, many businesses were closed after December 23 and didn't open until January 2nd, yesterday. Consequently, with supplier deliveries already slow, new orders needed to be placed no later than December 20th for delivery some time in January. The good news was not a miracle- just a mirage. That's what happens when you read just the headlines. How often have I said don't trade with the news coming from the media?

There is an old saying on Wall Street: so goes the first trading day of the year, so goes the first week, so goes the year. The saying fails to mention stupidity.

1/2/03 Fireworks In January

GE is asking for employees to shoulder higher healthcare co-payments. Such a request may result in GE's first strike in 30 years. The company is touching on a subject which can only cause fireworks. They are making a huge mistake in judgment. Even if employees swallow and accept the conditions due to the poor job market, underlying hatred for management will stay with the employees thru every increased co-payment.

The last time the market dropped 4 years in a row was during the depression.

Due to falling stock prices, IBM just contributed about $4 billion to its U.S. pension plan.

U.S. crude oil inventories are at a 26 year low.

How many of UAL's 80,000 employees will be fired? What a way to begin the new year.

I predict the next real hot spot will be Taiwan- not Iraq and not N.Korea. The Chinese are making growing military threats to recapture Taiwan. China is mighty with plenty of money and plenty of weaponry and plenty of technology. They are the force for this decade and beyond. Iraq and N.Korea are but a small nightmare compared with the China-Taiwan struggle.

Daniel Kahneman is the first psychologist to win the Nobel prize in economics. He said "the main mistake people make is they churn their accounts too much. They just do too much. And so, the advice to be diversified and not do too much is standard advice that people do not spontaneously follow. But not taking that advice is costly...it's just not going to happen that investors will beat the market." I'm an optimist compared to Kahneman.

1/1/03 Happy New Year

We start 2003 with a clean slate- no hits, no runs, no errors. Yesterday is history. Thursday is our first trading day of the new year. A few things have changed. The New York Stock Exchange announced new circuit breakers. As of Thursday, there will be revised circuit-breaker trigger levels for the first quarter of 2003, the NYSE announced.

Circuit-breaker points are the thresholds at which trading halts marketwide for single-day declines in the Dow Jones industrial average. During the first quarter, the 10-, 20- and 30-percent decline levels, respectively, in the Dow will be:

-- An 850-point drop in the Dow before 2 p.m. (all times Eastern) will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later.

-- A 1,700-point drop in the Dow before 1 p.m. will halt trading for two hours; for one hour if between 1 p.m. and 2 p.m.; and for the remainder of the day if at 2 p.m. or later.

-- A 2,550-point drop will halt trading for the remainder of the day regardless of when the decline occurs.

The second change is that consumers have even less confidence going forward than originally anticipated. The reasons are quite clear: a grim job market, little expectation for incomes to rise, and increasing fuel and healthcare costs. In sum, consumers view conditions in the New Year in a poor light. Unfortunately, terrorism continues to occupy the vast majority of focus in Washington. Obviously, protecting our safety and freedoms is vital. Nevertheless, our CEO needs to walk and chew gum at the same time and so does the Congress. We are on a very dangerous path. Confidence in the U.S. is waning, and that is reflected in the falling dollar. We need to import at least $1.5 billion per day to fund our budget deficit and our current account shortfall. That is becoming a daunting task. Those deficits undermine our safety and freedoms. Americans must remember that. All the more reason to spend less and save more. Only you can keep your family in food, shelter, and clothing. Not the government.

12/31/02 Sell The Rallies, Buy The Dips, Stay On The Sidelines?

As 2002 comes to a close, it appears that the market will have the worst December since 1931. At the present time, the S&P 500 is down over 20% this year and the Nasdaq has declined 30%. Where do we go from here?

1. Keep the trend your friend. For the past three years the trend has been down. It is still down. Do not buck the trend.

2. Fourth quarter results have not been released; however, the quarter is over today. I'm not interested in warnings for the 4th quarter. That's history. I am concerned about expectations for the March quarter and beyond. With minimal topline growth and little pricing power, what should a P/E ratio be for cost-cutting? Not very high in my view. You can't grow a company thru cost cutting.

3. The dollar is, in my opinion, still overvalued against the Yen and the Swiss franc.

4. The budget deficits at the local and state levels are a drag on the economy and will continue to be in 2003.

5. The federal government's budget deficit continues to exceed expectations by wide margins. The debt level will need to be raised in February. This indebtedness hampers economic flexibility.

6. It's not just that 41 million Americans don't have healthcare insurance. The rest of the story is the rapidly rising cost of healthcare for the rest of Americans who do have insurance. This problem is raging out of control.

7. The cold winter is creating higher heating bills, and the latter are exacerbated by the rising cost of heating oil, natural gas, and propane.

8. Despite what the Fed proclaims, this institution plays second fiddle to amrket forces. Do you really believe the Fed can print money and inflate the country out of its economic malaise? The dollar is weak and getting weaker. China will continue to export deflation into the U.S. India will continue to be an outsourcing IT force. Our country will not win an economic battle with a guns and butter arsenal. That's a losing proposition.

9. Despite what the media might indicate, the U.S. has weak economic leadership and focus. Ross Perot knew what it took to run a business. We need a chief executive who can make tough business decisions. On both sides of the aisle I don't see such a person.

10. Before you buy or sell, place yourself where the risk/reward is clearly in your favor. If you make a mistake, cut your losses short. There is no room for indecision. When not comfortable, do nothing. When unable to sleep, sell to the sleeping point. Look for potential value and concentrate on companies with repeat business. Such a stock could be Coca Cola. It's on the new low list. I don't make recommendations. I suggest investigating individual situations. Other examples might be Starbucks, McDonald's, Home Depot, and Micron Technology. Maybe one of these companies will merit your attention. At this writing, I don't own any of these stocks.

11. When it comes to a war or a potential war, I worry about Americans being injured and the possible loss of life. I don't concern myself with the impact of war on the stock market. Wars, thank goodness, end. The need for positive cash flow is on-going.

12. Investing is a long-term proposition. To be successful one must think like an owner. As a shareowner, you are a owner of the business. Ask yourself. Do you want to own a stake in that business?

13. The New Year begins tomorrow. It's a fresh slate. The fact that I have been right on the market for the last three years means nothing. That's history. We're in the present and looking out on the horizon. Maybe the economy will grow at 1 or 2% in 2003. Maybe there will be no growth. Maybe there will be a recession. Maybe, bite my tongue, a depression. Maybe deflation. Maybe inflation. Maybe stagflation. Take your pick. It matters but not entirely. In every economy and in every market opportunities are there for the picking. Remain alert. Please remember. You cannot buy at the low and sell at the high. Unlike your spouse, you are not married to an individual stock. It's only business.

I wish all of my readers a happy and healthy New Year.

12/30/02 Michael's

As a youngster, I always got my haircuts at Michael's Barbershop on N.Y.C.'s upper eastside. It was a few blocks walk from where I lived. After 92 years, Michael's has closed its doors.

The yield on stocks is higher than that of short-term treasury bills. Both are slim pickens.

Israel is battling its worst recession in 50 years.

The Nikkei is down 19% in 2002, and at its lowest level in 20 years.

Crude oil is trading at a 2 year high of $33 per barrel.

The dollar is at 6 week lows vs the yen.

Since 9/11, loayoffs in the financial services sector have exceeded 6%. Expect more in 2003.

In the past year TV political ads amounted to $1 billion. In my view, there isn't much to show for it.

The Energy Information Agency( we have agencies for agencies) recently forecast that U.S. households will spend 31% more for natural gas compared with last year, 41% more for heating oil, 17% more for propane, and 13% more for electricity. That amouints to a tax increase. When added to the rising cost of healthcare, it's no wonder you are seeing grimmer faces.

Now for the good news. For the first time since 1986, the Giants and the Jets are in the NFL playoffs at the same time.

A question for 2003- do you buy the dips, sell the rallies, or stand on the sidelines? Let's visit that subject tomorrow and possibly the day after.

Happy birthday wishes to Brittany and Maggie's mother.

12/29/02 The Commodity Research Bureau Index

The 17-commodity CRB last week reached a 5 year high. Natural gas, wheat, cocoa, and coffee are all on the rise and higher consumer prices could be the result.

Venezuela is now importing gasoline.

The dollar is at its lowest level against the Swiss franc in nearly 4 years.

For the month of December, the Dow is down 6.7%, the S&P 500 6.5%, and the Nasdaq 8.8%. As I stated at the end of November, the year-end rally had already taken place.

According to a N.Y. Daily News poll, 50% of the respondents gave Mayor Bllomberg an F.

Robert Menendez is now the number 3 Democrat in the House. As a possible VP running mate, he could help ensure the Hispanic vote in 2004.

In a letter to JP Morgan Chase employees the CEO wrote "give yourself an attitude check." At the same time, the rank and file employees had their stock bonuses slashed by more than 50%. Maybe the CEO should be cut.

Japan's economic minister said Japan's top priority in 2003 will be to end deflation.

12/28/02 No Santa Claus Rally

For the second day in a row the Dow and the Nasdaq closed near their session lows. The S&P 500 index closed at its lowest level in more than 2 months.

800,000 jobless lose their unemployment benefits today.

According to a recent poll, the vast majority of Americans believe the U.S. is very likely or somewhat likely to go to war with Iraq. There is a new moon around Feb 1, and that could be a possible date for the war to begin.

McDonald's is planning to introduce a new beef patty this Spring. Maybe I should ask for the recipe.

Ethan Allen opened its first store in China. Does that mean China will now be making their furnitiure?

Applied Biosystems to cut 9% of their workforce.

12/27/02 The Strong Get Stronger

Gold reaches $350 per ounce. The average mutual fund investing in gold is up 56% this year.

Oil prices hit a new 2 year peak.

30 year mortgage rates at 5.93% hit a 30 year low.

The dollar continues to drop vs the Euro, and is at a 3 year low.

12/26/02 Too Little Too Late

That's how WalMart described their holiday season business. Despite a couple of strong days just before Christmas, the company lowered its December same-store sales outlook to be up 2 to 3% rather than the previous 3 to 5% guidance. At this point, it is realistic to expect reduced expectations from other retailers.

There are still 3 1/2 million Americans receiving jobless benefits. A significant portion of those will have those benefits end in the next few days. This fact had to impact holiday sales.

12/25/02 Merry Christmas

According to the Stock Trader's Almanac, going back most of this century, about 45% of all stock market gains come in the year preceding an election year. In fact, the third year of a term produces about 3 times as many up years as down years.

The stock market seems headed for its third down December in six years. 2002 will be the first time since 1942 that the market has been down in 3 consecutive years. At the same time, so far this quarter the Dow is up 11%, the Nasdaq 17%, and the S&P 9%.

Crude oil prices have gained 17% since the start of the strike in Venezuela.

Gold is at a 5 1/2 year high at $347 per ounce.

We know that companies are looking for ways to cut costs. The daily layoffs are a daily reminder. What would Jack Welch say about this? In 2001 only 434 civilian federal government workers, out of a 3 million plus workforce, were fired. I guess the rest were great job performers and are a significant reason that this country's productivity is on the rise. Hello! Anyone home?

The treasury department asked Congress to increase the government's borrowing authority, and warned the current $6.4 trillion debt limit may be reached within 60 days. How is that possible? Only a month or so ago the budget deficit for the year ending next September was estimated at $146 billion. To exceed the debt limit the deficit would need to be $100 billion more than just estimated. When will Americans elect officials who actually will reduce the net outflow of government funds? The government produces absolutely nothing, and should be viewed as the employer and spender of last resort. Unlike the vast majority of Americans, do you think civilian federal government workers are worried this holiday season about losing a job or having their hours cut? Do they plan for the worst case scenario? I think not.

12/24/02 Posting #2 Haram

Haram is the Arabic word for forbidden. In Saudi Arabia churches are not permitted. Islam is the only accepted religion. As such, to celebrate Christmas one must have a very private gathering in one's home.

During these difficult and stressful times we sometimes overlook the wonders of freedom, and religious freedom is an important part of every day American life. We are indeed very lucky to be U.S. citizens.

12/24/02 Sectors In The S&P 500

For the first time since the bear market started in 2000, every one of the 10 broad sectors in the S&P 500 index dropped in 2002.

Oil hits a 22 month high at $31.43 per barrel. Gasoline prices rose at the pump this week.

November durable goods orders fell 1.4%. Without military orders, the fall would have been 2.3%. It should be noted that economists had predicted a small gain.

According to a poll taken by the Atlanta Journal-Constitution, 30% of those living in the state of Georgia said the economy is declining, and 50% said it is neither mending nor decaying. If people feel this way, it's no wonder that retail holiday sales are disappointing.

12/23/02 Inktomi

Several months ago I mentioned that, in my view, those who purchased internet stocks at highly inflated 2000 prices would not get their capital returned to them. They might rally, I said, from pennies to single digits and to expect nothing more.

Today Yahoo announced the purchase of Inktomi. The latter's shareholders will get less than $2 a share. This is better than pennies and more could not have been anticipated. Inktomi continues to lose money and layoff employees. As a stand-alone company, they didn't have a future. This is not the exception to the rule, but rather the legacy of the dotcoms. What a waste of capital and human effort.

12/22/02 An Early Posting For Sunday

In Europe shoppers are spending less on holiday presents, and visits to shopping centers are down from a year ago. The reasons given for consumers curbing their spending- a lack of confidence in economic growth and job security. Sound familiar?

The British pound has risen in value for 3 consecutive weeks. This year it is up 10% vs the dollar but is down 4 1/2% vs the Euro.

WalMart employs 1.4 million people. The second largest private employer is McDonald's, and they employ only 400,000.

12/21/02 "Every Investor Deserves Honest Investment Advice"

During my career on Wall Street I ran two successful brokerage firms. The settlement announced yesterday is both unjust and predictable. Jack Grubman agreed to a lifetime ban and a $15 million fine. His salary in one year- 2001- was $20 million. Grubman's employer, Citibank, paid a fine of only $400 million. Citibank made untold hundreds of millions of dollars in investment banking fees. Citibank agreed to no wrongdoing. They, along with 9 other firms who paid a total of $4.4 billion in fines, neither admitted nor denied charges that they had misled investors. With a settlement like this how could Spitzer then say "every investor deserves honest investment advice"? Spitzer then said "this has been only about one thing- ensuring retail investors get a fair shake." I think a good stocking stuffer for Spitzer would be a "Dow 10,000" cap.

November was the first month since May that investors were net buyers of stock funds. Since the major indexes rallied about 20%, that should come as no surprise.

Fourth quarter GDP growth is estimated at 1.4%.

Accounting irregularities must be viral. $9.1 million in accounting errors were discovered in the Des Moines, Iowa school district.

Retailers should have seen slow holiday sales coming. Consumer credit grew at a slim annual rate of 1% in October. In the 3rd quarter ended September the pace was 3 1/2%.

There are 37,000 U.S. troops in S. Korea.

Gucci's profits were down 14 1/2% for the latest quarter, and the company partially blamed poor sales in Hawaii.

The median price of existing homes in California in November increased 21 1/2% compared to the same period a year ago.

In the Silicon Valley 61% say their company is not hosting a holiday party; 75% are not giving any paid time off; and 60% plan less holiday spending in their households.

As noted in a previous blog, it was now officially announced that Medicare will cut payments to doctors by 4.4%.

Scientists at the National Climatic Data Center found that 2002 is likely to be the second warmest year on record for the globe.

The Philadelphia Inquirer posted a story saying that Al Hakam, 60 miles south of Baghdad, produced anthrax and other biological poisons between 1992 and 1996 when the plant was destroyed. This is according to someone who worked at that facility.

12/20/02 LIBERTY

"Experience teaches us to be most on our guard to
protect liberty when the government's purpose is
beneficent. Men born to freedom are naturally alert to
repel invasion of their liberty by evil-minded rulers.
The greatest dangers to liberty lurk in insidious
encroachment by men of zeal, well-meaning but without
understanding."
- Louis Dembitz Brandeis

Please get familiar with Bush's Total Information Unit. Hw wants the ISPs to facilitate the monitoring and surveillance of internet users thru this unit.

Approximately 10 securities firms will announce a $1 billion settlement with the SEC. This shall acknowledge misleading investors thru research recommendations aimed at winning investment banking business. Since the beginning of the bear market, $7 trillion has been lost. Does a $1 billion settlement sound just? How about ousting the firms from doing business with the public? It may not be the same, but Pete Rose has been banished from baseball for betting. Please think about it.

Greenspan sees no risk of deflation. He must not be familiar with over-supply overwhelming too little demand mixed with decreasing prices being exported by China. Just like he questions the ability to detect bubbles in real-time(which in fact he did), I question his willingness to acknowledge deflation in real-time(although Fed minutes clearly talk of deflation dangers). He does accept the fact that companies have trouble raising prices. That is some consolation.

In its 18th day the Venezuelan oil strike has resulted in daily production plunging from 3 million barrels to 400,000.

Home Depot has just opened its 1500th location.

Property taxes are rising by as much as 25% for N.Y.C. homeowners.

Gold hits a 6 year high, and is up 25% in 2002.

Weekly jobless claims at 433,000 and the 4 week moving average at 400,000.

Barnes & Noble announce weak holiday sales, and warn for their 4th quarter.

The economic downturn has erased 62,000 jobs in Georgia. Bankruptcies in that state are up 16%, and their GDP has grown only 1% in 2002.

Rupert Murdoch makes new approach to GM to buy DirecTV.

12/19/02 Nikkei Hits 20 Year Low

As can be seen in Japan, bear markets can have a long life- just like bull markets.

Crude oil trades over $31 per barrel and is up 55% in 2002.

Conseco files for bankruptcy. It is the third largest company to do so.

GM's Doraville, Ga. plant to cut production and have layoffs. This is GM's sole producer of minivans.

United cutting leisure class airfares by up to 40%. Will it be enough?

Sales fall short at Micron.

Activision cites poor holiday sales.

Blockbuster slashed it's 2002 profit outlook. The shortfall is a big one. So much for nesting.

Winnebago is not optimistic about 2003. Maybe high gas prices will keep folks off the roads.

It is hard to swallow that Iraq speculates it might destroy its own oil fields, food supplies, and power plants. Scorched earth has never been a successful policy.

Business owners are permitted to depreciate SUVs and pickups more quickly than cars. Why? SUVs are classified as light trucks. The SUV must weigh over 6000 pounds. That doesn't sound light to me. I find this matter upsetting, and isn't fair for couples without children or singles. In addition, suppose a mother doesn't want to be a soccer mom? Maybe Trent Lott should take this up as a new popular cause and make people forget the current furor.

12/18/02 Gold Trading Over $342 Per Ounce

The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.

Delta plans 3000 more layoffs in 2003.

For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.

Best Buy cut their 4th quarter earnings estimates.

Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.

December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.

In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.

California is looking at a $35 billion deficit over the next 18 months.

12/18/02 Gold Trading Over $342 Per Ounce

The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.

Delta plans 3000 more layoffs in 2003.

For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.

Best Buy cut their 4th quarter earnings estimates.

Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.

December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.

In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.

California is looking at a $35 billion deficit over the next 18 months.

12/17/02 KMart

Kmart to be delisted this week from the NYSE.

Factories and other industrial operations are running at 75% of their capacity in the U.S.

Ernst and Young says employers lose an estimated 20% of every dollar to workplace fraud. That is difficult to imagine.

Some Fed members are concerned further tax cuts "would likely take effect too late to foster much added spending in the year ahead."

The Congressional Budget Office forecasts a $145 billion deficit in 2003. I would be very surprised if the figure were that low.

McDonald's warns of a 4th quarter earnings disappointment.

Albert Einstein: "Insanity is doing the same thing over and over again and expecting different results."

12/16/02 The S&P

Since 1950 the S&P has only fallen 12 times in December. So far this month the index is down 5%.

An increasing number of households experience home payments of 35% or more of their before-tax income. For most people that would mean their house payments cost half or more of their take-home income. That's including property taxes and insurance, but not maintenance and utilities.

Two-thirds of Americans desire to be vaccinatined against smallpox. According to studies done by the CDC in the 1960s, for every million vaccinations given, there will be one to two deaths; from 14 to 52 life-threatening reactions uncluding gangrene, encephalitis, and severe skin reactions; and from 500 to 900 other side effects such as rashes, fevers, and viral eruptions far from the vaccination site. Anyone harmed by the vaccine will have to sue the gov't.

According to a November survey of 852 companies, nearly 45% of New York area companies laid off employees in 2002 compared to 39% in the rest of the country. Nearly 28% of New York companies plan more layoffs in 2003, and 31% will continue with hiring freezes.

Chrysler says they no longer exp[ect 2003 to be a bit easier but rather that "competition will stay tough also next year."

12/15/02 Tom Ridge And A Promise

When Tom Ridge was governor of Pennsylvania he promised that higher taxes would not result from increases in school pensions and easier eligibility standards for future retirees. So much for that promise. The Pennsylvania Public School Employees' Retirement System dropped $12 million per day or $4.4 billion in its latest budget year. Now trustees of the retirement system want to triple subsidies from Pennsylvania districts. In sum, that means homeowners will pay higher property taxes. I hope the money managers for the retirement system did not charge a fee for this fiasco. The stock market can be a costly venue.

In November there was a 2.3% gain in sales in furniture and other home-furnishings stores. The reason was simple- no money down, no interest, no payments for at least one year and, in most cases, 2 years. It's a page out of auto discounts. It's less the consumer buying but rather the retailer dumping inventory on a heavily discounted basis.

Accel Partners, a California-based venture capital firm, has waived its mangement fee until 2004. Typically, such a fee runs 2-2 1/2% of the assets managed.

An increasing number of drug companies have plants which no longer meet current sterility standards. This is part of the reason for persistent shortages of injected medications in hospitals.

12/14/02 My Sigma Nu Experience

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

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

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

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

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

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

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

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

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

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

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

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

Western European car sales declined 6.2% in November.

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

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

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

12/12/02 The Trojan

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

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

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

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

KMart to close 200-300 stores in January.

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

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

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

The foreclosure rate in Northern California is rising.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

12/9/02 John Snow

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

12/8/02 Tis The Season To Cut Costs

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

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

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

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

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

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

Landrieu wins Senate runoff in Louisiana.

12/7/02 There Are Times For Cheer And Times To Cheer From The Sidelines

The jobless rate for November rose to 6% as non-farm payrolls declined by 40,000 workers. I have written often on this subject and shown statistically how the jobless number is understated. Only 62% of the U.S. population hold jobs. Total manufacturing employment is lower than any time since November 1961.

Even though Americans are paying off debt rather than taking on more debt, the ratio of household debt to the GDP is 77%.

November sales for retailers declined for the first time since 1970. Retailers are faced with deflation.

In Chicago's Cook County visits to food pantries over the past 11 months are up 18.6% over the same period a year ago and total 2 1/4 million visits to food-providing agencies.

Mexico has 100 million people, and more than half are considered impoverished. Only 15% can qualify for credit cards, car loans, and home loans.

Cessna to layoff 1500 workers.

McDonald's Japan expects over a 60% drop in pre-tax profits for 2002.

Paul O'Neill and Larry Lindsey resigned. They didn't create the current economic malaise.

Traditionally the holiday season is a cheery one for the market. Since Oct 9 we have had a terrific rally. That's the present for the holidays. Unfortunately, the times for cheer have ended, and now is the time to cheer from the sidelines. I suggest once again to lighten up on stock positions, and thereby reduce your risk exposure. With limited business investment, consumer spending being harnessed, the jobless rate increasing, a murky economic horizon, and declining prices for goods, it is rational to expect an economy with few bright spots. As investors, the risk reward ratio is not in your favor.

12/6/02 Soft Retail Results And More Holiday Layoffs

Target's November same-store sales down 6.7%; Kohl's drops 3.4%; and Sears plummets 10.9%.

Humana to cut 2300 jobs. Convergys to layoff 950. Investment Technology Group to reduce workforce by 10%. We are still waiting for AOL to say what their layoff number shall be.

Gateway Computer said weaker than expected holiday season results puts the 4th quarter expectations at risk.

GM is increasing discounts on SUVs and trucks in an attempt to get rid of excess inventory. Cutting production would help.

In the third quarter household debt increased at a 9.6% rate and was the fastest since the 4th quarter of 1989. This is one of the reasons I have stated consumer spending will slow down from an unsustainable level.

The ECB cut rates by a 1/2 point to 2 3/4%. It was the first cut in one year. Within the 12 countries comprising the EU, unemployment hovers around 8 1/2% and retail sales remain on a downward slope. Business investment remains weak. Consumer conffidence is at a 5 year low. Bankruptcies are on the rise. It sounds similar to conditions in the U.S.

12/5/02 The Market Is Long On Soot And Short On Growth

Cisco to continue job cuts. The company is expected to report flat or slightly lower revenue for the quarter ending in January and possibly a further drop in the April quarter.

AOL will announce job cuts and says their rebound not likely until 2004.

Bankruptcy looms for UAL and American Air cuts 1100 flight attendants.

Federated Dept Stores November same-store sales fell 7.4% and December now looks down about 2%.

RJ Reynolds to reduce its workforce by 8% and earnings to be below estimates.

Full-time jobs in private businesses are down 279,000 so far this year. Since January 2001 corporations have slashed about 3 1/2 million jobs. Payroll cuts this year have averaged 121,000 per month. Job openings are down about 7 1/2% from one year ago. Businesses remain reluctant to hire permanent workers.

The ECB will cut rates today. Everyone in Europe is excited and downing a brew at the local pub. Before anyone gets too drunk with joy they might consider that the jobless rate in Germany rose in November to 10%, and that's the highest rate in more than 4 years. There are almost 4 1/4 million Germans out of work.

A further reality check reveals that the EU says the GDP of European economies may fall in the first quarter. The only other contraction since the 1993 recession was in the last quarter of 2001. In addition, it was stated that 2002 would end negatively. The 12 countries making up the EU have a combined GDP of $7 trillion.

Life is a compilation of choices, and that goes for investing. I feel strongly that during this holiday season my readers would be best served by having an eggnog latte and laying off stocks. The big sucking noise you hear is not the foam from the expresso machine. It's the followers buying stocks who are about to be sucked down the chimney. Those individuals will be long on soot and short on capital.

12/4/02 Posting #2 Closing The Crown Jewel, A Personal Blog

As readers of this daily blog, you aware that I successfully ran the Holly Sugar Company from December, 1981 until its sale in the Spring of 1988 to the Imperial Sugar Company. During that timeframe our stockholders received the 7th largest annual return of all the thousands of publically traded stocks in the U.S. Today it was announced that Imperial Sugar will be shutting down its crown jewel Houston sugar refinery and laying off 326 people. The plant has been running continuously since 1843, and has been the oldest continuing business in the Houston area and possibly the entire state of Texas. Pointing fingers will not make the company profitable and will not reopen all the plants which have been closed. Jobs have been lost forever and farmers have turned to other crops or sold their land. Only winners provide progress.

12/4/02 Corporate Bad News

Ford's U.S. vehicle sales fell 20% in November, and they announced production cuts (which my blog predicted 2 weeks ago). HP trimmed their revenue forecast for next year and said technology spending remains tepid (like we needed them to tell us that). Walt Disney issued another profit warning. Tenet Healthcare issued a profit warning for the next two years. Bridgestone cut their profit forecast by a mere 43%.

Now for the good news. Home prices in the UK rose 24% and 25 1/2% on an annualized basis for October and November respectively. As in the U.S., their inflated housing prices have provided a foundation for consumer spending.

Ann Abraham, the Bbritish parliamentary ombudsman, ruled the ministry had "withheld three documents related to reported sightings of unexplained areial phenomena in 1980- the Rendlesham Forest UFO incident." Ms Abraham didn't reveal that the UFO's ultimate goal was the delivery of double digit inflation and 20% interest rates to the U.S. during Carter's presidency.

12/3/02 Merrill Lynch Suggests Investors Reduce Their Equity Exposure

Merrill Lynch believes "the market still appears speculative...such speculation is typically indicative of the end of a market cycle, and not the beginning of a major bull market." They go on to say that it is extremely difficult to forecast corporate growth, and therefore, equities should have lower valuations. These comments should certainly be familiar to anyone who has been reading this blog.

Retailers must make up in volume what they lose in smaller profit margins. Consumers respond to advertised promotions. Talking about promotions, why not do away with rebates and just lower the price? A real sale should not have strings attached to it. When you go bargain hunting, it's wise to feel certain that you are receiving value. With stocks the idea is to buy a dollar of value for no more than 50 cents. Please avoid the fool's gold.

12/2/02 The ISM Manufacturing Index At 49.2 Disappointing

U.S. manufacturing shrank for the third consecutive month. Output continues to shrink. This should put to rest the thoughts that the economy has bottomed.

12/1/02 Download This

Originally the main function of the internet was to share and disseminate information. That still remains true but with an added feature- the downloading of shareware and/or freeware. The latter has had a significant impact on cash flow for many industries. Consider the music industry with CDs and other entertainment arenas. Recently, I learned of download.com and its freeware for games, such as, a game named drugwars. The point is simple. More and more revenue avenues are being closed via free access on the internet. This will, in my view, grow in importance over the years and impact profits.

11/30/02 Benefit This

With lengthier life expectancy the IRA madatory minimum withdrawal rule should be extended from the present 70 1/2 to at least 75, and tax payments on that income should not begin until at least 75 too.

More employees are extending their working lives past 65 simply to pay for health coverage because fewer and fewer companies provide retiree health benefits. When combined with social security benefits, the additional income can place the individual in a catch 22 of a higher tax bracket.

11/29/02 Eight Weeks

After today's close the Dow will have risen for 8 consecutive weeks. This is the first time the Dow has done this in the past three years. A good deal of money could have been made during this period which started on Oct. 9. I wrote at that time the market was moving into the most favorable timeframe of the year- late October thru January. I envisioned a bounce but not of this proportions. I have not changed my opinion- the smart move is to sell into this rally and reduce your exposure in companies with serious difficulties. There are few bargains in this market. You might do better shopping at WalMart special sales.

11/28/02 Happy Thanksgiving

Our diminished appetite for risk has impacted the economy this year but our appetite for turkey continues to grow. I have concluded that a turkey economy is consumer friendly. May everyone enjoy this wonderful day of thanksgiving.

11/27/02 Final Demand

The Fed said yesterday that final demand remains vulnerable to weak hiring and a war with Iraq.

Now for the good news. Over the years the market has risen 75% of the time the day before Thanksgiving. So we should look forward to a positive tone today. It would be great if every day of the year were like today.

Forecasters at the NABE cut their estimates for 4th quarter GDP growth to 1.4% from 2.7%. We should be thankful. It could have been negative growth. I'm already in the holiday spirit!

Even I was amazed to read that in 1999 out of 6000 analyst stock recommendations only 8 were labeled to sell. It just goes to prove that in the case of Wall Street analysts even a busted clock is not right twice a day. They are one big train wreck.

11/26/02 The Unemployed

The percentage of the unemployed without work for 27 weeks or more rose to 20.3% in October, and in October the average length of unemployment was 17 1/2 weeks. Those unemployed for 6 months or more amounted to 1.66 million Americans.

For the six months ended September 30 Americans filed for over 800,000 bankruptcies, a record number.

Business confidence in Germany fell to a 10 month low.

Last week U.S. chain store sales were on or below plan.

11/25/02 WalMart Cannot Forecast Sales For December

With only a few days left in November I believe it is rather significant that WalMart seems unwilling and/or uncomfortable to forecast same store sales for December. It appears that their November same store sales will grow at 3% or less.

According to the latest Census Bureau figures, 1.4 million Americans lost their health insurance last year. This trend is indeed serious and impacts lower and middle class family members. Healthcare coverage or the lack of it could become a major issue in the next presidential election.

11/24/02 Homeland Non-Security

On Friday our do nothing Congress adjourned for the year. They failed to extend beyond December 28 unemployment benefits for approximately 900,000 jobless workers. An additional 95,000 unemployed will exhaust their unemployment benefits each week thereafter. This is clearly a "soft spot" in our economy.

Taxable realized capital gains amounted to $600 billion in 2000, $350 billion in 2001, and are estimated at $250 billion this year. No wonder there are deficits at the federal and state levels.

Stock option income was $250 billion in 2000, and this year the amount will be minimal at best.

11/23/02 Getting In Touch With Their Unsold Side

Only the auto industry could run plants overtime in an economy with "soft spots". After a weak October Chrysler has a 97 day supply of inventory and Ford 81 days. The winter consistently brings with it the lowest prices for used cars, and there is a glut of used cars on lots. It won't be long before the auto companies will be parking their inventory in the Mojave desert next to all the mothballed jet planes. We should remember that new cars account for 15% of consumer retail spending. Maybe the solution is to sell them wholesale to consumers, or better yet, no money down with no interest and with no monthly payments for 5 years. The bottomline is you can expect auto production cutbacks.

Economists for the Philadelphia Fed reduced their growth forecasts for the 4th quarter and for 2003. They still expect growth to exceed 2%.

Prices in Hong Kong have fallen for 48 consecutive months. Their continued deflation, along with Japan's, will place a ceiling on prices in the U.S.

Brocade announced a 12% cutback of its workforce and revised its 1st quarter forecast downward. The stock certainly got slammed. Tax selling could place additional pressure on Brocade shares.

11/22/02 Out Of The Woods Perception Has Generated A Big Rally

The Dow and the S&P closed Thursday more than 20% above the Oct. 9 lows. Yesterday the Nasdaq hit its highest level in 5 months.

GE cut its earnings forecast for the 4th quarter and 2003.

Morgan Stanley to cut 2000 jobs.

Over the past year the state of Georgia has shed 2.2% of its jobs-86,500 positions.

Revise this!!!! U.S. leading economic indicators for September were revised lower to a negative 0.4% from negative o.2%. That is a 100% negative revision. For October those leading economic indicators were reported as unchanged. What will they be revised to in December? Creating a false perception can be very damaging. Proceed at your own risk tolerance.

11/21/02 Believe In The Facts Not What You'd Wish To Be True

More than half of BellSouth's workforce has agreed to take time off without pay this year to help the company cut costs. It is among corporate America's largest voluntary furloughs. You can expect to read more of this.

Lucent retirees worry that they will lose retirement medical coverage as the company struggles to avoid filing for bankruptcy protection.

Boeing to cut 5000 more jobs.

Immune Response may file for bankruptcy in a few days.

The gov't originally reported jobless claims for the Nov. 9 week at 388,000. Today that figure was revised upward to 401,000. In addition, the gov't stated that jobless claims for last week dropped 25,000 from the 401,000 revised level. I hope no rational person believes these numbers. They are a figment of someone's imagination and creation.

HP increases job cuts for 2003 by 1100 to 17,900. The original figure was 15,000, then 16,800, and now 17,900. It's nice to know their management has a feel for the business. It must be a joy to work there.

I have this annoying habit of reading cash flow statements. For 2002 HP had a $900 million negative cash flow from operations. So much for making money. HP management said they "are not banking on an improved economy to hit our profitability targets." With only their printer business cash flow positive, you can expect more job cuts in their PC and server divisions. Cost cutting can go just so far. Oracle discovered that.

11/20/02 Malpractice Premiums and Medicare Payments

Doctors and hospitals have reported alarming spikes in malpractice premiums as insurers have withdrawn from the market. Many physicians choose to quit practicing.

Medicare payments to doctors were cut 5.4% this year and will be reduced 4.4% next year. More and more doctors will stop accepting Medicare payments for service. Instead they bill Medicare payments in larger amounts, and leave it up to the patients to seek reimbursement.

Home Depot said it expects same store sales in the 4th quarter to drop 3 to 5 %. Home Depot's CFO said the company had cannilbalized 22% of its stores in the 3rd quarter. So much for store clustering.

Agilent, the HP spinoff, is going to layoff another 2500 workers.

October housing starts fell 11%. The percentage drop was the largest in 9 years. We must keep in mind that September was a record for starts. For the past year housing and home construction has been the star in the economy. I thought housing starts would have fallen many months ago. The timing of predictions can often make one look stupid.

If the stock market is to rise from this level, it will need to adeptly climb a daunting wall of worry. Uncertainty offers opportunities and risks. Currently, are the risks outweighed by the rewards? In my view, possibly if one is on mind-altering drugs. I like my reality straight up.

11/19/02 Investment Grade Quality Is Never Static

Never be lulled by the pundits. They almost always have an agenda, and the latter is hardly investment grade. Look at Japan. Fifteen years ago this country was held as the role model for management and economic excellence. Now Japan is in the soup, and that's not chicken soup. The Nikkei just made a 19 year low. Fears of bad loans continue to weigh on bank stocks. Deflation casts an economic pall. Talk of nationalizing banks frightens investors. Japan is in need of a savior. Where are the heroes when they are needed?

The WSJ reports today that GE may announce a large charge in order to build reserves at their Employers Re unit. I find that interesting because I had noted about a week ago that Warren Buffett was in talks to buy that unit. Obviously talks broke down, and possibly over insufficent reserves. That is speculation on my part. Maybe Buffett will now turn his attention to Burger King. Hamburgers go well with Coke.

It is an understatement to say I am distressed to learn that Iraq has been making "dusty" VX for 8 years and that last month they imported 25 metric tons of Aerosil to make "dusty" biological weapons. What are the weapons inspectors going to tell us? I never did understand politics.

11/18/02 Day 1039

You thought I was not counting? Over the past six weeks the market has risen, and will most likely open higher this morning; however, it is day day 1039 since the Dow closed at its all-time high. That is also the timeframe for the longest bear market on record- up to this point- Sept. 3, 1929 to July 8, 1932. During the latter period the Dow plunged 89%. The most the Dow has fallen in this bear market is 38%.

The market is focusing this morning on better than expected earnings for Lowe's Companies. I find much more significant WalMart stating that they see their November same store sales at the low end of their 2-4% growth outlook. For the past several months that growth has not slipped below 3 1/2%. In addition, Federated Dep't Stores said their 2nd week of November sales were disappointing.

An interesting quote comes from Jared Bernstein, an economist with the Economic Policy Institute. He states that "the unemployment rate presents too rosy a picture of labor market conditions now. It leaves out significant groups of people who are unemployed or underemployed." I have been making this same statement for months.

Tokyo's Nikkei close to a 19 year low.

11/17/02 Please Remain Standing During The Entire Performance

I was not surprised to read that 84% of Americans have access to a computer either at home or at work. Nearly 3 out of 4 computer users polled are planning to buy some of their holiday gifts online. Most polled were going to buy books, videos, and CDs.

The past year has had more than its share of grim moments. As such, I thought a humorous gift would be most appropriate. Early this morning an idea was sent along to me- talking toilet paper. You record your message in the holder which is provided, and when the toilet paper is pulled for use, your message comes out loud and clear, such as, please remain standing during the entire performance. To receive such a gift idea I must be on a list of those still in their anal period.

Enjoy the day, and as Dale Evans and Roy Rogers would sing, happy trails to you.

11/16/02 The Needed Stimulator To The Economy?

A good schtup a day. You think I am joshing. Not true. During the recent 4 day international conference held in Singapore it was declared that healthy sex lives make happy workers, and in turn, this counteracts a drooping economy. This proclamation was made by Emil Ng, the founder of the Asian Federation of Sexology. He went on to state that sexual well-being improves a nation's productivity. Ng also stated that "when the economy is down, sexual activity will be lower, not because of sexual problems, but financial problems. This is a vicious cycle."

I suggest that lunch hours be taken between the sheets and all corporate dining rooms removed. We can install cots in all cubes. We can replace stock options with clean bedding twice a week. I suggest we rally around the motto: screw our way out of the recession.
Yeah baby!

Let's remember the words spoken by Bruce Willis in the movie The Whole Nine Yards:" what's important is how I get along with people who are still alive." He could have been referring to multiple orgasms.

11/15/02 FBI Warning: Al-Qaida May Favor Spectacular Terrorist Attacks

These attacks would be characterized by "high symbolic value, mass casualties, severe damage to the U.S. economy, and maximum psychological trauma."

Prior to making an investment in a company, it is wise to uncover any uncovered pension fund. For example, GM's pension fund is underfunded by at least $20 billion.

George Plesko, an MIT accounting professor, says in 1992 there was no appreciable difference between pre-tax income and taxable net income reported to the IRS. Just six years later there was a major difference. Stockholders should be made aware of this fact. Also, by 1998 a University of Arizona study showed that the 1579 companies studied had reported almost $1 trillion more in liabilities to the IRS than to public shareholders and tax assets exceeded book assets by $1.9 trillion. These are material disclosures needing to be made.

More "soft spots": Sprint to lay off 1600; Cable and Wireless 3500; and Lehman 4% of their workers. Argentina defaults on a debt payment. Fourth quarter earnings growth for Target will be modest. Dell said it wasn't certain the industry would see a particularly strong 4th quarter. They don't see the signs of customers buying new computers.

11/14/02 Pay To Play

Commercial lenders are under the scrutiny glass. Regulators are investigating widespread allegations that commercial banks have been and are making loans contingent upon the borrower's ability to bring in other fee-based business. This practice is called "pay to play". When 3500 financial officers were recently polled, almost 50% believed "pay to play" was a very real issue.

Greenspan said, if necessary, the Fed could buy Treasury debt with longer maturities, which would bring down longer-term interest rates. He really said this to Congress yesterday. He must have blinked and missed the huge rally in long Treasuries over the past week or so. Greenspan doesn't get it. The market movements preempt Fed action. The Fed's policy simply is in reaction to market forces, and the latter set the tone.

Applied Materials expects orders and revenues to fall in its fiscal first quarter. This company is certainly one of the strongholds within the semiconductor industry.

11/13/02 Tightened Bank Lending

Domestic banks cite reduced tolerance for risk and increases in corporate bond defaults as the reasons given for tightened lending practices. As such, recently lowered Fed rates will not do much to improve liquidity in the system.

Eastman Kodak will cut 1300 to 1700 jobs. Research In Motion to cut 220 employees or 10% of its staff.

Philip Morris is experiencing soft cigarette sales. I wonder whether the soft economy is the main reason.

The Business Roundtable survey revealed that 60% of 150 chief executives said their company's employee base would probably be cut next year. The survey showed that capital expenditures are expected to stay flat in 2003. This finding would jibe with Greenspan's testimony before Congress this morning. He doesn't see much vigor in business spending. Without the latter that only leaves the consumer and the government to spend. The holiday season doesn't look like any great shakes, and the government needs to get a budget approved.

11/12/02 Trouble Down On The Farm

75% of the soybeans and 33% of the corn grown in the U.S. is genetically engineered. Americans have a positive attitude towards this new agricultural technology. The Economic Union is the 4th largest market for American farmers and accounts for 12% of U.S. farm exports. The EU wants to enforce the new October 17th legislation which covers biotech labeling and trace back rules. These new regs will hinder our farm exports. Basically it means, for example, our genetically engineered corn is approved for sale in the U.S. but not permitted to be shipped to Europe. In essence, Europeans see agricultural biotechnology "as a luxury they don't really need," says Bernd Halling of the biotech industry's trade group.

So far this year 160 publically traded companies have filed for Chapter 11 bankruptcy. Just another "soft spot".

Federated Dep't Stores (Macy's and Bloomingdale's) expects lower November same-store sales and December sales to be up 1% to down 2%.

Buffett's Berkshire Hathaway may buy GE's Employer Re for $8 billion. This would make Berkshire #1 in the reinsurance business.

11/11/02 Veteran's Day

We give thanks to all the Veterans who have provided us with the blessings of freedom and democracy. Every day should commemorate the successes as well as the sacrifices of our Veteran's. They are heroes.

There are many aftermaths from 9/11. Some can be found right on Wall Street. CFSB dismissed its well-regarded market strategist and Merrill Lynch fired its chief economist. Both had one common shortcoming- they failed to directly produce revenue. Over the past 34 months Wall Street has eliminated 68,000 jobs. With little IPO revenue and few merger fees, more layoffs can be expected. This is another "soft spot".

11/10/02 Another "Soft Spot"

Silicon Valley's jobless rate is now 7.9%. That's the highest level since 1983. Overall in California the rate is 6.4%.

Including today, there are only 7 sundays and 6 saturdays until Christmas.

Sending an email ad costs roughly half a cent and a piece of direct mail advertising about 100 times that amount. A survey has shown that half of on-line consumers are less likely to read on-line promotions. Yet, this year almost $2 billion will be expended on email promotions.

In a recent survey taken by Cigna 3 out of 5 workers say they plan to change their investment strategies if their year-end 401K balance is lower than the year before. I suggest those workers begin to think about new strategies. The new year is right around the corner.

The good news is that misery likes company. With 7 trillion dollars lost in market value in equities over the past 2 1/2 years there must be zillions of folks out there looking for new strategies. A good place to begin is the following: know what you're buying. That goes for stocks and not just underwear and socks.

11/9/02 The "Soft Spot" Befalls Turner's In Corning, Iowa

It's a very sad day when tradition's best closes its doors. After 134 years, Turner's Clothing Store is shutting its SE Iowa operation.

Clare Hushbeck, an AARP economist: "Nobody knows what the economy or the markets will do...more people are showing up at soup kitchens and food pantries and that's a real sign of the economic pain that Americans on fixed incomes are experiencing in this recession."

Paul Palmer Jr, Cypress Advisory Services in Houston: "Right now a lot of people lack the confidence to do anything because they don't want to run the risk of losing principal."

Paul McCulley, Pimco, "There is a global deficiency of global aggregate demand."

When there is uncertainty, a lack of confidence, too little demand, and too much supply, you have a recipe for trouble. That's what we have. Trouble.

11/8/02 The "Soft Spot" Hits Main Street America

McDonald's will miss their already reduced profit forecast, close restaurants, and lay off workers. The poor economy has hit the supermarket business. Safeway lowered its earnings forecast.

Most municipal bonds now have a higher yield than treasury bonds.

The yield curve is flattening. As such, the spread between 2 year and 30 year treasury bonds is narrowing. The yield on the latter is down to 4.82% and the 10 year yields 3.87%.

I have said it so many times. We have widespread overcapacity; too much consumer debt; imports pressing prices lower; and deflation looming on the horizon. Most businesses will continue to cut costs and sidestep hiring and capital investment.

SAS to cut 2700 more jobs.

11/7/02 The Fed Slices, Dices, And Panics

It is difficult to begin the day on a critical note. Providing praise, on the other hand, is quite uplifting. Yesterday the Fed lowered their funds rate to a level below the inflation rate. The latter is 1.4%. In essence, the Fed said this lowered rate would provide the balance between inflation and the "soft spot" we now have in the economy. This statement is an insult to the intelligence of the American people. Inflation is essentially non-existant. Additionally, we do not have a soft spot economically. We have a serious problem on our hands. You don't believe me?

Costco, one of our foremost retailers, today warned about less than expected results due to disappointing same store sales. Sam's Club, a unit of WalMart, announced a 1.6% decline in its October same store sales. WalMart, as a whole, produced a 3.7% sales gain, and this approximated its results for the past several months. The company said November would show a 2 to 4% sales gain, hardly the growth that made WalMart great.

Cisco's latest quarterly results showed a $500 million decline (a bit over 30%) in cash flow from operations from the prior quarter. The CEO expects sales for the current quarter to be flat to down 3 to 4%. He said customers remain cautious regarding spending and are unsure of revenue and profit projections.

Advanced Micro devices announced their need to lay off 20% of the workforce in order to bring costs in line with sharply reduced revenues.

The Bank of England and the European Central Bank both left their rates unchanged. There was a time these institutions would have followed the Fed's lead. Unfortunately, in my view, the Fed has lost its credibility in the marketplace. Only the media finds this Fed newsworthy.

The consumer is beleaguered. Does the Fed want the consumer to borrow more at slightly lower interest rates? Should they take out more car loans? Should they buy more presents on their debt laden credit cards? I don't think so. I believe a clean sweep is in store. Show the exit door to the Chair and the 12 governors and let them follow Harvey Pitt to the showers.

I apologize for this late posting. The .Net Passport server has been down.

11/6/02 Insurance Premiums

Insurance premiums are rising at their fastest clip in a decade, fueled by increased demand for hospital services and prescription drugs. Premiums are forecast to leap an average 15.4% for employers next year, even as the economy remains shaky and the job market tight.

Some employers are requiring workers to pay 10% to 30% more toward monthly premiums, raising deductibles and setting higher co-payments for office visits, hospital care and drugs. Hewitt Associates estimates that the amount employees will pay in premiums and other costs next year will rise by an average of $342, to $1,753.

Since June 415,000 jobs have been added in agriculture, and that accounts for roughly 50% of the new jobs added since June. Are marijuana farmers being counted now or possibly illegal migrant farm workers being added to payrolls?

The ISM monthly index of non-manufacturing activity(or lack of) showed new orders slowed in October to 50.9 from 52.3, and this is the lowest level since January. The non-manufacturing employment index fell to 46.2, and this is the 20th consecutive month for job losses.

11/5/02 More Job Cuts

In October there were 176,010 announced job cuts. This was the second highest monthly number in 2002. Only January had more.
Yesterday Applied Materials announced they are laying off 11% of their workforce, and Dow Jones is cutting an additional 3% of theirs. What I find interesting is that both of these companies are the leaders in their respective fields. Additionally, Jim Morgan, the CEO of Applied Materials, is one of the brightest guys in the Silicon Valley. If Morgan thought business were on the verge of improving, he wouldn't be making these cuts.

Last Friday Network Commerce filed for chapter 11. At one time the company had 650 employees and had a stock market value exceeding $500 million. Between 1998 and 2001 they reported losses exceeding $500 million. How many other stories like this are in the naked city?

Factory orders dropped 2.3% in September.

IBM will spend $700-800 million over the next year on ads to promote "on-demand computing." The spoof ads are intended to counteract technology gloom and doom. In my view, growth in cash flow and net profits might be a much better tonic.

The Dow at 8600 is up 20%(about 1400 points) above its 5 year low of about 7200 set intraday on October 10. I wonder how much new money was suckered into this bear market rally.

11/4/02 Happy Anniversary Guy

Your smiling eyes are everywhere and light up the sky.

Tomorrow there are 36 governorships, 34 Senate spots, and 435 House seats up for grabs. Hopefully, we will vote with our heads and not focus on the photo-ops. These individuals are to represent your beliefs. With all due respect, maybe they will do a better job than the current array of money managers who are stewards for your money. Everyone should be tired by now of losing money. Are we also tired of bloated government and a do-nothing Congress? The choice is yours. A single vote can make the difference.

After years of reading about the "Microsoft Case" it is finally over. Nothing happened except for the hundreds of millions of dollars wasted on pursuiing competition in our capitalistic society. John D. Rockefeller must be smiling.

Today I will need to rest. I have to prepare myself for the Fed meeting this week. The outcome has so much meaningless suspense.

11/3/02 Happy Birthday Guy

This blog is for you. I remember and will never forget. May your soul light up the earth and the stars.

I must have received at least 23 spam messages this week informing me that the Fed will lower interest rates this coming Wednesday. Does this mean that I can borrow at 1.5% or that the economy will turn on a dime? Actually I have given this matter a great deal of thought. I need to give credit where credit is due. The Fed is the second coming of Prozac- generically speaking of course. When I think of Alan Greenspan and his associates, I envision the Lone Ranger and Tonto, Spiderman, Superman, Elvis, John Wayne, and Madonna all coming to the rescue. After all, I read where our economic recovery is in peril. That's correct. Peril. Everything will be ok. I'll have some milk and cookies, go to bed, and wake up in March 2003 when all will be rosy.

The problem with the above scenario is missing the holiday season. The retailers need our dollars to buy merchandise for the Spring. I cannot have on my conscience the thought that my sleeping thru the holidays could contribute to KMart going the way of Loehman's. I would rather stay awake and swallow the peril pill. Reality is easier to digest in the short and long run.