2/15/05 Revisiting Greenspan One Year Later
It was one year ago that Greenspan stated “the growth of nonfederal debt, at 7-3/4 percent, was relatively brisk in 2003. However, a significant portion of that growth was associated with the record turnover of existing homes and the high level of cash-out refinancing, which are not expected to continue at their recent pace. A narrower measure, that of credit held by banks, also grew only moderately in 2003. All told, our accommodative monetary policy stance to date does not seem to have generated excessive volumes of liquidity or credit.” In fact, in 2004, the savings rate for consumers declined to 1%, the lowest level in 70 years, while personal spending rose 6.1%. Currently, average monthly imports are $155 billion, while average monthly exports total $96 billion. Imports from China have doubled since 2000. Although the trade deficit was a record $617 billion in 2004, we are on track to register a current account deficit of $700 billion in 2005.Year-to-year non-oil imports are up 13%. Greenspan’s forecast for a lower trade deficit this year are off the mark. In addition, Germany’s GDP fell 0.2% in the fourth quarter. Ask yourself whether European firms will be willing to reduce their margins further to protect U.S. market share. Will higher prices on European imports restrain spending? But China will be there to help. Their most recent year-to-year growth in manufacturing was a staggering 42%. There are plenty of goods to fill our import needs.
Janet Yellen, President of the San Francisco Fed: “To keep wealth rising over time, if that’s what households want, people are going to have to do more of the hard work of spending less, saving more.”
Yesterday was another bad day for employment. After acquiring MCI, Vverizon stated 7,000 jobs would be cut. The GAP will close a Maryland distribution center and cut 170 employees. Cavalier Homes will close its Ft. Worth plant and eliminate 150 jobs.
70% of stocks in the Dow are above their thirty-day moving average.
According to the Center for Economic and Policy Research in DC, housing prices, adjusted for inflation, are up 36% since 1995. It certainly seems much more than that. Valerie Patterson of the RealEstateJournal.com stated “as long as prices remain near today’s levels, most homeowners will still have a lot of equity against which they can borrow to finance other types of spending. However, if housing prices take a nosedive, many families would be unable to sell their home for enough to pay off their outstanding mortgage.” I’m confident that long-term rates will remain close to 4% forever. There is no reason to be concerned. Greenspan is here to tuck everyone in bed at night. Consumers can use their homes as an ATM well into the forseeable future. The Fed will be there to print the money. A warm glass of milk (make it soy) and the Fed--- the combination for sweet dreams.
According to TrimTabs.com, the net investments flowing into international funds in 2004 was a record $48.3 billion. However, last year international funds only had $452 billion in assets. This contrasts with domestic stock funds with assets of $3.7 trillion.
Sen. Barack Obama: “When you adjust for inflation, the president’s budget has even less money for veterans than it had a year ago. We have a tendency to applaud our Armed Forces when they are overseas and in uniform and have a tendency to forget about them when they come home.” Obama stated currently nearly half a million veterans’ compensation and pension claims are still waiting a decision. He called Bush “bull-headed” and warned that Bush’s proposed 2.7% increase for the VA doesn’t consider an increased demand from returning Iraqi veterans. We must do right by our veterans. It is both a moral responsibility and the responsibility of a free nation.
According to IMS Health, U.S. prescription drug sales rose 8.35 to $235 billion in 2004.
Skype is presently the leading European VOIP software supplier. They signed a memorandum of understanding to pre-load Skype software into some Motorola Wi-Fi enabled mobile phones and other devices.
Monday, February 14, 2005
2/14/05 Happy Valentine’s Day
Each and every day should be Valentine’s Day for those in love. Each day is special.
Can you imagine having to pay $2 billion for the privilege of not purchasing 90% of a company? What can you say about GM and the $2 billion handed to Fiat. Thank goodness I’m not a stockholder of GM.
If you’re an MCI shareholder, you have begun the week on a strong note. The transaction with Verizon values each MCI share at $20.75, or $6.746 billion. The deal requires MCI shareholder approval as well as regulatory approvals. The Boards of Directors of both companies have approved the agreement. Verizon expects the transaction to be essentially breakeven in year three, and cash flow will turn positive in year three. Time will tell if “this is the right deal at the right time.”
At what point does the Fed come to its senses. Over the past two months, the M3 money supply has been enlarged by $100 billion or about $600 billion on an annualized basis. Enhancing liquidity does not equate with debasing the worth of our currency. This irresponsible printing press must be stopped.
On a lighter note, it’s been a very long time since Bruce Lee died. There has not been anyone to take his place--- until now. He is the Thai warrior---Tony Jaa.
Five Across introduced Bubbler at DEMO@15!. It is available in beta. Bubbler updates text and pages in real time, allows drag-and-drop photo, audio, and video sharing, and has a group model that provides wiki-like collaboration for authorized users. In sum, it delivers advanced technology and produces a superior blogging platform. According to Technorati, 23,000 new weblogs are created every day, yet only 7% of U.S. online consumers currently have blogs, according to the Pew Internet & American Life Project.
According to National Climatic Data in Asheville, NC, the average U.S. temperature last month was 2.5 degrees warmer than the average for the last 100 years.
Motorola will offer a peak of its forthcoming iRadio at the DEMO@15!. This solution will mobilize hundreds of commercial-free Internet radio channels and your personal music collection. It can be enjoyed at home, in the car, or on the go and operates on a high-speed Internet connection and a mobile phone for continuous entertainment.
Over the last several days gold has rallied from $410 per ounce to $422.50. Silver, however, has been the recent real star performer, and it is trading near a two-month high at $7.24.
Japan’s current account surplus rose 35% in December to a record 1.616 trillion yen.
Much press has been devoted to the fact that 65% of the S&P 500 companies surpassed the average analyst estimate in the December quarter. It might be wise to consider the impact of lower taxes and currency adjustments. In addition, higher energy prices have been reflected in higher earnings and higher profit margins for oil and gas companies in the S&P 500.
Each and every day should be Valentine’s Day for those in love. Each day is special.
Can you imagine having to pay $2 billion for the privilege of not purchasing 90% of a company? What can you say about GM and the $2 billion handed to Fiat. Thank goodness I’m not a stockholder of GM.
If you’re an MCI shareholder, you have begun the week on a strong note. The transaction with Verizon values each MCI share at $20.75, or $6.746 billion. The deal requires MCI shareholder approval as well as regulatory approvals. The Boards of Directors of both companies have approved the agreement. Verizon expects the transaction to be essentially breakeven in year three, and cash flow will turn positive in year three. Time will tell if “this is the right deal at the right time.”
At what point does the Fed come to its senses. Over the past two months, the M3 money supply has been enlarged by $100 billion or about $600 billion on an annualized basis. Enhancing liquidity does not equate with debasing the worth of our currency. This irresponsible printing press must be stopped.
On a lighter note, it’s been a very long time since Bruce Lee died. There has not been anyone to take his place--- until now. He is the Thai warrior---Tony Jaa.
Five Across introduced Bubbler at DEMO@15!. It is available in beta. Bubbler updates text and pages in real time, allows drag-and-drop photo, audio, and video sharing, and has a group model that provides wiki-like collaboration for authorized users. In sum, it delivers advanced technology and produces a superior blogging platform. According to Technorati, 23,000 new weblogs are created every day, yet only 7% of U.S. online consumers currently have blogs, according to the Pew Internet & American Life Project.
According to National Climatic Data in Asheville, NC, the average U.S. temperature last month was 2.5 degrees warmer than the average for the last 100 years.
Motorola will offer a peak of its forthcoming iRadio at the DEMO@15!. This solution will mobilize hundreds of commercial-free Internet radio channels and your personal music collection. It can be enjoyed at home, in the car, or on the go and operates on a high-speed Internet connection and a mobile phone for continuous entertainment.
Over the last several days gold has rallied from $410 per ounce to $422.50. Silver, however, has been the recent real star performer, and it is trading near a two-month high at $7.24.
Japan’s current account surplus rose 35% in December to a record 1.616 trillion yen.
Much press has been devoted to the fact that 65% of the S&P 500 companies surpassed the average analyst estimate in the December quarter. It might be wise to consider the impact of lower taxes and currency adjustments. In addition, higher energy prices have been reflected in higher earnings and higher profit margins for oil and gas companies in the S&P 500.
Sunday, February 13, 2005
2/13/05 Extracting Reality
I believe it is worthwhile to compare two descriptions of Social Security. Each was stated within the last few days. In Pennsylvania, Bush said “every dime that goes in from payroll taxes is spent. It’s spent on retirees, and if there’s excess, it’s spent on government programs. The only thing that Social Security has is a pile of IOUs from one part of the government to the next.” There are excess funds over and above payments to retirees. One would well to remember Bush’s 2/27/01 State of the Union Address in which he pledged “to make sure the retirement savings of American seniors are not diverted in any other program.” By his admission this week in Pennsylvania and North Carolina, that pledge was not kept. He extracted the excess funds and diverted them into the government budget in an effort to limit the record deficit. My statement is confirmed by Douglas Holtz-Eakin, director of the nonpartisan CBO, who observed that “the surplus has been used to cushion things elsewhere in the budget. Right now, payroll taxes, revenues dedicated to the system, exceed benefit payments going out to the tune of $80 billion. Those funds provide a cushion for the remainder of the federal budget. That cushion will peak in 2010. It will diminish every year until, in our projections, 2020, at which point we will switch from cash flow surplus to cash flow deficit for Social Security. It requires funds to come in from 2020 and thereafter to make promised benefit payments.”
Listen to the Bush scare tactics. Does it remind you of statements surrounding WMD in Iraq. On Wednesday, Bush stated “the money-payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust.” Let’s compare those words with the statement made this week by Holtz-Eakin. He remarked “the trust fund has bred an enormous amount of confusion. There is a trust fund. It has in it U.S. Treasury securities. They are backed by the full faith and credit of the U.S. government, and they will not in fact be defaulted on. The Social Security Administration will present them to the Treasury. The Treasury will honor that commitment by raising taxes, borrowing more, or spending less.”
Holtz-Eakin opined that “the central domestic policy challenge of our time is rising health care costs.” The reason is simple. Historically, health care costs have risen 2.5 times faster than incomes. Recently, the differential is close to four times faster. If the differential is maintained at 2.5 times, by the time Baby Boomers retire, health care costs for Medicare and Medicaid will become 20% of our GDP.
Let’s switch gears for the time being. Let’s touch on low interest rates, low savings, and record consumer debt. Everyone has a hand in this predicament. The Fed reduced interest rates to artificially and unsustainable low levels. In effect, after adjusting for inflation, one could borrow for nothing. Money was a gift. It was a hand-out. It became worth less on the open currency market and also acted as a deterrent to saving. Why save when you cold only receive 1% or less in a money-market or savings account? Instead people went out and spent what could have been saved, and then some. In the last several years an additional $3 trillion of mortgage debt was placed on the books and total mortgage debt presently approximates $9 trillion. That doesn’t include the $2.1 trillion in additional consumer debt. Overall, consumption as a percentage of GDP rose from the average of 67% between 1975 and 2000 to just over 70%. Taking that extra 3 plus percent on an $11 trillion plus GDP, added annual spending of about $350 billion. It’s those funds that have contributed to the record trade deficits, and it’s no wonder we import 50% more than we export. I found Holtz-Eakin’s comments on deficits, borrowing, spending, and saving particularly worth relating. He stated that “deficits have traditionally represented borrowing to spend. If you borrow to spend as a nation, on the whole, you accumulate less for the future. We don’t save as a nation, we don’t have resources to fund all the things that are building blocks of economic growth. In the end, that economic growth is what allows standards of living to rise.” I believe the facts will show that, with heightened spending, record debts and twin tower deficits, and historically low savings, our standard of living is declining. That may not be reflected in the Dow, the S&P 500, the Russell, or other equity indices, but the stock market is not the ultimate barometer of this nation’s economic well-being. The consumer is the first and final arbiter. As Holtz-Eakin observed, “we still face a long-term imbalance that stems from rising spending. As a matter of simple arithmetic, you really do have to look at the spending side.” Wall Street might consider taking a long look in that direction.
In the week ending February 9, the Fed’s holdings of Treasury and agency bonds held on behalf of foreign central banks declined by $5 billion, the second weekly decline.
Seeking an alternative to our 4% Treasury bonds, one might look across the globe to New Zealand with its 6.5% interest rate combined with a 3.6% unemployment rate.
According to the Tax Foundation, only five blue states were net recipients of federal subsidies. Only two red states were net payers of federal taxes. In 2003, the blue states contributed $966 billion to the federal Treasury and got $830 billion back. The red states paid $697 billion and received $909 billion.
I believe it is worthwhile to compare two descriptions of Social Security. Each was stated within the last few days. In Pennsylvania, Bush said “every dime that goes in from payroll taxes is spent. It’s spent on retirees, and if there’s excess, it’s spent on government programs. The only thing that Social Security has is a pile of IOUs from one part of the government to the next.” There are excess funds over and above payments to retirees. One would well to remember Bush’s 2/27/01 State of the Union Address in which he pledged “to make sure the retirement savings of American seniors are not diverted in any other program.” By his admission this week in Pennsylvania and North Carolina, that pledge was not kept. He extracted the excess funds and diverted them into the government budget in an effort to limit the record deficit. My statement is confirmed by Douglas Holtz-Eakin, director of the nonpartisan CBO, who observed that “the surplus has been used to cushion things elsewhere in the budget. Right now, payroll taxes, revenues dedicated to the system, exceed benefit payments going out to the tune of $80 billion. Those funds provide a cushion for the remainder of the federal budget. That cushion will peak in 2010. It will diminish every year until, in our projections, 2020, at which point we will switch from cash flow surplus to cash flow deficit for Social Security. It requires funds to come in from 2020 and thereafter to make promised benefit payments.”
Listen to the Bush scare tactics. Does it remind you of statements surrounding WMD in Iraq. On Wednesday, Bush stated “the money-payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust.” Let’s compare those words with the statement made this week by Holtz-Eakin. He remarked “the trust fund has bred an enormous amount of confusion. There is a trust fund. It has in it U.S. Treasury securities. They are backed by the full faith and credit of the U.S. government, and they will not in fact be defaulted on. The Social Security Administration will present them to the Treasury. The Treasury will honor that commitment by raising taxes, borrowing more, or spending less.”
Holtz-Eakin opined that “the central domestic policy challenge of our time is rising health care costs.” The reason is simple. Historically, health care costs have risen 2.5 times faster than incomes. Recently, the differential is close to four times faster. If the differential is maintained at 2.5 times, by the time Baby Boomers retire, health care costs for Medicare and Medicaid will become 20% of our GDP.
Let’s switch gears for the time being. Let’s touch on low interest rates, low savings, and record consumer debt. Everyone has a hand in this predicament. The Fed reduced interest rates to artificially and unsustainable low levels. In effect, after adjusting for inflation, one could borrow for nothing. Money was a gift. It was a hand-out. It became worth less on the open currency market and also acted as a deterrent to saving. Why save when you cold only receive 1% or less in a money-market or savings account? Instead people went out and spent what could have been saved, and then some. In the last several years an additional $3 trillion of mortgage debt was placed on the books and total mortgage debt presently approximates $9 trillion. That doesn’t include the $2.1 trillion in additional consumer debt. Overall, consumption as a percentage of GDP rose from the average of 67% between 1975 and 2000 to just over 70%. Taking that extra 3 plus percent on an $11 trillion plus GDP, added annual spending of about $350 billion. It’s those funds that have contributed to the record trade deficits, and it’s no wonder we import 50% more than we export. I found Holtz-Eakin’s comments on deficits, borrowing, spending, and saving particularly worth relating. He stated that “deficits have traditionally represented borrowing to spend. If you borrow to spend as a nation, on the whole, you accumulate less for the future. We don’t save as a nation, we don’t have resources to fund all the things that are building blocks of economic growth. In the end, that economic growth is what allows standards of living to rise.” I believe the facts will show that, with heightened spending, record debts and twin tower deficits, and historically low savings, our standard of living is declining. That may not be reflected in the Dow, the S&P 500, the Russell, or other equity indices, but the stock market is not the ultimate barometer of this nation’s economic well-being. The consumer is the first and final arbiter. As Holtz-Eakin observed, “we still face a long-term imbalance that stems from rising spending. As a matter of simple arithmetic, you really do have to look at the spending side.” Wall Street might consider taking a long look in that direction.
In the week ending February 9, the Fed’s holdings of Treasury and agency bonds held on behalf of foreign central banks declined by $5 billion, the second weekly decline.
Seeking an alternative to our 4% Treasury bonds, one might look across the globe to New Zealand with its 6.5% interest rate combined with a 3.6% unemployment rate.
According to the Tax Foundation, only five blue states were net recipients of federal subsidies. Only two red states were net payers of federal taxes. In 2003, the blue states contributed $966 billion to the federal Treasury and got $830 billion back. The red states paid $697 billion and received $909 billion.
Saturday, February 12, 2005
2/12/05 Flowing Freely But Not Free
Interest on the U.S. debt was $321 billion in fiscal 2004 and is forecast to rise to $347.9 billion in fiscal 2005. As interest rates rise and the outstanding government debt expands to $8 trillion and above, what chance is there for the budget deficit to decline?
For the week of January 31, M3 increased $15.6 billion to $9.503 trillion. For the week of February 2, bank credit expanded by $46.7 billion to a record $6.9 trillion. For the past six weeks, bank credit has exploded by $156 billion. As I said yesterday, the world is puking dollars.
Arthur Miller: “Maybe all we can do is hope to end up with the right regrets.”
The Goldman Sachs Commodities index has risen by 5.9% in 2005. Once again, this index is outperforming stocks and bonds.
Janet Yellen, President of the San Francisco Fed, sees neutral interest rates ranging from 3 to 5%. Yesterday, she stated “over time, the degree of accommodation will have to diminish, with policy reverting toward so-called ‘neutral’ for inflation to remain well contained.”
I believe a more telling observation comes from Governor Alan Bollard of the Reserve Bank of New Zealand. He opined that “seeking to stabilize rising house prices or an overheated stock market might mean having to force inflation lower than otherwise would be required with monetary policy.”
This month’s AP-Ipsos consumer confidence index sank to 79.1, down sharply from 92.5 in January. It was the worst showing since October 2003.
Ivan Shaffer: “A man isn’t a man until he has to meet a payroll.”
Citigroup will cut 1,000 investment banking jobs. Solutia is closing its Acrilan fiber plant in Decatur, Ala. and about 210 workers will lose their jobs.
CBO Director Douglas Holtz-Eakin: “I believe private accounts are a policy decision. They are not a solution to the financial problems of Social Security…The central domestic policy challenge of our time is rising health care costs.” The Director stated that, as the President’s plan exempts defense and homeland security from budget cuts, it focuses reductions on just 17% of the federal budget. Holtz-Eakin said “the punch line is that near-term strategy, even if successful, leaves you with a long-term budget problem.” In my opinion, this cements the view that the downtrend in the dollar’s value will continue well into the future.
In 233 pages of documents, specifics were provided on how Bush would meet his goal of limiting discretionary spending growth to 2.1% in fiscal 2006. There would be cuts in job training programs under the Workforce Investment Act of 1998. A number of education programs were slated to get no funding at all in 2006, including Even Start family literacy and low-interest loans for needy students. He plans to abolish a program to help communities hire more police officers. A program that provides block grants to help improve the juvenile justice system would be abolished. However, Bush wants to make his tax cuts permanent, and Holtz-Eakin called these permanent tax cuts “a big deal” in that they would subtract $200 billion in revenue down the road.
According to a recent report from Demos, a research and policy group in New York, young adults aged 18 to 34 saw their debt increase by 55% between 1992 and 2001. This age group has the second-highest bankruptcy rate in the country. I have no doubt they are carrying more debt in 2005 than they did four years ago.
Benjamin Franklin: “Creditors have better memories than debtors.”
Interest on the U.S. debt was $321 billion in fiscal 2004 and is forecast to rise to $347.9 billion in fiscal 2005. As interest rates rise and the outstanding government debt expands to $8 trillion and above, what chance is there for the budget deficit to decline?
For the week of January 31, M3 increased $15.6 billion to $9.503 trillion. For the week of February 2, bank credit expanded by $46.7 billion to a record $6.9 trillion. For the past six weeks, bank credit has exploded by $156 billion. As I said yesterday, the world is puking dollars.
Arthur Miller: “Maybe all we can do is hope to end up with the right regrets.”
The Goldman Sachs Commodities index has risen by 5.9% in 2005. Once again, this index is outperforming stocks and bonds.
Janet Yellen, President of the San Francisco Fed, sees neutral interest rates ranging from 3 to 5%. Yesterday, she stated “over time, the degree of accommodation will have to diminish, with policy reverting toward so-called ‘neutral’ for inflation to remain well contained.”
I believe a more telling observation comes from Governor Alan Bollard of the Reserve Bank of New Zealand. He opined that “seeking to stabilize rising house prices or an overheated stock market might mean having to force inflation lower than otherwise would be required with monetary policy.”
This month’s AP-Ipsos consumer confidence index sank to 79.1, down sharply from 92.5 in January. It was the worst showing since October 2003.
Ivan Shaffer: “A man isn’t a man until he has to meet a payroll.”
Citigroup will cut 1,000 investment banking jobs. Solutia is closing its Acrilan fiber plant in Decatur, Ala. and about 210 workers will lose their jobs.
CBO Director Douglas Holtz-Eakin: “I believe private accounts are a policy decision. They are not a solution to the financial problems of Social Security…The central domestic policy challenge of our time is rising health care costs.” The Director stated that, as the President’s plan exempts defense and homeland security from budget cuts, it focuses reductions on just 17% of the federal budget. Holtz-Eakin said “the punch line is that near-term strategy, even if successful, leaves you with a long-term budget problem.” In my opinion, this cements the view that the downtrend in the dollar’s value will continue well into the future.
In 233 pages of documents, specifics were provided on how Bush would meet his goal of limiting discretionary spending growth to 2.1% in fiscal 2006. There would be cuts in job training programs under the Workforce Investment Act of 1998. A number of education programs were slated to get no funding at all in 2006, including Even Start family literacy and low-interest loans for needy students. He plans to abolish a program to help communities hire more police officers. A program that provides block grants to help improve the juvenile justice system would be abolished. However, Bush wants to make his tax cuts permanent, and Holtz-Eakin called these permanent tax cuts “a big deal” in that they would subtract $200 billion in revenue down the road.
According to a recent report from Demos, a research and policy group in New York, young adults aged 18 to 34 saw their debt increase by 55% between 1992 and 2001. This age group has the second-highest bankruptcy rate in the country. I have no doubt they are carrying more debt in 2005 than they did four years ago.
Benjamin Franklin: “Creditors have better memories than debtors.”
Friday, February 11, 2005
2/11/05 Going To School On Valentine’s Day
According to the American Floral Endowment, only 54% of Valentine’s Day flower purchases last year were roses. That percentage is expected to decline to below 50% in 2005. Tulips have risen in demand and even the Teddy Bear has been an attractive alternative. Imports account for 70% of the fresh-cut flowers sold in the U.S. It’s interesting to note that surveys show that men prefer sending red-colored flowers, while the majority of women prefer pastels. Consumers spend an estimated $19 billion a year on cut flowers and potted plants. Tastes are changing. Remember the recent growing trend for gift cards? A survey by Deloitte & Touche found that gift cards represented nearly $18 billion in sales during December and January, an increase of more than 20% from the prior year. The survey noted that “while an estimated $18 billion has already been added to sales from consumers’ gift card redemptions, consumers are likely still likely holding on to another $9 billion of unredeemed value on their cards.” Consumers’ tastes change. That can be true of flowers and gift cards. It hinges on alternatives. That can be true of investments too. However, some things remain the same with 36 million boxes of candy sold for Valentine’s Day annually.
Yesterday represented a reversal in fortunes for the contrarian investor. There was a sharp upturn in yield for the ten-year Treasury bond and the U.S. dollar declined in value versus the euro. For many petroleum forecasters, it was a disappointing day. Rather than declining, crude rallied sharply and settled just above $47 a barrel. So much for the small improvement in the December trade numbers which declined only because the price for oil had its largest one-month drop since 1991. As for our trade with China, it’s headed in the same direction. In 2004, our trade deficit with China was $162 billion. U.S. imports from China increased 29%, while U.S. exports to China grew 22% and reached $35 billion, a yearly high. China’s forex reserves increased to $609.9 billion in 2004, a 41% increase since 2003, and amounts to more than a third of China’s GDP. Their money supply continues to increase at a rate of 12 to 13 percent. Maybe Greenspan & Co.can emulate China and print money at the same double-digit rate. Why delay the inevitable? It’s only a matter of time until the world’s central banks begin to puke up dollars. They’re choking on them.
On Jan. 21, 2005, Comptroller General David Walker of the GAO stated “there are no stocks, or bonds or real estate in the trust fund. It has nothing of real value to draw down.”
Recently, Bush remarked “Some in our country think that Social Security is a trust fund---in other words, there’s a pile of money being accumulated. That’s just simply not true. The money---payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust. We’re on the ultimate pay-as-you-go system--- what goes in comes out. And so, starting in 2018, what’s going in---what’s coming out is greater than what’s going in. It says we’ve got a problem. And we’d better start dealing with it now.” I’m sure he is referring to the problem of “there is no trust.”
Jeremy Siegel wrote a book entitled “Stocks for the Long Run.” He examined returns for stocks and bonds between 1800 and 1950. Interestingly, during those 150 years, stocks only outperformed bonds 57% of the time. In the first 41 days of 2005, bonds have outperformed stocks. I wonder what will take place for the rest of this year.
Last week, the CBO stated the government would run a $12 billion budget surplus in January. Yesterday, they stated the surplus was only $8.7 billion. They were off by 27.4% in one week’s time. This lack of performance is irresponsible. These schmucks should be fired. How can anyone believe any budget numbers coming out of the CBO?
There is speculation that Sumitomo Mitsui Financial Group and Daiwa Securities are discussing a $1.3 trillion merger.
According to the U.S. Government Accountability Office (since when is anyone in government accountable?), American taxpayers face a “fiscal exposure” (sun block won’t help) of at least $43 trillion over the next 75 years, including $3.7 trillion from Social Security and $27 trillion from Medicare. Since the CBO can’t get budget estimates right in one week’s time, can you imagine how wrong the numbers will be from this “Accountability” office? Everyone in Congress can point fingers at one another and then have another drink on the taxpayers.
Economists polled in the Blue Chip Economic Indicators newsletter predicted the core CPI would increase 2.3% this year and 2.4% next year, up sharply from 1.8% in 2004. What does core CPI mean any way? Don’t we buy gas, heat our homes, and buy food? It’s a bullshit number.
Many politicians want to blame China for last year’s $617.7 billion record trade deficit, which represented a 24% rise over 2003. It should be noted that we ran record trade deficits with the EU, Mexico, and major oil-producing countries.
So much for inflation not being a concern. Effective March 1, Union Pacific is raising rail rates into and out of Phoenix’s congested freight yards from 8 to 100% for steel, construction products, aluminum, machinery, paper, salt, and other products.
According to the AP, 54% of people 50 and over disapprove of Bush’s job performance and 58% think the country is headed down the wrong track. Those 65 and over were most responsible for the declining confidence and approval numbers. Therefore, I cannot be held responsible. The poll was taken from Feb. 7-9.
I have a little suggestion. Rather than worry about matching assets with liabilities, the yield curve, and having to retire debt instruments, let’s explore the following. A very long time ago--- when we still had a manufacturing base and farmers milked cows by hand--- the Canadian Pacific issued an instrument called “perpetual 4s.” I propose all outstanding U.S. government debt be converted into perpetual 4s and all future debt be limited perpetual 4s except for small amounts of 3 and 6 month Treasury bills. This will eliminate the need for auctions and will dispense with the thought that the U.S could possibly pay off its debts. In addition, it will lock in the U.S. debts at 4%. There’s something for everyone. Call it 4s in every pot.
General Motors Corp. barred its employees, retirees and others who receive medical coverage from the company from filling prescriptions at Walgreen Co. drugstores, the Detroit News reported. Medco Health, which manages GM's pharmaceutical program, told GM's health-care recipients of the decision. Walgreen's opposes health-care plans that require ordering some drugs in bulk through mail-order companies, the paper reported.
Commenting on the first quarter, Ann Taylor Corp expects to see continued pressure in
its gross margin, specifically at the Ann Taylor division. Partially
offsetting the pressure in gross margin is the anticipated decrease in
selling, general and administrative expenses as a percentage of net sales, as
marketing as a percentage of net sales at the Ann Taylor division is expected
to decline.
Supercuts opened its 2,000th store.
According to the American Floral Endowment, only 54% of Valentine’s Day flower purchases last year were roses. That percentage is expected to decline to below 50% in 2005. Tulips have risen in demand and even the Teddy Bear has been an attractive alternative. Imports account for 70% of the fresh-cut flowers sold in the U.S. It’s interesting to note that surveys show that men prefer sending red-colored flowers, while the majority of women prefer pastels. Consumers spend an estimated $19 billion a year on cut flowers and potted plants. Tastes are changing. Remember the recent growing trend for gift cards? A survey by Deloitte & Touche found that gift cards represented nearly $18 billion in sales during December and January, an increase of more than 20% from the prior year. The survey noted that “while an estimated $18 billion has already been added to sales from consumers’ gift card redemptions, consumers are likely still likely holding on to another $9 billion of unredeemed value on their cards.” Consumers’ tastes change. That can be true of flowers and gift cards. It hinges on alternatives. That can be true of investments too. However, some things remain the same with 36 million boxes of candy sold for Valentine’s Day annually.
Yesterday represented a reversal in fortunes for the contrarian investor. There was a sharp upturn in yield for the ten-year Treasury bond and the U.S. dollar declined in value versus the euro. For many petroleum forecasters, it was a disappointing day. Rather than declining, crude rallied sharply and settled just above $47 a barrel. So much for the small improvement in the December trade numbers which declined only because the price for oil had its largest one-month drop since 1991. As for our trade with China, it’s headed in the same direction. In 2004, our trade deficit with China was $162 billion. U.S. imports from China increased 29%, while U.S. exports to China grew 22% and reached $35 billion, a yearly high. China’s forex reserves increased to $609.9 billion in 2004, a 41% increase since 2003, and amounts to more than a third of China’s GDP. Their money supply continues to increase at a rate of 12 to 13 percent. Maybe Greenspan & Co.can emulate China and print money at the same double-digit rate. Why delay the inevitable? It’s only a matter of time until the world’s central banks begin to puke up dollars. They’re choking on them.
On Jan. 21, 2005, Comptroller General David Walker of the GAO stated “there are no stocks, or bonds or real estate in the trust fund. It has nothing of real value to draw down.”
Recently, Bush remarked “Some in our country think that Social Security is a trust fund---in other words, there’s a pile of money being accumulated. That’s just simply not true. The money---payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust. We’re on the ultimate pay-as-you-go system--- what goes in comes out. And so, starting in 2018, what’s going in---what’s coming out is greater than what’s going in. It says we’ve got a problem. And we’d better start dealing with it now.” I’m sure he is referring to the problem of “there is no trust.”
Jeremy Siegel wrote a book entitled “Stocks for the Long Run.” He examined returns for stocks and bonds between 1800 and 1950. Interestingly, during those 150 years, stocks only outperformed bonds 57% of the time. In the first 41 days of 2005, bonds have outperformed stocks. I wonder what will take place for the rest of this year.
Last week, the CBO stated the government would run a $12 billion budget surplus in January. Yesterday, they stated the surplus was only $8.7 billion. They were off by 27.4% in one week’s time. This lack of performance is irresponsible. These schmucks should be fired. How can anyone believe any budget numbers coming out of the CBO?
There is speculation that Sumitomo Mitsui Financial Group and Daiwa Securities are discussing a $1.3 trillion merger.
According to the U.S. Government Accountability Office (since when is anyone in government accountable?), American taxpayers face a “fiscal exposure” (sun block won’t help) of at least $43 trillion over the next 75 years, including $3.7 trillion from Social Security and $27 trillion from Medicare. Since the CBO can’t get budget estimates right in one week’s time, can you imagine how wrong the numbers will be from this “Accountability” office? Everyone in Congress can point fingers at one another and then have another drink on the taxpayers.
Economists polled in the Blue Chip Economic Indicators newsletter predicted the core CPI would increase 2.3% this year and 2.4% next year, up sharply from 1.8% in 2004. What does core CPI mean any way? Don’t we buy gas, heat our homes, and buy food? It’s a bullshit number.
Many politicians want to blame China for last year’s $617.7 billion record trade deficit, which represented a 24% rise over 2003. It should be noted that we ran record trade deficits with the EU, Mexico, and major oil-producing countries.
So much for inflation not being a concern. Effective March 1, Union Pacific is raising rail rates into and out of Phoenix’s congested freight yards from 8 to 100% for steel, construction products, aluminum, machinery, paper, salt, and other products.
According to the AP, 54% of people 50 and over disapprove of Bush’s job performance and 58% think the country is headed down the wrong track. Those 65 and over were most responsible for the declining confidence and approval numbers. Therefore, I cannot be held responsible. The poll was taken from Feb. 7-9.
I have a little suggestion. Rather than worry about matching assets with liabilities, the yield curve, and having to retire debt instruments, let’s explore the following. A very long time ago--- when we still had a manufacturing base and farmers milked cows by hand--- the Canadian Pacific issued an instrument called “perpetual 4s.” I propose all outstanding U.S. government debt be converted into perpetual 4s and all future debt be limited perpetual 4s except for small amounts of 3 and 6 month Treasury bills. This will eliminate the need for auctions and will dispense with the thought that the U.S could possibly pay off its debts. In addition, it will lock in the U.S. debts at 4%. There’s something for everyone. Call it 4s in every pot.
General Motors Corp. barred its employees, retirees and others who receive medical coverage from the company from filling prescriptions at Walgreen Co. drugstores, the Detroit News reported. Medco Health, which manages GM's pharmaceutical program, told GM's health-care recipients of the decision. Walgreen's opposes health-care plans that require ordering some drugs in bulk through mail-order companies, the paper reported.
Commenting on the first quarter, Ann Taylor Corp expects to see continued pressure in
its gross margin, specifically at the Ann Taylor division. Partially
offsetting the pressure in gross margin is the anticipated decrease in
selling, general and administrative expenses as a percentage of net sales, as
marketing as a percentage of net sales at the Ann Taylor division is expected
to decline.
Supercuts opened its 2,000th store.
Thursday, February 10, 2005
2/10/05 Contrarian Investors
If you look up at the scoreboard, you’ll notice that, during the first 40 days of 2005, contrarian investors are having a field day. Money is flowing freely in their direction. The most one-sided investment projections for 2005 were for a falling dollar, rising long-term interest rates, and a rising price for gold. In reality, the dollar has risen 5.8% against the euro. Ten-year Treasury bond yields have declined from 4.22% to 3.98%. Gold has declined 5.6% this year. Forty days do not make a year. Let’s see what the next 40 days bring.
Today we’ll read about the trade deficit numbers for December. They are expected to decline from the record $60.3 billion in November to $57 billion. Much will be made of the drop. On an annualized basis it amounts to $40 billion, a drop in the bucket from a total of $660 billion. A deficit of $57 billion would still be the second largest monthly trade deficit in history.
Chad Hudson: “95 companies in the S&P 500 have issued guidance for the first quarter of 2005, 60% of those were negative pre-announcements and only 28% were positive. This 2:1 ratio is the highest since the third quarter of 2003, and the percentage of companies guiding down earnings is the highest in at least eight quarters…soaring commodity costs account for half the earnings growth of the S&P 500 during the fourth quarter.”
The Bush administration was not far from the mark in being concerned about WMD. They were close. Both Iraq and Iran begin with the same three letters. I am confident they’ll get it right on the second try. Iran stated it will not give up its nuclear technology and they intend to maintain the nuclear program as a point of national pride. The IAEA stated Iran has been pursuing nuclear activities covertly for more than 20 years. North Korea chimed in and stated they had nuclear weapons.
According to the Bank for International Settlements, over the past five years, foreign central bank financial claims on the United States have risen to $2.5 trillion.
According to a new study by Boston University’s School of Public Health, rising costs of health care consumed nearly a quarter of the nation’s economic growth over the last five years. That’s a larger impact than defense or education spending. Co-author of the study, Deborah Socolar, stated “health care expenditures are growing so much faster than the economy as whole, and that means there is less money available for everything else that people care about.”
Some economists believe that pension funds will maintain their efforts to overweight the long-end of the yield curve. The reason may lie in Bush’s desire to change defined-benefit funding rules and include the risk of terminating plans. As such, there would be more matching of assets with liabilities.
Inman Real Estate News: “Some appraisers willingly bend numbers on home valuations to satisfy their clients and get more work, a practice known as ‘appraisal inflation.’ In its most destructive form, appraisal inflation can assist predatory lending practices and can play a role in flipping schemes, in which properties are fraudulently assessed to win a high loan amount and then resold for higher prices. Exaggerated appraisals can lead to inflated home prices, increasing the risk of loan default and foreclosure and placing homes out of reach for some prospective buyers.” May real estate professionals believe fraudulent real estate appraisals played a part in the S&L crisis of the 1980s.
According to China’s Cabinet Development Center, that country projects 8% annual economic growth over the next five years. Their GDP should reach 2.8 trillion U.S. dollars by 2010. The Cabinet’s director stated “the next five years will be a ‘golden time’ for China’s economic development… Growth will be driven by China’s strength in materials and technology, a large domestic market, an abundant labor force and a stable society.”
Palatin Technologies, Inc. (Amex: PTN) reported the financial results for its second quarter ended Palatin Technologies, Inc. (PTN) reported the financial results for its second quarter ended December 31, 2004.
Total revenues were $4.8 million, compared to $0.3 million
for the same period in 2003. Palatin reported a net loss of $2.3 million, or
($0.04) per basic and diluted share, for the quarter ended December 31, 2004,
compared to a net loss of $4.6 million, or ($0.10) per basic and diluted
share, for the same period in 2003.
The increase in total revenues and the decrease in net loss for the quarter
ended December 31, 2004, compared to the same period in 2003, primarily
reflects the commercial launch of NeutroSpec(TM) in August of 2004 and revenue
recognized under its PT-141 collaboration agreement with King Pharmaceuticals.
NeutroSpec is Palatin's proprietary radiolabeled monoclonal antibody product
for imaging and diagnosing infections. PT-141 is Palatin's lead drug candidate
under development for male and female sexual dysfunction.
"During the last two quarters, Palatin has made significant progress,"
said Stephen T. Wills, chief financial officer of Palatin. "Our operational
success, which includes the approval and commercial launch of NeutroSpec and
the signing of our strategic alliance with King Pharmaceuticals, has
significantly increased our cash position and provided us substantial revenue
growth. We expect this financial progress to increase and continue throughout
2005."
Sara Lee’s restructuring will create a significant number of layoffs and employee attrition. The final estimate has not been provided.
Although first-time jobless claims dropped by 13,000 to a 4-year low, the number of workers continuing to receive benefits rose by 47,000 to 2.737 million and the 4-week average of continuing claims rose by 22,000 to 2.734 million.
If you look up at the scoreboard, you’ll notice that, during the first 40 days of 2005, contrarian investors are having a field day. Money is flowing freely in their direction. The most one-sided investment projections for 2005 were for a falling dollar, rising long-term interest rates, and a rising price for gold. In reality, the dollar has risen 5.8% against the euro. Ten-year Treasury bond yields have declined from 4.22% to 3.98%. Gold has declined 5.6% this year. Forty days do not make a year. Let’s see what the next 40 days bring.
Today we’ll read about the trade deficit numbers for December. They are expected to decline from the record $60.3 billion in November to $57 billion. Much will be made of the drop. On an annualized basis it amounts to $40 billion, a drop in the bucket from a total of $660 billion. A deficit of $57 billion would still be the second largest monthly trade deficit in history.
Chad Hudson: “95 companies in the S&P 500 have issued guidance for the first quarter of 2005, 60% of those were negative pre-announcements and only 28% were positive. This 2:1 ratio is the highest since the third quarter of 2003, and the percentage of companies guiding down earnings is the highest in at least eight quarters…soaring commodity costs account for half the earnings growth of the S&P 500 during the fourth quarter.”
The Bush administration was not far from the mark in being concerned about WMD. They were close. Both Iraq and Iran begin with the same three letters. I am confident they’ll get it right on the second try. Iran stated it will not give up its nuclear technology and they intend to maintain the nuclear program as a point of national pride. The IAEA stated Iran has been pursuing nuclear activities covertly for more than 20 years. North Korea chimed in and stated they had nuclear weapons.
According to the Bank for International Settlements, over the past five years, foreign central bank financial claims on the United States have risen to $2.5 trillion.
According to a new study by Boston University’s School of Public Health, rising costs of health care consumed nearly a quarter of the nation’s economic growth over the last five years. That’s a larger impact than defense or education spending. Co-author of the study, Deborah Socolar, stated “health care expenditures are growing so much faster than the economy as whole, and that means there is less money available for everything else that people care about.”
Some economists believe that pension funds will maintain their efforts to overweight the long-end of the yield curve. The reason may lie in Bush’s desire to change defined-benefit funding rules and include the risk of terminating plans. As such, there would be more matching of assets with liabilities.
Inman Real Estate News: “Some appraisers willingly bend numbers on home valuations to satisfy their clients and get more work, a practice known as ‘appraisal inflation.’ In its most destructive form, appraisal inflation can assist predatory lending practices and can play a role in flipping schemes, in which properties are fraudulently assessed to win a high loan amount and then resold for higher prices. Exaggerated appraisals can lead to inflated home prices, increasing the risk of loan default and foreclosure and placing homes out of reach for some prospective buyers.” May real estate professionals believe fraudulent real estate appraisals played a part in the S&L crisis of the 1980s.
According to China’s Cabinet Development Center, that country projects 8% annual economic growth over the next five years. Their GDP should reach 2.8 trillion U.S. dollars by 2010. The Cabinet’s director stated “the next five years will be a ‘golden time’ for China’s economic development… Growth will be driven by China’s strength in materials and technology, a large domestic market, an abundant labor force and a stable society.”
Palatin Technologies, Inc. (Amex: PTN) reported the financial results for its second quarter ended Palatin Technologies, Inc. (PTN) reported the financial results for its second quarter ended December 31, 2004.
Total revenues were $4.8 million, compared to $0.3 million
for the same period in 2003. Palatin reported a net loss of $2.3 million, or
($0.04) per basic and diluted share, for the quarter ended December 31, 2004,
compared to a net loss of $4.6 million, or ($0.10) per basic and diluted
share, for the same period in 2003.
The increase in total revenues and the decrease in net loss for the quarter
ended December 31, 2004, compared to the same period in 2003, primarily
reflects the commercial launch of NeutroSpec(TM) in August of 2004 and revenue
recognized under its PT-141 collaboration agreement with King Pharmaceuticals.
NeutroSpec is Palatin's proprietary radiolabeled monoclonal antibody product
for imaging and diagnosing infections. PT-141 is Palatin's lead drug candidate
under development for male and female sexual dysfunction.
"During the last two quarters, Palatin has made significant progress,"
said Stephen T. Wills, chief financial officer of Palatin. "Our operational
success, which includes the approval and commercial launch of NeutroSpec and
the signing of our strategic alliance with King Pharmaceuticals, has
significantly increased our cash position and provided us substantial revenue
growth. We expect this financial progress to increase and continue throughout
2005."
Sara Lee’s restructuring will create a significant number of layoffs and employee attrition. The final estimate has not been provided.
Although first-time jobless claims dropped by 13,000 to a 4-year low, the number of workers continuing to receive benefits rose by 47,000 to 2.737 million and the 4-week average of continuing claims rose by 22,000 to 2.734 million.
Wednesday, February 09, 2005
2/9/05 Statistics
Consumer borrowing rose at a 1.8% annual rate in December as borrowings increased $3.1 billion over those in November. Outstanding consumer credit stands at $2.1 trillion. That only tells part of the story. That Fed number omits home mortgages and home equity lines of credit. As such, with the trend towards using the home as an ATM, the Fed figures on consumer credit are misleading. Then again, many Fed members are misleading.
Thomas Jefferson: “Sometimes it is said that man cannot be trusted with the government of himself. Can he, then, be trusted with the government of others?”
Other than car sales, if China’s economy is slowing down, you could fool me. Their annualized export growth was 33% in December, but it jumped to 42% in January. On the other hand, imports rose by 25% in December and January.
A significant percentage of China’s export growth to the U.S. comes from the “new affluent” category that is comprised of individuals aged 35-54 whose household income is at least $125,000. It makes up, according to a new Visa USA survey, about 7% of our population; however, they earn nearly half of the total U.S. household annual income and hold nearly half of the nation’s net worth with an average of $100,000-$1 million in investable assets. Rather than seeking prestige and luxury, they focus on value, pragmatism, and spend considerable time clipping coupons.
GM’s Baltimore plant will close May 13. A total of 1,100 workers will be impacted. It will mean the end of the line for the Astro and the Safari. Krispy Kreme will cut 125 to 150 staff members or about 25% of its employees outside retail outlets. Layoffs are on the way from Pfizer.
Visa USA stated that total sales volume on its credit, debit, and prepaid cards in the U.S. grew 19.1% to $1,045 trillion in 2004. Debit cards experienced record volumes and grew 19.7%, while prepaid cards grew 112% year over year.
Prior to the passage of Medicare legislation in late 2003, the Bush administration estimated the cost at $400 billion for the years 2004 to 2013. In September 2004, the cost was revised upward to $534 billion. Yesterday, it was revised upward to $720 billion for the years 2006 to 2015, and that’s after assuming that cost savings of $480 billion will be realized over that period. We know how efficient the federal government is. It would be a gross mistake to place any value on its ability to reduce costs.
Robert L. Bixby, executive director of the Concord Coalition: “But to leave out Social Security, the AMT, and the war costs and say you have a plan to cut the deficit in half over 5 years is beyond chutzpah.”
Not surprisingly, Carly Fiorina stepped down as chairman and CEO of HP. On an interim basis, she will be replaced by the company’s CFO, Robert Wayman. HP stock jumped 12% in early morning trading.
As stated on several occasions in the past, the time to be disappointed with Cisco was when it was trading at $23.50 last year. At its present price of $17.50, it is a different ballgame.
Consumer borrowing rose at a 1.8% annual rate in December as borrowings increased $3.1 billion over those in November. Outstanding consumer credit stands at $2.1 trillion. That only tells part of the story. That Fed number omits home mortgages and home equity lines of credit. As such, with the trend towards using the home as an ATM, the Fed figures on consumer credit are misleading. Then again, many Fed members are misleading.
Thomas Jefferson: “Sometimes it is said that man cannot be trusted with the government of himself. Can he, then, be trusted with the government of others?”
Other than car sales, if China’s economy is slowing down, you could fool me. Their annualized export growth was 33% in December, but it jumped to 42% in January. On the other hand, imports rose by 25% in December and January.
A significant percentage of China’s export growth to the U.S. comes from the “new affluent” category that is comprised of individuals aged 35-54 whose household income is at least $125,000. It makes up, according to a new Visa USA survey, about 7% of our population; however, they earn nearly half of the total U.S. household annual income and hold nearly half of the nation’s net worth with an average of $100,000-$1 million in investable assets. Rather than seeking prestige and luxury, they focus on value, pragmatism, and spend considerable time clipping coupons.
GM’s Baltimore plant will close May 13. A total of 1,100 workers will be impacted. It will mean the end of the line for the Astro and the Safari. Krispy Kreme will cut 125 to 150 staff members or about 25% of its employees outside retail outlets. Layoffs are on the way from Pfizer.
Visa USA stated that total sales volume on its credit, debit, and prepaid cards in the U.S. grew 19.1% to $1,045 trillion in 2004. Debit cards experienced record volumes and grew 19.7%, while prepaid cards grew 112% year over year.
Prior to the passage of Medicare legislation in late 2003, the Bush administration estimated the cost at $400 billion for the years 2004 to 2013. In September 2004, the cost was revised upward to $534 billion. Yesterday, it was revised upward to $720 billion for the years 2006 to 2015, and that’s after assuming that cost savings of $480 billion will be realized over that period. We know how efficient the federal government is. It would be a gross mistake to place any value on its ability to reduce costs.
Robert L. Bixby, executive director of the Concord Coalition: “But to leave out Social Security, the AMT, and the war costs and say you have a plan to cut the deficit in half over 5 years is beyond chutzpah.”
Not surprisingly, Carly Fiorina stepped down as chairman and CEO of HP. On an interim basis, she will be replaced by the company’s CFO, Robert Wayman. HP stock jumped 12% in early morning trading.
As stated on several occasions in the past, the time to be disappointed with Cisco was when it was trading at $23.50 last year. At its present price of $17.50, it is a different ballgame.
Tuesday, February 08, 2005
2/8/05 Saving For A Rainy Day
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
Ask Jeeves acquires Bloglines. "Bloglines became so popular because it was one of the first Web services
to make blog and RSS feed reading free and easy to understand for average
Internet users. We want to continue this quest to bring our exciting
capabilities into the mainstream," said Mark Fletcher, CEO of Bloglines. "By
joining forces with Ask Jeeves, we will be able to accelerate our growth with
access to the millions of unique visitors to Ask Jeeves' properties.”
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
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2/8/05 Saving For A Rainy Day
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
2/8/05 Saving For A Rainy Day
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
2/8/05 Saving For A Rainy Day
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
Do you think today’s youngsters have heard that refrain? Does it mean much to the more than 2.5 million Americans who work in temporary jobs? By the way, that number has risen by about 10% from one year ago. When, according to the Kaiser Family Foundation, employers paid an average of $3,137 per employee for individual health coverage and $7,289 for family coverage in 2004, do you think employers give much thought to raising wages? Do you think they give much thought to hiring a permanent worker, one who would receive benefits? It’s no wonder that millions of Americans need to work more than one job.
Greenspan: “The growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the U.S. from almost 6% in 1993 to its current level of 1%.” What created that growth in home mortgage debt? The Fed accomplished it by pushing short-term rates down to 1%. They enabled the consumer to use the home as an ATM.
The median price of a home in Maui has now topped $600,000.
According to the Fed, over the past year, foreign central banks acquired our U.S. government debt at an annual rate exceeding $210 billion. That is quite significant; however, even more significant is that the rate of annual accumulation has slowed by 30% from early January 2004.
Rep. Ron Paul: “Freedom is the absence of government coercion…Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations… So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.”
Bush: “We look forward to spreading freedom around the world.”
A recent McKinsey & Co. study finds that 70% of mergers fall short when it comes to achieving their targets for revenue synergies, while 40% lead to cost-synergy disappointments.
A recent National League of Cities study included a survey of 288 municipal CFOs. It found that 61% of municipalities will be less able to meet their financial obligations in 2005 than they were in 2004. Last year was the third year in a row that general fund revenues, adjusted for inflation, declined. At the same time, costs for public safety and health care soared. Many cities are resorting to severe budget cuts and hikes in taxes and fees. Aid from the states to the cities fell 9.2% on average across the nation in 2004.
Insider purchases of company stock hit the lowest point in almost 12 years in January. The buying dropped down to a mere $34.1 million.
According to the Cambridge Consumer Credit Index, 83% of Americans say that debts they have incurred because of medical or dental procedures are burdensome enough to prevent them from buying large ticket items. It should be noted that, of the respondents who have outstanding medical debts, 78% have healthcare or Medicare coverage and 53% have dental insurance.
Kurt Richebacher: “Ultra-low interest rates introduced by central banks to fight threatening recession have triggered an explosion in borrowing for house purchases in many countries…The key question is whether, and to what extent, asset owners convert the asset appreciation into higher borrowing and spending…It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy’s pattern of growth--- actually an unsustainable pattern of growth.”
With 10-year Treasury yields at 4.05%, this week’s mortgage rates are set to decline again.
Nouriel Roubini: “Expect deficits at most as low as $547 billion (and as high as $600 billion) by 2006 and deficits as most as low as $921 billion (and as high as $1.1 trillion) by 2015. This is honest budget accounting. Instead the 2009 figure of $233 billion, shown by the administration today, is a LIE, LIE, LIE, LIE, and as many lies as 233 billion of them. They may think they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, and the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and so idiotic to believe half of the damned lies they have been peddling in their budget…Put it less politely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the U.S. to certain bankruptcy by the next decade.”
Do blue chip stocks have their origins in the blue states?
Palatin Technologies (PTN) and King Pharmaceuticals (KG) said their Phase 2A clinical study of the PT-141 drug for pre-menopausal women diagnosed with female sexual dysfunction showed an increase in sexual desire and genital arousal. Adverse events reported include nausea, headache and nasal congestion, it said.
Playtex Products plans to cut more than 300 jobs, or about 20% of its workforce.
Do you think there is any connection between rousing credit expansion, escalating asset prices, and a record trade deficit?
Monday, February 07, 2005
2/7/05 Trillions More
Vice President Cheney: “We are being tight. This is the tightest budget that has been submitted since we got here.” There is a slang use for the word “tight.” It can refer to one who has had too much to drink. I want to give Cheney the benefit of the doubt. I know he comes from Wyoming, and I know there is a serious drinking problem in Wyoming. All you have to do is witness the standing room only crowds at AA meetings. Let’s suppose for one moment that Cheney is serious about this spending blueprint for the year that begins October 1, 2005. If he’s serious, then he must believe the American people can’t handle the truth. His tight budget omits billions of dollars --- for Iraq and for Afghanistan. It omits trillions for the proposed transformation of Social Security. If that were not laughable enough, the budget omits the cost for making Bush’s first term tax cuts permanent. This is not a budget. This is a cost-exploding sham. I lost all respect for McCain when he stated “I’m glad the president is coming over with a very austere budget. I hope we in Congress will have the courage to support it.” In sum, when discussing this budget, members of this administration told only one truth this weekend. In referring to additional borrowing required in subsequent decades, Cheney stated “that’s right. Trillions more.”
It will be quite some show watching the infighting over this proposed budget. As the months go by, upward deficit revisions will be forthcoming. That has been the way for Bush’s first term, and I see no change on the horizon. Cutting education, health, farm, law enforcement, and food and nutrition programs while raising co-pays and user fees for Veterans is a sure path to a dead on arrival budget. Bush is seeking a 2.7% increase for the Department of Veterans Affairs health care accounts. It doesn’t require a large brain to know that health care costs have been rising at double-digit rates for the last several years. The latest inflation number for the overall economy was a rise of 3.3%. This administration is expert at spinning. This budget requires more than spinning or revisions. Our country requires more savings and less spending on pork. We need less taxes and less government. We need new industries creating more jobs. Our country is on the road to going broke. There is debt in every pot. Be smart and use the recent strength in the dollar to hedge your dollar-denominated assets with a basket of currencies. That’s the path foreign nations are following.
John P. Hussman, PhD: “Market risk no longer appears worth taking on the basis of an expected return.”
Evidently, GM did not learn from the success of the Toyota Prius and the Honda Civic Hybrid. The company hopes to sell 2,500 hybrids in 2005. Talk about missing the market.
According to a recent Newsweek poll, 56% of Americans think the stock market is too risky for Social Security funds. Cheney has a different view. He stated “the personal accounts will themselves provide a significant return for those who hold them.” Maybe he was referring to Halliburton stock options.
Casey Stengel: “I always heard it couldn’t be done, but sometimes it don’t always work.”
Vice President Cheney: “We are being tight. This is the tightest budget that has been submitted since we got here.” There is a slang use for the word “tight.” It can refer to one who has had too much to drink. I want to give Cheney the benefit of the doubt. I know he comes from Wyoming, and I know there is a serious drinking problem in Wyoming. All you have to do is witness the standing room only crowds at AA meetings. Let’s suppose for one moment that Cheney is serious about this spending blueprint for the year that begins October 1, 2005. If he’s serious, then he must believe the American people can’t handle the truth. His tight budget omits billions of dollars --- for Iraq and for Afghanistan. It omits trillions for the proposed transformation of Social Security. If that were not laughable enough, the budget omits the cost for making Bush’s first term tax cuts permanent. This is not a budget. This is a cost-exploding sham. I lost all respect for McCain when he stated “I’m glad the president is coming over with a very austere budget. I hope we in Congress will have the courage to support it.” In sum, when discussing this budget, members of this administration told only one truth this weekend. In referring to additional borrowing required in subsequent decades, Cheney stated “that’s right. Trillions more.”
It will be quite some show watching the infighting over this proposed budget. As the months go by, upward deficit revisions will be forthcoming. That has been the way for Bush’s first term, and I see no change on the horizon. Cutting education, health, farm, law enforcement, and food and nutrition programs while raising co-pays and user fees for Veterans is a sure path to a dead on arrival budget. Bush is seeking a 2.7% increase for the Department of Veterans Affairs health care accounts. It doesn’t require a large brain to know that health care costs have been rising at double-digit rates for the last several years. The latest inflation number for the overall economy was a rise of 3.3%. This administration is expert at spinning. This budget requires more than spinning or revisions. Our country requires more savings and less spending on pork. We need less taxes and less government. We need new industries creating more jobs. Our country is on the road to going broke. There is debt in every pot. Be smart and use the recent strength in the dollar to hedge your dollar-denominated assets with a basket of currencies. That’s the path foreign nations are following.
John P. Hussman, PhD: “Market risk no longer appears worth taking on the basis of an expected return.”
Evidently, GM did not learn from the success of the Toyota Prius and the Honda Civic Hybrid. The company hopes to sell 2,500 hybrids in 2005. Talk about missing the market.
According to a recent Newsweek poll, 56% of Americans think the stock market is too risky for Social Security funds. Cheney has a different view. He stated “the personal accounts will themselves provide a significant return for those who hold them.” Maybe he was referring to Halliburton stock options.
Casey Stengel: “I always heard it couldn’t be done, but sometimes it don’t always work.”
2/7/05 Trillions More
Vice President Cheney: “We are being tight. This is the tightest budget that has been submitted since we got here.” There is a slang use for the word “tight.” It can refer to one who has had too much to drink. I want to give Cheney the benefit of the doubt. I know he comes from Wyoming, and I know there is a serious drinking problem in Wyoming. All you have to do is witness the standing room only crowds at AA meetings. Let’s suppose for one moment that Cheney is serious about this spending blueprint for the year that begins October 1, 2005. If he’s serious, then he must believe the American people can’t handle the truth. His tight budget omits billions of dollars --- for Iraq and for Afghanistan. It omits trillions for the proposed transformation of Social Security. If that were not laughable enough, the budget omits the cost for making Bush’s first term tax cuts permanent. This is not a budget. This is a cost-exploding sham. I lost all respect for McCain when he stated “I’m glad the president is coming over with a very austere budget. I hope we in Congress will have the courage to support it.” In sum, when discussing this budget, members of this administration told only one truth this weekend. In referring to additional borrowing required in subsequent decades, Cheney stated “that’s right. Trillions more.”
It will be quite some show watching the infighting over this proposed budget. As the months go by, upward deficit revisions will be forthcoming. That has been the way for Bush’s first term, and I see no change on the horizon. Cutting education, health, farm, law enforcement, and food and nutrition programs while raising co-pays and user fees for Veterans is a sure path to a dead on arrival budget. Bush is seeking a 2.7% increase for the Department of Veterans Affairs health care accounts. It doesn’t require a large brain to know that health care costs have been rising at double-digit rates for the last several years. The latest inflation number for the overall economy was a rise of 3.3%. This administration is expert at spinning. This budget requires more than spinning or revisions. Our country requires more savings and less spending on pork. We need less taxes and less government. We need new industries creating more jobs. Our country is on the road to going broke. There is debt in every pot. Be smart and use the recent strength in the dollar to hedge your dollar-denominated assets with a basket of currencies. That’s the path foreign nations are following.
John P. Hussman, PhD: “Market risk no longer appears worth taking on the basis of an expected return.”
Evidently, GM did not learn from the success of the Toyota Prius and the Honda Civic Hybrid. The company hopes to sell 2,500 hybrids in 2005. Talk about missing the market.
According to a recent Newsweek poll, 56% of Americans think the stock market is too risky for Social Security funds. Cheney has a different view. He stated “the personal accounts will themselves provide a significant return for those who hold them.” Maybe he was referring to Halliburton stock options.
Casey Stengel: “I always heard it couldn’t be done, but sometimes it
Vice President Cheney: “We are being tight. This is the tightest budget that has been submitted since we got here.” There is a slang use for the word “tight.” It can refer to one who has had too much to drink. I want to give Cheney the benefit of the doubt. I know he comes from Wyoming, and I know there is a serious drinking problem in Wyoming. All you have to do is witness the standing room only crowds at AA meetings. Let’s suppose for one moment that Cheney is serious about this spending blueprint for the year that begins October 1, 2005. If he’s serious, then he must believe the American people can’t handle the truth. His tight budget omits billions of dollars --- for Iraq and for Afghanistan. It omits trillions for the proposed transformation of Social Security. If that were not laughable enough, the budget omits the cost for making Bush’s first term tax cuts permanent. This is not a budget. This is a cost-exploding sham. I lost all respect for McCain when he stated “I’m glad the president is coming over with a very austere budget. I hope we in Congress will have the courage to support it.” In sum, when discussing this budget, members of this administration told only one truth this weekend. In referring to additional borrowing required in subsequent decades, Cheney stated “that’s right. Trillions more.”
It will be quite some show watching the infighting over this proposed budget. As the months go by, upward deficit revisions will be forthcoming. That has been the way for Bush’s first term, and I see no change on the horizon. Cutting education, health, farm, law enforcement, and food and nutrition programs while raising co-pays and user fees for Veterans is a sure path to a dead on arrival budget. Bush is seeking a 2.7% increase for the Department of Veterans Affairs health care accounts. It doesn’t require a large brain to know that health care costs have been rising at double-digit rates for the last several years. The latest inflation number for the overall economy was a rise of 3.3%. This administration is expert at spinning. This budget requires more than spinning or revisions. Our country requires more savings and less spending on pork. We need less taxes and less government. We need new industries creating more jobs. Our country is on the road to going broke. There is debt in every pot. Be smart and use the recent strength in the dollar to hedge your dollar-denominated assets with a basket of currencies. That’s the path foreign nations are following.
John P. Hussman, PhD: “Market risk no longer appears worth taking on the basis of an expected return.”
Evidently, GM did not learn from the success of the Toyota Prius and the Honda Civic Hybrid. The company hopes to sell 2,500 hybrids in 2005. Talk about missing the market.
According to a recent Newsweek poll, 56% of Americans think the stock market is too risky for Social Security funds. Cheney has a different view. He stated “the personal accounts will themselves provide a significant return for those who hold them.” Maybe he was referring to Halliburton stock options.
Casey Stengel: “I always heard it couldn’t be done, but sometimes it
Sunday, February 06, 2005
2/6/05 Risks And Returns
It is essential that one, throughout life, distinguish between thinking and knowing. Too many make the mistake of equating the two. For example, how often have you heard someone say “I thought I knew that person” or “I was married to him for 25 years but there was a side I did not know existed” or “I did not know it was possible to lose everything” or …..? Too often, we think we know only to find out that we only thought and did not know at all. Life can make fools out of each one of us. So can the stock, bond, commodity, and currency markets. One must focus intently. For example, equity market volatility has declined significantly over the past 24 months. That does not mean the risks have declined commensurate with the volatility. Catastrophes can occur out of the blue. As Richard Parsons observed, “the fact that a catastrophe (the recent tsunami) is very unlikely to occur is not a rational justification for ignoring the risk of its occurrence.”
When pondering possible risks and returns, it is wise to begin with the saying “show me the money.” One begins by looking at the flow and generation of funds. For example, the Fed has once again raised short-term interest rates. That’s only a little diversion. After all, at 2.5%, rates are still two full percentage points below the ECRI’s Future Inflation Gauge that rose 4.5% in January to 120.0. In other words, inflation is alive and well and significantly higher than the gains in the wages of workers. But that is still not the whole story. The Fed is busy printing money. M-3 rose by $16.3 billion this week, by $54.1 billion over the past two weeks, and by $71.3 billion over the past five weeks--- for an annual growth rate of approximately 8%. Five weeks do not make a year, but this is consistent with the Fed’s modus operandi for quite some time. It is consistent with destroying the value of our dollar and with attempting to monetize our $7.5 trillion national debt. It might be wise to be reminded by Ron Kirby’s observation that “a dollar today brings about the same amount of goods and services as 3 cents in the 1920s.” Saying it another way, when thinking about the appraisal on your $1 million NYC apartment, do you know what your global purchasing power truly is? Do you know what $1 million U.S. dollars can purchase in other global asset classes? Does it even enter your mind?
We are reminded daily of the record and growing U.S. current account deficit. Even though we have a $160 billion trade deficit with China, do you know that China has only a very small current account surplus? You might have forgotten that I have mentioned this on a few occasions. That small surplus, which could turn into a deficit this year, is the primary reason that China does not believe its currency is valued unfairly and it is an important reason China wants to maintain the current currency peg to the dollar.
G-7 nations are considering selling gold to help poorer countries. That notion may help to explain, at least in part, the recent downturn in the price of gold. Should gold break the $400 an ounce level, one might consider placing some gold in one’s portfolio. A sharp decline in silver would also merit some consideration as an opportunity for an entry buy point.
This week the President will announce the budget. Even though the headlines are for Social Security, a big discussion point will be on the effort to cap the federal government’s share of Medicaid expenses. Just as a reminder, Medicaid expenses total $300 billion, and over the past four years, Medicaid rolls have expanded by more than 30%. The states currently spend $120 on Medicaid, and that represents 22% of state budgets. If a larger share of Medicaid expenses are thrown onto the backs of the state budgets, there will be some giant deficits looming on the horizon.
While the headlines have been focusing on mergers, during the past week several companies announced plant closings. Some examples were two International Paper container plants in Pennsylvania resulting in putting about 120 people out of work and Fleetwood closing its Hancock, MD plant that manufactures and sells travel trailers with about 300 lost jobs.
David MacKay of the Canadian International Pharmacy Association: “Ironically, there is much talk about security in retirement for Americans, yet many of them are forced to give up their life savings to pay for their medications. Retirement dreams are literally being swallowed by Big Pharma greed.”
Sunil Mittal: “To my mind, the next big wave---which will be bigger than telecoms or outsourcing---is in agriculture. India’s strength lies in its huge area of arable land, with great weather conditions. With three, four, or five months Europe doesn’t grow a fig--- but we can grow anything. I want to connect India’s farms with the world.”
It is essential that one, throughout life, distinguish between thinking and knowing. Too many make the mistake of equating the two. For example, how often have you heard someone say “I thought I knew that person” or “I was married to him for 25 years but there was a side I did not know existed” or “I did not know it was possible to lose everything” or …..? Too often, we think we know only to find out that we only thought and did not know at all. Life can make fools out of each one of us. So can the stock, bond, commodity, and currency markets. One must focus intently. For example, equity market volatility has declined significantly over the past 24 months. That does not mean the risks have declined commensurate with the volatility. Catastrophes can occur out of the blue. As Richard Parsons observed, “the fact that a catastrophe (the recent tsunami) is very unlikely to occur is not a rational justification for ignoring the risk of its occurrence.”
When pondering possible risks and returns, it is wise to begin with the saying “show me the money.” One begins by looking at the flow and generation of funds. For example, the Fed has once again raised short-term interest rates. That’s only a little diversion. After all, at 2.5%, rates are still two full percentage points below the ECRI’s Future Inflation Gauge that rose 4.5% in January to 120.0. In other words, inflation is alive and well and significantly higher than the gains in the wages of workers. But that is still not the whole story. The Fed is busy printing money. M-3 rose by $16.3 billion this week, by $54.1 billion over the past two weeks, and by $71.3 billion over the past five weeks--- for an annual growth rate of approximately 8%. Five weeks do not make a year, but this is consistent with the Fed’s modus operandi for quite some time. It is consistent with destroying the value of our dollar and with attempting to monetize our $7.5 trillion national debt. It might be wise to be reminded by Ron Kirby’s observation that “a dollar today brings about the same amount of goods and services as 3 cents in the 1920s.” Saying it another way, when thinking about the appraisal on your $1 million NYC apartment, do you know what your global purchasing power truly is? Do you know what $1 million U.S. dollars can purchase in other global asset classes? Does it even enter your mind?
We are reminded daily of the record and growing U.S. current account deficit. Even though we have a $160 billion trade deficit with China, do you know that China has only a very small current account surplus? You might have forgotten that I have mentioned this on a few occasions. That small surplus, which could turn into a deficit this year, is the primary reason that China does not believe its currency is valued unfairly and it is an important reason China wants to maintain the current currency peg to the dollar.
G-7 nations are considering selling gold to help poorer countries. That notion may help to explain, at least in part, the recent downturn in the price of gold. Should gold break the $400 an ounce level, one might consider placing some gold in one’s portfolio. A sharp decline in silver would also merit some consideration as an opportunity for an entry buy point.
This week the President will announce the budget. Even though the headlines are for Social Security, a big discussion point will be on the effort to cap the federal government’s share of Medicaid expenses. Just as a reminder, Medicaid expenses total $300 billion, and over the past four years, Medicaid rolls have expanded by more than 30%. The states currently spend $120 on Medicaid, and that represents 22% of state budgets. If a larger share of Medicaid expenses are thrown onto the backs of the state budgets, there will be some giant deficits looming on the horizon.
While the headlines have been focusing on mergers, during the past week several companies announced plant closings. Some examples were two International Paper container plants in Pennsylvania resulting in putting about 120 people out of work and Fleetwood closing its Hancock, MD plant that manufactures and sells travel trailers with about 300 lost jobs.
David MacKay of the Canadian International Pharmacy Association: “Ironically, there is much talk about security in retirement for Americans, yet many of them are forced to give up their life savings to pay for their medications. Retirement dreams are literally being swallowed by Big Pharma greed.”
Sunil Mittal: “To my mind, the next big wave---which will be bigger than telecoms or outsourcing---is in agriculture. India’s strength lies in its huge area of arable land, with great weather conditions. With three, four, or five months Europe doesn’t grow a fig--- but we can grow anything. I want to connect India’s farms with the world.”
2/6/05 Risks And Returns
It is essential that one, throughout life, distinguish between thinking and knowing. Too many make the mistake of equating the two. For example, how often have you heard someone say “I thought I knew that person” or “I was married to him for 25 years but there was a side I did not know existed” or “I did not know it was possible to lose everything” or …..? Too often, we think we know only to find out that we only thought and did not know at all. Life can make fools out of each one of us. So can the stock, bond, commodity, and currency markets. One must focus intently. For example, equity market volatility has declined significantly over the past 24 months. That does not mean the risks have declined commensurate with the volatility. Catastrophes can occur out of the blue. As Richard Parsons observed, “the fact that a catastrophe (the recent tsunami) is very unlikely to occur is not a rational justification for ignoring the risk of its occurrence.”
When pondering possible risks and returns, it is wise to begin with the saying “show me the money.” One begins by looking at the flow and generation of funds. For example, the Fed has once again raised short-term interest rates. That’s only a little diversion. After all, at 2.5%, rates are still two full percentage points below the ECRI’s Future Inflation Gauge that rose 4.5% in January to 120.0. In other words, inflation is alive and well and significantly higher than the gains in the wages of workers. But that is still not the whole story. The Fed is busy printing money. M-3 rose by $16.3 billion this week, by $54.1 billion over the past two weeks, and by $71.3 billion over the past five weeks--- for an annual growth rate of approximately 8%. Five weeks do not make a year, but this is consistent with the Fed’s modus operandi for quite some time. It is consistent with destroying the value of our dollar and with attempting to monetize our $7.5 trillion national debt. It might be wise to be reminded by Ron Kirby’s observation that “a dollar today brings about the same amount of goods and services as 3 cents in the 1920s.” Saying it another way, when thinking about the appraisal on your $1 million NYC apartment, do you know what your global purchasing power truly is? Do you know what $1 million U.S. dollars can purchase in other global asset classes? Does it even enter your mind?
We are reminded daily of the record and growing U.S. current account deficit. Even though we have a $160 billion trade deficit with China, do you know that China has only a very small current account surplus? You might have forgotten that I have mentioned this on a few occasions. That small surplus, which could turn into a deficit this year, is the primary reason that China does not believe its currency is valued unfairly and it is an important reason China wants to maintain the current currency peg to the dollar.
G-7 nations are considering selling gold to help poorer countries. That notion may help to explain, at least in part, the recent downturn in the price of gold. Should gold break the $400 an ounce level, one might consider placing some gold in one’s portfolio. A sharp decline in silver would also merit some consideration as an opportunity for an entry buy point.
This week the President will announce the budget. Even though the headlines are for Social Security, a big discussion point will be on the effort to cap the federal government’s share of Medicaid expenses. Just as a reminder, Medicaid expenses total $300 billion, and over the past four years, Medicaid rolls have expanded by more than 30%. The states currently spend $120 on Medicaid, and that represents 22% of state budgets. If a larger share of Medicaid expenses are thrown onto the backs of the state budgets, there will be some giant deficits looming on the horizon.
While the headlines have been focusing on mergers, during the past week several companies announced plant closings. Some examples were two International Paper container plants in Pennsylvania resulting in putting about 120 people out of work and Fleetwood closing its Hancock, MD plant that manufactures and sells travel trailers with about 300 lost jobs.
David MacKay of the Canadian International Pharmacy Association: “Ironically, there is much talk about security in retirement for Americans, yet many of them are forced to give up their life savings to pay for their medications. Retirement dreams are literally being swallowed by Big Pharma greed.”
Sunil Mittal: “To my mind, the next big wave---which will be bigger than telecoms or outsourcing---is in agriculture. India’s strength lies in its huge area of arable land, with great weather conditions. With three, four, or five months Europe doesn’t grow a fig--- but we can grow anything. I want to connect India’s farms with the world.”
It is essential that one, throughout life, distinguish between thinking and knowing. Too many make the mistake of equating the two. For example, how often have you heard someone say “I thought I knew that person” or “I was married to him for 25 years but there was a side I did not know existed” or “I did not know it was possible to lose everything” or …..? Too often, we think we know only to find out that we only thought and did not know at all. Life can make fools out of each one of us. So can the stock, bond, commodity, and currency markets. One must focus intently. For example, equity market volatility has declined significantly over the past 24 months. That does not mean the risks have declined commensurate with the volatility. Catastrophes can occur out of the blue. As Richard Parsons observed, “the fact that a catastrophe (the recent tsunami) is very unlikely to occur is not a rational justification for ignoring the risk of its occurrence.”
When pondering possible risks and returns, it is wise to begin with the saying “show me the money.” One begins by looking at the flow and generation of funds. For example, the Fed has once again raised short-term interest rates. That’s only a little diversion. After all, at 2.5%, rates are still two full percentage points below the ECRI’s Future Inflation Gauge that rose 4.5% in January to 120.0. In other words, inflation is alive and well and significantly higher than the gains in the wages of workers. But that is still not the whole story. The Fed is busy printing money. M-3 rose by $16.3 billion this week, by $54.1 billion over the past two weeks, and by $71.3 billion over the past five weeks--- for an annual growth rate of approximately 8%. Five weeks do not make a year, but this is consistent with the Fed’s modus operandi for quite some time. It is consistent with destroying the value of our dollar and with attempting to monetize our $7.5 trillion national debt. It might be wise to be reminded by Ron Kirby’s observation that “a dollar today brings about the same amount of goods and services as 3 cents in the 1920s.” Saying it another way, when thinking about the appraisal on your $1 million NYC apartment, do you know what your global purchasing power truly is? Do you know what $1 million U.S. dollars can purchase in other global asset classes? Does it even enter your mind?
We are reminded daily of the record and growing U.S. current account deficit. Even though we have a $160 billion trade deficit with China, do you know that China has only a very small current account surplus? You might have forgotten that I have mentioned this on a few occasions. That small surplus, which could turn into a deficit this year, is the primary reason that China does not believe its currency is valued unfairly and it is an important reason China wants to maintain the current currency peg to the dollar.
G-7 nations are considering selling gold to help poorer countries. That notion may help to explain, at least in part, the recent downturn in the price of gold. Should gold break the $400 an ounce level, one might consider placing some gold in one’s portfolio. A sharp decline in silver would also merit some consideration as an opportunity for an entry buy point.
This week the President will announce the budget. Even though the headlines are for Social Security, a big discussion point will be on the effort to cap the federal government’s share of Medicaid expenses. Just as a reminder, Medicaid expenses total $300 billion, and over the past four years, Medicaid rolls have expanded by more than 30%. The states currently spend $120 on Medicaid, and that represents 22% of state budgets. If a larger share of Medicaid expenses are thrown onto the backs of the state budgets, there will be some giant deficits looming on the horizon.
While the headlines have been focusing on mergers, during the past week several companies announced plant closings. Some examples were two International Paper container plants in Pennsylvania resulting in putting about 120 people out of work and Fleetwood closing its Hancock, MD plant that manufactures and sells travel trailers with about 300 lost jobs.
David MacKay of the Canadian International Pharmacy Association: “Ironically, there is much talk about security in retirement for Americans, yet many of them are forced to give up their life savings to pay for their medications. Retirement dreams are literally being swallowed by Big Pharma greed.”
Sunil Mittal: “To my mind, the next big wave---which will be bigger than telecoms or outsourcing---is in agriculture. India’s strength lies in its huge area of arable land, with great weather conditions. With three, four, or five months Europe doesn’t grow a fig--- but we can grow anything. I want to connect India’s farms with the world.”
Saturday, February 05, 2005
2/5/05 Close Call
Thank goodness for the annual benchmarking process and the updating of seasonal adjustment factors. They provided 203,000 more jobs being created between March 2003 and March 2004. This chiropractic revision meant that the U.S. gained 119,000 jobs since Bush took office in January 2001. Before you jump out of your pants with unrelenting joy, I should mention that there are 7.2 million Americans holding more than one job, representing 5.2% of the total labor force. The number of persons who work part time is 4.4 million. The share of the unemployed who have been without a job for more than six months has increased to 20.9%. The unemployment rate for African Americans is 10.6%, and for African American teens it’s over 30%. Hispanic teens face an unemployment rate of 19.6%. Manufacturing employment fell by 25,000 in January. Over the past four years, 2.8 million manufacturing jobs have been lost. On the other hand, employment in service-producing industries, such as, retailers, education and health, banks, transportation, warehousing, and government agencies, rose 177,000 in January after a rise of 123,000 in December. In case you think workers are getting rich, please think again. The average hourly earnings for workers rose 3 cents in January, and over the month, the average workweek declined by 0.1 hour to 33.7 hours. Over the year, the factory workweek was down by 0.3 hour. The labor participation rate edged lower to 65.8%. When was the last time it was lower? Some people actually drive to work. Crude is $47 a barrel or 35% higher than one year ago. In sum, the January gain of 146,000 new jobs was disappointing, and the Labor Department also trimmed the number of jobs created in the fourth quarter of 2004 by 59,000. I wonder what the revision will be for January?
As is the norm, the 1.8 million marginally attached persons were not counted as unemployed. They included 515,000 discouraged workers. They are described as discouraged because they are not currently looking for work specifically because they believed no jobs were available for them. Had they been non-specifically and non-currently looking for work, who knows whether they would be counted as unemployed.
The disappointing job report helped to push 10-year Treasury yields down to 4.09%. Adjusting for inflation, the yield on the 10-year is only about 0.9 percentage point above the rate of consumer price inflation. Over the last ten years, the average differential has been 2.9% higher. With the yield curve getting flatter, my long 2-year and short 10-year trade has turned into a poor decision. I took a 20 basis point loss. I firmly believe that 10-year Treasury yields are significantly too low. The market says I’m wrong. It’s important to undo a trade that has not worked out from day one.
Yesterday I read a brilliant analysis of the current interest rate landscape. It should be required reading for all Fed members. It’s entitled “Things Change” and was written by Gary Carmell of CWS Capital in Newport Beach. The link is http://www.cwscapital.com/pubs/qupdates/050130/change.html
There were several comments coming from the G-7 finance ministers. ECB president Trichet stated “the industrialized world as a whole is in deficit, there is a current account deficit, and there is no offsetting of the U.S. current account deficit by other industrialized countries.” Bank of England Governor King discussed “global imbalances” from trade and budget deficits and that governments must agree on the “nature of the risks inherent in current international monetary arrangements. There is likely to be a limit to the amount of debt that one country can issue as a result of persistent deficits before investors start to worry about its ability or willingness to repay.” On the other hand, Greenspan now says the current account deficit won’t create a crisis because the U.S. economy will adjust “without any significant consequences.” Why? Because of the falling dollar and plans to cut the budget deficit. Maybe Greenspan failed to notice the recent rise in the dollar versus the euro from 1.36 to 1.29, and maybe he failed to notice that the projected record budget deficit for 2005 will be higher than the record in 2004. It’s been a long time since Greenspan has been right on any important economic matter. Maybe the U.S. needs a new generation of bankers.
Greenspan noted that “interestingly, the change in U.S. home mortgage debt over the past half-century correlates significantly with our current account deficit.” If that is so, then, according to Freddie Mac’s projections, there isn’t much near-term hope for the current account declining very much. Freddie Mac estimates that cash-out mortgage refinancing added over $100 billion to the economy in 2004 and that it will boost the economy by $96 billion in 2005.
According to Trim Tabs, investors put $3.6 billion into U.S. and international stock mutual funds in the week ended Feb. 2 compared to $747 million of outflows the previous week. On the other side of the coin, in 2004, the ratio of insider selling to buying was 28:1, the most one-sided on record. It would not surprise me to see that ratio get more bearish in this year’s first quarter.
Mark Twain: “It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.”
Thank goodness for the annual benchmarking process and the updating of seasonal adjustment factors. They provided 203,000 more jobs being created between March 2003 and March 2004. This chiropractic revision meant that the U.S. gained 119,000 jobs since Bush took office in January 2001. Before you jump out of your pants with unrelenting joy, I should mention that there are 7.2 million Americans holding more than one job, representing 5.2% of the total labor force. The number of persons who work part time is 4.4 million. The share of the unemployed who have been without a job for more than six months has increased to 20.9%. The unemployment rate for African Americans is 10.6%, and for African American teens it’s over 30%. Hispanic teens face an unemployment rate of 19.6%. Manufacturing employment fell by 25,000 in January. Over the past four years, 2.8 million manufacturing jobs have been lost. On the other hand, employment in service-producing industries, such as, retailers, education and health, banks, transportation, warehousing, and government agencies, rose 177,000 in January after a rise of 123,000 in December. In case you think workers are getting rich, please think again. The average hourly earnings for workers rose 3 cents in January, and over the month, the average workweek declined by 0.1 hour to 33.7 hours. Over the year, the factory workweek was down by 0.3 hour. The labor participation rate edged lower to 65.8%. When was the last time it was lower? Some people actually drive to work. Crude is $47 a barrel or 35% higher than one year ago. In sum, the January gain of 146,000 new jobs was disappointing, and the Labor Department also trimmed the number of jobs created in the fourth quarter of 2004 by 59,000. I wonder what the revision will be for January?
As is the norm, the 1.8 million marginally attached persons were not counted as unemployed. They included 515,000 discouraged workers. They are described as discouraged because they are not currently looking for work specifically because they believed no jobs were available for them. Had they been non-specifically and non-currently looking for work, who knows whether they would be counted as unemployed.
The disappointing job report helped to push 10-year Treasury yields down to 4.09%. Adjusting for inflation, the yield on the 10-year is only about 0.9 percentage point above the rate of consumer price inflation. Over the last ten years, the average differential has been 2.9% higher. With the yield curve getting flatter, my long 2-year and short 10-year trade has turned into a poor decision. I took a 20 basis point loss. I firmly believe that 10-year Treasury yields are significantly too low. The market says I’m wrong. It’s important to undo a trade that has not worked out from day one.
Yesterday I read a brilliant analysis of the current interest rate landscape. It should be required reading for all Fed members. It’s entitled “Things Change” and was written by Gary Carmell of CWS Capital in Newport Beach. The link is http://www.cwscapital.com/pubs/qupdates/050130/change.html
There were several comments coming from the G-7 finance ministers. ECB president Trichet stated “the industrialized world as a whole is in deficit, there is a current account deficit, and there is no offsetting of the U.S. current account deficit by other industrialized countries.” Bank of England Governor King discussed “global imbalances” from trade and budget deficits and that governments must agree on the “nature of the risks inherent in current international monetary arrangements. There is likely to be a limit to the amount of debt that one country can issue as a result of persistent deficits before investors start to worry about its ability or willingness to repay.” On the other hand, Greenspan now says the current account deficit won’t create a crisis because the U.S. economy will adjust “without any significant consequences.” Why? Because of the falling dollar and plans to cut the budget deficit. Maybe Greenspan failed to notice the recent rise in the dollar versus the euro from 1.36 to 1.29, and maybe he failed to notice that the projected record budget deficit for 2005 will be higher than the record in 2004. It’s been a long time since Greenspan has been right on any important economic matter. Maybe the U.S. needs a new generation of bankers.
Greenspan noted that “interestingly, the change in U.S. home mortgage debt over the past half-century correlates significantly with our current account deficit.” If that is so, then, according to Freddie Mac’s projections, there isn’t much near-term hope for the current account declining very much. Freddie Mac estimates that cash-out mortgage refinancing added over $100 billion to the economy in 2004 and that it will boost the economy by $96 billion in 2005.
According to Trim Tabs, investors put $3.6 billion into U.S. and international stock mutual funds in the week ended Feb. 2 compared to $747 million of outflows the previous week. On the other side of the coin, in 2004, the ratio of insider selling to buying was 28:1, the most one-sided on record. It would not surprise me to see that ratio get more bearish in this year’s first quarter.
Mark Twain: “It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.”
Friday, February 04, 2005
2/4/05 Closing Remarks
I thought it only fair that I provide the real closing remarks that the President had prepared for the State of the Union Address. They were changed because the Vice President did not give his nod of approval.
The remarks began with a bit of a swagger. They projected an increase in January 2005 employment that would offset the job losses during the first term in office. To date, the U.S. lost 122,000 jobs since the President took office. Employment is down 241,000 jobs from the high point reached in March 2001. With some helpful revisions, it’s possible that figure can be eliminated. Unfortunately, there is a cautionary note to this rosy picture. The latest jobs component of the ISM service-sector index fell to its lowest point since September 2003. We are essentially a service economy, and the service sector has been carrying the job creation load since the economic recovery began in November 2001. With slowing service sector hiring and slowing productivity growth, unit labor costs will rise in the future and they will lead to further inflationary concerns and, ultimately, to higher interest rates. It will create additional borrowing costs for our nation, and this will create greater budget deficits than previously forecast. Of course, as previously mentioned, forecasts are meant to be broken.
Much of the President’s speech was devoted to reforming Social Security. Left out of the closing remarks was a word of caution. If investments in the proposed private accounts earn less than 3 percent a year above inflation, then a worker would do worse than in the existing system. Many conservative Republicans and all Senate Democrats object to the idea of financing accounts with money earmarked for the Social Security trust fund. Privately, there is a move on by the aforementioned Republicans and Democrats to bolster the existing Social Security program with money from general revenues. In sum, it’s doubtful that the proposed President’s plan will travel well into the corners of our nation’s populace. The idea of private accounts creates fear in most people.
The President explained that we don’t have an exit strategy in Iraq. Nevertheless, 15,000 U.S. troops will leave Iraq in February. Much was made of the sacrifices made and of our 1400 + troops dying and of our 15,000 wounded U.S. soldiers so that the Iraqis could be free to vote. Nothing was said about the projected outcome of the election. The President had them in the closing remarks but the Vice President asked to have them removed. They indicated that the U.S. choice, Allawi, was getting skunked in the voting by a “Sistani tsunami.” As the head of the Constitutional Monarchy Party remarked, “Americans are in for a shock. We’ve got 150,000 troops here protecting a country that’s extremely friendly to Iran, and training their troops.” If it works out that way, this would be shock and awe. Making matters worse, Gen. Richard Myers testified that more than two-thirds of the 136,000 members of the Iraqi security forces that we have trained and equipped were unready to combat the insurgency.
The President wanted to include some additional remarks about inflation. It is well appreciated that higher costs for materials and transportation are impacting the bottom line for many corporations. Cost controls have helped to partially offset the pressure on operating margins. However, as productivity growth eases, there has been an increasing desire to raise prices and offset higher costs. Whirlpool, for example, estimates that its material costs will increase another 7 to 8% during 2005. As such, Whirlpool implemented global price increases of 5 to 10%, effective January 1. The company has to do what is best for its shareholders. At the same time, if Americans are to afford higher priced appliances, then their job income must rise to offset inflation. That has not happened over the recent period. Job creation without sufficient income growth cannot sustain a consumer-based economy.
The President had included remarks on various currencies. He included a statement that there has been much speculation about China easing its current peg against the U.S. dollar. It has been suggested that the peg has been responsible in large part for the record trade deficit with China. One should note that a change in the peg would not alter the differential in unit labor costs that favor China. In addition, more countries are moving towards a dual currency basket. Russia is the latest example.
Finally, the President wanted to say a word about our economy. We are at war. Our defense budget has been escalating during this time of war. Defense contractors have benefited. Boeing is the second largest defense contractor. In less than three weeks, Boeing will announce the sale of its Wichita facility. The company has approximately 7,000 employees working there. Boeing Wichita builds 75% of the 737 airframe and assemblies for all of Boeing’s commercial aircraft, which are then shipped to Renton and Everett for final assembly. The President expects those 7,000 employees will continue to be employed by the new buyer. Over the past 48 months, Boeing cut thousands and thousands of workers from its payroll. Over the past 48 months, Boeing has received hundreds of millions of dollars in tax benefits. When does Boeing start benefiting the communities in which they serve?
I thought it only fair that I provide the real closing remarks that the President had prepared for the State of the Union Address. They were changed because the Vice President did not give his nod of approval.
The remarks began with a bit of a swagger. They projected an increase in January 2005 employment that would offset the job losses during the first term in office. To date, the U.S. lost 122,000 jobs since the President took office. Employment is down 241,000 jobs from the high point reached in March 2001. With some helpful revisions, it’s possible that figure can be eliminated. Unfortunately, there is a cautionary note to this rosy picture. The latest jobs component of the ISM service-sector index fell to its lowest point since September 2003. We are essentially a service economy, and the service sector has been carrying the job creation load since the economic recovery began in November 2001. With slowing service sector hiring and slowing productivity growth, unit labor costs will rise in the future and they will lead to further inflationary concerns and, ultimately, to higher interest rates. It will create additional borrowing costs for our nation, and this will create greater budget deficits than previously forecast. Of course, as previously mentioned, forecasts are meant to be broken.
Much of the President’s speech was devoted to reforming Social Security. Left out of the closing remarks was a word of caution. If investments in the proposed private accounts earn less than 3 percent a year above inflation, then a worker would do worse than in the existing system. Many conservative Republicans and all Senate Democrats object to the idea of financing accounts with money earmarked for the Social Security trust fund. Privately, there is a move on by the aforementioned Republicans and Democrats to bolster the existing Social Security program with money from general revenues. In sum, it’s doubtful that the proposed President’s plan will travel well into the corners of our nation’s populace. The idea of private accounts creates fear in most people.
The President explained that we don’t have an exit strategy in Iraq. Nevertheless, 15,000 U.S. troops will leave Iraq in February. Much was made of the sacrifices made and of our 1400 + troops dying and of our 15,000 wounded U.S. soldiers so that the Iraqis could be free to vote. Nothing was said about the projected outcome of the election. The President had them in the closing remarks but the Vice President asked to have them removed. They indicated that the U.S. choice, Allawi, was getting skunked in the voting by a “Sistani tsunami.” As the head of the Constitutional Monarchy Party remarked, “Americans are in for a shock. We’ve got 150,000 troops here protecting a country that’s extremely friendly to Iran, and training their troops.” If it works out that way, this would be shock and awe. Making matters worse, Gen. Richard Myers testified that more than two-thirds of the 136,000 members of the Iraqi security forces that we have trained and equipped were unready to combat the insurgency.
The President wanted to include some additional remarks about inflation. It is well appreciated that higher costs for materials and transportation are impacting the bottom line for many corporations. Cost controls have helped to partially offset the pressure on operating margins. However, as productivity growth eases, there has been an increasing desire to raise prices and offset higher costs. Whirlpool, for example, estimates that its material costs will increase another 7 to 8% during 2005. As such, Whirlpool implemented global price increases of 5 to 10%, effective January 1. The company has to do what is best for its shareholders. At the same time, if Americans are to afford higher priced appliances, then their job income must rise to offset inflation. That has not happened over the recent period. Job creation without sufficient income growth cannot sustain a consumer-based economy.
The President had included remarks on various currencies. He included a statement that there has been much speculation about China easing its current peg against the U.S. dollar. It has been suggested that the peg has been responsible in large part for the record trade deficit with China. One should note that a change in the peg would not alter the differential in unit labor costs that favor China. In addition, more countries are moving towards a dual currency basket. Russia is the latest example.
Finally, the President wanted to say a word about our economy. We are at war. Our defense budget has been escalating during this time of war. Defense contractors have benefited. Boeing is the second largest defense contractor. In less than three weeks, Boeing will announce the sale of its Wichita facility. The company has approximately 7,000 employees working there. Boeing Wichita builds 75% of the 737 airframe and assemblies for all of Boeing’s commercial aircraft, which are then shipped to Renton and Everett for final assembly. The President expects those 7,000 employees will continue to be employed by the new buyer. Over the past 48 months, Boeing cut thousands and thousands of workers from its payroll. Over the past 48 months, Boeing has received hundreds of millions of dollars in tax benefits. When does Boeing start benefiting the communities in which they serve?
Thursday, February 03, 2005
2/3/05 This Is Hard Work
The President could not include everything he wanted to say last night. It’s hard trying to include everything in an hour or so. He wanted me to pass on some of the thoughts not included due to time constraints.
He mentioned the 2.3 million jobs created in the past year. Unfortunately, five million + jobs were not created as previously forecast in the first four years of the presidency. These things happen. Forecasts are made to be broken. We did create a significant number of outpatient health services positions, educational service providers, and thanks to low interest rates, many jobs in building, selling, financing, and landscaping homes. The U.S. is in the service business. We manufacture very little for export. The 767 is gone. We have to wait until 2008 for the 7E7. Fortunately, due to the lack of fiscal responsibility, defense and government salaries rose in 2004, according to Dice Inc., the leading job board for technology, but computer software salaries fell in 2004 to levels not seen since 2001. There was a continued decline of salaries for contractors and consultants. That’s just the way the cookie crumbles. Working as a security-cleared professional in the government and defense sectors pays well. That’s why Boeing, our number two defense contractor, had profit margins in their defense business 2 ½ times those in commercial aircraft. Boeing stockholders think the company makes its money from commercial airplanes. That’s probably what the company wants you to believe. Defense contracts feed their cash flow. We take care of our own.
There was a discussion on reducing the deficit in half by 2009. Now, please understand this is just a forecast, and forecasts are made to be broken. The budget deficit will increase to a new record in 2005. It can’t be helped. I need to have discretion in my spending. That’s why discretionary spending rose 10% from 2002 to 2004. The President did not want to scare the American people. The national debt stands at $7.6 trillion and unfunded liabilities for Medicare and Social Security total $72 trillion. If he tries to do away with waste, fraud, and abuse, there won’t be any government workers or government contractors. Think of the loss of jobs. We need to keep America’s consumers on the front lines spending, spending, and spending.
The President talked about rising home ownership. There was not enough time to discuss the fact that home prices are outpacing income gains. For example, according to Arizona State University’s Arizona Real Estate Center, the reading on its key affordability index for existing homes fell, at the end of 2004, to its lowest level in 15 years. Despite the sagging affordability index, new and used-home sales broke records in 2004 in metropolitan Phoenix. This story is repeated in San Francisco and many other areas of the county.
The President took great pride in the recent elections in Iraq. There wasn’t sufficient time to discuss the significance of a Shi’ite government in power and their building an alliance with Iran. It would mean that Iraq and Iran together would control over 50% of the oil reserves in the Middle East. This would necessitate our invading Iran. That would mean more defense spending, more jobs, and more supplemental budgets that would increase the record deficits to even higher record deficits.
The President did not have time to discuss the daily funding of our twin tower deficits. Each day we need to import at least $2 billion in foreign capital. It’s the price the foreigners have to pay for America to be the world’s growth engine. We’re top economic dog. We’re the economic super power. Let’s take Malaysia. Not many folks know where it’s located. I didn’t either until Laura told me. She knows theses things. She taught school. Malaysia’s reserves are 54% of their GDP, and that’s up 20 percentage points from just two years ago. Then you look at China and their reserves. The world is afloat in dollars. There are too many dollars. I tell Greenspan to stop printing so many, but he won’t listen. He says there’s no alternative but to monetize our debts. I wanted to bring Volcker back but he wouldn’t take the job. The problem is the dollar is still number one on the world scene but it’s beginning to share the stage with other currencies, and, in particular, the euro. They built alliances over there but we really haven’t. I’m told things could get worse if we don’t save more and spend less. The American people don’t want to hear that.
The President wanted to discuss all these recent mergers. They are killing the job numbers. Every time there is a big merger 13,000 jobs are cut or 6,000 or some number in the thousands. It’s very bad for spending morale.
The President touched on the graying of the population. Hair coloring looks like a growth business. According to CSIS, by 2040, 26% of the U.S. population will be at least 60 years old, up from 16.3% in 2000. That’s why we need to encourage illegal aliens to come across our borders. They are young. They will reduce the age of our population. Someone has to work the fields. We don’t want to end up like China. By 2040, 28% of China’s population will be at least 60.
The President wanted to say a few words to corporations. There have been numerous tax breaks afforded them over the past four years. Worker productivity has helped the bottom line but hiring has not kept pace. More and more capital investments are flowing to China and India. According to Corporate Office Perspectives, the San Francisco Bay Area has more than 83 million square feet of vacant office, flex, and R&D space. That’s a story found in many other tech cities. Something has to be done about those vacant buildings. Either fill them or the tax breaks disappear. There may be pork in Washington but there’s no free lunch.
Finally, the President wanted to say a few words about the changes taking place in the work place. The average worker has toiled for the last several years creating positive productivity results that aided corporate profits but taking it in the butt with wages falling behind inflation. We are beginning to face a different picture. Productivity in the nonfarm sector slowed to a 0.8% annual rate in the fourth quarter of 2004, the smallest gain in nearly four years. With unemployment declining, the labor market is beginning to tighten in certain areas. Employees want higher wages and benefits. Without them, it’s not possible to make ends meet and still spend. Wages will need to rise and the majority of productivity gains are behind us. Corporations will need to find new ways to increase profits, and they had better not come from increased prices. If that happens, the Fed will fight inflationary forces and increase interest rates far beyond the most recent forecasts. Remember that forecasts are meant to be broken.
The President could not include everything he wanted to say last night. It’s hard trying to include everything in an hour or so. He wanted me to pass on some of the thoughts not included due to time constraints.
He mentioned the 2.3 million jobs created in the past year. Unfortunately, five million + jobs were not created as previously forecast in the first four years of the presidency. These things happen. Forecasts are made to be broken. We did create a significant number of outpatient health services positions, educational service providers, and thanks to low interest rates, many jobs in building, selling, financing, and landscaping homes. The U.S. is in the service business. We manufacture very little for export. The 767 is gone. We have to wait until 2008 for the 7E7. Fortunately, due to the lack of fiscal responsibility, defense and government salaries rose in 2004, according to Dice Inc., the leading job board for technology, but computer software salaries fell in 2004 to levels not seen since 2001. There was a continued decline of salaries for contractors and consultants. That’s just the way the cookie crumbles. Working as a security-cleared professional in the government and defense sectors pays well. That’s why Boeing, our number two defense contractor, had profit margins in their defense business 2 ½ times those in commercial aircraft. Boeing stockholders think the company makes its money from commercial airplanes. That’s probably what the company wants you to believe. Defense contracts feed their cash flow. We take care of our own.
There was a discussion on reducing the deficit in half by 2009. Now, please understand this is just a forecast, and forecasts are made to be broken. The budget deficit will increase to a new record in 2005. It can’t be helped. I need to have discretion in my spending. That’s why discretionary spending rose 10% from 2002 to 2004. The President did not want to scare the American people. The national debt stands at $7.6 trillion and unfunded liabilities for Medicare and Social Security total $72 trillion. If he tries to do away with waste, fraud, and abuse, there won’t be any government workers or government contractors. Think of the loss of jobs. We need to keep America’s consumers on the front lines spending, spending, and spending.
The President talked about rising home ownership. There was not enough time to discuss the fact that home prices are outpacing income gains. For example, according to Arizona State University’s Arizona Real Estate Center, the reading on its key affordability index for existing homes fell, at the end of 2004, to its lowest level in 15 years. Despite the sagging affordability index, new and used-home sales broke records in 2004 in metropolitan Phoenix. This story is repeated in San Francisco and many other areas of the county.
The President took great pride in the recent elections in Iraq. There wasn’t sufficient time to discuss the significance of a Shi’ite government in power and their building an alliance with Iran. It would mean that Iraq and Iran together would control over 50% of the oil reserves in the Middle East. This would necessitate our invading Iran. That would mean more defense spending, more jobs, and more supplemental budgets that would increase the record deficits to even higher record deficits.
The President did not have time to discuss the daily funding of our twin tower deficits. Each day we need to import at least $2 billion in foreign capital. It’s the price the foreigners have to pay for America to be the world’s growth engine. We’re top economic dog. We’re the economic super power. Let’s take Malaysia. Not many folks know where it’s located. I didn’t either until Laura told me. She knows theses things. She taught school. Malaysia’s reserves are 54% of their GDP, and that’s up 20 percentage points from just two years ago. Then you look at China and their reserves. The world is afloat in dollars. There are too many dollars. I tell Greenspan to stop printing so many, but he won’t listen. He says there’s no alternative but to monetize our debts. I wanted to bring Volcker back but he wouldn’t take the job. The problem is the dollar is still number one on the world scene but it’s beginning to share the stage with other currencies, and, in particular, the euro. They built alliances over there but we really haven’t. I’m told things could get worse if we don’t save more and spend less. The American people don’t want to hear that.
The President wanted to discuss all these recent mergers. They are killing the job numbers. Every time there is a big merger 13,000 jobs are cut or 6,000 or some number in the thousands. It’s very bad for spending morale.
The President touched on the graying of the population. Hair coloring looks like a growth business. According to CSIS, by 2040, 26% of the U.S. population will be at least 60 years old, up from 16.3% in 2000. That’s why we need to encourage illegal aliens to come across our borders. They are young. They will reduce the age of our population. Someone has to work the fields. We don’t want to end up like China. By 2040, 28% of China’s population will be at least 60.
The President wanted to say a few words to corporations. There have been numerous tax breaks afforded them over the past four years. Worker productivity has helped the bottom line but hiring has not kept pace. More and more capital investments are flowing to China and India. According to Corporate Office Perspectives, the San Francisco Bay Area has more than 83 million square feet of vacant office, flex, and R&D space. That’s a story found in many other tech cities. Something has to be done about those vacant buildings. Either fill them or the tax breaks disappear. There may be pork in Washington but there’s no free lunch.
Finally, the President wanted to say a few words about the changes taking place in the work place. The average worker has toiled for the last several years creating positive productivity results that aided corporate profits but taking it in the butt with wages falling behind inflation. We are beginning to face a different picture. Productivity in the nonfarm sector slowed to a 0.8% annual rate in the fourth quarter of 2004, the smallest gain in nearly four years. With unemployment declining, the labor market is beginning to tighten in certain areas. Employees want higher wages and benefits. Without them, it’s not possible to make ends meet and still spend. Wages will need to rise and the majority of productivity gains are behind us. Corporations will need to find new ways to increase profits, and they had better not come from increased prices. If that happens, the Fed will fight inflationary forces and increase interest rates far beyond the most recent forecasts. Remember that forecasts are meant to be broken.
Wednesday, February 02, 2005
2/2/05 Giving Thanks
In a preview to tonight’s State of the Union speech, I thought it would be helpful to provide an inside look at what the President will tell the nation. The theme will be giving thanks. He will give a special thanks to Greenspan for raising short term rates, calming fears about inflation, and not saying a disparaging word about the carry trade. He will thank the Fed members for printing money at well over twice the inflation rate and, thus, enable the declining dollar to make U.S. assets look cheap to foreigners. According to Fed statistics, at the end of the third quarter of 2004, foreigners owned $4.5 trillion more in U.S. assets than the U.S. own of foreign assets. The President will give a special thanks to foreigners for exporting their savings to our shores, thus enabling our nation to live well beyond our needs. He will give special thanks to the 45 million Americans who continue to live without health insurance and make sacrifices each and every day. As a show of good faith, the President will have Medicare pay for Viagra and this should provide an economic helping hand in creating a “neocon” erection. The President will give special thanks to investors for overlooking high market valuations while providing a landscape for stocks that exhibit resiliency and hope for riches. He will give special thanks to the construction trade and those participating in the housing boom--- builders, appraisers, mortgage brokers, bankers, buyers, sellers, and all believers in our ownership society. Through intense focus on execution, the housing boom has been extended beyond anyone’s dreams, and this, despite the affordability index declining to record lows. It just goes to show that miracles can happen. They do happen. I got re-elected. That, in itself, is a miracle. I thank one and all for not seeing the light.
Tonight the President will state that, according to new Brookings Institute and CBO projections, in just 10 years, spending on the elderly will total nearly $1.8 trillion, almost 50% of the federal budget. In 2000, it was 35% and in 1990 the total was 29%. The bulk of that growth is spending on Medicare and Medicaid. Because of the enormity of this accident waiting to happen, the President has elected to use his political capital and skip over this problem and focus on Social Security which the CBO stated will not be a problem until 2020. It’s easy to appreciate the reasoning because Holtz-Eakin, a recent White house economist, stated “Medicare and Medicaid spending triples, maybe quintuples by 2050, while Social Security goes up by 50%.” The CBO chimed in and observed that “over the long term, the increasing resources needed for Medicare, Medicaid, and Social Security will exert pressure on the budget that will make current fiscal policy unsustainable.” That brings us to another area of special thanks, and it is directed towards members of Congress. The President wants to thank these members for raising the debt limit on a yearly basis and, without a whimper. That cooperation has made believers out of all Americans in the American way---- spend, spend, and spend--- like there is no tomorrow.
In closing, the President will thank the American people for remaining steadfast and supportive while wages trail inflation, while benefits are cut, and the standard of living for Main Street deteriorates. These are necessary pills to swallow in a time of war. We invaded Iraq. It was part of the plan to bring democracy to the Middle East. There may not be a chicken in every pot, but the Iraqis have had an opportunity to vote.
We have a great nation. Through everyone’s dedication and sacrifice, it will get greater. Good night and God bless America.
In a preview to tonight’s State of the Union speech, I thought it would be helpful to provide an inside look at what the President will tell the nation. The theme will be giving thanks. He will give a special thanks to Greenspan for raising short term rates, calming fears about inflation, and not saying a disparaging word about the carry trade. He will thank the Fed members for printing money at well over twice the inflation rate and, thus, enable the declining dollar to make U.S. assets look cheap to foreigners. According to Fed statistics, at the end of the third quarter of 2004, foreigners owned $4.5 trillion more in U.S. assets than the U.S. own of foreign assets. The President will give a special thanks to foreigners for exporting their savings to our shores, thus enabling our nation to live well beyond our needs. He will give special thanks to the 45 million Americans who continue to live without health insurance and make sacrifices each and every day. As a show of good faith, the President will have Medicare pay for Viagra and this should provide an economic helping hand in creating a “neocon” erection. The President will give special thanks to investors for overlooking high market valuations while providing a landscape for stocks that exhibit resiliency and hope for riches. He will give special thanks to the construction trade and those participating in the housing boom--- builders, appraisers, mortgage brokers, bankers, buyers, sellers, and all believers in our ownership society. Through intense focus on execution, the housing boom has been extended beyond anyone’s dreams, and this, despite the affordability index declining to record lows. It just goes to show that miracles can happen. They do happen. I got re-elected. That, in itself, is a miracle. I thank one and all for not seeing the light.
Tonight the President will state that, according to new Brookings Institute and CBO projections, in just 10 years, spending on the elderly will total nearly $1.8 trillion, almost 50% of the federal budget. In 2000, it was 35% and in 1990 the total was 29%. The bulk of that growth is spending on Medicare and Medicaid. Because of the enormity of this accident waiting to happen, the President has elected to use his political capital and skip over this problem and focus on Social Security which the CBO stated will not be a problem until 2020. It’s easy to appreciate the reasoning because Holtz-Eakin, a recent White house economist, stated “Medicare and Medicaid spending triples, maybe quintuples by 2050, while Social Security goes up by 50%.” The CBO chimed in and observed that “over the long term, the increasing resources needed for Medicare, Medicaid, and Social Security will exert pressure on the budget that will make current fiscal policy unsustainable.” That brings us to another area of special thanks, and it is directed towards members of Congress. The President wants to thank these members for raising the debt limit on a yearly basis and, without a whimper. That cooperation has made believers out of all Americans in the American way---- spend, spend, and spend--- like there is no tomorrow.
In closing, the President will thank the American people for remaining steadfast and supportive while wages trail inflation, while benefits are cut, and the standard of living for Main Street deteriorates. These are necessary pills to swallow in a time of war. We invaded Iraq. It was part of the plan to bring democracy to the Middle East. There may not be a chicken in every pot, but the Iraqis have had an opportunity to vote.
We have a great nation. Through everyone’s dedication and sacrifice, it will get greater. Good night and God bless America.
Monday, January 31, 2005
2/1/05 TGIF
Thank goodness it's February. Last month left everyone with at least a gripe or two. I'm reminded that the best three months of the year just ended. I guess we have our work cut out for us. Let's get started.
For years I have been discussing the aging of the population as the number one trend in our nation. The importance of that trend continues and will continue into the future. There is another area that requires attention, and that's obesity. It is becoming more and more of a problem. The 4th Annual Metabolic Diseases Drug Discovery World Summit will convene in San Diego on April 11-12. It will feature the latest industry and academic advances by leaders in the fields of diabetes and obesity. The conference will focus on new targets and the development of therapeutic prospects for controlling the set of early risk factors that can develop into metabolic diseases. Some of the research efforts that will be presented shall focus on MC 4 Receptor Agonists. A leader in this effort is Palatin Technologies (symbol PTN), and they will be a presenter at the conference.
Palatin's research has involved the administration of Melanocortin-4 Receptor, and has resulted in this small molecule decreasing food intake by 30-50%---in rodents---and reducing body weight, and importantly, without adverse effects. In November 2004, Carl Spana, Ph.D, President and CEO of Palatin, stated "we will continue to aggressively pursue the development of this molecule with the intent of filing an IND in the second half of 2005." To date, five melanocortin receptor subtypes have been identified as playing a key role in sexual dysfunction, obesity, inflammation, and cachexia (extreme wasting). The company's melanocortin compound for erectile dysfunction currently is in Phase II clinical trials. Additionally, NeutroSpec, Palatin's proprietary radiolabeled monoclonal antbody product for imaging and diagnosing infections, has been approved by the FDA and is marketed and distributed by Mallincrodt Imaging.
As an investment, Palatin is not for everyone. The total market cap is only $124 million. The company is not cash flow positive and is losing money. The stock, however, sells for a modest price of $2.30 per share. In my view, it's work in obesity has merit as does its efforts in treating male and female sexual dysfunction as well as its product for imaging patients. For those taking a long-term view, Palatin might have a place in your portfolio.
Bernard Baruch: "A speculator is a man who observes the future, and acts before it occurs."
Thank goodness it's February. Last month left everyone with at least a gripe or two. I'm reminded that the best three months of the year just ended. I guess we have our work cut out for us. Let's get started.
For years I have been discussing the aging of the population as the number one trend in our nation. The importance of that trend continues and will continue into the future. There is another area that requires attention, and that's obesity. It is becoming more and more of a problem. The 4th Annual Metabolic Diseases Drug Discovery World Summit will convene in San Diego on April 11-12. It will feature the latest industry and academic advances by leaders in the fields of diabetes and obesity. The conference will focus on new targets and the development of therapeutic prospects for controlling the set of early risk factors that can develop into metabolic diseases. Some of the research efforts that will be presented shall focus on MC 4 Receptor Agonists. A leader in this effort is Palatin Technologies (symbol PTN), and they will be a presenter at the conference.
Palatin's research has involved the administration of Melanocortin-4 Receptor, and has resulted in this small molecule decreasing food intake by 30-50%---in rodents---and reducing body weight, and importantly, without adverse effects. In November 2004, Carl Spana, Ph.D, President and CEO of Palatin, stated "we will continue to aggressively pursue the development of this molecule with the intent of filing an IND in the second half of 2005." To date, five melanocortin receptor subtypes have been identified as playing a key role in sexual dysfunction, obesity, inflammation, and cachexia (extreme wasting). The company's melanocortin compound for erectile dysfunction currently is in Phase II clinical trials. Additionally, NeutroSpec, Palatin's proprietary radiolabeled monoclonal antbody product for imaging and diagnosing infections, has been approved by the FDA and is marketed and distributed by Mallincrodt Imaging.
As an investment, Palatin is not for everyone. The total market cap is only $124 million. The company is not cash flow positive and is losing money. The stock, however, sells for a modest price of $2.30 per share. In my view, it's work in obesity has merit as does its efforts in treating male and female sexual dysfunction as well as its product for imaging patients. For those taking a long-term view, Palatin might have a place in your portfolio.
Bernard Baruch: "A speculator is a man who observes the future, and acts before it occurs."
1/31/05 The View From The CBO
Did anyone read about the CBO's view of the dollar? They chimed in by stating the "CBO expects that the exchange value of the dollar will decline during the next two years, largely because continued deficits in the nation's current account will raise net liabilities to foreigners to new highs. In CBO's view investors will be less willing to add to their holdings of dollar assets at current exchange rates and interest rates." Did you get the last part about interest rates? The CBO says don't worry because the dollar's fall will be orderly. Of course, who would expect the decline to pick up speed from exaggerated heights? Eventually, the CBO believes the dollar's decline will boost U.S. net exports and economic growth. They never mentioned the negative impact on the purchasing power of all U.S. consumers.
While the Iraqis were voting, SBC and AT&T were doing a $16 billion deal; MetLife was talking to Travelers Life about a $12 billion acquisition; Eastman Kodak was finalizing a $980 million deal with Creo; Lee Enterprises and Pulitzer Newspapers were getting together in a $1.46 billion deal; and KKR and Providence were looking to acquire Adelphia. It was a normal weekend.
Over in San Francisco, the loud talk in restaurants was not about the money being made in stocks. That was back in 1999 and 2000. The chatter revolves around real estate deals. You can't get a table at a hot restaurant unless you have at least a half a dozen deals in the works.
As the value of real estate increases, I'm told not to worry. There's plenty of equity to cover the total debt of Amercian households that now exceeds $10 trillion. That knowledge helps me to sleep so much better each night. The consumer doesn't even need to visit a bank as a homeowner can use the home as an ATM. That's real convenience.
Steven Wood, chief economist at Insight Economics: "The cost of hiring workers is rising but the wage income of workers is not keeping up with inflation."
Blaming it on poor winter weather, Wal-Mart stated that same-store sales would rise 2.5% for the month of January, lower than the mid-point of the previous 2 to 4% growth expectation.
Currency trading is averaging about $2 trillion a day.
Rather than counting on the yuan's peg to the dollar to change, maybe we should focus more on the Chinese increasing their direct investments in U.S. businesses within our boundaries. As long as U.S. consumers fail to harness their appetite for Chinese imports, the best we can hope for is to attract Chinese investment to our shores--- and not in U.S. Treasury bonds. Japan has built factories here and made other investments. The Chinese can be expected to do the same. There is more to attract the Chinese than "think pads." It's conceivable China might wish to invest in one of the 'Big Four" U.S. coal producers.
Did anyone read about the CBO's view of the dollar? They chimed in by stating the "CBO expects that the exchange value of the dollar will decline during the next two years, largely because continued deficits in the nation's current account will raise net liabilities to foreigners to new highs. In CBO's view investors will be less willing to add to their holdings of dollar assets at current exchange rates and interest rates." Did you get the last part about interest rates? The CBO says don't worry because the dollar's fall will be orderly. Of course, who would expect the decline to pick up speed from exaggerated heights? Eventually, the CBO believes the dollar's decline will boost U.S. net exports and economic growth. They never mentioned the negative impact on the purchasing power of all U.S. consumers.
While the Iraqis were voting, SBC and AT&T were doing a $16 billion deal; MetLife was talking to Travelers Life about a $12 billion acquisition; Eastman Kodak was finalizing a $980 million deal with Creo; Lee Enterprises and Pulitzer Newspapers were getting together in a $1.46 billion deal; and KKR and Providence were looking to acquire Adelphia. It was a normal weekend.
Over in San Francisco, the loud talk in restaurants was not about the money being made in stocks. That was back in 1999 and 2000. The chatter revolves around real estate deals. You can't get a table at a hot restaurant unless you have at least a half a dozen deals in the works.
As the value of real estate increases, I'm told not to worry. There's plenty of equity to cover the total debt of Amercian households that now exceeds $10 trillion. That knowledge helps me to sleep so much better each night. The consumer doesn't even need to visit a bank as a homeowner can use the home as an ATM. That's real convenience.
Steven Wood, chief economist at Insight Economics: "The cost of hiring workers is rising but the wage income of workers is not keeping up with inflation."
Blaming it on poor winter weather, Wal-Mart stated that same-store sales would rise 2.5% for the month of January, lower than the mid-point of the previous 2 to 4% growth expectation.
Currency trading is averaging about $2 trillion a day.
Rather than counting on the yuan's peg to the dollar to change, maybe we should focus more on the Chinese increasing their direct investments in U.S. businesses within our boundaries. As long as U.S. consumers fail to harness their appetite for Chinese imports, the best we can hope for is to attract Chinese investment to our shores--- and not in U.S. Treasury bonds. Japan has built factories here and made other investments. The Chinese can be expected to do the same. There is more to attract the Chinese than "think pads." It's conceivable China might wish to invest in one of the 'Big Four" U.S. coal producers.
Sunday, January 30, 2005
1/30/05 M&A
With the P&G deal with Gillette, over the past three months, M&A activity has exceeded $850 billion. This is significant volume and the most since the $933 billion in the final one-third of 2000. I place a great deal of weight on whether an acquisition is done for cash or stock. As a former Chairman of a NYSE listed company, I considered our stock as the ultimate currency. For me to part with it in an acquisition, the opportunity would need to be extraordinary. I never found one that extraordinary. There is at least one other fairly bright person who feels the same way--- Warren Buffett. Only in a rare occasion did he ever offer even a small number of Berkshire Hathaway shares in an acquisition. Just like the Fed printing money, it is so easy to print more stock certificates when buying another company. Parting with cash, makes you think a good deal harder. Maybe that's why most acquisitions disappoint.
There is an element in M&A activity that rarely is mentioned. When should talks between companies be announced? There isn't a hard and fast legal rule and there is a good deal of leeway in this area. Talks between P&G and Gillette commenced in mid-November. P&G's CFO stated "most of us lost our Thanksgiving weekend to this." Some time in December negotiations stalled over price. In the second week of January, talks resumed and they remained in a tight circle of about 15 top P&G managers. The problem of price soon was eliminated. Even so, it is difficult for an acquisition to be a win-win situation for both parties to a transaction.
In January 2003, there was a $1.3 billion outflow from mutual funds. In January 2004, there was a $28 billion inflow. With only one trading day left in the month, this January could show close to a $10 billion outflow, possibly a record for the first month of the year.
With the P&G deal with Gillette, over the past three months, M&A activity has exceeded $850 billion. This is significant volume and the most since the $933 billion in the final one-third of 2000. I place a great deal of weight on whether an acquisition is done for cash or stock. As a former Chairman of a NYSE listed company, I considered our stock as the ultimate currency. For me to part with it in an acquisition, the opportunity would need to be extraordinary. I never found one that extraordinary. There is at least one other fairly bright person who feels the same way--- Warren Buffett. Only in a rare occasion did he ever offer even a small number of Berkshire Hathaway shares in an acquisition. Just like the Fed printing money, it is so easy to print more stock certificates when buying another company. Parting with cash, makes you think a good deal harder. Maybe that's why most acquisitions disappoint.
There is an element in M&A activity that rarely is mentioned. When should talks between companies be announced? There isn't a hard and fast legal rule and there is a good deal of leeway in this area. Talks between P&G and Gillette commenced in mid-November. P&G's CFO stated "most of us lost our Thanksgiving weekend to this." Some time in December negotiations stalled over price. In the second week of January, talks resumed and they remained in a tight circle of about 15 top P&G managers. The problem of price soon was eliminated. Even so, it is difficult for an acquisition to be a win-win situation for both parties to a transaction.
In January 2003, there was a $1.3 billion outflow from mutual funds. In January 2004, there was a $28 billion inflow. With only one trading day left in the month, this January could show close to a $10 billion outflow, possibly a record for the first month of the year.
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