Close Attention To Detail

11/19/05 Close Attention To Detail

Speaking to our troops at Osan Air Base in Korea, Bush stated "We don't know the course our own struggle will take, or the sacrifices that might lie ahead. We do know, however, that the defense of freedom is worth our sacrifice." Staying the course for freedom is the battle cry. Had you been in Congress, would you have voted to invade Iraq to fight for Iraqi freedom? Just an aside, remember the Korean war? We have 30,000 active duty personnel in Korea.

Medicaid provides health care for one-in-six Americans.

Yesterday, both the S&P and the Nasdaq closed at 4-year highs. A 6.3% gain for GM helped to power the market.

China will purchase 150 Boeing 737s and Kingfisher, the Indian airline, will buy 30 Airbus A320s.

Crude closed down 2% on the week to $56.14 a barrel and natural gas declined almost 30 cents on the week to $11.414 per million BTUs.

An estimated 17 million adults ages 18 and older (8.0 percent) reported having experienced at least one major depressive episode during the past year, the Substance Abuse and Mental Health Services Administration (SAMHSA) reported today. Around two thirds of them reported receiving treatment for that depression in the past year, according to the new report, "Depression among Adults."

Ford will cut 4,000 salaried jobs next quarter. Shortly, GM will announce the closing of several plants as well as the cutting of about 25,000 workers. The company has too many plants and too many models. GM cannot regain profitability in its North American operations while providing offerings with little demand.

The ECB indicated that, on Dec. 1, it would raise interest rates for the first time in five years.

Doug Noland: "The Federal Reserve’s responsibility “for maintaining financial stability” must begin long before there is an $800 billion Current Account Deficit, $3.6 Trillion of “repos,” $270 Trillion of derivative contracts, a too powerful Mortgage Finance Bubble, all-encompassing leveraged speculation and a terribly distorted Bubble Economy. Financial stability is a daily and ongoing discipline – an uncompromising commitment to broad-based financial and economic soundness, stability and sustainability, not some theoretical post-Bubble “mop-up” strategy."

The use of privately-traded derivatives reached a record in the first half of this year with the notional amount of outstanding trades worth $270,000bn, the Bank for International Settlements said on Thursday.

TheDeal.com noted that "the investment banks running the auction for Albertson's are trying to push a Dec. 7 deadline for final bids."

This is still a stockpicker's market. Most homebuilding stocks have declined at least 10-20% from their all-time highs. Beazer Homes made a new all-time high on Friday. It was my favorite homebuilder in 1998. I was patient and held the stock for five years. I was rewarded with a gain of five times my original investment. I left a great deal of money on the table. Since I sold my shares, the stock doubled again. My decision to sell was simply to lock in my profits. The fact is the company's stock has been a good value from 1998 to the present.

Francis Bacon: "It is the true office of history to represent the events themselves, together with the counsels, and to leave the observations and conclusions thereupon to the liberty and faculty of every man's judgment."

No Worries-- Be Happy

11/18/05 No Worries-- Be Happy


The price of homes sold in the Bay Area dropped in October for the second month in a row as a result of higher interest rates and reduced demand, a report said Thursday. The median price for the region was $614,000, according to DataQuick Information Systems, down about 8 percent from August's median of $619,000. October's price is up 17.2 percent, however, from the year before. A total of 10,508 new and resale houses and condos were sold in the region in October. That is 6 percent lower than last October, continuing a seven-month string of declines in year-to-year comparisons, and down about 19 percent from July. In the first 10 months of this year, there have been 5.1 percent fewer homes sold than in 2004.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,815 in October. That was up from $2,722 in September. A year ago it was $2,419.

General Motors CEO Rick Wagoner told employees Thursday that the company has no intention of filing for bankruptcy protection and that outside speculation surrounding the matter is "just plain wrong.""I'd like to just set the record straight here and now: There is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner wrote in a column posted on an internal employee website.
After selling down to $20.60, GM stock closed up $2 from that multi-decade low. In my view, GM offers unusual risk/reward potential. GM should soon announce a restructuring of its North American operations.

Gold hit a 18-year high at $486.90. If inflation does not pose a concern and our financial stability is not in question, then why is gold knocking on the door of $500 an ounce? It was only a few years ago we discussed the wisdom of purchasing gold at $253 an ounce. Could the recent price rise be tied to the Fed's decision to cease publication of M3 monetary statistics in March 2006?

The Philly Fed Index feel unexpectedly to 11.5 in November from 17.3 in October. This news led to a rally in the treasury bond market. For bonds, bad news is good news. Stocks rallied with Google leading the way as it passed the $400 mark. Even though the Nasdaq is at a 4 1/2 year high, that index is till 55%+ below its highest level reached in 2000. Meanwhile, the Nikkei is nearing a 5-year high, and of course, it too is way below its highest mark reached years ago.

If you have idle cash lying around and don't pay large commissions, Georgia Pacific offers a nice return on your money. Ex- commissions, you make 74 cents a share between today and Dec. 15, the period when the tender is completed and you get paid $48 a share.

Not surprisingly, building permits declined 6.7% in October and housing starts dropped by 5.6%, the fewest number since March.

A total of 545,000 jobless claims have been filed for Katrina and Rita and 16,400 for Wilma. In the latest weekly reporting period, the number of Americans receiving state jobless benefits rose 3,000 to 2.79 million.

The WSJ reported that Cisco is close to buying Scientific Atlanta for $6.9 billion, $5.3 billion net of cash, or $43 a share.

Hughes Supply had a record quarterly operating cash flow of approximately $112 million, and an internal return on invested capital in the quarter exceeding 30%. Those are impressive results.

"Yesterday, oil more or less hit a bottom," said analyst Victor Shum of Purvin & Gertz in Singapore. "The expectation now is that sustained cold weather in the U.S. Northeast is just a matter of time, and that's keeping crude from falling too low."

Yesterday, Bon-Ton Stores reported a disappointing quarter. Immediately, folks jumped to the conclusion that their purchase of the Saks Northern division stores was in trouble. That created a sharp drop in Saks shares but a much smaller decline for Bon-Ton. I think the sale is a win-win for both companies. I should mention that Kurt Barnard believes Bon-Ton can get on the right track. In addition, on Tuesday, Saks had mentioned that they had decided not to sell the Club Libby Lu operation. Shareholders need to keep it real. Club Libby Lu does $30 million in total sales. In other words, for Saks it's like a pimple on an elephant's ass. It is not sending a message as to the potential sale of Saks Fifth Ave.

Nationally, retailers expect to hire 520,000 people this year, comparable to last year, said National Retail Federation spokeswoman Ellen Tolley Davis.

Sol Palha: "Unfortunately real estate is no longer the stuff dreams are made off; instead it is the main ingredient of nightmares. Prices have shot to such levels that most people who go out and buy a house right now with all these creative financing options should seriously consider checking themselves into ward 12."

Chrysler is offering two years of free gasoline and scheduled maintenance.

Microsoft is morphing into an Internet advertising company coupled with Xbox360. We will see what Google, Yahoo, and Sony say about that.

Bush, in his final debate with Al Gore, stated "you need someone in office who will tell the truth." No worries--be happy. I want to puke. We have almost 2,100 killed and over 15,000 injured as a result of our invasion of Iraq. Bill Clinton initiated Desert Fox but he never started a war.

Chuck Hagel, a senior senator and Vietnam veteran: “The Bush Administration must understand that each American has a right to question our policies in Iraq and should not be demonised for disagreeing with them. Suggesting that to challenge or criticiZe policy is undermining our troops is not democracy, nor what this country has stood for over 200 years.”

A Cheney ally told Time magazine this week that “Cheney’s war is swallowing Bush’s presidency." Actually, Bush is quite effective in swallowing his own presidency. Our fighting men and women and the folks on Main Street are paying the price for his election and re-election.

Adrienne Rich : "Lying is done with words and also with silence."

Increases

11/17/05 Increases

Energy prices have climbed 29.5 percent over the past 12 months. Housing costs, which account for more than 40 percent of the consumer price index, rose 0.9 percent last month -- the largest gain since January 2001. Housing costs have jumped 3.9 percent over the past 12 months. It's easy to see why wages have not kept pace with the rising rate of inflation. The core rate of inflation is for the tooth fairy and not for us humans.

In September, net foreign purchases of long-term domestic securities were $118.1 billion, $4.3 billion of which were net purchases by foreign official institutions and $113.8 billion of which were net purchases by private investors. U.S. residents, meanwhile, bought a net $16.2 billion in foreign-issued securities.

The housing market index declined by 8 points from 68 to 60 in November, indicating a weaker but still healthy market. The index peaked at 72 in June.
It was the biggest one-month drop since October 2001.
All three components of the index fell in November: current sales of single family homes fell from 74 to 66, expected sales fell from 73 to 64 and buyers' traffic fell from 51 to 46.

Philadelphia-area consumers plan to increase their gift spending significantly this holiday season, according to the twentieth annual holiday survey of retail spending and trends commissioned by Deloitte & Touche USA LLP. The survey -- which includes the Pennsylvania cities of Philadelphia, Allentown and Harrisburg, as well as Southern New Jersey and parts of Delaware and Maryland -- found that area shoppers plan to spend an average of $638 on gifts this holiday season -- up from $522 a year ago and above the national average of $604. Area consumers expect to spend one-quarter of their total budget via the Internet.

Gold jumped $10 an ounce and silver topped $8. Platinum and copper made another record high. Natural gas rose sharply by 6.6% and crude touched $58 a barrel. At the same time, the yield on 10-year Treasury bonds dropped to 4.48%.

Crude inventories fell by 2.2 million barrels, the Energy Information Administration said. Gasoline inventories fell by 900,000 barrels, while distillate inventories, which include home heating oil, rose by 2.6 million barrels.

If you had a choice to buy all of GM or all of Avon, which company would you choose? The market cap for each is about $11.5 billion. Do you believe GM will file for bankruptcy? A three- month strike by UAW workers at Delphi could bankrupt GM, Sanford C. Bernstein analyst Brian Johnson wrote in a report. I don't believe that will occur. If I had $11.5 billion, I'd be more than happy to buy all the outstanding GM stock for that amount. As for Avon, I'm not into make-up.

Carl Jung: "The healthy man does not torture others--generally it is the tortured who turn into torturers."

Vice President Dick Cheney and his staff have been declaring themselves exempt from the travel disclosure laws followed by the rest of the White House, a Center for Public Integrity investigation released today found. The vice president's office appears to have stuck taxpayers with millions of dollars in travel costs and has avoided disclosing its expenses and destinations. The private sector routinely covers the travel expenses associated with government officials' appearances -- of which Cheney himself has made more than 275 since 2001 -- at think tanks, trade organizations and universities around the world. When the private sector picks up the tab, however, federal law requires that officials report where they went, how much it cost, and who paid. Yet since 2001, Cheney's office -- unlike Vice President Al Gore before him -- has claimed that it is not bound by the travel disclosure rules the rest of the White House complies with, the Center found. Letters from the vice president's counsel assert that the office is not "an agency" of the executive branch, but adds as "a matter of comity" that none of the staff has accepted travel payments from a non-federal source. Since the vice president's office engages in trips like any other government agency, its refusal of payment from the private sector defers the costs to taxpayers -- all while keeping the travel specifics concealed from public view.
If the vice president's position is not part of the executive branch, then maybe we can dispense with it.

Mahatma Gandhi: "You can chain me, you can torture me, you can even destroy this body, but you will never imprison my mind."

Did the U.S. use white phosphorus in a "massive and indiscriminate way" against civilians at Fallujah? Who gave the order to use white phosphorus in the first place?

The U.S. Bureau of Labor Statistics, which surveyed 60,000 households nationwide, suggests that, for all Katrina evacuees who haven't returned home, 33.4 percent who are seeking jobs have yet to find them.

N.Y. Daily News: "At the moment, no one can have confidence in the Bush administration. Almost three years into the war, the world is not safer, the Middle East is less stable and Americans and others die for a mission that is not what it once was called: a fight for democracy. It would be nice, as well as important, to know how we got into this mess - nice for us, important for the President. It wasn't that he had the wrong facts. It was that the right ones didn't matter."


Average weekly earnings rose by 2.9 percent, seasonally adjusted, from October 2004 to October 2005. After deflation by the CPI-W, average weekly earnings decreased by 1.6 percent.

Marc Faber: "Since the formation of the US Federal Reserve Board in 1913, the US dollar has lost 92% of its purchasing power. This after the US dollar maintained its purchasing power between 1792, when the Mint Act was passed, and 1913, when the Fed was formed. Since 1980, US household wealth, driven by easy money and credit has risen from US dollar 7 trillion to US dollar 49.8 trillion while total credit market debt has exploded from 120% of GDP, in 1980, to now over 320% of GDP. The US has no other option but to print money. Otherwise their illusionary wealth collapses and drags down the economy in a deflationary apocalypse. So, Mr. Bernanke will print money."

Indications

11/16/05 Indications

About 25% of the total estimated December holiday (Christmas and Hanukah) gift market will be produced by the wealthiest 10% of U.S. households, despite a reduction of 1.6% in their spending to about $57 billion. Signaling the challenge retailers face in achieving the 5% increase in 2005 holiday gift sales projected by The National Retail Foundation and The International Council of Shopping Centers, these results were obtained from the recently completed "Affluent Market Tracking Study #8" by The American Affluence Research Center.

Charles Barkley: "I got pulled over when I was behind the wheel of a Porsche in Philly once for what we call DWB - Driving While Black."

The number of new online job ads fell to
2,002,600 in October, 36,000 less jobs being offered than in September,
according to The Conference Board Help-Wanted OnLine Data Series(TM).
The September number was also down, declining 4.4 percent from August. In
October there were 1.34 online job ads per 100 persons in the U.S. labor
force, compared with 1.36 in September and 1.43 per 100 persons in the labor
force in August.
The number of new job ads declined from September in New England (down
5.6%) and the Middle Atlantic (down 5.8%) regions. The number of new online
job ads rose sharply in the West South Central region (up 19%), which includes
the states of Texas and Louisiana which were hard hit by the hurricanes and
are in the throes of rebuilding.
Ken Goldstein, labor economist at The Conference Board, said: "The storms
and flooding, and now the rebuilding and dislocations in the Gulf Coast area
are taking place in a weakening national labor market. The September and
October job growth numbers outside this region are down from their recent
trend levels. Consumer confidence was also down in both months. Nonfarm
payroll employment barely moved in October (+56,000), substantially below the average of 200,000 jobs added monthly during the prior year, and the Bureau of Labor Statistics notes that the weak employment growth in October was not attributable to the areas directly affected by the hurricanes. The Conference Board Consumer Confidence survey shows that consumers are continuing to feel less optimistic about the job market, with more consumers saying jobs are 'hard to get' and more expressing worries that more jobs won't be available in the months ahead. A weakening national situation is not good news for the Gulf Coast area,"
said Goldstein. Some workers seem reluctant to move to an area where the
labor market was already weak. There are also fears that because a sizable
part of the Gulf Coast economy lacks economic diversity and is overly
dependent on tourism, overall business may not be robust even after rebuilding
efforts are complete."

Mike Shedlock: In bubble areas such as California, 28% of new mortgages in the first half of 2005 were subprime vs. 5% in 2000. 42% of first time buyers made no down payment on their home, and over a third devoted at least 33% of the incomes to mortgage payment."

Why does the housing market have to go through an orderly transition culminating in stability? Since when are cycles stable? If Moskow were to widen his field of vision, he might see alternatives that are not so pleasant.

Chicago Federal Reserve President Michael Moskow stated in talking about housing prices that nationwide "it's hard to imagine a significant
drop in overall prices."

Centex Corp. expects to report net earnings from continuing operations for the fiscal year ending March 31, 2007 of $10.75 to
$11.25 a share. The homebuilder also reffirmed its 2006 forecast for net earnings from continuing operations of $9.65 to $9.85.

Groucho Marx: "A man's only as old as the woman he feels."

The Pension Benefit Guaranty Corp. disclosed in its annual financial
report that as of Sept. 30, it had $56.5 billion in assets to cover
$79.2 billion in pension liabilities. Its probable exposure to under-funded
pension plans gre to $108 billion from $96 billion.

The purchase of an average- priced, new vehicle during the third quarter of 2005 took 26.2 weeks of median family income, according to the Auto Affordability Index compiled by Detroit- based Comerica Bank. The latest reading is up 1.5 weeks from the prior quarter, resulting in the worst reading for affordability in four years. Including finance charges, the total cost of buying an average-priced light vehicle was $27,958 in the second quarter, up 6 percent from a year ago.

On Tuesday crude closed under $57 a barrel, a 5-month low.

Hedge funds were down an average of 1.16% in October, according to the HedgeFund.net-PerTrac Universes. The top 25% of hedge funds gained an average of 0.50%, while the bottom 25% of hedge funds was down an average of 2.62% for the month. Short Bias sector funds, the month's top performing strategy, were up an average of 2.35% in October. By comparison, the S&P 500 was down 1.78% during the month. Through September, the year-to-date average gain for hedge funds was 4.81%. The top 25% of hedge funds gained 8.60% for the year-to-date, while the bottom 25% was up 0.55% over the same period. The S&P 500 is down 0.41% since the beginning of 2005.

Jay Leno: "President Bush said that he is worried that Iraq could be overrun by religious fundamentalists. Hey, if it's good enough for the Republican Party, it's good enough for Iraq."

Paul Kasriel: "Households spent a record annualized $531 billion more than they earned after taxes in the third quarter of 2005, continuing the trend of net household deficits that began in the late 1990s...Household spending accounts for 76% of GDP."

OPEC raised its forecast slightly for 2006 oil demand, seeing demand rising 1.8%, or 1.5 million barrels a day, to 84.8 million barrels of oil a day.

Kaiser Hospital purchased the 63 acre Albertsons distribution site in San Leandro, CA. In 2012, Kaiser will move its Hayward hospital to San Leandro.

China sold 20,000 metric tons (22,000 tons) of copper from its state reserves Wednesday in the country's first auction of copper reserves, a move aimed at meeting surging demand and countering record prices for the metal. China will sell off another 20,000 metric tons on Nov. 23.

Lyndon B. Johnson: " I may not know much, but I know the difference between chicken shit and chicken salad."

Guidance

111/15/05 Guidance

Wal-Mart: "We expect earnings per share for the fourth quarter to come in between $0.82 to $0.86, and for the year, our forecast is $ 2.64 to $2.68."

Consider this statement. Greenspan doesn't think the dollar will lose its status as a reserve currency. What would the purpose be for even raising this point? Maybe Greenspan realizes there is a ticking time bomb for the dollar.

Congressional Budget Office Director Douglas Holtz-Eakin announced Monday that he will leave his post by Dec. 30 to take a position with the Council on Foreign Relations, a Washington think tank. Can you blame him? The budget is a moving red ink target.

Platinum traded at a 26-year high.

H. Lee Scott Jr., Wal-Mart's chief executive, stated "even with the lingering impact of the hurricanes and the impact of higher energy prices, I believe we will have a good holiday season."

J&J and Guidant agreed to revised merger terms that drop the deal price to $63.08 from $76. Payment will be made in the first quarter of 2006 in cash and stock.

The average price for gas at the pump was $2.34 a gallon last week.

Over the past year I have written many times about Palatin Technologies. I have been asked why I would take the time to write about a $2+ stock. Recently, many inquired as to why I would not have sold after a 35-40% run up. Once again, I have stated repeatedly that this is a 3-5 year investment. I am not an investor because of Neutro Spec but rather PT-141 and its potential to combat male and female sexual dysfunction and, more importantly, its ability to regulate the control of weight. I strongly urge you to read the link from the
November 21 NY Magazine at http://www.newyorkmagazine.com/lifestyle/sex/annual/2005/15061/index.html

Henry K. To: " The total amount of short interest on the NYSE is still only at 2.5% of all outstanding shares on the NYSE - hardly a precursor to a general short squeeze."

Ma Liqiang, director of the National Development and Reform Commission's economic operating bureau, stated in comments published on Monday that China's industrial output rose 16.3 percent to 5.69 trillion yuan in the first 10 months of the year.

After the closing bell on Monday, Target stated its November sales at stores open at least one year would be below its forecast of a 4 percent to 6 percent increase. The warning comes after a third-quarter earnings report last week that gave a disappointing forecast for the current quarter. An investor might consider a switch from Target to Wal-Mart.

U.S. wholesale prices increased a greater-than-expected 0.7% in October as energy prices continued to rise; however, the core rate of the producer price index fell 0.3% in October, and that was mainly due to falling prices for autos, trucks, clothing and food. It was the largest decline in core prices in 30 months.
Since I didn't purchase an auto, a truck, or clothing, my core rate didn't decline. How was your core rate?

Surprise

11/14/05 Surprise

Would you be surprised to learn that last week the new 52-week lows amounted to 298 while new 52-week highs came in at 249?

For all the talk about the revaluation of the yuan, would you be surprised to learn the yuan's value has risen only 0.3%?

If the trade deficit with China is $162 billion this year and $200 billion next year, why no talk about the balance of the deficit that totals $500 to $600 billion?

With the dollar at a 2-year high, foreign purchases of our exports become more expensive, and that includes our U.S. debt. As our nation's debt explodes even further, the foreign appetite for our Treasury notes is declining. For example, according to Treasury dep't data, foreigners purchased 21% of $218 billion of 2-year notes, down from 31% in 2004 and 21% of $154 billion of 5-year notes, down from 30% in 2004. As for 10-year notes, foreigners purchased 14% of $79 billion worth, down from 21% in 2004. I wonder whether this picture has anything to do with the Federal Reserve announcing that, on 3/23/06, they will cease to publish the M-3 monetary aggregate numbers. Are they so over-worked that this release has become too taxing? Or do they wish to place a dark window on repurchase agreements and the like? Don't be surprised to find that the Fed is running scared. The printing presses will be running at a double-digit rate to make up for the declining demand on the part of foreigners for our government debt. It is only a matter of time until our dollar can be used for wallpaper.

Crude is holding slightly above $58 a barrel.

Wal-Mart met its third quarter estimates. Lowe's is estimating $3.37-$3.40 for 2005 with comp sales rising 5-6%.

The UK will pull out of Iraq in 2006.

Knight Ridder's board will consider the sale of the company.

I was surprised to read that Koch Industries, the nation's second largest private company, will tender for Georgia Pacific at $48 a share. The stock closed on Friday at $34+. The total purchase price is $13.2 billion plus the assumption of $7.8 billion in debt. The Street will be hunting for the next undervalued lumber company. They don't always grow on trees.

State-owned Kuwait Petroleum Corp (KPC) said it is in talks with Sinopec, BP and Shell about building a joint-venture refinery with a daily crude processing capacity of 300,000 barrels in South China's Guangdong Province. "The talks are expected to be finalized in the first half of next year," Hamzah Bakhash, a KPC spokesman, told China Daily.

Polls

11/13/05 Polls

A majority of Americans polled disapprove of the way George W. Bush is handling his job as president -- an all time low in the Newsweek Poll-- 58 percent of Americans disapprove of the president's handling of his job -- a five-point decrease in approval since the September 29-30 Newsweek Poll. In addition, 60 percent of those polled disapprove of the way he is handling the economy, 32 percent approve. Seventy-three percent disapprove of Bush's handling of oil prices, 20 percent approve. Sixty-eight percent of Americans are dissatisfied with the way things are going in the United States at this time, a seven-point drop in satisfaction since the last Newsweek Poll. Only 26 percent are satisfied. Forty-two percent of those polled say that they disapprove of Bush's appointments to the Supreme Court; 42 percent approve. be confirmed, 34 percent don't know. When asked if they think Bush can be an effective president during his last three years in office, a 56 percent-majority say the President 'won't be able to get much done.' The president and his administration are also suffering an emerging credibility gap: 42 percent of those polled think the phrase 'is honest and ethical' describes Bush, 50 percent disagree. When asked if the same phrase describes Dick Cheney, 55 percent said no, it does not, and 29 percent said it did. Fifty-two percent of Americans believe that Cheney was part of a cover up to try to prevent the special prosecutor from getting the truth about who leaked CIA agent Valerie Plame's name to the news media, 27 percent do not believe he was involved. When asked if anyone in the Bush administration acted unethically in the CIA leak case, 54 percent said yes, they did. Forty-five percent of those polled say that they believe that someone in the Bush administration broke the law and acted criminally in the case handling, 30 percent say no laws were broken. When asked if the vice president deliberately misused or manipulated pre-war intelligence about Iraq's nuclear capabilities in order to build support for war with Iraq -- 52 percent say he misused intelligence, 33 percent say he did not. Overall, 65 percent of Americans disapprove of Bush's handling of the situation in Iraq, only 32 percent approve according to the latest Newsweek Poll.

When it comes to the stock and bond markets, do polls matter? How many of those polled have a stake in managing money and making investment decisions? At the same time, if the majority believe the country is headed in the wrong direction, should that be ignored by the markets over the long term? Much of market direction is determined by psychology. As a rule, investors are happier around Thanksgiving, Christmas, and New Year's. That is most often refelcted in higher stock prices. Will the good feeling last? Unfortunately, the holiday spirit does wear off and reality takes over. The bills need to get paid. The bills eventually come home to roost-- except of course for the U.S. government. That is our government. The one that spends and builds twin tower deficits rising from the ashes of wars, hurricanes, and pork.



Nissan President/CEO Carlos Ghosn announced Thursday morning the automaker will move its North American headquarters and 1,300 jobs from a Los Angeles suburb to Franklin(outside of Nashville), beginning in the summer of 2006. Nissan will build a $70 million corporate center in Cool Springs on Liberty Pike, south of the Embassy Suites hotel. Details for the construction project aren't final but completion is slated for 2008. Until then, Nissan North America will locate in 240,000 square feet of space in downtown Nashville's BellSouth building. Based on benchmark studies of similar corporate relocations, Ghosn estimates upwards of half the current employees will move, with the others to be hired locally. The average salary for headquarters positions, including those in marketing, finance, and administration, is $80,000. Economists at the University of Tennessee's Center for Business and Economic Research estimate the economic impact of the move at more than $500 million annually. The Nissan board's decision to move came after "extensive, deep studies," says Ghosn. The median price of a home in the LA area is roughly $500,000 and in the area around Nashville about $160,000. How many other companies will be making moves like Nissan's? The housing differential is even greater in San Francisco and Santa Barbara.

Judge Laurance Silberman, chairman of Bush's commission on WMD: "Our executive order did not direct us to deal with the use of intelligence by policy-makers, and all of us were agreed that was not part of our inquiry."

The price of copper touched an all-time high.

The average Costco store does more than $120 million in gross sales a year.

Peter Drucker: "My best book would have been 'Managing Ignorance,' and I'm very sorry I didn't write it."

According to auctionblockdatabase.com,"Sources said the deal may take longer than expected because the due diligence process is taking longer than expected. One source said the Thanksgiving holiday and the Christmas break may, in fact, push a deal announcement into the new year." This is hardly surprising considering that Albertsons has 2,500 locations and each buying group will be responsible for due diligence on various parts of the business. It's not as if one buyer will purchase and retain the entire complex of stores, pharmacies, distribution sites, real estate and locations-- especially since the FTC may require some to be divested. Do not confuse longer due diligence with a lower than anticipated price. I believe that would be a conclusion reached in error.

Consider

11/12/05 Consider

Heading into the 2005-06 winter heating season, electricity prices are 46% higher than a year ago, despite recent declines, according to Platts, the energy information business of The McGraw-Hill Companies.

Average U.S. monthly natural-gas spot prices for November rose by 4.3% from October, to $12.42/MMBtu -- a level 68.6% above the November 2004 average and the highest average since the wholesale market was deregulated in the mid-1980s, according to data released by Platts.

The number of U.S. service members who have been killed since the start of the Iraq war in March 2003 now totals at least 2,061.

Peter Drucker: "The most important thing in communication is to hear what isn't being said."

Build-A-Bear Workshop has expressed interest in buying Club Libby Lu stores from Sak’s Inc., according to a report in the St. Louis Business Journal. Targeting pre-teen girls, Club Libby Lu sells apparel, accessories and bath and body products in a fun, interactive shopping environment. Too Inc. and Claire’s Stores are also reported to have expressed interest in Club Libby Lu, which has 49 stores.

According to Bloomberg, "The Federal Reserve announced today it will discontinue reporting data on the broadest measure of the money supply, M3, effective March 23, 2006."

Due to Katrina, Rita, and Wilma, have you considered the size of the mortgage defaults that will occur in 2006? What will the impact be on banks and holders of MBS?

Frank Fernandez, chief economist of the Securities Industry Association, stated the U.S. securities industry will earn at least $24 billion before taxes in 2005.

This week's BS award goes to William Poole, President of the St. Louis Fed. He stated "current account deficits are being driven primarily by foreign demand for U.S. assets rather than by any structural imbalance in the U.S. economy itself."

The Chicago Mercantile Exchange plans to begin home-price trading in April. Investors will be able to buy contracts on the future direction of housing prices in the 10 cities, similar to what investors do now with oil or corn.

China has overtaken Japan to become Dell's third-biggest market for unit sales.
Official Chinese government figures show that total net savings at the end of September were 9.0 trln yuan, equivalent to nearly 70 pct of GDP. Now consider the lack of savings in our consumer-based U.S. economy. The difference is staggering.

China is planning regulations that would require the nation's oil companies to build their own refined oil reserves to guard against possible shortages. Wang Xiaochuan, vice director in charge of commercial reforms at the Ministry of Commerce, said that discussions on the regulations are now under way and the rules will be put in place shortly. "It's necessary for oil companies to build reserves as refined oil is an important resource for the proper operation of the economy," Wang told the 2005 China Petroleum Forum. Wang didn't disclose the capacity of the required reserves, but he said it would be within 20 percent of China's current refined oil consumption, and the latter is approaching 9 million tons on an annual basis.

Wal-Mart de Mexico SA, Latin America's largest retailer, said same-store sales grew for an eighth straight month in October as it benefited from expanding its number of outlets and taking market share from competitors.
Sales at stores open 12 months or more rose 8.6 percent in October from a year earlier, the biggest advance since March.

Peter Drucker: "The purpose of business is to create and keep a customer."

Consider the potential for monetary disorder in the U.S. and balance that with the knowledge of the VIX (the volatility index) only trading 18% higher than a multi-year low. Complacency can be the breeding ground for margin calls.

Norman Mailer: "America is a hurricane, and the only people who do not hear the sound are those fortunate if incredibly stupid and smug White Protestants who live in the center, in the serene eye of the big wind."

Facts

11/11/05

It's quite ironic that on Veterans' Day almost six in 10 — 57% — said they do not think the Bush administration has high ethical standards and the same portion stated President Bush, our nations Commander-in-Chief, is not honest, an AP-Ipsos poll found. Just over four in 10 say the administration has high ethical standards and that Bush is honest. There is something definitely wrong with this picture.

In October, the 0.3 percent decline in the price index of U.S. imports marked the first decrease for the index since May and only the second monthly drop recorded in 2005. Prior to the October decline, import prices rose 6.3 percent between May and September, driven by a 36.2 percent jump in petroleum prices over that period. In October, petroleum prices decreased 4.4 percent, but still rose 30.9 percent over the past 12 months. In contrast, nonpetroleum prices continued to rise, increasing 0.8 percent last month after advancing 1.0 percent in September. For the year ended in October, prices of nonpetroleum imports rose 3.7 percent while overall import prices increased 8.1 percent.
The October advance in nonpetroleum prices was driven by a 4.4 percent
increase in the price index for nonpetroleum industrial supplies and materials. For the second consecutive month, a sharp rise in natural gas prices led the increase. Excluding prices for petroleum and for natural gas, prices for industrial supplies and materials increased 1.6 percent and overall import prices rose 0.3 percent. Higher prices for chemicals, metals, and building materials also contributed to the increase in prices for nonpetroleum industrial supplies and materials, which increased 16.1 percent over the past 12 months. Foods, feeds, and beverages prices rose 1.1 percent in October, led by higher prices for fish, vegetables, and meat. Prices for foods, feeds, and beverages advanced 5.2 percent for the year ended in October.
In contrast, prices for capital goods and for consumer goods declined in
October, falling 0.3 percent and 0.1 percent, respectively. Lower computer
prices again led the decline in the price index for capital goods, which decreased 0.5 percent for the year ended in October. Consumer goods prices fell for the third time in the past four months but increased 1.2 percent over the past year. Automotive vehicles prices were unchanged in October and increased 0.6 percent over the past 12 months.

Light, sweet crude for December delivery on the New York Mercantile Exchange fell 71 cents to $57.09 a barrel by midday in Europe. On Thursday, the contract fell to $57.80, the lowest level for the front-month contract since July 21.
Brent crude slipped 83 cents to $54.85 on the ICE Futures exchange in London.
Heating oil was down more than 2 cents at $1.7208, while gasoline slid nearly 3 cents to $1.4794 a gallon. Natural gas fell a cent to $11.370 per 1,000 cubic feet.

According to the Washington Post, in the past year, D.C. area home sales have declined sharply, the inventory of unsold homes is dramatically up, and prices have flattened or fallen.

The September trade deficit surged to a record $66.1 billion. Of course, many economists opine that deficits don't matter.

Central banks purchased 55% of yesterday's $13 billion 10-year treasury auction at a yield of 4.58%. Before you get too excited, the bid-to-cover was lower than in the previous auction, and the question remains whether central banks were bidding with their own money and/or representing other buyers.

Dr. Douglas Busch: "Behavioral psychology is the science of pulling habits out of rats."

The University of Michigan consumer index rose this month to 79.2 from 74.2, and this has led pundits to believe this will be a buoyant holiday shopping season. In addition, consumer confidence continues to rise from its low point two months ago, according to the November results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. The positive trend could signal a better-than-expected season for retailers who - in light of high energyprices, hurricane recovery efforts, and rising interest rates - were bracing for the worst.
The CASH Index, which is derived from telephone interviews with
1,000 individuals across the U.S., this week, stands at 81.0 for November,
compared to 66.8 in October - but still below last year's November results of
89.8.
Improved confidence lifted the RBC Expectations Index, set at 100 in
January 2002, to 44.5 for November, an increase of 0.9 in October and the
highest it's been since May. November's results mark a sharp reversal since
September, when the index plunged to a negative 13.5; but expectations are
still not as high as they were last year in November, when the index stood at
69.

Mark Twain: " Life does not consist mainly, or even largely, of facts and happenings. It consists mainly of the storm of thought that is forever flowing through one's head."

According to the current issue of the journal Health Affairs, about 21 percent of private health spending in California goes to insurance paperwork. That translates into about $26 billion a year in California, according to the study's main author, Dr. James G. Kahn, professor at the Institute of Health Policy Studies at UCSF.

Jessamyn West: "We want the facts to fit the preconceptions. When they don't it is easier to ignore the facts than to change the preconceptions."

Silver Lake Partners Friday said it agreed to buy Serena Software Inc. for about $1.2 billion. Under the deal, which is expected to close in the first quarter, Serena stockholders will receive $24 in cash for each of their shares.

India's industrial growth slowed to 7.2 percent in the July-September quarter from 10.4 percent in the previous quarter, according to government data released today.

Present And Future..

11/10/05 Present And Future

Barry Ritholtz: "Notwithstanding our recent Bullishness, we remain uneasy about the market’s longer-term prospects. The lack of traction in the face of good earnings, increased dividends, and huge buybacks is certainly disconcerting. The Market is still only where it was back on August 2001. To paraphrase Jeff Saut, despite 14 straight quarters of double-digit earnings growth, the S&P 500 has gone virtually nowhere for 3½ years."

Crude is trading slightly below $59 a barrel. The EIA lowered its forecast for demand in 2005 by 60,000 barrels a day and by 140,000 barrels a day in 2006. However, the organization stated "there is the potential for further tightness to emerge."

George Washington: "I am for free commerce with all nations; political connection with none; and little or no diplomatic establishmen."

The U.S. trade gap for September most likely exceeded $60 billion. Conversely, China's October trade surplus registered a gain of $12 billion, up from $7.56 billion in September. For the first ten months of 2005, China's trade surplus amounted to $80.4 billion, up sharply from $11.1 billion a year earlier.

Steve Forbes: "The American administration i making a major mistake, trying to pressure the Chinese. I wish we'd back off." I concur; however, back off they won't. Bush is quite adept at blaming others for the mistakes he and his administration and the Congress make. Other than misspeaking, that is probably his greatest ability.

In the latest week, distillate inventories declined by 2.8 million barrels while crude inventories climbed by 4.7 million barrels and gasoline by 4.1 million gallons.

For the month of September, the nation's inventory-to-sales ratio dipped to 1.15, the lowest since 1.14 in May 2004.

Boeing will cut 250 jobs in Wichita and Frito Lay will also cut as many as 250 jobs.

Yesterday, the yield on 10-year treasury bonds climbed to 4.64%. That rate remains ridiculously low considering our twin tower deficits and the unwillingness of Bush and the Congress to strenuously cut spending.

Thomas Jefferson: "The merchant has no country."

The CBO projects that the interest rate on the 10-year treasury bond will rise to 5.4% by 2007.
Would you be surprised if that rise took place in 2006?

Auctionblockdatabase.com : "The private equity consortia that are bidding for Boise, Idaho-based supermarket Albertson's Inc. are trying to woo strategic buyers to their teams in an effort to bolster their bids."

If oil and gas shares have topped out and if housing stocks have topped out and if the financials have topped out, then what sectors will provide the leadership for the remainder of 2005 and for next year? If you are having trouble answering that question, then maybe you should take some money off the table.

Gary Lammert: "The 3 August 2005 averaged daily high of the Wilshire remains the
Maginot line for total available investment money to show its true
residual quantitative power in the twilight period of this 70 or so
year global economic cycle."

Banc of America raised its 2-year bankruptcy risk for General Motors to 40% from 30%.

Arthur Schopenhauer: "I am often surprised by the cleverness, and now and again by the stupidity of my dog; and I have similar experiences with mankind."

Mortgage rates continued to climb, with fixed rate mortgages reaching the highest level since Sept. 2003. The average 30-year fixed rate mortgage increased from 6.37 percent to 6.42 percent, according to Bankrate.com.

The economic outlook looks weaker for the United States and Canada but brighter for the other Group of Seven leading industrialized nations, an early warning indicator issued by the OECD think tank showed on Thursday.

JFK: "When we got into office, the thing that surprised me the most was that things were as bad as we'd been saying they were."

Conclusions

11/9/05 Conclusions

The Conference Board reported today that the leading index for Japan increased 0.4 percent, and the coincident index increased 0.3 percent in September. The leading index increased again in September for the fourth consecutive month, and the strength among the leading indicators has continued to be relatively widespread in recent months. With this month's gain, the growth rate of the leading index has picked up to about a 2.0 - 3.0 percent annual rate, up from the zero to slightly negative growth at the end of 2004, but this is still well below the peak growth rate reached in the first half of 2004. The coincident index also increased again in September after staying essentially flat from April to July. These increases keep it on a slightly rising trend. At the same time, real GDP grew at a 3.3 percent annual rate in the second quarter of 2005, down from a 5.8 percent rate in the first quarter. The recent behavior of the leading index suggests that the economy will continue to expand moderately in the near term.
At the moment, my trade of going long the yen and short the dollar reveals some bloody losses.
Other than the interest rate differential, I continue to believe Japan is headed on the right track economically while that is not the case for the U.S. As such, I will add to my position. This decision is not for the faint of heart and not appropriate for the vast majortiy of investors.

According to the Financial Times, Microsoft’s top executives admitted in internal memos that the company had failed to achieve leadership in key technologies and that its business was at risk if it did not respond to new internet offerings.

Bush stated the U.S. trade gap with China is "bothersome." I have concluded that Bush in the White House is bothersome. That and a buck and a half will get each of us on the bus.

Brad Setser: "China's exports to Europe have grown faster than its exports to the US since 2002. "

With retailers starting promotions sooner than ever, many stores are hiring earlier.
Chicagoans are expected to spend an average of $686 on gifts this year, the highest level in four years, and 44 percent higher than the average $476 they spent last year, according to a survey by Deloitte & Touche consultants.

According to UBS AG's Nikos Theodospoulos, Cisco may report today that revenue rose to $6.58 billion and per-share profit climbed to 24 cents.

Sales of full-size pick-ups fell by 31.8 per cent in October, compared with a year earlier, following a 26.4 per cent slide in September.

U.K. consumer confidence fell to the lowest in at least 18 months in October.

Paul Kasriel: "Fourth-quarter average real consumer spending will be lucky to be flat!... No growth in real consumer spending implies very slow growth in real consumer spending implies very slow growth in real GDP in the foutth quarter...Households' required payments of principal and interest are at a 25-year high relative to their after-tax income."

The volume of mortgage applications as tracked by the Mortgage Bankers Association increased by 2.3% in the week ended Nov. 4 compared to the prior week. On a seasonally adjusted basis, the number of applications filed for mortgages to purchase homes rose by 6.4%; however, refinancing applications slipped 3.4% on a week-to-week basis. Moreover, the rate of applications to buy homes stands 3.6% lower compared to a year ago, noted Jay Brinkmann, MBA's voice president of research and economics, and the four-week moving average for overall mortgage applications was off 1.2%.

The Flag Manufacturers Association of America (FMAA) reported US flag penetration and usage in the US is large and stable with 62% of the US population having a US Flag in their household.

Liberty Media Corporation today announced the appointment of Gregory B. Maffei as Director and CEO-Elect. After a brief transition, Mr. Maffei will assume the role of Chief Executive Officer sometime during the second quarter of 2006, replacing Dr. John C. Malone, who will remain Chairman. At that time, Mr. Maffei will also assume the title of President replacing Robert Bennett who, as previously announced, is retiring but will remain a director.

Fifty-five (55) percent of a thousand people recently surveyed by KeyCorp say they consider themselves to be disciplined savers. However, 80 percent report saving less than 5 percent of their income, 42 percent report saving less than 2 percent of their income, and 24 percent say they don't save anything at all. "It's clearly a case of people believing they're doing better job of saving than they actually are," said Andy Will, director of Consumer Product Management."The best intentions are not resulting in the best behavior." According to the survey, insufficient income, debt and spending habits are the main culprits that prevent people from saving as much as they would like. And rising gas prices have caused more than two-thirds of people (68 percent) to become more serious about saving money.

Happenings

11/8/05 Happenings

Borrowing by US consumers fell for the first time in 10 months in September as auto discounts expired and rising interest rates made it costlier to buy on credit. U.S. consumer credit unexpectedly dipped by $59.4 million in September. Economists had been forecasting an increase of $6 billion.

Toll Bros. "It appears we may be entering a period of more moderate home price appreciation." The company also mentioned buyers are taking longer to make purchasing decisions.

Serono, the Swiss biotech company, hired Goldman Sachs to explore strategic alternatives. It might be a good fit with a couple of big pharmaceutical companies. Even though the company is projecting at least 20% EPS growth in 2005, one might temper enthusiasm due to the lack of a strong drug pipeline.

Demand for crude was curtailed by warmer weather in many parts of the country, and crude futures fell to below $60 a barrel to their lowest level in 3 months.

The euro declined to a 2-year low versus the dollar.

"Strong operational performance was demonstrated in October, particularly in our Mortgage Banking segment," stated Countrywide's President and COO Stanford L. Kurland, "With year-to-date mortgage loan production of $405 billion, Countrywide is approaching its previous annual record of $435 billion set in 2003."

NBC, CBS will offer shows on demand for 99 cents.

Palatin's total revenues in the quarter ended September 30, 2005 were $5.1 million, compared to $4.5 million for the same period in 2004. Palatin reported a net loss of $6.0 million, or ($0.11) per basic and diluted share, for the quarter ended September 30, 2005, compared to a net loss of $3.0 million, or ($0.06) per basic and diluted share, for the same period in 2004. At September 30, 2005, the Company had cash and investments totaling $25.5 million. The increase in the net loss for the quarter ended September 30, 2005 versus the quarter ended September 30, 2004 was primarily attributable to increased research and development costs related to PT-141 amountng to $2.8 million. For the quarter ended September 30, 2005, royalty revenue on Mallinckrodt's commercial sales of NeutroSpec amounted to $916,000, compared to $578,000 in the quarter ended June 30, 2005 and $327,000 in the quarter ended September 30, 2004. However, in the current period, the Company recorded no product sales revenue(license sales) from shipments of NeutroSpec to Mallinckrodt, compared to $416,000 for the quarter ended September 30, 2004.
From my first mention of Palatin, I opined that one should take a 3 to 5 year investment view. My opinion has not changed. It will take that time horizon to see the fruits of PT-141 and the company's efforts in weight control. I believe Palatin is on the right track with its melanocortin-based research developments.

Attitudes And Concerns

7/7/05 Attitudes And Concerns

Although current economic indicators have remained stable, concerns about the future performance of the national economy have led to a sharp drop in confidence among the affluent, according to the latest quarterly McDonald Financial Group Affluent Consumer Confidence Index results, released today. Although those surveyed expressed greater confidence in the state of current local economic conditions, the Index found that affluent Americans' personal intentions to spend and invest over the next three to six months have slipped, after maintaining strong levels over recent quarters. The overall score for the most recent McDonald Financial Group Affluent Consumer Confidence Index was 42 out of 100, which is down from 52 last quarter and 48 from the year-ago period. This also represents the lowest Index level since April 2003. Additionally, a majority of respondents, or 57 percent, now thinks the economy is headed in the wrong direction, which represents the highest percentage recorded for this question since the Index was initiated in January 2003. In contrast, last quarter nearly the same percentage (54 percent) thought the economy was on the right track. According to the survey, 41 percent believe the economy will be worse in three months, while only 15 percent think it will be better -- a drop of 17 points from last quarter and an all-time low score for that question. Additionally, 64 percent expressed that they are "very concerned" about the impact of high oil prices on the U.S. economy. David Legeay, senior vice president, McDonald Financial Group, said,"Although this quarter's survey revealed a sharp dip in confidence among affluent Americans, this is roughly the same trend we saw at this time last year, when respondents' comments reflected the impact of uncertainties surrounding the Presidential elections. We believe this quarter's responsesmay have been influenced by a confluence of events including rising oil prices, Hurricanes Katrina and Rita, and the continuing situation in Iraq, which -- when combined -- have left many affluent individuals feeling concerned about the future of the national economy." Legeay added, "We also believe that regularly surveying the nation's affluent population is important, as many of the affluent are business owners or serve in executive positions where they are responsible for making capital expenditures and hiring decisions. As a result, their opinions can be an important barometer of where the economy is headed." The McDonald Financial Group Affluent Consumer Confidence Index -- a quarterly measure of market sentiment -- is based on a national survey of 400 randomly selected individuals with investable assets of $500,000 or more,and/or personal annual income of $150,000 or more. The poll was conducted byindependent research firm Penn, Schoen & Berland between Oct. 6 and Oct. 19, 2005.

Gary Tanashian: "Maybe we have an indefinite amount of time left to keep our debt model running. Certainly some perma-bears must now be coming to believe it will never end. Or maybe the US is becoming increasingly isolated on the global stage and the ascendant powers of Japan (mature, sophisticated economy), China (manufacturing giant) and India (technology center) will increasingly set the terms of global trade."

David Lerach, chief economic forecaster for the National Association of Realtors, predicted that, with average 30-year mortgage rates expected to reach 6.7% by the end of 2006, existing-home sales will decline 3.5% next year, to 6.9 million, from this year's projected 7.1 million; new-home sales will fall 4.5%; home price growth should slow significantly, with 2005's median 12.4% appreciation slowing to 5.3% in 2006. Lereah's predictions were for the nation as a whole. In sum, Lerach remarked "it's the peak of the boom." The housing
stocks already made that statement some months back. Lerach is looking for a soft landing. Doesn't everyone?

Brian Setser: "Add it up - stagnant real wages for many, more income volatility, less retirement security, less access to group insurance through work. That is an unpleasant combination for many."

As of Sunday, at least 2,045 members of the U.S. military have died since the beginning of the Iraq war in March 2003, according to an Associated Press count.

Borsi Giosue: "The great thought, the great concern, the great anxiety of men is to restrict, as much as possible, the limits of their own responsibility."

Talking about Albertsons: "How many times do assets like these come on the market?" asked analyst Andrew Wolf of BB&T Capital Markets. "Once every 50 years?"

Independence Air filed for Chapter 11 bankruptcy protection.

El Paso Corp. reported a loss of $390 million on derivatives that were intended
to manage the price risk of oil and gas production. Derivatives, in the hands of amateurs, is playing with fire. How many more companies will report losses from derivatives in the coming months?

It has been reported that, in addition to Spitzer's lawsuit, Guidant is also facing 136 class-action lawsuits.

John Hussman: "My impression is that Wall Street's expectations for year-end strength in the stock market have, to date, been self-fulfilling prophesies that have actually produced short-term strength in the market. At the same time, it's likely that those expectations are now so widely accepted that the hope for future market strength is probably already reflected in current prices. In short, with so many investors and analysts foreseeing a year-end advance, there's at least an even chance that we've already seen it...it strikes me that investors are substantially overlooking the growing risk of recession that is evident in more reliable and less transitory information."

Thomas Jefferson: “I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom.” “Aristocrats fear the people, and wish to transfer all power to the higher classes of society.” “The people...are the only sure reliance for the preservation of our liberty.”

Findings

11/6/05 Findings

Louis Pasteur: "Chance favors only the prepared mind."

In a recent study, a further correlation between obesity and brain pathways and the role of melanocortin was
established. The study was led by a scientific team at Beth Israel Deaconess Medical Center (BIDMC) and provides an understanding of the neuronal pathways and complex microcircuitry behind weight control and the role of the melanocortin-4 receptor (MC4R) to regulate either food consumption or energy expenditure.
Bradford B. Lowell, MD, PhD at BIDMC says, "The brain controls both food intake and calories expended with the purpose of keeping body weight stable. When something goes wrong with this process, obesity results. The findings of this new research provide us with more precise information about the neuronal pathways regulating this balance."
The study’s lead author Nina Balthasar, PhD says, "Scientists have known that by activating MC4Rs, body weight can be reduced."
Just as a reminder, I have frequently written about Palatin Technologies, melanocortin, and weight control.
This is a busy week for Palatin. They will be at the CIBC World Markets 16th Annual Healthcare Conference.Carl Spana, Ph.D., President and Chief Executive Officer of Palatin Technologies, will present at 1:30 p.m. Eastern Time on Monday, November 7, 2005 at the Waldorf Astoria Hotel in New York City. Then on Tuesday the company will issue its quarterly report. The following day the company will participate in the
Rodman & Renshaw Techvest 7th Annual Healthcare Conference. Carl Spana will present at 8:00 a.m. Eastern Time at the Palace Hotel in New York City.

China has mobilised its armed forces and allocated emergency funds and vaccines to fight bird flu as a mass cull of poultry and birds continued Sunday following a new outbreak in the country's northeast.

Mike Burk: "If Monday is up it will be the first time the OTC has been up for more than 3 consecutive days since early July. By this indicator that will mean the trend has changed from down to up."

Historically, the equity market's strongest period is from November-May. Everyone knows this fact. Consequently, traders look for a year-end rally beginning in November. In fact, most equity indices have risen over the last three trading days. I am not a trader. I try to place myself in an optimum position -- not just for three days or three weeks or three months-- but looking around the bend and over the horizon. The time to buy is when the skies are filled with storms and the time to sell is when the skies are sunny and bright. In other words, you buy straw hats in the winter months. You buy used cars in the winter months. You purchase stocks during the peak hurricane season. Keep your eyes on the important trends: the aging of the U.S., China, and Japan; the rising standard of living in China and India; the end of deflation in Japan; inflation outpacing wages in the U.S.; the interplay of rising interest rates and inflation on currencies and commodities; the growing world-wide disparity between the haves and the havenots; the growing U.S. dependency on foreign nations to export their savings to our shores in an effort to fund our twin tower deficits; and bulging global liquidity creating a stampeding herd searching for fat returns and depending on derivatives to limit forward-looking risks. The idea is not to get caught up in the day-to-day antics of program trading. Pick your spots and ignore the media headlines. Whe it comes to the equity, bond, commodity, and currency markets, no one is Houdini. Everyone gets bloodied. The idea is to heal and learn from the blood. If you faint from the sight of blood, don't invest. If you can't handle a scar or two, don't invest. If you can't do your own homework, don't invest. If you have no patience, don't invest. In other words, most people make lousy investors. Next year will test the abilities of all investors. Rather than simply focus on a possible year-end rally, I would position oneself for a trying 2006. If you think 2005 has been difficult, then maybe you should sit out 2006. High wire acts are never my thing.

John Maudlin: "In the last three years, almost 600 companies have reneged on pension-fund obligations, with 21 plans each totaling $100 million or more, topped by United's pension fund failure at $9.8 billion, the biggest since the government began guaranteeing pensions in 1974. In June, Delta Air Lines and Northwest Airlines told Congress their plans would default unless legislators extended the funding deadline. The automakers, short by $55 billion to $60 billion, may not be far behind."

Brian Tracy: "The more you seek security, the less of it you have. But the more you seek opportunity, the more likely it is that you will achieve the security that you desire."

As we move into the Phase II of prewar intelligence, one might consider the document DITSUM No. 044-02.
The misuse of prewar intelligence to try to justify the war in Iraq will come into clearer focus.

Andre Gide: "One does not discover new lands without consenting to lose sight of the shore for a very long time."

"If there's one thing that could bankrupt the country, it's health care," Comptroller General Walker said.

The federal Vioxx trial is scheduled to begin Nov. 29 in Houston, just 40 miles north of the state court where Texas jurors last August hit Merck with a $253 million verdict in the first Vioxx trial in the nation. Texas caps on punitive damages will cut that amount to no more than $26.1 million.

"We have told the (International Atomic Energy) Agency that we are going to inject new initial materials (uranium ore) into the production chain,"Javad Vaidi, an official from Iran's Supreme National Security Council, told state television.

Peter Drucker: "The best way to predict the future is to create it."

The Equity Market Shrugs

11/5/05 The Equity Market Shrugs

The BLS Commisssioner: "Job growth in the remainder of the country appeared to be below trend in October. In addition, the direct impact of Hurricane Rita on the national employment data for October was judged to be minimal. It is possible, of course, that employment growth for the nation could have been held down by indirect effects of Hurricanes Katrina and Rita, for example, because of their impact on gas prices.(Hurricane Wilma made landfall after the October survey reference period.)"

Robin Williams: "See, the problem is that God gives men a brain and a penis, and only enough blood to run one at a time."

Berkshire Hathaway stated Hurricanes Katrina and Rita cost the company's insurance subsidiaries $2.99 billion in the third quarter and could end up costing the whole insurance industry $60 billion to $70 billion.

Friedrich Nietzsche: "A casual stroll through the lunatic asylum shows that faith does not prove anything."

Before taking a closer look at yesterday's employment report, let's touch on a few items:
(1) Frank Nothaft, VP and chief economist for Freddie Mac stated "we are forecasting that home equity extraction from the refinancing of prime first mortgage liens will result in extraction of $204 billion in 2005, up from $142 billion converted to cash in 2004." This home ATM helps to explain, at least in part, the continued high level of consumer spending while wage gains have trailed the rate of inflation. At the same time, with mortgage rates increasing along side the recent rise in 10-year treasury yields, it is doubtful that the consumer can depend on much home equity extraction in 2006.
(2) Last week the dollar index jumped 2% and rose above the 91 level. The euro fell to a 1 1/2 year low versus the dollar. As interest rates in the U.S. continue to rise, the ECB has chosen to keep their rates unchanged at 2%. The widening yield spread between the eurozone countries and those in Japan help to explain the bull move in the dollar index.
(3) 10-year treasury bond yields rose to 4.66%, the highest close sinceJune 2004. (4) the equity market shrugged off the weak employment report and rising government bond yields. Transports, for example, hit an all-time high during the weak. In my view, if the equity market is to mount a significant rally from here, then greater participation must come from the S&P100, the OEX.

Stanislaw Lem: "Is it progress if a cannibal uses a knife and fork?"

The U.S. nonfarm payrolls rose by 56,000 in October. However, the September number was revised downward to a loss of 8,000 jobs. In October the gains were among the usual suspects: service industry jobs rose by 7,000, construction by 33,000, temps by 11,000, financial activities by 22,000, and healthcare and social assistance by 23,000. A big swing took place in manufacturing with 19,000 Boeing machinists returning to work. Without that, manufacturing would have lost 7,000 jobs and the overall October gain would have been 37,000.

Kinky Friedman: "If you elect me the first Jewish justice of the peace, I'll reduce the speed limits to 54.95."

Talking about Boeing, remember that the company's stock is in the Dow. Boeing has built 145 C-17s since 1993. Each plane is sold for $175 million. The plane is built at their Long Beach plant, and the company has orders for another 35 more with the last delivery scheduled for 2008. According to the Seattle Times, the Air Force has stated "we got what we need." That would be a huge blow to Boeing and the 6,500 employees working at the facility in Long Beach. Boeing had expected an order for another 42 planes. Boeing has already annoucnced closing a Long Beach plant in 2006 after the last 717 is delivered.

Erma Bombeck: "Marriage has no guarantees. If that's what you're looking for, go live with a car battery."

GM has elected to sweeten cash rebates to $1,000 through November 13.

Steven Wright: "You know when you put a stick in water and it looks bent? That's why I never take baths."

Gold hit a 7-week low while zinc hit a new high.

Denis Leary: "I would never do crack... I would never do a drug named after a part of my own ass, okay?"

Global Insight released a study yesterday that found Wal-Mart saved each American household an average of $2,329 in 2004. In addition, the company had a net positive economic impact in the form of .9% increase in real wages and the creation of 210,000 jobs nationwide.

Rodney Dangerfield: "In the school I went to, they asked a kid to prove the law of gravity and he threw the teacher out of the window."

Regular unleaded gasoline was averaging $2.43 a gallon retail, AAA stated on Friday, down 20% from an all-time high $3.057 on Sept. 5. Before you go out and celebrate, consider what you paid on Nov. 4, 2004.

Dave Barry: "I do think we need to explore the commitment problem, which has caused many women to mistakenly conclude that men, as a group, have the emotional maturity of hamsters. This is not the case. A hamster is much more capable of making a lasting commitment to a woman, especially if she gives it those little food pellets. Whereas a guy, in a relationship, will consume the pellets of companionship, and he will run on the exercise wheel of lust; but as soon as he senses that the door of commitment is about to close and trap him in the wire cage of true intimacy, he'll squirm out, scamper across the kitchen floor of uncertainty and hide under the refrigerator of Non-Readiness."

Many Americans wonder what Bush's daily schedule looks like. Here is an example of a crucial meeting: The President will welcome President Ali Abdullah Saleh of the Republic of Yemento the White House on November 10. The two leaders will discuss a range of bilateral issues, including the President's Freedom Agenda and cooperation on the war on terrorism.
I know the Republic of Yemento is on everyone's lips.

In this week's Barron's in Michael Santoli's column, there is a bullish take on Saks suggesting "a share price above 23" and "the likelihood that greater value should be realized before too long."

According to the Washington Post, a textile agreement between the U.S. and China will be signed next week. The deal would begin on Jan. 1 and last through 2008 -- a concession by China, which wanted it to expire in 2007, a anonymous source was quoted as saying.
It would allow imports of most major textile and apparel products from China to increase by 8 to 10 percent in 2006, by 13 percent in 2007 and by 17 percent in 2008 -- a concession by the United States, which had proposed keeping annual growth close to 7.5 percent, according to the Post.
Although a few details remain to be resolved, the agreement is likely to be signed next week by U.S. Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai, the report said.

Douglas Adams: "I'm spending a year dead for tax reasons."

Nose To Nose With Reality

11/4/05 Nose To Nose With Reality

A new AP-Ipsos poll found Bush's approval rating was at 37 percent, compared with 39 percent a month ago. About 59 percent of those surveyed said they disapproved, with 42 percent now saying they "strongly disapprove" of how Bush is handling his job — twice as many as the 20 percent who said they "strongly approve." In the AP-Ipsos poll, nearly one in five Republicans disapproved of Bush's handling of his job, compared with nearly nine in ten Democrats. Nearly seven in ten independents disapproved.
The president has lost support from some key groups of constituents over the past year. He's dropped 16 points in his approval rating with men in that time, 18 points with people who have a high school education or less, 16 points among Southerners and 13 points among Republicans.
Congress isn't faring much better. In early October, 35 percent of poll respondents approved of the job being done by Congress, down from 44 percent in February. In December 2004, soon after Bush's re-election, 51 percent approved of his handling of his job, while 47 disapproved, and 28 disapproved strongly.
"I'm surprised it's not even worse" in terms of Bush's latest poll numbers, said GOP consultant Rich Galen. He cited three months of unrelenting bad news that have Republicans "beginning to scratch their heads."

A new survey, the eighth in an annual series of cross-national surveys conducted by Harris Interactive, is the largest to examine health-care quality across several nations during the same period. The survey, published in the journal Health Affairs, questioned 6,957 adults who had recently been hospitalized, undergone surgery or reported health problems between March and June this year.
Nearly a third of U.S. patients reported spending more than $1,000 in out-of-pocket expenses for care. Canadians and Australians came next, with 14 percent of patients spending that much. The proportion reporting similarly high costs was far lower in the other countries.
Americans also were more likely to report forgoing needed treatment because of cost. About half of Americans said they had decided not to fill a prescription, see a doctor when they were sick or get recommended follow-up tests. About 38 percent of patients in New Zealand reported going without care, as did 34 percent in Australia, 28 percent in Germany, 26 percent in Canada and 13 percent in Britain.
About one-third of U.S. patients reported problems with the coordination of their care, such as when test results were not available at the time of their doctor's appointment or when doctors ordered duplicate tests. In the other countries, between 19 percent and 26 percent of patients reported similar problems.
Americans also reported the greatest number of medical errors. Thirty-four percent reported getting the wrong medication or dose, incorrect test results, a mistake in their treatment or care, or being notified late about abnormal test results. Thirty percent of Canadian patients, 27 percent of Australian patients, 25 percent of New Zealanders, 23 percent of Germans and 22 percent of Britons reported errors.
In addition to the findings in this survey, one must remember that at least 47 million Americans do not have health care insurance. This fact, combined with those crossing our borders illegally, creates an imploding health care system.

Ayn Rand: "Reality confronts man with a great many "musts," but all of them are conditional; the formula of realistic necessity is: "You must, if " and the "if" stands for man's choice"

Ten-year Treasury bonds traded yesterday at a 16-month high yield. Mortgage rates reached a 17-month high. In fact, one-year ARMs reached their highest rate in over 3 years. Homeowners with ARMs are beginning to feel the pinch. It's only a matter of time until foreclosures take off.

U.S. September factory orders declined by 1.7% with capital goods orders dropping a whopping 7.8%. Against that backdrop, the ISM Services Index for October rose to 60% from 53.3% in September.

Believe it or not the dollar rose to a 2-year high versus the yen and crossed the 117 level.

Cashmere is making the day at Saks Fifth Avenue. Their same-store sales for October rose by 10%. That's a great beginning for the holiday season.

A total of 520,,000 unemployment benefit claims have been filed since Katrina and Rita hit the Gulf Coast.

There is something wrong with this picture. For several quarters, corporate profits have risen in the double digits. Yet, unit labor costs declined 0.5% in this year's third quarter. In other words, employees produce the double digit gains, work their buns off; however, real wages are actually down 2.3% for the third quarter. Total compensation costs (wages paid + benefits) are down 1.5% on an inflation-adjusted basis. When do the employees get to eat a piece of the pie? If productivity rose 4.1% in the third quarter, who do you think was responsible for this gain? The tooth fairy?

Spitzer sued Guidant over their heart defibrillators, and claimed the company failed to inform doctors about a mechanical problem. The bad news is making it tough for J&J to stay the course.

Aluminum hit a 10-year high.

After a $2 gain yesterday, crude is holding above the $61 a barrel level.

Here is an example of your government at work. Through Nov. 2, there have been 5 meetings been the U.S. and China on textile imports. What has been accomplished? Are you sitting down? There is a new sock agreement, and it places a new quota of just over 10 million dozen pairs of imports of Chinese-made cotton, wool, and man-made fiber socks. Had there been no agreement reached, imports for the next 12 months would have been limited to sslightly more than 61 million dozzen pairs. Thank goodness for the Office of the U.S. Trade Representative.

“It’s turned from a seller’s market to a buyer’s market,” said Greg Spier, who builds large custom homes in suburban Boston. “The marketplace has become astute. There’s more inventory. People are becoming pickier. Maybe there’s eight to 10 homes to look at. A year ago maybe there were one to three.”

In the first nine months of 2005, China's trade surplus jumped to $68 billion from only $4 billion one year earlier.

Ambassador Joseph Wilson: "The documents (falsely alleging Iraqi procurements of 500 tons of yellow cake uranium from Niger) were known to be a forgery and the White House was so advised well in advance of the State of the Union speech."

Executive Order 12958 states unauthorized disclosure of classified information is grounds for losing one's securty clearance.

Dietrich Bonhoeffer: "To understand reality is not the same as to know about outward events. It is to perceive the essential nature of things. The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential. But on the other hand, knowledge of an apparently trivial detail quite often makes it possible to see into the depth of things. And so the wise man will seek to acquire the best possible knowledge about events, but always without becoming dependent upon this knowledge. To recognize the significant in the factual is wisdom."

The National Federation of Independent Business stated its monthly survey revealed member firms added 0.5 employees per business, on average, over the past three months. NFIB said U.S. small businesses expected to further expand their payrolls. The percentage of firms planning to hire, net of those who expect to cut jobs, held steady at a seasonally adjusted 17 percent in October, the same as in August and September.

Misled Or Lies Or Both?

11/3/05 Misled Or Lies Or Both?

"We're finally going to ... have Phase 2 of the investigation regarding how the intelligence was used to lead us into the intractable war in Iraq," stated Democratic leader Harry Reid (D) of Nevada.
Who gave the State of the Union speech in January 2003? It wasn’t Cheney or Rove or Rumsfeld? At what point is there accountability at 1600 Pennsylvania Avenue? Those 16 words transformed our nation into an invader. Nixon gave the orders to "invade" the DNC. Did anyone get killed? He resigned from office. You get my drift?

Norman Angell: "The capitalist can only make a whole people go to war . . . by capturing the popular will. The only prophylactic against that situation is to make the public aware of the way in which it is being misled."

Mark Twain: "One of the most striking differences between a cat and a lie is that a cat has only nine lives." In this case, it has 2,028 lives and growing.

The IEA warned of a 50% oil price rise by 2030. With the current rate of inflation, that increase looks low.

Samsung aims to double revenue by 2010.

Do higher interest rates matter? With the 10-year Treasury bond at 4.61%, mortgage rates will rise once again.

Germany will raise the sales tax to 18%. That is not a misprint.

The J&J-Guidant situation is coming to a head. The best Guidant shareholders can receive is a lower price. How committed is J&J to this deal? In my view, the time to walk away was before the FTC approved the combination. Guidant is in a weak bargaining position. My thoughts remain the same. The price will not exceed $65 and could be closer to $60.

I might have been smart to stay away from Guidant and my uncommon values treated me well until I overstayed my welcome. My Dell/Hewlett hedge must have been generated from where I am sitting. That was my putz move for 2005. I apologize to anyone who followed my view on this.

Symantec cut its forecast and the stock got creamed. Mercury Interactive had some roblems with options and it ran into a brick wall. Macrovision missed its
earnings and sales targets and the company will cut jobs by 10%. McAfee provided a disappointing outlook. Novell will cut 600 jobs. Everything is not coming up rosy in tech land.

Ron Ellison: "A recently released report from the big banking firm(Citigroup) noted that every year since 1998 research analysts' forecasts have been either too strong or too shy by, you guessed it, 10 percent. And that's the good news. The bad news came in 2000 during the technology bubble when they were off a whopping 70 percent."

Challenger Gray & Christmas stated that layoffs rose by 13% in October to 81,301. Job rductions year-to-date are up 4.7% to 864,953 compared with 2004.

How is it that the API and the Energy Department have different takes on the weekly oil, gasoline, and distillate inventories? How do we know which one is right? Maybe neither is correct.

In the market place, however, heating oil traded at a 3-month low and natural gas at a 2-month low. The market is the ultimate authority.

In describing the Denver real estate market, Tony Sagami stated "in October, the house sales were up a measly 0.8% higher and the number of homes for sale is 12.4% higher than the same period last year."

A recent poll of Latin Americans in business, government, and education in six Latin American nations showed that just 17 percent of Argentinean leaders and 12 percent of leaders in Brazil viewed Bush positively.
The Miami Herald/University of Miami Business School/Zogby Elite Poll of 523 Latin America opinion leaders was conducted Aug. 17 through Sept. 15. It included respondents in the public and private sectors, mass media and academia in Mexico, Chile, Colombia, Venezuela, Brazil and Argentina.

Wal-Mart Stores, Inc reported net sales for the four-week period ending October 28, 2005. SAM'S CLUB comparable sales without gasoline sales would have been 4.8%for the October four-week period. Total U.S. comparable sales would have been 4.0% without the SAM'S gasoline sales. During the four-week and thirty-nine-week periods, Wal-Mart Stores, Inc. added over $2.2 billion and $20.6 billion in sales, respectively. They estimate comparable sales in the U.S. for the November four-week period to be in the 3 to 5 percent range.

Dr. Paul Zickler of DoctorSolve: "Medicare and You," the handbook designed to aid seniors in understanding Plan D, contains a critical mistake. It tells beneficiaries that if they qualify for an extra subsidy for their drug costs, every plan is available to them with no monthly premium. The truth is only the very basic plans have no premiums for those who qualify for extra assistance. The Centers for Medicare & Medicaid Services do not intend to correct the problem, but instead will rely on insurance companies to do it for them. "This is in fact the second blooper with 'Medicare and You,'" says Zickler. "The first printing omitted mention of the $2,850 coverage gap or donut hole. How many more mistakes are buried in its cumbersome text?"

The ECB maintained the 2% interest rate level.

Can you have a year-end tech rally without the participation of Intel, Cisco, and Microsoft?

CVS operates more than 5,400 stores in the United States, making it the largest drugstore chain by store count. However, it trails Walgreen Co. in revenue.

Adolf Hitler: "Make the lie big, make it simple, keep saying it, and eventually they will believe it."

Not Surprising

11/2/05 Not Surprising

The gap between what Bay Area households earn and what they need to buy median-priced homes has grown by 21 percent in the past year, according to the California Association of Realtors (CAR).
CAR said on Tuesday that its quarterly income gap index showed a $100,670 shortfall in the Bay Area, the biggest in the state. Buyers of median-priced $721,850 homes in the region between July and September needed a household income of at least $169,180 to qualify for a typical mortgage.
Statewide, households with a median income of $54,140 are $73,810 short of the $127,950 qualifying income needed to purchase a median-priced home at $545,910. That's up 33.7 percent from last year's third quarter.
CAR calculates its index assuming a 20 percent down payment and a monthly payment for principal, interest, taxes and insurance that is no more than 30 percent of a household's income.

The Fed funds rate and the prime rate are both at their highest point in 4 1/2 years.

Knight Ridder Inc.'s largest shareholder, Private Capital Management LP, wants the nation's second-biggest newspaper publisher to seek a buyer. After spiking higher yesterday on this news, I would be careful about buying stock at these levels.

About 1,500 Boeing machinists went on strike at 12:01 a.m. Wednesday after last-minute talks broke down between their union and the company unit that operates the Delta rocket program.

Australian authorities have received specific intelligence that terrorists are planning an attack on the country, Prime Minister John Howard said Wednesday.

A greater number of Web shoppers will boost holiday spending online to $18 billion this year, a 25 percent increase from 2004, according to a new report by analyst Carrie Johnson of Forrester Research in Boston.
Web shoppers' average household income is $68,000. 2.5 million new households are expected to shop online in 2005, bringing the total to 42 million, or 39 percent of U.S. households.
"These folks may not spend as much as they had originally planned because of rising expenses, but they will keep online sales steady," Johnson said.
The Nikkei traded at a 4-year high.

GM and Ford vehicle sales declined about 25% in October. The domestic market share of the Big Three U.S. automakers slipped to 52.4% from 56.8% a year ago.

Yesterday, natural gas traded at a 2-month low.

The ISM October report had few surprises as the price index rose to 84% from Sept.’s 78%. New orders slipped to 61.7% from 63.8%, but the employment index improved a bit to 55% from 53.1%.

Continental Airlines will be the first U.S. carrier to fly non-stop from our shores to India. They will start non-stop service from NYC to India.

ContraryInvestor.com: "In the past 10 months, Asia has purchased all of $30 billion in U.S. treasuries…The U.K. has purchased $80 billion."

According to LBO Wire, a service published by Dow Jones Newsletters, Saks Inc. "is likely to start a formal sale process for its remaining assets including the flagship Saks Fifth Avenue sometime early next year…Several buyout firms would potentially be interested in the assets, including Bain Capital, Texas Pacific Group, Blackstone Group, Leonard Green & Partners, Thomas H. Lee Partners and Kohlberg Kravis Roberts & Co. A source for this article stated that "Saks Fifth Avenue will have a much higher valuation than Northern Department Stores." If blood is flowing to your brain, you would know that. The brand and the real estate combine to create a generous valuation.

According to Boise’s Idaho Statesman newspaper, Larry Johnston, Albertsons Inc. president, chairman and chief executive officer, could walk away with an estimated $40 million if the Boise company is sold. Johnston could receive about $35 million of the $40 million from the value of his stock options. That bunch of money provides an incentive to sell Albertsons to the highest bidder.

Barry Ritholtz: "The market’s tone has becoming increasingly firmer as of late. The many technical, internal and seasonal factors we track suggest that a modest short-term bottom is being formed. While the bottom has not been fully formed, we are becoming increasingly more comfortable shifting towards a Bullish position (however briefly that may be). We would be even more aggressive if several confirming factors showed improvements.
Regardless, we find that the elements are slowly coming together to support at least a modest year end rally, with a short-term bottom made sometime in early-mid November, and a projected top in mid-December…our expectations for a rally are modest: a 10% move for the Nasdaq 100; the SPX runs into difficulties in the 1280-90 area. Dow Industrials could see 11,400.
Beyond New Year’s Eve we become increasingly Bearish."

Scott Burns provides a list of some of the problems confronting Main Street Americans: •With the typical household consuming about 1,000 gallons of gas a year, an increase from $1.50 a gallon to $3 a gallon means a purchasing power loss of $1,500.•Rate increases for electricity and natural gas.•Rising medical co-pays and other out-of-pocket expenses for health care, plus rising employee insurance premium costs. Premium costs were up 10 percent in 2004 alone.Another way to see the same thing is to examine wage gains. In 2004 the average weekly earnings of private, nonagricultural workers rose by only 2.2 percent. The consumer price index rose by 3.3 percent over the same period. This year has been a replay — year-over-year wage gains are running less than 3 percent, while inflation has ramped up toward 4 percent. And all this assumes we believe the price index is an accurate reflection of the inflation we experience.

Cutera raised its 2005 revenue forecast to $73.6 million from $70 million, as well as its earnings forecast to 87 cents a share from 62 cents a share. It cited better-than-expected third-quarter results and its fourth-quarter outlook for the higher 2005 forecast.

U.S. consumer attitudes have worsened in the past two weeks, ABC News and the Washington Post reported Tuesday. The ABC/Post consumer comfort index fell to negative 21 in the latest week from negative 19 the previous week and negative 17 two weeks ago. The year's low came in mid-September at negative 23.

Gerda Lerner: "We can learn from history how past generations thought and acted, how they responded to the demands of their time and how they solved their problems. We can learn by analogy, not by example, for our circumstances will always be different than theirs were. The main thing history can teach us is that human actions have consequences and that certain choices, once made, cannot be undone. They foreclose the possibility of making other choices and thus they determine future events."

Deutsche Telecom to cut 19,000 jobs.

With many consumers concernedabout higher prices of goods, especially oil and gas, overall spending during the holidays this year could well be lower than it was last year. According to the latest Experian-Gallup Personal Credit Index(SM) survey, 32 percent of consumers expect to spend less this year, while just 12 percent expect to spend more and 56 percent expect to spend about the same.

At least 2,028 members of the U.S. military have died since the beginning of the Iraq war in March 2003. Yesterday Rumsfeld discussed sending moreof our troops to Iraq. How many members of Congress and the Bush administration have or have had family members sent to Iraq to fight in this war?

For fiscal 2006, Beazer Homes expects to earn $10.50 per share.

Ambassador Joseph Wilson: "We the People must know who, precisely, inserted those sixteen words on uranium from Niger into the State of the Union speech, who precisely over-ruled the Department of State and the Central Itelligence Agency when they objected, and who precisely participated in an on-going cover-up of this falsehood until well after the elections...The public has a right to demand, at least, the resignations of Cheney, Rice, Rove, and Rumsfeld."