Happy Black Friday

11/25/05 Happy Black Friday

An increase of 7.2 percent in consumer spending in September and October, combined with falling prices at the pump, is providing "strong momentum" for the holidays, said Scott Krugman, spokesman for the National Retail Federation. "We're looking at a strong holiday season," Krugman said.

Cythina Helms: "If man liked shopping, they'd call it research."

Rep. Norm Dicks is a Democrat from Bremerton, WA. He is a member of the House Intelligence Committee and a known Hawk. Without the threat of weapons of mass destruction (WMDs), he said, he would "absolutely not" have voted for the war. Dicks says the intelligence was "doctored." "A lot of us relied on [former CIA director] George Tenet. We had many meetings with the White House and CIA, and they did not tell us there was a dispute between the CIA, Commerce or the Pentagon on the WMDs," he said.

China's central bank sold dollars to 10 domestic banks at the current exchange rate of 8.0810 yuan per dollar with an agreement to buy them back in a year's time at 7.85 yuan. The implied yuan rise of about 2.9 percent reflects nothing more than the difference between U.S. and Chinese interest rates.

Philip Stevens of the Financial Times: "The image that will forever haunt this president is of the mission accomplished banner that served as backdrop to his triumphal landing on the aircraft carrier USS Abraham Lincoln in those heady days of May 2003. Now, cynics will tell you the banner will soon be dusted down and unfurled again – only this time the purpose will be to give political cover to an American retreat from Baghdad."

According to Shop.org and BizRate Research, 79% of online retailers will offer free shippinh with conditions such as a minimum order this holiday season. Shipping and handling account for between 7.5 to 10 percent of overall sales.

Last year, the busiest shopping day was Saturday, December 18, according to the International Council of Shopping Centers. Black Friday was the second busiest day.

With the first in-depth analysis of the air bubbles trapped in the ice core of east Antarctica, scientists have discovered that today's atmospheric carbon dioxide levels are the highest in 650,000 years.
The analysis highlights the fact that today's rising atmospheric carbon dioxide concentration, at 380 parts per million by volume, is already 27 percent higher than its highest recorded level during the last 650,000 years, reported scientists in two papers in the Nov. 25 issue of the journal Science.

PJ O'Rourke: "At school we had a name for guys who were 'trying to get in touch with themselves.'"

Happy Thanksgiving

11/24/05 Happy Thanksgiving

Rebecca Harding Davis: "For, after all, put it as we may to ourselves, we are all of us from birth to death guests at a table which we did not spread. The sun, th earth, love, friends, our very breath are parts of the banquet...Shall we think of the day as a chance to come nearer to our Host, and to find out something of Him who has fed us so long?"

Ten days ago an exlosion at a PetroChina chemica plant released benzene into an 80 km stretch of the Songhua river. The plant is outside the city of Jilin but the polluted portion of the river is expected to reach Harbin, a city of 9 million people, this morning and it will take 40 hours to pass through. Thousands have jammed railroads and planes in an attempt to avoid the pollution. All water was turned off in Harbin, and there has been a run on bottled water.

Yesterday, there was heavy selling in shares of Saks. It was in reaction to the news that insiders at the company had sold 1,136,379 shares on Nov. 17 at $17.52+. Since just before mid-year, Saks has been in negotiation s to sell parts of the company. That has occurred. It also has meant that insiders could not trade in Saks shares during this period. It is believed that negotiations to sell its flagship Saks Fifth Avenue operation will not take place until after Christmas. As such, this was a limited window to exercise stock options and simultanelously sell shares in the open market. Many of the shares had an option price of $8.81 and the options were to expire shortly. Often it is wise to sell on the news, so to speak, but it is also wise to understand the news and not simply the headlines.
In my view, the market price is underestimating the enterprise value for Saks, its valuable real estate, its under-leveraged balance sheet, and the potential to improve the current margins at Saks Fifth Ave. On a risk/reward basis, one might seriously give consideration to the purchase of these shares. Many will buy cashmere at Saks this holiday season. I prefer to stock up on the stock at this level.

Unemployment claims resulting from Rita and Katrina now total 555,000 and for Wilma 27,400.

The Conference Board Help-Wanted Advertising Index -- a key measure of job offerings in major newspapers across
America -- was unchanged in October. The Index now stands at 38, the same as
in the previous month. It was 37 one year ago.
In the last three months, help-wanted advertising declined in eight of the
nine U.S. regions. Steepest declines occurred in the Mountain (-15.7%), West
North Central (-11.0%) and East North Central (-9.2%) regions. Help-wanted
advertising increased in the West South Central (2.4%) region.
Says Ken Goldstein, labor economist at The Conference Board: "The
post-holiday labor market will likely remain weak. This is consistent with the
slowing trend in The Conference Board Leading Economic Indicators. Hurricanes,
flooding and energy prices have all held back growth. But outweighing these
concerns is lingering consumer worries about prices starting to rise faster
than wages. With slower hiring, and indications that hiring might remain soft
in the months ahead, the economy could struggle, setting up a self fulfilling
prophecy."
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). 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 holiday retail sales environment looks positive for 2005, although the conditions are less favorable than in
2004, according to Standard & Poor's in a report released this week, "Retail
Outlook:  Holiday 2005."
"Despite media reports about a potentially gloomy holiday season,
consumers have proven to be fairly resilient thus far and we have learned not
to underestimate their willingness and ability to spend," said Marie Driscoll,
an equity analyst for Standard & Poor's.  Overall, Standard & Poor's expects a
gain of about 3.5% to 4.0%, which is below the 6.7% increase reported for the
2004 holiday season by the National Retail Federation.
"The single biggest levers this holiday season, both positive and
negative, will be the robust employment picture and the projected increases in
heating costs, respectively," said Ms. Driscoll.  Some of the positive
influences include extra shopping days and an extra Saturday the day before
Christmas, declining retail gas prices, lower unemployment, and higher
incomes.  Conversely, some of the negative influences include the potential
for high home heating costs, negative savings rate, and declining consumer
confidence.
"We expect cost-conscious consumers to continue to seek the best
price/value offerings to maximize their gift giving and expect Wal-Mart and
Target to be lead destinations for more commodity-type gifts such as consumer
electronics, toys, and sporting goods," continued Ms. Driscoll.  "We also see
consumers shopping both discounters for quality, value-priced jewelry, fashion
apparel, accessories, and home furnishings.  In addition, we believe both
Wal-Mart and Target may benefit from some consumers 'trading down' this
holiday season.  That said, we see cross-shopping as a more enduring pattern
of behavior for most consumers," she concluded.

GfK NOP today announced results from its annual Roper Reports(R) Holiday Shopping Outlook, finding almost half (45%) of
Americans expecting to spend less this season compared to 2004, and only 8% of
consumers saying they will spend more. Fluctuating fuel prices are having a significant impact on consumers as
they enter the holiday season.  More than half (57%) of respondents state the
cost of fuel is hurting their household a lot, and a majority (56%) say they
will spend less money on gifts as a result.  Americans plan to spend an
average $780 on gifts for friends and family, down $78 from 2004.  While
spending is down, shopping lists remain steady with consumers on average
purchasing gifts for 11 people again this year.
"With all the recent noise around heating prices, Americans are feeling
the pressure, and it's showing in their spending plans," says Cary Silvers,
vice president of GfK NOP's Roper Reports division.  "There was a twenty
percentage point increase this year compared to last in the number of
consumers who say they plan to spend less.  As the holiday shopping season
kicks off, only 12% of Americans believe now is a good time to buy (October
2005 reading)-the lowest number we've seen in five years.  Faced with fading
consumer confidence, we may see the traditional battle-of-the-best-holiday-
deals reach new heights this year."
The Holiday Shopping Outlook found that a majority of consumers,
struggling with what to get Aunt Mae or Grandpa Joe, are turning to gift cards
as a way to please those hard-to-shop-for friends and family members.  Nearly
two thirds (62%) plan to give the gift of -- gift cards.  While gift cards
simplify shopping and ensure timely giving, they drag out the sales process
when it comes to redemption.  Only 11% of consumers use gift cards within one
week of receiving them, and half (52%) of Americans wait to redeem gift cards
thirty days or longer.

The University of Michigan Sentiment Index rose to 81.6 in November from 79.9.

W.T. Purkiser:"Not what we say about our blessings, but how we use them,
is the true measure of our thanksgiving." 

Travel Safely

11/23/05 Travel Safely

Optimism remains the watchword for this holiday season, with retail sales expected to increase by 4% to 4.5%over those recorded in 2004, according to Clear Thinking Group, LLC, a retailing/consumer products and industrial manufacturing consultancy.

New Survey from The Boston Consulting Group (BCG) Reveals Middle-Market
American Consumers(1) Looking To Reduce Overall Spending During The Holiday
Season, While Splurging On A Few Luxury Categories. 40% of consumers are planning to spend less over the next three months and only 23% are planning to spend more.(2) Nonetheless, they will treat themselves, family and friends to 'luxury' gifts while bargain hunting for items that don't mean as much to them.

U.S. holiday gift spending will likely fall slightly this year and stores will have to offer discounts to satisfy shoppers hunting for bargains, according to a survey released on Tuesday. U.S. households are expected to spend an average of $466 on gifts this holiday season, down from last year's estimate of $476, the survey by The Conference Board showed.

Consolidated Credit's 6th Annual Holiday Spending Survey finds sixty-two percent of people plan to spend less money during the 2005 holiday season. Last year, most respondents said they planned to spend more.
Over forty-three percent said they are paying off debt from last holiday
season, which is up from 30% last year. "The tough economic conditions in
2005 did not enable consumers to pay their debts in a timely manner," says
Howard Dvorkin, founder of the non-profit, Consolidated Credit Counseling
Services, Inc. and author of Credit Hell: How to Dig Out of Debt.

The National Retail Federation revised its holiday sales forecasts higher for the first time ever during a holiday season. It now expects November-December retail sales to rise 6% to $439.53 billion. The NRF saw 5% in September.

Marsoft: “For the third quarter as a whole, freight rates were down by an average of 40% relative to the second quarter, falling to their lowest level since mid-2003. Period charter rates also declined significantly, falling by about 25% over the past three months.
Cape rates on our benchmark Tubarao/Rotterdam iron ore route fell to a low of $22,000 per day by the start of August, before climbing back to $50,000 per day by the end of September. For the third quarter as a whole, rates averaged $39,000 per day, their lowest level in two years, and down from $61,000 per day in the second quarter. By mid-October, rates had strengthened further, topping $55,000 per day.”

Barry Ritholtz points out that, according to the BLS, “the average American spends more on entertainment than on gasoline, household furnishings and clothing and nearly the same amount as spent on dining out.”

The Mortgage Bankers Association said its index of mortgage application activity for the week ended November 18 declined to 635.4, 3.4 percent below the previous week's level.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.26 percent last week, down 0.07 percentage point from the previous week's 6.33 percent, a 17-month high.

Mexico’s Ortiz, Brazilian Finance Minister Antonio Palocci and Chile's Finance Minister Nicolas Eyzaguirre all commented on their exchange rates today, underscoring concern in the region that the currency rallies may drag on exports and hurt economic growth.
``The appreciation of the Mexican peso is not an isolated case,'' Ortiz said. Mexico's peso has gained 4.6 percent in 2005 and the Brazilian real has jumped 23%.

The House on Tuesday agreed to a $3,100 pay raise for Congress next year to $165,200. Officially, it is not a raise. It is a COLA. Interestingly, the same does not apply to the minimum wage.

Sen. George Voinovich (R., Ohio): "Contrary to what some of my colleagues believe, tax cuts do not pay for themselves." Ohio lost 6,500 jobs in October.

Today is the busiest travel day of the year. I hope everyone gets to their final destination safely.

Happenings

11/21/05 Happenings

Wal-Mart will match pricing in any local competitor's print ad; no rebates, no hassles, just low prices for customers; special items available at 5 a.m. on Black Friday; five days of special savings online at Walmart.com.

Saks Saks Fifth Avenue unveiled the new Holiday Snowflake Spectacular at the Fifth Avenue flagship yesterday during a special launch event. The company believes the Saks Snowflakes are destined to become a treasured New York Holiday tradition. To accomplish the Snowflakes in the windows required:
- 50 fully programmable, unique snowflakes reaching ten stories high
(36-8'-0"; 14-20'-0"), inspired by William "Snowflake" Bentley's
snowflake photos from the 1920s
- The project required 8,000 feet of steel, 5 miles of lighting, 72,000
LED modules, 15 multicolor changing uplights, 40 strobes, 13,000 feet
of cable and more than 5,000 hours of production.
This is a must-see for all residents and visitors to NYC during the holiday season.

Lobbyist Michael Scanlon, a former aide to Rep. Tom DeLay, pleaded guilty Monday to attempting to bribe a member of Congress and promised to help federal prosecutors in an investigation in which Washington officials are potential targets.
Scanlon agreed to serve between 51 and 63 months in prison and pay a $250,000 fine as part of his guilty plea to the charge of conspiring to commit fraud. He was also ordered to pay restitution of $19.7 million to the defrauded tribes.
The plea agreement filed by federal prosecutors listed 10 actions they said were taken by Rep. Bob Ney, R-Ohio, as part of a conspiracy with Scanlon and Abramoff aimed at passing legislation to help the lobbyists' Indian clients.
In exchange, Scanlon and Abramoff provided Ney and his staff with lavish trips, golf outings, tickets to sporting events and concerts, meals at expensive restaurants and campaign contributions, the plea agreement said. We will be reading more about Scanlon and certainly about Abramoff.

If sales in the final week of November meet the company's sales goals, Target said it expects to generate a modest gain of 2 percent to 3 percent in same-store sales growth for the month. Meanwhile, Wal-Mart Stores Inc. on Saturday said in a recorded call that it's still on track to generate same-store sales growth of 3 percent to 5 percent for November.

Washington Mutual is laying off 370 workers at its El Paso, Texas collections center. More customers are paying their bills online and that’s the reason for the cut in workers.

GM stated it would stop production at 12 plants, including four in Michigan, and cut 30,000 hourly jobs in North America by the end of 2008. An additional 2,500 salaried jobs at GM are in the crosshairs. The moves will lower GM's $41 billion annual operations expenses by $7 billion by the end of next year, GM’s CEO Wagoner stated.

2005 will be the sixth consecutive year of job losses in the state of Michigan.

GM, Ford Motor Co. and DaimlerChrysler AG's Chrysler Group share of the United States' automotive market has fallen from about 81% of all vehicles sold in 1975 to about 60% today.

The Conference Board reported that the Composite Index of Leading Economic Indicators increased 0.9% in October, following a decline of 0.8% in September, and no change in August. Ken Goldstein, Labor Economist at The Conference Board stated "The Leading Economic Indicators began to slow in July. The latest readings, however, show
a snap back in October. That's an indication that the economy -- after losing
some steam this summer and then suffering a major shock -- bounced back a
little in October. But the big question mark is whether this will be enough to
save the holiday retail season. Latest readings from the Index could be a
signal that holiday sales won't be as bleak as earlier feared. But it doesn't
rule out a rough patch ahead for retailers or a relatively weak post-holiday
economic performance early in 2006."
The Conference Board also reported that the Coincident Index increased 0.1%
in October, following a 0.3% increase in September, and a 0.6% decline in
August. The Lagging Index increased 0.8% in October, following a 0.2% decline
in September, and a 0.2% increase in August.

The London-based Center for Global Energy Studies warned of low distillate stocks in the United States after production was battered from Hurricanes Katrina and Rita and stated "Distillate output has suffered most from the refinery shutdowns, falling by 600,000 barrels per day from peak summer levels. Imports have only made small inroads upon this supply gap...Stocks are now close to the bottom of the seasonal range."

Now I will turn my attention to Albertsons. Some analysts will emphasize that third quarter earnings were 3 cents below their estimates. Those folks will miss the story.
Reported net earnings year-to-date reached $284 million or $0.76 per diluted share versus $249 million or $0.67 per diluted share in the prior year. Net earnings from continuing operations for fiscal year 2005 year-to-date grew to $298 million or $0.80 per diluted share versus last year's results of $288 million or $0.77 per diluted share. Total sales year-to-date reached $30.1 billion versus $28.8 billion last year. Year-to-date comparable store sales were +0.6% and identical store sales were +0.4%. The Company has narrowed its previous guidance of $1.37 to $1.47 per diluted share for fiscal year 2005 earnings from continuing operations to between $1.37 to $1.40 per diluted share excluding any unplanned, extraordinary events (such as hurricanes and the Company's exploration of
strategic alternatives). First Call’s estimate is $1.32. The Company also reaffirmed its outlook for positive comparable and identical store sales for fiscal year 2005. Capital expenditures for fiscal year 2005 are expected to be between $1.0 and $1.1 billion, consistent with previous guidance. Gross margin in the quarter increased 19 basis points to 28.12% versus last year's third quarter at 27.93%. The Company stayed on track to meet its $1.25 billion cost reduction goal by the end of fiscal year 2006, recording $71 million in new cost reductions during the third quarter of 2005, bringing the total cost reduction achieved since mid-2001 to $1.156 billion. During the quarter, 7 new stores were opened, 18 were closed and 41 remodels were completed. A total of 2,476 stores were open at the end of the quarter in 37 states. I continue to believe that Albertsons will deliver value to its stakeholders and a sale of the company will produce results that exceed most expectations. A closer look at the sale of the San Leandro distribution center would confirm that statement. The Company consummated the sale of its San Leandro, California distribution center to Kaiser Hospital and entered into a leaseback arrangement to facilitate the transition to a streamlined distribution operation in Northern California. The net cash proceeds of $94 million were applied to reduce the Company's outstanding
commercial paper borrowings. Albertsons owns a great deal of valuable real estate, and, in my view, the stock price does not fully reflect those values. A sale of the company will unlock the differential.

Prepare

11/21/05 Prepare

The United States is unprepared for the next flu pandemic, lacking the manufacturing capacity to provide 300 million doses of a vaccine for three to five more years, Health and Human Services Secretary Mike Leavitt said Sunday.
"What we all learned from [Hurricane] Katrina is that sometimes we have to think very clearly about the unthinkable," Leavitt said. "We're not as prepared as we need to be. ... We will not have enough for everyone."

UAW officials from Chrysler Group plants across the country will meet in Dearborn today and Tuesday to discuss whether the union should give Chrysler the same health care concessions that it recently agreed to with General Motors Corp., according to a UAW delegate who will attend the meetings.

If Delphi Corp.'s 24,000 UAW workers were to go on strike, they would have nearly $1 billion at their disposal from existing strike funds.

A greater number of Web shoppers is expected to boost holiday spending online to $18 billion this year, a 25 percent increase from 2004, according to Forrester Research.
Today, online sales make up 7.7 percent of total retail sales, according to Forrester Research. One in five online retailers is expecting sales of 75 percent or higher this holiday than last year, according to the National Retail Federation.

We have Black Friday, the day after Thanksgiving. Now we have Cyber Monday, the Monday after Thanksgiving when Web sites carry ads about special discounts and promotions, according to a report to be released today by the National Retail Federation.

John Hussman: “Market action continues to display internal divergence that isn't characteristic of robust bull markets, and on a short-term basis, the market appears substantially overbought too…Last week, for example, despite the fresh high in the S&P 500, the number of stocks registering new 52-week lows expanded to 422, easily outpacing the 286 achieving new highs. Breadth was also unimpressive for a push to new highs, with the weekly advance/decline figures at 1893 versus 1609, respectively. Nasdaq, which was the strongest index, actually exhibited more decliners than advancers on a weekly basis…Despite the appearance that the major indices are making substantial progress, Friday's close for the S&P 500 was just 0.87% higher than its prior August 3rd high, while the Russell 2000 remains 1.27% below its level on that date on a total return basis.”

China confirms 21 bird flu outbreaks in 9 provinces.

The White House dispatched Defense Secretary Donald Rumsfeld to four networks Sunday to make the case for staying the course in Iraq. With Rumsfeld’s lack of credibility, that was one more dumb idea.

Light sweet crude prices turned higher on Monday, recently trading up 55 cents at $57.76 a barrel.

General Motors Corp Chief Executive Rick Wagoner will announce plans this week to close four US assembly plants, the Automotive News industry paper reported today.

One might consider the possibility that the recent rise in many equity indices could top out by the end of the November. Selling into strength appears to be a viable strategy. Being prepared with larger cash reserves is not the worst thing that can happen to you. It could also place you in a position to take advantage of an opportunity presenting itself during end-of-the-year tax-selling time.

On a pro forma basis, that is, as if the three newspapers acquired in
August had been with Knight Ridder in 2004 as well, total advertising revenue
for October was up 0.1%. Retail was down 2.3%; national was down 1.1% and
classified was up 3.5%. Help wanted was up 17.2%, real estate was up 13.3% and
auto was down 17.5%. I continue to believe better investing opportunities can be found elsewhere.

Microsoft’s Xbox 360 hits the stores at midnight. It launches on Dec. 2 in Europe and on Dec. 10 in Japan. The company expects to sell close to 3 million consoles over the next three months. With total company sales of $40 billion, how important can the Xbox 360 be? Will it transform Microsoft’s image to a “cool” company? I would doubt it.

Benjamin Franklin: "By failing to prepare, you are preparing to fail."

Developments

11/20/05 Developments

Emirates orderedr 24 Boeing 777-300ERs, 10 777-200LR Worldliners and 8 777 Freighters, with the first airplanes scheduled for delivery in 2007.

Saudi Arabia's King Abdullah: "Reduce the burden on citizens by reducing taxes on oil products when prices rise. Limit the speculation, refute rumors and misleading information that could distort the realities of the market."

The WSJ reported that Toyota may surpass GM to become the world's biggest car maker when it unveils its 2006 production targets next month.

On Friday, Michael Scanlon, 35, was charged with conspiracy, accused of plotting with Jack Abramoff to defraud the Indian tribes and bribe government officials, including a member of Congress. He is to appear in court Monday to enter a guilty plea worked out with prosecutors.
The matters surrounding Scanlon and Abramoff could have wide-spread political implications.

Pulte Homes recently advertised a free gas fireplace, free main-level hardwood floors, free upgraded cabinets and a free washer and dryer at one upscale development in Maryland. Also, it offered a choice of free heat for six months, a free 42-inch plasma television set or free window coverings worth $5,000. It sounds a little like the free gas offer for 2 years from Chrysler.

In 2004, the average disabled veteran nationwide received $8,378 annually from the Veterans Affairs Department for disabilities that ranged from war wounds to injuries suffered in car accidents while on duty. But disabled veterans in Illinois received the least in the nation at $6,961 -- which was more than $5,000 less than veterans in high paying states. For years, Illinois veterans and those in five other states -- Indiana, Michigan, Ohio, New Jersey and Connecticut -- have received well-below-average disability payments.

Greg Miller: "The Semiconductor relative strength gave us a short term pop on November 1, but has since given up its momentum. The Slow Stochastic on this ratio has turned DOWN! If you believe that the semi's must lead if we are to go higher, then I suggest that you must admit that their lack of out-performance at this juncture is becoming a bearish indication for the entire market."

Brad Setser: "As a result of the war on terrorism, the US now has bases all around China - something China no doubt has noticed."

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."