4/26/03 Zorbing
Zorbing has its origins in New Zealand, the same country which brought the world bungy jumping. Despite the fact that the Zorb can pick up some pretty hefty speeds along its journey, there has never been a serious accident. You can Zorb on the hills, on snow, and on water. The Zorb is a clear bubble-like, inflatable 10.5 foot sphere with a 3.9 foot inner chamber. Air cushioning keeps the Zorber safe inside as they hurtle down the hill or along the water. This is considered an extreme sport, and may be coming to your neighborhood. It arrives on one of Boston's rivers today.
I mention Zorbing not just because it looks like fun but also because looks can be deceiving. On looking at tapes of Zorbing you might think it could be dangerous. The design, however, successfully eliminates the danger. That brings me to SARS. In the U.S. there might be fear from listening to the news and reading the headlines, but the reality of the danger hasn't really been understood. I know that is true on Wall Street. Yet, there are several companies that have mentioned SARS in their recent news releases. Analysts have looked down on those companies as making excuses for possible poor future results. I suggest Wall Street is all wet. Sybase has temporarily closed its offices in Beijing and Hong Kong out of the fear of the spreading SARS epidemic. The Sybase CEO said only yesterday "I am worried, the uncertainty kills markets. It's all a matter of confidence and if every day there are more cases and more people die, the impact will be quite dramatic by the end of the June quarter." We are talking uncertainty, lack of confidence, fear, and possible death. That combination can impact the social and financial fiber of any community on the globe. Shigeru Omi, head of the WHO's Western Pacific regional office, said "the threat posed by SARS is unprecedented. Tourism has almost disappeared. Normal life has also been severely disrupted."
When we look at the economies across the globe, the facts show weakness in the US., euro-denominated countries, Japan, and the U.K. Non-Japan Asia was the fastest growing region of the world economy last year, and China had extraordinary GDP growth in the first quarter- prior to their disclosing the onset of SARS. Asia ex-Japan and South Korea accounted for about 45% of global trade volume in 2002, and the OECD said they were expected to account for over 30% this year, but that was before the fallout from SARS which began in April. Even though Japan has had only two possible SARS cases reported, their Finance Minister is worried that SARS will have a serious impact on Japan's domestic economy. It's not just travel, tourism, shopping, trade, demand for industrial imports like metals and rubber, but also the risk to the global supply chain, and this was even mentioned in the latest Beige Book. Unlike Zorbing, SARS does not have a built-in design to cushion the danger as it spirals and spreads and picks up speed. A global impact on business has begun. This is not a short-run problem. As we go into summer, a virus becomes less potent, but then the weather changes
and it will spiral again. There truly is a growing level of ucertainty. It's no wonder that Japan's Nikkei closed at a new 20-year low.
Business investment fell at a 4.2% annual rate in the first quarter. That was before SARS became a front page fear. SARS can only further dampen the chances for a pick-up in business spending. I believe that is true too of consumer spending, and in the first quarter that spending was the slowest in a decade. Since the consumer accounts for almost 70% of our economy, it is only prudent to have a negative outlook going forward.
Taiwan quarantined over 1100 doctors, nurses, and patients in a hospital.
Three more deaths were reported yesterday in Toronto and eight new cases among health workers. Toronto continues to export SARS to other countries, and that includes the U.S.
Nineteen people have died in Singapore, and 2800 individuals have been quarantined.
WestPoint Stevens to cut 320 jobs, Reader's Digest 200 workers, and EDS to have an undisclosed number of layoffs.
The PC and cell phone market have depended on Asia for a good part of its growth. With SARS, a portion of that demand has been quarantined. Channel inventories are high as end users disappear from view and hide behind masks. Quarterly forecasts will be guided lower- much much lower- and stock prices will follow south.
The S&P posted its biggest decline in two weeks.
Warren Buffett: "No reason to get puffed up because I have a lot of money."
There is a fear that SARS has been significantly understated in Shanghai.
The dollar has lost 19% against the euro in the past 12 months.
Volkswagen said the drop in the dollar will hurt their sales and earnings this year, and that operating profit in 2003 will fall for the second straight year.
GM will trim production 10% in the second quarter and Ford 17%.
Robert Ardrey: "You can't say civilization isn't advancing. In every war they kill you in a new way."
NYC may legalize video slot machines in an effort to close the $3.7 billion budget gap. Just don't cough and sneeze around the machines.
Low-cost cigarettes are eating into sales for RJ Reynolds and Philip Morris. RJR cut its earnings forecast by about 50%. When tough economic times hit, price becomes more important, and brand items take more of a back seat.
Friday, April 25, 2003
4/25/03 Thinking Is Not Necessarily Knowing.
Wall Street and the Iraq war have one thing in common- you think you know but you don't really know. Yesterday President Bush provided the first public indication that his Administration didn't know where the WMD are in Iraq. I alluded to that in yesterday's blog. The President said "But we know he had them. And whether he destroyed them, moved them or hid them, we're going to find out the truth." I believe the President. I believe he thought he knew where the WMD were located. They had 100 possible sites with some evidence leading to that conclusion. David Albright, a former nuclear-weapons inspector in Iraq, said he had believed that the Aministration was overstating the likelihood that Iraq had rebuilt its weapons program. He said "If there are no weapons of mass destruction, I'll be mad as hell. I certainly accepted the administration claims on chemical and biological weapons. I figured they were telling the truth. If there is no massive arsenal, I will feel taken. Because they asserted things with such assurance." So what does Wall Street have in common with the above? There is a wide-spread assurance that the worst is behind the economy and that earnings will pick up strongly by the fourth quarter. Based on this divine knowledge, the markets have rallied strongly since the lows reached in 2002. There are some great companies like Starbucks selling at 35+ times earnings. The overall market does not have the continual growth of Starbucks. Some like Amazon are doing better. Their quarterly sales reached $1 billion and they only lost $10 million. The stock no longer sells at $14. It's now at $28. The overall market forecasts for revenues and earnings are significantly incorrect. They do not in any way take into account the impact of SARS, and there isn't one person with enhanced knowledge of this virus willing to state its existence is here only for the short run. In fact, just the opposite is true. I discussed some weeks back its similarity to AIDS based on RNA rather than DNA. That fact alone is vital. This fact is not based on thinking but rather on knowing. Just consider that the World Bank believes that this year SARS could cut the Asian economies by one-sixth. Based on what is happening in China, Hong Kong, Singapore, and other countries, that projection could be very low. Keep in mind that SARS is spreading and the death rate is rising. That is not a good formula for correct projections concerning revenues and earnings.
Initial U.S. jobless claims rose to 455,000, the highest level in more than one year, and were 30,000 higher than the number projected by economists. The four-week moving average is about 440,000.
The number of workers continuing to receive jobless benefits increased by 42,000, and was at the highest level since the week ended November 2, 2002. This does not reflect a lackluster economy.
Bert Murray: "It used to be that death and taxes alone were inevitable. Now there's shipping and handling."
Airline traffic for the week ended April 13 fell 11% from a year earlier. That's not lackluster either.
BE Aerospace, the world's largest maker of airline seats, said it would cut more jobs this quarter on top of the 1400 reductions already announced.
President Bush: "There is too much economic uncertainty today." The facts support that statement.
George Shaw: "A government which robs Peter to pay Paul can always depend on the support of Paul." That presupposes Paul doesn't have SARS.
There is an excellent article in the May issue of Business 2.0 by Paul Kaihla on Bob Beyster and his employee-owned SAIC located in La Jolla. They have revenues of approximating $6 billion, and they are the largest privately held infotech company.
U.S. light crude futures fell to a five-month low of $25.77 per barrel. Gas prices will continue to fall at the pumps.
The Conference Board's Help-wanted Advertising Index fell two points in March to 38. It was 45 one year ago. Their chief economist said "the earliest the labor market will snap back to life will be later this year or even early next year."
Howard Dvorkin, Pesident of Consolidated Credit Services, said, that in a recent poll, nearly 80% stated they would spend at least 10% less on a vacation than was the case a year ago, and that 45% said the most popular vacation destination would be with friends and family.
AIG said the spread of SARS is curbing sales in Hong Kong and China and may hurt earnings. Asia contributed over 25% of AIG's revenue last year.
Marriott says forecasting future performance is very difficult given the continued economic uncertainty, the lingering effects of the Iraq war, and SARS.
LVMH fears SARS could hurt luxury goods sales in its key Asian market. PPR's Gucci said that sales are thought to be possibly impacted as well.
China signed a contract for 30 Airbus jets. I trust those planes won't be delivered for some time. China's planes aren't welcome in too many places right now. SARS isn't going away any time soon.
U.K.'s GDP grew only 0.2% in the first quarter, the slowest pace in one year. The number of shoppers is lower than a year ago at this time.
CDC's Gerberding said "we are very concerned about what appears to us to be ongoing transmission in China of SARS. It's going to take a great deal of time before we really piece together the full picture there."
The CDC said you are not at risk if you travel to Toronto. Just stay away from hospitals and anyone who might cough or sneeze. At least they didn't include hiccups.
Beijing placed 4000 people under quarantine.
Japan's unemployment rate rose to 5.4% in March, and is near record levels. Fujitsu had a worse than expected loss.
A Millersville, Maryland woman returned from China with SARS symptoms. She and her husband and one year old son are being quarantined for 8 days. It just goes to show that quarantining is occurring all over the globe.
The Kansas City Royals will be playing the Toronto Blue Jays in Toronto for a weekend series. I predict that not too many fans will show up at the Skydome. Many players on the visiting Royals want the game postponed to later dates.
I predict that the spreading of SARS will freeze business spending.
A second major hospital in Beijing was shut yesterday.
In NYC the number of SARS cases are thought to be about 18. Mayor Bloomberg said a travel advisory against the city could cripple an already fragile economy.
A Philippine Airlines flight to South Korea was turned back to Manila after a passenger showed SARS-like symptoms. That was a smart decision. CDC's Gerberding said "there is nothing to suggest that an infected traveler could not come to this country and initiate a cascade of transmissions."
.
Wall Street and the Iraq war have one thing in common- you think you know but you don't really know. Yesterday President Bush provided the first public indication that his Administration didn't know where the WMD are in Iraq. I alluded to that in yesterday's blog. The President said "But we know he had them. And whether he destroyed them, moved them or hid them, we're going to find out the truth." I believe the President. I believe he thought he knew where the WMD were located. They had 100 possible sites with some evidence leading to that conclusion. David Albright, a former nuclear-weapons inspector in Iraq, said he had believed that the Aministration was overstating the likelihood that Iraq had rebuilt its weapons program. He said "If there are no weapons of mass destruction, I'll be mad as hell. I certainly accepted the administration claims on chemical and biological weapons. I figured they were telling the truth. If there is no massive arsenal, I will feel taken. Because they asserted things with such assurance." So what does Wall Street have in common with the above? There is a wide-spread assurance that the worst is behind the economy and that earnings will pick up strongly by the fourth quarter. Based on this divine knowledge, the markets have rallied strongly since the lows reached in 2002. There are some great companies like Starbucks selling at 35+ times earnings. The overall market does not have the continual growth of Starbucks. Some like Amazon are doing better. Their quarterly sales reached $1 billion and they only lost $10 million. The stock no longer sells at $14. It's now at $28. The overall market forecasts for revenues and earnings are significantly incorrect. They do not in any way take into account the impact of SARS, and there isn't one person with enhanced knowledge of this virus willing to state its existence is here only for the short run. In fact, just the opposite is true. I discussed some weeks back its similarity to AIDS based on RNA rather than DNA. That fact alone is vital. This fact is not based on thinking but rather on knowing. Just consider that the World Bank believes that this year SARS could cut the Asian economies by one-sixth. Based on what is happening in China, Hong Kong, Singapore, and other countries, that projection could be very low. Keep in mind that SARS is spreading and the death rate is rising. That is not a good formula for correct projections concerning revenues and earnings.
Initial U.S. jobless claims rose to 455,000, the highest level in more than one year, and were 30,000 higher than the number projected by economists. The four-week moving average is about 440,000.
The number of workers continuing to receive jobless benefits increased by 42,000, and was at the highest level since the week ended November 2, 2002. This does not reflect a lackluster economy.
Bert Murray: "It used to be that death and taxes alone were inevitable. Now there's shipping and handling."
Airline traffic for the week ended April 13 fell 11% from a year earlier. That's not lackluster either.
BE Aerospace, the world's largest maker of airline seats, said it would cut more jobs this quarter on top of the 1400 reductions already announced.
President Bush: "There is too much economic uncertainty today." The facts support that statement.
George Shaw: "A government which robs Peter to pay Paul can always depend on the support of Paul." That presupposes Paul doesn't have SARS.
There is an excellent article in the May issue of Business 2.0 by Paul Kaihla on Bob Beyster and his employee-owned SAIC located in La Jolla. They have revenues of approximating $6 billion, and they are the largest privately held infotech company.
U.S. light crude futures fell to a five-month low of $25.77 per barrel. Gas prices will continue to fall at the pumps.
The Conference Board's Help-wanted Advertising Index fell two points in March to 38. It was 45 one year ago. Their chief economist said "the earliest the labor market will snap back to life will be later this year or even early next year."
Howard Dvorkin, Pesident of Consolidated Credit Services, said, that in a recent poll, nearly 80% stated they would spend at least 10% less on a vacation than was the case a year ago, and that 45% said the most popular vacation destination would be with friends and family.
AIG said the spread of SARS is curbing sales in Hong Kong and China and may hurt earnings. Asia contributed over 25% of AIG's revenue last year.
Marriott says forecasting future performance is very difficult given the continued economic uncertainty, the lingering effects of the Iraq war, and SARS.
LVMH fears SARS could hurt luxury goods sales in its key Asian market. PPR's Gucci said that sales are thought to be possibly impacted as well.
China signed a contract for 30 Airbus jets. I trust those planes won't be delivered for some time. China's planes aren't welcome in too many places right now. SARS isn't going away any time soon.
U.K.'s GDP grew only 0.2% in the first quarter, the slowest pace in one year. The number of shoppers is lower than a year ago at this time.
CDC's Gerberding said "we are very concerned about what appears to us to be ongoing transmission in China of SARS. It's going to take a great deal of time before we really piece together the full picture there."
The CDC said you are not at risk if you travel to Toronto. Just stay away from hospitals and anyone who might cough or sneeze. At least they didn't include hiccups.
Beijing placed 4000 people under quarantine.
Japan's unemployment rate rose to 5.4% in March, and is near record levels. Fujitsu had a worse than expected loss.
A Millersville, Maryland woman returned from China with SARS symptoms. She and her husband and one year old son are being quarantined for 8 days. It just goes to show that quarantining is occurring all over the globe.
The Kansas City Royals will be playing the Toronto Blue Jays in Toronto for a weekend series. I predict that not too many fans will show up at the Skydome. Many players on the visiting Royals want the game postponed to later dates.
I predict that the spreading of SARS will freeze business spending.
A second major hospital in Beijing was shut yesterday.
In NYC the number of SARS cases are thought to be about 18. Mayor Bloomberg said a travel advisory against the city could cripple an already fragile economy.
A Philippine Airlines flight to South Korea was turned back to Manila after a passenger showed SARS-like symptoms. That was a smart decision. CDC's Gerberding said "there is nothing to suggest that an infected traveler could not come to this country and initiate a cascade of transmissions."
.
Thursday, April 24, 2003
4/24/03 Lackluster
What is the best thing since sliced bread? Simple. The honesty and clarity coming from the Fed's beige book. It reminds me of the joke- I'm good at being inarticulately abstracted for the same reason midgets are good at being short. Pablo Picasso would have loved the Fed. He disliked computers. He felt they were useless because they could only give him answers. The Fed doesn't even serve up questions. My suggestions are two-fold. We just need to hold our breath and believe. In the morning we'll say goodbye to lackluster performance forever, have taxes licked, and only have death to worry about. Alternatively, my favorite solution to combat what the Fed calls our lackluster economy, is to apply StriVectin. It works on wrinkles and crow's feet and possibly could be an anti-aging miracle cream. We know it combats stretch marks. We know this. In sum, StriVectin will make the economy look nicer. Things are rosier with the Nasdaq selling at a five month high.
The Fed said consumers are wary. Is that why AOL lost 289,000 subscribers last quarter up 109,000 from the prior quarter? The good news is that AOL's quarterly revenue only fell 4%.
Siebel reported a 93% decline in net income from the year ago's first quarter. It could have been worse.
Peoplesoft is closing its Santa Clara office and cutting 200 jobs. Software license fees dropped 40% in the first quarter. There is a silver lining. Their Pleasanton headquarters will remain intact.
What's lackluster about 45 million Americans not having health insurance? The number keeps rising every quarter.
AMR lost $1 billion in the quarter and the pilots are considering not ratifying the contract deal with the airline.
Planes leaving from NYC to Toronto are 90% empty. I can understand that. A 40 year-old doctor just returned to Baltimore after a visit to Toronto. He returned with the SARS symtoms.
China plans a broad SARS quarantine. They sealed off the 1200-bed Beijing University People's Hospital as "no one is allowed to enter or leave." They have 60 confirmed or suspected cases of SARS at that hospital.
JetBlue will possibly order 115 planes from Airbus as Boeing would lose out once again.
Britain's InterContinental Hotels to lay off 800 workers.
Germany's largest bank, Deutsche Bank, will report a first quarter loss.
Aviva, Britain's largest insurer, said the outlook remains challenging.
Germany's Siemens cautioned about slow spending in major markets.
Sony's results for the year fell 36% short of forecasts. The fourth quarter loss was larger than expected. Game business sales declined 25%. Sony's CEO said "we should have taken a more drastic reorganization...Sony's not in a satisfying business condition at all right now and we have to start a full scale overhaul."
Hilton's quarterly income dropped 74%.
In NYC, for the second straight day, customers flocked to the Abacus Federal Savings Bank in Chinatown and withdrew more than $2 million. In Philadelphia a branch of the same bank had similar problems yesterday as more than $700,000 was withdrawn.
Pfizer said that job cuts are coming to former Pharmacia Corp. sites in Kalamazoo County in Michigan.
U.S. troops have searched more than 80 of the top 100 most likely sites for WMD in Iraq. Lt. Gen. David McKiernan, commander of land forces in Iraq, said "we did have several hundred sites that we had some history of intelligence on that we were going to exploit." That doesn't sound like a real confidence builder.
Toronto accounts for 20% of the Canadian economy.
Alcoa may mothball its smelter in Ferndale, Washington come September 30.
For wary consumers, there are several offerings out there: $99 flights each way to Honolulu, Maui, and Kauai from either LAX or SFO; 7 day Gulf of Alaska cruises for $399; and for the real adventurous, $78 round trip airfares from Portland, Oregon to Sacramento. That's all the potential enjoyment that's fit to be printed.
What is the best thing since sliced bread? Simple. The honesty and clarity coming from the Fed's beige book. It reminds me of the joke- I'm good at being inarticulately abstracted for the same reason midgets are good at being short. Pablo Picasso would have loved the Fed. He disliked computers. He felt they were useless because they could only give him answers. The Fed doesn't even serve up questions. My suggestions are two-fold. We just need to hold our breath and believe. In the morning we'll say goodbye to lackluster performance forever, have taxes licked, and only have death to worry about. Alternatively, my favorite solution to combat what the Fed calls our lackluster economy, is to apply StriVectin. It works on wrinkles and crow's feet and possibly could be an anti-aging miracle cream. We know it combats stretch marks. We know this. In sum, StriVectin will make the economy look nicer. Things are rosier with the Nasdaq selling at a five month high.
The Fed said consumers are wary. Is that why AOL lost 289,000 subscribers last quarter up 109,000 from the prior quarter? The good news is that AOL's quarterly revenue only fell 4%.
Siebel reported a 93% decline in net income from the year ago's first quarter. It could have been worse.
Peoplesoft is closing its Santa Clara office and cutting 200 jobs. Software license fees dropped 40% in the first quarter. There is a silver lining. Their Pleasanton headquarters will remain intact.
What's lackluster about 45 million Americans not having health insurance? The number keeps rising every quarter.
AMR lost $1 billion in the quarter and the pilots are considering not ratifying the contract deal with the airline.
Planes leaving from NYC to Toronto are 90% empty. I can understand that. A 40 year-old doctor just returned to Baltimore after a visit to Toronto. He returned with the SARS symtoms.
China plans a broad SARS quarantine. They sealed off the 1200-bed Beijing University People's Hospital as "no one is allowed to enter or leave." They have 60 confirmed or suspected cases of SARS at that hospital.
JetBlue will possibly order 115 planes from Airbus as Boeing would lose out once again.
Britain's InterContinental Hotels to lay off 800 workers.
Germany's largest bank, Deutsche Bank, will report a first quarter loss.
Aviva, Britain's largest insurer, said the outlook remains challenging.
Germany's Siemens cautioned about slow spending in major markets.
Sony's results for the year fell 36% short of forecasts. The fourth quarter loss was larger than expected. Game business sales declined 25%. Sony's CEO said "we should have taken a more drastic reorganization...Sony's not in a satisfying business condition at all right now and we have to start a full scale overhaul."
Hilton's quarterly income dropped 74%.
In NYC, for the second straight day, customers flocked to the Abacus Federal Savings Bank in Chinatown and withdrew more than $2 million. In Philadelphia a branch of the same bank had similar problems yesterday as more than $700,000 was withdrawn.
Pfizer said that job cuts are coming to former Pharmacia Corp. sites in Kalamazoo County in Michigan.
U.S. troops have searched more than 80 of the top 100 most likely sites for WMD in Iraq. Lt. Gen. David McKiernan, commander of land forces in Iraq, said "we did have several hundred sites that we had some history of intelligence on that we were going to exploit." That doesn't sound like a real confidence builder.
Toronto accounts for 20% of the Canadian economy.
Alcoa may mothball its smelter in Ferndale, Washington come September 30.
For wary consumers, there are several offerings out there: $99 flights each way to Honolulu, Maui, and Kauai from either LAX or SFO; 7 day Gulf of Alaska cruises for $399; and for the real adventurous, $78 round trip airfares from Portland, Oregon to Sacramento. That's all the potential enjoyment that's fit to be printed.
Wednesday, April 23, 2003
4/23/03 Reality Is In A State Of Disconnect
Over the past six months or so Ebay shares have rallied about 100% to $92. This company has performed brilliantly and continues to generate significant free cash flow. Yesterday, estimates for earnings per share were raised from $1.35 to $1.45. That means the stock is selling at over 60 times earnings. The time to be buying excellent companies is during sharp market drops. With many averages selling at three and four month highs, now is not such a time.
Yesterday President Bush gave a vote of confidence to Alan Greenspan. That was nice. He is recovering from a successful prostate operation. Sometimes my memory is not sharp. Did Paul O'Neill also receive such kind words?
The FTSE has risen close to the 4000 level.
The number of mortgage applications filed this week was the lowest of the year as the refinancing index slumped 8% to its lowest level of 2003. Mortgage demand for home loans fell for the fifth straight week.
The WHO said the SARS mortality rate is worsening. It has risen from 4% to 5% or possibly in some areas to 6%. The WHO said that China's "health system has collapsed over the past 10 or 20 years because the central government has not invested in health." They went on to say "If China is not able to deal with SARS, then it will be very problematic to deal with globally...diseases like SARS don't respect borders."
Japan's March trade surplus shrank by 20%, and this was a much sharper drop than economists had expected.
Arcata, California is the first city in the nation to pass an ordinance that forbids its citizens from voluntarily complying with the Patriot Act.
7-Eleven Inc. had a 13.5 cent per-gallon profit margin on gasoline in the first quarter.
Kelly Services stated "As our first quarter results reflected, we are continuing to see a pattern of economic weakness and related softening demand for staffing services. As we enter the second quarter, uncertainty surrounding the timing of the economic recovery has increased."
Over 100 people have died from SARS in Hong Kong and that is true for China as well.
U.S. crude oil inventories are 15% lower than a year ago. When OPEC talks of a possible glut, they must be talking about hot air.
Exports account for 25% of China's economy. The Canton Trade Fair has generated $3.3 billion in exports so far, and this is down from $9.3 billion at the same time a year ago.
Only 9% of California voters have a great deal of confidence in the Legislature to do what is right to resolve the budget deficit.
Silicon Valley businesses have an office vacancy rate of nearly 33%.
Starting tomorrow all primary and secondary schools in Beijing will be closed for two weeks. This action has been taken because of the SARS virus, and 1.7 million children will be effected by the school closings.
Because of SARS, the CDC issued a travel advisory for Americans going to Canada.
Maybe we should send the UN weapons inspectors over to comb China's countryside in an effort to search for unreported cases of SARS. This virus is a real-time WMD.
Lucent posted its 12th consecutive quarterly loss.
Over the past six months or so Ebay shares have rallied about 100% to $92. This company has performed brilliantly and continues to generate significant free cash flow. Yesterday, estimates for earnings per share were raised from $1.35 to $1.45. That means the stock is selling at over 60 times earnings. The time to be buying excellent companies is during sharp market drops. With many averages selling at three and four month highs, now is not such a time.
Yesterday President Bush gave a vote of confidence to Alan Greenspan. That was nice. He is recovering from a successful prostate operation. Sometimes my memory is not sharp. Did Paul O'Neill also receive such kind words?
The FTSE has risen close to the 4000 level.
The number of mortgage applications filed this week was the lowest of the year as the refinancing index slumped 8% to its lowest level of 2003. Mortgage demand for home loans fell for the fifth straight week.
The WHO said the SARS mortality rate is worsening. It has risen from 4% to 5% or possibly in some areas to 6%. The WHO said that China's "health system has collapsed over the past 10 or 20 years because the central government has not invested in health." They went on to say "If China is not able to deal with SARS, then it will be very problematic to deal with globally...diseases like SARS don't respect borders."
Japan's March trade surplus shrank by 20%, and this was a much sharper drop than economists had expected.
Arcata, California is the first city in the nation to pass an ordinance that forbids its citizens from voluntarily complying with the Patriot Act.
7-Eleven Inc. had a 13.5 cent per-gallon profit margin on gasoline in the first quarter.
Kelly Services stated "As our first quarter results reflected, we are continuing to see a pattern of economic weakness and related softening demand for staffing services. As we enter the second quarter, uncertainty surrounding the timing of the economic recovery has increased."
Over 100 people have died from SARS in Hong Kong and that is true for China as well.
U.S. crude oil inventories are 15% lower than a year ago. When OPEC talks of a possible glut, they must be talking about hot air.
Exports account for 25% of China's economy. The Canton Trade Fair has generated $3.3 billion in exports so far, and this is down from $9.3 billion at the same time a year ago.
Only 9% of California voters have a great deal of confidence in the Legislature to do what is right to resolve the budget deficit.
Silicon Valley businesses have an office vacancy rate of nearly 33%.
Starting tomorrow all primary and secondary schools in Beijing will be closed for two weeks. This action has been taken because of the SARS virus, and 1.7 million children will be effected by the school closings.
Because of SARS, the CDC issued a travel advisory for Americans going to Canada.
Maybe we should send the UN weapons inspectors over to comb China's countryside in an effort to search for unreported cases of SARS. This virus is a real-time WMD.
Lucent posted its 12th consecutive quarterly loss.
Tuesday, April 22, 2003
4/22/03 Listen To Your Instincts
First I want to apologize. I may have been the first individual to predict one year ago a $300 billion budget deficit for the government fiscal year ending 9/30/03; however, I was much too low in my forecast. In my current view, the number will come closer to $450 billion. Being off by 50% does not make me very bright. With this burgeoning deficit, the May upcoming quarterly refunding will be of historic proportions- possibly $70 billion. I believe this huge supply of notes will create a rise in interest rates. Additionally, with simply the budget deficit and the account deficit added together (ex Medicare and Medicaid), this country will need to import about $2 billion of foreign capital daily. That is a tall order given the present low level of interest rates and the falling U.S. dollar. As such, in my view treasury notes and the dollar are overvalued. It should be noted that I have been right up to now on the dollar but wrong on treasuries.
Roy W. Walters: "If you're already in a hole, it's no use to continue digging."
There are 10 million households that earn one-third of the U.S. personal income and hold two-thirds of the personal wealth of all Americans. A very recent study shows that the wealthy have curtailed spending and that additional cuts can be expected over the next 12 months.
According to the SEC, 70% of the Fortune 500 do not provide enough analysis in financial disclosure.
Southwest Airlines increased their revenue and net income for the first quarter. They saved $77 million pre-tax in the quarter by hedging their fuel requirements. For the remainder of this year and thru next year they are mostly hedged as well. This is smart management at work. It should be noted that, without the hedging, Southwest would have lost money in the quarter.
Last year the annual Canton Trade Fair greeted more than 120,000 people, "closing deals worth nearly $17 billion," said Brad Glosserman of the CSIS Pacific Forum. Because of SARS, how many visitors to the Fair will be there this year?
Barry Goldwater: "A government that is big enough to give you all you want is big enough to take it all away."
Thousands of UK citizens are discontinuing plans to travel to Hong Kong and China as SARS spreads. Each year 308,000 Britons travel to Hong Kong and 258,000 to China.
Gold traded at a three week high of $333 per ounce.
After the first two weeks of April, WalMart said their same-store sales would be near the low end of its forecast for the month.
Three new SARS cases were announced in India. The Phillipines had its first SARS death. SARS has now impacted 26 countries and deaths mount. Howard Kunreuther, a Wharton School professor, said "I don't remember anything quite like this, at least in recent years. Not this kind of fear. I can't remember any epidemic that has had the impact on business this way."
500,000 respirator masks just reached Hong Kong in an urgent air shipment.
The Mormon Church has been sending missionaries to Hong Kong since 1950. No new missionaries will be sent until the SARS virus and its impact on Hong Kong is evaluated further.
Crude oil futures closed near $31 per barrel.
Milton Friedman: "The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy."
March U.S. leading economic indicators dropped 0.2%
Since November about 500,000 jobs have been lost in the U.S.
Bank of Japan Governor Fukui said his country's financial system is in a "severe state." The yen fell to its lowest level in about four years vs the euro. I give Fukui credit for being forthright. That's more than I can say for our Fed governors. On the other hand, maybe they believe the glass is truly full. That theory does not hold water, however, since hot air is opaque and cannot be seen.
Paul A. Samuelson: "Politicians like to tell people what they want to hear, and what they want to hear is what won't happen."
Chinese Premier Jiabao said their health system was ill prepared in the countryside where 70% of China's 1.3 billion people live and urged citizens not to travel to the countryside because SARS could spread "before we know it and the consequences could be too dreadful to contemplate."
Germany's Infineon, Europe's second-biggest maker of semiconductors, reported its eight consecutive quarterly loss. Results were worse than anticipated.
Lending Tree raised its 2003 guidance from 50 cents to 70 cents per share. The stock sells at about 17 times estimated earnings. The company continues to perform well.
I always welcome receipt of emails from my readers. Last night I received an email from a very respected and dedicated California educator. It was in response to my discussion of how local budget shortfalls are impacting everyone's neighborhoods and stated "Our governor has cut the education dollars to such a degree that it has impacted the lives and educations of millions of school children. Classified employees are no longer replaced with substitutes when they are ill which impacts the learning environment of children with special needs. Even credential teachers are not replaced on a daily basis when they are ill which causes classes to be combined and ratios to be increased. Suddenly, children cannot play on playground equipment due to lack of repair and no funds to replace them. Janitors are "cleaning" 1/2 again as many rooms which leaves learning environments less than desirable at times. After school programs are being cut leaving enrichment and tutoring needs unmet. Music, Art, and Library programs are slashed leaving the chance for creative learning environments ceasing to exist. Counselors in Middle Schools are forced to cover multiple schools per person and reach the needs of over 1200 students, many of whom are considered to be emotionally and academically at risk. Free lunch and breakfast programs are being reviewed and the level of assistance reduced. Teacher supply budgets have been cut forcing them to pay out of pocket for basic things needed on a day to day basis. The days will come when we look back at this time and see that our children were the victims of the choices that were made without their consent or knowledge. Many will say that choices were unavoidable, yet I say, they were avoidable and shame on the governor for making economic change happen on the backs of our children."
The Dow industrials began 2003 down 32% from its all-time high. Compared to the Nasdaq decline this is tame. Given the present debt levels within our economic borders, our growing dependence on foreign capital, the relatively low level of central bank gold holdings in relationship to their assets weighted in U.S. dollars, and the declining inclination for the big consumer spenders to spend as much, I envision very significant risk for the Dow at its present level. In fact, I am as bearish on the Dow now as I was on the Nasdaq in May/June 2000. I would also sell treasury, corporate, and municipals bonds, mortgage backed securities, and, if one were absolutely feeling the necessity to invest, I would purchase convertible bonds and short the underlying security (that strategy worked great in 1973 and 1974). Basically, I would continue to hold as few U.S. dollars as possible and continue to hold gold investments as well as notes issued by New Zealand and Norway.
First I want to apologize. I may have been the first individual to predict one year ago a $300 billion budget deficit for the government fiscal year ending 9/30/03; however, I was much too low in my forecast. In my current view, the number will come closer to $450 billion. Being off by 50% does not make me very bright. With this burgeoning deficit, the May upcoming quarterly refunding will be of historic proportions- possibly $70 billion. I believe this huge supply of notes will create a rise in interest rates. Additionally, with simply the budget deficit and the account deficit added together (ex Medicare and Medicaid), this country will need to import about $2 billion of foreign capital daily. That is a tall order given the present low level of interest rates and the falling U.S. dollar. As such, in my view treasury notes and the dollar are overvalued. It should be noted that I have been right up to now on the dollar but wrong on treasuries.
Roy W. Walters: "If you're already in a hole, it's no use to continue digging."
There are 10 million households that earn one-third of the U.S. personal income and hold two-thirds of the personal wealth of all Americans. A very recent study shows that the wealthy have curtailed spending and that additional cuts can be expected over the next 12 months.
According to the SEC, 70% of the Fortune 500 do not provide enough analysis in financial disclosure.
Southwest Airlines increased their revenue and net income for the first quarter. They saved $77 million pre-tax in the quarter by hedging their fuel requirements. For the remainder of this year and thru next year they are mostly hedged as well. This is smart management at work. It should be noted that, without the hedging, Southwest would have lost money in the quarter.
Last year the annual Canton Trade Fair greeted more than 120,000 people, "closing deals worth nearly $17 billion," said Brad Glosserman of the CSIS Pacific Forum. Because of SARS, how many visitors to the Fair will be there this year?
Barry Goldwater: "A government that is big enough to give you all you want is big enough to take it all away."
Thousands of UK citizens are discontinuing plans to travel to Hong Kong and China as SARS spreads. Each year 308,000 Britons travel to Hong Kong and 258,000 to China.
Gold traded at a three week high of $333 per ounce.
After the first two weeks of April, WalMart said their same-store sales would be near the low end of its forecast for the month.
Three new SARS cases were announced in India. The Phillipines had its first SARS death. SARS has now impacted 26 countries and deaths mount. Howard Kunreuther, a Wharton School professor, said "I don't remember anything quite like this, at least in recent years. Not this kind of fear. I can't remember any epidemic that has had the impact on business this way."
500,000 respirator masks just reached Hong Kong in an urgent air shipment.
The Mormon Church has been sending missionaries to Hong Kong since 1950. No new missionaries will be sent until the SARS virus and its impact on Hong Kong is evaluated further.
Crude oil futures closed near $31 per barrel.
Milton Friedman: "The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy."
March U.S. leading economic indicators dropped 0.2%
Since November about 500,000 jobs have been lost in the U.S.
Bank of Japan Governor Fukui said his country's financial system is in a "severe state." The yen fell to its lowest level in about four years vs the euro. I give Fukui credit for being forthright. That's more than I can say for our Fed governors. On the other hand, maybe they believe the glass is truly full. That theory does not hold water, however, since hot air is opaque and cannot be seen.
Paul A. Samuelson: "Politicians like to tell people what they want to hear, and what they want to hear is what won't happen."
Chinese Premier Jiabao said their health system was ill prepared in the countryside where 70% of China's 1.3 billion people live and urged citizens not to travel to the countryside because SARS could spread "before we know it and the consequences could be too dreadful to contemplate."
Germany's Infineon, Europe's second-biggest maker of semiconductors, reported its eight consecutive quarterly loss. Results were worse than anticipated.
Lending Tree raised its 2003 guidance from 50 cents to 70 cents per share. The stock sells at about 17 times estimated earnings. The company continues to perform well.
I always welcome receipt of emails from my readers. Last night I received an email from a very respected and dedicated California educator. It was in response to my discussion of how local budget shortfalls are impacting everyone's neighborhoods and stated "Our governor has cut the education dollars to such a degree that it has impacted the lives and educations of millions of school children. Classified employees are no longer replaced with substitutes when they are ill which impacts the learning environment of children with special needs. Even credential teachers are not replaced on a daily basis when they are ill which causes classes to be combined and ratios to be increased. Suddenly, children cannot play on playground equipment due to lack of repair and no funds to replace them. Janitors are "cleaning" 1/2 again as many rooms which leaves learning environments less than desirable at times. After school programs are being cut leaving enrichment and tutoring needs unmet. Music, Art, and Library programs are slashed leaving the chance for creative learning environments ceasing to exist. Counselors in Middle Schools are forced to cover multiple schools per person and reach the needs of over 1200 students, many of whom are considered to be emotionally and academically at risk. Free lunch and breakfast programs are being reviewed and the level of assistance reduced. Teacher supply budgets have been cut forcing them to pay out of pocket for basic things needed on a day to day basis. The days will come when we look back at this time and see that our children were the victims of the choices that were made without their consent or knowledge. Many will say that choices were unavoidable, yet I say, they were avoidable and shame on the governor for making economic change happen on the backs of our children."
The Dow industrials began 2003 down 32% from its all-time high. Compared to the Nasdaq decline this is tame. Given the present debt levels within our economic borders, our growing dependence on foreign capital, the relatively low level of central bank gold holdings in relationship to their assets weighted in U.S. dollars, and the declining inclination for the big consumer spenders to spend as much, I envision very significant risk for the Dow at its present level. In fact, I am as bearish on the Dow now as I was on the Nasdaq in May/June 2000. I would also sell treasury, corporate, and municipals bonds, mortgage backed securities, and, if one were absolutely feeling the necessity to invest, I would purchase convertible bonds and short the underlying security (that strategy worked great in 1973 and 1974). Basically, I would continue to hold as few U.S. dollars as possible and continue to hold gold investments as well as notes issued by New Zealand and Norway.
Monday, April 21, 2003
4/21/03 Forget Syria, N. Korea, Rebuilding Iraq, And Biotoxin Threats
Those headlines avoid the real horror stories. How is it that a sale in the U.S. has to be a give-away and not produce positive cash flow? What we're witnessing, for the most part, is business as not profitable commerce. For example, a year ago Midwest Airlines ordered 25 717s from Boeing. A big deal was made of the sale. I agree it was a big deal because the real buyer was not Midwest. Boeing bought their own planes as Boeing Capital used borrowed money to purchase the 25 jets at the list price of $940 million. Midwest will make monthly payments over 20 years. In reality, Midwest may not survive this year. Just as importantly, to make the induced sale, Midwest this year will receive more money from Boeing Capital than it will pay out. At the end of 2002, Boeing Capital owned 317 planes. Looking at it objectively, Boeing isn't selling planes and can't even give them away successfully. We see this type of induced transaction in all lines of business- ranging from autos to computer software. So I suggest stocks should be valued in a new light. What is the proper price/earnings ratio for give-away sales? How much of GM's revenue and Microsoft's booked sales are so-called induced transactions?
The largest 150 companies in the Silicon Valley lost $18.4 billion on sales of $265.4 billion over the last 4 quarters. In my book losses don't make for success stories and they don't make stocks cheap. 2003 has started out in a disappointing fashion, and the demand is not there to change matters for the better any time soon. In essence, tech stocks as a group are not good values.
Japanese investors are continuing to move into euro denominated assets.
The Metropolitan Chicago area now has a total population of nearly 9 million. Their economy hit the lowest level in February in a year. I don't see March and April numbers showing improvement.
Bloomberg said that UK's economic growth rate probably slowed to 0.3% in the first quarter. I wonder what the growth rate in the U.S truly is ex government spending and private sector induced transactions. You would be right on the money if you said not too hot.
Intel cut the prices of its fastest microprocessors by as much as 38%. I hope those microprocessors are not being utilized in computers manufactured in China and Taiwan. Workers are going to stay home rather than go to work. Living is preferable to dying.
Singapore will quarantine up to 2400 people in an attempt to contain the spreading of SARS.
Nixon thought he was the master of the cover-up. Actually, the Chinese can hold their own. The number of SARS cases is 10 times higher in Beijing than previously reported. Roads to shopping malls are empty. Malls are empty. One accountant said "the best thing is to stay home. What's one month's salary when your life is at stake?" She wants a month off from work- even without pay. She is not alone.
Fourteen million people live in Beijing. How many have died from SARS? How many are infected? How many are suspected to have SARS? The WHO representative in China said that "50% of the cases (suspected) most likely could be probable." Citizens are concerned for their survival. The official Xinhua agency said "any inappropriate methods of work will...evolve into grave catastrophe." Actually, the catastrophe is here. The cover-up sealed China's fate. The Beijing Star Daily said "a cover-up is more scary than an epidemic." I think they're both horrific.
As I have discussed so often, our states and local municipalities have, for the most part, overwhelming budget shortfalls. The payroll cuts, the reductions in services, and higher taxes in several areas will be coming to your local neighborhoods. They'll be with you for quite some time. It's called work harder (if you're lucky enough to have a job) and do with less.
Did you ever wonder how the Chinese accomplished the SARS cover-up? The authorities would transfer hospital patients to hotels, drive some around in ambulances, and drove others all around Beijing. These actions helped to avoid the local WHO representatives from seeing the real SARS picture. It's just a different take on avoiding reality- like with induced commercial transactions. You might say that no one is dying at Boeing. Maybe not but 35,000 people have lost their jobs, and management is still drawing a paycheck.
Does it bother you that Congress got a 3.1% pay raise this year and will get another hike in 2004? Retirees on Social Security got a 1.4% adjustment. How many citizens are really out of work? How many can't find a job? How many have to work part-time? How many are afraid of losing their jobs by the end of the day? How many can't make ends meet and stand on lines at food kitchens all over this country? You want me to read about Syria and N.Korea and rebuilding Iraq? I care about Americans not being able
have a roof over their heads. Surprise!!!! I am not a left wing liberal. I am an American who has his eyes wide open. That's more than I can say about most in the nation's capitol. The lack of performance in that locale should be accompanied by a reduction in salaries and an elimination of perks.
Economists, the Fed, and politicians say the U.S. is poised for expansion. If that's the case, they should rush out and buy common stocks and growth stock funds. They've been talking expansion for three years. They have been wrong for three years. They continue to draw salaries for being wrong. It's the American worker who achieves higher productivity and then gets fired. It's time the system gets changed. Let's eliminate the wrong-sayers. Don't replace them. You won't miss them. I promise.
Those headlines avoid the real horror stories. How is it that a sale in the U.S. has to be a give-away and not produce positive cash flow? What we're witnessing, for the most part, is business as not profitable commerce. For example, a year ago Midwest Airlines ordered 25 717s from Boeing. A big deal was made of the sale. I agree it was a big deal because the real buyer was not Midwest. Boeing bought their own planes as Boeing Capital used borrowed money to purchase the 25 jets at the list price of $940 million. Midwest will make monthly payments over 20 years. In reality, Midwest may not survive this year. Just as importantly, to make the induced sale, Midwest this year will receive more money from Boeing Capital than it will pay out. At the end of 2002, Boeing Capital owned 317 planes. Looking at it objectively, Boeing isn't selling planes and can't even give them away successfully. We see this type of induced transaction in all lines of business- ranging from autos to computer software. So I suggest stocks should be valued in a new light. What is the proper price/earnings ratio for give-away sales? How much of GM's revenue and Microsoft's booked sales are so-called induced transactions?
The largest 150 companies in the Silicon Valley lost $18.4 billion on sales of $265.4 billion over the last 4 quarters. In my book losses don't make for success stories and they don't make stocks cheap. 2003 has started out in a disappointing fashion, and the demand is not there to change matters for the better any time soon. In essence, tech stocks as a group are not good values.
Japanese investors are continuing to move into euro denominated assets.
The Metropolitan Chicago area now has a total population of nearly 9 million. Their economy hit the lowest level in February in a year. I don't see March and April numbers showing improvement.
Bloomberg said that UK's economic growth rate probably slowed to 0.3% in the first quarter. I wonder what the growth rate in the U.S truly is ex government spending and private sector induced transactions. You would be right on the money if you said not too hot.
Intel cut the prices of its fastest microprocessors by as much as 38%. I hope those microprocessors are not being utilized in computers manufactured in China and Taiwan. Workers are going to stay home rather than go to work. Living is preferable to dying.
Singapore will quarantine up to 2400 people in an attempt to contain the spreading of SARS.
Nixon thought he was the master of the cover-up. Actually, the Chinese can hold their own. The number of SARS cases is 10 times higher in Beijing than previously reported. Roads to shopping malls are empty. Malls are empty. One accountant said "the best thing is to stay home. What's one month's salary when your life is at stake?" She wants a month off from work- even without pay. She is not alone.
Fourteen million people live in Beijing. How many have died from SARS? How many are infected? How many are suspected to have SARS? The WHO representative in China said that "50% of the cases (suspected) most likely could be probable." Citizens are concerned for their survival. The official Xinhua agency said "any inappropriate methods of work will...evolve into grave catastrophe." Actually, the catastrophe is here. The cover-up sealed China's fate. The Beijing Star Daily said "a cover-up is more scary than an epidemic." I think they're both horrific.
As I have discussed so often, our states and local municipalities have, for the most part, overwhelming budget shortfalls. The payroll cuts, the reductions in services, and higher taxes in several areas will be coming to your local neighborhoods. They'll be with you for quite some time. It's called work harder (if you're lucky enough to have a job) and do with less.
Did you ever wonder how the Chinese accomplished the SARS cover-up? The authorities would transfer hospital patients to hotels, drive some around in ambulances, and drove others all around Beijing. These actions helped to avoid the local WHO representatives from seeing the real SARS picture. It's just a different take on avoiding reality- like with induced commercial transactions. You might say that no one is dying at Boeing. Maybe not but 35,000 people have lost their jobs, and management is still drawing a paycheck.
Does it bother you that Congress got a 3.1% pay raise this year and will get another hike in 2004? Retirees on Social Security got a 1.4% adjustment. How many citizens are really out of work? How many can't find a job? How many have to work part-time? How many are afraid of losing their jobs by the end of the day? How many can't make ends meet and stand on lines at food kitchens all over this country? You want me to read about Syria and N.Korea and rebuilding Iraq? I care about Americans not being able
have a roof over their heads. Surprise!!!! I am not a left wing liberal. I am an American who has his eyes wide open. That's more than I can say about most in the nation's capitol. The lack of performance in that locale should be accompanied by a reduction in salaries and an elimination of perks.
Economists, the Fed, and politicians say the U.S. is poised for expansion. If that's the case, they should rush out and buy common stocks and growth stock funds. They've been talking expansion for three years. They have been wrong for three years. They continue to draw salaries for being wrong. It's the American worker who achieves higher productivity and then gets fired. It's time the system gets changed. Let's eliminate the wrong-sayers. Don't replace them. You won't miss them. I promise.
Sunday, April 20, 2003
4/20/03 Unreconciled Federal Spending Transactions
If ever-present Congressional "oinks" were not enough wasters and abusers, Americans are additionally confronted with unreconciled federal spending transactions, and the latter include many payment errors. These faulty accounting practices will cost the taxpayers of this country a mere $35 billion this year and equate to approximately 44% of the supplemental funds approved for the war in Iraq. Possibly, the CBO should go to the "short form" and simplify matters by eliminating unresolved federal spending items- wipe them off the books. While accomplishing this little feat, dump the big Congressional spenders who are back alley examples of waste and abuse rather than upstanding fiscally responsible U.S. tax-payer representatives
Speaking of back alleys, Hong Kong's Secretary for Home Affairs, Patrick Ho, said he was shamed by the city's filthy back alleys. They need to change the name for the Chinese new year to the year of the cockroach.
Royal Philips Electronics NV is Europe's biggest consumer electronics manufacturer. They announced a decline in first quarter sales.
Since March 12, the Dow Jones Stoxx 50 and Stoxx 600 have risen by 22% and 19%, respectively. This is a good time to lighten up on many european stocks. Earnings for Stoxx 600 companies will decline in 2003 for the third consecutive year.
Intel and HP have closed their Hong Kong offices.
We will see whether teleconferencing can effectively replace face-to-face business meetings in many Asian countries. If not, orders will be negatively impacted. In any event, I believe SARS will be utilized as a growing explanation for slowing business conditions in that region of the world. It should be noted that many businessmen in Japan cannot travel to SARS-impacted countries because the health risk can eliminate their insurance coverage.
In Maryland, by law, the state can spend no more than it collects in taxes and other revenues. Deficits are not allowed. For Maryland to achieve this balanced budget, $1 billion in expenses will need to be cut. Governor Ehrlich, Maryland's first Republican governor in nearly four decades, says he can and must accomplish this goal.
U.S. Airways turned its underfunded pension plan for its pilots over to the government's Pension Benefit Guaranty Corp. Retirement benefits were cut in roughly half to $28,500 for 60 year old retirees. So much for union airline agreements.
An economist at the Asian Development Bank said yesterday that SARS could push Hong Kong into a recession. Growth prospects have already been cut to below 1%.
Toronto's business leaders plan on an April 28 summit meeting. SARS is having a serious economic impact in Toronto.
Toronto's Sunnybrook Hospital had to close its trauma unit when 12 medical workers were suspected of contracting SARS after being exposed to 2 SARS cases at the hospital.
Vietnam is closing its northern land border with China.
Air-India suspended all flights to Singapore from Delhi and Hyderabad and temporarily discontinued flights to Kuala Lumpur and Jakarta.
AMR's flight attendants' union cancelled their agreement to accept wage cuts and will hold a new vote. The Transport Workers Union may soon follow by taking legal action. Their representative stated "I believe the failure to disclose the existence of this program(executive compensation package) was a material breach of the company's duty to provide relevant information."
On Saturday 20 more people died from SARS in China and Hong Kong. Another 300 were infected by SARS in China- almost all in Beijing. Chinese authorities cancelled a week-long national holiday (maybe they were going to Ft. Lauderdale's spring break) to dissuade people from travelling and spreading the virus. After the 10 fold increase in the SARS tally was released, so were China's health minister and Beijing's Deputy Party boss. These firings will only increase their already-high unemployment rate.
If ever-present Congressional "oinks" were not enough wasters and abusers, Americans are additionally confronted with unreconciled federal spending transactions, and the latter include many payment errors. These faulty accounting practices will cost the taxpayers of this country a mere $35 billion this year and equate to approximately 44% of the supplemental funds approved for the war in Iraq. Possibly, the CBO should go to the "short form" and simplify matters by eliminating unresolved federal spending items- wipe them off the books. While accomplishing this little feat, dump the big Congressional spenders who are back alley examples of waste and abuse rather than upstanding fiscally responsible U.S. tax-payer representatives
Speaking of back alleys, Hong Kong's Secretary for Home Affairs, Patrick Ho, said he was shamed by the city's filthy back alleys. They need to change the name for the Chinese new year to the year of the cockroach.
Royal Philips Electronics NV is Europe's biggest consumer electronics manufacturer. They announced a decline in first quarter sales.
Since March 12, the Dow Jones Stoxx 50 and Stoxx 600 have risen by 22% and 19%, respectively. This is a good time to lighten up on many european stocks. Earnings for Stoxx 600 companies will decline in 2003 for the third consecutive year.
Intel and HP have closed their Hong Kong offices.
We will see whether teleconferencing can effectively replace face-to-face business meetings in many Asian countries. If not, orders will be negatively impacted. In any event, I believe SARS will be utilized as a growing explanation for slowing business conditions in that region of the world. It should be noted that many businessmen in Japan cannot travel to SARS-impacted countries because the health risk can eliminate their insurance coverage.
In Maryland, by law, the state can spend no more than it collects in taxes and other revenues. Deficits are not allowed. For Maryland to achieve this balanced budget, $1 billion in expenses will need to be cut. Governor Ehrlich, Maryland's first Republican governor in nearly four decades, says he can and must accomplish this goal.
U.S. Airways turned its underfunded pension plan for its pilots over to the government's Pension Benefit Guaranty Corp. Retirement benefits were cut in roughly half to $28,500 for 60 year old retirees. So much for union airline agreements.
An economist at the Asian Development Bank said yesterday that SARS could push Hong Kong into a recession. Growth prospects have already been cut to below 1%.
Toronto's business leaders plan on an April 28 summit meeting. SARS is having a serious economic impact in Toronto.
Toronto's Sunnybrook Hospital had to close its trauma unit when 12 medical workers were suspected of contracting SARS after being exposed to 2 SARS cases at the hospital.
Vietnam is closing its northern land border with China.
Air-India suspended all flights to Singapore from Delhi and Hyderabad and temporarily discontinued flights to Kuala Lumpur and Jakarta.
AMR's flight attendants' union cancelled their agreement to accept wage cuts and will hold a new vote. The Transport Workers Union may soon follow by taking legal action. Their representative stated "I believe the failure to disclose the existence of this program(executive compensation package) was a material breach of the company's duty to provide relevant information."
On Saturday 20 more people died from SARS in China and Hong Kong. Another 300 were infected by SARS in China- almost all in Beijing. Chinese authorities cancelled a week-long national holiday (maybe they were going to Ft. Lauderdale's spring break) to dissuade people from travelling and spreading the virus. After the 10 fold increase in the SARS tally was released, so were China's health minister and Beijing's Deputy Party boss. These firings will only increase their already-high unemployment rate.
Saturday, April 19, 2003
4/19/03 Imminent Danger
Margaret Thatcher: "Unless we change our ways and our direction, our greatness as a nation will soon be a footnote in the history books, a distant memory of an offshore island, lost in the mists of time like Camelot, remembered kindly for its noble past."
The CBO had expected our March budget deficit to be $54 billion. It came in at $58.7 billion, and would have been higher but for the fact that there were only four fridays this month, and the government normally records refund payments at the end of each week. Last March there were five fridays and the monthly deficit amounted to over $62 billion. From a public statement basis, most economists seem undisturbed by our outlandish and dangerous deficits. It is almost surreal to be faced with a March deficit of about $100 billion dollars when adding together the budget and account deficits. That fails to take into account monthly expenses for Medicare and Medicaid- about another $100 billion. Respectively, the imminent danger is not the WMDs which might or might not be in Iraq but rather this nation's lack of fiscal responsibility. As Margaret Thatcher so succinctly stated, "there can be no liberty unless there is economic liberty." I cherish my freedoms. Whether it's the Iraqi war or the Civil War, Americans have fought and died as well as returned home wounded as they sought to protect our freedoms. We have a Congress which spends with reckless abandon and an Administration which fails to take the lead economically. They will lead us into war but not lead this nation via tough economic decisionmaking. It's not enough to discuss a tax package. It's a great idea but the impact is too far down the road. We require dire spending cuts. That means severe cost cutting. That means big staffing cuts, and that starts right at the top and works its way down thru the Congress. It means wage cuts, perk cuts, and doing without. If there are 41 million Americans without healthcare insurance, then eliminate such insurance for the Congress. Then see what reforms come into existence. It's not enough to get tough with Saddam Hussein and others like him. Get tough with the real evil doers- the budget deficit creators. Either we live within our means or foreigners will storm the exits and bring with them assets formally invested in this country. That storm has begun. Either we change our ways and our direction, or the dollar will be replaced by the euro and other currencies as the accepted medium of commerce exchange. I can assure you of several things- we can no longer depend on foreign capital to fund our deficits; our economic liberty is at risk; and the financial markets are prone to a meltdown.
You probably are thinking that my concerns are not shared by others. Actually, for the first time since 9/11, a new poll found Americans are more concerned about the economy than about terrorism. Pew Research Center said 41% cited the economy, unemployment. or the budget deficit as the nation's biggest problem and ony 29% pointed to terrorism.
Even though the president has an over-all approval rating of 72%, only 48% of registered voters said they would support his re-election.
Spike Milligan: "Money can't buy friends, but it buys a better class of enemy."
Yesterday was Good Friday and tomorrow is Easter. SARS, however, has changed Canada's church-going at this time of year as there is a formal request not to touch holy water or kiss icons. Sharing of a cup of wine has also stopped.
WalMart imports $12 billion a year in goods from China.
Eton College, Britain's most famous private school, will bar students returning fro their Easter holidays in Singapore, Guangdong province, or Hong Kong from returning to their dorms and classrooms when the term starts next week.
SARS is seen hastening loan defaults at Malaysian banks.
The Singapore government is providing a $230 million aid package for industries hit hardest by SARS.
Margaret Thatcher: "No one would have remembered the Good Samaritan if he'd only had good intentions. He had money as well."
Italy's GDP growth forecast was cut to 1.1% from 2.3% for this year, and Germany's was cut in half to 0.5%.
Due to SARS, visitor arrivals in China are down 80%. Thailand and Taiwan both say visitor bookings are down 50%. At this point the economic impact of SARS to Asia is estimated to be at least $15 billion.
Hong Kong reported its highest one day death toll from SARS as more than 12 people died today.
Singapore Prime Minister Tong said "if we fail to contain SARS in Singapore, it may become the worst crisis our country has faced." The services sector makes up 62% of its GDP. On Thursady Singapore slashed its growth forecast to possibly as low as one-half of one per cent.
The EU said the growth in the 12 euro countries may have shrunk by 0.2% in the first quarter and that the second quarter may be only a positive 0.1%.
The shrinking value of the dollar vs the euro is helping many U.S. companies sell more products in Europe. Yesterday Colgate-Palmolive announced a recent sales gain of 19.7%, and Textron also said the lower dollar helped their results.
Margaret Thatcher: "Unless we change our ways and our direction, our greatness as a nation will soon be a footnote in the history books, a distant memory of an offshore island, lost in the mists of time like Camelot, remembered kindly for its noble past."
The CBO had expected our March budget deficit to be $54 billion. It came in at $58.7 billion, and would have been higher but for the fact that there were only four fridays this month, and the government normally records refund payments at the end of each week. Last March there were five fridays and the monthly deficit amounted to over $62 billion. From a public statement basis, most economists seem undisturbed by our outlandish and dangerous deficits. It is almost surreal to be faced with a March deficit of about $100 billion dollars when adding together the budget and account deficits. That fails to take into account monthly expenses for Medicare and Medicaid- about another $100 billion. Respectively, the imminent danger is not the WMDs which might or might not be in Iraq but rather this nation's lack of fiscal responsibility. As Margaret Thatcher so succinctly stated, "there can be no liberty unless there is economic liberty." I cherish my freedoms. Whether it's the Iraqi war or the Civil War, Americans have fought and died as well as returned home wounded as they sought to protect our freedoms. We have a Congress which spends with reckless abandon and an Administration which fails to take the lead economically. They will lead us into war but not lead this nation via tough economic decisionmaking. It's not enough to discuss a tax package. It's a great idea but the impact is too far down the road. We require dire spending cuts. That means severe cost cutting. That means big staffing cuts, and that starts right at the top and works its way down thru the Congress. It means wage cuts, perk cuts, and doing without. If there are 41 million Americans without healthcare insurance, then eliminate such insurance for the Congress. Then see what reforms come into existence. It's not enough to get tough with Saddam Hussein and others like him. Get tough with the real evil doers- the budget deficit creators. Either we live within our means or foreigners will storm the exits and bring with them assets formally invested in this country. That storm has begun. Either we change our ways and our direction, or the dollar will be replaced by the euro and other currencies as the accepted medium of commerce exchange. I can assure you of several things- we can no longer depend on foreign capital to fund our deficits; our economic liberty is at risk; and the financial markets are prone to a meltdown.
You probably are thinking that my concerns are not shared by others. Actually, for the first time since 9/11, a new poll found Americans are more concerned about the economy than about terrorism. Pew Research Center said 41% cited the economy, unemployment. or the budget deficit as the nation's biggest problem and ony 29% pointed to terrorism.
Even though the president has an over-all approval rating of 72%, only 48% of registered voters said they would support his re-election.
Spike Milligan: "Money can't buy friends, but it buys a better class of enemy."
Yesterday was Good Friday and tomorrow is Easter. SARS, however, has changed Canada's church-going at this time of year as there is a formal request not to touch holy water or kiss icons. Sharing of a cup of wine has also stopped.
WalMart imports $12 billion a year in goods from China.
Eton College, Britain's most famous private school, will bar students returning fro their Easter holidays in Singapore, Guangdong province, or Hong Kong from returning to their dorms and classrooms when the term starts next week.
SARS is seen hastening loan defaults at Malaysian banks.
The Singapore government is providing a $230 million aid package for industries hit hardest by SARS.
Margaret Thatcher: "No one would have remembered the Good Samaritan if he'd only had good intentions. He had money as well."
Italy's GDP growth forecast was cut to 1.1% from 2.3% for this year, and Germany's was cut in half to 0.5%.
Due to SARS, visitor arrivals in China are down 80%. Thailand and Taiwan both say visitor bookings are down 50%. At this point the economic impact of SARS to Asia is estimated to be at least $15 billion.
Hong Kong reported its highest one day death toll from SARS as more than 12 people died today.
Singapore Prime Minister Tong said "if we fail to contain SARS in Singapore, it may become the worst crisis our country has faced." The services sector makes up 62% of its GDP. On Thursady Singapore slashed its growth forecast to possibly as low as one-half of one per cent.
The EU said the growth in the 12 euro countries may have shrunk by 0.2% in the first quarter and that the second quarter may be only a positive 0.1%.
The shrinking value of the dollar vs the euro is helping many U.S. companies sell more products in Europe. Yesterday Colgate-Palmolive announced a recent sales gain of 19.7%, and Textron also said the lower dollar helped their results.
Friday, April 18, 2003
4/18/03 P/E Based Cost Cutting For The Nasdaq
The Nasdaq gained 5% for the week, and had its highest close in three months. That optimism could not have been realistically generated by present or projected revenue growth. Profit improvement came thru cost cutting. Taking Oracle as an example, I think we can say that overhead reduction has its limits. In the end, topline growth will be necessary to maintain upbeat forecasts as well as P/E ratios. At present a great many tech companies have already issued warnings for the second quarter.
A Deloitte Research survey of the world's 100 largest financial-services companies indicates they expect to transfer an estimated $356 billion of their operations and two million jobs offshore over the next five years in order to reduce costs. India would be a major beneficiary.
According to a Bloomberg article, Indonesia's state oil company is considering replacing the dollar with the euro in its oil and gas transactions. I believe there will be other countries following Indonesia's lead. It should be noted that Indonesia has the world's largest Muslim population. Were countries to dump the dollar, as it were, I wonder how the U.S would fund the huge federal deficits, which the CBO forecast at $1.82 trillion over the coming decade.
The four week jobless claims average was 424,750, the highest level in 11 months. For the week ended April 12, jobless claims rose 30,000 to 442,000. There are about 3.6 million Americans receiving unemployment benefits.
Boeing to cut 1060 workers. U.S. Airways to lay off 890 attendants. Delta Airlines to furlough 200 pilots. Unifi to cut 400 jobs. Seiyu to eliminate 2500 jobs. Since Boeing began its layoff announcements, there have been about 35,000 workers removed from the company's payrolls. That total is larger than the population of most cities in this country.
Brazil began screening cargo ships arriving from high-risk SARS areas.
The University of California has ordered 44 of its students attending two Beijing universities to leave China immediately due to concerns for SARS.
SARS is an equal opportunity disease- it has been found in almost every bodily fluid that has been tested. Additionally, there are many methods of infection- through sewage, person-to-person contacts, environmental contamination, and we shouldn't forget the cockroaches.
If SARS were not enough, a severe Dutch outbreak of bird flu is spreading across Europe. Hopefully, it won't spread to pigeons in N.Y.C.
CenDyne, one of the world's leading suppliers of optical storage and PC peripheral products(CD burners), said because of SARS it is looking into alternative manufacturing facilities for its new product line. Presently its products are manufactured in Asia.
As the focus on looting in Iraq continues, there are now 126 confirmed dead.
N.Y. State's factory index fell to -20.4 from -2.8 in March, the biggest drop since 9/11.
The Bank of Japan sold $20 billion yen in the first quarter in an attempt to limit its currency's gain vs the dollar.
Japan and Europe both have current account surpluses while ours is currently about 5 1/2% of our GDP.
Investors from outside the U.S. sold $3.5 billion of U.S stocks in Januart. In the fourth quarter of 2002 they had purchased $12.5 billion of U.S. stocks.
In Canada, Ontario suggests wider quarantines to stem SARS, and asks anyone with a SARS symtom to remain home for several days.
Verizon is piloting in Virginia the installation of high-capacity fiber-optic hookups directly to homes and businesses.
In order to get the ball rolling on recalling Gray Davis, a total of 800,000 signatures is required. There is an Internet-based movement to accomplish this recall.
The Nasdaq gained 5% for the week, and had its highest close in three months. That optimism could not have been realistically generated by present or projected revenue growth. Profit improvement came thru cost cutting. Taking Oracle as an example, I think we can say that overhead reduction has its limits. In the end, topline growth will be necessary to maintain upbeat forecasts as well as P/E ratios. At present a great many tech companies have already issued warnings for the second quarter.
A Deloitte Research survey of the world's 100 largest financial-services companies indicates they expect to transfer an estimated $356 billion of their operations and two million jobs offshore over the next five years in order to reduce costs. India would be a major beneficiary.
According to a Bloomberg article, Indonesia's state oil company is considering replacing the dollar with the euro in its oil and gas transactions. I believe there will be other countries following Indonesia's lead. It should be noted that Indonesia has the world's largest Muslim population. Were countries to dump the dollar, as it were, I wonder how the U.S would fund the huge federal deficits, which the CBO forecast at $1.82 trillion over the coming decade.
The four week jobless claims average was 424,750, the highest level in 11 months. For the week ended April 12, jobless claims rose 30,000 to 442,000. There are about 3.6 million Americans receiving unemployment benefits.
Boeing to cut 1060 workers. U.S. Airways to lay off 890 attendants. Delta Airlines to furlough 200 pilots. Unifi to cut 400 jobs. Seiyu to eliminate 2500 jobs. Since Boeing began its layoff announcements, there have been about 35,000 workers removed from the company's payrolls. That total is larger than the population of most cities in this country.
Brazil began screening cargo ships arriving from high-risk SARS areas.
The University of California has ordered 44 of its students attending two Beijing universities to leave China immediately due to concerns for SARS.
SARS is an equal opportunity disease- it has been found in almost every bodily fluid that has been tested. Additionally, there are many methods of infection- through sewage, person-to-person contacts, environmental contamination, and we shouldn't forget the cockroaches.
If SARS were not enough, a severe Dutch outbreak of bird flu is spreading across Europe. Hopefully, it won't spread to pigeons in N.Y.C.
CenDyne, one of the world's leading suppliers of optical storage and PC peripheral products(CD burners), said because of SARS it is looking into alternative manufacturing facilities for its new product line. Presently its products are manufactured in Asia.
As the focus on looting in Iraq continues, there are now 126 confirmed dead.
N.Y. State's factory index fell to -20.4 from -2.8 in March, the biggest drop since 9/11.
The Bank of Japan sold $20 billion yen in the first quarter in an attempt to limit its currency's gain vs the dollar.
Japan and Europe both have current account surpluses while ours is currently about 5 1/2% of our GDP.
Investors from outside the U.S. sold $3.5 billion of U.S stocks in Januart. In the fourth quarter of 2002 they had purchased $12.5 billion of U.S. stocks.
In Canada, Ontario suggests wider quarantines to stem SARS, and asks anyone with a SARS symtom to remain home for several days.
Verizon is piloting in Virginia the installation of high-capacity fiber-optic hookups directly to homes and businesses.
In order to get the ball rolling on recalling Gray Davis, a total of 800,000 signatures is required. There is an Internet-based movement to accomplish this recall.
Thursday, April 17, 2003
4/17/03 Weapons Of Mass Instruction
The WHO said that China may have five times as many cases of SARS as has been reported. I would settle gladly for that number. In Hong Kong retail sales are off 50% or more, restaurant revenues down 80%, and hotel occupancy is in the single digits. The hotel visitation collapse hit Toronto too. There is a very popular 900 room Holiday Inn well situated in Toronto. They have historcally had very high occupancy rates. Due to SARS only one per cent of the hotel is occupied, and 500 hourly employees were laid off. This tells me management does not expect business to improve any time soon. Switching to a different SARS locale, I wonder why health officials in NYC refuse to release information on where the cases are located in the city. Supposedly, there are about 25 acknowledged cases. Maybe the secretive actions are taking a page from the Chinese. Full disclosure would be the best route.
Stanley Myers, president and CEO of SEMI, said "the worldwide semiconductor manufacturing equipment industry experienced a second year of significant(29.6%) decline and fell to its lowest annual level since 1994." I expect 2003 to hold few upward surprises for this industry. We just heard a very downveat forecast from Novellus. The latter placed much of the recent blame on SARS. Analysts scoffed at that explanation. I suggest the analysts fly to Asia and take a first hand look at the present business conditions. Naturally, that would never happen. They'd be too afraid of contracting SARS.
March initial unemployment claims in Georgia rose 27% over year ago numbers.
Nokia cut its forecast for the network infrastructure market and its own accessible market to decline by more than 15% in 2003. This forecast reflects a sharp drop from just a few months ago.
The March housing starts rose 8.3%. This number took me by surprise. I have continually underestimated the strength in the housing market.
Motorola to cut 1000+ jobs and Tellabs to lay off 665. A good clue to the great long term investments is to pay attention to those companies hiring in bad times. As I have repeated time and time again, WalMart, my favorite company, continues to expand and to add employees. They are the number one employer in the private sector. Starbucks just announced the purchase of Seattle Coffee Co. Unlike Starbucks, two-thirds of Seattle Coffee's sales come from its wholesale division. Starbucks continues to hire, and they are growing internationally- as is WalMart. On the other hand, companies like Motorola are shrinking. Even in the good times, Motorola had dificulties. Motorola has proven to be a disastrous investment. There are many many examples like Motorola but few like WalMart and Starbucks. It is wise to stick with the latter and the others in that category. The time to buy such companies is during a market scare, such as, 9/11 or the 1987 debacle.
Michael Jordan ended his 15 year career. His accomplishments were so vast that they spanned the globe. He truly is a legend in his own time.
James Sensenbrenner, the House Judiciary Committee chairman, said "the Justice Department has classified as top-secret most of what it's doing under the Patriot Act..the public debate(as such) is centering on (the Act's) onerousness." He complains not enough information is being shared to make a judgment on how well or poorly the USA Patriot Act is working. That sounds like a rational evaluation and not surprising.
There are an estimated 38 million houses built before 1950 which still have lead-based paint on their walls. There is a future for Benjamin Moore.
Ten countries joined the EU and that makes twenty five.
Once again, Arizona's Maricopa County had the highest annual growth rate among the 10 largest counties nationwide. Second highest is Houston's Harris County.
Reuters CEO told today's annual meeting of shareholders that "I expect financial markets to remain in very poor shape and to stay weak for at least the rest of the year."
China's President Hu Jintao said "since the discovery of the SARS cases, I feel very worried. I feel anxious for the masses." Given the level of sanitation in China, the words "worried" and "anxious" hardly reflect the present dire situation in China. Their economy may have grown 9% in the first quarter but the roach and rat population may have exploded in triple digits.
One out of five web surfers visited online banks and credit unions in March.
According to the latest Field Poll, Gray Davis is the most unpopular governor in California in the past 50 years. With less than expected state income tax receipts and less than anticipated sales tax revenues, California's budget deficit will continue to explode. Key counties have people leaving. Santa Clara County leads the nation in population decline, and San Francisco is right on its heels. Our biggest state represents a large chunk of our country's GDP. It has one of the world's largest economies. Recovery is not around the corner. The exits are too crowded.
The WHO said that China may have five times as many cases of SARS as has been reported. I would settle gladly for that number. In Hong Kong retail sales are off 50% or more, restaurant revenues down 80%, and hotel occupancy is in the single digits. The hotel visitation collapse hit Toronto too. There is a very popular 900 room Holiday Inn well situated in Toronto. They have historcally had very high occupancy rates. Due to SARS only one per cent of the hotel is occupied, and 500 hourly employees were laid off. This tells me management does not expect business to improve any time soon. Switching to a different SARS locale, I wonder why health officials in NYC refuse to release information on where the cases are located in the city. Supposedly, there are about 25 acknowledged cases. Maybe the secretive actions are taking a page from the Chinese. Full disclosure would be the best route.
Stanley Myers, president and CEO of SEMI, said "the worldwide semiconductor manufacturing equipment industry experienced a second year of significant(29.6%) decline and fell to its lowest annual level since 1994." I expect 2003 to hold few upward surprises for this industry. We just heard a very downveat forecast from Novellus. The latter placed much of the recent blame on SARS. Analysts scoffed at that explanation. I suggest the analysts fly to Asia and take a first hand look at the present business conditions. Naturally, that would never happen. They'd be too afraid of contracting SARS.
March initial unemployment claims in Georgia rose 27% over year ago numbers.
Nokia cut its forecast for the network infrastructure market and its own accessible market to decline by more than 15% in 2003. This forecast reflects a sharp drop from just a few months ago.
The March housing starts rose 8.3%. This number took me by surprise. I have continually underestimated the strength in the housing market.
Motorola to cut 1000+ jobs and Tellabs to lay off 665. A good clue to the great long term investments is to pay attention to those companies hiring in bad times. As I have repeated time and time again, WalMart, my favorite company, continues to expand and to add employees. They are the number one employer in the private sector. Starbucks just announced the purchase of Seattle Coffee Co. Unlike Starbucks, two-thirds of Seattle Coffee's sales come from its wholesale division. Starbucks continues to hire, and they are growing internationally- as is WalMart. On the other hand, companies like Motorola are shrinking. Even in the good times, Motorola had dificulties. Motorola has proven to be a disastrous investment. There are many many examples like Motorola but few like WalMart and Starbucks. It is wise to stick with the latter and the others in that category. The time to buy such companies is during a market scare, such as, 9/11 or the 1987 debacle.
Michael Jordan ended his 15 year career. His accomplishments were so vast that they spanned the globe. He truly is a legend in his own time.
James Sensenbrenner, the House Judiciary Committee chairman, said "the Justice Department has classified as top-secret most of what it's doing under the Patriot Act..the public debate(as such) is centering on (the Act's) onerousness." He complains not enough information is being shared to make a judgment on how well or poorly the USA Patriot Act is working. That sounds like a rational evaluation and not surprising.
There are an estimated 38 million houses built before 1950 which still have lead-based paint on their walls. There is a future for Benjamin Moore.
Ten countries joined the EU and that makes twenty five.
Once again, Arizona's Maricopa County had the highest annual growth rate among the 10 largest counties nationwide. Second highest is Houston's Harris County.
Reuters CEO told today's annual meeting of shareholders that "I expect financial markets to remain in very poor shape and to stay weak for at least the rest of the year."
China's President Hu Jintao said "since the discovery of the SARS cases, I feel very worried. I feel anxious for the masses." Given the level of sanitation in China, the words "worried" and "anxious" hardly reflect the present dire situation in China. Their economy may have grown 9% in the first quarter but the roach and rat population may have exploded in triple digits.
One out of five web surfers visited online banks and credit unions in March.
According to the latest Field Poll, Gray Davis is the most unpopular governor in California in the past 50 years. With less than expected state income tax receipts and less than anticipated sales tax revenues, California's budget deficit will continue to explode. Key counties have people leaving. Santa Clara County leads the nation in population decline, and San Francisco is right on its heels. Our biggest state represents a large chunk of our country's GDP. It has one of the world's largest economies. Recovery is not around the corner. The exits are too crowded.
Wednesday, April 16, 2003
4/16/03 $214 Billion And Counting
Direct investment in the U.S. by foreigners is
cascading downward at an alarming rate- $214 billion
of assets left the country in 2002, and that trend can
be expected to continue. It would appear that maybe
our country is no longer viewed as a safe haven and/or
an attractive place to secure a good return on assets.
One cannot fault others for thinking just that. After
all, the federal debt stands at $6.5 trillion and is
about to climb again. There is no one around like Ross
Perot to clamp down on spending and get the cash flow
machine flowing into positive territory. Every
American citizen has their name on a piece of that
debt. Add that to your mortgage payments, your car
payments, your credit card payments, your insurance
payments, student loan payments, etc. and now try
sleeping at night.
GM warns about its 2003 full-year earnings. Who is
left to buy a car?
S&P warns that SARS is a risk to Asian growth in 2003
and that the disease would add pressure to economies
already facing heavy fiscal burdens.
Texas Instruments to cut 800 jobs.
Yesterday the Street was excited about the numbers for Microsoft and Intel.
Microsoft is a great company with $44 billion or so in cash but the stock sells
at 25 times 2004 earnings (the estimates were reduced by management yesterday)
and at over 8 times sales. Is this a value? Intel proved to be a different case as the
company believes "continued uncertainty in global economic conditions makes it particularly
difficult to predict product demand and other related matters. The latter did not stop
management from releasing detailed projections for the next quarter. I was left with a sense
of being had, so to speak. Having run a Fortune 500 company, I am experienced in releasing
quarterly numbers. I am left with the impression that Intel manages its quarterly numbers for
R&D; marketing, general and administrative expenses; and other operating expenses.
The numbers are too similar from quarter to quarter to quarter. Intel is selling at 40 times
earnings and at 4 times sales. I'll leave that to other investors much smarter than I am.
Weyerhaeuser CEO says the lumber producing industry is in "a real struggle..we think
we're riding along the bottom of the business cycle."
SARS, like the AIDS virus, uses RNA to replicate itself. With SARS you can transmit and
infect without major symtoms.
Direct investment in the U.S. by foreigners is
cascading downward at an alarming rate- $214 billion
of assets left the country in 2002, and that trend can
be expected to continue. It would appear that maybe
our country is no longer viewed as a safe haven and/or
an attractive place to secure a good return on assets.
One cannot fault others for thinking just that. After
all, the federal debt stands at $6.5 trillion and is
about to climb again. There is no one around like Ross
Perot to clamp down on spending and get the cash flow
machine flowing into positive territory. Every
American citizen has their name on a piece of that
debt. Add that to your mortgage payments, your car
payments, your credit card payments, your insurance
payments, student loan payments, etc. and now try
sleeping at night.
GM warns about its 2003 full-year earnings. Who is
left to buy a car?
S&P warns that SARS is a risk to Asian growth in 2003
and that the disease would add pressure to economies
already facing heavy fiscal burdens.
Texas Instruments to cut 800 jobs.
Yesterday the Street was excited about the numbers for Microsoft and Intel.
Microsoft is a great company with $44 billion or so in cash but the stock sells
at 25 times 2004 earnings (the estimates were reduced by management yesterday)
and at over 8 times sales. Is this a value? Intel proved to be a different case as the
company believes "continued uncertainty in global economic conditions makes it particularly
difficult to predict product demand and other related matters. The latter did not stop
management from releasing detailed projections for the next quarter. I was left with a sense
of being had, so to speak. Having run a Fortune 500 company, I am experienced in releasing
quarterly numbers. I am left with the impression that Intel manages its quarterly numbers for
R&D; marketing, general and administrative expenses; and other operating expenses.
The numbers are too similar from quarter to quarter to quarter. Intel is selling at 40 times
earnings and at 4 times sales. I'll leave that to other investors much smarter than I am.
Weyerhaeuser CEO says the lumber producing industry is in "a real struggle..we think
we're riding along the bottom of the business cycle."
SARS, like the AIDS virus, uses RNA to replicate itself. With SARS you can transmit and
infect without major symtoms.
Tuesday, April 15, 2003
4/15/03 Anuj Gujar:"It All Boils Down To Bullshit And
Money"
Does it really matter whether IBM misses its quarterly
earnings per share number by a penny? They produce
revenue of $20 billion+ per quarter. Projections are
not an exact science. The relevant question might be-
where is the value in IBM trading at $81 per share?
They will earn only $4.30 per share this year, the
stock sells at over 1.5 times sales, and the company
has a debt-to-equity ratio of 6.8 to 1.
February business sales fell 1%, manufacturing sales
were down 1.5%, and inventories rose to their highest
level in two years. Due to weak demand, it would take
about 1.4 months to deplete inventories at the current
sales rate, the highest ratio in a year.
Even with warmer weather and the late Easter,
WalMart's April department store sales have declined.
China's Premier said the outbreak of SARS in China is
"grave". He warned that China's economy might feel the
impact of the disease. It has been, Premier, for the
past month or so.
Hong Kong's leaders call SARS the "21st century
disease".
Philadelphia Federal Reserve Bank President Anthony
Santomero said "it is especially difficult to see how
things will evolve over the next several quarters." If
that's so, then how did he forecast 3-4% growth
towards the fourth quarter? Maybe he has a different
definition of the word "several".
The CDC said the Urbani strain of the SARS-associated
coronavirus is distinct from all previous recognized
coronaviruses. This fact should not be pooh poohed.
It should be noted that hospitals in Hong Kong no
longer have enough intensive care beds or isolation
wards to combat SARS. Plans are in the works to check
the temperature of every passenger departing from
their airport. All Hong Kong schools remain shut until
at least April 21. Seven people died form SARS
yesterday in Hong Kong, and 1200 have now been
infected.
The age 50+ group in the U.S. has grown in the past
five years from 41 to 47 million and now represents
over 36% of the aggregate population of 128 million
adults.
America West to cut 250 jobs, Hillenbrand about 275,
and Hi-Country Foods 65 workers.
WHO's David Heymann said "if SARS maintains its
present pathogenicity and transmisibility, SARS could
become the first severe new disease of the 21st
century with global epidemic potential."
An Illinois judge drops the bond for Philip Morris to
about $7 billion. That's a nice round number.
The Chairman and CEO of Novellus:"The demand for
semiconductor capital equipment remains sluggish."
Over the past two weeks there has been a significant
decrease in the second quarter revenue projections.
The Intel Pentium 4 chip with an 820 megahertz system
fails to perform to specification and shipping has
been halted.
ECB President Duisenberg said "A further cut in
interest rates would not be enough on its own to get
the eurozone economy back on its feet."
About 95% of inbound travelers have cancelled their
trips to Indonesia. Why? Fear of SARS.
The spreading of SARS is accelerating on a daily basis
throughout China. Seventy four new cases were reported
there yesterday by the WHO.
Referring to the sequencing of the SARS genetic code,
the CDC director said "But it is not the magic bullet for
dealing with SARS."
Detroit Mayor Kilpatrick announced the closing of 6 recreational
centers and the layoff of 193 people as part of the plan to balance
the city's $1.4 billion budget.
On Monday there were three more of our soldiers killed and three
more wounded in Iraq.
Money"
Does it really matter whether IBM misses its quarterly
earnings per share number by a penny? They produce
revenue of $20 billion+ per quarter. Projections are
not an exact science. The relevant question might be-
where is the value in IBM trading at $81 per share?
They will earn only $4.30 per share this year, the
stock sells at over 1.5 times sales, and the company
has a debt-to-equity ratio of 6.8 to 1.
February business sales fell 1%, manufacturing sales
were down 1.5%, and inventories rose to their highest
level in two years. Due to weak demand, it would take
about 1.4 months to deplete inventories at the current
sales rate, the highest ratio in a year.
Even with warmer weather and the late Easter,
WalMart's April department store sales have declined.
China's Premier said the outbreak of SARS in China is
"grave". He warned that China's economy might feel the
impact of the disease. It has been, Premier, for the
past month or so.
Hong Kong's leaders call SARS the "21st century
disease".
Philadelphia Federal Reserve Bank President Anthony
Santomero said "it is especially difficult to see how
things will evolve over the next several quarters." If
that's so, then how did he forecast 3-4% growth
towards the fourth quarter? Maybe he has a different
definition of the word "several".
The CDC said the Urbani strain of the SARS-associated
coronavirus is distinct from all previous recognized
coronaviruses. This fact should not be pooh poohed.
It should be noted that hospitals in Hong Kong no
longer have enough intensive care beds or isolation
wards to combat SARS. Plans are in the works to check
the temperature of every passenger departing from
their airport. All Hong Kong schools remain shut until
at least April 21. Seven people died form SARS
yesterday in Hong Kong, and 1200 have now been
infected.
The age 50+ group in the U.S. has grown in the past
five years from 41 to 47 million and now represents
over 36% of the aggregate population of 128 million
adults.
America West to cut 250 jobs, Hillenbrand about 275,
and Hi-Country Foods 65 workers.
WHO's David Heymann said "if SARS maintains its
present pathogenicity and transmisibility, SARS could
become the first severe new disease of the 21st
century with global epidemic potential."
An Illinois judge drops the bond for Philip Morris to
about $7 billion. That's a nice round number.
The Chairman and CEO of Novellus:"The demand for
semiconductor capital equipment remains sluggish."
Over the past two weeks there has been a significant
decrease in the second quarter revenue projections.
The Intel Pentium 4 chip with an 820 megahertz system
fails to perform to specification and shipping has
been halted.
ECB President Duisenberg said "A further cut in
interest rates would not be enough on its own to get
the eurozone economy back on its feet."
About 95% of inbound travelers have cancelled their
trips to Indonesia. Why? Fear of SARS.
The spreading of SARS is accelerating on a daily basis
throughout China. Seventy four new cases were reported
there yesterday by the WHO.
Referring to the sequencing of the SARS genetic code,
the CDC director said "But it is not the magic bullet for
dealing with SARS."
Detroit Mayor Kilpatrick announced the closing of 6 recreational
centers and the layoff of 193 people as part of the plan to balance
the city's $1.4 billion budget.
On Monday there were three more of our soldiers killed and three
more wounded in Iraq.
Monday, April 14, 2003
4/14/03 Forward-Looking Statements
Last Fall I commented that the third quarter corporate earnings releases were not the important statistic but rather what managements had to say about the December quarter. I remarked that I envisioned a poor climate for holiday retail sales, and that the fourth quarter results would be much weaker for the S&P 500 companies. I wrote a similar blog in the winter just before the flurry of quarterly releases in January. By that time, it was well known that the December quarter was going to be weak and that holiday sales were disappointing. I mentioned that the March quarter would be weaker than the one just being released. That brings us to the present. I envision the June quarter to be weaker than the one now being reported. We are in the throws of a recession with enormous overcapacity, dwindling profit margins, and disappointing topline growth failing to produce anticipated profits. Additionally, there are the growing pressures from SARS within the Asian countries as well as Canada. Just because SARS has not hit your neighborhood, do not believe your neighborhood could not be impacted. I will touch on this point several lines from now. The main point is not to focus on catching a fleeting rally. Focus on the trend, and if you do, there is a much better chance you will outperform 95% of the mutual funds in existence. Most money managers are in the wrong business.
About 3000 people worldwide have been infected with SARS and approximately 140 have died.
Hong Kong's Airport Authority warned "our core business is under threat." There are 1150 announced SARS cases in Hong Kong, and the death toll is rising daily.
Philadelphia Federal Reserve President Anthony Santomero said "I see economic growth accelerating over the course of this year toward a healthy and sustainable pace of around 3 or 4% by year's end and into 2004." He cautioned, however, "it is far too soon to declare that the global situation has now been stabilized and the U.S. economy is back on track." My only response is that I have been listening for three years to economists predicting profit growth in our economy. All I see is dwindling profit margins and growing overcapacity and less demand.
Dow theorists are getting more bullish and believe there could be an uptrend in the making. If the trend changes, you'll have plenty of opportunity to get on board. Wait for the change to occur. Let others be a hero with their money and not yours.
Ralph Acampora from Prudential Securities says "I think we could rally to year end, and we rise 20, 25, or 30%, but after that we correct...we really have economic problems and earnings problems." He was correct in predicting some years back that the Dow would go to 10,000 but he also said the Nasdaq would go to 6,000. Why bet on a rally when there are economic and earnings problems? Are you nimble enough to play a rally in quicksand? Maybe the hedge funds are, but certainly not the average investor.
Electronic manufacturers and contract manufacturing companies are faced with potential problems arising from SARS. Demand for their products has continued to weaken, and workforce health problems are not a welcome hurdle. Payrolls will continue to be cut as weak demand produces added excess capacity. Plants will be closed. Solectron has only one known SARS case. Flextronics, Celestica, and Sanmina-SCI hope they will not be infected with the virus. The outsourcing business is in an economic downtrend, and SARS exacerbates an already delicate payroll balancing act.
4000 Lockheed Martin employees at their Ft. Worth, Tx plant will go out on strike today.
Even though Americans believe their tax bill is currently too high, 61% say it would be better to hold off on additional tax cuts now in order to avoid creating larger budget deficits. The man on Main St. sounds smarter than many in the Congress.
Stephen Roach, Morgan Stanley's chief economist, says "America's gaping current account deficit - now likely to be exacerbated by runaway budget deficits- is particularly worrisome. It underscores the growing perils of a world that is far too dependent on the U.S.... a global double-dip recession would not be a fluke-merely a reflection of the systemic flaws that have long been ailing the world."
Rising California workers' comp expenses add more pressure on companies to layoff workers as profit margin declines hasten.
Canada has been dealing with SARS for more than a month with 283 cases and 13 deaths. People are afraid to cough in public. Hospitals have temporarily banned visitors. More people are working from home. WalMart told its employees not to travel to Canada. For those not respecting growing quarantines, tougher measures might be forthcoming, and that is the case of the HP employee who may have committed a criminal offense by going out.
I have often mentioned that the U.S is required to import daily $1.6 billion of foreign capital to fund our account and budget deficits. A good portion of these funds has been arriving from Asian countries, and particularly China. The SARS virus is dramatically impacting many Asian economies, and this can be expected to continue. The stark threat of SARS is not disappearing any time soon, and there will be less free cash flow to purchase our treasury debt. This may create higher interest rates as well as making funds less accessible to many sectors of our economy. This is why SARS may truly impact your neighborhood. Mr. Rogers is sadly no longer with us, and it would be a tragedy to think he has been replaced, even on a temporary basis, by SARS. It might very well happen.
Last Fall I commented that the third quarter corporate earnings releases were not the important statistic but rather what managements had to say about the December quarter. I remarked that I envisioned a poor climate for holiday retail sales, and that the fourth quarter results would be much weaker for the S&P 500 companies. I wrote a similar blog in the winter just before the flurry of quarterly releases in January. By that time, it was well known that the December quarter was going to be weak and that holiday sales were disappointing. I mentioned that the March quarter would be weaker than the one just being released. That brings us to the present. I envision the June quarter to be weaker than the one now being reported. We are in the throws of a recession with enormous overcapacity, dwindling profit margins, and disappointing topline growth failing to produce anticipated profits. Additionally, there are the growing pressures from SARS within the Asian countries as well as Canada. Just because SARS has not hit your neighborhood, do not believe your neighborhood could not be impacted. I will touch on this point several lines from now. The main point is not to focus on catching a fleeting rally. Focus on the trend, and if you do, there is a much better chance you will outperform 95% of the mutual funds in existence. Most money managers are in the wrong business.
About 3000 people worldwide have been infected with SARS and approximately 140 have died.
Hong Kong's Airport Authority warned "our core business is under threat." There are 1150 announced SARS cases in Hong Kong, and the death toll is rising daily.
Philadelphia Federal Reserve President Anthony Santomero said "I see economic growth accelerating over the course of this year toward a healthy and sustainable pace of around 3 or 4% by year's end and into 2004." He cautioned, however, "it is far too soon to declare that the global situation has now been stabilized and the U.S. economy is back on track." My only response is that I have been listening for three years to economists predicting profit growth in our economy. All I see is dwindling profit margins and growing overcapacity and less demand.
Dow theorists are getting more bullish and believe there could be an uptrend in the making. If the trend changes, you'll have plenty of opportunity to get on board. Wait for the change to occur. Let others be a hero with their money and not yours.
Ralph Acampora from Prudential Securities says "I think we could rally to year end, and we rise 20, 25, or 30%, but after that we correct...we really have economic problems and earnings problems." He was correct in predicting some years back that the Dow would go to 10,000 but he also said the Nasdaq would go to 6,000. Why bet on a rally when there are economic and earnings problems? Are you nimble enough to play a rally in quicksand? Maybe the hedge funds are, but certainly not the average investor.
Electronic manufacturers and contract manufacturing companies are faced with potential problems arising from SARS. Demand for their products has continued to weaken, and workforce health problems are not a welcome hurdle. Payrolls will continue to be cut as weak demand produces added excess capacity. Plants will be closed. Solectron has only one known SARS case. Flextronics, Celestica, and Sanmina-SCI hope they will not be infected with the virus. The outsourcing business is in an economic downtrend, and SARS exacerbates an already delicate payroll balancing act.
4000 Lockheed Martin employees at their Ft. Worth, Tx plant will go out on strike today.
Even though Americans believe their tax bill is currently too high, 61% say it would be better to hold off on additional tax cuts now in order to avoid creating larger budget deficits. The man on Main St. sounds smarter than many in the Congress.
Stephen Roach, Morgan Stanley's chief economist, says "America's gaping current account deficit - now likely to be exacerbated by runaway budget deficits- is particularly worrisome. It underscores the growing perils of a world that is far too dependent on the U.S.... a global double-dip recession would not be a fluke-merely a reflection of the systemic flaws that have long been ailing the world."
Rising California workers' comp expenses add more pressure on companies to layoff workers as profit margin declines hasten.
Canada has been dealing with SARS for more than a month with 283 cases and 13 deaths. People are afraid to cough in public. Hospitals have temporarily banned visitors. More people are working from home. WalMart told its employees not to travel to Canada. For those not respecting growing quarantines, tougher measures might be forthcoming, and that is the case of the HP employee who may have committed a criminal offense by going out.
I have often mentioned that the U.S is required to import daily $1.6 billion of foreign capital to fund our account and budget deficits. A good portion of these funds has been arriving from Asian countries, and particularly China. The SARS virus is dramatically impacting many Asian economies, and this can be expected to continue. The stark threat of SARS is not disappearing any time soon, and there will be less free cash flow to purchase our treasury debt. This may create higher interest rates as well as making funds less accessible to many sectors of our economy. This is why SARS may truly impact your neighborhood. Mr. Rogers is sadly no longer with us, and it would be a tragedy to think he has been replaced, even on a temporary basis, by SARS. It might very well happen.
Sunday, April 13, 2003
4/13/03 "Temporary Headwinds"
One of the Bush Administration's greatest blunders, I believe, was to replace Treasury Secretary Paul O'Neill with John Snow. I said this at the time it happened, and now feel more than ever that Snow is inept and an embarrassment to the nation he represents. These aforementioned beliefs only refer to his role as Treasury Secretary. Yesterday, Snow remarked that the job market faces "temporary headwinds." That is absolutely disrespectful to the recent years which have resulted in millions in this country being without a job, to those who must settle for part-time work because a full-time job is not available to them, and to even more millions every day who are frightened that their job will be eliminated- like the latest 10,000 N.Y.C. workers. Ari Fleischer said Bush would "cast a wide net" in the search for a successor to O'Neill. His net must have had gaping holes in it. Supposedly our VP played a significant role in choosing Snow. Cheney's business acumen can be evaluated by his performance at Halliburton.
EU's Pedro Solbes says of the U.S. economy that "large and growing deficits in the current account and in the federal budget give rise to concern...raising questions about the sustainability of the present path of public finances." And what does Snow say about this remark and others? He can only state "in a way we got off lightly." Solbes is discussing sustainability and Snow can only make light of the situation. Maybe that's what's wrong in Washington. Members of the Administration need to stand on a bread line and also wait on long lines at an unemployment office. Maybe then there would be a greater appreciation for this country's economic plight. It's truly serious business and threatens our democratic well-being.
Alexander Hamilton, the first U.S. Treasury Secretary, said "for it is a truth, which the experience of all ages has attested, that the people are commonly most in danger when the means of insuring their rights are in the possession of those of whom they entertain the least suspicion."
William E. Simon, former Treasury Secretary, said "bad politicians are sent to Washington by good people who don't vote."
Would you rather have Snow or someone like O'Neill who told it straight and was smart and tough? For example, O'Neill once remarked "I believe in a strong dollar, and if I decide to shift that stance I will hire out the Yankee Stadium and some rousing brass bands, and to announce that change in policy to the whole world."
At present Cathay Pacific Airways is losing $3 million per day.
California's state budget gap rose almost 10% in the first quarter, and is clearly out of control. In my view, Davis is in way over his head.
The war in Iraq has made U.S. investors understandably more wary about business in the Middle East. One CEO stated "the war is making people hold their breath and wait, and the economic effect of when people hold their breath is disastrous."
You think trading on Wall Street is volatile? On Saturday the "Saddam dinar" was 4000 to the U.S. dollar and today it's 2700.
In England's Sunday Telegraph discovered secret Iraqi documents show how extensive were Russia's efforts to assist Hussein's regime prior to the war starting, and this assistance went on for years.
One of the Bush Administration's greatest blunders, I believe, was to replace Treasury Secretary Paul O'Neill with John Snow. I said this at the time it happened, and now feel more than ever that Snow is inept and an embarrassment to the nation he represents. These aforementioned beliefs only refer to his role as Treasury Secretary. Yesterday, Snow remarked that the job market faces "temporary headwinds." That is absolutely disrespectful to the recent years which have resulted in millions in this country being without a job, to those who must settle for part-time work because a full-time job is not available to them, and to even more millions every day who are frightened that their job will be eliminated- like the latest 10,000 N.Y.C. workers. Ari Fleischer said Bush would "cast a wide net" in the search for a successor to O'Neill. His net must have had gaping holes in it. Supposedly our VP played a significant role in choosing Snow. Cheney's business acumen can be evaluated by his performance at Halliburton.
EU's Pedro Solbes says of the U.S. economy that "large and growing deficits in the current account and in the federal budget give rise to concern...raising questions about the sustainability of the present path of public finances." And what does Snow say about this remark and others? He can only state "in a way we got off lightly." Solbes is discussing sustainability and Snow can only make light of the situation. Maybe that's what's wrong in Washington. Members of the Administration need to stand on a bread line and also wait on long lines at an unemployment office. Maybe then there would be a greater appreciation for this country's economic plight. It's truly serious business and threatens our democratic well-being.
Alexander Hamilton, the first U.S. Treasury Secretary, said "for it is a truth, which the experience of all ages has attested, that the people are commonly most in danger when the means of insuring their rights are in the possession of those of whom they entertain the least suspicion."
William E. Simon, former Treasury Secretary, said "bad politicians are sent to Washington by good people who don't vote."
Would you rather have Snow or someone like O'Neill who told it straight and was smart and tough? For example, O'Neill once remarked "I believe in a strong dollar, and if I decide to shift that stance I will hire out the Yankee Stadium and some rousing brass bands, and to announce that change in policy to the whole world."
At present Cathay Pacific Airways is losing $3 million per day.
California's state budget gap rose almost 10% in the first quarter, and is clearly out of control. In my view, Davis is in way over his head.
The war in Iraq has made U.S. investors understandably more wary about business in the Middle East. One CEO stated "the war is making people hold their breath and wait, and the economic effect of when people hold their breath is disastrous."
You think trading on Wall Street is volatile? On Saturday the "Saddam dinar" was 4000 to the U.S. dollar and today it's 2700.
In England's Sunday Telegraph discovered secret Iraqi documents show how extensive were Russia's efforts to assist Hussein's regime prior to the war starting, and this assistance went on for years.
Saturday, April 12, 2003
4/12/03 Read The Fine Print Not Just The Headlines
It was reported that GE's first quarter earnings per share were down 9% on a 1% revenue decline. However, provision for taxes dropped 30% and made the already dismal results look better than they actually were. The television and newspaper reporters failed to provide this little tidbit of information. As investors, it's your job to read the fine print.
Cemex SA, the world's third-largest cement maker, said first quarter profits dropped 71%. I thought construction was so booming.
In 2002 only 3.5% of U.S. equity funds produced positive results. Do you still want to invest in a mutual fund?
In Texas wholesale gasoline prices have been trending downward for over a month. The average price for regular unleaded is $1.52 per gallon in Texas. California officials said everything is on the up and up in their state's gasoline pricing. Maybe they should get their heads out of the tank. Gasoline still goes for $2 per gallon or so in the San Francisco area where they have some major refineries.
The U.S. Commerce Department said retail sales rose 2.1% in March. I have serious reservations about that figure. Would you prefer to believe WalMart, Target, Federated, Kohl's, Sears, JC Penney or the government? The latter are not required to attest to their numbers. The government said the sales were supposedly up due to strong auto sales; however, GM, Ford, and Chrysler said their sales were down. Retailers complained about lousy weather in March, and yet the government said sales were strong in garden shops. People must be planting in the snow and rain.
Lee Ah-Miu, age 73, lives in Hong Kong. In discussing SARS she said "I have never seen anything so bad in all my life and I am very old. I don't know if I can live to see the day when I walk around without a mask."
The commander of the 37,000 U.S. troops based in South Korea barred military and associated civilian staff from traveling to China and Hong Kong because of SARS.
The good news is that Chinese doctors recommend a potion containing dead silkworms and cicada skin as a protection against SARS. Now we have nothing to fear.
What will it take for traders and investors to comprehend that we are in a bear market? Yesterday the Dow rose 105 points in the first half hour of trading and the Nasdaq about 20 points. By the end of the first hour the gains were lost, and results would remain negative for the remainder of the day. It would be wise to stop throwing good money after bad. On the other hand, the bears are coining it.
RF Micro Devices announced a bigger than expected loss for the quarter and traded down to the $5 level. A few years ago the stock sold over $90.
Consumer sentiment in April rose to 83.2 from 77.6. This was better than economists had predicted, and was welcome news. At the same time declining stock prices and continuing job layoffs won't do much for the nation's on-going confidence.
Santa Clara-based wireless network equipment maker Netgear filed for an IPO. They had filed for an IPO in September 2000, but pulled the offering several months later due to market conditions. In the prospectus, the company cites SARS as a risk factor for potential investors.
Walt Disney, in a debt filing made Thursday, said SARS could potentially worsen their theme park business and "may also contribute to a reluctance to travel."
While looting continues in Iraq, the war toll is 107 killed, 399 wounded, and 10 missing in action.
Hong Kong's Cathay Pacific Airways is considering stopping all passenger flights in May due to a 70% decline in passenger traffic.
The WHO says SARS could spread worldwide by air travel.
Another 10,000 pink slips may be going to N.Y.C. workers.
It was reported that GE's first quarter earnings per share were down 9% on a 1% revenue decline. However, provision for taxes dropped 30% and made the already dismal results look better than they actually were. The television and newspaper reporters failed to provide this little tidbit of information. As investors, it's your job to read the fine print.
Cemex SA, the world's third-largest cement maker, said first quarter profits dropped 71%. I thought construction was so booming.
In 2002 only 3.5% of U.S. equity funds produced positive results. Do you still want to invest in a mutual fund?
In Texas wholesale gasoline prices have been trending downward for over a month. The average price for regular unleaded is $1.52 per gallon in Texas. California officials said everything is on the up and up in their state's gasoline pricing. Maybe they should get their heads out of the tank. Gasoline still goes for $2 per gallon or so in the San Francisco area where they have some major refineries.
The U.S. Commerce Department said retail sales rose 2.1% in March. I have serious reservations about that figure. Would you prefer to believe WalMart, Target, Federated, Kohl's, Sears, JC Penney or the government? The latter are not required to attest to their numbers. The government said the sales were supposedly up due to strong auto sales; however, GM, Ford, and Chrysler said their sales were down. Retailers complained about lousy weather in March, and yet the government said sales were strong in garden shops. People must be planting in the snow and rain.
Lee Ah-Miu, age 73, lives in Hong Kong. In discussing SARS she said "I have never seen anything so bad in all my life and I am very old. I don't know if I can live to see the day when I walk around without a mask."
The commander of the 37,000 U.S. troops based in South Korea barred military and associated civilian staff from traveling to China and Hong Kong because of SARS.
The good news is that Chinese doctors recommend a potion containing dead silkworms and cicada skin as a protection against SARS. Now we have nothing to fear.
What will it take for traders and investors to comprehend that we are in a bear market? Yesterday the Dow rose 105 points in the first half hour of trading and the Nasdaq about 20 points. By the end of the first hour the gains were lost, and results would remain negative for the remainder of the day. It would be wise to stop throwing good money after bad. On the other hand, the bears are coining it.
RF Micro Devices announced a bigger than expected loss for the quarter and traded down to the $5 level. A few years ago the stock sold over $90.
Consumer sentiment in April rose to 83.2 from 77.6. This was better than economists had predicted, and was welcome news. At the same time declining stock prices and continuing job layoffs won't do much for the nation's on-going confidence.
Santa Clara-based wireless network equipment maker Netgear filed for an IPO. They had filed for an IPO in September 2000, but pulled the offering several months later due to market conditions. In the prospectus, the company cites SARS as a risk factor for potential investors.
Walt Disney, in a debt filing made Thursday, said SARS could potentially worsen their theme park business and "may also contribute to a reluctance to travel."
While looting continues in Iraq, the war toll is 107 killed, 399 wounded, and 10 missing in action.
Hong Kong's Cathay Pacific Airways is considering stopping all passenger flights in May due to a 70% decline in passenger traffic.
The WHO says SARS could spread worldwide by air travel.
Another 10,000 pink slips may be going to N.Y.C. workers.
Friday, April 11, 2003
4/11/03 Tommy Thompson: "Probably It Will Be A Year Before We Come Up With A Vaccine For SARS"
State Street to lay off 1800 workers. Proctor & Gamble to cut 275 jobs. Brocade Communications to let 115 go.
Crude oil at a three week low.
The Nikkei declined 2% to its lowest level since January 1983. Toyota, Sony, and Ito-Yokado, market leaders, were hit hard. Trading volume was especially heavy on the downside.
The Concorde is no more. Likewise Cypress Gardens.
The eurozone economy could very well have contracted in the first quarter.
As of April 9, 1290 cases of SARS had been identified in China. There is little question that China's outbreak of SARS is bigger than what their government has reported. Hospital statistics reveal a much larger problem.
Four percent of the identified cases of SARS have died. From a medical standpoint, that is a high percentage.
Three times as many companies are giving negative profit warnings as firms providing pleasant earning surprises.
In February the U.S. trade deficit amounted to $40.3 billion. No matter how you spin the number it was the third highest monthly deficit on record.
Microsoft has slashed Xbox prices by 20% in Europe.
SARS is impacting hotels, airlines,restaurants, and other services across Asia. Nine people in Singapore have died from SARS and 126 more have been infected. Singapore's Minister of Manpower, Lee Boon Yang, said on Thursday "we are facing an unprecedented situation. We are dealing with a serious, unseen threat." The country slapped a quarantine on arriving workers from China, Hong Kong, Canada and others for 10 days. In the last three weeks hotel occupancy in Singapore is down more than 50%.
In Kowloon there are over 50,000 people for every square kilometer. That excludes the untold number of cockroaches and rats.
Last Fall I warned of the slowing sales at WalMart. I specifically stated, if the best company in the industry and possibly the country was having difficulty, then watch out for the others in the industry. Yesterday WalMart reported March same-store sales up only 0.7%. The last time their same-store sales rose less than 2% was in December 2000. Therefore, it was not surprising that Target, Federated, Dillard's, JC Penney, and Sears all had declining same-store sales. Only Costco showed good results. By the way, for the thirteen straight month McDonald's had lower same-store sales. Bank of Tokyo-Mitsubishi Ltd economist Michael Niemira said "the consumer isn't just shifting towards discounters. It may be the consumer is holding off spending regardless of the venue." That has been my contention.
Hong Kong-based Political and Economic Risk Consulting ranked China's health care system next to last in the region, ahead of only Indonesia.
Motorola is one of the largest investors in China. The company has restricted travel to SARS-impacted areas and is permitting workers to leave Guangdong and Hong Kong.
India-based IT consulting services firm, Infosys, is cautious for the quarter and for the whole year. The stock dropped 30% yesterday.
A survey of the Business Roundtable indicated that only 9% of U.S. executives expect to hire new workers while 45% expect to have worker layoffs. Twenty seven percent expected to reduce their capital spending. Forty four percent of the companies said rising health care costs were the greatest cost pressure they are facing.
Twenty five percent of Hong Kong's 1000+ SARS cases are health workers. Reportedly, 30 people have died from SARS in Hong Kong. I believe that figure is understated.
The CDC said that SARS does not look like anything they have seen before in animals or in people in the U.S. It's possible, they said, the damage is caused by the body's immune response killing the healthy cells plus the microbes.
2002 was the first negative return year for hedge funds since 1987. Supposedly, there are more than 6000 hedge funds. In my view, there are too many mutual funds, too many hedge funds, and too many VC funds.
Some analysts have said that Yahoo is trading at a discount to both eBay and Amazon.com. That is true; however, that statement fails to suggest that eBay and Amazon.com lack good value at current trading levels. I believe this is the case. No one has proven to me you need to overpay for 20 to 30% annual growth. To illustrate my point, take First Data Corp. They will earn $1.90 per share, the stock trades at 35, and they are the leading processor of credit cards purchases in the U.S.
I have received some emails asking why I am making such a big deal about SARS. It is a big deal, and globally is getting to be a bigger deal every day. It will be in the headlines long after many of our troops have left Iraq.
State Street to lay off 1800 workers. Proctor & Gamble to cut 275 jobs. Brocade Communications to let 115 go.
Crude oil at a three week low.
The Nikkei declined 2% to its lowest level since January 1983. Toyota, Sony, and Ito-Yokado, market leaders, were hit hard. Trading volume was especially heavy on the downside.
The Concorde is no more. Likewise Cypress Gardens.
The eurozone economy could very well have contracted in the first quarter.
As of April 9, 1290 cases of SARS had been identified in China. There is little question that China's outbreak of SARS is bigger than what their government has reported. Hospital statistics reveal a much larger problem.
Four percent of the identified cases of SARS have died. From a medical standpoint, that is a high percentage.
Three times as many companies are giving negative profit warnings as firms providing pleasant earning surprises.
In February the U.S. trade deficit amounted to $40.3 billion. No matter how you spin the number it was the third highest monthly deficit on record.
Microsoft has slashed Xbox prices by 20% in Europe.
SARS is impacting hotels, airlines,restaurants, and other services across Asia. Nine people in Singapore have died from SARS and 126 more have been infected. Singapore's Minister of Manpower, Lee Boon Yang, said on Thursday "we are facing an unprecedented situation. We are dealing with a serious, unseen threat." The country slapped a quarantine on arriving workers from China, Hong Kong, Canada and others for 10 days. In the last three weeks hotel occupancy in Singapore is down more than 50%.
In Kowloon there are over 50,000 people for every square kilometer. That excludes the untold number of cockroaches and rats.
Last Fall I warned of the slowing sales at WalMart. I specifically stated, if the best company in the industry and possibly the country was having difficulty, then watch out for the others in the industry. Yesterday WalMart reported March same-store sales up only 0.7%. The last time their same-store sales rose less than 2% was in December 2000. Therefore, it was not surprising that Target, Federated, Dillard's, JC Penney, and Sears all had declining same-store sales. Only Costco showed good results. By the way, for the thirteen straight month McDonald's had lower same-store sales. Bank of Tokyo-Mitsubishi Ltd economist Michael Niemira said "the consumer isn't just shifting towards discounters. It may be the consumer is holding off spending regardless of the venue." That has been my contention.
Hong Kong-based Political and Economic Risk Consulting ranked China's health care system next to last in the region, ahead of only Indonesia.
Motorola is one of the largest investors in China. The company has restricted travel to SARS-impacted areas and is permitting workers to leave Guangdong and Hong Kong.
India-based IT consulting services firm, Infosys, is cautious for the quarter and for the whole year. The stock dropped 30% yesterday.
A survey of the Business Roundtable indicated that only 9% of U.S. executives expect to hire new workers while 45% expect to have worker layoffs. Twenty seven percent expected to reduce their capital spending. Forty four percent of the companies said rising health care costs were the greatest cost pressure they are facing.
Twenty five percent of Hong Kong's 1000+ SARS cases are health workers. Reportedly, 30 people have died from SARS in Hong Kong. I believe that figure is understated.
The CDC said that SARS does not look like anything they have seen before in animals or in people in the U.S. It's possible, they said, the damage is caused by the body's immune response killing the healthy cells plus the microbes.
2002 was the first negative return year for hedge funds since 1987. Supposedly, there are more than 6000 hedge funds. In my view, there are too many mutual funds, too many hedge funds, and too many VC funds.
Some analysts have said that Yahoo is trading at a discount to both eBay and Amazon.com. That is true; however, that statement fails to suggest that eBay and Amazon.com lack good value at current trading levels. I believe this is the case. No one has proven to me you need to overpay for 20 to 30% annual growth. To illustrate my point, take First Data Corp. They will earn $1.90 per share, the stock trades at 35, and they are the leading processor of credit cards purchases in the U.S.
I have received some emails asking why I am making such a big deal about SARS. It is a big deal, and globally is getting to be a bigger deal every day. It will be in the headlines long after many of our troops have left Iraq.
Thursday, April 10, 2003
4/10/03 Headlines Provide An Incomplete Story
Yesterday the world watched a 20 foot statue of Hussein come down in Baghdad. 100 soldiers died, about 180 have been injured, and eight are still missing in action. Hussein ruled for 24 years, and because of our military skills and the determination of our troops, he was overthrown in three weeks. It says a lot about our fighting men and women. As the statue came down, the Dow rose 75 points. It looked like a wonderful day in the neighborhood. The other half of the day emerged. Another U.S. soldier was killed and another 20 were injured in fighting in Iraq. Then we learned that a friendly-fire incident killed 11 civilians in Afghanistan. War is devastating. The toll mounts long after the shooting stops. The market knows from reality. By the end of the trading day the Dow lost 100 points and the Nasdaq declined 26 points.
WalMart is in my view our country's finest public company. They set the standard in many areas. The company consistently is ahead of the pack. Yesterday they limited employee travel because of SARS.
Gold closed up three dollars at $326 per ounce.
AT&T closed at its lowest price $14.67, in almost 20 years. The company expects to report a loss and more job cuts.
Dun and Bradstreet expects earnings to miss expectations. The stock dropped almost 5 points yesterday.
Stanley Works cuts 1000 jobs, Nokia 1800, and Applied Micro Circuits 275.
The director of the CBO said that medicare beneficiaries will spend $1.8 trillion on prescription drugs over the next 10 years. I think that number is low.
Dr. Jim Hughes, head of infectious diseases at the CDC, said "I think we have to assume that the SARS virus is in Asia to stay." He said it may well remain in the U.S. too.
Mexico's inflation rate accelerated in March to a yearly rate of 5.64%.
With Yahoo selling at 60 times estimated earnings, where's the value?
Spirit Airlines, the largest U.S. privately held airline and a leading low-fare carrier, reported a 9% rise in March in their load factor and a 19% increase in revenue pasenger miles. These results are due to good management, fair pricing, and strict attention to the needs of the customer.
Nordstrom as well as American Eagle announced declines in March same store sales.
The Nikkei dropped below 8000 and Sony hit a 4 year low.
The IMF chief economist, Kenneth Rogoff, said he believes the Bush propoed tax cuts were "awkwardly timed" because they would add to a budget deficit already rising sharply. He criticized Alan Greenspan and other central bank officials for failing to combat falling prices which have impacted Japan and which threaten weak growth in the U.S. and Europe.
Microsoft has about $45 billion in cash. About one quarter of its 2002 income came from its investments. Unfortunately, its equity investments have not been nearly as successful as the returns from its software business. For the first time Microsoft is allowing hardware makers to modify the CE code and sell devices based on that code. This will enable "derivative works" to be produced by others.
Currently, Philip Morris has until April 21 to pay the full $12 billion bond. Madison County Judge Nicholas Byron doesn't want to bakrupt the company. The lead plaintiff lawyer believes the company has the funds to pay the $12 billion without bankrupting them. I think they can come up with the money but believe each side will give somewhat.
The Congress won't vote on the proposed Bush tax cut proposal for another thirty days. It must not be such a pressing matter.
Doctors and nurses in Hong Kong are contracting SARS at an astonishing rate. This illness will kill a great many people.
I read every day where long-time bears are throwing in the towel on this bear market. Each person has a perfect right to change an opinion. I give them credit for believing in their own convictions. At the same time I question their analytical processes. I am ecstatic about the three week accomplishments of our troops in Iraq. At the same time my pessimism about the global economy has increased during that period of time. SARS is a growing problem, and second half optimists will be immensely disappointed.
Yesterday the world watched a 20 foot statue of Hussein come down in Baghdad. 100 soldiers died, about 180 have been injured, and eight are still missing in action. Hussein ruled for 24 years, and because of our military skills and the determination of our troops, he was overthrown in three weeks. It says a lot about our fighting men and women. As the statue came down, the Dow rose 75 points. It looked like a wonderful day in the neighborhood. The other half of the day emerged. Another U.S. soldier was killed and another 20 were injured in fighting in Iraq. Then we learned that a friendly-fire incident killed 11 civilians in Afghanistan. War is devastating. The toll mounts long after the shooting stops. The market knows from reality. By the end of the trading day the Dow lost 100 points and the Nasdaq declined 26 points.
WalMart is in my view our country's finest public company. They set the standard in many areas. The company consistently is ahead of the pack. Yesterday they limited employee travel because of SARS.
Gold closed up three dollars at $326 per ounce.
AT&T closed at its lowest price $14.67, in almost 20 years. The company expects to report a loss and more job cuts.
Dun and Bradstreet expects earnings to miss expectations. The stock dropped almost 5 points yesterday.
Stanley Works cuts 1000 jobs, Nokia 1800, and Applied Micro Circuits 275.
The director of the CBO said that medicare beneficiaries will spend $1.8 trillion on prescription drugs over the next 10 years. I think that number is low.
Dr. Jim Hughes, head of infectious diseases at the CDC, said "I think we have to assume that the SARS virus is in Asia to stay." He said it may well remain in the U.S. too.
Mexico's inflation rate accelerated in March to a yearly rate of 5.64%.
With Yahoo selling at 60 times estimated earnings, where's the value?
Spirit Airlines, the largest U.S. privately held airline and a leading low-fare carrier, reported a 9% rise in March in their load factor and a 19% increase in revenue pasenger miles. These results are due to good management, fair pricing, and strict attention to the needs of the customer.
Nordstrom as well as American Eagle announced declines in March same store sales.
The Nikkei dropped below 8000 and Sony hit a 4 year low.
The IMF chief economist, Kenneth Rogoff, said he believes the Bush propoed tax cuts were "awkwardly timed" because they would add to a budget deficit already rising sharply. He criticized Alan Greenspan and other central bank officials for failing to combat falling prices which have impacted Japan and which threaten weak growth in the U.S. and Europe.
Microsoft has about $45 billion in cash. About one quarter of its 2002 income came from its investments. Unfortunately, its equity investments have not been nearly as successful as the returns from its software business. For the first time Microsoft is allowing hardware makers to modify the CE code and sell devices based on that code. This will enable "derivative works" to be produced by others.
Currently, Philip Morris has until April 21 to pay the full $12 billion bond. Madison County Judge Nicholas Byron doesn't want to bakrupt the company. The lead plaintiff lawyer believes the company has the funds to pay the $12 billion without bankrupting them. I think they can come up with the money but believe each side will give somewhat.
The Congress won't vote on the proposed Bush tax cut proposal for another thirty days. It must not be such a pressing matter.
Doctors and nurses in Hong Kong are contracting SARS at an astonishing rate. This illness will kill a great many people.
I read every day where long-time bears are throwing in the towel on this bear market. Each person has a perfect right to change an opinion. I give them credit for believing in their own convictions. At the same time I question their analytical processes. I am ecstatic about the three week accomplishments of our troops in Iraq. At the same time my pessimism about the global economy has increased during that period of time. SARS is a growing problem, and second half optimists will be immensely disappointed.
Wednesday, April 09, 2003
4/9/03 Your Neighborhood Cockroach May Cause SARS
N.Y.C. to lay off 2000 education workers. Qantas Airways to let 1000 go. Tecumseh Products gives pink slip notices to 550. Barra to cut 9% of their workforce.
The war on Iraq has produced 95 dead, 155 wounded, and 8 MIAs.
The Philip Morris judge says the company may not have to post a $12 billion bond to appeal a $10 billion damage suit. They may have to post the damaged lungs of the company's top brass. Just a joke.
Japanese companies plan to cut back on capital spending in 2003 by 2.2% for the third straight year.
Global airlines body IATA warned that SARS could hurt the industry more than the Iraq war. For example, Cathay says SARS has "annihilated" passenger bookings.
Due to SARS, Malaysia bars visitors from China and Hong Kong.
In Chinatowns around the U.S. people are scared. For many, business is down 50% in the last two weeks. People are afraid of SARS, and aren't coming to Chinatown. On the other hand, family medical practices are seeing more patients as they arrive with cold symptoms and want to be checked for SARS.
The dollar is already about two cents weaker vs the euro from its strongest level since the war started. This is a good clue that the war rally on Wall St. has come to a close.
The Federal government gave San Francisco $10 million for the fight on terrorism. I guess the fight is expected to go only a few rounds.
Gartner, Inc. said for the second consecutive year worldwide semionductor manufacturing sales declined by more than 30%.
Sales at major U.S. chain stores fell 2.5% in the week ended April 5 compared with the same week a year ago.
Disney's stock is selling at about 30 times estimated 2003 earnings. Where's the value?
Between 1995 and 2010 the 45+ age bracket will grow 3 times as quickly as the rest of the population. Baby boomers now control 43% of the nation's disposable income.
Joseph DeRisi is a researcher at UCSF and he created a computer "virus chip" which identified SARS as a type of coronavirus which, he said, "is not a simple mutation of a human virus." Despite anything you might read or hear about SARS, DeRisi's statement indicates trouble ahead.
Cockroaches may carry the SARS virus. Everyone needs to be extra careful about the people with whom they associate.
Here's a no brainer. Which economy is more important to you- that of the U.S. or post-war Iraq?
N.Y.C. to lay off 2000 education workers. Qantas Airways to let 1000 go. Tecumseh Products gives pink slip notices to 550. Barra to cut 9% of their workforce.
The war on Iraq has produced 95 dead, 155 wounded, and 8 MIAs.
The Philip Morris judge says the company may not have to post a $12 billion bond to appeal a $10 billion damage suit. They may have to post the damaged lungs of the company's top brass. Just a joke.
Japanese companies plan to cut back on capital spending in 2003 by 2.2% for the third straight year.
Global airlines body IATA warned that SARS could hurt the industry more than the Iraq war. For example, Cathay says SARS has "annihilated" passenger bookings.
Due to SARS, Malaysia bars visitors from China and Hong Kong.
In Chinatowns around the U.S. people are scared. For many, business is down 50% in the last two weeks. People are afraid of SARS, and aren't coming to Chinatown. On the other hand, family medical practices are seeing more patients as they arrive with cold symptoms and want to be checked for SARS.
The dollar is already about two cents weaker vs the euro from its strongest level since the war started. This is a good clue that the war rally on Wall St. has come to a close.
The Federal government gave San Francisco $10 million for the fight on terrorism. I guess the fight is expected to go only a few rounds.
Gartner, Inc. said for the second consecutive year worldwide semionductor manufacturing sales declined by more than 30%.
Sales at major U.S. chain stores fell 2.5% in the week ended April 5 compared with the same week a year ago.
Disney's stock is selling at about 30 times estimated 2003 earnings. Where's the value?
Between 1995 and 2010 the 45+ age bracket will grow 3 times as quickly as the rest of the population. Baby boomers now control 43% of the nation's disposable income.
Joseph DeRisi is a researcher at UCSF and he created a computer "virus chip" which identified SARS as a type of coronavirus which, he said, "is not a simple mutation of a human virus." Despite anything you might read or hear about SARS, DeRisi's statement indicates trouble ahead.
Cockroaches may carry the SARS virus. Everyone needs to be extra careful about the people with whom they associate.
Here's a no brainer. Which economy is more important to you- that of the U.S. or post-war Iraq?
Tuesday, April 08, 2003
4/8/03 Selling On The News
The weekend war news was so encouraging that the amateurs pounced on the markets in the early going yesterday, and then they got pounded. Before the day was over a significant reversal had taken place. After being up 242 points, The Dow staggered to a meager 21 point gain. The Nasdaq had gained over 3% and barely could hold a plus side of 7 points. The S&P 500 had been at 904 and ended almost unchanged at 880. When your entry point is poor, lessons from Wall Street can be expensive. Follow the leader doesn't hack it on the corner of Broad and Wall streets. In Iraq they take prisoners of war. The stock market doesn't take prisoners.
Another potentially lethal venue is SARS. We know over 100 people have now been killed, 2700 have been infected, and it has found its way into 16 countries. SARS targets the world.Yesterday India reported its first SARS case. We are aware that the disease is spread easily from person to person. It may have multiple ways to spread. It also originated in a part of the world that sees a great many travelers. There is no cure for SARS nor a vaccine. Fast recognition appears the only possible solution. The director of the CDC said yesterday "we may see further spread of the disease in this country...we don't know where this is going to go." It was suggested to avoid travel to Hong Kong, Hanoi, Singapore, and China. Hopefully, SARS will not be like the 1918 flu when more than 20 million people died.
Recently, retail sales have dropped 50% in Hong Kong.
Consumer credit for February increased $1.5 billion vs consensus of $3 billion. Total consumer debt is $1.74 trillion.
N.Y.C. will lay off 3400 workers in the next 30 days.
Citigroup will lay off additional traders and salesmen in its global equities business.
March consumer confidence in Tokyo worsened, and fell 1.5 points to 38.8. This reveals a serious level of pessimism.
U.K. retail sales last month fell the most in 11 years.
Our states are suffering their worst budget crises since WW II.
U.S. movie ticket sales have dropped 8% from last year.
When the Iraqi war started, consumer confidence picked up. More job cuts, disappointing earnings, and growing deaths from SARS will take consumer confidence down again, and to new lows.
The Fed's top monetary policy staffer said "the best policy for dealing with deflation is to avoid it strenuously by acting preemptively." Does preemptively mean waiting from 2001 to do something about deflation?
The weekend war news was so encouraging that the amateurs pounced on the markets in the early going yesterday, and then they got pounded. Before the day was over a significant reversal had taken place. After being up 242 points, The Dow staggered to a meager 21 point gain. The Nasdaq had gained over 3% and barely could hold a plus side of 7 points. The S&P 500 had been at 904 and ended almost unchanged at 880. When your entry point is poor, lessons from Wall Street can be expensive. Follow the leader doesn't hack it on the corner of Broad and Wall streets. In Iraq they take prisoners of war. The stock market doesn't take prisoners.
Another potentially lethal venue is SARS. We know over 100 people have now been killed, 2700 have been infected, and it has found its way into 16 countries. SARS targets the world.Yesterday India reported its first SARS case. We are aware that the disease is spread easily from person to person. It may have multiple ways to spread. It also originated in a part of the world that sees a great many travelers. There is no cure for SARS nor a vaccine. Fast recognition appears the only possible solution. The director of the CDC said yesterday "we may see further spread of the disease in this country...we don't know where this is going to go." It was suggested to avoid travel to Hong Kong, Hanoi, Singapore, and China. Hopefully, SARS will not be like the 1918 flu when more than 20 million people died.
Recently, retail sales have dropped 50% in Hong Kong.
Consumer credit for February increased $1.5 billion vs consensus of $3 billion. Total consumer debt is $1.74 trillion.
N.Y.C. will lay off 3400 workers in the next 30 days.
Citigroup will lay off additional traders and salesmen in its global equities business.
March consumer confidence in Tokyo worsened, and fell 1.5 points to 38.8. This reveals a serious level of pessimism.
U.K. retail sales last month fell the most in 11 years.
Our states are suffering their worst budget crises since WW II.
U.S. movie ticket sales have dropped 8% from last year.
When the Iraqi war started, consumer confidence picked up. More job cuts, disappointing earnings, and growing deaths from SARS will take consumer confidence down again, and to new lows.
The Fed's top monetary policy staffer said "the best policy for dealing with deflation is to avoid it strenuously by acting preemptively." Does preemptively mean waiting from 2001 to do something about deflation?
Monday, April 07, 2003
4/7/03 The Labor "Underutilization" Rate
There are about 5 million workers who have taken part-time jobs because they couldn't get full-time work. If you add them to the country's 8.5 million unemployed, plus discouraged job-seekers who have stopped looking for work, you have just under a 11% labor "underutilization" rate in February.
The labor pool is growing in substitute teaching. In the Chicago public schools the number of substitutes has about doubled in the past year to over 8000.
New York City has lost 223,000 jobs in the past two years. Local unemployment stands at a five year high of 8.6%. Last year applications for food stamps rose 20%. However, business is booming at pawnshops. People want cash rather than Rolex watches.
In 1997 William Strauss and Neil Howe wrote "The Fourth Turning:An American Prophecy". They predicted "a global terrorist group blows up an aircraft and announces it possesses portable nuclear weapons. The United States and its allies launch a preemptive strike. The terrorists threaten to retaliate against an American city. Congress declares war and authorizes unlimited house-to-house searches. Opponents charge the president concocted the emergency for political purposes." The authors predicted an era with 20 years of global crisis.
The Washington Times reports that 14 al Qaeda members are in Mexico working with Mexican crime organizations in an attempt to enter the U.S. covertly and conduct a terrorist attack.
Chemical Ali is dead.
Gordon Brown will deliver the UK's annual budget. The country's growth prospects will be cut.
The Pentagon says the U.S. military will govern Iraq for at least six months. Will that be a situation that pleases Tony Blair? He is our best friend on the global landscape.
Roger Clemens is five wins from the 300 club.
North Sea Brent crude oil declined to $23.50 per barrel. Gas at the pump is not coming down fast enough. It is way too high given current crude pricing.
For the first time the number of people in U.S. prisons and jails exceeds 2 million. That excludes juvenile offenders. This means that one in every 142 U.S. residents is imprisoned or in jail.
The Illinois legislative pension plan provides those with 20 years of government service to collect a pension based on 85% of the salary of their choosing, and they receive a 3% increase in their pensions after that. Pensions grow by 3% annually once an individual turns 60. Still this is not enough of a reward, in my view, for working a government job for 20 years. At the end of each day your soul pays too stiff a price.
Alan Greenspan: "Ownership of physical property is capable of being defended by police, the militia, or private mercenaries. Ownership of ideas is far less easily protected."
Some experts have linked SARS to a new form of coronavirus, other types are usually found in animals. Chinese specialists, however, link many SARS deaths to a rare form of the virus chlamydia, usually transmitted thru sexual contact.
In Texas Cash Today as well as Harrigans have filed for chapter 11.
This morning witnessed stocks soaring on the international markets; government bonds plunged in price and yields increased; the dollar rose to a 2-week high against the euro, yen, and Swiss franc; the Nikkei was up over 2%; and gold hit a 4-month low around $320.50 per ounce in Asia.
When the shelling in Baghdad ceases, stocks will plunge with fervor. Peace will not produce prosperity. Only jobs ring cash registers. The "underutilized" can tell you all about that.
There are about 5 million workers who have taken part-time jobs because they couldn't get full-time work. If you add them to the country's 8.5 million unemployed, plus discouraged job-seekers who have stopped looking for work, you have just under a 11% labor "underutilization" rate in February.
The labor pool is growing in substitute teaching. In the Chicago public schools the number of substitutes has about doubled in the past year to over 8000.
New York City has lost 223,000 jobs in the past two years. Local unemployment stands at a five year high of 8.6%. Last year applications for food stamps rose 20%. However, business is booming at pawnshops. People want cash rather than Rolex watches.
In 1997 William Strauss and Neil Howe wrote "The Fourth Turning:An American Prophecy". They predicted "a global terrorist group blows up an aircraft and announces it possesses portable nuclear weapons. The United States and its allies launch a preemptive strike. The terrorists threaten to retaliate against an American city. Congress declares war and authorizes unlimited house-to-house searches. Opponents charge the president concocted the emergency for political purposes." The authors predicted an era with 20 years of global crisis.
The Washington Times reports that 14 al Qaeda members are in Mexico working with Mexican crime organizations in an attempt to enter the U.S. covertly and conduct a terrorist attack.
Chemical Ali is dead.
Gordon Brown will deliver the UK's annual budget. The country's growth prospects will be cut.
The Pentagon says the U.S. military will govern Iraq for at least six months. Will that be a situation that pleases Tony Blair? He is our best friend on the global landscape.
Roger Clemens is five wins from the 300 club.
North Sea Brent crude oil declined to $23.50 per barrel. Gas at the pump is not coming down fast enough. It is way too high given current crude pricing.
For the first time the number of people in U.S. prisons and jails exceeds 2 million. That excludes juvenile offenders. This means that one in every 142 U.S. residents is imprisoned or in jail.
The Illinois legislative pension plan provides those with 20 years of government service to collect a pension based on 85% of the salary of their choosing, and they receive a 3% increase in their pensions after that. Pensions grow by 3% annually once an individual turns 60. Still this is not enough of a reward, in my view, for working a government job for 20 years. At the end of each day your soul pays too stiff a price.
Alan Greenspan: "Ownership of physical property is capable of being defended by police, the militia, or private mercenaries. Ownership of ideas is far less easily protected."
Some experts have linked SARS to a new form of coronavirus, other types are usually found in animals. Chinese specialists, however, link many SARS deaths to a rare form of the virus chlamydia, usually transmitted thru sexual contact.
In Texas Cash Today as well as Harrigans have filed for chapter 11.
This morning witnessed stocks soaring on the international markets; government bonds plunged in price and yields increased; the dollar rose to a 2-week high against the euro, yen, and Swiss franc; the Nikkei was up over 2%; and gold hit a 4-month low around $320.50 per ounce in Asia.
When the shelling in Baghdad ceases, stocks will plunge with fervor. Peace will not produce prosperity. Only jobs ring cash registers. The "underutilized" can tell you all about that.
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