11/5/05 The Equity Market Shrugs
The BLS Commisssioner: "Job growth in the remainder of the country appeared to be below trend in October. In addition, the direct impact of Hurricane Rita on the national employment data for October was judged to be minimal. It is possible, of course, that employment growth for the nation could have been held down by indirect effects of Hurricanes Katrina and Rita, for example, because of their impact on gas prices.(Hurricane Wilma made landfall after the October survey reference period.)"
Robin Williams: "See, the problem is that God gives men a brain and a penis, and only enough blood to run one at a time."
Berkshire Hathaway stated Hurricanes Katrina and Rita cost the company's insurance subsidiaries $2.99 billion in the third quarter and could end up costing the whole insurance industry $60 billion to $70 billion.
Friedrich Nietzsche: "A casual stroll through the lunatic asylum shows that faith does not prove anything."
Before taking a closer look at yesterday's employment report, let's touch on a few items:
(1) Frank Nothaft, VP and chief economist for Freddie Mac stated "we are forecasting that home equity extraction from the refinancing of prime first mortgage liens will result in extraction of $204 billion in 2005, up from $142 billion converted to cash in 2004." This home ATM helps to explain, at least in part, the continued high level of consumer spending while wage gains have trailed the rate of inflation. At the same time, with mortgage rates increasing along side the recent rise in 10-year treasury yields, it is doubtful that the consumer can depend on much home equity extraction in 2006.
(2) Last week the dollar index jumped 2% and rose above the 91 level. The euro fell to a 1 1/2 year low versus the dollar. As interest rates in the U.S. continue to rise, the ECB has chosen to keep their rates unchanged at 2%. The widening yield spread between the eurozone countries and those in Japan help to explain the bull move in the dollar index.
(3) 10-year treasury bond yields rose to 4.66%, the highest close sinceJune 2004. (4) the equity market shrugged off the weak employment report and rising government bond yields. Transports, for example, hit an all-time high during the weak. In my view, if the equity market is to mount a significant rally from here, then greater participation must come from the S&P100, the OEX.
Stanislaw Lem: "Is it progress if a cannibal uses a knife and fork?"
The U.S. nonfarm payrolls rose by 56,000 in October. However, the September number was revised downward to a loss of 8,000 jobs. In October the gains were among the usual suspects: service industry jobs rose by 7,000, construction by 33,000, temps by 11,000, financial activities by 22,000, and healthcare and social assistance by 23,000. A big swing took place in manufacturing with 19,000 Boeing machinists returning to work. Without that, manufacturing would have lost 7,000 jobs and the overall October gain would have been 37,000.
Kinky Friedman: "If you elect me the first Jewish justice of the peace, I'll reduce the speed limits to 54.95."
Talking about Boeing, remember that the company's stock is in the Dow. Boeing has built 145 C-17s since 1993. Each plane is sold for $175 million. The plane is built at their Long Beach plant, and the company has orders for another 35 more with the last delivery scheduled for 2008. According to the Seattle Times, the Air Force has stated "we got what we need." That would be a huge blow to Boeing and the 6,500 employees working at the facility in Long Beach. Boeing had expected an order for another 42 planes. Boeing has already annoucnced closing a Long Beach plant in 2006 after the last 717 is delivered.
Erma Bombeck: "Marriage has no guarantees. If that's what you're looking for, go live with a car battery."
GM has elected to sweeten cash rebates to $1,000 through November 13.
Steven Wright: "You know when you put a stick in water and it looks bent? That's why I never take baths."
Gold hit a 7-week low while zinc hit a new high.
Denis Leary: "I would never do crack... I would never do a drug named after a part of my own ass, okay?"
Global Insight released a study yesterday that found Wal-Mart saved each American household an average of $2,329 in 2004. In addition, the company had a net positive economic impact in the form of .9% increase in real wages and the creation of 210,000 jobs nationwide.
Rodney Dangerfield: "In the school I went to, they asked a kid to prove the law of gravity and he threw the teacher out of the window."
Regular unleaded gasoline was averaging $2.43 a gallon retail, AAA stated on Friday, down 20% from an all-time high $3.057 on Sept. 5. Before you go out and celebrate, consider what you paid on Nov. 4, 2004.
Dave Barry: "I do think we need to explore the commitment problem, which has caused many women to mistakenly conclude that men, as a group, have the emotional maturity of hamsters. This is not the case. A hamster is much more capable of making a lasting commitment to a woman, especially if she gives it those little food pellets. Whereas a guy, in a relationship, will consume the pellets of companionship, and he will run on the exercise wheel of lust; but as soon as he senses that the door of commitment is about to close and trap him in the wire cage of true intimacy, he'll squirm out, scamper across the kitchen floor of uncertainty and hide under the refrigerator of Non-Readiness."
Many Americans wonder what Bush's daily schedule looks like. Here is an example of a crucial meeting: The President will welcome President Ali Abdullah Saleh of the Republic of Yemento the White House on November 10. The two leaders will discuss a range of bilateral issues, including the President's Freedom Agenda and cooperation on the war on terrorism.
I know the Republic of Yemento is on everyone's lips.
In this week's Barron's in Michael Santoli's column, there is a bullish take on Saks suggesting "a share price above 23" and "the likelihood that greater value should be realized before too long."
According to the Washington Post, a textile agreement between the U.S. and China will be signed next week. The deal would begin on Jan. 1 and last through 2008 -- a concession by China, which wanted it to expire in 2007, a anonymous source was quoted as saying.
It would allow imports of most major textile and apparel products from China to increase by 8 to 10 percent in 2006, by 13 percent in 2007 and by 17 percent in 2008 -- a concession by the United States, which had proposed keeping annual growth close to 7.5 percent, according to the Post.
Although a few details remain to be resolved, the agreement is likely to be signed next week by U.S. Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai, the report said.
Douglas Adams: "I'm spending a year dead for tax reasons."
Saturday, November 05, 2005
Friday, November 04, 2005
Nose To Nose With Reality
11/4/05 Nose To Nose With Reality
A new AP-Ipsos poll found Bush's approval rating was at 37 percent, compared with 39 percent a month ago. About 59 percent of those surveyed said they disapproved, with 42 percent now saying they "strongly disapprove" of how Bush is handling his job — twice as many as the 20 percent who said they "strongly approve." In the AP-Ipsos poll, nearly one in five Republicans disapproved of Bush's handling of his job, compared with nearly nine in ten Democrats. Nearly seven in ten independents disapproved.
The president has lost support from some key groups of constituents over the past year. He's dropped 16 points in his approval rating with men in that time, 18 points with people who have a high school education or less, 16 points among Southerners and 13 points among Republicans.
Congress isn't faring much better. In early October, 35 percent of poll respondents approved of the job being done by Congress, down from 44 percent in February. In December 2004, soon after Bush's re-election, 51 percent approved of his handling of his job, while 47 disapproved, and 28 disapproved strongly.
"I'm surprised it's not even worse" in terms of Bush's latest poll numbers, said GOP consultant Rich Galen. He cited three months of unrelenting bad news that have Republicans "beginning to scratch their heads."
A new survey, the eighth in an annual series of cross-national surveys conducted by Harris Interactive, is the largest to examine health-care quality across several nations during the same period. The survey, published in the journal Health Affairs, questioned 6,957 adults who had recently been hospitalized, undergone surgery or reported health problems between March and June this year.
Nearly a third of U.S. patients reported spending more than $1,000 in out-of-pocket expenses for care. Canadians and Australians came next, with 14 percent of patients spending that much. The proportion reporting similarly high costs was far lower in the other countries.
Americans also were more likely to report forgoing needed treatment because of cost. About half of Americans said they had decided not to fill a prescription, see a doctor when they were sick or get recommended follow-up tests. About 38 percent of patients in New Zealand reported going without care, as did 34 percent in Australia, 28 percent in Germany, 26 percent in Canada and 13 percent in Britain.
About one-third of U.S. patients reported problems with the coordination of their care, such as when test results were not available at the time of their doctor's appointment or when doctors ordered duplicate tests. In the other countries, between 19 percent and 26 percent of patients reported similar problems.
Americans also reported the greatest number of medical errors. Thirty-four percent reported getting the wrong medication or dose, incorrect test results, a mistake in their treatment or care, or being notified late about abnormal test results. Thirty percent of Canadian patients, 27 percent of Australian patients, 25 percent of New Zealanders, 23 percent of Germans and 22 percent of Britons reported errors.
In addition to the findings in this survey, one must remember that at least 47 million Americans do not have health care insurance. This fact, combined with those crossing our borders illegally, creates an imploding health care system.
Ayn Rand: "Reality confronts man with a great many "musts," but all of them are conditional; the formula of realistic necessity is: "You must, if " and the "if" stands for man's choice"
Ten-year Treasury bonds traded yesterday at a 16-month high yield. Mortgage rates reached a 17-month high. In fact, one-year ARMs reached their highest rate in over 3 years. Homeowners with ARMs are beginning to feel the pinch. It's only a matter of time until foreclosures take off.
U.S. September factory orders declined by 1.7% with capital goods orders dropping a whopping 7.8%. Against that backdrop, the ISM Services Index for October rose to 60% from 53.3% in September.
Believe it or not the dollar rose to a 2-year high versus the yen and crossed the 117 level.
Cashmere is making the day at Saks Fifth Avenue. Their same-store sales for October rose by 10%. That's a great beginning for the holiday season.
A total of 520,,000 unemployment benefit claims have been filed since Katrina and Rita hit the Gulf Coast.
There is something wrong with this picture. For several quarters, corporate profits have risen in the double digits. Yet, unit labor costs declined 0.5% in this year's third quarter. In other words, employees produce the double digit gains, work their buns off; however, real wages are actually down 2.3% for the third quarter. Total compensation costs (wages paid + benefits) are down 1.5% on an inflation-adjusted basis. When do the employees get to eat a piece of the pie? If productivity rose 4.1% in the third quarter, who do you think was responsible for this gain? The tooth fairy?
Spitzer sued Guidant over their heart defibrillators, and claimed the company failed to inform doctors about a mechanical problem. The bad news is making it tough for J&J to stay the course.
Aluminum hit a 10-year high.
After a $2 gain yesterday, crude is holding above the $61 a barrel level.
Here is an example of your government at work. Through Nov. 2, there have been 5 meetings been the U.S. and China on textile imports. What has been accomplished? Are you sitting down? There is a new sock agreement, and it places a new quota of just over 10 million dozen pairs of imports of Chinese-made cotton, wool, and man-made fiber socks. Had there been no agreement reached, imports for the next 12 months would have been limited to sslightly more than 61 million dozzen pairs. Thank goodness for the Office of the U.S. Trade Representative.
“It’s turned from a seller’s market to a buyer’s market,” said Greg Spier, who builds large custom homes in suburban Boston. “The marketplace has become astute. There’s more inventory. People are becoming pickier. Maybe there’s eight to 10 homes to look at. A year ago maybe there were one to three.”
In the first nine months of 2005, China's trade surplus jumped to $68 billion from only $4 billion one year earlier.
Ambassador Joseph Wilson: "The documents (falsely alleging Iraqi procurements of 500 tons of yellow cake uranium from Niger) were known to be a forgery and the White House was so advised well in advance of the State of the Union speech."
Executive Order 12958 states unauthorized disclosure of classified information is grounds for losing one's securty clearance.
Dietrich Bonhoeffer: "To understand reality is not the same as to know about outward events. It is to perceive the essential nature of things. The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential. But on the other hand, knowledge of an apparently trivial detail quite often makes it possible to see into the depth of things. And so the wise man will seek to acquire the best possible knowledge about events, but always without becoming dependent upon this knowledge. To recognize the significant in the factual is wisdom."
A new AP-Ipsos poll found Bush's approval rating was at 37 percent, compared with 39 percent a month ago. About 59 percent of those surveyed said they disapproved, with 42 percent now saying they "strongly disapprove" of how Bush is handling his job — twice as many as the 20 percent who said they "strongly approve." In the AP-Ipsos poll, nearly one in five Republicans disapproved of Bush's handling of his job, compared with nearly nine in ten Democrats. Nearly seven in ten independents disapproved.
The president has lost support from some key groups of constituents over the past year. He's dropped 16 points in his approval rating with men in that time, 18 points with people who have a high school education or less, 16 points among Southerners and 13 points among Republicans.
Congress isn't faring much better. In early October, 35 percent of poll respondents approved of the job being done by Congress, down from 44 percent in February. In December 2004, soon after Bush's re-election, 51 percent approved of his handling of his job, while 47 disapproved, and 28 disapproved strongly.
"I'm surprised it's not even worse" in terms of Bush's latest poll numbers, said GOP consultant Rich Galen. He cited three months of unrelenting bad news that have Republicans "beginning to scratch their heads."
A new survey, the eighth in an annual series of cross-national surveys conducted by Harris Interactive, is the largest to examine health-care quality across several nations during the same period. The survey, published in the journal Health Affairs, questioned 6,957 adults who had recently been hospitalized, undergone surgery or reported health problems between March and June this year.
Nearly a third of U.S. patients reported spending more than $1,000 in out-of-pocket expenses for care. Canadians and Australians came next, with 14 percent of patients spending that much. The proportion reporting similarly high costs was far lower in the other countries.
Americans also were more likely to report forgoing needed treatment because of cost. About half of Americans said they had decided not to fill a prescription, see a doctor when they were sick or get recommended follow-up tests. About 38 percent of patients in New Zealand reported going without care, as did 34 percent in Australia, 28 percent in Germany, 26 percent in Canada and 13 percent in Britain.
About one-third of U.S. patients reported problems with the coordination of their care, such as when test results were not available at the time of their doctor's appointment or when doctors ordered duplicate tests. In the other countries, between 19 percent and 26 percent of patients reported similar problems.
Americans also reported the greatest number of medical errors. Thirty-four percent reported getting the wrong medication or dose, incorrect test results, a mistake in their treatment or care, or being notified late about abnormal test results. Thirty percent of Canadian patients, 27 percent of Australian patients, 25 percent of New Zealanders, 23 percent of Germans and 22 percent of Britons reported errors.
In addition to the findings in this survey, one must remember that at least 47 million Americans do not have health care insurance. This fact, combined with those crossing our borders illegally, creates an imploding health care system.
Ayn Rand: "Reality confronts man with a great many "musts," but all of them are conditional; the formula of realistic necessity is: "You must, if " and the "if" stands for man's choice"
Ten-year Treasury bonds traded yesterday at a 16-month high yield. Mortgage rates reached a 17-month high. In fact, one-year ARMs reached their highest rate in over 3 years. Homeowners with ARMs are beginning to feel the pinch. It's only a matter of time until foreclosures take off.
U.S. September factory orders declined by 1.7% with capital goods orders dropping a whopping 7.8%. Against that backdrop, the ISM Services Index for October rose to 60% from 53.3% in September.
Believe it or not the dollar rose to a 2-year high versus the yen and crossed the 117 level.
Cashmere is making the day at Saks Fifth Avenue. Their same-store sales for October rose by 10%. That's a great beginning for the holiday season.
A total of 520,,000 unemployment benefit claims have been filed since Katrina and Rita hit the Gulf Coast.
There is something wrong with this picture. For several quarters, corporate profits have risen in the double digits. Yet, unit labor costs declined 0.5% in this year's third quarter. In other words, employees produce the double digit gains, work their buns off; however, real wages are actually down 2.3% for the third quarter. Total compensation costs (wages paid + benefits) are down 1.5% on an inflation-adjusted basis. When do the employees get to eat a piece of the pie? If productivity rose 4.1% in the third quarter, who do you think was responsible for this gain? The tooth fairy?
Spitzer sued Guidant over their heart defibrillators, and claimed the company failed to inform doctors about a mechanical problem. The bad news is making it tough for J&J to stay the course.
Aluminum hit a 10-year high.
After a $2 gain yesterday, crude is holding above the $61 a barrel level.
Here is an example of your government at work. Through Nov. 2, there have been 5 meetings been the U.S. and China on textile imports. What has been accomplished? Are you sitting down? There is a new sock agreement, and it places a new quota of just over 10 million dozen pairs of imports of Chinese-made cotton, wool, and man-made fiber socks. Had there been no agreement reached, imports for the next 12 months would have been limited to sslightly more than 61 million dozzen pairs. Thank goodness for the Office of the U.S. Trade Representative.
“It’s turned from a seller’s market to a buyer’s market,” said Greg Spier, who builds large custom homes in suburban Boston. “The marketplace has become astute. There’s more inventory. People are becoming pickier. Maybe there’s eight to 10 homes to look at. A year ago maybe there were one to three.”
In the first nine months of 2005, China's trade surplus jumped to $68 billion from only $4 billion one year earlier.
Ambassador Joseph Wilson: "The documents (falsely alleging Iraqi procurements of 500 tons of yellow cake uranium from Niger) were known to be a forgery and the White House was so advised well in advance of the State of the Union speech."
Executive Order 12958 states unauthorized disclosure of classified information is grounds for losing one's securty clearance.
Dietrich Bonhoeffer: "To understand reality is not the same as to know about outward events. It is to perceive the essential nature of things. The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential. But on the other hand, knowledge of an apparently trivial detail quite often makes it possible to see into the depth of things. And so the wise man will seek to acquire the best possible knowledge about events, but always without becoming dependent upon this knowledge. To recognize the significant in the factual is wisdom."
The National Federation of Independent Business stated its monthly survey revealed member firms added 0.5 employees per business, on average, over the past three months. NFIB said U.S. small businesses expected to further expand their payrolls. The percentage of firms planning to hire, net of those who expect to cut jobs, held steady at a seasonally adjusted 17 percent in October, the same as in August and September.
Thursday, November 03, 2005
Misled Or Lies Or Both?
11/3/05 Misled Or Lies Or Both?
"We're finally going to ... have Phase 2 of the investigation regarding how the intelligence was used to lead us into the intractable war in Iraq," stated Democratic leader Harry Reid (D) of Nevada.
Who gave the State of the Union speech in January 2003? It wasn’t Cheney or Rove or Rumsfeld? At what point is there accountability at 1600 Pennsylvania Avenue? Those 16 words transformed our nation into an invader. Nixon gave the orders to "invade" the DNC. Did anyone get killed? He resigned from office. You get my drift?
Norman Angell: "The capitalist can only make a whole people go to war . . . by capturing the popular will. The only prophylactic against that situation is to make the public aware of the way in which it is being misled."
Mark Twain: "One of the most striking differences between a cat and a lie is that a cat has only nine lives." In this case, it has 2,028 lives and growing.
The IEA warned of a 50% oil price rise by 2030. With the current rate of inflation, that increase looks low.
Samsung aims to double revenue by 2010.
Do higher interest rates matter? With the 10-year Treasury bond at 4.61%, mortgage rates will rise once again.
Germany will raise the sales tax to 18%. That is not a misprint.
The J&J-Guidant situation is coming to a head. The best Guidant shareholders can receive is a lower price. How committed is J&J to this deal? In my view, the time to walk away was before the FTC approved the combination. Guidant is in a weak bargaining position. My thoughts remain the same. The price will not exceed $65 and could be closer to $60.
I might have been smart to stay away from Guidant and my uncommon values treated me well until I overstayed my welcome. My Dell/Hewlett hedge must have been generated from where I am sitting. That was my putz move for 2005. I apologize to anyone who followed my view on this.
Symantec cut its forecast and the stock got creamed. Mercury Interactive had some roblems with options and it ran into a brick wall. Macrovision missed its
earnings and sales targets and the company will cut jobs by 10%. McAfee provided a disappointing outlook. Novell will cut 600 jobs. Everything is not coming up rosy in tech land.
Ron Ellison: "A recently released report from the big banking firm(Citigroup) noted that every year since 1998 research analysts' forecasts have been either too strong or too shy by, you guessed it, 10 percent. And that's the good news. The bad news came in 2000 during the technology bubble when they were off a whopping 70 percent."
Challenger Gray & Christmas stated that layoffs rose by 13% in October to 81,301. Job rductions year-to-date are up 4.7% to 864,953 compared with 2004.
How is it that the API and the Energy Department have different takes on the weekly oil, gasoline, and distillate inventories? How do we know which one is right? Maybe neither is correct.
In the market place, however, heating oil traded at a 3-month low and natural gas at a 2-month low. The market is the ultimate authority.
In describing the Denver real estate market, Tony Sagami stated "in October, the house sales were up a measly 0.8% higher and the number of homes for sale is 12.4% higher than the same period last year."
A recent poll of Latin Americans in business, government, and education in six Latin American nations showed that just 17 percent of Argentinean leaders and 12 percent of leaders in Brazil viewed Bush positively.
The Miami Herald/University of Miami Business School/Zogby Elite Poll of 523 Latin America opinion leaders was conducted Aug. 17 through Sept. 15. It included respondents in the public and private sectors, mass media and academia in Mexico, Chile, Colombia, Venezuela, Brazil and Argentina.
Wal-Mart Stores, Inc reported net sales for the four-week period ending October 28, 2005. SAM'S CLUB comparable sales without gasoline sales would have been 4.8%for the October four-week period. Total U.S. comparable sales would have been 4.0% without the SAM'S gasoline sales. During the four-week and thirty-nine-week periods, Wal-Mart Stores, Inc. added over $2.2 billion and $20.6 billion in sales, respectively. They estimate comparable sales in the U.S. for the November four-week period to be in the 3 to 5 percent range.
Dr. Paul Zickler of DoctorSolve: "Medicare and You," the handbook designed to aid seniors in understanding Plan D, contains a critical mistake. It tells beneficiaries that if they qualify for an extra subsidy for their drug costs, every plan is available to them with no monthly premium. The truth is only the very basic plans have no premiums for those who qualify for extra assistance. The Centers for Medicare & Medicaid Services do not intend to correct the problem, but instead will rely on insurance companies to do it for them. "This is in fact the second blooper with 'Medicare and You,'" says Zickler. "The first printing omitted mention of the $2,850 coverage gap or donut hole. How many more mistakes are buried in its cumbersome text?"
The ECB maintained the 2% interest rate level.
Can you have a year-end tech rally without the participation of Intel, Cisco, and Microsoft?
CVS operates more than 5,400 stores in the United States, making it the largest drugstore chain by store count. However, it trails Walgreen Co. in revenue.
Adolf Hitler: "Make the lie big, make it simple, keep saying it, and eventually they will believe it."
"We're finally going to ... have Phase 2 of the investigation regarding how the intelligence was used to lead us into the intractable war in Iraq," stated Democratic leader Harry Reid (D) of Nevada.
Who gave the State of the Union speech in January 2003? It wasn’t Cheney or Rove or Rumsfeld? At what point is there accountability at 1600 Pennsylvania Avenue? Those 16 words transformed our nation into an invader. Nixon gave the orders to "invade" the DNC. Did anyone get killed? He resigned from office. You get my drift?
Norman Angell: "The capitalist can only make a whole people go to war . . . by capturing the popular will. The only prophylactic against that situation is to make the public aware of the way in which it is being misled."
Mark Twain: "One of the most striking differences between a cat and a lie is that a cat has only nine lives." In this case, it has 2,028 lives and growing.
The IEA warned of a 50% oil price rise by 2030. With the current rate of inflation, that increase looks low.
Samsung aims to double revenue by 2010.
Do higher interest rates matter? With the 10-year Treasury bond at 4.61%, mortgage rates will rise once again.
Germany will raise the sales tax to 18%. That is not a misprint.
The J&J-Guidant situation is coming to a head. The best Guidant shareholders can receive is a lower price. How committed is J&J to this deal? In my view, the time to walk away was before the FTC approved the combination. Guidant is in a weak bargaining position. My thoughts remain the same. The price will not exceed $65 and could be closer to $60.
I might have been smart to stay away from Guidant and my uncommon values treated me well until I overstayed my welcome. My Dell/Hewlett hedge must have been generated from where I am sitting. That was my putz move for 2005. I apologize to anyone who followed my view on this.
Symantec cut its forecast and the stock got creamed. Mercury Interactive had some roblems with options and it ran into a brick wall. Macrovision missed its
earnings and sales targets and the company will cut jobs by 10%. McAfee provided a disappointing outlook. Novell will cut 600 jobs. Everything is not coming up rosy in tech land.
Ron Ellison: "A recently released report from the big banking firm(Citigroup) noted that every year since 1998 research analysts' forecasts have been either too strong or too shy by, you guessed it, 10 percent. And that's the good news. The bad news came in 2000 during the technology bubble when they were off a whopping 70 percent."
Challenger Gray & Christmas stated that layoffs rose by 13% in October to 81,301. Job rductions year-to-date are up 4.7% to 864,953 compared with 2004.
How is it that the API and the Energy Department have different takes on the weekly oil, gasoline, and distillate inventories? How do we know which one is right? Maybe neither is correct.
In the market place, however, heating oil traded at a 3-month low and natural gas at a 2-month low. The market is the ultimate authority.
In describing the Denver real estate market, Tony Sagami stated "in October, the house sales were up a measly 0.8% higher and the number of homes for sale is 12.4% higher than the same period last year."
A recent poll of Latin Americans in business, government, and education in six Latin American nations showed that just 17 percent of Argentinean leaders and 12 percent of leaders in Brazil viewed Bush positively.
The Miami Herald/University of Miami Business School/Zogby Elite Poll of 523 Latin America opinion leaders was conducted Aug. 17 through Sept. 15. It included respondents in the public and private sectors, mass media and academia in Mexico, Chile, Colombia, Venezuela, Brazil and Argentina.
Wal-Mart Stores, Inc reported net sales for the four-week period ending October 28, 2005. SAM'S CLUB comparable sales without gasoline sales would have been 4.8%for the October four-week period. Total U.S. comparable sales would have been 4.0% without the SAM'S gasoline sales. During the four-week and thirty-nine-week periods, Wal-Mart Stores, Inc. added over $2.2 billion and $20.6 billion in sales, respectively. They estimate comparable sales in the U.S. for the November four-week period to be in the 3 to 5 percent range.
Dr. Paul Zickler of DoctorSolve: "Medicare and You," the handbook designed to aid seniors in understanding Plan D, contains a critical mistake. It tells beneficiaries that if they qualify for an extra subsidy for their drug costs, every plan is available to them with no monthly premium. The truth is only the very basic plans have no premiums for those who qualify for extra assistance. The Centers for Medicare & Medicaid Services do not intend to correct the problem, but instead will rely on insurance companies to do it for them. "This is in fact the second blooper with 'Medicare and You,'" says Zickler. "The first printing omitted mention of the $2,850 coverage gap or donut hole. How many more mistakes are buried in its cumbersome text?"
The ECB maintained the 2% interest rate level.
Can you have a year-end tech rally without the participation of Intel, Cisco, and Microsoft?
CVS operates more than 5,400 stores in the United States, making it the largest drugstore chain by store count. However, it trails Walgreen Co. in revenue.
Adolf Hitler: "Make the lie big, make it simple, keep saying it, and eventually they will believe it."
Wednesday, November 02, 2005
Not Surprising
11/2/05 Not Surprising
The gap between what Bay Area households earn and what they need to buy median-priced homes has grown by 21 percent in the past year, according to the California Association of Realtors (CAR).
CAR said on Tuesday that its quarterly income gap index showed a $100,670 shortfall in the Bay Area, the biggest in the state. Buyers of median-priced $721,850 homes in the region between July and September needed a household income of at least $169,180 to qualify for a typical mortgage.
Statewide, households with a median income of $54,140 are $73,810 short of the $127,950 qualifying income needed to purchase a median-priced home at $545,910. That's up 33.7 percent from last year's third quarter.
CAR calculates its index assuming a 20 percent down payment and a monthly payment for principal, interest, taxes and insurance that is no more than 30 percent of a household's income.
The Fed funds rate and the prime rate are both at their highest point in 4 1/2 years.
Knight Ridder Inc.'s largest shareholder, Private Capital Management LP, wants the nation's second-biggest newspaper publisher to seek a buyer. After spiking higher yesterday on this news, I would be careful about buying stock at these levels.
About 1,500 Boeing machinists went on strike at 12:01 a.m. Wednesday after last-minute talks broke down between their union and the company unit that operates the Delta rocket program.
Australian authorities have received specific intelligence that terrorists are planning an attack on the country, Prime Minister John Howard said Wednesday.
A greater number of Web shoppers will boost holiday spending online to $18 billion this year, a 25 percent increase from 2004, according to a new report by analyst Carrie Johnson of Forrester Research in Boston.
Web shoppers' average household income is $68,000. 2.5 million new households are expected to shop online in 2005, bringing the total to 42 million, or 39 percent of U.S. households.
"These folks may not spend as much as they had originally planned because of rising expenses, but they will keep online sales steady," Johnson said.
The Nikkei traded at a 4-year high.
GM and Ford vehicle sales declined about 25% in October. The domestic market share of the Big Three U.S. automakers slipped to 52.4% from 56.8% a year ago.
Yesterday, natural gas traded at a 2-month low.
The ISM October report had few surprises as the price index rose to 84% from Sept.’s 78%. New orders slipped to 61.7% from 63.8%, but the employment index improved a bit to 55% from 53.1%.
Continental Airlines will be the first U.S. carrier to fly non-stop from our shores to India. They will start non-stop service from NYC to India.
ContraryInvestor.com: "In the past 10 months, Asia has purchased all of $30 billion in U.S. treasuries…The U.K. has purchased $80 billion."
According to LBO Wire, a service published by Dow Jones Newsletters, Saks Inc. "is likely to start a formal sale process for its remaining assets including the flagship Saks Fifth Avenue sometime early next year…Several buyout firms would potentially be interested in the assets, including Bain Capital, Texas Pacific Group, Blackstone Group, Leonard Green & Partners, Thomas H. Lee Partners and Kohlberg Kravis Roberts & Co. A source for this article stated that "Saks Fifth Avenue will have a much higher valuation than Northern Department Stores." If blood is flowing to your brain, you would know that. The brand and the real estate combine to create a generous valuation.
According to Boise’s Idaho Statesman newspaper, Larry Johnston, Albertsons Inc. president, chairman and chief executive officer, could walk away with an estimated $40 million if the Boise company is sold. Johnston could receive about $35 million of the $40 million from the value of his stock options. That bunch of money provides an incentive to sell Albertsons to the highest bidder.
Barry Ritholtz: "The market’s tone has becoming increasingly firmer as of late. The many technical, internal and seasonal factors we track suggest that a modest short-term bottom is being formed. While the bottom has not been fully formed, we are becoming increasingly more comfortable shifting towards a Bullish position (however briefly that may be). We would be even more aggressive if several confirming factors showed improvements.
Regardless, we find that the elements are slowly coming together to support at least a modest year end rally, with a short-term bottom made sometime in early-mid November, and a projected top in mid-December…our expectations for a rally are modest: a 10% move for the Nasdaq 100; the SPX runs into difficulties in the 1280-90 area. Dow Industrials could see 11,400.
Beyond New Year’s Eve we become increasingly Bearish."
Scott Burns provides a list of some of the problems confronting Main Street Americans: •With the typical household consuming about 1,000 gallons of gas a year, an increase from $1.50 a gallon to $3 a gallon means a purchasing power loss of $1,500.•Rate increases for electricity and natural gas.•Rising medical co-pays and other out-of-pocket expenses for health care, plus rising employee insurance premium costs. Premium costs were up 10 percent in 2004 alone.Another way to see the same thing is to examine wage gains. In 2004 the average weekly earnings of private, nonagricultural workers rose by only 2.2 percent. The consumer price index rose by 3.3 percent over the same period. This year has been a replay — year-over-year wage gains are running less than 3 percent, while inflation has ramped up toward 4 percent. And all this assumes we believe the price index is an accurate reflection of the inflation we experience.
Cutera raised its 2005 revenue forecast to $73.6 million from $70 million, as well as its earnings forecast to 87 cents a share from 62 cents a share. It cited better-than-expected third-quarter results and its fourth-quarter outlook for the higher 2005 forecast.
U.S. consumer attitudes have worsened in the past two weeks, ABC News and the Washington Post reported Tuesday. The ABC/Post consumer comfort index fell to negative 21 in the latest week from negative 19 the previous week and negative 17 two weeks ago. The year's low came in mid-September at negative 23.
Gerda Lerner: "We can learn from history how past generations thought and acted, how they responded to the demands of their time and how they solved their problems. We can learn by analogy, not by example, for our circumstances will always be different than theirs were. The main thing history can teach us is that human actions have consequences and that certain choices, once made, cannot be undone. They foreclose the possibility of making other choices and thus they determine future events."
Deutsche Telecom to cut 19,000 jobs.
With many consumers concernedabout higher prices of goods, especially oil and gas, overall spending during the holidays this year could well be lower than it was last year. According to the latest Experian-Gallup Personal Credit Index(SM) survey, 32 percent of consumers expect to spend less this year, while just 12 percent expect to spend more and 56 percent expect to spend about the same.
At least 2,028 members of the U.S. military have died since the beginning of the Iraq war in March 2003. Yesterday Rumsfeld discussed sending moreof our troops to Iraq. How many members of Congress and the Bush administration have or have had family members sent to Iraq to fight in this war?
For fiscal 2006, Beazer Homes expects to earn $10.50 per share.
Ambassador Joseph Wilson: "We the People must know who, precisely, inserted those sixteen words on uranium from Niger into the State of the Union speech, who precisely over-ruled the Department of State and the Central Itelligence Agency when they objected, and who precisely participated in an on-going cover-up of this falsehood until well after the elections...The public has a right to demand, at least, the resignations of Cheney, Rice, Rove, and Rumsfeld."
The gap between what Bay Area households earn and what they need to buy median-priced homes has grown by 21 percent in the past year, according to the California Association of Realtors (CAR).
CAR said on Tuesday that its quarterly income gap index showed a $100,670 shortfall in the Bay Area, the biggest in the state. Buyers of median-priced $721,850 homes in the region between July and September needed a household income of at least $169,180 to qualify for a typical mortgage.
Statewide, households with a median income of $54,140 are $73,810 short of the $127,950 qualifying income needed to purchase a median-priced home at $545,910. That's up 33.7 percent from last year's third quarter.
CAR calculates its index assuming a 20 percent down payment and a monthly payment for principal, interest, taxes and insurance that is no more than 30 percent of a household's income.
The Fed funds rate and the prime rate are both at their highest point in 4 1/2 years.
Knight Ridder Inc.'s largest shareholder, Private Capital Management LP, wants the nation's second-biggest newspaper publisher to seek a buyer. After spiking higher yesterday on this news, I would be careful about buying stock at these levels.
About 1,500 Boeing machinists went on strike at 12:01 a.m. Wednesday after last-minute talks broke down between their union and the company unit that operates the Delta rocket program.
Australian authorities have received specific intelligence that terrorists are planning an attack on the country, Prime Minister John Howard said Wednesday.
A greater number of Web shoppers will boost holiday spending online to $18 billion this year, a 25 percent increase from 2004, according to a new report by analyst Carrie Johnson of Forrester Research in Boston.
Web shoppers' average household income is $68,000. 2.5 million new households are expected to shop online in 2005, bringing the total to 42 million, or 39 percent of U.S. households.
"These folks may not spend as much as they had originally planned because of rising expenses, but they will keep online sales steady," Johnson said.
The Nikkei traded at a 4-year high.
GM and Ford vehicle sales declined about 25% in October. The domestic market share of the Big Three U.S. automakers slipped to 52.4% from 56.8% a year ago.
Yesterday, natural gas traded at a 2-month low.
The ISM October report had few surprises as the price index rose to 84% from Sept.’s 78%. New orders slipped to 61.7% from 63.8%, but the employment index improved a bit to 55% from 53.1%.
Continental Airlines will be the first U.S. carrier to fly non-stop from our shores to India. They will start non-stop service from NYC to India.
ContraryInvestor.com: "In the past 10 months, Asia has purchased all of $30 billion in U.S. treasuries…The U.K. has purchased $80 billion."
According to LBO Wire, a service published by Dow Jones Newsletters, Saks Inc. "is likely to start a formal sale process for its remaining assets including the flagship Saks Fifth Avenue sometime early next year…Several buyout firms would potentially be interested in the assets, including Bain Capital, Texas Pacific Group, Blackstone Group, Leonard Green & Partners, Thomas H. Lee Partners and Kohlberg Kravis Roberts & Co. A source for this article stated that "Saks Fifth Avenue will have a much higher valuation than Northern Department Stores." If blood is flowing to your brain, you would know that. The brand and the real estate combine to create a generous valuation.
According to Boise’s Idaho Statesman newspaper, Larry Johnston, Albertsons Inc. president, chairman and chief executive officer, could walk away with an estimated $40 million if the Boise company is sold. Johnston could receive about $35 million of the $40 million from the value of his stock options. That bunch of money provides an incentive to sell Albertsons to the highest bidder.
Barry Ritholtz: "The market’s tone has becoming increasingly firmer as of late. The many technical, internal and seasonal factors we track suggest that a modest short-term bottom is being formed. While the bottom has not been fully formed, we are becoming increasingly more comfortable shifting towards a Bullish position (however briefly that may be). We would be even more aggressive if several confirming factors showed improvements.
Regardless, we find that the elements are slowly coming together to support at least a modest year end rally, with a short-term bottom made sometime in early-mid November, and a projected top in mid-December…our expectations for a rally are modest: a 10% move for the Nasdaq 100; the SPX runs into difficulties in the 1280-90 area. Dow Industrials could see 11,400.
Beyond New Year’s Eve we become increasingly Bearish."
Scott Burns provides a list of some of the problems confronting Main Street Americans: •With the typical household consuming about 1,000 gallons of gas a year, an increase from $1.50 a gallon to $3 a gallon means a purchasing power loss of $1,500.•Rate increases for electricity and natural gas.•Rising medical co-pays and other out-of-pocket expenses for health care, plus rising employee insurance premium costs. Premium costs were up 10 percent in 2004 alone.Another way to see the same thing is to examine wage gains. In 2004 the average weekly earnings of private, nonagricultural workers rose by only 2.2 percent. The consumer price index rose by 3.3 percent over the same period. This year has been a replay — year-over-year wage gains are running less than 3 percent, while inflation has ramped up toward 4 percent. And all this assumes we believe the price index is an accurate reflection of the inflation we experience.
Cutera raised its 2005 revenue forecast to $73.6 million from $70 million, as well as its earnings forecast to 87 cents a share from 62 cents a share. It cited better-than-expected third-quarter results and its fourth-quarter outlook for the higher 2005 forecast.
U.S. consumer attitudes have worsened in the past two weeks, ABC News and the Washington Post reported Tuesday. The ABC/Post consumer comfort index fell to negative 21 in the latest week from negative 19 the previous week and negative 17 two weeks ago. The year's low came in mid-September at negative 23.
Gerda Lerner: "We can learn from history how past generations thought and acted, how they responded to the demands of their time and how they solved their problems. We can learn by analogy, not by example, for our circumstances will always be different than theirs were. The main thing history can teach us is that human actions have consequences and that certain choices, once made, cannot be undone. They foreclose the possibility of making other choices and thus they determine future events."
Deutsche Telecom to cut 19,000 jobs.
With many consumers concernedabout higher prices of goods, especially oil and gas, overall spending during the holidays this year could well be lower than it was last year. According to the latest Experian-Gallup Personal Credit Index(SM) survey, 32 percent of consumers expect to spend less this year, while just 12 percent expect to spend more and 56 percent expect to spend about the same.
At least 2,028 members of the U.S. military have died since the beginning of the Iraq war in March 2003. Yesterday Rumsfeld discussed sending moreof our troops to Iraq. How many members of Congress and the Bush administration have or have had family members sent to Iraq to fight in this war?
For fiscal 2006, Beazer Homes expects to earn $10.50 per share.
Ambassador Joseph Wilson: "We the People must know who, precisely, inserted those sixteen words on uranium from Niger into the State of the Union speech, who precisely over-ruled the Department of State and the Central Itelligence Agency when they objected, and who precisely participated in an on-going cover-up of this falsehood until well after the elections...The public has a right to demand, at least, the resignations of Cheney, Rice, Rove, and Rumsfeld."
Tuesday, November 01, 2005
Looking Out
11/1/05 Looking Out
Slowing home sales and higher prices are trends that are expected to continue next year, according to a forecast released Friday at the National Association of Realtors Conference in San Francisco. David Lereah, NAR's chief economist, said existing home sales are projected to decline nationally in 2006 by 3.5 percent to 6.86 million and new home sales are expected to fall 4.5 percent to 1.24 million next year. Next year's figures for 2006 would be the second highest year for each sector. The national median existing-home price for all housing types, after jumping about 12.4 percent to $208,100 for all of this year, is projected to grow by 5.3 percent in 2006 to $219,200. The median new-home price is seen increasing 4.1 percent to $230,200 in 2005, and then rise more sharply next year as higher construction costs work into the market. The typical new home price is forecast to rise 7.3 percent in 2006 to $247,000.
"We are in the process of setting a fifth consecutive annual record for both existing- and new-home sales, but the market will be coming off of a five-year boom and experience a soft landing next year," Lereah said. "An uptrend in mortgage interest rates will cause some slowing of the sales pace, but we forecast 2006 to be the second highest year on record and housing will continue to support the overall economy." Total housing starts this year are forecast to be the highest since 1972, rising 5.7 percent to 2.06 million units, before declining 4.6 percent to 1.97 million in 2006.
"Baby boomers remain in their peak earning years. Their children - the 'echo boomers' - are just entering the period of life when people typically buy their first home. Immigrants, who have been arriving in strong numbers for many years, are buying in to the American Dream," Lereah said. "The market transition will result in a cooling of home price gains, but it'll be fair to say housing activity will remain healthy for some time to come."
The 30-year fixed-rate mortgage is projected to rise slowly to 6.7 percent by the end of next year. "As interest rates rise and home sales ease, it should help to bring the market closer to equilibrium between home buyers and sellers," Lereah said. "That is expected to take pressure off of home prices and allow appreciation to settle to a more normal pace in 2006."
Yesterday’s attacks in Iraq brought the number of Americans killed in October to 92, the highest monthly toll since January, when 106 American troops were killed in violence ahead of national elections there. This month's death toll and January's have been surpassed only twice since the war began: in November 2004 and in April 2004.
JFK: "The wave of the future is not the conquest of the world by a single dogmatic creed but the liberation of the diverse energies of free nations and free men."
Italian Prime Minister Berlusconi: “I tried to get Bush to not invade Iraq.”
It is rare that I am impressed. Last evening I watched a taped speech on C-SPAN that Joseph Wilson delivered to the National Press Club. He spoke for well over 30 minutes without notes. His facts were precise and he spoke with absolute clarity and immense self-confidence. I truly recommend that all Americans take the time to listen to this talk. I would hope it will be re-played and/or a tape may be available.
According to the St. Louis Business Journal, Saks is mulling the sale of Club Libby Lu.
Saks Inc. said Monday it was exploring options for its Club Libby Lu unit as it sheds stores nationwide. Club Libby Lu, a retailer for "tween" girls, has 56 U.S. stores. Among potential buyers could be St. Louis-based Build-A-Bear Workshop Inc., Too Inc. and Claire's Stores Inc., reports said. According to the NY Post, R. Brad Martin, the chief executive of Saks Fifth Avenue, has told financial and industry sources that he would like to continue running the company’s crown jewel, Saks Fifth Avenue, until a long-awaited turnaround takes hold. I strongly believe there have been strategic buyers waiting to purchase the crown jewel and that shareholders will soon see the buyers come forward. In the meantime, Saks may pay a substantial dividend from the funds received in the sale to Bon-Ton and from Club Libby Lu.
The Commerce Department stated consumer spending rose 0.5 percent in September, and this reversed a 0.5 percent August decline. Adjusted for inflation, real spending dropped 0.4% in September and 1% in August. Personal income also increased 1.7 percent last month, compared with a 0.9 percent decrease in August, the department said. The September PCE rose 0.9%, the biggest increase since Feb. 1981.
For the month of October, crude declined about 10% and natural gas approximately 15%. Unleaded gas hit an 11-week low at $2.49. Yesterday, crude closed below the $60-a-barrel mark for the first time since July 21. The dollar rose to a 2-year high against the yen, and my trade here is going in the wrong direction. The October Chicago PMI rose to 62.9% from September’s 57.9%.
The U.S. Treasury borrowed $52 billion in this year’s third quarter, expects to borrow a net $96 billion in this year’s fourth quarter, and a staggering $171 billion in the first quarter of 2006. With that type of borrowing, do you think 2-year Treasury bonds will remain at a yield of 4.40%? Don’t you think rising short-term yields will become significant competition for the equity market?
Barrick Gold offered to buy Placer Dome for about $9.2 billion in cash and stock. Barrick stated it will pay a maximum $1.22 billion in cash and issue a maximum 303 million shares under the deal. Many of Barrick’s operating mines, development projects and exploration sites are located near those of Placer Dome. Maybe Barrrick will tweak the final terms, but, in my opinion, most of the appreciation in Placer Dome took place yesterday.
Lockheed Martin Corp and three private-equity firms are focusing on a purchase price for Computer Sciences Corp. of about $64 to $65 a share, The Wall Street Journal reported.
Dell expects 3rd quarter earnings of 39 cents, about one penny shy of estimates, and revenues will be slightly below its prior outlook. The stock is now knocking on the $30 level. This year has not been kind to Dell stockholders.
Hughes Supply is one of the nation’s largest diversified wholesale distributors of construction, repair and maintenance-related products with over 500 locations in 40 states. Yesterday, the company raised its third quarter sales and earnings outlook. In addition, its Board of Directors formed a Special Committee to explore strategic alternatives in order to maximize shareholder value That news drove the stock to a new all-time high of $35+ in after hours trading. The company retained Lehman as its financial advisor. Not being currently familiar with the company, I will need to do some homework to evaluate the potential in this situation.
Judge Alito’s mother was quite forthcoming and stated that her son is against abortion. Bush’s base must consist solely of men.
Continuing their inability to make a correct decision, the White House announced yesterday that John Hannah would replace Libby as Cheney's national-security adviser. Libby faces his first court appearance Thursday before U.S. District Judge Reggie Walton on charges of perjury, making false statements and obstruction of justice. He is expected to plead not guilty. The White House also announced that David S. Addington, who's been Cheney's legal counsel, would assume Libby's duties as chief of staff.
Addington reportedly helped draft an opinion by then-White House counsel Alberto Gonzales stating that the Geneva Conventions didn't apply to some detainees in the war on terrorism. On June 26, 2002, the Iraqi National Congress, the INC, wrote a letter to the Senate Appropriations Committee staff identifying Hannah as the White House recipient of information gathered by the group through a U.S.-funded effort called the Information Collection Program. The information turned out to be false.
Eric Hoffer: "In times of change, learners inherit the Earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Yesterday Bush tried to change the subject with the nomination of Alito. Today it’s a talk on the avian flu. His knowledge on this subject should overwhelm the nation. I thought Bush would be the worst president in our country’s history, but he has exceeded my worst fears and his daily explorations and decisions are for the record books.
Doug Wakefield points out that, “according to Investors Intelligence, bullish sentiment on the stock market has now had 158 straight weeks with more bulls than bears. In the 42 years that this has been tracked, this is the longest streak of bulls outnumbering bears. It is currently even 6 weeks longer than the 152 weeks that bulls outnumbered bears as we experienced the Crash of 2000.”
Let's say the FTC approves the J&J-Guidant deal today. What happens next? In my view, J&J is in the catbird seat. Going forward, J&J does not need this deal. Given the past product problems at Guidant, I see little upside potential for their shareholders and plenty of risk if J&J takes a walk. Do I believe the deal will occur? Yes, but at a price near present levels.
The DivaCup(TM), manufactured out of medical grade silicon, may become the next generation of feminine hygiene.
In pre-market trading, Lucent has dropped 3.5% to $2.75. Dell has declined to $30.25. This is not a very auspicious beginning to the month of November.
Elaine Maxwell: "My will shall shape the future. Whether I fail or succeed shall be no man's doing but my own. I am the force; I can clear any obstacle before me or I can be lost in the maze. My choice; my responsibility; win or lose, only I hold the key to my destiny."
Slowing home sales and higher prices are trends that are expected to continue next year, according to a forecast released Friday at the National Association of Realtors Conference in San Francisco. David Lereah, NAR's chief economist, said existing home sales are projected to decline nationally in 2006 by 3.5 percent to 6.86 million and new home sales are expected to fall 4.5 percent to 1.24 million next year. Next year's figures for 2006 would be the second highest year for each sector. The national median existing-home price for all housing types, after jumping about 12.4 percent to $208,100 for all of this year, is projected to grow by 5.3 percent in 2006 to $219,200. The median new-home price is seen increasing 4.1 percent to $230,200 in 2005, and then rise more sharply next year as higher construction costs work into the market. The typical new home price is forecast to rise 7.3 percent in 2006 to $247,000.
"We are in the process of setting a fifth consecutive annual record for both existing- and new-home sales, but the market will be coming off of a five-year boom and experience a soft landing next year," Lereah said. "An uptrend in mortgage interest rates will cause some slowing of the sales pace, but we forecast 2006 to be the second highest year on record and housing will continue to support the overall economy." Total housing starts this year are forecast to be the highest since 1972, rising 5.7 percent to 2.06 million units, before declining 4.6 percent to 1.97 million in 2006.
"Baby boomers remain in their peak earning years. Their children - the 'echo boomers' - are just entering the period of life when people typically buy their first home. Immigrants, who have been arriving in strong numbers for many years, are buying in to the American Dream," Lereah said. "The market transition will result in a cooling of home price gains, but it'll be fair to say housing activity will remain healthy for some time to come."
The 30-year fixed-rate mortgage is projected to rise slowly to 6.7 percent by the end of next year. "As interest rates rise and home sales ease, it should help to bring the market closer to equilibrium between home buyers and sellers," Lereah said. "That is expected to take pressure off of home prices and allow appreciation to settle to a more normal pace in 2006."
Yesterday’s attacks in Iraq brought the number of Americans killed in October to 92, the highest monthly toll since January, when 106 American troops were killed in violence ahead of national elections there. This month's death toll and January's have been surpassed only twice since the war began: in November 2004 and in April 2004.
JFK: "The wave of the future is not the conquest of the world by a single dogmatic creed but the liberation of the diverse energies of free nations and free men."
Italian Prime Minister Berlusconi: “I tried to get Bush to not invade Iraq.”
It is rare that I am impressed. Last evening I watched a taped speech on C-SPAN that Joseph Wilson delivered to the National Press Club. He spoke for well over 30 minutes without notes. His facts were precise and he spoke with absolute clarity and immense self-confidence. I truly recommend that all Americans take the time to listen to this talk. I would hope it will be re-played and/or a tape may be available.
According to the St. Louis Business Journal, Saks is mulling the sale of Club Libby Lu.
Saks Inc. said Monday it was exploring options for its Club Libby Lu unit as it sheds stores nationwide. Club Libby Lu, a retailer for "tween" girls, has 56 U.S. stores. Among potential buyers could be St. Louis-based Build-A-Bear Workshop Inc., Too Inc. and Claire's Stores Inc., reports said. According to the NY Post, R. Brad Martin, the chief executive of Saks Fifth Avenue, has told financial and industry sources that he would like to continue running the company’s crown jewel, Saks Fifth Avenue, until a long-awaited turnaround takes hold. I strongly believe there have been strategic buyers waiting to purchase the crown jewel and that shareholders will soon see the buyers come forward. In the meantime, Saks may pay a substantial dividend from the funds received in the sale to Bon-Ton and from Club Libby Lu.
The Commerce Department stated consumer spending rose 0.5 percent in September, and this reversed a 0.5 percent August decline. Adjusted for inflation, real spending dropped 0.4% in September and 1% in August. Personal income also increased 1.7 percent last month, compared with a 0.9 percent decrease in August, the department said. The September PCE rose 0.9%, the biggest increase since Feb. 1981.
For the month of October, crude declined about 10% and natural gas approximately 15%. Unleaded gas hit an 11-week low at $2.49. Yesterday, crude closed below the $60-a-barrel mark for the first time since July 21. The dollar rose to a 2-year high against the yen, and my trade here is going in the wrong direction. The October Chicago PMI rose to 62.9% from September’s 57.9%.
The U.S. Treasury borrowed $52 billion in this year’s third quarter, expects to borrow a net $96 billion in this year’s fourth quarter, and a staggering $171 billion in the first quarter of 2006. With that type of borrowing, do you think 2-year Treasury bonds will remain at a yield of 4.40%? Don’t you think rising short-term yields will become significant competition for the equity market?
Barrick Gold offered to buy Placer Dome for about $9.2 billion in cash and stock. Barrick stated it will pay a maximum $1.22 billion in cash and issue a maximum 303 million shares under the deal. Many of Barrick’s operating mines, development projects and exploration sites are located near those of Placer Dome. Maybe Barrrick will tweak the final terms, but, in my opinion, most of the appreciation in Placer Dome took place yesterday.
Lockheed Martin Corp and three private-equity firms are focusing on a purchase price for Computer Sciences Corp. of about $64 to $65 a share, The Wall Street Journal reported.
Dell expects 3rd quarter earnings of 39 cents, about one penny shy of estimates, and revenues will be slightly below its prior outlook. The stock is now knocking on the $30 level. This year has not been kind to Dell stockholders.
Hughes Supply is one of the nation’s largest diversified wholesale distributors of construction, repair and maintenance-related products with over 500 locations in 40 states. Yesterday, the company raised its third quarter sales and earnings outlook. In addition, its Board of Directors formed a Special Committee to explore strategic alternatives in order to maximize shareholder value That news drove the stock to a new all-time high of $35+ in after hours trading. The company retained Lehman as its financial advisor. Not being currently familiar with the company, I will need to do some homework to evaluate the potential in this situation.
Judge Alito’s mother was quite forthcoming and stated that her son is against abortion. Bush’s base must consist solely of men.
Continuing their inability to make a correct decision, the White House announced yesterday that John Hannah would replace Libby as Cheney's national-security adviser. Libby faces his first court appearance Thursday before U.S. District Judge Reggie Walton on charges of perjury, making false statements and obstruction of justice. He is expected to plead not guilty. The White House also announced that David S. Addington, who's been Cheney's legal counsel, would assume Libby's duties as chief of staff.
Addington reportedly helped draft an opinion by then-White House counsel Alberto Gonzales stating that the Geneva Conventions didn't apply to some detainees in the war on terrorism. On June 26, 2002, the Iraqi National Congress, the INC, wrote a letter to the Senate Appropriations Committee staff identifying Hannah as the White House recipient of information gathered by the group through a U.S.-funded effort called the Information Collection Program. The information turned out to be false.
Eric Hoffer: "In times of change, learners inherit the Earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Yesterday Bush tried to change the subject with the nomination of Alito. Today it’s a talk on the avian flu. His knowledge on this subject should overwhelm the nation. I thought Bush would be the worst president in our country’s history, but he has exceeded my worst fears and his daily explorations and decisions are for the record books.
Doug Wakefield points out that, “according to Investors Intelligence, bullish sentiment on the stock market has now had 158 straight weeks with more bulls than bears. In the 42 years that this has been tracked, this is the longest streak of bulls outnumbering bears. It is currently even 6 weeks longer than the 152 weeks that bulls outnumbered bears as we experienced the Crash of 2000.”
Let's say the FTC approves the J&J-Guidant deal today. What happens next? In my view, J&J is in the catbird seat. Going forward, J&J does not need this deal. Given the past product problems at Guidant, I see little upside potential for their shareholders and plenty of risk if J&J takes a walk. Do I believe the deal will occur? Yes, but at a price near present levels.
The DivaCup(TM), manufactured out of medical grade silicon, may become the next generation of feminine hygiene.
In pre-market trading, Lucent has dropped 3.5% to $2.75. Dell has declined to $30.25. This is not a very auspicious beginning to the month of November.
Elaine Maxwell: "My will shall shape the future. Whether I fail or succeed shall be no man's doing but my own. I am the force; I can clear any obstacle before me or I can be lost in the maze. My choice; my responsibility; win or lose, only I hold the key to my destiny."
Monday, October 31, 2005
Around The Globe
10/31/05 Around The Globe
Jonathan Alter, Newsweek’s Senior Editor and Columnist: "According
to Fitzgerald, Libby had conversations with at least seven other government
officials about Joseph and Valerie Wilson that he did not disclose to the
grand jury. Why were top White House officials and Vice President Cheney so
concerned about an obscure former diplomat like Wilson? Because he had the
temerity to offer public dissent. By showing how evidence of Saddam's WMDs had
been cooked, Wilson undermined the very reason Augie Schroeder and the rest of
the U.S. military went to war. He was more than "fair game," as Karl Rove
called him. He was a mortal threat."
The Chinese Academy of International Trade and Economic Cooperation stated that China’s exports and imports are expected to total $1.6 trillion in 2006, an increase of 15% from this year. It should be noted that, during the recent annual two-week Canton fair, orders for textile exports to the U.S. dropped 44% from last year to $310 million.
Japan’s central bank stated that deflation would end this year and that consumer prices would rise by 0.1%. It is expected that there will be a gradual increase in short-term interest rates; however, they will remain at “very low” levels.
According to the WSJ, Saks plans to sell its northern department-store unit to Bon-Ton for $1.1 billion, possibly signaling a sale of the rest of the firm. The sale involves 142 stores in 16 states, such as, Carson Pirie Scott, Younker’s, and Herberger’s, with annual sales of $2.2 billion. I continue to believe that, with Goldman Sachs representing Saks in negotiations, a significant price will be achieved for the Saks Fifth Avenue stores, and thus create approximately $22.50 per share for the shareholders. In my view, the current price of $16.66 does not reflect the potential value within Saks.
Lenders expect to process $2.26 trillion of home loans next year, down from this year's expected $2.78 trillion and sharply lower than 2003's record of nearly $4 trillion worth of loans processed. "As rates move up there'll be more consolidation, mergers and people leaving the business," said Ray Morris, a director of business development at GMAC Mortgage Corp.'s subservicing business. Lenders are cutting loan fees, and some lenders are willing to offer lower mortgage rates even if it takes away from their profits.
"Companies are losing money to keep market share," said Douglas Duncan, chief economist at the Mortgage Bankers Association. "The consumer is being subsidized because the competition is so fierce. For the short run, the consumer is getting a better deal."
This week, India celebrates the festivals of Diwali and Eid al-Fitr.
Tomorrow I anticipate, along with just about everyone else on Wall Street, that the Fed will raise interest rates to 4%.
Crude is somewhat lower this morning at $60.74 a barrel.
I would expect that shortly Goldman Sachs and Blackstone Group should have some positive news out of the bidding groups for Albertsons.
John Hussman: “You can control actions, not outcomes. If you focus on controlling outcomes, you'll find yourself constantly reacting and overreacting to insignificant deviations from what you think you “should” be achieving, and your actions are going to be dictated by an enormous amount of noise.”
ZAP is a California environmentally conscious alternative vehicle distributor. The company has purchased 20% of Obvio! of Brazil. ZAP ordered 50,000 minicars from Obvio!. "What we're getting here is Italian-style quality that people know and love -- with Chinese pricing," said Steve Schneider, ZAP's chief executive. "That sounds like a winning combination to me."
The Obvio! 828, a three-passenger microcar designed for city driving, grabbed ZAP's attention first. Modeled after a similar vehicle briefly sold in Brazil in the 1980s, the 828 will be equipped with a four-cylinder, 1.6-liter, 170-horsepower engine designed to go from zero to 60 miles per hour in just 5.2 seconds.
Obvio! is also developing a sportier model called the 012, with extra horsepower and a race-car design. The 828 is expected to retail for about $14,000, while the price tag on the 012 should be twice that amount.
Both cars will be small enough to fit sideways in a parallel parking space, and will be engineered to run on gasoline or ethanol, or any mix of the two. They will also come with a personal computer on the dashboard that runs Windows XP, allowing drivers to download music and digital radio streams.
Novartis AG agreed to terms with Chiron Corp. (CHIR) to buy the remaining 58% it didn't already own in the U.S. drugmaker for $5.1 billion, or $45 a share.
Reverend Frank Bates: "It is important to remember that from the beginning our
nation has experienced numerous calamities and challenges. With respect to
Thanksgiving, we sometimes forget that the Pilgrims lost over half their
families to starvation and disease in the terrible winter of l620. They could easily have given in to hopelessness and despair. Instead, in the midst of their grief, with hope and faith, they continued to pursue their dreams. The following year, they reaped a bountiful harvest and proclaimed a time of celebration, giving birth to our own Thanksgiving Day."
General Motors Corp plans to explore making hybrid cars for China with its main partner in the country, SAIC Motor Corp. LTD, targeting their introduction by 2008.
Japan's Orix Corp. will purchase Houlihan Lokey Howard & Zukin for $500 million.
Wal-Mart may expand in India.
Economic stats for today: Core PCE Deflator (Sept), personal consumption and personal income (Sept),
and the Oct. Chicago PMI.
Add another hand-me-down to the list. Bush will nominate Samuel Alito to fill the vacancy on the Supreme Court. Alito had been appointed by Bush's father to the Third Circuit court. I trust this nomination shall please the base as well as Scalia.
Elizabeth Dole speaking of her husband Bob Dole: "Sometimes I think we're the only two lawyers in Washington
who trust each other."
Jonathan Alter, Newsweek’s Senior Editor and Columnist: "According
to Fitzgerald, Libby had conversations with at least seven other government
officials about Joseph and Valerie Wilson that he did not disclose to the
grand jury. Why were top White House officials and Vice President Cheney so
concerned about an obscure former diplomat like Wilson? Because he had the
temerity to offer public dissent. By showing how evidence of Saddam's WMDs had
been cooked, Wilson undermined the very reason Augie Schroeder and the rest of
the U.S. military went to war. He was more than "fair game," as Karl Rove
called him. He was a mortal threat."
The Chinese Academy of International Trade and Economic Cooperation stated that China’s exports and imports are expected to total $1.6 trillion in 2006, an increase of 15% from this year. It should be noted that, during the recent annual two-week Canton fair, orders for textile exports to the U.S. dropped 44% from last year to $310 million.
Japan’s central bank stated that deflation would end this year and that consumer prices would rise by 0.1%. It is expected that there will be a gradual increase in short-term interest rates; however, they will remain at “very low” levels.
According to the WSJ, Saks plans to sell its northern department-store unit to Bon-Ton for $1.1 billion, possibly signaling a sale of the rest of the firm. The sale involves 142 stores in 16 states, such as, Carson Pirie Scott, Younker’s, and Herberger’s, with annual sales of $2.2 billion. I continue to believe that, with Goldman Sachs representing Saks in negotiations, a significant price will be achieved for the Saks Fifth Avenue stores, and thus create approximately $22.50 per share for the shareholders. In my view, the current price of $16.66 does not reflect the potential value within Saks.
Lenders expect to process $2.26 trillion of home loans next year, down from this year's expected $2.78 trillion and sharply lower than 2003's record of nearly $4 trillion worth of loans processed. "As rates move up there'll be more consolidation, mergers and people leaving the business," said Ray Morris, a director of business development at GMAC Mortgage Corp.'s subservicing business. Lenders are cutting loan fees, and some lenders are willing to offer lower mortgage rates even if it takes away from their profits.
"Companies are losing money to keep market share," said Douglas Duncan, chief economist at the Mortgage Bankers Association. "The consumer is being subsidized because the competition is so fierce. For the short run, the consumer is getting a better deal."
This week, India celebrates the festivals of Diwali and Eid al-Fitr.
Tomorrow I anticipate, along with just about everyone else on Wall Street, that the Fed will raise interest rates to 4%.
Crude is somewhat lower this morning at $60.74 a barrel.
I would expect that shortly Goldman Sachs and Blackstone Group should have some positive news out of the bidding groups for Albertsons.
John Hussman: “You can control actions, not outcomes. If you focus on controlling outcomes, you'll find yourself constantly reacting and overreacting to insignificant deviations from what you think you “should” be achieving, and your actions are going to be dictated by an enormous amount of noise.”
ZAP is a California environmentally conscious alternative vehicle distributor. The company has purchased 20% of Obvio! of Brazil. ZAP ordered 50,000 minicars from Obvio!. "What we're getting here is Italian-style quality that people know and love -- with Chinese pricing," said Steve Schneider, ZAP's chief executive. "That sounds like a winning combination to me."
The Obvio! 828, a three-passenger microcar designed for city driving, grabbed ZAP's attention first. Modeled after a similar vehicle briefly sold in Brazil in the 1980s, the 828 will be equipped with a four-cylinder, 1.6-liter, 170-horsepower engine designed to go from zero to 60 miles per hour in just 5.2 seconds.
Obvio! is also developing a sportier model called the 012, with extra horsepower and a race-car design. The 828 is expected to retail for about $14,000, while the price tag on the 012 should be twice that amount.
Both cars will be small enough to fit sideways in a parallel parking space, and will be engineered to run on gasoline or ethanol, or any mix of the two. They will also come with a personal computer on the dashboard that runs Windows XP, allowing drivers to download music and digital radio streams.
Novartis AG agreed to terms with Chiron Corp. (CHIR) to buy the remaining 58% it didn't already own in the U.S. drugmaker for $5.1 billion, or $45 a share.
Reverend Frank Bates: "It is important to remember that from the beginning our
nation has experienced numerous calamities and challenges. With respect to
Thanksgiving, we sometimes forget that the Pilgrims lost over half their
families to starvation and disease in the terrible winter of l620. They could easily have given in to hopelessness and despair. Instead, in the midst of their grief, with hope and faith, they continued to pursue their dreams. The following year, they reaped a bountiful harvest and proclaimed a time of celebration, giving birth to our own Thanksgiving Day."
General Motors Corp plans to explore making hybrid cars for China with its main partner in the country, SAIC Motor Corp. LTD, targeting their introduction by 2008.
Japan's Orix Corp. will purchase Houlihan Lokey Howard & Zukin for $500 million.
Wal-Mart may expand in India.
Economic stats for today: Core PCE Deflator (Sept), personal consumption and personal income (Sept),
and the Oct. Chicago PMI.
Add another hand-me-down to the list. Bush will nominate Samuel Alito to fill the vacancy on the Supreme Court. Alito had been appointed by Bush's father to the Third Circuit court. I trust this nomination shall please the base as well as Scalia.
Elizabeth Dole speaking of her husband Bob Dole: "Sometimes I think we're the only two lawyers in Washington
who trust each other."
Sunday, October 30, 2005
Bits And Pieces
10/30/05 Bits And Pieces
For the October reporting period, Wal-Mart’s U.S. comp sales rose approximately 4.3%. The company stated that, without gasoline, the increase would have been about 30 basis points less.
Will Bush nominate Luttig, Alito, or Owen to the Supreme Court tomorrow?
Since January 2004, the Pentagon estimates that there have been 26,000 Iraqi casualties. If I’m correct, we invaded Iraq in March 2003.
Mike Burk: “The last trading day of October and the first 4 trading days of November are some of the strongest days of the year. This period during the 1st year of the Presidential Cycle has not been quite as strong as the average for all years, still, for the OTC the average return since 1965 has been nearly 1.5%.”
In case you had not noticed, recently the Fed has accelerated the pace of the M-2 and M-3 money supply. This is an effort to stimulate spending and increase demand for goods and services. Once again, too much government leads to too much debt, too little savings, and the on-going devaluation of our dollar. If you believe the Bush administration has produced less government, then you need to see a proctologist.
When the 2008 election comes around, John McCain will be 71.
Improved living standards bring an increasing demand for sugar. China's official statistics predict the country will need extra 2 million tons of sugar, in addition to its production expectation of 9.5 million tons this year. The country's total demand for the 2005-2006 refining season will stand at 11.5 million tons.
Soaring demand by China's prosperous food industries and outputfalls in sugar cane are to blame, according to Feng Zuhua, the top economic official at China's biggest sugar cane producer, Guangxi Zhuang Autonomous Region.
The region accounts for 60 percent of China's annual output of sugar cane, a major source for sugar. The cane is mainly planted in southern provinces. Sugar beets are harvested in northeastern provinces and northwestern Xinjiang Uygur Autonomous Region.
In my view, the long term trend for sugar demand is rising. Whether it is China or India or Korea or some other developing country, greater wealth creates more demand for sweets and therefore sugar. Before you get on your health high-horse, a teaspoon of sugar has but 16 calories.
Senate Budget Committee Chairman Judd Gregg (R-N.H.) called for the reinstatement of a windfall profits tax on oil companies.
OPEC's president Sheikh Ahmad al-Fahd al-Sabah stated yesterday that, after recent decreases, oil prices were approaching a level acceptable to both consumers and producers.
James Madison: ""The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse."
For the October reporting period, Wal-Mart’s U.S. comp sales rose approximately 4.3%. The company stated that, without gasoline, the increase would have been about 30 basis points less.
Will Bush nominate Luttig, Alito, or Owen to the Supreme Court tomorrow?
Since January 2004, the Pentagon estimates that there have been 26,000 Iraqi casualties. If I’m correct, we invaded Iraq in March 2003.
Mike Burk: “The last trading day of October and the first 4 trading days of November are some of the strongest days of the year. This period during the 1st year of the Presidential Cycle has not been quite as strong as the average for all years, still, for the OTC the average return since 1965 has been nearly 1.5%.”
In case you had not noticed, recently the Fed has accelerated the pace of the M-2 and M-3 money supply. This is an effort to stimulate spending and increase demand for goods and services. Once again, too much government leads to too much debt, too little savings, and the on-going devaluation of our dollar. If you believe the Bush administration has produced less government, then you need to see a proctologist.
When the 2008 election comes around, John McCain will be 71.
Improved living standards bring an increasing demand for sugar. China's official statistics predict the country will need extra 2 million tons of sugar, in addition to its production expectation of 9.5 million tons this year. The country's total demand for the 2005-2006 refining season will stand at 11.5 million tons.
Soaring demand by China's prosperous food industries and outputfalls in sugar cane are to blame, according to Feng Zuhua, the top economic official at China's biggest sugar cane producer, Guangxi Zhuang Autonomous Region.
The region accounts for 60 percent of China's annual output of sugar cane, a major source for sugar. The cane is mainly planted in southern provinces. Sugar beets are harvested in northeastern provinces and northwestern Xinjiang Uygur Autonomous Region.
In my view, the long term trend for sugar demand is rising. Whether it is China or India or Korea or some other developing country, greater wealth creates more demand for sweets and therefore sugar. Before you get on your health high-horse, a teaspoon of sugar has but 16 calories.
Senate Budget Committee Chairman Judd Gregg (R-N.H.) called for the reinstatement of a windfall profits tax on oil companies.
OPEC's president Sheikh Ahmad al-Fahd al-Sabah stated yesterday that, after recent decreases, oil prices were approaching a level acceptable to both consumers and producers.
James Madison: ""The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse."
Saturday, October 29, 2005
The Truth
10/29/05 The Truth
Patrick Fitzgerald: "The truth is the engine of our judicial system."
The Special Prosecutor's investigation continues--- in the pursuit of the truth. It should be noted that, at the inception of the 22-month investigation, he did speak with Bush and Cheney. They were not under oath. I envision Mrs. Wilson filing a civil lawsuit against the Bush administration. (You remember the Paula Jones suit against Bill Clinton?) I am confident that both Bush and Cheney will be forced to testify under oath.
Andrew Jackson: "One person with courage makes a majority."
When an individual officially becomes president, he places his handle on the bible and takes the oath of office. That oath is a solemn one. It has deep meaning. We will discover whether that oath was demeaned and undermined. We will discover who is fit to serve and not serve the citizens of our country.
Dr. Karl Menninger: " One of the most untruthful things possible, you know, is a collection of facts, because they can be made to appear so many different ways."
The Commerce Dept's first reading on 3rd quarter GDP growth was a rate of 3.8%. What were the main engines for that growth--- July and August auto sales resulting from incentive packages, post-hurricane government spending, and consumers spending at a 3.9% annual rate. The latter will not continue as wages and salaries for all civilian workers grew by just 2.3%, the smallest amount in 25 years in the 12 months that ended in September. Adjusted for inflation, which is running at an annual rate of 4.7%, actual pay fell by 2.3%.
Lee Scott, Wal-Mart's CEO: "Our customers simply don't have the money to buy basic necessities between paychecks."
The U.S. has a shortage of drilling rigs.
China says its trade surplus may triple this year to $90 billion.
Pimco's Bill Gross: "We are due for what appears to be a 2% or less GDP growth rate in 2006, a rate sure to stop the Fed and to induce eventual ease at some point later in the year."
Will the AMT finally be eliminated in 2006?
According to the OMB, the mortgage interest deduction saves homeowners $76 billion a year.
According to the deal.com, "in an attempt to bolster their bids, the CVS Kroger buyout team are trying to attract strategic buyers for Albertson's to join their consortia."
Since 2001, rents in San Francisco have fallen 19%. Meanwhile, only 11% can afford to purchase a home or condo in that city. When it doesn't make sense, maybe it's time to reverse course.
Microsoft has $40 billion in cash and will spend $19 billion of that amount on a stock-buyback program by December 2006.
According to Women's Wear Daily, citing unnamed sources, Saks was again in acquisition talks with Bon-Ton Stores Inc. The two are said to be negotiating an agreement for Bon-Ton to buy Saks' Northern Department Store division, which includes moderate-priced retailers such as Carson Pirie Scott, Herberger's and Bergner's.
Talks fell apart last month after the two reportedly couldn't agree on a price. Saks wanted $1.5 billion and Bon-Ton was offering $1 billion, according to Women's Wear Daily.
Albert Einstein: " Truth is what stands the test of experience."
Patrick Fitzgerald: "The truth is the engine of our judicial system."
The Special Prosecutor's investigation continues--- in the pursuit of the truth. It should be noted that, at the inception of the 22-month investigation, he did speak with Bush and Cheney. They were not under oath. I envision Mrs. Wilson filing a civil lawsuit against the Bush administration. (You remember the Paula Jones suit against Bill Clinton?) I am confident that both Bush and Cheney will be forced to testify under oath.
Andrew Jackson: "One person with courage makes a majority."
When an individual officially becomes president, he places his handle on the bible and takes the oath of office. That oath is a solemn one. It has deep meaning. We will discover whether that oath was demeaned and undermined. We will discover who is fit to serve and not serve the citizens of our country.
Dr. Karl Menninger: " One of the most untruthful things possible, you know, is a collection of facts, because they can be made to appear so many different ways."
The Commerce Dept's first reading on 3rd quarter GDP growth was a rate of 3.8%. What were the main engines for that growth--- July and August auto sales resulting from incentive packages, post-hurricane government spending, and consumers spending at a 3.9% annual rate. The latter will not continue as wages and salaries for all civilian workers grew by just 2.3%, the smallest amount in 25 years in the 12 months that ended in September. Adjusted for inflation, which is running at an annual rate of 4.7%, actual pay fell by 2.3%.
Lee Scott, Wal-Mart's CEO: "Our customers simply don't have the money to buy basic necessities between paychecks."
The U.S. has a shortage of drilling rigs.
China says its trade surplus may triple this year to $90 billion.
Pimco's Bill Gross: "We are due for what appears to be a 2% or less GDP growth rate in 2006, a rate sure to stop the Fed and to induce eventual ease at some point later in the year."
Will the AMT finally be eliminated in 2006?
According to the OMB, the mortgage interest deduction saves homeowners $76 billion a year.
According to the deal.com, "in an attempt to bolster their bids, the CVS Kroger buyout team are trying to attract strategic buyers for Albertson's to join their consortia."
Since 2001, rents in San Francisco have fallen 19%. Meanwhile, only 11% can afford to purchase a home or condo in that city. When it doesn't make sense, maybe it's time to reverse course.
Microsoft has $40 billion in cash and will spend $19 billion of that amount on a stock-buyback program by December 2006.
According to Women's Wear Daily, citing unnamed sources, Saks was again in acquisition talks with Bon-Ton Stores Inc. The two are said to be negotiating an agreement for Bon-Ton to buy Saks' Northern Department Store division, which includes moderate-priced retailers such as Carson Pirie Scott, Herberger's and Bergner's.
Talks fell apart last month after the two reportedly couldn't agree on a price. Saks wanted $1.5 billion and Bon-Ton was offering $1 billion, according to Women's Wear Daily.
Albert Einstein: " Truth is what stands the test of experience."
Thursday, October 27, 2005
Out Of Favor
10/28/05 Out Of Favor
September durable goods orders declined 2.1%. Non-transportation orders dropped 1% for the month.
The total number of hurricane-related jobless claims amounts to 502,000.
September U.S. new home sales rose 2.1% but that is after August's 11.6% decline. Sales in Sept. were flat with one year ago. At the current monthly sales rate, inventories equate to a supply of 4.9 months, and that is the same as the level in August.
Since Bush became president in 2001, the SBA budget has been cut in half. The 2006 budget is $593 million, down from $1.1 billion in 2001. By comparison, the Pentagon budget is just under $400 million.
Shurgard is exploring strategic alternatives. Public Storage continues to pursue the company.
Pertaining to seeking strategic alternatives, this is an avenue that was previously announced by Saks Inc. In July, they sold Proffitt's and McRae's to Belk Stores for $622 million or roughly 90 cents on the sales dollar. In May 2005 Carlos Slim added to his 10% + ownership in Saks at the $16+ level. After rising to $24 during the summer, the stock has dropped back to $15.80, and yesterday was the first time since March 2005 that the stock had closed below $16. It is clearly out of favor. The company has essentially three separate groupings:
1) Parisian, Younkers, Carson Pirie Scott, Herberger's, Bergner's, Boston Store, Off 5th Ave.- this grouping has 143 stores 2) 48 Club Libby Lu stores and 3) Saks Fifth Ave. which operates 57 stores in 25 states with approximately 15,000 employees. In my opinion, numbers 1 and 2 will be sold. The value could approach $1.3 billion. It should be noted that the total company has debt of $763 million or 26% of the entire capitalization. There is $250 million in cash on the books and inventories amounting to about $1.28 billion. It should be noted that the average transaction at Saks Fifth Ave. is up 7%. The customer is buying more in the stores.
At $ 15.80, Saks is valued at $2.25 billion, and, in my view, does not reflect the enterprise value of the company. Net of debt, a value closer to $22.50 per share would, in my opinion, more clearly reflect a realistic assessment of the company's worth. Should Saks Fifth Ave. improve its operating margins and have better expense control, then the value could move to a higher level. That is certainly doable.
Figures from the Organization for Economic Cooperation and Development show that each U.S. household of four spends more than $600 a year because of tariffs that cause higher prices on farm goods and taxes that go to subsidies.
30-year mortgage rates hit 6.15%.
In yesterday's trading, within the Dow, there were 4 stocks down for every one higher.
Microsoft's quarterly sales rose 6%.
Will today be the day Fitzgerald announces indictments stemming from
obstruction of justice, perjury, and making false statements?
The Snowman and Helicopter Ben do not believe there is a housing bubble, and I do not believe our nation has inflation.
September durable goods orders declined 2.1%. Non-transportation orders dropped 1% for the month.
The total number of hurricane-related jobless claims amounts to 502,000.
September U.S. new home sales rose 2.1% but that is after August's 11.6% decline. Sales in Sept. were flat with one year ago. At the current monthly sales rate, inventories equate to a supply of 4.9 months, and that is the same as the level in August.
Since Bush became president in 2001, the SBA budget has been cut in half. The 2006 budget is $593 million, down from $1.1 billion in 2001. By comparison, the Pentagon budget is just under $400 million.
Shurgard is exploring strategic alternatives. Public Storage continues to pursue the company.
Pertaining to seeking strategic alternatives, this is an avenue that was previously announced by Saks Inc. In July, they sold Proffitt's and McRae's to Belk Stores for $622 million or roughly 90 cents on the sales dollar. In May 2005 Carlos Slim added to his 10% + ownership in Saks at the $16+ level. After rising to $24 during the summer, the stock has dropped back to $15.80, and yesterday was the first time since March 2005 that the stock had closed below $16. It is clearly out of favor. The company has essentially three separate groupings:
1) Parisian, Younkers, Carson Pirie Scott, Herberger's, Bergner's, Boston Store, Off 5th Ave.- this grouping has 143 stores 2) 48 Club Libby Lu stores and 3) Saks Fifth Ave. which operates 57 stores in 25 states with approximately 15,000 employees. In my opinion, numbers 1 and 2 will be sold. The value could approach $1.3 billion. It should be noted that the total company has debt of $763 million or 26% of the entire capitalization. There is $250 million in cash on the books and inventories amounting to about $1.28 billion. It should be noted that the average transaction at Saks Fifth Ave. is up 7%. The customer is buying more in the stores.
At $ 15.80, Saks is valued at $2.25 billion, and, in my view, does not reflect the enterprise value of the company. Net of debt, a value closer to $22.50 per share would, in my opinion, more clearly reflect a realistic assessment of the company's worth. Should Saks Fifth Ave. improve its operating margins and have better expense control, then the value could move to a higher level. That is certainly doable.
Figures from the Organization for Economic Cooperation and Development show that each U.S. household of four spends more than $600 a year because of tariffs that cause higher prices on farm goods and taxes that go to subsidies.
30-year mortgage rates hit 6.15%.
In yesterday's trading, within the Dow, there were 4 stocks down for every one higher.
Microsoft's quarterly sales rose 6%.
Will today be the day Fitzgerald announces indictments stemming from
obstruction of justice, perjury, and making false statements?
The Snowman and Helicopter Ben do not believe there is a housing bubble, and I do not believe our nation has inflation.
Facts
10/27/05 Facts
PetroKazakhstan Inc. announced today that the acquisition of the Company for US$55.00 cash per share by CNPCInternational Ltd. ("CNPC") pursuant to a Court-approved Plan of Arrangement has closed. Shareholders will receive payment for their shares from Computershare Trust Company of Canada within the next few days.
Yesterday was my 1400th post using blogger software. Over the years the software has provided enormous benefits and almost no difficulties. The transition to ownership by Google has been seemless and improvements have continued.
According to a U.S. Minerals Management Service report Wednesday, 68 percent of daily oil production and 56 percent of daily gas production in the Gulf of Mexico remained shut-in. Much of the recent build up in crude inventories is due to the refining damage caused by Katrina and Rita.
As of Oct. 15, according to the Pentagon, 15,220 members of the U.S. military had been wounded in action since the Iraqi operation began in March 2003 -- 542 during the war that ousted Iraqi President Saddam Hussein and 14,678 since U.S. troops began battling the insurgency. Nearly half of those wounded were injured severely enough that they could not return to duty within 72 hours.
As of Oct. 15, according to the Pentagon, 15,220 members of the U.S. military had been wounded in action since the Iraqi operation began in March 2003 -- 542 during the war that ousted Iraqi President Saddam Hussein and 14,678 since U.S. troops began battling the insurgency. Nearly half of those wounded were injured severely enough that they could not return to duty within 72 hours.
At San Francisco's SBC Park at 7:30 yesterday morning,
about 150 people -- out of 4,300 applicants -- showed up for a lottery for 20 new condos. Luxury condos that normally fetch $500,000 to $1.3 million were being offered at $85,000 to $233,000.
According to the American Express 2006 Global Business Travel Forecast,
for U.S. business fliers, airlines' reduced schedules and high fuel costs will push airfares up 5 percent to 8 percent on domestic economy-class flights, and up 2 percent to 6 percent on international business-class flights.
Rising demand and a limited number of new hotel rooms will drive higher-end hotel rates up 2 percent to 5 percent and midrange hotel rates up to 3 percent higher in the United States.
Car-rental companies are likely to charge as much as 7 percent to 8 percent more as they face steeper costs related to maintaining their fleets, Matthew Davis, London-based director of global consulting at American Express, stated.
Pulte Homes CEO Richard J. Dugas said that the company expects full-year earnings of $5.35 to $5.45 a share, based on the year-to-date performance.
Previously, the company expected 2005 earnings of $5 to $5.25 a share, adjusted for a stock split. Pulte said its board approved a $100-million increase in the company's share buyback authorization, bringing the total to $120 million.
10-year Treasury bond yields rose yesterday to 4.59%, a 7-month high, and 2-year yields hit 4.36%, the highest point since Feb. 2001.
Bunge revised higher its 2005 profit outlook and now sees net income of $3.97 to $4.13 a share, assuming stable currencies in South America and Europe.
On Oct. 27, 1997, the Dow plummeted 554 points or 7%.
The London Metal Exchange (LME) copper price averaged $1.704 per pound in the 2005 third quarter, compared with $1.293 in the corresponding 2004 period and $1.537 in the 2005 second quarter.
Problems with physician access and abundant sales force coordination have led pharmaceutical companies to plan and prepare for potential sales force reductions, notes a study from pharmaceutical research firm Cutting Edge Information. Increasing challenges in the US pharmaceutical market are affecting themore than 90,000 drug reps that call on doctors. As physician access difficulties increase, pharmaceutical executives consider reducing their salesforce numbers to achieve the same results with fewer reps.
George Bernard Shaw: "If you can't get rid of the skeleton in your closet, you'd best teach it to dance."
PetroKazakhstan Inc. announced today that the acquisition of the Company for US$55.00 cash per share by CNPCInternational Ltd. ("CNPC") pursuant to a Court-approved Plan of Arrangement has closed. Shareholders will receive payment for their shares from Computershare Trust Company of Canada within the next few days.
Yesterday was my 1400th post using blogger software. Over the years the software has provided enormous benefits and almost no difficulties. The transition to ownership by Google has been seemless and improvements have continued.
According to a U.S. Minerals Management Service report Wednesday, 68 percent of daily oil production and 56 percent of daily gas production in the Gulf of Mexico remained shut-in. Much of the recent build up in crude inventories is due to the refining damage caused by Katrina and Rita.
As of Oct. 15, according to the Pentagon, 15,220 members of the U.S. military had been wounded in action since the Iraqi operation began in March 2003 -- 542 during the war that ousted Iraqi President Saddam Hussein and 14,678 since U.S. troops began battling the insurgency. Nearly half of those wounded were injured severely enough that they could not return to duty within 72 hours.
As of Oct. 15, according to the Pentagon, 15,220 members of the U.S. military had been wounded in action since the Iraqi operation began in March 2003 -- 542 during the war that ousted Iraqi President Saddam Hussein and 14,678 since U.S. troops began battling the insurgency. Nearly half of those wounded were injured severely enough that they could not return to duty within 72 hours.
At San Francisco's SBC Park at 7:30 yesterday morning,
about 150 people -- out of 4,300 applicants -- showed up for a lottery for 20 new condos. Luxury condos that normally fetch $500,000 to $1.3 million were being offered at $85,000 to $233,000.
According to the American Express 2006 Global Business Travel Forecast,
for U.S. business fliers, airlines' reduced schedules and high fuel costs will push airfares up 5 percent to 8 percent on domestic economy-class flights, and up 2 percent to 6 percent on international business-class flights.
Rising demand and a limited number of new hotel rooms will drive higher-end hotel rates up 2 percent to 5 percent and midrange hotel rates up to 3 percent higher in the United States.
Car-rental companies are likely to charge as much as 7 percent to 8 percent more as they face steeper costs related to maintaining their fleets, Matthew Davis, London-based director of global consulting at American Express, stated.
Pulte Homes CEO Richard J. Dugas said that the company expects full-year earnings of $5.35 to $5.45 a share, based on the year-to-date performance.
Previously, the company expected 2005 earnings of $5 to $5.25 a share, adjusted for a stock split. Pulte said its board approved a $100-million increase in the company's share buyback authorization, bringing the total to $120 million.
10-year Treasury bond yields rose yesterday to 4.59%, a 7-month high, and 2-year yields hit 4.36%, the highest point since Feb. 2001.
Bunge revised higher its 2005 profit outlook and now sees net income of $3.97 to $4.13 a share, assuming stable currencies in South America and Europe.
On Oct. 27, 1997, the Dow plummeted 554 points or 7%.
The London Metal Exchange (LME) copper price averaged $1.704 per pound in the 2005 third quarter, compared with $1.293 in the corresponding 2004 period and $1.537 in the 2005 second quarter.
Problems with physician access and abundant sales force coordination have led pharmaceutical companies to plan and prepare for potential sales force reductions, notes a study from pharmaceutical research firm Cutting Edge Information. Increasing challenges in the US pharmaceutical market are affecting themore than 90,000 drug reps that call on doctors. As physician access difficulties increase, pharmaceutical executives consider reducing their salesforce numbers to achieve the same results with fewer reps.
George Bernard Shaw: "If you can't get rid of the skeleton in your closet, you'd best teach it to dance."
Wednesday, October 26, 2005
Trends
10/26/05 Trends
The median price of a home in the California Realtors' Santa Clara region was up 16.3 percent to $733,000, compared to September 2004. Sales were down 9.1 percent.
The median price rose at the same rate in Santa Cruz county to $750,000, while sales dropped 15.2 percent.
In the Monterey region, the median price shot up 13.4 percent to $712,800 as sales dropped 4.8 percent.
In the Bay Area, the price was up 10.5 percent as sales fell 8.5 percent.
Statewide, the median price hit $544,000 in September, up 17 percent from a year ago. Sales increased across the state almost 4 percent compared to the same month a year ago.
Sales in the state totaled 650,800 in September 2005 compared to 626,000 recorded in September 2004.
"The September median home price compared with August has fallen every year since 1993, in 20 of the last 26 years," said Jim Hamilton, president of the association, in a statement. "This year is no exception and is part of the seasonal shift to an off-peak period in the real estate market as we approach year's end."
PetroKazakhstan Inc. announced today that the Alberta Court of Queen's Bench has granted the order approving the Arrangement involving the acquisition of the Company for US$55.00 cash per share by a wholly-owned subsidiary of CNPC International Ltd. This was a situation with several twists and turns but, had you done the necessary homework, you would have realized
almost all was simply a great deal of meaningless noise. Just as China learned from the Unocal episode, I trust India will learn from PKZ.
President Bush's negative rating now stands at 66 percent for his handling ofevents there, the lowest of his presidency. For the first time, a majority(53%) of adults feel that military action in Iraq was the wrong thing to do. These are some of the results of a Harris Interactive(R) poll of 1,833U.S. adults surveyed online between October 11 and 17, 2005 just before theIraqis voted to ratify their new constitution. Other interesting findings from the poll include: -- President Bush's ratings on Iraq are now 66 percent negative, 32 percent positive, slightly worse than his ratings in September (65% negative, 34% positive) and July (64% negative, 34% positive). -- A 61 to 24 percent majority is not confident that U.S. policies in Iraq will be successful, again slightly lower than the numbers in September (59% and 23%, respectively).-- A 53 to 34 percent majority believes that taking military action against Iraq was the wrong thing to do. This is the first time that a majority feels this and is a complete reversal from two years ago when a 55 to 32 percent majority believed that taking military action was the right thing to do.-- Only 19 percent of all adults feel that the situation for U.S. troops in Iraq is getting better, while 44 percent think it is getting worse; 33 percent see no change and four percent are not sure. These numbers are unchanged from September. -- Equal percentages feel that things in Iraq are moving in the right direction (38%) and that things are moving in the wrong direction (38%), but fully 24 percent are not sure.
Donald Rumsfeld: "Death has a tendency to encourage a depressing view of war."
With net income of $1.19 billion, Lucent posted the second consecutive profitable year and posted annual revenues of $9.44 billion, up 4 percent year over year. They reported revenues of $2.43 billion, net income of $374 million, or 8 cents per diluted share, for the quarter.
Marie Beyle: "The shepherd always tries to persuade the sheep that their interests and his own are the same."
EnCana's third quarter cash flow was $1.93 billion or $2.20 per share, up 51%.
Ben Bernanke: "The U.S. Government has a technology, called a printing press...The Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter."
The Conference Board's October Consumer Confidence Index fell to 85 from September's 87.5. The Present Situation index declined to 108.2 from 110.4, and the Expectations index dropped to 69.5 from 72.3. Lynn Franco, Director of the Conference Board's Consumer Research Center, stated "in order to avoid a blue Christmas, retailers will need to lure shoppers with sales and discounts."
Wal-Mart has a major ad campaign beginning Nov. 1.
Teddy Roosevelt: "Patriotism means to stand by the country. It does not mean to stand by the president or any other public official."
Texas Instruments and DuPont gave disappointing 4th quarter outlooks.
Crude is holding above $62 a barrel. Natural gas had a record close yesterday
of 14.338 and heating oil rose 5.7%. January orange juice ftures closed at a 7-year high. Meanwhile, the yield on 10-year Treasury bonds rose to 4.51% and the 2-year to 4.30%.
September existing home sales were unchanged from the prior month.
Not surprisingly, IBM authorized another stock buyback-- this time $4 billion.
The Grand Jury meets today in the Plame matter. The fact is there is a great deal more involved than simply Plame. I continue to believe indictments will be forthcoming. However, what follows is connecting the dots. The picture that unfolds in coming months will, in my opinion, not be pretty. One should ask the following: there are three years remaining in Bush's term. How many in this Administration will go the distance? I believe the number will be tiny.
What's good for the goose is good for the gander. Sometimes it is wise to reflect on the past and how it might impact the future. Let's take a recent statement by Sen. Kay Bailey Hutchinson of Texas: "I certainly hope that if there is going to be an indictment that says something happened, that it is an indictment on a crime and not some perjury technicality where they couldn’t indict on the crime so they go to something just to show that their two years of investigation were not a waste of time and dollars." Based on this "technicality" she voted to impeach Bill Clinton.
It is wise to learn from all the articles on PetroKazakhstan. Many were designed to discourage a bidding war and to hold down the price of the acquisition. Many of the recent articles in the WSJ on Albertsons have, in my view, a rancid smell and remind me a good dela of PKZ. That'swhy I state over and over again that it is wise not to trade based on media reports. The media has its own agenda, and that may not serve investors well.
Kroger has 2,525 store and Albertsons has 2,487. Again, I suggest you pay a good deal of attention to the value embedded in the 750 free-standing pharmacies owned and operated by Albertsons. You might want to re-visit the sale of Eckard's by JC Penney. I have previously made note of this.
Ronald Reagan: "We must reject the idea that every time a law's broken, society is guilty rather than the lawbreaker. It is time to restore the American precept that each individual is accountable for his actions."
The median price of a home in the California Realtors' Santa Clara region was up 16.3 percent to $733,000, compared to September 2004. Sales were down 9.1 percent.
The median price rose at the same rate in Santa Cruz county to $750,000, while sales dropped 15.2 percent.
In the Monterey region, the median price shot up 13.4 percent to $712,800 as sales dropped 4.8 percent.
In the Bay Area, the price was up 10.5 percent as sales fell 8.5 percent.
Statewide, the median price hit $544,000 in September, up 17 percent from a year ago. Sales increased across the state almost 4 percent compared to the same month a year ago.
Sales in the state totaled 650,800 in September 2005 compared to 626,000 recorded in September 2004.
"The September median home price compared with August has fallen every year since 1993, in 20 of the last 26 years," said Jim Hamilton, president of the association, in a statement. "This year is no exception and is part of the seasonal shift to an off-peak period in the real estate market as we approach year's end."
PetroKazakhstan Inc. announced today that the Alberta Court of Queen's Bench has granted the order approving the Arrangement involving the acquisition of the Company for US$55.00 cash per share by a wholly-owned subsidiary of CNPC International Ltd. This was a situation with several twists and turns but, had you done the necessary homework, you would have realized
almost all was simply a great deal of meaningless noise. Just as China learned from the Unocal episode, I trust India will learn from PKZ.
President Bush's negative rating now stands at 66 percent for his handling ofevents there, the lowest of his presidency. For the first time, a majority(53%) of adults feel that military action in Iraq was the wrong thing to do. These are some of the results of a Harris Interactive(R) poll of 1,833U.S. adults surveyed online between October 11 and 17, 2005 just before theIraqis voted to ratify their new constitution. Other interesting findings from the poll include: -- President Bush's ratings on Iraq are now 66 percent negative, 32 percent positive, slightly worse than his ratings in September (65% negative, 34% positive) and July (64% negative, 34% positive). -- A 61 to 24 percent majority is not confident that U.S. policies in Iraq will be successful, again slightly lower than the numbers in September (59% and 23%, respectively).-- A 53 to 34 percent majority believes that taking military action against Iraq was the wrong thing to do. This is the first time that a majority feels this and is a complete reversal from two years ago when a 55 to 32 percent majority believed that taking military action was the right thing to do.-- Only 19 percent of all adults feel that the situation for U.S. troops in Iraq is getting better, while 44 percent think it is getting worse; 33 percent see no change and four percent are not sure. These numbers are unchanged from September. -- Equal percentages feel that things in Iraq are moving in the right direction (38%) and that things are moving in the wrong direction (38%), but fully 24 percent are not sure.
Donald Rumsfeld: "Death has a tendency to encourage a depressing view of war."
With net income of $1.19 billion, Lucent posted the second consecutive profitable year and posted annual revenues of $9.44 billion, up 4 percent year over year. They reported revenues of $2.43 billion, net income of $374 million, or 8 cents per diluted share, for the quarter.
Marie Beyle: "The shepherd always tries to persuade the sheep that their interests and his own are the same."
EnCana's third quarter cash flow was $1.93 billion or $2.20 per share, up 51%.
Ben Bernanke: "The U.S. Government has a technology, called a printing press...The Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter."
The Conference Board's October Consumer Confidence Index fell to 85 from September's 87.5. The Present Situation index declined to 108.2 from 110.4, and the Expectations index dropped to 69.5 from 72.3. Lynn Franco, Director of the Conference Board's Consumer Research Center, stated "in order to avoid a blue Christmas, retailers will need to lure shoppers with sales and discounts."
Wal-Mart has a major ad campaign beginning Nov. 1.
Teddy Roosevelt: "Patriotism means to stand by the country. It does not mean to stand by the president or any other public official."
Texas Instruments and DuPont gave disappointing 4th quarter outlooks.
Crude is holding above $62 a barrel. Natural gas had a record close yesterday
of 14.338 and heating oil rose 5.7%. January orange juice ftures closed at a 7-year high. Meanwhile, the yield on 10-year Treasury bonds rose to 4.51% and the 2-year to 4.30%.
September existing home sales were unchanged from the prior month.
Not surprisingly, IBM authorized another stock buyback-- this time $4 billion.
The Grand Jury meets today in the Plame matter. The fact is there is a great deal more involved than simply Plame. I continue to believe indictments will be forthcoming. However, what follows is connecting the dots. The picture that unfolds in coming months will, in my opinion, not be pretty. One should ask the following: there are three years remaining in Bush's term. How many in this Administration will go the distance? I believe the number will be tiny.
What's good for the goose is good for the gander. Sometimes it is wise to reflect on the past and how it might impact the future. Let's take a recent statement by Sen. Kay Bailey Hutchinson of Texas: "I certainly hope that if there is going to be an indictment that says something happened, that it is an indictment on a crime and not some perjury technicality where they couldn’t indict on the crime so they go to something just to show that their two years of investigation were not a waste of time and dollars." Based on this "technicality" she voted to impeach Bill Clinton.
It is wise to learn from all the articles on PetroKazakhstan. Many were designed to discourage a bidding war and to hold down the price of the acquisition. Many of the recent articles in the WSJ on Albertsons have, in my view, a rancid smell and remind me a good dela of PKZ. That'swhy I state over and over again that it is wise not to trade based on media reports. The media has its own agenda, and that may not serve investors well.
Kroger has 2,525 store and Albertsons has 2,487. Again, I suggest you pay a good deal of attention to the value embedded in the 750 free-standing pharmacies owned and operated by Albertsons. You might want to re-visit the sale of Eckard's by JC Penney. I have previously made note of this.
Ronald Reagan: "We must reject the idea that every time a law's broken, society is guilty rather than the lawbreaker. It is time to restore the American precept that each individual is accountable for his actions."
Tuesday, October 25, 2005
Looking Out
10/25/05 Looking Out
U.S. consumers could have
saved $20 billion in 2004 and even more during this and future years by using
more generic drugs, according to a new report by Express Scripts, Inc.
Projectable to the U.S. commercially insured population, the study examined
six major drug-therapy classes and was based on a random sample of
approximately 3 million individuals.
Wal-Mart stated the company will open 555 to 600 stores in fiscal year 2006. This
represents more than 600 million square feet of gross retail space, an 8% increase over
presentlevels.
Gary Lammert, The Economic Fractalist: "The total cumulative value of the rest
of the world equities roughly equals the value of the Wilshire 5000...
In the 1929 primary devolution, the DJIA first fractal decay base of
11 days was determined by a preceding rising base sequence of 4 plus
days. The 1929 high was contained in the second decay fractal of 27
days, which was then followed by an additional third decay fractal of
27 days in the three fractal decay pattern of x/2.5x/2.5x: 11/27/27
days. For the primary 2005 devolution the first fractal decay base
appears to follow a 9 day plus rising antecedent base. Inductively
and extrapolating from the 1929 data, albeit with a single pattern for
extrapolation, a 23-24 day fractal sequence including the 3 August
high appears to be the defining first fractal base of what will likely
be an efficient nonlinear equity asset destructive devolution that
will echo the 1858-1932 Second Grand Fractal first sub fractal."
What happens when you lie to a grand jury? For what reason would Libby's grand jury testimony
differ from his notes with respect to who told him about Plame? Supposedly Cheney told him. Does
that surprise you?
"Helicopter Ben" is replacing Greenspan. Throwing money out of helicopters is a new method
in continuing the dollar's long-term descent.
Evan Esar: "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
"Crude dipped to $60.25 a barrel. Are we to get ecstatic about $2.60 gas at the pump? Is this a victory ofsome sorts? Maybe it's a new version of shock and awe.
Franchising China 2005 will feature 305 booths -- up by more than 10
percent from 2004. Attendance is expected to top last year's record of 20,300
visitors.
Franchising China is held in China's three largest franchising markets.
The events attract mainland China investors looking for franchise
opportunities in a range of sectors including food and beverage, furniture,
education, automotive and business services.
Franchising China is an event of eMedia Asia Ltd, a joint venture between
Global Sources and CMP Media. Joint venture president, Mark Saunderson, said:
"By 2010, franchises are expected to account for 30 percent of China's total
retail sales.
"Growth is being driven by the new affluence of Chinese consumers --
average earnings of urban residents have risen 91 percent over the past five
years. The industry has also benefited from the China's Ministry of
Commerce's new legal guidelines for franchising and commerce in China."
The U.S. service personnel death toll in Iraq reached 2,000.
Niles Bohr: "Prediction is very difficult, especially if it's about the future."
U.S. consumers could have
saved $20 billion in 2004 and even more during this and future years by using
more generic drugs, according to a new report by Express Scripts, Inc.
Projectable to the U.S. commercially insured population, the study examined
six major drug-therapy classes and was based on a random sample of
approximately 3 million individuals.
Wal-Mart stated the company will open 555 to 600 stores in fiscal year 2006. This
represents more than 600 million square feet of gross retail space, an 8% increase over
presentlevels.
Gary Lammert, The Economic Fractalist: "The total cumulative value of the rest
of the world equities roughly equals the value of the Wilshire 5000...
In the 1929 primary devolution, the DJIA first fractal decay base of
11 days was determined by a preceding rising base sequence of 4 plus
days. The 1929 high was contained in the second decay fractal of 27
days, which was then followed by an additional third decay fractal of
27 days in the three fractal decay pattern of x/2.5x/2.5x: 11/27/27
days. For the primary 2005 devolution the first fractal decay base
appears to follow a 9 day plus rising antecedent base. Inductively
and extrapolating from the 1929 data, albeit with a single pattern for
extrapolation, a 23-24 day fractal sequence including the 3 August
high appears to be the defining first fractal base of what will likely
be an efficient nonlinear equity asset destructive devolution that
will echo the 1858-1932 Second Grand Fractal first sub fractal."
What happens when you lie to a grand jury? For what reason would Libby's grand jury testimony
differ from his notes with respect to who told him about Plame? Supposedly Cheney told him. Does
that surprise you?
"Helicopter Ben" is replacing Greenspan. Throwing money out of helicopters is a new method
in continuing the dollar's long-term descent.
Evan Esar: "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
"Crude dipped to $60.25 a barrel. Are we to get ecstatic about $2.60 gas at the pump? Is this a victory ofsome sorts? Maybe it's a new version of shock and awe.
Franchising China 2005 will feature 305 booths -- up by more than 10
percent from 2004. Attendance is expected to top last year's record of 20,300
visitors.
Franchising China is held in China's three largest franchising markets.
The events attract mainland China investors looking for franchise
opportunities in a range of sectors including food and beverage, furniture,
education, automotive and business services.
Franchising China is an event of eMedia Asia Ltd, a joint venture between
Global Sources and CMP Media. Joint venture president, Mark Saunderson, said:
"By 2010, franchises are expected to account for 30 percent of China's total
retail sales.
"Growth is being driven by the new affluence of Chinese consumers --
average earnings of urban residents have risen 91 percent over the past five
years. The industry has also benefited from the China's Ministry of
Commerce's new legal guidelines for franchising and commerce in China."
The U.S. service personnel death toll in Iraq reached 2,000.
Niles Bohr: "Prediction is very difficult, especially if it's about the future."
Sunday, October 23, 2005
Updates
10/24/05 Updates
The Oct. 31, 2005 issue of Newsweek: "Whatever news Fitzgerald makes this week, however, the case has shed light on how Cheney and his clique of advisers cleared the way to war, and how they obsessed over critics who got in the way. "The notion that they've become a gang has some merit," says a longtime colleague of Libby's. "A small group who only talk to each other...You pay a price for that."
The number of U.S. service members who have died in Iraq since we invaded that country is now at least 1,992. The number of troops wounded in Iraq stands at 15,220, according to the Pentagon. Of those, 7,159 were so seriously hurt that they have not returned to duty. In my view, too little is written about those service members injured in Iraq as well as the medical attention they have received. Over the past 2 ½ years I have written about the months of waiting to receive adequate treatment and quoted individuals at various hospitals and bases. In addition, I have written about the limited benefits these individuals receive, and that is after risking their lives in battle.
Google Inc.'s market value briefly surpassed $100 billion for the first time Friday.
This past week the outstanding U.S. national debt exceeded $8 trillion for the first time. It increases an average of $1.62 billion per day. In December 2003, the debt surpassed $7 trillion for the first time. The good news is that your share of the national debt is only a bit less than $27,000. The bad news is that, at the rate we’re spending, it won’t be long before your share approaches $30,000. Since no one complains at the voting booth, you have no reason to wine and gripe.
The Oct. 31, 2005 issue of Newsweek: "Whatever news Fitzgerald makes this week, however, the case has shed light on how Cheney and his clique of advisers cleared the way to war, and how they obsessed over critics who got in the way. "The notion that they've become a gang has some merit," says a longtime colleague of Libby's. "A small group who only talk to each other...You pay a price for that."
The number of U.S. service members who have died in Iraq since we invaded that country is now at least 1,992. The number of troops wounded in Iraq stands at 15,220, according to the Pentagon. Of those, 7,159 were so seriously hurt that they have not returned to duty. In my view, too little is written about those service members injured in Iraq as well as the medical attention they have received. Over the past 2 ½ years I have written about the months of waiting to receive adequate treatment and quoted individuals at various hospitals and bases. In addition, I have written about the limited benefits these individuals receive, and that is after risking their lives in battle.
Google Inc.'s market value briefly surpassed $100 billion for the first time Friday.
This past week the outstanding U.S. national debt exceeded $8 trillion for the first time. It increases an average of $1.62 billion per day. In December 2003, the debt surpassed $7 trillion for the first time. The good news is that your share of the national debt is only a bit less than $27,000. The bad news is that, at the rate we’re spending, it won’t be long before your share approaches $30,000. Since no one complains at the voting booth, you have no reason to wine and gripe.
The national average for self-serve, regular unleaded gasoline was $2.6587 a gallon on October 21, down about 25.3 cents per gallon from October 7, according to the nationwide Lundberg survey of about 6,000 gas stations. "This is the biggest drop in a two week period that we have ever seen in our many decades surveying the gasoline market,"survey editor Trilby Lundberg said.
Paul Kasriel: "For the first time since 1995, the real M2 money supply is contracting on a year-over-year basis. Contractions in real M2 typically lead to recessions. Indeed, the last recession occurred without real M2 contracting- its growth just slowed."
Lucy Benington: "Opportunities
Storm Clouds
10/23/05 Storm Clouds
Weather forecasting is a chancy business. Who is to really know when storm clouds will turn into major natural disasters? No one knows for certain what part mankind plays in the increased number of hurricanes and typhoons. One thing is for certain. We will know this week whether an individual or individuals played a role in criminal wrong doings. Patrick Fitzgerald’s 22-month investigation will end in a matter of days.
Patrick Fitzgerald: "When you're a pitcher, you throw the ball over the plate and if you think you threw a strike and the umpire says it's a ball, it doesn't matter how much you think it's a strike. You put your case on. You don't walk into court out of fear that when you do it, either a judge will disagree with some of what you say or a defense attorney will call you overzealous."
There are many Americans who have not followed this investigation. Clearly, Wall Street has not shown any fall out. It’s earnings season. The focus has been on Google, Caterpillar, Apple, IBM, and others. Maybe Wall Street should show a bit more interest. Rove and Libby are but a small step from Bush and Cheney. Remember Ehrlichman and Haldeman? Of course, it could be different this time. The pundits say it is always different this time.
Life is not always as it appears on the surface. Bahrain is a small Persian Gulf country roughly 3 ½ times the size of Washington, DC. It is strategically located and 60% of its exports consist of petroleum products. One year ago, Bahrain signed a Free Trade Agreement with the U.S. Bahrain is a hostile place for Americans. If a black flag is placed above a place of business, it signifies Americans should not enter. If a black flag is posted on a road, it means Americans should not drive on it. That doesn’t seem very free to me. You can only imagine how unwelcome we must be in Iraq. We did not invade Bahrain. At least 1,987 American service personnel will never return to our shores.
The term "fastwalker" does not refer to a power walker. It is a term that was invented by NORAD to describe and categorize objects that approach from space, enter our atmosphere, maneuver strangely about, and then leave the atmosphere again. In other words, they refer to UFOs. I often think politicians in Washington, DC are from outer space. Unfortunately, they don't leave the atmosphere. They leave devastation in their wake. They have much in common with opportunistic viruses.
Tom Barrack of Colony Capital: "I feel totally safe playing polo on a field full of pros. But when amateurs are all over the field, someone can get killed. They have more guts than brains. They charge after every ball and don't know when to hold back." In U.S. real estate "there's too much money chasing too few good deals, with too much debt and too few brains. That's why I'm getting out…They’ve driven prices to the point where the yields on high-quality properties are like the return on bonds, around 5% or 6%. That’s too low."
Anthony J. D'Angelo: "Wherever you go, no matter what the weather, always bring your own sunshine."
Weather forecasting is a chancy business. Who is to really know when storm clouds will turn into major natural disasters? No one knows for certain what part mankind plays in the increased number of hurricanes and typhoons. One thing is for certain. We will know this week whether an individual or individuals played a role in criminal wrong doings. Patrick Fitzgerald’s 22-month investigation will end in a matter of days.
Patrick Fitzgerald: "When you're a pitcher, you throw the ball over the plate and if you think you threw a strike and the umpire says it's a ball, it doesn't matter how much you think it's a strike. You put your case on. You don't walk into court out of fear that when you do it, either a judge will disagree with some of what you say or a defense attorney will call you overzealous."
There are many Americans who have not followed this investigation. Clearly, Wall Street has not shown any fall out. It’s earnings season. The focus has been on Google, Caterpillar, Apple, IBM, and others. Maybe Wall Street should show a bit more interest. Rove and Libby are but a small step from Bush and Cheney. Remember Ehrlichman and Haldeman? Of course, it could be different this time. The pundits say it is always different this time.
Life is not always as it appears on the surface. Bahrain is a small Persian Gulf country roughly 3 ½ times the size of Washington, DC. It is strategically located and 60% of its exports consist of petroleum products. One year ago, Bahrain signed a Free Trade Agreement with the U.S. Bahrain is a hostile place for Americans. If a black flag is placed above a place of business, it signifies Americans should not enter. If a black flag is posted on a road, it means Americans should not drive on it. That doesn’t seem very free to me. You can only imagine how unwelcome we must be in Iraq. We did not invade Bahrain. At least 1,987 American service personnel will never return to our shores.
The term "fastwalker" does not refer to a power walker. It is a term that was invented by NORAD to describe and categorize objects that approach from space, enter our atmosphere, maneuver strangely about, and then leave the atmosphere again. In other words, they refer to UFOs. I often think politicians in Washington, DC are from outer space. Unfortunately, they don't leave the atmosphere. They leave devastation in their wake. They have much in common with opportunistic viruses.
Tom Barrack of Colony Capital: "I feel totally safe playing polo on a field full of pros. But when amateurs are all over the field, someone can get killed. They have more guts than brains. They charge after every ball and don't know when to hold back." In U.S. real estate "there's too much money chasing too few good deals, with too much debt and too few brains. That's why I'm getting out…They’ve driven prices to the point where the yields on high-quality properties are like the return on bonds, around 5% or 6%. That’s too low."
Anthony J. D'Angelo: "Wherever you go, no matter what the weather, always bring your own sunshine."
Saturday, October 22, 2005
Dangers In Greedville
10/22/05 Dangers In Greedville
Weyerhaeuser said it will close a pulp mill in Cosmopolis and a sawmill in Aberdeen due to poor markets, aging machinery and high operating costs. The closures were announced on the same day as the company reported falling profits. Both mills are in timber-dependent Grays Harbor County in Southwest Washington. Weyerhaeuser is the county's largest employer, with about 1,045 workers, according to data from the Grays Harbor County Economic Development Council. The local hospital is the next largest employer with about 590 employees. The two mills employ about 342. The largest is the 50-year-old Cosmopolis mill, which employs 245 making specialty pulp for plastics, photographic papers and cigarette filters. The 81-year-old, large-log lumber mill in Aberdeen produces about 125 million board feet per year of softwood lumber used in residential and commercial construction and appearance-grade millwork.
Weyerhaeuser said it had no choice but to close the under-performing mills, and the company expects more mills to close as it continues to cut costs.
"We recognize the impact of today's announcement for our employees, contractors, local communities and customers and we are committed to working constructively in the months ahead to prepare for the transition," said Steven Rogel, chairman, president and chief executive officer. "In a world of weakening markets and tightening economics we reached the point where we have no alternative."
The Cosmopolis operation is Weyerhaeuser's only specialty pulp operation, and "is not a strategic fit for the company," according to the announcement. But it won't close immediately. The exact date won't be determined until next year, and will be based on customer contracts. The age of the Aberdeen mill was a contributing factor in its closure, as were declining demand and prices and competitive position, Weyerhaeuser said.
Cisco has begun building a $50 million campus in Bangalore, India, which will have enough room for 3,000 employees. The 1-million-square-foot development will be located on the Outer Ring Road in Sarapur and Cisco expects to finish it by June of 2007. It will house Cisco employees working in the areas of research and development, information technology, sales and customer support. "India has been and continues to be a strategic market for Cisco both in terms of business opportunities and as a base for outstanding engineering talent," stated Cisco president and chief executive officer John Chambers.
According to Reuters, Albertsons Inc. has received a preliminary takeover bid from Kroger Co for the entire company, while its drug store unit has attracted bids from CVS, Walgreen’s, and Rite Aid. Kroger will be competing against several teams of private equity firms. Albertsons is the number two grocery chain behind Kroger. On Friday, the WSJ ran an article stating that some bidders had submitted preliminary offers for the company. According to The New York Times. those include consortiums led by investment groups, including one led by Kohlberg Kravis Roberts, one by Thomas H. Lee Partners, and another by the Yucaipa Companies. The Times article stated bids all are in the high-$20s-a-share range. It is wise to remember not to trade with the newspapers. One must do their own homework. With Goldman Sachs and Blackstone Group managing the auction, I continue to believe shareholders of Albertsons will be pleased with the outcome. It should be noted that things don’t always pan out the way I envision. In purchasing PKZ at $38, I thought a fair purchase price would be $52. As a bidding war between China and India appeared more likely, I raised my take-out value to $56 and then $62. India only bid once and we will end up with $55. The situation with Albertsons has many more players and more paths to the finish line. That’s not a negative. It makes for a more fluid bidding process. I remain comfortable with a value of $31 to $33 a share.
What others may believe is of no importance to me. It’s my money and I answer only to me. I should mention that, according to auctionblockdatabase.com, final bids for Albertsons are due the week of October 24.
Wal-Mart Stores, Inc. will web cast its annual analysts' meeting on Tuesday and
Wednesday, October 25-26, 2005. The web cast and conference call will take place at
the times noted below.
October 25 12:15 p.m. - 4:30 p.m. CDT 415-537-1832
October 26 7:30 a.m. - 3:00 p.m. CDT 877-871-4104
Wal-Mart stated today that, for the October reporting period, comparative sales for the U.S. are estimated to be within the company’s guidance of 2 to 4 percent.
Sol Palha on housing problems:
“There is always a way to spin a story and make it look like things are not so bad especially when so much is at stake but the following facts cannot be changed
* Housing prices have been dropping for 3 months in a row.
* In many cities the more expensive houses are taking longer to sell.
* Inventories are slowly building up, nothing dramatic yet but that's how bubbles usually pop.
* Mortgage rates are rising across the board. The 30-year mortgage has just hit a 15-year high.
* More and more individuals are slowly starting to look into the option of renting VS buying. In time this will gather even more steam
* Real Estate is also taking a breather in several hot international markets; China, Australia and Britain are the main ones that come to mind.
? A revision in the US Tax code could also have potentially detrimental effects on the housing sector.”
Liquidity generates a flow of funds but it does not guarantee profits. Year-to-date M3 has expanded at a 7.3% rate, bank credit at 11.9%, and real estate loans at 14.8%. In other words, there is plenty of money available. The cost for that money is rising. That means the need to make more money just to offset the increased cost of funds. The problem is not everyone is invested in Google. Instead, many investors engage in greater risk-taking. Unfortunately, too many risk takers are not smart enough to take that added risk. Many don’t even understand the extent of the risk taken, such as, in derivatives. You have a generation of schmucks who think they are geniuses taking on added risk. Innocent investors get hurt in the process. That’s progress in greedville?
Tim Geithner, NY. Fed President: “Our current account deficit is now running at a rate of above 6 percent of GDP, a level without precedent for a major economy. It matters because of the composition of the imbalance. Our trade deficit is now roughly the size of the current account deficit, and very large relative to our export base. And our net investment income balances are now likely to move into deficit. It matters because of the trajectory of the U.S. imbalance. On reasonable assumptions about its likely near term path, this deficit will produce a very large net deterioration in our net external liabilities relative to national income, with progressively larger net transfers of income to the rest of the world. This pattern should concern us because it is not simply the result of the savings and investment decisions of the private sector. The fact that we are using a substantial part of the savings we are borrowing from the rest of the world to finance an unsustainable level of public borrowing leaves us more vulnerable than if those savings were being used for productive private investment…these imbalances matter because at some point they will have to reverse. Market forces will at some point induce an adjustment. And that inevitable process of adjustment will bring with it the risk of large movements in relative prices, greater volatility in asset prices and slower growth in the United States and in the rest of the world.”
Judge Sturgess: “Justice is open to everyone in the same way as the Ritz Hotel.”
Weyerhaeuser said it will close a pulp mill in Cosmopolis and a sawmill in Aberdeen due to poor markets, aging machinery and high operating costs. The closures were announced on the same day as the company reported falling profits. Both mills are in timber-dependent Grays Harbor County in Southwest Washington. Weyerhaeuser is the county's largest employer, with about 1,045 workers, according to data from the Grays Harbor County Economic Development Council. The local hospital is the next largest employer with about 590 employees. The two mills employ about 342. The largest is the 50-year-old Cosmopolis mill, which employs 245 making specialty pulp for plastics, photographic papers and cigarette filters. The 81-year-old, large-log lumber mill in Aberdeen produces about 125 million board feet per year of softwood lumber used in residential and commercial construction and appearance-grade millwork.
Weyerhaeuser said it had no choice but to close the under-performing mills, and the company expects more mills to close as it continues to cut costs.
"We recognize the impact of today's announcement for our employees, contractors, local communities and customers and we are committed to working constructively in the months ahead to prepare for the transition," said Steven Rogel, chairman, president and chief executive officer. "In a world of weakening markets and tightening economics we reached the point where we have no alternative."
The Cosmopolis operation is Weyerhaeuser's only specialty pulp operation, and "is not a strategic fit for the company," according to the announcement. But it won't close immediately. The exact date won't be determined until next year, and will be based on customer contracts. The age of the Aberdeen mill was a contributing factor in its closure, as were declining demand and prices and competitive position, Weyerhaeuser said.
Cisco has begun building a $50 million campus in Bangalore, India, which will have enough room for 3,000 employees. The 1-million-square-foot development will be located on the Outer Ring Road in Sarapur and Cisco expects to finish it by June of 2007. It will house Cisco employees working in the areas of research and development, information technology, sales and customer support. "India has been and continues to be a strategic market for Cisco both in terms of business opportunities and as a base for outstanding engineering talent," stated Cisco president and chief executive officer John Chambers.
According to Reuters, Albertsons Inc. has received a preliminary takeover bid from Kroger Co for the entire company, while its drug store unit has attracted bids from CVS, Walgreen’s, and Rite Aid. Kroger will be competing against several teams of private equity firms. Albertsons is the number two grocery chain behind Kroger. On Friday, the WSJ ran an article stating that some bidders had submitted preliminary offers for the company. According to The New York Times. those include consortiums led by investment groups, including one led by Kohlberg Kravis Roberts, one by Thomas H. Lee Partners, and another by the Yucaipa Companies. The Times article stated bids all are in the high-$20s-a-share range. It is wise to remember not to trade with the newspapers. One must do their own homework. With Goldman Sachs and Blackstone Group managing the auction, I continue to believe shareholders of Albertsons will be pleased with the outcome. It should be noted that things don’t always pan out the way I envision. In purchasing PKZ at $38, I thought a fair purchase price would be $52. As a bidding war between China and India appeared more likely, I raised my take-out value to $56 and then $62. India only bid once and we will end up with $55. The situation with Albertsons has many more players and more paths to the finish line. That’s not a negative. It makes for a more fluid bidding process. I remain comfortable with a value of $31 to $33 a share.
What others may believe is of no importance to me. It’s my money and I answer only to me. I should mention that, according to auctionblockdatabase.com, final bids for Albertsons are due the week of October 24.
Wal-Mart Stores, Inc. will web cast its annual analysts' meeting on Tuesday and
Wednesday, October 25-26, 2005. The web cast and conference call will take place at
the times noted below.
October 25 12:15 p.m. - 4:30 p.m. CDT 415-537-1832
October 26 7:30 a.m. - 3:00 p.m. CDT 877-871-4104
Wal-Mart stated today that, for the October reporting period, comparative sales for the U.S. are estimated to be within the company’s guidance of 2 to 4 percent.
Sol Palha on housing problems:
“There is always a way to spin a story and make it look like things are not so bad especially when so much is at stake but the following facts cannot be changed
* Housing prices have been dropping for 3 months in a row.
* In many cities the more expensive houses are taking longer to sell.
* Inventories are slowly building up, nothing dramatic yet but that's how bubbles usually pop.
* Mortgage rates are rising across the board. The 30-year mortgage has just hit a 15-year high.
* More and more individuals are slowly starting to look into the option of renting VS buying. In time this will gather even more steam
* Real Estate is also taking a breather in several hot international markets; China, Australia and Britain are the main ones that come to mind.
? A revision in the US Tax code could also have potentially detrimental effects on the housing sector.”
Liquidity generates a flow of funds but it does not guarantee profits. Year-to-date M3 has expanded at a 7.3% rate, bank credit at 11.9%, and real estate loans at 14.8%. In other words, there is plenty of money available. The cost for that money is rising. That means the need to make more money just to offset the increased cost of funds. The problem is not everyone is invested in Google. Instead, many investors engage in greater risk-taking. Unfortunately, too many risk takers are not smart enough to take that added risk. Many don’t even understand the extent of the risk taken, such as, in derivatives. You have a generation of schmucks who think they are geniuses taking on added risk. Innocent investors get hurt in the process. That’s progress in greedville?
Tim Geithner, NY. Fed President: “Our current account deficit is now running at a rate of above 6 percent of GDP, a level without precedent for a major economy. It matters because of the composition of the imbalance. Our trade deficit is now roughly the size of the current account deficit, and very large relative to our export base. And our net investment income balances are now likely to move into deficit. It matters because of the trajectory of the U.S. imbalance. On reasonable assumptions about its likely near term path, this deficit will produce a very large net deterioration in our net external liabilities relative to national income, with progressively larger net transfers of income to the rest of the world. This pattern should concern us because it is not simply the result of the savings and investment decisions of the private sector. The fact that we are using a substantial part of the savings we are borrowing from the rest of the world to finance an unsustainable level of public borrowing leaves us more vulnerable than if those savings were being used for productive private investment…these imbalances matter because at some point they will have to reverse. Market forces will at some point induce an adjustment. And that inevitable process of adjustment will bring with it the risk of large movements in relative prices, greater volatility in asset prices and slower growth in the United States and in the rest of the world.”
Judge Sturgess: “Justice is open to everyone in the same way as the Ritz Hotel.”
Friday, October 21, 2005
Unstable Ground
10/21/05 Unstable Ground
Before I get into this morning’s discussion, I’d like to address an article in today’s WSJ.
This paper stated “Refco’s $430 million of bad debts stemmed by multiple customers, including money manager Victor Niederhoffer.” Vic wrote that all his debts to Refco have been paid in full. I believe him. When an entity or entities try to dismember one’s reputation in an unjustified manner, I don’t like it.
Lenny Bruce: “In the Halls of Justice the only justice is in the halls.”
Yesterday’s negative NYSE action was the biggest one-day drop in 4 months and must be viewed very carefully. Why? It came right after the biggest one-day up move in 3 months. This is more than out of the ordinary and helps to explain the rise in the VIX. Yesterday there were 144 new lows on the NYSE and only 39 new highs for the year. More troubling was that over three-quarters of the volume on the NYSE just happened to be on the downside. Now, please take the following with a grain of salt. Earlier in the week we had that $1.4 billion trade in ExxonMobil. This was followed by large buying in S&P futures that created short covering. Then there was yesterday’s down day. It appears to me that one or more large accounts are being liquidated. They appear to be heavily centered in energy commodities and energy-related equities. Today is option expiration. It could be a highly volatile ride.
Ford will be closing plants and announcing significant layoffs. What else is new?
I don’t write often about Google because it rubs salt in the wounds of many. I have been writing about Google for three years. It is a superior technology company and they offer many beta programs that can make your daily life a great deal more efficient. It serves no purpose to remind readers that I suggested a couple of years ago to purchase shares in this company when and if it went public. That’s not the purpose for mentioning Google. The company’s results for the quarter rose seven-fold. Whether Google goes to $335 or higher, it cannot hold up the rest of the market. There will always be a few companies that shine in dimming times, but eventually, when they raid the whorehouse, they take all the girls. Your beautiful sister, in this case, Google, might be the last to go, but it will go. The stay may be short, but it will go.
Crude is trading around $60 a barrel this morning. It is only a $10 decline from the recent top, and a natural reaction to less demand for gasoline as the peak driving season is behind us. That does not mean we should ignore $2.75 a gallon gas and high prices for heating oil and natural gas. The International Council of Shopping Centers thinks it is business as usual. They see same-store holiday sales in Nov. and Dec. rising by 3 to 3 ½ percent. In 2004, it was 2.3%. I think they’re nuts. They should be happy as a pig in manure if this season matched last year’s. The consumer is stumbling around the ring as if hit by Rocky Marciano.
Russian oil major Lukoil has proposed to PetroKazakhstan and China's CNPC to settle ownership disputes over a joint venture in Kazakhstan, two Russian news agencies reported.
"We have contacted PetroKazakhstan and CNPC - I sent a letter to these two companies - with a proposal to meet and hold talks to resolve our disputes," Interfax quoted Lukoil Vice President Andrei Kuzyayev as telling a press conference in Astana on Thursday.
The RIA Novosti agency also quoted Kuzyayev as making the similar remarks.
With regards to Albertson’s, according to auctionblockdatabase.com,
"Sources confirmed that due diligence began the week of Oct. 3, and that the KKR group has already gone to Albertson's headquarters for management presentations.
The other two groups were scheduled to go the week ofOct. 10. A deal announcement is expected around the end of November."
According to the People’s Daily in China, “The first pipeline for recycling natural gas concomitant in Kazakhstan, solely financed by the Chinese side, went into official operation on October 5 and the recycling levels have surpassed the standards set by the
Kazakhstan government, winning the full affirmation from the government…According to local media quoting well-informed sources, the government's support for CNPC's
acquisition is because it not only benefits the two oil companies, but also Kazakhstan. Firstly, located at the middle point of the China-Kazakhstan oil pipeline, the Kumkol oilfields under PetroKazakhstan produce nearly 7 million tons of oil annually, which
is very advantageous to the oil-transmitting pipeline scheduled to be complete by the end of this year. Secondly, CNPC's successful settlement concerning the rational use of petroleum concomitant gas is beneficial to solving the issue of resources waste and
environmental pollution for PetroKazakhstan. Thirdly, being favorable to eliminating contradictions existed between PetroKazakhstan and the Kazakhstan government
in the areas of petroleum exploitation and management, and to turning around the company's economic losses resulting from these. Fourthly, the Kazakhstan government wishes to realize multilateral capital structure in the energy resource area in order to
change the situation of western capital concentration in this area. More analyses show that the repeated enhancement between China and Kazakhstan in the area of energy resource cooperation is in line with the long-term strategic interests of the two countries.”
Seven-Eleven Japan increased its offer for Seven-Eleven (U.S.) to $37.50 from $32.50 per share. Before everyone gets excited for the arb community, the average cost for the arbs is about $35.50. That 2 dollar profit per share is overwhelmed by the losses on the books in Guidant. In addition, the positions in Guidant are significantly larger than those in Seven-Eleven. There is a spread of $1.75 remaining in PKZ. The deal should close in 5 days. That appears to me as an opportunity rather than a red flag (no pun intended).
The Conference Board announced yesterday that the U.S.leading index decreased 0.7 percent, the coincident index decreased 0.1 percent and the lagging index increased 0.2 percent in September.
* The leading index decreased sharply in September
as the economic impact of the hurricanes in the Gulf
region began to be reflected in the component data.
September’s decline in the leading index is its third
consecutive fall. In September, the largest negative
contributors to the leading index were the index of
consumer expectations and initial claims for
unemployment insurance. The growth rate of the leading
index has been slowing down steadily from a peak
growth of about 10.0 percent at the end of 2003, and
it is now fluctuating in the 0.5 to 1.5 percent annual
rate range in recent months.
* The coincident index, a measure of current
economic activity, decreased in September, and the
slight increase in August was revised down to a slight
decrease as actual data for personal income, which
partially reflects the impact of Hurricane Katrina,
became available. September’s decline in the
coincident index is also partly due to the effect of
the hurricanes as employment and industrial production
registered decreases. The coincident index has been
increasing at a relatively steady 2.5 percent annual
rate since April 2003, but its growth rate has
moderated in recent months.
* The leading index has slowed down steadily since
mid-2004. The impact of the hurricanes reinforced an
already existing moderation in the leading index.
Excluding the large positive contributions from the
interest rate spread, the leading index has been
fluctuating around a relatively flat trend throughout
2005. At the same time, the growth rate of real GDP
has slowed to a 3.3 percent annual rate in the second
quarter of 2005, down from a 4.3 percent rate in the
first quarter of 2004. Although it is too soon to tell
if the negative impact of the hurricanes on the
leading index will be lasting, the recent behavior of
the leading index is still consistent with the economy
continuing to expand more moderately in the near term.
Leading Indicators. Four of the ten indicators that
make up the leading index increased in September. The
positive contributors – beginning with the largest
positive contributor – were vendor performance,
building permits, interest rate spread, and stock
prices. The negative contributors – beginning with the
largest negative contributor – were average weekly
initial claims for unemployment insurance (inverted),
index of consumer expectations, real money supply*,
manufacturers’ new orders for nondefense capital
goods*, and manufacturers’ new orders for consumer
goods and materials*. The average weekly manufacturing
hours held steady in September.
The leading index now stands at 136.8 (1996=100).
Based on revised data, this index decreased 0.1
percent in August and decreased 0.1 percent in July.
During the six-month span through September, the
leading index increased 0.4 percent, with seven out of
ten components advancing (diffusion index, six-month
span equals seventy percent).
Coincident Indicators. Two of the four indicators that
make up the coincident index increased in September.
The positive contributors to the index – beginning
with the largest positive contributor – were personal
income less transfer payments*, and manufacturing and
trade sales*. The negative contributors to the index –
beginning with the largest negative contributor – were
industrial production and employees on nonagricultural
payrolls.
The coincident index now stands at 120.7 (1996=100).
Based on revised data, this index decreased 0.1
percent in August and increased 0.2 percent in July.
During the six-month period through September, the
coincident index increased 0.8 percent.
Lagging Indicators. The lagging index stands at 120.3
(1996=100) in September, with four of the seven
components advancing. The positive contributors to the
index – beginning with the largest positive
contributor – were average duration of unemployment
(inverted), average prime rate charged by banks, ratio
of consumer installment credit to personal income*,
and ratio of manufacturing and trade inventories to
sales*. The negative contributors – beginning with the
largest negative contributor – were commercial and
industrial loans outstanding*, change in CPI for
services, and change in labor cost per unit of
output*. Based on revised data, the lagging index
remained unchanged in August and increased 0.2 percent
in July.
The Philly Fed Index rose to 17.3 in Oct. from 2.2 in Sept. Troubling were the prices received sector increasing to 32.6 from 8.6 and the prices paid sector rising to 76.6 from 52.7. The latter was the highest level in 25 years. You remember 1980, don’t you? Inflation was not a pretty sight during the Carter years.
According to a national poll conducted by the Sacred Heart University Polling Institute, gas prices are seriously impacting the quality of life in America.
* Over three-quarters of all respondents, 77.6%, indicated that recent
gasoline price increases are very seriously (42.3%) or somewhat
seriously (35.3%) impacting their own quality of life. This is an
increase from 71.3% recorded in April 2005.
* Over half of all Americans surveyed, 55.8%, indicated they will travel
less this coming holiday season as a direct result of higher gasoline
prices. Another 37.4% suggested they would not travel less and 6.8%
were unsure. In April 2005, 43.5% of those surveyed said they would
travel less over the summer of 2005.
* Americans are using their credit cards to pay for gas much more
frequently today than a year ago. One-third (31.2%) of respondents who
have a car, truck or SUV said they are using credit cards to pay for
gas more frequently today than they were one year ago as a result of
higher prices.
* Increasing numbers of Americans surveyed are reporting their next car
will be smaller and more gas-efficient. Among those currently owning a
car, 56.0% now report their next car will be smaller and more gas-
efficient -- up from 45.7% in April 2005.
* 45.2% of those who will purchase a new car will consider a "hybrid"
vehicle, while 38.0% suggest they will not consider the new "hybrids."
According to John Gerlach, associate professor in the Economics and
Finance Department at Sacred Heart University, "The new survey clearly shows
that the continuation of high gas prices is forcing Americans to change their life style.
"More of us are also planning to buy more fuel-efficient cars than was the
case five months ago, and the sales of large SUVs have already declined from
their highs of a year ago. This is not good news for U.S. auto makers, who
have relied on the sales of these vehicles to offset losses on their
automobiles.
"Given the continuation of high gas prices and the outlook for more of the
same (not to mention higher home heating costs this winter), it is not
surprising that a growing number of Americans feel that their quality of life
is being negatively impacted. And it may very well get worse in the next six
months." Jerry Lindsley, director of the Polling Institute, commented that,
"spiraling gas and home heating oil prices may be the 'stealth issue' that
will impact the careers of incumbent elected officials in '06 and possibly '08
as much as they are impacting Americans' quality of life. With our survey
showing the President's approval rating down to 42% positive and recent
ratings of Congress down to 29% positive -- it may be 'incumbents beware.'
Consumer anger may impact both political parties alike if they don't get it
together on this quality-of-life issue."
The number of Pennsylvanians with employer-provided health insurance declined by 4.1 percent between 2000 and 2004 according to a new study by the Keystone Research Center and Washington D.C.-based Economic Policy Institute. The decline means that about 494,000 fewer Pennsylvanians get health insurance through their employer today than did in 2000. One in seven of the people who lost employer-provided health insurance coverage in the U.S. between 2000 and 2004 lived in Pennsylvania.
Justice Brandeis: “Our government... teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”
Before I get into this morning’s discussion, I’d like to address an article in today’s WSJ.
This paper stated “Refco’s $430 million of bad debts stemmed by multiple customers, including money manager Victor Niederhoffer.” Vic wrote that all his debts to Refco have been paid in full. I believe him. When an entity or entities try to dismember one’s reputation in an unjustified manner, I don’t like it.
Lenny Bruce: “In the Halls of Justice the only justice is in the halls.”
Yesterday’s negative NYSE action was the biggest one-day drop in 4 months and must be viewed very carefully. Why? It came right after the biggest one-day up move in 3 months. This is more than out of the ordinary and helps to explain the rise in the VIX. Yesterday there were 144 new lows on the NYSE and only 39 new highs for the year. More troubling was that over three-quarters of the volume on the NYSE just happened to be on the downside. Now, please take the following with a grain of salt. Earlier in the week we had that $1.4 billion trade in ExxonMobil. This was followed by large buying in S&P futures that created short covering. Then there was yesterday’s down day. It appears to me that one or more large accounts are being liquidated. They appear to be heavily centered in energy commodities and energy-related equities. Today is option expiration. It could be a highly volatile ride.
Ford will be closing plants and announcing significant layoffs. What else is new?
I don’t write often about Google because it rubs salt in the wounds of many. I have been writing about Google for three years. It is a superior technology company and they offer many beta programs that can make your daily life a great deal more efficient. It serves no purpose to remind readers that I suggested a couple of years ago to purchase shares in this company when and if it went public. That’s not the purpose for mentioning Google. The company’s results for the quarter rose seven-fold. Whether Google goes to $335 or higher, it cannot hold up the rest of the market. There will always be a few companies that shine in dimming times, but eventually, when they raid the whorehouse, they take all the girls. Your beautiful sister, in this case, Google, might be the last to go, but it will go. The stay may be short, but it will go.
Crude is trading around $60 a barrel this morning. It is only a $10 decline from the recent top, and a natural reaction to less demand for gasoline as the peak driving season is behind us. That does not mean we should ignore $2.75 a gallon gas and high prices for heating oil and natural gas. The International Council of Shopping Centers thinks it is business as usual. They see same-store holiday sales in Nov. and Dec. rising by 3 to 3 ½ percent. In 2004, it was 2.3%. I think they’re nuts. They should be happy as a pig in manure if this season matched last year’s. The consumer is stumbling around the ring as if hit by Rocky Marciano.
Russian oil major Lukoil has proposed to PetroKazakhstan and China's CNPC to settle ownership disputes over a joint venture in Kazakhstan, two Russian news agencies reported.
"We have contacted PetroKazakhstan and CNPC - I sent a letter to these two companies - with a proposal to meet and hold talks to resolve our disputes," Interfax quoted Lukoil Vice President Andrei Kuzyayev as telling a press conference in Astana on Thursday.
The RIA Novosti agency also quoted Kuzyayev as making the similar remarks.
With regards to Albertson’s, according to auctionblockdatabase.com,
"Sources confirmed that due diligence began the week of Oct. 3, and that the KKR group has already gone to Albertson's headquarters for management presentations.
The other two groups were scheduled to go the week ofOct. 10. A deal announcement is expected around the end of November."
According to the People’s Daily in China, “The first pipeline for recycling natural gas concomitant in Kazakhstan, solely financed by the Chinese side, went into official operation on October 5 and the recycling levels have surpassed the standards set by the
Kazakhstan government, winning the full affirmation from the government…According to local media quoting well-informed sources, the government's support for CNPC's
acquisition is because it not only benefits the two oil companies, but also Kazakhstan. Firstly, located at the middle point of the China-Kazakhstan oil pipeline, the Kumkol oilfields under PetroKazakhstan produce nearly 7 million tons of oil annually, which
is very advantageous to the oil-transmitting pipeline scheduled to be complete by the end of this year. Secondly, CNPC's successful settlement concerning the rational use of petroleum concomitant gas is beneficial to solving the issue of resources waste and
environmental pollution for PetroKazakhstan. Thirdly, being favorable to eliminating contradictions existed between PetroKazakhstan and the Kazakhstan government
in the areas of petroleum exploitation and management, and to turning around the company's economic losses resulting from these. Fourthly, the Kazakhstan government wishes to realize multilateral capital structure in the energy resource area in order to
change the situation of western capital concentration in this area. More analyses show that the repeated enhancement between China and Kazakhstan in the area of energy resource cooperation is in line with the long-term strategic interests of the two countries.”
Seven-Eleven Japan increased its offer for Seven-Eleven (U.S.) to $37.50 from $32.50 per share. Before everyone gets excited for the arb community, the average cost for the arbs is about $35.50. That 2 dollar profit per share is overwhelmed by the losses on the books in Guidant. In addition, the positions in Guidant are significantly larger than those in Seven-Eleven. There is a spread of $1.75 remaining in PKZ. The deal should close in 5 days. That appears to me as an opportunity rather than a red flag (no pun intended).
The Conference Board announced yesterday that the U.S.leading index decreased 0.7 percent, the coincident index decreased 0.1 percent and the lagging index increased 0.2 percent in September.
* The leading index decreased sharply in September
as the economic impact of the hurricanes in the Gulf
region began to be reflected in the component data.
September’s decline in the leading index is its third
consecutive fall. In September, the largest negative
contributors to the leading index were the index of
consumer expectations and initial claims for
unemployment insurance. The growth rate of the leading
index has been slowing down steadily from a peak
growth of about 10.0 percent at the end of 2003, and
it is now fluctuating in the 0.5 to 1.5 percent annual
rate range in recent months.
* The coincident index, a measure of current
economic activity, decreased in September, and the
slight increase in August was revised down to a slight
decrease as actual data for personal income, which
partially reflects the impact of Hurricane Katrina,
became available. September’s decline in the
coincident index is also partly due to the effect of
the hurricanes as employment and industrial production
registered decreases. The coincident index has been
increasing at a relatively steady 2.5 percent annual
rate since April 2003, but its growth rate has
moderated in recent months.
* The leading index has slowed down steadily since
mid-2004. The impact of the hurricanes reinforced an
already existing moderation in the leading index.
Excluding the large positive contributions from the
interest rate spread, the leading index has been
fluctuating around a relatively flat trend throughout
2005. At the same time, the growth rate of real GDP
has slowed to a 3.3 percent annual rate in the second
quarter of 2005, down from a 4.3 percent rate in the
first quarter of 2004. Although it is too soon to tell
if the negative impact of the hurricanes on the
leading index will be lasting, the recent behavior of
the leading index is still consistent with the economy
continuing to expand more moderately in the near term.
Leading Indicators. Four of the ten indicators that
make up the leading index increased in September. The
positive contributors – beginning with the largest
positive contributor – were vendor performance,
building permits, interest rate spread, and stock
prices. The negative contributors – beginning with the
largest negative contributor – were average weekly
initial claims for unemployment insurance (inverted),
index of consumer expectations, real money supply*,
manufacturers’ new orders for nondefense capital
goods*, and manufacturers’ new orders for consumer
goods and materials*. The average weekly manufacturing
hours held steady in September.
The leading index now stands at 136.8 (1996=100).
Based on revised data, this index decreased 0.1
percent in August and decreased 0.1 percent in July.
During the six-month span through September, the
leading index increased 0.4 percent, with seven out of
ten components advancing (diffusion index, six-month
span equals seventy percent).
Coincident Indicators. Two of the four indicators that
make up the coincident index increased in September.
The positive contributors to the index – beginning
with the largest positive contributor – were personal
income less transfer payments*, and manufacturing and
trade sales*. The negative contributors to the index –
beginning with the largest negative contributor – were
industrial production and employees on nonagricultural
payrolls.
The coincident index now stands at 120.7 (1996=100).
Based on revised data, this index decreased 0.1
percent in August and increased 0.2 percent in July.
During the six-month period through September, the
coincident index increased 0.8 percent.
Lagging Indicators. The lagging index stands at 120.3
(1996=100) in September, with four of the seven
components advancing. The positive contributors to the
index – beginning with the largest positive
contributor – were average duration of unemployment
(inverted), average prime rate charged by banks, ratio
of consumer installment credit to personal income*,
and ratio of manufacturing and trade inventories to
sales*. The negative contributors – beginning with the
largest negative contributor – were commercial and
industrial loans outstanding*, change in CPI for
services, and change in labor cost per unit of
output*. Based on revised data, the lagging index
remained unchanged in August and increased 0.2 percent
in July.
The Philly Fed Index rose to 17.3 in Oct. from 2.2 in Sept. Troubling were the prices received sector increasing to 32.6 from 8.6 and the prices paid sector rising to 76.6 from 52.7. The latter was the highest level in 25 years. You remember 1980, don’t you? Inflation was not a pretty sight during the Carter years.
According to a national poll conducted by the Sacred Heart University Polling Institute, gas prices are seriously impacting the quality of life in America.
* Over three-quarters of all respondents, 77.6%, indicated that recent
gasoline price increases are very seriously (42.3%) or somewhat
seriously (35.3%) impacting their own quality of life. This is an
increase from 71.3% recorded in April 2005.
* Over half of all Americans surveyed, 55.8%, indicated they will travel
less this coming holiday season as a direct result of higher gasoline
prices. Another 37.4% suggested they would not travel less and 6.8%
were unsure. In April 2005, 43.5% of those surveyed said they would
travel less over the summer of 2005.
* Americans are using their credit cards to pay for gas much more
frequently today than a year ago. One-third (31.2%) of respondents who
have a car, truck or SUV said they are using credit cards to pay for
gas more frequently today than they were one year ago as a result of
higher prices.
* Increasing numbers of Americans surveyed are reporting their next car
will be smaller and more gas-efficient. Among those currently owning a
car, 56.0% now report their next car will be smaller and more gas-
efficient -- up from 45.7% in April 2005.
* 45.2% of those who will purchase a new car will consider a "hybrid"
vehicle, while 38.0% suggest they will not consider the new "hybrids."
According to John Gerlach, associate professor in the Economics and
Finance Department at Sacred Heart University, "The new survey clearly shows
that the continuation of high gas prices is forcing Americans to change their life style.
"More of us are also planning to buy more fuel-efficient cars than was the
case five months ago, and the sales of large SUVs have already declined from
their highs of a year ago. This is not good news for U.S. auto makers, who
have relied on the sales of these vehicles to offset losses on their
automobiles.
"Given the continuation of high gas prices and the outlook for more of the
same (not to mention higher home heating costs this winter), it is not
surprising that a growing number of Americans feel that their quality of life
is being negatively impacted. And it may very well get worse in the next six
months." Jerry Lindsley, director of the Polling Institute, commented that,
"spiraling gas and home heating oil prices may be the 'stealth issue' that
will impact the careers of incumbent elected officials in '06 and possibly '08
as much as they are impacting Americans' quality of life. With our survey
showing the President's approval rating down to 42% positive and recent
ratings of Congress down to 29% positive -- it may be 'incumbents beware.'
Consumer anger may impact both political parties alike if they don't get it
together on this quality-of-life issue."
The number of Pennsylvanians with employer-provided health insurance declined by 4.1 percent between 2000 and 2004 according to a new study by the Keystone Research Center and Washington D.C.-based Economic Policy Institute. The decline means that about 494,000 fewer Pennsylvanians get health insurance through their employer today than did in 2000. One in seven of the people who lost employer-provided health insurance coverage in the U.S. between 2000 and 2004 lived in Pennsylvania.
Justice Brandeis: “Our government... teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”
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