COMFORTABLY NUMB
great title, great song, great way to deal with current world and economic events. a bit of a twist on "ignorance is bliss" but nonetheless it seems to describe the way many of us are feeling lately. its the feeling that we verbalize by saying "well, since theres nothing i can do about whats going on, i hope it will work out OK". we've all said it and we all feel it. so as events unfold and the world changes under our feet, we all use "everything will work out in time" as the mantra for seeing through the scary headlines and 24 hour war coverage. we use the power of positive thinking and repeat over and over to ourselves the comforting saying "things will work out fine, they always do". yet in the back of our minds we all know that this time things seem much more dangerous and uncertain.
as the media floods us with breaking news and our government does daily press conferences to reassure us, it all becomes a blurr. if you think about it too much it immobilizes you. if you try to ignore it you feel out of touch. yet going to work and spending time with family doesnt seem the same lately. there is a pall of nervousness and anxiety that hangs over us. even though it isnt affecting most of our day to day activities its still there. my fear is that soon it will affect us in a more direct and personal way. for our brave troops and their families its very personal. for us its just news.
maybe watching it so much is in some way preparing us for a more intimate relationship with it all. we are definitely becoming more callous about bombs exploding in cities and u.s. soldiers being held as POW's. we are getting used to the nightly reports about our soldiers getting killed. we are learning more about why most of the world dislikes america. we are learning more about the middle east and what it means in the world history. and we are learning that we have had it pretty good for a very long time. we are learning that things can change very fast. i hope they change back just as fast.
so until this all ends, i think i'll go listen to some pink floyd and hope things work out OK!
have a grateful day!
larry
Friday, March 28, 2003
Wednesday, March 26, 2003
RALLY IS OVER...LOOK OUT BELOW!
hopefully you have enjoyed the mini-bull market we have experienced since the war began. now its time to get ready for the war to begin for real and it wont help the market add to its gains. in fact, i believe the news flow will change dramatically for the worse and president bush will not be able to passify investors when it happens. as much as our leaders are telling us how well things are progressing in iraq, the war is getting out of control and very "off plan". we are fed a constant flow of conflicting reports from u.s. media presenting a positive 'spin' on the war progress, while non-u.s media interprets the news in an un-biased and often un-american way. each and every bit of information coming from the front is subject to wildly varying interpretation and analysis, none of which helps much in understanding whats really happening.
soon, that news will turn very bad by all interpretations as the battle for bahgdad begins and our soldiers start to be killed in large numbers. saddam hasnt been detered, and may in fact be emboldened by the world outrage at the u.s. aggression. now he has a chance to go down in history as the arab leader that defeated the american invaders. this is basically saddams nirvana for a perfect ending. my guess is he will not let any of his prophets down. i hope our soldiers and leaders can take it. unfortunately, the market will not be able to.
have a grateful day!
larry
hopefully you have enjoyed the mini-bull market we have experienced since the war began. now its time to get ready for the war to begin for real and it wont help the market add to its gains. in fact, i believe the news flow will change dramatically for the worse and president bush will not be able to passify investors when it happens. as much as our leaders are telling us how well things are progressing in iraq, the war is getting out of control and very "off plan". we are fed a constant flow of conflicting reports from u.s. media presenting a positive 'spin' on the war progress, while non-u.s media interprets the news in an un-biased and often un-american way. each and every bit of information coming from the front is subject to wildly varying interpretation and analysis, none of which helps much in understanding whats really happening.
soon, that news will turn very bad by all interpretations as the battle for bahgdad begins and our soldiers start to be killed in large numbers. saddam hasnt been detered, and may in fact be emboldened by the world outrage at the u.s. aggression. now he has a chance to go down in history as the arab leader that defeated the american invaders. this is basically saddams nirvana for a perfect ending. my guess is he will not let any of his prophets down. i hope our soldiers and leaders can take it. unfortunately, the market will not be able to.
have a grateful day!
larry
Tuesday, March 25, 2003
NOT SURE WHEN BUT VICTORY IS CERTAIN
each day we give the world good reason to think we are arrogant. in a confident, and what some might say brazen statement, president bush said today that "we cannot know the duration of this war, but yet we know its outcome. we will prevail." even as we have faced some of the fiercest fighting and weather difficulties of the conflict so far, with casualties mounting and POW's in the hands of saddams torturers, our president has committed himself to the war, no matter the cost. that was obvious in his supplemental budget request for $75 billion to fund the war and coerce allies to stay the course.
a list of them follows...
things that have gone 'wrong'
1) the u.s. could not get the u.n. to authorize the military action against iraq.
2) the u.s. could not get turkey to allow us to use it for a northern front.
3) "shock & awe" was a nice show but did not get saddam to surrender.
4) civilian casualties are mounting daily.
5) not 1 iraqi has greeted an american soldier with an american flag.
6) the weather is hampering our progress.
7) we have not found any chemical or biological weapons.
8) we have not fully prevented oil well fires.
9) worldwide protests are getting worse.
10) domestic support is waning rather than rising as we march towards bahgdad.
things have also gone 'right'
1) most of the oil is safe...at least for now.
2) some iraqi soldiers are surrendering...not as many as in the last gulf war.
3) the u.s. marines are 50 miles from bahgdad in 6 days...scared to cross 'red-line' and face saddams wrath.
4) many cities are secure, we think, and humanitarian aide has started to arrive, but much more is needed.
5) opec has not started an oil embargo...yet.
6) u.s. military casualties are minimal...so far.
7) chemicals weapons have not been used against our troops...yet.
8) israel has not been engaged by saddam...yet.
9) kuwait has not been successfully attacked...yet.
10) no terrorist attack/retaliation has occured in the u.s....yet.
11) no refugee crisis has developed...yet.
as you can see, the things that have gone right could still end up going into the 'wrong' column, but for now the lists are about even. unfortunately, i think that could change for the worse, regardless of how optimistic our president and military leaders are. and until they know for sure that we will 'win', and i'm not sure what a win will look like, we shouldnt be bragging about the victory.
have a grateful day!
larry
each day we give the world good reason to think we are arrogant. in a confident, and what some might say brazen statement, president bush said today that "we cannot know the duration of this war, but yet we know its outcome. we will prevail." even as we have faced some of the fiercest fighting and weather difficulties of the conflict so far, with casualties mounting and POW's in the hands of saddams torturers, our president has committed himself to the war, no matter the cost. that was obvious in his supplemental budget request for $75 billion to fund the war and coerce allies to stay the course.
a list of them follows...
things that have gone 'wrong'
1) the u.s. could not get the u.n. to authorize the military action against iraq.
2) the u.s. could not get turkey to allow us to use it for a northern front.
3) "shock & awe" was a nice show but did not get saddam to surrender.
4) civilian casualties are mounting daily.
5) not 1 iraqi has greeted an american soldier with an american flag.
6) the weather is hampering our progress.
7) we have not found any chemical or biological weapons.
8) we have not fully prevented oil well fires.
9) worldwide protests are getting worse.
10) domestic support is waning rather than rising as we march towards bahgdad.
things have also gone 'right'
1) most of the oil is safe...at least for now.
2) some iraqi soldiers are surrendering...not as many as in the last gulf war.
3) the u.s. marines are 50 miles from bahgdad in 6 days...scared to cross 'red-line' and face saddams wrath.
4) many cities are secure, we think, and humanitarian aide has started to arrive, but much more is needed.
5) opec has not started an oil embargo...yet.
6) u.s. military casualties are minimal...so far.
7) chemicals weapons have not been used against our troops...yet.
8) israel has not been engaged by saddam...yet.
9) kuwait has not been successfully attacked...yet.
10) no terrorist attack/retaliation has occured in the u.s....yet.
11) no refugee crisis has developed...yet.
as you can see, the things that have gone right could still end up going into the 'wrong' column, but for now the lists are about even. unfortunately, i think that could change for the worse, regardless of how optimistic our president and military leaders are. and until they know for sure that we will 'win', and i'm not sure what a win will look like, we shouldnt be bragging about the victory.
have a grateful day!
larry
Friday, March 21, 2003
SHOCKED & AWED
the u.s military has bombed bahgdad. the pictures on tv are amazing and the force being used is incredible. if saddam is still alive he cant be very happy about what is happening to his palaces or his empire. if the arab world is watching they are probably not happy either. now that the u.s. has decided to unleash all its fury on the arab world, we need to be ready for them to respond in-kind. obviously they will not try to invade the u.s. and they wont bomb washington d.c., at least not from the air. what we have started will take on a life of its own and will not end with our deafeat of saddam and occupation of iraq. saddam may be gone but the arab world will not soon forget the images of bahgdad being destroyed by the u.s. military. i worry about a day when the favor is returned.
the u.s military has bombed bahgdad. the pictures on tv are amazing and the force being used is incredible. if saddam is still alive he cant be very happy about what is happening to his palaces or his empire. if the arab world is watching they are probably not happy either. now that the u.s. has decided to unleash all its fury on the arab world, we need to be ready for them to respond in-kind. obviously they will not try to invade the u.s. and they wont bomb washington d.c., at least not from the air. what we have started will take on a life of its own and will not end with our deafeat of saddam and occupation of iraq. saddam may be gone but the arab world will not soon forget the images of bahgdad being destroyed by the u.s. military. i worry about a day when the favor is returned.
Wednesday, March 19, 2003
1/2 THE TAXES WITH 2x THE RISK
originally written 1/6/03
the newly proposed and soon to be implemented tax package is getting lots of investors very excited. its being billed as a $600billion tax cut over 10 years with the 'centerpiece' of the plan being a sizable cut in taxes paid on dividends paid by corporations. many market bulls are touting this as a superb reason to buy stocks that pay dividends. and so nobody gets left out, even stocks that dont pay dividends are rallying as some believe the new tax code will inspire them to start paying a dividend...microsoft was 1st and probably wont be the last... there, everybodys happy.
now for the reality of the situation. first of all, the tax plan is just a proposal. i know, i know...bush has control of the congress so his plan will get passed without any problems. NOT! the democrats have a few cards in their hand that they have yet to play and tax plans are notoriously watered down and in most cases they come too late to help in the way they were intended to.
secondly, lets say the prez gets what he wants. will it stimulate the economy? only time will tell. the problem may come when the companies that do pay dividends need to cut them if business continues to struggle.
thirdly, lowering tax rates on dividends doesnt reduce the risks of investing in stocks. in fact, it creates a false sense of security and even some speculative frenzy as investors 'bet' on an outcome that may or may not happen. in addition it encourages companies to payout earnings instead on reinvesting them into the business. thus it favors value rather than growth investments.
fourthly, (i know that sounds silly) any incentive for businesses not to reinvest earnings to grow their business is a "dis-incentive" for growth...which is what stock values are based on. if a company choses to pay-out earnings rather than reinvest them in the business, well then the earnings are taxed and growth slows. the result is not good for future capital expenditures or business growth.
with this so called 'bold' proposal, the administration is embarking on a new economic strategy of targeting the stock market and in fact is talking up the equity markets by promising this 'new and improved' stimulus. his advisors have convinced mr bush, as if he wasnt aware, that the economy will be more important in the next election than the war. they may have something there. being that the war will be quick and painless(according to the same advisors), we will need something else to focus on and that will be our stock portfolios.
bold is a good word but its an inappropriate one for this particular plan. stupid, ill-concieved, and ridiculous are adjectives used by more intelligent commentators than myself, but i think they fit much better. if we need stimulus now, then stimulate us now. and there are many ways to do that, yet none of them are in the plan proposed by mr. bush. maybe he is working this backwards, propose crazy stuff, then let the dems change it to be more for the middle class and then take credit for being a centrist and a president for the masses. im not sure his tact but so far he seems to be headed the wrong way on the economic path to recovery.
have a grateful day!
larry
originally written 1/6/03
the newly proposed and soon to be implemented tax package is getting lots of investors very excited. its being billed as a $600billion tax cut over 10 years with the 'centerpiece' of the plan being a sizable cut in taxes paid on dividends paid by corporations. many market bulls are touting this as a superb reason to buy stocks that pay dividends. and so nobody gets left out, even stocks that dont pay dividends are rallying as some believe the new tax code will inspire them to start paying a dividend...microsoft was 1st and probably wont be the last... there, everybodys happy.
now for the reality of the situation. first of all, the tax plan is just a proposal. i know, i know...bush has control of the congress so his plan will get passed without any problems. NOT! the democrats have a few cards in their hand that they have yet to play and tax plans are notoriously watered down and in most cases they come too late to help in the way they were intended to.
secondly, lets say the prez gets what he wants. will it stimulate the economy? only time will tell. the problem may come when the companies that do pay dividends need to cut them if business continues to struggle.
thirdly, lowering tax rates on dividends doesnt reduce the risks of investing in stocks. in fact, it creates a false sense of security and even some speculative frenzy as investors 'bet' on an outcome that may or may not happen. in addition it encourages companies to payout earnings instead on reinvesting them into the business. thus it favors value rather than growth investments.
fourthly, (i know that sounds silly) any incentive for businesses not to reinvest earnings to grow their business is a "dis-incentive" for growth...which is what stock values are based on. if a company choses to pay-out earnings rather than reinvest them in the business, well then the earnings are taxed and growth slows. the result is not good for future capital expenditures or business growth.
with this so called 'bold' proposal, the administration is embarking on a new economic strategy of targeting the stock market and in fact is talking up the equity markets by promising this 'new and improved' stimulus. his advisors have convinced mr bush, as if he wasnt aware, that the economy will be more important in the next election than the war. they may have something there. being that the war will be quick and painless(according to the same advisors), we will need something else to focus on and that will be our stock portfolios.
bold is a good word but its an inappropriate one for this particular plan. stupid, ill-concieved, and ridiculous are adjectives used by more intelligent commentators than myself, but i think they fit much better. if we need stimulus now, then stimulate us now. and there are many ways to do that, yet none of them are in the plan proposed by mr. bush. maybe he is working this backwards, propose crazy stuff, then let the dems change it to be more for the middle class and then take credit for being a centrist and a president for the masses. im not sure his tact but so far he seems to be headed the wrong way on the economic path to recovery.
have a grateful day!
larry
Tuesday, March 18, 2003
ONE THING HAS NOTHING TO DO WITH THE OTHER
war and the economy have nothing to do with each other. not a popular viewpoint but the fact of the matter is its true. so far there hasnt been a shot fired yet almost every company and economic report has cited the war with iraq for causing uncertainty that has resulted in poor business performance and outlooks. nice scapegoat but the facts do not support that reasoning. let me try to elaborate.
computer sales are not down because of the war, they are down because we all have enough computing capacity to surf the web and balance our checkbooks and businesses have only recently finished upgrading their hardware. there is no 'killer app' and there is over capacity in every area of the technology industry which may take many more years to work off.
auto sales are not being affected by the war, in fact they have continued to stay strong in spite of the war. what is causing auto sales to slow is the deteriorating jobs market and almost two years of 0% financing and other gimmicks that pulled demand forward. in addition, cars on the road are 'younger' and better built than 5 years ago so they do not need to be replaced as often.
the airline industry may have been somewhat affected by the war issue, but they have had almost 2 years to adjust and still the bankruptcies will continue due to over capacity and high fixed costs. the airline industry has needed a complete re-organization for many years and todays enviroment will force that to take place.
advertising is always cyclical and we are in a down cycle currently.
telecommunications is a mess regardless of the war. can you say "over capacity", "debt" and "chapter 11"?
insurance is dealing with its own problems including guarantee loss benefits and poor actuarial management.
homebuilding has been positively effected by the FED, cant blame problems here on the war.
entertainment should be doing great as its an easy and inexpensive escape from the war news...so dont blame the war.
defense is certainly not being adversely affected by the war, more bombs and military equiptment should be a boon to this industry but other factors are having a more detremental effect on their busines than the DOD orders are helping.
banking is being affected by higher credit loss rates and lower demand for loans.
brokerage is being affected by the bear market, conflicts of interest scandals, fraud, corporate malfeasence and lousy advice to clients.
retail is being effected by the employment market and its own over capacity.
restaurants are being affected by higher costs of labor, healthcare and energy plus how many new stores can be opened without canabalizations.
oils should be doing better with the war concerns as they should be benefiting from higher energy prices and firm demand.
transportation is being hurt by higher costs and lower rates combined with too much capacity.
capital goods are being affected by higher costs and lower revenues.
commercial property is suffering form 'phantom' tenants, rising vacancies and lower lease rates. these problems are a result of the boom time when companies over leased planning for further expansions. in addition, companies are downsizing to meet more realistic needs.
what will affect business and the economy is if the war spreads outside of iraq or becomes a "real" battle within iraq. then every industry and the world economy will be affected in a very bad way. for now though its just a plain old recession-like economic enviroment that is causing business to be difficult. that will not change by defeating saddam hussein or capturing osama bin laden. most americans have not changed the way they live or spend due to the war or the 'high' terror alert level. thats what makes us great, i guess. to blame the economic malaise on the war is just a bad excuse and once the war is over, which it will be shortly, the real issues that are effecting the economy will rise to the surface. then we may hope for a war with north korea so we can blame the economic problems on kim jong il.
have a grateful day!
larry
war and the economy have nothing to do with each other. not a popular viewpoint but the fact of the matter is its true. so far there hasnt been a shot fired yet almost every company and economic report has cited the war with iraq for causing uncertainty that has resulted in poor business performance and outlooks. nice scapegoat but the facts do not support that reasoning. let me try to elaborate.
computer sales are not down because of the war, they are down because we all have enough computing capacity to surf the web and balance our checkbooks and businesses have only recently finished upgrading their hardware. there is no 'killer app' and there is over capacity in every area of the technology industry which may take many more years to work off.
auto sales are not being affected by the war, in fact they have continued to stay strong in spite of the war. what is causing auto sales to slow is the deteriorating jobs market and almost two years of 0% financing and other gimmicks that pulled demand forward. in addition, cars on the road are 'younger' and better built than 5 years ago so they do not need to be replaced as often.
the airline industry may have been somewhat affected by the war issue, but they have had almost 2 years to adjust and still the bankruptcies will continue due to over capacity and high fixed costs. the airline industry has needed a complete re-organization for many years and todays enviroment will force that to take place.
advertising is always cyclical and we are in a down cycle currently.
telecommunications is a mess regardless of the war. can you say "over capacity", "debt" and "chapter 11"?
insurance is dealing with its own problems including guarantee loss benefits and poor actuarial management.
homebuilding has been positively effected by the FED, cant blame problems here on the war.
entertainment should be doing great as its an easy and inexpensive escape from the war news...so dont blame the war.
defense is certainly not being adversely affected by the war, more bombs and military equiptment should be a boon to this industry but other factors are having a more detremental effect on their busines than the DOD orders are helping.
banking is being affected by higher credit loss rates and lower demand for loans.
brokerage is being affected by the bear market, conflicts of interest scandals, fraud, corporate malfeasence and lousy advice to clients.
retail is being effected by the employment market and its own over capacity.
restaurants are being affected by higher costs of labor, healthcare and energy plus how many new stores can be opened without canabalizations.
oils should be doing better with the war concerns as they should be benefiting from higher energy prices and firm demand.
transportation is being hurt by higher costs and lower rates combined with too much capacity.
capital goods are being affected by higher costs and lower revenues.
commercial property is suffering form 'phantom' tenants, rising vacancies and lower lease rates. these problems are a result of the boom time when companies over leased planning for further expansions. in addition, companies are downsizing to meet more realistic needs.
what will affect business and the economy is if the war spreads outside of iraq or becomes a "real" battle within iraq. then every industry and the world economy will be affected in a very bad way. for now though its just a plain old recession-like economic enviroment that is causing business to be difficult. that will not change by defeating saddam hussein or capturing osama bin laden. most americans have not changed the way they live or spend due to the war or the 'high' terror alert level. thats what makes us great, i guess. to blame the economic malaise on the war is just a bad excuse and once the war is over, which it will be shortly, the real issues that are effecting the economy will rise to the surface. then we may hope for a war with north korea so we can blame the economic problems on kim jong il.
have a grateful day!
larry