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31 March 2003
9:33am and the DJIA has been down over 200 points in early trading.
The NASDAQ is also off 2.5% in moderate trading. Breadth is heavily
negative. We are betting on a rally later in the next few days today and
so we are establishing trading positions in the DIA around $79.85 and
SBC under $20 and BGEN at $29.40. We may hold the DIA since
under $80 has been a good place to begin buying for the past two
years. For a rally when the war news gets better we also bought
SPDR Technology at $14.40 for accounts where we sold it
several weeks ago and also AOL at $11.
12:57pm and we added to our SLE trade at $18.75 and bought
May Department Stores at $19.90 in those same trading accounts.
Our posts have been few today because we had to go out for an
hour and have been setting up some month end trades. We don't have a
feel for how the stocks will close but our guess is unchanged.
2:27pm and we traded out of SBC for 35 cents per share profit, the
DIA for 80 cents per share profit and the BGEN for 70 cents per
share profit. We sold our small holding in IBC at $10.59 for 50
cents per share profit because it looks like a mark up is occurring in the stock.
Treasuries have been strong all day. The DJIA is heading back
down into the close so it looks like our unchanged for the day guess is a goner.
3:02pm and the DJIA closed down 156 points at 7990. The
S&P 500 lost 15 points to end the month at 847 and the
NASDAQ surrendered 29 points to close the month and
First Quarter of 2003 at 1340.
And tomorrow is another day in a difficult time.
31 March 2003 - Morning Comment
6:30am and it looks like March wants to go out like a bear with the DJIA futures
down 100 points, and the S&P 500 down a similar percentage and the NASDAQ
futures down 18 points. The Asian markets were down overnight and Europe is
down 2% across the board.
The war seems to have all the markets in a funk. The Nikkei closed the
Japanese fiscal year below 8000 today. We hope that same fate of 14
down years isn't in store for the U.S. markets. Even the bible only forecasts
seven years of famine.
We would guess down early and up late but that is only our guess and we
don't know how educated that guess is.
28 March 2003
8:04am and it may be that until the war is won the markets
will flounder. The present stock market action is in direct
contrast to the rally that began and didn't end at the start of the
Gulf War in 1991. But then the 1991 Coalition was basically
removing an army from foreign territory not invading the army's
homeland as the 2003 Coalition of Two plus friends at home is doing.
Asia was down 1% overnight and Europe is down more now. Treasuries are rallying.
We received the following e-mail:
This was in this morning's Washington Post.
Ledeen has two children of military age. I wonder if their deaths would be secondary to the grand plan.
"Along similar lines, Michael A. Ledeen, author of 'The War against the Terror Masters'
and a scholar at the American Enterprise Institute, argued at a forum on Iraq earlier the
week: "I think the level of casualties is secondary. I mean, it may sound like an odd
thing to say, but all the great scholars who have studied American character have
come to the conclusion that we are a warlike people and that we love war. . . .
What we hate is not casualties but losing. And if the war goes well and if the
American public has the conviction that we're being well-led and that our people
are fighting well and that we're winning, I don't think casualties are going to be the issue."
The quote gives a good flavor of the thinking of the neo-con chicken hawks.
As long as it is other people's children and grandchildren and fathers and
brothers and mothers and sisters and aunts and uncles the sacrifice is OK.
We hate the casualties and we had hoped our country had reached the point where
peace and negotiation would replace war and vituperation.
8:10am and Chip Reid is on CNBC again standing in front of a battalion
headquarters somewhere in Iraq and he can't tell us where, of course. He and
Brian Williams and all the folks in their bomber jackets are on a great adventure.
Lawrence of Arabia would be proud.
8:38am and there was an incident that closed a bridge in NYC and that put a
scare in the markets. It now seems there is nothing to it.
U.S. Personal Spending was unchanged in February while income rose 0.3%.
The DJIA has opened lower and is currently off 60 points.
9:38am and stocks are mired at lower levels. Maybe traders are going to
wait till after the weekend to take positions. Three more days in Iraq will
go a long way to showing how the war is going.
10:18am and Conagra is down $3 today and Sara Lee is down $1.25 on
news that investigators are tying the two companies to Ahold, the large
Dutch retailer that is in big financial trouble because of phony profits at its
U.S. subsidiary. In our reading of the story in the WSJ we see how some
folks at SLE and CAG may have criminal problems but we don't see any
financial repercussions. And so we are trading some shares in our
aggressive trading accounts for a move back up later today as the sellers
become buyers. We bought SLE at $18.59 and CAG at $18.45.
10:49am and JIM 'Ichabod' Grant is on CNBC warning of inflation and doom and gloom.
11:27am and we are repurchasing the MOND we sold yesterday a few pennies higher.
We liked the way it acted after we sold it and volume has dried up. Our
guess is that Fidelity was a buyer not a seller yesterday. And if Fidelity was a
seller there was a buyer there. And so we think the stock has a couple of
more trading points in it. We are buying it back today because the trading
action in the stock has been encouraging.
We are adding more BGEN at $29.50 to our aggressive accounts.
BGEN held up well the last two days and is down today in light trading.
11:42am and in these days of seemingly all bad news we received an e-mail about our kids in
Sri Lanka that makes the stress worthwhile. Thanks to all of our clients who are part of providing for them.
Friday, March 28, 2003 6:00 AM
Subject: Thank you
Thank you very much for your E-mail dated 24th March. I whish to apprise that the
Bank has informed me regarding the $18000 credited to my account. Once again
I thank you for your kind contribution of such a large sum of money.
Please convey my thanks from the bottom of my heart to Mr. Bud Lemley who has
contributed a large sum to our Institute. As such I earnestly beg of you to convey my
thanks to the clients of Mr. Bud Lemley and Members of the WEORC.
I have the pleasure to inform you that our children have obtained a bundle of
Certificates by showing their ability at the school sports meet held at the beginning of this term.
Four of our children emerged Champions at the sports meet. I know that you also have pleasure in hearing the abilities of the children as myself.
I regret that I have not been able to begin the construction of the wall. The reason for that is the
widening of the high way road. Many people have put-up various ideas and I have already asked
the village officer of the area regarding a firm plan.
Children are very keen regarding the vegetable cultivation from the past few months. They do the
cultivation with great enthusiasm. Now their cultivation has grown up and some are reaping the harvest.
Green Pees, Beans, Ladys Fingers, Brinjal and Dark Green Vegetables are grown and among fruits -
Papaws, Passion Fruit, etc are grown. Children safeguard them with great care and pleasure. Now the
small vegetable beds are very beautiful.
The children's 1st term holidays will be given at the beginning of next month. The Sinhala and
Hindu New Year falls during that vacation. I have decided to accompany the children on an excursion
after the New Year. Children like very much to go on this trip which is being done every year.
I repeatedly thank from the bottom of my heart for the kind service you render to the Institution.
Certainly, I feel that God's Love is embedded through the help you give. Please convey my kind regards to Carole.
We invoke God's Blessings to you all in our Prayers.
12:23pm and Rummy is on television giving his daily briefing.
Now he is going to take on Syria for shipping night vision goggles to
Iraq and he also threatened Iran. Thankfully he has not threatened
Russia yet. Rumsfeld's Syria/Iran warnings are unsettling since we
think the U.S. has its hands full with Iraq right now. But then we are war
wimps who just want all our soldiers home safe and sound and don't think the
Chicken Hawk adventure in Iraq is worth one American life. Obviously the
Chicken Hawks don't feel the same way. For them it's time to start bellying
up to the pork barrel trough. Richard Perle is trying to sell Global Crossing
to the Chinese and Dick Cheney's Halliburton gets the first no bid contract
in Iraq and no one will disclose the value of the contract.
Where is Ken Starr when we really need him?
The stock markets are rudderless fluctuating between even and down
50 points on the DJIA. Breadth is mixed, positive on the NYSE and
negative on the NASDAQ. Volume is light.
We sold the CAG at $19.80 for a nice $1.25 per share gain.
we decided not to hold the additional BGEN that we bought today
over the weekend and so we sold it at $29.90 for a scratch profit.
We will hold the Sara Lee and Mondavi.
1:36pm and the stock markets are selling down. It looks like a sell program.
The DJIA is down 84 points but volume remains tame.
1:42pm and SBC raised its dividend by 1.25 cents with a special 5
cents payout this quarter. The yield is now 5.5%. The stock market doesn't care.
3:02pm and The DJIA closed down 56 points at 8145.
The S&P 500 lost 5 points to end at 863 and The NASDAQ dropped 14 points to finish at 1369.
For the year, the DJIA is down 2.2%, the S&P 500 is down 1.8% and the NASDAQ is up 2.6%.
The Model Portfolio has slipped back to about $499,000 but is still up
8.4% for the year and is 78% cash. We will post an updated
Model Portfolio on Tuesday morning to reflect month end value.
28 March 2003 - Morning Comment
6:49am and Asia, Europe and U.S. futures are lower. On CNBC the guest analyst is
talking about sending an associate to Texas to talk with bankers and persons connected
with AMR Corp to find out whether the airline will file bankruptcy. We predicted
bankruptcy for UAL and AMR soon after US AIR filed bankruptcy last year.
Chapter 11 bankruptcies have become the tool of choice for executives to
reduce debt and re-price options. Who cares about wiped out shareholders?
Our local school board has decided to reduce teaching positions, impose
fees, freeze salaries, except for administrators, and cut bus routes. We
are sure this is going on all over the country. The same actions are
occurring at all government levels. But at the local level, health insurance
plans also are being changed and fringe benefits eliminated. And all the
while the U.S. is squandering $100 billion and countless lives on a war
that in the end won't substantially change the lives of the folks in Iraq.
They'll just have another general or dictator running their lives. You say no?
Then just look at Afghanistan where the Taliban have been replaced by the
war lords, where women's rights have been abrogated after a year of show
and where the country has again become the largest exporter of opium. And
the White House points to Afghanistan as a success story even though no one
can drive safely outside of Kabul.
There is an economic side to this diatribe. Deficit spending works if the
money is spent in the U.S., blowing it in a far away place will have no
effect on the U.S. economy.
We have no ideas on the market action for today.
27 March 2003
7:55am and we can't help but laugh every time Chip Reid, an
NBC reporter embedded (is that like in bed?) with the troops
somewhere in Iraq appears on the television screen. He reminds
us of Ted Baxter from the Mary Tyler Moore show from days gone by.
Mondavi, a stock we have had an interest in over the years,
just announced a loss for the quarter and lowered earnings
expectations for the rest of this year and next. Banc of
America has lowered its rating and price target to $18. MOND
closed at $23. We own a bit at that level and this is one of those
cases where we are going to try and pick up a position on the
sell off this morning. If folks aren't going to drink French wine, Mondavi is just the ticket.
Insiders' control about 70% of the shares outstanding and
Fidelity owned 1.3 million at the last report we could find.
So the level the shares find depends on whether Fidelity is a
seller or a buyer at these lower levels. Since average daily
volume is fewer than 100,000 shares Fidelity could really slam the
stock. But after that there would be more than a dead cat
rebound since family members aren't going to sell.
8:25am and Jobless claims were 402,000. GDP for the Fourth
Quarter was up 1.4% versus up 3.4% in the Third Quarter.
The Washington Post has a story that the war may last for months
and the "longer than expected" concept is placing a drag on the stock
futures. It looks like we will have a lower opening. Our feeling is that the
media is finally getting more realistic about the war. We are going to
win it, it will just take more time and treasure than the war hawks had
expected. And we consider that a good development since it may calm the
craziness about the U.S. becoming the tyrant remover of the world. One
very negative effect that has yet to be talked about in the mainstream
media or The White House is that North Korea is much stronger and well
equipped militarily than Iraq. So tough talk is not going to work and because
Iraq has not been the push over expected the Bush boys had better get back
to the drawing boards on their approach to the North Koreans.
9:09am and we think the war news is going to improve over the next few days.
And so we are willing to take a trading position in DIA at $81.34 in some of our
larger accounts where we traded it last week for a small loss. The 8100 level is a
better level from which to trade. We are back in the SBC at $20.95 and we are
picking up Ionics around $16.10.
9:29am and we were only able to get 15,000 MOND at $18.1667 and so
we are going to place the shares we bought in the accounts that already
held it to reduce their cost price and give us an opportunity to trade out of
the stock at a scratch profit if it reaches $20.50 today, which will be a
victory since we entered the day with a $6 per share loss on the 10000
shares we owned. All stocks are anchovies.
10:52am and the DJIA remains 1% lower in moderate trading. We
purchased SPDR Technology shares in our trading accounts at $14.86.
12:42pm and we sold our DIA trade at $82.05 for a 70 cents per share profit.
We have our MOND in to sell at $20.50 which will get us out even. The
DJIA has improved as have the S&P 500 and NASDAQ but all three
remain lower for the day. Breadth is even and volume is on the light side.
1:53pm and we added shares at $16.08 to our Ionics trade of yesterday
giving us a new trading cost of $16.36. As we enter the final hour the
DJIA is flat and the S&P 500 and NASDAQ are slightly higher.
Hopefully we will get a punch higher so we can exit our SBC
trade profitably. We sold Mondavi at $20.50.
3:02pm and we sold the SBC trade at $20.80 for a 19 cents per
share loss. On the day we still came out ahead with our DIA added in.
At the close the DJIA was down 30 points at 8200. The S&P
500 lost 2 points to finish at 867 and the NASDAQ was off 3 points at 1384.
And tomorrow is not just another day.
27 March 2003 - Morning Comment
7:17am and we had a wonderful morning comment with many erudite observations
on the war and the stock markets that just disappeared into the innards of our
wonderful Word program.
Since inspiration lasts but a fleeting second, at least for us, we will give our
short take on the markets. We think there is a trade or two over the next few
days that we might attempt as month end approaches. We may, but since
Bank America just downgraded one of our picks, Mondavi, we may just sit on our hands also.
Japan was up slightly overnight, Europe is over 1% lower across the board and
U.S. stock futures are lower with Treasuries higher. All in all, another interesting day is shaping up.
26 March 2003
8:21am and the talk on CNBC with Congressional folks is that the
dividend tax cut may not make it. There had been some talk of allowing a
deduction for half, and we think that there still could be a compromise
on say the first $10,000 of dividend income which makes sense to us.
So that feature is the big unknown in the proposed tax package.
8:46am and stocks did open slightly lower but are not dropping
precipitously. We are going to take a position in BGEN for a
month end trade since some large mutual funds own the stock
and we are betting they will try and mark it up for Quarter end by Monday, March 31.
11:03am and the DJIA is trying to rally. Every time Bush gives a
speech about the war he tears up at the end. We remember when
Edmund Muskie was forced from the race for President when he
teared up in anger over a remark made about his wife. Times do change.
We bought the SBC at $20.85 and the BGEN at $31.23, both in our
larger aggressive accounts. In most accounts we are keeping our powder dry.
12:50pm and breadth is negative and volume is low. Stocks are
drifting lower and Treasury prices are moving higher. We surmise
that today is a "we are not winning as fast as we should" day in the stock and
bond markets. The BGEN purchase is a bust so far but we sold the
SBC for a 40 cents per share gain. And the beat goes on.
1:01pm and Rumsfeld is not leading the daily Pentagon briefing.
The lonely time in the last few months this occurred was Monday and the DJIA dropped 300 points.
2:14pm and there won't be a 300 point drop today. Since it
weakened after we confirmed our larger trade we bought a bit more
BGEN in smaller accounts at $30.60 on our quarter end mark up play.
We also are trading a small amount of ION in accounts off the $16.60 level.
It is a very thin trader so we are only doing in a few aggressive trading accounts.
2:30pm and we have to go riding with the prince so we are leaving a bit
early today. The weather is supposed to get nasty for the next few days.
At 2:30pm the DJIA was down 25 points, the S&P 500 was off 2
points and the NASDAQ was up 2 points.
And tomorrow is not just another day.
26 March 2003 - Morning Comment
7:11am and with the war news becoming familiar and positive the stock markets
seem to have adopted an upward bias. The Monday sell off in stocks was used as
a buying opportunity Tuesday by folks who missed the first bull boat and so
hopped on the second chance boat yesterday. We don't foresee a major pullback
unless the Bush folks lose control of their news message again as they did over the
weekend. Casualty figures of 500 Iraqis killed versus no Americans, while reminiscent
of an earlier war, are welcome and positive both for the American psyche and the
stock markets, and rising stock markets and lower oil prices are really what this war is about.
The movement of Treasury yields lower yesterday was in opposition to the all is
going well thesis because the going well thesis suggests higher interest rates as debt
balloons. If the war is really going well and the markets rally again today we would
expect lower prices on Treasuries and thus higher yields.
On the stocks front, Sears is going to open higher on news that they have put their
credit card operation up for sale. The credit card operation has become an
albatross to the share price and although the credit card portion supplies 60% of
earnings the financial engineers on Wall Street who need a big payday have convinced
the Sears higher ups that selling the finance arm is just the ticket to punch to get their
under water options in the black again. This action reminds us of just last year when
our neighbor Gary Comer was able to sell his Lands End operation to Sears for $2
billion plus. At the time Sears shares were selling at $62 and Gary chose to take cash
and pay the tax bill. This morning S shares will rally to open at $25.
Disney has been added to the UBS Warburg focus list and Honeywell has been
downgraded by another investment firm.
Today should have an upward bias after a soft opening. We will probably try
our SBC trade and may sell a bit more Ionics to reduce positions but that is all we plan for now.
25 March 2003
9:13am and The Conference Board, whomever they are, reported
that their consumer confidence index fell to 62.5 in March from a revised 64.8 in
February. Sales of existing homes fell 4.3% in February.
Stocks are meandering and there isn't much direction to the stock
markets in the early going. We are going to trade SBC today in a few
accounts where we have been trading it every day.
10:25am and there is a bit of a rally occurring. The DJIA is up 60
points and our screen is mostly green. Volume is light. We aren't
doing anything. The vet it here so we will be back in a few hours.
12:44pm and we are back and the DJIA is up 100 points. The
Bush folks are getting out front on presenting their side of the
war after a few days of fumbling. They have a clear message
again which is not "shock and awe" but now is "we expected a
tough fight all along". The stock and bond markets are responding
to that message with stocks higher and bonds retreating.
Also there are reports that Barton Biggs has suggested a 40% to
50% move in stock when the war ends. We haven't seen the interview.
Volatility rules the day.
Vice President Cheney who received $50 million from Halliburton
when he left to become VP is pleased to announce that Halliburton
has received the first no-bid contract for oil well cleanup in Iraq.
Halliburton is subcontracting the firefighting part of the clean up contract.
So the logical question is why should Halliburton get the firefighting part of the
contract and then be allowed to subcontract it except to pick up a management fee.
And even though it is a U.S. Government contract the dollar amount of the
contract is not being released. Different rules?
Delta Airlines CEO Mullins received a $13 million pay package last
year which was double his year before pay. Delta lost $1.7 billion
last year. In March of this year Mullins reduced his pay by 10% to
share the pain. What a guy!
1:56pm and as we enter the final hour the DJIA is trimming its gains.
The Senate voted to halve the Bush tax cut and that seemed to bring
in some selling. We read where the cuts will be restored in the "hash out"
between the House and Senate bills and so we still think the entire tax cut package will pass.
2:24pm and we sold SBC at $21.30 for a 15 cents per share profit.
3:02pm and the DJIA closed up 68 points for the day at 8285.
The S&P 500 gained 11 points to finish at 875 and the NASDAQ was up 21 points at 1391.
And tomorrow is not just another day.
25 March 2003 - Second Post
7:40am and now we have body counts starting on Iraqi soldiers killed. Europe was
higher than when we walked in this morning and the U.S. futures were up about 1%.
The DJIA is lower now and the NASDAQ is up fractionally. The markets are
obviously moving based on the speed and progress of the war and the "shock and awe"
nametag on the start of the war was now in retrospect a bad prognosticator. It's the
failure of unreasonable expectations rather than the failure of the military campaign that is affecting the markets.
We presume the Treasuries are moving higher on a safety issue because the passage
of the new tax cuts this week will cause a sell off once the war situation settles down.
25 March 2003 - Morning Comment
7:10am and it is gratifying that the five year Treasury continued higher after we sold it
yesterday. It's gratifying because the continued rise confirms our trading instinct was
correct on the purchase timing. And we are not unhappy we sold for a lesser profit
because even if our instinct was correct the risk/reward with the amount of money we committed was not.
As the war continues, the Congress is not sleeping. They are busy passing the $750
billion tax cut that will either be the panacea for, or destroyer of, the economy,
depending on your political and/or economic persuasion. One reason we held the
SBC and XLU is that the dividend return on both should give a good pop or at least
support when the tax package passes.
We tried trading the DIA yesterday and may do so again today but our
inclination is to rest on our laurels and maybe even sell if any of our few
stocks pops in a rally. All the stocks we own are anchovies.
We'll be in and out most of the day because the horse veterinarian is
coming this morning to check up on the prince's horse.
24 March 2003
7:08am and The WSJ is reporting that Sandy Weill has withdrawn his
name from consideration as one of the public representatives on the NYSE.
Weill is the CEO of Citigroup which has been censured and fined for
misleading the public. His nomination is an example that the old boy
network and fleecing the public is alive and well on Wall Street.
7:29am and we sold the U.S. Treasury 3% due 2008 at 100 1/8 for a
$150 per $100,000 principle trading profit. That's a lot better than the
$300 for $100M loss we had about ten minutes after we purchased on
Friday. And we thank our lucky stars for surviving that hubristic purchase.
Moreover the volatility was a good warning of the risk we were taking which we didn't fully appreciate.
10:05am and the DJIA has surrendered all of Friday's gains.
We are trading the DIA that we bought at $83.03 which price is down over
$2 on the day. We are following our theory that when the DJIA is down over
100 points on an intraday basis there has been only one day in the last 30
days where a buy trade hasn't worked. Luckily, the DJIA was down 200
points when we began buying. The media pushed the markets up and the
media has brought the markets down. We are watching except for the DIA trade.
11:37am and the DJIA is down 284 points. Volume is moderate and
breadth is 4/1 negative.
1:31pm and the DJIA is down 308 points and the NASDAQ is
down 50 points as Friday's euphoria becomes Monday's gloom.
We noticed a change in the tenor of the media outlets yesterday and the
negativism has only increased today. Breadth is 4/1 negative and
volume on the NYSE is 18/1 down versus up volume. The
markets are in a funk and we are hoping for mini rally to rescue our
DIA trade, or at least limit the damage.
2:31pm and Europe closed 3% to 5% lower for the day. There is no
rally attempt occurring in the markets. The Pentagon is giving its daily
briefing and Rumsfeld is not leading it as he usually does.
We are closing our DIA position with a 60 cents per share loss.
2:40pm and we have some little ones who need to go for a walk and
then ride horses. Since it is going to rain we are leaving early to
accomplish these goals. As we leave the DJIA is down 310 points, the
S&P 500 is off 32 points and the NASDAQ has dropped 50 points.
And tomorrow is not just another day.
24 March 2003 - Morning Comment
6:30am and European markets are lower as are U.S. stock futures. Japan was higher
but it seems that most stock markets are reacting negatively to the news from the war
front. While we aren't surprised the going is a tad difficult, we think the media over
analysis of each battle occurrence is having more of a negative effect than it should.
We don't think anyone but the media expected to reach Baghdad by Sunday.
Over the weekend we decided we were too cute with our Treasury buy on
Friday and so we are hoping to use this morning's rally in Treasuries to eliminate
our position. The upside/ downside risk reward ratio is skewed over the longer
term towards the negative and that is what we realized while reflecting on our purchase.
Our belief is that interest rates will begin rising sometime this year and that we
shouldn't be trying to catch one last blip down in interest rates.
Another interesting day is in store.
21 March 2003
7:31am and CPI was up 0.6% in February. The core rate was up 0.1%.
Weekly earnings were down 0.5%. CNBC is saying that traders are
betting that those first cruise missiles did get Saddam and his sons.
That's the reason for the strength in the London, France and
Germany with all of the European markets are up over 3%. The
DJIA futures are coming back in a bit.
8:00am and we have to run downtown to get a haircut.
8:55am and the markets are higher and holding. Volume is large and
breadth is good.
11:41am and the stock markets are strongly higher. The five year is
yielding over 3% and we are buying it and trying to sell our remaining
stock positions. We will post more when we are finished.
1:48pm and we bought the Treasury five year at $99.92 in the
accounts where we traded it last month. The Treasury five year
notes has dropped 2% in the last two weeks and even a dead
cat bounce will give us a nice trading gain. We sold the SPDR
Technology Trust at $15.42 for a 70 cents per unit gain. We also
eliminated the rest of our NCR position at $19.40 for a scratch gain.
We lightened our Ionics holdings by selling stock for a scratch that we bought at $17.
Since Spring is upon us we thought it was time to offer our springtime poem:
The mud has come again in March
as it does every year
to remind of green and warmth and light
soon to fill us all with cheer.
Last week with new born calf frozen
upon the snow/mud cattle pen
zero winds had done their work
and we were frantic to get her in.
This time of year is touch and go
for mothers dropping calves and lambs
we race the rain and mud and snow
to born them live and healthy.
It may seem strange we bear the stress
and feel triumphant when we win
since eventually most will go
to slaughterhouse and retail bin.
But our job is right now
to get them born and on a teat
and when the night the calf survives
there is no greater farming treat.
Back to our story of frozen calf
a bright idea we soon did have
we dragged the nearly lifeless form
to sauna floor to help her warm.
Carnation milk from baking shelf
heated in a warming boat
was soon forced down an anxious throat
but yet recovery seemed remote.
Wondrous strength in babies lies
for soon our frosty calf was warm
and looking round the sauna room
a place more strange than mother's womb.
Now still the mud does ooze and slurp
in every step we take
but Frosty frolics unaware
her life was saved with lucky break.
A small triumph in farming life
smalls combined help us feel fine
the cycle lengthened with our care
still will triumph in its time.
Yes the redwings have returned
and sparrows busily prepare
their nests in every cranny found
while plovers rock upon the ground.
and drabness soon will pass to sun
the season muddily marches on
man controls so little ground
It's good to have nature 'round.
3:02pm and the DJIA closed up 210 points at 8525 and is
positive for the year. The S&P 500 gained 16 points to end at
893 while the NASDAQ was up 16 points at 1420.
For the year the DJIA is up 2.2%, the S&P 500 is up 1.8%
and the NASDAQ is up 6.1%.
The Model Portfolio is up 8.7 and is 86% cash or Treasuries.
We will post the Model Portfolio tomorrow.
And the war continues.
21 March 2003 - Morning Comment
6:10am and on the Feast of St. Benedict the stock futures are indicating a
whiz bang opening. The FTSE is up 3% in Europe although Asia was mixed.
With the war going well for the Coalition of the willing the markets are sighing
relief and are eager to move higher early today.
From news reports we have seen it seems that the Pentagon is trying to
avoid widespread death and so has held back on the massive bombing
promised. That promise was most probably a psychological weapon and
hopefully the Iraq forces will realize the futility of fighting and surrender.
The stock market had a good consolidation day yesterday and with
today being the last day of triple witching and with the quarter end
approaching the rally looks ready to resume and mark eight up days in a
row. We have a few stocks left to sell into the rally and we will be
happy to do so if prices allow.
20 March 2003 - Third Post
7:40am and unemployment claims were down 4000 for the week but that is
the negated by the adjusting up 5000 for the prior week. The stock and bond
market are leery and watching the war news.
8:34am and the DJIA is down 42 points. The profit taking will run its
course quickly and then we'll see how the rally goes. Remember triple
witching is tonight and tomorrow.
9:29am and the DJIA is off 140 points. Breadth is big time negative but
volume is low. We are buying DIA in trading accounts at $81.83 since the
DJIA is off over 100 points. Over the last month there have been only
two days when the DIA did not move back to even after being down 100 points.
There was an electric power surge causing the lights to flicker on the floor
of the CBOT and MERC in Chicago a few minutes ago as the DJIA and
S&P 500 made their lows for the day and Treasuries their high. A trader
called from the floor to ask what was happening. Our response was to
worry about Commonwealth Edison or whatever their new name is, not Saddam.
9:44am and it just occurred to us that the old buy for the dividend play will
come back big time if the dividend exclusion plan passes. Back when
dividends received by corporations were 85% tax free, corporations
used to buy a big dividend paying stock right before ex dividend
date and then sell right after.
For individuals, if the stock doesn't sell off more than the dividend, a
trader will be able to turn short term gains into tax free income. That's
because the dividend will be tax free but the trader will incur a short term
loss when he sells the stock ex dividend if the shares sell off the amount of the
dividend. The Tax Free trusts using this strategy are probably already
packaged and printed at the big brokerages waiting to be sent to clients.
9:53am and Reuters is reporting that according to the official White
House television network FOX NEWS oil wells are burning outside Basra.
10:02am and it is night time in Iraq and the bombing has started. The
markets have rallied a bit on a report that Saddam was wounded last night.
No network has confirmed and the Pentagon is mum. This positive news is
competing with the oil well fire news that the Pentagon did confirm.
11:32am and we haven't seen any news but stocks are rallying. The
DJIA is up for the first time today.
11:39am and sometimes a scratch profit is a victory. We bought
BGEN at $33 for a trade last week and it proceeded to drop to $31 ten minutes later
when some perceived bad news about a warning label was released. Today we
sold for $33.15 and are happy to get out even and raise the cash. We have
sold half our DIA trade at $82.62 to reduce the position and give us the ability to
hold the rest for hopefully a better price later today on the half remaining.
12:16pm and the Pentagon has announced that the major war operation had
begun. We used the knee jerk bounce to sell the balance of our DIA trade at $82.90.
Our average sale price was $82.77. We made 90 cents per unit on the trade.
1:01pm and we sold NSC at $19.25 for a 55 cents per share profit. The
DJIA is now up 40 points and if we get a push higher we are hoping to sell a few
more stocks. The ten year Treasury has crossed 4% and the five year crossed 3% today as
Treasuries continue to retreat in the face of the stock rise and the reality of higher budget deficits.
2:01pm and as we enter the final hour of trading the DJIA is down 16 points. Since the
results of the war are nebulous so far, the stock markets are confused. And we have no
idea how the day will end.
2:20pm and we sold the portion of our NCR holdings that we had bought at $18.25 for a $1 per
share profit. We kept the higher priced shares because we think they will work out for us.
Until we bought these shares we didn't know how lightly NCR trades.
Now we know that it is not a good trading stock because the specialist won't accommodate any volume.
European stocks ended lower but all their markets have bounced much
more in the last five days than the U.S. market
3:02pm and no we don't think the picture is Saddam because the guy on
TV has a brown mustache and Saddam's is dyed black. For the sixth
day in a row the DJIA closed up, with a gain today of 21 points to settle at 8287.
The S&P 500 rose 2 points to end at 876. The NASDAQ gained 7 points to finish at 1403.
Last night the value of The Model Portfolio exceeded $500,000. We began the
Model Portfolio on December 21, 1983 with $50,000. And so in 19 years and
3 months The Model Portfolio has risen 10 times in value. That is an annualized
return of 12.6% with only one down year in the 19 years. Past performance is not
an indication of future performance.
And tomorrow is not just another day.
20 March 2003 - Second Post
7:30am and as we start the day the DJIA is up five days in a row.
That hasn't happened for a long time and the point move has been
700 points. A pause at this time would not be untoward, nor
would a 200 point pullback. Asia was higher overnight and
Europe which also has had a huge rally is in a watching mood
at slightly higher levels. U.S. futures are soft but not selling off.
Treasury prices are also soft and we would surmise that the
markets are going to await further action from the war before
more upside or downside occurs.
20 March 2003 - Morning Comment
6:38am and what's to say? We are guessing that the Bushies are waiting to get the big
bombing going until after the U.S. stock markets open since there was such brouhaha
in 1991 when the bombing started when U.S. markets were closed. Also it will be
night in Iraq and the explosions will look better on TV. Once the bombing starts and
the power and might of the U.S. military are spread across media land we presume
there will be a resumption of the rally. We plan to sell the rest of our holdings into that rally.
We are saddened that with the power and might of the U.S. there never was any
real consideration by Bush 43 of using the pressure of world opinion and NATO
military power to keep squeezing Saddam to disarm. To say that Saddam hasn't
responded to pressure and partially disarmed flies in the face of facts presented
on the White House television outlet FOX TV that showed that he has 250,000
troops now versus 1,200,000 in 1990. Iraq has less than 90 fighter planes versus
400 plus in 1990 and only one tanker plane. Same kind of reductions goes for
missiles and tanks etc. Had the U.S. encouraged the world to continue to pressure
Saddam total disarmament would have come.
Saddam is a creep. He persecutes his people and did for the ten years he was a
U.S. ally during the Reagan and Bush 41 administrations. In fact most of the
atrocities he is accused of occurred while he was a U.S. ally and a Republican
administration was in office. We liberals feel deeply for the persecuted people in
Iraq. We would gladly welcome all who want to come to the U.S. Guess who
wouldn't want them here? Guess who has issued orders to detain asylum
seekers from Iraq while the Homeland Security department decides whether
they are entitled to asylum? Is that a really tough decision?
William Safire, in the New York Times this morning, makes a big deal about a
French company selling rocket fuel to Iraq. He fails to mention that the U.S
Reagan and Bush 41 administrations allowed the sales of anthrax and other toxins
and chemicals to Iraq. Those are the poisons Bush 43 accuses him of still having.
Who better to know? Moreover when Bush 43 mentions the poison gassing of the
Kurds in 1988 he neglects to mention that Saddam was still our ally and the
Bush 41 administration did and said nothing. In fact it was the liberal wimp
peaceniks that protested and made the world aware to no avail. Maybe
Bush 43 doesn't know when the gassing occurred.
The U.S. during Bush 41 trained Osama and the Taliban freedom fighters to
fight the Russians and the Northern Alliance in Afghanistan. The Russians
and Northern Alliance are now our allies and the Taliban are our enemy.
As the song goes "when will we ever learn?"
The war is on. May the troops on both sides escape unscathed.
And if there is a next time may diplomacy be given a real chance.
War is the easy and inhuman solution.
19 March 2003
8:11am and stock futures are giving back some of their gains
so we may not have the rally continuation. No new news.
Oil continues to drop in price and so OPEC is worrying about the
price of oil dropping to $22 per barrel. Miraculously as the
winter season ends supplies of oil are being found.
10:40am and we sold JPM for a $1.60 per share profit,
HD and MCD for a $1+ per share profit. We traded
BMY for a scratch and sold our BAX position for a
scratch 25 cents per share profit. We are serious about taking
trading profits if we can.
The DJIA is down 40 points and the NASDAQ is off 2%.
Given the move in the NASDAQ over the last few days that's not surprising.
11:49am and the DJIA is trying to stage a rally. Since the war
might start tonight shorts may cause a covering rally later today.
Disney is holding its annual meeting today in Denver. The show
must go on although Denver's airport is closed and no traffic is
moving because of the blizzard.
11:58am and 15 Iraqis have surrendered at the Kuwait border.
Hopefully this is the precursor of many more surrenders.
12:39pm and the woman who owned our farm for many years
passed on last month. She was an interesting lady whom we
knew for many years but never did know. We were always "new" people to her.
Marie Ryan, RIP
Marie died in her 99th year
on a cold and dreary day
for a hard and weary life
that tested all the way.
Her lined and wizened face did tell
of years of mirth and grief,
Irish she was in birth and belief
and till death she turned no leaf.
A Gorman girl Marie was born
on the family farm,
she must have dreamed and been
carefree and had a child's charm.
In youth with sisters all around
she was the oldest one,
marrying a Ryan she moved a mile
never further from then on.
Outliving both a son and mate
and son's mate and child too,
new folks never knew her thoughts
with them words shared were few.
We live on the place she owned
for many many years,
yet she ne'er visited to walk about
maybe because of its tears.
For on our farm in '63
son Bill's Etta passed away
a bitter winter valentine
on her oldest child's birthday.
On that day so long ago
Death forever changed
and tragedy marked the place
where grandchildren used to race.
We met the Ryans when shock had passed
replaced by living life
and doing all the things one must
when man has lost a wife.
We hayed and milked and visited
with Ryans through the years
but Marie was never in the mix
held back by speechless tears.
She mothered all the children up
as best as she could do,
Marie the pillar we did meet
never knew her young and new
And while she's gone to better place
where eagles soar and angels sing
John Ben and Ole, Peg and Dode
still wait the mourning ring.
1:55pm and entering the last hour the DJIA is up 41 points, the S&P
500 is up 5 points and the NASDAQ is only off 5 points. Treasuries
are again tanking with the five year approaching a 3% yield after
being at 2.50% two weeks ago. That rise in yield represents a 2% loss in principle.
2:53pm and we sold a part of our SBC holdings at $21.70 that we
bought in large trading accounts the day before yesterday for a 20 cents per
share loss. We still own the shares in most accounts including the large
accounts at the lower price we paid yesterday. We wanted to reduce the
size of the holding and raise cash at the same time. We also sold our SPDR
Financial holdings at $21.60 for a scratch 25 cents profit. That's better
than the $2 per share loss we had two weeks ago. And that sale raises a
nice chunk of cash in all accounts.
3:02pm and the DJIA closed up 71 points at 8265. The S&P 500 was up
8 points at 875 and the NASDAQ closed down 3 points and 1397.
And tomorrow is not just another day.
19 March 2003 - Morning Comment
6:50am and on the Feast of St. Joseph it looks like the
war begins tonight. News of troop movements the
Kuwait border caused European stocks to reverse a
small sell off and move higher. U.S. stock futures are also
higher. U.S. and world markets have experienced a remarkable
rally the last five days as the finalization of war plans coupled
with a quarter end and triple witching Friday have all joined to
move stocks higher and Treasuries lower.
Another 5% rally over the next few days will get stocks
back to their January highs where the sell off began in
anticipation of the war. Timing these moves has been
difficult but we hope to be back to cash in a couple of
days and up about 10% in the Model Portfolio.
We are not war analysts and so we want to be on the
sidelines as soon as possible. Hopefully the war will be
swift with minimal casualties.
Today is shaping up to be an up day as more folks try to catch the rising star.
18 March 2003
6:35am and one effect of the war rally is that with quarter end arriving
many money managers are going to be scrambling to get in the right
stocks because the rally is going to carry the averages to the plus side
for the first quarter in quite a while. That's one reason we think the
rally will have legs especially if the ground war doesn't start till April Fools Day.
7:31am and new housing starts were down 11% in February. January
housing starts were revised to down 0.1% from up 0.2%. Weather
was a factor of course, but that is still oops fro the economic bulls.
Crude oil is down about $2.50 per barrel. Building permits were up 0.4%.
The stock futures have given a tad back on that news. But there are so
many wannna be buyers out there that any sell off this morning we will met by buying.
And today we learn an old friend bit the dust as Spiegel Stores filed for
bankruptcy. The Otto Family of Germany owns 89% of the outstanding
stock but also has a $180 million loan to the company by which they
will probably maintain control. Luckily we only own a few shares at a
cost of 50 cents per share in our speculative trading accounts.
8:55am and stocks opened higher but profit taking has brought the
averages and indexes back to even on the day. We sold our EK for a $1.20
one day gain and ABS for a similar one day gain. We are buying Rowan
Drilling which we haven't owned for many years at $18.50 and also some
Norfolk and Southern at $18.50, both in some large accounts.
We hope to add SBC and NCR to more accounts today and to pick up additional
Interstate Baking under $10 per share.
12:02pm and we added more SBC to our large accounts and all the
accounts in which we bought Baxter. We bought SBC at $22.50.
We also bought a few more shares of NCR at $19.22 and Bristol
Myers at $22.60 in our larger and trading accounts where we sold EK.
The DJIA is up 25 points and the markets seem to be awaiting the
Fed announcement at 1:15pm.
1:16pm and the Fed decided to leave rates unchanged with no bias
change. Stocks are rallying on the news. Treasuries have rallied a bit on the news.
It's interesting that yesterday, March 17, tobacco stocks were
downgraded at Salomon Smith Barney and on this morning, March 18, the
NYT ran an article about the Justice Dept pursuing a $300 billion law suit
against the tobacco companies for racketeering. The suit is scheduled for
trial in September 2004. Tobacco stocks are down big today on that news.
The trial comes just in time for contribution time for the 2004 elections.
1:35pm and the stock markets are back to even for the day.
Breadth remains positive and volume is good but lighter than
yesterday. It looks like the rally is trying to regain strength for the final hour or maybe not.
2:55pm and we are always happy to take a profit. We sold the
RDC we bought earlier today for a $1 per share profit and we also sold
AWE at $6.55 in accounts that had 1000 shares or more for a nice $1 per share profit.
We held the smaller amounts because most of those accounts with less than 1000
shares are not as fully invested as our larger holdings accounts and we think there is more upside in the AWE.
3:02pm and the DJIA closed up 50 points at 8192. The S&P 500 rose
3 points to end at 866 and the NASDAQ was up 8 points to finish at 1400.
And tomorrow is another day.
18 March 2003 - Morning Comment
6:02 am and Bush has declared war. The rally should last until the
ground troops start to move and then we may have a pull back till the dust clears.
Yesterday in our larger accounts in early trading we initiated
positions in MCD at $13.50, EK at $28.88, JPM at $21.38, HD at $23,
and SBC at $21.80. In a few large accounts we also
bought NCR at $18.25, ABS at $18.15 and Mondavi at $23.75, and
XLF at $20.61. All were bought for trades on the war rally thesis.
All are relatively cheap but not absolutely cheap.
Volume was strong yesterday it was a 9/1 up versus down day.
Breadth was good. Today will give a better read on where the markets
are going over the short term. Treasuries sold off yesterday and will
probably be off today if stocks continue to rally. Asia was up over 1% and
Europe is up this morning also. U.S. Stock futures are also higher. There
should be a pullback sometime today, but if there is it will be bought.
17 March 2003
St. Patrick's Day becomes a sad time for the world. Today is
not a day we feel much joy and so our only post will be this
poem. We will continue to do our job for our clients but it
seems a bit obscene to talk of money and profits at a time of killing and pain.
While robins came just yesterday
a week ago the cold winds blew
and nearly froze a newborn calf
that chose the moment wrong to birth.
Today the wet warm smell of spring
permeates our pores and sight
floating mist above the trees
still bare but budding with delight.
A world away November threatens
the birds and beasts and peoples sight,
the time of year that should bring joy
instead sparks fear and threatens night.
The leaders smartly salute their flags
and order troops to kill kindly
and wordily proclaim their truths
that nevermore can tyrants rule.
Tyrants that were just our friends
and killed the Kurds with our ascent
but made one step without our yea
and now we've said that they must pay.
And so our spring is joyless too
as many fore have also been
and will so to in future be
until real leaders set us free
To talk and talk and talk and talk
and hope and learn and listen to
the voices crying for an end
to power making might as right.
17 March 2003 - Morning Comment
6:16am and so today we light a candle for all who will die in an attempt to bring
peace to a country by killing. To bring freedom to a country by removing a
dictator the U.S. installed and encouraged to wage war. To punish a dictator
by killing his subjects because he committed atrocities while he was a U.S. ally.
Talk about déjà vu.
The stock futures are lower. Asia was lower as is Europe. We expect the
U.S. markets to trend lower until war starts. We've give up our military
analyst card since there are so many now, and we just presume from all the
words and actions that whatever is going to happen is going to happen
within the next week or two, and for sure by April Fools Day.
14 March 2003
8:45am and the stock markets opened flat as we suppose some folks are taking profits.
Yesterday's move was strong enough to warrant further upside. We are nibbling at
Baxter which dropped $5 yesterday on a reduced earnings outlook. It is down
another $1 today at $20.50 and at that price it is selling at 11 times earnings
and about 1.6 times revenues. That's a good value price. It even has a yield of 2.8%.
9:24am and the University of Michigan Consumer Sentiment Survey was 75
versus an expected 78.
Bush, Blair, and Aznar are to meet in the Azores on Sunday to discuss the war (?),
Tony Blair's poll numbers (?) or the price of Spanish olives being supplied to the
troops in Kuwait (?). And what happened to the ex king of Bulgaria?
9:32am and our brother the computer guru is questioning our use of the term
spring to discuss this morning's weather. He says that it was below freezing last night.
We said that below freezing weather at night with above freezing days and longer
sunlight gets the sap running in the maples. And with the sap running in the maples
coupled with all the saps running around Washington it surely must be spring season.
9:42am and in the too cheap stocks department we are buying an old friend Ionics at $16.20.
The shares are off over $1.40 today to a new 12 month low on lower earnings. But, backlog is
at a record, book value is $25 per share, cash on hand is $9 per share and the company will
eventually be acquired. Ionics is the leader in pure water for industrial use and in desalinization technology.
We are buying Baxter and Ionics because they are cheap. They have real value at these prices.
11:41am and France is up another 7% today with London and Germany both up over 3%.
The rally has run into some profit taking but we still think the bias is to close higher. The
DJIA is up 12 points after being up over 100 earlier. The NASDAQ is down 6 and the
S&P500 is flat. We bought some Biogen at $33 in our trading accounts. It's down
today because they are being required to place a warning label on their MS drug
Avonex. BGEN has been at the $37 level and above for most of this year.
1:02pm and bummer, bummer, Northern Kentucky Men's Basketball team lost in
the first round and are out of the NCAA II tournament. They finish the year 25
wins versus 6 loss and Number 4 in the country. They tried to dodge one bullet too many.
The stock markets are flat and Treasuries have recovered a bit from yesterday's sell off.
2:28pm and volume has dried up and the markets are mixed. Traders are flattening
positions ahead of the weekend and yesterday's rally looked like it forced most of
the nervous shorts to cover then.
3:02pm and the DJIA closed up 39 points at 7860. The S&P 500 finished up 1
point at 832 and the NASDAQ was down fractionally to close at 1340.
For the year the DJIA is down 6% the S&P 500 is off 5.5% and the NASDAQ is
up 0.2%. The Model Portfolio is up 7%. We will post the updated Model Portfolio on Monday.
And tomorrow is the Ides of March. Watch your back Saddam.
14 March 2003 - Morning Comment
7:24am and as we welcome a beautiful spring day the overseas markets are all up on the
back of yesterday's world wide rally. Some of the gurus we read say the rally is because
war is more certain and the Europeans finally realized this fact. And since Europe led the
rally yesterday that makes as much sense as any explanation.
If this is the war rally, we don't have as much money working for us as we wanted,
but then we weren't suffering much when stocks were dropping. We are not convinced
that there won't be a big dip before the end of the war and so we are not going to chase the rally.
7:32am and PPI was up 1% for February, core PPI was down 0.5%. The
Michigan sentiment index comes later.
There is a summit to be held in a neutral country not France by the UK, Spain
and the U.S. this weekend that Bush is going to attend. The stock markets' rally
this morning according to another guru is because folks see peace on the horizon
and stock markets like peace. That guru neglected to mention that there will be a
war in which people get killed before that peace but as Katie often says men have
disjointed thinking and speaking forms that only men can understand and often
gloss over the obvious that they feel whomever they are talking with should intuit from their body language.
So up and away today, unless we go lower.
13 March 2003
7:32am and stock futures continue higher and Treasuries are lower.
Retail sales were down 1.6% in February, ex autos down 1%.
Unemployment claims for March 1 were adjusted to 435,000 from 430,000.
The four week average on jobless claims is now 420,000.
Baxter and ADP warned this morning and Tyco says there are
irregularities in its Fire and Security division in Europe. Based on the
trouble we had getting ADT, a Tyco subsidiary, to quit charging
Katie's father for security at a house he sold we would suggest that their
U.S. operations aren't on the up and up either.
Ford is being downgraded at Bank of America. JP Morgan remains
negative on autos.
Stocks are going to open higher as several gurus have called the
bottom and many traders are eager to make back the money they
have lost over the past four years. Treasuries are selling off strongly as
asset allocation is supposedly occurring by selling Treasuries and buying stock indexes.
8:05am and at the close of business yesterday the European bourses were
down big on top of the falls of the last few years. Amsterdam is down 32%,
Germany 24% and France 22%. It serves them right for squashing King
George XLIII's grand alliance plans.
9:37am and stocks gapped up on the opening and now are giving a bit of the
gain back. They still remain higher for the day and breadth and volume are a bit better today.
11:21am and after giving back half the opening gain the DJIA is now making new
highs up 150 points at 7702. The FTSE in London is up 6% as is France after
being down big yesterday. There was a large sell program in European stocks
the last few days that has obviously abated.
Speaking of not losing money by losing money, Ford is now at $7 per share
probably on its way to $5 or lower. Rumors of bankruptcy are overblown since
this is one company where the Ford family shareholders would be wiped out in bankruptcy.
Anyway, we sold at $9.80 for a loss to not incur greater losses. This illustrates that there are
times to take money off the table at a loss.
The five year Treasury has lost more than half a point today and the ten year Treasury is
down over 1.25 points today. Those are big moves. There are rumors galore about a quick
war and that agreements are being forged with Iraqi commanders to surrender their forces as
soon as war begins. We hope so since there is no hope for the soldiers if war does begin.
Supposedly that is fueling the Treasury collapse. It looks like asset allocation moves are
occurring from bonds to stocks and that is the more likely reason for the drop in Treasuries.
As interest rates rise traders who have shorted the five year to hedge mortgage debt are
forced to cover. Several timing gurus have also gone from cash to fully invest over the past
few days and that is giving a positive impetus to investor psyches.
12:12pm and the Netherlands rallied 10% today. Now that is volatility and crushed shorts.
The DJIA is holding up 140 points and folks may start climbing on the bandwagon ahead of
the weekend. As the war approaches shorts don't want to be short over the weekend as we
mentioned on Monday after Friday's short covering rally proved that point.
12:31pm and it's interesting that those stocks that pre announced are getting crushed today
even as the stocks rally. That is an indication that the rally is a short covering and asset allocating one.
Baxter is down $5 at $22, ADP is off $2.50 at $28 and Tyco is down $1.65 at $12.40.
With all the crooked books and crooked officers at Tyco we just can't understand
why investors are interested in that stock.
1:53pm and entering the final hour the DJIA is up 207 points at 7760. The S&P 500 is up 20
points at 824 and the NASDAQ is smoking up 44 points at 1323. The five year Treasury is
down one full point which is a tremendous one day move. It looks like traders want to take them
higher in the last hour. We must have already won the war. No kidding, the stock and bond
markets are acting like some big hedge funds know something we little folks don't know. We
don't think that's the case but the volatility is obviously increasing.
2:55pm and we have to leave a bit early. The stock markets never looked down and
Treasuries never looked up today; and so much for our down close guess. The DJIA
closed up 270 points at 7820, the S&P 500 gained 27 points to close at 831 and the
NASDAQ jumped 60 points to close at 1340.
And tomorrow is another day.
13 March 2003 - Morning Comment
6:50am and Asia was mixed overnight and Europe is higher. We received the following email:
Bud: Your track record on "betting" on the DJIA close is not something to be desired.
Hope it will improve over time. On another more important subject, the advantages of the
weak dollar may soon be overcome by negative factors resulting from the weak dollar. How
does this situation fit into your stock market trading tactics?
Our reply: as you will notice we may suggest where the market will close but we
do not place any money on that bet.
The weak dollar, strong dollar argument and its impact on our imports and exports has
been going on for years. American manufacturing jobs have been moving out of the
country for thirty years and that trend is accelerating. The job loss which is replaced
by service and independent contractor status is a very real culprit exacerbating our
economic problems. Also the companies that have maintained manufacturing jobs
in the U.S. like the autos are entering a period of low or no profits. And the new auto
jobs being created by foreign manufactures are not union or at less than union wages
(two stage pay scales). We don't care to get in a political argument about the worth of
unions but we only point out that the loss of health care benefits and the increasing of the
co-pay are having a significant negative effect on the American consumer. Moreover the
reneging on pension benefits and the foisting of those benefit requirements on the Pension
Guaranty Board as companies file Chapter 11 bankruptcy means that there will be an
overall reduction in the medical and pension benefits of hundreds of thousands of
workers with a corresponding drop in spend ability.
We think the economy is going further in the tank because we think the housing
bubble has to burst and that the bankruptcies in the airlines and utilities industry
have to run their course. We continue to be struck by the stories we hear of the
money people have lost in the markets. We've been lucky and I think that lost
money is not going to be replaced soon. So any rallies will fail this spring and we
may not bottom till year end if then. But the rallies will be tradable and we will
attempt to catch them with a small portion of our money
We could go on an on but suffice to say that we think the glass is three
quarters empty and the well is running dry. Sorry to be so negative but it is the
Ides of March and Caesar Blair had better watch his back since Rummy the
Brute may be lurking near. Guess we'll have to stop speaking English and
drinking English tea if the Republican Congress has its say.
Stock futures are higher and we think we'll close lower. As always that's a no money bet.
12 March 2003
7:25am and the futures are moving still lower. The Model Portfolio is
down a bit this week with our losing trade of 500 DIA on Tuesday.
We also added to the three SPDR trusts on Monday and those prices are lower.
We added to the AWE position yesterday and as of this morning the
Model was at $488,000 with $400,000 or 84% cash. As with the quick
spike this morning on the Osama captured rumor, and short war or Osama
news will provide a quick and probably substantial rally since the DJIA is
down now over 14% from its highs this year.
Our plan is to continue to add to the SPDR trusts if they move lower and
we will be buying SPY and DIA to hold for the rally as opposed to trade.
Our beginning DIA buy to hold point is under 73 in the DIA which works out to
7250 on the DJIA. We are going to add SPY to larger accounts around the 78 or 775 on the S&P 500 level.
That's our plan for now subject to change as warranted by market conditions,
Trade deficit was $41 billion in February.
7:45am and the FDA is threatening legal action against parties that help individuals
buy drugs more cheaply in Canada. We thought Republicans believe in free markets
and less government intervention.
The WSJ also reports that Saudi Arabia pledged to meet world oil demands
should war break out. Those folks are true friends, willing to sell oil to the
world at $40 to $50 a barrel so that U.S. trucks can continue to roll.
12:20pm and we had to go out for a little while. Stocks are 1% lower and
most of our screen is red. Volume remains muted, breadth is 2/1 negative
and new lows are expanding. London and Germany are both down 5% today.
12:35pm and it's funny but when we are away from the tape for several
hours it takes us a while to develop a feel for what is happening. If Europe
stays down big through the close we would expect U.S. stocks to sell off into
the close also. The "go it alone the heck with Britain attitude" expressed by
Rummy yesterday may play well in some parts of the U.S. but it sure has annoyed
the Brits. We don't think Bulgaria and Italy, ex the Vatican, are a dynamic alliance
and Blair's political troubles are affecting the stock markets.
1:53pm and entering the final hour stocks are staging a modest rally. The DJIA is
down 37 points and the S&P 500 is down 4 points. We still are betting on a better than 1% lower close.
3:02pm and breadth remained negative even during the rally through the last hour.
At the close the DJIA was up 20 points at 7540. The S&P 500 was up 3 points at
803 and the NASDAQ gained 8 points to end at 1278. And our guess of a lower close was wrong.
And tomorrow is another day.
12 March 2003 - Morning Comment
7:04am and Asia was higher but Europe is down big. The S&P 500 futures are higher
and NASDAQ futures are lower. The big news in the WSJ is that Bernie Ebbers of
WorldCom may have known about the financial chicanery that occurred at the company.
This information has taken two years and two reports to reach this level. Who's kidding
whom? Our question is who are Bernie's friends in high places? Martha Stewart has been
stripped roasted pickled and ruined over $50,000 and the court appointed special investigators
who are making big bucks are just now deciding that maybe Bernie knew more than he admits.
Tony Blair has big troubles in Britain and so there is now talk of moving the date certain back to
March 27. We presumed all along that that would be the compromise date since the new moon is
April 1. Hence we arrive at our name for the war of The April Fools War.
The Washington Post says the Feds are investigating AOL for inflating revenue. That would be
another big surprise.
All in all with the war back on the "when and if" burner and WorldCom/AOL news we would
expect more drifting lower today.
When we came in this morning stock futures were lower and we were about to write that
fact when we looked at the screen and saw them higher. That confused us but CNBC just
announced tat there was an Osama is captured or being followed rumor that caused the spike.
The rumor has been discredited and so now the futures are lower. And the beat goes on.
11 March 2003
7:21am and Barton Biggs is saying that the markets are in the process of making a bottom.
We think they are too as we said before and we are glad that Barton agrees with us.
We think it will be a tradable bottom. There is word that the British are willing to accept a
deadline delay and so that will also delay the tradable bottom. The bottom will most probably
coincide with the beginning of war or more hopefully a U.S pullback as Saddam abdicates
or complies to the satisfaction of the British if not the White House chicken hawks.
7:32am and new lows expanded on the sell off yesterday and that is not a positive sign for
the turn. Volume was also light but we are detecting a bit of panic in the talking heads on
CNBC. They usually lead. Unfortunately, one of our clients who is always wrong emailed
today asking whether he should get back in since the markets are at the level where he
panicked out on duct tape day February 14. That is a negative sign.
8:10am and Paul Krugman in the NYT reports that two years ago the non partisan
Congressional Budget Office was projecting a surplus of $5.6 trillion over the next ten years.
The CBO is now projecting a deficit of $1.8 trillion over the next ten years. Even among friends,
let alone formerly deficit conscious Republicans, a $7 trillion difference should amount to more than coffee money.
8:42am and we are using this morning's rally to sell our DIA and SPY trades.
We were going to hold the DIA for a while longer but decided that the trend is down and
we will look to reenter at lower levels. We lost 45 cents per unit on the DIA and 60 cents
per unit on the SPDR. We are giving back some of our gains for the year but that is the
price of trying to catch a good trading bottom. We believe that the effort will be worthwhile.
10:14am and stocks are now lower. The Air Transport Association reports that airlines
plan to cut up to 70,000 jobs if war with Iraq occurs. The airlines presume there will be a sharp drop in air travel.
The S&P 500 is stuck at the 803-805 "better not break" support levels that the markets
bounced off on February 14th. Volume is light and trading is tentative.
11:03am and stocks bounced off the support level again. Maybe it was our selling our
trading positions that gave the markets strength. With our position in the SPDR trusts we'll
be happy to see stocks rise because eventually the stock markets are going to test the October
2002 lows. The longer it takes to get there the less likely it is that those lows will hold.
12:26pm and in the only in America with a Republican Congress column, we learn from
CNN that three Congressional House dining rooms will change the name of french fries to
freedom fries and yes, french toast to freedom toast. Republican Congressman Bob Ney from
Ohio and Walter Jones of North Carolina spearheaded the effort and held a news conference to
announce the changes. Not Neigh as in horse or Nay as in know nothing but Ney as in............ .
And we will sleep well tonight knowing that those two politicians are doing what's right for America.
12:50pm and just talked with our favorite uncle, who is our only uncle, because we
wanted to know if he thought we should now start calling ourselves Freedom Americans
instead of French Americans.
The DJIA is up 53 points so we guess the end of the world won't be today. The S&P is at 810,
comfortably above 804 and the NASDAQ is up a bit. Breadth is slightly negative and volume is
better than yesterday but still slow. On the www.realmoney.com website yesterday we read a piece
by James De Porres that mentioned that the NADAQ is down 75% in three years and volume is one
half of what it was three years ago. And that means that only 12.5% of the dollar volume is being traded
on a daily basis in NASDAQ stocks as was being traded at the high. That's an astounding figure and is
why many brokers are having a tough time making a living.
1:02pm and Maytag is falling apart today down $3 to under $20 per share.
We traded it years ago between $20 and $25 and never did understand why
the stock traded at $70 in 1999. We wondered about it the same way we did
about Motorola and a host of other stocks that went to ridiculous prices. We aren't interested at these levels
1:11pm and it's unanimous. The three talking head experts that CNBC has on
live now, one from PaineWebber, one from Legg Mason and one from Wells
Capital Management, all agree that now is the time to buy. Coupled with Barton
Biggs calling for a bottom soon we wonder where the bears are. The last two
experts say the DJIA will be up 30% to 40% from trough to peak. That's great if they
tell where the trough is. From 5000 to 7000 on the DJIA would be 40% but we don't
think anyone who purchased now would be happy with that result.
1:19pm and when we wrote the 12:26pm piece on french fries we didn't know it would be
all over the TV. We like to present hidden tidbits. We guess this one is just too screwy for the media to pass up.
1:37pm and we are very pleased to announce that Northern Kentucky University men's
basketball team finished the season ranked #4 in the nation among NCAA II basketball
teams with 25 wins and only 5 losses in the toughest division in NCAA II. Way to go Norsemen.
1:41pm and AMR Corp, the holding company for American Airlines, is on the cusp of
filing bankruptcy. We predicted this last fall when USAIR filed bankruptcy. When the
law imposes no penalty on management by removing them, or taking away their salaries,
or not allowing them options in the post Chapter 11 entity, there is no incentive for
executives to keep a company out of Chapter 11. We think some utility companies
and any company with a lot of debt may decide to go the Chapter 11 route and that is
why we are nervous holding companies with debt that are in financial trouble.
2:01pm and entering the last hour the stock markets are basically flat.
2:51pm and Boeing shipped 24 jetliners in February down 33% from last year. With the
bankruptcies and reduced flight schedules of many airlines there must be quite a few
airliners on the market. GE Credit was big in the airline leasing business. We don't know if they still are.
3:02pm and there was no collapse even though the S&P 500 broke 804 in the last hour.
The S&P 500 managed to close above 800, just barely at 800.72. The DJIA lost
40 points to end at 7525 and the NASDAQ dropped 8 points to end at 1270.
And tomorrow is another day.
11 March 2003 - Morning Comment
7:03am and Japan lost another 2% last night. London and Germany are lower and U.S.
stock futures are muted. If stocks open higher they will roll over almost immediately. The
stock markets are in the process of establishing a trading low. We put some more money to
work yesterday in our larger accounts. The Model Portfolio is about 25% invested. We are
using Indexes to invest because we are trying to trade a move in the overall market not invest
in individual stocks. There are some stocks that are reaching attractive prices but we will only
buy them if we have a panic blow off day.
We are trying to be prudent in our actions and we know that markets are pendulums and they
swing from optimistic to pessimistic. We are approaching a tradable low. Why not wait till we
get there before committing any money? We are buying on the way down because the low will
occur too fast and the trading will be too hectic. Today should be interesting.
10 March 2003
7:39am and the gurus are talking about a Fed ease. Another 25 basis
points is not going to do anything except transfer funds from savers to
profligate banks. The Japan comparison will also be raised. But our
crystal ball on short term money movements has been cloudy lately.
We do believe that at the first sign of economic recovery, interest
rates will move higher.
8:25am and North Korea fired another missile into the Sea of
Japan on Monday. Iran is enriching nuclear materials. It looks like
the Lone Cowboy in Washington is going to be busy for the next year.
8:46am and there are several reasons why we are placing more money
at risk. On Friday, stocks rallied quickly on news of Osama's sons
being captured. Interestingly, this fact has not been confirmed but it
demonstrates how starved the markets are for good news. While we don't
want war, when it comes we hope it is short and the loss of life is small. If
such good news occurs we think there will be a 1000 point rally within a day.
Also on Friday the market rallied at the close instead of selling off like it
did the week before. That occurrence demonstrated that short sellers are
more afraid to be short than the bulls are to be long. That fact is a sea
change from the psychology of the last month.
10:41am and today marks the third anniversary of the 5132 top in the
NASDAQ in 2000. The NASDAQ is currently at 1284. In three years the
NASDAQ has lost 75% of its value, a Crash in any language. Over the last
three years the S&P 500 is down 50%. In that same three year time period the
Model Portfolio is up over 40%.
We bought more XLK at $13.95, XLF at $20.38, XLU at $17.87 and DIA
at $76.57 in our larger accounts where we took our lumps in Kraft last week.
Since we are looking for a market move and have no feeling for individual
stocks we are employing the SPDR trusts for our participation. We are also
trading some SPY off the $82 level in our aggressive trading accounts. The
SPDR trusts and the DIA are bought for a one week to two month move, unless…. .
11:05pm and the stock markets are at their lows for the day with the
DJIA down 126 points. Volume is light. As the stock markets trend
lower the new lows are not expanding and that is a positive. 806 is the
line in the sand on the S&P 500. We may test it tomorrow.
1:24pm and stocks are not able to mount a rally. The DJIA, S&P 500 and
NASDAQ are all trading below their closing lows for 2003. The next stop
may be the October lows. Breadth is negative but there isn't any panic around.
The attitude seems to be resignation towards lower prices until the war occurs.
Actually we don't think there are any investors around either. The daily action is
traders picking each others pockets and that's about it. We are adding AWE to
some accounts at $5.27since it is down 10% from our last small buy. The last
hour should be interesting.
1:49pm and the markets are lower in part because Fannie Mae (FNM) is
down $4 on remarks by regional Fed President William Poole that any
unexpected financial shock to either FNM or Freddie Mac (FRE) could inflict
heavy damage on the U.S. economy. We don't think that should come as a shock
to anyone but the markets are in a mood to sell off on good news and crash on
bad news. About the only thing the stock markets have going for them is that
some shorts don't want to be short over week ends. And today is not Friday.
3:02pm and the DJIA closed down 170 points at 7570. The S&P 500
closed down 21 points at 807, just above the dreaded 806 level. The
NASDAQ lost 27 points to end at 1278. Tony Blair suggested that the
deadline for war may be extended. Here comes the April fools' war.
And tomorrow is another day.
10 March 2003 - Morning Comment
7:15am and two calves born over the week end on a twenty below zero
day in blowing snow is not our idea of luck or fun. Happily, our
shower room in the barn has a heated floor and so the calves spent
a couple hours after birth on the floor warming up and now they are
ready to face the cruel cold world, and so are we.
Japan was down overnight and London is higher while France and
Germany are lower. U.S. stock futures are lower in a giveback of
Friday's short covering rally. Tomorrow is voting day at the UN.
Bristol Myers is restating earnings for years past, lowering the
out years and increasing the just past year. That's a neat trick
when you get the benefit of nice earning three years ago and then
turnaround and use the same earnings for your just completed year.
We are going to use any sell off in the SPDR trusts today to increase
our position in larger accounts. As the war nears we are going with the
odds that the war will be a quick success. Pundits have spent a lot of
time talking about the troubles after the war but we think many folks
will just be glad to have the event finished.
The aftermath of the war will take some time to comprehend and, sad as
the fact is, we don't think that Washington will give a hoot what happens
after they claim victory. Afghanistan is a very good example. Kabul is
relatively safe and the rest of the country has returned to the warlords
and poppy growing. The same will happen in Iraq. The Bushies know the
American attention span is short and diverted by surviving day to day
in a very punk economy. And by not interfering after the war, the Bushies
can claim to be anti colonialist, which is one of the current charges against them.
We would guess the stock markets will be off again early, then rally and stagnate.
7 March 2003
7:33am and non farm payroll jobs were down over 308,000.
The unemployment rate was up 0.1% to 5.8% (it's really
about 10%) and hourly earning rose 0.7%. Hourly earnings
rose as folks are laid off.
Treasuries are moving higher stock futures lower and the
gurus are predicting another Fed rate cut. Can anyone say Japan?
8:08am and the stock futures continue to sell off. We
have decided to stay because the markets are going to
be interesting today. The Volvo will have to wait.
9:16am and after opening down 100 points the DJIA has
turned higher on news that Osama's sons have been arrested.
How many sons are not known? Maybe every son is worth
100 points on the DJIA. Oops now the DJIA is heading
9:31am and stocks are stabilizing at slightly lower
prices as the markets await confirmation by the U.S.
authorities of the arrests. An interesting phenomenon
of the stock rally on news of the arrests was that
Treasuries dropped sharply. The volatility in the
markets for both stocks and Treasuries is an indication
that the respective sell off and rally are reaching a
turning point, at least on a short term basis.
9:44am and the AP is reporting that Osama has 14 to
18 sons. There is no mention of daughters.
10:35am and the DJIA is back on the positive side.
We are disappointed that the utility stocks are not
selling off more because we would like to build our
position in the SPDR utility trust. When the war is
won we think Bush will be able to push his tax package,
as bad as it is, through Congress. And we think the
dividend exclusion will pass in some form, maybe with a
$10,000 per year cap. That will give a lift to utility stocks,
or at least talk of such a package will give a lift.
11:13am and stocks are moving higher as Treasuries move
lower in yield. That is a confusing picture but the stock
movement may be ascribed to the fact that wire services
are reporting that the U.S. and Britain are going to set
a March 17 deadline for Iraq to comply. Happy St. Patrick's Day, Saddam.
We sold the balance of our Kraft position in larger
accounts for a $3 per share loss. That's the largest
loss we have experienced in a while but it will let
us concentrate on the much larger SPDR trust holdings.
12:39pm and after sending a possum to possum heaven
we are back at our desk watching the stock markets
stand still. The short covering rally seems to have
stalled. Breadth is neutral. We continue to think
that a wash out down 300 plus point day or two and
a significant break below 800 on the S&P 500 is
necessary to set up a sustainable rally. We also
don't think a sustainable rally can occur until
after the Iraq situation is settled by war or
Saddam leaving. And we'll be happy to miss the
rally if Saddam leaves or is assassinated and
war is avoided. The reality is that if Saddam
is assassinated or leaves the new generals who
take over will probably be just as bad. But
Saddam's demise would certainly avoid war.
1:02pm and it's official that Britain says it is
amending its resolution to set a March 17 deadline.
Now that the date is set traders can decide when to
load up or short in advance of that date. Strangely
with a date in hand, stocks are losing steam.
1:36pm and the last hour is going to be interesting.
We can't figure this market and from today's action it's
obvious many traders are in the same boat as we.
1:42pm and a successful resolution of the Iraq situation
will mean a drop in the price of oil which would be perceived
as a positive for the markets as it would act like a tax cut
that affects everyone. The European markets closed lower on
the day but off their lows.
If Osama bin Laden is killed over the weekend-there are
rumors that the Special Forces are hot on his tail-there
will be a 300 point rally on Monday. If nothing occurs
over the weekend then the stock markets will probably
head lower. The late day rally is short covering by folks
who don't want to risk being short over the weekend. We don't
know whether this rally signals a psychological change but
it does show the power of geopolitical events on the stock
markets on a short term time frame. And this rally suggests
that a short successful war will engender a 10% plus rally.
3:02pm and the DJIA closed up 60 points at 7736. The S&P 500
gained 7 points to finish at 828 and the NASDAQ was rose 3
points to end at 1305.
For the year the DJIA is down 7%, the S&P 500 is off 5.8%
and the NASDAQ is down 2%.
The Model gave back a bit this week but is still up 6.8%
for the year and is 89% cash or cash equivalents.
Portfolio as of 3/7/03 is posted.
And tomorrow is another day.
7 March 2003 - Morning Comment
6:48am and we are off to Madison later this morning to have one of
our Volvos checked. So the stock markets will have to survive
the day without our beady eyes watching stocks go lower.
President Bush's scripted "press conference" last night was a
declaration of war and so now it is just a question of when.
And until the when occurs the markets are probably going to
continue to trend lower. After the war starts and it becomes
clear that the U.S. will prevail we would expect a rally
especially if the DJIA is around the 7400 level or below.
But the rally will not take the DJIA back to 10000. A 1000
point rally from 7400 would be 12% and take the DJIA back to
where it was a few weeks ago. We think that's the best to expect.
European bourses are all down 1% to over 2% this morning.
The news from Intel was received negatively and coupled
with the war threat the U.S. stock futures are off over 1%.
Japan closed at a 20 year low today down over 2%. The stock
crash in Japan is an answer for those who don't think
markets in developed economies can trend lower for a long
time. In that time period there have been many 20% rallies
but the overall trend has been down. Japan's bubble in
stocks and real estate prices may have been greater than
that of the U.S. but our bubbles have yet to fully correct
themselves. And as with Japan as the bubble went to excess
the correction will also.
Bombers have been dispatched to the Pacific area, probably
as a threatening gesture to North Korea. It is so sad that
after 50 years of cold war, and twelve years of relative
peace for the major powers of the world, the world is now
back to an era of threat and counter threat. It doesn't have
to be this way. God doesn't choose sides. Too bad #43 doesn't know.
We'll have our usual post a bit later tonight.
6 March 2003
7:30am and initial jobless claims were up 12,000 to 430,000.
Continuing claims were up 180,000 to 3,356,000. Productivity
was up 4.2% for the year 2002. If companies keep firing people
productivity will keep rising.
7:57am and Gap Stores announced that overall sales were up 14%
and that same store sales were up 8%. Those are relative
numbers since last years numbers were terrible on the downside.
But it does show that Gap is recovering since this is the fifth
month in a row of rising same store sales, albeit off a much
reduced base. These numbers will give the stock a pop today
unless the markets go down big. We don't own it, having sold
yesterday ahead of the numbers at 75 cents per share loss.
But we remain interested in the stock and would like to
reenter under $10 per share.
10:11am and the DJIA has been vacillating between up 50
points and down 50 points all morning. Currently the DJIA
is down 37 points. One interesting occurrence is that
Treasuries are lower with the stock markets down.
There had been a rumor that Osama had been captured
but the White House denied it. Treasuries have been
moving opposite to stocks for the last month so the
sell off in Treasuries is unusual. It may just be profit taking.
1:05pm and our posts are short and far between because
we are running out of things to say. Until the Iraq
situation is clearer, the markets are going to be range
bound. As the bombing begins we presume there will be a
lack of buying until the outcome becomes clear which may
only take a day or two after the troops start moving. The
gurus are saying that Bush's press conference tonight will
not mark the beginning of war. The thinking is that a speech
next week may announce the beginning. The major averages are
down over 1% at this time with the DJIA off 106 points. We are back to watching.
3:02pm and the DJIA closed down 102 points at 7674.
The S&P 500 lost 8 points to end at 822 and the NASDAQ
was off 12 points at 1302.
And tomorrow is another day.
6 March 2003 - Morning Comment
7:03am and Asia closed lower and Europe has been trading lower. The
European Central Bank lowered their rates by 25 basis points this
morning while London held firm. U.S. stock futures are slightly
lower. The feeble rally at the close yesterday after the Blix
and Powell interviews didn't mean much. The markets are going
to stay in this trading range or head lower until war is
certain. Then who knows.
5 March 2003
Today is Ash Wednesday and a teaching day for my brother and chief
computer guru and so we missed our morning comment.
The Model Portfolio
as of Tuesday, March 4, 2003, has been posted.
7:04am and explosions in Israel, bombers to North Korea, and no
combat troops for the Philippines lead this morning's headlines.
Gas is well over $2 per barrel and it's time to go to war to make
the world safe and lower oil prices.
CNBC has Louis Navellier as guest expert explaining how to profit
from the coming war. Louis runs a bunch of mutual funds that were
hot in the bubble years but have been disasters the last few years.
We are much calmer after our sales yesterday even though the sales
involved losses. There are times when we have to dip our toes and
sometimes our whole foot in the water to find out that it isn't yet
right for entering. The minor pain incurred is the price we and our
clients pay for our testing. We have reduced investment back under
20% in most accounts; the Model Portfolio is at 13% invested. So we
have our toes in the water but we aren't going further yet.
The rally we thought would happen on the Iraq missile destruction
didn't. And so it's back to watching and waiting for a good one or
two day slam down before making further commitments.
7:29am and we received the following email:
"Bud: Entering the market now seems to ignore the massive
uncertainties that exist?"
We agree that there are massive uncertainties. And since
the rally we expected didn't occur we were wrong to buy on Friday. We
were expecting a rally because we thought the missile destruction would
mean something. Silly us. When no rally occurred Monday we raised some
cash. The investments in the SPDR trusts are beginning positions and,
because they are a conglomeration of stocks, they have much less daily
risk and we are going to hold and add to them. In October / November 2002
we bought an initial position in them, and then bought lower and will
probably do so again. We sold the SPDR at a profit in January 2003
and collected the dividend on the SPDR Utility Trust which we will
do again. The AWE is a very small percentage position that we will
add to if it goes lower. As long as we treat AWE as a trading vehicle
it's OK. We sold half or more of Kraft today for a $2 per share loss
and sold GPS for a 75 cents per share loss. Kraft is cheap and we are
going to hold the small balance in larger accounts for now. The markets
are setting up for a trading opportunity and its going to be quick so we
want to keep some money in with the SPDR. Keep the faith and thanks for
the question. We trust your nervousness and respect it.
7:43am and The New York Times is suggesting that the war will start at the
end of March. New moon is April 1 so are we in store for an April Fools War?
The bus bombing in Haifa this morning is terrible. And it may have
happened even if the Israeli army had not been attacking in Gaza
for the past two weeks and killing 37 Palestinians. But is has
always been true that violence begets violence. The killing in
Bosnia by the Serbs was linked to an event that happened in the
eleventh century. Now that's a long memory. And the U.S. belief
that the Iraq people will love us after we kill 50,000 of them
too liberate them is poppycock. The National Geographic's
recent issue contained a story and pictures of Qatar where
the U.S. has built a huge airbase and the ruler of that
country has allowed elections and western ideas to be introduced.
Most of the people the author interviewed did not have good things
to say about America. And NG is not a political magazine and the
comments about America were in passing. But killing people has never
been a way to gain their confidence. It does gain their submission
as long as the power is exercised.
8:02am and having given up the Turkey trot, and sliced Turkey and
Wild turkey whiskey, and French wine, and French fries, but not
French crepes and we are wondering if Russia vetoes in the Security
Council whether we will have to also surrender on Russian vodka,
Russian dressing and change the name of the Russian River in California.
8:51am and sometimes we are lucky. We really like Pepsi and the
Quaker Oats acquisition but we sold the trade yesterday because
we wanted to raise cash and we had purchased it for a trade only.
We had a slight loss on the trade. Today the stock is down $1.30
because Deutsche Bank cut its outlook on Pepsi Bottling. We still
have Pepsi on our radar screen but we are now waiting for the big
sell off to take a larger chunk down.
The DJIA opened down 20 points and is now up 20 points. We may
have a repeat of Monday's up 50 down 50 day in store.
9:07am and a strange part of this market is that with the April
Fools War around the corner the defense stocks are on their lows
and today Northrop Grumman is warning on earnings. And oils stocks
are also announcing punk earnings in relation to the price of oil.
Could it be that these companies don't want to seen to be profiting from the war?
9:59am and CBS news is reporting that Russia, Germany and France
will not allow a war resolution to pass in the Security Council.
The DJIA is down 36 points and heading lower. The ISM manufacturing
index was 53.9 in February versus 54.3 in January.
By the by, Turkey was offered "only $4 to $6 billions" to becoming
part of the coalition of the bought and paid for.
12:18pm and UN inspector Blix is talking now. Secretary of
Defense Rumsfeld and General Tommy Franks are going to talk
soon. The DJIA is up 50 points and the S&P and NASDAQ are
both up 1%. Treasuries are selling off.
1:08pm and today is a "three for" as we now have Secretary
Powell live on CNBC saying Iraq is still failing to disarm
while half an hour ago Inspector Blix was saying the opposite.
If the matter weren't going to involve hundreds of thousands of
lives we would suggest today as a good Saturday Night live skit.
In fact it probably will be.
1:48pm and Powell's speech is tantamount to a declaration of war.
Stocks and Treasuries remain confused by the cross currents and
there is a real retreat to the sidelines occurring.
2:10pm and the DJIA is up 44 points. That makes no senses except
that folks are buying the war rally before the war. The reality
is that the rally in 1991 did not occur until traders knew the
war was going the U.S. way.
Schering Plough just announced lowered earnings expectations and
the stock is going to re-open lower. Many years ago we went
through the same kind of price drip drop torture with Syntex
when the stock dropped from $40 to $12 as it's main anti inflammatory
drug went off patent. We held Syntex all the way down. We do learn
from our mistakes and also we are much quicker to act and that's
why we have been light on our trading feet with SGP. Syntex was
eventually acquired by PG and the anti inflammatory is now sold
as Aleve and makes big bucks for PG. We are still interested in
SGP. We just aren't in a rush to buy. They still have to cut the dividend.
3:02pm and it just dawned on us that President Bush wants to be
able to say to Saddam, "Beware the Ides of March Saddam" when he
gives his going to war speech next week.
At the close the DJIA was up 63 points at 7768. The S&P 500 was
up 7 points at 828 and the NASDAQ was also up 7 points at 1316.
And tomorrow is another day.
4 March 2003
7:56am and Happy Birthday to Kathy Pinto Cannova, the person who keeps
LY&Co running smoothly and yours truly content. It's less that 50 and
more than 40 and that's as much as we can say about the matter.
8:07am and futures remain lower so we are going to be down to start
with. The auto downgrade will weigh on the markets.
Motorola is selling 25 million shares of Nextel at $13 and change for
$325 million and hedging the value of the remaining 25 million shares
it owns. This is a stock that sold over $80 per share while Motorola
owned it. This action is a continuation of the terrible management
decisions made by the nepotic CEO Chris Galvin. His management of
Motorola is a perfect example of why nepotism often doesn't work.
And the lousy performance of Motorola over the last five years also
puts the lie to the genius of Edward Breen, new CEO and supposed
savior of Tyco and former CEO of Motorola who left just in time
and with big bucks. CEOs are masters at managing the business
press and their own golden parachutes. Too bad they are only human
when it comes to managing their companies. The last three years have
shown how obscene CEO paychecks have become for the results delivered.
The events of the last three years confirm that payment for executive
genius was as much of a bubble as stock prices.
10:12am and the stock markets are drifting lower. The DJIA is down 1%
and going lower. We sold GPS at $13 in our smallest accounts for a 50
cents per share loss and reduced the position in a few larger accounts.
We don't over own the stock except in the small accounts where we sold it
and so we don't feel any rush to exit. In the accounts where it remains it
is a small enough position that we would be comfortable buying more at
lower prices and that is the exposure we want at the present. Most of our
managed accounts except the smallest are under 20% invested with the Model
Portfolio under 20%. We are not going to post the Model until the week end.
Bill Fleckenstein, a noted bear, who writes on www.realmoney.com makes a
good point today that the markets sometimes go up on war news and sometimes
down. His belief which makes sense to us is that the only really bullish
news at the present time would be that Saddam is leaving power. We do
think that over time the markets will adjust to a stalemated situation
both in Iraq and North Korea as the markets did during the Cold War. But
that will take time as will any economic recovery. Nevertheless we still
foresee a spring rally that will be tradable.
11:05am and we are sitting here thinking that we don't want to look
stupid selling the individual stocks we bought Friday. But we don't
like the looks of the stock markets with the S&P 500 is breaking support.
And the North Korean flyby situation has all the markings of a leader in
North Korea who wants as much attention from the U.S. as Saddam is receiving.
And so we are going to risk looking stupid (it won't be the first or last
time) by selling Pepsi (-30 cents), Hewlett (-30 cents), and EK (-90 cents)
now. That raises a good bit of money at a manageable loss expense. We are
holding the Kraft for now as well as the GPS and the SPDR positions and
the AT&T Wireless position because it is relatively small. In fact we
added a few shares of Awe to larger accounts today. Our sales today reduce
the Model to under 15% exposure.
1:15pm and there is word on the CNBC that Russia is going to veto the U.S.
resolution and stocks head lower. The AP reports that Russia has not decided
what to do.
Also, Warren Buffet's negative assessment of stocks in his yearly missive to
Berkshire Hathaway shareholders released last night and today has not helped
the situation. We are glad to see Warren agrees with us.
In news from the BBC, Afghanistan is once again the world's leading heroin
producer. Since the Taliban were overthrown by the U.S. the war lords have
resumed the production and shipment of heroin to the world.
The White House is releasing $150 million in heating aid for low income
families. They must have seen our propane gas story form yesterday. There
are 4.5 million families eligible for the assistance so that works out $33
per family for the month of February.
2:22pm and after being down about 130 points the DJIA is now down
about 100 points.
3:02pm and the DJIA closed down 132 points at 7706. The S&P 500
surrendered 12 points to end at 822 and the NASDAQ dropped 13 points to 1307.
And tomorrow is another day.
4 March 2003 - Morning Comment
7:03am and it is looking like a down opening. Asia and Europe are
down and so are the U.S. stock futures. The North Korean intercept
event which didn't seem to move the markets late yesterday had an
overnight effect in Asia that has carried over. Also there was a
terror attack in the Philippines.
On the business news front Deutsche Bank has downgraded the auto
stocks to sell. This is earnings warning season and so any business
news is going to be negative. Coupled with a very negative international
news scene events may conspire to push stocks through the lower end of the
recent trading range and set up a test of the October lows and then we will
see how many real buyers there are. It looks like we were early with our
buying but we kept it small so we have plenty of buying power left.
3 March 2003
Today is (03/03/03) and the only time this century that we will have that
number combo. 333 is a Fibonacci number and we presume a lot of numbers
players will be playing that combo today.
7:16am and in our readings this morning we find that we are out on a
limb regarding our belief that there will not be war with Iraq. Our
readings suggest that many stock traders are already discussing the
reconstruction of Iraq after the war and the implications of that
action on the deficit. We are bemused but not surprised that at least
some of the traders want the war now so that the stock markets can get
on with their rally or collapse as the case may be. Our belief is that
many of these armchair warriors have only a passing acquaintance with
the idea that real people are going to get killed in the conflict. We
love the "kick Saddam's rear" people who are issuing their ultimatums
from the comfort of their trading rooms.
There are a group of traders in New York who are still in shock over 9/11,
having personally witnessed the death and destruction of friends and loved
ones. We certainly understand their desire for vengeance and closure. We can
understand their shock and in these lightly traded markets these folks have
an inordinate effect on day to day stock action. We think the stock markets
are reflecting their inner turmoil since mainstream America has given up on stocks.
Out here in the heartland, young folks are being called up for active duty
and so the confusion over the why and when has created a totally different
attitude toward any war. Most of the citizens will support the president;
any president if the U.S. goes to war. But politically speaking, in the two
or three states that Bush needs to win the next time around for a real
election victory, the sentiment for war is much less bellicose than on Wall Street.
7:32am and personal income rose 0.3% in January and spending was down 0.1%.
Oil is a tad weaker. The Personal Saving Rate was 4.3% in January versus 3.9%
in December. One of the reasons for the rise in personal income was the kick
in of pension and social security raises. Consumer spending on durables
dropped 5.7% in January. This drop is ascribed to a drop in auto sales as
Christmas buying robbed sales from January. We had reported on this
phenomenon in December when we had a conversation with a local store
owner who mentioned that sales were lower because all the young folks in
the area had their money tied up in monthly payments on the new trucks they bought.
7:46am and the WSJ reports that a State Department working group has
suggested that Iraq's oil fields be opened to foreign investment and
development after the U.S. wins the war. Are we surprised? And why do
those nasty Europeans and Middle Easterners think that this war is about oil?
As the WSJ article says:
"One administration official described the group as extremely helpful in
mapping out the long-term issues involved in restoring Iraq's oil industry.
A number of U.S. agencies have been informally consulting oil companies,
field-service firms, well-fire specialists and construction companies to
plan oil-field contingencies during military action, according to U.S.
officials and company executive."
Can Dick Cheney's Halliburton and Condoleezza Rice's Chevron tanker be far behind?
9:10am and the ISM number was 50.5 versus and expected 52. Stocks are
higher but have stagnated at up about 1% on the major measures.
9:29am and a rally in bonds is pushing stocks lower. The pop in the
averages on the Iraq missile destruction has run its course and now
it is time to go back to the same old same old.
11:15am and we sold our trade in FHRX for a scratch. We only bought
it for an immediate bounce and when we didn't get the bounce we sold.
We are not interested in low price troubled stocks at this time.
12:33pm and the DJIA is up 12 points and going nowhere. The NASDAQ is
down 1%. Breadth is positive and volume is very light. All the talking
heads and "experts" are predicting war within two weeks and that has the
stocks markets muted and Treasuries rallying.
12:41pm and we are reducing the Kraft and Pepsi positions we initiated on
Friday in some of our smaller large accounts for a scratch loss because we
want our invested percentage in all accounts to be below 25%. We are also
hoping to sell our GPS position today if we get any kind of late afternoon
rally. We had the stock in to sell for a scratch loss this morning on the
rally but missed. We want to concentrate on the SPDR positions. We thought
we would get a pop in GPS this morning, but the way GPS is acting it is
probably damaged goods until after quarter end on March 31.
1:02pm and we are saddened to learn that Senator Christopher Dodd will not
become the seventeenth Democrat to run for President. How many more in 2004?
At this time we would like to make our formal announcement that we too
will NOT be seeking the Presidency in this election cycle. We hold our
options open for the future and we would like to thank our daughters and
grandchildren for their support and encouragement.
1:05pm and we think the Al Qaida terrorist should fire the photographer
who took his picture. As with most individuals he looks a lot better in
pictures where he has his clothes and head dress on. We vote for Monica
Lewinsky and Bill Clinton hugging whenever this terrorist's name is mentioned
on TV since that is a much nicer picture and surely there is a way
Fox and CNBC to tie Clinton to this guy. Every time Sam Waksal of
Imclone Systems name is mentioned CNBC throws up a picture of Martha
Stewart after a quick picture of Sam.
1:15pm and our propane gas man just filled our 500 gallon tank.
We prepaid last summer at 88 cents per gallon. He told us today's cash
price is $1.78. The run up in energy prices is as nuts as it was two
years ago. And it is also a significant tax-like increase on the economic
recovery at a time when the folks in Washington say they want to stimulate
the economy. And that's why we changed our mind on the Gap.
1:34pm and GM's sales for the month of February were off 19%.
Ford's were down about 1% because F had a bad February a year ago.
Daimler Chrysler sales were off 4.5%.
2:15pm and the DJIA is at its low for the day off 50 points. The
trading today has been dull and drifting. We have no idea what the last
forty five minutes will bring.
2:17pm and we just learned that North Korean MiG fighters intercepted a
U.S. spy plane over the weekend over the Sea of Japan. Iraq can't do anything
right and North Korea can't do anything wrong
2:51pm and most every guru we hear and read is suggesting a retest of the
October lows and then a nice rally to highs later this year. When all are in
agreement the opposite usually occurs.
3:02pm and with no rally we didn't sell the GPS. At the close the DJIA was
down 55 points finishing at 7836. The S&P 500 dropped 6 points to end at 835
and the NASDAQ lost 17 points to end at 1320.
And tomorrow is another day.
3 March 2003 - Morning Comment
6:45am and before proceeding with the day's business we have to correct a quote from Friday's post.
In Friday's post we had the following paragraph:
In the useless but interesting information department that has nothing to do with
stocks; "Odeint, dum metuant" is a new term entering the war talk lexicon. It comes
from the old Roman Empire and refers to the safety of Roman citizens as they passed
through the world being protected by the military power of Rome and means "let them
hate us, as long as they fear us".
From a client we received the following:
I'm glad the warmongers are using one of my favorite expressions, but I
hope they get it right: it's oderint (add an r) dum metuant. Sorry, I took four
years of Latin in high school, then two more in college, so I have to get
SOMETHING out of it.
With that taken care of we can now deal with the mundane events of the weekend.
It is our belief that the Bushies are going to have a much tougher time with their
war chant now that Saddam is destroying the missiles. That is not a wish, it is
the reality of the U.N. and Tony Blair's political need to get the stamp of approval
from the U.N. before he commits British troops. The Turks will give their approval
for U.S. troops for a few dollars more. Bush can don the statesman's mantle and stand
down with the explanation that it was necessary to take all the steps of troop buildup
to convince Saddam of U.S. intentions to go to war in order to convince him of U.S.
intentions to force compliance.
We hold this lonely opinion and believe that the markets will come around to it with
a corresponding rally when the reality becomes apparent.
No war, less deficit, no rebuilding, no troops stationed, and lower oil prices will
all combine to cause the rally. We don't think the long term picture has changed but
the markets are entering a sweet period of spring when we usually have a rally.
No, we haven't been smoking anything funny. Even we are afraid to be risking money in
the markets at this time. But there are times when the potential reward justifies the
risk. We think such a trading opportunity is upon us and that is why we did some buying on Friday.
website there is a new list of boycott items for patriotic Americans beside
French cheese and wine and German beer. Now since Turkey has refused to take
our generous $24 billion offer, which would fund for three years all the unfunded
education and Head Start programs being cut in the Bush budget, we must begin a
boycott of: turkeys, Turkish baths, Turkish delight and Turkish cotton, not to
mention turkey calls, and the turkey trot.
With the capture of the Al Qaida terrorist over the weekend and missile destruction
the stock futures are higher. Asia was higher overnight and Europe is mostly higher.