Table On-Topic Summary - 07-Nov-2002
A compilation of this board's financial/economic posts From 44757 to 44824

Post  44757  by  lkorrow       Reply
Jeff, guess I read that a little too fast. I read your note to wilful and see what you meant. Thanks, Linda

Post  44758  by  lkorrow       Reply
Jeff, I guess I'd have to classify myself as a somewhat long-term trader. My last trade was in September, prior to that was July. I thought I mentioned this before, but I only have a small, fixed sum in Etrade and new money is not going into it. So I will put a mental stop limiting my losses. I don't have a traditional investment strategy of buying the dips during long-term downtrends. In my opinion, that's not prudent given my circumstances. If I want to play, I have to sell something else. That's the way it is.

My thought was if weevil is going into funds, he ought to set similar mental stops to avoid significant losses in this market or he'll be in the same boat as all those other investors that have lost their shirt over the last three years. Especially going in near a top with an iffy economic outlook and a 4th quarter that CEOs like Chambers are saying will be flat or down. To me that's just common sense.

Post  44759  by  Decomposed       Reply

No problem. But be forewarned: It is Cold Fusion, and you have to install the cold fusion server on a PC in order to run it.

Since this is a $2000 (low end) or $5000 (high end) product, you'll probably want to get a single-user CF engine running on your PC. Uh... what operating system are you running? I'm running Windows '98 at home, and 2000 on my Laptop.

If you can't find a single user version on or, e-mail me your address ( and I'll be happy to burn and mail you a CD for Windows '98. You'll need to write me anyway so I can e-mail you the HTML/CF code.

If you (or anyone else) are interested in seeing the code run, I have it -- or at least something that's pretty close to the most current version of it -- installed on a free CF server. You could use freecfm yourself, if you're interested. Its only huge drawback is that it severely restricts the amount of CPU time you're allowed to burn. I've found that it won't work for my nightly Table extractions since it terminates after reading just 20 or 30 of table's messages. (Today we had 99 messages.)

If you're pulling a lot of information from other websites, the free server isn't going to do the trick. Another option, of course, is to pay an ISP to host your CF programs. There are a lot of Cold Fusion hosts to pick from, and you can probably find a business-quality CF host in the in the $30/$40 per month range.

Cold Fusion doesn't do anything that you couldn't do with CGI scripts on unix, or with Active Server Pages on NT -- but it does them EASIER. A *lot* easier. If you know perl, then you'll find Cold Fusion to be a piece of cake. A friend of mine who uses BSD all the time is working to learn PHP right now. It sounds very similar to Cold Fusion.

Anyway... I'll await your e-mail.

Post  44760  by  Decomposed       OT: Table ON TOPIC SUMMARY Nov 6, 2002
Post  44761  by  Decomposed       ot: Cold Fusion
Post  44762  by  maniati       OT: No Requiem for the Democrats From Me

Post  44763  by  pmcw       Reply
Gartner Dataquest forecasts global semiconductor market to grow 12% in 2003
Original date: 2002/11/7
Translator: Richard So
On November 6, Gartner Dataquest forecast that the worldwide semiconductor market would post 12% growth in 2003 to US$171.8 billion in revenues.

The only problem with this is that 2002 sales are not going to be $153.4B. (To hit $171.8B in 2003 with a 12% increase one must start with $153.4B in 2002) You would think an organization as large and sophisticated as Gartner could do basic math. 2002 will come in at about $140B. 12% growth is the second lowest forecast I've read this year, but infinitely more credible than Semico's 30% forecast (those guys in Phoenix smoke the really good stuff). If it is 12% we will see sales of around $157B. Personally, I think it will be between that and $165B.

Regards, pmcw

Post  44764  by  clo       OT: Maniati, let's hope the dem's learned a valuab

Post  44765  by  pmcw       Reply
TSMC, UMC orders may yield better-than-expected 4Q
Original date: 2002/11/7
Translator: Jane Wang
Investment analysts reported that Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) are seeing better-than-expected orders that may boost their fourth-quarter revenues.

Nvidia and VIA Technologies reportedly have increased orders to TSMC by an equivalent of the capacity of an 8-inch fab.

STMicroelectronics (ST) and Infineon Technologies reportedly have increased orders to UMC. Sources said that UMC has seen growth in communications and LCD-related chip orders and shortened its planned year-end maintenance at Fab 8F.

Some of the recent demand, mostly short-term and urgent, is said to have resulted from the resumption of normal operations at US West Coast ports.

TSMC and UMC would not comment on the rumors and maintained the guidance given at their third-quarter investors conferences.

Post  44766  by  Decomposed       ot: maniati,
Post  44767  by  pmcw       OT: clo, You're right on both accounts. McAuliffe
Post  44768  by  maniati       OT: Decomp: Well, if they don't learn, they don't
Post  44769  by  maniati       OT: clo: IMO, one of the lessons to be learned is
Post  44770  by  pacemakernj       OT: Weevil, I am telling you buy stocks on ANY pul
Post  44771  by  pacemakernj       OT: JB the attack on Iraq IS NOT pure madness. Let

Post  44772  by  pmcw       Reply
The following observations are from Anthony Chan. He's on my top five favorite list for economists. Not only do I think he is usually right on track, he nearly always shows how numbers can be distorted to illustrate descriptive pictures. The following paint what I see as an honest picture of where we currently sit. It was published before the Fed meeting and I'm anxious to hear his comments about the rate cut he didn't see as appropriate. I'm also bothered by it being a half a percent, but I'm coming to grips with it and understanding better the sound fundamental reasons looming a couple quarters out to rationalize the larger cut. These include war, consolidation of corporate America, supporting banks as they absorb bad loans, low cost financing for Government deficits (state, local and federal) and maintaining consumer participation. Anyway, enough of me, on with Chan:

Anthony Chan, Ph.D.
November 4, 2002

* In recent years, record levels of personal income have supported
healthy growth rates in consumer spending. However, during this same
period, consumer credit has risen at an even faster growth pace than income.
As a result, the pace of consumer spending reported in the third quarter
appears to be unsustainable over the near term. We project that real
personal consumption expenditures are more likely to rise by only 2.25% to
2.5% over the next twelve months.

Consumer Credit Trends and the Recovery

Personal income hit another all-time record in September, rising by 0.4% to
$9.0 trillion. In recent years, however, consumer credit has been rising at
an even faster pace than income and the ratio of credit-to-personal income
now stands just below a record high. These trends lead us to believe that
while consumption will continue to grow, consumers will be unable or
reluctant to maintain the vigorous pace of spending recorded in the third
Consumer credit is on track to grow at a faster pace than personal income
for a fourth consecutive year in 2002. Last year, for example, consumer
credit surged by 6.9% while personal income inched higher by just 1.5%. In
fact, since the beginning of the current data series on personal income in
1959, income has risen by 2256% while consumer credit has gone up by 3434%.

With these trends in place, we believe that it is unlikely that consumer
spending will be able to maintain the third quarter's 4.2% growth pace.
Given that consumer spending accounts for over 2/3 of overall economic
activity, the recent movements in consumer credit support the call for a
continued moderate economic recovery. With no more than 2.0% growth
expected in the fourth quarter, real GDP is on track to grow by just 2.4%
for all of 2002 compared to an average growth pace of 3.7% in the first year
of the last nine economic expansions.
It is important to note that the consumer credit numbers exclude mortgage
debt. And while consumer credit outstanding hit $1.7 trillion last year,
single and multi-family mortgage debt outstanding reached $6.2 trillion.
The good news, however, is that housing prices have been rising at an
impressive clip over the last couple of years, so the rise in mortgage debt
has actually strengthened rather than weakened consumer balance sheets.
In addition, the faster percentage growth in consumer credit relative to
personal income masks the fact that income growth has actually outpaced
credit growth in dollar terms in recent years. In fact, since the start of
the last expansion in 1991, personal income has jumped by $4.0 trillion
while consumer credit has gone up by just $942 billion (consumer credit
started from a much lower base, so a smaller dollar change can still be a
larger percentage increase). Amazingly, then, while the credit-to-income
ratio is near an all-time high, the dollar gap between income and credit is
also at a record level. So while we expect consumer spending to slow, we do
not anticipate an outright contraction in consumption that would lead to a
double-dip recession.
If this nascent economic recovery truly is sustainable, history suggests
that both personal income and consumer credit will accelerate in the years
ahead as both tend to grow much more strongly in expansions than in
recessions. Consumer credit, however, was unusually strong in last year's
recession, rising by an annualized 6.1% for the fastest growth pace in a
contraction since 1948-49, when pent up demand after World War II fueled a
17.0% surge in credit.
This healthy pace of consumer credit growth is a good indication of why last
year's recession will go down as one of the mildest on record. It is also a
sign of the relative lack of pent up demand heading into this recovery.
While we expect that consumer spending will stay positive, then, we also
believe that consumption growth will slow from its recent robust pace and
that the overall economic recovery will continue to be gradual.

Data Coming Out This Week:
The Federal Open Market Committee will meet on Wednesday to decide on the
direction of short-term interest rates. Although the odds had risen
substantially prior to the release of last week's jobs report that the Fed
would cut rates, we believe that the report failed to provide a clear and
justifiable reason to lower rates immediately. Therefore, although we
expect that policymakers will engage in a heated and contentious debate, we
believe that they will opt to postpone lowering short-term rates until
seeing more evidence on the health of the economy ahead of the December FOMC
meeting. The Fed's decision on rates should be announced around 2:15PM on
Non-farm Productivity for the third quarter (released on Thursday at 8:30AM,
consensus = +4.1%, BOIA estimate = +4.5%, second quarter actual = +1.5%)
should be fueled by a sharp rise non-farm business output and a small
contraction in hours worked.
Finally, Consumer Credit for the month of September (released on Thursday at
3:00PM, consensus = +$5.0 billion, BOIA estimate = +$4.0 billion, August
actual = +$4.2 billion) should be a bit weaker than in August. We believe
that softer auto sales and fresh cash from mortgage refinancing activity
will be largely responsible for suppressing the rise in credit.

Anthony Chan, Ph.D
Sr. Managing Director and Chief Economist
Bryan Jordan
Banc One Investment Advisors

Post  44773  by  lkorrow       Reply
"Call me John"

Cisco CEO interview on cnbc. I captured MOST of it for those that missed it.

Cisco's business has three segments:
- router/swithces - analysts say it will grow 10-20%
- service provider 3% today, great if we can double it
- 9 value-added segments - ip telephony, security, storage, etc. - may be at high end of estimates there

Customer's business needs to improve before Cisco's will.

Jack Welch complimented him on his high margins but asked with China, how will he maintain those margins with the Asian competitive threat. He said he was the only non-Asian at Wang and he understands that China will be a tremendous and challenging engine for the world.

He said in the last decade there were 4 waves of competition
- cabletron synoptics types
- ibm hp compaq
- startups like jnpr redback extreme nortel alcatel
- next, new biz model - price/perf, compete on productivity and value add

Sees an integrated network where software plays a big role.
Cisco is a hardware and software firm.

He's optimistic long run but notes obstacles for the short term -- global economies around the world, many segments being challenged at once, contraction

Productivity occurs in waves on three-year cycles.
How do you take complex technology and change process.

Cisco will report both GAAP and pro forma and tie them together, showing the differences. Have learned more disclosure is better.

They will not expense options. Ownership is important to corporate America. Half of Cisco's options issued to go non-managers.

On other news, JPM Chase says the rumor that they suffered a large loss on gold trades is false and irresponsible. This recycled rumor periodically surfaces from Europe.

Post  44774  by  jeffbas       Reply
pmcw, my guess is that Greenspan decided to err on the side of too much rather than not enough. In particular, I think this increase in the spread for banks will help them deal with losses and feel less constrained to tighten credit standards. Also, I think this combo of the rate decrease and the Republican win should act to cause folks to feel there is reduced risk going forward of something really bad. That should help to reduce risk premiums in pricing of assets and in consumer decisions about (not) buying.

Post  44775  by  lkorrow       OT: JB, I don't think they would ever do what you
Post  44776  by  pacemakernj       OT: Maniati, great post. But, one thing you'll get

Post  44777  by  Decomposed       Reply
Good luck, pace. I didn't care for the market's reaction to yesterday's cut one bit and bailed from my day-old XICO purchase at a small loss.

Your move is gutsy. By summarily loading the wagon, aren't you trying to pinpoint a bottom -- which every investment advisor will tell you is a dangerous practice?

I figure that the Fed cut rates more than anticipated because it has to. That's not a good thing, it's a fairly desperate thing. If it stimulates the economy and works like most rate cuts, it will still take a full year for the economy to respond. And Greenspan took this action because he sees more clouds on the horizon.

But Greenspan has already tried this -- and numerous rate cuts haven't yet stopped the slide. Now, he's reaching the point where he can't cut rates much more. At a Federal Funds rate of 1.25%, there are at most five more coming. That sounds like a lot, but there have already been at least a dozen. Once those five are gone, it gets spooky. The Fed's arsenal will be empty. The economy will officially be out of control.

Other issues:

o Consumer confidence is lousy;

o Corel laid off 22% of its workforce a few days ago;

o Cars aren't selling;

o A LOT of folks are leveraged to the hilt with their expensive new homes -- and will be strapped for cash for a LONG time to come;

o Unemployment doesn't yet seem to have become a big issue, yet I'm certain that it will;

o War, possibly on several fronts, is looming;

o After a decade-long, record-setting bull market, one would expect a LONG, harsh bear market. Well, it's been long already, but in many ways still not harsh. Do you hear anyone saying that p/e ratios are now too low? Yet one would expect that to be the case before a large economic downturn reverses;

o Yesterday, you were jazzed about Cisco's report yesterday. Cisco had good numbers, but actually had a less-than-enthusiastic outlook. It's trading down today. Is your different interpretation evidence, perhaps, that you're seeing the world through rose-colored glasses?

Just a few thoughts. Honestly, though, I hope you're right. I still have a lot of money invested.

Post  44778  by  pmcw       Reply
WiFi Goes to Washington

A new technology could not only restart economic growth but also help connect everyone, everywhere to the Internet—at low cost.

Reed E. Hundt, Stagg Newman, and John E. Richards
The McKinsey Quarterly, 2002 Number 4

Remember when technology-based start-ups were going to put established companies out of business? The surviving incumbents are now having a last laugh. But their schadenfreude may be short-lived in the telecommunications industry because a new technology called Wi-Fi (wireless fidelity) is threatening the business models of the mobile carriers, the phone gear makers, and the providers of high-speed DSL and cable modem services.

Wi-Fi—known among techies as 802.11, a reference to its underlying technology standard—is an alternative means of Internet access. Simply hook up an inexpensive Wi-Fi base station (chip plus transceiver) to a high-speed Internet connection such as DSL, a cable modem, or a T1 line and place this base station within a couple of hundred feet of a house. All users in the vicinity who have a very inexpensive Wi-Fi device in their PCs or PDAs can then share low-cost, high-speed access to the Internet, without having to pay individually for more expensive dedicated DSL or cable modem service.

Even better, with exciting new technologies such as mesh and ad hoc networks, improved Wi-Fi devices could create overlapping Wi-Fi networks in hotels, airports, office buildings, and malls. Strings of linked Wi-Fi networks can stretch through apartment buildings, campuses, and neighborhoods. Forget about digging up streets for fiber to every building or about erecting forests of towers; Wi-Fi can stretch the fabric of Internet connectivity, cheaply and painlessly, over any community to points where traffic is aggregated onto high-speed fiber backbone networks.

Wi-Fi exploits the spectrum used by gadgets such as cordless telephones and microwave ovens—airwaves that haven’t been auctioned or allocated to an exclusive user. This is the proverbial free lunch of spectrum. At last, Internet access can be easy, cheap, always on, everywhere. And Wi-Fi access is fast: indeed, with a fiber rather than a DSL or cable modem connection from the backbone network to the Wi-Fi base station, the transfer speed of Wi-Fi can be faster than the typical speeds of those technologies.1 A fiber connection of this sort would make it easy to download, stream, and swap movies—or vast volumes of corporate data—not only to computers but also to a new generation of flat screens equipped with Wi-Fi chips. Users will be able to make telephone calls by speaking into microphones in their lapels or on the edges of their computer screens. Guglielmo Marconi, the inventor of wireless communication, will have the last laugh on Alexander Graham Bell, the inventor of the telephone.

What’s the rub? Telephone companies could find that Wi-Fi will replace the additional, or "discretionary," phone lines that residential and business customers have had installed to supplement the traditional single "lifeline" connection. That change alone would probably make every telephone company in the United States unprofitable. Mobile carriers too could lose a substantial portion of their revenues (particularly future wireless data revenues) to Wi-Fi networks.

For the mobile and wireline phone companies, the market-based reaction would be to embrace the new technology and extend its applications. But the likely alternative—though one that would poorly serve the economy and consumers—is for those companies to use the power of governments to slow or thwart Wi-Fi’s advance. Already, in Taiwan only communications providers licensed by the government can operate commercial Wi-Fi networks. Some European countries appear to have similar, albeit ambiguous, regulations. Under such rules, Starbucks, which has put Wi-Fi connectivity into many of its shops, may not be able to charge an additional nickel a cup to patrons who want to have the Internet along with their coffee. Meanwhile, in the United Kingdom, regulators in effect prohibited service providers from offering commercial Wi-Fi services but recently took the wise course and reversed this rule, and BT has already indicated that it will offer them.

Wi-Fi might also be squelched if governments decided to favor other industries that use the same radio frequencies. In Florida, one ham-radio operator has gone to court to shut down a Wi-Fi operator on the grounds that the apartment dwellers using this form of wireless Internet access were interfering with his radio. The electrical-lighting industry has petitioned the US Federal Communications Commission (FCC) to permit the use of the spectrum in a way that would create difficulties for Wi-Fi. And satellite operators have complained that Wi-Fi broadcasts will obstruct signals to and from satellites.

Such spectrum battles are chronic at the FCC. Each of them will give the government a choice: to promote Wi-Fi or to restrain it. Even if the FCC sided with Wi-Fi on all issues of competing use, consumers would still have to reckon with the possibility that the government might protect existing communications services by forcing Wi-Fi to meet regulatory requirements for the security of signals and the quality of service. Actually, meeting these standards would be a laudable goal, but it should be achieved through competition and innovation, not government mandates. Imposing such requirements is a time-tested regulatory way of deterring competition and delaying change.

Finally, the biggest risk is simply that the FCC might fail to allocate enough spectrum for free, unlicensed Wi-Fi and its many offshoots. If this new technology sweeps the country and the globe, as experts claim it can, spectrum auctions might become unnecessary to promote competition. Looking beyond auctions for revenues, the US Treasury Department might have to settle for reasonable taxation of a newly burgeoning information sector. But if governments become addicted to auction revenues, they may resist the allocation of free airwaves to Wi-Fiers.

Post  44779  by  lkorrow       Reply
pmcw, it's reassuring that he doesn't think the consumer will collapse. My own view was that refinancing put enough money in pockets to see the consumer through. What percentage refinanced larger mortgages, I don't know, but it seems irrelevant to the current situation. I wonder if he has concerns on an auto sale slowdown. The 0% financing bubble might be bridging the industry to the point where the normal sales cycle returns coming off the spending bubble of the late 90's. Still something of a gap, I would think. . . .

"So while we expect consumer spending to slow, we do
not anticipate an outright contraction in consumption that would lead to a double-dip recession."

Post  44780  by  ttalknet2       Reply
The Fed's Prescription for Disaster

An Interview with Frank Shostak

[Posted November 7, 2002]

Frank Shostak is an economist at Man Financial, Australia. He was interviewed following the announcement of the Fed's latest policy move. The Fed has lowered the interest rate, again, and it seems that the whole world is celebrating.

Frank Shostak: Actually, it is a disastrous move, so far as I'm concerned. Last year, the Fed cut interest rates 11 times. Why anyone should believe the 12th is the charm is beyond me. From the end of last year until now, the federal funds rate was 1.75 percent, and now we have a very aggressive lowering by half a percent to 1.25 percent.

This indicates desperation. It shows that the Fed believes the economy is doing poorly, more poorly than is usually reported, but that they have no idea why or what to do about it. Why does the Fed say it is lowering rates?

Shostak: The Fed believes it has to fight deflation. This is in addition to its traditional claim to be fighting inflation. So now we find that the Fed is fighting both inflation and deflation. In truth, the Fed doesn’t fight inflation; it creates it, and in doing so, it creates the foundation for deflation. They are fighting the problem with the same means that they used to create the problem in the first place. What does the lowering of rates mean for the supply of money and credit?

Shostak: If you read the Fed's statement, you see that creating money is the goal. If you look at the money base, the latest figures for October, increases were running 6.7 percent year on year. In September, the increases were running 5 percent. So already, the Fed was pushing quite a bit of new money into the system. It won’t surprise me to see them really step it up now.

While the Fed is going to do its best to inflate the money, it can happen that money supply won’t increase - depending on the behavior of banks. If banks stop lending, due to tighter credit standards or fewer borrowers, the money supply will not respond. This is what happened in the 1930s What is the current situation with regard to lending?

Shostak: Consumer and real estate loans by commercial banks are still strong. But business loans have been declining on a yearly basis for 15 months in a row. Credit standards are tightening and many businesses have difficulties to obtain credit. Also, the debt-to-asset ratio in business is at the highest level as far back as we have data.

In short, banks are happy to lend to consumers and on real estate and mortgages. But in the business sector, the credit crunch is real. The possibility that the US could end up like Japan is quite high. Given the record high consumer debt-to-assets ratio I envisage that banks will slow their lending to consumers in the months ahead. You mean a persistent lag in productive capacity, a kind of long-run recessionary environment that doesn’t go away.

Shostak: Right. If you look at industrial production, we see that the cyclical component—which is the underlying movement in relation to the long–term trend—has been below the trend for 18 months.

This raises a question. If you have had such aggressive lowering of interest rates for so long, from 6 percent to less than 2 percent, and nothing has happened to industrial production, that immediately raises the possibility that we are dealing with something more serious than people realize.

The analogy between the US and Japan is increasingly conspicuous. In both cases, the central bank has lowered rates to virtually nil, and not revived the economy. Most of the recent indicators in the US have been declining. How does this square with forecasts?

Shostak: All the official forecasts said that by now we should have a strong recovery. Yet it is nowhere to be seen. All the Keynesian and mainstream forecasters have been completely wrong. Yet no one says anything about it. Meanwhile, the Austrians have been completely right in their forecasts.

In the symposium we had early last year at the Mises Institute, the Austrians all predicted that there would be a shallow recovery that would quickly peter out. This was in contrast to what most everyone else in the major investment houses said. They said that the recovery would be there by this time last year. Well, the Austrians have been correct.

And only the Austrians have an explanation. As with Japan, it appears that the pool of real funding could really be in trouble. If the pool of funding had been there, the lower rates would have created a big rebound. But that has not happened. If the Fed believes money is the answer, why doesn't it just reduce rates to zero?

Shostak: The worry is that this would produce panic. It would underscore the reality that the Fed is incapable of producing wealth from its printing press. It would show that the Fed is completely powerless, except to produce mis-signals that generate malinvestment. The only thing that might temporarily move is the stock market. To what extent is the Fed looking at stocks as a proxy for the whole economy?

Shostak: It does seem that the Fed is watching stocks very closely. They believe that if the Fed can raise valuations, that will have a psychological impact and causes consumers to spend and producers to borrow, and the economy will pick up. But this is complete nonsense.

The stock market does respond to cuts, even to the prospect of cuts, at least temporarily. On October 9, the Dow fell to a low of 7,286. Today it closed at 8,771, an increase of 20 percent. The S&P has increased 19 percent, and Nasdaq has risen by 27 percent. But the issue here is that valuations are becoming extremely high, once again. And so you regard yet another downward correction as highly likely.

Shostak: Most certainly. To give you an indication, look at the dividend yield on the S&P, a good measure of valuation. We are currently seeing a yield of 1.6-1.7 percent. If you look at the historical average from 1900 until today, it is 4.3 percent. This means that if reality asserts itself, as I believe it will, stocks are going to follow suit and dividend yield should increase. Consequently, there is a high likelihood that the S&P500 could half from its current levels.

Eventually you have to look at what is happening to real corporate profits. So far, the indications are not that good. You can do lots of things with smoke and mirrors, but the bottom line is that genuine profits cannot be created right now. It is not possible, given the level of debt-to-assets on all levels. The bottom line is just not there. I cannot agree with those who say that we have seen the worst. Any other indicators to watch?

Shostak: All the ratios of capital goods to consumer goods production are still at very high levels. This means that the adjustment we need has barely begun. If we look at the consumer sector, at durables versus non-durables, that’s even worse, which means that we are a long way from meaningful economic recovery.

What we need if we want recovery is a big liquidation of capital goods, to normalize it with the consumer goods sector. And in the consumer sector, we need a reduction in the durable goods production relative to non-durable goods production. The Fed should not attempt to forestall that. Sometimes it is said that Greenspan is the most powerful man in the world.

Shostak: Right, but this reminds us that this powerful man only has one tool at his disposal: printing money. And this tool only creates an illusion. One cannot create real wealth by printing money. If printing money could create wealth, there would not be poverty in the world today. Every third world country could print money and become rich. There would never be a recession. We would have perennial wealth creation with no effort.

You can pump all the money you want but it does not create anything; it only destroys. It creates a misallocation of resources, consumes capital, and makes everything much worse. With all the new money, why don't price respond more dramatically?

Shostak: Prices have not responded because businesses do not have pricing power. The reason is that people don’t have as much real income as they used to have. If you don’t have the means to spend, it is hard for business to raise prices.

There would be price inflation if people were spending at the same level as they used to. When production is falling, those who produce have less means of payment. We are looking at a snowball of downward pressure. What would you tell Greenspan today?

Shostak: I would tell him that what he has done in lowering rates is delay recovery by many months and maybe many quarters. This is why Greenspan doesn't call you.

Shostak: Well, true, but at least the Mises Institute does call.


Frank Shostak is an adjunct scholar of the Mises Institute and a frequent contributor to Send him MAIL and see his outstanding Daily Articles Archive.

Post  44781  by  lkorrow       Reply
Temporary Open Market Operations $11.5B today. Wonder if it will translate into an infusion this afternoon or is used for other purposes. . . .

Post  44782  by  lkorrow       Reply
Analyst on cnbc surprised by gold action, says drop in rates producing dollar weakness should have resulted in a move from dollars to gold, but people are remaining in dollars.

Today: dollar down, gold up, market down, gold stocks down.

Post  44783  by  uponroof       Reply
maniati/pace...nowhere to go but down

Mr. Roger Arnold reflects on the prospects of the ruling party wrt managing the economy. (note his reference to "enough rope to hang themselves" - an increasingly popular thought these days?.....take heart clo!)

In other words, this economy is FUBAR that will most certainly harm those appointed to the task of repair.


General Comments

There are a lot of little items of importance right now that I will hit briefly:

Truth or Dare: The Lose Lose Scenario for the Republican Party

The republican win in congress is a reactive mandate by the people. It is a vote against the probable attempt at tax hikes by the democrats; and that is good. A choice of the lesser of two evils. But I do not believe it was a vote for reality. Reality being the acceptance by voters of inevitable economic pain that can not be stopped by fiscal policy and the debt bubble must be burst. I will explain.

The republican party has been given enough rope to build a bridge across this economic slow down OR to hang themselves.

Building a bridge is hard. It requires leadership as well subordination of individual goals to the greater good. I don't believe that is likely to occur. The most probable political outcome will be to hang themselves. That is the nature of politics.

I do not say that lightly, or because I prefer the the democratic party over the republican party. It is simply reality.

When I was taking my securities licensing exams several years ago I had an instructor whom told me something that rang so true and offered so much clarity with respect to government regulation and politics that I have never forgotten it. He said, in all seriousness, if you get to a question on the exam concerning government regulation and you can't recall the answer choose the answer where not only does nobody win but offers the worst possible outcome for all parties involved; the proverbial lose lose scenario. His insight into the mechanics of government and politics is accurate.

One of our primary messages this year in the DO's has been that monetary policy can not supersede the business cycle. So far this has been proven accurate. The fed has used monetary policy to continue to increase money supply and lower the cost of money during the past 2 years. It hasn't stopped the economic slow down. As we have discussed why on several occasions I will not rehash here again.

However, these same rules apply to fiscal policy. Although the republicans have now been given a mandate to accelerate the income tax deductions planned for future years and even create new deductions for corporations the probability that fiscal policy will now pick up where monetary policy failed and induce a resurgence of economic activity is very low.

The reality of this situation however will not keep the republicans from attempting to do so.

Unfortunately, in my opinion, the most probable outcome of this will be to reduce the rate of slowing of the economy but will not change its trajectory. This reduction in the rate of slowing also raises the probability that the economy will be in an even worse situation in 2004 than it is today.

Just as monetary stimulus forced consumer spending up over the past year and precluded the bottoming of the economy the same I believe will now occur with fiscal stimulus. The democrats need do nothing more than sit back and watch the republicans struggle with a problem that has no politically acceptable response and then capitalize on it in 2004. I believe this may very well become a lose lose scenario for the republican party.

If fiscal stimulus postpones the slow down but does not act as the catalyst to reverse it and the economy has stagnated in 2004 the republicans will get decimated in the next presidential elections.

Now, don't get me wrong. I am not advocating a democratic party response to this economic slow down.

That party would have followed Germany's lead and increased taxes. That not only would not have alleviated the economic problem of the US but would have resulted in even greater, deeper and longer damage.

Now it is not impossible for the republicans to pull this off but it will be very difficult. The tax cuts need to be deep and targeted almost exclusively for primarily domestic small business. International firms will face backlash and counter productive protectionist responses from Europe and Asia if their taxes are cut; which is bad.

Consumer tax cuts will again allow large inefficient companies the opportunity to continue to operate when they should be allowed to die. The key and backbone of the US Economy is the small business and that is where the majority of the tax cuts need to be made.

I will stop here. There is a lot more to be said about this and I will be touching periodically in the future.


The ECB blew it BIG TIME by not lowering rates. BUT, the US is again the beneficiary of an incredibly incompetent political and economic leadership in Europe. Remember our lose lose government story above? It is even more applicable in economic collectives like Germany and Japan.

The divergence between the FED funds at 1.25% and the overnight rate in Europe at 3.25%, on a marginal base is gargantuan. So, why aren't the Europeans selling the dollar and US treasuries in return for the increased returns in Europe?

Because Europe is going Bye Bye economically and the European investors know it. There is a flight into US assets on a protection of principal basis.

Productivity numbers

Productivity surged forward in the last year. That is not a result of operating efficiencies at corporations. It is because they are reducing costs and thus cost per unit by firing people. Which means they can increase productivity even as revenues fall and they slowly go out of business. It is not pretty. Be careful

Post  44784  by  kduff       OT: Maniati,

Post  44785  by  Decomposed       Reply

Just be sure to tell us when you start dumping gold because of deflationary concerns! I confess that I am VERY tempted to sell KNM today. But I probably won't.

Post  44786  by  Decomposed       ot: Whoops.
Post  44787  by  pmcw       OT: kd, The only reason he pulled out from leaders
Post  44788  by  pacemakernj       OT: Decomp all valid points. But that is exactly w

Post  44789  by  Decomposed       Reply
re: Gold

Some of you have wondered how it is that gold stocks are moving down. Just a quick FYI... they aren't *all* down. KGC is up a few percent, and NEM which has little hedging is up a smaller amount.

KGC, incidentally, is one of the few that's unhedged, and NEM doesn't do a lot of hedging either. On that basis, the moves in gold make sense.

KRY and KGC have a history of similar pricing. You might remember that I switched out of KRY and bought KGC when I noticed KGC was trading nearly 15% beneath KRY, with no good reason for the divergence. The situation is now reversed: KGC is $1.94 and KRY is $1.66, but it appears that there IS a reason.

The bottom line is that I'll swap gold stocks again, but only if the gap gets a little bigger. If I see a 40 cent gap with no other news accounting for it, I'll consider KRY oversold relative to KGC.

Post  44790  by  pacemakernj       OT: Roof, you know I have been very concerned wrt

Post  44791  by  pmcw       Reply
rdb, If you get a chance, please share your thoughts on SFNT. You've certainly played it well on VSE. You and "1969" are running a very close race right now. TIA Regards,pmcw

Post  44792  by  lkorrow       Reply
Decomposed, I wish I followed in your footsteps, KRY is clobbering my nice gains on NEM and AU. While AU's still undervalued relative to NEM, if NEM shows good results next week, I expect it will rally nicely. All that institutional backing comes into play. Don't know how de-hedging costs factor in, though.

You're right, 28 gold stocks in my watch list are split about 50:50 winners/losers (delayed quotes).

Post  44793  by  tinljhtkh       Reply
Some post election comments!

We may be traveling an interesting road in this post 2002 election world, and we may have to wonder about the air pressure in our economic tires! Warstud said that he smelled deflation while Weevil is ready to pump up his investments once again! The air from deflating tires usually has its own peculiar smell!

I have been reading Weevil’s posts in particular with some interest over the last few hours! His desire to get back into the markets and the lessons that he has learned from his past experiences may mirror those of many other investors who got burned as the NASDAQ bubble burst in march of 2000! They recently gave a couple of economists the Nobel Prize for almost 50 years of research that came up with the same conclusion that weevil has arrived at—experience counts! Part of the reason that "the bubble" occurred in the first place was the huge number of inexperienced investors who invaded the markets during the 1990's, destroying market discipline!

The unanswered question (a possible Nobel Prize in a decade or so) is how many of the inexperienced will return to the fray with the wisdom that they have gained, and how they and their accumulated experience may make it a better and more orderly marketplace? It also appears that the era of free stock analysis may be entering a new phase, and that those who have learned how to do their own due diligence (DD) will have a leg up on those who still haven't figured out how! In my opinion, if there is a large return to this marketplace by the 1990's crowd, it will signal that this is going to be even more of a traders market than it was in the past! This may also fundamentally change the traditional definition of what investing for the long run is, and bring the idea of looking at the broad markets into even more demand than it already is! As we move into a more globalized economy, factors that impact individual stocks will spread out over more areas of expertise than they ever have before. It is going to become so complicated and specialized that, paradoxically, more generalization is going to be required than ever before!

Short term, however, I would be careful about jumping into this market at this time! There are a number of issues that still need to be sorted out. I think that this large rally is nothing much more than a temporary liquidity builder in preparation for the uncertainties that may be coming after the first of the year! If bonds continue to lose ground, they will become attractive again if we actually go to war against Iraq, causing a dumping of equities and the resulting loss of much market capital! Equity investors will flee back into bonds while some of those who were enticed off of the money market sidelines may see some of their capital lost when the markets retreat again. This possibility, in my opinion, may be the final straw for many investors who will then leave the markets for the rest of their lives! Many already have left to invest in real estate and they may be facing another bubble there!

I don't see where the huge final flush out that will set the stage for any kind of real rebound has yet occurred! Corporations have moved from managing earnings to managing expectations, taking advantage of the exceptionally weak third quarter comps available to them from the year ago September 11th disaster! They have, on the positive side, probably gotten mostly through the period when the new accounting rules forced massive non-cash write-downs for good will impairment! The bad news is that now underfunded pension plan issues have replaced the writedown problem. I’m sure that we have all learned that corporations were reporting pension income as a part of their profits even though the money was unavailable to the corporation for any other purpose than to pay retirement benefits.

The American accounting model is in great need of revision, to say the least!

The great short-term issue that I see facing all of us is what occurred during the election held on Tuesday! The Republicans were able to focus the voter’s attention on one issue--security--as a result of what has occurred over the last year or so! The election was not focused on Iraq or terrorism other than how that affected our basic need to feel safe in our own country and our own homes! This very narrow focus may have made us all even less secure than we were before!

Since this was the first national election since September 11th, its results may have also sent a message to the world that we may not have intended to send! Many Americans have had reservations about the war with Iraq, but they were lost in the electoral shuffle.

The Bush administration is likely to use this election as a mandate to do whatever they choose to do on the international stage, and that may be a mistake of tragic proportions! Before the voters validated what had been going on by electing the Bush backed candidates, there may have been a feeling or a hope that there would be some sort of check on what had been said expressed by the voters in the United States! The failure of the Democrats to focus on the key issues has to play a large part in what ever hardening perceptions of us may now be occurring in certain parts of the world! Even the "parts" have to be redefined because it is now a world of land mass crossed by the communications advances that makes so much of it without any boundaries at all except those that exist inside of so many ever more divided minds!

This morning, on CNBC, Jack Welch, the retired GE CEO, mentioned the concept that the more that a nations economy is involved in the global mix, the less chance that there is of a war occurring either between the United States and the given country, or of a regional conflict breaking out between neighbors! He was referring to a United States-China conflict or something occurring between India and Pakistan as good examples of those concepts! However, there are states such as North Korea that are not yet involved in the global economy. These states might decide to strike first and ask questions later as they react to a nation who has now validated the "you're either for us or against us" concept in the first election after it's leader spoke of it! In addition to that, we have an undetermined number of actual and potential terrorist groups out there operating across many borders that might also be further radicalized by this mid-term vote!

By the results from this election, we have, as a nation, formalized, in many eyes, our approval of all of the Bush concepts! In addition to that, we have also further formalized our approval of an administration whose election financing came almost entirely from corporations! Although it may be true that the average American corporation is trying to be honest in its dealings, in the shadow of Enron, this mid-term vote sends, at best, a very confusing message to the rest of the world. Among the already partially radicalized groups out there right now is a worldwide coalition that exists in opposition to globalization. They appear and proceed to protest at most sites where the big economic nations meet. They were very violent in Seattle a few years ago but were held in better check up in Canada earlier this year!

These global groups may take our electoral response to Enron very badly! Enron and all that it represents were on the ballot whether we liked it or not! The specter of Harvey Pitt resigning as SEC chief on election night only served to highlight the conflicts existing within the Bush administration when it comes to the issue of corporate regulation! The reason that he had to resign--William Webster--has also again raised the question of "who can you trust?" Webster was once the FBI director, and has apparently enriched himself with some questionable alliances in the private sector! Webster also has a lineage that goes right back to the Reagan Bush years!

In addition to those problems, we still face the twin issues of loss of pricing power and commoditization that confound so many sectors of American business. Jack Welch, again this morning on CNBC, stated that corporations, who could not differentiate themselves by innovation and achieve pricing power in that manner, would simply have to find cheaper places to manufacture their goods!

China once again raises its head!

Both Welch and Cisco CEO John Chambers commented on the Chinese situation this morning on CNBC! Chambers, who once worked in China, has the utmost respect for their education system and the intelligence of their workforce! Welch stated that the Chinese were very entrepreneurial, despite their governmental system! He also said that the enormity of the China manufacturing invasion of western economies was going to become a major political issue in the coming years! China is going to be a much more serious issue than Japan was back in the 1980's because they will lead the cheap labor charge that will further the loss of pricing power by their commoditization of so many products! They are apparently very efficient and accurate in their production capabilities, producing with equal quality to the American worker!

Warstud, in his post 44705, also brought up the specter of deflation as he reacted to the Federal Reserves latest round of rate easing!

I don't see how, over the long haul, anything good can come from this new cycle of rate cutting! All it is going to do is remove what little pricing power that the Fed has left! Its just another version of zero percent financing, except on a much larger scale! Now, even the financing doing the financing is going to be zero percent!

Zero times zero is zero!

Yes, there will be money spent on capital expansion! It has to happen sometime or other. There will simply be less money spent for the same product until all of the competition is wiped out by the six hundred pound gorilla's in each sector! Then there will not be as much choice or innovation because the other players will be gone! Jack Welch, again this morning on CNBC, highlighted that innovation would be what would have to happen for American corporations to survive in this global world! By that time, Fed rates may be climbing sky high because of the huge federal deficits brought about by the loss of tax revenue caused by the continual decline in prices combined with the governments continual tax cutting as apart of their efforts to stimulate a deflating economy!

If we look at the NASDAQ, the ride that it has taken since the mid-1990's is a perfect response model for the answer that some economists are bringing forth as a solution to the deflation problem--printing more money!

The NASDAQ corporations printed money by using their capital to buy other companies, issued more stock to raise more money, and did stock splits to create more stock to continue the cycle until they inflated the "currency" to over 5000 by mid-March 2000! Now, many of them are either going or gone while the survivors are locked in a pricing power war with the remainder and lower priced product produced by cheap off-shore labor such as that originating out of China! Deflation is still very evident in most NASDAQ stock prices and the spate of reverse stock splits that we are currently seeing!

There isn't much that the Fed can do about that cycle except to let it run its course! They can reduce rates to zero and print all of the money that they want! As I mentioned above, what so many of these commoditized corporations are doing right now is trying to figure out which cheap labor economy to move they’re manufacturing to! Increased productivity has even turned on many of them because while it temporarily increases margins, it has also enticed other huge commodity players to come into their space in their own hunt for expanded markets!

We have also reached a point where technology allows for much of the work that used to be accomplished here in the United States to be done by remote control from somewhere else! It is another version of teleconferencing! The West Coast dock workers are typical of those fighting the efficiencies that allow off-shore workers to do the same jobs that some of their members have been doing for years, and not even live in the United States when they do them! One of the supposed problems that the Democrats had with the home security bill were the fact that there were few guarantees for union workers built into it! As robotics continues to take hold in the manufacturing and transportation sectors more and more jobs will be lost! As the old saying goes, if you want to follow the economy, follow the unemployment rate! Jobs or the lack of them creates the money that the consumer uses to purchase the goods and services that drive this economy forward! Right now, there aren't a lot of employment increases going on out there! In my opinion, it is not a temporary blip on the economic screen, but a transition into a world where there will be consumers spending less money at the most efficient commodity providers around--Wal-Mart, Dell, Microsoft, and their kind!

The deflationary cycle, if there is one, will stop sooner or later! At what level that happens may end up mirroring the NASDAQ model of the last few years--down from 5000 plus to 1400 or less! And, all of that printed money will be gone too!

What we are going through is a series of transitions of enormous significance--all fueled by our heralded increases in productivity that are doing nothing more than reducing the employment base--one efficiency at a time! Just look at the wage concessions that American labor has been giving in the airline sector as your guide! Or, on a more comical level, the wage givebacks happening on the CEO level these days. That is an economic model even worse than any that the NASDAQ could provide! The average CEO, during the 1990's, saw their income swell to over 400 times that of the average American worker, while those same workers saw theirs merely double!

And then they started to cheat! The corporate time bombs existing inside of American business may be the most serious peril that we face! Like landmines from some ill-defined conflict, they may haunt us for years to come as their unexpected explosions rock our economy and our equity markets when we least expect them!

Looking at all of these issues that we face, we may be traveling down a very bumpy road on very leaky, constantly deflating tires that require frequent stops to correct which ever one of them has either lost air or been shot flat! Economic tire patches may have the most pricing power of all if we can get them made cheaply enough in China!




Post  44794  by  jeffbas       Reply
Decomp, if the Fed was panicked they would have cut 75 BP. Fifty was an intermediate step to get attention. Also cutting these rates isn't the only item in their arsenal. I believe that they could print money and buy long term debt, as two examples of other things.

Post  44795  by  lkorrow       Reply
Pace, good speech by GWB. Wish, though, that he would have mentioned the rate cut and why it benefits us. Most people don't have a clue.

Big day tomorrow at the United Nations -- war or no-war. Would be nice to get past Iraq as you have said. Market should react one way or the other, one would think. I don't think people are betting against America, just recognizing the economy is still adjusting. I'm encouraged by recent events, but it takes a little time. jmho.

Post  44796  by  Decomposed       Reply

Who said anything about panic?

I did use a related wordm "desperate," but I also qualified it with the word "fairly." That's different from panic which, by definition, means unreasoning.

The Fed *is* reasoning. It knows that a .75% drop would create a panic, so it carefully avoids doing that. But, just as Goldmann Sachs predicted in August, the Fed will have reduced rates by .75% before the year is out. Unfortunately, what the Fed knows is that despite a BUNCH of rate cuts, the economy still hasn't caught fire. That's pretty disturbing, but there's not much else the Fed can do.

BTW: Can the Fed *really* print money? I very much doubt it -- that's a Treasury function, and I don't believe the Fed is even a government body. The Fed does, however, "generate" money via the funds rate money multiplier effect.

Post  44797  by  uponroof       Reply
Decomposed...Russell: not impressed with easing.

Take this rate cut and stuff it. Strategists, led by Richard Russell, heap abuse on market


An icon for America's Fed-bashers, Dow Theory Letters editor Richard Russell, laid it on thick. "The Fed will fight this bear (market) tooth and nail, so this will be a long, tortuous bear market," Russell told about 800 paying attendees at the conference.

At the age of 75, Russell counts himself among a handful of financial newsletter editors, including James Dines and Joseph Granville, who have been tracing markets on behalf of individual investors for more than 40 years. Russell is credited with calling the top of the bull market in stocks that ran from 1949 to 1966. About 7,000 people subscribe to Russell's newsletter.

At the New Orleans gathering, investors were hanging on Russell's every word.

"When you follow the market, you are following the money," Russell said. "You find out where the money is. It sounds easy. It's not."

Russell says the stock market is overpriced even by the lowest estimates for company profits. If America's largest companies, as measured by the Standard & Poor's 500 Index, were to earn just $18.48 a share in core profits next year, the stock market would still be terribly expensive, the newsletter editor said. (Core profits exclude income from pension funds, with the cost of stock options deducted as an expense.)

In long lasting bear markets, stocks have gotten far cheaper than they are now, Russell said. In 1946, stocks traded at about 6 times S&P 500 profits. In 1973, it cost 7 times a company's average per-share yearly profit to buy one of the S&P 500 (SPX: news, chart, profile)stocks. In 1981, it was 7.5 times earnings.

"Now it's 48 to 50 times earnings and 45 times dividends," Russell said. "How is this market going to get to under-valuation? No one knows. But it will. And we'll see a Dow (INDU: news, chart, profile) yield of 6, 7, 8 percent. It will be a very long trip down." The Dow Jones Industrial Average of 30 large companies currently yields less than 3 percent.

Russell said the losing stock market that began, by his estimates, in 1999, could last "anywhere from eight to 15 years ... maybe two decades." Most ordinary investors are best advised to keep their funds in cash, allowing it to compound slowly in ultra-safe money-market accounts or triple-A-rated municipal bonds, he said.

"This is going to be a very difficult period. It is going to be very deceptive," he said. "The ultimate concept to remember is that stocks won't be great buys until they are undervalued."

As for gold, Russell said his data showed a 20-month moving average of gold's price moving above a 40-month moving average in July, "signaling a major bull market" for the depressed metal. Technicians use moving averages to uncover what they hope will be lasting price trends for stocks, bonds, commodities and other investments.

Russell expects the price of gold, now at $320 an ounce, to equal or exceed the nominal level of the Dow average, now at 8,770, at some point. "Gold will cross at $3,000 an ounce, with the Dow at 3,000 or lower," said Russell
(uponroof- hoo boy! jeffbas, are you reading this?!)

Russell invoked the names of stock market researchers and strategists he regards as the country's best, including Elliott Wave International's Robert Prechter, in presenting his view of a sharply lower stock market. Prechter, economist Stephen Roach and a handful of others see the possibility of a horrible financial depression in coming years.

"Unemployment will be a vicious problem," Russell said. "Before next year is out, we'll see another 20 percent drop in the dollar. China is at economic war with the West. I wouldn't be surprised if it backs (its currency) with gold."

uponroof- dramatic statements abound after the last 48hrs. It all contributes to volatility which btw is a symptom of the bear. I won't be dumping gold anytime soon! What I have in now is the equivalent of a very good insurance plan. I am not loading up until POG 330 is breached....till then I have about 25% in gold which will stay there indefinately.

Good Luck


Post  44798  by  pdowd       Reply
I am ready for economic upheaval.! We grow our own vegetables - raise our own beef cattle and dairy cattle- we have crawfish ponds and do our own fishing - I am heavily armed and I have stocked up on cheap collectibles from Ebay as well as twenty dollar antique gold coins. I own my own home boats and vehicles. I am ready for the Revolution !!!!!! Later PD.

PS. My wife is 8 years younger than me , beautiful , and can tie a cherry stem in a complete knot using only her tongue!!!!!!!!!!!!!!!! I don't need anything else other than that !

Post  44799  by  pacemakernj       OT: Linda, he did say that interest rates are low.
Post  44800  by  oldCADuser       OT: I see you're a fan of...
Post  44801  by  Decomposed       ot: Breaking news. (This is not nice.)
Post  44802  by  lkorrow       OT: Pace, Yes and he said he's addressing this eco

Post  44803  by  lkorrow       Reply

MSNBC Breaking News

French diplomats at the U.N. say they've reached agreement with the United States on a new Iraq resolution.

Post  44804  by  weevil       Reply
Pace...I hear you....I've been using pmcw's "3 buys" method of filling my wish list. I still need one more buy in xico and was waiting on the 1 buck mark. I'm really needing to go in to the medical stocks more and that is were I'll be doing my DD for the rest of the year. I'll probably pick a fund and move back to techies. Good luck.

Post  44805  by  tinljhtkh       OT: OCU!

Post  44806  by  wilful       Reply
This for that guy that inquired
about mtg rates:

Mortgage rates drift lower

Anticipation of rate cut by Fed keeps rates low; one-year ARM hits lowest level since February 1994.
November 7, 2002: 12:58 PM EST

NEW YORK (CNN/Money) - Anticipation of an interest rate cut pushed rates for long- and short-term mortgages lower this week, and the Fed's larger-than-expected move is expected to drive rates even lower in coming weeks, mortgage lender Freddie Mac said Thursday.

Freddie Mac reported that the 30-year mortgage averaged 6.11 percent with an average of 0.6 of a point payable up front to the lender for the week ending Nov. 8. The rate fell from an average 6.13 percent last week and remained below its 6.45 percent average a year ago.

Post  44807  by  pacemakernj       OT: PDowd as I recall don't you live in Louisiana?

Post  44808  by  pacemakernj       Reply
Weevil, I bought some MRK back today. I like the big pharmaceuticals now that the R's are in. You may want to look at them. That is as good a place to start as any. You know you can build your own healthcare fund. Why pay the fees. There are a ton of great companies out there, DGX, CAH, PFE. Many of those have drip's as well. Furthermore they allow you to but them directly without paying any commission. Look into it. Good Luck Pace.

Post  44809  by  pmcw       Reply
PFE has a DRIP, but the very small dividend means it takes forever to meaningfully increase the share count. I've traded PFE for years and made good money selling covered calls. However, for most not familiar with the sector, I suggest looking at the Vanguard Health and Science fund. It is one of the top performers in the space. Regards, pmcw

Post  44810  by  optimistic4dollars       OT: Decomposed, sent you a email eom

Post  44811  by  Decomposed       Reply
re: Gold - KRY after hours

Schwab extended trading shows KRY finishing at $1.98 today -- up 29 cents from KRY's regular-day close. Is something going on with the company?

(I'm suspecting not. In extended hours, I've known people to play games with light volume stocks... selling one share at $1.98 right at the end, or pulling some other trick in hopes of raising the next day's opening price price. The thing is, KRY's volume is not all that light.)

Post  44812  by  tinljhtkh       OT: pdowd!

Post  44813  by  rdb14       Reply
As Al Pacino once said: "all right, just this once you can ask me about my business". :.). SFNT is a company I have owned twice. Bought about 8 years ago in the 12-17 range and sold at 38 after coming down from 62. Bought again about 1 year ago at about 10.25 (avg) (doubling my previous postion). They have been in business for approx. 20 years and were in the managed VPN business, running as the middleman. In the past couple of years they have been making tremendous inroads in internet security and encryption. They have a long list of major customers including CISCO, Samsung, HPQ, Centillium, etc, etc. They just surprised to the upside 2 weeks ago, earning .10 a share, +.06 over est. Only 7+ million shares outstanding with approx. 4.0 million in institutional and insider hands. Biggest growth area presently will be chip royalties from TXN, which will be rolling in starting Jan. 1. Their chips will be in almost all TXN phones. Their chips are also the encryption standard for the U.S. Military, installed in their battlefield management systems. Government business will be growing very strongly as other government agencies are coming on board. Management is very strong and has met every promised goal made in the past couple of years (save the missed earnings as the market tanked in April, 01 (I think). CEO Tony Caputo tends to be overly cautious in his projections but my guess is that we'll have many more upside surprises in the near future. Business is getting that good. Last week they announced the purchase of Cylink, a nice fit for their business and the stock dropped 2.65 really fast to the low 16's but you see where it is today (5 days later) as the market digested the fit of the two companies.
Needless to say the company is the centerpiece of my portfolio. There is a good board on Yahoo where lots of additional information can be obtained. I do believe this company has a long way to go.
Hope I've helped you.
The usual disclaimer: Do your own DD.
Back to lurking :.)


Post  44814  by  weevil       Reply
pmcw....would that be the same as the Vanguard Health Care fund? thanks

Post  44815  by  pmcw       Reply
Decomp, I don't show any after hours trades for KYY. What you're seeing might be a mistake. If it matters, you might want to call. That aside, I've also seen some weird (and made a few) trades afterhours. Mine weren't to manipulate, but to put in an order just over or under if the spread was stupid. Sometimes if the best ask is way above the close you can put in one just a titch under and a market order (I know all after hour trades are limit, but you see the best ask before you enter your price) will pick it off. However, it's usually just a 100 share or so trade. Regards, pmcw

Post  44816  by  Arkural       Reply
OT-Feeling lethargic? Blame the PC

By Lisa M. Bowman
Staff Writer , CNET
November 7, 2002, 10:08 AM PT

Researchers in Japan have scientifically documented what dwellers of Dilbertville have known for years: Prolonged daily computer use can make you sore and sap your strength, energy and motivation.
In a three-year study of more than 25,000 workers,

Reader Resources
Stress in the work place
Learn how to reduce stress
caused by the tools of the trade.

Japanese researchers discovered that people who sat in front of computer screens were more likely to experience physical pain such as eye and shoulder strain, and to suffer from motivational symptoms such as lethargy.

Although workers are spending an increasing amount of time in front of their computers, no consistent guidelines exist about how long is safe to sit at a computer screen.

The study, led by Dr. Tetsuya Nakazawa and published in the November issue of the American Journal of Industrial Medicine, found that workers who spent more than five hours per day in front of a computer screen reported significantly higher complaints of sleep-related symptoms and mental stress.

Such symptoms included lethargy, anxiety, "difficulty getting along with co-workers," and a "reluctance to go out to work."

There was no time limit that triggered complaints of physical pain--the most commonly documented symptoms associated with computer use in the study. Workers most often reported symptoms such as eyestrain, headaches and stiff shoulders.

"Our results suggest that physical symptoms increase with duration of daily VDT (visual display terminal) use without threshold, while mental- and sleep-related symptoms increase with VDT work of more than five hours per day," the researchers wrote.

The researchers urged more studies of the link between computer use and physical and mental symptoms.

Post  44817  by  pmcw       Reply
wee, Si - I got the name wrong - symbol VGHCX. Regards, pmcw

Post  44818  by  pmcw       Reply
Thanks Bob, They sound interesting. I liked how you built your position with mulitple buys and the allocation showed conviction. It was good to hear you've had time to learn about them. Do you have a backgound in their field? Regards, pmcw

Post  44819  by  uponroof       Reply
Dollar trapped between Fed and U.S. fiscal policy

Some interesting observations as impacting changes are happening fast these days.



"...On Wednesday, the Fed cut its benchmark short-term lending rate to a 41-year low of 1.25 percent, a day after President George W. Bush's Republican Party broaden its lead in the House of Representatives and recaptured the Senate. U.S. interest rates are now significantly lower than Europe's.

Initially, the dollar advanced on renewed expectations the altered political landscape in Washington would reinvigorate Bush's legislative agenda -- that could include making his 2001 tax cut permanent, and perhaps include new reductions.

But the Fed sparked wide confusion -- and a dollar sell-off -- with a half percentage point cut that not only exceeded the market's expectations, but was accompanied by wording that suggested the central bank was bringing its rate-cutting campaign to a close for the time being.

A tax cut could eventually send the dollar higher, but sluggish U.S. growth prospects and the lower interest rate environment has the U.S. currency caught in a downdraft.

"What you've got is monetary and fiscal policy both in a very stimulative mode," said Lara Rhame, U.S. economist at Brown Brothers Harriman in New York.

"The U.S. (has) the more proactive policy reaction around the globe ... But right now I'm not sure our policy reaction is going to be enough," she added, as lower taxes and borrowing costs across the business and consumer spectrum has shown little discernible economic stimulus thus far.

The dollar's predicament was borne out even further on Thursday, when the European Central Bank left its benchmark interest rates unchanged -- emphasizing a hefty interest-rate differential.

Higher interest rates customarily lures investors to the financial instruments of that economy, thereby increasing demand for its currency.

That much was apparent on Thursday, as the euro surged to a 3-1/2 month high against the dollar, below $1.01 (EUR=). The dollar also sank to a 3-month low against the Swiss franc, below 1.48 francs (CHF=).

Post  44820  by  uponroof       Reply

KRY After hours trades typically misrepresent reality. You're right, the brokers who day trade this stock play games with each other constantly. There is mucho contempt and animosity amongst some of those fellas.

BTW- I have been watching your plays with KGC and KRY. Congrats on your successes, but I'd be careful. There is something off the charts going on with KRY.

Not to discourage you but KRY is steeped in third world corporate political warfare, and not fairing very well at the moment. They do not place much stock in PR, and as a result, have suffered through this last PR war (intentional disinformation) at the hands of PDG/VNVNF.

Mining math dictates much higher shares with LC but either the rumor baggage (especially being in VZ), or financing (dillution?) is really taking it's toll. Alas, with all that said, I am yet holding a bit for a precious few reasons....number 1 being a takeover.

btw- KGC is a very good stock (I love it) and without baggage at the moment, but with somewhat less high performance potential IMHO.

Good Luck


Post  44821  by  uponroof       Reply
POG back to 320 tonight.

Could we have a memorable Friday?

If the repubs can sweep both houses mid term, and AG can fire two of his last few bullets (possibly dooming the dollar versus the euro)....why not a POG breakout?

Post  44822  by  oldCADuser       OT: Well, Twin Peaks is the only reference that I

Post  44823  by  spirare       Reply
Nov. 7, 2002. Gold Market Comment:

The global economy remains weak and that is
reflected in the weak equities markets.

Consumer and corporate debt remain at all
time record levels.

Meanwhile the U.S. dollar index is poised
to sink below the all-important 105 level
now that U.S. interest rates have been cut
once again and both the European Central Bank
and Bank of England have elected to
hold rates steady.

As a result the price of gold has climbed
higher and appears to be set to climb much further.

The recent U.S. political elections resulted in
Republican control of all branches of
U.S. government and now President George W. Bush
could have a free hand to deal with external
problems such as Saddam Hussein in Iraq.

The result could be that the President will have
little opposition and therefore war appears
more likely.

Gold and petroleum prices have risen on increased potential geopolitical tensions.

Meanwhile, many consider the yesterday?s
Federal Reserve interest rate cut to be an
act of desperation.

As a result global equities markets and
the U.S. dollar weakened making precious metals
more attractive.

***The current outlook for the price of gold has
improved considerably.***

Caledonia's Power Point Presentation will soon
be in the EUROPE Road Show and the
CALVF / MN9 PR Introduction will be made!

The PowerPoint presentation, videotaped and
synchronized will be digitized for
transmission to EURO Investors
and Members of The Richmond Club.

A link to the presentation is available on Caledonia's website and on the Caledonia Mining

Corporation profile page.

Caledonia has recently been selected by
The Richmond Club to be showcased to an audience
of 625,000 investors through its broker / analyst
luncheon and exposure to institutional investors
and national EURO / USA Media.

The Current Gold Price

Imo. Tia, Pass It Along>>>>>>>>>

(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)

Post  44824  by  lkorrow       Reply
Decomposed, Moneycentral usually shows after hours bottom line, but it doesn't show any activity on KRY. Freerealtime shows it up $.03 to 1.72, but the volume isn't shown.|Quote&IM=quotes&symbol=KRY&type=Quote&