Mover Mike

Here's the headline from the AP as reported by Forbes: March trade deficit drops by bigger-than-expected amount. Doesn't that make you think that maybe the lower dollar is finally improving our trade deficit?

The U.S. trade deficit narrowed sharply in March as demand for imports fell by the largest amount since the last recession was ending.

The Commerce Department reported Friday that the deficit totaled $58.2 billion, down 5.6 percent from February, a larger improvement than had been expected.

The smaller deficit reflected spreading weakness in the U.S. economy, which cut demand for imports by 2.9 percent, the largest one-month decline since December 2001, one month after the last recession ended.

What's the real truth?

March 2006 -62,178
March 2007 -63,035
March 2008 -58,200 vs last year down 7.6%.

For three months Jan. through March 2007 -178,620
For three months Jan. through March 2008 -179,480

<see chart>

One month doesn't change the pattern. The USD has been falling since 2002. It's going to take a much bigger USD fall to really cut into the trade deficit?

Mark Nelson has a wonderful little chart that shows how chilly it has been:

Number of 60 degree days from February through April.

Now I realize that this is just a small picture and it covers only the last five years, but it sure keeps me from getting excited about, sharp intake of breath, Global Warming!

A conservative Sacramento law firm, Pacific Legal Foundation, plans to join the fray over the fate of polar bears in anticipation of a U.S. Fish and Wildlife decision next week on whether the bears are endangered, according to the Sacramento Bee.

"This listing of the polar bear really isn't about the polar bear," said a foundation attorney. "This is a political ploy on the part of activist groups to try to hijack global warming policy from the hands of Congress and to put it into the hands of the courts."

It's about time someone challenged the idea that Polar Bears are threatened! (Hat Tip to ADN.com)

On April 30th I posted Long Bond Could Trade At 4% And Below! I asked my friend and money manager, Bill, about the meaning of lower yields on Treasuries. Bill wrote me back and said

You may be correct, but I think it is also possible we have a trading range.

We may even have seen the top for bonds and the low for yields. In other words, I think it is completely up in the air. I can't manage much conviction on any of this. I do agree with Bill Gross, the Treasuries have very little value at these levels. His comment was Treasuries are the most overvalued asset in the world. Seems a little strong, but makes a useful point.

I replied:

Let's stand in the possibility that I'm correct, and the charts look more like I am than on April 30th, what is the treasury 2-10-30 year telling us. That's what fascinated me. In the light of record CRB and Oil and grains and weaker USD, shouldn't the treasuries be dropping, interest rates be rising??? Why aren't they?

Bill replied:

A combination of flight to quality and recession talk, both of which might be short term.

Yet, Van Hoisington supports your view, and it has not paid to argue with them - and they are mostly fundamental. Confusing, but fascinating time; maybe the best in 70 or 80 years.

I Googled Van Hoisington and found that Hoisington Investment Company has a Quarterly Review and Outlook.

The Fourth Quarter Review and Outlook states:

The longest-dated Treasury bond ended 2007 at a 4.45% yield. This was 35 basis points below the 2006 close, and marked the lowest year-end interest rate on a long Treasury security in 42 years. The capital gain associated with this yield reduction, plus the coupon, generated a 10 ½% return for investors, well above the 7% total registered by the Lehman Aggregate Bond Index.

The 30-year closed yesterday at a 4.45% yield, which supports Bill's view that we are in a trading range.

The Review continues

The beginning of what will surely be considered the greatest credit event since the 1930s emerged in 2007 with the discovery that derivatives multiply bad credit. The “seizing up” of credit markets resulted in a worldwide reduction of credit issuance from $2.5 trillion in the 2nd quarter to $1.3 trillion in the 4th quarter, a near 50% reduction according to a recent New York Times article. A supply shrinkage of over $1 trillion is enough to shift the supply curve to the left, resulting in a bond price increase and lower yields in high quality fixed income securities. This more than offset an increase in inflationary expectations, and was most likely the proximate cause of the sharp reduction in Treasury interest rates in the latter half of 2007.

They expect either two back-to-back quarters of declining GDP or possibly alternating quarters as we had in the 2000 slowdown. The result:

First, investor desire for risk-free assets will increase at a time when default rates will be soaring on other fixed income securities. Second, the overall reduction in credit market instruments will mean fewer alternatives for those desiring a fixed rate of return. By the end of 2008 we would expect new record low yields in Treasuries for this cycle.

In the Quarterly Review and Outlook, First Quarter 2008 the Review concludes

Thus, if this growth, or outright recession, ends in 2008, the low in bond yields will be some time in 2010. However, if we are in an extended growth recession that lasts into 2009 or 2010, as we suspect, and if rates are at record low levels, similar to the 1940s and 1950s, then the low in rates is likely to coincide with the end of the recessionary period.

Now the BIG QUESTION: are we in a recession? If we are we should start to see prices peaking and we can justify lower yields on treasuries. If we are not in a recession then prices are not peaking and yields should not be falling, but rising and they aren't. Like Bill said "Confusing, but fascinating time; maybe the best in 70 or 80 years."

Have you ever thought you looked like someone, someone famous? I remember sitting in a movie theater when Armand Assante came on the screen.

I sat there mesmerized thinking we could be twins. Same Roman nose, same eyes, same eyebrows, same Italian look. I found out later, he's about six years younger. It was a weird experience. I examined his every move and thought that's me up there! Then when the movie was over and we walked out into the lobby, I wondered if the people were just being polite by not rushing me for an autograph.

For a while, when I would see Assante on the screen, I noticed he had put on a little weight, as did I, and we stopped being twins. People never did rush me or girls throw panties.

Lately, I find myself looking like someone else. My Father!

That's me or is that my father? I see him in quick glances in the mirror, I see him in my thumbs and the way I move my hands. We both, even, drove school buses. Dad was just chosen as Multnomah County's Volunteer of the Year. He works with Elders In Action, preparing the road for the Baby Boomers. We are both involved in our communities trying to move opinions and politicians.

I took some online test once that said I would die at 68! Dad is going to be 87. I hope I'm like my father and stick around for quite a few more years.

map 2.4 2008/05/08 20:33:20 45.133N 120.946W 17.8 12 km ( 7 mi) ESE of Maupin, OR

map 1.7 2008/05/07 11:08:26 45.119N 120.945W 18.8 12 km ( 8 mi) ESE of Maupin, OR

map 1.9 2008/05/07 09:53:31 45.120N 120.926W 17.3 14 km ( 8 mi) ESE of Maupin, OR

map 1.9 2008/05/04 05:24:08 44.096N 121.878W 3.2 34 km (21 mi) SW of Sisters, OR

map 1.4 2008/05/03 19:38:12 45.139N 120.930W 16.6 13 km ( 8 mi) ESE of Maupin, OR

map 1.7 2008/05/03 12:00:11 45.124N 120.917W 13.3 14 km ( 9 mi) ESE of Maupin, OR

map 1.6 2008/05/02 09:33:54 45.134N 120.928W 17.1 13 km ( 8 mi) ESE of Maupin, OR

Maupin Earthquake Mover Mike

After a three decade hiatus, nuclear power is coming back! By Kristi E. Swartz of The Atlanta Journal-Constitution wrote:

Georgia Power will pay approximately $6.4 billion to Westinghouse Electric to build its share of two proposed 1,100-megawatt nuclear reactors at the utility's Vogtle plant south of Augusta, the utility said Wednesday.

[...]

... the nation tries to lessen its dependence on natural gas and foreign oil as well as cut back on carbon emissions and other pollutants. Based on the state's expected growth, Georgia Power says it needs to add more than 7,000 megawatts of capacity and that nuclear energy is essential to achieving that goal.

NPR reported "Seventeen power companies in the U.S. are making plans to build more than 30 nuclear plants." At a cost of at least $14 Billion apiece that comes to over $400 Billion, a massive investment. That's the good news on the subject of global warming or climate change. We are concerned about the environment and the future of fossil fuels, and the prices have forced us to consider alternatives.

One alternative is the Pebble Bed Modular Reactors which I wrote about back in 2005.

For some amazing photos of Chaiten Volcano in Chile check out:

Jim Andrews or Nuestroclima

Chaiten Volcano Chile Volcano

By a vote of 7-0. Vallejo voted to file for bankruoptcy.

The city faces a $16 million deficit in the 2008-2009 budget starting July 1 and unsuccessfully negotiated with its police, firefighter and electrical workers unions for contract concessions through 2012. Public safety salaries comprise 74 percent of the city's general fund budget.

Who will be hurt? The Unions!

Mayor Osby Davis said he believes the city should honor its contracts with the unions, but he was persuaded the city can't pay its debts at this time.

This was just announced in October, 2007.

Now some are having second thoughts. Why fellow Democrat Rep. Jane Harman, D-Calif., said, "Our enthusiasm for corn ethanol deserves a second look. That's all I'm saying, a second look."

You're darn right it deserves a second look.

"Corn ethanol was presented as an almost Holy Grail solution," said Rep. Mike Doyle, D-Pa. "But I believe its negatives today far outweigh its benefits. ... We need to revisit this ... and back away from the food to fuel policy."

Update:

Maybe Bill Gates has seen the light:

Microsoft Corp. chairman Bill Gates's investment arm sold 1.1 million shares of Pacific Ethanol Inc.'s stock from April 21 to May 2, according to a document filed with the Securities and Exchange Commission Wednesday.

Oh, my! Isn't that an awful looking chart:

Surprised? I'm not! The new computer system was supposed to save tax payers money.

The new software program was originally estimated to cost $31 million, including $16.9 million promised to Ariston and millions more to pay quality-control consultants and buy the software, new servers and other hardware. Now city analysts expect it to cost $49.5 million.

City leaders liked Ariston because it was small and they figured that the company would give the city a lot of attention.

But the firm's size quickly became a problem. Last summer, a consultant hired to do regular quality control updates told city managers that Ariston was working too slowly and that the city and the contractor lacked the kind of detailed plan necessary to get the new system working on time.

"Today, the City Council will vote to hire SAP, the software manufacturer, to finish the installation... Council members will also vote on borrowing $10.5 million to pay for some of the cost overruns."

If you are a Republican, you have to love what's going on with the Democrat party. Here's a comment from The Oregonian's editorial page:

"...(Democratic) party leaders face a series of grim choices between now and their Denver convention in August.

They could and, for their own good, should prevail on their uncommitted superdelegates to make their choices clear before the convention.

But if that settles the dead heat problem, it does not solve the Michigan-Florida problem."

Here's Democrat Kate Brown's ad for Oregon's Attorney General

Isn't that rich. Their party is going to disenfranchise the voters in Michigan and Florida. They are going to disenfranchise blacks in those two states and they are going to disenfranchise Hispanic voters that they have worked so hard to bring on board. And don't forget women who voted for Hillary are going to be swept back to the time before emancipation.

In the end their nominee may be selected in a smoke-filled room by old white men.

Sen. Barack Obama Sen. Hillary Clintone Kate Brown

On January 10th I wrote B of A in Talks to Buy Countrywide

Bank of America Agrees to Buy Countrywide for $4 Billion The deal rescues the country's largest mortgage lender and expands the financial services empire of the nation's largest consumer bank. The transaction would value Countrywide at $7.16 a share.

Reuters and Forbes are both suggesting that B of A is on the verge of either backing out of the deal or renegotiating the price.

Bank of America faces $20 billion to $30 billion in write-downs once the deal closes because it has to mark Countrywide's loan portfolio to market, according to Paul Miller of Friedman Billings Ramsey, who said in a research note Monday that Bank of America should cut its price from $7 a share to $2 a share or less.

B of A seems to be wary of Countrywide's option ARM portfolio which according to S&P Equity Research analysts has not been stress tested.

Ben Smith at Politico quotes Sen. Clinton:

"We’re going to go right at OPEC," she said. "They can no longer be a cartel, a monopoly that get together once every couple of months in some conference room in some plush place in the world, they decide how much oil they’re going to produce and what price they’re going to put it at," she told a crod at a firehouse in Merrillville, IN.

If you really are serious about breaking up cartels, how about the cartel called the Federal Reserve. To Quote Hillary "...once every couple of months in some conference room in some plush place in the U.S., they decide how much money and credit they’re going to produce and what price or interest rate they’re going to put it at."

The only way to get out from under the thumb of OPEC is to open up all prospective oil productive areas and be self-sufficient.

The only way to get out from under the tax of inflation and dollar ruination is to close the FED!

Sen. Clinton OPEC Federal Reserve

At the end of April, rice rationing was in the news, Sam's Club was limiting the purchase of rice to four bags at a time. Costco put on limits at some stores.

The Blue Square and Supersol supermarket chains have begun limiting purchases of rice, Israeli newspapers said yesterday. Supersol is restricting each customer to "three bags per type of grain product," the Jerusalem Post reported.

Relentless demand from developing countries and poor crop yields have pushed rice prices up 70 percent so far this year, raising concerns of severe shortages of the staple food consumed by almost half the world's population.

Now add one more concern to the already short supply: the tropical Cyclone Nargis that struck Burma on Friday night and Saturday morning.

Myanmar TV reported last night: "The confirmed number is 3934 dead, 41 injured and 2879 missing within the Rangoon and Irrawaddy divisions."

It also said: "According to the information that we have as of May 5, there could be tens of thousands dead in Bogolay township and thousands more dead in Labutta township."

The storm which arrived with a storm surge between 10 and 12 feet made a direct hit on the Irrawaddy delta, Burma’s main rice producing region. While it is far too early to assess crop losses, they are likely to be substantial and generate yet more upward price pressure on the available supply rice.

Cyclone Nargis Rice Burma

MAP 4.6 2008/05/04 02:51:13 43.159 -126.356 12.1 OFF THE COAST OF OREGON

MAP 3.7 2008/05/04 02:41:05 43.015 -126.273 10.0 OFF THE COAST OF OREGON

MAP 3.6 2008/05/03 06:34:32 43.196 -126.433 10.0 OFF THE COAST OF OREGON

Oregon Earthquake Mover Mike

Here we have the top 34 largest companies in the U.S.
Politicians are jumping on the band wagon over a windfall profit tax on the oil companies. Of the 34 companies in terms of profit margin, 18 have a higher profit margin; in terms of operating margin 19 have a higher operating margin: In terms of return on assets 27 out of 34 have a lower return on assets; in terms of return on equity 21 out of 34 have a lower return on equity.

Company	Symbol	Profit Margin (ttm)	Operating Margin (ttm)	Return on Assets (ttm)	Return on Equity (ttm)
United Technologies	UTX	7.86%	13.01%	8.63%	22.20%
3M	MMM	14.87%	22.43%	14.15%	33.05%
International Business Machines	IBM	10.76%	15.38%	8.71%	38.53%
Caterpillar	CAT	7.80%	10.86%	5.74%	43.65
American International Group	AIG	5.63%	16.93%	1.14%	6.28%
Johnson & Johnson	JNJ	18.64%	25.32%	N/A	N/A
Procter & Gamble	PG	13.96%	20.29%	7.18%	16.66%
Wal-Mart Stores	WMT	3.36%	5.86%	8.80%	20.42%
Coca-Cola	KO	20.64%	26.02%	12.23%	30.91%
Boeing	BA	6.58%	9.06%	6.78%	59.84%
American Express	AXP	12.24%	24.79%	3.82%	34.91%
Altria Group	MO	24.86%	36.15%	24.48%	94.48%
Merck & Co.	MRK	20.10%	25.5%	N/A	N/A
Citigroup	C	-13.28%	-28.74%	-0.31%	-5.20%
Exxon Mobil	XOM	11.23%	16.80%	16.47%	34.47%
General Motors	GM	-21.38%	-1.76%	-1.19%	N/A
E.I. DuPont de Nemours	DD	10.372%	13.43%	7.62%	29.01%
J.P. Morgan Chase	JPM	21.95%	34.76%	0.85%	10.65%
Honeywell International	HON	7.23%	12.52%	8.39%	27.25
Verizon Communications	VZ	5.98%	18.03%	5.69%	11.44%
Home Depot	HD	5.68%	9.36%	9.37%	19.70%
Pfizer	PFE	15.77%	29.39%	N/A	N/A
General Electric	GE	12.95%	14.36%	2.01%	19.03%
Alcoa	AA	7.30%	10.39%	5.07%	14.09%
Microsoft	MSFT	28.33%	36.77%	19.78%	45.28%
McDonald's	MCD	11.16%	25.10%	N/A	N/A
Intel	INTC	17.32%	23.94%	11.47%	17.35%
Walt Disney	DIS	11.64%	19.63%	7.21%	13.51%
AT&T	T	10.41%	17.42%	4.92%	11.11%
Hewlett-Packard	HPQ	7.29%	8.77%	6.95%	20.66%
Google	GOOG	24.89%	29.89%	14.21%	21.11%
Yahoo	YHOO	14.89%	9.57%	3.44%	10.96%
Halliburton Company	HAL	22.25%	21.86%	14.01%	34.48%
Goldman Sachs Group Inc.	GS	23.83%	36.19%	0.94%	24.93%

How about the competitors of Exxon?

Company	Symbol	Profit Margin (ttm)	Operating Margin (ttm)	Return on Assets (ttm)	Return on Equity (ttm)
BP plc	BP	7.33%	9.48%	7.33%	23.38%
Chevron Corp.	CVX	8.98%	14.31%	13.22%	25.60%

I dion't see anytjing there that indicates we are getting ripped off.

Here's the WSJ:

This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don't want more production to increase supply. They want oil "independence" but they've declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President? (Emphasis added)

BTW, the drug companies are way more profitable than the oil companies. And the most profitable "drug" company of them all is Altria Group, manufacturer of cigarettes"

There's another policy contradiction here. Exxon is now under attack for buying back $2 billion of its own stock rather than adding to the more than $21 billion it is likely to invest in energy research and exploration this year.

Jonah Goldberg asks a great question in Tuskegee and the truth, "...why (do) blacks remain the most reliable voters for the party of ever-expanding government power...?"

It's worth noting that the Tuskegee study, launched under the New Deal, was symptomatic of arrogant liberal government.

Rush Limbaugh had a similar, along the same lines riff yesterday. He said that the Super Delegates are very worried that Obama, after the Rev. Wright affair, can't beat McCain and would love to choose Clinton (who can't win either). They fear they will alienate the black voters forever if they don't choose Obama. Limbaugh says not to worry. Blacks have been screwed by Democrats often, but keep coming back. Go ahead and choose Clinton!

Big government has not been kind to blacks. Take one example: New Orleans and Katrina. The Democrat governor refused help from Bush as storm drew near and the black Democrat mayor sat on his buses as people drowned.

In November of 2007 I wrote What Is NAU?

Nau Inc. (pronounced "now") was a sustainable clothing e-tailer. It had plans to open 20 stores this year and 140 by 2010. Just two weeks ago it opened in Los Angeles. Yesterday, it closed its doors permanently.

Nau's appeal: With every sale we donate 5% to environmental or humanitarian organizations working to create positive change. Their partners are Conservation International, Heifer International, 1000 Friends of Oregon, Ecotrust and The Oregon National Desert Association. NAU also has a blog, The Thought Kitchen and an interesting post I’m Dreaming of a Green Christmas, Part 1 NAU has four stores, one in Bridgeport, Boulder, CO, Chicago, IL and Bellevue, WA.

I have never been a fan of socially responsible investing. As a stockbroker, I pooh-poohed the idea, even though funds were started on the concept and some brokers specialized in the area.

I believe a company's sole business is to make money and reward shareholders. Make so much money for shareholders that they can choose to spend their money funding bleeding heart causes, which are probably all anti-Capitalist, and, in turn, will try to kill the golden goose.

Which is better: Nau giving 5% of sales to environmental groups or growing the business to the point that hundreds of people work at Nau, get salaries and health and retirement benefits, and spend all the hard earned money in the communities, who, in turn, contribute to the art museums, and support plays and ballet and OPB, and feel so prosperous that they vote on funding for the schools?

I'm sorry to see Nau go under. I really like their clothes even though they seemed pricey. The good news: one more time a goody-goody concept bit the dust and their clothes and accessories are 50% off, while supplies last!

I hear their ads. DirectBuy! Even Dr Laura carries an ad on her show. This expose from KHOU.com in Houston, however, is not a ringing endorsement!