Monday, October 31, 2005

MOE !!!!!

If you like Phish/SKB or any JAM BAND you must listen to "WORMWOOD"


Sunday, October 30, 2005


It really hard to sum up in a few words what is wrong with the FED policy last 30 years, and from what BB has said we get a feel more of the same and then some is coming.

WE did get a wild ride and 20 yr plus bull cycle, at the end of which it bubblized (not a word). Technology was the driver of economy in the 90's, and was responsable for the good economy, not any policy. Thank Bill Gates maybe?

WHat is MUST HAVE NOW? if you have a perfectly good IPOD will you ignore it to buy another that plays some video? I thought it was for LISTENING? the screen is TINY. But there are devices that let you hook it up to your stereo. OK

MOST EVERYONE'S computer is now running a chip that will not ever do all it is capable, the upgrades needed when a 500 MGZ speed was tops is now gone with 2.5 G considered entry level.

I think XMAS might be OK, but it is usually graded on how much MORE people spent than previous, there it might dissapoint IF FLAT, FLAT would be good IMHO

If A bear market and slowing economy is SNIFFED OUT 6-12 months early by stock market, and a guy smart like Leuthold feel ones coming in early 2006, we're in that time frame now. 6,000-8,000 is my bottom number for Dow. 1000 for naz 600-800 for SPX not a penny more.

Its almost guaranteed by history, SECULAR market follow each other, a 3 yr bear is cyclical, but it followed the longest running bullmkt in history. 3 years is LONG IN THE TOOTH for a cyclical bull mkt, going long even for yr end rally is fools play for me, I await other opportunities. HIGHS FOR ALL INDEXES ARE IN IMHO

For what BUSH did to undercover CIA agent, for LYING to AMerican people when he KNOWINGLY used the African "yellow cake" story where IRAQ was SAID to have been trying to buy African uranium, a NEAR CERTAINTY, even as he was told it was a LIE, he used that to make his case for a liars was, why IMPEACHMENT procedings have not begun I do not understand.

He has misused the ultimate sacred power of making war.....for his OWN purposes. He stains the white house more than any MOnica dress ever could!



Last year almost $600 Billion for consumer spending came from the home ATM machine, as rising home values led to cashing out.

If anyone mortgage debt grew because of this, savings dropped to decades low.

It should be obvious that homes have given us near all they can, so how will spending be sustained?


Saturday, October 29, 2005




Parabolic moves gets retraced.



ISn't THIS where ALL the action is? WHy is the Chinese stock market SINKING like a stone then?

Bombay market
Falling recently after rocket shot bull.



And hardly anyone knows the scoop!


GDP OPINION and MORE GDP analysis Rise to adj monetary base after steep slide

Prudent Bear's Doug Noland Credit Bubble Report from buble link:
Broad money supply (M3) surged $40.6 billion (week of October 17). Over the past 22 weeks, M3 has surged $442.6 billion, or 10.9% annualized. **(THAT IS CRISIS PUMPING MY FRIENDS)

We continue to exist in an environment of economic uncertainty, our economy dependant mostly on consumer and gov spending, NOT investment. Wage growth still mostly non existant. Lifestyles maintained through borrowing.

However, housing prices have topped or are very near to doing so, this will not allow such rampant cashouts from rising valuations to stimulate economy as before.

HEAVY debt loads, and higher costs are pressuring consumers, already RETAILERS are running heavy discount sales to beat the xmas rush, one of the earliest pushes I can remember.

The gov is being pressured to CUT spending to help pay for Katrina expenses and war related spending.

Knowing that, the wonderful HYPED 3.8 GDP of Friday was mostly because of consumer and gov spending, you dont freakin' say?!

SAVINGS near or below ZERO, so you knwo where the spending is coming from....piling on more debt just when stricter bankruptcy laws and higher minimum credit card payments are enacted.

As I said yesterday, it was my opinion that IF GDP was so peachy why didn't market rally on that by 11 AM???? A break of opening level could have led to a rush to 10K IMHO as interest rates are RESISTING any fall, higher than expected GDP numbers do not support falling rates.

As jiggy as it looked we had new lows outpacing highs on the NAZ and NYSE.

ONLY SCOOTER nabbed? no Chenney, No Rove....yet? there is your basis for the rally IMHO, I see nothing else. The shame is if these traitor cronies get off.


Friday, October 28, 2005


Cheney Adviser Resigns After IndictmentAP - 4 minutes ago
WASHINGTON - Vice presidential adviser I. Lewis "Scooter' Libby Jr. resigned Friday after being charged with obstruction of justice, perjury and making a false statement in the CIA leak investigation, a politically charged case that could throw a spotlight on President Bush's push to war.

Great news the last qtr GDP came in at 3.8 surprising the wiseguys. Now the funny thing the chain deflator makes it look like we have little inflation, and this little ruse INFLATES the GDP!! same time we have had pathetic readings for months in the LEI'S! Plain and simple the GOV statistics are nothing but pure BS.

NOT included in any CPI figuring is property tax increases NOR the rise in home prices! so what good is it?

CHI Consumer Sentiment fell below expectations and is down dramatically from its old highs.

The world economy depends on Americans consuming and taking on debt at continued historic levels. Our GDP doesnt show what we can make, it shows what we can consume!

On another jived rally day, we have new lows outpacing highs by 4 to 1 margin BULLY? on lower volume! BULLY?

Richard Russell's PTI has remained in bear territory and if when rising and positive you dont go against it? then when falling and negative.......

BOGUS GDP which also contains Hedonic gimmickery, might keep pressure on rising interest rates.......ouch


Volume DID pick up near the close, but new lows paced new highs UP volume was 81%.

GDP figures came out at 8:30 1 hour before open, after gapping higher by 10:50 to 11:00 the market was near UNCHANGED, then BAMM at 11 AM the market didnt look back. WHAT changed at 11 AM for the near vertical rise? beats me.

Only SCOOTER getting indicted? wonderful.



Thursday, October 27, 2005


FDG and other Coal companies under pressure, TOPT etc tankers have sold off, XOM stock flat after HISTORIC earnings release...what gives?

what MEE FDG and BTU are trying to warn and XOM non reaction to HISTORIC earnings release.hmmmmmm lower oil coming....but me thinks from slack demand, then that means weaker economy than expcted IMHO

Mkt new lows still NOT receding and along with potential not seen in 3 years cross of 20 and 50 WK EMA on VIX portends potential for increased volatility is going to be here for awhile and most likely this is a negative.$VIX,uu[w,a]waclyiay[df][pc20!c50!f][vc60][iut!La12,26,9!Lb14]&pref=G

Wednesday, October 26, 2005

Breakup or Breakdown?

At 1/2 hour to close 168 new NYSE lows with only 61 new highs. This isn't the technical backdrop I expected after 169 point reversal and looked for follow through, of course could lie ahead.

10 yr bond yields breaking out to upside. yields nearing 4.6% SHOW ME



UPDATE 1-Chicago Fed national activity index falls in Sept
Wed Oct 26, 2005 10:33 AM ET (Adds details, table)

CHICAGO, Oct 26 (Reuters) - The Federal Reserve Bank of Chicago on Wednesday said its gauge of the U.S. economy fell in September as the impact of Hurricane Katrina was felt in production and employment indicators.
The Chicago Fed said its National Activity Index fell to minus 0.71 in September from a downwardly revised minus 0.09 in August, initially reported at plus 0.10.
The three-month moving average of the index was lower at minus 0.20 in September after being at plus 0.16 in August.
Any reading below zero for the three-month average suggests economic growth is below its historical trend. The average had shown above-trend growth for over two years until now.
Production-related indicators were hurt by a 1.3 percent drop in industrial production and a decline in capacity use.
Employment indicators were negative, mostly on a decline in September non-farm payrolls and a higher jobless rate, both tied to the after-effects of Katrina in the U.S. Gulf region.
Consumption and housing indicators made a positive contribution as housing starts and building permits rose and monthly retail sales were strong.
Overall, 36 of the 85 individual indicators tracked by the Chicago Fed made positive contributions in September while 48 made negative contributions and one was neutral.
Following are details of the index:
Monthly index:
Sep 05 Aug 05 (prev) Sep 04
-0.71 -0.09 +0.10 -0.29
Three-month moving average:
Sep 05 Aug 05 (prev) Sep 04
-0.20 +0.16 +0.26 +0.19
A zero shows an economy expanding at historical trends, negative values indicate below-trend growth and positive values signal growth above trend, the Chicago Fed said.

The 85 economic indicators that comprise the Chicago Fed's index are drawn from four categories: production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories.

© Reuters 2005. All Rights Reserved.


**(see also my friends how my use of 20EMA has kept us on sidelines with bonds, they have broken out large today. Commercial traders, smart money near record LONG.stay tuned)

The Daily Reckoning PRESENTS: Did Hurricane Katrina strike a robust or a fragile and vulnerable U.S. economy? According to many, the economy was expanding strongly - however, Dr. Richebächer thinks otherwise...

by Dr. Kurt Richebächer

Corroboration was seen in particular in recent job gains that were fast enough to lower the unemployment rate to a four-year low of 4.9%. In our view, the plethora of statistical data was overwhelmingly pointing to slowing economic growth.
Consumer spending may have remained surprisingly resilient, but considering its feeble underpinnings in the housing bubble, the time before a marked pullback is, in any case, rather limited. All that is needed to stop the consumer borrowing-and-spending spree in its tracks is a halt to the rise in house prices, implicitly finishing the provision of increasing collateral for higher borrowing.
Reported payroll growth over the first eight months of 2005 has been 1,506,000, averaging 188,000 per month. To those who are impressed, we have to say that this gain is 40% below the average job growth at this stage in past business cycles. Apparently, most economists have jumped to the happy conclusion that ample construction efforts will soon more than offset the initial hit to economic growth. Devastations are not subtracted from growth, while reconstruction is added to it. Such damage has, therefore, generally tended to boost economic growth.
But this time there is a big difference. Past hurricanes have generally hit resort and retirement areas. Katrina has shut down significant regional economic production and port facilities. The Gulf of Mexico accounts for 30% of U.S. oil production and 23% of natural gas production. Economic activity will be significantly constrained from the supply side. In 2004, Louisiana and Mississippi produced 1.2% and 0.6% of U.S. GDP growth.
To quote John Williams' Shadow Government Statistics: "The U.S. statistical bureaus face a reporting nightmare in the months ahead. Door-to-door surveying, telephone surveying and company reporting from the storm-damaged area will not be possible for a month or two, perhaps longer. Many businesses no longer exist. That means that employment and unemployment data, in particular, will have to be guesstimated, and those guesses mean that the Bureau of Labor Statistics can come up with any numbers it desires."
With great interest and attention, we are pursuing the struggle in the U.S. bond market between a large bearish community apparently betting on an impending recession or a period of slow growth triggering the accustomed "Greenspan put" - and a Federal Reserve displaying unprecedented determination to enforce higher long-term rates, so as to slow the housing bubble, increasingly fueled by speculative fervor.
In our view, the bond bulls are right about the economy's weakness. The U.S. recovery is grossly ill-natured, depending fatally on continuous strong support from "asset-driven" consumer spending. Stopping the housing bubble is sure to stop the mortgage refinancing bubble. To us, this seems like pulling the rug from under the table.
While the bond bulls appear perfectly right in their dire assessment of the economy, we think they are playing a dangerous game. Under apparently tremendous pressure to produce profits, they risk a clash with the Fed. For the Fed people, on the other hand, their credibility is at stake.
This might well force them to go further with their rate hikes than they intended.
Further, it has to be realized that today's U.S. bond market is a house of cards. Maintaining long-term interest rates at their present level needs a steady, huge stream of carry trade creating artificial demand for assets. Financial credit soared in the second quarter to $1.124.8 billion at an annual rate, from $648.8 billion in the prior quarter.
If the Fed cracks this trade by inverting the yield curve, this would send long-term rates steeply up. A fire sale of unimaginable proportions could begin, with bond prices crashing. Comparing the credit explosion with the savings implosion and also with a consumer inflation rate now up 3.6% year over year, U.S. interest rates are, in any case, ridiculously low.
Lately, another conundrum has caught our attention: the unprecedented huge and growing wedge between soaring credit growth and dwindling money growth. Our investigations identified two main culprits: the U.S. trade deficit and escalating Ponzi financing of unpaid interest.
The best-known fact about the U.S. economy's recession in 2001 is its extraordinary mildness. There were only two quarters with negative growth. For the year as a whole, real GDP increased 0.8%. This compares with an average decline of real GDP by 2% during previous postwar recessions.
An economy's performance during recession, generally lasting one year, is certainly an interesting aspect. Yet far more important are the strength and pattern of the ensuing recovery over three, four or more years. In essence, it lays the foundation for future longer-term growth. Its composition between consumption, investment, net exports and government spending is, therefore, of utmost importance.
In actual fact, the 2001 recession already had a totally unusual pattern. Prior recessions were triggered by monetary tightening responding to rising inflation rates. Essentially, this put a sharp curb on all credit-financed spending. In practice, these were mainly business investment, both fixed and inventories; residential building; and consumer durables.
Unlike all prior experience, the economic downturn that developed in 2001 clearly had its cause not in tight money and credit. True, during the first half of 2000 the Fed had hiked its federal funds rate in three steps to 6.5%. Yet with a generous provision of bank liquidity, it accommodated a credit expansion of record pace. For the first time ever, the U.S. economy went with roaring money and credit growth into recession - a mild one, though.
Business fixed investment plunged over two years virtually in splendid isolation. Measured in real terms, it fell by 4.2% in 2001 and by 9.2% in 2002, followed by unusually weak growth of 1.3% in 2003. It was by far its worst performance in any postwar business cycle. This investment slump unequivocally broke the boom.
What followed the unique 2001 recession pattern was an equally unique pattern of economic recovery. Still, the unusually fast and aggressive easing had its spectacular immediate and widely trumpeted success in the mildest postwar recession.
Consumer spending never paused, increasing by 2.5% in 2001 and 2.7% in 2002. Its largely credit-financed component of spending on durable consumer goods raced ahead by 4.3% in 2001 and 11.7% in 2002. Equally exceptional was the behavior of residential building. After a slow start, it took off into the famous housing bubble.
Business fixed investment, normally a main driver of recoveries, refused to respond at all. Rather, it accelerated its decline during 2002. And this, in fact, has become and remains America's central structural problem. Though it has recovered from its lows, it is no higher than in 2000. As the recovery developed, American publicity kept hammering into people's heads that the U.S. economy is greatly outperforming Japan and Europe. This conveniently diverted attention from the fact that in reality America had its most anemic recovery in the whole postwar period by any measure.
Still, different measures show very different results. By the reported productivity growth, this recovery resembles a "new paradigm" miracle. By the real GDP numbers, the economy appeared to be doing quite well, though much worse than in past cycles. But in terms of employment and wage and salary growth, this recovery has been and remains a disaster.
Dr. Kurt Richebächer
for The Daily Reckoning

Tuesday, October 25, 2005


What is wrong with the popular definition of inflation?

According to Mises,
Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation.

By responding to the symptoms of inflation that the Fed has itself created the US central bank gives the impression that it fights inflation. Once it is realized that inflation is increases in the money supply, it becomes obvious that the source of inflation is the Fed and fractional reserve banking. It also becomes obvious that rather than fighting inflation, it is the Fed itself that generates the inflationary process.


For the past several weeks, Fed officials have warned the public about the growing inflation threat. Officials blame the growing risk of inflation on the rising price of gasoline as a result of the rise in crude oil prices and hurricane Katrina. Despite all this Fed officials are resolute that it is their duty to protect the US economy from the inflation menace.

According to officials, what is needed to counter the looming inflation threat is to prevent an acceleration in inflationary expectations. This, it is held, can be achieved by pursuing a transparent and credible policy to counter inflation. It is overlooked by most experts that the source of inflation has nothing to do with the high price of oil and high gasoline prices.

The main source of inflation is the Fed itself. Various measures that Fed officials are promising to employ in the fight against inflation rather than fixing the problem will make things much worse. These policies only generate a further misallocation of resources, which in turn undermines the process of wealth generation.


October 26, 2005
Misreading Bernankeby T. Stein / S. McIntyre

So it finally happened. On a chilly Monday morning in October, news surfaced that the nomination of Ben Bernanke as new Fed chairman was imminent. Immediately, the stock market rallied as the selection of the Wall Street-friendly Bernanke (who was the odds-on favorite) was seen as a positive development. Likewise, the Dollar dropped slightly and the precious metals edged up as most traders recalled Bernanke as the monetary dove who once declared that the U.S. Government could prevent deflation because the Fed/Treasury can "helicopter" money in to stimulate the economy. Likewise, his musings about "a technology called the printing press" have sent hearts racing in today's momentum driven equity markets and emboldened U.S. Dollar bears to know that however bad Greenspan was, Bernanke is likely to be worse. You see, Greenie followed a central banking legend in Paul Volcker, but at least the economy was fundamentally sound when it was handed over in 1987. In contrast, Helicopter Ben, whether he comprehends it or not, is inheriting a fundamentally flawed economy in early 2006. The mind-numbingly large credit and debt imbalances that have been stoked over Greenspan's 18 years will in all likelihood be unraveled sometime fairly early on in Bernanke's tenure.

According to, the Bernanke announcement "dispelled uncertainty over the Fed Chairman's successor a couple of months earlier than investors had anticipated, and Bernanke's stated intention of maintaining continuity during the transition, as well as a confirmation that Greenspan will remain Fed Head until the official end of his 18 year term in January, seemed to relieve stock investors."

So what are we to make of the market's reaction to the Bernanke announcement? Not much. Actually, we wouldn't be surprised if the investing public is misreading Bernanke. Think about it, a new Fed Chairman's immediate priority is always to establish credibility as a rock-solid central banker willing to maintain political independence. It would be foolish for Bernanke to give into political pressure early in his term by reversing the Fed's direction on interest rates.

Yet there has been dissension among the ranks of FOMC members (votes haven't been unanimous lately) and we really don't know what Bernanke will do. Frankly, long-term investors shouldn't loose any sleep over trying to predict interest rates over the short term. Instead, investors should be focused on the consequences of Alan Greenspan "the icon" being replaced by Ben Bernanke "the unknown".

The most important element of our financial system today is confidence. While he lacks charisma, Alan Greenspan is the perfect confidence artist. He is everything an all-powerful central banker should be: boring, elderly, brainy, long-winded, and most importantly LUCKY. Easy Al has been able to paper over all of the U.S.' problems over the last decade or so and to date a drunken U.S. economy has yet to feel the real hangover. There was Mexico in '94, Asian Meltdown/LTCM in '98, Y2K, and the Internet bubble bursting/911 from '00-'02 where Greenspan (frightened at the thought of a normal recession and the accompanying political fallout it might bring) did everything in his power to try and avert the business cycle. Whether it be by lowering the price of money (interest rates) or ramping up the availability of credit through monetary supply increases and the prompting of GSEs and banks to stimulate lending, Alan Greenspan has perpetuated a recession-less economy mentality that will ultimately lead to the mother of all recessions when the giant U.S. real estate bubble he created pops slowing our heavily-levered consumption-driven country and sparking a nasty time in America. Bernanke will be the man in charge of trying to put Humpty Dumpty back together again.

We would guess that 99% of those working in the investment industry never take the time to read through Greenspan's speeches on the Fed's Web Site. Why should they? Substance is not nearly as important as delivery is because body language and tonality make up 93% of communication. As long as Americans can run on their treadmills with boring old Greenspan on CNBC, confidence remains high. Even most members of congress and the media remain utterly clueless about the effects of monetary policy. The ill-winds blowing beneath the surface of the U.S. economy largely go unnoticed. Apart from Bernie Sanders (I-VT) and Ron Paul (R-TX), most congressmen fail to make good use of Greenspan's appearances on Capitol Hill. Republicans and Democrats will either ask elementary school level questions or try to get the chairman to endorse (or reject) a particular policy position.

This will all change once Bernanke takes over. Bernanke, who is younger, speaks a lot less eloquently than Greenspan. Bernanke has been interviewed on CNBC multiple times over the last year, and looks shaky at best. We expect him to struggle mightily when put under the microscope the next time the markets turn lower with vengeance. Never before has the Fed chairmanship changed hands with so many economic headwinds blowing.

Todd Stein & Steven McIntyreTexas Hedge Report


Ben Bernanke, current chairman of the administration’s council of economic advisors, is President Bush’s nominee to succeed Alan Greenspan as chairman of the Federal Reserve. We believe will see more fine tuning of monetary policy with potentially negative implications for the dollar. We have extensively commented on Bernanke for over a year:

· Bernanke is on record as a supporter of policy that seeks to manage the entire yield curve. See Is a Dollar Crisis Looming? (October 10, 2005); see also The Modern Command Economy: the 30-Year Bond is Returning (August 4, 2005)

· Bernanke is a supply side economist. See Greenspan: "We can guarantee Cash, but we cannot guarantee purchasing power!” (February 16, 2005)

· In my view, Bernanke uses communication seeking to manage expectations in lieu of transparency. See The Fed Embraces Public Perception in Place of Sound Monetary Policy (April 18, 2005)

· We comment on how Ben Bernanke is getting more influential in The Emperor's New Clothes (October 6, 2004)
, and forecast that he will succeed Greenspan in Fed May Not Stop Inflation (August 18, 2005)

· We believe Bernanke promoted the plan to hand out $2,000 to hurricane victims. It is an indication of more micro-management to come. See China Is Open for Business: Will China’s growth eliminate inflation? (September 21, 2005)

· Let us not wrap up a discussion about “Helicopter Ben” without a reference to his infamous comments that throwing money out of helicopters is an appropriate way to manage monetary policy. See China's Basket of Currencies (July 26, 2005).

Axel Merk
Axel Merk is Manager of the Merk Hard Currency Fund

** When most figure greenspan has led us into the black hole it will be too late



Bernanke: Inflation not spreading CNN
New Fed chief nominee, in pre-appointment interview, says price gains limited to energy and raw materials.
Bernanke to head Fed.

** As you should know, the FED watches CORE INFLATION, which excludes FOOD and ENERGY. So they say INFLATION is NOT filtering down into economy! Is this not pure BS or what?

SO remember that when you are shopping, when you fill your gas tank, that the higher prices you are paying is not real. When you purchase your first home, ignore the prices you are paying, because HOUSING PRICE INCREASES don't find their way into the data!

RALLY based on "NEWS" as does yesterday does not a lasting rally make, however that is not to say it is over just yet. RED futures may lead to turnaround especially IF Consumer Sentiment rises unexpectedly....and it might.

EWT is calling for a top in bond yields based on bipolar positioning of the Large Speculators (net short) and the smart money Hedgers (net long). I see the yield set to either shoot up or down here near important support and resistance. If I was to gamble, I might consider 2 yr yields or shorter, so my money wouldn't get tied up too long, held to maturity I cannot lose principle. I recently bought some 4% CD's just to park some cash for 6 month duration.

I wouldn't laugh off a 169 pt gain, no sir, and I am not sure that is the kickoff of the XMAS rally, early......let's watch market action for further signs.


Monday, October 24, 2005



Spending cuts of $23 B is peanuts. Imagine just the interest we have to pay, there is NO inflating out of this pig.




Todays action jiggy for Ben Bernanke, this was mostly a given, but I am unsure of ST direction until I see more. I choose not to chase this FED rally of what really doesn't mean squat to me.

MARKET will set longer term rates, there is where I AM looking.



Kimberly-Clark quarterly profit falls
Mon Oct 24, 2005 8:08 AM ET

NEW YORK (Reuters) - Kimberly-Clark Corp. on Monday posted lower third-quarter profit due to restructuring costs, but sales rose, aided by price increases on items such as Huggies diapers.

Net income fell to $325.3 million, or 68 cents per share, from $441.3 million, or 89 cents a share, a year earlier. Profit before unusual items was $451.7 million, or 95 cents per share.

Analysts, on average, expected Kimberly-Clark, whose products also include Kleenex tissues, to earn 95 cents per share, according to Reuters Estimates. That view was in line with a forecast the Dallas-based company gave in July, when it called for a profit of 94 cents to 96 cents a share.

Sales rose 6 percent to $4 billion.

In July, Kimberly-Clark announced plans to cut about 10 percent of its work force and close or sell 20 plants as it works on improving its diaper and health-care businesses and expanding in emerging markets. Its largest rival, Procter & Gamble Co. , recently bought Gillette Co. to add new products to its lineup and give it better leverage in developing regions.

Shares of Kimberly-Clark fell 5.4 percent during the quarter. The six-company S&P Household & Personal Products Index <.GSPHHPE>, which includes Kimberly-Clark, rose 6.8 percent in that time, driven by expectations for P&G's acquisition of Gillette. That deal closed on October 1, just after the quarter came to an end.

Friday, October 21, 2005




Read you loud and clear Bush back at ya!

ALmost 2 to 1 advancers with only 58% UP volume for OPEX FRI. YAWNNNN

114 new lows (contracting) but only 34 new highs. All kinds of stocks exploding MRCY, looks like bad news is REAL BAD!

Tankers continue to underpeform, a little pop from 52 wk lows for NAT and TOPT not so lucky for SFL.

As I showed the adj monetary base is collapsing, BDI declining again.....IMHO does not bode well for period dead ahead, we call it consumers buffet XMAS.

Don't you just feel like spending gobs of money? 'tis the season to be jolly!

Think of all the worthless krap you need...... 10,200 was punctured, but we closed barely above.Next week could be telling, not sure if any kind of bottom is in yet.

Oil falls, gas falls stocks fall, dollar rises gold rises rates fall, jibberish!

The cookie crumbles on PENN AVE. LEI is still falling, has been weak for over a year.

Housing prices have topped IMHO, and the Bear Market is back IMHO

Fools bid GOOG to $90 B mkt cap, fools shorted it! bear NOT choosey .

Stocks are going back to undervalued unknown levels one way or another, RR pointed out Thursday HEAVY Futures SPX buying got market goosed WED......magic hands using LOTS of ammo........



Washington home market softens as investors sell
Thu Oct 20, 2005 06:12 PM ET
By Ilaina Jonas and David Lawder

NEW YORK/WASHINGTON, Oct 20 (Reuters) - In the Washington D.C. area, once one of the strongest residential real estate markets, things are going soft, and that's becoming hard on home sellers and some home builders.
After hitting a high in May, the number of contracts in Washington D.C. and its surrounding Virginia areas of Prince William, Loudoun, Fairfax and Arlington counties have fallen by about half, according to the Greater Capital Area Association of Realtors. Meanwhile, inventory of houses for sale has doubled and in some cases tripled, and homes are staying on the market 30 percent longer.
In Falls Church City, contracts peaked in April and inventory is double that seen in December.
Too many houses are for sale, experts said. Speculators -- who last year bought homes, not to live in, but to sell or "flip" within a year -- are trying to cash in on the price increases now. "For Sale" signs are sprouting on lawns and depressing prices throughout the market, analysts and Realtors said.
"Anything over $500,000, especially in the suburbs, is just sitting." said Gay Ruth Horney, of Long & Foster Real Estate Inc. in Maryland's Montgomery County, where inventory rose 5 percent and homes stayed on the market 7 percent longer than in September 2004.
Would-be landlords have discovered that they are not able to achieve rents high enough to cover their mortgages. she said.
"The rents aren't high enough to cover their mortgage so people are selling" she said.
At this week's average 30-year fixed U.S. mortgage rate of 6.1 percent as recorded by Freddie Mac (FRE.N: Quote, Profile, Research) , a $500,000 house requires a monthly payment of $2,424 after a 20 percent down payment. That excludes insurance, taxes and utilities.
"If people can spend that kind of money, they want to buy, not rent," Horney said.
"Things are sitting longer, and I think what's happened is that the buyers have kind of rebelled," she said. "They're not willing to pay these kinds of prices."
Earlier this week, home builder NVR Inc.(NVR.A: Quote, Profile, Research) reported quarterly earnings that missed Wall Street's projections, blaming it on the weak Washington market. NVR, based in Reston, Virginia, has the greatest market share in the area.
In addition to NVR, Toll Brothers Inc.(TOL.N: Quote, Profile, Research) , Hovnanian Enterprises Inc.(HOV.N: Quote, Profile, Research) and Comstock Homebuilding Companies Inc. (CHCI.O: Quote, Profile, Research) have the greatest exposure to Washington. They report later, but Comstock said net new orders in the quarter fell by nearly 60 percent.
JMP Securities analyst Jim Wilson said Washington D.C. is just the most recent of the over-heated speculator-infested markets to be hurt when those investors decide to leave just as quickly as they arrived.
"They came down in California and Vegas last year," Wilson said. "Now they're going to come down in D.C."
The investor-inflicted softness has analysts watching other red-hot markets.
"We will continue to closely monitor markets with a significant investor presence such as in Arizona and Florida for a rise in inventory levels," Banc of America Securities analyst Daniel Oppenheim wrote in a research note, "However, we believe demand continues to far exceed supply in those markets."


Topping of major indexes not in synch, Trannies and Dow 2005 early tops, Banking back in 2004 and recently the UTES, last to go...NOT bullish action , more like old and dying 3 yr cyclical bull market. recent SHARP declines here. no matter what other stats say this from horses mouth. BDI tunred back at FIB and declining trendline resistance, should TRANS follow suit?

TOPT and other tankers at or near 52 wk lows,??? how so as OIL was peaking? now under $60???? whahhhh??? OIL falling stocks falling, YES.

CAT 3rd qtr up 34% stock off $5 plus. INTC MSFT EBAY cant move NAZ but GOOG will?

Be careful my friends. Bonds catching FEAR bid? Dow hovering now near 10,200...getting interesting this FRI opex



RIMM denied stay pending Supreme Court appeal-NTP
Fri Oct 21, 2005 11:40 AM ET TORONTO, Oct 21 (Reuters) - A U.S. appeals court has denied a motion by BlackBerry maker Research In Motion Ltd. (RIM.TO: Quote, Profile, Research) (RIMM.O: Quote, Profile, Research) to stay a patent infringement case pending a U.S. Supreme Court review, NTP Inc. said on Friday.
NTP, which successfully sued RIM for patent infringement, said the case will move back to the District Court it was first heard in for re-confirmation of an injunction that would halt U.S. sales of the BlackBerry device and shut down its service in the United States.



Shares of Electro Energy (EEEI) surged 49% to $4.45 Thursday after the battery maker agreed to design a prototype battery pack that could be used to power a Toyota Prius. The agreement, which involves no payment to the company, was inked with the California Cars Initiative, or CalCars, a nonprofit group that's trying to create a market for plug-in hybrid cars. Toyota Motor (TM), the manufacturer of the Prius, has no connection to the deal.

"We have no dealings with Electro Energy,"
says Nancy Hubbell, a spokeswoman for Toyota. "And the chances of that happening are minimal. When it comes to the development of our cars, that is done in-house. We have engineers in Japan developing our hybrid systems. And our batteries come from Panasonic. It is one of our business partners, and that is a long-standing relationship."

Though Electro Energy didn't claim any relationship with Toyota in its press release, it's not surprising that it wants to connect its name to the wildly popular Prius. With gasoline prices so high, the Prius, introduced in 1997, is the best-selling hybrid in the world. Toyota expects this year to sell more than double the 50,000 vehicles that it sold in 2004. The Japanese auto maker projects its hybrid sales will hit a million vehicles by 201

Prices manufacturers paid for materials rose to the highest in 25 years

U.S. Philadelphia Area Manufacturing Growth Rebounds (Update2) ListenListen

Oct. 20 (Bloomberg) -- Manufacturing growth in the Philadelphia area expanded more than predicted this month, adding to evidence the U.S. economy is strong in the face of surging energy prices spurred by Hurricanes Katrina and Rita.

The Federal Reserve Bank of Philadelphia's general economic index for October rose to 17.3 from 2.2 last month, the biggest increase in almost three years. A number greater than zero means a higher percentage of the factories surveyed in the area reported business was improving rather than deteriorating.

Prices manufacturers paid for materials rose to the highest in 25 years. Prices they received for their products jumped by the most since 1981, showing that companies may be having better luck passing those costs on to customers. The report may reinforce the Federal Reserve's view that faster inflation poses a greater risk than slower growth.

``Prices received rising so much is the first sign that businesses have increased power to pass on these energy-price increases,'' said Chris Rupkey, an economist at Bank of Tokyo- Mitsubishi Ltd. in New York. ``Energy will shortly be a major factor in the inflation equation, and this is what the Fed is worried about, so expect policy makers to keep pushing interest rates higher.''

The U.S. economy sustained the shock from the hurricanes and kept expanding, the Fed said yesterday. Governor Donald Kohn predicted that manufacturing will strengthen as companies rebuild inventories and said the Fed must focus on controlling inflation.

Economists expected the Philadelphia Fed index to rise to 10, according to the median of 50 forecasts in a Bloomberg News survey. Estimates ranged from a low of 4.6 to a high of 20.

New Orders

``Once you take out the impact of Hurricane Katrina, demand for manufactured goods remains pretty robust,'' Nariman Behravesh, chief economist at Global Insight in Lexington, Massachusetts, said before the report. ``The underlying strength in the economy is still pretty good.''

The index of prices received by factories increased to 32.6 this month from 8.6. The prices paid index for raw materials rose to 67.6 from 52.7 in September.

The new orders index rose to 18.6 in October from minus 0.5 in September. Unfilled orders increased to 0.8 from minus 10.9. The shipments index rose to 19.5 from 13.2, and the measure of inventories fell to minus 4.5 in October from 1.4.

Economists watch the Philadelphia Fed's survey of companies in Pennsylvania, Delaware and southern New Jersey for clues to the health of manufacturing nationwide. Manufacturing accounts for about 13 percent of the economy.

New York

Manufacturing in New York state expanded at a slower pace in October and factories were less optimistic about the future in the face of higher energy costs, a Federal Reserve index showed Oct. 17.

The two regional Fed reports will be followed Nov. 1 by the Institute for Supply Management's factory index report for the month of October. The index for September showed manufacturing growth accelerated.

Energy prices surged after Hurricane Katrina struck the Gulf Coast on Aug. 29, knocking out oil rigs and refineries. The costliest storm in U.S. history was followed on Sept. 24 by Hurricane Rita.

The hurricanes cut oil output by 57.6 million barrels since Aug. 26, the U.S. Minerals Management Service said on Oct. 14. Crude oil prices reached a record $70.85 a barrel on Aug. 30 and remained near that level through the end of September.

Energy Surcharge

Pittsburgh-based Alcoa Inc. said on Oct. 10 that profit at its main aluminum business fell 11 percent in the third quarter on higher costs for energy and raw materials.

Wyomissing, Pennsylvania-based Carpenter Powder Products Inc., a maker of specialty alloys, this week said it will add an energy surcharge to make up for the rising price of natural gas.

Wilmington, Delaware-based DuPont DuPont Co., the third- largest U.S. chemical maker, said Oct. 13 that damage costs from Hurricanes Katrina and Rita to plants in the U.S. Gulf Coast area were about $150 million.

The company said it is monitoring ``the inability to supply customers due to temporary plant and electricity outages, as well as broader impacts from dramatically higher energy and ingredient costs, higher transportation costs, and disruptions to the operations of its customers and suppliers.''

Forecasts Cut

The concentration of chemical companies in the region covered by the Philadelphia Fed manufacturing index makes the survey more sensitive to fluctuations in energy prices.

American consumers are also being squeezed. The average retail price of regular gasoline at the pump reached a record $3.069 a gallon the week ended Sept. 5, according to the Department of Energy. The price was $2.725 in the week ended on Oct. 17.

The storms prompted economists to lower their forecasts for economic growth. The median estimate in the latest Bloomberg News monthly survey of 71 economists was for gross domestic product to expand at an annual rate of 3.4 percent in the third quarter, compared with 4.1 percent in the last survey before Katrina.

Reconstruction following the storms will give the economy a lift, the Fed's Kohn said yesterday, helping to counter a slowdown in consumer spending.

``The economy retains a good deal of forward momentum,'' Kohn said in a speech at Carnegie-Mellon University in Pittsburgh, Pennsylvania.

Job Market

The hurricanes' impact on the labor market is starting to wane, a report earlier today showed. The number of Americans filing first-time claims for unemployment insurance fell to 355,000 last week from the prior week's 390,000, the Labor Department said.

``Katrina will be more of a positive for manufacturing demand as time goes by,'' Joel Naroff, president of Naroff Economic Advisers in Holland, Pennsylvania, said before the report. ``There's so much that's needs to be replaced and that demand would never have existed without Katrina.''

Thursday, October 20, 2005


GOOG up $30 in AH! But futures do not reflect this rabbid buying, nor that of SNDK.

We wiped out ALL of WED we reversed again other way......OPEX FRI coming, that could get interesting!

Market has had record earnings to push it along and we cant get past 2005 or 2004 highs, yet bullish majority exists.

GOOG market cap near $90Billion, oh my, bonds want to rally but not even today could they get jiggy with whopper sell off.


Wednesday, October 19, 2005


The Conference Board Consumer Confidence Index Falls To Lowest Level In Nearly Two Years
September 27, 2005

The Conference Board Consumer Confidence Index, which had rebounded in August, plummeted in September. The Index now stands at 86.6 (1985=100), down from 105.5 in August. The Present Situation Index decreased to 108.9 from 123.8. The Expectations Index fell to 71.7 from 93.3 last month.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS NFO. TNS NFO is one of the TNS group of companies (LSE: TNN). The cutoff date for September’s preliminary results was September 20th.

“Hurricane Katrina, coupled with soaring gasoline prices and a less optimistic job outlook, has pushed consumer confidence to its lowest level in nearly two years (81.7 in October 2003) and created a degree of uncertainty and concern about the short-term future,” says Lynn Franco, Director of The Conference Board Consumer Research Center. “Historically, shocks have had a short-term impact on consumer confidence, especially on consumers’ expectations. Fuel prices remain high, though they have retreated in recent days, and when combined with a weaker job market outlook, will likely curb both confidence and spending for the short-run. As rebuilding efforts take hold and job growth gains momentum, consumers’ confidence should rebound and return to more positive levels by year-end or early 2006.”

Consumers’ overall assessment of ongoing conditions was considerably less favorable in September. Those claiming business conditions are “good” declined to 25.2 percent from 29.7 percent. Those claiming conditions are “bad” increased to 17.7 percent from 15.1 percent. The employment picture was also less upbeat. Consumers saying jobs are “hard to get” increased to 25.4 percent from 23.1 percent, while those claiming jobs are “plentiful” fell to 20.1 percent from 23.6 percent.

Consumers’ outlook for the next six months turned considerably pessimistic. Those anticipating business conditions to worsen increased to 19.8 percent from 10.0 percent. Those expecting business conditions to improve declined to 15.3 percent from 18.7 percent.
The outlook for the labor market also soured. Those expecting more jobs to become available in the coming months decreased to 14.0 percent from 16.4 percent. Those expecting fewer jobs increased to 25.0 percent in September, up from 17.3 percent in August. The proportion of consumers anticipating their incomes to decrease in the months ahead rose to 10.8 percent from 8.9 percent last month.

Source: September 2005 Consumer Confidence Index, The Conference Board.
The next release is scheduled for October 25, Tuesday at 10 A.M. ET.

Home builder Stocks rebound after downgrade

Not DOWN and out yet?

However, might be just a dead cat bounce.


PULL HEAD OUT OF.......sand? Sharp rallies part of crashing market.

72% up volume, but new lows handily outpaced new highs again. Sure looks like players are still focused on calling a bottom more than CYA.

Some comments on today

Yet earnings, and the Fed report were measures of the economy's status weeks and months ago. While investors were eager to buy after October's poor performance, they remain nervous about rising inflation and consumer spending for the fourth quarter and beyond -- leading analysts to wonder whether Wednesday's rally can be sustained.

"There are some signs on the wall here that we may have hit the bottom of this market, and we could be ready to move up," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "The big question, though, is how far we move up and how long it lasts."


*(click to enlarge) Compared to previous low the RSI and MACD are deeper, that along with synched decline of the 20 and 50 EMA leads me to think rates will continue to rise (bond prices fall).

A break of 112 is needed to allow further decline, if not I feel a retrace is near, and would HALT at either of these declining moving averages.

RSI is in oversold territory, so especially if bounce is not forthcoming, a BAD OMEN. At the outset, if futures are correct, a weak stock market should also attract bond buyers.....should.

With most foreign exchanges declining, it should cause additional pressure on the US equity markets. A break of 10,200 could usher in a new wave of selling. EVER heard of CASH???

Remember when INTC earnings would guarantee a rally?



Futures red

INTC dissapoints and YHOO a yawner, and is anyone watching the NIKK fall apart lately? Could get interesting today.


Tuesday, October 18, 2005


And you come up with 1,280 hits (under news) and for inflation? 24,700

What does it mean? maybe nothing, but as a contrarian, it is so lopsided it tells me hardly anyone is thinking DEFLATION is a problem today.

And when deflation is mentioned, it is in sentance quite often as spoken by BOJ as if beaten.

Has debt been INFLATED AWAY? I rather doubt it, we have only added to it. It has not vanished it has multiplied by an X factor.

Now the Fed is caught with high oil prices which have fed into every aspect of economy with fuel surcharges being added to anything that doesn't put itself on the shelf, and these go on quickly but come off stubornly. The effects will be with us for awhile.

Expenses have inflated, cost of living health care has inflated, minimum credit card payments have inflated, property taxes have inflated along with housing prices, but wages have deflated not hardly rising at all to keep pace with all that is.

The stock market is deflating, not even higher than 2004 highs, WHY all the damn bullishness then? Or why the weak stock market, the trading range bound stock market?
Maybe because just as profits are peaking,the rose has bloomed, no one sees the petals falling off the rose just yet.

VIX, one volatility measure is in measured uptrend and the unbeaten string of bullish readings still intact, even as stock prices go nowhere except the next hot VACCINES for BIRD FLU "scare" even though ONE main company has gotten most of money and is light years ahead of anyone else SNY.

The market is a lot weaker than it shows, the trend is DOWN until shown otherwise.



**proving myprevious point below! (that the little krappies running are NOT probably going to beat out a CHIR or SNY!! IMHO AKA SVA NVAX etc etc)

Sanofi-Aventis (NYSE: SNY), the leader in the pursuit of a bird flu vaccine, certainly is large. And the company's leadership was recently confirmed when the federal government agreed to pay it $100 million to produce a bird flu vaccine.

D.....more than just a contrarian....


Moody's may cut BAWAG (Austria) on Refco exposure

Tue Oct 18, 2005 10:57 AM ET NEW YORK, Oct 18 (Reuters) - Moody's Investors Service on Tuesday said it may cut the debt ratings of Austrian Bank BAWAG P.S.K., citing a $425 million line of credit at risk linked to Refco Inc. (RFX.N: Quote, Profile, Research) , which filed for bankruptcy protection this week.

"Moody's is concerned that the potential loss content of this exposure could negatively affect the bank's capitalization," the rating agency said.
Moody's said it may cut the bank's "A2" long-term rating and its "C-plus" financial strength rating.

Moody's affirmed the bank's "P-1" short-term rating.
Downgrades usually raise a company's borrowing costs.

**My friends, these bastards hid from regulators for 8 YEARS!!!! so who knows what other funny stuff awaits or the extent of trouble in derivitive or hedge fund land, of course they want to regulate themselves!


2 PLUS 2

INflation rising fastest in 15 years both CPI and PPI coming in HOT well above "expectations. And on that news GOLD falls??

The DOLLAR rises! could be players figure FED will keep raising rates, watch 10 yr yields closely for reaction to HOT INFLATION NUMBER.

The rally should show its hand very soon as to whether it is to relieve oversold condition or is beginning of something longer lasting.


Saturday, October 15, 2005

What DO AVian FLu and Bear Markets Have In Common?

Avian Flu and Bear Markets 10/14/2005 5:26:32 PM

The threat of avian flu has moved from the back burner to the front burner. Last week, we learned that U.S. scientists had recreated the virus that caused the Spanish flu epidemic that killed more than 40 million people in 1918 and 1919. The bad news is that this lethal Spanish flu virus seems to have also originated as a bird virus. And this week comes the news that birds in Turkey have been found to harbor the HN51 strain of bird flu, the strain that has jumped to humans in Asia.

Bob Prechter wrote about the effects of negative social mood on health, and he made the connection between epidemics and bear markets in his socionomics book, The Wave Principle of Human Social Behavior, and the Theorist. As avian flu becomes part of the news, providing a reason to worry about the possibility that it might become the next big flu epidemic that we've dodged for the past 65 years, it might be worth reading why epidemics happen when they do.
* * * * *
Epidemics, Social Mood, and Bear Markets
Excerpt from The Wave Principle of Human Social Behavior (p.326)
The most extreme example that I can think of that could be argued as constituting an outside event that would affect societies is an epidemic or pandemic. After all, they kill thousands or millions of people. How could they fail to be an important social factor affecting mood?The fact is that epidemics and pandemics seem to hit populations during major negative social mood trends. Perhaps it happens that way because people’s psychological constitutions are weaker during bear markets. Perhaps it is because people’s personal behavior, whether involving hygiene (as in the time of the plague or in recent years with respect to hypodermic needles used to inject drugs) or sexual promiscuity, is more conducive to spreading disease during social mood retrenchments. Perhaps it is because social mood retrenchment brings economic contraction, which makes people less able to afford the creature comforts that ward off disease and more apt to crowd into smaller, more affordable spaces.

Whatever the reason, when we study pandemics of the Dark Ages or the Spanish influenza epidemic that broke out during the bear market of 1917 (which year also saw intense fighting in World War I and the Communist coup in Russia), there always appears to be a bear market in force, and the extent of the epidemic tends to correlate with the size of the setback in mood.Does Disease Spread Fear or Does Fear Spread Disease?

Excerpt from
May 2003 Theorist
Increased susceptibility to disease now could prove exceptionally devastating due to human disease bacteria’s developing resistance to established antibiotics, which is due primarily to the widespread inappropriate prescription of antibiotics for viral infections. If aggregate human health has indeed begun a period of serious setback, future historians will undoubtedly comment on how those changes in health and risk affected human mood. The actual direction of causality is the opposite.

The biggest change in human mood in centuries is ushering in a change in the trend of aggregate human health from the positive to the negative. This time, mood seems to be playing an even more direct role (as it has done from time to time in the past), as the destruction of human health through biological warfare agents would be a consciously desired goal.Only socionomists can provide the proper perspective on this situation.

For example, the accompanying headline from a newspaper reads, “Disease Spreads Fear.” The truth of the matter, as usual with respect to conventional thinking about social mood causality, is the opposite. The world’s social mood has been in a bear market for three years, and much of Asia specifically has been in a bear market for nearly six years, since 1997. The waxing of negative social psychology preceded the outbreak of the SARS epidemic, as has been the case regarding all the major epidemics that I have studied. Therefore, a proper headline, reflecting the socionomic insight, should read, “Fear Spreads Disease.” That is closer to the truth of the matter.

Just as the developing economic depression has been mild to date, so has the emerging difference in aggregate human health. Do not fall into the trap, as so many people do, of scoffing, “What depression?” simply because there are as yet no large ranks of unemployed or “bread lines.” Such are the conditions at the bottom, when it will be time to turn bullish. This change in the trend of public health is likewise a process, not an event.

When wave (c) of Grand Supercycle wave is in force, then the worst of the new trend will become manifest. Don’t wait until then to wonder if this outlook is valid, or you will be caught unprepared. According to the World Health Organization, the “Spanish flu” pandemic of 1918 killed between 40 and 50 million people worldwide “and caused the largest number of deaths in the 20-39 age group, devastating economies at the end of World War I.” That was only a Cycle degree bear market. This one is two degrees larger. People should be preparing now for greater stresses to come.

Editor's note: If you would like to read more analysis as interesting as this, now's the time to sign up for our Global FreeWeek, which ends next Wednesday, October 19, at 5 p.m. Find forecasts for global stock markets in cities like Singapore and Frankfurt, currency markets, bond markets, as well as gold, silver, oil and gas. Discover the social trends now unfolding in Europe and the United States that may affect the financial markets. Just click here for more information about how to sign up.


Baron wolman was amazing! Right Steve....




*click to enlarge For nearly 2 years the Dow has gone literally nowhere, and isnt even above it's 2004 highs! What is going on? I think the Dow has already topped in this cyclical bull, a correction of the greater Bear Market trend which is correcting over 20 years of "good times".

Let's see what this rally to correct recent decline can do, where it tops. We still don't a single bearish plurality in the IIAA poll as yet, the bullish string goes unbroken.

Lots of bullish ammo has been spent, This from the Current Credit bubble bulletin from Doug Noland:

Broad money supply (M3) surged $41.7 billion, surpassing $10 Trillion (week of October 3) for the first time. M3 has now doubled in less than nine years, after reaching $5 Trillion during the first week of 1997.

Yet as I showed a few posts ago, the adjusted monetary base for the most recent week declined sharply:

An interesting development, which I am attempting to understand and wonder if the monetary base isn't affected by real estate activity........but we do have an explosion in money supply yet the aggregate as I show declining sharply.

If market sees oil dropping (if it gets below $60) and says this is bullish, it can only come from expanding supplies and WANING demand......which has been published as such.

Wait, what?? waning demand? slowing consumption? How could that be? Why the only thing that would cause that would be a weakening economy.

That's what the data piints to my friends, weakneing housing stocks and finacials, recent weakness in some commodities and coal stocks. Weak COF stock and an expanding list of stocks hitting fresh 52 week lows.

IMHO this is the OPENING BARAGE of PHASE II of the BEar Market, brush up on your hsitory and see how ALL the other bear markets ended.

Now if you saw the incredable amounts of fresh money our crisis driven Fed has printed, and match that up with last weeks plummeting adjusted monetary base.......2 plus 2 are not equaling 4.

I find the action in the bond pits unsettling as well, the yield RISNG instead of falling during recent strong selloff.






"The whole world right now is producing petroleum at their maximum capacity," he said. "In Venezuela, for example, we can't produce a single barrel more."

Venezuela, a member of Organization of Petroleum Exporting Countries, is the world's fifth largest oil exporter and a major supplier to the U.S. market.

Venezuela's state oil company, Petroleos de Venezuela, says it pumps 3.2 million barrels of crude oil a day. But industry analysts put the figure lower, saying the country has never fully restored output since an extended strike in 2003 that sought to force Chavez's resignation.

Increased production would not solve the price problem, Chavez said.

"The cause of the increase in the price is not in the production. It's partly the intermediaries who make things dearer. It's also because of the increase in demand and the irrational capitalist consumerism model," he said.
"The United States for example, with scarcely five percent of the world's population, uses almost 25 percent of the petroleum and combustion fuels produced in the world," he said.


What me worry?
Lions at the gate?
Birds flocking in our trees....
Won't eat chicken ever again.
I didn't vote for the idiot....
When can we go look for some frogs?
I smell lemming stew.......yum!
Those kibbles suck man! gimme some of what you got!
Did you Fabreze this carpet? lovely
Damn right I'm man's best friend.
She's hot, I could bite her on the ass!
WHy does one ear flop down?
WHy is that dog sniffing my ass? I wiped!


Friday, October 14, 2005


Dow was up, but friends, NOTHING is a straight line, markets gets ovebrought, it will sell off, and if oversold it will rally.

But what we want to know is what is the intermediate and longer term trend, and that I think has turned down. I would not just yet say the Bear Market is back in force, it is too early to tell.

SO with the rise today of 70 Dow points we also get this info 241 NEW LOWS and only 23 NEW HIGHS. 20 to 1

VIX melted away 1.60 to fall to 14.87 and with any hint of a rally the fear just slips away.

IMHO, from what I see, the rally is going to correct the inital decline and then the sell off will resume.

Pellet Stoves are flying out the door, there are shortages of them and the pellet fuel I hear. Buying of these will detour that for other purchases.

Coal and energy stocks continues their selloff today FDG off 4.35% MEE bucked the trend up $1.24
But TANKER stocks languish near 52 weeks low like TOPT and NT.

TASR is now weekly oversold on the RSI and I wonder if its DONE, or not.,uu[w,a]wallyiay[pc20!c5!f][vc60][iut!Ub14!Ua12,26,9]&pref=G It would HAVE to hold $5 or there isn't much under that for support as you can see. 20 EMA is still declining.



Needs no comment. except..woooooooffff



WHERE IS THE MONEY VELOCITY? AND LOOK at last weeks plummet! Goes along with market weakness and could be housing related!



The Innovest 15

Altair Nanotechnologies



Biosante Pharmaceuticals

FEI Company

Flamel Technologies

General Electric


JMAR Technologies

Lumera Corp.

Nalco Holding Co.

Plug Power

Spire Corp.

Starpharma Group

Veeco Instruments

Thursday, October 13, 2005


AN Up day? A flat day? WIth only 40% UP volume? With 380 NEW LOWS and only 17 NEW HIGHS. THat is a 22 to 1 ratio! Does that sound like market strength? Does such a lopsided day sound like it should end with NO CHANGE in DOW? Do you think its possible the DOW and SPX are being targeted by the Green team? PPT

Who know really, but with those stats you would think trple digit losses. Bonds are getting oversold, but just on the daily, not weekly. So a mild correction is in the works I think with a nice round number 4.5% probably the high for this move, so watch todays high if broken.

EXPORT PRICES EX OIL were up 1.2% for an annualized 14.4% JUMP, now THAT'S INFLATIONARY!

I had suggested (though most disagreed) that not only was oil in for a correction along with other commodities, but it would fall because the high prices would cause CONSUMPTION to FALL! Last month crude oil inventories fell by-246K, but this month they popped to PLUS 1017K yowza.......

30-50% higher winter fuel costs are already locked in however, so falling prices should not help winter heating much.

Coal shares like FDG MEE are now correcting along with oil shares.

Transports fell another 1% today and ducked under their Sept lows. VIX hit 17 today before falling back a bearish trend.

AFter blowing through its Aug lows, RUT oversold. Overall market has been blitzed, and do for breather, let's see what Bulls can do.

The internals of market are MUCH weaker than the action shows, beauty is truely only skin deep.

PS: MY 2 bond tracking portfolio's were killed today going deep red and for the first time with heavy volume as investors flee safety.....or so they thought

Duratek......I feel IMHO any strength should be sold.

NEW YEARS PRAYER This was sent to me, I am sharing it with you, and you may want to share it with your family, a beautiful and meaningful presentation.


Wednesday, October 12, 2005

BLACK GOLD Turn coal or natural gas into petroleum products or hydrogen fuel? SYNM and SSL interesting companies


Apple launches a video iPod

Will anyone buy video iPod?
Apple launches a video iPod, but are consumers ready?
October 12, 2005: 4:14 PM EDT
by Amanda Cantrell, CNN/Money staff writer

NEW YORK (CNN/Money) - With the launch of the widely anticipated video iPod, Apple CEO Steve Jobs is undoubtedly hoping that the skeptics who say consumers won't want to watch video on a tiny screen are wrong.

Today, Apple unveiled the widely-anticipated video-enabled iPod that allows users to download and play music videos, home movies, and one of five shows from ABC and Disney, including "Desperate Housewives" and "Lost." What's more, they can watch content downloaded onto the video iPod on a normal television.

The video iPod has a 2.5 inch screen, comes with 30 or 60 gigabyte memory, comes in both black and white, and will be priced at $299 and $399. It holds up to 15,000 songs and 25,000 photos, or more than 150 hours of video.

With price points that aren't dramatically higher than those for iPods without video, the video iPod could be what Apple needs to goose sales for the holiday quarter. Apple revealed during its fiscal fourth quarter earnings announcement last night that the company shipped 6.45 million iPods, including 1 million nanos, a product revealed just a couple of weeks shy of the quarter's end. But iPod shipments fell short of analysts' expectations, which ranged from 7.5 million to as high as 9 million.

Apple CEO Steve Jobs unveiled the iPod along with several other products, including a new iMac computer with a remote control to access music, photos and movies. The computer is designed to serve as an entertainment hub, executives said.

The company has struck a deal with ABC and the Disney Channel to allow users access to five television shows one day after they air on TV, six short films from Pixar animation studios and over 2,000 music videos.

As part of the video iPod launch, Apple also launched iTunes 6, which lets users buy the music videos, Pixar shorts, and episodes of "Desperate Housewives," "Lost," "Night Stalker," "That's So Raven" and "the Suite Life of Zack & Cody" for $1.99 each.

But will anyone buy it?
One of the biggest questions about the product's demand is whether anyone will actually want to watch video on a 2.5 inch screen. But with attachments, users will be able to watch downloaded videos and TV programs on a regular television.

"It's critical to remember that these are really devices that are attached to a much wider range of services and interests on the part of customers that I think are fundamentally changing what used to be television," said Mark Stahlman, an analyst at Caris & Company. "It's becoming much more personalized and much more interesting."

Users who missed an episode of "Desperate Housewives," for example, could download the program, connect their iPod to their TV, and watch the episode.

For now, though, movies are still not part of the picture. "This is truly a video iPod, not a movie iPod," Stahlman said.

What's interesting about the new iPod is not the fact that it plays video, but the fact that one of the largest media companies in the world has agreed to license content for it, said said Nitin Gupta, who covers Apple as an analyst at Boston-based research firm Yankee Group.

"Video was inevitable in digital audio players; to actually build the consumer demand portion of that, there really needs to be compelling content," said Gupta. "What's promising is that you have one of the biggest content companies in the world willing to experiment with this. But I'm doubtful it will appeal (right now). What will be more compelling is $10 for a whole season. But with Apple and Disney talking, it brings the ability for innovative distribution deals to come to light."

While some Mac followers are still skeptical about the demand for such a product, Roger Kay, an analyst with Endpoint Technologies Associates, points out that while the idea of the video iPod may not appeal to adults, it could be a big hit with kids.

"If you look at Generation Z, they are already holding Gameboys in front of their faces," he said, referring to the 10- to 18-year-old market. "The same kids that are holding Game Boys between their hands are going to think this is a natural thing and will say 'Oh, that's so cool, I need to have one.'"

Since video files are larger than audio files, industry watchers have also questioned the storage issue. Kay said one option for the company would be to create compressed versions of these files that will sit on its servers. What will happen to the ads that appear during the television programs during regular broadcasts is unclear.

Kay said that Apple has likely worked out the kinks on the newest extension of the iPod line.

"I'm confident that whatever it is Apple wouldn't put it on the market unless it's a pleasure to use. That's their business method. They don't bring something to market that's not going to be a great experience; they haven't made a mistake (in that arena) for years."

The company also announced a new iMac, the iMac G5, which includes a remote control which will allow users to optimize its new Front Row media package, which lets users play music, photo slide shows, DVDs and iMovies. It starts at $1,299 and also includes a built-in video camera.

Caris & Co.'s Stahlman said he thinks Apple is far from finished making new product announcements and will probably roll out more products in the coming weeks.

Analysts noted that the timing of the new product announcements -- one day after the company reported its fiscal fourth quarter earnings -- was interesting. Despite posting the highest revenue and earnings in its history and quadrupling its profit from the year-ago quarter, the company's stock plunged 10 percent in after-hours trading as investors expressed disappointment that revenues missed expectations. The company reported sales of $3.68 billion for the quarter; analysts had projected $3.73 billion.



WHere's Rummy been?Don't hear much outa Haliburton Dick? Howza Rove doing? Bill Frist?
How's that SS reform doing? Bush going to raise taxes? change home mortgage deduction? nominates a friend and personal lawyer to supreme bench?How's the occupation of IRAQ going? Got AL Q on the run? How's that PLAN for Gulf States going? what NO commission or person in charge yet? What congress off for 7 weeks, what foot shuffling? Plan to control 2nd largest oil reserves going well? WHAT oil is now TRIPLE what it was before invasion? WHAT IRAQ pumps LESS oil now than before war? WHO'D that contract go to? MORE NO BID contracts? Gonna spend what it takes, though we are broke.....

INterest rates are on the rise, breaking ABOVE previous high, the trend is higher rates. WHen you have LOWEST Pres ratings, when consumer sentiment plummets, highest in history energy prices, winter gas prices to heat going to be 50% higher than last year, minimum payments to credit cards doubled, higher mortgage payments on adjustable mortgages, bombed from 2 major storms, have 400K homeless, and N.O. going bankrupt, when you have police and FBI who MUG their citizens, when our Congress allows our rights via the COnstitution to be handed away VIA the PAtriot Act, when the PRes threatens to use military for civilian disaster relief etc, when MARTIAL LAW is a high potential.....when every fricken night and day you hear PANDEMIC FLU TALK on radio and TV, and SPecials arent the Bradey Bunch Xmas show but 1918 FLU MASACRE.....when property tax bills coming in rise by 30%, when wages dont keep up with basic inflation and spending always overtakes and saving or wage increases, when the savings rate just fell to a N
EG .6% a historic low, when we are saddled with historic debt and credit expansion beyond any known level......when our airlines are failing, when CEO's continue to cheat and steal (REFCO), when WMT GM and many top companies hit new 52 wk lows, when the opposing party cannot offer a decent candidate, where 3rd stringer types are in position of power in White HOuse, when we NEED LEADERSHIP BUSH puts forward a 5 yr old POS Energy Bill that rewards and gives the TOP OIL COMPANIES TAX WRITEOFFS@!!!!! I suppose $20B of profit per qtr not good enough? where EVERY SPENDING BILL gets passed, when every year gov gets bigger yet services and ability to respond gets worse.......where our borders go unprotected, where people that SNEAK into the country are rewarded......where we cant even mandate higher gas mileage to relieve energy crisis

We have a PANDEMIC alright, of BAD LEADERSHIP and CRONYISM......we're diggin a deep hole my friends....dark deep hole....lemmings must turn into lions.....

VERY OVERSOLD market, could snap back hard...but brief...10K gets broken.....and if it does....will the bullish consecutive 155 wks of plurality continue? a LITTLE bit of bearishness wont wipe that out, last PHASE was near 3 years long./.....



Comments on MIERS nomination

"She's never been a judge before, never served on the bench. This is part of President Bush's strategy of surrounding himself with people who are also in over their heads." —Jay Leno, on Supreme Court nominee Harriet Miers"

Harriet Miers, as you know, has no experience. Apparently no experience is the main requirement to be a Bush appointee." —David Letterman

Idiotic Sound Bite of the Week
"I think with a lifetime appointment to the Supreme Court, you can't play, you know, hide the salami, or whatever it's called." —Democratic Party Chairman Howard Dean, urging President Bush to make public Supreme Court nominee Harriet Miers's White House records, MSNBC's Hardball Ron Paul archives

Remember this guy is a REPUBLICAN!

The Constitution above all is a document that limits the power of the federal government. The fundamental point that has been lost in our national discourse is this: the Constitution prohibits the federal government, including the federal judiciary, from doing all kind of things. Until we have federal judges who understand this, it matters little what political stripes or experience they bring to the bench. The Constitution does not empower government and grant rights, it restricts government in order to safeguard preexisting rights. When federal courts disregard this principle, acting as legislatures or failing to enforce constitutional limitations, we get the worst kind of unaccountable government.

I'M done!

Duratek "your voice in the dark"


And its sad but true!
WHat the F was he thinking?




311 new lows
18 new highs

80% down volume

Miraculous end of day recovery for Dow, above numbers dont lie.

Some kind of bounce expected,would take selling pressure ease, buying power not convinced. Jewish Holiday tomorrow, some traders will be away.

BOND YIELDS have broken above previous high, now that is plain as day and trouble.


Tuesday, October 11, 2005


CHina's wealth gap is growing MORE distorted (read story by clicking link)

You see "smart" money some say RUNNING to China to do business, sell insurance, many think as 1 in 700 have car compared to our 2 to household, so much potential for so much business.

And it's all BS! The avg CHinese is working like a DOG and has little to show. The gap between rich and poor is astonishing, even more so because its communist regeim, HEY must be something in it for them. WE think hey let's Westernize them? here come the come the bankers.

This situation is getting hot and could explode in social unrest.



WHO the F is working for whom? And BUSH wants to use Military forces for disasters and potential health pandemic?..."heeee, I'm just thorwing it out on the table....."

Patriot Act passed as FEAR taken advantage of, just as the setup of FED reserve System walked all over our Constitution, so did Patriot Act. Congress and most Americans bent over grabbed their ankles and then said THANK YOU>



Something rotten my friends, if 3M is looking at 52 wk low? VERY diversified co.



Minutes of the Sept. 20 closed-door discussions revealed increased worries among Fed policy-makers about inflation due to a spike in the price of gasoline and other energy products following hurricane-related production shutdowns caused by Katrina. But the Fed officials said they believed the hit to economic growth from Katrina would prove to be temporary.
Because of this view, the Fed expressed concerns that not raising rates at the September meeting would send the wrong signal about the Fed's view of the underlying soundness of the economy.
"A pause in policy tightening at this meeting had the potential to mislead the public both about the committee's perceptions of the fundamental strength and resilience of the economy and about its commitment to fostering price stability," the minutes stated.

**for once I am speachless!



Alcoa Third-Quarter Profit Rises 2 PercentMonday October 10, 11:00 pm ET By Daniel Lovering, Associated Press Writer
Alcoa Third-Quarter Profit Rises 2 Percent As Low Aluminum Prices
PITTSBURGH (AP) -- Aluminum manufacturer Alcoa Inc. on Monday said third-quarter profit edged up 2 percent as lower aluminum prices and higher energy costs cut into profitability.

**And the talk is "stock futures higher, rally set from higher profits...."

A low could be nearby, how far it pops could depend on how goosey AAPL numbers are tonight


Monday, October 10, 2005


"Those who do not remember the past may be condemned to relive it." This old adage applies especially to politicians who, driven by public opinion and sentiment, rarely remember the past. Few members of Congress care to remember the Vietnam War (1961-1973) which took the lives of more than 50,000 American soldiers, some 400,000 South Vietnamese allies, more than 900,000 North Vietnamese men, and countless women and children. They all died in an international conflict waged primarily by the United States to assist the South Vietnamese people in their desperate struggle for independence.

At first glance, the Vietnam War differed significantly from the present conflict that is raging in Iraq. In Vietnam, the United States forces together with South Vietnamese armies were unable to defeat the Viet Cong and North Vietnamese invaders; they failed despite massive military aid to South Vietnam and in spite of heavy bombing and U.S. commitment of nearly 550,000 men most of whom were reluctant draftees. In Iraq, the American army of some 150,000 volunteers routed the Iraqi forces in a few days and readily occupied the country. In Vietnam, American intervention meant to repel the insurgents and invaders and halt the advance of militant world communism. In Iraq, the American invasion merely intended to prevent a tyrant from developing nuclear weapons and liberate the people from his heavy yoke. Such were the stated motives. In politics, unfortunately, the true motives of an action are usually concealed; some noble pretext may be placed in front of any action.

We may only speculate on the driving force that made the political heads of both sides give the marching orders. But any reflection may soon reveal the similarities in the cultural and ideological background of both conflicts. The Vietnam War escalated from a Vietnamese civil war into an international conflict between the United States and world communism. North Vietnam received much support in the form of armament and technical assistance from the Soviet Union, from China, and other communist countries. The war did not end, despite a 1973 peace agreement and American withdrawal, until North Vietnamese forces occupied all of South Vietnam and reunited the country in 1975.

The Iraqi conflict, just like the Vietnam War, has become a phase of a broader struggle which may prove to be as protracted and costly as the Vietnam War. It may be a bitter conflict not only with the Arab world of some 250 million people but also with the fanatical forces of the world of Islam with more than one billion believers. Surely, the vast majority of Muslims throughout the world is nonbelligerent, seeking to live by the words of the Koran in which God speaks in the first person. But it takes only a few thousand insurgents and revolutionaries to continue the fight. By now the number of attacks against American forces launched by underground insurgent groups is legion. Nearly every day we hear of killing, sabotage, destruction of public and private property, hostage takings, and suicide bombings. Favorite targets are police- and army recruiting centers, electrical installations, oil-producing facilities as well as American troops on the road.

During the Vietnam War American public opinion gradually turned rather adverse and hostile toward its continuation. Its length, the high casualties and even the news of American soldiers involvement in war crimes, such as the massacre of My Lai, turned many Americans against the war. In major cities thousands of young men fearing early calls for military service and combat in Vietnam soon aired their opposition in protest rallies and marches. On college campuses from coast to coast hordes of students expounded their disapproval and defiance. Sensing a growing antiwar movement, a few senators, such as J. S. Fulbright, R. F. Kennedy, E. J. McCarthy, and G. S. McGovern soon sought to lead the movement.

In Iraq, much public support for the invasion was lost when American television vividly depicted life in Baghdad after its fall. American soldiers gleefully watched widespread acts of looting, vandalism, and sabotage of public and private property. They watched when the national museum of Iraq, which housed some of the finest treasures of the ancient world, was looted. All over the world the friends of the private property order were saddened by the spectacle of willful destruction. They waited for the news that a brief telephone call by the president of the United States or his secretary of defense or just an American general in Iraq had called a halt to the looting and the wanton destruction – they waited in vain.

Many Iraqis waited for a relief plan like the Marshall Plan which had helped to rebuild Europe after World War II. But there was no plan, no preparation for the new order which proved to be much more destructive than the war itself. After the looting and burning came a wave of street crime by many thugs, psychopaths, and criminals who had been released along with political prisoners. There was no police which was scared and hiding. With the chaos and lawlessness came economic disintegration, goods shortages, hunger and want. Hundreds of thousands of civil servants lost their jobs as the Saddam command system disintegrated. They soon haunted the occupyers and insurgency unleashed carnage throughout the country. At their disposal was a million tons of weapons and ammunition of all sorts which were stored in numerous unguarded depots around the country.

It cannot be surprising that in chaos, insecurity, and want political Islam has come into view. Ever since Iran had become a theocratic Islamic republic in 1979, some qadis and mufties have been working diligently to reform other Muslim countries as well. In Iraq where the movement had lain underground throughout the Saddam years it emerged into open and is heard loud and clear. In Shiite Iraq where religious authority is clearly defined, several ayatollahs are highly critical of the occupation. In Sunni Iraq a new generation of clerics readily embraces the militant aspirations of the large Arab world. Some deliver messages of jihad, the Muslim holy war, that views the United States and Israel as inseparable allies in a war against the Muslim world.

Ardent disciples, jihadists from the ranks of the Sunni Arab Ba'ath party, a socialist group whose overall goal is Arab unity, and from militant Islamists from all parts of the Muslim world are offering their lives in the fight to expel the invaders and establish a fundamental Islamist state.
Surely, the insurgents who are few in number, probably no more than a few thousand, cannot defeat the American forces militarily. But they may succeed in perpetuating the disorder, creating an atmosphere of intimidation, insecurity, and despair. They may inflict some casualties on U.S. forces, ever increase the cost of U.S. involvement, and thus weaken support for the war. They may tax American staying power and erode the willingness to persist.

In free societies public opinion may change and redirect public policy; it is stronger than the legislature and nearly as strong as the moral code. It led to the withdrawal of American forces from Vietnam in 1973, from Lebanon following the 1983 bombing of the Marine barracks in Beirut, which killed 260 marines, and from Somalia a decade later after 18 servicemen were killed. These precedents seem to indicate that the world of militant Islam may outlast the world of an American president and his party.

If the future is only the past again, entering through another gate, we must prepare for American withdrawal from Iraq. In Vietnam the American people endured the anguish and affliction for a decade; in Iraq the voices of frustration and disappointment are already heard after two years of victory and success. In the Vietnam War two Democratic presidents, John F. Kennedy and Lyndon Baines Johnson, perceiving a growing communist threat, dispatched the military advisers and combat divisions; a Republican president, Richard M. Nixon, brought them back. In Iraq a Republican president, George W. Bush, ordered the troops to Baghdad; it may take a Democratic president to call them back. He may realize that American occupation forces will never win the hearts and minds of Islamic people and that his political efforts are unlikely to succeed in creating an Islamic democracy.
* * *
In Vietnam, the rulers and commanders of the Democratic Republic of Vietnam (North Vietnam), of the Union of Soviet Socialist Republics (USSR), and The People's Republic of China obviously relished their success and rejoiced in the American retreat. But in the span of barely two decades the forces of communism were disintegrating and retreating while the United States emerged as the sole superpower and undeniable leader of the world. In 1990 the Soviet Union ceased to be the citadel of socialism as the Soviet-bloc nations of Poland, East Germany, Czechoslovakia, Bulgaria, Romania, and Hungary shed their communist rule and chose to become independent again. Ukraine soon followed suit. In economic and political turmoil the Congress of People's Deputies voted for the dissolution of the USSR; Mikhail Gorbachev, its president, resigned and was not replaced. In China after the 1976 death of Mao Zedong, the founder of the People's Republic, his successors worked diligently toward two major objectives: to modernize and strengthen the economy and to forge closer political and economic ties with Western nations, especially the United States. They even designated several coastal regions as free-enterprise zones to draw foreign investments, trade, and technology, especially from the United States. In Vietnam economic conditions continued to deteriorate despite substantial aid from the Soviet Union. In the late 1980s, finally, changes in national leadership led to a policy readjustment toward privatization of commerce and industry and foreign investment. But the government continues to be racked by corruption, abuse of power, and incompetence. Vietnam continues to be one of the poorest countries in the world with per-capita income of barely one-third of that of the People's Republic of China.

In Iraq, it is unlikely that the hostile forces will soon disintegrate and give way to Western values and mores. The world of Islam is a spirited living religion that is nearly 1400 years old, and the world of Arab nationalism, although much younger, is full of life and growing with every day of American occupation of Arab land. Both forces undoubtedly would jubilate about American withdrawal and immediately return to their ancient ways and the law and order of the Koran. But such a world is indicative not only of much economic destitution but also of political and clerical authority. There is pitiful poverty in Muslim countries such as Afghanistan, Pakistan, Indonesia, Mali, Niger, Chad, and Sudan where per-capita income is less than $1,000 a year. Income in oil-producing countries is higher but the emoluments of emirs, sultans, and princes greatly reduce the income of the common people.

The poverty of the Muslim world stems especially from two economic prohibitions ordained by the Koran. They limit all believers to just two sources of income: payment for services rendered, that is, wages and salaries, and transfer income which flows from private charity and public welfare. They prohibit the two other sources of income that render human labor much more productive: interest on savings and investments, and entrepreneurial profit, which rewards investors and innovators. The Koran, Sura 3:13, is specific:"Believers do not live on usury, doubling your wealth many times over. Have fear of God, that you may prosper, guard yourselves against the Fire prepared for nonbelievers." Similarly, they prohibit any reward for risk-taking and speculation on the chances of quick or considerable profits.

Economic destitution and political authority undoubtedly explain the migration of Muslims, legal and illegal, amounting to many millions of young people, from Islamic regions to Western countries, such as France, Germany, Italy, the United Kingdom, and many others. In the United States their numbers are growing rapidly, probably exceeding five million now. They are attracted by high standards of living and economic freedoms which are the attributes of the Western order. They labor and prosper, earning profits and interest. But we cannot help wondering what they would do to our economic order if they were in a majority and at liberty to introduce and enforce the economic prohibitions and limitations of the Koran.Cf. Sowing the Wind, p. 265 ff.
Hans F.