Sunday, January 27, 2008


Time is running out in several situations. Time to invest before the market moves swiftly. Time to vote. Time to win the war.

When Bush 41 won the Gulf War quickly, his popularity soared. He seemed politically unbeatable. Unfortunately for him, the American people are short term thinkers. They want to know, "what have you done for me lately?" Bill Clinton, a master at reading political polls, took on the popular incumbent and won.

Bush 42 has practiced the Clinton game of "political timing" and he has played "an interesting game of RISK". In the game of RISK, one masses ones armies at "strategic land bridges". Bush jumped into the middle of the land bridge of Iraq. In doing so, he separated the Syrians and the Iranians. He also jumped in the middle of the land bridge of Afghanistan. Did you know that Afghanistan shares a border with Iran and another with China? More importantly, Afghanistan is on the other side of Iran from Iraq. Bush surrounded the most powerful of the enemy without going into battle against them. He recruited Pakistan to squeeze the Taliban from the other side. The bottom line is that he has carefully timed the "winning of his war". With this war dragging on, surviving democratic candidates have moved further and further to the left. The risk for democrats is that they are about to select an "anti war" candidate just about the time that victory is declared, and Americans love a recent victory!

In recent weeks, the Bush administration has increased the pressure on Pakistan and the Musharraf administration to go after the terrorist who live in the mountains just beyond the Afghanistan border. The US has built up its troop strength in Afghanistan and could divert troops from Iraq to Afghanistan or Pakistan to clean out one of the last big rats nest of terrorist. So far, Musharraf has not agreed to allow US troops to go into the mountains of Pakistan but it may not remain his decision to make. The political situation in Pakistan is volatile, to say the least.

Over in Iraq, the Iraqi military is taking the lead in going after one of the last of the big rats nest of terrorist in Iraq. The US will support the action in the Nineveh providence. In the mean time, Iraq is ramping up its oil production and will soon let bids to develop one of its large rich fields and the Sunni contingent in Parliament only have one more week to decide to rejoin the government before a new Iraqi government is formed. Bathist have been allowed to retake lower level government positions and 9,000 of the Sunni militiamen are being trained to join the regular army. About 80,000 Sunnis are being paid $300 per month to assist in routing al Qaeda. The whole point is that the war in Iraq is not over but the remaining task are along the lines of mopping up. With the insurgents using women and children to deliver suicide bombs, a bomb here or there will be hard to stop. However, the "minds of the people" have turned against these atrocities and the perpetrators will be stopped.

If you do not believe attitudes are changing in the Middle East, I offer one more fact for your consumption. The first female soccer game was just played in Saudi Arabia! As always, the down trodden stand to gain the most from change. Conditions are not perfect in the US or in Iraq but men and women in these countries have the legal right to vote and to serve.

For the majority of Islamist, there is no perceived need for a physical jihad. The great many believe that the "greater jihad" is an inner struggle for faith. Military confrontation still seems necessary in regard to the terrorist strong hold in the mountains of Afghanistan and Pakistan. Should these areas be "cleaned out", the majority of the people of the world would breath a big sigh of relief. What do you think? Is is likely that another major attempt will be made to capture or kill Osama bin Laden between super Tuesday on February 5 and the first Tuesday in November?


Time is running out before the big stock market bounce. Many stocks in many different sectors will bounce and climb, bounce and climb. The Business Week front cover indicator has called the turn in drug stocks. The massive influx of people around the world into cities suggest that Dover Elevator Corporation will enjoy the next several years. The chair of US Airways says that the coming round of airline mergers will involve all six of the major carriers. Total home sales in 2007 were the 5th highest on record and suddenly long term mortgage rates are at historical lows. The refi index is out the roof again, which suggest that Lowe's and Home Depot should see a steady stream of home improvement projects.

The home sales situation is most interesting. We currently have a record number of people at prime home buying ages. Under our tax laws, the government pays a significant portion of the cost to buy a home. In the same way that a 1% drop in the 30 year bond rate increases the value of a bond by about 10%, the recent drop in long term mortgage rates has decreased the cost to by a home by about 10%. In a short amount of time, the lower cost will be translated into 10% higher prices.

It has been easy to slam the silly stimulus package that is about to be passed by the government but the key to it is the timing. It will not matter that the stimulus had little to to with the economic turn if the congress gets a lot of press just before the economy hits third gear. Time is running out, the Senate needs to act quickly for the stimulus package to be in line to get some of the credit for the coming turn.


The average pay for data entry in the USA is $35,400 per year. In India, the average pay is $1,900. However, the average annual raise in America is running at less than 4% and the average annual raise in India is running at 14%. Under these circumstances, in an age of lightening communications, it only makes common sense for IBM to perform a lot of data entry in India. It also makes sense for India to use IBM to perform all sorts of "computer work". The "gloom and doom crowd" only see the "outsourcing of jobs to India". Because the "gloom and doom crowd" has a negative mind set, they cannot seem to see that America and American corporations are in a "win-win" trade with India. American corporations keep having one positive earnings surprise after the other and they keep hiring Americans at high wages. It takes a lot of people working at $1,900 per hour to provide the "profits" for India to afford to pay for data services from IBM. IBM will be one of the "big cap stocks" that should see substantial appreciation over the next several years. The turn is here, the huge surplus of dollar reserves held by country after country are being recycled. That is the kind of recycling I can get behind!


New claims for unemployment insurance has typically climbed sharply before recessions are announced. New claims have been as high as 800,000 in the weeks leading into recessions. New claims were 390,000 in March of 2001. Last week, new claims fell to 300,000. All the while, indicator after indicator keeps flashing buy signals.

Inflation in Germany just turned down sharply. The two year note just hit a momentum low that I have never seen before. The t-bill rate to the fed funds rate still shows that there is room for the FOMC to act. The t-bill rate to the S&P dividend rate is close to par! Why buy a cd if a big blue chip stock will pay you more, if Uncle Sam will give you a tax break and if the value of the shares are bound to go up over time?

Insiders are buying and buying and buying stocks!

The dollar is turning!

IBES valuations are at record levels! Stocks are as cheap as they have ever been!


Since the Bush tax cuts automatically expire in 2010, the risk of a major tax increase has hung over the markets like the sword of Damocles since the democrats won control of congress. The current democratic race riot could be the gift the republicans do not deserve. Republicans, with control of the congress and the presidency, spent money like democrats. The American people have the right to be upset and the outlook for republicans has not looked good. However, the Clintons may have over played their hands. Their practice of divide and conquer has not gone over well when a favorite son has been under attack. Hillary has been forced to move even further to the left to hold on to the 'loyal base". It was no surprise for Obama to win in South Carolina where half the democratic voters are black. The surprise was the massive turnout and the percentage of whites who voted in protest of the Clinton games. This does not mean that Obama has a cake walk to the nomination. Indeed, I believe Hillary is still odds on to win. However, the risk has grown that Hillary will have to accept Obama as the VP candidate and the risk is that she will run so far to the left that she will have a hard road back to the centrist middle later.

Rush Limbaugh and other "conservatives" continue to attack McCain and Huckabee. Rush says he may not vote republican if either are the nominee. I took another online political test today to discover once again that I am an economic conservative foremost and thus, according to the survey the candidate I should support is Rudy. On the other hand, Huck is the most socially conservative candidate and most of my answers align well with his. If I change my answer in regard to education, my answers are even closer to Hucks.

My Dad was a big believer in public schools. He like to tease that other children needed to go to school with the Millers, because kids learn more from other kids than they do from the teachers. Dad also believed in "taking dormitory". He was ready to push his little birds out of the nest. However, my children and I attended public schools and know that improvement is needed. Since I believe in markets, vouchers seem to be the most efficient way to "force" schools to improve. Huckabee supports public schools. He is a big fan of arts and music as being part of the creative process that needs to be taught to all children. He and Dad would have been good friends.

The race in Florida is neck to neck between McCain and Romney. However, in national polls, McCain is far ahead of Romney. A Romney win in Florida means the race is still wide open. A McCain win could just about seal the nomination for McCain. A Romney win could encourage Rudy to stay in to win delegates in his strong holds such as New York and New Jersey and for Huck to win southern states.

Since McCain polls well against democrats, winning the support of independents in particular, a settled republican race and a protracted battle by the democrats could give the stock markets a heck of a boost. The market will be quick to discount a republican win if it is to happen.

BUY, BUY, BUY -- Any number of events could be the catalyst that starts this fire to burning!