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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (10102)	12/7/2002 4:44:05 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

12/06/02: Market Monitor -Frank Cochrane, President of Investment Timing Consultants PAUL KANGAS: My guest Market Monitor this week is Frank Cochrane, President of Investment Timing Consultants, an investment advisory firm based in Farmington Hills, Michigan. And welcome back to NIGHTLY BUSINESS REPORT, Frank. FRANK COCHRANE, PRESIDENT, INVESTMENT TIMING CONSULTANTS: It's great to be here, Paul. Thank you very much. KANGAS: On your last visit with us, May 10 of this year, with the Dow around the 10,000 level, you shocked many of our viewers by predicting it would fall as low as 5,500 during the following six months. And it got almost halfway down that level, 7,100, in early October. Has the eight week rally we witnessed recently softened your bearish stance? COCHRANE: Short-term, Paul, I'm bullish. I think we could have a rally going into mid-January. However, longer term, I think what this eight week rally has done is basically delayed the inevitable. I think next year, the next six, 12 months or so, the market will work lower. We'll go below the levels that we were in early October. KANGAS: Why so bearish still? COCHRANE: Valuation I think is the key. The Fed has basically done everything they can do. They can lower rates a bit more, but the market is still very expensive. We had a huge bubble and build up in this market in the mid to late '90s. I think a correcting process has to occur, will occur. This may take several more years. We may do a lot of churning activity. But the volatility is going to be there. We're going to see some huge up moves and some huge down moves. But I think a person has to be very proactive, very nimble and very dedicated to managing their portfolio in a manner that they just keep on watching everything every single day. The days of buy and hold, I think, are gone for a long, long time. KANGAS: So you see us in a secular or long-term bear market, but it could be punctuated by some cyclical or very handsome bull markets in the short-term? COCHRANE: Absolutely. We've seen some great gains here. For example, Intel (INTC) from $12 to $20. KANGAS: Right. COCHRANE: IBM (IBM) from the low $50s up to almost $90. KANGAS: And do you think this rally that we've seen recently still has legs? COCHRANE: Yes, do I. I think that the market will rally, as we saw today, based upon the news of the day. KANGAS: Yes, it did well. COCHRANE: And should some year end 401K money, that type of thing, going into the market, and a Santa Claus rally, that effect, I think, should last until mid-January. But then I would be real, real cautious. KANGAS: OK. Now, the last time you were with us in May, you said hold onto some previous recommendations you made, which were way up, Northrop (NOC), United Technologies (UTX). And they still are doing well. Johnson & Johnson (JNJ) hasn't done anything. Are you still with any of those? COCHRANE: I would hold onto them here certainly, especially given the geopolitical situation. KANGAS: You liked the golds, Newmont Mining (NEM), Barrick <Company: Barrick Gold Corporation; Ticker: ABX; URL: barrick.com; and Gold Fields (GFI), and they all had big run-ups after you were here in May. But now they're back even a little below where they were. You still like them? COCHRANE: I think gold stocks will do extremely well next year. Most commodities will do well next year. So I would -- KANGAS: And you recommended actually shorting the Qs, which turned out to be profitable, and IBM when it was $82, it went down to $55, profitable. Dell Computer (DELL), though, has hung in there pretty good. What about those three? COCHRANE: It's done real well and I think that stock will basically hold its own, although I wouldn't buy it here. KANGAS: OK. COCHRANE: Again, what I would do with those types of stocks is trade them. Look at the high range, look at the low range and trade on that basis. KANGAS: OK. Any new recommendations here? What kind of strategy? COCHRANE: I would continue, I would look at oil stocks, stocks in the XOI. I would look at shorting IBM in the high $80s. KANGAS: Still again? OK. COCHRANE: Buy back the low $50s, low $60s. Intel -- the ETFs, I would look at shorting those and buying those. This is a market to be traded. KANGAS: OK. COCHRANE: Those people that do that will be rewarded. KANGAS: Do you or any of your personal interests have positions in these recommendations you're making? COCHRANE: Not at all. KANGAS: None of them? COCHRANE: No. KANGAS: OK. So in other words, you're still, you're still looking for a 5,500 Dow eventually? COCHRANE: I think eventually. It may take a year -- KANGAS: What about NASDAQ? 800? That's what you said last time. COCHRANE: Yes. I think NASDAQ 800 and I think somewhere in the 500 to 600 range on the S&P. KANGAS: OK. COCHRANE: Eventually. Again, and trade this market. Be very, very nimble. KANGAS: Be nimble. Jack be nimble, Jack be quick. COCHRANE: Exactly, Paul. KANGAS: All right, Frank, thanks very much. Thank you. KANGAS: My guest Market Monitor, Frank Cochrane, President of Investment Timing Consultants. nightlybusinessreport.org

To: Jim Willie CB who wrote (10102)	12/7/2002 7:03:46 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Ignore the Whining about Deflation... economics.sbs.ohio-state.edu An economic policy guru's homepage...fyi... economics.sbs.ohio-state.edu

To: Jim Willie CB who wrote (10102)	12/7/2002 8:01:02 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Source: Friedman likely to be next top economic adviser cnn.com <<...Stephen Friedman, a former Goldman Sachs chairman, is likely to replace Lawrence Lindsey as President Bush's chief economic adviser, a senior administration official confirmed Saturday...>>

To: Jim Willie CB who wrote (10102)	12/7/2002 10:57:29 PM
From: Softechie	Respond to of 89467

O'Neill's Candor, Tin Ear Often Ruffled Feathers PAUL O'NEILL IS LEAVING BEHIND a trail of ruffled feathers that often undercut his credibility as the Bush administration's chief steward on economic policy. The former Alcoa chief largely abandoned the carefully scripted style of his predecessors when discussing the economy and financial markets. But his candor often came off as a tin ear for political necessities. He once was even given a stern lecture on courtesy by West Virginia Democratic Sen. Robert Byrd. Following are some examples of Mr. O'Neill's most memorable statements -- on everything from the dollar to Latin America's economy -- and the occasional clarifications from the Treasury Department. (O'Neill's Unconventional Ways Lead to Rocky Start, 03/19/01) The Quote: "These are important friends and allies of the United States. Critically, they need to put in place policies that would ensure that as assistance money comes, it does some good and it doesn't just go out of the country to Swiss bank accounts." -- July 28, 2002 The Context: On whether to provide financial assistance to Latin American nations. The Reaction: Brazil's currency declined 13%, but nearly recovered within a few days. The Treasury Department issued a statement explaining that Mr. O'Neill wasn't saying foreign-government officials might steal aid. -------------------------------------------------------------------------------- The Quote: "I think the people who have abused our trust, we ought to hang them from the very highest branches." -- June 14, 2002 The Context: On the escalating crisis of big-business misconduct and accounting malfeasance. The Reaction: The Treasury Department clarified that Mr. O'Neill wasn't calling for lynch mobs, but accountability for chief executives. -------------------------------------------------------------------------------- The Quote: "The image I have in mind of Washington is the stupid goat who, rather than stand back and think about the problem, keeps running into the wall." -- May 2002 The Context: On his contempt for Washington politics. -------------------------------------------------------------------------------- The Quote: "We're working to find a way to create a sustainable Argentina, not just one that continues to consume the money of the plumbers and carpenters in the United States who make $50,000 a year and wonder what in the world we're doing with their money." -- August 2001 The Context: On CNN, a week before he endorsed an $8 billion International Monetary Fund package of new loans for Argentina. -------------------------------------------------------------------------------- The Quote: "If you set aside Three Mile Island and Chernobyl, the safety record of nuclear is really very good." -- May 21, 2001 The Context: A speech to a business group. -------------------------------------------------------------------------------- The Quote: "Able-bodied adults should save enough on a regular basis so that they can provide for their own retirement and, for that matter, for their health and medical needs." -- May 2001 The Context: In an interview with London's Financial Times. Updated December 6, 2002 1:29 p.m. EST

To: Jim Willie CB who wrote (10102)	12/8/2002 10:26:34 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 89467

JW: Do you think maybe the rise in the unemployment rate is because they are beginning to unwind the large increase in ag. employment you mentioned a few months ago? Could it be related to the end of the elections? No, for Shrub is an honorable man. Rat

To: Jim Willie CB who wrote (10102)	12/8/2002 10:27:24 AM
From: stockman_scott	Respond to of 89467

Where's the deflation? Here is an extract from commentary that was posted at www.speculative-investor.com on 5th December 2002. If we define deflation correctly, that is, if we define it as a decrease in the total supply of money and credit, then there clearly isn't any deflation. The total US money supply has been growing at a rapid rate for several years and has risen by around 7% over the past 12 months. There is, though, a legitimate concern that the massive debt burdens being carried by US consumers and corporations, plus the huge over-capacity in some sectors of the economy (the telecommunications industry being a prime example), plus the wobbling economic recovery, will lead to more defaults and bankruptcies. Contrary to popular opinion a debt default doesn't result in a decrease in the supply of money (when someone defaults on a debt the lender's net worth takes a hit, but the money that was originally loaned still exists somewhere in the economy). However, if defaults are widespread and sizeable then the ability and the desire of lenders to make additional loans will diminish. As such, widespread debt defaults will likely, at some point in the future, lead to less lending/borrowing and therefore slower money supply growth (or perhaps even money supply contraction, that is, genuine deflation). But, it is blatantly obvious that we haven't yet reached that point because the total supply of US dollars grew at an annualised rate of around 15% over the most recent 2-month period. Furthermore, with the Fed having recently proclaimed its willingness to monetise anything and everything in order to devalue the dollar by increasing its supply should prices start to fall, the possibility of the US experiencing deflation at any time over the next 12 months is remote. Actually, there isn't much chance that the US will experience deflation between now and when inflation is perceived to be an enormous problem (once the financial markets start to discount a high US$ inflation rate the Fed will no longer be free to inflate to its heart's content). Even if we define deflation incorrectly, that is, even if we accept the government-sponsored definition that deflation is a reduction in the price of some arbitrarily-selected hedonically-adjusted basket of goods and services, there still isn't any deflation. The CPI has risen at an annualised rate of 2.7% since the beginning of this year and is likely to finish the year with a gain of around 3%. Of course, if we remove some of the more troublesome items (the ones that have gone up in price the most) from our basket of goods and services, as is the common ploy, we would end up with a lower positive number (in the same way that the S&P500 Index would be lower if we decided to omit some of the best-performing stocks from its calculation). But where's the logic in that? Prices have risen this year, but what about next year? Well, according to the Future Inflation Gauge calculated by the Economic Cycle Research Institute (http://www.speculative-investor.com/FIG_fed.htm) next year's increase in the CPI is going to be greater than this year's. So, where's the deflation? The Fed, by the way, has recently signaled its intention to fight a fall in prices, not its intention to fight deflation. An effect of deflation is lower prices, but prices can fall for reasons other than deflation. For example, becoming more productive or importing more cheap products from China would put downward pressure on prices, but these price suppressants have nothing to do with deflation. However, regardless of what causes prices to fall (assuming they fall at all, which we seriously doubt), the Fed has threatened to offset any fall in the general price level by depreciating the US$. This is not an empty threat since the Fed has the power to make the US$ so worthless that it ceases to circulate as currency. Clearly, the Fed will want to stop the devaluation well before the US$ becomes completely worthless. With the Fed having recently come out so strongly against deflation and reminded us of its enormous power in the field of currency depreciation, when the effects of inflation become more obvious (as they no doubt will over the coming 12 months) will the Fed be congratulated for having saved us from the deflation bogey? Will Alan Greenspan receive a medal of honor, to go with his knighthood, as a tribute to his courageous efforts in what will almost certainly appear to be a very successful war against deflation? If so, it really would be a public relations coup on his part because the leader of a major central bank has never before been commended for destroying the purchasing power of the national currency. Finally, the Fed's threat to devalue the dollar might not be an empty one, but its threat to peg long-term interest rates at artificially-low levels is (in recent speeches both Fed Governor Bernanke and Fed Chairman Greenspan have mentioned the possibility of the Fed buying whatever amount of long-term debt it needed to buy to keep long-term interest rates at some pre-determined low level). If the US$ was being devalued and the Fed had committed to keep the yields on 10-year bonds from rising above, say, 2%, who else besides the Fed would be a buyer of bonds? Anyone who bought bonds under such circumstances would be accepting a guaranteed loss, in real terms. If the Fed decided to peg long-term interest rates well below levels that would otherwise be set by the market then there would be a mass exodus from the US credit markets and a collapse in the US dollar's exchange rate. Unless, of course, all the other major central banks were implementing a similar strategy in which case there would be panic buying of gold and other hard assets. Regular financial market forecasts and analyses are provided at our web site: speculative-investor.com One-month free trial available.