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Tuesday, November 23, 2010


Turkey Day Comin'

Thanksgiving Day represents a recess - for the lame duck Congress, from work (unless you are in retail), hopefully from stress. Yes, some people actually look forward to Black Friday shopping - not for me though. I prefer the last minute December rush. As for Congress, they have a lot on their minds, income tax rates, an estate tax solution, the new START Treaty (a cause for "debate" on the news shows Sunday morning) and now a renewed crisis in Korea. Yes, the world's a mess, but why is anyone surprised, this administration is just as incompetent in terms of foreign policy as domestic.

It all really came together when the realization hit home that civilian trials of terrorists won't work, and neither does it make sense for the TSA to be patting down dowdy grandmothers. Nevertheless, Obama has to show his base that he is going to stand up to the GOP majority in the House, so look for more stonewalling on all of these issues.

In Dallas last Saturday, at our insurance brokerage convention, George W. Bush was our guest speaker and his appearance was easily the best of the week (beating a tough field that included Tom Peters and Dan Sullivan). Funny how well the same mannerisms that made him look ignorant on television made him endearing in person. (Commenting on the warm reception his book has received, Bush remarked that most people didn't think he could read, let alone write). His self deprecating humor was really fun, but he stuck to his guns on the key positions of his Presidency, Iraq, low taxes, taking the war to the terrorists. Compared to our current President, he looked and sounded competent. He remarked that he feels pretty good these days when people wave, and show him all five fingers.

I think the Bush Presidency was doomed from the start with the media because of Florida, and no matter how many recounts showed him as the winner, the left would not believe any of them until one showed Gore the winner (which never happened). What a shame. I would never try to make the case that George was one of the top tier Presidents since he never stood up to Congress on spending, but he was very good on the war on terror. As for the Iraq decision, subtraction of Hussein was a good thing.


Another Jets thriller Sunday, this one I would have to put in the Ripley's Believe It or Not category. Actually have tickets for Thursday night so my daughter and I will go to the Meadowlands and sit in the rain to see the Jets tackle the Bengals, coming off their hideous loss to Buffalo.

Most disturbing thing for Jets fans is the continued inability of the offensive line to dominate. In fact, against Houston, they neither run blocked nor pass protected very well. That was especially true after a Houston cheap shot took out one of the starters.

Meanwhile, the Giants lost their second in a row, this one excusable since it came on the road against Philly, but still not a real good game. If I were a Giants fan I would be concerned but not panicky. I can see them going on another tear soon.

The other concern for NY fans is that neither team is playing especially well in their new home.

The Mets ended the Los Metso's era, naming Terry Collins as manager, and hopefully that will bring on a new era of discipline and consistency. We'll see. I thought it was interesting that new GM Sandy Alderson indicated he will be undertaking a review of the team's medical and conditioning staff. Those are the only guys whose record the last few years has been lousier than the players.


The Fed's QE2 plan has received sufficient criticism here and from other sources and countries. The capper has been the market's reaction which has been to sell long term Treasuries, driving interest rates UP! This is, of course the opposite of what the Fed had been trying to achieve. Yet, in what will be a great irony, I would predict that higher interest rates are what banks need to have the incentive to loosen the credit spigots. Think about it. Why would you loan money in a shaky business environment at some pitifully low interest rate. Higher rates offer banks a chance for a return. So the Fed might actually achieve credit creation through QE2by causing the opposite effect from what it intended. In other words, screwing up in reverse.


One wonders if anything will save the municipal bond market. Default risks are truly frightening in that sector, especially with the stimulus money that mostly went to the states drying up. Maybe instead of buying Treasuries, the Fed should be buying muni's.


Last week on Monday, I bought 50 shares of Honeywell (HON) at 47.65, a zero buy. On the 16th, we bought 100 more shares of Goldman Sachs preferred (GS.PR.D) at 22.45. On Wednesday, we bought 400 shares of Newpark Resources (NR) at 5.51, a value buy. Yesterday, we sold 100 shares of Ladish (LDSH) at 46.30, now that it is subject of a takeover offer, half cash and half stock in a company I don't want to own. These shares were originally bought following a recommendation from my full service Stifel Broker on 8/19/08 at 26.00). Another good reco!

GREAT idea about the Feds buying Muni's (and that just may happen!). The Feds have done zero about improving transparency and improving regulations in financial markets. Like "Obamacare" we have heard precious little about Dodd/Frank. The same old situation that added gasoline to the financial fires seems to be continuing.
Take a gander at this article from the NY Times http://dealbook.nytimes.com/2010/11/26/the-little-irelands-of-structured-finance/
Just where are the counterparties?? I hope not Freedonia
As always,
Hail Freedonia
Rufus T. Firefly
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