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Gene Inger's
Daily Briefing. . . . for Tuesday, June 19, 2007:
Good evening;
The deepest
political changes . . . for the last several hundred
years might seem to be an exaggeration if one is domestically
oriented in considering that sharp remark. I noted during the
course of my opening MarketCast this morning that the
controversy is increasingly grasped on a bipartisan basis, and
it absolutely relates to our future as well as provides
further understanding on what's evolving from the Balkans to
Asia as well as throughout the Middle East / Persian Gulf
region, and probably Asia too. This fluid situation is not
unprecedented, in preamble years before major wartime
erupted.
What's behind this
'growing awareness' is the gaping hole between 'empowerment'
of course, as relates to not only the disenfranchised masses
in the world these days, for sure; but I'm thinking to a
surplus in 'hope' for instant gratification as they 'discover'
a lot of things that we in the West (or the advanced East)
take for granted. That doesn't always mean they are or were
exploited, but it does reference resentment of 'control', as
most monarchies that aren't legitimate republics, or certainly
all the Islamo-fascist dictatorships, or even the battle
between people that yearn for a future (George Bush isn't
wrong about most people preferring democracy and a better
life, but missed the reality that it only takes a small number
of fanatics to impose a cap on aspirations, for some time).
[The majority of this first-time discussion is reserved for
ingerletter.com]
Most dangerous are
these 'gangs' masquerading as political parties or even as
terror groups; which of course are such as Hamas and Hisballah.
Even Fatah isn't quite so moderate as the media (all too
quickly) labels them; but at least they are attempting a
maintenance of a Nation-State structure.
This may be the key:
the idea that (particularly in formerly colonial Middle East
and of course much of Africa) borders were mechanically or
artificially drawn; thus societies at this point don't have
that much history, and they often have groups living within
the confines of 'borders' that really are a different society.
(Examples reserved, as while our members are sophisticated and
not touchy about discussing reality, we tend not to delve into
the pragmatic realities of these issues aside our
ingerletter.com views).
Sure, Ike didn't;
but JFK got involved (should he have?). Even in post-war
debates on Vietnam, everybody dated it from JFK's
light-advisory infusion rather than from reality that he
inherited a failed-state syndrome from the Eisenhower
Administration. Sure it was years later than the involvement
escalated, but the problem was misunderstood at the start, so
we wonder if there are presently-applicable lessons to be
learned from the experience. [We explore particular countries,
and the financial implications a bit.]
Bottom-line:
we won't delve into publicly now; but may should serve
as a warning as I ponder the deterioration of Nation-States in
the civilized world (think EU; clearly it is not perfect, but
they're not slinging bombs at each other); the flawed effort
to subtly disenfranchise the American people by virtue of the
unnoticed (but remarkable) parts of NAFTA (including the
trafficking not of people but of actual truck traffic.. as I
noted before the story about the 'tollway' through Texas,
which omitted the story's meat that relates to Mexican trucks
driving for hundreds of miles before the first 'port-of-entry'
in the United States); all as part of what some believe is an
organized intention to erode our sovereignty, while not
acknowledging it ongoing, despite obvious holes in
border-control and enforcement, which we tend to think is not
simply based on naiveté, cost, or out-of-control alien
invasion, but 'intended consequences' of agreements that are
in the Congressional Record, but never discussed in this
Nation's media. Tripartite nation anyone?
In the case of the
region from the Balkans to Asia; and the Middle East; no
solution is contemplated. Attempts to resolve the situation by
20th Century means are failing and that is
increasingly evident. It has leaders (not just here either)
extremely nervous, as they worry about borders being redrawn
based on 'religious fanaticism', rather than a geographic,
sectarian, or even economic-based series of interests. This is
dynamite!
(Specific countries
and regions referenced.) This must become international in
scope, for if not, there is going to be an explosion, and
years (if not decades) of chaos. That will be a risk anyway,
including Africa; but it may actually not undermine our
markets in a long-term way; provided 'exogenous' events don't
prevail. That risk is increasing. The majority of economists,
globalists, and market analysts, don't see or ignore this. I
am normally a bull, and historically have called virtually
every major upside move for the past nearly-40 years. And I'm
still an optimist by nature; so it's not experience or age
that tempers my zeal for chasing this market, though we have
been bullish over the past several weeks again, correctly
expecting the higher prices in the Averages. Of course this
has nothing to do with being one of the 'lonely bulls' back in
2002, at a time when we (from then for several years going
forward) calling 'accidents biased to the upside only'.
Presently, upside accidents is not exactly an ingerletter.com
focus.
Fault:
the Administration mostly just for not grasping the depth
of change, and trying to address problems narrowly and without
comprehension of 21st Century dynamics. Also
'unintended consequences' of a noble effort: bringing
information access to most of the world. Previously the Arab
masses, the Asian masses, and the African masses (mostly still
so), were only aware of their community, and if they were
'worldly', what was going on in the next village; or possibly
their provincial capital. No longer.
Now it is common to
find hand-cranked battery-charging generators and some type of
link to the Internet, which exposes the youth to a world they
didn't know existed. That is the 'television' of the modern
age; but augmented. Now they can study and delve a good bit
into what's going on everywhere, or realize how remotely
detached they are from the (envied?) modern life. They resent
this, and in this way the 'global village' so many champion
becomes the 'global quagmire', because there is not enough
wealth, or jobs, or capacity to absorb populations, or even
sufficient resources such as land that's not arid, much less
energy; to support this kind of worldwide uprising of what I
will call 'aspirational resentment'. Most of the world is
younger than it once was, and it is restive. Stir in the West
innocently stoking envy, (we'll reserve the rest of
this for a thorough discussion with ingerletter.com members
and link from our new web site for visitors at geneinger.com
who with one-click can join us at ingerletter.com as of now;
also there normally aren't new current comments at
geneinger.com except rare event of the other site being down;
the reason these hosts intentionally are cross-Country). I do
not want to say this is preparation for wider war or events;
but is lite redundancy.
China essentially
did it right; and slowly from the government's perspective
(even that was not perfectly executed, too many were actually
executed; many flaws developed; but revolutions did get
clipped.. though that one would have been pro-democracy). It
was important because it mirrored (in my opinion) the same
condition of aspirations. (Comments on this or how China
deflected a potential catharsis, are reserved here.)
That is not
occurring in the Middle East or Persian Gulf. We actually
tried to help I'm thinking; but with inadequate force or
understanding; and without international aid for the level of
intensity needed. And there was not the history and culture of
a China. Of course Iraq (and Iran for that matter) have old
cultures; but now we're not dealing as in the past with
'oilmen or rug merchants', we're dealing with fanatics with
agendas.
It is possible that
others have addressed these subjects; I haven't had time to
explore this elsewhere (but will try). I do know that
Henry Kissinger has debated Zbigniew
Brzezinski
on the subject; with elements of both positions having
merit. But I'm trying to go beyond that, and contemplate what
it means for markets. It means (reserved).
I also suspect that
the 'Gilded Age' investment mentality obscures
this reality (core reserved for ingerletter.com), but doesn't
change the facts of societal decline as bits and pieces of
this filter through the political discussion, but absent a
cohesive broad understanding of what's at stake. Could what's
at stake even be WesternCivilization.
MarketCast
(intraday + evening Daily Briefing) remarks
in audio-video . . observed risks of these factors as
trending toward a head, while basic ways to address our own
forecast in the past few sessions was just this: 'enjoy
it while it lasts'. Tonight's very special
'geopolitical' discussion..on nothing less than the future of
our world.. will now migrate to an assessment of the intraday
volatility, then chart analysis in audio-video.
Three things
happened to roil markets, which nevertheless failed to derail
a forecast intraweek rally commencement from the morning low.
These items in my view were:
1)
former (young members will
remember) Fed Chairman Paul Volker expressed fear that
markets are extended; that inflation's rising; or that most
Americans aren't saving adequately; which while these are
'givens' we believe, may again conjure-up whether this is part
of a new regulatory theme of sorts, to dampen excess
speculation (and/or knowledge of efforts to impede 'private
equity' and LBO deals, via taxation moves, or anything
similar), as it follows the lines of former Chairman
Greenspan, and of course the present Chairman, Mr. Bernanke,
who has expressed similar ongoing concerns;
2)
Now, just day after managers of a
troubled Bear Stearns internal hedge fund presented lenders
with a last-ditch plan to reinvigorate the fund with
additional financing, creditor Merrill Lynch pushed forward
with plans to sell hundreds of millions of dollars in
collateral assets out of the fund, according to traders. I
suspect this too relates to an argument we've made that the
game increasingly was being threatened by evaporation of 'free
money' (or nearly so) leverage in setting-up those deals, and
that as carrying costs increased, the economics for the deals,
decreased. We don't know if this contributes to a 'credit
crunch' that we've speculated about for several weeks, but it
could point in that direction;
3)
Implications of bond executives
familiar with the Bear fund collapse afraid that if it
liquidates the balance of holdings we are experiencing
subliminal growing risk about billions of dollars worth of
losses across hedge funds or dealers, at some point (doesn't
automatically correlate action; I'll say more to members).
Daily action .
. . indeed expected markets to turn back-up, in an
attempt to revive at least temporarily flagging momentum,
which was expected aside the Oil price rise as well as
aside the increased 'threat matrix' related to ABC's
terrorist-plan reports (last) evening, which highlights the
potentially heightened awareness of consequences that arise
from permitting the 'sanctuary' in Pakistan for basically the
world's worst people
In recent days and
weeks we mentioned Pakistan again, because of the harboring of
al Qaeda and Taliban, and what it could mean. If
Islamabad thinks they're somehow safer by looking the other
way; I think not. On top of it we have threats of
Hamastan, which used to be known as Gaza, which must
not be known as that for long; but may be easier to tackle (of
course that doesn't mean easy) than Hizballah was in Lebanon
last year as Israel learned the hard way. Gaza can be
surrounded, and isn't bordering with Iran's clients in Syria.
And Israel is the only totally cohesive nation in the region.
New members are
encouraged to review our text commentary in the archives
below, for the previous few days, to scan our assessment of
Iran, Iraq; Turkey, Lebanon and other hotspots as well as
potential strange liaisons as well as incredible forward
risks.
Speaking of media;
we were honored to have 'speculated' a week or more ago, that
a most logical competitor bidding for Dow Jones / Wall
Street Journal, would be none other than General
Electric, for all the reasons we outlined. It is firming
considerably.
Investing . .
. returns to optimism; for the long-term, barring
awful exogenous times that are a risk. For today's
teens, and college grads emerging this Summer into their first
careers, these promise to be interesting times. By the time
they commence buys for retirement, their average entires may
start to look pretty good. Better than today.
Now the
latest Daily Briefing audio-video
MarketCast final 'chart'
comments:
Bits & Bytes
. . . provide investors ideas in a few stocks, often
special-situations, but also covers an assortment of
technology issues (needed for assessment of general factors in
tech overall, or as compelling developments call for) that are
key movers in the NDX, SOX or S&P, plus ideas ingerletter.com
thinks might merit further reflection.
Rarely we will
comment about stocks in text. Typically remarks are via
audio-video.
Last night's stock
remarks are reiterated in case you missed them; partially as
relate to the Apple iPhone and AT&T's
plans, as we postulate them. We won't comment at this point as
to whether the suppliers of 'cheap' computers worldwide are
clueless or not with respect to the positive and negative
implications of 'empowering' the youth of the world, or at
least making them aware. It's more intrusive (reserved for
members).
To last night's discussion:
(Apple, AT&T, Level
3, PURE Bioscience, Intel and Motorola noted)
Bottom-line:
envision this as the first truly-portable multifunction
device, combining a camera (albeit without flash, a mistake),
iPod (albeit with limited storage initially), and a the
Internet (yes, that makes it a mini-computer); plus (oh yes) a
cell iPhone. At this point we don't even know if it has
compatible voice-command and phonebook upload capabilities
(through its 'Bluetooth 2.0', which it has); though it must or
becomes very much a deal-killer for the majority of folks who
insist on using such features as they're driving/commuting,
and preferably as displayed on their nav-screens (if available
on a vehicle), with respect to phonebook/address book
scrolling capabilities. We hear from the rumor-mill
(reserved).
Of
course much of that's for 'future' versions; but the phonebook
link aspect must be on first iterations, or there's a problem.
If it is, sales may not only affect cellular competitors
(raise the price and minimize the subsidies cellular carriers
for years have offered), which everyone realizes; but also
diminish need for many business or casual-user consumers to
carry laptops. We see the key (other than a 'bluetooth' link)
being 'sideline' or the embrace of downloading from a PC, not
over-air; for many prosumers going to be adequate, along with
quick-checks of stocks or email via the device. That's where
an insufficient focus on internet ability, and how it might
cannibalize (this part we'll reserve for ingerletter.com).
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Members please note:
we have no association with any publicly traded firm
(never have had; never will), other than as shareholders,
while trading from time to time as deemed necessary for
personal reasons; especially once initial targets are reached.
We may be right or wrong on a stock, but are not financial PR
or IR; have never, and will never be compensated by a company
or their representatives, directly or indirectly, for stock
coverage. Our opinions may be valid or invalid, but reflect
our own view.
Comments are interpretative
speculative postulations provided 'as is with
all faults' and all risks with no assurance about
future performance of anything (markets or stocks) in any way
whatsoever. Personal necessity, irrespective of opinions, may
require buys or sells deemed necessary, without prior notice.
In summary . .
events continue reminding us of risks Allied fighting forces
face, given continued attacks on free peoples, by elements
including organized terrorist forces in various countries. A
world addressing terror threats continues, as domestic
issues absorb us less as we focus on the Middle East crisis
and World War III avoidance. (In this case World War
III or IV if you count the Cold War as III, could be
Islamic terrorist interference targeting 'global
village' communications or necessity supply-chains.)
Though few generally
concurred for three years, our consistent view has been
slow but persistent American growth isn't negative,
allowing the protracted gradual growth without ancillary
significantly high interest rate pressures. There's no
truly-restrictive monetary policy; nor is there likely to
be one, irrespective of oil-induced inflationary
pressures. This is a continuing saga. Often we get a
speculative phase later in a bull market, but
increasingly towards the end of an overall rising phase. In
our view, there has not been that degree of speculation, but
that is a potential feature developing let us suggest
somewhere in the years ahead, maybe later
(reserved), barring disaster.
McClellan
Oscillator finds NYSE 'Mac' shuffling with intervening
bull-bear fights that more recently are at +24 for the NYSE
and +17 on NASDAQ. If LBO's (the leveraged buyouts)
begin to implode.. well (we'll reserve reiterating our view on
this). We'll keep an eye out as shifting Volatility
evolves. Suspect volatility to transition (reserved).
Issues continue
including oil, terror; China,
Pakistan (possibly the key to survival
for a number of aspects of the 'war on Terror'); certainly
all the Middle East, Korea, and
economics. As assessed for a couple weeks, watch the
Dollar and Oil in all of this.
We are a
resilient people and resilient market; that's why it
hasn't fallen totally apart, yet. However it's
increasingly borderline; though we did think rallies as we
moved into Triple Witching. Thereafter some
fluctuations with risks likely to increasingly grow. If we get
a decent intraweek rally (even to new highs) it's fragility
may become evident I suspect when Oil prices resume
forecast recent firming that's essentially (as noted).
Enjoy the
evening,
Gene
Gene Inger,
Publisher |
