Monday, April 16, 2012

Unusual day

Most of the conservative stocks are up slightly and the nasdaq stocks are all down. This is just the ambivlance in a stock market that is oversold by any measure but the one of always discounting the possibility of panic.

Saturday, April 14, 2012

Friday buskers, Saturday drug planning

Yesterday we went into Manhattan to see older daughter in the hospital. Long story but she has had a little setback in a chronic condition. What lightened up the day in a major way were the many buskers in our commute to and through the city.

In the main area of Penn Station there was a fairly unusual busker for NYC, a real hard core country and western singer, tall skinny guy in the required jeans and cowboy hat. He was cool and good, hated to need to just keep walking but we exchanged smiles. Then on the Penn Station subway platform uptown there was a steel drum player that was a cut above the usual, and a young guy as well. We waited through an unusual lapse in trains so had a serenade that was uninterrupted for four or five minutes. It was a welcome wait, and gave the chance to throw a few dollars into his case.

Changing underground to the cross town shuttle at west 42nd street, there was Delta Dave Johnson sitting in his wheelchair and playing an electric guitar and burning with the harmonica. Once again I needed to keep walking, but sure was smiling. At east 42nd station next at the end of the shuttle we came upon a really different act. One man playing a saw, yes a regular wood cutting saw, and whistling. He was an old man sitting in a chair. He had no amplification but the whistle was strong and the saw with his bow was searing. I watched in awe for a few minutes, this was history and I needed to slow down.

Walking through the tunnel to the uptown Lex line we reached the east side underground and there were two electric guitar players my age or older, long raggedy hair and tats, playing some really mean metal. They were good. This music buffet was one of the best in quite awhile and I pride myself on knowing the busker music that's in the city. This was a quality day.

Here's the second story of this post. Without going into detail, the doctors are suggesting that wonderful older daughter go on a rather new medication. The one that she has been using is gross and cheap but is losing its efficacy and is not curing her. I checked with my local pharmacist and the cost of this new medication is $3000 for ten pills and she would need to take one a day for at least a year. Yeah, try to digest that, BUT...

Thank goodness I worked for a good solid company that I enjoyed for many years but can't say that for the final three years. They were sort of tough, but getting through them allowed for full retirement benefits even though I was only 53. About this drug, after talking to the pharmacist I called our pharmacy provider under our retiree insurance plan and found out that it was covered and they would charge $250 for a 90 day supply, and continue as long as prescribed.

I'm not so sure about the possible side effects and benefits of this drug, but at least cost is not issue. Adult older daughter is so smart that she will ultimately make her own decision, but she is really thrift minded for all of us and it's reassuring to know that cost is not an issue.

"I'm your puppet"

One could guess that James and Bobby Purify would never have imagined their famous song being applied to global political events in 2012, but it just came to mind. The media by default refers to Bashar al-Assad and Kim Jong-Un as leaders of their countries. Their titular claim to power is real but their actual power is seriously questionable.

The big news for Bashar last week was that the French government cut off his Euro-bred spoiled wife's credit lines and access to products at her favorite stores. No more Prada sunglasses, Chanel bags, and Hermes scarves coming into Damascus anytime soon. It's bad enough for Bashar to be bossed around by all those generals and getting the blame for everything they do, but now his home life must be hell.

The pampered young inexperienced descended diety Kim Jong-Un now already has egg on his face, with the rocket fiasco of a few days ago. It is almost ludicrous to think that he is in charge of the country but now he is an international joke before getting a chance to do anything. Those darn generals. The legacy of his grandfather Kim Jong-Sung was so strong that it gave his alcoholic, drug addicted, philandering father, Kim Jong-Il, cover and actually it seems gave him power. The generals were seriously loyal to the grandfather in every way, and to his son.

It is questionable whether that loyalty still lives on. It is a myth that the regime wants the starving people to swallow, taking the place of food. The diety legacy and the loyalty factor could hardly be of much consequence now in the minds of the military leaders and top government functionaries that are now in the middle of a changing of the guard from people in their late 70's and 80's and being handed to a new group in their 60's. They are running the country. Overweight chubby cheeks is just a poster boy, literally, for this dangerous country.

Who is in charge of these countries is a serious question. With North Korea is seems that even the CIA has no idea and with Syria there are probably those who know but the media is certainly not part of that information flow.

Excerpts from Steve Earle's book - prior comment

---"Hank don't need a sheepskin from some fancy college to know what he needs and when he needs it! Just give him steak and taters when he's hungry, whiskey when he's dry, 'a woman'(word changed) when he's lonely, and maybe a little old-time religion when he dies."

---"She more than likely came from good enough people. Poor, honest, hard-working folks that never got ahead but did all right as long as they kept their heads down and didn't study too much on what they didn't have."

---"Doc knew the physical withdrawal symptoms were nothing compared with the deeper demons, the mind-numbing fear and heart crushing despair that awaited him..."

---"You okay Doc?"
"Well, okay would be an overstatement, but I reckon I'll live."

---"Lonely's a temporary condition...Lonesome's a whole other thing. Incurable..."

---"They came and they lit their candles and then they sank to their knees and silently waited. Not for a sign or a miracle, for these were not Sunday Christians offering up foxhole prayers. Most had prayed every day of their lives, and they knew no such vulgar display was forthcoming. They expected no such remedy. No answers. They prayed only for affirmation, the peace that comes from unconditional and unwavering faith."

Thursday, April 12, 2012

Steve Earle's "I'll Never Get Out of this World Alive"

In the new fiction section of our local library, amid the multiple copies of Nora Roberts, Janet Evanovich, James Patterson, Clive Cussler, and other books of best seller luminaries(there are now five different books from the James Patterson factory in the new fiction section each with more than one copy), it is a quest for books with some literary merit, regardless of genre, that is always on.

Several days ago I snatched a lone and probably lonesome copy of "I'll Never Get Out of this World Alive" off of the shelves. What to expect was not known, but certainly Steve Earle is well known in the music world and the NYT Book Review Section has some coverage of this book last year.

After a stunning first few pages, the progress was tentative and I wondered if this was more of a music celebrity's incantation of personal hipness than something of real interest. Should I keep reading. Plowing ahead was the right choice. This is really a terrific book that anyone with some experience with New Orleans, Texas, hard core country music, and making mistakes could not help but adore. Other folks could like it as well, but this was just zeroing in on a target market which I'm sure was the last thing on Steve Earle's mind.

The characters charm or repulse, Hank Williams haunts, the setting is palpable, and the tale itself evolves in a way that has an edge of your seat quality. There is humor, some subtle, some in your face, throughout. There is the chapter on November 1963 and the opening part on Yah-kee coming to San Antonio is a beautiful smile before the trauma of Dallas later.

One could wonder whether Steve Earle should write another book. This one would be hard to top, and music is the domain where he reigns as a Dylanesque star in his uniquely carved out area. Then again, maybe he should. I would scoop it up immediately off of Amazon and not wait to dig it out at the local library after five copies of Nelson DeMille books.

Tuesday, April 10, 2012

Financial markets relief tomorrow - a guess here

On March 27 there was a short note here, "Financial markets are now in for a stall out", followed by another on March 29, "Financial markets will still slip."

Both were right as markets have not only stalled out but slipped, seriously slipped since then. If I had the guts to back up my thoughts with action, one of those double leverage market short ETF's should have been a play at the time, but those things are scary if you get it wrong. My action, almost none, was just to stick with what was there and not add a thing no matter how attractive, and sell one stock that already was bothersome.

It would be a welcome break if everything settled down tomorrow and allowed everyone to catch their breath. That's my best guess, as shorts will cover part of their positions to book some of their great five days of profits. They could be wary about the earnings season that begins in earnest over the next two weeks and could be a little less troublesome than some presume. Political uncertainty is mildly reduced with Romney assured to be the winner on the Republican side and now those with that inclination can begin giving all of their money to the main GOP superpac, American Crossroads or whatever it is called.

Alcoa, while no big financial power is sort of the New Hampshire of the market, as it always reports first as it did today and beat expectations.

Tomorrow should be a day of relief. If not, Katie bar the door.

Serial inflation or is it cereal inflation

There have been a few news report at times in the last year about the stealth inflation on our food shelves. That's products with the same labels and same look but with slightly smaller containers and less of the product being bought, at a price the same as previously.

Now that has hit home. One of the staples here, Post Selects Great Grains cereal, has just pulled off this switch in the last month. The boxes are marginally smaller but now contain 13oz of cereal as opposed to the prior 16oz. As added and maybe unwanted info, Uncle Sam whole wheat and flaxseed is the radical health food cereal that is the base of this breakfast ritual but then it is cut by the more mainstream Post Great Grains for a more palatable flavor. Walnuts and raisins are added. Not bad, but then those days when the sausage and eggs are a side dish...

There is a certain undeniable intuitive, maybe visceral, feeling held by many that the government statistics on inflation are blind. The easy starting point is excluding food and energy from the "core" number. Don't eat, drive, heat, cool, or turn on your lights and appliances and then there is almost no inflation. How reassuring is that.

This stealth inflation of what one gets for what they buy is a different and perhaps less tangible effect. We needed a new coffee grinder last year and went to the local chain kitchen products to purchase one. We chose what looked like a good one and my wife asked the salesperson how long it would last since the one we had just broke. She looked at me and asked how long we had owned that one and my memory retrieved the number 14 years. The salesperson replied, "Oh honey, nothing lasts that long anymore."

Small appliances like toaster ovens, microwaves, dehumidifiers, humidifiers etc. may look the same but their longevity and performance has changed. That was the case with almost all consumer electronics as well, same look, maybe more buttons, but less quality into the early 2000's. Then Apple took over the world and quality technology has changed much of that. One problem for the consumer though. Where the young teen of those earlier years had to have the latest Nike Michael Jordan's at the extravagent price of $100, now it's the lastest IPhone, IPad, or whatever cool gadget at a whopping cost difference to those sneakers.

As Bernanke tries to spur growth by robbing savers, the retired, and those on fixed incomes with his zero interest rate policy, it is still unclear to many that our cost of living is not going up. Bernanke's policy may be benefitting only those companies and individuals with the most stellar credit ratings while setting the stage for more visible inflation later. Ouch.

Monday, April 09, 2012

The annual tax and AMT moan

Yes, it is tax preparation time again as we all know. This year, for the first time ever, an accountant is being used here for our taxes. For so long I had clung to the notion that an American citizen should be capable of doing their own taxes if they chose to spend the time doing it. Part of that rationale was that doing it myself would allow an understanding of what's going on. Another part is that with an MBA in finance and a part of my job life spent in banking, why shouldn't it just be done here, everything arranged neatly on the ping pong table. The last part was just some sort of internal pride - "I can't even do my own taxes?"

Each year it became more and more tedious and at times I began to wonder what I was missing. Last year I had a local accountant do older daughter's taxes because she had earnings in two states and I did not want to go through the effort of learning another state's tax law and forms. He did a fine job for a reasonable cost, and then offered to take a look at my taxes for review. He found a couple of beneficial credits that I was unaware of and that clinched it. What he found may well have paid for a good part of his services, and a ton of tedious work would have been avoided here.

Of course, having an accountant does not give any relief to the record keeping and document retrieval. That's taken some time but it's done, and the first review copies of our returns are being looked at, checked, and a few minor errors corrected. It's such a relief to be near the end of the process.

Yesterday, on Bloomberg radio the previous head of the IRS was interviewed by Charlie Rose. The IRS man was asked "Is it true that you hire an accountant to do your taxes?" His response was "Yes, they're too complicated. In fact I use two accountants, a primary one in New York to do the work and another specialty firm in L.A. to double check what has been done. Having served in my previous job I don't want to take any risk of embarrassment by filing my taxes incorrectly."

Guess I'm in good company, but what a statement that is about the ridiculous complexity of our tax system.

Readers here will know that the AMT(Alternative Minimum Tax or is it, I'm confused, Alternative Maximum Tax) is frequently mentioned as an abuse of taxpayers. If one lives in a state with high income taxes and high property taxes(hand raised here) it is absolutely and almost immorally punitive. It hits the middle class(even a few at income levels not much more than $100,000) like a hammer in those states and with its weird logic has no impact on those making income above around $$750,000 when last checked. It just chews through the middle and upper middle class, a law that was originally designed years ago to make sure that the really really wealthy were paying their fair share of taxes and not hiding all of their wealth in trusts and munis. Those really wealthy folks are now not even touched by this law.

Politicians of both parties just let the law ride, Clinton did, Bush did, Obama does, because it raises money for the government from a class that "has no reason to complain." If one looks at where the real political campaign money comes from, especially now, one could also say "and has no real political power as well." "Slimeball phony politicians all" one can think as our accountant shows how much that law added to the fair calculated rate of the return this year, more than last year.

Enough on AMT. It is an annual rite here.

Footnote: a primary aspect of AMT is that it essentially eliminates all deductibility of state and local income and property taxes on Schedule A. So unless you have a boatload of mortage interest, really disasterously poor health, or sell a kidney for charity, there is no way to offset being vulnerable to AMT. There is of course a threshold of income that is required to reach that vulnerability, but it is a threshold that is not so high considering the money one needs to live in this state. Ah, we also have an 8.6% sales tax.

Friday, April 06, 2012

Economic improvement is not a straight line trajectory

Yesterday's NYT's business section had a lead article with the title "Low Growth in Earnings Expected." It was precipitated by the lower that expected addition of new jobs reported, despite the slight decline in the unemployment rate.

It was the typical "opinion piece as news article" that business writing has evolved into during the 24 hour a day news cycle. One day of news that does not follow the market's script exactly and is then extrapolated into the forecast for the year, for the future.

Sure, the news was well below the consensus of economist's estimates, but what should be just as fully investigated is why the economists were so grossly off the mark. One could suggest that they work in a herd mentality. There are many other reasons for the "miss", but one month does not determine a year.

If someone does not expect corporate earning "growth" to slow down, they are ignoring the base off of which prior earnings have been compared to as the economy slowly advances out of the lingering impacts of the severe depression.

The economy has its challenges and rarely does a country's economy or a company's performance move in a predictable straight line up, even if improving. The U.S economy is not Apple.