Sunday, November 30, 2014

Afghanistan already begins falling apart as foreign troops withdraw?

It took invading Islamic State fighters and almost three years before the government of Iraq and its supposed unified military began to collapse after the U.S. withdrawal.  The major part of final troop withdrawals, not including a small force that President Obama has recently received approval to leave behind, is underway in Afghanistan and the Taliban and tribal forces are already on the attack.  In recent weeks there have been a series of bombings and raids in Kabul that are more intense than "normal" times and this weekend Taliban fighters in Helmand Province overran an Afghan National Army outpost.  Camp Bastion, the army's main base in the south which had been handed over to the Afghan's by the British in October, has been under siege for the last three days by the Taliban fighters.

Afghan authorities are quick to say that the media is making too much of the activity in Kabul and in the south of the country.  That is impossible to know from here, but that a negative pattern could emerge is not unexpected.  Afghanistan is a country of shifting alliances among tribes and between provincial ethnic groups.  It is unclear whether it has ever been a unified country in any kind of governable model except under force, under force which historically is always challenged and never completely secure.  It is unclear what impact Obama's 9800 troops left behind after the end of the year can have, as advice cannot replace a well coordinated and committed army.

The impact of the U.S. forces may simply be another one of Obama's lines in the sand, one that if crossed and American lives are threatened, lives of those staying in the country on civilian business, aid workers that stay, and the U.S. troops, and like in Iraq Obama could use air power and even an eventual "temporary" increase in troops again to prop up the government.  If that is the thought, it is unclear if this thought process is wise.

What could not be accomplished over the last ten years is unlikely to be accomplished over the next ten unless the Afghan government becomes an effective internal alliance building administration, and the rampant corruption that was allowed to exist under Karzai can be addressed.  How does this happen?

If it does, if it could, that would be extraordinary and welcome.  If Obama's 9800 troops can facilitate the process that would save the education and rights of women in that country and a period of peace free from medieval Taliban "justice" for all people there, no one here would complain.  The question is obviously whether real change in the diffuse Afghan culture is possible.  

Friday, November 28, 2014

Active four hour equity market

Weren't people supposed to be sleeping off their Thanksgiving merriment or instead heading to the gym to work it off.  OPEC's decision to let the oil supply glut ride and not cut production apparently made those choices impossible for some.  Volumes in most energy related stocks easily exceeded average full day levels.

One could ask if OPEC needs a market analyst, or someone like an investors relations consultant who advises firms on the expected equity investor's reactions to major announcements.  The market reacted.  If Mr. Market could talk he said "if you Saudi Arabia don't cut production, we will pay you much much less for your oil".  This does not seem to be a financial positive for OPEC or big oil players.  Big oil company stocks were down significantly and in most cases oil service stocks were down by even more.  Big rail companies that deliver the oil were down significantly and in most cases rail supplier stocks were down radically more.  There was absolute carnage out there today but it was so far confined to one major market sector.

Of course, there were big winners such as the airline industry and its multiple suppliers as well as some major retail stores where investors began salivating, even after yesterday, as they dreamed not of more cornbread stuffing with gravy but of more ringing cash registers and online flows surging.  What would normally have been a quiet day was not.

Apart from the energy market move today, the overall equity market is close to its highest in a year.  Fidelity's Extended Market Index Fund, Total Market Index Fund, and S&P Index Fund are each at 52 week highs.  In addition to that the Fidelity Intermediate Bond Fund and Total U.S. Bond Index Fund are both in the top quartiles of their 52 week performance.  In a word, things are peachy all around, for now.  Still, seeing one critical sector of the global economy move into almost chaos today is something to watch closely.

Back to the couch.    

Wednesday, November 26, 2014

"Chef", an understated exceptional film

This film seemed attractive when it was first released in the spring of this year but it was missed here.  We saw it last night in the comfort of home and it was a perfect Thanksgiving eve treat.

There is something really attractive about a film with, one, great music, Latin, Texas blues, New Orleans Neville style, and much more, and two, great regional food, Cuban, New Orleans, Texas BBQ and more street food.  As the film moves along from a bumpy start for the major characters at first to a life validating road trip in the second half that untangles all of the relationships in a pleasant way, it is a classic American film.  It has humor to offset the less upbeat moments and loving moments to offset the mistakes made.  All in all this is not a credible story, and it does not need to be.  That is not the point.

If a viewer is looking for some sort of major messages of the literate or revelatory type, it is not be be found here.  If one has the view that music, food, and conviviality have their own soulful messages there is plenty in this film to satisfy.  It was written, directed, and starred in by Jon Favreau who seems to be one of the busiest and most creative people in Hollywood these days.  From the mega-budget films Iron Man 1 and Iron Man 2, which Favreau directed, to this low budget, relatively quickly created small wonder is an unusual accomplishment.

The film is also stocked with name players in roles of various sizes including Dustin Hoffman, Scarlett Johansson, Robert Downey Jr., John Leguizamo, and others that I can't remember or spell, so it  has both major role and cameo star appeal like some of those late 50's and early 60's Hollywood films.  One could guess that speaks to Favreau's stature in that town now.  It seems to be well deserved.

By the way, the point is good and fully diverting entertainment.


Pope Francis speaks out at the European Parliament

If the article on the comments by Pope Francis in today's NYT is even remotely accurate, and how could direct quotes from his two speeches not be, he said some remarkable things that no one in Europe or for that matter the rest of the world would have the audacity to say in such a direct public setting.

He warned that Europe had lost its vibrancy, with any vision or cohesion being clouded by economic malaise and a remote and vast technocratic European bureaucracy.  In a word, he cut through all of the bs.  To take a quote from his speech, "In many quarters we encounter a general impression of weariness and aging, of a Europe which is now a grandmother, no longer fertile or vibrant", or could he have said no longer in need of contraception which might be the only positive thing about this in his church's mind.

There is much more to this and it does not need to be rewritten here.  One takeaway is the thought that the European Union's managed economy is one that across all specters is as intricate, complex, and muddled as the Dodd Frank bill is in the U.S.  The Affordable Health Care Act could be mentioned as well.  These well meaning bills, each with certain highly positive aspects, but each with highly ambivalent or poorly designed language and some terrible politically motivated add-ons, are not conducive to innovation or risk taking.  Dodd Frank is the best example with one its primary goals having been to directionally eliminate "too big to fail" and in the end its complexity added on top of Sarbanes Oxley ten years ago has forced many community banks to throw in the towel and merge, and many mid tier banks to join in with the bigger banks, making them bigger.  There is much more that could be said.  Fortunately, unlike Europe the U.S. technology, media, consumer products,  industrial and most other areas are not dictated by highly complex, political, and opaque bills like Dodd Frank and in certain aspects ACA.

This post is, however, about Pope Francis, and one could think that both the Republicans and Democrats might just agree on one thing.  That is --- is there any way that we can keep this guy from getting a visa to the United States and speaking to a joint session of Congress, a United Nations assembly, and, God forbid, to the people themselves at Yankee Stadium.  In different ways he could end up giving this country equal treatment with Europe, as in a quietly and politely spoken tongue lashing that is both bi-partisan and perceptive. 

Monday, November 24, 2014

Before Black Friday chaos, there are food pandaemonium days

Good quality grocery stores in much of this area of highly priced real estate are not as expansive as they are in many other parts of the country.  Our two primary stores here are North Shore Farms and Whole Foods.  They both have narrow aisles and more merchandise than space, and parking lots that can require a hike to the store so long that one almost needs a compass(Whole Foods in a lot with other stores), or one that is so packed that it always looks full and requires at least two parking attendants to guide cars in and out(North Shore Farms).

We went to NSF this afternoon in a futile effort to beat the Thanksgiving rush.  The rush has already begun.  I have never so appreciated a  rear view camera and the beeping whenever close to another car.  This was not a normal Monday crowd.  We survived.  Our day tomorrow is already scheduled, and it's difficult to imagine what finishing our shopping on Wednesday will be like.  No, it's not actually.

We forgot to buy milk today and we prefer the bread at Whole Foods.  We hope to go early on Wednesday but it's a guarantee that many others do as well.   On Thursday we hope to honor Costco, relax, and stay in.    Happy Thanksgiving.

Tuesday, November 18, 2014

Recommendations, from recent days

--- "Begin Again"  --- this 2014 film found on Netflix was watched here sight unseen, knowledge absent, and it was a hit.  The music was good enough, but the setting was exceptional for this viewer.  Having walked much of Manhattan for more than 30 years, having arrived on my own and ventured out, and knowing that experience was one thing.  Seeing the many locations of the film in the city was nostalgic in a way, and sort of bizarre as recognizing every location, from the lower east side to Columbus Circle(used various times in different angles and circumstances which non-New Yorkers would not recognize), to Greenwich Village areas, the film was just so next door to this viewer.  Overall the film was darn good as well, sure worth a watch if the other choice is NCIS.

---"The Alaska Of Giants and Gods", by Dave Eggers, is a short story in the 11/17 "The New Yorker".  Like David Foster Wallace, Eggers enters parts of his novels in this magazine before they are published.  In the publishing world, especially with all of the ambitious writers, that is apparently, even for the famous,  a way of making ends meet.  Readers know that his work is read here.  I read this story twice, both times finding it interesting.  I worry that like Wallace as he waned in hindsight, Egger's writing is becoming less optimistic, more downcast, even as it is still completely engaging.  This short story is amazing, indescribable.

--- "Sweet Sunday" by John Lawton is a complete mystery, murder mystery but mystery as well as to how this book came to be.  Lawton is the exceptional writer of the "Troy series" of historical fiction books focused on WWII.  His book "A Lily of the Field" was priceless, and if he was not attached to a genre could maybe have had a shot at a Man Booker prize.  It was recognized at a top 50 book by the NYT and had other awards.  "Sweet Sunday" was found on the bookshelf at the town library. What a find.  The book is historical fiction but completely incongruous.  It was published in 2002 in the U.K. but only published this month in the U.S.  Little wonder.  It is a strange book, a combination of  "Apocalypse Now", a travel through the 1960's beat generation and the hippiest generation at Woodstock, and a murder mystery to boot, this book is a morass of stories, and places, New York City and west Texas in particular.  The writing about Vietnam is a bit painful, but brilliant.  The writing about life in that time is a little on the downside.  The lament at the end underscores that as looking for meaning the main character asks for "a voice that would avert the inevitability of loss and make me feel that life must not always come down to this---the emptiness of ease, the comfort of inaction."  This is a wild book, off cue at times, but on target as well.

Friday, November 14, 2014

Yahoo still

It seems to be necessary.  While there are rarely direct calls to buy certain stocks on this blog, it on occasion happens when there is almost absolute certainty, like Facebook at $21 and Twitter at $31.  There have been others, but the most recent out and out call was Yahoo on September 23 at $39.  That was after the Alibaba IPO when some investors implied little other value to the company.  The vote here was all in Yahoo, still after a much lower base price.  That was done with some trepidation, as I rarely make distinct recommendations, not wanting some unknowing reader to think that I actually know what will happen.  Yahoo closed today at $51.75.  I can relax now. 

Thursday, November 13, 2014

A stoic Obama and a dangerous Putin, side by side

At the Asian economic summit in Beijing in recent days, the staging seemed rigged.  President Obama and the kleptocrat Putin seen in photos often seemed to be arranged side by side, as equals.  Their nuclear arsenals may be equal, who knows, but their global leadership roles should not be.  It is unfortunate that President Obama, in the eyes of world opinion, has become somewhat of a "has been" after the mid-term elections.  The timing of this Asian trip was not good.

Putin's new obvious aggression in Ukraine, his aerial invasions of the Baltic, Sweden, and Finland airspace, and his assertion that Russia will begin bomber surveillance of the Alaskan coast, the Caribbean, and the U.S. gulf coast is provocative in a way not seen since the Cuban missile crisis.  There is no comment yet from Obama.  He wants to focus on U.S. issues, continued punishment of our nation's leading global banks for what should be shared responsibility, unflinching on any compromise related to the XL pipeline, and pretending that the Affordable Health Care Act and the Dodd-Frank bills are some sort of golden standard.  They are flawed, but they are directionally right and could be improved, but he admits to no flaws, preferring the "head in the sand" approach to public relations and any changes.

This approach by Putin now cannot be just looked at as something to ignore, just the ranting of an egomaniac.  He has power.  His country has been manipulated to support him. They have him and they have a renewed hope for the power of their fatherland.  Look at WWI.  That did not start with any real purpose.  Look at WWII.  That started with the ignoring of obviously hostile actions, bellicose threats, and racist action.  Obama can stay in his protective shell, ignore the election results, think that he salvaged his Asia trip with an unenforceable agreement with China on climate change, use his executive power in a way that may lead to impeachment, and approach his remaining two years in an almost nihilistic way.

On the other hand he could engage with others and act like a real human being.  He could be royally pissed by Putin.  He could acknowledge that some of the legislation that his administration has passed is not perfect.  He does not need to give in to the Republicans, but one could suggest that he does need to be aware of what has just happened in the elections and in his own debased stature in even the Democratic party.  He does need to be aware that, no longer what he thinks, in his ongoing position as President of the United States, Commander in Chief, other countries, particularly Russia and China, see him as severely compromised by the recent elections.  They definitely do and they are acting on that thought.  

Wednesday, November 12, 2014

Early nights, balmy weather

Winter that came to many parts of the country did not come here.  We continue to have autumn weather, lots of leaves, mild winds, balmy temperatures, showers from time to time, and it is a great alternative to bad weather.  The time change does make for a really early evening as always, more apparent to us as we often head out on our dinner foraging in the late afternoon.  We may need to adapt as night vision is fine but not a strength as it was when years ago I drove the roads of western North Carolina late at nights at high speed, with complete glee.  I could not in any way do that now.  K does not drive and her night "vision" is no help.

We were just out, picking up some teriyaki salmon and salad components, some string beans for tonight, and basic staples.  We have many loose ends to clear up in the next week or so related to house chores and financial responsibilities.  That requires the organization that comes here in fits and starts.

The photo album dive continues...  E-mails and calls with good friends are a lifeline.

Tuesday, November 11, 2014

The wonder of photo albums

Here on Veteran's Day it is especially appropriate to mention the attraction of old photo albums, even as we have only begun the process of reviewing the many that we have.  The Veteran's Day reference relates to an album that I found in Virginia, and now have here, after my father died.  In it, there was a photo of a shot-up plane, wheels gone, flat down on some desolate looking plain.  What is this I wondered?  At my father's memorial service one of his hometown friends from Bedford showed up, and discussed just tangentially the time that Joe(that's my father) got shot down in China.  I had never known that, although the evidence was now right in front of me.  When I gave my parents leather bound notebooks in the early 2000's and asked them to write about their lives, my mother was already beset with very early Alzheimer's and wrote little, while my father wrote extensively about his early life and later travels.  He left out completely 1939 to 1945, his war experience, their marriage, and all of their travels after he became a pilot trainer stateside.

My father was a pilot in the Flying Tigers after they became officially part of the Army Air Force, not before when they were part of the OSS, an even more secretive predecessor to the CIA.  He was based in Kunming, and he did speak to me of great memories there as he went hunting for geese with his mates and local helpers.  He was a country boy and had hunted all of his life.  Apparently, in a mission like many others fought against the Japanese, his plane was hit, and in those days before much professional equipment the plane rose to altitudes above normal to escape the ground fire.  His sinuses were temporarily destroyed but his life was saved.  They crash landed successfully on the belly of the plane.  I wonder, did he have his darn box camera with him in the plane, is that how casual the mission was meant to be, or did they dive close enough to the base for him to walk back out with his camera.  I will never know, as all of this is learned after his passing, thanks to a photo album and a distant friend.

Photo albums are now being looked at that depict the years of my children's birth and maturation until age 16 or so.  Other than the very early childhood period, they relate to all of our travel.  In fact some relate to travel in the six years before K and I were married and we traveled together to France and Portugal regularly.  In general, the shots including K show as a robustly healthy, exuberant, and upbeat person, not quite like today.  The many photos just mirror some of which are on the walls of the extensively covered basement rooms that we see always, but on this viewing in the books they show so much more.  There are some of my parents, especially ones of my mother and each daughter in Hillsborough and New Orleans respectively, that deserve reprinting and framing.  The expressions in the photos are priceless, showing without a doubt when the photographer, me, was being magnetic or annoying, or some instances of other relative's in-law disdain, just not liked very much.  So obvious now.  We still have many albums left to peruse as this photo book viewing just started two nights ago.  It is not, surprisingly to me, a dreary nostalgic look, but one of real discovery about my children, wife, and myself, a truly worthwhile endeavor, no kidding.

To be continued...

Sunday, November 09, 2014

"All Or Nothing"

This is the title of an article in the November 10th edition of "The New Yorker".  Its subtitle is "A playwright's search for his feral instincts".  Jez Butterworth, the English playwright and screenwriter, was unknown here until I came upon this article looking for one last thing to read last night.  The article for some reason did not seem promising at first, but my first impression was completely wrong.

While Butterworth is not immune to periods of seeming writer's block or just plain lack of motivation, from what is read here, when he is on he is prolific.  He has written several plays that received major critical acclaim, and others that charmed but had a more narrow dedicated audience.  There is no reason to detail the plays since they have not be seen here, and there is no insight to add.  Butterworth writes screenplays to make money and because he is good at it.  Among others, he wrote the screenplay for the James Bond film "Skyfall" and is at work on another Bond film now.  One would presume these cover the mortgages and then some.

The real charms of the article, by far, are the instances that describe insights that have helped Butterworth with his writing.  One is a simple exchange between Miles Davis and Dizzy Gillespie that he heard about while watching a YouTube interview with Davis.  Another is an insight that he had while seeing an exhibition of Robert Capa photos.  Yet another is the humorous behavior of Neil Young as he closed a concert, taking control of the moment.  There is more.  The number of artists of various types that are drawn into this article as part of the commentary was engaging to this reader.

Regular readers of this blog are well aware that "The New Yorker" is a week in week out favorite of the writer.  There are notable articles almost every week and they are not chosen for comment here.  I assume that many readers here have already seen what has been written, on paper or the internet.  Occasionally there is an article that is so compelling or so unique that it cannot help but be mentioned on ENS.  "All or Nothing" falls more easily into the unique category.

Saturday, November 08, 2014

What happens if...?

The decision by President Obama and the Pentagon to add 1500 U.S. troops to Iraq is difficult to evaluate from this perspective.  Certainly Islamic State is a horrific threat to the area.  The dearth of on the ground journalistic reporting now from both Iraq and Syria leaves observers with limited access to first hand accounts, insights, and observations.

Rather than add U.S. troops, or if necessary in addition to that, it seems that giving further aid to the Kurd's Peshmurga forces is an opportunity that is being overlooked.  Kurdish forces that have been the most potent protection against Islamic State haven't received any of the heavy weapons that it asks for and needs to fight on even terms with the enemy(Islamic State of course being the beneficiary of billions of dollars worth of the best arms and equipment when the U.S. built and supported but corrupt Iraqi army folded).  While small arms and ammunition have been provided, the artillery and first rate tanks and other vehicles have not.  This has been discussed here several times in recent months, as Obama's fear that a more powerful Peshmurga would hinder his pipe dream of a unified Iraq and that hope stands in the way.

The point on that is, Wouldn't it be better to appropriately aid an effective indigenous force than put the burden on U.S. troops and an American public that has serious battle fatigue?  The point of this post is to ask, What happens if or when what may be inevitable occurs?  That is, what happens when a U.S. soldier is captured by Islamic State and then shows up in a dreadful video on You Tube?

The plan, adamantly stated, is that American soldiers are not combat troops.  That is the intention, but with the plan also being that these soldiers will be embedded with Iraqi troops around the country, not only in Baghdad and Erbil, but also in other areas including the volatile and contentious Anbar province, combat or not these soldiers could be in a vulnerable position.

This certainly raises the possibility of a dire consequence that unfortunately needs to be contemplated.

Friday, November 07, 2014

The tension over banking regulation

Whether the public wants to believe it or not, today banks, including the big banks, are highly sensitive to abiding by government regulation, that is if they can figure out the rules.  The big banks in particular have been hit with huge penalties over the last four years, and these fines continue almost unabated more than six years after the Great Recession, that has long since passed, began.

At this point the Justice Department, state AG's, and the SEC piggyback together to extract these huge penalties that have little connection to real damages.  They often seem to be based simply on comparisons.  If these legal entities get a settlement from one bank on a certain activity, that and often plus more becomes the proxy for all other banks.  Since confidence is such a crucial part of banking and these regulators seem to have the ability to ruin businesses if they choose to do so, banks fall over each other to capitulate as quickly as possible in most cases.  See BofA's latest dilemma.

The so-called "Libor rigging" and "currency market manipulation", two separate regulatory vendettas, are called scandals before anyone fully understands what the facts are, and more importantly what the actual damage of any possible wrongdoing is.  The damage is always assumed to be massive and the execution of these schemes described as "conspiracies" with the intent of defrauding the public.  It is not that simple, not even close.  A few bad actors do not damn an entire industry and entire parts of the capital markets.  That fact does not slow down the regulators and politicians.

So how did this rant begin?  We have been trying to get the required medallion signatures to gather assets for two estates.  The first estate focused on is being executed in this jurisdiction. Two our local banks, retail branches of really big banks, have declined to give them due to associated risk and new rules.  We have not yet talked to our third banker.  Our primary bank said that they would execute the medallion signatures only if we opened the estate account there.  That was our intent since they are our major bank and we have an embarrassing amount of assets there to support our liquidity in this zero interest rate environment, so they should definitely meet the new "know your customer" guidelines.

Here is the silly conundrum.  They say that we need to have money to deposit to open an account.  Since this will be an estate account, the money needs to be related to the estate, sort of makes sense.  If we cannot get the medallion signatures to get the money released from brokerage firms and banks, we have no related money to deposit.  And, as you the reader can see, if we can't open an account we can't get the medallion signatures.  Makes sense, right.  NO. 

This will be worked out.  The rules cannot be this stupid.  The retail bankers are either as frustrated as we are or they are just adamantly stubborn, as a cabdriver in New Orleans once said to me, "stubborn equals stupid".  In general this is all apparently due to new implementation of parts of the Dodd Frank law or they are part of the Patriot Act rules, or BOTH.

Which comes first, the chicken or the egg?  Some bankers have no idea, but they know that they will take no risk when it comes to regulatory dictates, no way.  They like to have their jobs.  It has to be certain that this will be worked out at a more senior level at our main bank, but what happens when we need other medallion signatures for the second estate that is being executed in upstate New York.  Who knows?

Thursday, November 06, 2014

The sand shortage

On yesterday's New York Times op-ed page, there was an article with the title "Why Sand Is Disappearing."  Who knew?  In fact as I read this, it was realized that this phenomenon had been experienced here recently.

The gist of the opinion piece or detail of scientific facts is that beaches all over the world for ages naturally replenished themselves before each summer.  Due to stronger forces of nature, extensive development of shorelines, and rising sea levels, "75 to 90 percent of the world's natural beaches are disappearing."  This is not yet so visible to observers as beach replenishment activity, in which huge amounts of sand dredged from coastal waters or shipped from inland mines are brought in to eroding beaches and reinforced by barriers or re-created dunes.

Not all sand is the same, and some works better than others.  In fact, not all sand is acceptable sand at all.  A few months ago in the summer, I drove out to Fire Island National Seashore for what I expected to be a relaxing afternoon, with towels,  books, and cold water in hand.  This beach east of the crowded, heavily commercial, extra wide and man made Jones Beach is one that was idyllic in comparison.  It had soft white natural beach sand that was the height of comfort, to the extent one is into that at a beach.  There was no visible trash and the water was clear.

Since the early 1980's this had been the beach of choice, for myself and for the family.  Jones Beach at times was not neglected with family as its array of snacks, soft serve ice cream, and top notch hot dogs attracted.  For those just looking for primarily a beach, however, the National Seashore was the place to go.

Going out this most recent time was the first time in maybe seven or eight years, as circumstances changed and children no longer needed to be taken.  I was really looking forward to the experience once again.  As I walked it was, I admit, damn hot, and this was no longer a complete positive.  The ocean breeze was not as cooling as remembered, but the mission was underway.  My towels finally on the beach and my book open, the reading began, and it was just not too comfortable.  I got up and stretched, walked along the shoreline, but something was different.  Maybe it was just me.  Things do change.

When I arrived home earlier than expected, family members asked how it was.  My thought was that perhaps the beach experience had finally been outgrown, but what I said was, "I just didn't enjoy lying in the dirt."  I didn't, and then thought no more about it.

Reading "Why Sand Is Disappearing" led to the realization that I actually had been lying in dirt and it was the beach that had changed, not necessarily me.  Hopefully the beautiful white sandy beaches of Forte dei Marmi in Tuscany are intact, and we can go there again to see if beaches are still the attraction to me that they once were.  If not, at least the food will be good.

Wednesday, November 05, 2014

Election results in, what will follow?

The Republicans now control the Senate and control the House by an enhanced margin.  The Democrats were unable, or unwilling, to take advantage of the rebound in the economy since the dog days of 2009 and the current relative strength of the U.S. economy under the Obama administration.  Exit polls showed that the economy was the most important issue in the majority of voter's minds, but the Republicans achieved a wipe-out at the polls.  As mentioned in a post here on Monday, while the economy has rebounded, "expectations have not been met for many.  If the economy is the biggest issue, the choice is not yet clear."  In situations like this, a "kick the bums out" is often the default mechanism of voters.

What happens now?  The first big issue is whether President Obama still decides to bypass Congress and take executive action on immigration reform near term.  If so, that will not bode well for cooperation near term.  We'll see.

If a confrontation over that can be averted, it is possible that Obama will feel motivated to work on some bipartisan legislation on issues like immigration, infrastructure spending, and tax reform.  As he still will have the power of the pen, the Republicans could be motivated to work with him as well, since they would almost certainly want to approach the 2016 Presidential elections with some level of accomplishment.

One must consider that Obama has not been working well not only with Republicans in Congress but also with Democrats.  He has been isolated with an inner circle of White House staff, and now he is in a funk about being excluded by many of his own party members from participating except marginally in the 2014 elections.  How much can his perceived arrogance take?  To salvage his reputation and to chart his own course, he may now enjoy not being beholden to the Democrats in Congress any more than he is is to Republicans.  In this awkward scenario, compromises may be possible.  Wishful thinking maybe but, as a start, getting much needed infrastructure spending underway and consequentially a better job producing fiscal policy revved up could be just the tonic for growing the economy in a way that has more widespread results and buoys the middle class.  Immigration reform, even if watered down somewhat, needs to come next, and if those two things were accomplished in 2015, that would be amazing.  Comprehensive tax reform will need to wait, as only one-offs will be possible before Congress goes idle during election year 2016.

The Republicans could get lucky.  There are situations where the times make the man, or woman, rather than the man, or woman, making the times.  The former was often observed here in business.  "So and so was such a great manager" they said, when really he just happened to be appointed to the business that he ran as it hit its economic sweet spot.  "So and so was just a terrible manager" it was said, when his business was hit by economic conditions that made success untenable and he worked mightily just to lose less.  Given some wind at their backs, the Republicans could be in a situation that makes them look smart, if they don't screw it up.

Here are two other observations from yesterday's results and commentary.  First, those Republicans that tried to hang ebola and ISIS around Obama's neck were misguided to say the least.  Was their Party playing any role of leadership on these issues, raising any alarms, or offering any insight?  Very little.  Second, the Clinton's took a bashing and one could question whether their time has now finally passed, both Hillary and Bill.  One could cringe every time hearing Hillary's enthusiastically cute "I'm back" at an event earlier in the year in Iowa is replayed.  They both did everything possible for the losing Grimes in Kentucky and Pryor in Arkansas, obviously without results.  

To conclude, 2016 will still find the Democrats with a substantial lead among black voters, Hispanic voters, gay voters, voters focused on the environment(millennials), as well as their customary liberal base, and they are not by any means compromised in that race by the 2014 mid-terms, or at least that's the opinion here.


Monday, November 03, 2014

"Olive Kitteridge"

This HBO film shown in four one hour segments over two nights was watched here.  It was mesmerizing.  Sitting stoically with rapt attention, the two hour portions delivered last night and tonight did not call out for bowls of ice cream, guacamole and chips, or bathroom breaks.  And the chair chosen is not even that comfortable.

The performances of the main characters were completely believable, at times painful, and at others emotionally touching.  It is not clear if this was an absolute perfect time for this to be viewed here or the absolute worst time.  Regardless of which, it was a time, and its aim was true.  The film was certainly absorbed and understood, understanding underscored by experiences of recent years(a triple under, never done that).  The final segment finished with a moderately uplifting and even humorous sequence that paired the star, Frances McDormand, with Bill Murray.  We viewers seemed to deserve that relief after dealing with so much, and the ending enhances rather than diminishes all that went before.

"Olive Kitteridge" was great television or film or programming, or whatever anyone wants to call it.   

These elections without substance

When looking at local elections here in New York where we vote for a state assembly representative, for a state senator, for a U.S. house representative, and for governor, there is an amazing lack of substantive discussion about any meaningful issues.  Everyone, it seems, Democrat or Republican has roughly the same opinions, or that is what they claim.  All viable candidates want more job growth, a stronger economy, better schools, less taxes, lower health care costs, and their name in the winner's category tomorrow evening.  That's about as deep as it gets, or that is as deep as it gets.

The most amusing or disconcerting race is the local one here for New York state senate.  It is best described as never ending mailings of personal attacks, raising of petty issues, and unverified claims of what they have accomplished.  The only issue of any substance that the two candidates openly dispute is "a woman's right to choose" with the Democrat clear on his opinion and the Republican speaking in unintelligible gobbledegook.  There is no vision from either candidate, no discussion of actual plans that would help the economy, no ideas on improving education, and not a clue of credible rhetoric on how to cut taxes and pay for all that needs to be done here.

Why should anyone be surprised?  From this vantage point, this is typical of what is going on all over the country, state by state.  Has anybody ever accused Mitch McConnell of having a vision of anything, or having one new idea, knowing much of anything about foreign policy, or doing anything progressive in his life.  He is a "political leader" with a capital P, and he more than anyone has set the tone for this mid-term election, one without any discussion of real problems and possible solutions.  His main argument for re-election is that he is already there so he should stay there.  If his opponent were stronger he would be in real trouble, but that does not appear to be the case.

Across the country almost every candidate, with the exception of some radical xenophobes or undisguised hate mongers, say that they support some elements of immigration reform.  That's odd, as few if any candidates are discussing any new plans or even support for existing proposals in these mid-term elections.  The Republicans would prefer to duck the issue for fear of even further alienating the already legally existing Hispanic vote and the Democrats are happy to duck as well, not wanting to be quoted by the independent right wingers as being soft on immigration.

Every candidate, as always, talks about tax reform, not what to do but how they support it.  Talk about kicking the can down the road and blaming opponents for no action, every election.  The Republicans do have as their "leader" on this subject Representative Paul Ryan, but his ideas could be viewed as too quirky and reminiscent of Reagan's pet Arthur Laffer.  They want to avoid the issue.  The Democrats do as well, as Obama's limited actions on the issue have primarily negatively affected the upper middle class, that's upper Middle Class, the middle segment of our populace that is shrinking.

Speaking of the shrinking middle class, there are few candidates offering any plans or new ideas for fear of taking any risk.  The Republicans can't say enough about entrepreneurship and small business, meaning that they expect that through the beauty of our system people will take care of growth on their own  --- What Me Worry?  With significant structural changes in the economy, a phrase that is ofter slung around by politicians who don't know what it means, and the job training and educational challenges in this country, there is much to be done, but not talked about with any specifics.  That would be too dangerous to do during an election.  So they want people have is blind faith, cast their ballots, and discover what candidates think after the election.  Democrats too are diving for cover on this issue as it always seems to lead to a revival of Obama's anti-business rhetoric, and now Hillary's untimely recent comment in a political speech, "Don't let anybody tell you that corporations and big businesses create jobs."  What a flat out stupid comment.  Big corporations and businesses can bloat easily, so they are always trying to be more efficient and hold job count down if they can, but that just means that they are outsourcing many more tasks or functions to smaller companies that specialize and can do it better.  The big business that Clinton refers to is the originator of many jobs that don't appear on their books.

Last and maybe least, the environment and its protection should be a major issue but since the Republicans mostly stay mute on this and have their heads in the sand, there is not much of a way to have a debate, even informally.  This may be the next major dink in the Republican's armor, an add-on on for 2016, as millennials who have not participated in the bounty of a strong economy look around to determine what's important to them.  The environment is.

Where does all of this lead us tomorrow.  One could think that it leads to an electorate that will vote based on long held attitudes, on single issue focuses like either women's rights or abortion, gay rights, gun "rights" or should one say assault weapon rights, a visceral reflex dislike of Obama that is either long held or acquired as they have tired of his aloof demeanor, retreat into a small inner circle of advisors, and now a retread pep rally approach to large safe audiences, or whatever else is a voter's singular interest or opinion.  One thing we know is that most votes will not be based on any thorough debate over the direction of this country, sound economic actions, or principled governance that takes account of as many of our citizens as possible, since many candidates themselves have avoided anything of substance.  Competence will not even be an issue, as no one seems to have thought about that.

The economy in the aggregate is doing well relative to the rest of the world, but expectations have not been met for many here.  If the economy is the biggest issue, the choice is not clear cut to many voters.



Sunday, November 02, 2014

"The Narrow Road to the Deep North", a comment on Richard Flanagan's novel

Amazon had enticed me to purchase this book a week before it became widely known and won the Man Booker prize for fiction in mid-October.  I started reading the book at the time of purchase and was immediately blitzed by attention getting and unexpected phrases, even as I tried to sort out what was going on.  Examples of phrases in the first 15 pages --- "A happy man has no past, while an unhappy man has nothing else."  Another --- "Whatever they called him --- hero, coward, fraud --- all of it now seemed less and less to do with him... He was not unaware of his critics.  Mostly he found himself in agreement with them.  His fame seemed to him a failure of perception on the part of others.  He had avoided what he regarded as some obvious errors of life, such as politics and golf...He could still even shock himself, - the ease and alacrity with which he could lie and manipulate and deceive..."

With this book in my possession, it was freely marked up over several weeks as the sentences that stopped me with their blunt reality, their humor, or their quick turn of a phrase seemed as if they would be worth a look back.  Unlike most books read here, this was not a quick read.  While the book was relatively easy to understand, with some patience at the beginning, and the writing was wonderful,  the brutal reality of much the book's story of life in a Japanese POW camp made reading at times difficult, requiring a break here.  The evil of war, so harshly told, fell victim to newspapers, magazines, and personal issues, and the book was put down for days at a time. 

I pushed on and the book was worthwhile in many ways.  It is unusual and it is relentless to the end.  Somehow "The Narrow Road..." is also a love story, shared love, unrequited love, love betrayed, lost love, and love pretended for practical or well meaning purposes.  Flanagan's tale moves seamlessly between times and places, between the profound and the routine.  It can keep a reader on their toes.

The Man Booker judges could hardly have chosen a more perplexing but completely credible book, one that has the quality of capturing aspects of life that is more penetrating than most non-fiction and certainly more interesting because of the distance that fiction gives a writer.  Choosing a book that is so uncompromising seems to be a bold move, and a welcome one.

Saturday, November 01, 2014

After a sharp two week U.S. stock market rally, what's next?

After experiencing the largest correction of the year in the S&P and in the Russell 2000, that is now recent history.  Since October 20th the market has bounced back, led by large caps, transportation stocks, and technology stocks.  How fickle the market has become.  It almost seems better just to ignore it.

There are such inconsistencies in information.  Yesterday a consumer sentiment survey showed that consumers were more positive than they have been since July of 2007.  Today October consumer spending was reported as the weakest in eight months.  If all of the negative global news and fears about the mid-term elections have had an impact on consumer spending that will end soon. The holidays are coming and the usual discounts will begin to become more pronounced in stores and online. The elections will be over and likely fade as an issue.

Looking at global economic impacts on U.S. confidence, a modest slowdown in China's economic growth is widely expected and already discounted in stocks, one would think.  Europe's fight to avoid widespread economic stagnation is ongoing and well known, and at this point it is entirely possible that Merkel will find some way to both blink and save face.  Ukraine remains an issue, one that could lead to a dysfunctional European market, but unless something happens that can be seen as a complete breakdown of cooperation there will be no spread to U.S. markets.  Watch the oil and gas agreement with Russia that is just being finalized, supposedly.

The U.S. corporate earnings season is almost completed and, with a few important exceptions, results have been close to or ahead of expectations. Job growth is moving in the right direction.  What the U.S. needs, as Janet Yellen tells us repeatedly, is discernible wage growth.  If the holiday season brings us that nicely wrapped present, the market still can move higher.  Stepping out on a limb here, but this could be the best holiday season in seven years, and if so why wouldn't there be some competition for employees.