Friday, November 30, 2007

Right On Time. Government Sponsored Bailouts

Here we go. Per the Wall Street Journal, the U.S. government is attempting to broker a deal with financial institutions to stop mortgage resets. One hundred years ago, this wouldn't have likely happened. But, New Deal politics have changed the perspective of government's role as society's financial safety net. I'm not making judgement but just stating the facts that the role of government has changed to well beyond what the founders of this country had envisioned. In my opinion, some social programs are quite worthy. Earlier this year we mentioned this very situation likely coming to pass. But, as I wrote then, there is no free lunch. Any such plans, are going to have an impact. And, as was easily anticipated, the impact was likely to be in finance industry earnings. Good for homeowners but bad for financial stocks. Personally, I believe some attempts to help defaulting homeowners are worthwhile although many would disagree under the premise that bailouts of any type are bad for the economy. I don't disagree with that point. But there is also an issue of compassion for those so close to the economic edge in times of crisis. Maybe finance industry executives should cut their personal earnings to help fund any such program since they caused this mess. haha. Like that would ever happen.

In any event, this doesn't remotely affect any economic outcomes.
posted by TimingLogic at 8:31 AM links to this post

Wednesday, November 28, 2007

SEC Deals Major Blow To Shareholders

Today the SEC dealt a major blow to shareholders in a vote suppressing transparency and corporate governance reform.

Lack of investor transparency and conflicts of interest with corporate boards has led to pay packages and buyouts for failed CEOs at HP, Home Depot, Citigroup, Merrill and many others that have cost shareholders tens to hundreds of millions of dollars. Lack of transparency into corporate boards and governance has contributed to financial debacles at Countrywide, Enron, Citigroup, Bear Stearns and a host of other companies. Increasing shareholder rights, SEC oversight and the independence of boards is a major requirement to restoring confidence in the American financial markets. It is a shame to see an attempt at improving transparency, shareholder rights, oversight and investor confidence be voted down.
posted by TimingLogic at 4:12 PM links to this post

Is Oil In The Blow Off Stage?


First off, I want to first make a few comments about a prior post. I had written earlier this year that Dubai was an example of the ticking time bombs of oil rich Middle Eastern fiefdoms. It's telling that CNBC is likely top ticking the Middle Eastern oil economies by recently shooting their show from the United Arab Emirates state of Abu Dhabi or Dubai or both. There is significant precedence for CNBC to be embracing particular businesses or investment strategies as they are peaking. That happened in 2000 with technology, in 2005 with housing and in 2007 with private equity amongst other examples. We saw CEOs within these businesses made to be TV rock stars during these tops as the media fawned over them. Mind you, oil is in there too. Now, it is sovereign wealth funds and the respective emerging markets that are getting their time in the spotlight with these interviews. Specifically for this spotlight it is oil rich sovereign funds. I didn't actually see which state(s) were interviewed but I did see three interviews with UAE officials. Or should I say members of the royal families. I do not like any hint of royalty and consider it a sellout that a media supposedly committed to free markets is embracing a "banana republic". Royalty reeks of societies that limit personal freedoms. A little like the U.S. ruling class today. A joke. The U.S. situation will take care of itself regardless of who wins any political elections. Why? Because free markets most often determine politician's economic actions and much of their economic legacies and not the other way around as is generally believed. As a society we generally want to give the credit to one person sitting in a small office in Washington for determining the fate of a $14 trillion economy with quadrillions of moving parts. Or, should I say politicians have the ego to take the credit. Nothing wrong with a healthy ego but what was that leadership quote from Lao Tzu a few posts ago? I digress.

Back to Dubai and Abu Dhabi. I could never have dreamed of the massive excesses that are being undertaken there. A state with a little over one million residents is building an airport to support traffic of 125 million visitors? Wrong cycle to be betting on never ending consumption and real estate folks. Anyway, two major messages came across in those interviews. One, there is massive malinvestment in consumption oriented sectors which we talked about. Two, there is a desire to buy anything American due to a tremendous confidence in the American economy. I'll address that one before the end of December. But, I'll just say that I have confidence in democratic economies as well. Yet, that in no way translates into confidence in equities or most any other asset class for the foreseeable future. They aren't even remotely the same thing. Just a reminder of how volatile the world's petroleum producing economies are likely to get before we move on to the post.

As I've written before, one of my favorite stocks this cycle has been Valero. (As an aside, I also wrote on here that their top notch CEO Bill Greehey and its executive team were dumping stock like there is no tomorrow in 2006. More so than at any time in Valero's history. That fact is long forgotten by oil bulls. As is the fact that Greehey was a regular guest on financial television.) I don't really look at Valero's specific movement on a daily basis but at key turning points, I've strapped my trading system onto the stock and made commentary that I was bullish or bearish on its movement. The last buy signal I wrote about yielded a 60% return over a handful of months. Valero was not just a great investment this cycle but a great stock to trade. The key word is "was".

There is no doubt the investment world loves the oil story. Universally more so than they loved technology in 2000. Because the technology theme was limited mainly to the U.S. and the oil story is a global one. Bigger story=>Bigger bubble? The whole world believes the oil scheme perpetuated this cycle and investors everywhere are participating in it. Who could deny the increased energy demand needed to fuel international growth? Talk about a crowded trade. Likely the most crowded trade in history. Just remember one important fact. The world has never seen synchronized growth like this before. As I wrote earlier this year, the last time we had a comparable synchronized global growth environment, we saw the worst recession and largest stock market decline since the Great Depression. We will likely not see this type of synchronized environment again for quite some time. Maybe decades. Those metrics depend on many factors but so far the global economic environment isn't even close to supporting another cycle like this. My point? Expected future energy demand is likely to be very erroneous. Yes fundamentals do matter. Of course, we wrote this last year when everyone was jumping for joy and convinced there was no stopping global growth.

Natural gas and coal don't have the appeal of oil and I believe much of the appeal is black gold's futures market is very deep and very liquid. No pun intended. Deep and liquid are key characteristics of any market a professional trading organization would want to trade. In addition, oil has international economic appeal because of its demand profile. And, it is a significant hedge against economic uncertainty as is gold. The oil futures market has been a source of enormous profits for professional investors. And, I do mean enormous. Surely tens to hundreds of billions in profits from trading oil. That said, in the last month or so, I posted a link to a survey where financial advisors were most bullish on oil stocks as their favorite investment. Any time Wall Street is in complete agreement, we need to worry. This cycle is has been industrial commodities, Goldilocks, sustainable global growth, inflation worries, yield producing investments, oil, emerging markets, Apple, Google, hedge funds, derivatives, quantitative trading, Goldman Sachs and China amongst others.

There are many ways to measure sentiment in in the oil futures market. I know a handful of pretty reliable methods but I'm sure oil traders know even more. Let me give you something simple that anyone can watch. It's more anecdotal than scientific so it is not a short term timing method but it is a data point worth watching to determine the health of the energy markets. Energy equity prices typically lead strong futures moves in the oil and gasoline markets. When gasoline stocks exhibit strength and are trending, gasoline futures and oil futures have typically headed higher in this cycle. One of the easiest anecdotal data points this cycle has been to watch Valero. Valero is a proxy for gasoline prices and refining spreads. As the chart above shows, the stock has not followed oil or oil stocks higher in this most recent move. Valero has not produced any type of measurable return for nearly two years as a buy and hold investment. Mostly chop in the stock's action. That is not a good sign in my estimation. Couple this with the generally held belief that higher energy prices translate into higher and higher energy company profits and one should be very careful here. Higher energy prices do not always translate into higher profits. As energy resource supply and demand characteristics change in the technology, equipment, investment and human capital requirements, energy profits come under pressure as the cycle progresses. Then there is economic substitution and reduced demand caused by higher prices. Higher and higher oil does not translate into higher and higher profits. There is a ceiling of peak profits given specific underlying factors.

This cycle gasoline has moved in a repeatable pattern with oil. Some time ago that cycle broke both with the futures market and the equities market. Many times major trend changes take place with subtle changes in market behavior. The oil futures market has surprised me by running nearly to $100 a barrel. But bubbles can always become larger bubbles. And, with fewer and fewer investments working over the last six months, more and more money is likely plowing into oil as it is one of the few investments still working. I believe there is substantial evidence oil is the "technology stock" type of bubble investment this cycle and this decoupled move to $100 could very well be a final run similar to technology in 2000. As market participation narrows in any rally, strength is confined to fewer and fewer winners. This has been the case with oil and not gasoline. And, the participation in the recent futures market rally did not exhibit the enthusiasm I would like to see leading the move to near $100 to be highly suspect.

Regardless of the games played with oil inventory cancellations and other deceptive games of traders, underlying demand for oil related products is very weak in the U.S. Some product demand profiles are at the lowest levels in over a decade or more. That means energy demand is negative in many products. All while we've had a ramp up in production over this cycle. It's time to listen to energy CEOs and scientists in the oil industry as the "experts". Not the traders that the general public listens to on television and in the media. Traders know no more about oil than you or me. In fact, I suspect quite a few know even less. They know how to make money by following a trend and feeding off of the sentiment in an open outcry trading environment. That means down as well as up.

Those in the oil industry have been telling us for years there is plenty of oil while Wall Street's participation in the oil futures market exploded as have prices. We've heard any of a multitude of reasons from traders and Wall Street analysts as to why oil is marching higher. Those include little marginal gasoline refinery capacity to turmoil in the Middle East to China to marginal spreads between supply and demand to peak oil to Nigerian rebels to Chavez chatter and half a dozen other reasons. Most of the reasons given for high oil prices have been transient except for the emerging market growth theme. In other words, increased demand. That premise is going to be severely tested as emerging market growth is going to suffer a very hard landing as we have been discussing since starting this blog.

Enthusiasm for never ending oil consumption growth is a position put forth by dubious "experts". Indeed we have seen generally rising demand over longer term cycles but don't confuse that with generally rising prices over long periods of time. That has never happened. Ever. China's industrialization has produced enough excess economic capacity across many sectors that it could take ten or more years to work off if their bubble economy pops. Or should I say when. In such an outcome, what implication does that have for energy demand in real estate, manufacturing and other heavy users of energy in China? For other countries ramping up energy sapping industrial and commodity capacity to feed China's expected bull market in infrastructure anticipated to last another twenty to thirty years? I think the trend followers anticipating this type of future demand in China's growth are very exposed to a highly suspect position. Closer to home we now have enough excess oil in the U.S. to bathe in and demand is seriously waning. Games, forecasts and hopes won't prop a market up forever if fundamentals continue to deteriorate. Not just in oil but in any market.

As I've said before, the U.S. has the technology today to relatively elegantly cut its oil consumption significantly. By 30-50% per unit of GDP in thirty years is not an impossibility. The world's scientists will finally break our dependence on oil. It might not happen tomorrow and it might happen in waves but it will happen. And, it will happen regardless of what special interests, lobbyists and politicians want. This is not the 1970s. Because now, there are at least four truths lobbyists and special interests can no longer suppress: A nearly universal concern about our planet; America's desire to not watch our sons and daughters endlessly die in Middle East conflict; A trillion dollars spent every decade protecting U.S. oil interests that could be spent for economic investment or social programs-this excludes current Iraqi war costs; And technology has progressed enough to develop viable alternatives. There was never a truth worthy of sustainable alternative energy in the 1970s crisis. Once prices abated, it was easy for society to forget the pain of high energy prices.

I read something a few years ago that I thought was very telling for those drawing trend lines into eternity for positive oil demand and high oil prices. It stated something along the lines of Germany and France had not increased their oil imports in thirty years due to energy efficiency and independence initiatives. What if the U.S. had actually used the Department of Energy's creation to accomplish the same feat? What if the U.S. and other countries now accomplish this feat on a go forward basis? Or what if the entire globe unleashes science on this problem and what evolves is even more compelling? Now, I can't find that data anymore so I'm going from memory. If anyone has the exact statistics, post it in the comments section and I will move it as an addendum to this post.

Will the world's oil consumption continue to increase over the long term or will oil come under pressure from alternatives and efficiency well before we run out? That is, if we ever would or could run out. That's any easy answer for me. In a society (the U.S.) where efficiency and alternatives haven't received any serious consideration and with massive advances in technology coming, what is the world capable of in the application of energy efficiency and alternative energy sources over the next thirty years? The cumulative consciousness of hundreds of thousands of scientists, engineers, entrepreneurs and companies across the globe is now focused on a major problem and they will not be denied. Why? Because free markets see significant profits and business benefits in energy efficiency and green technologies. Not because politicians want to tax us for being polluters as so many apparently find as an appealing solution in today's environment. Or any other of the well intentioned but misguided ideas of politicos. Politicians ought to get out of the way and let the markets work. Funding for basic research is a constructive role of facilitation governments can play but picking the market's winners and losers is for the market place and business to decide.

I suspect advances in coming decades will be staggering and beyond the imagination of most everyone. Not just in energy sources but green technologies across every aspect of our lives. I can envision some very radical changes to the economy with developing technologies. So much so that nearly every thing I touch or do would be radically changed. And, if one person can imagine it, what will the cumulative consciousness of the global society create? It will likely be an amazing driver of productivity, new business and employment.

In the mean time, the the world's largest energy consumers in Japan, Europe and the U.S. are slowing very rapidly. We could very well be seeing a major peak developing in oil prices. And, while I have no reason to believe this is the ultimate peak, the emerging green fundamentals combined with the negative macro economic fundamentals developing could very well be aligning to support oil's ultimate peak. Forever. Is that the current cycle or something thereafter? Who knows. Regardless of when it will happen, it will happen. We will see oil's involvement in the global economy diminish and at some time, it is plausible if not probable oil will be completely banished from any role in energy consumption. That might take one hundred years or longer to banish oil completely but it will happen.
posted by TimingLogic at 11:04 AM links to this post

Tuesday, November 27, 2007

Big Red Tells Russians How To Vote



Today the International Herald Tribune reports that Russians are being told when and how to vote. In a world of increasing volatility, isn't it heart warming to see our comrades in Russia haven't forgotten their duty as Soviets to be subservient to the state just like in ....... China? I wonder which party might win the elections? This at a time when pro democratic Russian Presidential candidate and former world chess magnifique Garry Kasparov was jailed for participating in a pro democracy rally. Let's all celebrate tolerance for communism, fascism, state intimidation and state sponsored repression by singing the Soviet Union's national anthem. It appears to be back in vogue.
posted by TimingLogic at 1:43 PM links to this post

Saturday, November 24, 2007

Holiday Retail Sales

I just wanted to take a few minutes and jot down some comments before I head out for the day. It seems many are finally realizing retailers are going to have a very weak holiday season. Waiting to see the "white of your eyes" fundamentals would have been very painful for investors owning retail stocks. Most retail stocks have fallen off of a cliff. Some down 50% or more in a matter of months. That includes companies like JC Penney, Starbucks and Bed, Bath & Beyond with skilled teams and great management.

Retail discounts are very heavy and were very early this season. This means many retailers are more interested in moving out excess inventory, a profit killer, than making their Christmas profit objectives. It also likely means sales have fallen off of a cliff without heavy discounting. So, I am very dubious of any comments about sales. Even if sales over the weekend turn out to be decent, they will be highly discounted sales and likely well short of expectations if one includes sales leading up to this long weekend. If retailers have a serious inventory problem and have misread demand, post December sales are going to be at discount levels we probably haven't seen in decades. Oh, and don't be fooled by the lines waiting to get into stores we see on television news clips. Those people are lined up for early bird specials which is heavily discounted loss leaders in limited supply. Marketers then hope those same shoppers will impulsively spend on higher profit items once in the store. Don't bet on it without heavy discounting. Consumers are less likely to mortgage their future than banks have this cycle. Banks are making said mistakes with other people's money. It's always fun when you are making money--banks--by risking other people's money. Not so fun when it's your own money.

Many retail stocks are still extremely overvalued both fundamentally and with respect to future earnings. In a bizarre set of circumstances, many retailers considered defensive investments are more expensive than growth retailers. Frankly, much of the best value in retail investments is now in the areas perceived to have the highest risks. It's just amazing how incredibly inept investors seem to have become. We have an environment of locusts roaming from one investment to another without any concern or understanding of fundamentals. This is a sign of excess market liquidity that will eventually go to money heaven along with the overabundance of hedge funds causing this phenomenon.

Wal-mart's recent strength and reasonable earnings outlook is held as a beacon of hope for many. Well, that is simply misreading the tea leaves. Wal-mart's earnings are steady because they have drastically cut back on growth and spending. That might be a temporary stopgap for earnings but I view this as one of many signs of deteriorating long term fundamentals for the company. I am very bearish on Wal-mart long term. I would not be surprised to see the company lose at least 50% of its value from here. New store openings are being slowed and capital spending is being slashed in an attempt to prop up earnings. That means less real estate transactions, less engineering, less construction, less fabrication for store fixtures, less energy demand for utilities, less taxes for local governments, less jobs, less software, less consulting, less diesel generators for stores, less demand for finished goods and less, less and more less. How is this good for the economy? Oh, and as we discussed before, this is not limited to Wal-mart. Many retailers are slashing their spending.

A quick check of some compadres in the capital goods space have yielded a picture that Wal-mart has kiboshed some major spending projects. One person has told me a major project accounting for 6% of this company's annual revenue was just cut from the Wal-mart budget. That means discretionary capital equipment spending at Wal-mart is likely nonexistent except for very high return on investment projects that have very low risk.

Finally, a comment about the weekend travel. While this might seem anecdotal at best, traffic on the highways was down to nearly nothing in my travels. And I do mean nothing. That compares to years past when Thanksgiving traffic was so heavy that delays and traffic jams on the same highway were commonplace. I have never seen anything like it. Additionally, a major truck stop I pass is typically packed on Thanksgiving with truckers. This year the truck lot was 75% empty.

Very negative sentiment after seeing the biggest global boom in history is not a gift from the gods as many would have one believe. It is a vote of no confidence and a potentially ominous sign to batten down the hatches.
posted by TimingLogic at 8:58 AM links to this post

Wednesday, November 21, 2007

Happy Thanksgiving!

This week we celebrate Thanksgiving Day as a national holiday in the U.S. What does thanks"giving" mean other than a day off of work, food and football games? Most of us have much to be grateful for. Especially when compared to the realities of those who suffer for their very existence in many parts of the world. Our ability to compartmentalize is a great reason why humanity has been able to flourish. Yet, that same ability sometimes leads us to forget about those who really have a need for a helping hand. Whether that be someone we know, a complete stranger or someone half way around the world.

As we celebrate the holiday season over the next month or so, why not commit yourself to do something great? Greatness is not measured by money or by the size of the deed. It is measured by small acts of kindness. By giving what one is capable of giving. That could be reaching out to a friend you haven't talked to in years or making amends with a strained family relationship or writing your Congressperson about the situation in Darfur or handing a few dollars to a person in need or giving your time to a cause you are passionate about. In the end, life is about people and relationships. It is about helping others and belonging. Be it a family, a community or a group of friends. Many are searching for that opportunity and you could do something great by reaching out to them. Do something great.

Happy Thanksgiving!
posted by TimingLogic at 10:43 AM links to this post

Tuesday, November 20, 2007

Does Frankenstein Understand Fundamentals?


A Wall Street Haiku
I think, I hope, I pray
The bear will go away
I think the Fed will save us
So there isn't a big market fuss
I hope the market will go higher
And that we won't have an outlier
I pray my investments will do well
And that Wall Street's foolishness won't lead us straight to hell

Now you know why I'm not a poet. My iambic pentameter is hopeless. And, yes I realize this isn't really a haiku. "I think" seems to be the general investment thesis not based on models but based on an Ouija Board. "I hope" seems to be the general viewpoint of the buy and hold crowd held in a trance by Wall Street marketing. "I pray" is the generally accepted perspective that if stocks go down, they will come back up in a time frame acceptable to my investment objectives. Fifteen to twenty-odd years later, ask the Japanese investors about that one.

Let me first make a comment about sentiment here since a few of the historically clueless are taking a "contrary" stance on the negativity we are witnessing. I've written repeatedly that sentiment has failed as a contrary data point at times in history and will fail again. Do you think sentiment was bullish as the market fell for three years post 1929's panic? That's an extreme example but it is indeed reality as are many other instances. So, a little about current sentiment. Many are saying that sentiment is becoming negative again. What a surprise given many of the fundamentals starting to rear their head. When there is a rally, it doesn't take a rocket scientist to play it. But, negative sentiment is not to be confused with what we are now seeing. What we are now seeing is the reality of many being scared shitless at the Frankenstein Wall Street has created with leverage, hedge funds, quantitative trading, debt, derivatives, lack of risk management and all of the other opaque trash we know about......as well as what ugly little secrets have yet to reveal themselves as many firms likely attempt to hide their stupidity while they pray for a miraculous turnaround in fundamentals. Remember we are a few weeks removed from Apple, RIMM, Baidu and Google being launched to heights relative to fundamental valuation metrics that would make NASA panic.

I don't post alot of graphs on here for a few reasons. One, is that some of my work is off limits. I'll share the results of much of my work but not necessarily all of the data or models used to arrive at those conclusions. And, frankly I don't like Excel and I don't like spending my time creating graphs. It's work. My blog is about what I want to do. That is to think. Writing is an extension of thought. Pictures may be worth a thousand words but words unlock ideas, knowledge and the advancement of humankind. I learn by consuming words and thoughts of those brilliant minds before me or around me. Words, both spoken and written have unlocked the beauty of humanity. Words are timeless expressions of our lives. Just remember this: before man had mastered the written word, he drew pictures on cave walls. And he probably used Excel to do it. Words are beautiful poetry. Okay, maybe not my words. Pictures are for cavemen. Okay, enough attempted humor. We are going to look at a graph in this post.

First let's focus on a word that both cavemen and Wall Street never seemed to master. That word is "fundamentals". (You thought I was going to say "risk". Ah, but cavemen did learn how to master risk or humanity never would have made it this far. Only Wall Street hasn't mastered that word. Now you know where Wall Street is on the evolution scale.) In a world of hedge fund quantitative and black box trading strategies do fundamentals matter any more? They matter more than ever because fundamental analysis is the only thing that is going to protect investors from the lunacy of quantitative trading gone mad. By the time this cycle is over, we will likely cringe at the term quantitative as we cringed at the words Intel, Oracle, Cisco, Sun, EMC and others post 2000's collapse.

So, how are fundamentals? Above is a diffusion index composed of two dozen key economic data points. As I've written before, I prefer not to follow mainstream analysis because the mainstream is typically wrong. Most economists are generally late in their analysis or completely out to lunch at worst. Not all as there are some brilliant economists out there. Two are linked to on my blog. Case in point is one of the best econometric services just said this past week that they see no danger of a recession on the horizon. Really?

The index above fell fast and hard into the beginning of 2000 before the stock market showed signs of weakness. It remained weak until its clear recovery signaled an economic turn around in 2003. (Minor smoothing, as is typically done to reduce volatility when combining so many data points, helps to avoid false signals. Smoothing isn't shown above.) As an aside, it would also have kept one fully invested in the 1998 financial crisis that many of today's prognosticators have incorrectly compared to what we are seeing today. The bull continued two and one half more years post 1998 but in hind site, even if one liquidated in 1998, tis better to sell early than late. Or as a friend said recently, "No one ever went broke selling early.". Anyone that held through the massacre in 2000-2003 would gladly have sold out in 1998 if they could go back in time. So, might you imagine what this index is telling us now? Well, maybe Santa Claus will come to my blog on Christmas.

In the greatest wrestling match in modern history, we are going to find out if Frankenstein can defeat Fundamentals. Buy a ticket to the freak show and find out.

I think, I hope, I pray Frankenstein will just go away.
posted by TimingLogic at 11:29 AM links to this post

Thursday, November 15, 2007

Volatility and Mexico's Mess. Free Markets Actually Do Work.

The world has become a very uncertain place for many over the last decade. For others it has become a booming economic opportunity. So, do you believe the world's events are completely random or are you starting to have an appreciation that enhanced volatility might be a cyclical phenomenon? Not that volatility ever disappears. If you do believe events are completely random and there is no such animal as a cycle of heightened volatility, you might change your mind before this cycle ends.

This is an amazing revelation by Mexican officials. Not because of the situation but because they would actually make such a public admission of incompetence and what appears to be the beginnings of a plea for help. Mexico's oil industry appears to be in a bit of a serious pinch. Decades of mismanagement leave the potential for an economic or financial crisis or both that is exacerbated by Mexico's continued corruption and refusal to embrace free market reforms. It seems the majority of the world's oil is under the jack boot of tyranny. And, much more of it is in countries such as Mexico where the energy assets have been nationalized.

Nationalization of energy assets for the benefit of society is a noble thought but a poor business model on so many levels. As an aside, if I were to ever believe any significant fundamentals based argument about why oil prices are this high, I could much more easily believe it is because the vast majority of oil producing nations are mismanaging their assets and don't have access to the energy market's best technology. This is much more plausible than the concept of peak oil. And given that people with no expertise in the scientific exploration of oil or geology or any other scientific expertise are on the side of peak oil, the argument of declining investment and lack of expertise is more plausible. Peak oil is a repeatable offense by end-of-the-world types looking for validation. It is a concept that has been repeated so many times in so many forms throughout history that it's almost laughable. First it was wood, then whale oil, then coal and now oil for the umteenth time. An argument supported by fuzzy science. Declining production as we see in Mexico has nothing to do with what's in the ground. And, I have never seen an executive at a major oil company or country state anything other than there is plenty of oil. Of course, I could put forth abiotic oil as a counter argument to peak oil and produce quite a bit of supporting data as well. Not that I have any opinion on the abiotic oil theory. All of this said, oil is still a bubble. Price/demand characteristics might have led to a substantial rise in oil post 2000 but the massive premium we are seeing is purely speculation. I still believe longer term support for oil is in the mid $30s.

Now, Mexico is an unusual nation. According to the Gini coefficient, it has the highest income inequality on earth. Gini data and income inequality can be very misleading and often manipulated to prove nearly any point, most specifically to further class warfare politics in the U.S., but in Mexico a few dozen families have controlled nearly half of the country's wealth for what seems to be forever. Mexico is the western hemisphere's version of the modern day caste system. Those same wealthy families also have undue influence on the government. So, we never see true reform or opportunity created for the masses because the Haves aren't about to adopt altruism as their prime motivator. It's the same reason why I have said the Chinese communists are not going to institute democratic ideals without strife or revolution. Even though, in the end, opportunity for all would actually improve greatly if the Have-nots were given economic opportunity through the institution of free market reforms, democratic ideals and by breaking up monopolies in Mexico. But, we aren't talking about logic. We are talking about human nature, greed and control. So, instead every hard working Mexican citizen suffering economic despair wants to come to the U.S. where their work will be rewarded with opportunity for their children and families. Just as some of my relatives who illegally stowed away on vessels from Germany. I suppose I'm an illegal alien too. Of course, that was at a time when everyone was accepted at our borders. The mindset on immigration around the developed world has changed drastically since then. Partly because social programs would bury unregulated immigration. The mindset on immigration, whether you are for it or against it, is in part a very real sign of economic fear and uncertainty and a lack of confidence in government's fair enforcement of laws and trade policies. In the U.S., it's part of the same lack of confidence in capital markets and Washington politics created by Washington's lack of SEC enforcement, lack of sound financial regulation and laissez-faire view on financial politics amongst other factors.

I know that Venezuela is experiencing the same problems with their energy complex as Mexico under the leadership of self appointed savior incarnate and narcissistic extraordinaire Hugo Chavez. I'm sure that corruption, greed, narcissism or any of the other characteristics of a dictator don't apply to him. Yet, it was poverty and corruption which sowed the seeds of despair allowing such a personality to come to power as, again, we have seen over and over again in history. We get some indication of the persona of Chavez given he wants to change the constitution to stay in power forever. Of course, to impart his brilliance and his version of what is fair for all people. Oh, and to live in the "Big House". I can't wait for an American czar to look out for my best interests. Remember those times in history when free countries were ruled by those seeking power rather than by self rule? It's such a fond memory now isn't it?

It is at times like these that many want to hate or bash capitalism. Sometimes it appears to be grounded with little morality. Not always but since the Wall Street persona has infiltrated the mindset of the economy, at times like these free market capitalism seems wrong to many. And, parts of the system are not working properly. The good news is that is going to change. The story of Mexico's oil industry is what socialism and state control gets you. It gets you incompetence, a lack of focus, poor execution, self reinforcing negative behavior, corruption, declining wealth and a host of other problems. And those are the good problems. Mexico isn't running out of oil, it's suffering due to lack of investment, corruption and incompetence. This should be a warning sign to all countries that have or are nationalizing assets. As we have seen time and again, it simply doesn't work all that well. Or, more often than not, it eventually doesn't work at all.

Where would Mexico be today if it had kept its energy markets open to competition and direct investment? It would be..........Canada. The same place they would be if they had liberalized their economic markets for the benefit of their citizens. Mexico doesn't need to turn over their national oil wealth to private business bringing technology and expertise. Those types of debates, that led to nationalization in the first place, are emotional grabs for power by control hungry politicians. Just like Chavez. They simply need to have a rational policy to tax the free market investments for the benefit of the nation as a whole like.........Canada. That might be shared oil revenues, a tax on oil revenues or a host of other options. Instead, Mexico remains disproportionately reliant on the good graces of its neighbors to the north for investment, economic vitality, income, solvency, money sent across the border by its citizens and bailouts. This time, we might have to bail ourselves out so Mexico needs to step up to the plate and take a swing for reform and free markets. Of course, they could continue to do nothing and fall further into the abyss of irrelevance and remain the cheap labor market for U.S. companies. Could that be why American politicians really never insist on reforms in Mexico? Cheap labor for the politics of corporatism? Would someone tell me how dumbing down the population for cheap labor is a long term creator of wealth? That applies to any nation including the U.S.
posted by TimingLogic at 12:13 PM links to this post

Tuesday, November 13, 2007

The Crisis Has Passed!

Not! As I wrote in the comments section after a 200 to 300-odd point loss in the Dow a handful of Fridays ago, we were going to get a rally. And we did. And, as I told my friends still holding the bag this past weekend, we'll get a rally this week. And, we have. There are certain very high probability short term rally points and we hit one this past Friday at the close. That probability of a rally was over 90% in the last ten years. Markets go up and down for a million reasons that don't involve fundamentals in the short term. The press writes whatever seems to be a headline story for the day as a reason for the rally but professional traders know it has nothing to do with headlines. But, they aren't going to tell the media or the public that because they like both to be completely clueless. How else are they to manipulate them? A serious decline going into Christmas would be very Grinch-like and it wouldn't allow Wall Street to take time off for the holiday season. That said, pricing action today shows a lack of confidence of this being anything other than a trader's rally. Grab the dice for another roll! Enjoy the game.
posted by TimingLogic at 3:58 PM links to this post

Ford Motor Company Update

"A leader is best when people barely know he exists, not so good when people obey and acclaim him, worse when they despise him. But of a good leader who talks little when his work is done, his aim fulfilled, they will say, 'We did it ourselves.'." -- Lao Tzu

It never ceases to amaze me how incredibly brilliant our ancestors were. Somehow many of us are conditioned to believe we are more intelligent than those before us. Nothing could be further than the truth. We have more accumulated knowledge as a global society but the minds of our ancestors could be brilliant business leaders, inventors, artists, scientists, teachers and the like in today's world. This quote remains some of the most prescient words on leadership ever spoken. And they were spoken thousands of years ago. Forget about the latest leadership schemes, gimmicks and strategies of the moment meant to sell books. True leadership strategies are timeless as are their virtues.

First off, all of the perspectives on macro issues I've posted on here remain my view unless I've followed up with a different viewpoint. On that note, one topic I feel compelled to update is my position on Ford's stock. I haven't done any recent analysis but it's apparent the price is weakening and the upward pricing action that gave some downside protection is basically gone.

I remain very bullish on the American auto industry long term but with economic fundamentals deteriorating, those turnarounds are likely to face very significant headwinds. As we discussed before, bullish on the company's prospects doesn't always translate into bullish on the stock. Especially when fundamentals aren't aligning with a turnaround.

I also find it ironic that while everyone was telling us to buy Toyota's stock some time ago, I was and remain negative on its outlook. In fact, since I wrote that commentary, Toyota's stock has collapsed and a quick look has the stock down over thirty percent while Ford has remained flat to up in price. Too many people that didn't understand the global economic risks or the massive transformational efforts of U.S. automakers were piling into Toyota. As we discussed before, Toyota has been taking candy from a baby in the form of GM, Ford and Chrysler. Those days are gone forever. Toyota remains a great company but on a go forward basis, they will face formidable competitors in resurgent U.S. auto manufacturers. As time goes on and transformational efforts gain more traction, Toyota's dominance will be pushed like never before. Toyota's foray into large, expensive automobiles, SUVs and pickups makes them very vulnerable to a global slowdown. Their product mix has never been so vulnerable and that translates into significant risk not priced into the stock. Honda, on the other hand, has maintained a more conservative product stance and that is one reason I have expressed my belief that Honda is the best managed car company on earth. Honda remains focused on engineering excellence while Toyota has become partially focused on growth for the sake of growth. The desire to unseat GM as the world's largest automaker will likely cause Toyota much pain. Pain caused by straying from the company's core principals.

Ford is making tremendous progress in its efforts and astonished Wall Street recently with results much better than anticipated. All of this with a poor product mix and dated designs in its core U.S. markets. These issues will be addressed over time. (Bring over some of those awesome Ford designs from Europe!) Ford is moving aggressively to a global product development strategy, global engineering and global procurement. These strategies will pay of very handsomely in speed to markets, strategy, execution and profits. Mulally has also jockeyed to put finance where it needs to be in a design and engineering company: in an important support role. Finance should not be telling engineers and designers how to build a car as was the case at Ford. As Henry Ford told us, finance should run banks not car companies. This change in strategy will give opportunity to the creativity of Ford's tremendous intellectual capital to rise to the challenge. Mulally has shown a deft hand at empowering his team and working with the rank and file as opposed to legacy American auto executives who lay blame to paying a decent wage for their market place ills. The primary objective of any CEO and Mulally in this turnaround is to unlock the economic capital inside of one of the world's richest intellectual companies. Not run roughshod over it as a domineering "fix-it" guru as is so typically believed. That is why Lao Tzu's quote is timeless. The employees and their cumulative genius will save Ford. It is a leader's job to empower those employees and create an environment conducive to success. The only thing Mulally needs to fix is the focus on personal responsibility, organizational structure, strategy and alignment of resources. The rest will fall into place.

I am very bullish on Ford's decision to sell Aston Martin, Jaguar and Land Rover. I would be even more bullish if they would sell Volvo. And, if they would do it quickly. The volumes at Volvo are insignificant to the long term health of Ford and premium brands will represent serious risk and drag on operations for some time. The buyers of these brands are likely top ticking the premium auto market and will be left holding the bag. Good for Ford. Bad for private equity and other potential buyers. These acquisitions never should have happened in the first place and were a result of pressure by Wall Street in the "bigger is better" automotive merger wave and very poor management decisions.

I mentioned the risk of bankruptcy earlier and while I believe those risks for American auto makers remain remote, they do exist and could rise. With Ford's stock floating in a band of long term support and with cash flow moving in the right direction, I don't foresee a break down in its price but anything is possible given the unfolding global dynamics. Therefore, with the accumulated downside protection in the stock evaporating, I prefer to revisit Ford's stock at a later time for possible purchase.

UPDATE: To answer a question, I am not bearish on the long term viability of Toyota. Toyota is one of the greatest companies on earth. I am bearish on the stock because of changing fundamentals.
posted by TimingLogic at 11:17 AM links to this post

Sunday, November 11, 2007

Death Watch China Update


On Saturday China raises the banking reserve requirements again in an attempt to cool their economy. As discussed some time ago, I believe the Chinese economy is out of control, is melting up and officials know it. Still no sell signal on the Shanghai Index but it smells very ripe for one.

Recently, a well known market guru has come out and made comment that the Chinese stock market is not a bubble but if it goes up another 30%, it will be a bubble. Huh? So, a bubble is defined by a 30% differential in equity prices? This is complete and utter nonsense. But, at the same time he has stated that the Federal Reserve is printing money with abandon. Another bit of nonsense. It is obvious he has ulterior motives or serious bias in his statements. We've been talking about the Chinese economy being a bubble long before Chinese equities became a bubble and long before the possibility was acknowledged by anyone on Wall Street. Equities don't determine if an economy is a bubble. Equity blow offs are a manifestation of an economic bubble and that is how we knew China's economy was a bubble and wrote last summer that Chinese equities would likely launch higher. This same guru has also said he hopes the Chinese government can stop the market from rising further and cool the bubble. If he understood history, he would realize he is wanting the Chinese government to do exactly what the U.S. Federal Reserve knowingly did in 1929. How'd you like that outcome? Did that do anything for you?

I find it more telling that true investing genius--Warren Buffett--recently sold out of his PetroChina shares while said guru blathers on about complete nonsense. The Chinese equity bubble is fundamentally much larger than the U.S. bubble was during its industrialization; 1929. The Chinese financial system is also significantly less mature than the U.S. system was in 1929 and the concentration of poor investment due to corrupt communist pet projects leads to substantially higher risk as well. In other words, guided investment based on corruption and pet projects rather than market based investments are making any negative outcome potential much more significant. And, given the Chinese consumer economy is nearly nonexistent in twentieth century terms, their industrialization bubble has all of the pieces in place to end very, very badly. That is, unless you believe communist central planning can mitigate market based outcomes. Well, do you? If you believe the Federal Reserve can save the U.S. economy, you indeed do believe in central planning as is nearly universally believed on Wall Street and main street. The outcomes will likely be substantially worse than 1929 and there is every reason to believe it will lead to significant socioeconomic volatility in China. Especially compounded by a society where human rights are suppressed. Read that social instability, widespread unemployment, communist crackdowns and potential revolution. So, that could mean a more repressive and dangerous China might develop if hard liners gain an upper hand and quell any potential social unrest.

Why have I been so outspoken on human rights? Because economics and volatility does indeed play a substantial role in human rights and vice versa. Sounds a little too bizarre to believe any of this could happen now doesn't it? Did what happened post 1929 sound bizarre in 1928? I hope I'm wrong about any outcomes but repressive regimes seldom go quietly (The USSR did and we can hope for something similar.) and we've seen this situation repeat itself time and again in history. And, the investment world and business community are completely oblivious to any risks. There's that doggone risk word again. But let's hope this one does. Both for the world and Chinese citizens.

On a final note, I'll give you something to think about. This is something I have wondered for quite some time. I have absolutely no reason to believe this to be true other than circumstances seem all too obvious to me. I could actually paint a very compelling picture that the U.S. government policies over the last decade and a half have actually created a destabilized China. And, that destabilization was accomplished while making China reliant on the U.S. for economic vitality, therefore mitigating risk of global military strife and maximizing the potential for economic and political liberalization. (Good risk management. ha.) All while the rest of the world, including China, is completely convinced the current incarnation of China will inherit the twenty first century. Do you believe economic sabotage or economic subversion has ever been used as a form of power and destabilization projected by governments? You should because it has. And if you don't believe it, why not? Who would benefit the most from a destabilized communist China? From a democratic China? From a China embracing economic liberalization? The U.S. in far too many ways to imagine. Wars are not always fought with guns. To me, it seems as though this outcome could easily have been plotted and many U.S. economic and trade policies have almost made it predictable. So, is there any way someone could have hatched this strategy? Is it really any different than Reagan's strategy that included both international political actions and military spending meant to drive the Soviet Union into a state of instability? Just something to ponder over that morning cup of joe.
posted by TimingLogic at 9:23 AM links to this post

Thursday, November 08, 2007

The Four Horsemen Of The Coming Apocalypse: Baidu, RIMM, Apple and Google

It seems Google, RIMM, Baidu and Apple, four of the biggest bubbles in U.S. equity markets are not too happy today. Each is down six to eleven percent. Now paparazzi, momentum morons and clueless media types will tell you it's just one day and these stocks have made many wealthy. They are indeed right on both accounts. And, maybe they could go higher but I seriously doubt it given the macro environment. If they can do this in just one day, how many "just one days" does it take to drop 50-90%? Five? Six? Seven? As I wrote quite a while ago, my target for Apple was in the thirties. I've been wrong so far by underestimating the extent of momentum lunacy but the end state this cycle will not be a pleasant one. Apple in the mid thirties is a very generous valuation target which takes into account a great management team and superior product. Longer term it could drop further if fundamentals change significantly. While it seems unbelievable, Apple could eventually fall well below $20 and still be richly valued. Ditto with similar drops in the other names. These stocks are so overvalued that I'd rather take a cyanide pill than put my money in these companies as long term investments. I could buy half of the equity markets in Asia or emerging Europe for the valuations these companies have. But, I've beat that drum quite a few times on Google and Apple. We just have to watch and wait to re-evaluate as events unfold. Enjoy the volatility.

By the way, gotta love that "open" consortium Google put together for a portable device operating system. Open as long as they use Google's operating system. Yeah, those types of consortiums have a high success rate from a historical perspective. NOT! Now, Google is entering a realm where they have zero proven experience or competency and tremendous risk. Microsoft must be salivating because this is their core competency and Google will likely get smashed or taught some serious lessons before it is all said and done. Hubris breeds a feeling of invincibility and leads to ultimate disappointment or worse.
posted by TimingLogic at 2:12 PM links to this post

Tuesday, November 06, 2007

Liberty Or Security?

Just a quick note about a story on Yahoo's home page today. I find this story rather bizarre and oddly coincidental given yesterday was Bonfire Night in Britain. Anyone see the V for Vendetta movie? The comic book (I believe comic book) adaptation of a fascist Britain arising from global volatility that is liberated by a modern day Guy Fawkes on Bonfire Night?

I must say that in an odd bit of irony, much of what has been laid out as warnings by our founding fathers and advocates of freedom are being tested around the globe. And, it isn't just fringe elements of society that are taking notice of disturbing trends. Volatility is indeed a real phenomenon. And, it does impact human behavior in a very significant and typically negative way. Putting RFID chips into school uniforms reeks of civil liberty abuses. What's next? A chip in my head? I'm sorry but that was approved five years ago. Since when is it the responsibility of the state or school to determine what is appropriate for my child? Remember the quote I posted on here some time ago?

"Any society that would give up a little liberty to gain a little security will deserve neither and lose both."
--Benjamin Franklin
posted by TimingLogic at 1:47 PM links to this post

Monday, November 05, 2007

Wall Street's Game Of Liar's Poker

Oh isn't deception a wonderful thing? To convince the entire world we are in a Goldilocks environment yet to have those same talking heads put the economy into long term peril by their complete and utter disregard for risk management. Just as we said, here it comes: talk of dividend cuts in financial stocks and Citigroup in particular. To date, we've got the CEO of Citi and Merrill out. There will be more. We'll likely have Congressional hearings on what went wrong before it is all over. The irony is the United States Congress and the Executive branch are jointly the single largest contributors to this mess. (Although you are going to see how few people across the globe are wearing bathing suits when the tide rolls out as we quoted Buffett before. In other words, many more problems not apparent to most.) But, someone has to take the fall in the blame game. We know it usually isn't those who should.

If you take anything from this blog, it should be that one should disregard much of what has been "learned" in school, from the media and from half of the people we interact with. When one tracks down the source of all generally accepted knowledge, it is usually suspect at best. I have heard some people say this is a negative outlook on life. Interesting perspective. That might be the position of someone believing their life is the Truman Show but it is far from negative. It's a prerequisite for knowledge. To learning truth. It is the way of the Buddha. And, you don't need to be a Buddhist to seek truth or enlightenment. Now, this might not be possible in all of life's endeavors but when it comes to savings, I prefer to make that a priority. There is nothing wrong with advice from Wall Street or investment professionals but they don't have the same sense of urgency with my savings as I do. Nor do most have my best interests at heart. Wall Street is in the game of perpetuating a racket and they spend more with manipulating ad agencies and marketing organizations than any other industry to perpetuate that racket. So, zombies come on TV and say they are buying Citigroup when it drops from the low 50s to the high 40s. Or they tell you to buy Apple at $130 or $170. If you are adept at trading, that's great. But, where are they when the sell signal comes? Or, do you hold Citigroup to bankruptcy? Too big to fail? We'll see. I expect the government cannot let Citi's U.S. banking business fail but would they save the entire company in a crisis? Maybe Citigroup's problems end at this quarter's reported problems or next quarters.

Why are we repeatedly fixated on these talking heads giving us sound bite advice? Well, that is a complicated bit of psychology. One issue is misplaced trust as John Galbreath and Ben Graham have told us time and again. That belief is perpetuated by a massive marketing machine. And because it isn't their money, Wall Street will do things I would never dream of doing with my own savings. And because they charge management fees on our money regardless of what the market does. And, because incompetence is the rule, not the exception, on Wall Street. So, in a down year as their fees diminish maybe they have to drive a Mercedes and not a Ferrari. Yes, there are competent minds and even great minds on Wall Street but they aren't foolish enough to create the messes we see before us or come on the Lightning Round or the other sound bite gaming spots. Could you see Warren Buffett, David Dreman or Ben Graham participating in such madness? As I said before, when this cycle ends, we will no longer have horns and buzzers and skits on financial television. Those shows will be long gone.

Are you amazed at how the unfolding of current events with financial institutions is catching everyone off guard? Well, I'm not really amazed but I wish I were. A little side story. There is a money manager who has a blog that I read every so often. He's sometimes got worthwhile commentary. I'm not going to name the blog because I don't want to finger him. He wrote this long treatise some time ago as to why he was adding a certain insurance company to his portfolio. It was actually very detailed and he did alot of what I would call cursory analysis. In an environment similar to the last few decades, you'll seldom get the type of analysis Warren Buffett or Ben Graham would do. Something every fund manager making big jack has the resources and capability of doing. But it doesn't seem to be a priority anymore. Why? First, because many have become too reliant on their Bloomberg terminal and don't know how and secondly because of a very lackadaisical mindset in an industry where people are paid inordinate sums of money to be average because we, the customers, allow it. That is why 80+% of money managers underperform the market or index they are tracking. My posted response to his analysis was that insurance companies were eating all of the risk financial companies could feed them and his analysis had holes. It wasn't brilliance on my part to know this, it was called work. If he had done true diligence, he would have known that. This isn't rocket science. We simply have an industry rife with incompetence. Has it always been this way? Yes, but it has reached unprecedented levels. Now, in the last two weeks we find out that same insurance company may have choked down $30 billion in garbage fed to them by Wall Street. True? Rumor? Do you want to buy the stock and wait to find out? Guess what company is now on the new price low list?

Now Goldman Sachs said recently they are glad that others are coming around to the view that international markets will pull us through this slow down. What is that about? Does it make it more likely to be true if more people eat the dog food? Do you feel more safe by having other equally incompetent opinions in your camp? I say incompetent because of the foolish risks Goldman is taking during a period of very heightened global risk. I just can't seem to get away from that damn risk word. Emerging markets are the last great hope of bulls. Do you use hope as your investment strategy? This type of consistently lax view of reality is going to be punished severely. It is so ingrained in this industry that Mr. Market will do the unexpected and punish them beyond what any could imagine. And, someone will say, "See, that book about black swans".....that the herd just lapped up....."is a great piece of insight" or unpredictable events just happened again. And, I will say as I have been saying that is complete nonsense. It was predictable. If it weren't, why have I been writing about it since starting this blog? By the way, did you ever wonder how Goldman managed to report record profits in a quarter where their top hedge fund lost nearly thirty percent of its value? Now, either Goldman clients are getting the shaft and Goldman is keeping the cream for themselves or there are some rather serious losses on their books and we are seeing fuzzy accounting. Or, maybe there is something I just don't understand about first grade math. I'm sure I just need to be enlightened by the great Buddha.

I'm reading more and more that many believe the invisible hand of the Fed is keeping equities afloat. I don't buy that as I have said before. Even if they were trying, and I have no reason to believe they are, centralized planning ist kaput. That strategy cannot control a market of millions of buyers and sellers forever. The levitating action of this market and its resilience is likely being caused by other factors. More on that in one of the next few posts.

Now, where's that inflation everyone has been talking about for the last few years? Once again, this is the safe "herd" opinion of an industry with no historical ability to determine a crisis until after it has happened. As we have discussed incessantly, and my work is backed up by quantitative data to validate that position, it is simply a matter of time until the inflation bugs are proven to be completely wrong. And, that appears to be just about everyone. Until the data changes to an inflationary environment, and I will post on here if it does (and it has a nearly impossible chance of changing), we are in a deflationary environment. The fun is just beginning. Belly up to the bar and get ready to watch the biggest game of liar's poker our generation has ever seen. This will be one to tell your children and grandchildren.
posted by TimingLogic at 6:59 AM links to this post

Sunday, November 04, 2007

The Search For Perfect Food


French society has given the world much including the guillotine and helping Americans gain their freedom, for which I am grateful. (Okay the guillotine is a bad joke but the French aristocracy learned dignity, human rights and self determination are universal truths.) And, French companies, research institutions and universities are a powerhouse in the fields of science. But, the greatest of French contributions may be in the art and experience of food, drink and taking time to enjoy life's pleasures. You remember those?

There is some question as to where croissants originate but it's obvious to me the incredibly talented French bakers perfected them. If you've ever entertained making croissants from scratch, you know it is easier to win the New York City Marathon. Alas, look no further than your local Trader Joe's for the most recent advancement of technology available to consumers. LCD televisions? Halo 3? The iPhone? Better. Chocolate croissants you bake at home. Blasphemy to French bakers but great for you and me. The croissants come frozen and require "proofing" or letting the yeast do its wonderful deeds but then you have hot, flaky, buttery, chocolate croissants out of your own oven. Now, I'm not a food critic but what could be better than pastry dough, butter and chocolate? Oh, and they are only 320 calories a piece. So, the average American male could eat about eight and average female about five to fulfill their daily caloric intake. Of course, that doesn't leave room for the ice cold milk or freshly brewed coffee you'll want to have with these tasty treats.

How is this related to topics at hand? Enjoying life is more important than current events? Keeping things in perspective is emotionally healthy? Trader is in the name of the company? I wish Trader Joe's were a publicy traded company trading at a discount to its peers?
posted by TimingLogic at 9:49 AM links to this post