Week in Review 
For the week 4/24/2006 - 4/28/2006
Brian Trumbore
President/Editor, StocksandNews.com

Frankly, UN, I Don't Give a Damn

So spoke Iranian President Mahmoud Ahmadinejad as the International Atomic Energy Agency presented its final report on Iran's nuclear program and said, yes, Iran is enriching uranium. But far more worrisome is the fact the IAEA had to admit it had no clue what Iran was really doing, let alone where. This is the same agency, of course, that was hoodwinked for 18 years before Iran itself came clean and confessed it was working on nuclear technology.

Earlier in the week, Ahmadinejad said "No one can take away (our nuclear effort)," while Grand Ayatollah Khamenei threatened the West again if attacked.

And if there are still three or four halfway educated people out there who doubt Iran's true intentions, let me note a report from the London Times.

Ahmadinejad recently met with one of the world's leading terrorists, Hizbullah's Imad Mugniyeh, in Syria. What's significant here is that Mugniyeh is responsible for Hizbullah's overseas operations and would be the one launching some of Iran's counterattacks should the U.S. and/or Israel bomb suspected nuclear facilities.

So the Security Council should have a pretty clear mandate about now, right? I mean sanctions, at a minimum, should be levied immediately because Iran is snubbing its nose at the world community, right?

Wrong. Russian President Vladimir Putin said it's up to the IAEA to figure out a solution (even though the Security Council asked the IAEA for the report), while China remains adamant against any action that would potentially impact its ability to receive Iran's oil. So once again it's up to the United States to lead and, as we all know by now, our credibility isn't exactly at its strongest these days.

The Security Council meets next week but no one should expect any decisive action. Iran continues to play its hand brilliantly and I for one wouldn't want to chance that it's bluffing. The U.S. can only assume the mullahs will obtain the bomb far sooner than most "experts" agree and now we also know Iran clearly has the delivery capability, as a recent purchase of 18 long-range missiles from North Korea proves.

Iraq

But believe it or not, there is a shred of decent news this week on this front and without attempting to be too cute, I'd love to see a clash between Ayatollah Khamenei and Iraq's Ayatollah al- Sistani. Kind of like Gandalf vs. Saruman.

Let's face it?if Ayatollah Sistani had not been the force for moderation that he has been the past three years, the war in Iraq would have already been lost. Sistani once again called for peace and, most importantly, offered his support to the new government being formed in Baghdad in dismantling the militias.

Prime Minister-designate al-Maliki, who met with Sistani, will get nowhere without disbanding these private armies, but had earlier sent mixed signals on the subject, saying, yes, they should be dismantled but the militias should also be integrated into the security forces. It's a fine line here, but U.S. Ambassador Khalilzad said "decommissioned, demobilized," first, then integrated. In other words, al-Maliki was acting like militia units, en masse, could join the formal Iraqi police and army forces, while Khalilzad is saying they must give up their weapons first and then each member would be handled on a case by case basis.

Enter Sistani, who recognizes that either way the security forces will always be infiltrated by bad guys, but in the end minimizing violence is the key to establishing some kind of stable Iraqi state.

Meanwhile, al-Zarqawi brazenly appeared on video, unmasked, and I agree with the Bush administration this is an act of desperation. Desperate people, though, are still capable of incredible acts of cruelty. But while our inability to capture him is mind-boggling, Zarqawi may have just overplayed his hand.

We also note the deaths of three Italian soldiers and one Romanian in a car bombing. It's easy to forget the Italians still have 2,000 troops here, mostly in Nasiriyah, and play a critical role. Unfortunately, for those of us still supporting the war, the recent change of government in Rome doesn't bode well when it comes to Italy's future participation.

Also, in that other war, Afghanistan, we note the deaths of four Canadian soldiers in an attack there.

Finally, in this evolving war on terror, authorities in Egypt now suspect the recent bombing of another Sinai resort, the third such attack in 18 months, could be the work of a new home-grown network, not al-Qaeda, which has never claimed responsibility for any of the blasts.

Korea

"In the half century since the agreement, there has been a great change on this land. Guns have turned into ploughs, cannon smoke into factory smoke, and gunfire into sounds of love and harmony, establishing the base for well-being and national peace."
--Inscription on the Korean War Memorial in Seoul.

I visited the memorial on Friday before taking a trip to the DMZ, the demilitarized zone between North and South, and the above pretty well sums up today's South Korea, one of the true Asian Tigers.

I was walking through the museum for about an hour, though, when I realized I was the only American in the place. Then I was startled to turn a corner and see three U.S. soldiers. Of course I shouldn't have been. After all I'm well aware we still have 30,000 troops here, but my reaction is also a sign of how easy it is to take things for granted in Korea, forgetting that the nut job across the border in Pyongyang could at any moment unleash the whirlwind.

In the museum itself, one that covers Korean participation in all wars (note to self?no wonder they hate the Japanese), when you enter the formal Korean War exhibit you are in a room surrounded by war footage blasted on the walls.

It was captivating film but I was immediately struck by something else. Every single adult that passed through as I was standing there stopped for a while to view the carnage on display. But not one single student. The school kids couldn't have cared less as they noisily, and rudely, moved on.

And boy you better believe this is important. I saw firsthand how in a recent poll here, half of South Korea's young people would side with North Korea if the United States attacked Kim Jong il's nuclear facilities. You're reading that right. In turn, just a fraction of those with memories of the war and its depressing aftermath would.

When I was in Lebanon last year, I mentioned that there was no more complex place in the world, politically, but the Korean Peninsula is right up there.

The elderly here understand just how wicked and dastardly the North Korean regime is and how at a moment's notice, Seoul could be vaporized. The youth are like "whatever."

But there are also some good reasons for the latter attitude. The last thing anyone wants is a war, obviously, and both South Korea and China are terrified the North could implode, sending millions of refugees pouring across their borders.

So both the South and China are trying economic integration and this isn't a bad thing. At North Korea's largest experiment with capitalism, an industrial complex at Kaesong which I could see the outlines of from the DMZ, 6,000 workers are bussed in each day to work for South Korean-owned plants. The South needs a low-wage base to compete with China, so many South Koreans view China as the real issue, not their cousins north of the 38th parallel.

For China's part, they are moving from competing with the likes of Thailand and Indonesia, in terms of quality of goods, to vying with southern European nations and South Korea, and eventually France, Germany, Japan and the United States. [See the Microsoft / Lenovo deal, for example, and the future of the Chinese auto industry.]

Caught in the middle, actually, is the U.S. I haven't been a fan of Secretary of Defense Donald Rumsfeld, to say the least, but I thoroughly agree on his basic outline for realigning U.S. forces, including an item I discuss below involving Guam.

Here in South Korea, the Pentagon now believes the South is more than capable of defending itself and we have been moving our remaining forces away from the DMZ, as well as Seoul. [It's hard to imagine, since it's largely hidden, but you forget Seoul itself is an armed camp.] In the War Museum I ended up talking to one of the three American soldiers, a Private Quinones from Jersey City, NJ, who told me he was stationed at our main base these days, some 30 miles south of Seoul and further away from a potential North Korean artillery blitz. Most South Koreans, especially the young people, want us totally out. You know what? We should be, as long as we can project a strong enough presence within a few hours flying time of Pyongyang. Think nuclear retaliation.

As for the U.S. / North Korean relationship these days, it would appear the U.S. is making real progress in disrupting Lil' Kim's illegal activities that are the lifeblood of his dictatorship. Counterfeiting, drugs, money-laundering, arms trafficking?all seem to be in some state of disarray according to reports, though at the same time the North still managed to deliver those long- range missiles to Iran.

So the question is does White House strategy drive the North Koreans to the negotiating table? Will Kim Jong il realize his future is in playing a role towards the establishment of a unified Korea? As opposed to the situation with Iran, where I see no good resolution, I am equal parts pessimist and optimist on this front. I just wish we knew more about Kim's generals. Where do they really stand? It's the burning question the U.S. intelligence community would like an answer to.

As for my trip to the DMZ, you're going to have to forgive me in holding back on some thoughts because I'm both running out of time before posting and I need to further assimilate everything I saw.

I went with 12 others, Canadians and Europeans, and for part of the six-hour excursion we were joined by other tours. You get to see quite a bit and get a real sense of the dangers, though you're never close enough to see any North Koreans.

The tour takes you to the Freedom Bridge that all of you have seen on television and at this point you're in the 8-km "military exclusion zone" which both sides have. Then in the middle is the 2-km DMZ, again on both sides.

The highlight was going through tunnel #3 that the South Koreans discovered in 1978, the first two having been found in 1974 and 1975. [A 4th was uncovered in 1990.] You walk the equivalent of 10 stories down and then 400 meters across before you hit the first of three concrete walls installed by the South Koreans to prevent the North from flooding the tunnel on their end with poison gas.

The discovery of the tunnels was a huge shock to the South because you have to picture in tunnel #3, for example, anywhere from 10,000 to 30,000 soldiers could have emptied into South Korea, per hour?.all only 30 miles from the center of Seoul. The ceiling is about 5 feet 6 inches and being taller than that I had to crouch down the whole time walking through it. No more tunneling for me, by the way. But you're also thinking 'just how many North Koreans died building this thing?' They used prison labor, of course, and there was no food or water supply.

You are also taken to an observation post in the middle of the DMZ where with binoculars you can easily see across to the North, as well as Panmunjom where any negotiations between the two sides take place. Even the negotiating table has a dividing line right down the middle.

Our tour guide, a young woman, was very optimistic about the future, particularly because of the economic integration taking place. But what concerns me is the clear indifference by many in the South towards its nation's history. I'll have further thoughts next week after going through all my notes, but sitting in my hotel room, knowing some nut could launch an artillery barrage that would take out hundreds of thousands of people at a moment's notice, would certainly have me sleeping with one eye open were I citizen here. Lastly, consider this. There are an estimated 30,000 North Korean spies in the South.

Wall Street

Once again the major averages were mixed as the tug of war continues between those who believe the Federal Reserve is basically finished raising rates, after one last hike on May 10, and those who feel the economy is simply too hot and inflationary pressures, be they from energy, other commodities, and eventually wages, will force the Fed to do otherwise.

This week Federal Reserve Chairman Ben Bernanke appeared before a joint congressional economic committee and said "vigilance in regard to inflation is essential." But he also added he was concerned about a slowing housing market and rising energy costs and the impact these two in particular can have on the consumer and overall economic activity. So Bernanke added the Fed could pause for a spell to examine more data, as the Fed's governors are certainly well aware there is a lag effect from the 15 interest rate increases they've already instituted.

The bond market took Bernanke's comments to heart and yields on the long end of the curve rose slightly on the week while the two-year Treasury rallied a bit on the theory that the Fed will indeed stop for a while.

The long end, of course, is more concerned with an actual inflation threat, while the shorter end concerns itself with the here and now.

But what does the actual data tell us? This week's readings on housing were decidedly mixed. While existing and new home sales rose, surprising some, the median price on existing was up just 7.4% year over year, as opposed to the double digit growth we've been used to, while the median price on new home sales actually fell 2.2% from a year ago and a full 6.5% between February and March. No matter how you slice it, the market has stagnated in terms of price and the issue becomes is housing on the verge of rolling over?

Two key readings on consumer confidence were mixed as the full impact of the recent price spike at the gas pump has yet to be fully felt in these surveys, while the Fed's review of regional economic activity expressed some of the same concerns Ben Bernanke shared, including the finding that while some companies are attempting to pass through higher costs, they are meeting only limited success thus far thanks to competition.

Regarding energy, oil settled down this week despite the worsening news on the Iran front, but little should be read into this, especially President Bush's dubious call for tapping the Strategic Petroleum Reserve (this isn't an emergency) and a Senate proposal for a $100 rebate as well as renewed calls on the part of Congress to investigate the oil industry for price gouging.

As for the rebate, I've already spent mine on about six beers here in Seoul. I meant to tell you, a pint of Guinness is $16! A regular bottle of beer is $9 in my hotel. Come to think of it, I'll gladly take the $100, Mr. President?or am I supposed to use it for something else? Anyway, it doesn't help matters when the likes of ExxonMobil are reporting earnings of $8.5 billion.

Everywhere you go soaring oil is a drag and the future isn't particularly rosy when you have a leading producer such as Venezuela and its wingnut President Hugo Chavez proclaim that he is out to de facto nationalize his nation's energy resources in significantly hiking royalties received by the government as well as taxes levied on those drilling for it. Ergo, if I'm a foreign oil company, why the heck would I want to do business here? And this is the rub. Venezuela desperately needs new investment and technology, it won't get it, and its oil fields will yield less and less just as the world needs more. That's not how you get back to $50 oil, folks.

But for now the world economy, despite the roadblocks being set up in the form of higher fuel prices, rising interest rates and a questionable housing market, keeps booming. And it's definitely a bubble.

China's central bank, for one, recognizes this as it hiked its key interest rate, surprising most everyone. But China was only doing the prudent thing in this case in attempting to put the break on runaway capital investment and ill-advised commercial lending. But if China slows that doesn't bode well for those exporting to the country.

Meanwhile, the Bank of Japan said it will take it slow in raising its interest rates for the first time in eons, but the recovery appears for real and consumer prices are indeed rising. Hikes are inevitable, yet another drag.

All of this spells bad news for the U.S. dollar and it's been slumping for months now. But like all movements in the financial markets, it's the rate of change, speed, that matters and for now the decline is orderly.

Street Bytes

--The Dow Jones hit its highest level since Jan. 2000 before closing at 11367, up 0.2% on the week. The S&P 500 lost a point and Nasdaq declined 20 points to 2322, thanks in no small part to Microsoft's terrible earnings report late Thursday that led to a decline in Mister Softy of $3, the worst performance since 2000, the following day. Microsoft missed on its first quarter bottom line and its future guidance was sloppy, owing to the fact it is gunning for Google on the search side and that means much higher spending and lower profits, at least for now. Otherwise, overall, corporate earnings continue to be solid.

--U.S. Treasury Yields

6-mo. 4.91% 2-yr. 4.86% 10-yr. 5.06% 30-yr. 5.16%

The initial report on first quarter GDP came in at 4.8% versus 1.7% for the fourth quarter. But it's time to think of the second and all looks OK thus far, depending on oil's impact on consumer spending. [Any true slump in housing will begin to bite in Q3 by my way of thinking.]

--The upcoming G-8 summit in St. Petersburg could be all about energy security (as well as a little Iran talk) and this week the chairman of Russia's gas giant Gazprom blasted the European Union for its efforts to deregulate and diminish the influence of Gazprom and its pipelines that supply the continent with 25% of its natural gas. Alexei Miller said his company can always shift its focus to Asia and their booming needs, and the next day Russian President Vladimir Putin echoed his buddy's remarks. In a meeting with German Chancellor Angela Merkel, Putin said:

"Think about it from our point of view. What are we to do when we hear the same thing every day? We start to look for other markets.

"When people come to us, it is investment and globalization, but if we plan to go somewhere, then it is always the expansion of Russian companies."

Well, as Spock would say, "Logical, Vladimir, but also a bit disingenuous." In less than two months it could be a real tension convention in St. Pete.

[For his part, Putin did do one thing right as he reversed course and rerouted a key Siberian oil pipeline significantly away from world treasure Lake Baikal, which contains 20% of the world's unfrozen fresh water. Also, Gazprom did sign a significant deal with Germany's BASF, giving up a significant ownership portion in a Siberian gas field.]

--The U.S. Justice Department is investigating the shady energy trading firm RosUkrEnergo that is half-owned by Gazprom. I have written of the mob connections here, even more important these days because RosUkrEnergo became the key middleman in a recently brokered deal between Gazprom and Ukraine to keep the gas flowing there. So RosUkrEnergo decided to release its ownership structure this week, adding real faces to the murky picture, and most would agree we still don't know much about these guys.

--Meanwhile, staying with oil, Chinese President Hu Jintao went from America to Saudi Arabia where he signed a bunch of energy deals with Saudi King Abdullah. What the Saudis like about the Chinese in particular, aside from their money, is the fact they don't lecture the Kingdom on democracy. Yes, the Saudis love this hands-off approach to their domestic policy, and in the case of China it can also sell Saudi Arabia weapons without first needing to gain parliamentary or congressional approval.

Following his Saudi adventure, Hu then traveled to Nigeria where he obtained all manner of exclusive drilling rights. "This is fun!" Hu was heard to say. [Actually, I'm not exactly sure what Hu said, but he had to be at least thinking it.]

--Boy, here in Seoul the big story is the scandal that has claimed Hyundai's chairman who was arrested and charged with embezzling over $100 million that he used for illegal lobbying and bribery. The chairman's son, who runs Kia Motors, has not as yet been charged with any wrongdoing himself but is still under investigation.

--In another case of CEOs gone bad, former Computer Associates CEO Sanjay Kumar, one of the true dirtballs in his sport, pleaded guilty to massive accounting fraud. I mean this lying weasel was so directly involved he was flying around the world at quarter end trying to close sales?and if he didn't, he booked them anyway?in order to hit Wall Street's earnings estimates.

--And in Tokyo, where I spent some time in Narita Airport, there is the incredibly awful story of a leading architect, developer and others who falsified earthquake data and put up some 200 buildings (including apartments and condos) where officials now realize they would collapse under just a moderate quake in Tokyo. You don't get any more criminal than this.

[By the way, the difference in security at Narita vs. TSA in the U.S. is truly laughable. The Japanese' professionalism is to be admired?and copied.]

--Honda Motor Co. reported revenues rose 21% in the first quarter. Honda's profit also exploded and it now receives 75% of this from its North American operations. The comparable figure is 60% for Nissan while Toyota garners 43% of its profits from the U.S. and Canada. Much of this is due to the weak yen vs. dollar relationship, which helps the Japanese when the dollars are translated back into yen, as well as the fact they have a good product. But the currency angle could be about to change.

--Microsoft's Bill Gates was treated like a rock star in Vietnam this week, while the company agreed to purchase $700 million of Chinese hardware over the next five years; this after Hu Jintao's visit to Gates's place and a subsequent agreement by leading Chinese PC maker Lenovo to install $1.2 billion worth of, hopefully, bug-free Windows operating systems.

But at the end of the day?putting on my best CNBC anchor voice? "While Bill Gates received rock star treatment in Asia, investors on Wall Street greeted Microsoft's first quarter earnings announcement with jeers."

[If I were the Vietnamese, I'd rather see Bono.]

--Here's a better tech story I gleaned from a local Korean paper. LG Phillips LCD is a Korean-Dutch joint venture formed in 1999 between LG Electronics and Philips Electronics. So on Thursday the two officially completed the world's largest LCD flat panel manufacturing plant in the world here near Seoul; one that will churn out 90,000 panels a month by year end. The production line is the size of six soccer fields and will eventually employ some 25,000 directly and 42,000 indirectly. Good for them.

--South Korean workers spend more hours on the job per year than anywhere else in the world, an average of 2,390 per person. I saved this note from a while back because it really pertains to France as well?where they work only 1,431 hours, lowest among nations that should matter.

--My portfolio: At first, my carbon fiber play continued to hit new highs, but then on Thursday, whap! Down $3 and another $1.50 on Friday. But don't fret for yours truly?it's still premium beer for the kid. [Just this year, this volatile sucker has gone from $9 to $31 and now back below $26.]

--Sounds like Kenny Boy, former Enron chairman Ken Lay, is having a difficult time on the witness stand. Yes, there is a god.

--Yikes, I see shares of Lucent are now fetching about $2.75, or less than the cost of a good Sunday paper. At least the paper might contain an idea or two that is more profitable, including post-merger with Alcatel.

--Goldman Sachs is receiving some unfavorable publicity across the pond in the UK. It seems the investment banker is playing all sides and can't possibly be acting in its clients' best interests when it appears to be prospecting competitors at the same time.

--The nightmare that is the Refco bankruptcy continues. The trading giant went under in October yet 17,000 clients of its futures and foreign exchange divisions still can't access their accounts, even though they were told long ago that the funds were segregated from the bankrupt unit. Nonetheless, the court has frozen the assets.

--Sun Microsystems' CEO and co-founder Scott McNealy stepped down and slid into the comfy chairman seat, relinquishing his post to ponytailed Jonathan Schwartz. Sun Micro's revenues peaked in 2001 at $18 billion and fell all the way to $11 billion for the 2005 fiscal year. McNealy, who likes to duke it out with Microsoft, should have just walked away totally.

--And now?.your list of biggest ports in the world, based on shipping container volume.

1. Hong Kong
2. Singapore
3. Shanghai
4. Shenzhen (China)
5. Busan (South Korea)
6. Kaohsiung (Taiwan)
7. Rotterdam (think wooden shoes and windmills)
8. Los Angeles (think plastic surgery)
9. Hamburg (think hyped up hot dogs, not burgers)
10. Dubai (think Bush administration incompetence)

--Inflation Watch: Trader George said the frozen peaches he uses for his morning shake are up 20% in three months! Geez, I never knew my friend was such a health nut.

Foreign Affairs

Israel: The government, in showing amazing restraint following the Tel Aviv suicide bombing that Hamas claimed was a legitimate act, is courting international support and thus far it appears to be the right choice.

Taiwan: Officials here breathed a sigh of relief following President Bush's meeting with China's Hu Jintao. From Lawrence Chung of the South China Morning Post:

"The island has been nervously watching the (talks), fearing the American leader would punish Taiwan by making a statement that could hurt Taipei's interests?

"But in their meeting (April 20), Mr. Bush simply restated the long-held U.S. stance that his administration would continue to deal with cross-strait issues in terms of the three communiqu?s between Washington and Beijing as well as the Taiwan Relations Act."

Premier Su Tseng-chang said "We appreciate President Bush for his insistence in upholding the global mainstream values of democracy and freedom."

Bush basically said a lot of nothing, but in the dangerous game of chicken and semantics, that's often enough.

Solomon Islands: What? Well, there has been a lot of violence in these poverty racked islands in the South Pacific and it all started because some claimed that a recent vote to elect a new prime minister was fraudulent and based on money pouring in from Taiwan to prop up its favored candidate.

None of the charges have yet been proved, but what's interesting is that Taiwan is still recognized by 25 nations, including the Solomons, the Marshall Islands, and bigger countries such as Panama and Costa Rica.

China and Taiwan have been battling over these 25 through checkbook diplomacy and China this week said it was fed up with Taiwan maintaining legitimacy in the eyes of the world as an independent state. Just another sidelight to the heated debate between these two.

Nepal: Yes, this place does matter and a good idea of just how much so is the fact the U.S., India and China were all intimately involved in quelling the violence and getting King Gyanendra to step aside and reinstate parliament. The next key was to get the Maoist rebels to stand down and they agreed to a three-month ceasefire to observe how the political process takes shape.

France: As predicted by your editor, the National Front far right party of Jean-Marie Le Pen is making big strides in opinion polls following all the recent unrest in France, especially the immigrant riots. Overall, though, in the drive for next year's presidential election, Socialist Party candidate Segolene Royal is in the early lead with a 34% 'approval' rating (not 'who would you vote for'). Nicolas Sarkozy is at 30%, Dominique de Villepin 29%, and Le Pen at 21%.

Lebanon: For the first time since the assassination of former prime minister Rafik Hariri in Feb. 2005, Syrian President Bashar Assad was interviewed by UN investigators. It's not known what he said, but if Bashar is anything like his father it was four or five hours of nothing but seeing whose bladder would give out first.

Japan: Prime Minister Junichiro Koizumi just celebrated his 5th year in office though he's slated to step down in September. So the locals are reflecting on his lengthy tenure, especially by post- war standards. An editorial in The Asahi Shimbun concluded the following:

"(What) has he actually done for the nation?

"He has stabilized Japan's relations with the United States by falling into step with the George W. Bush administration. Another positive achievement was that he brought to Japan some victims of North Korean abductions and their families. But he has made a complete mess of Japan's diplomatic relations with China and South Korea.

"We would not say Beijing and Seoul are completely blameless. But it was ultimately Koizumi's five visits to Yasukuni Shrine that effectively shut down the channels of dialogue, not only with the Chinese and South Korean leaders but also with their foreign ministers.

"Koizumi's stance has emboldened those at home who believe in the legitimacy of Japan's actions in World War II, and aroused unease and suspicion even in Japan's most needed ally, the United States. Japan's estrangement from China and South Korea is certain to weaken Japan's presence in the international community."

But on the economic front, despite the recovery, the Asahi Shimbun conducted a telling poll. After five years of Koizumi, 42% said their lives have gone downhill and only 18% say their life has changed for the better. This is startling, but then I also pointed out recently that just as in the U.S. and elsewhere, in Japan there is a growing divide between the 'haves' and 'have nots.'

Separately, there's another issue on the foreign policy front, the disputed islands claimed by both South Korea and Japan, what some call the Liancourt Rocks, but which I've discovered are better known as Tokto in Japan and Dokdo in Korea.

I need to get a better handle on this one and will comment further next week, but for now evidently South Korean President Roh heightened tensions when he said in a nationally televised address an "amicable relationship between South Korea and Japan can never be established as long as Japan continues glorifying its history and claiming rights to the territory."

In Japan, they're supposedly saying nothing can be settled until Roh is out of office.

[I saw this morning that a U.S. Air Force map from the 1980s shows the islands being in South Korea's exclusion zone, not Japan's.]

Seeing as I have to fly between the two one more time, I urge that they sit down over a beer and chill out until I've left the region.

Sri Lanka: Does civil war here really matter to the rest of us? Long ago I used to draw the analogy that a car bomb going off in Sri Lanka doesn't, but one in Tel Aviv does. That's still the way I feel, except that the Tamil Rebels are some of the fiercest terrorists in the world - many say the best - and we don't want them passing along their knowledge to others, as they already have.

Brazil: It's below the radar but Brazil appears to be proceeding with its own nuclear program, including enriching uranium. What concerns some is that Brazil won't allow unlimited inspections, a la Iran, even though it too is a member of the Nuclear Nonproliferation Treaty. I'm not worried.

Guam: Well, it's not a nation and instead is a U.S. possession, but when I arrived on Monday, the headline in the local paper read "The Marines Are Coming!" 8,000 of them in addition to the thousands already here, all part of the Pentagon's troop realignment efforts.

The U.S. has 50,000 soldiers in Japan and these 8,000 are coming from Okinawa; a complex negotiation with Japan wherein Tokyo is ponying up a lion's share of the cost of relocation. It's a huge shot in the arm for Guam, of course, and this island of 154,000 will see its population increase by up to 30,000, including troops' families, by 2012.

One other note on Guam, where I'll be spending a few days again before heading back home this week, the day before I first arrived the U.S. Surgeon General was here to discuss bird flu preparations. But because Guam is so far from any significant land mass, most experts believe that any bird already ill would never make it here in the first place.

---

Pray for the men and women of our armed forces.

*I have to add, the aforementioned Private Quinones from Jersey City truly represented the best of America. I told him how proud I was of him and his service and we ended up having a great chat. But I had to ask, "So, are you a Mets or Yankees fan?" "Yankees." He saw the look of disgust on my face. "Yeah, Mets," I replied. Where I live, it always comes down to this.

God bless America.

---

Gold closed at $656
Oil, $71.58

Returns for the week 4/24-4/28

Dow Jones +0.2% [11367]
S&P 500 -0.1% [1310]
S&P MidCap -0.7%
Russell 2000 -1.0%
Nasdaq -0.9% [2322]

Returns for the period 1/1/06-4/28/06

Dow Jones +6.1%
S&P 500 +5.0%
S&P MidCap +8.8%
Russell 2000 +13.6%
Nasdaq +5.3%

Bulls 45.4
Bears 25.8 [Source: Chartcraft / Investors Intelligence]

Have a great week. I appreciate your support.

And shout out to LT!

Brian Trumbore

BUYandHOLD does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction or investment strategy. Any investment decisions you make will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs. The securities mentioned above are being used for illustrative purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy. The securities markets are subject to the risks of fluctuating prices and the uncertainty of rates of return and yields inherent in investing. Past performance is no guarantee of future results. The opinions expressed above are not necessarily those of BUYandHOLD, Freedom Investments, its officers, directors or any of its affiliates.