Week in Review 
For the week 9/24/2007 - 9/28/2007
Brian Trumbore
President/Editor, StocksandNews.com

Wall Street...and the Global Bubble

I had a whirlwind trip to Ireland this week for a little golf and good cheer (ahem), but I did have an opportunity to do some more research on my global real estate boom/bust thesis. In fact when I arrived Sunday morning, the newspapers were filled with headlines such as:

"It's a case of boom not bust, say the real experts?Celtic Tiger isn't facing extinction, though some want us to think it is;" "We need these expert scaremongers?like a hole in the head:" "The economic wake-up call Ahern must answer;" "If there is a slump, who talked us down?"

What sparked the excessive coverage were the musings of two commentators/authors, George Lee and David McWilliams, who I've been trying to come up with appropriate comparisons to and I'm stuck with Joseph Granville and Robert Prechter from the Wall Street of the 1980s, both of whom were influential market pundits then during a volatile time.

Lee and McWilliams over the prior days and weeks had appeared on some highly-rated television programs in Ireland and pronounced the Irish economy was going down the tubes, and fast.

But they based their explanations on the end of cheap oil (Mr. Lee) and a comparison to Uruguay at the beginning of the 20th century (McWilliams). Huh? Heck, I can come up with something far easier to understand, but first I'll throw out some opinion from the Irish papers.

From Finance Minister Brian Cowen: "The economy is stronger today than at any point in its history. More people are at work, incomes are high, opportunities for people here to get on have never been better. In the last 10 years, the hard work of the Irish people, responding to the policies of this party in government, has built a platform of prosperity."

No doubt, Ireland has had a great 10-year stretch, but I read this and could only think of another shill, U.S. Treasury Secretary Hank Paulson.

Marc Coleman, in an opinion piece for the Sunday Independent, had a good history lesson.

"Alone amongst the countries of the world, Ireland's population is 50 percent lower now than in 1841 when 8.1 million lived on the island and 6.5 million lived in what is now the Republic. Although 1.5 million people died in the famine Ireland's population should have rebounded as did those of famine- stricken countries at the time like Finland. But for over 100 years, Ireland was gripped in policy permafrost?.As Europe's population trebled between 1850 and 2000, ours was cut in half?.

"Finally - 100 years after it actually happened - we started to recover from the famine. [Protectionism was abandoned in 1957 and Ireland's economic clock started to tick.] But although we'd opened our economy, we started to go backwards in the Seventies as state spending and taxation rose?.

"In 1987, good fiscal management was added to economic openness. We have never looked back and we have never had it so good. And there is a reason why this should continue well into the 21st Century. Outside of the far north of Europe, ours is the lowest population density country in Europe.

"With globalization, hundreds of millions of people are on the move, looking for a country like Ireland to make their home. Land rich but people poor, Ireland is hurtling through history on a journey back to the future. Last year the population of the state reached 4.2 million, a number last recorded in 1861?.

"But what kind of future is it? How can Ireland grow its population when the 4.2 million here are suffering outlandish property prices and growing congestion? Sadly, underpopulation is not the only legacy of the famine. An obsession with land by our people and a dysfunctional approach to its management by our Government is blocking our progress. We are building a diverse and high technology economy in the 21st Century. But we are designing cities that look more like collections of small villages. We are building out and down when we should be building in and up. Rip-off house prices, long commutes and a declining quality of life are just some of the consequences of this. There are many others.

"The water crisis in Galway is another. Poisoned by tens of thousands of one-off housing, it is yet another legacy of a stunted past. Farms, sub-divided in the 1840s in a desperate attempt to survive hunger, are now the foundations on which we build population growth. Instead of clustering efficient close knit communities, we are sprinkling our people all over the countryside. We are building a country in which public services - everything from public transport, sewerage, water supply, healthcare and education - are impossible to deliver efficiently. And despite a level of car ownership that is low by EU standards, the resultant long commutes have turned us into one of Europe's most oil dependent nations. With the price of oil exceeding $81 a barrel?this is not a place we want to be."

Frankly, in all my trips to Ireland, 16 since 1989, I hadn't fully thought out Marc Coleman's thesis on land development and its impact on the infrastructure. All I know is that Ireland's problems on this front, such as with sewerage and lack of landfills, has always been a big issue.

But another commentator, Alan Ruddock, also in the Independent, noted that "Inward investment, such a vital part of our economic development over the past 15 years, is drying up. Foreign companies may still come to Ireland, but the majority are seeking cheaper and more productive European economies. The danger signals from Intel, which announced last week that 200 jobs would go this year, are flashing brightly."

In the end, though, it's still about real estate, even if so many in the country don't want to admit it. Affordability? Forget it. Ireland's young people may not be subprime borrowers in the U.S. sense, but as friends Martin and Joanne B. told me, the two having been long-time residents of the Lahinch area in County Clare, there have been an awful lot of "100% mortgages" issued the past few years.

Yes, it's a global phenomenon, this real estate bubble. A professor at NUI Galway, Alan Ahearne, wrote in the Independent:

"The market is seized up. It's a classic symptom of the boom- bust pattern. Sellers are trying to offload their houses but demand has evaporated. There is no one around prepared to pay the kind of money sellers are demanding. The problem is that it takes a while for sellers to come to terms with the reality that their houses are no longer worth what they think they are worth.

"I am hearing that banks are already putting the boot into developers, who will have to repay the money they borrowed - and that will mean cutting prices to shift stock.

"When interest rates rise it puts people under pressure, but usually homeowners still make their mortgage payments. They may have to cut spending elsewhere, but they don't want to lose their homes. However, when people lose their jobs, which could be the result of the global recession, then they may default on their payments. What kills a housing market, what turns a bust into an all-out crash are big increases in unemployment."

Sound familiar? Substitute just about any country in the world these days. All in different stages, mind you, with perhaps a few yet to peak, but the day of reckoning has arrived. And as Professor Ahearne so correctly said, when the global recession hits, and job losses begin to pile up, that's when you have something truly serious. Thus far in Ireland, it merely looks like a garden variety correction.

But I know this place very well and it's had an incredible run? over 7% GDP growth, annually, for the past ten years. But so much of the wealth has been fueled by soaring property values and the access to credit off of this. Prices are already dropping for the first time in the cycle and that's just a beginning.

As for back here in the U.S., new- and existing-home sales for the month of August plunged again, with the median price on new-homes now down 7.5% year-over-year, while homebuilders KB Home and Lennar reported dreadful earnings due in part to massive writedowns of both land holdings and housing stock. By one measurement, inventories nationwide are up to ten months. There is no recovery, sports fans, until you put a serious dent in that figure.

KB Home's CEO said "oversupply of unsold new and resale homes?has worsened," citing "tighter lending standards, low affordability and greater buyer caution?We see no signs that the housing market is stabilizing."

Lennar's CEO echoed that there was "no evidence" of a recovery and instead saw "further deterioration."

And we are just entering the peak period for mortgage resets, September thru December.

But, again, this is a global story. From Friday's Sydney Morning Herald, the country's largest building materials supplier warned of "the deepest downturn?in the history of Australia" and that if things didn't turn around, "we will then be looking back to the Depression."

"The crisis was so bad in Sydney that existing homes in some pockets were cheaper to buy than vacant parcels of land," according to the paper. The managing director of the building supplies company, Lindsay Partridge, said "Sales of vacant land in Sydney are close to non-existent." The Housing Industry Association's chief economist said, "The affordability issue is very bleak in outer Sydney."

Sarah Lyall of the New York Times had a great piece last week on the coming end of Britain's "borrow-and-spend era," one that had represented a drastic change in attitudes toward money, or as one expert told Lyall, the "buy now, pay later, culture." The UK crash is coming to a pub near you as well.

Street Bytes

--The quarter is over and the S&P 500 was up 1.6% during the period after a 3.6% gain in September; pretty impressive when you include the 9.4% swoon 7/19-8/15. On the week, the Dow Jones tacked on 0.5% to 13895, the S&P added one point, while Nasdaq rose 1.1% to 2701. Both the Dow and S&P are now within a two- or three-day rally of their all time highs. Stock investors keep repeating the mantra; all is well, especially with the global economy. They are sadly mistaken.

--U.S. Treasury Yields

6-mo. 4.06% 2-yr. 3.96% 10-yr. 4.57% 30-yr. 4.83%

Aside from the housing data, August durable goods were off a larger than expected 4.9%, while construction spending edged up, a key reading on Chicago manufacturing was still above the 50 mark that normally denotes contraction, and personal consumption (consumer spending) was up a solid 0.6%. So once again we had all the commentators say that the American consumer is not dead?and who can argue? And for the record, second quarter GDP had its final revision, up 3.8%. Most see the third and fourth both coming in around 2%.

Treasuries were aided at week's end by the release of a key inflation figure, now up only 1.8% year-over-year, when you strip out everything you and I use, eat, smell, touch, look at and listen to.

--A Goldman Sachs analyst said Merrill Lynch could be forced to write down as much as $4 billion in mortgage-related securities (CDOs and the like) as well as buyout-financing commitments.

--Inflation Watch: Wheat prices continue to soar to record highs, above $9.00 a bushel and more than double the price from a year ago, thanks to tight world supplies and rising demand. Australia's drought is a big reason and the global inventory picture is the worst in 26 years. [Commodities overall had their biggest monthly gain in 32 years.]

Separately, the USDA predicts that net farm income will be $87.1 billion in '07, up nearly 50 percent over 2006. Because of this last point, more than a few are questioning some of the outrageous subsidies still being paid.

--The SEC is investigating whether the brokerages "unduly influenced" the rating agencies, such as S&P and Moody's, by paying for credit ratings on various mortgage securities. In a congressional hearing Senator Jim Bunning described the process as "like a movie studio paying a critic to review a movie and then using a quote from his review in the commercials." Executives at the agencies denied the accusations but there is little doubt they are true. Of course the issue is the rating of many subprime mortgage pools, for example, as being investment grade when in fact they turned into junk, with any subsequent downgrades coming long after the fact because the rating firms were afraid of losing future business.

--After a two-day strike, General Motors and the UAW reached an historic agreement on healthcare that essentially takes $50 billion in future obligations off GM's books, known as "legacy costs," thus allowing the automaker to better compete with its Japanese competitors. This paves the way for Ford and Chrysler to seek similar UAW contracts. GM also won the right to pay newly hired employees less than existing workers, while union workers will receive signing bonuses and lump-sum payments over the next three years. I'll comment further on the healthcare aspect of the contract as I learn more details, but for now I don't underestimate the potential benefits for Corporate America overall.

--Google can't avoid the impact of the housing debacle from an advertising standpoint, let alone rivals Yahoo and AOL, as mortgage originators, brokers and other affiliated companies go under or drastically reduce ad spending. Oppenheimer estimates that financial services account for about 10% of total net online revenue. One hedge-fund manager told Barron's Mark Veverka, "Google is far more exposed than the Street is letting on."

--British Airways placed a huge order, over $8 billion, for both Airbus' flying A380 jumbo wiener and Boeing's 787 Dreamliner. But both planes will be powered by Rolls-Royce engines; a loss for General Electric and Pratt and Whitney.

--New York Mayor Michael Bloomberg left the company he founded back in 2001, but he is getting some unwelcome publicity nonetheless due to a suit that some former employees and the EEOC have filed against Bloomberg LP for practices going back to 2002. The suit claims the company discriminated against female employees who announced they were pregnant by demoting them, among other offenses.

--The Financial Times reported that Alcatel-Lucent CEO Pat Russo has one month to present an emergency restructuring plan to her board, but a source told the FT that her position is not in question. What is in question is the logic behind the merger. An analyst at Dresdner Kleinwort said "There is little doubt that the merger has turned into a veritable fiasco. Key customers, valuable employees, critical partners and influential lenders may lose faith unless prompt action is taken and profitability restored within a year."

On my way back from the airport I passed ALU headquarters and all the newly-planted trees along the main road are dead, while the geese were resting under one of the few remaining shade trees, plotting their next move on an already brown turf.

[Actually, the dead trees reminded me of my New York Mets, or Mutts, as they are being called these days. Zero life in these overpaid choke artists, that's for sure.]

--According to researchers at Columbia University in New York and Peking University in Beijing, the H5N1 bird flu virus can pass through a pregnant woman's placenta to infect the fetus. The same scientists also found evidence of what doctors had long suspected, that the virus not only affects the lungs, but passes throughout the body into the gastrointestinal tract, the brain, liver and blood cells; all of which explains the high fatality rate. At least the collaboration in the research could one day lead to a viable vaccine. [South China Morning Post]

--I've knocked the viability of Internet-phone service operator Vonage in the past, wondering how it could continue, and this week two different courts ordered Vonage to pay up over now successful patent infringement suits filed by Sprint Nextel and Verizon. Vonage stock, $15 back in May '06, closed the week at $1.

--My portfolio: The China biodiesel story of mine, which has been moribund for months, sprang to life on Thursday. In two days it rose 90%...yup?you read that right, which put a step in my typing, and premium beer in the fridge. I have no idea what the reason was for volume 30Xs normal on Friday, though the issue all along has been securing financing for the planned expansion that would grow production by ten-fold over the next 1 ? years.

--In the latest sign of the apocalypse, check out actor Nicolas Cage's real estate holdings, as noted in the Journal.

He is relisting an 11,500-square-foot estate in L.A.'s Bel-Air section for $35 million. He recently purchased a 25,000-square- foot manor house in Middletown, R.I. for $15.8 million. He has also purchased homes the last few years in San Francisco, Las Vegas (a mansion he bought in '06 for $8.5 million), New Orleans and Bath, England; plus his main residence is a waterfront house in Newport Beach, Calif., that he bought for $25 million in 2005.

Foreign Affairs

Iran: President Mahmoud Ahmadinejad addressed the UN General Assembly, saying in part:

"In the last two years, abusing the Security Council, the arrogant powers have repeatedly accused Iran and even made military threats and imposed illegal sanctions against it. Previously, they illegally insisted on politicizing the Iranian nation's nuclear case, but today, because of the resistance of the Iranian nation, the issue is back to the agency [International Atomic Energy Agency], and I officially announce that in our opinion the nuclear issue of Iran is now closed and has turned into an ordinary agency matter."

Of course Ahmadinejad is relying on appeaser Mohamed ElBaradei, IAEA chief, to help carry his water and the IAEA announced in July it had given Iran until December to answer a series of questions regarding its nuclear activity. Both Russia and China have said they want to wait until year end and the IAEA before instituting another round of UN sanctions through a third (or 4th, depending on how you look at it) resolution out of the Security Council. Then late Friday, all powers agreed to give Iran another two months before further action.

Of course while this is going on, the fact is Iran continues to enrich uranium, even though the Security Council has twice demanded it stop.

It's scandalous, yet French President Nicolas Sarkozy, not President George W. Bush, seems to be the only one who truly gets it. In his own speech to the General Assembly, Sarkozy said:

"There will not be peace in the world if the international community falters in the face of the proliferation of nuclear arms. (The crisis) will only be resolved if firmness and dialogue go hand-in-hand?.Weakness and renunciation do not lead to peace. They lead to war."

What did Bush do with his time on the podium? Talk a lot about Burma. Now don't get me wrong, Burma is important, especially when we view China's reaction as a way of gauging its own future intentions, but c'mon, Mr. President. You know there is no more important problem in the world these days than Iran.

The Wall Street Journal had an editorial detailing how the White House has fallen down on the job with regards to Tehran's tactics and how Bush's bark has been far bigger than his bite, consistently talking of prices to be paid, though none has been.

"The Bush presidency is running out of time to act if it wants to stop Iran from gaining a bomb. With GIs fighting and dying in Iraq, Mr. Bush also owes it to them not to allow enemy sanctuaries or weapons pipelines from Iran. If the president believes half of what he and his administration have said about Iran's behavior, he has an obligation to do whatever it takes to stop it."

The conservative editorial page of the New York Post opined:

"Even the Bush administration at this point seems weary of increased confrontation with Iran. The president, quite noticeably, had little to say about Iran in his General Assembly address. And Secretary of State Condoleezza Rice has stressed the need for a diplomatic solution to Iran's nuclear ambitions."

And just what is Iran trying to accomplish in the region, overall? Commentator Charles Krauthammer explains in his Washington Post column.

"Ahmadinejad has chosen?to assemble, deploy, flaunt and partially activate Iran's proxies in the Arab Middle East: (1) Hamas launching rockets into Israeli towns and villages across the border from the Gaza Strip. Its intention is to invite an Israeli reaction, preferably a bloody and telegenic ground assault.

"(2) Hizbullah heavily rearmed with Iranian rockets transshipped through Syria and preparing for the next round of fighting with Israel. The third Lebanon war, now inevitable, awaits only Tehran's order.

"(3) Syria, Iran's only Arab client state, building up forces across the Golan heights frontier with Israel. And on Wednesday (Sept. 19), yet another anti-Syrian member of Lebanon's parliament is killed in a massive car bombing.

"(4) The al-Quds force of the Iranian Revolutionary Guards training and equipping Shia extremist militias in the use of the deadliest improvised bombs and rocketry against American and Iraqi troops. Iran is similarly helping the Taliban to attack NATO forces in Afghanistan."

Ahmadinejad is doing all these things to buy time while he gets the bomb and as Krauthammer writes the message is this:

"If anyone dares attack our nuclear facilities, we will fully activate our proxies, unleashing unrestrained destruction on Israel, moderate Arabs, Iraq and U.S. interests - in addition to the usual, such as mining the Strait of Hormuz and causing an acute oil crisis and worldwide recession."

I said years ago, even after the invasion of Iraq, that longer term the Bush presidency would be judged on two issues, North Korea and Iran and the ability to keep them from developing nuclear weapons, perhaps more so than Iraq. The North already did, but we'll soon see whether diplomacy amounts to anything there. Iran can still be stopped, but at this point only militarily.

Israel: So speaking of stopping Iran, in a detailed report from Newsweek, 2008 is the year Israeli and/or the United States will take action assuming diplomacy fails. Israel can ill afford to wait any longer. [This is yet another reason why I have been gearing my economic predictions towards 2008 as well. It's not just about the bursting of the bubble, it's about a hot spot or two coming home to roost, which in turn would cripple business confidence and capital spending.]

According to Newsweek, Iran has established "crisis committees" to draw up war contingencies, while the Bush administration and Pentagon are not in lockstep with their Israeli counterparts on how best to address the growing threat. Both countries do agree taking out Iran's nuclear program is not an easy task and blowback is a serious concern.

Separately, when it comes to the recent Israeli strike on Syria, one report I saw in Ireland said Israeli commandos had seized nuclear material of North Korean origin prior to the attack.

Iraq: The Pentagon is requesting $190 billion to fund the wars in Afghanistan and Iraq in 2008, up from $173 billion in '07. [By comparison, spending was $94 billion in '04 and $122 billion in '06.]

The U.S. military is also saying the Blackwater disaster in Baghdad could seriously undermine efforts to stabilize the country. If we are promoting the "rule of law," then we need to follow it ourselves. Or as the New York Post opined:

"A lot of goons are running around in Iraq on behalf of U.S. diplomats. Failure to rein them in will have dire consequences?

"Exactly what happened still isn't clear?But the massacre remains a travesty - one that the United States needs to address quickly if it wants to preserve the still-fragile progress in law and order that is emerging as a result of the troop surge?.

"The dangers of Blackwater's continued lack of accountability should be clear:

"It leads the swollen-headed among the contractors to think they can do whatever they please - opening the door to possible atrocities.

"It feeds the perception of Americans as arrogant occupiers.

"It fosters an atmosphere of recklessness - at the exact moment when U.S. troops seem to be winning Iraqi trust?.

"(How) can imams and tribal and party leaders - and their gunmen - trust Petraeus, when, for all they can see, the U.S. government is employing irresponsible 'militias' of its own, in the form of private contractors?"

Meanwhile, Turkey and Iraq reached agreement on a security pact aimed at curbing the PKK, the Kurdish separatist group, but Turkish troops still aren't allowed to pursue PKK fighters over the border into Iraq.

Burma: I may not be an expert on Burmese history (I refuse to use the junta's preferred name of Myanmar), but President Bush and everyone else seem to be saying the generals have been in control 19 years. My knowledge says it's more like 45 years, with a worthless civilian puppet or two thrown in the mix.

80 percent of the 50 million residents here identify with the Buddhist faith and it was something as innocuous as a fuel increase, compared to far more egregious past abuses, that got the country's monks out into the streets to launch a series of protests.

But now the government has cracked down in a situation reminiscent of Tiananmen Square and by Friday had cut off Internet and cellphone service, both of which it controls, as it ringed the monks' quarters and shrines. Activist Aung San Suu Kyi, a 1991 Nobel Peace Prize winner who also won a 1990 election that the generals then disavowed, emerged briefly from house arrest before being taken away again.

And while most of the world community has condemned Burma's thugocracy, little is being done. The Washington Post opined:

"The problem is that the 'whole world' is not yet prepared to prevent a massacre of monks. Several countries that like to think of themselves as strategic partners of the West - in particular, Russia and China - are blocking concerted international action against the regime. China, which has taken advantage of Burma's pariah status to turn it into a virtual economic colony, came out against UN sanctions yesterday (Wednesday). Russia's foreign ministry issued a statement rejecting 'interference in the domestic affairs' of Burma and predicting that 'the situation will be back to normal soon' - chilling words considering what the troops in Rangoon would have to do to return the situation to 'normal.'

"Yesterday, Russia and China prevented the Security Council even from condemning the violence against protesters. In effect, they have given the regime a green light for brutal repression. We can hope that the generals will be deterred by the warnings about the war crimes trials that could await them, or that their officers and conscripts will refuse to carry out their orders. If the repression proceeds, Russian President Vladimir Putin and Chinese President Hu Jintao will have Burma's blood on their hands."

They already do by this standard.

Pakistan: President Musharraf cracked down on opposition leaders, but the Chief Justice of the Supreme Court ordered the release of those arrested, once against pitting Chaudhry against the leader that had fired him. The same court did, however, rule Musharraf can stand for election while being head of the country's army, thus dismissing challenges to his right to hold both posts. The presidential vote is on for Oct. 6, ahead of former prime minister Benazir Bhutto's return from exile. A security ring has been thrown around Islamabad, and authorities even prevented parents from taking children to school. That's our boy!

Lebanon: The election to select a new president was postponed from Sept. 25 to Oct. 23 and the reason was they didn't have a quorum in parliament, as I wrote could be the case last week, with Hizbullah and other Shia parties boycotting the opening of the session. What a freakin' mess.

North Korea: The nation's No. 2 met with a Syrian delegation in Pyongyang, thereby confirming talk of some kind of developing alliance between these two. South Korean President Roh is heading to Pyongyang for his summit with Kim Jong-il next week and is already facing harsh criticism in Seoul because Kim is hellbent on having Roh observe one of those precious North Korean celebrations, only this one portrays the defeat of South Korean troops.

China: Officials are conceding there are real problems with the Three Gorges Dam, the world's biggest hydropower project. Experts have concluded the dam faces accelerating environmental problems that "could lead to catastrophe." The issues include erosion and landslides, pollution and 'ecological deterioration' caused by 'irrational development' along the river.

"We absolutely cannot relax our guard against?security problems created by the Three Gorges project. We cannot sacrifice our environment for short-term economic prosperity," said the director of the project's construction body. [Sydney Morning Herald]

But it's too late, and the government has proven it won't act.

On a related matter, Jim Yardley of the New York Times had a story on Shijiazhuang, China, a city in the North China Plain of two million people where water is drying up. The Chinese are so ignorant, however, that "One new upscale housing development is advertising waterfront property on lakes filled with pumped groundwater. Another half-built complex, the Arc de Royal, is rising above one of the lowest points in the city's water table."

It's just another example of China's water crisis. You need it for crops and you need clean water to drink, but at the same time China's key growing areas are faced with drought, the water table is plummeting, and what water is available is more often than not polluted by industrial dumping and thus laced with chemicals.

When I came back from my trip on Wednesday evening, I saw a piece NBC News was doing on water in Africa and how about 1 in 3 don't have access to clean drinking water on the entire continent. What have I said since the start of StocksandNews? "Clean water and good roads are the keys to development" and that those who run around the developing world promoting the use of computers where clean water isn't yet available are truly idiots.

Germany: Chancellor Angela Merkel met with and praised the Dalai Lama, thereby infuriating China, whose ambassador condemned the act in the harshest terms.

Ireland: I was surprised to see such a heated debate in the press when I arrived here regarding the fate of Prime Minister Bertie Ahern. Ahern was forced to testify for four days before a tribunal examining his past finances, including allegations concerning ill-documented sources of more than $140,000 in cash dating back to 1994 and 1995, while Ahern admitted he kept no personal bank accounts in Ireland from 1987 to 1993. Some opposition leaders are urging Ahern to resign, but this doesn't look likely.

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Pray for the men and women of our armed forces.

God bless America.

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Gold closed at $750
Oil, $81.66

Returns for the week 9/24-9/28

Dow Jones +0.5% [13895]
S&P 500 +0.1% [1526]
S&P MidCap +0.4%
Russell 2000 -1.0%
Nasdaq +1.1% [2701]

Returns for the period 1/1/07-9/28/07

Dow Jones +11.5%
S&P 500 +7.6%
S&P MidCap +10.0%
Russell 2000 +2.3%
Nasdaq +11.8%

Bulls 55.6
Bears 25.6 [Source: Chartcraft / Investors Intelligence?close to an outright sell signal?which is generally around 60/20, bull/bear. Reminder, this is a contrarian indicator.]

Have a great week. I appreciate your support.

And Martin, thanks for all you did this week. Joanne, welcome aboard.

Brian Trumbore

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