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Bird's Eye View: Tuesday, January 25, 2008

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Investors are focused on the outcome of the two day FOMC meetings. If the Fed cuts .25 basis points, the stock market will sell-off. If the Fed cuts .50 basis points, the market may extend its current rally, but will eventually begin focus on Q108 earnings.

The question now is whether the recent rally was the start of a new bull market, or a rally in a bear market. The jury is still out, but I will side with the latter.

As US interest rates come down, the dollar continues to move lower and gold continues to soar.

Crude oil is trading up this morning to $91.15/bbl on expectations for a rate cut by the FOMC tomorrow. Fed Fund futures estimate an 86% chance the central bank will cut its benchmark lending rate to 3%.

American Express (AXP) said its fourth-quarter profit fell 10 percent after the company said it was putting more money in reserves to cover defaults.

The overseas markets climbed overnight;

Tokyo's Nikkei rose 2.99 percent
Shanghai index rose 0.87 percent
Hong Kong's index rose 0.99 percent
London's FTSE rose 1.30 percent
Frankfurt's DAX rose 1.31 percent
Paris CAC rose 1.83 percent.

We are far from being out of the woods, so I wouldn't get to excited about the recent rally.

The President's speech last night was interesting...

President Bush gave his last State of the Union address last night, and you'll have to excuse me if I don't drink the tainted punch from the bowl. You'll have to remember I am a contrarian, and slightly dyslexic, so I tend to look at both sides of every issue.

Here are a few quotes from the speech, coupled with a few of my dyslexic comments..

1) "And to further protect America against severe disruptions to our oil supply, I ask Congress to double the current capacity of the Strategic Petroleum Reserve."

My Take:

It looks as if we are in a race against China to hoard more oil. If this happens, prices will remain high and go higher. This is simple supply and demand.

2) "Five years have come and gone since we saw the scenes and felt the sorrow that the terrorists can cause. We've had time to take stock of our situation. We've added many critical protections to guard the homeland. We know with certainty that the horrors of that September morning were just a glimpse of what the terrorists intend for us -- unless we stop them."

My Take:

15 of the 19 September 11th hijackers were citizens of Saudi Arabia. The other four were from Egypt, Lebanon, and the Arab Emirates. Call me silly, but shouldn't we be bombing Saudi Arabia instead of Iraq?

3) "To secure our border, we're doubling the size of the Border Patrol, and funding new infrastructure and technology. Yet even with all these steps, we cannot fully secure the border unless we take pressure off the border -- and that requires a temporary worker program. We should establish a legal and orderly path for foreign workers to enter our country to work on a temporary basis. As a result, they won't have to try to sneak in, and that will leave Border Agents free to chase down drug smugglers and criminals and terrorists."

My Take:

U.S. Border Patrol agents, Ignacio Ramos and Jose Compean are serving 22 years in federal prison for shooting and wounding a Mexican drug smuggler after catching him sneaking marijuana and cocaine into the United States.

President Bush has ignored appeals to pardon the two agents even after more than a hundred members of Congress sent the President letters begging him to do so. Now the drug dealer is suing the Border Patrol for $5 million claiming they violated his civil rights. The drug dealer was given immunity.

4)"Social Security and Medicare and Medicaid are commitments of conscience, and so it is our duty to keep them permanently sound."

My Take:

Two of these programs are considered a form of Universal Healthcare (Medicare and Medicaid). Why not throw in Universal Healthcare for everyone. Almost 50 million Americans are without health insurance, and according to the World Health Organization, the U. S. health system ranks 37 out of 191 countries according to performance.

If the Politician's are looking for a few more votes, I know where they can find 50 million of them. If Medicare, and Medicaid, are "commitments of conscience", what about those who are denied medical treatment because insurance companies deign claims, or those who cannot afford insurance at all.

Once again we a led to believe there are good social programs, and bad social programs. Medicare and Medicaid are good, while Universal coverage for all is bad. Universal healthcare is good for retired military, but bad for the general population. It all boils down to money, and milking the American people until they get old (or poor) enough to afford Medicare and Medicaid .
France, Britain,and Canada are light years ahead of us in taking care of their sick.

This reminds me of the politicians who are telling us who the good Communists, and who the bad ones are. I guess it all has to do with your agenda.

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