CheetahhhhhhhBlog Mark III

Our quixotic engagement with Filipino customs should be finished today or tomorrow. In the end it appear to be costing me P70,000 or about $1,600 which pisses me off to no end.

If you’ve been following your retirement portfolio, you will have noticed you lost a lot of money this week. #1, this blog warned you beforehand. I’ve been in cash this week, watching the market drop. #2 there’s a lot of gloom on Wall Street, but I think it’s a bit overblown. I would say reality that the economy is still recovering has dawned on everybody who, until now, thought it was going to just magically keep going up. At the beginning of January I said I anticipate this will be a bit of a sideways year, with a bias toward the upside. I still hold that opinion. I don’t think we’re witnessing a crash; I think we’re seeing a market correction, which might last a bit longer, might not. Personally I don’t think the Russel, which is what I trade, will go down much more, but trying to be really specific about the market is a fool’s game. I am re-entering the market on Friday because the big events that caused it to whipsaw around will be finished, Bernanke was reappointed yesterday, and today the GDP figures will be released at 830AM New York time. Things should settle down. The market might have a bit of a downward bias for the short-term. This is countered by the fact that the jobs situation is improving, just not as strongly as analysts forecast, and also by the fact that corporate earnings have been, on the whole, good. So I don’t see us in a real gloom-and-doom scenario. Rather, I would say that the market priced in more recovery than we can actually realistically anticipate. The market is like an auction. High prices were being bid because a spectacular recovery was anticipated. Now a mediocre recovery is more realistic, so the high bids are going down.

Watched the State of the Union last night. Can’t say I was impressed. Nothing negative, just not impressed. To be candid, I was a Hilary supporter, and while I vote a straight Deomcratic ticket and will continue to do so, nonetheless, I have never been terribly impressed with Obama. He’s OK but I’m not a fervent supporter such as I was with old Bill. I loved Bill Clinton. Voted for him twice and was proud to do so. With Obama, eh, he’s got my vote because he’s a Democrat, but that’s about as far as it goes.

Anyway the Swiss government backed away from its deal to hand over the names of UBS clients suspected of U.S. tax evasion, after Swiss courts say the disclosures violate Swiss law. Nice to see the Swiss rediscovered their backbone.

Well what with being in cash this last week of January, Teggatz Enterprises limited its profit potential a bit. We did however make 10% this month which is damn nice by anybody’s standards.

The Financial Times reports that this Obama spending freeze will add up to less than 1% of spending. Which is in that case another example of political window dressing. The Financial Times describes it as “a positive step akin to spitting into a forest fire”. I’ve been very disappointed with Obama about this kind of thing, I will tell you candidly. A lot of his initiatives have had no real substance behind them. Another example being this idiotic bank levy. The Financial Times writes that the only way to get the current budget under control without significantly raising taxes would be to cut entitlements, ie social security and medicare. And this would be politically impossible, so the only real option (according to the Financial Times) would be to raise taxes. I can toss another option into the ring. Cut down significantly on military spending. It costs us something like a gazillion dollars a day to maintain these ridiculous expeditionary forces we have abroad. Not to be cynical but if the Iraqis and Afganis want to blow each other up (which is what all available evidence would suggest) then I don’t see why we have to pay a gazilllion dollars a day to witness it with American blood. Am I the only person who thinks this? Or have we all just accepted these idiotic wars? And wasn’t Obama going to get us out of these idiotic wars? Whatever happened to that?

Well it turns out that one of our ninongs (godfathers from our wedding… Filipinos are really into godparents and I have many) is running for congress and owns a customs agency. There you go. Vanessa contacted him and he sent us to his agency, where apparently everything will be taken care of for a reasonable price. Our initial quote from a broker was P100,000 or about $2100 which is a lot of scratch just to get some things out of a container, and which is actually an outrageous fortune in the Philippines. The only question is the tax, apparently, which is an outrageous 50% in this country, though apparently there are ways around this. The corrupt nature of getting things into this country is a tad discouraging, to put it politely.

What with all the hoop-la in the press, I’m mildly interested in this Apple tablet being unveiled today. They’ve made a real coup d’etat with publicity, I must say. I have to say, the iPhone is the best mobile computer bar none, partly for its size. It’s not actually such a great phone, poor sound quality, and the antenna or whatever frequently loses the signal. But as a portable wireless device, the iPhone rocks. I can’t really see myself carrying around a big iPhone, which is apparently what this new tablet will be. Also the tablet is apparently being made to compete with the Kindle, and I’m really all about the Kindle, partly because of the e-ink screen, which has no backlighting, and so is very easy on the eyes. Why would I switch from the eye-friendly Kindle to a backlighted screen that hurts after an hour or two? And further, if I’m going to use a backlighted screen with a device that doesn’t fit into my pocket, why wouldn’t I just use my Eee-PC mini-laptop?

On Monday I advised caution. I withdrew my positions from the market. This is painful for me because I lose money every day I’m not invested. You will note that the general market took my advice (all 75 of my daily readers) because volume on the New York Stock Exchange has been muted while, like me, traders wait to see what happens. I’m waiting for the State of the Union address and the re-election of Bernanke. The Wall Street Journal writes this morning, “Wall Street faces several big risks from events taking shape in Washington this week. Traders will digest hearings on the bailout of AIG, an interest-rate decision from the Federal Reserve, a reconfirmation battle for Federal Reserve Chairman Ben Bernanke and a State of the Union Address in which President Obama may offer new details on his proposal to restrict banks’ speculative trading.”

The boat is here with our container. We’re busy trying to get it out of customs. The port, customs, and brokers are all very corrupt and so the whole thing is very stressful and difficult.

There was a lot of news last week in financial markets. The president first of all has this plan to tax the big banks 15 basis points, which I already said was stupid. Last week he added some aggressive rhetoric about cutting banks down to size. I have no opinion about this, don’t know enough about it to comment intelligently. To top this off, there is some question about whether Bernacke will be reappointed, though it seems likely. In addition, China is moving to reign in bank lending. All this added up to a 5% drop in equity markets.

I spent the entire weekend thinking about what to do. It has me mildly stressed. I will tell you my conclusions. First, I doubt the markets will fall more than 10% in total, and my reason for saying this is statistical. Last year we had the big “once in a lifetime” huge statistical anomaly of a crash, so it is unlikely to occur again. Of course these are statements of probability; I view a second crash as unlikely. It is however possible. The problem is the president tossing around rhetoric about banks; he could say something which really upsets traders. This rhetoric directed toward banks strikes me as political rather than practical, because banks will simply pass extra costs on to their customers (ie you and me). Because the president’s rhetoric seems political rather than practical, it is hard to predict. If there is one thing traders don’t like, it’s change or uncertainty. Another thing is Bernacke. While he looks like he’ll be reappointed, he might not be. This could sent the market into a big drop, again because traders don’t like uncertainty.

I am considering liquidating my positions and going into cash for a week or so. I have not yet decided. My previous paragraph highlights where the improbable (a big market drop) could happen. From my perspective, I can’t stomach much risk, as I have children to feed. I was up until 2AM rolling around worrying about this. So staying invested in the market has failed the Ambien test. If you need more than one Ambien to get to sleep, then what you’re considering has too much risk. So I may well liquidate and go into cash for a week or so.

As always I could be completely wrong.

The financial papers are making a big hoopla about this Republican victory in MA. It doesn’t actually strike me as so significant, but I suppose those elephants need to hold on to whatever they can.

For various statistical reasons, I anticipate a roughly 10% correction in the stock market. For the Russel I’d anticipate about a 50 point drop.

As always I could be completely wrong.

According to Investor’s Business Daily, some lab in Holland has used pig stem cells to grow pork, although the texture isn’t right yet. That’s very sci-fi, though you’d have to pay me a million bucks before I’d eat lab-grown pork.

I’m pretty well on record for being pissed off with my encounters with the US government. Anybody who cares to ask my opinion will get a mouthful about how Uncle Sam taxes me but provides no tangible services, makes me wait for hours at the embassy, etc etc, and I won’t even get into issues on US soil like waiting in line at the DMV (although that’s state government I suppose). Anyway I had my first close encounter with the Filipino Feds and I have to say, they might be worse. Went to the Dept of Finance about a customs fee waiver for my shipping container. Can’t get a straight answer about anything. Strong suspicion people want some cash. Etc. Gave me a big damn headache. Almost makes me miss Uncle Sam and that’s… well, that’s just crazy. I will say this much about Uncle Sam. Government workers do generally perform their jobs. Perhaps slowly and with a bad attitude, but you ask them a question, you’ll get an answer. Not so here. Not so at all.

Anyway Vanessa and I are tremendously stressed about the customs fee and all the draconian paperwork and nonsense. You actually need a broker in this country to handle it because it’s too much for one person. I suppose that’s the point. I’m probably going to be out a lot of cash. While I can get a fee waiver, for various reasons which I’m not going to bore you with, it’s impractical and unhelpful. For example I have to gave a 150% deposit of my customs fee, so I might as well just pay the damn fee because that’s cheaper. I really was going to have a stress breakdown today.

We’re back in Manila. Travel with small children is really a chore, I must say once again. For one thing you need to bring so much junk… toys, baby gear, etc etc… Bug refused to take his backpack off for the metal detectors in the airport and started a tantrum about how he “doesn’t like the police”… then in the hotel lobby Vanessa went to get us some food while I was checking in and Bug threw tantrum #2 about how he wants his mommy, screaming and kicking, very embarrassing actually, and I’m hard to embarrass. I suppose part of it is the Terrible Twos, which are called terrible for a reason. But also travel is hard for kids.

Van and I are very thankful to be back in Manila. For example I had pizza for dinner. What a treat

First of all, I have been a fan of Google for a long time. I think they’re one of the best companies out there. I just wish I could afford to buy their stock. Anyway I was disappointed 2 years ago when they agreed to censor their websites in China. After the Chinese (government?) launched cyber attacks on Gmail a few days ago, Google is now refusing to censor its web search engine. Right on Google. Nice to see you grew a backbone.

Now, you ask a Filipino why his country is poor, he will likely answer corruption. Indeed the Philippines has lots of resources; you need only look around you to see them. And there is actually plenty of money here; the luxury shops in Makati, the Makati Porsche and Maserati dealers, etc, are making money from somebody. The problem is that 99% of the people don’t have enough to live. 1% have plenty. This is actually your basic third-world formula, and is nothing unique to the Philippines. Go to Peru, for example, and you’ll see the same thing. The thing that is somewhat remarkable about America and English-speaking economies is that wealth is spread a tad more around. A tad.

Anyway regarding corruption. We are worried about customs duties on our container of stuff arriving next week. We called up the customs office and one woman told Vanessa the tax would be a million pesos, which is $20,000. I called up and spoke to a boss and he said the tax “wouldn’t be much”. In both cases we have rampant corruption, they were probably going to give their numbers and “help” us line their pockets, because I finally found a PDF document of the Philippines tax code and the customs duty for personal effects is zero. The bitches. If this was my country I’d call the police and charge them with soliciting bribes. It’s not my country so I will leave any action up to Vanessa (she handles Filipino things, I handle American things).

While I am an Obama supporter, this blog has been critical of the Federal stimulus from the start. And while the White House congratulates itself on last year’s stimulus package, here’s a staggering statistic: Nearly 38M people, or one in eight Americans, rely on food stamps. Furthermore the administration’s notion of chocking fees onto the big banks to help pay for the stimulus is ridiculous. The big banks repaid their TARP money. GM and AIG haven’t repaid a dime. This idea of milking the big banks is just a bit of window dressing to play at reducing the deficit, etc etc. Furthermore anybody who takes the trouble to read the financial papers knows that the unemployment rate is going to be hovering around 10% for a long time, partly because many of the jobs lost in this crash will never be replaced. Now this all sounds like I’m anti-Obama. I’m not. Indeed the federal stimulus may have averted another Great Depression. We’ll never really know. Personally I would have run things a little different but then again nobody elected me president.

This blog recently pointed out that the Chinese real estate market was a bubble about to burst. Yesterday the People’s Bank of China made moves to pop the bubble before it bursts. Since I seem to be calling the bubbles I’ll identify a few more. Gold. Emerging market stocks, particularly China and India. When the emerging market bubble bursts, I think the global impact will be surprisingly small. All this talk about the economic might of India is ridiculous.