Wednesday Night #1152

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Wednesday Nighters again paid homage to the late Pierre Sévigny, Sir Peter Ustinov & Alistair Cooke, three greats in our world.

Wednesday Nighter Harry Mayerovitch O.W.N. was again congratulated for celebrating the start of his ninety-fifth year of life by publishing his latest book, “Way to Go.” His publisher Drawn & Quarterly will launch the book on Saturday April 3rd at the Blue Metropolis Festival.

Hubert Marleau, a new guest, was an asset  on the Economy throughout the evening.

Dick Clarke’s recollections have met with varied reactions from Wednesday Nighters, ranging from whether the Iraq invasion was petroleum-based rather than a counter terrorism operation. That the September 11 attack was sponsored by Al Qa’Ida is not subject to debate, although the only ones shooting at Americans were the Iraqis in the no-fly zone . President Bush’s 2004 election campaign will undoubtedly be largely driven by his claims to success in counteracting terrorism.

Tuesday 30 Mar 2004 9/11 allegations divide Americans
WASHINGTON—Americans are split on the question of whether U.S. President George W. Bush MBA-Presidents Sep-07 ignored warnings of the 2001 Al Qaeda terrorist attacks, even after the White House unleashed a week-long counterattack to discredit its accuser, Richard Clarke.
You’re not allowed to make a mistake if you’re National Security Adviser

Oil
As for oil, although it is claimed that all five of Saudi Arabia’s oil fields have been contaminated by water, it is likely that Russia and not the Middle East will be the major supplier in the foreseeable future. There has been some concern about the price of oil in the future, with predictions of the price of crude rising to a possible fifty dollars per barrel in the face of cutbacks in world production by OPEC. However, the annual increase in the sale in China of one million new vehicles and the purchase of incredible numbers of S.U.V.s in the U.S. would indicate that consumers are not that concerned about the ever-increasing cost of petroleum products. The price of gas is down in Europe and the increase in the U.S. is largely due to the decline in the U.S. dollar. In fact, in constant dollars, there has been no increase in the price of oil.
A million new cars … every year in China … Americans are buying SUV’s. … Do consumers really care about the price of gas?

Iraq
Whatever his motives for invading Iraq, it is certain that withdrawal of the U.S. from that country would not only serve to accord validity to terrorism and reinforce the image of the U.S. as a government that does not finish what it starts, but would also inevitably draw the U.N. and/or its member nations into the situation. Canadians might do well to ponder what our role might or should be when this happens. [Editor’s Note: the Wedesday Night discussion predated the appalling news and video scenes from Fallujah of the murder of 4 American security guards and the mutilation of their bodies which have generated more outrage among Americans than any other event in the war and post-war period. What influence this and the ongoing Congressional inquiry may have on the November polls]
The invasion of Iraq was the most successful and least costly invasion in history. That spoiled it. … Things are not going from bad to worst .. They are going from wonderful to normal.

Healthcare
With extended waits for cancer therapy, questions are starting to arise as to our ability to continue to pay for Medicare. Those posing the question appear to draw a distinction between the government and the electorate. To illustrate the flaw in this reasoning, one might ask whether the insurance companies can afford to continue to insure properties against fire. The government of Canada has decreased its contribution to Medicare over the years and although the current government of Québec has injected a considerable amount of money into the Medicare plan, poor planning, linguistic roadblocks and unwillingness to pay adequate incentives for overtime in areas of shortage have proven a guarantee of continuing problems. The failure to integrate qualified foreign practitioners into the system has exacerbated the problem.

Wednesday 24 Mar 2004
NEW MONEY FOR PUBLIC HEALTH EMERGENCIES The federal government will spend $665 million over two years to respond to public health crises, including $165 million to help establish a national public health agency.

Gold
Gold is beginning to come into its own again with some predicting the price may rise to five hundred dollars an ounce. The sudden interest in the acquisition of gold runs counter to the climate of uncertainty and deflation that spurred previous events. Perhaps it is being fuelled by the belief that the U.S. dollar might be in danger of ultimate collapse, but to some who have studied the situation closely, it appears that the U.S. is building a two-tiered empire of those nations whose currency is tied to the U.S. dollar and those whose currency is semi-pegged to it. It is claimed that when the trade deficits and surpluses of the whole are taken into account it is in complete balance. In effect, the U.S. has become the central banker to its sphere of fiscal influence. The electronic market has become the e-Bay of the financial field with a infinite number of products offered and traded evenly in thinly traded products. This has resulted in a transparency unprecedented in the field.
Gold is no longer a measure of inflation

JACQUES CLÉMENT’S REPORT ON THE ECONOMY

CANADA – ECONOMIC and FINANCIAL UPDATE
Gross domestic product (by industry) in January was negative due to a decline of over 3% in wholesale sales, 5% decline in imports and exports, weak shipments, stagnant business spending, weak employment and consumer confidence tumbling as a result of the substantial rise in gasoline prices and strong Canadian dollar. I still expect Bank of Canada to ease policy on April 13 by ¼% to 2% despite retail sales rebounding by 1½% in January. The Canadian dollar trading range: 75 cents U.S. to 77 cents U.S., supported by the continuing strong commodity prices.
QUÉBEC BUDGET
Considering the legacy of over five billion hidden deficit and losses on bad loans and investments by the previous administration, it is remarkable that the Finance Minister was able to eliminate 90% of it and forecast fiscal 2003-2004 to end with a deficit of less than four hundred million. The government should have no problem in selling eight hundred and eighty million dollars of assets and investments , given the strength of the real estate market. The anti-deficit law will be respected. The 115 billion debt as a percentage of provincial domestic product will be similar to the federal government at 42% in the new fiscal year. Although the one billion dollar tax reduction will not take effect until January 1, low revenue families, children, poor and handicapped people will mainly benefit. Health, with one billion dollar additional spending, with a twenty billion budget, makes it the largest in Canada. The main losers in this budget are the City of Montreal, the Transport Commission and the moderate increase for education. This was a very responsible and transparent budget with positive proposals for business and simplified fiscal system.
U.S. ECONOMIC and FINANCIAL UPDATE
The focus will be on March employment data to be released Friday. Over 100,000 new jobs are expected following very strong economic recovery since mid-June last year. First quarter G.D.P. is expected to rise by over 4½%. Factory orders recovered somewhat in February. New home sales rebounded by close to 6% and existing home sales by 2%. Corporate profits and margins remain strong. Durable goods orders rebounded by 2½% in February. Both Michigan and the Conference Board consumer confidence have improved slightly. Personal and disposable income continue to rise moderately as does consumer spending.
Gold is heading for $450 U.S. and should trade between $420 U.S. and $430 U.S. in the near term. Crude oil is heading for $40 U.S. in a near-term trading range of $ 35 U.S. to $40.00 U.S., following OPEC’s decision to cut output by 4%.
EUROPE
The euro is trading between $1.22 U.S. and $1.24 U.S., expecting the possibility of the European Central Bank easing policy tomorrow with inflation (1.6%) at its lowest in four years, very moderate increase in G.D.P., industrial production decline in France, Germany and Italy, second consecutive decline in business confidence in Germany, the lowest in five months. Institutional and investor sentiment sharply dropped in March to its lowest in sixteen months. France, Germany and Spain have a rate of unemployment Wall-Street-Layoffs of 10% to 11%.
The market doesn’t like uncertainty. If there is uncertainty, October will be a difficult time.

The Prologue

This Wednesday Night returns to its origins, embracing the old quote “it’s the economy, stupid” and by inference, the Market. We will look at both, remembering that it is suggested the U.S. electorate is more concerned with the President’s performance vis à vis the economy, than with his performance internationally. As though the two could be separated.
Amidst the uncertainties of the market and concerns about the jobless recovery, it is worth considering the statement from Stephen Poloz, Senior Vice-President and Chief Economist, Export Development Canada in his weekly report of March 10: “Disposable personal income is 3.7% higher than last year, personal consumption spending is up about the same amount, and household wealth has risen by 12% in the past 12 months. These are not boom-like numbers, but they are solid and will continue to support growth.”
So, will the market continue to rise?
We don’t pretend to have the answers, but we will look very briefly at a tool that may provide some help – MetaStock Professional 9.0 is award-winning charting and analysis software for Real-time Traders.
Jacques Clément and our faithful economists, reinforced by “Uncle Hughie” Anderson, will supply the charts to navigate the way through the evening’s topics.