Current Events, May 2007….

1) The economy/investing: I seem to vacillate here, but I did mention we are seemingly at an inflection point. Our economy is slowing while the housing and auto industries are getting their asses handed to them. Still, commodities, while up, are not going through the roof and unemployment is at historical lows. The dollar continues to weaken vs. the Euro, but its holding its own vs. Asian currencies. It’s a mixed bag. In the short term, I have taken some profits and am back to about 10-20% cash. I decided I had to do this, because the market has been up over 20 straight days and I was in 100% the entire time. Currently, I am about 75% in equities with 5% Bonds and will likely take some more profits in the next few weeks. I am looking for another sell off in the next few months to put some of my freed up profit back to work. I am focusing on high quality, large cap stocks that have the ability to generate cash in a weak American economy or can substantially benefit through exports as the dollar stays relatively weak. I am staying away from anything related to discretionary spending and have bought quite a bit of oil (via USO) to hedge against what I see as major geo-political risk in the Middle East. All my assets are under non-taxable accounts, so I don’t have the ability to short anything. I am considering opening up another account to change this. My current favorites are Unilever (UL/UN), Verizon (VZ), Microsoft (MSFT), General Electric (GE), General Dynamics (GD), Goldman-Sachs (GS), Slumberger (SLB), and Glaxo-Smith-Kline (GSK). I have another small cap growth play going, but am very wary, because I’m not sure if this is the right kind of asset for the current market. I may take all my small cap profits. I also have made major $$’s investing in China via FXI. Already, I have taken a ton of profits off of FXI, and am considering closing out my position in China entirely in the near future.

2) Viva Le France: Segolene Royal was a strikingly beautiful socialist candidate (sorry to sound like a chauvinist, but come on, she was pretty hot for a fifty something year old – not as hot as wordybitch, but I digress). She managed to lose her bid to become France’s first female president. My young daughters are distraught, because they wanted “the girl to win,” and were too young to grasp the concept of the European welfare state and growing immigration problems when I tried to explain French politics. Still, I am very optimistic about Nicolas Sarkozy. He seems to have a capitalist mentality and no moral hang-ups about turning out riot police, tear gas, and fire hoses on the “youths” (ie Muslim immigrant radicals) that have taken to burning, on average, 100 cars a night. He also wants to work more with America, and unlike Jaques Chirac, Sarkozy was not involved in selling a nuclear reactor to the Iraqis’ only to have it blown up by the Israelis. With that being said, France is still France. Having Sarkozy as president (backed up by Angela Merkel in Germany) will help US/European relationships, but there will still be issues. At least the disagreements will hopefully be more civil and constructive now. The bad news is that if Sarkozy can get some traction on the labor and welfare issues that plague his country, France will be much more competitive with the US economically. Almost forgot, Sarkozy looks like Rocky Balboa too, kick ass!!

3) Fuel Standards: Obama went and got all tough in a recent speech about foreign policy, stating that he wants to grow the US Military and while keeping on the offensive against terrorists. It was good stuff, enough to make me even reconsider him as a candidate, but then he had to open up his mouth about fuel standards. His speech implied that both car manufacturers and oil companies have chosen to keep America depenedent on high priced gas being guzzled by poor fuel efficiency cars. I will leave off the oil companies for now, and focus only on the auto industry. What really pisses me off, is that currently, Americans love frame science and technology debates in a legalistic rhetoric. The argument is that if required by government, auto manufacturers will simply magically build more fuel efficient cars. That is correct, but any engineer will point out that any design is a trade off of options. The biggest trade off with fuel efficiency is weight, which drives the amount of structural steel in a design. Many would say less steel is better. That works until you get into a wreck. I see absolutely nothing wrong with somebody who drives less than 100 miles a week wanting to own a big, fuel inefficient, safer vehicle to put their families in if they are willing to pay for their gas. It’s their choice, not Congress’s. Make no bones about it, higher CAFÉ standards mean poorer safety and protection for motorists. In addition, the market seems to be working out pretty well in this area. Has anybody noticed that Ford and GM are getting their asses kicked, while Honda and Toyota are running the table, mostly because they offer more fuel efficient products? Still, it’s not the real issue, because union benefits and health care are crushing the American auto industry. Obama’s big speech about getting tough with automakers is merely a pretext to create higher fuel standards in tandem with a Federal bail-out of the US automakers on pensions and health care, a crafty mix of popular environmentalist rhetoric that’s really all about union special interests. He just lost my potential vote. Anyway, all Ford needs to do is design a completely riot and fireproof car to sell in France and they can get back to profitability. At the rate the French are going, they’re on track to have about 30-40,000 cars burned by rioting “youths” a year.

4) Decision 2008: I am torn between the president I want, vs. the president I think the nation needs. I WANT Rudy Gulianni to be my next president. He has my conservative bent on many things, without the social platform that turns me off about so many GOP candidates. In my opinion, Karl Rove and the ideal of big government, “compassionate,” conservatism have seriously sundered the alliance between traditional conservatives and libertarians within the GOP. As a libertarian, I feel like the GOP no longer takes my support seriously. With that being said, I can honestly say I hate everything about the current Democratic party. That brings me to the president I think America needs, which is most likely Senator Hillary Clinton. That’s a tough choice to make, and on most of the issues, I strongly disagree with the senator. I think I will post an essay some time in future about my current thinking.

5) Tick-Tock: Hey, douschbags!! That's you Congress. My brothers and sisters at arms are still taking hostile fire while you hold hearings on Alberto Gonzales and the sub-prime mortgage industry. I want the troops home to. The easiest way to do that is win. Let's go!! And yes Hillary, even though I consider you ruthless and underhanded enough to be suberp president, I still expect you to actually work a little in the senate before your campaign gets seriously underway! Let's see some funding, folks!!

Also, I have been working on a big, mega essay about anti-Americanism. I want to finish that up in the near future. We’ll see how it goes.