|
 We begin today with some practical advice: Don’t self-diagnose by using the Internet. These are the “symptoms and warning signs” of a heart attack, according to HeartInfo.org:
- Uncomfortable pressure, fullness, squeezing or pain in the chest
- Pain spreading to the shoulders, neck or arms
- Lightheadedness, fainting, sweating, nausea or shortness of breath
- Anxiety, nervousness and/or cold, sweaty skin
- Paleness or pallor
- Increased or irregular heart rate
- Feeling of impending doom.
As we were dozing off to sleep Monday evening, the old ticker skipped a beat. We were short of breath and numbness stretched down the arm. We’re still on the younger side of the age scale, so a heart attack seemed unlikely. Still, we looked up the symptoms online… and there they were: “discomfort in the chest, pain in the neck, sweaty skin, irregular heart rate...” The Web site screams:
“IF YOU NOTICE ONE OR MORE OF THESE SIGNS IN YOURSELF OR OTHERS, DON'T WAIT. CALL EMERGENCY MEDICAL SERVICES (9-1-1) RIGHT AWAY!”
So we did. We checked into the ER at Sinai Hospital at 4 a.m. Tuesday morning...
If we were smart, we would have noticed only the last symptom -—- “feeling of impending doom” — and gone back to sleep.
 Bear Stearns announced yesterday that it would NOT bail out the riskier — and bigger loser — of its two now-infamous funds. The fund, which has already sustained 23% losses, is now likely to be broken down and auctioned off. Only then will we be able to open it up and see if there’s anything of value left inside…
“To death and taxes you can add this to your list of inevitabilities,” Pimco’s Bill Gross offered. “The subprime crisis is not an isolated event and it won't be contained by a few days of headlines in The New York Times. It will not remain confined to a neat little Petri dish in some mad financial derivative scientist’s laboratory.
“Ultimately… [subprime] will affect risk spreads in markets completely divorced from U.S. housing… Consumption will be reduced to say nothing of new home construction over the next 12-18 months… The willingness to extend credit in other areas -- high yield, bank loans and even certain segments of the AAA asset-backed commercial paper market should feel the cooling Arctic winds of a liquidity constriction.”
 The major U.S. indexes charged out of the gates yesterday morning. The Dow, Nasdaq and S&P 500 were up almost 1% before lunch. Then traders caught wind of the “impending doom” themselves. All three indexes posted small losses by the day’s end.
 The national glut of homes for sale has reached a 15-year high. Countrywide inventories announced on Monday reveal a record 4.5 million homes for sale. That’s a nine-month supply at the current sales pace. We haven’t seen a market like this since June 1992.
“We still seem to be in the sellers’ denial phase of the market,” says Joel Naroff of Naroff Economic Advisors. “We haven't even hit the buyers’ denial portion, when people don't realize that prices are no longer dropping. This market has a very long way to go before we will be able to characterize it as solid.”
 “Virtually nobody foresaw the Great Depression of the 1930s,” reads a statement issued by the Bank for International Settlements (BIS) this week, “or the crises which affected Japan and southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of noninflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived.
“The Chinese economy seems to be demonstrating very similar, disquieting symptoms,” the bank said. The BIS went on to call China’s growth “unstable, unbalanced, uncoordinated and unsustainable.”
 The BIS also admonished “private equity” players in the same statement. “The levels of leverage employed in private equity transactions have raised questions about their longer-term sustainability. Their strategy depends on the availability of cheap funding. Sooner or later the credit cycle will turn and default rates will begin to rise.”
Chris Mayer, covering private equity for readers of Mayer’s Special Situations, drew similar conclusions. Look at this chart:
“This is pretty amazing,” Chris told his readers. “Nine of the top 10 buyouts have occurred in the past 13 months. We are truly living in a history-making time.” Private equity has been binging on credit all year, buying up companies in all sectors -- casinos, food and financial services, communications, real estate, entertainment…
Chris has found a water treatment company ripe for takeover, which he calculates will net its shareholders up to 71% on the transaction. To find out which company, how he calculates the potential gains and what other buyout targets he has on his list, be sure you’re reading Mayer’s Special Situations.
 Peruvian mining officials announced that their silver and gold production was significantly down from a year ago, 11% and 28%, respectively. On the news, silver dropped 60 cents to $12.40, an eight-month low. Gold also took a nasty hit -- it’s now at $641.
 The Taipei weighted index, Taiwan’s main market index, gained 1.4% yesterday to 8,939, its highest level since 2000. In 2007 alone, the index has gained over 14%.
“Foreign investors have Taiwan as their single biggest underweight,” said a trader with Citigroup. “Sentiment is in the doldrums, and relative to the region, valuations are as cheap as they've ever been.” Of the Asian indexes, Citigroup is betting that Taiwan is the least likely to overheat this year.
 Exxon Mobil and ConocoPhillips thumbed their noses at President Chavez this week. Both companies refused to sign equity interest agreements on their Orinoco Belt projects.
On May 1, Chavez set a deadline for oil companies to sign over 60% of their share in the belt to the national oil firm Petroleos de Venezuela S.A. Four of the six major firms operating on the belt signed the deal by the deadline this past Monday. But as of today, Exxon and Conoco have taken an “all-or-nothing” approach.
“Nothing” will be the most likely result… at least for a little while. “If they do not want [to accept the terms],” Chavez said in an interview, “I told the minister to tell them they can go, that they should leave, that we, in truth, do not need them. Petro Venezuela is capable, we can do it, and we have enough allies in the world, we are not alone. We have plenty of allies in the world to make progress in the Orinoco oil belt.”
Adios, Hugo... buena suerte.
 “Corruption is smothering the oil industry in Iraq,” reports Dan Amoss, editor of Strategic Investment. Siphoners, smugglers, saboteurs and corrupt officials have reduced Iraq’s oil output to a half a million barrels less per day than before Shock and Awe came to town.
One stretch of Iraq pipelines was recently found to have as many as 39 “illegal” siphons. The oil that does make it to the refineries is sold on the black market by corrupt officials.
“Every politician in southern Iraq has his hand in the till,” says Dan. “We shouldn’t be surprised that the Iraqi parliament is making little progress in initiatives to secure the country. Most Iraqis are positioning for what they expect will be a violent land grab once the U.S. eventually withdraws its forces.” Find out more about The Great Oil Grab of 2007!
 “Great daily update, as usual!” exclaims a reader. “For us semi-monolinguistic Neanderthals around, a translation of “sauve qui peut” would’ve been helpful. Thanks to the blessing/curse of the Internet and instantly available (sometimes way too much) information, I agree with you whole-heartedly. It is ‘every man for himself’ in these ‘interesting’ times. Your insight, plus a dampened finger testing wind direction, helps guide a few of us through the ‘misinformation jungle.’ Keep up the great work.”
 “I am a salty trader,” said our last reader, “somewhat worthy of it, and I have contributed the legal maximum to Ron Paul’s presidential campaign. There is a part of a person's life that is beyond mere profit and loss. If we lose our liberties we will have lost a precious element of our lives. I encourage you to also contribute to Congressman Paul's campaign. You will feel better and your grandchildren will bless you. You can still make money.”
 Warren Buffett is auctioning off spots at his lunch table on eBay again this year. The current high bid is over $265,000. Last year’s seat went for over $600,000.
Regards,
Addison Wiggin
The 5 Min. Forecast
P.S. After 12 hours of pricking, prodding, poking, monitoring and ignoring me, the doctors determined that my heart was fine. I passed the stress test. My blood checks out. So what happened? They don’t know. But they suggested my good friends caffeine, alcohol and stress were probably all at the party.
|
Monday. June 25, 2007: 
