Monday, July 18, 2016

Checks and Balance Sheets

For the better part of a century, there’s been a clear separation between the ownership and the management of publicly traded companies. Most shareholders haven’t individually owned enough stock or had the expertise to credibly demand a say in decision-making. As a result, most owners have been passive; if they disagree with the direction of a company, their only option has been to sell.

But all that is changing. First, institutional shareholders have gotten bigger, and their ownership of corporate America has become more concentrated. These institutions invest the savings of many Americans, and the amount they manage has swelled. Second, many of these institutional shareholders have developed deep industry expertise, truly understanding the industries in which they invest. Third, poor performance by management and outright cases of abuse of power and even fraud have created a mindset among shareholders that management teams have lost their right to be left alone. Lastly, there are a few shareholders, commonly known as “activists” but whom I call “highly engaged shareowners,” who are galvanizing their fellow shareholders and providing the catalyst for management to be held accountable.

Critics have accused so-called activists of advocating business decisions that create a short-term bump in stock prices at the expense of the company’s long-term health, and some politicians would like to legislate against the rising influence of shareholders, claiming that it leads to short-termism, rising inequality and low pay for workers.

The management and directors of public companies, not the shareholders, have driven such short-term behavior, and the way to build strong companies and create jobs is not through government mandate or protecting weak management teams. It will happen because market forces will reward the companies in which management teams and highly engaged shareowners work together to achieve sustained, lasting growth.

There’s no going back: Public shareowners are becoming more involved, more informed and more engaged. That will lead to better long-term growth and performance, a win-win for all constituencies, including customers, employees, shareholders and management.

GOOD READS -  "Dealbook" column on NYT Business front, "Tell-Alls, Strategic Plans and Cautionary Tales": "One of the best books I've read recently isn't out until October. It is a biography of Alan Greenspan titled, 'The Man Who Knew: The Life and Times of Alan Greenspan' ... by the journalist Sebastian Mallaby ... Greenspan is a fascinating subject because for so long he was considered a genius, only to later be blamed for the financial crisis."

GOOD READS PART DEUX - The Trump Before Trump," by David Frum on the cover of Saturday's WSJ Review section: "There are lessons for today's Republican Party in the ill-fated populist insurgency of William Jennings Bryan.

TRUMP'S RIGHT HAND MAN - Trump son-in-law Jarey Kushner: A 35-year-old real estate developer, investor and newspaper publisher, Mr. Kushner derives his authority in the campaign not from a traditional résumé but from a marital vow ... Yet in a gradual but unmistakable fashion, Mr. Kushner has become involved in virtually every facet of the Trump presidential operation, so much so that many inside and out of it increasingly see him as a de facto campaign manager ...

And now that Mr. Trump has secured the Republican nomination, Mr. Kushner is counseling his father-in-law on the selection of a running mate. It is a new and unlikely role for Mr. Kushner, a conspicuously polite Harvard graduate whose prominent New Jersey family bankrolled Democrats for decades and whose father's reputation was destroyed, in a highly public and humiliating manner, by his involvement in electoral politics.

BANKING ON A CRISIS  - America’s shadow banking system slowed sharply through the end of June, with the value of bonds backed by personal, corporate and real-estate loans falling $98 billion from the first half of 2015. That drop off in issuance of securitized bonds, a 37% decline from a year earlier, is making it harder for businesses, shopping-mall owners and consumers to refinance their debt. Contributing factors include a regulation that will require producers to hold some of the securities they create and uncertainty raised by Britain’s vote to leave the EU. The Brexit vote has produced dire predictions for the U.K. economy and the rest of Europe, but nowhere is the risk concentrated more heavily than in the Italian banking sector. In Italy, 17% of banks’ loans are sour, nearly 10 times the level in the U.S.

COLLEGE CHRONICLES – The opinion of Higher Education Today: “Millennials and student debt crisis: The number one reason for the high cost of college tuition, that is guaranteed government students loans. If (they) never existed, we guarantee you that college tuition today would be half of what it currently costs, because colleges and universities are absolutely immune from pricing. Because you, as a student, have been guaranteed a student loan, you are graduating from college with a home mortgage -- without the home.”

RESEARCH 101 - FAREWELL, THOMAS - The Library of Congress last week bid adieu to a relic of its internet past:, the first online legislative information system, established in 1995. Its replacement,, was unveiled in 2012 and has now officially become the main site for parsing through legislative records. It employs a more streamlined search function and mobile interface, along with a non-anthropomorphized name.

STATE OF THE ART - Republican National Convention app launches: Users will be able to watch our YouTube 360-degree livestream broadcast of the convention floor ... stay up-to-date on the Convention schedule, find your way around Cleveland and the Convention Complex [including the nearest restroom], check out your favorite speeches, or watch the proceedings live." Screenshot

... The app in the Apple Store

 ... Google Play

INTERNET – With politics now consuming the news a hot new web site for public discussion. The world’s first network for voters, Brigade:

POLITICS 101 - 5 takeaways from Clinton's email reprieve : While the campaign dodges a bullet - dashing GOP hopes - the scandal will live on": "1) Americans still don't trust Clinton. ... 2) Paranoia may destroy her. ... 3) The system is rigged! ... 4) Trump vs. Comey? ... 5) Stop using email.

OUT AND ABOUT – Seen at the Glendora Country Club in full golf attire, Joe Zanetta, Cornell ’75 and Cornell Law ’78 and Dan McElvaine, St. Lawrence ’08.

An interesting lecture/discussion hosted by Tom Scali in Claremont entitled “A Cynics View of the Holy Land” given by Dr. Jonathan Reed, Provost of the University of La Verne, but also well known as “Indiana Jones” by his colleagues and former students.

FILLER UP - Top 10 countries by recoverable oil reserves," per Rystad Energy: 1) United States: 264 billion barrels ... 2) Russia: 256 billion barrels ... 3) Saudi Arabia: 212 billion barrels ... 4) Canada: 167 billion barrels ... 5) Iran: 143 billion barrels ... 6) Brazil: 120 billion barrels ... 7) Iraq: 117 billion barrels ... 8) Venezuela: 95 billion barrels ... 9) Mexico: 72 billion barrels ... 10) China: 59 billion barrels.

TOP MUNI DOGS -- See the highest-paid municipal employee in each California city: Most California cities paid at least one employee more than $200,000 in salary, overtime and bonuses last year, according to a Sacramento Bee review of new municipal pay figures from the State Controller's Office. Wages for the highest-paid employee in each city ranged from about $10,000 for the city manager in the tiny town of Amador to about $510,000 for the chief investment officer in the city of San Francisco." With searchable database:

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Dick Button (86) Boca Raton, FL.; John Glenn (95) Columbus, Ohio; “Action” Jackson Krich …future DB; Linda Ronstadt (70) Tucson, AZ.; Kat Weaver …Dr. of FLEX.

JACKASS OF THE MONTH – The Donald is becoming a Rink Rats Jack Ass regular: Donald Trump has a message to African Americans — I understand you because “even against me, the system is rigged.” Last Tuesday Trump spoke to Fox News’ Bill O’Reilly about the racial tension that has ripped through the United States.

O’Reilly asked the presumptive Republican nominee what his message would be to African Americans who “who believe that the system is biased against them. The American system because they're black, they don't get the same kind of shot, they don't get the same kind of fairness that whites do.”

“I have been saying even against me the system is rigged when I ran ... for president, I mean, I could see what was going on with the system and the system is rigged,” Trump responded. That isn’t an uplifting message, O’Reilly said.

“What I'm saying is they are not necessarily wrong. I mean, there are certain people where unfortunately that comes into play ... And I can relate it really very much to myself,” Trump said. O’Reilly pressed on asking Trump more specifically if he actually understood the experience of African Americans in this country.

“I would like to say yes, but you really can't unless you are African American. You can't truly understand what's going on unless you are African American. I would like to say yes, however,” Trump said.

-Donald Trump is sort of to politics what Bernie Madoff was to investment ... He is selling something that people don't fully understand and appreciate what it actually means.

In announcing Mike Pence, Donald Trump talks mostly about himself. Introducing his new running mate on Saturday, Donald Trump stood alone behind a lectern bearing only his name and rambled for 28 minutes about his primary victories, what he called Hillary Clinton's crimes against the country, how pastors should be allowed to endorse candidates and how he correctly predicted the outcome of the Brexit vote.

Occasionally, Trump mentioned his new 'partner,' Indiana Gov. Mike Pence, mostly looking down to read from notes when he did. The presumptive Republican nominee insisted Pence was his 'first choice' despite reports that he was uncomfortable with the decision until the end. Trump eventually invited Pence onstage, and the two shook hands. 'You're amazing,' Pence whispered to him. Then Trump left the stage. The interaction lasted all of six seconds.

And so it goes, another JACK ASS of the Month title to The Donald.

VEEP -- 7 ways Mike Pence is nothing like Donald Trump: 1. He voted to invade Iraq. ... 2. He is an evangelical Christian. ... 3. He caved to critics last year amid political controversy. ... 4. He's only had one wife. ... 5. He swore off negative campaigning. ... 6. He's a Midwesterner through and through. ... 7. He opposes banning Muslims from the U.S.

RNC - Members of Congress SKIPPING THE COUNTRY instead of going to Cleveland: Several House Republicans are going on overseas Congressional delegation trips instead of going to the GOP convention in Cleveland, according to multiple sources involved in the planning. One such trip is being led by Utah Rep. Jason Chaffetz, the powerful chairman of the investigatory House Oversight and Government Reform Committee. His trip boasts eight Republicans and two Democrats, according to a source. There are other trips going overseas as well, according to Capitol Hill sources.

The GOP convention speakers:  Natalie Gulbis, the 484th ranked female golfer in the world; Oklahoma Gov. Mary Fallin; Florida Attorney General Pam Bondi; Iowa Sen. Joni Ernst; Melania Trump; Darryl Glenn, a Republican running for Senate in Colorado; Dana White, president of the Ultimate Fighting Championship; investor Peter Thiel; private equity investor Thomas Barrack; Sen. Tom Cotton of Arkansas; former NYC Mayor Rudy Giuliani.

--Theme nights: There are plans to emphasize different themes each night of the convention. Mr. Trump wants to touch on a few of his favorite hot-button issues, like the 2012 attack on the American diplomatic compound in Benghazi, former President Clinton's infidelities and border security.

The roster of speakers ... reveals a lineup lacking many of the party's rising stars. Instead, it features some of Mr. Trump's eclectic collection of friends, celebrities and relatives ... The parade of people seems to have been selected to broaden Mr. Trump's demographic reach.

TELEPHONE DRAMA – I am home during the day a lot more during the summer months. Has anyone out there picked up some of your telephone calls lately during the day? Here are a few of mine:

“I have forty five minutes before I am arrested:” Many phone calls from the Internal Revenue Service saying that I am being investigated and have forty five minutes to get back to them before they will be at my house to arrest me.

“Your computer has a serious virus and needs immediate attention:” Really, how do you know that and if you represent Microsoft Corporation why do you sound like you are from a different galaxy?

“We are in your neighborhood and would like to install a new security system:” I would believe The Watergate conspirators before I would believe these scam artists.

“Would you like to donate some blood:” Now I do believe the American Red Cross and I do donate blood, but I only have so much blood in me…they call weekly.

Such are the summer time telephone dramas, stay tuned my next Blog may be from jail.


Major League Baseball Game of the Week: Saturday July 23, 7:05 p.m. ET, CSN: Cleveland Indians (54-38) at Baltimore Orioles (53-38). Two playoff bound teams in the American League, Orioles are tough in Camden Yards. Birds win 5-4.

Season to date (53 -39)

MARKET WEEK – In markets, the U.S. ended on a quiet note in what was a record setting week, with the S&P 500 and the Dow Jones Industrial Average both making all-time highs. On Friday, major indexes closed within a few ticks of where they opened. Treasury yields finished higher; the 10-year yield closed at 1.60%, over 20 basis-points higher on the week. The U.S. dollar index closed higher on Friday, with big gains against the EUR and the Yen.

News of the Turkish coup attempt came after the close in U.S. equities, but the futures markets (which were still open) fell 0.25%. Currency markets were also still open and the Turkish lira fell 4% in the last 30-minutes of trading.

The week ahead in the U.S. is quiet on the data front. Thursday sees existing home sales, jobless claims and the Philadelphia fed manufacturing index reports.

The focus for local investors will be second-quarter earnings reports. This coming week is the first full week of the quarter, with many large-cap companies reporting. Here is the schedule for the upcoming week:

Monday: Bank of America, IBM, Netflix and Yahoo.

Tuesday: Goldman Sachs and Microsoft.

Wednesday: eBay and Intel.

Thursday: Amazon, AT&T, Chipotle, Domino's, Starbucks and Visa.

Friday: American Airlines, General Electric and Honeywell.

DRIVING THE WEEK - Consider this: Over the last week, a man drove a truck through a beautiful seaside town in France, killing 84 people, including two Americans. The government of Turkey -- once a bastion of relative stability in the Middle East -- was briefly overthrown by a failed military coup. On the homefront, Donald Trump spent all week playing coy about his vice presidential choice, eventually tapping Indiana Gov. Mike Pence, only to have someone in his inner circle leak that he was trying to wiggle out of the selection the night before he was set to announce. One day after a man killed three police officers in Louisiana, the Republican convention kicks off here today focusing on "making America safe again.

This week, we go to Cleveland, where Trump -- a man who donated money to his Democratic rival and invited her to his third wedding -- will become the Republican nominee. Meanwhile, Republicans are millions of dollars short of the money they need to pay for the convention, and have asked corporations and Sheldon Adelson, the billionaire casino mogul, to help bridge the gap. The following week, we'll all go to Philadelphia, where Democrats will nominate Hillary Clinton, who, despite -- or maybe because of -- more than a decade of public service, has bottom-of-the-barrel-low favorability ratings. AND more American citizens are aware of Pokémon Go than who are their elective representatives.

What a world.

The GOP convention will dominate with Trump's nomination coming Thursday night ... Treasury Secretary Jack Lew on Monday "will conduct a bilateral meeting with European Commissioner for the Euro and Social Dialogue and Vice-President of the European Commission Valdis Dombrovskis" ... Lew chairs an FSOC meeting in the afternoon ... Bank of America reports second quarters earnings Monday ... Goldman reports Tuesday and Morgan Stanley on Wednesday ... ECB meets Thursday in Frankfurt with no change expected ... ComiCon offers some RNC counterprogramming starting Thursday in San Diego ... G-20 finance leaders meeting begins in Chengdu, China on Saturday.

Next week: Summer gardening, summer food, summer cocktails.

Until Next Time, Adios.

Claremont, CA

July 18, 2016



Monday, July 11, 2016

Someone Tell a Joke

The last week or so I had that feeling in my stomach, I remember that feeling: September 11, 2001, the summer of 1968 (yes I am an old gangster), the feeling that something is wrong and it is out of my control.

First came the cellphone video of an African-American man being fatally shot by a Louisiana police officer, and the astonishing live feed of a Minnesota woman narrating the police killing of her African-American boyfriend during a traffic stop. Then came the horrific live television coverage of police officers being gunned down by a sniper at a march protesting the police shootings.

And suddenly that eerie feeling was in my stomach again. Gun violence, police accountability, and racial bias have been at the center of the civic debate since August 2014, when a black teenager was killed by a white officer in Ferguson, Mo., a suburb of St. Louis.  Mass murders in Newtown, Conn.; Charleston, S.C.; Orlando, Fla., and too many other locales have resulted in national shame.

Both black anger at police killings and the boiling frustrations of some whites who feel they are ceding their long-held place in society have been a constant undercurrent in politics since January and the Iowa presidential caucuses.  In the midst of one of the most consequential presidential campaigns in memory, these events have raised the prospect of still deeper divides in a country already torn by racial and ideological divisions.

Where is our leadership? Where is common sense and respect for your fellow citizens?

Perhaps we just need to make our own personal worlds safe and respectful, that is a start. Instead of blaming someone, work together to make it better, instead of wanting only for you, want for all. Instead of listening to ignorance, teach respect and human dignity. Should all else fail, how about a simple joke to make all smile:

What happens to a frog's car when it breaks down?

It gets toad away.

Reaching the end of a job interview, the Human Resources Officer asks a young engineer fresh out of the Massachusetts Institute of Technology, "And what starting salary are you looking for?" The engineer replies, "In the region of $125,000 a year, depending on the benefits package." The interviewer inquires, "Well, what would you say to a package of five weeks vacation, 14 paid holidays, full medical and dental, company matching retirement fund to 50% of salary, and a company car leased every two years, say, a red Corvette?" The engineer sits up straight and says, "Wow! Are you kidding?" The interviewer replies, "Yeah, but you started it."

In a Catholic school cafeteria, a nun places a note in front of a pile of apples, "Only take one. God is watching." Further down the line is a pile of cookies. A little boy makes his own note, "Take all you want. God is watching the apples."

Why is it that your nose runs, but your feet smell?

Two lawyers walking through the woods spotted a vicious looking bear. The first lawyer immediately opened his briefcase, pulled out a pair of sneakers and started putting them on. The second lawyer looked at him and said, "You're crazy! You'll never be able to outrun that bear!" "I don't have to," the first lawyer replied. "I only have to outrun you."

"Knock, knock."

"Who's there?"


"Nobel who?"

"No bell that's why I knocked."

A guy spots a sign outside a house that reads “Talking Dog for Sale.” Intrigued, he walks in. “So what have you done with your life?” he asks the dog. “I've led a very full life,” says the dog. “I lived in the Alps rescuing avalanche victims. Then I served my country in Iraq. And now I spend my days reading to the residents of a retirement home.” The guy is flabbergasted. He asks the dog’s owner, “Why on earth would you want to get rid of an incredible dog like that?” The owner says, “Because he’s a liar! He never did any of that!”

FAILING GRADE - California Gets an F When it Comes to Fostering Small Businesses. A new report from Thumbtack, a hiring marketplace for professionals, says the Golden State is one of the worst in the nation for small businesses. California ranked as the "third least friendly state" in America.

GOLDEN YEARS? - Almost 750,000 California seniors still working after age 65: "Much of that growth reflects a swell of baby boomers entering retirement age. But the proportion of California seniors between ages 65 and 74 still working or looking for work also has risen, going from 19 percent in 2000 to 26 percent in 2014.

GOLDEN YEARS? PART DEUX - Social Security’s more than 60 million beneficiaries are projected at this point to receive a tiny 0.2 percent cost-of-living adjustment next year, while some Medicare recipients could see steep premium increases. That’s according to the annual trustees reports released June 22 about the financial health of Social Security and Medicare.

The long-term outlook for Social Security old-age and disability benefits, taken together, remains the same as a year ago, with promised benefits payable until 2034 and then, without changes to the law, 79 percent of promised benefits payable through 2090. Meanwhile, the trust fund that finances Medicare’s hospital coverage is fully funded until 2028, two years less than projected a year ago.

During a press conference, U.S. Treasury Secretary and managing trustee Jacob J.  Lew urged Congress to “not wait until the eleventh hour to address the fiscal challenges given that they represent the cornerstone of economic security for seniors in our country.”

Social Security annually weighs whether to give beneficiaries a cost-of-living adjustment based on the inflation rate during the third quarter of the year compared to the last year a COLA was awarded. Beneficiaries didn’t receive a COLA for 2016 because the inflation rate had fallen, the third time since 2010 they didn’t get a bump in payments. The 0.2 percent COLA that the trustees project for 2017 could yet change with inflation. The final word will come in October.

Gasoline prices have been rising this year, and the higher employment rate means that employers will have to increase wages to attract workers — both signs of inflation, said James Angel, an associate professor of finance at Georgetown University. Still, Angel said, Social Security beneficiaries should not expect much when it comes to a COLA next year.

The big question for Medicare beneficiaries is what happens to the Part B premium in 2017. With no COLA for 2016, about 70 percent of Medicare beneficiaries were “held harmless” from cost increases and are paying the same standard premium as they had in the previous three years ($104.90 a month). The rest are required by law to share the load of increased costs and pay a lot more. Congress, though, stepped in last year with a solution that limited the impact of the increases for 2016.

The small COLA now projected for 2017 would still have an impact on Part B premiums. The report estimates that standard premiums for most of those in the 30 percent not currently held harmless would jump by $27.20 to $149.00 a month next year. The other 70 percent would pay $107.60 a month in 2017 — $2.70 more than they pay now, according to the nonprofit National Committee to Preserve Social Security and Medicare.

Among the 30 percent affected in 2017 would be people who did not have their premiums deducted from Social Security checks in 2016 (including those new to Medicare in 2017) and those who already pay higher premiums because they have higher incomes. The report estimates that higher-income beneficiaries would see even higher jumps in premiums next year — from $166.30 to $204.40 a month for the lowest affected tax bracket, and from $380.20 to $467.20 for those in the highest.

A third group ­— low-income people whose states pay their Part B premiums — are not personally affected, but their states will bear the added costs.

This year’s report also projects an increase in the annual Part B deductible from $166 to $204 for all beneficiaries.

Under Medicare law, Part B (which covers doctor services, outpatient care and medical equipment) is funded differently from Part A hospital insurance.  Part B premiums are set to cover 25 percent of total costs, and the federal government contributes the remaining 75 percent out of general revenues.  The higher income-related premiums are set to cover 35, 50, 60 or 80 percent of the costs, depending on income level.

The rise in Medicare costs, which trigger increases in Part B premiums, is mainly due to the high prices of some recently developed prescription drugs, the report says. “High cost drugs are a major driver of Medicare spending growth,” said Medicare’s acting administrator, Andy Slavitt. “For the second year in a row, the spending growth for prescription drugs dramatically outpaced cost growth for other Medicare services.”

MOVING ON UP - California, the state that some prominent critics have claimed is a hellhole for business, is now the world's sixth-largest economy. The latest rankings from the World Bank -- previewed last month in an analysis from the state Dept. of Finance -- show that just five countries produced more last year than California: the U.S., China, Japan, Germany and the United Kingdom. So California's economy is now bigger than those of France, India, and Italy.

We're wondering how the news will be met in Texas and Florida, whose governors have made high-profile forays into California, complete with ad campaigns to push for relocated people and businesses. They've relied on a sales pitch (and studies, see below) that suggest California's taxes and regulation make it excessively difficult to do business here.

The U.S. Bureau of Economic Analysis reported last month that California's GDP was $2.5 trillion in 2015, up 4.1 percent from a year earlier. California saw more economic growth than the United States as a whole, which was up 2.4 percent.

BYE, BLACKBERRY - BlackBerry's long-held dominance on Capitol Hill has officially come to a close, after a a Sergeant at Arms announcement last week that said Senate staffers would no longer be issued the phone after the current supply runs out, reports POLITICO's Heather Caygle. The device, which has played an integral role in Congressional culture, is renowned for its security, distinctive keyboard and usage by many officials including President Obama and, of course, Hillary Clinton, who's looking at one intently in her famous texting photograph.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: George W. Bush (70) Austin, TX.; Tom Hanks (60) Woodland Hills, CA.; Toby Keith (55) Dallas, TX.; Kevin O’Leary (62) Manhattan, NY.; Sylvester Stallone (70) Beverly Hills, CA.

JULY 10, 2008 – It was on this date that Apple Corporation introduced the digital marketplace entitled App Store. One Hundred Thirty billion downloads later this marketplace is a key link to many to the internet. Fifty billion dollars have been paid by Apple to developers as their share of this marketplace.

What app do you use the most?

THE WATER COOLER - “Morning Joe” hosts Mika Brzezinski and Joe Scarborough could soon go public as a couple. Rink Rats has exclusively learned that Brzezinski and her husband of 23 years have quietly divorced.

Popular MSNBC stars Scarborough and Brzezinski are widely rumored to be romantically involved — and there’s plenty of on-air chemistry for all to see. But while Scarborough quietly divorced in 2013, the TV duo have never confirmed they’re romantically involved.

An NBC insider told us, “Everybody at 30 Rock knows they are a couple . . . They are constantly together, they arrive and leave events together, even on weekends. They are each other’s publicists and finish each other’s sentences. It’s the worst kept secret in TV.”

Brzezinski, 49, and her ex-husband, WABC Eyewitness News investigative reporter James Hoffer, who married in 1993, have undergone an under-the-radar divorce, which was recently settled, we’re told. They have two teenage daughters.

Scarborough, 53, divorced Susan Waren, a former aide to former Florida Gov. Jeb Bush, in 2013 after a 12-year marriage. The former couple, who have two children together, separated the previous year.

NO STRESS - All but two of 33 big U.S. banks passed the final round of the Federal Reserve’s annual “stress tests” on June 29, winning permission to boost dividends and buybacks. Large firms such as Bank of America and Citigroup, which struggled on the tests in recent years, passed this time. Both banks, along with J.P. Morgan Chase, followed the report by announcing they would boost capital returns to shareholders. Morgan Stanley also passed but received a rebuke of its internal risk-management processes, while the U.S. banking units of Deutsche Bank and Banco Santander were held back again. This year’s results could prove a tonic for bank stocks, reflecting the Fed’s view that the banking sector is much stronger than it was leading up to the 2008 bailouts. Analysts have said that post crisis regulatory changes helped contain the damage from the Brexit market rout.

BROADWAY - Hamilton After Miranda ... Will 'Hamilton' suffer after the loss of key principals?: This weekend, the hip-hop musical about the Founding Fathers ... goodbye to three principal members - Lin-Manuel Miranda, creator and original Alexander Hamilton; Leslie Odom Jr., who won a Tony Award as Aaron Burr; and Phillipa Soo, a Tony nominee who portrays Eliza Schuyler. For many 'Hamilton' fans, [today] will mark the chance to brag about whether they saw the original cast.


Major League Baseball Game of the Week: Tuesday July 12, 8:00 p.m. ET, Fox; Major League Baseball All-Star Game in San Diego, CA. American League is healthy and ready for a rout, AL wins 8 – 3.

Season to date (52 -39)

AT THE BREAK – Baseball’s Power Ten Teams:

1). San Francisco Giants   2). Chicago Cubs   3). Texas Rangers   4). Washington Nationals

5). Cleveland Indians   6). Baltimore Orioles   7). Los Angeles Dodgers

8). Boston Red Sox   9). Toronto Blue Jays   10). Houston Astros

MARKET WEEK – With the help of a strong jobs report on Friday and the Federal Reserve still undecided about a rate increase has fueled a strong rally in U.S. stocks and U.S. bonds last week. The world has no better place to stash their cash then the U.S. markets.

The coming week begins second quarter earnings reports starting off with Alcoa on Monday.

STOCK TO WATCH – Air Lease Corp. (AL) potential 40% growth rate the next twelve months.

Adobe Systems (ADBE) Another firm where the growth rate is higher than the Price/Earnings ratio, potential here is for a 20% growth the next twelve months.

Skyworks Solutions (SMKS) iCloud security firm with a 35% growth in the next twelve months.

DRIVING THE WEEK - President Obama returns from Europe and will travel to Dallas on Tuesday following the killing of five police officers there last week ... Treasury Secretary Jack Lew will travel to Paris, London, Brussels and Berlin Monday through Thursday for discussions with counterparts on Brexit impact and other issues ... House Financial Services has a hearing Tuesday at 10:00 a.m. on "Making a Financial Choice: More Capital or More Government Control?" ... House Financial Services subcommittee has a hearing Tuesday at 2:00 p.m. on fin tech ... House OGR has a hearing at 10:00 a.m. on Wednesday on the FDIC application process ... Senate Banking has a hearing Thursday at 10:00 a.m. on "Evaluating the Financial Risks of China." ... U.S. and EU leaders will continue work on TTIP in Brussels ... Bank of England will announce its latest rates decision on Thursday and could stage a post-Brexit cut ... JPMorganChase reports earnings Thursday. Wells Fargo and Citigroup report Friday. This is Congress's last week in session for the summer.

END OF AN ERA - The great Mike Allen, who created Playbook and helped launch Morning Money for Politico, signed off his 3,304th and final Playbook on Sunday: "I haven't used an alarm clock since college: I just bolt out of bed every morning, humbled and thrilled to have the chance to serve you one more time.” Thank you Mike Allen for being a source of information and insight.

REMEMBERING ELIE WIESEL - Elie Wiesel, the Auschwitz survivor who became an eloquent witness for the six million Jews slaughtered in World War II and who, more than anyone else, seared the memory of the Holocaust on the world’s conscience, died on Saturday July 2 at his home in Manhattan. He was 87.

Mr. Wiesel, a charismatic lecturer and humanities professor, was the author of several dozen books. In 1986, he was awarded the Nobel Peace Prize. But he was defined not so much by the work he did as by the gaping void he filled. In the aftermath of the Germans’ systematic massacre of Jews, no voice had emerged to drive home the enormity of what had happened and how it had changed mankind’s conception of itself and of God. For almost two decades, the traumatized survivors — and American Jews, guilt-ridden that they had not done more to rescue their brethren — seemed frozen in silence.

But by the sheer force of his personality and his gift for the haunting phrase, Mr. Wiesel, who had been liberated from Buchenwald as a 16-year-old with the indelible tattoo A-7713 on his arm, gradually exhumed the Holocaust from the burial ground of the history books.

It was this speaking out against forgetfulness and violence that the Nobel committee recognized when it awarded him the peace prize in 1986.

“Wiesel is a messenger to mankind,” the Nobel citation said. “His message is one of peace, atonement and human dignity. His belief that the forces fighting evil in the world can be victorious is a hard-won belief.”

REMEMBERING SYDNEY SCHANBERG - NYT's Robert D. McFadden: "Schanberg, a correspondent for The New York Times who won a Pulitzer Prize for covering Cambodia's fall to the Khmer Rouge in 1975 and inspired the film 'The Killing Fields' with the story of his Cambodian colleague's survival during the genocide of millions, died on Saturday in Poughkeepsie, N.Y. He was 82. ... a risk-taking adventurer who distrusted officials, relied on himself in a war zone and wrote vividly of political and military tyrants."

Next week: Jack Ass of the Month and Words of the Month

Until Next Time, Adios.

Claremont, CA

July 11, 2016


PRAYER THIS WEEK – We need it,  from Mother Teresa:

Monday, July 4, 2016

The First American Financier

This 240th birthday weekend for the United States of America marks the beginning of a very interesting summer ahead. In politics; 16 days to the Cleveland Republican convention, 23 days to Philadelphia Democratic Convention, 130 days to Election Day, who knows what fun is ahead in the political future of America. The Rio Olympic Games begin in 32 days under a looming variety of health hazards. A new United Kingdom Prime Minister is to be elected in 67 days, the result of the Brexit vote in June. Britain shocked the world by voting to leave the European Union but how exactly they will leave and over what period is far from clear. No nation has ever left the 28-nation bloc and the surprise Brexit victory has plunged UK politics into chaos, with the Prime Minister resigning, Tory candidates vying for his position stabbing each other in the back, and opposition leader Jeremy Corbyn facing a rebellion from Labour MPs.

61 days to the opening games for University of Michigan and University of La Verne football, 66 days to the NFL opening night, 94 days to St. Lawrence University Hockey opener, and 100 days until opening night in the National Hockey League.

Since this is Independence Day weekend I thought a good topic would be an individual we are hearing and reading about quite often these days: Alexander Hamilton. Besides being a “cool” play and impossible tickets, who is this first American Financier?

”How does a bastard, orphan, son of a whore

And a Scotsman, dropped in the middle of a

Forgotten spot in the Caribbean by providence

impoverished, in squalor

Grow up to be a hero and a scholar?”

— The opening words of “Alexander Hamilton.”

Though he never attained the highest office of his adopted country, few of America’s founders influenced its political system more than Alexander Hamilton (1755-1804). Born in the British West Indies, he arrived in the colonies as a teenager, and quickly embarked on a remarkable career. He was a member of the Continental Congress, an author of the Federalist Papers, a champion of the Constitution and the first secretary of the Treasury, where he helped found the first national bank, the U.S. Mint and a tax collection bureau that would later become the U.S. Coast Guard. Troubled by personal and political scandals in his later years, Hamilton was shot and killed in one of history’s most infamous duels by one of his fiercest rivals, the then Vice President Aaron Burr, in July 1804.

Born in the West Indies, Hamilton moved to the mainland in 1772 and entered King’s College (now Columbia University) the following year. By 1774 he was speaking at public meetings and writing revolutionary essays, and in 1776 he became a captain of artillery. After taking part in the Battle of Long Island and the retreat from New York City, he joined Washington’s staff in 1777, where he remained until February 1781. He commanded a battery of artillery at the Battle of Yorktown.

In 1780 he married Elizabeth Schuyler, daughter of the major general and Hudson Valley landlord Philip Schuyler. He was already close to the Livingston family, and the marriage cemented his social position and his political, elitist point of view. He argued throughout the 1780s for strengthening the national government in The Continentalist essays, the two Letters from Phocion, and The Federalist, written with James Madison and John Jay. He served in Congress and the New York state legislature and was a delegate to the Federal Convention of 1787. Although he had been central to the movement that led to the convention, his role was relatively minor and he was privately critical of the Constitution it produced. He nonetheless devoted his full energy to ratification in 1787 and 1788.

As secretary of the treasury Hamilton’s great achievement was funding the federal debt at face value, which rectified and nationalized the financial chaos inherited from the Revolution. But he accomplished still more. He was responsible for creating the First Bank of the United States on the model of the Bank of England, and his Report on Manufactures fostered commercial and industrial development in the new nation. He also played a significant role in generating the Washington administration’s policy of unfriendly neutrality toward the French Revolution and in establishing a rapprochement with Britain.

Hamilton’s policies and actions provoked intense opposition, led by Thomas Jefferson and James Madison. Just as Hamilton and Madison had collaborated in the Federalist movement during the 1780s, so Jefferson and Madison now collaborated against Hamilton’s Federalist party in the 1790s. The result was division, both within the Washington administration and in the country as a whole. After Hamilton left the Treasury in 1795 to practice law, he continued to be active in Federalist politics, but he was deeply critical of the presidency of John Adams. Nonetheless, at Washington’s insistence, he was made inspector general of the army during the Quasi War with France in 1798.

Despite his personal and political dislike of Jefferson, Hamilton was instrumental in securing his victory over Aaron Burr in the presidential election of 1800. That and his subsequent opposition to Burr’s bid to become governor of New York led to his death at Burr’s hands in a duel in 1804.

Hamilton mistrusted the political capacities of the common people and insisted on deference to elites. In a speech delivered at the Constitutional Convention, Hamilton praised the hierarchical principles of the British political system. He argued, for example, that the new American president and senators should serve for life. Many of the Convention participants feared the “excess of democracy,” but Hamilton went much further. He wanted to bring an elective monarchy and restore non-titled aristocracy to America. “The people are turbulent and changing,” he declared. “They seldom judge or determine right.” They must be ruled by “landholders, merchants and men of the learned professions,” whose experience and wisdom “travel beyond the circle” of their neighbors. For America to become an enduring republic, Hamilton argued, it had to insulate rulers and the economy as much as possible from the jealous multitude.

Just as Jefferson’s republican championing of the people’s liberties depended upon his acceptance of a permanent underclass of slave laborers, so does Hamilton’s commitment to the success of the entrepreneurial self-made man depend upon his assumption that there would be a deferential political underclass to do the heavy work.  Hamilton, with his contemptuous attitude toward the lower classes, was perfectly comfortable with the inegalitarian and antidemocratic implications of his economic vision. No founder of this country more clearly envisioned the greatness of a future empire enabled by drastic inequalities of wealth and power. In this sense, Alexander Hamilton is a representation of our times.

DECLARATION OF INDEPENDENCE - The Declaration of Independence wasn’t signed on July 4, 1776. On July 1, 1776, the Second Continental Congress met in Philadelphia, and on the following day 12 of the 13 colonies voted in favor of Richard Henry Lee’s motion for independence. The delegates then spent the next two days debating and revising the language of a statement drafted by Thomas Jefferson. On July 4, Congress officially adopted the Declaration of Independence, and as a result the date is celebrated as Independence Day. Nearly a month would go by, however, before the actual signing of the document took place.

More than one copy exists. After the adoption of the Declaration of Independence, the “Committee of Five”—Thomas Jefferson, John Adams, Benjamin Franklin, Roger Sherman and Robert R. Livingston—was charged with overseeing the reproduction of the approved text. This was completed at the shop of Philadelphia printer John Dunlap. On July 5, Dunlap’s copies were dispatched across the 13 colonies to newspapers, local officials and the commanders of the Continental troops. These rare documents, known as “Dunlap broadsides,” predate the engrossed version signed by the delegates. Of the hundreds thought to have been printed on the night of July 4, only 26 copies survive. Most are held in museum and library collections, but three are privately owned.

Eight of the 56 signers of the Declaration of Independence were born in Britain. While the majority of the members of the Second Continental Congress were native-born Americans, eight of the men voting for independence from Britain were born there. Gwinnett Button and Robert Morris were born in England, Francis Lewis was born in Wales, James Wilson and John Witherspoon were born in Scotland, George Taylor and Matthew Thornton were born in Ireland and James Smith hailed from Northern Ireland.

There was a 44-year age difference between the youngest and oldest signers. The oldest signer was Benjamin Franklin, 70 years old when he scrawled his name on the parchment. The youngest was Edward Rutledge, a lawyer from South Carolina who was only 26 at the time. Rutledge narrowly beat out fellow South Carolinian Thomas Lynch Jr., just four months his senior, for the title.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Wally Amos (80) Atlanta, GA.; Larry David (69) Brentwood, CA.; Sandra Lee (50) Albany, NY.; Carl Lewis (55) Houston, TX.; Lisa Looney ….famous educator.

GOOD READS - "Renewing the University," by Alan Jacobs in National Affairs: For the past several years, American universities have been buzzing with protests and counter-protests, charges and counter-charges. These have centered on a rather small cluster of concepts: safe spaces, the campus as home, microaggressions, and trigger warnings. ... Universities need to get beyond these disputes, at least to some degree, if they are going to retain any meaningful chance to fulfill their social missions.

POTUS WEEK AHEAD - On Monday, the President and the First Lady will celebrate the Fourth of July by hosting military heroes and their families for an Independence Day celebration with a barbeque, concert, and a view of fireworks on the South Lawn. Staff and their families from throughout the Administration will also attend this event for the fireworks viewing and performance by Janelle Monáe and Kendrick Lamar. The President will deliver remarks, which will be pooled press. ... On Tuesday, the President will travel to Charlotte, North Carolina for a Hillary for America campaign event. ...

On Thursday, the President will travel to Warsaw, Poland to attend the 2016 NATO Summit, his fifth and final Summit with NATO leaders. ...

On Friday , the President will meet with the Presidents of the European Council and the European Commission ... Afterward, the President will hold a bilateral meeting with NATO Secretary-General Stoltenberg. In the afternoon, the President will hold a bilateral meeting with President Duda of Poland to discuss U.S.-Polish relations ... Afterward, the President will participate in a NATO family photo and attend a NATO session on the NATO Alliance Council. In the evening, the President will participate in a family photo and attend a working dinner with NATO leaders. The President will remain overnight in Warsaw, Poland.

On Saturday, the President will attend a NATO session on Afghanistan followed by a session of the North Atlantic Council. In the afternoon, he'll participate in a session of the NATO-Ukraine Commission before holding a press conference. In the evening, the President will depart Warsaw ... to Seville, Spain. ... The President will remain overnight in Seville, Spain.


Major League Baseball Game of the Week: Saturday July 9, 4:15 p.m. ET, Fox; Washington Nationals (50-33) at New York Metropolitans (44-37). We are at the half way point of this Major League Baseball season, Mets are five games back of the Nats. Big weekend series, can the Mets pitching come through? The answer is no, Nats win 6 – 2.


Wed. July 6 – Wales 2 Portugal 1

Thurs. July 7 – France 4 Germany 2

Sunday July 10 Finals – France 3 Wales 1

Season to date (50 -37)


“Perseverance in almost any plan is better than fickleness and fluctuation.” - Alexander Hamilton, July 1792

Next week: Jack Ass of the Month and Words of the Month

Until Next Time, Adios.

Claremont, CA

July 4, 2016


CARTOON OF THE WEEK –What do we celebrate on the Fourth of July?