THEME: FREE TRADE
Bush is going to UK next week. Are we headed for a trade showdown???

US aerospace trade chief warns on EU stance
By Caroline Daniel in Washington
Published: November 13 2003 19:31 | Last Updated: November 13 2003 19:31

The head of the leading US aerospace trade body has warned that European "belligerence" over steel tariffs and tax reform could harm commercial aviation trade.

In an interview with the FT, John Douglass, president of the Aerospace Industries Association, said there was a feeling in the US that "some countries, mainly France and Germany, and occasionally Canada, exploit the US market."

"Our government gives equal treatment to Airbus and they reap huge economic benefit from the US market, at the same time as [France and Germany] fight us in the UN and around the world. If that continues, don't you think trade would be affected by that, and sooner or later we could say we are not going to give them access?"

Mr Douglass's comments come against a background of growing concern in Washington about the disappearance of US manufacturing jobs.

The aerospace industry has been hard hit: employment has fallen from a high of 1.3m during the cold war to less than 600,000, and Boeing, the US aerospace group, is poised to lose its lead in new commercial aircraft orders to Airbus, its European rival.

"There is nervousness about the sabre-rattling by the EU on trade issues. People are getting tired of [cases being taken] to the WTO [World Trade Organisation] and every other damn thing that comes down the pike.

"There will be a reaction to the economic belligerence by the EU . . . every time we see Pascal Lamy [EU trade commissioner] threaten to sue us over something it runs against the grain of how Americans think about Europe. It is like a neighbour who is constantly calling the cops and complaining," Mr Douglass said.

While he said those concerns would continue in the run-up to US presidential elections next year, he expected President George W. Bush to make a statement on December 17, when he would announce increased aerospace R&D funding and talk about a replacement to the space shuttle. "Inevitably there will be an increase in space spending because they have got to replace the shuttle."

Mr Douglass said he hoped the industry would receive further support from the federal government.

MEME: PRESIDENTIAL CYCLE

"The economy is always the best in the third year of a presidential term," said Louis Navellier, president of Navellier Management Inc. in Reno, Nev. "And election years are the second-best years for the economy."
"This is economic nirvana," Navellier said. "I think I saw Alan Greenspan almost smile on TV yesterday."

MEME: JOBLESS RECOVERY
The Father of the Jobless Recover speaks!!!
From LA Times article

The trouble, economist Nick Perna said, is that "if every company was lean and mean, the economy would be in serious recession."
Perna - who is credited with coining the term "jobless recovery" more than a decade ago - is hopeful that, as confidence builds and the economy expands, hiring will follow. After all, the jobless recovery of the early '90s eventually gave way to a lengthy, job-packed expansion.
"In the best of all worlds, we'll get rapid productivity growth and, when people are displaced, they're able to find work in other sectors," Perna said.

John Challenger, chief executive of Challenger, Gray & Christmas, the placement firm, is more bleak.
"My sense is that hiring and job creation will be meager," he said. "There are huge transformative forces at work, with technology and globalization forcing us in different directions. I think we're in uncharted territory."

THEME: ASSET BUBBLES
Some perspective on asset sizes...

``From 1950 to 1982, housing was roughly equal to gross domestic product in the U.S.,'' says Joe Carson, head of global economic research at Alliance Capital Management. ``Now it's 40 percent bigger than GDP. From 1965 to 1995, equity market capitalization was 50 percent of GDP. Now it equals GDP.''

MEME: SUSTAINABILITY
MEME: CORRECTION
MEME: WALL OF WORRY
THEME: SCEPTICISM

Richard McCabe, chief market strategist at Merrill Lynch, believes "the market's recent lukewarm response to positive economic and corporate news surprises could be a prelude to an interim correction within its ongoing cyclical bull market."

"When pushing the accelerator of a car, and it goes from zero to 100 miles per hour ... at some point (the rate of pickup) can't sustain itself," says Richard Cripps, strategist at Legg Mason Wood Walker.

What drives the market higher is the classic "wall of worry." The appearance of the memes cited above is symbolic of this phenomena. During the bear market, the memes that drove it were "bottom" and "capitulation." When people focused on these memes, invariably the market got weak. This makes for an easy short-term trade.