Wednesday, April 1, 2015

"The Month That Was - March 2015"

                     Sydney M. Williams
                                                                                                                                 April 1, 2015
                                                                                                             
The Month That Was
March 2015

“One swallow does not make a summer,
but one skein of geese, cleaving the murk of March thaw, does make a spring.”
                                                                                                                                Aldo Leopold (1887-1948)
                                                                                                                                Conservationist

March madness, which we in America associate with basketball and which became popularized around the world by Lewis Carroll’s character the March Hare in “Alice’s Adventures in Wonderland,” is derived from the observed mating habits of the Hare. Like most of the world’s species, mating seasons are known for emotion replacing reason. Among the human variety, December babies are often the consequence.

There was much during the past month beyond basketball that would qualify as madness: Vladimir Putin disappeared for a week, perhaps to be with his girlfriend who allegedly was giving birth? Andreas Lubitz, co-pilot of a Germanwings Airbus A320 jetliner, deliberately crashed the plane he was flying into the French Alps, killing all 150 aboard, taking murder-suicide to a new level. The U.S. Ambassador to South Korea, Mark Lippert, was slashed with a razor by an assailant known to be a political extremist. Former New York Mayor Rudy Giuliano questioned President Obama’s love for America. Harrison Ford was hospitalized after he crash-landed his vintage World War II plane on the Penmar Golf Course outside of Los Angeles. And Starbucks’ CEO Howard Schultz began and ended a campaign to improve race relations by having the company’s coffee cups read, “Race Together.” With a majority of the servers being African-American, while most of the patrons are Caucasian the idea, while noble, was doomed. 

The most important event of the month, however, was the nuclear agreement being negotiated between the Obama Administartion and Iran, with its myriad tentacles affecting most of the Middle East and, consequently, much of the free (and not so free) world. The proposed agreement also highlighted the widening gap in domestic politics between the two Parties in Washington. The agreement, which theoretically would ban for ten years Iran’s ability to develop nuclear weapons, is supposed to be signed by the end of the month. It is difficult for an American politician whose furthest horizon is the next election to think decades out, as do so many in the Middle East. The potential for a nuclear arms race in the region seems a likely consequence.

For centuries the Middle East has been a cauldron of turmoil. Tensions, always tight, have worsened between the Shiites represented by Iran and the Sunnis by Saudi Arabia. Both have as partners secular governments and both incorporate terrorists and aspects of Sharia Law, which are an anathema to freedom loving Westerners. Standing alone, and loved by neither, is Israel. Iran, which is one of the world’s foremost supporters of terrorism, took advantage of the turmoil caused first by the invasion of Iraq by George W. Bush that was without adequate post-invasion plans and then second by the premature removal of troops by Barack Obama that left no peace keeping apparatus in place. Apart from Iraq, Iran has extended her reach within the region, in Syria, Lebanon and especially in Yemen, with her support for the Houthis. Iran has become our ally in Iraq against ISIS, because it is a way for Iran to support Bashar al-Assad and because it provides a foothold in a country she has long seen as an enemy. In Yemen, Iraq is our enemy in the battle against the Houthi. Both the Houthi and ISIS are Islamic terrorists, with the ISIS being Sunnis and the Houthi, Shiites.

As for the U.S. nuclear negotiations with Iraq, the talks have sent Secretary of State John Kerry careening around the world like a kid in a souped-up kiddy car at a bumper car rally on the Bonneville Salt Flats. Foreign policy has not fared well under Mr. Obama. The peripatetic Mr. Kerry seems to be following the lead of his predecessor whose greatest accomplishments were miles flown and countries visited. His pontificating pronouncements, accented with his Long Island “lock jaw,” add an element of absurdity to what is his ability to say nothing, while sounding superior. As for the Administration, any deal is better than no deal. It would be amusing were the stakes not so serious. Of course, for Mr. Obama’s political opponents – which now include, besides most Republicans and some Democrats, Israel and Saudi Arabia – the reverse is true: no deal is better than a bad deal.

Elsewhere overseas, Benjamin Netanyahu won re-election in spite of a poor economy and despite Mr. Obama’s efforts on behalf of his opponent, Isaac Herzog. An attack by Islamic extremists, backed by ISIS, killed 23 tourists in Tunisia, while in Yemen suicide bombers killed 123 and wounded 350 at two mosques. Tunisia had been considered a success story from the “Arab Spring” of 2012, while Yemen had been mentioned by Mr. Obama as one of our strongest allies. As Houthi rebels advanced, Yemen President Abd Rabbuh Mansūr Hādī had to flee the country and the U.S pulled out its troops. Indicative of deteriorating relations, the Saudis flew bombing missions against Houthi positions in Yemen without first notifying the Americans. The elections in Nigeria, Africa’s largest nation and home to the Islamic terrorist group Boko Haram, suggest that former military ruler Muhammadu Buhari defeated incumbent Goodluck Jonathon.

While taking questions at the City Club of Cleveland, President Obama indicated it may be time to consider compulsory voting. While such a law does exist in Australia, it seems odd for a free and democratic people. While I personally feel we should vote, making it mandatory is wrong. There are times when thinking Americans prefer to sit-out an election. Mr. Obama said it “would take care of the ‘money thing’,” but gave no hint as to why candidates having to reach more people would be cheaper. Hillary Clinton’s scandals got deeper when she announced that not only had she used exclusively a non-government email system when serving as Secretary of State, but that she had her own server – or rather one she shared with the Clinton Foundation – and that she had deleted more than 32,000 e-mails, e-mails that she alone determined were not relevant to her years at State. Showing that the wheels of justice do turn, albeit slowly, the Justice Department decided there was no case – neither criminal nor civil – against former Ferguson police officer Darren Wilson in the shooting death of Michael Brown last August. This was despite the use of overwhelming legal force on the part of Attorney General Eric Holder.

Ted Cruz became the first to declare his candidacy for President at a speech at Liberty University in Virginia. On the Republican side, the field will be crowded. Democrats would prefer to anoint Ms. Clinton with the crown and scepter that represent the Democratic nomination, thereby avoiding the costs of a primary and depriving 40% of the population of a choice. Sergeant Bowe Bergdahl, who was exchanged for five al Qaeda fighters and who received a hero’s welcome at the White House, was charged with desertion, further embarrassing Mr. Obama in illuminating his naïveté. A Religious Freedom Restoration Act (RFRA) was passed in Indiana – designed to provide a legal framework for those who claim that government rules or requirements impinge on their rights to exercise religious freedom – generated unintended (and unexpected) reactions from gay and lesbians who claim they are being targeted. The reaction from Leftist states like Connecticut and Washington was swift: state employees will not be able to travel to Indiana at state expense. Since 19 states, including Connecticut, have enacted RFRAs, the attacks are hypocritical and politically motivated, aimed at a popular Republican governor, Michael Pence.

Financial markets were busy. Janet Yellen, Chair of the Federal Reserve dropped, as expected the word “patience” from her commentary, but she did not, as she emphasized, substitute “impatience.” Fed Funds have now been at 25 basis points since the fourth quarter of 2008, the longest spell, I believe, of such abnormally low rates. It is enough to make one believe that the Fed is more interested in accommodating the heavy borrowing by the Federal government than working in the best interest of the American economy. The yield on the Ten-Year declined modestly, as money came out of equities. The Dollar continued higher, while oil and gold fell. Despite the cold weather in the Northeast, cocoa prices fell almost 10% during the month. On the first trading day of the month the NASDAQ Composite closed above 5000 for the first time since March of 2000. It did so on two other occasions during the month, but closed at 4900.88. European stocks have outperformed their American cousins, as they have done year-to-date.

In sports, March “madness” dominated the news. As the month ended, we were down to the final four in the NCAA tournament: Wisconsin will play Kentucky and Duke will play Michigan State next weekend, both games to be in Indianapolis. Peyton Manning, who turned 39 this month, re-signed with the Denver Broncos, but at a $4 million reduction in salary. For the second time in its history, Alaska’s Iditarod Race was moved from Anchorage to Fairbanks because of snow conditions. Dallas Seavey won for the third time, beating his father, Mitch, in a time of 8 days, 18 hours, 13 minutes and 6 seconds. His prize: $70,000 and a new pickup truck!

Besides being the 15th Anniversary of the NASDAQ trading above 5,000, March was the 50th Anniversary of “Bloody” Sunday, the Civil Rights March from Selma to Montgomery, Alabama across the Edmund Pettis Bridge. Five years ago this month, President Obama signed into law the Affordable Care Act, and one year ago Malaysian Flight 370 disappeared in what remains one of air travels’ biggest mysteries. Also, in March 2014, Russia invaded Crimea, where they remain.

Death, as its wont, made its entrance. Edward Cardinal Egan, former Bishop of the Archdiocese of New York and who helped console a grieving city after 9/11, died March 5th, a month shy of his 83rd birthday. Lew Kuan Yew, the man who took the British colonial backwater of Singapore and transformed it into a thriving financial and trading power house of a city-state, died at age 91. While he was authoritarian, he was also principled, forward looking and pragmatic. Irving Kahn, a Wall Street legend who made his first trade in June 1929, died at age 109[1]. He once said, “The important thing is to keep that brain going.” Amen.












[1] Mr. Kahn actually died on February 24th, but I first saw the obituary in the March 6th edition of the Financial Times.

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