<a href=cbs.marketwatch.com>THOM CALANDRA'S STOCKWATCH By Thom Calandra, CBS.MarketWatch.com Last Update: 10:31 AM ET May 12, 2003

SAN FRANCISCO (CBS.MW) - The dollar is crashing. The dollar is crashing. CBS MARKETWATCH COMMENTARY THOM CALANDRA (WEEKDAYS) How to time the timers TOMI KILGORE (MONDAYS) A convergence of technicals weigh in on IBM BAMBI FRANCISCO (TUESDAYS) The reality behind the 'Matrix' technology MIKE TARSALA (WEDNESDAYS) Microsoft XBox: A game of pitfall? DAVID CALLAWAY (THURSDAYS) Wall Street analysts: the new SARS JON FRIEDMAN (FRIDAYS) N.Y. Times' explanation of reporter fiasco falls short

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The American dollar is now at its lowest point since January 1999, its euro nemesis rising as high as $1.1626 Monday morning. The Australian and New Zealand dollars notched nearly four-year highs against the U.S. dollar as well.

Gold, which benefits from dollar weakness, rose above $350 an ounce for the first time since March 12. See: Euro riding high.

U.S. Treasury Secretary John Snow "has been all over the heartland and now all over talk-TV, saying 'strong dollar, best interests' out of one side of his mouth and 'the market sets rates competitively' out of the other.' This time he is able to add that exports are getting

stronger because the dollar is weak," notes longtime currency strategist Barbara Rockefeller at Rockefeller Treasury Services.

"This is where the administration wanted to be all along and now they can admit it, especially given the Fed's seal of approval last week to devaluation-inspired inflation," says Rockefeller, whose work on currencies is among the best of U.S. strategists. "Now the only issue is how long it takes for the new perspective to reach the majority of interested parties."

Rockefeller says Wall Street issuers of stock and bonds have the most to lose as the dollar slides (more than 20 percent this year alone against the euro). "The stock boys love to scare themselves with panic stories and the crashing dollar offers a good opportunity. Corporate bond issuers can't be too thrilled, either. They have to offer a premium," she says from her Connecticut headquarters. "But before the U.S. says or does anything to rebalance the outlook, we will probably see both Japanese and European intervention."

The dollar's continued slide this year will embolden some currency speculators, says Chuck Butler, chief strategist at Everbank.com. "Liberties are going to be taken with the dollar now, whenever traders feel feisty enough to do so," Butler said about the currency markets. "They don't have the fear of a strong dollar policy as they once did."

Butler, whose Everbank.com in St. Louis allows individuals to shuttle dollars into foreign-denominated certificates of deposit, has been forecasting the dollar's decline for at least the past two years. His thesis is that investors are seeking the higher yields available on cash deposits in currencies other than the dollar. Market yields on U.S. Treasury bonds Monday morning were falling to historic lows, with the 10-year yield below 3.6 percent.

The dollar still has a way to go -- down, says Butler. "I'm still concerned about the speed euro traders are marking up the currency, but until I see any signs of a pullback," he says, "so you just go with the flow."

For now, stock market investors are paying little attention to the dollar's continuing cascade. Most must believe, as the Treasury secretary indicated, that cheaper dollars will help American exporters of goods and services, such as McDonald's (MCD: news, chart, profile) and Gillette (G: news, chart, profile), in their overseas businesses.

The stock market, says Richard Dickson at pioneering analytics firm Lowry's Reports, "has developed a pattern of ignoring signs of short-term weakness, so at this point we would give the benefit of the doubt to the bulls. "Until selling shows definite signs of picking up ... the market is unlikely to suffer anything more than an occasional short-term setback."

One wild card is oil. Higher oil prices could derail any economic recovery that is in the cards for this year. Supply constraints could boost oil prices just as the summer driving season heads our way.

"What's the bottom line? For the oil markets, it means oil in the $25 to $30 per barrel range for the near term," says Joseph Duarte, Dallas fund manager and financial author. "But if circumstances worsen in the Middle East, we could see much higher prices for some time. For investors and traders, it suggests a potential profit opportunity in the energy sector."

Duarte points to "razor-thin storage margins" of oil in U.S. markets, as well as declining oil-rig counts across the world as signs supply troubles may be just ahead. "Oil companies are doing everything that they can to control refinery capacity. And with no chance for any kind of a swing producer appearing (such as Nigeria or Venezuela), any kind of further supply disruption, either intentional or accidental with or without an increase in demand, would send oil prices rising significantly once again," he says.

Duarte, of River Willow Capital Management, uses shares of oil-services firm Lonestar Technologies (LSS: news, chart, profile) as his leading indicator for where oil prices are headed. Lonestar shares are up almost 30 percent since April 1. "The pieces for another round of supply squeezing are certainly in place, and the oil stocks are clearly forecasting that the dynamics of the marketplace have been altered significantly," Duarte says about the flow of oil through Middle East ports. "Lonestar Technologies is predicting higher prices for oil, just as the oil market fundamentals are dramatically pointing the same way."

As for gold, Wall Street and Main Street strategists increasingly see the metal eclipsing its $389 an ounce high from earlier this year as the dollar declines. "The world is dangerously awash with U.S. dollars. More than three quarters of global central bank reserves are in U.S. dollars," notes Frank Giustra of Endeavour Capital, a Canadian merchant banker. "The downward trend in the dollar began two years ago and is very much intact. Although it has fallen approximately 25 percent against the U.S. dollar index, the dollar is still overvalued and will most likely fall a further 15 percent in the next two years alone."

Giustra, former president of mining financier Yorkton Securities, says gold investors will benefit. "As gold is priced in U.S. dollars, the dollar's decline will make it cheaper to purchase in other currency terms and less attractive for non-U.S. gold producers to produce," says Giustra, writing for International Speculator. "More importantly, if its imperial status is severely challenged and no other currency emerges as a viable alternative, then gold will regain its historical status as the currency of last resort and the ultimate store of wealth."

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Thom Calandra's StockWatch is CBS MarketWatch's flagship column. The regular report is in its eighth year at CBS.MarketWatch.com. Thom Calandra is also author of subscription service The Calandra Report.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, May 11, 2003 By: Rainbow Sally

Date: Fri, 09 May 2003 16:58:42 -0700 From: Rainbow Sally rainbowsally@zippnet.net To: Editor@VHeadline.com Subject: re: your VHeadline letter

Dear Editor: Both the left and the right are guilty of mass murders. Hitler was a rightist. The issue should strictly focus the Constitutions of our countries ... not right-left polarization.

I also am American.

Left and right polarizations are destroying the US ... we can't even agree on abortion issues. We have engaged in a war we did not want (until troops were committed), and we are a million miles from living up to our own Constitution. We have adopted an unspoken amendment honoring free enterprise at the expense of free speech, for example. (See current FCC regulation debate, for example).

Venezuela has its own constitution ... and its President (imagine what would happen here if this happened to Bush) was abducted, forced from office and then reinstated ... largely by popular demand.

We can learn a lot about the differences and similarities of capital-ism and democracy from Venezuela. We can learn a lot about how one side can cause a problem and then blame the other for not being able to stop them from causing the problem.

That's where I jumped into Venezuelan politics about two months ago ... I am speaking of the opposition's sabotage of the petroleum industry (implicit) and the cutting of electrical transmission lines (explicit).

Perhaps this is not a white hats v. black hats western movie?

Now then, if we assume that there are no good guys (as in "all have sinned?") we can also admit that their Constitution has no ulterior motives of its own and is likely to be impartial by its nature. So we can hope their Constitution is more readable than ours! Because we are not doing that well ourselves, my friend.

DynCorp -- buying and selling human sex slaves. How bad of an idea was it to have a privatized military?

How far have we already descended into a neo-plantation mentality?

And how can WE best recover some degree of humanity before God himself produces a little "friendly fire" out of his frustration with our obstinence, our deliberate incompetence (when it serves our purposes), and our incessant cheating -- and calling it "righteousness", trying to implicate even Jesus Christ in our murders.

Pray for our President ... pray that he be stopped by a valid impeachment process so that no other US President ever ever ever tries this again! War Crimes 'R' [NOT] Us.

And while you're kneeling by your bed, pray also that Venezuela's Constitution holds the key to correcting their problems.

Rainbow Sally rainbowsally@zippnet.net

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, May 11, 2003 By: Patrick J. O'Donoghue

Venezuelan Executive Vice President Jose Vicente Rangel has received a visit from the US non government organization called The Foreign Relations Council (FRC).  

Rangel spoke for more than three hours with International Crisis Group deputy president and FRC official, Mark Scheider, Robert Orr, Julia E. Sweig, George Folsom, Williams L. Nash, Daniel Chistman and John G. Heimann. 

After the meeting a spokesman for the visitors said it will continue exchanges with government officials and "relevant institutions" to draw up a report entitled, "Beyond Drugs: A USA strategy for Regional Challenges of Colombia and the Andes." 

The report will revolve around economic development and enforcement of law and security in Colombia, Ecuador and Venezuela. 

Rangel says he thinks the visitors took away a good impression of Venezuelan border policy and bilateral relations with the USA.

Posted: Friday, May 09, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: Nobel Prize winner Gabriel Garcia Marquez is not in good health. This has prompted him to write a letter to his friends which I have received via Internet, where it can be read not only by his personal friends but by his numerous admirers all over the World. For those who do not read spanish I have made a translation which, I hope, transmits something of its original beauty.

From Gabo to his friends...

Ask the Lord for the strength and wisdom to express them ... tell your loved ones how much they mean to you..."

This is the letter from Gabriel Garcia Marquez to his friends ... in writing it, he is preparing for a journey that many other distinguished travelers have undertaken before him ... a long line of great minds and great hearts ... who have created exquisite beauty with the rather modest tools of humanity. His work has added significantly to the wonder of Man... Man, who, although condemned to death remains defiant, addressing an audience that he, she feels will be listening beyond the remotest stars.

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email gustavo@vheadline.com

Fri May 9, 2003 02:55 PM ET By Pascal Fletcher

CARACAS, Venezuela (<a href=reuters.com>Reuters) - Six nations seeking to end Venezuela's political crisis told President Hugo Chavez's government and its opponents on Friday to settle their differences and agree to hold a referendum on the leftist leader's rule.

In a statement released after two days of talks in Caracas, envoys from the so-called Group of Friends urged both sides to decide on a peaceful electoral solution to their conflict, which has kept the world's No. 5 oil exporter in political and economic turmoil for more than a year.

Chavez's government and its opponents have spent weeks haggling over the terms of a proposed agreement committing them to the holding of a constitutional referendum after Aug 19, halfway through the current term of the populist president.

The Group of Friends -- the United States, Brazil, Mexico, Chile, Spain and Portugal -- has since January been supporting efforts by the Organization of American States to broker an election deal in Venezuela.

In the statement read at a news conference, the Group noted both sides had expressed their willingness to reach agreement.

"The Group exhorts them to dedicate their utmost urgent efforts to overcome ... the differences that persist," said the statement, read by Brazil's representative Gilberto Saboia.

FIERCE OPPOSITION

Former paratrooper Chavez, who was first elected in 1998, has resisted a fierce opposition campaign pressing him to resign. The president, who is accused by foes of ruling like a dictator, survived a coup last year and weathered an opposition strike in December and January.

But despite the pressure for an accord, the two sides are still clearly at odds over key issues.

The government, citing national sovereignty, rejects the idea of international organizations like the OAS acting as guarantors of any future referendum. But the opposition, which accuses Chavez of trying to wriggle out of the referendum, says international pressure for the poll to be held is essential.

"I think it's possible there will be an agreement ... we exhort everyone to give that little bit more political will to get there," Curtis Struble, acting U.S. Assistant Secretary of State for Western Hemisphere Affairs, told Reuters.

Government negotiators have insisted that before a referendum can be held, the National Assembly, where Chavez supporters still hold a slim majority, must elect a new electoral authority to set a date for the poll.