www.sierratimes.com Stock Market Overview Cambridge Asset Management

By Martin & Bart Siegel, CPA, CFP We continue to use our sailing analogies to communicate to our readers the way we approach the market. The ocean is an unforgiving taskmaster, as well as a limitless source of riches. I am sure you can come up with your analogies, but they all come down to the basic laws of nature, and how we adapt to them. Whether you are a sailor, an explorer, a pilot, or even a hunter, you need a compass, or map, to know where you are. Our compass is the profile of the 30 stocks that make up the Dow Jones Industrial Averages. We also monitor the Standard and Poor, and Mid-cap averages. They all pretty much track each other. We monitor the percentage of stocks that are rated buys, holds, and sells, according to our criteria. These indices do not show any signs of dramatic deterioration, despite all of the confusion, and anxiety. In our opinion the stock market is exhibiting remarkable stability, and order.

It has been, and continues to be our strategic decision, that we are witnessing a broadening bottom that has been unfolding over the past months. The final test is going to occur this week when President Bush decides to attack Iraq. Historically, the first reaction in a wartime scenario has been a brief relief rally as we get past the initial confusion, and events begin to unfold. After this initial rally there is a period of consolidation, and filling, as the future unfolds.

There are presently three important elements effecting our economic decisions. These elements consist of the uncertainty over the war, President Bush’s economic stimulus plan, and the rate of inflation. As you know we are on the brink of a decision. Every indication is that the war is imminent. Depending on whom you believe this will either be a blood bath, or it will be over shortly after it begins. There are many who expect the Iraqi army to surrender upon declaration of war. No one has predicted anything other than an American dominated military victory. The cost in time, money, and lives are the variables. Presently many capital investment plans are on hold because of the tax advantages being anticipated in President Bush’s proposed tax package. His proposed tax package is designed to stimulate the economy, bolster the stock market, provide incentives to work harder, and take investment risks. Lastly the greatest contributor to inflation in recent months has been the increase in the cost of energy. The latest report on the oil picture is that Venezuela is producing, and delivering, oil at the rate of 3 million barrels a day. OPEC has assured us that they will deliver the oil that we need. Some estimates predict that a favorable resolution to the Iraqi crisis will result in oil falling into the $20 a barrel range. The other indicators of inflation show that deflation is the greater risk. Interest rates continue to remain at historically low levels. The recasting of mortgages has produced a very dramatic infusion of hundreds of billions of dollars into our economy. Sixty percent of those that hold mortgages have refinanced.

Although the economy has not responded as dramatically as we would like, there is continued evidence of economic growth. After pushing near recent lows, Wall Street staged its strongest advance on increased trading volume in five months. This surprised many that doubted the market could rally given investors’ fear of war. The investors’ unwillingness to sell stocks implies that they believe the economy is not that bad, and they expect things to improve. Positive factors likely to contribute to a strengthening economy include low interest rates, an expanding money supply, and the end of a three year cycle of low investment in computers, plant, and equipment.

From a different point of view we have strong evidence that America retains its lead in invention, and innovation. The new Intel chips, the science of nano technology, and the shift from silicone to carbon based technologies implies dramatic improvements in the speed, and applications, of computers. Wait till you hear the reviews on Windows 2003. Early indications are that Bill Gates did it again. We are also beginning to come to grips with hybrid automobile propulsion systems, and hydrogen cell fusion.

Stay strong, and if you choose optimistic. If you are nervous it is not unjustified. Life is not without risk and that there may be some rough seas ahead. On the other hand you also have ample reason to be positive. We at Cambridge find it a heck of a lot more fun anticipating good times ahead. Don’t underestimate the presidential election cycle. Act responsible, remain diversified, don’t take risks you can’t afford, live within your means, and try to enjoy life.

www.nytimes.com By LAURA SILBER

Two weeks ago in Belgrade, I walked into Zoran Djindjic's living room and sat down on the couch. There he was, Serbia's first democratically elected prime minister, talking away, telephone in one hand and remote control in the other. It is hard, now, to believe he is gone, gunned down outside his office on Wednesday.

A pair of crutches lay next to a pile of books on a coffee table; I think "Bush at War" by Bob Woodward was on top. We looked at photographs of my daughters, and he marveled at how the little one resembled my husband. The three of us had been friends back in the days when few outside of Serbia knew Zoran, the man who would one day become leader of his country and send his political arch-enemy, Slobodan Milosevic, to the war crimes tribunal in The Hague.

Over a long night of talk and wine, we discussed America's code orange security alert, Iraq, Serbia and the world as phantasmagoria: this was Zoran Djindjic, a hundred things at the same time. It was the way he ran Serbia — masterminding, pressing forward with plans to wrench a fractured country into the modern age.

We talked about a failed assassination attempt on him a few days before — a truck had swerved into his car. He seemed unshaken. I told him I was worried about how easily I had entered his house. He made a call to bolster security. I think he assumed he was smarter than his enemies. He and his wife, Ruzica, did not seem afraid. I felt humbled by their courage.

Fit and slim, Zoran was on crutches after rupturing his Achilles tendon the week before in an exhibition soccer match: the government versus the police. He laughed at how the police officers were surprised to see him, and did not know whether to win or to throw the game to the prime minister.

Upbeat and full of plans, this was not a man who expected to die soon.

His murder is a tragedy for Serbia, and a lesson for the United States. When he and his fellow reformers overthrew the Milosevic regime in 2000, they inherited a security system that had been built up Soviet-style by Marshal Tito. Under Mr. Milosevic's stewardship and through years of war and economic decline, that force became an amalgam of paramilitary and organized crime.

Zoran and his reformers were able to remove Mr. Milosevic, and later to send him to be tried, because the secret service units had become disillusioned with the Serbian strongman. But even with him gone they remained unreformed and untouchable.

Something similar is likely to play out wherever America tries to uproot a nasty dangerous despot — as it helped to oust Mr. Milosevic and is trying to oust Saddam Hussein. Even having American troops occupy a country is unlikely to make a difference in the short run. A regime, in particular one that has developed in isolation like Iraq, Serbia and North Korea, does not die with one man. And the security apparatus becomes like a Hydra fighting for survival.

The reformist government lacked the strength to dismantle that system. Indeed, after taking power in 2001 Zoran opted at first to live in an uneasy coexistence with the security forces. However, he knew that organized crime and corrupt security officers presented a major obstacle to reform. In the last few months Zoran was gearing up for a final showdown with the renegade special forces and their taskmasters in the Serbian police who make up the Zemun mafia clan — brutes with monikers like Idiot, Fool and Bugsy. These men spilled blood in Bosnia, Kosovo, Croatia, the streets of Belgrade and abroad; now they dominate the traffic in drugs and prostitutes and immigrants throughout the Balkans. The prime minister knew they were threatening his life. But he told me he would simply let the thugs kill each other and then send the survivors to The Hague.

His murder is another reminder to the Serbian people that those who committed crimes against Croats, Bosnian Muslims and Kosovars came to roost at home. And these men could not stand the fact that Zoran was trying to wrest control of Serbia.

Two weeks ago I asked Zoran when Serbia would send the remaining indicted war criminals — especially Ratko Mladic, the Bosnian Serb general — to the the dock in Hague. It was too difficult at the time, he answered, there was no one who dared to arrest Mr. Mladic. But he told me he planned to send three army officers accused of crimes committed at Vukovar in Croatia right away. After that, he said, he had been told that the West would stop exerting so much pressure on him to comply with the tribunal.

Zoran Djindjic loved the world. He told me how he had met Fidel Castro at the inauguration of the new Brazilian president, Luiz Inácio Lula da Silva. Mr. Castro said he had expected Zoran to be taller — after all, Yugoslavia is a world force in basketball. "It's the technique, not just the height," Zoran responded.

Mr. Castro said, "I thought you only liked Americans."

"No, I like Cubans, too," Zoran replied, pulling a thick cigar out of his jacket. Castro looked down, laughed, and said the cigar was fake. Later that night the he sent a humidor full of the finest Cuban cigars to Zoran at his hotel.

Perhaps it is only the sort of man who can joke with Fidel Castro and also win the approval of the White House who could hope to forge a new Serbia. There is no doubt that the men who killed Zoran represented a nexus of hard-core nationalists and criminals who hated him because they knew he wanted to rein them in. They hoped that with those bullets, Serbia would fall into disarray and stop cooperating with The Hague, and that the next elected leader would pale next to Zoran Djindjic in courage and intelligence. I fear they were right.

Laura Silber, senior policy adviser at the Open Society Institute, is co-author of "Yugoslavia: Death of a Nation."

www.vheadline.com Posted: Friday, March 14, 2003 By: Patrick J. O'Donoghue

Venezuelan Ambassador to the United Nations (UN) Milos Alcalay has supported Chile and Mexico’s position at the UN debate on Iraq.

Welcoming Guinea to the presidency of the Security Council, Alcalay highlights his government’s complete adherence to international law, especially compliance with decree 1441.

Venezuela’s position, Alcalay points out, is in line with a decision taken at the Non-Aligned Nations meeting in Kuala Lumpur.

Addressing the General Assembly, the Ambassador stated that the Venezuelan government agrees with the Chilean Foreign Minister’s call to seek a resolution that has the unanimous support of the Security Council.

“A solution through diplomatic channels would establish peace as the supreme value and bolster the UN's prime objective.”

Venezuela also supports efforts of UN Secretary General Koffi Annan to seek a peaceful solution to the conflict.

edition.cnn.com Thursday, March 13, 2003 Posted: 0626 GMT ( 2:26 PM HKT)

TOKYO, Tokyo (Reuters) -- Japan's corporate goods price index (CGPI), a measure of companies' costs, showed Thursday that wholesale prices declined at their slowest rate in two years in February.

The domestic CGPI, a revamped version of the wholesale price index, was down 0.9 percent from February 2002 and up a preliminary 0.2 percent from January, the Bank of Japan said on Thursday.

Analysts had forecast on average a year-on-year fall of 1.0 percent and a month-on-month rise of 0.1 percent.

"The main reason is the rise in oil prices," a BOJ official told a briefing. He added that a rise in the cost of other raw materials had also helped the slowdown in the year-on-year fall.

Japan's manufacturers are entirely dependent on imports for oil supplies. Recent tension in Iraq and a strike in Venezuela have pushed oil prices up about 11 percent in the past two months.

Commodity prices worldwide have also risen about seven percent this year, having knock-on effects on costs at Japanese companies ranging from food processors to metals firms.

Though the rate of decline in Japan's wholesale prices slowed, Thursday's figures show that deflation still reigns in the world's second-largest economy.

"There has been some hope that higher raw material prices could lead to inflation at home," said Seiji Adachi, economist at Credit Suisse First Boston.

"But with domestic demand poor and the supply-demand gap getting bigger, companies will struggle to pass on the rises to their selling prices."

The government has identified falling domestic prices as the top problem facing the economy.

Now into its fourth year, deflation is crimping profits at manufacturers and means that bad loans at Japan's banks are getting bigger almost as fast as the banks are managing to reduce them.

The government has called on the Bank of Japan to take new measures to help in the fight against deflation, increasing the pressure on incoming governor Toshihiko Fukui, whose appointment was approved by Japan's lower house of parliament on Thursday.

www.upi.com From the Business & Economics Desk Published 3/12/2003 6:00 PM

Here is a look at some of Wednesday's top business stories:

-0- Shares end up ahead of U.N debate

NEW YORK, March 12 (UPI) -- Prices on the New York Stock Exchange and Nasdaq Stock Market rallied modestly late in the trading session Wednesday, as investors hunted for bargains ahead of an expected U.N. vote on a new Iraq resolution by as early as Thursday.

The Dow Jones industrial average gained 28.01 points, or 0.37 percent, to close at 7,552.07, while the Nasdaq composite index added 7.77 points, or 0.60 percent, to close at 1,279.24.

The broader New York Stock Exchange composite index, however, dropped 12.94 points to close at 4,486.70, while the Standard & Poor's 500 gained 3.46 points to close at 804.19. The American Stock Exchange composite index dropped 7.70 points to close at 811.73, while the Wilshire 5000 Index added 20.61 points to close at 7,631.08.

Volume was 1.80 billion on the Big Board and 1.43 billion on the Nasdaq Stock Market.

Analyst attributed some upward action to investors squaring their positions ahead of Thursday's U.N. debate on the latest British/U.S. proposal regarding the Iraq situation.

In economic news, the Commerce Department reported that the U.S. trade deficit narrowed to $41.1 billion in January, which lifted the dollar slightly against other major currencies but did little to bolster equities.

U.S. Treasury prices eased. The 10-year bond dropped 1/32 to 102 13/32. Its yield, which moves in the opposite direction of its price, was flat, sticking at 3.58 percent from that yield Tuesday.

-0- U.S. airlines waive fines amid war fears

EAGAN, Minn., March 12 (UPI) -- Northwest Airlines has joined United, American, Continental, Delta, U.S. Airways and ATA in waiving penalties for passengers changing tickets in the event of war in Iraq.

Northwest said its new ticketing policy would give passengers the option to delay international travel and rebook a flight within 90 days after the start of military action without paying a $150 or $200 fee that would normally apply.

"Northwest's flexible international ticketing policy allows our customers to purchase travel at extremely attractive fares with the assurance that they can change their travel plans in the event of military action in the Middle East," said Laura Liu, vice president of international revenue management.

The fee will be waived only once and refunds will not be given if a lower fare becomes available. Customers will have to pay the difference if the rebooked fare is higher.

Northwest also will waive the $100 fee for customers making changes in tickets for domestic travel within 60 days of the start of hostilities. The tickets must be used by Dec. 15, 2003, in any case.

The world's fourth-largest airline is the seventh major U.S. carrier to announce a ticket policy change, joining United Airlines, American Airlines, Delta Airlines, Continental Airlines, U.S. Airways, KLM, Air Canada and ATA in easing penalties for ticket changes.

KLM is Northwest's international partner. ATA allows changes for a "Code Red" alert, as well.

Domestic airline passenger traffic fell 8 percent during the 1991 Gulf War and passenger loads on some international flights were down more than 40 percent.

International bookings fell more than 20 percent during the Department of Homeland Security's recent "Code Orange" terrorism alert, according to the Air Transport Association.

Customers must advise their travel agent or Northwest international reservations of a ticketing change before their scheduled flight or within 30 days of the start of military action, whichever comes first.

-0- NYMEX rises as U.S. oil supplies shrink

LOS ANGELES, March 12 (UPI) -- The stage was set for even-higher oil prices when the United States' oil supply fell at the same time crude imports fell by more than 1 million barrels per day, the U.S. Energy Information Administration said Wednesday.

The news contributed to a jump of more than $1 for April crude futures on the New York Mercantile Exchange Wednesday afternoon and an increase of more than 70 cents on London's International Petroleum Exchange.

"Crude oil imports have averaged over 8.3 million barrels per day over the last four weeks, but this is still 300,000 barrels per day less than averaged during the same four-week period last year," the EIA said. "Although the origins of weekly crude oil imports are very preliminary ... imports from Venezuela over the last two weeks appear to be much closer to pre-strike levels than earlier in the year."

The agency reported last week's total imports averaged 7.6 million barrels per day. Modern supertankers generally have a cargo capacity of nearly 2 million barrels.

Oil has been extremely volatile to the upside ever since the United States and Iraq began moving toward a military confrontation. Gasoline prices in the United States have reached virtual record levels of $1.706 per gallon, according to AAA, with California averaging a whopping $2.119.

The EIA said that U.S. gasoline stocks fell 4.1 million barrels last week and remained "below the low end of the normal range," while crude supplies in the Midwest continued to bump along at slightly above the lowest level recorded since the EIA began keeping supply records in 1989.