By Rick Glaze

The Dow Jones industrial average finished the week at about the same level as the previous weekly close.

Despite a strong rally on Friday, the small stock index and the tech heavy Nasdaq lost ground for the week down 1.2 and 1.9 percent respectively. Many Dow stocks will report third quarter earnings this week and as you have learned in this column, earnings are where the rubber meets the road for stock valuation. Even though inflation is still low, the prospect for its climbing higher in the future looms over investors because of sky-high energy prices.

Core inflation is the price of things without food and energy in the mix. This shows economists where prices are going with less volatility. The core rate for September was reported last week at a tame 0.1 percent gain over August. But, when you add food and energy into the mix, the rate was up 1.2 percent and was the biggest jump in 25 years.

The hurricanes proved to be a major disruption for oil and gas distribution, so the debate is on as to whether or not higher prices will continue and/or whether it will spill over into higher prices for other goods and services.

In the 1970s, the oil shock was countered by a somewhat naive government response of lowering interest rates. The thought was that lower rates would offset the effect of high oil. The devastating result actually was to drive up wages and prices leading to stagnating inflation.

Speaking of major mistakes, the special election is coming up for Californians, giving us a chance to correct a few major flaws of past government wisdom. Two major Bay Area newspapers have endorsed Proposition 77, the redistricting measure. The San Francisco Chronicle and the San Jose Mercury News jumped on board with our governor to bring back the power of our vote. In September the proposition was leading in the polls by 61 percent.

Meanwhile it was learned that the California teacher’s union collects $100 million per year from teacher paychecks without their permission. Further, court documents report the union has borrowed $34 million and is trying to borrow an additional $50 million to fight Proposition 75. A yes vote on Proposition 75, paycheck protection, would curtail this questionable behavior.

Californians should demand better government, so as they say in Chicago, vote early and often. Just kidding!

Rick Glaze is the president of Glaze Capital Management of Los Altos and is a registered representative of and offers securities through First Allied Securities Inc.