[Posted Sunday noon /Sat. PM ET…from Guam.]
My friend George, who works on an equity desk at a large bank
in New York, sent me a note the other day saying I wasn’t going
to be returning to a happy country after being away 4 1/2 weeks,
and parts of it, particularly the New York and Washington, D.C.
areas, are more than a bit stressed out. I knew what he meant,
but not to the full extent until I got off the QE2 in Sydney on
Thursday and checked into a hotel. For the first time in a month
I watched CNBC and learned of what I was missing.
Basically, I guess I better get cracking on the safe room. I
probably have enough duct tape for one window and you’ve
always known since long before 9/11 that I try to have an ample
supply of Chex Mix on hand. Throw in a little beer and water
and I’ll be ready to hunker down upon my return.
As I write this I’m on my way from Sydney to Manila, a journey
I haven’t been looking forward to, but it’s only for a layover,
after which I fly on to Guam so I can post this column before
the long trek home. Of course my thoughts, like many of the
flying public these days, are of shoulder-fired missiles.
While in Sydney, I visited the ANZAC (Australia New Zealand
Army Corps) Memorial, the concept for which resulted from
New Zealand and Australia’s efforts at the Battle of Gallipoli,
which by now you know is one of my favorite historical events
that I’ve tried over the years to get more of a handle on. As I
noted last week, New Zealand lost 2,700 in this 8-month fight
which commenced April 25, 1915, and the other day I learned
over 8,000 Australians died as well (along with an estimated
90,000 Turks).
So I asked the guide a question I know the answer to, but I
wanted to hear his reply. “Why is ANZAC Day a national
holiday in the two countries, even though you both lost?”
“Because it was the first time we had been tested in a big way in
battle, and despite losing,” I was told, “we fought heroically.”
But then this kind gentleman said, “War is so awful, you know.
All these young people, their hopes and dreams shattered.”
Friday in Melbourne, over 100,000 demonstrated for peace, and
this weekend in Sydney, London, the U.S. and around the
world, millions more will march. Sadly, many of these folks
are missing the point.
What of the dreams of those innocents who died on 9/11? What
of those in Bali? Tunisia? Kenya? Moscow? Israel? All these
folks were doing was going to work, a synagogue, school, the
theater, or on vacation. And who did this? The world’s bastards,
who desire not to fight some conventional war like at Gallipoli,
where the combatants came to respect each other tremendously
(part of the mystique of that particular battle), but rather simply
to murder and terrorize, not armies, but civilians.
No one wants war, but war has become necessary in the case of
Saddam. Unfortunately, the consequences of the nasty buildup
to it could have devastating consequences of their own, and I’m
referring to the possibility of trade wars, thanks to the outrageous
behavior of the likes of France, Germany, and Belgium, our
supposed NATO allies. Forget the debate over UN Resolution
1441, the real damage is the failure of these 3 to live up to their
NATO obligations when it comes to Turkey. It is truly
despicable and I, for one, will do my best to boycott products
from all 3, along with any other nation that I feel doesn’t step up,
whether we’re talking Iraq, North Korea or the other situations
that come down the pike in the coming decades. Of course this
kind of attitude, when widespread on both sides, can cripple the
world economy even further than it already is, but each
individual has to take a stand.
On the other hand, even if the people in the countries that
comprise the “coalition of the willing” are far from supportive of
their government’s efforts, as is the case with Australia, Britain
and the rest, I’ll do my part and buy their goods as a show of
thanks. I suspect those of you who share my opinion will do the
same.
Wall Street
Once again, excuse the abbreviated comments on the financial
scene, but it sure has been a dreadful stretch since I left, hasn’t
it? This week saw Federal Reserve Chairman Alan Greenspan
clash with the Bush Administration on fiscal policy, even though
that isn’t supposed to be in Greenspan’s job description. And it
also bears repeating, pin the damn name tag on his windbreaker
and send him to the dog track already, where he can pick the
greyhounds with Nelson Mandela…or so I hope.
Not that any Fed chairman could really influence policy at this
point, since everyone and their mother now knows the
geopolitical concerns we all talk about first need to be cleared
up, at least somewhat, before any talk of the future direction
of the economy has any legitimacy.
In the here and now, though, as the Fed and all of the Street’s
leading economists lower their forecasts for growth in 2003,
Merrill’s top strategist Richard Bernstein said that a double-dip
is a virtual certainty with $35 oil beginning to do a real number
on the global economy. For its part, heating oil is at a 23-year
high and I just pray that those assigned to look after my home
didn’t accidentally turn my thermostat up! One thing is for
sure, I missed a brutal 4+ weeks on the weather front by
traveling when I did.
And if you were looking for that ever elusive rebound in
technology and capital spending, both Merrill and Goldman
Sachs issued sobering reports, to say the least, calling for no
significant pickup until 2004 at the earliest.
Finally, in case you haven’t noticed, much of the world, save a
few examples amongst the developing nations, is sliding back
into the abyss, as everyone lowers their growth forecasts and
consumer confidence drops. One or two large terrorist attacks
and a severe global recession is a certainty.
Street Bytes
–For the week, the major indexes finally posted gains, after four
weeks of declines, with the Dow Jones and S&P 500 both
gaining 0.6%, while Nasdaq tacked on 2.2%.
–U.S. Treasury Yields
6-mo. 1.18% 2-yr. 1.60% 10-yr. 3.95% 30-yr. 4.88%
–Energy: Aside from the aforementioned heating oil situation,
U.S. inventories of crude now stand at the lowest levels since the
1970s, as U.S. producers don’t want to commit to further
exploration until the global economic picture is clearer. No one
believes the current $35+ price level will stick, while the Bush
Administration is under increasing pressure to tap into the
Strategic Petroleum Reserve in order to lower prices.
As for the bogus claim that the coming war is merely about oil
and not Saddam’s arsenal, the fact is that Iraq’s energy
infrastructure is in such a shambles, it will take years before it
can increase its own production in a post-Saddam world to any
great degree.
Meanwhile, in two other developments, Venezuela still has
weeks to go, if not months, before its own production is back up
to speed, while British Petroleum gave the Russian energy sector,
as well as President Putin, a huge shot in the arm with its $6.75
billion commitment to buy a controlling stake in #3 producer
Sidanco, along with private interests.
–Securities regulators will allege fraud at CSFB and Salomon
Smith Barney as part of the final report on the global conflicts of
interest settlement. But it was revealed that 2/3s of the estimated
$1.5 billion that the brokerage firms will be forced to pay out is
tax deductible. And then there is the case of Citigroup Chairman
Sandy Weill, who received a lot of press because he opted not
to give himself a bonus for ’02. Big freakin’ deal.
–Dell issued a super earnings report for its fiscal 4th quarter,
particularly given the current environment, as the company saw
revenues climb 21% year-over-year.
–Microsoft is facing new antitrust complaints from a coalition of
European companies.
–Sun Microsystems is cutting prices for some server products
by up to 35%.
–One of the many Wall Street items I haven’t been able to
follow too closely recently is the tax shelter scandal involving
top Sprint executives, along with those at other large companies.
Of course no one is crying for the victims (suckers), while the
accountants who structured this garbage should land in jail,
where they could then be forced to give “Bubba” his own
shelter.
–Japan’s GDP unexpectedly grew for a 4th straight quarter,
albeit minimally, which is at least better than a stick in the
eye, I always say.
–My portfolio: My energy stocks took a bath, so after holding
my own during the latest downturn in equities, I return home
with a battered and bruised portfolio. I also now hope Team
New Zealand wins the America’s Cup so I can breathe easier on
my Telecom New Zealand pick.
–Finally, McDonald’s restaurants in Sydney (there are 14 of
them downtown!) heavily promote a toasted cheese and tomato
sandwich, an item I’ve never seen at home in New Jersey…and
why not, I ask?
International Affairs
North Korea: Secretary of Defense Donald Rumsfeld, in
addressing the North Korean stalemate, was also speaking to the
overall realities of today. “We have reached a point in history
when the margin of error we once enjoyed is gone.”
This week the UN Security Council and the IAEA agreed that
Pyongyang is breaking all of its previous agreements with
regards to its nuclear program, while at the same time both the
Council and the U.S. refuse to level sanctions that Kim Jong-Il
and his band of orcs have previously said would be “an act of
war.”
For its part, Washington finally admitted what we all long knew
was the case years ago, that being that the North may already
have the capability of reaching the U.S. west coast with a
ballistic missile. Meanwhile, Japan issued a firm warning that it
was prepared to act preemptively if it felt Kim was preparing to
launch a missile at Japan.
But then there was South Korea’s president-elect saying the
North doesn’t have even one nuke today, when just about
everyone else in the world believes they already have more than
that.
Saudi Arabia: The Kingdom apparently has decided that U.S.
troops should be evicted, an act that might encourage political
reform, with the thought being America could always be invited
back to help protect it. But what if we don’t want to?
Germany: Along the same lines to the above, there is a
movement afoot to drastically pare back the U.S. military
presence in Germany. Good.
Pakistan / India: Not for nothing, but this potential flashpoint
really is heating up again, as both sides expelled diplomats and
ratcheted up the rhetoric, while India test-fired a cruise missile
capable of carrying nukes. We desperately need these two to
cool it.
Colombia: There are reports that either the IRA or Basque
separatists lent their technical expertise in the bombing of the
nightclub that claimed at least 34 lives, because the operation
was far more sophisticated than previous FARC operations.
Since IRA involvement with FARC has already been proved,
no one should rule out their role in this last act.
I had a beer in Sydney with a QE2 crew member from Belfast,
Steven, a terrific guy and I mentioned the Colombia situation. He
then told me that the IRA has far more military power than most
people realize. Even with some of the small steps they have
taken to disarm, Steven felt they could inflict incredible
damage in Northern Ireland and Britain if they ever wanted to.
Random Musings
–Some interesting, if distressing, poll figures from Britain:
Only 9% favor war against Iraq without UN approval.
And in a poll where Brits were asked to identify the greatest
threat to world peace, 32% chose the U.S., 23% Iraq, 27% North
Korea.
–To show you how ignorant some Americans are, one asked a
tour guide, “So what’s the weather like in Australia?” Ah, Miss,
Australia is the size of the continental United States. Would you
ask, “What’s the weather like in the U.S.?” Granted, Aussie
weather is far more uniform than our own, but I found this
amusing. Speaking of the weather in Australia and the awful
drought that has plagued the area, it was announced as I was
leaving that El Nino is over and rains are finally on the way.
Separately, this one newspaper had great weather coverage of
about 300 international cities and I noticed only one had a
designation of “smoke” every day…Islamabad. So I hereby
cross that off my ‘to do list.’
–I’ve said it before and it bears repeating…let Turkey recreate
the Ottoman Empire.
–A new study of the universe reveals that it is comprised of
“dark energy,” which makes up 73%; “cold dark matter,” 23%;
and 4% “ordinary matter” of which we are made. I’m assuming
beer is part of the 4%, though Guinness could also be included
in the “cold dark matter.” [They’ve been brewing it colder,
you know.]
–I got in a huge fight over the death penalty with a monsignor
onboard ship. By the end of the discussion, we really didn’t like
each other very much.
–So I saw where 14 pilgrims were crushed to death at the Hajj, a
small figure compared to the 1,400 who died during the stoning
of the Devil back in 1990.
–In Manila, the disembarkation card reads in big letters,
“Warning: Death to drug traffickers under Philippine law.”
–In Sydney, I stopped at the oldest pub in town, the Lord
Nelson, to have a few pints of Quayle Ale, named after, yes,
our own former vice president, who quaffed a few there back
in 1989. I always liked the man.
–Boy, I loved Melbourne and Sydney. And despite the prevalent
anti-war sentiment in the country, I could not have been treated
better. I can’t wait to return (New Zealand as well).
I’ll save some fun comments for Tuesday’s “Bar Chat,” but for
now here’s one reason to love Australia, America’s great ally;
every child right through secondary school has to wear a
uniform.
And now…QE2: The real story…not that there is anything
wrong with that.
I held off on something about the QE2 that I realized early on. In
fact about the third day I was having a drink with a couple I met,
one that has taken frequent world cruises on the ship, when I
said, “There sure seem to be a lot of gays onboard.” “That’s
why it’s known as QE Gay,” Wally replied. In fact, the ship has
quite a reputation, I learned, for being “gay-friendly.”
Now before some of you cry foul, I am not casting aspersions,
merely stating a fact. As it developed, the boys must have
figured me out from day one, because it was never an issue, but
among the single male passengers around my age, I think two of
us were straight.
Overall, though, I had quite an experience on the ship. I
certainly got to visit some places I may never see again in my
life and I doubt I’ll ever cruise the Pacific a second time. The
problem is you are thrown into a mix of 1,500 passengers, 95%
of whom you would never want to spend time with back home,
and it wasn’t just because of the age difference between myself
and most of the others.
Oh sure, there were delightful folks I hope to keep in touch with,
particularly some of my dinner partners, but in this instance I
was very fortunate because I could have ended up with some
real pretentious jerks. Part of my disgust had to do with the
fact I was upgraded to the top dining room, the Queens Grill,
where often my loud laugh was the only one in the room. I was
going to have a good time, drinking my beer (not the $100 wine)
whether anyone else liked it or not, and in this regard I think the
crew enjoyed me. [I also had the best looking woman on the
entire ship, a Czech girl by the name of Simona, as my waitress.
Sometimes life is very good.]
I also need to address the fact that there were some real loonies.
One of my accomplishments during the 25 days was I got to do
something I always wanted to, read Homer’s “The Odyssey”
while on a boat, and I came across this passage, as told by
Odysseus, which I realized summed up some of the characters
onboard the QE2.
“…his wits were fuddled with wine…So with his fuddled wits he
went, hag-ridden by his own folly and fuddledom.”
That’s it! I thought. Everyone drinks way too much, but if you
were fuddled before you boarded the QE2, you were clearly
headed for fuddledom if you spent the full 88-100 days on the
entire world cruise.
Will I ever do this again? No. I need to be in contact with the
real world on a more consistent basis and not having even
access to CNN for 10 days, despite having intermittent Web
access, just doesn’t cut it. I can, however, say that I can see
why a lot of retirees do it, but even many of them were
frustrated by the lack of contact in today’s increasingly
toxic world.
Which leads me to my final thought. This week we hit the 4-
year mark of StocksandNews, an achievement I’m quite proud
of. Going back to my stint at PIMCO Funds writing the same
column, it is now 5 1/2 years of uninterrupted commentary
on the world’s political and financial scene.
I still get comments from friends and old business colleagues
who know I left a lot of money on the table when I simply up
and walked away. “Why did you do it?” they ask. Well, one
reason is my recently completed 52 weeks, where I traveled
during 12 of them, ranging from Turkey to Slovenia, Taiwan
to Moscow, New Zealand to Medora, North Dakota. Thanks
to the last listed destination, I can safely say I was the
only one in the world to experience all of them.
But does it make me a better person, which at the end of the
day is what really matters? Maybe. It does, at least, give me a
far better sense of what makes the world go ‘round than 95% of
the world’s political leaders, that’s for sure. For now, though, I
need to stay closer to home over the coming year and focus on
my business. As always, thanks for coming along for the ride,
and to my ever increasing audience outside the U.S., like in
China and Singapore, help me spread the word.
—
God bless the men and women of our armed forces.
God bless America.
—
Gold closed at $352…we’ll catch up on this topic next week.
Oil, $36.80…yikes.
Returns for the week, 2/10-2/14
Dow Jones +0.6%
S&P 500 +0.6%
S&P MidCap -1.3%
Russell 2000 -0.1% [Small and mid lagged.]
Nasdaq +2.2%
Returns for the period, 1/1/03-2/14/03
Dow Jones -5.2%
S&P 500 -5.1%
S&P MidCap -7.3%
Russell 2000 -6.4%
Nasdaq -1.9%
Bulls 40.2%…huge decline, more next week.
Bears 31.5%…reminder, back on 10/11/90, a market bottom,
bulls were at 32.2%, bears, 53.7%. [Source: Investors
Intelligence.]
We’ll return to our normal schedule, posting at 7:00 AM ET next
Saturday morning.
Brian Trumbore
