[This is an abbreviated Week in Review as I have some comments
on the past…and the future…following the weekly summary.
Also, some market figures will be updated over the weekend as
this is being posted 12/30]
**Update, 12/31 a.m. – No rest for a newsman. In a stunning
development, Russian President Boris Yeltsin resigned, effective
immediately, and turned over the reigns of power to Vladimir Putin.
In addition, elections for President will now be held around
March 27th, virtually assuring that Putin will be the people”s choice.
This move, however, in no way impacts any of my following statements
on this fascinating, and troubled, land.
—–
Consumer confidence in America is at its highest level since
October, 1968. And it would appear that retailers had a
spectacular Christmas with sales increases of 7-8% the norm.
The Nasdaq soared again and all of the other major indexes hit
new highs during the week. The Nasdaq registered the best year
ever for a major index.
Overseas markets also staged a strong finish to an awesome year.
Markets from London and Frankfurt to Tokyo and Hong Kong
hit new highs (in Tokyo”s case, a new high for the year). No one
can ever recall such synchronized performance.
And then there was the case of Qualcomm. An analyst at
PaineWebber on Wednesday initiated coverage on the stock and
set a $1,000 price target. It had already risen from $25 in
March to $500 when he issued his pronouncement and boom!
The stock shot up to $659 in one day. Thursday morning
Qualcomm ran up to $740 before selling off to about $660. Yes,
this one issue epitomizes the whole technology sector”s
stupendous performance this year. Forget traditional valuation
measurements, just think “potential.” Frankly, I can”t figure it out
so this week I spruced up my own portfolio with some real
garbage (I don”t mention specific stocks but you can probably
figure this one out). Lord knows, there”s a ton of it on Wall
Street. It just may take awhile for the masses to understand this.
Trading in the bond market was thin, to say the least, as everyone
was just waiting for the ball to drop. It sure was a gloomy year in
bondland as the yield on the 30-year Treasury rose from 5.09 on
12/31/98 to finish 1999 around 6.48%. And with the consumer
confidence and strong Christmas sales figures, you know the
Federal Reserve can”t wait to hold its February meeting and hike
interest rates.
“I will not sell my kidney on eBay.”
–Bart Simpson
So the last few weeks I have stated my opinion of online retailing.
And as one analyst said of Value America (which doesn”t look
like a survivor), “You can”t have a losing business model whether
your business is virtual or real.” Many of the etailers are
struggling for a formula as they burn through their capital. Value
America has plunged from a high of $74 on its first day of trading
to about $5. And issues form Amazon to eBay to eToys are well
off of their highs established earlier in the year.
Yet in a study released by Goldman Sachs, 97% of web browsers
said that their own online shopping experience exceeded or met
expectations. Another study showed that 28% shopped online
this year, double last year”s pace. 64% said the experience was
more positive than shopping in stores.
International Affairs
Assistant Secretary of State Strobe Talbott, a long-time Russian
apologist, this week accused them of “indiscriminate killing” in
Chechnya. And Moscow admits that they are using the horrific
fuel-air explosives which can reach the innocent civilians hiding in
their basements. And wasn”t it nice of Russia to launch its final
assault on Grozny Christmas Day, when the world was
preoccupied with other things?
William Safire joined the growing chorus of voices wondering
aloud who really set off the apartment bombs in Russia that
helped to precipitate the latest Chechen tragedy. But he
lamented, “Nobody will investigate the suspicion that the
bombing of apartment houses was the work of the K.G.B.”
Russia can not lose this war and yet, as I write, the Chechen
rebels are putting up fierce resistance in Grozny. Boris Yeltsin
was seen the other day passing out medals to his generals for a
job well done. But the job isn”t finished yet.
Elsewhere, the Chinese government sentenced four Falun Gong
leaders to sentences ranging from 7 to 18 years. And the
Communists chose to hold a “show trial,” reminiscent of the
worst abuses of the past.
In Venezuela, criticism of the handling of the flood aftermath has
reached President Chavez and, as I have predicted for months,
Chavez is using the crisis to further his dictatorial ambitions. Said
one opposition leader in the Wall Street Journal, Thursday, “What
we are witnessing is the installation of an autocratic authoritarian
government.”
And in Germany, the saga of former Chancellor Helmut Kohl just
gets more and more depressing. I told you a few weeks back of
his denials that he knew of secret campaign funds and how he was
beginning to sound like Richard Nixon. Well, this week he
admitted to knowledge of the accounts and he is now subject to
prosecution…and jail.
Random Musings
–Louis Farrakhan preached about racial and religious unity in his
first appearance after cancer treatment. He said his near-death
experience changed him.
–In the latest sign that the stock market bubble is about to burst a
Vail, Co., ski resort installed computer kiosks along its runs so
skiers can check stock quotes and make trades.
–Albert Einstein as Time”s “Person of the Century?” No
argument here, though to have Gandhi on the short list instead of
Pope John Paul II is wrong. As far as I can see, Gandhi”s people
are still very poor. John Paul was a crucial figure in the fall of
Communism. Appearing on “Meet the Press,” William F.
Buckley agreed with me that the Pope was the real “Person of the
Century.” But, seeing as I may be upsetting some of you by
bringing this up every month, that”s it. No mas.
–Harvey Araton, sportswriter for the New York Times, wrote of
the uproar in New York over John Rocker”s comments, “Many of
the same folks now calling for Rocker”s scalp buy Sprewell
jerseys for their kids.”
–The European storms that hit this week were the worst in at
least 50 years. Some 2.5 million homes in France were without
electricity. It is truly amazing that in this year alone we had
catastrophic earthquakes in Turkey and Taiwan, biblical floods in
the U.S. and Venezuela, and now this.
–You just can”t make this up. I”m standing in line for a cup of
coffee when this construction worker starts chatting about Y2K
with a woman next to him. My ears perked up, anticipating some
real pearls of wisdom. “No, we aren”t going to have any
problems with the electricity in the U.S. But in Third World
countries like Israel and Iceland, they may have some.” I”m sure
the inhabitants of these 2 highly developed nations would be
pleased to learn that they are really “Third World.” Ignorance,
thy name is America.
–If you run road races you probably always have the thought,
“Geez, those Kenyans are good.” Well, this year 8 of the top 9
male road runners in the U.S. were…Kenyans.
–Dana Priest, writing in the Washington Post, reported that the
Apache helicopter deployment in the Kosovo conflict cost close
to $500 million! Absolutely incredible…and scandalous. And, of
course, you”ll recall that the Pentagon then decided they weren”t
even ready for combat. The fear was that the casualties would be
too high. So it took 30 trains (to Germany), 20 ships and 81 C-
17 flights (along with 6,200 support troops) to send Task Force
Hawk over and back.
–Here”s another place to cross off that “must visit” list.
Turkmenistan. The president was just named essentially ruler for
life. He then decreed that monthly wages should double to $50
and every citizen gets 2 pounds of salt.
–A slow week for politics. But John McCain did announce that
he had raised $6.1 million in the 4th quarter bringing his total take
to $13.6 million (plus he now qualifies for about $6 million in
matching funds). But that still pales in comparison to George
Bush”s total take of close to $65 million.
On the Democratic side, Bill Bradley raised $8 million in the
quarter, double that of Al Gore. For the year Bradley is up to
$27 million to Gore”s $29 million, truly staggering to be that
close to a sitting Veep.
–Pundit Mark Shields predicts that George W. will choose
Nebraska Senator Chuck Hagel to be his running mate (yes, I still
don”t think McCain has a chance), an intriguing pick. Hagel was
a huge Vietnam war hero as well as a highly successful
businessman before entering the Senate. Actually, he”d make a
good President!
–I”m sick of people defending Los Alamos scientist Wen Ho Lee.
And now it seems that a federal judge feels the same way.
Labeling him a substantial security risk, the judge denied him bail.
–Thank God George Harrison is O.K. That was almost a
horrible way to end the century.
–Beer…check. Chex Mix…check. Flashlights…check. Toilet
paper…check. Bring on Y2K!!
Gold closed at $289
Nymex Crude Oil, $25.60 [Average price for the year was $18.00
vs. ”98 average of $13.34]
Returns for the week, 12/27-12/31
Dow Jones +0.8%
S&P 500 +0.8%
S&P Midcap +1.7%
Russell 2000 +4.6%
Nasdaq +2.5%
Returns for the year, 1999
Dow Jones +25.2%…11497 [not including dividends]
S&P 500 +19.5% [but up 21.0% total return]
S&P Midcap +13.3%
Russell 2000 +19.6%
Nasdaq +85.6%…4069 [Nasdaq 100 +102%]
Bulls 55.0% [Getting High!]
Bears 27.0% [Source: Investors Intelligence]
*Check out the 12/31 “Bar Chat” for some historic speeches of
World War II.
*My link, “Quotes/Markets,” leads you to Quote.com. They
have vastly improved their site and I urge you to register (it takes
a minute) and place your portfolio there. The news updates on
your individual selections are great.
—–
“The further backward you look, the further forward you can
see.”
–Winston Churchill
The 20th century was a horrid one. True, there were spectacular
advances in the fields of medicine and science, and it was rightly
called “The American Century,” but the human toll exacted by the
likes of Hitler, Stalin and Mao was staggering. Deaths in war were
anywhere from 35-60 million (depending on how you calculate it)
while the number of civilians killed by governments excluding war
was about 170 million! [Source: The Economist] While exact
figures will never be known, it is estimated that Communism
alone was responsible for over 100 million of the casualties (62
million in the Soviet Union and 45 million in China). And what”s
even worse is that for years Western intellectuals ignored or
covered up these deaths.
But as the century ends we can take solace in the fact that the
twin evils of Communism and Facism were defeated. Heroic
figures strode the globe, like Churchill and Roosevelt, at the
world”s greatest time of need. [Of the former, Newsweek
recently opined, “Churchill helped save the world with a whisky
in his hand.”] And financial markets around the world are
rejoicing as the ideal of capitalism finds its way into previously
darkened lands.
So what will the next century bring? That”s a question for men
and women far more learned than yours truly. No, I”m grounded
in the past…and today. And as I commented to my father at
Christmas, I don”t find a lot of reasons to be optimistic.
Russia – The conduct of the war in Chechnya is scary. And if its
ever proved that the Russian government blew up their own
people as they slept in their apartments, that would have
stupendous ramifications. The presidential election is only six
months away and will help shape this country”s development for
possibly decades to come. A further tilt back to empire building
is not out of the realm of possibility. Our next president will have
his hands full and don”t you know that Europe”s leaders are
viewing the action in Chechnya with a certain amount of
trepidation as well. One specific area to watch for next year is
Russia”s relationship with Georgia. They could attempt an
invasion there for the purposes of building a buffer zone around
Chechnya. The U.S. and Europe wouldn”t be able to ignore that.
China – Formal admittance to the WTO is not guaranteed. The
debate in our Congress will be severe as China shows no signs of
adopting “Western” standards when it comes to human rights.
China will continue to build up its military capabilities and clearly
Taiwan is threatened. We would have to defend Taiwan if they
are attacked. A weak U.S. president, however, may acquiesce.
North Korea – This area has been relatively quiet the past few
months, but something may be up. I noticed this week that the
government in Seoul has been aroused by the distribution of gas
masks to U.S. dependents in Seoul. Since the end of the Korean
War this step has never been taken. Why are we doing it now
when relations between North and South are supposed to be
slowly improving? And a friend just informed me that a U.S.
aircraft carrier scheduled to sail for Australia is going to North
Korea instead. A fighter pilot stationed on this ship told my
friend that he expects action. I don”t want to make more of this
than warranted but these two circumstances are rather chilling
reminders of the instability in the North. Do they finally join the
rest of the civilized world or do they go out in a suicidal blaze of
fire?
India/Pakistan – They both have nukes and they are both capable
of incredible feats of stupidity. These nations desperately need
leaders of vision and courage before the world”s first nuclear war
erupts.
The Islamic Bloc (Iran/Iraq et al) – Historian Samuel Huntington
recently wrote of the territory stretching from Morocco to
Indonesia, “The Muslim world lacks one or two dominant states
that can maintain order within the Muslim community and
constrain or mediate conflicts between Muslims and others. Also,
the increasing number of men aged 16 to 30 in many Muslim
countries feeds the ranks of militants and fighters.” Early next
year we will have to confront Saddam Hussein again unless he
lets weapons inspectors back in. And in Iran, key parliamentary
elections are being held in February. We can only hope that the
forces of moderation continue to make gains.
The Balkans – We have an awful lot of troops there, and will have
for year to come. It”s still a tinderbox.
Austria/Germany – What? I have spent a lot of time recently
thinking about the re-emergence of Fascist forces in these two
countries. In Austria, a man by the name of Jorg Haider recently
led his far-right party to a 29%, 2nd place finish in Austria”s
parliamentary election. He blends nostalgia for Nazism with a
hatred of foreigners. And in the former East Germany, Nazism is
spreading among the disaffected. The reason I feel this could be a
potential flashpoint is simple. These ugly forces are emerging in
the face of generally strong economic times. I cringe at the
thought of what may develop during the next downturn.
Unemployment in the former West Germany is 8.5%. In the East
it”s 18.2%. You get the picture.
Israel – Let”s hope they know what they are doing if they give up
the Golan Heights to Syria. And let”s hope that Iraq doesn”t
decide to start lobbing chemical weapons into this land. In an
hour the conflict would go nuclear.
Colombia/Venezuela – The former still has the potential to
become the world”s first narco-terrorist state. The latter is a
basket case led by a soon-to-be dictator. Some say these two
pose no threat to our national interests. I disagree. A Chavez
dictatorship could lead other Latin American nations to look
inward…and back to the past.
Mexico – Huge presidential election in July. So far the campaign
has been peaceful. Let”s hope it stays that way and that the
corruption which is so endemic in the country is tackled head on.
There are other key issues to deal with, foremost among them the
growing threat of protectionism, not globalization, if the debate
over the WTO is exacerbated by our efforts to tell the developing
world what they can and can not do. And there will be a serious
debate over whether or not the U.S. should pursue a missile
defense shield (we should).
And politically, we have our own rather important election
coming up. One thing is certain. The two parties will offer
differing visions, giving us a real choice for once. And if the
Reform Party gets a legitimate candidate then it”s really going to
get interesting.
And what of our own economy and the markets? When will the
American consumer finally have their confidence shaken? And
what will become of Alan Greenspan, who is up for re-
nomination? Can the U.S. continue to thrive or will our
inventions be ripped off by other nations who can produce the
goods cheaper? When will the politicians have the courage to do
something about the coming crisis in Social Security and
Medicare? And when will this stock market bubble burst?
Knowing my luck, not until the Nasdaq hits 8,000 as I sit on my
cash (well, 50% cash anyway).
I have written frequently of how I wish Americans would learn to
be more humble in their dealings with the rest of the world. George
Bush often talks of this. And I loved what Sen. Daniel Patrick
Moynihan said in response to Tim Russert”s question the other
day on how he would like future generations to lead their lives.
“I want my kids to walk humbly with their God.”
Maybe I spend too much time in the past. But I hope future
generations will have learned the lessons of this century. We
often shut our eyes to tyranny until it was too late. But we also
had heroes; men of action, faith and commitment.
Yet it”s time to move on. Sports commentator Jack Whitaker
recently wrote of his return to Normandy where he landed D-
Day plus 3. He was upset to find a golf course, the Omaha Beach
Golf Club, on what he considered sacred ground. But when he
visited the beautiful spot he began to understand and he thought
of these lines by Carl Sandburg:
Pile the bodies high at Austerlitz and Waterloo
Shovel them under me and let me work
I am the grass, I cover all
Shovel them under and let me work
Two years, 10 years, and passengers will ask the conductor
What place is this, where are we now?
I am the grass, let me work.
Brian Trumbore
Update: 1/1/00
Thank God the celebrations worldwide were peaceful. And yes, believe
it or not, I”m happy there weren”t any serious Y2K-related problems.
You can be sure I”ll have much more to say on this next week. And
now that I have all of this beer and chex mix…PARTY AT MY PLACE!!
