*The Week in Review was done in two parts. As noted below, most of
it was written on 12/9. I have a brief update to fill in some holes
at the end. This second part was posted late on 12/12.
[Note: Due to travel, the following was posted on 12/9]
“Everyone who fails to leave by Saturday will be destroyed.”
–Message on leaflets dropped by the Russian military onto the
citizens of the Chechen capital of Grozny.
On “Meet the Press,” John McCain said that because “we don”t
see Chechnya on our television screens, it doesn”t seem to move
us. It”s up to the President to talk about it.”
So this week President Clinton said that “with each passing day
(Russia) is sinking more deeply into a morass that will intensify
extremism and diminish its own standing in the world.” But the
President did not threaten to cut off aid because he said that 2/3”s
of the current aid goes towards denuclearization. I would
question whether or not that 2/3”s is actually being used for this
purpose.
Yes, the Russians are doing exactly what I said they would weeks
ago, which, in the words of an editorial in the Washington Post
this week, “(The Russians) true aim seems to be more the
eradication of a people than of a band of criminals.”
No one has mentioned what I”m about to say, but it”s worth
thinking about. The pretext for Russia”s actions was the series of
apartment bombings in Moscow and elsewhere this fall which
killed some 300 people. The Kremlin has claimed the bombs
were set by Chechen militants. Moscow has yet to produce any
evidence that they were. There is a chance, albeit slight, that the
government set the bombs off themselves. Now you know why
you won”t find this crazy thought anywhere else.
But how crazy is it? The poll numbers for new Prime Minister
Vladimir Putin are soaring. Yes, as Clinton has pointed out, no
one doubts the Russians right to protect their own territory. And
yes, no one is saying that the Chechen militants (Islamic
Fundamentalists) are fighting a noble cause. They aren”t. The
rebels move into Dagestan was illegal and unjust. Russia, and the
western world, don”t want an Islamic foothold in the key
Caucusus oil-producing region. It would have a tremendously
destabilizing effect.
But I keep thinking back to the apartment bombs. Why would
the Chechens have wanted to bring down the wrath of the
Russian military on their heads? Did they really think the
Russians would cave as they did in the ”94-”96 war?
The intrigue in Moscow and around the Kremlin only grows.
This week Boris Yeltsin ordered the sacking of Moscow”s police
chief, a move seen as an attempt to undermine Mayor Yuri
Luzhkov”s image as a man controlling the capital. Luzhkov, a
candidate for President next year, said of the move (incredibly
unprecedented), “They (the Kremlin) need the policy of the
destruction of our country to continue. The last 10 years have
brought Russia despair and unhappiness and today these Kremlin
figures want to destroy morals and order in society.”
Luzhkov”s Fatherland-All Russia party (which also contains
former prime minister Primakov) trails badly in the polls leading
up to the now crucial parliamentary vote to be held December
19th. Before the Chechen conflict they were in the lead. I ask you
again, who really set off those bombs?
Wall Street
I will write more later, but for now, James Cooper and Kathleen
Madigan had an interesting piece in the 12/13 issue of Business
Week. In the third quarter, corporate profits increased to the
tune of $78 billion from the year earlier period (at the height of
the Russian financial crisis). On the surface that seems good.
However, $46 billion was for higher inventory values (led by the
doubling in oil prices) and improving overseas operations
accounted for $27 billion. Excluding these 2, corporate profits
barely rose. And higher costs for labor and material as well as
higher interest rates will continue to squeeze profits going
forward. Considering that next year”s comparisons may not be as
strong, what does this say about today”s market valuations?
The Federal Reserve released their “Beige Book,” a survey of the
current economic environment in the Fed”s 12 districts. The
economy continues to exhibit “moderate to strong growth” with
some signs of slowing (good), while the rate of increase in
salaries and wages does not appear to be accelerating (also
good…and amazing).
I told a reporter yesterday that I have been floored wages aren”t
rising faster. I now realize what”s happening. Employers must be
paying their employees cash under the table. Heck, that”s what
Charlene”s Drug Store did with me back in 1974 when I was
working there at the age of 16! [$60 for 40 hours].
And here”s a remarkable stat. Through Dec. 8th, 2158 Nasdaq
stocks were down for the year versus 2149 that were up. But
hey, the Nasdaq is up well over 60%! How can that be? Narrow
leadership, my man.
A few international business notes…Japan”s economy fell 1% in
the third quarter and consumer spending was flat but analysts
seem convinced that better days lie ahead.
And Germany”s economy exhibited some oom-pah-pah as it grew
0.7% in the third quarter, the highest rate in about 1 + years.
Manufacturing orders rose and unemployment fell. In addition,
Chancellor Schroeder won reelection for the leadership post of
his Social Democratic Party.
The overall Eurozone unemployment rate is now 9.9%, the first
time it has been below 10% in 7 years.
International Affairs
On Wednesday, Sinn Fein”s Gerry Adams produced a secret
listening device that British intelligence allegedly planted in a car
as a way of monitoring talks held amongst Sinn Fein”s leaders.
As Adams said, this was a serious “breach of faith.” This falls on
the heels of a story put out by the New York Times Anthony
Lewis on Tuesday, wherein Lewis writes of a British journalist,
Tony Geraghty, who was recently arrested by the British Ministry
of Defense. Why? Geraghty has been charged with violating the
Official Secrets Act for simply describing in a book how the
government uses surveillance systems to trace suspected enemies
of the state. The British government would claim that they are
stopping bombers but, according to Geraghty, the surveillance is
now increasingly being turned on Britons at home. It will be
interesting to see if these incidences eventually have an impact on
Prime Minister Tony Blair”s standing.
China is building a new missile base, capable of knocking out
Taiwans”s own military bases. This is at least the second one we
have discovered in the past few months.
Israel and Syria agreed to resume peace talks, a significant
development. Israeli Prime Minister Barak is willing to negotiate
on the Golan Heights. Syria”s nuts if they don”t take him up on it.
Personally, I think Israel should hold onto this vitally strategic
territory.
In a related item, U.S. and foreign officials believe that Iran has
stepped up its support of Palestinian terrorist groups. Separately,
Iran has a key parliamentary vote in February, pitting the
hardliners vs. the reformers. Tehran has been rejecting our
overtures for a dialogue. If the hardliners gain in February, that
will be a nasty sign for the future.
You haven”t heard much recently about E. Timor, which means
two things. Kofi Annan deserves some credit and the Australian-
led UN force is doing their job. Go Aussies! What a great
people. We don”t appreciate this country enough.
The Organization for Security and Cooperation in Europe
released a detailed report on the aftermath of the war in Kosovo.
Albanians are exacting their revenge and the KLA has been right
in the thick of it. But don”t worry. Our President has called this
whole campaign a huge success.
WTO Aftermath
President Clinton”s own aides described the Seattle WTO talks as
“a fiasco” and a “circus.” It”s just another foreign policy failure.
Thomas Friedman had the following take.
“Too many unions and activists want the quick fix for
globalization: just throw up some walls and tell everyone else
how to live. There was a country that tried that. It guaranteed
everyone”s job, maintained a protected market and told everyone
else how to live. It was called the Soviet Union. Didn”t work out
so well. In the end it probably did more damage to its
environment and workers than any country in history.”
I have been troubled by a number of issues. As a conservative
Republican you would probably expect me to be a fan of Big
Business who would take the attitude that if you can”t compete,
i.e., the developing world, tough. But I don”t. I agree with some
of what Kofi Annan said recently (which I quoted at length last
week). “The industrialized world must not try to solve its own
problems at the expense of the poor.” Tariffs on developing
countries manufactured goods are often 4 times that placed on
goods arriving from industrialized countries. How fair is that?
Liberals talk ad nauseum about child labor laws. But in a place
like India, child labor exists because of the acute poverty of the
children”s families. And, while I, like everyone else, want to see
worldwide pollution standards improved, how do we demand that
the developing world put into place technology they can”t afford,
knowing that it would then further restrict those nations ability to
compete in the marketplace and keep them down?! Just some
food for thought.
This Week In Politics
–John McCain leads George Bush 37-30 percent in the latest poll
in New Hampshire. Bill Bradley leads Al Gore 44-40. But
nationally, both lag badly. I really don”t see how either one can
win the overall nominations. But…
–Bill Bradley”s campaign war chest is already at $25 million, his
goal for the whole primary campaign.
–Boy, did you catch “60 Minutes” last week? In an interview
with Gore, Lesley Stahl clearly had one thought on her mind,
“How do I take this guy to bed?” It was the biggest suck up
since Monica. Gore did say he had a “genuine friendship” with
Clinton and that there was “no tension” between the two. Of
course he then proceeded to take credit for all of the
administration”s accomplishments. Separately, Gore also took
credit for “uncovering” the Love Canal toxic waste site near
Niagara Falls. He didn”t and he clarified this the next day.
–McCain released his medical records, all 1500 pages of them, in
an effort to dispel rumors that he”s a little off his rocker.
–On “Meet the Press,” Tim Russert continued his love affair with
Jesse Ventura. Ventura did say something interesting, that being
the possibility (at least in Ventura”s mind) of wooing McCain to
the Reform Party. This is intriguing. McCain is the perfect fit
and he”d get at least 20% of the vote…while handing the White
House to Gore.
–In the Arizona Republican debate, Gary Bauer and Alan Keyes
left the best impressions but, as we all know, collectively they
garner about 3% of the Republican vote so it”s time to move on
and get the debates down to just Bush, McCain and Forbes. Then
in January we toss out Forbes.
–Speaking of Forbes, the Union Leader of New Hampshire
endorsed him (which didn”t help him in the latest poll as he still
has just 10%). The paper said while “some would say he looks
like a geek,” he nevertheless “is one tough, smart customer who
can be the strong, principled leader America needs.” I say too
bad. He looks like a geek. And speaking of looks, sad to say, if
Gary Bauer looked better, he”d be a legitimate candidate.
–As I”ve stated before, I”m for McCain but, in the absence of his
winning the nomination, I”m still concerned about George W.
I”m not convinced there is anything there. I”m amazed that with
the incredible staff he has assembled, he simply doesn”t seem to
have a grasp of some key issues.
–Hillary Clinton”s moving plans really are extraordinary. Never
in our history, that I”m aware of, has a First Lady moved out like
this. As Maureen Dowd wrote this week, “The Clinton”s
continue to break creative new ground in family dysfunction.”
And how about those rumors, quickly denied by the White
House, that Chelsea Clinton would take over the First Lady”s
official duties? This is…oops, I forgot the family gag order
imposed on me when it comes to discussing the First Daughter.
Random Musings:
–Everyone has a special place in their heart for firefighters. Are
there any better people on the planet? Have you ever met one
who was a bad guy? So to the families of the six who lost their
lives in Worcester, Mass., may you find peace. A father of one of
those killed commented on his son, “He was a hero the past few
days but he was a hero the day he was born.”
–I was in New York on Monday and, as is my custom, I walked
into St. Patrick”s. What I didn”t know was that I was walking
into a massive Polish / American celebration, filled with pomp and
circumstance. The cathedral was jammed and the mass was
ending with a rousing rendition of the Polish national anthem (I
think it was). It was a rather moving event and, of course, as I
walked out I immediately thought of….Jesse Ventura. Huh?
Well, it was Ventura, you”ll recall, who labeled organized religion
a “crutch for the weak-minded.” Governor, all I saw on Monday
were some pretty strong people celebrating something good.
–So Edmund Safra was really killed by his male nurse. Always
go with females.
–Coca Cola chairman Douglas Ivester unexpectedly resigned at
the age of 52, and after just two years at the helm. I guess his
stomach couldn”t tolerate the stuff. Mine can”t. That”s why I
drink beer.
–Sir Charles Barkley suffered an end worthy of the best Greek
tragedy. Last night, Barkley came home to Philadelphia, site of
his first years in the NBA, to play his last game there (Barkley has
announced his retirement at the end of the season). The Sixers
graciously flew his mother and grandmother into town for the
occasion. Then Charles suffered a horrible knee injury, right
there in front of them. His career is over.
–Elian Gonzalez, the 6-year old Cuban boy, should probably be
returned to his father. Clinton / Gore have a real political hot
potato on their hands.
–Y2K Update: The French military said its nukes are Y2K
compliant, but it”s other military systems aren”t. I bring this up
just to remind you that there are other large militaries around the
globe aside from the U.S., Russia and China.
Don Jones, director of Year 2000 readiness at Microsoft, says
viruses could become the largest New Year”s threat. One virus is
an email message that says, “Here”s some pictures for you!” and
comes with an attached program labeled “pics4you.exe,” which
activates the virus immediately and sets Microsoft”s Internet
Explorer browser to a porn site. Don”t open email attachments
from unknown sources.
Mark R. (who works in the brokerage industry) says that the
word in the upper echelons of Wall Street is that Nasdaq trading
volume is already stretching its true capacity limits. Separately,
some managers fear that a meltdown could occur from everyone
checking their account balances not on Jan. 1st, but rather on the
2nd.
–Pete Rose: Former baseball commissioner Fay Vincent wrote
an interesting op-ed piece this week. As some of you know, Rose
has intensified his campaign to get back into baseball. I have felt
he should not be allowed back, a procedure which would make
himself eligible for the Hall of Fame, because he never came clean
about his gambling.
Vincent reminds us that after the 1919 Black Sox scandal,
gambling became the only corporal crime in the Major League
Agreement. This has always been my point. Others say, “Well,
what about Darryl Strawberry or Steve Howe and all of the
chances they got after admitted drug abuse?” Well, drug abuse is
subject to collective bargaining with the Players Union because it
is viewed as a disease, while betting on baseball has never been
viewed as a medical issue.
Vincent concludes that the issue is not simply about Rose. It”s
about the game. “I might forgive Pete Rose, and I can
understand why he so badly wants to be part of the game again.
But for me mercy is summoned forth by contrition and must
always be balanced by justice.”
–George McGovern wrote a bizarre op-ed piece in the New
York Times last Sunday. In it he defends LBJ and his handling of
Vietnam. McGovern points to the recently uncovered audio tapes
which show that back in 1964, LBJ was worried about spreading
U.S. involvement. Forget for the moment your own personal
opinion on Vietnam. McGovern”s defense is that, see, LBJ really
did care. Yoh, George. No one doubts he cared. The fact is,
however, that no matter how much he cared, he took deliberate
actions opposite of his personal feelings. I think we all wish this
new McGovern standard could be applied to all facets of our own
lives. [Think about how awful HE would have been as President]
–The Artist, or Prince, was on “The Today Show” the other day.
Matt Lauer started off by greeting him with “Happy Holidays.”
Prince then mumbled, “I don”t celebrate the holidays.” But then
The Weird One proceeded to mention Christ, in a reverential way,
with each statement he made. What am I missing here?
–A survey found that a coffee mug is the least appreciated gift a
schoolchild can give their teacher. That”s because it”s not an
official StocksandNews coffee mug, kids. Separately, fake apples
or gifts with the apple motif rank low as well. Shares of an IPO
rank rather high, however.
–“The Eagles Greatest Hits, 1971-1975” album is the top-selling
one of the century, better than Michael Jackson”s “Thriller.”
Surprisingly, it even beats out the “Greatest Hits of Pia Zadora!”
–Now admit it, the following thought crossed your mind as you
heard of NASA”s futile attempts to contact the Mars Polar
Lander. Two little guys are looking at this small pile of scrap.
“@#$% %$# &%#@!” (rough translation, “What the
&%#@!”), says one to the other. As for NASA administrator
Daniel Goldin, where the hell has he been? He”s the man at the
top yet I haven”t seen his face since the afternoon it was supposed
to land. Yoh, Dan, if you can”t stand the heat, at least put on a
heat shield and face the music!
–IBM is going to develop a super computer 100,000 times faster
than Deep Blue, the one that beat chess champion Gary
Kasparov. It seems to me that the computer may be able to solve
one of the world”s great puzzles, that being how to match up
young kids with their true NBA fathers!
Gold closed at $281
Nymex Crude Oil, $25.20 [Iraq agreed to a new 6-month extension
of the oil-for-food program]
Returns for the week, 12/6-12/10
Dow Jones -0.5%
S&P 500 -1.1%
S&P Midcap -3.1%
Russell 2000 +0.5%
Nasdaq +2.8%
Returns for the period, 1/1/99-12/10/99*
Dow Jones +22.3%
S&P 500 +15.3%
S&P Midcap +7.0%
Russell 2000 +10.6%
Nasdaq +65.1%
Bulls 51.7%
Bears 29.3% [Source: Investors Intelligence]
*Not including dividends.
–Series on Islam continues, see “Hott Spotts”
–Order your coffee mug by 12/15 and you should have it by
Christmas. If your mug is damaged upon receipt, please contact
me and we will send out another one!! [Note to SA at One Park
Ave., in NYC…please send me a fuller address…UPS won”t
deliver]
Brian Trumbore, 12/9….a brief update will follow on 12/12 to
complete the week.
**Update 12/12:
Official marathon coverage to follow, but first…
Since I wrote my comments of 12/9, we have witnessed Boris Yeltsin,
at a press appearance in China, reminding Bill Clinton that Moscow
“has a full arsenal of nuclear weapons” and “we will dictate how to
live, not him.” Very reassuring, eh? Actually, Prime Minister
Putin immediately commented that he knows Clinton”s own harsh words
earlier in the week were “motivated by the wish to save Russia
additional problems.” The next day, Russia mobilized ten new
ballistic missiles.
As for Chechnya, Russia did succumb to international pressure, at
least for a few days, as they declared a cease-fire around the capital
of Grozny in order to let some civilians leave before the final
assault. Of course, the vast majority of the civilians are still
hiding in their basements and haven”t received the word. There are
conflicting signs from the Russian government and the Russian
military. The position of the generals has been consistent. Wrap
up the campaign by year end. The parliamentary elections are one week
away.
A few other news items.
–Wen Ho Lee was finally indicted by a federal grand jury on 59
counts of stealing secrets from Los Alamos, but he has not been
charged with espionage, as yet.
–Bill Bradley announced that he has an irregular heartbeat but
it does not appear to be serious.
–And remember the 14 FALN Puerto Rican terrorists who were recently
released? It turns out that a FALN terrorist leader actually
negotiated the release of the 14 directly with White House officials.
The White House denies the published reports.
Turning to Wall Street, the Dow Jones finished the week at 11224, off
61 points. The Nasdaq continued to be the big winner. Two IPOs
had absolutely phenomenal debuts. VALinux was priced at $30 and hit
$320 before closing its first day at $239, the largest first-day
performance in IPO history. Also, another issue, Freemarkets, was
priced at $48 and finished it”s first day at $280.
The 30-year Treasury bond responded positively to more tame news
on the inflation front as the Producer Price Index for November
rose only 0.2%, as expected (with the core rate unchanged). The
yield is back down to 6.16%
Brian Trumbore Runs A Marathon
So I went down to Kiawah, SC to run my 2nd marathon. Once again, I
failed to train properly. Once again, I paid the price.
Actually, I was pretty cocky going into this race. Yes, I hadn”t done
much in the way of distance training, but I knew the course was flat
and the weather looked to be good.
The night before the race I had a good meal but I woke up the next
morning with a rather unsettled stomach. If you have ever run
a long distance race, you”ll appreciate what follows. If not, you
will probably want to finish right here.
The start was very crowded but after the first mile or so things
settled down, except my stomach. Nonetheless, my friend and I ran
the first 1/2 in exactly 2:00, the same time as our other marathon in
Dublin. The goal was to finish around 4:15 or 4:20, a good time for
us. At 14 miles, my friend felt better than me and he took off. At
this point I realized just how lucky I was to be in America and I was
thanking Wall Street for creating a tremendous amount of wealth.
You see, if you haven”t been down to Kiawah before, all you need to
know is that it is one beautiful place with a lot of very wealthy
residents. In fact, there is a real building boom taking place in
this area and throughout the marathon course we all had a chance
to see some of the palaces that were going up.
And new construction, most importantly for me and my stomach, also
meant PORT-A-JOHNS!! Yes, yours truly found four of these wonderful
contraptions between miles 14 and 20. The booming economy and stock
market had saved the day. Of course, any participants who were
following me as I went about my assorted rounds probably thought
I was looking for a shortcut or that I was pulling a Superman stunt.
No sirree. If they also followed me out of these lifesavers, they
would have noticed I was wearing the same uniform.
So, suffice it to say I was nowhere near 4:15 when I finished. And
yes, I did finish. I have to admit I almost broke down at the end.
The 2nd half of the race was friggin” hell. But there was one moment
at the very end I”ll never forget. I had been running the better
part of the last six miles with this older gentleman, who it appeared
was running his first. We didn”t say anything to each other and in
the end I finished maybe a minute ahead of him. When I saw him
cross the line I approached him and stuck out my hand. You have to
have been in these situations to appreciate what happened next but
you never saw a more grateful expression on one”s face in your life.
We briefly grabbed each other. Merry Christmas, stranger.
