[Posted 7:15 a.m. I”m ready for some football.]
“George Bush doesn”t need to win the election. I do.”
–Al Gore, on the campaign trail, as reported by Newsweek.
As they say at the track, it”s “post time” for your editor. And we
continue to await a winner. For now, I”m limiting the vitriol
somewhat. There”s plenty of time for that when this mess reaches
a conclusion.
I listened to a little talk-radio the other day and I was surprised at
the tone of the callers. Every single one was worried about the
fate of the country but they couldn”t pinpoint the reasons why.
So is the country going to hell in a handbasket? Morally, maybe.
Constitutionally, no. But do we face some tough times? You
betcha. And there”s a big difference between the two questions,
an understanding of which is also necessary if you want to divine
some of the issues plaguing Wall Street.
America”s system of government is far from perfect but everyone
else continues to aspire to it so we must be doing something right.
At the moment, however, our system is poisoned, the purging of
which is going to be difficult.
This election of ours is fascinating when you begin to look behind
the numbers. Following are what I consider to be the most
telling.
2000 Poll Results
All Men (48% of electorate) 53-42, Bush
All Women (52%) 54-43, Gore
Male College Grads 57-38, Bush
Female College Grads 57-40, Gore
Whites (82% of electorate) 54-42, Bush
Blacks (10%) 90-8, Gore
[Black women 94-6, Gore]
Catholics 49-47, Gore
Jews 79-19, Gore
Union Households 59-37, Gore
Urban Areas (Pop. Over 500,000) 71-26, Gore
Rural Areas 59-37, Bush
All 30-44-year-olds, 49-48, Bush
All 45-59-year-olds, 49-48, Bush
[Source: Voter News Service]
So a look inside this tie vote that we are trying to resolve also
reveals significant splits within various segments of the
population. Does it foretell revolution? Of course not. Do we
have a lot of folks who feel disenfranchised (and I”m not talking
about those who couldn”t figure out a ballot)? Yes. Are we
liable to have another Oklahoma City or two in the future?
Unfortunately yes, as well.
I wrote last week that the stench from this election and from the
past 8 years of the Clinton administration will linger for a long
time. And it”s now quite obvious that regardless of who occupies
the White House come January 20, it”s going to take more than
opening up all the windows to air it out.
Peggy Noonan spoke for many of us in Friday”s Wall Street
Journal.
Clinton, Gore and their operatives “seem, to my astonishment as
an American, to be men who would never put their country”s
needs before their own if there were even the mildest of conflicts
between the two. America is the platform of their ambitions, not
the driving purpose of them.”
But while Americans have exhibited a tremendous amount of
patience with regards to this vote, thus far, many are also quickly
losing confidence in the system as a whole. That is worrisome
and it”s a feeling that is not easily remedied.
And an America that is beginning to lose confidence may be an
America that can be exploited by those who are jealous of our
success.
For the financial markets, an America that is beginning to lose its
way is one that is not conducive to soaring rallies that take us to
new highs. It”s an America that may not strut as proudly (not
necessarily a bad thing, mind you). It”s also an America that may
hesitate to consume as much as it once did.
But we”ll get through this ugly period, divided as we may be, until
suddenly…whap! A crisis of real proportions will smack us in the
face, forcing us, in the words of John McCain, to sacrifice for the
common good.
Wall Street
There was some hope that when the Federal Reserve got together
on Wednesday they would lighten up on the inflation rhetoric,
especially in light of the evidence which shows that while the
numbers are up from the levels of the past few years, inflation
does not appear to be a worrisome item.
But the Fed not only left interest rates unchanged (as expected),
they also continued to warn of the risks of accelerating inflation.
And now one has to wonder if Alan Greenspan and Co. are
behind the curve because the Fed also admitted that the economy
is slowing. No kidding. And when some of the best economic
minds on Wall Street, namely Ed Hyman of ISI and Bill Gross of
PIMCO, have no trouble spouting the term “hard landing,” you”d
think the Fed would take notice.
While the equity markets were unchanged on the week (the Dow
Jones closed up 0.3% to 10629; the Nasdaq slipped 2 points to
finish at 3027), partially due to the election uncertainty, all the
signs of a potential recession appeared on the horizon.
Continued disappointing earnings, both reported and forecast,
from the likes of Hewlett-Packard and Bell South.
Rising bad debt, both here (for example, Bank America and First
Union) and abroad (Taiwan”s leading bank).
Stubbornly high prices for oil which, going largely unnoticed, will
crush Asia if left unchecked.
A large drop-off in capital spending, particularly in the crucial
telecom sector.
A poor underwriting environment for new capital formation as
well as more stringent bank loan requirements.
And add to this a sharp falloff in investor confidence (which may
take awhile to be reflected in the sentiment indicators, but it”s
there).
Investors portfolios are full of pain and the tone at cocktail parties
these days is greatly subdued.
This is all where a melding of Washington, Main Street, and Wall
Street occurs. Right now, it makes for a lousy combination.
Street Bytes
–Oil: As expected, OPEC said, “No mas,” no more production
increases, as they believe that current supply exceeds demand and
prices will eventually fall. So they are actually looking forward to
cutting back production sometime before April (that”s my guess).
The cartel will hold an extraordinary meeting on January 17 to
gauge when these cuts might occur.
And Venezuela”s President Chavez scored a victory when his oil
minister, Ali Rodriguez (not to be confused with baseball”s Alex
Rodriguez, the original A-Rod) was selected to be OPEC”s next
Secretary General. With puppet Rodriguez firmly in place,
Chavez can exercise his hard-line on oil prices.
–This week Merrill Lynch introduced coverage on Krispy Kreme
with a rather lukewarm rating. The stock is way overvalued by
any traditional measurement. But it once again reminded me of
my college days at Wake Forest in Winston-Salem, NC, which
also happens to be the place where Krispy Kreme was founded.
We used to hawk a lot of the donuts, for textbooks, you know.
There was only one problem. You tended to eat one box for every
box you sold.
–Most European assets have flooded into the U.S. in the last 15
months, meaning that, for now, the timing has not been great.
Historically, this has been a good contrarian indicator.
–This was a horrible week for the Net as all manner of companies
reported increasing problems, or closed up shop. Content and e-
tailing sites remain the main victims. Regarding the latter, early
indications are that online holiday sales are off to a slow start.
–Speaking of the troubled Net, a Pets.com spokesperson said,
“We”re in discussions with a number of people for some of the
bigger assets, like the sock puppet.” Heck, I could make a sock
puppet! Who”s buying?!
–Goldman Sachs”s Abby Cohen issued “Clear Sailing Alert” #46,
pronouncing that stocks were as attractive as they”ve been all
year. She is pinning her hopes on a formula of slow growth plus
low inflation equaling an accommodative Federal Reserve along
with higher stock prices.
–Interest rates, at least on the Treasury side, were influenced by
the election indecision, the Fed”s pronouncements and the equity
markets. The long end of the yield curve rallied as bond traders
were convinced the Fed”s next move is to ease.
U.S. Treasury Yields
1-yr. 6.14% 2-yr. 5.87% 10-yr. 5.70% 30-yr. 5.78%
The International Scene…yes, there was other news.
Middle East: According to a poll taken by a leading Palestinian
university, only 3% of the people support a leading role for the
U.S. in peace talks. 75% support military attacks against the
American presence in the region. [Source: Deborah Sontag / NY
Times] These are incredibly depressing figures if you are one
who believes peace is possible between Israel and the Palestinians.
Me? I know better…but I”ll pray nonetheless.
In Egypt, clashes over parliamentary elections have killed at least
12. President Mubarak”s party already controls well over 90% of
the seats. Some brave souls are paying the ultimate price in
seeking democracy.
Iraq met with U.N. officials to discuss an end to the sanctions.
Saddam knows that with a fractured coalition the U.N. is
operating from a severely weakened position. He would allow
arms inspectors back in if the sanctions were formally lifted.
Then he could play his little shell game for years.
Turkey: NATO member Turkey has been trying to win approval
for European Union membership. So this week, the European
Parliament voted 234-213 to accuse the Turks of genocide
against Armenians 85 years ago. Yes, the exact same issue that
fortunately our U.S. Congress decided to let lie a few weeks ago.
The EU wants Turkey to apologize, Turkey refuses.
Should they? Perhaps. But it”s time to move on. Turkey is
absolutely critical to stability in the Middle East. [I”ll save you
from looking at a map…it borders Syria, Iran and Iraq.]
Balkans: Elections were held one week ago in Bosnia-
Herzegovina and as the votes were tabulated, sans chads, it
became clear that NATO had suffered a significant defeat.
Moderate candidates lost out to nationalists. Said one American
analyst on the scene, “It”s catastrophe. If these election results
hold in roughly the same percentages, the international
community is really in trouble.”
In the Serb sector, an extreme nationalist won while the
nationalist Croat party was winning in the other sector. So, as
your editor keeps pointing out, it ain”t over ”till it”s over.
Separately, the U.S. re-established relations with Yugoslavia and
said it would rush aid to the country. That”s an encouraging sign.
Asia
Check this out and then ask yourself, why would I invest here?
Japan: Next week, opponents from within Prime Minister Mori”s
own party are going to try and oust him. Mori has less than a
20% approval rating but has vowed to fight on.
Taiwan: President Chen Shui-bian lost more key support and his
ruling party now controls only 66 of 220 seats in parliament.
Remember, Chen was elected to a 4-year term just last spring.
The movement to oust him grows…which doesn”t speak well of
democracy in Taiwan in the opinion of your editor.
And, again, this matters because China is sitting back, missiles
poised. After letting the political chaos fester for a bit more in
Taiwan, why wouldn”t China attack? Well? All they have to do
is take out the airfields to prove their point. Given the right
mood, the people may just say, “O.K. You win.”
And do you think the U.S. would do anything? Of course not.
And to those who think China would then be blackballed from the
rest of the world as far as trade, think again. Look what has
happened with Iraq? Everyone is rushing back in. And China is
simply too big a market for anyone to ignore.
Of course there is a lot more to this scenario than I have outlined
here, such as Japan and South Korea running into our arms for
help. But if you think this is far-fetched, you could be right.
Nonetheless, keep your eye on Taiwan.
Philippines: The House impeached President Estrada. The Senate
probably won”t. Estrada is accused of taking payoffs from illegal
gambling operations.
Indonesia: President Wahid continues to totter as civil war rages
in the secessionist province of Aceh. Aceh has huge oil reserves
and one of the many issues is that the natives don”t feel they are
getting their fair share of the revenues. The New York Times”
Calvin Sims was in Aceh recently and reported seeing photos of
dead men with their eyes gouged out.
And all of the trouble in Indonesia is within close proximity to
Thailand, Malaysia, and Singapore, where they all fear an influx
of refugees which would further destabilize the region.
There, do you still want to invest here?
Russia: President Putin once again laid his missile plan on the
table with President Clinton this week. Russia wants to see a
reduction in nuclear warheads on both sides to below 1,500. Of
course Russia can barely afford 200, if they still want to maintain
a credible conventional force as well. The Pentagon, however, is
adamant that the U.S. should maintain 2,500 warheads.
Meanwhile, the Russian military was ecstatic that their air force
had “buzzed” the U.S. aircraft carrier Kitty Hawk twice this fall
(it was just announced this week). Russia claimed they caught us
with out pants down, while the U.S. says we had the craft on
radar and didn”t deem them to be an actual threat.
And former assistant Secretary of State Elliott Abrams wrote that
on December 31st, thousands of “unregistered” Russian churches
will be “liquidated.” Officials can delay the actual registration
process to keep the churches from being legal.
Vietnam: President Clinton”s historic trip was buried in the other
news of the week. On a matter of this kind I have to leave it up
to veterans like John McCain to tell me what is right. McCain
says it”s time to move on so that”s good enough for me.
But this is one miserable, ugly, very Communist nation. I
wouldn”t apologize for anything (Clinton hasn”t) and I wouldn”t
be generous with the aid. We do, however, want to see our boys
returned and that”s more important than anything else. On a
related issue, I will have something more to say in “Random
Musings.”
Peru: The opposition now controls Congress. President
Fujimori”s days are numbered.
Canada: And not for nothing but our good neighbors to the north
have an election of their own on November 27 which appears to
be heating up. Prime Minister Chretien thought he”d have a
cakewalk but now, Alberta”s Stockwell Day is closing the gap.
To show you just how unknown Day is, I popped his name into a
major search engine this week and couldn”t find anything in the
first 120 links.
[Note: For overseas viewpoints on the U.S. election, check out
“Hott Spotts.”]
Congress
As I write this the Senate stands at 50-49, Republicans, with the
state of Washington and the Gorton / Cantwell race still up in the
air. The House is at 220-211, Republicans, with 2 Independents
and 2 seats still up for grabs (in N.J. and Florida).
Senate Democrats are threatening to demand a power-sharing
agreement in committee chairmanships, even if Washington State
goes to the Republicans, which would give them a 51-49 edge.
But let”s say it turned out 50-50. If Bush wins, Vice President
Cheney breaks any ties. If Gore wins, Lieberman”s Senate seat
would go to the Republicans as Connecticut”s Republican
governor would be able to fill it, thus back to 51-49, Republicans.
Over time, however, Republicans could be saying goodbye to
Senators Thurmond and Helms, both of whom are in ill health. In
each case their respective seats would go to Democrats since
North and South Carolina have Democratic governors.
Advantage Dems.
Republicans counter, though, that some Democratic Senators
aren”t exactly spring chickens (see Robert Byrd) or are walking
heart attack candidates (i.e. Ted Kennedy).
Bottom line, particularly in the case of 97-year-old Strom
Thurmond, Democrats should be on the lookout for a “Weekend
at Bernie”s” scenario.
Finally, regarding this year”s budget wrap-up, Congress will
reconvene December 5th for what should prove to be a most
interesting and contentious session.
More Political Musings
–New Jersey”s Senator-Elect Jon Corzine spent $43.30 per vote.
I got a kick out of some of the Election Day postmortems. There
was lots of sudden hand-wringing… “Jon Corzine bought the
election!” Duh.
–House Minority Leader Richard Gephardt finally said something
I could agree with. Change Election Day to Saturday and/or
Sunday and establish a uniform time to close all the polls…or just
forbid the networks from calling until the West Coast closes!
When this election is finally wrapped up, I will have far more to
say about the media”s role in it all.
–James Carville called Ralph Nader an “egomaniac” on “Meet the
Press.” Carville should read my 11/17 “Wall Street History”
piece on Nader. Like him or not…Ralph Nader has more
backbone than 90% of the pols in Washington.
–Many of us just want Trent Lott to shut up. I want to see more
of Fred Thompson and Chuck Hagel.
–In case you”re curious, I”m for keeping the Electoral College.
Time and time again, it”s been proven that our Framers were a
helluva lot more intelligent than the idiots we have running things
today.
–William Safire pointed out that we shouldn”t be surprised at the
perception that the Democrats have better attorneys than the
Republicans. It is the trial lawyers, after all, who practically fund
the Democratic Party.
Random Musings
–The Washington Post reported that sentries on the USS Cole
did not have ammunition in their guns and that the “rules of
engagement” prevented them from firing without first obtaining
permission from the Cole”s captain or another officer. Couple
this with the earlier item I reported on, regarding the Russians
and the Kitty Hawk, and there might be a troubling pattern.
–The cost of a first-class stamp will rise to 34 cents in early
January.
–“I”m not a politician but…..” –Former Secretary of State
Warren Christopher this week. Barf.
–Man, by next summer I”m going to be ready for “The Lord of
the Rings” movie.
–Regarding that Dagestani Airlines flight that was hijacked to Tel
Aviv, how did Dagestani Airlines even get certified in the first
place? “We know you have a choice of airlines today and we
thank you for flying Dagestani.”
–I would like to apologize to all of my Dagestani friends for the
above inconsiderate remarks.
–Needed: One volunteer to have himself taken hostage in a
hostile country, so Jesse Jackson can go over and get the hero
freed. We need to do something to get Jesse out of the States
until this election process is complete.
–I have held back the following for a few weeks but it needs to
be brought up now, before everyone else becomes aware of it.
Charles Ogletree is a highly respected Harvard Law professor
who is heading up a “Reparations Assessment Group,” a serious
effort to seek monetary compensation for Black Americans whose
relatives may have been slaves.
From time to time these movements have popped up, with little
publicity, but Ogletree has brought Johnnie Cochran and other
high-powered attorneys on board a team which is seeking a legal
solution (rather than a political one). Ogletree points to
settlements the U.S. Government has reached with Japanese-
Americans held in World War II internment camps. One attorney,
Alexander Pires, will go after corporations that are involved as
well.
In light of the current political climate, this could be a rather
unsettling issue, to say the least. I”ve seen enough of Ogletree to
feel he will handle it in a responsible manner. But if Jesse Jackson
and Al Sharpton become involved, look out.
–The other Jesse, Governor Ventura, is going to be doing color
commentary on XFL football broadcasts. I”m sure most of
Minnesota is just thrilled by this. Jesse said, “But it”s only on
Saturdays.” Now it”s true that Ventura already coaches high
school football, which is admirable. This, however, seems to
cross the line. You”re the freakin” governor!!
–Exports of U.S. corn are dropping sharply due to the
mishandling of genetically engineered corn, Starlink, which has
never been approved for human consumption. Nations such as
Japan and South Korea are pulling their orders. If this occurred
during a period of rising trade tensions, you”d have a trade war.
–If you hold up a Palm Beach County ballot during an eclipse,
will a swinging chad keep you from going blind?
–As I reported awhile back, the Russians confirmed they will be
bringing the Mir space station back to earth in February. But first,
a crew is going up in January to prepare the craft for a safe re-
entry, currently targeted for the Pacific, east of Australia. But I
have this image of one man being left behind, a la Slim Pickens in
Dr. Strangelove, who will ride Mir back down.
–Future movie: “I Was a Teenage Chad,” starring Leonardo
DiCaprio.
–Mr. Rogers is retiring due to the fact that his sweaters were
eaten by moths. Actually, I never watched him. At four, I was
into Eric Sevareid.
–Note to Albert Gore III…or is it IV? [The kid who was caught
doing 95 mph this summer in North Carolina and then was hidden
from view during the Democratic National Convention.] Tuck
your shirt in! Did you see that kid walking into church on
Sunday?
–Poet and author Maya Angelou has signed a contract to do
greeting cards for Hallmark. So I wonder what she”ll write?
Here, for instance, are the first few lines of her inaugural tribute
to Bill Clinton, 1/20/93.
A Rock, A River, A Tree
Hosts to species long since departed,
Marked the Mastodon.
Happy Birthday!
—
Now here”s my own verse which she can use if she so wishes.
A Bear, A Wolverine, A Raccoon
All capable of amazing destruction,
Seal the Dumpster.
My Deepest Sympathy.
*If you come up with your own magical prose, pass it along.
–It always ticks me off when Republicans blast funding great
causes like PBS. They are so off base. Sure, PBS occasionally
has a program that may not appeal to certain right-wingers,
tough. The vast majority of PBS programs are outstanding,
particularly “Frontline” and “American Experience.” I hope some
of you saw the program this week on the American POWs in
North Vietnam. One of the most powerful shows of its kind I
have ever seen and it should be required viewing for every school
kid across the country. These guys were incredible heroes and
what they endured should never be forgotten.
Gold closed at $266
Oil, $35.45…cold snap definitely impacted the price.
Returns for the week, 11/13-11/17
Dow Jones +0.3%
S&P 500 +0.1%
S&P MidCap +0.4%
Russell 2000 +0.4%
Nasdaq -0.1%
Returns for the period, 1/1/00-11/17/00
Dow Jones -7.5%
S&P 500 -6.9%
S&P MidCap +13.4%
Russell 2000 -4.4%
Nasdaq -25.6%
Bulls 50.9%…About a 10-day lag. It”s coming down.
Bears 30.6% [Source: Investors Intelligence]
Note: The editor is taking next Friday off, re: “Bar Chat” and
“Wall Street History.” Week in Review will be posted as usual
on Saturday.
And I should also note something I”ve been meaning to bring up.
Some of you happen to catch the commentary within the first half
hour or so after it”s been posted. You thus see a few mistakes
which I am in the process of correcting. Just wanted you to
know I eventually pick them up. I appreciate your understanding.
Thanks to Scott and Liz for their Florida insights.
Happy Thanksgiving! Give thanks for what”s great about this
country and keep the faith. We”ll eventually rid ourselves of the
crud. I think.
Brian Trumbore
