[The following was posted from Rome about 6:00 a.m. ET.]
My week in Rome is one I”ll not soon forget. As I make no
secret of my own Catholicism, I hope you understand the tone of
some of the following is a little different than you are used to
seeing in this space.
So with that as introduction, I must say I was deeply moved on
more than one occasion these past few days and I was touched by
the incredible display of “faith” as people from all over the world
gathered to honor the 44 new cardinals.
You have to picture an absolutely beautiful scene; two gloriously
sunny days, sitting in St. Peter”s Square with an immense crowd
that represented nothing but hope and goodness. Much of what I
felt shall remain personal but there were a few moments I feel
comfortable sharing.
All of the 44 cardinals went up to receive their red birettas on
the first day, giving the faithful an opportunity to cheer on their
heroes. The Latin American participants were quite passionate,
for example, but I almost broke down when the new cardinal
from the Ivory Coast stepped forward before the Pope. His
followers burst into song that filled the square. Life is good.
And despite Africa”s deadly, seemingly intractable problems, at
least here were some with faith and hope.
On the second day, the Pope held a Mass of celebration, an event
at which the cardinals receive their rings. We all agreed that it
was one of the simplest, yet most beautiful experiences of our
religious lives, and then the Pope thrilled us all by cruising
around St. Peter”s in the Popemobile. He came within 20 feet of
our group and it was an electric moment.
Pope John Paul II is more than just a religious figure. He is one
of the true giants of our time. I wrote at the end of 1999 that
Winston Churchill and John Paul II were at the very top of the
list of those who changed the world.
Churchill”s place in history is more than secure. But I also
suspect that the Pope”s ranking will only soar as the centuries roll
by, for it was John Paul II who minced no words in encouraging
the people of his native Poland to rise up against totalitarianism,
thus setting an example for others in the region and around
the world. It was the Pope who took the position that
Communism was evil (making it easier for Thatcher and Reagan
later on), and that the world could no longer tolerate a system
that crippled the human spirit. And, some day it will be proved
that he almost paid for his stance with his life.
John Paul II stepped forward when the world needed him most.
You may disagree with the philosophy of the church and the
Pope”s role in it, but you can never deny that this is a man of
tremendous strength of spirit, faith, character, and will.
It was some 23 years ago that a College of Cardinals had the
foresight to select a man who was perfect for the times, one who
would help reshape the world, giving hundreds of millions a reason
to hope. And as I watched John Paul II adoringly embrace those he
had just elevated, I couldn”t help but think that in the not too
distant future, God will be doing the same to him.
The Markets
You”ll have to excuse this rather abbreviated market recap,
though thanks to having CNBC in my hotel, I was able to keep
up a bit.
Wall Street continued to be wracked by fear of declining profits.
Sun Micro and EMC were emblematic of this new era, stating
that they really had no clear idea what the future holds, only that
revenue growth would slow and once rosy forecasts could be
thrown out the window. Of course, just a few short weeks ago,
everyone had it all figured out. A slow first half, and a probable
profits recession (with real declines in earnings), but with a
strong rebound in the second half. Now, those who are honest
simply say, “I don”t know.”
On Thursday, the Nasdaq hit a new 2-year low, trading below
2200 at one point, and thereby officially vindicating those of us
who didn”t touch the technology sector in 1999 or early 2000
because we thought “valuation mattered.” Those Wall Street
gurus who saw fit to tout stocks with 100+ price/earnings ratios
as part of a “new era” of investing, are responsible for inflicting
immense financial pain on their clients. It was nothing less than
incredible irresponsibility and when the U.S. naval court
disposes of the recent submarine tragedy, perhaps it can call
some of Wall Street”s “finest” to fully account for their actions.
For the week, the Nasdaq lost 6.7% to close at 2262, while the
Dow skidded 3.3% to the 10441 level.
Despite a higher-than-expected reading on consumer prices, the
bond market feels the Fed will have to ease another half percent
in interest rates come their next meeting on March 20, as the
slowdown and the tumbling markets take precedence. The short
end of the yield curve saw its lowest rates since 1999.
U.S. Treasury Yields
1-yr. 4.61% 2-yr. 4.52% 10-yr. 5.09% 30-yr. 5.48%
Meanwhile, a “wild card” emerged this week with the financial
debacle in Turkey. What seemed like a relatively minor spat
between the prime minister and the president of the country,
erupted into full chaos. The president accused the prime minister
(who holds the real power under Turkey”s system) of not doing
enough to fight corruption (there”s that word again, boys and
girls).
But Turkey”s financial markets took the disagreement to mean
that a potential change in government could be in the offing, and,
given Turkey”s history, perhaps a military takeover. So about $5
billion in assets fled the country and the stock market in Istanbul
fell 33% in 3 days, including a record 18% drop on Wednesday.
While many were quick to say that this was simply an isolated
case, and not another Asian or Russian financial crisis that would
spread worldwide, the fact is that many European banks, in
particular, have large loans to Turkey and unless the situation
stabilizes quickly, the government could easily default (the IMF
has a huge stake here as well). To give you a sense of the
turmoil, ponder the fact that interbank interest rates rose to
7500% at one point (you read that right).
Street Bytes
–The Net: I saw the following from a Washington Post article
written by Howard Kurtz, as reported in the Herald Tribune.
Kurtz quotes Detroit Free Press columnist Mike Wendland.
“I”m getting bored with the Internet. It looks like the Net itself is
losing appeal and the surfing public is becoming dot-bored.”
While it pains me to say this, you know from previous
commentary that I don”t disagree. And a recent Nielsen / Net
Ratings survey showed that the average time spent online
dropped from 17.5 hours a month in October to 14.9 hours in
December. That”s huge, folks.
Quite simply, this all plays right into my gadget theory as well.
Cell phone? Yes. Mobile phone with Internet applications? No.
Ironically, I saw our focus company OpenWave”s CEO on the
European version of Squawk Box. Don Listwin reiterated that
the mobile phone of the future will be the “remote control for life
and a great tool for people on the go.” Maybe so. But unless the
average American or European sees real value, the profit
potential for this sector of the telecom industry is limited.
As I was attending Father Dulles”s last mass before he became
cardinal, I noticed that NBC”s Keith Miller was there.
Afterwards, I introduced myself and asked him where he had
been traveling recently. Miller (a great guy, by the way) said he
just came from Finland where he was preparing a piece on
Nokia. Ding ding!, mused your editor. So I asked Keith to give
me his thoughts on all the new gadgets and he couldn”t have
agreed with yours truly more. In fact, he said one could order a
suit on the Nokia phone if the consumer so desired, but why
would you? And then the payoff was that when he tried to test
out all the new applications, he couldn”t even log on! Nothing
worked.
But for those of you who may be thinking right about now, well,
that”s just a capacity issue and they”ll correct that down the road,
I say, for the umpteenth time, but who”s going to pay for it?
These companies are already up to their eyeballs in debt and
what foolish bank is going to lend them more money for such an
uncertain revenue bet?
*And this week you had Deutsche Telekom and France Telecom
announcing that they are collectively selling $4 billion in Sprint
shareholdings in order to pare down their own debt loads.
[I jotted down a ton of thoughts on the cell / mobile phone craze
over the course of the week and I will have a lot more in the next
review.]
–One of the dumbest sayings of the past year or so has been,
“There”s plenty of cash on the sidelines,” implying that a huge
rally is just around the corner. At some point this will be true,
but for those who foam at the mouth (like a bovine afflicted with
mad cow) at the mere mention of cash holdings, remember that
this argument hasn”t held water in a year, and that far broader
factors have more of an influence on investor behavior, like the
levels of capital spending or debt. And those folks who have
been holding the cash only wish they had salted away more.
–Another sign of the times. Webvan, the online grocery delivery
service, continues to collapse, shutting down its operations in
Dallas. More than half of their customers don”t go back for a
second order.
–Major advertisers are scaling back their purchases of ad-time
by 20% or more.
–The G-7 finance ministers got together last week and said the
world economy is just fine, except that while they were worried
about the current slowdown in the U.S., they didn”t hesitate to
say Japan was “sick.”
Meanwhile, the IMF has drastically reduced its own forecast for
economic growth in the U.S. to 1.7%, down from 3.2%, which
was the estimate in its last formal forecast.
International Affairs
Iraq: No surprise, France and Russia, who both desperately want
to trade with Iraq, said there was “no legal basis” behind our
bombing of Iraq. Gosh, those French are a real pain in the butt.
Sometimes you get the feeling that the only reason why we
liberated the jerks was to save the Louvre.
Separately, the Pentagon, in a rare display of candor, admitted
that the latest bombing near Baghdad was far from successful.
And President Bush clearly recognizes that the current sanctions
regime needs to be modified.
China: The U.S. has accused China of helping Iraq upgrade their
air defense systems and the New York Times had a scathing
report on the Communists” use of psychiatric hospitals for
electroshock therapy, employed against dissidents like Falun
Gong.
While in Hong Kong, the territory”s chief executive (who is just
a tool of Beijing) is officially calling Falun Gong a “cult.” The
Catholic Church believes it will be next.
Middle East: Ehud Barak quit politics. Nothing else was
particularly earth shattering as Ariel Sharon continues to
scramble to form a new government. However, it”s all just a
matter of time before the region flares anew. And Colin Powell
will attempt to work his magic with a whirlwind tour of six states
in four days. [Powell will also be pressing a renewed approach
to Iraq.]
Russia: The whole issue of Robert Hanssen, the FBI
counterintelligence officer accused of passing on vital secrets to
the Russians, certainly plays into the hands of those who say
Russia should be treated as an enemy. A certain level of spying
is expected, but, since we give the Russians hundreds of millions
in aid, they need to be dressed down rather severely.
This week, however, President Putin shifted his opinion
somewhat on national missile defense, saying he wants a
dialogue with the U.S. But Putin is also still trying to pry Europe
out of our grasp and get them to adopt his way of thinking on a
European system.
Japan: Prime Minister Mori”s approval rating stands at 9, count
”em, 9 percent. As for the U.S. sub accident, it seems apparent
that the civilians on board played some sort of role in distracting
the crew; this after the fishing vessel had been tracked on sonar
just one hour earlier.
Pakistan: Look for nukes on Pakistan”s submarines, particularly
the three French ones they just purchased. Now what if they
decide to have civilians on board their vessels for a PR pleasure
cruise?
“Captain, what happens if I push this button?”
“I don”t know.” [You don”t think of Pakistan as a real maritime
power.]
Five minutes later, somewhere in India…Dohh!
Indonesia: Horrific ethnic clashes broke out on Borneo this
week, claiming over 150 lives at last report. Many have been
beheaded. Said President Wahid as he prepared to go on a 14-
day overseas trip, “We don”t have any problems.”
Europe: Just observing the scene at Rome”s airport, and the city
in general, I am more convinced than ever that when the next big
economic downturn hits the continent, there will be major
troubles. Simply put, I have been to Britain, Ireland, Poland,
Austria, and Italy over the past two years and the refugee
population is teeming, particularly in the big cities. And it”s just
a fact of European history that one should be concerned about
this increasingly volatile mixture.
And you may have seen this week that a freighter grounded in
the south of France, with over 900 Kurds on board, while Spain
had an incident involving 200 Algerians who had to be rescued
while crossing the Straits of Gibraltar.
Finally, you have the story of 12 neo-Nazis being arrested in a
small Italian town this week.
Mad Cow
Well, the Italians certainly blame the British for exporting the
disease (as does every other European country), and I noticed
that another confirmed case was found in the country this week.
But Italians are fighting back, stealing their neighbors” horses.
Of course, this isn”t too smart since many of the animals are on
hormones which could cause illness if eaten by humans.
Meanwhile, Britain has another huge agricultural problem with a
raging outbreak of ”foot and mouth,” or, as it may be more
commonly known in the States, ”hoof and mouth” disease. It”s a
highly infectious virus which affects sheep, pigs, and other
livestock…but is not deemed to be harmful to us. Which
differentiates it from ”foot in mouth” disease, an affliction
common to editors, though, if lucky, not normally fatal.
And then there is the spat between Canada and Brazil, with
Canada banning Brazilian beef (as has the U.S.), even though
there are no documented cases of mad cow down there. It”s
become a little trade war between the two, but the problem is
little trade wars can get out of control.
Random Musings
–Yak Update: While we”re on the subject of livestock…even
here in Italy we pause to acknowledge the lowly yak. Or is it?
The International Yak Association says tests show that yak meat
is about 95% fat free and low in cholesterol. And for those of
you who hate fat on their meat, yak fat is easily trimmed because
it lies just under the skin as protection against the cold climate
and high altitudes in which the animals evolved. Yak…the
healthy meat. Next update, ahh, soon.
–William Jefferson Clinton et al: So there we were, sitting in St.
Peter”s Square, 5 minutes before the start of a Papal Mass, and
the discussion turns to Bill Clinton. For starters, you have the
relatively minor stuff that keeps emerging; like the publishing at
government expense of “The Farewell Addresses of William
Jefferson Clinton,” emphasis on plural. George Washington had
one.
And then you had the op-ed piece that our former president wrote
in the New York Times. I realize this is a bit dated, but it”s from
Sunday and falls under the week in review. Truthfully, as I read
it I was floored by the third paragraph. There Clinton is, listing
pardons from the past, like Washington”s of the leaders of the
Whiskey Rebellion, or Nixon”s of Jimmy Hoffa, or Ford”s of
Nixon…but it was just a listing and I thought, so far, ok.
But then he goes, “(And) President Bush”s pardon of six Iran-
contra defendants, including former Defense Secretary
Weinberger”s which assumed the end of that investigation.”
Absolutely astounding. And, of course, he has to end up his
official defense with the following:
“…The accusations made against me in this case have been
particularly painful because for eight years I worked hard to
make good decisions for the American people.”
I think I”m getting sick…but wait, there”s more…in the name of
Hillary”s brother Hugh. I haven”t had the chance to study this
issue too deeply, but suffice it to say that it was yours truly who
one year ago discussed dirtball Hugh and his Hazelnut deal in the
nation of Georgia; a plan that threatened our ally, President
Eduard Shevardnadze. Georgia, as I have long warned, is a
potential target of future Russian aggression.
I”m sure I ruffled some feathers when I wrote a few weeks ago
that “treason” was not out of the question when it came to Bill
Clinton, assuming there are more bombshells to come, i.e.,
China. I would venture to say that I am no longer alone in this
thought.
–Republicans have a real problem with Strom Thurmond”s
rapidly declining health situation. With a Democratic governor
in South Carolina, the 50/50 Senate split could soon be
“advantage Democrats.”
–Name dropping alert: I was sitting in St. Peter”s when I noticed
GE”s Jack Welch just three rows away. So after the consistory
(the ceremony that elevates the cardinals) I had to introduce
myself and we talked Irish golf. For those of you who play there,
like we both do, his favorite course is Baltray. And no, there was
no way I was asking him about the state of the world economy,
as tempted as I was to do so.
–StocksandNews is not mourning the death of New Black
Panther Party chief, Khalid Muhammad, one of the truly awful
people on the planet.
–160 of the current 184 cardinals have been appointed by Pope
John Paul II. 135 are eligible to vote for a new one (you have to
be under the age of 80 to do so). Of the 135, the Pope has
appointed over 92% of these. So it”s a given that his successor
will carry through with the agenda that John Paul II has put forth.
–Italy is a country with immense potential, and it does continue
to make progress. But it”s also clear that the mob still controls
vast sections of the country and the economy and the resulting
corruption is a hugely negative force. The Herald Tribune
published a daily country section and the mob violence
throughout Italy is downright scary. Unfortunately, many of the
victims are innocents, caught in the crossfire, like a 12-year-old
boy who just happened to be walking next to an intended mob
target (he got hit also).
Rome is not supposed to be the center of action; it”s mostly
further south in places like Naples and Sicily. Nonetheless, you
do take notice of bodyguards. I had my own episode one night,
strolling the Via Veneto, when I was apparently walking too
close to three very dapper gentlemen. Out of the shadows came
two thugs who pressed up against either side of me and stared me
down. I immediately knew what was going on and smiled at
one, as if to say, c”mon, what the heck would I do? They didn”t
smile back and I quickly found an opening to move ahead of the
crowd.
[Don”t let this scare you. Rome is an awesome place and a little
excitement is good for everyone.]
–Before I left for Rome last Sunday, I watched the first half of
the Daytona 500. I was shocked to learn some 15 hours later the
fate of Dale Earnhardt. While I realize everything has been said
by now, I consider myself a pretty good fan of NASCAR and for
those of you who don”t think it”s a sport, or that these drivers are
not great athletes, I would urge you to attend a race. I”ve been to
four and when you see these guys up close, all you can do is
shake your head in admiration and go, how the heck do they do
this? Clearly, Earnhardt”s death (he was my personal favorite) is
a huge blow for the sport. [I will have far more in Monday”s
“Bar Chat.”]
–Finally, I owe the opportunity accorded me this week to my
good friend Father Scanlon (an avid “Bar Chat” reader by the
way…though he must shake his head quite often). Our group of
45 or so was here to honor Avery Dulles. I had the privilege to
chat briefly with Cardinal Dulles a few times and I never met a
more humble figure in my life. And the love his friends and
family have for him shines through.
What an incredible person. This son of former Secretary of State
John Foster Dulles shocked his family by converting to
Catholicism (the only member to do so) and then opted to
become a priest. And, in choosing the Jesuit order, he took on
their vow of poverty and obeisance.
Dulles is the 1st American Jesuit to become cardinal. In almost
all cases, cardinals are first bishops, yet Avery turned down the
Pope”s offer to make him one years ago, because he wanted to
stay true to his Jesuit principles.
Oh, but the Pope got him this time. You can”t turn down the
cardinal title. So now he returns to his professorship at Fordham
University, Avery Cardinal Dulles. How awesome to be one of
his students?!
So I just observed him these past few days. At his mass on
Tuesday, his homily was about how he wondered what Jesus
thought of the regal treatment accorded cardinals (and he was
laugh out loud funny about it). And throughout all the rituals and
lunches and dinners, Cardinal Dulles seemed to have such a
bemused look on his face, like, hey, what”s all the fuss?
For yours truly, it was just an honor to be around him and may
God grant him many more years so he can touch others the way
he touched me.
—
Gold closed at $262
Oil, $29.04
Returns for the week, 2/19-2/23
Dow Jones -3.3%
S&P 500 -4.3%
S&P MidCap -4.0%
Russell 2000 -4.4%
Nasdaq -6.7%
Returns for the period, 1/1/01-2/23/01
Dow Jones -3.2%
S&P 500 -5.6%
S&P MidCap -3.6%
Russell 2000 -1.3%
Nasdaq -8.4%
Bulls 61.2% [Whassup with this!]
Bears 28.6% [Source: Investors Intelligence]
Have a great week!
Brian Trumbore
