[Posted (with a little luck) from Guam, Sat. PM / Fri. PM ET]
Folks, I left home on Wednesday morning for the Far East and
it”s been difficult keeping up with the comings and goings on
Wall Street these past few days. Believe it or not, I couldn”t log
on to the Internet from my hotel in Tokyo (I was ready to call in
the Strategic Air Command), but I did just learn that the markets
had their slowest day of the year on Friday. The Dow finished
the week off 1.2%, to close at 10821, while the Nasdaq lost 3.8%
to fall back to the 2107 level. Clearly, 11000 and 2200 represent
levels the Dow and Nasdaq, respectively, are having trouble
piercing. And with regards to the Nasdaq, despite the nice rally
from the bottom, we are still 2900+ points from the all-time high.
It takes time for the average investor, many of whom bought at
Nasdaq 4000 or higher, to realize that it will be years before they
break even. And that”s a big reason why I feel this summer
could be deadly, activity-wise, in the financial markets. Lots of
malaise and cynicism.
The big economic news hit on Friday, with the latest reading on
consumer confidence exhibiting a nice little (unanticipated)
rebound, while retail sales for April were much higher than
expected and the core producer price index was higher than
projected as well. Add it all up and the markets were once again
spooked that the Federal Reserve may not lower interest rates 50
basis points on May 15. And the long end of the Treasury curve
took it on the chin as resurgent inflation fears entered the picture.
But at least the European Central Bank finally acted, albeit in a
minimal way, when it realized that its hardheaded approach on
rates certainly wasn”t helping the European economy,
particularly Germany”s, so they lowered interest rates this week.
Bottom line, it”s the ongoing tug-of-war between those who
think the second half”s economic performance will be much
better, vs. those who see an ongoing profits recession. I fall in
the latter camp and I see us all just getting truly bored with it all.
Street Bytes
–U.S. Treasury Yields
1-yr. 3.81% 2-yr. 4.33% 10-yr. 5.49% 30-yr. 5.89% Yikes!
–Productivity declined in the first quarter for the first time in 6
years. It”s time for some soul-searching. Go off into a corner
and ask yourself, “Am I truly more productive, today, than I was
last year?” If the answer is “no,” then grab a beer and think
about what you need to do differently.
–Cisco, in confirming its first quarter-to-quarter revenue decline,
said it was confident business would begin to recover over the
coming 6 months.
–The Gartner Group issued a report projecting that global chip
sales will contract 17% this year, and, just as importantly, may
not rebound to 2000 levels until 2003. Remember how I used to
write about Intel”s corporate lies concerning their expansion
plans in Ireland? Ya think they will postpone them further, lad?
–And on the telecom front, Nortel Networks not only faces a
potential cash crunch, but it also announced its chairman was
retiring earlier than originally thought and the CEO was
resigning for health reasons. [I think I have this right. Apologies
if I”m off on the facts.]
–The 5/14 issue of Business Week had an important cover story
titled “The Numbers Game,” detailing the scam that passes for
financial accounting in much of Corporate America today.
“Companies have cast aside constraints on how they report sales
and earnings to the public. They are dodging accounting rules
built up over decades, choosing instead a slew of unconventional
and often questionable practices.”
Not exactly a ringing endorsement for stocks.
–Heineken is denying it”s in talks to acquire Foster”s. The
rumored price tag would be $7.8 billion. Geezuz, mates. And
imagine what it would be if I started drinking it!
–So on my long flight from Newark, I brought along all my
right-wing propaganda, and the recurring theme on the financial
front is Greenspan bashing. Yoh, guys, that”s like so old! We
were bashing the chairman last September. It”s too late now.
Did the Fed screw up tightening last year? Of course. But now
the Fed is doing as much as they can (assuming they move again
on the 15th). So come up with something new, like how the
animals are slowly taking over.
–The editor really doesn”t drink as much beer as he lets on,
except at the Old Town Square in Warsaw, but that”s a story for
a different day and the preceding has nothing to do with “Street
Bytes.”
–Web-hosting outfit Exodus Communications reported that it
added a whopping 34 new customers in the first quarter, vs. 545
for the comparable period last year. Internet fever…catch it!!!
–Energy: The flight from Newark to Tokyo (Narita) goes up
over Hudson Bay, through Canada, and then across the northern
part of Alaska. You fly over Alaska for hours…and hours…and
hours. I mean to tell you, the weather was clear and it was
absolutely spectacular but, my word! I”m happy for the .001% of
the population that will get to see the Alaskan wilderness in their
lifetime, but I think we can afford to drill for oil on a piece of
land less than the size of Washington, D.C. Trust me, there will
still be lots of pristine beauty left over.
And before I left on my trip, I enjoyed seeing the same gas and
traffic stories we all saw, oh, about 20 years ago. A front page
item in the New York Times said that conservation could be the
equivalent of between 265 and 610 of the 1300 power plants the
Bush Administration is calling for. Great. So what about the
other 700-1000 that we”ll still need! Of course we have to
conserve, but you and I know exactly what will happen. When
the day comes that the price of oil drops anew, goodbye
conservation.
Lastly, there are rumblings about windfall profits tax legislation,
like that which they are trying to pass in California. Now your
editor has a decent self-interest in the debate with my personal
energy holdings, but it”s always fun to see companies bashed
which turn actual profits and employ hundreds of thousands.
Some seem to think there”s something wrong with that. After the
press conferences, these jokers hop into their SUVs.
International Affairs
Israel / Middle East: So here”s an example of what Israel is up
against. Syrian President Bashar Assad, as the Washington Post
editorialized, “offered a vivid, if vile, demonstration of why he
and his government are unworthy of respect or good relations
with the United States or any other democratic country. Greeting
Pope John Paul II in Damascus, Mr. Assad launched an attack on
Jews that may rank as the most ignorant and crude speech
delivered before the pope in his two decades of travel around the
world.”
Assad was supposed to be part of a new generation of more
enlightened leaders in the Middle East. What”s particularly
worrisome is that I can”t believe he meant to come off as badly
as he did, i.e., his strings are being pulled by hardliners. [And
now you understand why Turkey is such a vital ally of the U.S.
and Israel.]
As for the pope, he was blistered in some circles for not speaking
out more forcefully while in Syria. What is he supposed to say?
I read all of John Paul II”s comments and, as a man of peace, he
said what he could.
Back to virulent rhetoric, in Egypt a heretofore obscure singer
has become an overnight sensation with her song “I hate Israel.”
The only very minor consolation is that state radio doesn”t play
it.
Of course this kind of toxic anti-Israeli garbage has been going
on for a long time. And this week Israeli Prime Minister Sharon
accused the Palestinians of “murderous incitement,” as they
bombard the airwaves with their own poisonous venom, in the
case of the two young boys who were stoned to death by
Palestinians. Later, two Romanian contract workers were killed
and, unfortunately, Israel killed a Palestinian baby, as the
situation went through one of its many escalations in the level of
violence.
[Back to Syria, I just have to add a personal note here. I was
surprised to learn that the pope was the first ever to enter a
mosque. I beat him by a week. In Istanbul, one of the many I
went into is Aya Sofiya, built in the 6th century. It was originally
a Christian church, but the Muslims had all the frescoes covered
up…no idolatry allowed…just like the Taliban of today.
Anyway, Ataturk later insisted they be uncovered and Aya
Sofiya is now a beautiful museum.]
China: So I look out my hotel window in Narita on Friday
morning and see some women in the courtyard stretching, and,
of course, I immediately thought of Falun Gong and Beijing”s
treatment of the “sect.” It”s such a bunch of B.S. Why does the
world put up with the fact that by some accounts, China has
tortured to death in excess of 200 Falun Gong members? I feel
like I know something about the group and, to me, they aren”t
much different than those ladies I saw stretching outside my
room.
And I get a kick out of those back home who say that Bill
Clinton has disappeared from the scene. I have to tell you, in
Turkey, all I saw were television reports on him, and then on
Thursday, there was Clinton, all over the Japanese airwaves,
giving a speech to a Hong Kong forum on U.S. / China relations.
“Don”t assume relations will always be adversarial,” said the
man who was impeached in addressing the new administration in
his remarks. And then he got into the National Missile Defense
argument, saying, “The most likely threat is from small-scale
weapons,” not ballistic missiles.
Which means I have to comment, again, on NMD. I love the
way the Democrats are blasting it, the same folks who were
supportive of Clinton”s own helter-skelter plan. And how many
times do those of us in the know have to say, “Yes, of course the
U.S. is just as susceptible to a suitcase bomb or a rigged tanker
sitting in Long Beach Harbor, as we are to a ballistic missile
strike. So we don”t even try to protect ourselves from the latter?”
Democratic Senate leader Tom Daschle said, “Let”s not deploy
(a missile shield) until we”ve solved all the problems.” Huh?
And then, “We”re for research…but not spending billions of
dollars.” Uh, Mr. Daschle? This kind of research costs
money…real money. You can”t have it both ways. Color him,
idiot.
And then there is Democratic Senator John Kerry, who”s already
running so hard for president in 2004, it”s painful to watch.
Kerry said, “There is a distinct possibility of a (ballistic missile)
attack from a rogue nation.” Then he proceeds to blast NMD.
Lastly, remember an issue that I brought up long ago. Who”s to
say the U.S. would retaliate if crazy North Korea launched a
missile at Anchorage, let alone the West Coast? Seoul is 30
miles from the border of North Korea. Would we really risk
contaminating South Korea? And a nuclear strike against Iran or
Iraq could contaminate Turkey or Israel. Our fear should be
nuclear blackmail, and it admittedly can take many different
forms. But concerning NMD, specifically, Donald Rumsfeld
summed it up on “Meet the Press,” “I can”t imagine (any
American president) would allow us to be vulnerable.”
Japan: Prime Minister Koizumi has said he”ll cut government
spending and force the banks to clean up their balance sheets,
which means higher unemployment. But the people here love
him and he”s received an early 80% approval rating. His
predecessor, Mori, scored a whopping 8%. But, I”m reading the
papers on Friday and Koizumi already seems to be backtracking
on some key issues, including direct election for prime minister.
And a few more notes from the “Land of the Rising Sun.”
Geezuz, the sun rose at like 4:15 AM! Like, set the clocks
correctly, Yoshi. And you should have seen the breakfast line
when the restaurant opened at 6:00 AM. [It was 5:00 PM by my
body clock.] I mean, I thought I was at the Calgary Stampede!
On a more serious note, two Japanese were charged with
commercial espionage in the theft of Alzheimer”s research from
the Cleveland Clinic. Couple that with the recent Lucent
situation involving Chinese scientists, and you can see how
intense the global economic scene is becoming. [Of course,
don”t you know we”re doing the same thing.]
And on the front of the newspapers here is, yes, the ongoing flap
with South Korea over the textbooks. Korea has sued to prevent
publication, while Koizumi said he won”t insist the book be
amended to appease them.
Then there was the news item concerning two “scientific”
whaling boats that will hunt up to 160 whales “for research
purposes.” Where is Moby Dick when you need him?!
Lastly, I just have to make the observation that you can see how
quickly Japan could get revved up again…militarily, I mean. In
just 36 hours, I was searched more times than in all my European
trips combined. Even the airport shuttle buses are boarded by
hoards of policemen (all very polite…but firm). The discipline is
there…all they need is a charismatic leader. Ain”t Asia exciting
these days?
North / South Korea: The Bush Administration told South
Korean officials that they would resume missile talks with the
North. Separately, though, intelligence sources say that the
North has suddenly pulled out of a construction project that
would have provided a rail link between Pyongyang and Seoul.
[Isn”t it weird that my edition of “Word” on this laptop knows
the spelling of Pyongyang, but not Nasdaq? Is Microsoft really a
communist front? I never thought so before…]
Russia: Every now and then it”s important to note something like
the following, 36% of Russian people earn less than $1 a day.
And after one year in office, only 17% think the nation is better
off under Vladimir Putin, while 71% felt there was no change or
they were worse off.
Italy: On Sunday, Italians are likely to elect Silvio Berlusconi
(not to be confused with Silvio from “The Sopranos”), for his
second go at prime minister. [He served 7 months before.]
Berlusconi controls the 3 major television networks and a large
financial services firm, for starters. I don”t see any potential
conflicts of interest, do you?
Balkans: Serbs and Muslims are battling once again in Bosnia,
while in Macedonia, it”s time to kick butt against the Albanians.
[I don”t mind writing this; from what I gather, this site isn”t very
big over there.]
Ghana: The latest casualty in the soccer wars, as 120 died in a
stampede at a match. So that means that just in the past few
months, there has been death and destruction at soccer venues in
Ghana, Zimbabwe, Congo, and South Africa (along with the
stadium collapse in Iran). In all instances, the police used
teargas, which then created a panic.
Globalization / The U.N.
Columnist David Ignatius reiterated the old maxim in the
Washington Post the other day. “You”d better be nice to people
on the way up, in case you meet them on the way down.”
This space has been warning about the growing anti-
Americanism in the world for some time and it was all
manifested in the decision of the U.N. body to kick the U.S. off
the human rights and narcotics panels. I was hoping that the
Bush Administration would have learned from the hubris of the
Clinton team, but, alas, they have gotten off to a shaky start,
albeit, in areas like missile defense and the environment, they are
correctly scrambling to make up for dumb early mistakes.
It”s pretty simple to me, really. We can adopt policies
independent of world opinion, but we also have to play the
diplomatic game. If some two-bit African or European
ambassador wants his back scratched, or a photo op with the
president, give it to him. And then take the opportunity to
explain why the U.S. is going to do X, Y, Z. They all know we
are the only superpower, but they also want a little respect.
Yeah, it”s a dirty game, but, increasingly, we have to play it.
So now Secretary of State Colin Powell is getting beat up, and, it
would appear he was more than a bit nanve regarding the U.N.
actions. But he also is highly understaffed at the moment, during
this ongoing transition (the Bush folks still haven”t sent the
nomination of our U.N. ambassador to the Senate, for example),
and that didn”t help matters.
I still have a lot of faith in Powell. He is the perfect diplomat. I
also understand how some on the right think he is often too weak
and an appeaser. Fear not, friends, that”s why we have kick-ass
Donald Rumsfeld at Defense, as well as Prime Minister Cheney.
I guarantee you that Powell”s own unique skills will come in
handy come crisis time. If I end up being wrong, I”ll say so.
As for the U.S. Congress, and its move to cut off $244 million in
U.N. aid unless the U.S. is restored to the Human Rights
Commission, what a bunch of freakin” hypocrites. Yes, on this
issue, I”m with the Democrats. For years I have railed that we
should first pay off our dues…then we”d have the right to play
hardball. But it was the shortsighted, small-minded positions of
some on the far, far right that helped get us in this mess in the
first place.
Past actions have consequences, and to those who think we can
just shun the rest of the world, I have two deadly words…trade
wars.
Random Musings
–Well, I won”t miss Timothy McVeigh”s execution after all.
Were Louis Freeh and Janet Reno the most incompetent team
ever, or what? Where is Efrem Zimbalist Jr. when you need
him? I also miss Hugh Beaumont and Fred MacMurray, for that
matter.
–In New York, police arrested 21 members of the Blood street
gang, including a few women, members of the “Bloodettes.” I
guess no more “Chiffons,” or “Dixie Cups.”
–New Jersey Congresswoman Marge Roukema wants Congress
to draft a resolution condemning “The Sopranos.” That”s what
gives New Jersey a bad name…its politicians, that is.
–So it”s NASA, John Glenn, and yours truly, from what I”ve
gathered, who are the only ones who seem to be offended by
Dennis Tito and his little space adventure. Heck, I”ve been
writing how we should put a man on Mars, soon. And I couldn”t
care less if we have space tourists someday. But Tito defied
NASA and snubbed his nose at the U.S. You”ll never convince
me otherwise.
–Less than 10% of the Christian population of Britain and
France attends church at least once a month. In Scandinavia, it”s
less than 3%. Meanwhile, thanks to immigration, the Muslim
populations in these areas are expanding rapidly. Separately, in
the U.S. up to 95% say they believe in God, but in Western
Europe, it”s 50%. Some experts theorize that extremely low
figures, such as those in Europe, undermine a shared basis of
public morality. [Source: T.R. Reid / Washington Post]
–New Zealand has decided to strip its military, including the
total elimination of its fighter air force. Seriously, it”s so bad
that one officer was charged with stealing ammunition during
joint exercises, and the same guy had his men shouting “bang
bang,” instead of using up live ammo.
Now I”ve decided that as much as I”d love to visit the country, I
could no longer live there. Yes, I need a nation with nukes and a
missile shield.
–I have to follow up on my Bob Kerrey / Vietnam comments of
last week. Again, those who wish to replay the war, and try to
place blame on the U.S., need to be reminded of the fact that the
North Vietnamese (as represented by their government and
military) were ugly, awful people. If they weren”t, then why did
9 of 10 refugees head south after the nation was partitioned in
1954? And after ”54, the North Vietnamese executed at least
10,000 (some estimates range up to 100,000) during the
Communist land collectivization of this era. Then, after the
Vietnam War, why would 1 million wish to flea the country in
rickety boats (from which over 50,000 perished)? And today,
Vietnam is still just one of 13 nations (out of 192) without any
form of genuine legislature.
Writing about the Vietnam War, and other conflicts of this kind,
Victor Davis Hanson had the following observation.
“Can anything good come of a Western citizenry that dictates
when, where, and how its soldiers are to fight, even as it permits
its writers, artists, and journalists freely and sometimes wildly to
criticize the conduct of their own troops?” [Source: American
Heritage]
–I”m sitting in a lounge at Narita Airport, observing a Thai
Airways 747 come in. There are about 20 police surrounding the
plane, taking license plates of every vehicle servicing the plane.
I expect it to blow any minute now…
–You know what? Social Security really isn”t a problem.
–So the Senate joined the House in approving President Bush”s
$2 trillion budget, with the $1.35 trillion tax cut. Now the hard
part; holding spending increases down to the 4-5% level. What
really cracks me up is the incredible waste that already exists
within the government. Two reports this week laid it bare. NBC
had one on the waste (and possible fraud) in the Department of
Education, while the Wall Street Journal had a piece on the lack
of productivity at the IRS (thanks to the Internet).
–24% of employees spend more than an hour managing their e-
mail. [See above.]
–A University of Virginia physics professor, utilizing a special
software program, uncovered over 100 cases of cheating in his
class. 122 could be expelled. Said the prof, “With the Net, you
can easily slide down the slope into full-fledged intellectual
theft.” Oh, don”t you know it.
–I can”t say I have ever had a lot of respect for Jesse Ventura,
but the governor said the following the other day. “Everybody
wants to protect the environment to a certain level…but until
they can show me something else, we”re at the top of the food
chain.” [Newsweek] Right on…until the dolphins learn to walk,
that is, which I figure is about 5 years off.
–The flight to Tokyo went down the Kamchatka peninsula. I
could only muse, “I hope Continental told the Russians of our
coming.” And I also observed that there is lots of real estate
available for development in Kamchatka…in case you”re
interested.
–My travel agent always puts in the request for “VIP upgrade,”
not that it means anything. In Tokyo, my ceiling was about 6” 1″
high and the sink was down around my knees. So I figure I was
given the Billy Barty room.
–All the way to Tokyo and no Godzilla!!! Darnit.
The following will be added in another day or so, barring
technical difficulties.
Gold closed at $268
Oil, $28.55
Returns for the week, 5/7-5/11
Dow Jones -1.2% [10821]
S&P 500 -1.7% [1246]
S&P MidCap -1.6%
Russell 2000 -1.1%
Nasdaq -3.8% [2107]
Returns for the period, 1/1/01-5/11/01
Dow Jones 0.32%
S&P 500 -5.65%
S&P MidCap -1.56%
Russell 2000 0.79%
Nasdaq -14.7%
Bulls 47.9%
Bears 37.2%
Note:
I”m off to Yap, a little island chain southwest of Guam.
Basically, I”m leaving civilization for a while. After five days
there, I eventually make my way to Hong Kong, where next
week”s review will originate. Folks, I”m not going to get a lot of
info on the world over the coming days, so I hope you”ll
understand if next week”s piece is a bit different. Maybe I”ll find
out the meaning of life. Maybe I”ll drink so much beer I won”t
remember, even if I do!
Happy Mother”s Day, Mom!!!
Brian Trumbore
