[Posted Sunday, 11:30 PM ET]
Folks, here is the deal. A few hours ago I returned from an 8-day
trip to Ireland where I physically punished myself (hey, just
being honest), I’m running on fumes, I didn’t watch television all
week (except for sporting events in pubs), didn’t go on the Net
(because it wasn’t feasible in the small hotels where I was
staying), and didn’t pick up a good newspaper until Wednesday,
at which point I began scrambling to catch up on the events of
the week.
So, we have a choice. I can tell you all about my week of golf
and suds, we can discuss the market, or chat about the situation
in the Middle East.
Well, since I haven’t missed a “Week in Review” since I started
this site in February 1999, please accept my humble apologies as
I attempt to put something up for the archives of Planet Earth
(a bit of blarney).
Wall Street
I don’t know about you, but when I add up all the latest data it
smacks of one thing, an extremely weak recovery that had one
inventory-inflated quarter of strong growth and which seems
destined for minimal increases in output for the remainder of the
year. Plus, I still feel a double-dip is a distinct possibility and
now more and more seem to be joining this camp.
This week it was generally weaker manufacturing figures, a drop
in construction spending, and a far less robust jobs report for
April which set the tone. Regarding the latter, the
unemployment rate spiked to 6.0% (though 40,000+ jobs were
created), its highest level in 8 years and not exactly the kind of
figure that the Bush administration wants to see much longer, let
alone Republican congressional and senate candidates.
As for Nasdaq, it now stands, or wobbles, at 1613, down 16% in
just the past 8 weeks, as the carnage in the telecom sector spreads
with a vengeance.
This week WorldCom was once again in the spotlight as CEO
Bernie Ebbers was forced out. As noted before, these things
have a way of spiraling out of control, which is the case with
WorldCom and rumors that it won’t be able to service its $30
billion in debt beyond 2003 due to various convenants and
restrictions.
Overall, over $500 billion in telecom debt has already been
written off, with another $2 trillion in market cap wiped out,
most of it forever.
This week the Federal Reserve meets to opine on the health of
the economy as well as the future direction of interest rates.
They will stand pat with little need for concern that growth will
spur inflation.
Lastly, to beat a dead horse on what has now become a common
theme, sentiment is awful as the issues of mistrust only grow in
number…and I’ll have to keep writing this each week since there
are going to be far more shoes to drop.
Street Bytes
–For the record, Nasdaq lost 3.1% to reach the aforementioned
1613, while the Dow gained 1.0% to get back to over 10000
(10006).
–U.S. Treasury Yields
6-mo. 1.86% 2-yr. 3.15% 10-yr. 5.06% 30-yr. 5.54%
Basically unchanged on the week.
–Energy: Iraq announced on Sunday it was resuming oil
shipments after its 30-day embargo, since no one else followed
its lead. On the week, crude slipped just 50 cents, even with the
lessening of tensions in the Middle East.
–Sun Micro lost president and chief operating officer, Ed
Zander, who represented the latest in a wave of senior executive
flight from the company. Sun’s stock finished the week below
$7.
–Hewlett-Packard’s bitter battle with Walter Hewlett has finally
been resolved in HP’s favor, meaning that the merger with
Compaq is now official, symbol HPQ on the Big Board. Of
course the big question is, “Now what?” And Miss Fiorina
certainly didn’t distinguish herself in this whole bloody affair.
–Warren Buffett announced at his annual shareholder meeting
that everyone seems to be underestimating the terror threats of
tomorrow; specifically nuclear, chemical or biological, stressing
that from an insurance industry standpoint, simply introducing a
chemical or biological agent into an office tower’s air system
would result in damages dwarfing 9/11, though overall he is very
bullish on the insurance sector as a whole.
–Every time I see a piece on why investors shouldn’t abandon
the telecom sector, I feel the need to add something like the
following, which comes from Bain & Co.’s Vince Tobkin (via
the Washington Post). “We may have put 80 years worth of
capital into the ground.”
–Xerox was severely downgraded, just months after it seemed
they were turning it around.
–Once again, Cisco’s earnings release on Tuesday could be a
market moving event, depending on what John Chambers says
on the company’s prospects.
The Middle East
I will mercifully keep my comments brief this week, as we will
learn far more about the future direction of war or peace when
President Bush meets with Israel’s Ariel Sharon and Jordan’s
King Abdullah.
The U.S. and UK were able to broker the end to Arafat’s siege
and as of this writing there is a chance for a similar deal at the
Church of the Nativity.
For now I’ll just add that Human Rights Watch confirmed that
there was no Israeli massacre of civilians and that the final death
toll for the Palestinian side was 52, not hundreds as the first
reports had it. Of course you can be sure most Arab
sympathizers either won’t hear this side of the story or will
refuse to believe it.
Lastly, on the issue of settlements, Bush will press Sharon and it
really won’t matter what the latter says, since there is no way the
settlers are leaving without a fight.
International
France: Well, your editor said Jean-Marie Le Pen would lose 68-
32 and it ended up about 82-18, in favor of conservative
incumbent Jacques Chirac. Make that corrupt incumbent and it’s
a big reason why there is no joy in Mudvieux today, for while the
French deserve credit for soundly repudiating a neo-Fascist, the
fact is their political system is a shambles when it produces a
run-off between two such disastrous candidates.
Chirac may have a parliamentary majority, today, but he has
no mandate and look for politics to heat up anew, with new faces
for us outsiders, at least, in the not too distant future.
For now, Le Pen seems finished at age 73, and, like Austria’s
Haider, it is another example of a far-right movement that at least
in the polls is still largely simmering, as opposed to boiling over
with significant electoral gains. I would maintain, however, that
‘simmering’ is not the same as finis.
Pakistan: President Musharraf won approval from 97.7% of the
voters in the referendum that hands him an extra 5 years in
power. Critics charged fraud. As for the White House position,
they can’t be pleased at the setback for true democratic change in
holding the vote, but we keep our partner in the war on terror and
that is clearly more important over the shorter term.
China: The apparent successor at year end to President Jiang
Zemin, Vice President Hu Jintao, came to Washington this week
for get acquainted talks with the Bush administration. While the
tone was cordial, Hu did warn the U.S. against improving ties
with Taiwan as well as selling them more sophisticated
weaponry, both of which, of course, we should continue to do
more of the same.
Russia: It seems almost a certainty that a major arms control
treaty will be signed between the U.S. and Russia in just 3 weeks
time at the summit between Bush and Putin in Moscow and St.
Petersburg. Separately, though, I was saddened to see that my
favorite Russian, Alexander Lebed, was killed in a helicopter
crash last Sunday. I mentioned Lebed just last January as a man
I once hoped would lead Russia after Yeltsin. He was a gutty,
courageous figure who would have whipped his country into
shape, granted, with a bit of an iron fist, but that is the kind of
leadership we are seeing from Putin these days and in this new
era the U.S. can actually be a beneficiary.
Jordan: A group of us flew Royal Jordanian out of JFK to
Shannon. Now why this flight goes there, deposits just 10 folks,
and then proceeds to Amman I’ll never know, but the flight was
adequate. Actually, it was on time and the food was acceptable,
but, otherwise, it was a mess when you add in the fact that the
temperature on the plane was 95 degrees and some passengers
chose this flight to hash out centuries old family arguments, or so
it seemed.
But, at least we were given a copy of the Jordan Times and in
flipping through it a few things strike you. King Abdullah, one
of the better folks in the region, is seriously trying to put through
his modernization campaign, or, in the words of an editorial,
combat “favoritism and nepotism,” as well as touting equal
opportunity.
The other thing you notice is the number of articles on
Hollywood and the effort to get first-run flicks in the local
theaters on a more timely basis. This and the fact you see large
ads for shows like “Friends” and “West Wing” and you can see
some of the contrasting forces in the Arab world.
Ireland: Prime Minister (Taoiseach) Bertie Ahearn has called an
election so that dominates local and national news coverage.
I’ve been coming to Ireland since 1989 (this was my 12th trip)
and the changes have been startling. Economic growth
continues, albeit not at the blistering 8-9% pace of years past,
while you are beginning to see some real strains, particularly in
the amount of traffic (we experienced our first real jams this
time) versus the still pitiful transportation system.
[Bertie’s campaign motorcade, however, was clocked doing 95-
mph in a 40-mph zone, thus gaining him the moniker “Sonic
Boom Bertie.”]
But the biggest change we noticed just this year was the impact
of immigration, in other words, with many hotels, pubs and
restaurants in need of help, you see a lot of folks that are, err,
definitely not Irish…not that there is anything wrong with this.
Bottom line, Ireland still casts that mystical, magical spell that
keeps folks coming back, but it is definitely straining to maintain
it, while at the same time meeting the demands of the modern
world.
Random Musings
–The job market for college grads looks gloomy, with hiring
estimated to be 36% below last year’s pace.
–President Bush’s approval rating remains at 77%, but by a 48-
44 margin, voters prefer Democratic to Republican candidates in
congressional races this fall.
–The House passed a massive farm bill, which hurts trade
relations as those we claim are illegally subsidizing their own
farm industries can just as quickly point to the U.S. for doing the
same. Basically, any notions of standards of conduct in this
game are going out the window.
–This week’s sign that the apocalypse is near: Zimbabwe was
elected to the U.N. Commission on Human Rights.
–So Queen Elizabeth’s jubilee festivities are now underway and
the big controversy last week was over where to sit 4 former
prime ministers; Thatcher, Heath, Major and Callaghan, all of
whom hate each other. Secrecy was the order of the day, so I
didn’t see how it worked out in the end, but I’m assuming some,
if not all 4, were assigned to the kids’ table.
–Britain’s crime problem grows by the week so Tony Blair has
launched a massive campaign against mobile phone theft.
Legislation is on the boards that would yield 5 years in prison for
stealing one.
–Ah yes, May Day, a time for some Europeans to hit the streets
and riot, which is exactly what many do in the major cities, as
was the case this year. Berlin, which has a slight history, you
know, saw its annual slugfest between police and anarchists
(that’s code for world class dirtballs). One group of 200
smashed its way into a supermarket to scarf up some free food.
–Americans will be discarding 500 million obsolete PCs by
2007, with the bulk of them shipped to Asia (particularly China)
where laborers will break them up for usable parts and materials.
The problem is these workers, paid $1.50 or less an hour, are
exposing themselves to massive levels of toxic waste and don’t
even know it.
–Watergate figure John Dean said he will announce who Deep
Throat is on June 17, though there is little indication Dean met
with either Woodward and Bernstein to discuss the matter.
–Bill Clinton has evidently asked for a fee of $50 million to
develop a television talk show. Can’t you just see him, emerging
from the curtain, clapping his hands in that inimitable style of
his? Wouldn’t it just make you sick? Actually, this is the same
guy who took his $8 million plus advance for his memoirs and
hasn’t even started working on it.
–The average cost of a wedding in the New York metro area is
$31,800. [USA Today]
–Johannesburg was Ireland’s entry in this weekend’s Kentucky
Derby, attempting to become the 1st European winner of the
event. There was a lot of mystery surrounding the race so my
brother and I were surprised that in the pub where we witnessed
it, more people seemed interested in a snooker tournament than
the race itself. Alas, J-burg finished 8th.
–Speaking of Johannesburg…South Africa…a television
director and technician were fired after pressing the wrong button
and airing a porn movie they were watching to the entire nation.
–The following is for golf enthusiasts and would normally be
Bar Chat fodder, but in light of my just completed experience I
have a few comments. I bet there aren’t too many of you who
have played in 70-mph winds like we did last Sunday, with wave
after wave of hailstorms to boot. Unbelievable.
But, we were a hearty lot and I actually had an even 100 at
Ballybunion Old in less severe conditions (winds of only 40
mph), not bad for this regular hacker of the fairways. As for
Ballybunion New (the Trent Jones course), sincerely, major
changes have been made and those of us who last played it about
7 years ago thought the New was spectacular. There’s only one
problem. You must be in some sort of shape to walk it.
We also played my course, Lahinch, and they have just
completed work on four new holes. The layout is back to being
as good as any in Ireland.
Lastly, aficionados may have heard of the new Greg Norman
layout, Doonbeg, located 35 minutes south of Lahinch and set to
open in July. Folks, thanks to Peter and Erin at the club, I
received a tour of the place and it is as spectacular as any links
course you’ll find in the world. I already booked my tee time for
when I head back in September.
So that’s my bit for Irish tourism. I’d love to help any of you
who are planning first time golf outings on the Emerald Isle.
I’ve seen a large chunk of the country and I can pick out a pub or
two as well. Just remember to let the Guinness fully settle.
God bless the men and women of our armed forces.
God bless America.
—
Gold closed at $312 [2-year high]
Oil, $26.62
Returns for the week, 4/29-5/3
Dow Jones +1.0% [10006]
S&P 500 -0.3%
S&P MidCap +0.6%
Russell 2000 +2.2%
Nasdaq -3.1% [1613]
Returns for the period, 1/1/02-5/3/02
Dow Jones -0.2%
S&P 500 -6.5%
S&P MidCap +5.3%
Russell 2000 +4.9%
Nasdaq -17.3%
Bulls 51.1%
Bears 29.8% [Source: Investors Intelligence]
Note: We will return to our regular schedule next week…
Saturday AM.
Have a great one. I appreciate your support.
Brian Trumbore
