UPDATE: 2/1…I just learned of the space shuttle disaster.
Some of the following may seem very inappropriate in hindsight.
I apologize, but I have to keep it up. I will not comment further
on the tragedy until my next review.
I would urge you, however, to go to my “Bar Chat” archives and
read what I posted just last week in the 1/28 edition. It was
Ronald Reagan”s speech on Challenger, 17 years ago.
[Posted Friday…from somewhere in the Pacific]
“Our time is now. If we carry the day and turn the tide, we can
hope that as long as men speak of freedom and those who have
protected it, they will remember us and they will say, ‘here were
the brave and here their place of honor.’”
That’s Ronald Reagan. One should never travel far without having
a quote or two handy from the Gipper. I have to admit I think of
this man quite a bit, knowing that the day he dies will be one that
touches more than a few of us deeply.
President Reagan was on my mind before George W. Bush’s
State of the Union address, and you can draw a parallel or two
between them after Bush’s speech. Both faced challenges of
immense danger. One triumphed. We can only hope the other
does as well.
Most of you know by now that I am traveling on the QE2,
a journey from Los Angeles to Sydney. As I write this we are
actually outside Moorea, in French Polynesia. A fantastic
looking place.
Last week I gave you a sense of some of the frustrations on
board in terms of combining business with pleasure, but after
this past week I thought I’d provide a little more detail,
especially for those who haven’t been on extensive cruises.
Each day we receive 3 news digests. One from the N.Y. Times
consisting of about 8 pages worth of summaries, one British
compendium of about equal length, and a 4-page Financial
Times brief. Most of these are worthless, except for the weather
information, quite frankly. Of course, if all you care about is
whether or not your country or state was hit by a terrorist attack,
it suffices, but for some of us this lack of reporting sends us
scattering to the computer room and the Internet, particularly
since our satellite hasn’t been able to pull in CNN since Sunday.
Invariably the Web connections are intermittent out at sea and
it’s a most frustrating and expensive experience trying to keep
up.
But after dinner on Tuesday, I was able to print out a copy of the
President’s address and sat in one of the bars to peruse it. I
shared it with others and conversation turned to Iraq. Bottom
line, I’m amazed at the depth of disgust amongst this
international crowd for Bush and our supposed rush to war.
Earlier in the day, I attended a lecture by Alvin Shuster, a former
bureau chief for the New York Times who also happens to be
one of my nightly dinner companions (along with his lovely
wife). Alvin asked the large audience how many thought the
U.S. should go to war, even without full UN approval, and it was
over 70-30 against. On one hand I shouldn’t be surprised
because 77% of Britons are against it given the same scenario,
along with 80% of Spaniards and a growing percentage of
Americans, to cite a few examples.
It boils down to the Democrats argument, at least among those
like Senator John Kerry, who argue that the Bush Administration
is merely exhibiting “blustering unilateralism.” Opponents say
the President has yet to make a compelling case, and they
continued to say so after the speech (with the notable exception
of Democratic Senator Joseph Lieberman).
In talking to fellow passengers, as well as through my extensive
readings over the years, I’m nonetheless still amazed how people
fail to understand that if Saddam and future maniacs aren’t
stopped we’re doomed. If we don’t get some handle on these
weapons of mass destruction, not only are tens of millions
physically at risk, those who survive are condemned to a truly
depressing existence, one of continual despair.
But I do have to add that, yes, the Administration’s case has thus
far lacked the smoking gun and even Secretary of State Powell’s
February 5 presentation to the UN Security Council may still fail
to convince the skeptics.
At least we have chief weapons inspector Hans Blix to thank for
his surprisingly harsh report of last Monday, though by week”s end
he was backing off a bit. The chairman spelled out how Iraq had
failed to answer crucial questions, and, critically, he discussed
the issue of possible violations on the missile front, Saddam being
limited under UN sanctions to a range of 150 km (93 miles).
Blix’s condemnation played no small part in the highly
significant gesture by 8 European leaders, who wrote a joint
letter to the Wall Street Journal on Thursday in full support of
the U.S. and military action. So we hereby praise these
nations…Spain, Britain, Italy, Poland, Hungary, Czech Republic,
Denmark and Portugal.
Interestingly, the Europeans didn’t even approach France and
Germany about the effort, though it’s still my guess that in the
end, France will climb aboard.
Those like Senator Kerry who complain of “blustering
unilateralism” look increasingly like fools in the face of this solid
international support, particularly when you have leaders such as
Tony Blair and Spain’s Aznar, both of whom face immense criticism
at home, yet nonetheless are lining up behind the United States.
But perhaps the New York Times’ William Safire summed it up
best.
“The point is this: Both sides of the debate are furiously
positioning to cover themselves in case the other side proves
right. But the difference is this: Even if the hawks are wrong
about Saddam’s treachery, 20 million terrified Iraqis would be
freed. If the doves are wrong and their delay enables the
genocidal tyrant to become a world power, millions of American
lives could well be lost.”
Of course Safire could have added ”tens of millions across the
globe,” not just in the U.S., would be at risk if the doves prevail.
Wall Street
I wasn’t able to keep up that much this week, but by now you all
know any future rallies will be limited until Iraq and other issues
are cleared up. This was also the line of the Federal Reserve,
basically, which in holding interest rates steady at its latest
confab, added that while risks are balanced between weakness
and inflation, it was confident that once the geopolitical scene
improves, future growth in the economy seems ensured.
It better, because those of us who said we’d have a double-dip
can practically claim victory following the report that 4th quarter
GDP came in at a minuscule 0.7%. [For all of 2002 growth was
at a 2.4% level.] Certainly the first quarter isn’t shaping up to be
a stellar one, either, as consumer confidence slipped in January
to a 9-year low, while the GDP figures revealed that consumer
spending in the quarter was anemic. So with the consumer
practically in retreat (Friday”s figure notwithstanding) and
businesses remaining on hold, the only thing saving us continues
to be housing, and you know my stance here.
But now it’s time to do a little name-dropping, because as I was
glancing through the daily cruise photos on board, which they post
on the wall, I saw someone familiar. “Hey, that’s Roger
McNamee.” And lo and behold it was, plus he’s just tables from
me at dinner each evening.
For those of you not familiar with Roger, in my mind he is the
premier expert on the technology sector. He and his fellow
investors have also been responsible for a slew of new ventures,
most of which have panned out beautifully. But what I like
about the man (who’s also a regular panelist on Louis Rukeyser’s
program) is that he was really the first to turn cautious on
the group in 2000. If you had listened to him on his many
public appearances and you were loaded up with tech stocks,
at least you would have pared your losses considerably.
So the other night I went over to introduce myself to Roger and
his wife and they graciously allowed me to sit down and chew
their ears off for a while. But not wanting to be a total bore,
I limited my business-related inquiries to a few questions and at
one point he replied that when it came to investing in tech
over the next 3 years or so, “it’s a good time to go on cruises.”
In other words, don’t get carried away trying to pick a bottom
in Nasdaq. There’s no rush.
Well, I did have to ask him about my little position in Taiwan
Semiconductor, my own 3% effort to bottom fish, and he said he
thought it could work out, over the longer-term, of course. So
the next day TSM reported earnings below expectation due to the
continued weak recovery in chips and I was ‘stopped out’ (at
least I think I was). If I could do it all over again I would have
pulled it and held the shares, but as I’ve long said, selective stops
prevent you from being a total idiot.
[So if I was hit on the stop, I’m about 70% cash, 6% Mystery
Telecom Inc., and 24% energy.]
Street Bytes
–As January goes, so goes the year, or so that”s what the
book tells you. Notice how I never brought this up in this
space, because it”s not about a particular month this time,
it”s about Iraq. Anyway, for the record, the Dow Jones and
S&P 500 both fell in January, 3.5% and 2.7%, respectively. The
Dow closed at 8053, S&P 500 855 and Nasdaq 1320.
–U.S. Treasury Yields
6-mo. 1.19% 2-yr. 1.71% 10-yr. 3.97% 30-yr. 4.84%
–Britain: The key FTSE equity index hit a 7-year low this week,
as the nation faces ongoing labor problems with its firefighters
and the threat of war, along with a more big picture item, that
being the same record level of personal debt that is a potential
time bomb in America as well. Experts here are also increasingly
worried about Britain’s own property bubble.
–Japan: The rising yen versus the U.S. $ threatens any recovery
here, plus there are further signs the consumer is retrenching
again. Add in the fact that the Nikkei is close to a 20-year
low, along with record unemployment, and it looks kind of crappy
here, doesn”t it?
–Energy: President Bush provided some impetus for the energy
efficiency movement as he threw out some goodies for the fuel
cell industry in his State of the Union address. But I think
something more basic is going on in America these days, a
combination of a rapidly growing anti-SUV movement and
simple common sense. U.S. auto manufacturers have to
understand that if they don’t hop aboard the hybrid / fuel cell
bandwagon, sales will increasingly go to Japanese and European
manufacturers.
–Just when some want you to believe that the worst of the
corporate governance scandals have been revealed you see
further evidence of just how prevalent they were, as exhibited
in the cases of Kmart and Xerox. An internal investigation into
the former has revealed that top executives were nothing but a
bunch of crooks, enriching themselves at the cost of employees
and shareholders, while in the Xerox fraud matter, the SEC has
now sued auditor KPMG for colluding in Xerox’s efforts to
inflate revenues.
–We congratulate AOL Time Warner for reporting the single
largest loss in American business history, $98.7 billion for all of
2002, thanks largely to giant writedowns in the valuation of its
America Online unit. Great job, guys. Vice chairman Ted
Turner, who had nothing to do with the AOL disaster and has
been frustrated since day one of the merger, is stepping down.
Look for him to rail against the company, as he should.
–Senior portfolio managers at large mutual fund firms are still
averaging about $750,000 to lose your money, the same as at the
top of the market a recent survey revealed.
–For the month of January there were no initial public offerings,
the first time this has happened since 1974.
–Some good news…advertising in all forms continues to firm.
–The SEC appears to be on the verge of imposing stronger
regulations on the hedge-fund industry, and not a moment too
soon as Wall Street continues to promote some new products as
hedge-funds for the little guy, just in time for Joe Schlep to get
screwed.
International Affairs
[As I am about to go to post, Bush and Blair have held their
meeting, but little analysis is available. Additionally, it
would appear that Turkey will come through for the U.S., thanks
to pressure from their kick-ass military on the political leadership.
I always loved those tough SOBs.]
Israel: Though the turnout was at a record low, Israeli voters
nonetheless exhibited their strong support of Prime Minister
Ariel Sharon’s hardline policies against the Palestinians by
handing him a decisive victory in Tuesday’s election. Sharon
still has to cobble together a working coalition.
North Korea: Pyongyang continues to skillfully play its cards, as
it maintains its own hardline stance with the U.S. in the ongoing
effort to blackmail Washington. U.S. intelligence also
indicates that the North is beginning to move the fuel rods.
Afghanistan: Heavy fighting occurred this week as the U.S. led
coalition forces against Afghan rebels and remnants of the
Taliban. I would like to particularly acknowledge the nation of
Norway, which contributed F-16 fighter jets to the effort. This is
the first time Norway has used its combat aircraft since World
War II. Sincerely, to my fellow Americans, as a gesture of
appreciation try and buy a Norwegian product or two over the
coming weeks.
India: New Delhi is increasingly concerned over evidence of
China’s ongoing support for Pakistan’s nuclear weapons
program. Of course if Pakistani President Musharraf is deposed,
then we have a huge problem here.
Thailand: Boy, this is a crazy world these days. A further
example of this just presented itself as the governments of
Thailand and Cambodia suddenly have a very tense situation on
their hands. It was alleged that a Thai actress said Cambodia’s
famed Angkor Wat temple belonged to Thailand (a centuries old
claim among some groups), a charge the actress vehemently
denied. No matter, as Cambodians rioted against the Thai
embassy in Phnom Penh. At last report, Thailand has its army
on high alert.
Ivory Coast: And then you have this situation, where a 4-month
long brutal civil war was to have ended thanks to a French-
brokered peace accord. But this is basically another Christian-
Muslim conflict and the Christians are now begging the U.S. to
intervene…important to note in this era of rising anti-
Americanism. There are a few who still appreciate us, it would
seem.
Zimbabwe: France wants to hold its annual Franco-African
summit and in doing so invite President Robert Mugabe, which
would fly in the face of existing EU sanctions, i.e., we have a big
potential issue here.
Brazil: Just a prediction, but new President Luiz da Silva is
going to be a royal pain in the ass for the U.S. to deal with. He
has begun to promote himself as the leader of the Third World,
the poor vs. the rich, yet he has a very naïve view of the global
picture.
Random Musings
–Quotes of the week:
Colin Powell – “History will judge us as to whether or not we
have the strength, the fortitude and the willingness to take (the)
next step.”
President Bush – “This country has many challenges. We will
not deny, we will not ignore, we will not pass along our
problems to other Congresses, to other presidents, and other
generations. We will confront them with focus, and clarity and
courage.”
“If this is not evil then evil has no meaning.”
–Republican Senator Richard Lugar offered up his ideas in an
op-ed piece this week that is of the utmost importance. One
topic, discussed often in this space, is Congress’
responsibility to provide the necessary funding to enable us to
destroy the former Soviet Union’s weapons stockpiles. Lugar
also wrote that the American people must understand that we
have to spend far more money on our embassies, particularly for
staffing. The embassies are our eyes and ears and clearly we do
not have the most qualified individuals in some key positions.
[Of course it doesn’t help that this is not exactly an attractive job
these days, knowing you could be assassinated at any moment.]
–Bill Gates is stepping up to the plate again, taking another large
chunk of his wealth and applying it for the good of mankind. He
is going to establish a $200 million program for grants,
specifically to identify and answer the critical questions on the
leading causes of death in developing countries. This in turn
should create international competition, and through competition
come results that benefit all of us. Along the same lines, I think
we were all impressed by President Bush’s renewed commitment
to fighting AIDS in Africa and the Caribbean. I imagine Bono is
pleased as well, having written a strong op-ed piece on the topic
leading up to the State of the Union.
–It”s time to pin a nametag on Nelson Mandela”s windbreaker. I have
long admired the man, but he is clearly losing it. Now he is labeling
President Bush a racist, saying he won”t cooperate with the UN on
Iraq because Secretary General Kofi Annan is black. If you see
Nelson on the street, walking aimlessly, point him back home.
–In a far simpler time, I often wrote of the noble yak, the story
of which I discovered years ago due to a particular blizzard in
Manchuria. Well, I do have to pass along a fact that Joshua P.
uncovered the other day, that being that hobbits really have yak
hair on their feet. The ever useful yak. And the meat is good for
you, too.
–Funny how you come across some people who for even just a
few hours can have a real impact on your life. I didn’t tell you
the full story of my trials and tribulations last week in posting
this column in Honolulu. I took a cab in my search for a Kinko’s
(and the Kinko’s girl I wrote of…Paul J. said there is a possible
Springsteen song there) and the cabbie was a black from
Washington, D.C. Now I’m not one who is capable of being Mr.
Positive Thinker all the time, as you’ve undoubtedly discovered,
so when this man asked me how I was doing I started to
complain a little, realized I was being a real jerk about it, and
then said, “but you are about to make my day better, my man!”
To which this amazing sage replied, “Everything between your
ears contains both your hopes and fears. And remember,
everyday you wake up is a blessing.”
Did this change my life? For just a few hours, but I guarantee
I’ll remember this good fellow forever. Actually, aside from my
family and friends, those who have been most memorable were
all little people; God’s real chosen ones.
–And now for some further musings on this cruise.
Once we left Honolulu, we had calm seas for 4 days in route to
Tahiti and Moorea. At least that gave us all a chance to hit the
decks, as I did for about 4 hours each of those days.
They have changed our agenda some so that we are now going to
be docking in Hobart, Tasmania for one day late next week. I’m
psyched and already signed up for an excursion to see the
Tasmanian Devil. As some of you sailors also know, however,
the seas around this particular country can be super rough, so
look for more complaining from your editor.
You know, with all my time on deck, I have yet to see one fish,
shark or whale. But you’re cruising in this vast ocean and
you keep thinking, what the hell is really down there?
Don’t tell anyone onboard, but last night I awoke about 1:00 AM
(I was actually a good boy last evening) and thought I smelled
smoke. Guess what? I was recharging my laptop and it was
getting real hot. If I had been out partying, I could have burned
the ship down. Needless to say, though, I then stayed up for an
hour until I convinced myself I hadn’t started an electrical fire
inside the walls. But this is just our little secret, okay?
When you meet new people here, all of us immediately pull out
our ‘A’ material. Then you see them a second time and both of
you forget you already told each other the same stories.
Folks, I hate to trash another place, but you all can cross Tahiti
off your ‘to do list.’ I saw a good deal of the island and aside
from the phenomenal mountain canyons (which are largely
inaccessible, plus King Kong resides there), the place has little to
offer, specifically considering the distance to get here in the first
place. There is also loads of poverty.
I met the ship’s doctor and he confirmed what I suspected. Due
to the advanced age of most passengers, quite a few are simply
loony.
–Finally, back on the mainland, more words from President Bush.
“We Americans have faith in ourselves but not in ourselves
alone. We do not know – we do not claim to know all the ways
of Providence, yet we can trust in them, placing our confidence
in the loving God behind all of life and all of history.
“May He guide us now, and may God continue to bless the
United States of America.”
And may I add, as we do each week in this space…
God bless the men and women of our armed forces. We love
you all.
—
Gold closed at $369
Oil, $33.51
Returns for the week, 1/27-1/31
Dow Jones -1.0%
S&P 500 -0.7%
S&P MidCap -0.3%
Russell 2000 -0.8%
Nasdaq -1.6%
Returns for the period, 1/1/03-1/31/03
Dow Jones -3.5%
S&P 500 -2.7%
S&P MidCap -3.0%
Russell 2000 -2.9%
Nasdaq -1.1%
Bulls 50.0%…3rd week in a row.
Bears 26.1% [Source: Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
