*** I'm driving up from Virginia to New York, spending the
night in an Econo-Lodge on the outskirts of Trenton - where I
get a view of the back of a storage shed from my room. I've
got to be in Rye, NY, before 11 am. So, this has to be very
short.
*** Wall Street is getting its metaphors mixed up. The big
news on Friday was that the employment numbers from the
Bureau of 'much' Labored Statistics was just what the street
wanted.
*** The number of new jobs - 11,000 - has gone down. It's a
dubious number...because the census workers were released in
the same period. But it was the perfect number for those who
believe in the "soft landing" idea.
*** Greenspan, you will recall, is trying to cool the economy
with rate hikes. A soft landing is what you get when the cool
air emanating from the Fed gently coddles the overheated
bubble towards the ground. (see: A Synthetic Soft Landing? http://www.dailyreckoning.com/body_headline.cfm?id=224)
*** Wall Street likes the 'soft landing' concept. It allows
them to forget about any further rate increases...or the kind
of 'hard landing' produced by a crash, or recession. But the
shills and pollyannas just can't leave well enough alone. As
soon as it looks as though the bubble economy might be losing
altitude, they turn up the fuel jets.
*** Thus, the Dow rose 154 points on Friday. The Nasdaq rose
62, bringing it to 4023. It's still a long way from the peak
of March 10th - 5048. But it doesn't have that much farther
to go in order to match the June 21st rally top of 4068.
*** Today's Reuters article tells us that despite all the
soft landing talk, the market "is finally cleared for a
takeoff." With all this confusion at the aerodrome, my advice
to you is to keep your feet on the ground until it is over.
*** The week brought a 1.8% increase in the Dow and a 1.44%
increase in the Nasdaq. The Dow is selling at a little over
20 times earnings. The Nasdaq...well...why mention it?
*** The week produced twice as many advancing stocks as
declining ones and twice as many new highs as new lows.
*** It is certainly hazy, hot and humid here in NJ. And the
market does appear to be in a summer rally. How far...how
high...we'll just wait to see.
*** Platinum rose another $5.80. And an article in Barron's
tells us that gold is as big a bargain today as it was in the
early 70s when it was priced at $35.
*** "The collapse of the most expensive growth stocks in the
NASDAQ may not be the start of a global bear market,"
suggests Mard Faber "but it is a message from the gods to
reduce risk, and to be stingier about the price one is
willing to pay for growth." Faber offers five Asian stocks
worthy of such stingy affection... (see: Value Vindication in
Asia http://www.dailyreckoning.com/body_headline.cfm?id=226)
*** A study done by MSNSBC of IPOs shows that it was very
hard for an ordinary investor to make money last year.
Goldman's did 51 IPOs, for example, which - if purchased at
the open - would leave you down 15% on the group. Goldman's
institutional clients, however, getting their shares at pre-
IPO prices came out of the study with a 90% gain. But other
institutional clients didn't do as well. Overall, the study
showed that all IPO buyers lost money.
*** A WSJ story notes that corporate debt as a percent of GDP
is at its highest level ever. And defaults are rising. $9.4
billion of junk bonds defaulted in the 2nd quarter - more
than the total ($8 billion) that were issued. 17% of the
junks are in "distress," with the default running at 5.58%
annualized. Moody's expects it to rise to a default rate of
7%.
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miss being on The European Advantage Tour, September 16-23,
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Freedom's just another word
for nothing left to lose.
But nothing, ain't worth nothing, honey
if you ain't free.
Janis Joplin,
performing "Bobby McGee"
So many paradoxes; so little time.
I landed at Dulles Airport Friday afternoon and drove down to
the little town of Lovingston, VA, south of Charlottesville.
This is a beautiful area of the country, with many imposing
and gracious farms on the rolling hills...and quite a few
shacks and shanties in the gullies.
Rural poverty is picturesque in Europe, where you find
ancient stone buildings in pretty much the same shape they've
been for centuries. But it is depressing in America. People
live in trailers, or dilapidated wooden houses, surrounded by
the cheap junk of the machine age - old cars, broken down
tractors and farm equipment, rusted out refrigerators and
washing machines... everything that won't burn.
The occasion of my visit was the wedding of my nephew, who
was married on Saturday. He married his high school
sweetheart in a touching ceremony presided over by my
brother-in-law, a Baptist minister of great charm and wit.
Reverend Campbell has performed hundreds of weddings in the
quarter of a century he's been preaching. The makers of
Kleenex have surely gotten a boost over the years - thanks to
the paradoxical sentiments these marriages inspire. People
are so happy, they cry. But it is rare for the eyes of Rev.
Campbell himself to redden and moisten as they did on
Saturday.
Marriage makes no sense, of course. It is contrary to the
spirit of liberty we men profess to adore. A man, entering
the holy state of matrimony, makes commitments that,
statistically, only half will honor. Beneath the statistics,
the pledge to 'love and to cherish...forsaking all
others...until death' is a guarantee that is usually
outlasted by a refrigerator or the drive train on a
Oldsmobile.
And what sense does it make, anyway? These days, a man does
not have to offer to marry a woman to have his way with her.
It is cheaper to eat in restaurants and use cleaning services
than to take on the expense of a traditional wife. And why
not keep his options open?
He finds his bride irresistible at 21, but will she still be
irresistible at 41 or 51? Or will another 21-year-old be the
woman of his dreams? Mistresses may be tolerated in France,
but not in Southern Virgina.
Besides, an ambitious young man can expect his purchasing
power to rise over time. As he ages and makes more money -
there should be more women available to him. Whether he
chooses to rent by the hour, or to marry, his field of choice
will probably increase.
Not only that, as he matures a young man's ideas may change
too. He may want a redhead in his 20s...but a brunette may be
more to his liking in his 30s. And from a practical point of
view, the type of woman he will want will change with the
life he chooses for himself. One woman may be well suited to
the life of a farm wife out on the great plains, for example,
but completely out of place as the wife of the U.S.
ambassador to the court of St. James.
And yet, Mark Campbell, with no gun to his head, gave up his
freedom on Saturday. With a smile on his lips and a look of
deep satisfaction on his face, he did an apparently
irrational act. He forged his own chains...shackled his own
leg... and if you believe his solemn pledge, threw away the
key.
Was Mark, like the poor rabbit I ran over last week, betrayed
by his own instincts?
I was puzzling over this Saturday morning at the Lovingston
Caf‚. In a moment of Deep Contemplation, I felt as though I
had hit upon a New Dialectic that would explain everything...
from the course of western civilization to... the kiss.
Alas, I was interrupted.
"Everything all right here?" asked the helpful waitress in
the soft country drawl of Nelson County, VA.
"Yes. I'm fine."
Then, back to my cogitations...and scribbling.
But Lovingston is not Paris, where the waiters serve you a
cup of coffee and leave you alone for hours.
Perhaps that is why the French have produced such ponderous
and impenetrable works of philosophy and literature - they
have been able to work without interruption!
"Can I get you anything else?" she inquired after a moment
had passed. She seemed genuinely concerned for my welfare, as
if she thought there must be something wrong with someone who
had no visible source of distraction.
So I tried to explain: "I'm just sitting here trying to
unlock the deepest mysteries of life and explain the course
of human history."
"Well," she said, handing me my bill, "I'll take that
whenever you're ready."
More on life's deepest mysteries tomorrow,
Bill Bonner
P.S. This from my friend Jack Forde:
"[S]cientists at University College London now have more
concrete proof of whether or not it's the real thing - brain
scans. They have shown that the first flushes of true love
produce visible changes in the brains of people that can be
seen with magnetic resonance imaging (MRI).
"We looked at the activity in their brain produced by a
picture of the person they love," Semir Zeki, a professor of
neurobiology, said in a telephone interview Wednesday.
"There are four small areas of the brain in which activity
goes up and that increase correlates with their viewing of
the picture of the person they are in love with."
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