|
Co-brand
Partnerships
| |
|
|
|
|
| |
|
Contributed by Bill
Bonner
Publisher of: The
Fleet Street Letter |
|
PARIS, FRANCE
TUESDAY, 8 MAY 2001 |
|
|
Today:
Victory in
Europe Day
|
*** A dull day on Wall Street...it's getting lonely on
recession watch...
*** Investors, strategists, and gurus - all becoming more
bullish
*** This is not what they do at bottoms, of course...
a bad risk/reward ratio...Revenge of the Nerd Stocks...and
Maria lands a job...
|
* * * * * * * * * * Advertisement * * * * * * * * * * *
Lied To? Cheated? And...Ripped Off?
Investors have lost an average of $4.6 trillion. Another
$50,000 PER FAMILY will disappear before the "Big Con"
fully unwinds. How will you fair? Very well, if you read
this free report. Learn how to:
- Turn every $5,000 you invest into as much as $105,250
with one simple,low-risk investment.
- Buy the greatest companies in the world - on sale now for
70%, 80% and 90% off!
- Earn double-digit profits in the World's Safest
Investment - a dependable source of income in 2001.
Your copy of The Big Con will show you how to safely
accumulate more money in the next 12 months than you have
in the last 2 years combined. Click here:
The Big Con
http://www.agora-inc.com/reports/STRT/BlueProfits
* * * * * * * * * * * * * * * * * * * * * * * * * * * *
*** It was a snoozer today on Wall Street - apparently, not
enough fresh bad news to celebrate.
*** The Dow Jones Industrial Average fell 16 points and the
NASDAQ eased almost 18 points. Even bulls need to rest now
and then. But make no mistake, dear reader, caution once
again has fallen out of fashion on Wall Street - at least
temporarily.
*** As Morgan Stanley Dean Witter Chief Economist, Stephen
S. Roach writes, "It's getting lonely again on the
recession watch. The US economy rose instead of fell in the
first quarter of 2001. And the bold and aggressive actions
of the Federal Reserve have gone a long way in convincing
the financial markets that any landing will be soft, rather
than hard...I remain convinced that the case for US
recession is as compelling as any that I have seen in 20
years."
*** The American Association of Individual Investors
reports that bullishness has risen; 64% of its members
expect higher stock prices in the near-term...only 23% are
bearish. Richard Bernstein of Merrill Lynch says that Wall
Street strategists are recommending their clients have
69.5% of their assets in stocks - a new record.
*** And my old friend, Mark Hulbert, reports that
investment newsletter writers have turned bullish too. At
the beginning of April, he says, their exposure to the
Nasdaq was minus 85% (it was negative because they had so
many short positions). Now it is positive 21%. On average,
the newsletter advisors are 51% in equities, after being
"incredibly quick as a group to return to the bullish
camp."
*** This is not what they do at major bottoms, Hulbert
points out. "Instead of quickly becoming bullish [at the
low point of Dec. '74], "they reacted with disbelief... the
typical newsletter editor believed the rally to be a bear-
market trap. As a result, these editors therefore helped
form the wall of worry that was the foundation for an
incredible bull market."
*** "The editors' recent actions," he continues, "are more
reminiscent of what they did, on average, after bear-market
rallies throughout 1973 and 1974. In the wake of each such
rally, many editors were quick to declare that the bear
market was over. They were seduced into increasing their
equity exposure just in time for the bear market to resume.
After successive losses, these editors finally threw in the
towel, declaring in effect that a rally would never again
sway them into believing that a bull market had begun. That
turned out to be the final low."
*** If April marked the bottom, it will be the first time a
bottom has ever been immediately recognized by the
investment newsletter crowd. "Do you want to make that
bet?" asks Hulbert.
*** Another friend who doesn't like the odds is Fleet
Street contributor, John Mauldin: "I just don't like the
risk to reward ratio. Ask yourself the following question.
Which will affect your lifestyle more: not gaining 10% in
your portfolio or losing 30%?"
*** The S&P is selling at 26 times earnings, 6 times book
value, with a 1.25% dividend yield. It could fall in half
and still not be cheap. There is a lot of downside - and
not much upside.
*** "It's been a marvelous party. The gay laughter. The joy
of being wealthy. The balmy breezes wafting the sound of
tinkling crystal, toasting the arrival of all the material
things one could want," muses Doug Casey. "Everyone - well,
a few people, anyway - knew the party would end, and that
the Black Horsemen would ride in and totally destroy the
place. Since it's such a huge party - by far the biggest in
history - encompassing fully half the inhabitants of the
US, it's going to take a while for the crowd to panic. Most
people think that the rent-a-cops, Alan Greenspan and Baby
Bush will shoo the Horseman away; I think not. The March
decline was just a probe; the second and third waves are
yet to arrive. Drop your champagne glass, and run." (see:
Where Will It End? A Brief Glimpse Into The Future)
*** Ready to get back into tech? Witt SoundView chief
investment strategist, Arnold Berman writes, "After a long
spell in which technology fundamentals were downright
horrible, they now have become merely miserable. The news
is no longer all bad, just mostly bad."
*** This helps explain why there has been soft landing for
Cisco. While not yet "pulling a Mir," Cisco is nothing like
the gleaming, hi-tech wealth capsule that soared into the
heavens one year ago. Similarly, the chip stocks have been
conspicuously close to the ground of late. Despite the
NASDAQ's rally, Micron Technology languishes in the low 40s
- a few points below where it finished the month of
January.
*** The beleaguered Japanese yen is bouncing off of its
recent lows along with the Nikkei, or perhaps, because of
the Nikkei. As investors chase the Japanese stock market
rally, they must buy yen in the process, thereby boosting
its value against the dollar.
*** All eyes, including those of the financial markets,
will be on Japan's new Prime Minister, Junichiro Koizumi.
The Nikkei Weekly stresses that time is of the essence: "He
must demonstrate tangible progress on his reform pledges in
less than three months, before his party is tested in the
upper house election in July."
*** No small task. An editorial in the Nikkei Weekly
observes, "Koizumi comes to power at a decisive moment for
the nation's economy, long plagued by ills that have defied
all conventional cures. The economy is under strong
deflationary pressures stemming from weak demand, falling
asset prices and massive debts. A slowdown in the U.S
economy is only magnifying those woes. Koizumi...is charged
with the historic mission of developing and implementing a
viable long-term strategy for creating a new economy. What
is more, he must do so without triggering a new wave of
financial crises."
*** Why doesn't Japan simply "crank up the printing
presses?" One of the great questions of economics, even in
this Information Age, remains unanswered. Almost every
sentient being in America is confident that Greenspan can
get the economy moving - simply by reducing rates and
increasing the money supply. Under real pressure, they
believe, he would simply "print more money" to get things
moving. But there were printing presses in the 1930s too.
With a quarter of the workforce unemployed, surely if ever
there was a time to "crank up the presses" that was it. And
why doesn't Japan turn on its new high-speed presses? More
on this subject tomorrow....dear reader...or the next day.
*** Lynn Carpenter calls it the "Revenge of the Nerd
Stocks." Her Fleet Street holding, H&R Block, is up 55%
since she recommended it. It was a "sleeper" she says.
Sweet dreams.
*** Nothing sleepy about the oil patch though. Today's
mergers and acquisition headlines featured a couple new
deals between oil companies. The blockbuster was Valero's
$4 billion bid for Ultramar. The merged companies will
become the second-largest oil refiner in the US, second
only to Exxon/Mobil.
*** The Blue Team's Dan Denning offers "evidence of slowing
U.S. consumption and imports... with total exports [from
select Asian countries] down a worrisome 11.7%,
significantly worse than the 6.8% rate posted in January."
*** "What's this telling us?" Denning asks, "U.S. imports
are going down. So far, foreigners have been willing to
subsidize U.S. over-consumption by holding on to US
dollars. If they decide to stop - which these trade debt
numbers seem to indicate - it could be the event that
triggers the decline of the dollar and delivers an
unexpected shock to the stock market." (for more on the
Daily Reckoning Blue Service, please click
here.)
*** "No, you may not wear a see-through blouse," I laid
down the law. Maria, 15, has gotten her first gig as a
mannequin. This Thursday night, she begins her career is
show biz as a runway model for a Paris fashion house.
*** Paris is as quiet and lonely today as a tort lawyer's
funeral. The streets are empty... I could get a seat on the
metro with no problem. It wasn't this way on VE Day 56
years ago. More below...
* * * * * * * * * * Advertisement * * * * * * * * * * *
BEST BEACH BUY IN THE CARIBBEAN
Talcum-powder fine, bleached white, and deserted...fringed
by clean, clear turquoise water...these beaches are among
the most spectacular in all the Caribbean.
Plus...these islands are safe, friendly, easily
accessible... and cheap. Indeed, this is the best deal
going in the Caribbean today. Details in your FREE report.
For more, click here now:
http://www.agora-inc.com/reports/ipr/daily25
* * * * * * * * * * * * * * * * * * * * * * * * * * * *
VICTORY IN EUROPE DAY
"War is hell."
William T. Sherman,
before burning Atlanta,
September, 1864
Our attitudes toward war are a puzzle of contradictions.
People are often happy when a war begins...but usually
happier when it ends. We hate war, but we revere war heroes
and war leaders. Of course, the difference between a war
hero and a war criminal is determined less by the actual
events, than by the outcome.
Senator Kerry, for example, still enjoys the sympathy, if
not the admiration, of much of the American public and
media. Kerry is lucky to have been fighting for the
Pentagon and not the Wehrmacht. Otherwise, he would almost
certainly have been tried for murder, and hung.
I have written in the past about war heroes - men who have
done their duty and deserve our respect. Today, I celebrate
those who had sense enough not to follow orders.
We know that wars are destructive and wasteful, but splash
the right jingoes on newspaper headlines and people take it
up as eagerly as a 3-year-old picks up a loaded pistol.
On this day, 56 years ago, Paris celebrated the end of the
most costly, brutal, maniacal episode of warfare in history
- WWII.
People danced in the streets...bands played...the bells of
St. Merry's, next to my office, and those of every church
in Paris, rang for hours. From balconies, banners and
kiosks the news was shouted out: LA GUERRE EST FINI!
People cried too. Some cried with particular cause: perhaps
they grieved for one of the men who were shot by the Nazis,
the men who are remembered by the many plaques about town
"Ici est tombe..." they say, "Mort pour La France." [Here
is where so and so fell...dead for France.]
Or maybe they were thinking of one of the many victims of
reprisals...or those murdered by the resistance, the
fascists, or by one of the criminal gangs that flourished
during the chaos. No plaques remember these people - they
are forgotten.
But most Parisians who wept on that day did so out of joy -
joy that the war was finally over.
Compared to cities in Normandy, Germany, or Russia - or
even London - Paris suffered little during the war. France
had the biggest army in Europe before the war, but her
troops were largely cut off and annihilated in the opening
days of the war. French military leaders had failed to
understand how the tank - supported by airpower - had
changed the way wars could be conducted.
In shock and disbelief, the French had no plan and no
provisions with which to keep fighting. Instead, they gave
up the fight and made peace with the Germans. The English
charged France with failing to do her duty...by giving up
the fight too soon. But what was the point?
Parisians lived under German rule for 4 years. But the
Germans never terrorized or destroyed the country as they
had in Poland and Russia. Most German troops must have
considered themselves fortunate beyond words to be able to
enjoy the cafes and brothels of Paris, rather than to be
fighting for their lives on the Eastern Front.
After the Allies successfully landed in Normandy, and broke
beyond the hedgerows to the open roads, Hitler determined
to reduce Paris to rubble before they got there. To that
end, he summoned Major General Dietrich von Choltitz to his
headquarters and put him in charge of the city's garrison.
Why Choltitz? Because he had already ordered the bombing of
Rotterdam and directed the siege of Sebastopol in the
Crimea. In this latter battle, only 347 of his 4,800 men
were fit for duty by the end. Still, he managed to capture
the city and destroy it.
Choltitz had a reputation for being able to follow through
on unpleasant orders. He covered the German retreat out of
Russia, for example, leaving little standing. His
reputation for destruction grew so great that he was blamed
for having reduced Warsaw to ruins. But he was not even in
Poland at the time.
It is easy to dismiss Hitler as a madman and his Nazi
followers as unthinking zealots and opportunists. But it is
hard to understand the German Army's aristocratic officers,
of whom von Choltitz was one. They generally despised
Hitler, as he did them. They surely saw too that the little
corporal had put Germany on course to a military
disaster...and that he was not only mad, but incompetent.
But people will allow themselves to get swept up into
almost any insanity if it is popular enough. Hitler was
an elected head-of-state. He was the commander-in-chief of
the armed forces. They must have wanted to believe that he
was not the crackpot he appeared to be. Thus, while the
Wehrmacht killed thousands of soldiers in dozens of
countries all over Europe, its generals could not bring
themselves to kill one single man in Rastenburg: the
Fuhrer.
As the two-front war continued, it became more and more
obvious that Hitler was not the leader Germany needed.
Choltitz, receiving his assignment from Hitler directly,
had hoped to find that the Fuhrer had matters in hand.
Instead, what he found was what he described as one of the
most bizarre and unsettling experiences of his life.
"Since the 20th of July," Hitler began his tirade, "dozens
of generals - yes, dozens - have bounced at the end of a
rope because they wanted to prevent me, Adolf Hitler, from
continuing my work."
"He was in a state of feverish excitement," said Choltitz
remembering the encounter. "Saliva was literally running
from his mouth. He was trembling all over and the desk on
which he was learning shook with him. He was bathed in
perspiration and became more agitated."
"Now," said the Fuhrer, "you're going to Paris." The city,
he told general Choltitz, "must be utterly destroyed. On
the departure of the Wehrmacht, nothing must be left
standing, no church, no artistic monument." Even the water
was to be cut off so that "the ruined city may be a prey to
epidemics."
"I was convinced there and then," said Choltitz, "that the
man opposite me was mad!"
Would Choltitz carry out an order given to him by a
lunatic? Another old soldier of the Prussian aristocratic
school, Field Marshal von Kluge, said to him: "I'm afraid,
my dear Choltitz, Paris may become a rather disagreeable
assignment for you. It has the air of a burial place about
it."
"At least it will be a first class burial," replied
Choltitz. Von Kluge committed suicide 6 days later.
A few weeks later, Choltitz was in Paris...and American and
French troops were at the gates of the city. Choltitz had
let a sarcastic sense of humor creep into his conversation.
He reported back to the German high command that he was
going to blow up the Cathedral of Notre Dame...
Invalides...the Palais Bourbon. He was going to level the
Arc de Triomphe and destroy the Opera to clear a field of
fire (as if there was any intention or point to fighting!)
To his staff one evening he remarked, "Ever since our
enemies have refused to listen to and obey our Fuhrer, the
whole war has gone badly."
Choltitz then let it be known that he could not surrender
to the Resistance (of whom there were about 20,000 already
in the city...already skirmishing with German troops). He
would only surrender to proper officers. Hearing this, the
French troops under Leclerc rushed into the city. Going
right to the Hotel Meurice on the rue de Rivoli, a young
French officer burst into Choltitz's room. "Do you speak
French," asked the Frenchman excitedly.
"Probably better than you do," was Choltitz's reply.
Your editor, enjoying VE Day.
Bill Bonner
For investment ideas consistent with those you read in
the Daily Reckoning please enroll in the Daily Reckoning
Blue Service: http://www.agora-inc.com/reports/STRT/BigReturns
|
|
|
|
| | |
| |
| About
The Daily Reckoning: |
|
Daily Reckoning
author Bill Bonner
Bill Bonner is,
in spite of himself, a natural born contrarian. Early each morning, Bill
writes The Daily
Reckoning—his take on the financial markets and what’s going
on in the world—and sends it off by e-mail before most Americans’
alarm clocks have buzzed. Many readers say it's the first thing they want
to read when they get up—not only because it's informative and thought
provoking, but also it's inspiring, in its own quirky and provocative way.
Of course, there's
much more to Bill than his daily market commentary. He's also the founder
and president of Agora Publishing, one of the world's most successful
consumer newsletter publishing companies. Bill's passion for international
travel and big ideas are reflected in the company he's successfully built.
In 1979, he began publishing International Living and Hulbert's
Financial Digest . Since then, the company has grown to include
dozens of newsletters focusing on health, travel, and finance. Bill has
vigorously expanded from Agora's home base in Baltimore, Maryland since
the early ’90s—opening offices in Florida, London, Paris, Ireland, and
Germany.
Agora's publication
subsidiaries include Pickering
& Chatto, a prestigious academic press in London and Les
Belles Lettres in Paris, best known as a publisher of classical
literature in bilingual editions.
|
|
|
|
