*** Big gains in Dow and Nasdaq...will the rally last?
*** 'Hedonics Brawl' turns to mud wrestling...
*** Danes vote against the euro...gold falls...utilities
hit new high
*** Whoa! The Dow shot up 195 points yesterday. And the
Nasdaq rose 122 points. For the moment, anxiety has given
way to greed, not fear. How long will it last? Remember
the 4 E's that have been bothering the market - Energy,
Earnings, the Economy and Euro? Well let's look at what
*** Energy - the price of oil fell $1.28 yesterday,
following the Saudi announcement that they would pump
even more if necessary to stabilize the price. They don't
want the whole world getting worried about oil. People
might look for alternatives. They might stop using so
much of the black goo. Worse, they might find a
substitute! That's why OPEC has increased production 3
times in the last year.
*** Earnings - The news from P&G was that earnings would
be good. P&G stock climbed $5...and led the entire Dow.
Bristol Myers also reported good earnings. Later in the
day, Apple Computer came out with bad earnings news...but
the masters of the universe on Wall Street had already
headed home. The stock fell 40% in after hours trading.
*** According to the Wall Street Journal, Apple "abruptly
end[ed] an 11-quarter winning streak" yesterday and
announced net income "excluding investment gains" would
be about $110 million - significantly shy of the $165
million expected by analysts. "We've clearly hit a speed
bump," Steve Jobs was reported to have said.
*** Economy - The economic news, too, was almost all
good. Surprisingly good. Incredibly good. Fantastically
good. Delusionally good. The Bureau of Labor Statistics
came out yesterday and announced that the economy grew
faster than expected in the last quarter. Instead of
getting bigger at a 5.3% annual rate, it grew at 5.6%
*** The BLS also announced that it had revised the
inflation number for the last quarter - down! From 2.3%
to 2.1%, annualized.
*** I know what you're thinking...didn't I tell you
yesterday that they would revise it upwards? Well, yes.
But the "Hedonics Brawl," yesterday, was like a mud
wrestling match between two fat women. There was a lot of
splashing around, but neither side could get much
Our own Kurt Richebacher wrote a letter to Barron's in
response to Gene Epstein's column. He got a call from the
editor...but his letter was not published.
Meanwhile, the BLS did correct its CPI estimate for the
year. It found that it had made an error on "air
conditioner quality measures." Forget hedonics applied to
computers. We're talking the hedonics of air-
conditioners. The BLS admits it got the math wrong and
adjusted its annual CPI estimate UP from 3.4% to 3.5%.
*** Not that investors were following this battle.
Instead, the economic reports from the financial press
cited the 'soft landing' that most think is almost a sure
*** And finally, there's the euro. The Danes voted
against it. But the damage was moderate. People seemed to
take it in stride. And the European Central Bank seemed
prepared to defend the euro if the going got tough. So,
the euro sank a little - down below 88 cents - and that
was all there was to it.
*** Cisco rose $2 - it is still below $60.
*** The advance/decline ratio tilted further towards the
positive side yesterday - with twice as many stocks going
up as down. There were also almost twice as many hitting
new highs as hitting new lows.
*** Gold fell $2.70 after teasing gold bugs with a
healthy increase on Wednesday. The metal goes nowhere. It
is as inert and lifeless as a sidewalk drunk in an
*** Utilities hit a new high yesterday. Bonds were up
too. These, along with the advance/decline numbers, are
bullish signs. The nation's money supply continues to
expand at twice the rate of GDP...and an election is
coming. Anything is possible.
*** As I'm sure you know by now Priceline's shares also
fell by 42% in one day this week (they are down by 93%
since April 1999). Most analysts say Priceline.com's
stock plummet was caused by the airlines themselves -
cutting into the e-tailer's business, because airfare
makes up 85% of Priceline's revenue. But "that's bunk,"
says Porter Stansberry. "Competing airlines will never
effectively compete with Priceline. In fact, their on-
line initiative - Hotwire.com - has been delayed until
next year. The real problem is Priceline's website
doesn't tell shoppers how to get a good price. If the
range of accepted bids for similar flights were available
- they'd be successful."
*** Canada is in the process of tripling its natural gas
exports to the U.S. The NY TIMES: "Canada, which supplies
16 percent of American consumption exports to the United
States expects to grow [their exports by] 50 percent this
decade." John Myers recommends a Canadian natural gas
producer:(see: Another Way To Play The Natural Gas Sqeeze)
*** Today is my friend Michel's birthday. "Things are as
good as they possibly could be," said Michel the other
day, confusing me... "because they can only be as they
are." But what if they were different? "Then, they would
not be as they are." Okay...got it.
When The Greatest Credit Bubble in History Burst...What
No banks or brokerage houses went bust in the 1929 crash.
In fact, many people prospered immediately following
Black Monday. The real damage was done later on... when
the sentiment turned against stocks altogether.
Will you profit in the months ahead? Prepare yourself now
- EVERYTHING that is happening in the markets today has
already happened before. The only difference is the size
and the scope. Click here for the Hidden Logic of Credit
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * THE DRAGON'S DAY
"They just don't get it."
speaking of Analog Men
"It is vain and futile to look for logic in the human
Ulysses Everett McGill,
In the film "Oh Brother"
The Paradis caf sits on the corner just opposite my
office. The woven plastic chairs and small tables are
arranged, row on row, under an awning, in good
weather...and retreat to somewhere inside when winter
"It is the time for the destruction of error" begins the
fourth section of W.H. Auden's poem, entitled '1929.'
"The chairs are being brought in from the garden,
The summer talk stopped on that savage coast
Before the storms, after the guests and birds:"
Auden described the way seasons change and life yields...
to death. He may have also been describing the way a bull
market gives way to a bear. Or, how the confidence of a
boom turns into the anxiety and fear of a bust.
Readers of the financial media do not expect to find
poetry in their daily reports. But today is not only St.
Michael's day...it is the anniversary of Auden's death in
If you join the Boca Raton Racquet Club...or move into a
fancy neighborhood in Manhattan - you will find people
who made their money in land, in industry...perhaps a few
sports heros, rap singers and dot.com millionaires. Few
of the people you will meet, and I feel pretty confident
of this, will have made their money in poetry.
Poetry has been in a bear market for nearly 100 years.
And yet, poetry is interesting to us because, of all the
arts, it is perhaps the least susceptible to mob-
Last night, Elizabeth and I went to a very up-market art
and antique show. If you have enough money...and are
unsure of your own tastes and judgment...this would be a
good place to buy things that wouldn't embarrass you.
There were some fine paintings - 17th century portraits by
Dutch painters...19th century hunt scenes and a few
sentimental scenes that must have given Norman Rockwell
an inspiration. In one, a young woman sits at a railway
station...wide-eyed, and ready to enter the big, wide
People might open their own eyes and look to see what
they like and what they don't. They might delight in the
fanciful Fragonnard scenes of fluffy romance...they might
prefer the heavy, rich family portraits of early 19th
century bourgeois artists - or, who knows, they might
like one of the color chaos canvases from the splatterer
school...or even maggot-filled cow's head of Damien
'There is no accounting for tastes,' is the relevant
expression. But you can account for a lot of what goes on
in the art world by remembering how the "C" spot and the
sensation mongers of the media work.
The idea of today's art merchants is not to appeal, as
poetry does, to people one by one...but to turn their art
works into subjects of mob interest. In this respect, art
is even better than stocks, because a buyer can put his
art on display so that everyone knows he 'gets it."
You may recall the success of last year's show at the
Brooklyn Museum of Art. It was, appropriately enough,
entitled "Sensation." Also appropriately enough it was
backed by former ad man Charles Saatchi, who understands
the nature of his business: creating collective hysteria,
like the oil crisis or Big Tech stocks.
Imagine, for a moment, that there were no "art market" -
and no culture pages in the New York Times...and no
"modern artists" who have been turned into celebrities on
the society pages and the teen magazines...
Imagine that someone comes to you with a proposition: for
a few hundred thousand dollars you can own the following
work of art: an unmade bed, with used condoms, dirty
underwear and a liquor bottle on it. Left to your own
senses what would be your reaction?
And yet, Tracy Emin's work is on display this week at the
Royal Academy of Arts in London. Ms. Emin has achieved
minor celebrity status. As far as I know, people may
actually buy the stuff she puts together.
Another work shows Pope John Paul II being struck down by
a meterorite. Get it? God's little joke. Oh, if God would
only choose his targets better...and send down a shower
of stone on these claptrap artists!
St. Michael is said to have fought dragons and chased the
devil. Where is he now that we need him?
"This is the dragon's day," says Auden, later in his
But God has a sense of humor too. And perhaps nothing is
so amusing as collective madness. The sight of people
spending fortunes to buy trash - one of the displays at
the BAA show is described in the IHT as "a large pile of
garbage" - must send a ripple of laughter through the
entire assembly of gods, demi-gods, angels and
archangels. Perhaps they laugh too at millions of earnest
voters lined up at polling places to elect dunderheads
whom no one really wants...and at investors who pay 263
times earnings for companies about which they haven't a
It's a funny world. As Elizabeth and I made our way
around the show, we spotted a pair of 18th century chairs
with gilded, curved arms and purple fabric that reminded
us of pimp-mobiles in Baltimore's ghetto neighborhoods.
"They're hideous," said Elizabeth. We were just too
ignorant to realize how attractive they were - at $10,000
In another room was the work of a master sensationalist -
Pablo Picasso. The painter has evidently tossed a
greeting to a friend - giving his regards in crayon, with
a childish sketch in the corner... which must have taken
about 30 seconds of attention. Remarkably, someone had
framed this casual scrap and now offered it for sale. I
did not ask the price.
But imagine that you had only your own eyes to guide you.
Imagine that your C spot had been lobotomized and you
were too ignorant to know that this art would make you
cool and too dull to care. What would it be worth to you
- this piece of paper with a scrawled note and crude
Poetry is largely immune to collective thinking. It
almost never 'catches on.' Instead, each reader has to
figure it out...alone...one by one.
Your dragon-slayer ...still trying to figure it out...
P.S. the last lines of Auden's poem: "1929"...on how a
We know it, know that love
Needs more than the admiring excitement of union,
More than the abrupt self-confident farewell,
The heel on the finishing blade of grass,
The self-confidence of the falling root,
Needs death, death of the grain, our death,
Death of the old gang; would leave them
In sullen valley where is made no friend,
The old gang to be forgotten in the spring,
The hard bitch and the riding-master,
Stiff underground; deep in clear lake
The lolling bridegroom, beautiful, there.
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Last modified: April 01, 2001
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