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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  The Dragon's Day

*** Big gains in Dow and Nasdaq...will the rally last?
*** 'Hedonics Brawl' turns to mud wrestling...
*** Danes vote against the 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 
afternoon nap.

*** 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'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 - - 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." it.

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"They just don't get it."

Ed Yardeni, 
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 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 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 by one. 

Your dragon-slayer ...still trying to figure it out...

Bill Bonner

P.S. the last lines of Auden's poem: "1929"...on how a 
boom ends...

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.
About The Daily Reckoning:
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Bill Bonner, recognized internationally as a brilliant writer, entrepreneur
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commentary absolutely FREE. For the first time, outsiders are getting a peek into his powerful and profitable investment insights. Bill's practical contrarian advice empowers even average investors to protect their hard-earned wealth and achieve amazing gains.

Bonner writes his email letter from Paris, France, each morning --
describing the wacky, wonderful world of investment, politics and everything remotely related. Irreverent. Sharp. Honest. Thoroughly, unabashedly contrarian. It's also among the fastest growing e-letter on the Internet.  It's a brand new service... but it has a distinguished history..

For nearly 62 year, The Fleet Street Letter, the oldest investment
advisory letter in the English language has consistently delivered
invaluable economic and political foresights to savvy investors. Current readers regularly enjoy impressive investment gains even as the market falters. Here's more from his online readers...

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Last modified: April 01, 2001

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