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The website Yahoo! - alone - gobbles up about $18,000 A
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- Enough juice to light up 360 single family homes!
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*** "Maybe we've seen the worst," said one analyst
yesterday as the Dow rose 12 points and the Nasdaq shot up
97, to close above 3,000.
*** Long-time bear, Barton Biggs thinks he's seen a Big
Bottom. Biggs says he expects the Nasdaq to rise 25% in the
weeks ahead.
*** Investors are expecting the Supreme Court to put an end
to the election purgatory today...and believe that the
long-awaited end-of-the-year rally is finally underway.
*** Maybe it is. If I were Mr. Bear...I would probably be
ready for a break. And it wouldn't surprise me if the rally
were strong enough to make us wonder about our major
hypothesis: that the bull market is over...and the real Big
Bottom won't be seen until people stop looking for
it...that is, when stock prices work their way down so low
that people give up thinking about them.
*** Intel rose more than $3 yesterday...along with Cisco,
another `must own' Big Tech, which went up about $2.50.
*** But not all techs rose. Sun Microsystems fell 12%. JNI
fell 45%.
*** The Bank of America is a trendsetter. The bank warned
that bad debt losses may reach $1.2 billion in the last
quarter of the year. But eager to turn lemons into
lemonade, the bankers announced that they were setting up a
new "debt business." "This is a reflection of the turn in
the credit cycle," remarked a fixed-income analyst.
*** Credit cycle? There wasn't even supposed to be a credit
cycle anymore. Not after the `New Economy' was invented.
And Bruce Steinberg, chief economist at Merrill Lynch, says
he thinks the New Economy is still alive and well. After a
brief interlude of worry and doubt, opines Steinberg,
businesses will still borrow in order to make huge new
investments in new technology.
*** Stephen Roach, meanwhile, holds a similar post at rival
firm Morgan Stanley Dean Witter. He believes the steep
incline of the downturn in economic growth is telling. In
less than 12 months, GDP growth will drop from over 6% to
less than 2%, he predicts. "This is a recession-style
compression in the growth rate," he says.
*** Don't worry, replies Steinberg, "That was an incredibly
important statement by Greenspan," he says, referring to
Greenspan's speech last week. "It means that the Fed will
not sit around and let the economy sink into recession."
*** Greenspan will "be reactive, not proactive," reasons
Roach. "Whatever the Fed does early next year will be too
little, too late..."
*** The trouble with economists and analysts is that they
are notoriously wrong. The Wall Street Journal looked at
the forecasts for the year 2,000 from 11 top Wall Street
analysts. Nine of them said the S&P would go up over the
year...above 1600. (It is, of course, down for the
year...at 1369.) Only one guessed right about the direction
of the S&P.
*** That in mind, you may now consider the news that a
group of top analysts came out yesterday and said the S&P
is now at its most attractive level in 2 years.
*** The dollar rose a little yesterday. It is back to about
87 cents per euro. The dollar may have topped out...but it,
like the Dow, is dawdling rather than diving down directly.
*** Oil rose a little, a dollar and six cents.
*** "Will consult for food," reads the headline on Red
Herring. The Internet consulting firms have fallen along
with their clients. The average consulting company stock is
down 71.6% since October 1.
*** The Dec. 4 issue of Barrons included an ad for the
American Century Vista fund - a fund with heavy investments
in tech stocks. The ad quoted a 12-month rate of return of
108.12%. But the number is asterisked. A footnote tells you
that the return was calculated through Sept. 30. What a
difference a few weeks make! By the time the ad appeared,
the actual return had declined by nearly 86 percentage
points. Similarly, ad an for T.Rowe Price's Science &
Technology fund ran in the Nov. 27 issue of Business Week,
citing a return of 38.42%. Yet, again, updating the return
to the date of the ad would have given the fund a loss of
12.9%.
*** I took both girls, Sophia and Maria (pronounced Mariah)
to dinner last night. I'm leaving for the U.S. today...I'll
be gone almost until Christmas eve. So we found a good
restaurant on the Avenue Kleber. Little did we know that
the chef was about to have a nervous breakdown...more
below.
*** Also, I know that there are a lot of new readers
(thousands of them) to the Daily Reckoning...so perhaps it
is time for an introduction...again, more below.
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The conversation in the rather up-market "Les Bouchons de
Francois Clerc" came to an immediate halt. Everyone had
heard the booming voice in the kitchen. Someone was `losing
it'...
I will do my best to translate, without offending your
refined sensibilities, dear reader:
"C'est une catastrophe! This place is a bordello filled
with the excrement of fat porcine animals of low
intelligence who prostitute themselves."
It was a remarkable stream of cussing which went on for
several minutes. I had heard nothing like it, even when
Pierre skinned his knuckles while trying to fix the
tractor.
Maria laughed. Other diners looked at each other
awkwardly...or down at their food nervously. Had the man
lost his mind? What had he done to the food? We could
imagine tomorrow's headline in the leftist newspaper,
Liberation:
"Diners Poisoned as Chef Goes Mad!"
I could even imagine the article's slant: sympathy for the
poor chef who had probably been asked to work more than his
usual 35 hours and was justifiably indignant over the
working conditions, or perhaps over the condition of the
carrots he was given to work with...along with a certain
unstated contempt for the dead bourgeois customers - who
had driven the poor man mad.
This is my first experience with a chef gone berserk. But
they must go crazy all the time. French diners are very
demanding. And very critical. They take food seriously.
At least a couple DR readers have wondered why I make my
home in France. To some, living in France in the time of
Chirac has no more appeal than serious dental work in the
time of Colbert. But in reply to the question, I respond
that life, like theatre, is lived as either tragedy or
comedy. An American in France sees the comedy in things. We
are like Chevy Chase in his movie, "European Vacation," too
ignorant to worry about what the chef puts in the soup...
and too romantic to care.
And there is another reason - which helps explain, or
perhaps illustrate, many of the ideas you find in the Daily
Reckoning...which I will explain.
The French take many things seriously. Maria and Sophia
recounted their experiences at school, Maria doing wickedly
accurate impersonations of some of the characters at the
Instituted de la Tour...and Sophia reporting, in depth, on
the strange goings-on at the Ecole Actif Bilingue.
Poor Diane! Maria reported that her friend broke down in
tears as her teacher evaluated her work in front of the
entire class. Apparently, each of the students is asked to
stand as the teacher tells her how she is doing. The
pressure is intense. Teachers in France do not worry about
a child's self-esteem. Students are criticized sharply,
almost mercilessly. It is hard to feel sympathetic towards
a 14-year-old boy. But Maria's account of how teachers
picked on the only two boys in her class brought me close.
I have also heard parents criticize their children in a
manner that would seem harsh in America. But parents are
expected to spend a lot of time pushing their children to
do well in school. So much depends on getting good grades
in France...the whole country seems to be run by people who
did well in secondary school, took competitive exams and
got into the elite `grand ecoles' such as E.N.A., the
school of administration that prepares most of France's
high-ranking business and political leaders.
"The enarques [as graduates from E.N.A. are called] are
untouchable," says a friend of mine, asking not to be
quoted. "There are always scandals in France - and people
going to jail. But the enarques never go to jail. Because
the judges are enarques too."
[I am secretly hoping that maybe Henry will make it into
E.N.A...and will make me untouchable too.]
Sophia's school is completely different from Maria's. It is
a school for foreigners, and perhaps redundantly, for
misfits. Sophia is there because her French is not good
enough for the regular schools. Unlike the younger
children, she has had to learn French the hard way - by
studying it.
There are four major groups in Sophia's school. There are
the French - who are usually hard cases - the "Arabs," the
"Koreans," and the Anglo-Saxons. Thus do school children
divide the races of mankind.
"Instruction is supposed to be in English," Sophia told us.
"But nobody speaks English except us, the Anglo-Saxons. The
rest speak various things that sound a little like they
might be English...but I usually can't understand a word."
Curiously...
"But the Koreans," as Sophia's schoolmates refer to all the
East Asians in their school, "who barely speak English,
seem to be the only ones who get good grades."
This little insight by Sophia triggered a recollection in
her sister:
"Dad," she asked, "How come you and Mom argue about such
silly things? I mean, I heard Martine's parents arguing
about money...or maybe it was over what kind of car they
were going to buy."
"But you and mom," she continued, "last weekend...I mean
who ever heard of parents arguing over who was that...
Darwin?"
Ah yes, Darwin. Well, that.
"Maria, we weren't arguing," I protested, trying to close
ranks with Elizabeth, "we were just discussing it."
But Koreans!
Yes - we had mentioned Koreans. I had actually. East Asians
seem to work harder; and intelligence tests suggest that
they are smarter than Anglo-Saxons. Or the French. In
Darwinian terms, they seem to have a competitive advantage.
How come the whole world is not full of Koreans? Because, I
had pointed out to Elizabeth, Darwin's theory is flawed. It
was a silly point...but a silly argument needs silly
points.
Who could take an argument over Darwinism seriously? Even
worse, who could take Darwinism seriously? Still, it is fun
to argue about it...
Uh oh...I'm going to miss my plane if I don't leave now.
More to come...and Darwinism...and living in France...
And, of course, more...
Rushed,
Bill Bonner
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