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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter

MONDAY, 12 JUNE 2000 


Today:  Getting What You Need

*** Nothing happened on Wall Street on Friday...a fitting 
end to the week
*** But the Dow is decisively below the 50% retracement 
*** "Phony" PPI numbers...bad loans 
cutting back...and more

*** The PPI I referred to last week came out on schedule on 
Friday. It showed inflation rising at the wholesale level 
by .2%, small enough to qualify as "unchanged."

*** It was not a 'big day' on Wall Street. It was a little 
day. Nothing comes from nothing happened after 
nothing was announced. The Dow rallied and then fell - 
ending the day down 53 points. The Nasdaq managed to rise 
49 points.

*** Advancing stocks led declining ones 1668 to 1185. And 
there were 65 stocks hitting new highs on the NYSE, against 
39 hitting new lows.

*** All in all, it was a fitting end to an indecisive week. 
The Dow fell 1.67% over the week. The Nasdaq rose almost 
the same amount - 1.61%.

*** The week ended with the Dow with a P/E of 20. The S&P's 
P/E is 28. And the Nasdaq's P/E is still a sizzling 150.

*** No sooner had the PPI number appeared than critics 
began attacking its veracity. Bill King described it as 
"phony," intended more to help re-elect Al Gore than to 
provide investors with meaningful information. The Bureau 
of Labor Statistics, the agency officially in charge of 
fudging the figures, reports that gasoline is down 10% 
since March. King asserts that it is really up 30%. 

[For a free one-month trial to Bill King's service please 
call 1-800-433-1528 (code 3437)]

*** King leads us to the BLS website where the numbers are 
explained (or obscured) and we encounter our old drinking 
buddy, 'hedonic' measures: "An alternative quality 
adjustment technique using hedonic regressions has been 
incorporated into PPI adjustment processes. Hedonic 
regressions estimate the functional relationship between 
the characteristics embodied in the products in a market 
and the products' selling prices" In other words, the BLS 
quants take a guess at how much something is worth, rather 
than rely on actual prices.

*** Hmmm...well, sounds like Pentecost. Everyone in France 
celebrates the holiday today, but no one is quite sure what 
we are celebrating.

*** I listened carefully as Pere Marchand attempted an 
explication in yesterday's sermon. People spoke in tongues, 
they were given the gift of healing, someone's hair caught 
fire. It was all rather remarkable. 

*** Richard Russell, interviewed in this week's Barron's, 
reminds us that the Fed has raised the discount rate to 6% 
or higher only 7 times since 1920. Each time, the market 
performed badly afterwards. The most recent episode was in 
1989. The Fed once again put the discount rate at 6% on May 

*** And the Financial Times warns that a review of large 
loans by federal bank regulators shows a sharp rise in the 
number of bad loans. The proportion of "adversely rated" 
loans in the March 1998 report was only 2.5%. In '99 it had 
risen to 3.7%. The report this year is expected to show a 
further increase.

*** The big number this week will be the CPI report 
expected on Wednesday. In this numbers-watching market, you 
would expect Wall Street to hunker down until the figures 
are released. But this is also the week when June S&P 
futures expire. Bill King expects the big players to try to 
goose up the market before the close of business on 

*** Oil rose a little on is still above $30 a 
barrel. Gold fell 40 cents. 

*** The dot.coms are cutting back. Industry websites are 
full of staff cuts, budget cuts, and the unkindest cuts of 
all - when capital is cut off and the company has to close 
up shop. laid off 13 workers. CBS laid off 24 in 
its Internet group. closed its cyberdoors. 
APBnews laid off "all 140 staffers" (I wonder who's minding 
the store).

*** Dan Ferris, editor of Real Asset Investor: "Natural gas 
storage levels are 25% lower than last year. Gas prices 
have gone from $2.30 earlier this year up to around $4.40 
this week. Some traders have been talking about natural gas 
prices in the $8-$10 range by the end of the year." 
Climbing prices and falling inventories with no relief in 
sight? Sounds like an unfurling opportunity...but not the 
way most investors think. ( 

*** "Why are we not already in a major bear market, rather 
than feeling nauseous?" asks Lord Rees-Mogg, who thinks he 
knows... (

*** "Putin's Adviser Extols Ayn Rand" says The Moscow 
Times. "Newly appointed presidential economics adviser 
Andrei Illarionov showed his economic colors Tuesday as he 
vociferously supported the ideas of one of the 
most influential shapers of Western thought on free 
markets, Ayn Rand," said the paper. Then, quoting Mr. 
Illarionov: "Every import tariff and every limit on 
foreign-exchange transactions is a blow to 
our consciousness. Every tax acts against our freedom." The 
new economics advisor to President Putin made the remarks 
at a news conference Tuesday dedicated to the launch of 
Rand's work in the Russian language. Illarionov cited 
Chile's economic plan under the dictatorship of General 
Augusto Pinochet as an ideal example of good economic 

*** Labor markets all over the world must be getting tight. 
Reuters reports that "Swedish furniture chain Ikea is 
trying to attract young professionals with handwritten job 
advertisements on lavatory walls." In the toilet, explained 
a manager, "people are more relaxed and receptive to our 
message." What sort of employees was Ikea looking for in 
the toilet? Copywriters.

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Getting What You Need

You can't always get what you want
You can't always get what you want
You can't always get what you want
But if you try sometime
You just might find
You get what you need

The Rolling Stones

Copywriters are hyper-sensitized to the difference between 
want and need. You can't sell people what they need. A man 
buys what he needs reluctantly and at the lowest possible 
price - with no margin for an advertising budget.

Imagine walking into a restaurant. On the chalkboard at the 
entry you find this message:

"Today's special: 

Nothing special, just a piece of dead cow, mistreated 
terribly before it was cut up...and some cooked
plants...with enough calories and nutrients to keep
you alive until tomorrow. $25.
What more do you need anyway?

Sound appetizing? 

After I completed Friday's Daily Reckoning, I wandered down 
the street to my favorite luncheon spot - the Caf‚ St. 

The owner and waiters greeted me as a regular. 

"What's the 'plat du jour?'" I asked.

"Ah," said the waiter, almost confidentially, "we have a 
delicious blanquette de vaux with carrots a huile 

Even if you don't know exactly what you're eating, it 
sounds more appealing than the dead cow.

"Du vin?" the waiter inquired, nodding his head and pursing 
his lips as if to prompt the proper response.

"Bien sur, un bordeau..."

As I was saying this, sitting against the plate glass 
window of the caf‚, a woman walked by outside. 'Walk' does 
not do justice to the way she passed. She moved with such 
fulminating grace and such pullullating charm that the 
whole sidewalk seemed to undulate in time with her steps. 
The cold glass of the Caf‚ St. Andre caressed her as she 
went by. 

All of a sudden the rest of the world was out of focus, 
only she could be seen clearly - a vision of such beauty 
that it remained imprinted on my retina, like a flash of 
light you see even after you close your eyes.

"Monsieur," said the waiter, bringing me back to my senses 
"that is not on the menu."

Oh the agonies I suffer on your behalf, dear reader. I had 
gone to the Caf‚ St. Andre for a relaxing lunch, with a 
copy of Gary North's latest epistle, intending to find a 
few nuggets of insight and information I could pass along 
to you. But I had not reckoned on summer...

Summer seems to have struck Paris suddenly. It was like a 
woman who had suddenly looked in the mirror and discovered, 
for the first time in her life, that she was beautiful. 

And then...her whole look changed. Her face. Her clothes. 
The way she walked. The way she talked. Even the way she 
smelled. Thus did the whole city seem to change the way she 
presented herself.

It was bad enough in the winter months. Every drug store 
window displayed ads for an anti-cellulite cream...making 
its point with the most perfect derriere you ever saw. This 
was neither the derriere you needed, nor were ever likely 
to have, but it was certainly the one you wanted.

And CelioI don't know what they are selling but their ads 
seem to celebrate the virtues of breast augmentation. And 
then...there are the Aubade underwear bad, so bad. 

It was hard enough, even in midwinter to focus on the GDP 
growth rate, banking reserves, and hedonic measures. But on 
Friday, hedonic measures seem to have gotten out of hand 

As you can see, today's letter is about more than just the 
stock market. Maybe a parental warning is in order. 
Today's, letter is about sex. No not the kind of tawdry, 
vulgar sex you see on TV. This is about something 
else...something much dirtier. Any connection to investing 
or economics is purely coincidental.

I am probing the living heart muscle - like a nurse 
searching for a collapsed vein...or maybe a doctor looking 
at an EKG...what do those little peaks and valleys mean? 

A redhead in long white pants, and a pink tank top 
sauntered down the street. She was absolutely gorgeous, 
too. A model maybe. She walked fast, as if she were late 
for an assignment. Then, there was a woman who looked like 
Greta Garbo. And another one - a young Deneuve. Following 
her was a Brigitte Bardot-like woman with a waifish face 
and a figure that reminded me of someone.

In fact, each one seemed to remind me of something - but I 
didn't know quite what it was. It was like Proust's lemon 
cakes - triggering a recollection so rich and inviting I 
could barely resist. But a recollection of what? I was like 
an aging writer, trying to recall love affairs I never had, 
and lovers I only imagined.

A woman in an extremely small, extremely tight blue skirt 
walked towards the caf‚. As she approached, the feeling - 
whatever it was - increased, like the sound of an on-coming 
freight train. And then, there she was - right outside the 
window - all motion...voluptuous...irresistible. I cannot 
describe her in detail. She was everything a woman should 
be. And as she passed, the wave washed over me, leaving me 
crumpled up, broken, collapsed on the beach. 

Francis Galton, Darwin's cousin, was so fascinated by some 
of the women he saw in Africa, he could scarcely believe 
they were real. He got out his calipers and other measuring 
devices and went to work, moved no doubt by the spirit of 
scientific curiosity.

But it was not science that moved me on Friday.

Just as one wave subsided another wave built up - a woman 
in a yellow dress, a stunning woman with hair nearly the 
same color as her dress...riding a bicycle. Could a woman 
in a dress that short be really be riding a bicycle, I 
asked myself as she drew alongside the caf‚ window. And 
then, she passed, and I felt as though my surf board had 
slipped out from under me and I crashed down onto the 
beach. Oh my...the rocks!

It is summer. Not technically yet. But it sure looks like 
summer. The streets of Paris are full of attractions and 
distractions. Enticing, enchanting, absolutely 

Of course, not all the people passing the Caf‚ St. Andre on 
Friday were beautiful young women. There were also a few 
handsome young men. (Do women feel the same way way when a 
handsome man passes? I don't know...)

Then, too, there were quite a few tourists - many of the 
recognizably American. One couple was typical. The woman 
looked bright and chipper, like she had invested in 
Microsoft back in 1987 and gotten a good night's sleep on 
the plane from New York. The man was a different story. He 
looked as though he had waited until December of '99 to buy 
Microsoft and hadn't slept a wink. His jaw was slack and 
looked as though he could use a good drink.

"Back in 1897," Gary North tells us, "economist-sociologist 
Vilfredo Pareto's study of income distribution appeared. He 
surveyed the larger countries of Europe and found that 
there was a strange income distribution curve in all 
nations that he studied. Something in the range of 20% of 
the population received about 70% to 80% of the income."

The 80/20 rule became known as Pareto's Law. As recently as 
1998, it was tested in a study of the U.S. and Canada. 
Again, it was discovered that little had changed. In 1997, 
the top 20% of the population owned 84.3% of the wealth.

Gary concludes that "Getting rich is simply not possible 
for 80% of the population. Anything that offers the hope of 
riches to the middle-class majority is a delusion."

It may be a delusion, but it is certainly a popular one. 
People want to get rich. They do not need to get rich. 

I remind myself that beauty is only skin deep. And like 
money, it is superficial. But superficial seems plenty deep 
enough. Money can't buy love. But it can buy those Russian 
women in the Bois de Boulogne. And what would be nicer - a 
30 minutes of cheap, imitation love with the woman on the 
bicycle...or a lifetime of the real thing with Janet Reno? 

Hmmm...maybe I'm thinking too small. Or too American. Why 
settle for 30 minutes? French men often have mistresses 
they keep for decades. President Mitterand's mistress 
shocked society in France by showing up, with his 
illegitimate daughter, at his funeral. It was not the 
revelation that he had a mistress that was shocking. 
Everyone knew that. But that she would attend the funeral -
- that just wasn't done.

Radical feminists, bless their hearts, (if they have 
hearts), say that there's no difference between traditional 
marriage and prostitution anyway. In both cases, the woman 
is kept (at great expense, I might add) in order to give 
the man what he wants.

But the radicals don't understand the difference between 
want and need. What you want is what you don't have - even 
if what you have is better. 

Finishing my blanquette de vaux, the waiter returned.

"Dessert" he asked, "can I recommend a cherry tart?"

"Oh yes..."

Your correspondent, hard at work...

Bill Bonner

P.S. I am glad I am happily married. Otherwise, I might be 
tempted. I might buy a tech stock at 200 times sales. Or 
try to meet a redhead. Either way, I'm sure I would regret 

About The Daily Reckoning:
The Daily Reckoning... "more sense in one e-mail than a month of CNBC."  That's what readers are saying about The Daily Reckoning.

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
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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 02, 2001

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