07/20/03
Greenspan decoder rings were operational this week. The Fed chairman tried to talk down the bond market in a speech before Congress… and investors apparently got the message. The Dow lept up 137 points Friday to end the week at 9,188… 68 points ahead of the Monday opener.
Despite similar gains Friday, both the Nas and S&P 500 were down for the week; -25 points to 1708 for Nasdaq… -4 to 993 for the S&P. Year to date? Of the major stock market indices, the Nasdaq is still in the running for the most brownie points; it’s 28% in the black thus far for the year. The Dow and S&P are ahead by 10% and 13%, respectively.
"Earnings week" continues this Monday… but one wonders if what is reported will really make a difference. Investors are so convinced that the ‘second-half recovery’ is in the fix (where have we heard that before?) money is streaming back into stock funds. According to Trim Tabs, by way of USAToday, stock funds that invest primarily in U.S. stocks saw inflows of $2.9 billion in the week ending July 16th… a boost of some $600 million from the prior week.
Gold traded as high as $348 this week, but ended about .50 cents cheaper than where it began: $344. The euro, however, got a little cheaper… you can now buy one with US$1.12. Lucky for us, your Paris based editors, eh?
Cheers,
Addison Wiggin,
The Daily Reckoning
March 19-20, 2003
P.S. "The modern-day, limited-government movement has been co-opted," Congressman Ron Paul told his colleagues the day after my son was born (July 10th). "The conservatives have failed in their effort to shrink the size of government. There has not been, nor will there soon be, a conservative revolution in Washington. Political party control of the federal government has changed, but the inexorable growth in the size and scope of government has continued unabated. The liberal arguments for limited government in personal affairs and foreign military adventurism were never seriously considered as part of this revolution.
"Since the change of the political party in charge has not made a difference, who’s really in charge?
"If the particular party in power makes little difference, whose policy is it that permits expanded government programs, increased spending, huge deficits, nation building and the pervasive invasion of our privacy, with fewer Fourth Amendment protections than ever before?"
THIS WEEK in THE DAILY RECKONING
PRAY FOR DAWN (07/18/03)
by Bill Bonner
"… Both French and Americans believe themselves exceptional. That they are different, we do not deny… But that they are also very much the same is also true; neither can make the world stand still. The centralized welfare state took a big leap forward in France in the 1930s under Léon Blum… and in America under Franklin Roosevelt in the same period. And now, a kind of heady, vainglorious, feeblemindedness has taken hold in Washington. Led by the neo-cons, Americans see themselves as gods… as masters of the universe who intend to remake the world in their own image… "
PREMEDITATED FRAUD (07/17/03)
by Karim Rahemtulla
"… Companies that still pay a pension are obligated to use a conservative rate of return – usually based on the 30-year U.S. Treasury bond – to calculate the future benefits from a plan. Well, what if you could raise the rate of return with the stroke of a pen? The answer: the amount of your liability would actually decrease… which means Corporate America would be perpetrating a massive fraud on retirees… "
CHINA CALLING (07/16/03)
by Robert Tracy
"… Companies of substance are rare… and they do not necessarily operate in the United States. China Mobile (Hong Kong) Ltd., the world’s largest mobile phone operator (as measured by number of subscribers), is a company that has captivated our attention lately. It is, we believe, a company of substance with both a low valuation and a promising growth profile… "
THE BLESSINGS OF DEFLATION (07/15/03)
by Llewellyn H. Rockwell, Jr.
"… There is no radical disconnect between the interest of consumers (who always want lower prices) and overall economic health. You can only marvel at the many economists and commentators who try to convince the public that deflation is a very scary thing. In doing so, they enjoy the cachet associated with generating a counterintuitive conclusion, but in this case, it is simply wrong. The first intuition that bargains are a great thing is precisely the right one… "
BASTILLE DAY (07/14/03)
by Bill Bonner
"… A poll taken in the early 1780s might have shown the French to be extremely optimistic and confident. And why shouldn’t they be? The last major financial crisis – caused by John Law’s Mississippi Bubble – blew up over 60 years before. And had the world ever seen anything approaching the splendor of Versailles? But in 1789, Paris mobs came to the crossroads of history and veered left. They replaced an absolute monarch who had very limited power, with a people’s republic restrained neither by common sense nor common decency… "
———————
HEADLINE, NEWS And INSIGHT: "Extreme" Central Banking…
The Monster That Credit Created
by Dan Denning
"… We have now entered the era of ‘extreme’ central banking, where bankers must turn everything they can into cash to promote inflation. It’s a kind of reverse Midas touch, where everything becomes currency and where debts can magically become new money in the economy. This is how the end begins, with more and more desperate measures to pay off the debt with new money. The only problem is that each new unit of currency decreases the values of all the others in existence. Prices rise. Inflation is born. And the currency is destroyed in a blizzard of paper. Later, fire…
"
The Economy: Place Your Bets
by Andrew Kashdan
"… Commodity prices should lay to rest any lingering fears of deflation. Meanwhile, economists ignore the negatives and place their bets for a strong second half, while rising bond yields threaten to take a bite out of an already feeble recovery… "
Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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