06/29/03
Friday’s close:
Dow -89.99 to 8989
Nasdaq -8.73 to 1625
S&P 500 -9.60 to 976
Investors ignored Greenspan’s attempt to goose the markets with a 25 basis point cut to the Fed funds rate Wednesday. Losses over the week culminated in today’s 89 point "pullback"… the Dow, the S&P 500, and the Nasdaq all fell… 2.3%, 2.0%, and 1.2%, respectively… 1536 stocks advanced Friday on the NYSE…1715 fell.
Bonds also came under selling pressure, but managed to end Friday with the 10-yr Treasury up a skosch… its yield at 3.54%.
According to Briefing.com investors and consumers remained bullish this week. Personal spending rose 0.1%, personal income was up 0.3%, and the revised reading for the Michigan Sentiment report was 89.7… two points higher than expected.
Gold lost $8 bucks this week. But the "red-wine benchmark" improved slightly: after falling as low as $1.20 to the euro, the US dollar rose to $1.14 by the close on Friday…allowing your editors to get a decent bottle of Bordeaux for under $5.00 again.
*** you’ll note the Weekend Edition is a little truncated this week. It’s likely to be so for awhile… we’ve got a little one on the way. Cheers, Addison. (You’ll find a full week of The Daily Reckoning below).
THIS WEEK in THE DAILY RECKONING
WE THE DEAD (06/27/03)
by Bill Bonner
"…The days of the American constitutional republic are long over. The neo-cons claim that they are bringing Wilsonian democracy to the entire world. Somehow, they seem to know that this is what the world wants and needs. Everybody gets a vote in this new Democratic Valhalla. Every half-wit’s ballot is worth as much as George W. Bush’s. Every fool and moron gets to have an opinion. Only we, the dead, are left out. Excluded. Ignored. Forgotten…"
‘WHITE ELEPHANTS’ AND OTHER MONETARY AILMENTS (06/26/03)
by Dr. Marc Faber
"…In the real economy (with a small capital market), bubbles tend to be contained by the availability of savings and credit…whereas in the financial economy (with a disproportionately large capital market, compared to the economy), the unlimited availability of credit leads to speculative bubbles, which get totally out of hand…Ignoring the difference could be disastrous…"
THE FIRST PANACEA (06/25/03)
by John Myers
"…The massive eight trillion dollars of U.S. financial assets held by foreigners means that all foreign central banks and foreign institutions have good reason not to liquidate stocks and bonds, even if the U.S. were to systematically debase its currency. Liquidating U.S. assets could create a vicious cycle of dollar weakness, leading to additional asset sales that would lead to additional dollar weakness, on so on it would go. What Washington really has then, is tacit permission from foreign investors to devalue the dollar; albeit slowly. And this is precisely the path that the Fed is pursuing…"
VIPERS, AND THIEVES, TOO (06/24/03)
by Addison Wiggin
"[Louis] McFadden described the Fed as ‘one of the most corrupt institutions the world has ever known’…an ‘evil institution that has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government.’ Given the fact that we’ve just experienced the fastest descent from ’surplus’ to ‘deficit’ in the nation’s history, McFadden’s observations seem as relevant today as they did 70 years ago…"
ANTI-LEVERAGE: A THEORETICAL MASTERPIECE (06/23/03)
by the Mongambo Guru
"…And then – and this is the part that I think will swing it for me with the Nobel Prize people – I make the leap to the concept of government as an asset, and one whose maintenance costs make it also so, so, so, it is hard to think with your enthusiastic applause still ringing in my ear, subject to an exponentially approaching natural limit…"
HEADLINE, NEWS And INSIGHT: A unique way to play the gold market… pop divas getting burned out on excess… and a short history of empirical demise…
Like Gold, Only Better
by Dr. Steve Sjuggerud
"…I went looking for the best way to get into gold right now… a way providing significant upside potential, but with limited downside risk. It’s actually hard to find… You could own gold outright. But if we’re right in this Fed scenario, we’d like a little more bang for our buck. You could buy gold futures, but they’re risky — why risk losing more than your initial investment if you don’t have to? The next logical choice might be shares of mining companies, but mining shares are getting pricey. I had to dig deeper…"
Ka-Ching!
by Rick Terry
"…there is a great unspoken knowingness; a guttural, instinctual premonition that, for the idolized, gilded calf of American consumerism… the gig is up. Even our sex symbols are in on the secret. Everyone knows except Messrs. Greenspan, Bernanke, and McTeer. Although, I suspect even this trio senses the sea change – late at night when it’s just them and their MTV. Everyone knows it. It’s just that nobody wants the music to stop…"
The Decline of the Pax Americana
by John Myers
June 28-29, 2003
