The Daily Reckoning Weekend Edition
September 02-03, 2000
By Addison Wiggin
MARKET REVIEW: Fed Out of the Picture for 2000?
Complex news for the workers’ holiday: “Economy Seen
Slowing, Markets Joyous” a Reuters’ headline tells… as
six Fed rate hikes from June ’99 to May ’00 appear to be
showing their mettle.
The Dow, however, barely noticed. It finished up 23 for the
day. But on the heels of a healthy 112-point surge on
Thursday earlier losses for the week were marginalized. The
big board ended the week at 11,238… an overall gain of
The broader markets faired about the same. The Nasdaq,
which also enjoyed significant Big Tech gains Thursday, was
up 27 to close at 4234 – a 191 point jump for the week. The
S&P 500 moved up, but barely. She was reportedly seen
sauntering into her hotel to enjoy the holiday weekend at
Early Friday, the Labor Department released unemployment
figures, which edged to 4.1% in August still daringly close
to a 30-year low. ‘Total payrolls’ fell by the most
significant amount in nearly a decade. But, as Lynn
Carpenter predicted earlier this year, much of the decline
in the seasonally-adjusted total employment can be
attributed to 158,000 temp workers sent out by Census
bureau to harass American citizens for their vitals.
Still analysts cooed: “Essentially, as a result of recent
tame economic data,” one of the fearless was quoted in
Reuters… “The Federal Reserve Board seems to be out of
the picture for the rest of the year.”
Perhaps the Fed will make use of their new-found free-time
searching for the $624 billion they’ve misplaced (see: “It
All Makes Sense In Bora Bora” – below.)
The Russell 2000 closed up 4 at 541.
PRICES: Platinum and Palladium Up Big, Dollar
Dangerously High, Natural Gas Headed for Crisis
Gold: $280.80, down $1.20
Silver: $5.05, down a fraction
Platinum: $595, up $8.60
Palladium: $725.00, up $7.95
Crude Oil: $33.40, up $.26
Natural Gas: $4.835, up $.053 ? This is where you want to
keep you eye peeled for the next couple of months,
especially around Nov 1. More below… (Dan Ferris)
CRB Index: 228.45, up 1.04
Dollar Index: 111.33, down 1.24
Yen: $.009, up a very, very small amount
Euro: $.90, up a penny
British Pound: $1.46, same here
MARKET COMMENT: Labor Day Weekend…
Profits from beer and cola…
“As we come to Labor Day and the end of summer… it’s
time to think defensively. I’m no doom and gloomer – I
rarely get out of the market entirely – but this fall is a
good time to load up on cash, bonds and the most super-
stable stock picks… which do not include Big Tech.
Here’s an example. We just added what I think is the
world’s best beverage company to the Fleet Street Letter
portfolio. No matter what happens in the economy, a beer
or cola goes down well – and sales stay on track. But few
companies in this very crowded and cutthroat arena can
actually turn a big profit or increase their sales by
much. Coke certainly can’t. Anheuser Busch can’t.
Our Fleet Street pick can. It’s up 7% this week alone.
That’s not sizzling compared to the tech-stock world, but
this fall I believe the name of the game will be “how not
to lose your capital” and in a super-value world seven
percent’s pretty darn good. You can sleep well with this
one… you won’t have to worry about an 80% drop
As for Bud, we shorted it via a put option in the
Contrarian Speculator and nailed down our first 27% this
week when we sold part of our position. The rest is up 72%
at the moment.”
The Fleet Street Letter
“P.S. By the way, since Fleet Street Letter went to press
on the 22nd, the Viant short has gained 71%.
Unfortunately, FSL is analog, being a print newsletter. We
did get it posted digitally for our readers on the 28th.
Anyone who acted on that advice then has made a mere 54.7%
(For more on profiting with Lynn’s trading system see you
free report in The Daily Reckoning Investor’s Library
…And Looking Ahead To The Heating Season.
“I see major magazines are picking up my theme: The
Internet’s Dirty Secret (it runs on fossil fuels, shhhh.)
Our stocks – CONSOL Energy, EOG Resources, El Paso Energy,
Enron and Dynegy – are enjoying some limelight.
Ironically, this early popularity could indicate a
correction in share prices. If so, you’ll want to buy the
dips. Here’s why:
The start of the heating season is exactly two months
away. Sixty five percent of US households heat with gas.
Twenty two percent use electric heat. The American Gas
Association reports 2.14 trillion cubic feet of natural
gas in storage versus 2.52 last year. That’s 15% below
last year level. It’s going to be very hard to make up the
difference in the next 8 weeks – even with the gas rig
But here’s the real concern. Even if we do make it to last
year’s levels; last year was the mildest winter in 105
years of record keeping. I’m betting against another 105-
year record. That means higher demand with tighter supply.
Currently, natural gas prices are closing in on $5. If the
shortage is as bad as I think it is, you can expect price
spikes as high as $7… and they’ll last through the
winter. Natural gas will follow on the heels of oil… and
be the next energy commodity to surprise everyone by going
higher than expected in a very short amount of time.”
Real Asset Investor
FLOTSAM AND JETSAM:
Ahhh… the French: Politics Over Contract.
“No, you can’t use…” The waiter said in broken English
pushing my debit card back to me as if it smelt bad. “Must
be 100 Francs or more.”
The bill was 98 Francs.
On principle, I refused to order more dessert. So, I left
my wife as collateral, and walked down the street to the
ATM. When I returned, I placed a crisp 100 Franc note on
the table. Within seconds the waiter, like a tern diving
for herring, swooped down on my money.
By law, in France 15% gratuity is included with the bill,
so we waited for change. Fifteen minutes later it was
obvious our waiter wasn’t coming back. Without so much as a
nod, he kept the 2 Francs.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
“If you can’t answer a man’s argument, all is not lost; you
can still call him vile names.”
– Elbert Hubbard