The Daily Reckoning Weekend Edition

September 09-10, 2000

Paris, France

By Addison Wiggin

MARKET REVIEW: Big Tech Takes a Beating, Nasdaq ends the
Week Below 4,000… Oh, And It’s Still a Bubble, Stupid

Even in Europe…all eyes remain on the Nasdaq. Um, just in
time, too. The index dropped below 4,000 for the first time
in two weeks on Friday, as investors dumped Big Techs.

“…the Nasdaq has declined below the prior week’s low, so
I can say with confidence that the Nasdaq has topped out,”
an analyst crowed with confidence to CNN. The tech-heavy
Nasdaq slipped 119 to 3978… an overall loss of 255 for
the week.

The Dow was down slightly 39 to cap the week at 11,220. It
slid 18 for the week. Still not a bad showing. This hold
out for old economy die-hards seemed content to linger a
few extra days in the summer of love – or maybe it just
takes longer for this old boy’s Labor Day hangover to
subside. Who knows…

On Friday, losers outgunned winners 5-to-4 on the NYSE. And
the S&P 500 shed 8 for the day and 26 for the week to end
below 1500 at 1494.

This week saw oil claimed new high territory…

It crested $35 briefly on Thursday before dropping back to
$33 to close the week. The oil drama is heating up nicely
for OPEC’s first-ever summit in the Western Hemisphere.

…as the euro claimed new low ground. The Esperanto
currency fell below $.87 pulling the Franc and the British
pound down with it. Despite sound economic fundamentals,
three events this week underscore the source of woe for the
ever precarious euro…

Meanwhile debt, consumer and public, increased in the US.
Bill King: “Reserve Bank credit rose $6 billion last week.
Foreign holdings of US debt at the Fed total $714 billion
and the Fed holds $511 billion in its own account. Tis
bubble fuel… for the month of August, debt increased $75
billion to $17 trillion… it’s a bubble stupid.”

The Russell 2000 dropped slightly 7 at 535 – down 6 for the
week.

PRICES: Oh, the Sad, Sad Euro… but Take a Look at
Palladium!

Gold: $2.77… oh, why bother…

Crude Oil: $33.60, down $1.76 on Friday

Natural Gas: $4.88, down .11 (midweek it broke $5 and it’s
going higher still…hang on!)

Platinum: $606.50 up $19.50 for the week

Palladium: $763.00 up $45 for the week

CRB Index: 229.80, down .41

Dollar Index: 114.30, up again

Yen: $.009 holding steady

The sad, sad Euro: $.86, down again

British Pound: $1.42, down $.01 and falling – and still a
good short…

MARKET COMMENT: Value Abounds… and More Darned Cheap
Stocks

“Since you can’t predict the future,” wrote Bill Bonner on
Friday, “all you can do is to buy investments that are
priced at levels where they are not likely to go much
lower… a very modest goal. But it comes with the hidden
wish that a very cheap stock will not be very cheap
forever.”

Every dog has his day, as they say. Lynn Carpenter: “Since
picking 10 great companies to hang onto without qualms for
the next 10 years, a few have lagged. We expected that. All
sectors don’t get hot at once.

One of the laggards was T.J. Maxx. But, only a contrarian
would buy an apparel retailer in the hot months of the
year. At one point it was down 30% – but now it’s back.
Still, this could be the last chance this year to get into
this stock at a real bargain price. It’s a leader in its
field… but the field has been ignored most of this year.

Right now, you can still get it for a P/E of 12 and price
to sales of 0.56. It’s not priced for perfection … it’s
priced at half its real earnings per share growth rate and
has a return on equity of 36%. That would be outstanding
in the software business. In retail, T. J. Maxx is in a
class all by itself. Buy TJX now…

Finally, I note the financial media have gone hot on
defense industry stocks. A little late, I think. We bought
Northrop Grumman in April and have seen a nice 42.5%
increase in five months. Of course, that’s not the end of
the ride. It’s still a buy, I still like it… and it pays
a 2% dividend, too.”

Lynn Carpenter,

The Fleet Street Letter

For more Darn Cheap Stocks, please visit:
The Fleet Street Letter 10-Stocks-For-10-Years portfolio.

The REAL NEWS Is: Natural Gas Shortage!

“We are headed for a major natural gas supply shock this
winter. Today, we have 15% less natural gas in storage
than last year at this time. November 1 is the start of
the heating season. After that time, natural gas
taken out of storage will exceed the amount put in. Which
means…

THERE IS NOT ENOUGH TIME TO MAKE UP THE 15%
DEFICIT BEFORE NOVEMBER 1. PERIOD.

The impact of this will be enormous, as 65% of us heat
with gas. By contrast only 22% use electric heat. Propane
and butane will probably get some action as substitutes
for natural gas.

It’s going to be a long, cold winter. We’re up
significantly on every one of our energy picks El Paso
Energy, EOG Resources, Enron and Dynegy… and expecting
to go much higher.”

Dan Ferris,

Real Asset Investor

FLOTSAM AND JETSAM: The Beginning of the End for the Euro?

In Western Europe saving is a way of life. “There is
nothing,” says Dr. Kurt Richebacher “that prevents banks in
Continental Europe from promoting consumer credit. Yet such
promotion is nonexistent.” By contrast, during the summer
of love we’ve seen the savings rate in the US plummet to
negative territory.

Still, politics is a way of life here, too. And “three
events have converged this week,” reported the
International Herald Tribune on Friday, “to underscore the
unclarity” with which the EU is proceeding… and
consequently the heavy role politics is playing in
weakening the euro:

“…the French government began issuing warning signals
about the real chance of failure… of the EU’s inter-
government conference on institutional reform.

…a [proposed] referendum on the EU’s eastward
expansion… created a deep wave of discomfort in Germany
and Eastern Europe. Public opinion polls show a majority of
Germans opposed to the expansion.

…the blockade of refineries by French protesters…
illustrated the unwillingness of the government to reduce
public spending. Higher oil costs have not been compensated
by lowering taxes which represent up to 83 percent of
prices to consumers at the pump.”

The French, stewards of Europe’s second largest economy,
“have [repeatedly] sidestepped an aggressive program aiming
at tax reduction and reform, and narrowing public
expenditure.”

Yet, says the Fleet Street Letter’s Brian Durrant, “it is
widely agreed among European leaders that a single European
currency is a necessary and irreversible step towards a
political union run by un-elected and unaccountable central
bureaucracy.”

“Once we’re locked in, we’re locked in,” warns a website
hosted by a consortium of 338 British businessmen. An anti-
euro campaign curiously titled: Europe Yes, Euro No –
accusing the euro of representing the move toward “higher
taxes, the wrong interest rate, and a single state” – has
been gaining wider appeal in the UK…

…and On September 28, 2000 the citizens of Denmark will
march to the polls vote ‘yes’ or ‘no’ to joining the euro.
What if Denmark says ‘no’? We could see the Euro out on the
street looking for work. But that’s okay… I hear they
need help mopping the floor at McDonalds on rue Soufflot
near Les Jardins du Luxembourg.

Addison Wiggin
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“There are two methods, or means, and only two, whereby
man’s needs and desires can be satisfied. One is the
production and exchange of wealth; this is the economic
means. The other is the uncompensated appropriation of
wealth produced by others; this is the political means.”

– Albert Jay Nock