Waste Not Want Not

Here we go again.

“Accounting concerns” is what analysts are calling them…this time at IBM. Investors reacted by knocking the Dow down 98 to 9903. The “big board” relinquished the hopeful 10,000 level it passed on Thursday. Consumer sentiment is taking it on the chin, too.

But “investors, looking to blame this latest decline on something, may just as well choose the capacity utilization numbers that came out today,” Dan Denning pointed out to me yesterday while I was kibitzing in his office here in Baltimore. “They were appropriately villainous. Cap U was down to 74.2%. That’s its lowest level since 1983.”

What’s more, the capacity utilization number has been falling consistently for the past seven months. “I’ll tell you one thing, that’s no sign the recession is over or that the economy is recovering,” said Dan, who is, as you may know, the editor of Strategic Investment . “If businesses aren’t using existing capacity – what do they see coming down the pike?”

For the week, TNT stocks (tech, net & telecom) were beaten down the most. The tech-laden Nasdaq dropped over 2%, to close the week out at 1805.

Addison Wiggin,
The Daily Reckoning
February 17, 2002

P.S. “Hmm…maybe it’s deflation,” Dan suggested, taking a page out of the Bill Bonner playbook. “Maybe economists, craning their necks to see inflation coming down the road, have missed deflation setting up camp at their feet, right under their noses.”

“If you wanted to skip ahead a few years and see how the American debt and deflation problem plays itself out – take a look at Japan. Stock prices there are at 18- year lows. Government debt is 140% of GDP. How to cure the deepening deflation has become a major policy debate. And debt keeps getting in the way.”

For a few of Denning’s DEFLATION RESISTANT investment recommendations – up 57%, 68%, 53%


by Bill Bonner


“…In the investment world, few indicators are as reliable as the big banks. Find out where the big banks are lending a lot of money undefined and it is almost always a black hole…we’d certainly like to know where the big banks are going to lend next, so we can sellshort…”


“…Here at the Daily Reckoning…we admire the wonders of nature. And one of the wonders we most admire is the ability of Mother Nature to separate fools from their money. While the old economy did so reluctantly, the New Economy, we think, did the workspectacularly…”

Guest Essay by Martin Weiss

“…The key force driving the US economy and stock market is earnings. And right now, I count at least 8 major corporate earnings killers that are about to crash into Wall Street…”


“…People think they can get rich by ‘being in the market.’ But for a hundred years, the market has really only produced about a 6% rate of return. This has generally been enough to keep people from losing ground to inflation and taxes, but it is a long way from making peoplerich…”


“…What a pity there is no Federal Reserve system of the heart – a group of wise old graybeards who could protect the currency of love…and keep the union of a woman and a man in perpetual expansion, like the U.S. economy, with only an occasional, mild correction. If only there were some way to help a couple keep their stockrising!…”

The Daily Reckoning