Where's The Beef?

The Daily Reckoning

Weekend Edition

June 23-24, 2001

Paris, France

By Addison Wiggin

MARKET REVIEW: Where’s The Beef?

The “second half” begins next week…where’s the recovery? Analysts (and other back peddlers) are now beginning to sound like they believe the “recovery” won’t occur before 2002 – even if the Fed drops the overnight lending rate for the sixth consecutive time next week.

The wild ‘hope’ of another Greenspan panacea helped the markets close higher through most of the week, but here at The Daily Reckoning we believe another reduction is a dubious proposition at best… and unlikely to cure the market’s slide… especially with more warnings still to come.

Earnings warnings and other bad “news” is making an impression. Friday investor euphoria was punctured and the springtime “sucker’s” rally stymied…The Dow shed 110 to 10,604. The Nasdaq lost 23 at 2034 – barely keeping its head above 2000 for the week. The S&P 500 fell 11 to 1225.

Around the globe on Friday…the Nikkei skipped up slightly +0.6%… France and Britain each rose a skosch… and the DAX in Germany dropped by a similar amt…

The Russell 2000 lost 9 to 488.

ADD’L PRICES FOR THE WEEK: CRB way down…

Gold: $273

Crude Oil: $26.83

Natural Gas: $3.74

CRB Index: 205

Dollar Index: 119

The Sad, Sad Euro: $.85

British Pound: $1.40

Japanese Yen: $.81

THIS WEEK in THE DAILY RECKONING
By Bill Bonner

06/22/01 MERS EL KABIR

“…The French government could talk all it wanted about preserving the fighting spirit of its troops – but with the wehrmacht bearing down on them, the soldiers themselves threw down their guns and fled. Will American consumers do the same? Will they throw down their credit cards? Will they reject McTeer’s patriotic appeal to ‘spend, spend, spend’ and decide to look out for their own balance sheets?…”

06/21/01 THE LIFE OF ALAN

“…After 18 fat years, all of a sudden, the American economic Nile has begun to run dry. Our hero is on the spot. For unlike Joseph, the Jew who interpreted Pharoah’s dream and became Egypt’s second-in-command, Alan did not encourage savings during the bountiful years. And so, the drought has begun…and the granaries are empty…”

06/20/01 FAITH AND HISTORY, FEAR AND GREED

“…While members of the Church of the Fed place their Faith in the power of Greenspan, History itself dredges up a Pandora’s box full of contradictions. Thus we become witnesses of a titanic boxing match between Faith and History…”

06/19/01 IRONIC TWISTS

“…consumers, looking for relief from high debt levels, will find little succor from the Fed. Neither short-term credit card interest rates, nor long-term mortgage interest rates are falling. The banking system, through which Mr. Greenspan’s reflationary gas is pumped, no longer works the way it used to. The result: Mr. Greenspan pumps…but the vapors go where they were not expected…”

06/18/01 THE GARDEN PARTY… AND MORE VERY CHEAP STOCKS

“…Maybe my ambitions are too modest, dear reader. But I have never been on a first name basis with a divinity. I do try to figure out how the ‘invisible hand’ works, but it seems presumptuous to give it a shake. Perhaps it is by modest expectations that great ones are achieved…”

* * * * * * * * * * * * * * * * * * * * * * * * * * * *

HEADLINE, NEWS And INSIGHT: Uncle Sam Bites and Other Truisms…Con Game: The Fed And The Dollar…Bargain Prices, Excessive P/Es…

Buy And Fly v. Buy And Hold
by Lynn Carpenter

Two recent studies show, not only did frequent traders fall behind the steady-Eddies by 38%… they had to pay a lot more taxes, too. Some of these busybodies had more than 100% turnover rates. That means that nearly everything they made was also taxable. That’s what happens when you sell winners. Uncle Sam bites.

Confidence, Too, Can Go To Dangerous Excess
by Dr. Kurt Richebacher

For sure, Mr. Greenspan has to cope with a big confidence problem. But that problem is rooted in the overblown, unreasonable expectations that he himself and others have systematically implanted into people’s heads with their ludicrous new paradigm propaganda.

Don’t Shop ‘Til P/Es Drop
by Jay Akasie

The market’s been in a slump longer than day traders (remember them?) ever dreamt possible. Still, the bulls offer constant reassurance that this “correction” has created a bargain hunter’s paradise. Far be it from us to spoil the sale of the century, but we have a few warnings for would-be shoppers.

Argentina Shocks Me – Time To Move On
by Steve Sjuggerud

It’s not the end of the world. In fact, Cavallo’s new currency scheme will have one decent outcome – it will push Argentina to the brink and they’ll finally have to make a decision: devalue or dollarize. It’s about time.

The Ultimate Con Game
by Harry Schultz

What message are U most bored of hearing? It’s Greenyspin saying: “Inflation is not a serious concern.” And what makes U most angry, economically? Knowing that Greenyspin is spinning, ie, lying. U know (& he knows!) inflation is bubbling like hot lava as we speak. So, why does he…