THE DAILY RECKONING
WEEKEND EDITIONSeptember 30 and October 1st, 2000 Final Weekend in Q3 Paris, France By Addison Wiggin MARKET REVIEW: Earnings Fears Body Slam The Indexes…
Savings Rate Hits Record Low…Denmark Rejects the Euro
The Four 'E's logged a final day victory in round three of
their title bout for the Year 2000 this week - as worries
over energy, the euro, and earnings continued to hammer
the indexes. The Dow closed down 173 Friday… marking a 197 loss for
the week. But the ol' boy retreated to his corner calmly
at 10650… he finished Q3 up 1.9%, and analysts promise
Monday's Q4 bell will see him up and at 'em again. Nasdaq's Friday close of 3798 weighs in at a loss of 105
for the day and 131 for the week. Chez Big Tech was
especially weakened by a round-house of earnings trouble at
Apple - which tumbled down, down, down more than 50% on
Friday, crumpling the all but lifeless to 25 and change. "With oil hanging in there above $30," John Myers reminds
me "company's who produce products made with petroleum -
computers, air conditioners, ping-pong tables, tooth
paste, building adhesives, detergents, plastic garbage
bags, and paving asphalt - are going to see significant
earnings troubles…" At this time last year oil was
trading at around $10 a barrel. The Nasdaq is 7.4% lower than its Q3 start and 28% below
its springtime high of 5132. At 1436, the S&P 500 had
closed down 21 for the day, but was only 12 points lower
for the week. The euro sustained a glancing blow, too, this week when
the Danes rejected adopting the currency at the polls. The
market, however seems to think the euro has had enough…
the euro held steady at US$.88. And the economy… well what can we say? "Incomes rose
steadily in August," the WSJ reports "but spending
increased… even faster." Sending the nation's savings
rate to an all-time low of negative 0.4%. Vive la bubble,
folks, vive la bubble… we live in extraordinary times. The Russell 2000 closed the week up 3 at 521.
The Wilshire Smallcap was up 2 at 859.
PRICES for the week…
Gold: $278.90, up $2.70
Crude Oil: $30.34, down $2.34
Natural Gas: $5.12, down $.01
Platinum: $579, down $6
Palladium: $707, up $20
CRB Index: 226 unchanged
Dollar Index: 113.25 down a quarter point
Yen: $.009 … same ol', same ol'
The sad, sad Euro: $.88 up a cent from last week.
British Pound: $1.47, up $.02
MARKET COMMENTS: OPEC Blames Excessive Taxation for Oil
Prices…A Great Time To Own Oil Stocks…
"…OPEC isn't ready to take the heat for higher prices.
This week the cartel issued this statement: 'Excessive
taxation on petroleum products accounts for the highest
share of the final price to the consumers in the major
consuming countries.' Iranian Central Bank governor Mohsen Nourbakhsh agreed:
'producers were told to adjust their economies, while
consumer governments strengthened their economies by
increasing taxes.' Hmmmn… rising energy prices and falling stocks remind me
of a time most bulls would just as soon forget. Long-of-
tooth traders will remember - that was a very good period
to own oil stocks…" John Myers,
Real Asset Investor
*** HOT PICK OF THE WEEK: The "Hedonics Brawl" Heats Up…
The Real Inflation rate…
"The great digital divide between America and Europe is
least of all in the economies. It exists overwhelmingly in
the statistics and propaganda." Dr. Kurt Richebacher
"The last two issues of Barron's have included a series of
articles challenging our own Dr. Kurt Richebacher.
Specifically, his contention that the Bureau of Labor
Statistics incorrectly measures the growth in GDP by using
what are called "hedonic" measures… …"hedonic price indexing" Richebacher maintains, has
distorted the CPI and productivity figures - the very tools
the Fed uses to determine the inflation rate and
subsequently… monetary policy. Point blank: the American economy and stock market are not
as strong as they look." Dan Denning,
The Fleet Street Letter
For more on the "Hedonics Brawl":
**** See: Dr. Richebacher's article "Lousy Economics,
Statistical Wizardry…Who Gains?" Below…
**** Note: I've also posted a letter from Bill detailing
some eerie parallels between today's market and the credit-
financed stock market boom of the late '20s… Plus, some
very important differences: the euro; the use of hedonic
measures in calculating GDP; and the true rate of
inflation… all factors which make today's market far more
volatile than anything in US stock market history. To read
Bill's letter - and invitation to delve further into the
hedonics debate -
click here. Addison
Of course, there's more Weekend Edition to follow…
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- Excerpted From "End Notes" in Doug Casey's International
Speculator
"Mencken loved to talk about religion, and in doing so made
few friends among Boobus Americanus. It1s tough to pick any
one of his hundreds of choice comments. 'One of the most irrational of all the conventions of
modern society is the one to the effect that religious
opinions should be respected. …[This] convention protects
them, and so they proceed with their blather unwhipped
and almost unmolested, to the great damage of common sense
and common decency. That they should have this immunity is
an outrage. There is nothing in religious ideas, as a
class, to lift them above other ideas. On the contrary,
they are always dubious and often quite silly. Nor is there
any visible intellectual dignity in theologians. Few of
them know anything that is worth knowing, and not many of
them are even honest.' HL Mencken,
Minority Report, 1956, pg 380.
Gibbon attributed the fall of Rome as much to Christianity
as anything else. Of course, who's to say the Fall of Rome
wasn't a good thing, at least in the long run? 'The policy of the emperors and the Senate, so far as it
concerned religion, was happily seconded by the reflections
of the enlightened, and by the habits of the superstitious,
parts of their subjects. The various modes of worship which
prevailed in the Roman world were all considered by the
people as equally true; by the philosopher as equally
false; and by the magistrate as equally useful. And thus
toleration produced not only mutual indulgence, but even
religious concord.' Edward Gibbon, Decline and Fall
of the Roman Empire, 1777, Ch.2."
Doug Casey,
International Speculator
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CONTRARIAN GLOSSARY: The "C" Spot
THE "C" SPOT: A Dangerous little corner of the brain where
collective thinking occurs. It is useful in sporting
events… cavalry charges, and political campaigns… and
essential for reading the editorial pages without
laughing… but otherwise it is an impediment to the human
race and should be surgically removed. | 
