The bond rules. After a bouncy beginning to the week, with all of the stock market's recent fears seemingly quelled, and the tech sector acting like its old self again, a dismal two-year-note auction yesterday sent bond yields skyrocketing and stock prices plummeting. There is, of course, no sign of any inflation on the horizon, but bond investors are no more--and no less--rational than stock-market investors. Fear feeds on itself, and that was all bond buyers--that is, bond sellers--felt this week.
As everyone and their uncle--what does everyone's uncle look like, anyway?--have pointed out, if bond yields continue to rise, then stocks will look increasingly overvalued. But it would be nice if journalists stopped using perma-bears (that is, people who have thought stocks were overvalued for the last decade) to deliver supposedly objective bearish forecasts. These people have been predicting doom since always. So when they say stocks are overvalued, that's about as meaningful as listening to Fidel on the inevitable demise of capitalism. Give us someone who's changed his or her mind, dammit!
Okay, I feel better now. On to the Chatter.
1. "Big news in the Internet world this week was the incipient debut of Drugstore.com, which Amazon.com owns 40 percent of. Now we get to buy our prescription drugs and our toiletries online. Wow, how convenient. 'Honey, I promise I'll brush my teeth as soon as the shipment from Drugstore.com gets here!' "
2. "R.J. Reynolds has just introduced a new ad campaign for its Russian cigarette, the Petr1, using the slogan 'Russia, forwards.' As part of the campaign, customers who mail in three proofs-of-purchase will have the chance to win a Lada car. Customers who don't mail in anything will be given a Lada."
3. "The Chinese State Statistical Bureau has, improbably enough, vowed to do a better job with its numbers after being attacked not only by foreign investors but also by party officials. The bureau, for instance, tends to put out what the Wall Street Journal calls 'unadjusted figures' that are invariably dazzling, only to ratchet them down sharply weeks later. Seems like it'd be simpler if the bureau just said, 'These are the lies for this month. We'll have the truth sometime in the near future. We hope.' "
4. "Charles Schwab's online trading operations broke down this week, the latest in a series of online brokerage snafus. Angry customers argued they should be reimbursed for trades they would have made but weren't able to. I can just hear the depositions in the lawsuits now: 'I don't know how I knew that I should buy that stock just before it skyrocketed, but I did, and then I couldn't get through to make the trade. Justice? There's no justice, not in this world.' "
5. "Consider these words: 'I have aged 20 years in these last hours. Formations scatter in confusion, spreading the seeds of fear. The black spells of sorcery draining life. Strongholds disintegrate into bloodsoaked earth. ... The stillness creeping in on death's shoulders. Am I counted among the living?' So, what do you think? Ad copy for a computer role-playing game, or the thoughts of a typical Microsoft witness after being grilled by David Boies?"
6. "In yet another attempt to win back the confidence of Wall Street, Boeing's top execs met with analysts Wednesday and promised dramatic changes. CEO Phil Condit, who has been under considerable fire for the past year and a half, said, 'There are no sacred cows.' Condit then added that he would be wearing a hairshirt for the remainder of 1999 and began beating his chest in a gesture of ritual atonement. The analysts were unimpressed."
6a. "Remember, this is satire, or at least a feeble imitation thereof."
7. "Most surprising headline of the week: 'Chilean Firms Feel Pain of Japanese Recession.' What's next? 'Madagascan Firms Reap Riches From Icelandic Boom'?"