Dr. Pangloss would be ecstatic were he an American investor right now. Inflation continues to look dead, with both the producer and consumer price indices coming in with excellent numbers this week. Employment is high. Earnings season has started, and with almost no exceptions, companies are reporting numbers well ahead of last year’s. It was just 10 months ago that the whole world economy looked to be on the verge of collapse, and now all we worry about is whether the Nasdaq will break 3,000 by the end of the summer.
Storm clouds? I’m sure they’re out there. Greenspan could become an Ayn Randian again. The world economy could come roaring back and end this blissful period of our parasitism on the low prices and anxious capital of just about every other country in the world. Or consumers could decide that there’s nothing left to buy (but then again, have you seen that new dual-deck CD player?). Or the Republicans could get their tax cut, overstimulate the economy, force Greenspan to jack up interest rates, further impoverish an already-deprived state infrastructure, and so on. But I digress. It’s summer time. The living is easy. Chat on.
1. “Russian tycoon Boris Berezovsky announced that he wants a seat in Russia’s parliament. I think that means he’s going to run for office. But maybe not. Maybe he just wants to pay a couple million rubles and have the seat deeded to him. That’s much quicker, after all. You avoid all that troublesome campaigning.”
2. “In the World Economic Forum’s latest ranking of global competitiveness, Colombia, Ukraine, and, yes, Russia, were among the least competitive nations in the world. Unless, of course, you’re in the narcotics or arms-smuggling industries, in which case there’s nowhere else you want to be.”
3. “Online music retailer CDNow announced that it would be merging with annoying offline music retailer Columbia House in a deal that by some accounts valued CDNow at $170 million less than its current market cap. CDNow had been on course to run completely out of money by the beginning of next year, which means the deal deprives us of the pleasure of seeing the company change its name to CDNeveragain.”
4. “House Ways and Means Chairman Bill Archer unveiled a $863.9 billion tax-cut package that would include the complete repeal of the estate tax, a repeal of the corporate minimum tax, a cut in the capital-gains tax, and a 10 percent across-the-board income-tax cut, all changes that are heavily weighted to benefit high-end earners. ‘What we are talking about today is a defining difference between Republicans and Democrats,’ Archer said. So Republicans think rich people should get to keep a lot more of their money than they do now, and Democrats don’t. Actually, that sounds just about right.”
5. “Floundering movie studio MGM announced that this fall it will sell even more shares of its beaten-down stock to the public in a $750 million equity offering. Ah, yes. Just what we need. More stock in a company that hasn’t turned a profit in almost a decade, that just wrote off $140 million in losses, and that’s in an industry that keeps talking about the need for belt-tightening. What’s next? A whole new season of Malcolm and Eddie?”
6. “Despite roaring retail sales, the producer price index rose less than expected last month, and the consumer price index didn’t even move. Don’t you wonder if companies aren’t going to start raising prices, just to see if they can?”
7. “Fidelity’s Magellan Fund just went over $100 billion in assets, a total significantly greater than the total amount of assets in all U.S. stock funds 15 years ago. God, it’s going to be painful when the baby boomers retire and start taking all this money out of the market.”
