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Grizzly's Growlings Current Report |
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Monday Morning Market Musings 01/03/2000 |
| The
Y2K Hangover
NOTE: This edition of Monday Morning Market Musings has been held over until Tuesday, January 4th, so we can observe and evaluate Monday’s Y2K events, if any. First, we’d like to extend best wishes for a happy, healthy, prosperous, and hopefully profitably New Year to all of our readers. Needless to say, 1999 was not a profitable one for us bears. We’ll be doing our best in 2000 to zero in on what we still believe is an imminent top, and subsequent crash, in U.S. and worldwide financial markets. Well, did you chug a little too much cheap champagne last weekend? Did the tequila almost kill ya? Did your friend Harvey help you bang into a few walls? If you over-imbibed last Friday evening as the world welcomed the next millennium (well, not really), you’re not alone. As we discussed throughout 1999, we think the U.S. stock markets have been drinking too freely at the spiked punch bowl. The markets have greeted Y2K with like a drunken sailor. The Dow Jones Industrial Average banged into the wall Monday morning, and as we go to press early Tuesday morning, the futures markets are sharply lower, portending additional selling. As we said last month: "When will it blow? Who knows, but you sure don't want to be in the neighborhood, or long the market, when it does." Given Monday and Tuesday morning’s sharp sell-offs and volatility, the new millennium is off to a promising start for us bears. US STOCKS REMAIN ON FULL CRASH ALERT! Conclusive evidence of 1999’s phantom bull market is seen in the year-end numbers. For all of 1999, the DJIA rose 25%, yet only 1182 NYSE issues rose for the year, while more than twice as many, 2557, were losers for the year. Even on the high-flying NASDAQ, which gained an incredible 86% for the year, advancing issues just barely exceeded the decliners by a margin of 2629 to 2497. This has not been a "rising tide lifts all boats" kind of bull market. From the December 20th issue of Barrons: 52% of S&P stocks are down for the year; 67% of NASDAQ stocks are down 20% from their 1998 highs; 45% of NASDAQ stocks are down 40% from their 1998 highs. This is (err, was) a bull market?! Expert Tidbits: Alan M. Newman, editor of HD BROUS & Co., Inc.’s CROSSCURRENTS, consistently provides the hard-hitting analysis us bears need to stay informed, and alive: "According to Salomon Smith Barney (as of early December), in the Russell 1000 (the largest 1000 stocks), those with no earnings have moved up 50.9%. Those with earnings were down 2%. I think we ought to give those analysts a round of applause. They clearly know what they are doing." "The top 10 most active issues today (December 7th) traded a dollar amount equivalent to 135% of daily GDP. Yahoo alone traded 86% of GDP. And still some of you will not admit this is a certifiable stock market mania?" " ’Zero years’ have been the worst years of decades, averaging a 7% annual loss since 1890. The past has always been prelude to the future. And so the millennium mania now meets the Decennial Cycle head on. If the mania is to end, it will likely end in a year ending in zero - the year 2000. " Arch Crawford, editor, Crawford's Perspectives:
Bonds As we’ve mentioned over the past months, most stocks have been in a stealth bear market, overshadowed by the mania in the NASDAQ. Yet also shielded from most media discussion was the tanking of the bond market. According to David Tice, Manager of the Prudent Bear Fund, 1999 was the worst year for bonds since 1977. Rising interest rates have killed many a bull market, and the current one will not be an exception. The U.S. is one of 20 countries labeled "vulnerable to a credit bust" in an analysis by Standard & Poor's, the credit-rating agency. S&P cited the bloated length of the current economic upswing, commercial loan portfolios were likely to have been built on overly optimistic projections (how else can you justify a P/E of 285 on the NASDAQ?), and consumer debt also remained at historically high levels. Y2K The rollover into Y2K has gone surprisingly smoothly, so far at least. A few dozen minor glitches and goof-ups have been reported, with the safe shutdown of five nuclear power facilities in the U.S. the worst of the lot. The most embarrassing error belongs to the US Naval Observatory, which is the nation’s official timekeeper. Their Web site reported Sunday, January 1st as belonging to the year 19100! That’s one heckuva a leap year! Taxpayers of Britain spent an unbelievable $1 billion dollars (600 million pounds) on the evenings’ fireworks extravaganza and celebration. Talk about a hangover! Russia Boris Yeltsin (finally) resigned, on New Year’s Eve. The Russian market promptly slapped ol’ Boris in the face with an 18% rally. Prime Minister Vladimir Putin will succeed Yeltsin, The deepening crisis and civil war in Chechnya may prove as tough to solve for Putin as was Vietnam for America. Good luck Mr. Putin! "Let’s party,
‘cause the future ain’t what it used to be." |
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Is
This a New Millennium? |