*** Wealth effect shifts into 'R'... William Shattner
looking for work...
*** The world according to Wim... Thank heavens, someone
is watching the oil supply and "doing what seems
indicated"...
*** Slot machines in hell...strategic plastic
surgery...and so much more...
*** The wealth effect has gone seriously into reverse.
The Nasdaq is down 15% for the year. In very round
numbers, that's about an $800 billion loss. And the
additional cost of oil is estimated to be about $161
billion.
*** The big question, of course, is whether the drop in
the tech stocks represents a buying opportunity. Al
Frank, perhaps the best stock picker in America, thinks
so:
"With each day's irrational overreactions," he says,
"more and deeper bargains are created. I like to think of
myself as not greedy, but I feel like I am in a going-
out-of-business candy store with much or the merchandise
marked way down for immediate sale. I believe that in
less than a year we will look back at this time,
comparing it with early October 1998 and other almost
unbelievable bargain periods, wishing we had more cash or
more faith in value investing to pick up more of the
distressed selling."
*** Maybe. But it seems more likely that Mr. Bear is
merely correcting three years' worth of irrational
overreactions on the upside...and he has a lot more work
to do before his job is done.
*** Yesterday, the Nasdaq slumped 51 to 3,472, returning
to the downtrend it started four days ago. Dell already
trading below its 52-week low, fell another $2.63.
*** "People are worried about a slowdown in demand for
the high-priced, high-growth stocks of technology
companies. They're looking for... investments," said an
investment strategist in a Reuter's article. What a novel
idea for the stock market: investing.
*** Still, the Dow, an index where you might presumably
find a few companies in which it is worth investing
closed down 60 to 10,724. 1549 stocks finished lower;
1261 higher.
*** The S&P 500 rose just shy of 2 points to close 1,436.
*** Priceline.com closed down its "name-your-price"
program for gasoline and groceries... their stock closed
down $3. William Shattner couldn't be reached for
comment.
*** Gold rose 40 cents... and despite the ECB's finest
intentions, the euro dropped to $.86 against the US
dollar.
*** Yesterday, just days after the Fed met and decided to
keep US rates unchanged, the European Central Bank rose
rates by a quarter point. In the world according to Wim
(Duisenberg), tighter credit would create the best
conditions for "continuing robust growth" in Europe. But
the hike seems to have had the immediate and exact
opposite effect. What's more, it has undone what
European, American and Japanese central banks thought
they achieved on Sept. 22 when they bought euros en
masse.
*** Oil prices rebounded a bit from Thursday's dip - up
35 cents to $30.88 a barrel. Prices had dropped 90 cents
on Bill Clinton's announcement that the 30 million
barrels released from the US strategic reserves would be
awarded to 11 lucky oil companies...
*** "I do think we're going to have enough supplies to
get through winter," the leader of the free world, and
part-time logistical-supply specialist, was reported by
Reuter's to have said on Thursday. "I'm just going to
watch it every day and do what seems indicated." In the
meantime, he said he wants the oil delivered to consumers
quickly.
*** Whew, thank god... Clinton is watching the oil supply
and getting it delivered quickly. Imagine what all those
companies - those men and women who earn their livings
day-in, day-out delivering oil to consumers - would do if
they didn't have the president telling them to "get it
there quickly."
*** High fuel prices have ignited strikes in Argentina
this past week, too. Strikers there won the battle to
have taxes reduced. But oil demand - outstripping
delivery capacity worldwide - continues to enervate tax
collectors... as prices rise, it becomes increasingly
obvious to consumers how much gouging is really going on
- on the way to the pump.
*** This winter's "crisis" in the industrial world may
just be the beginning of huge increases in the demand for
oil worldwide. According to Marc Faber, "demand for oil
is exploding in the emerging economies - especially in
Asia."
*** "Crude oil demand in China has doubled since 1992 to
4.4 million barrels per day," says Faber. "Asia including
Japan now consumes almost as much crude oil as the US.
But consider this: Asia has more than 3 billion people,
whereas the US has a population of only 265 million. In
other words, while in the US per capita oil consumption
is more than 24 barrels per year, in the case of emerging
Asia it is less than two barrels.
*** "If all the global healing apostles and all the Asian
bulls are right," Faber concludes, "then oil demand is
likely to explode there over the next two years." (see: Contrarian Profits From High Prices At The Pump)
*** Electricity and coal, too are increasingly in short
supply. The "United States GDP and electricity demand
have risen dramatically together, both up 60% since
1975," Dan Ferris tells me. "The Energy Information
Administration's current forecast says electricity demand
will continue to follow GDP growth through 2020. Why is
this important? Coal - king coal - has tracked these
increases impressively. Since 1970, coal demand by public
electric utilities has risen 173%."
*** Ferris has selected one company in particular he
believes you should own if you want to take advantage of
the dramatic rise in electricity usage brought on by the
information age... (see: The Internet's Dirty
Secret,
Part 4)
*** Yesterday Addison told you about our agreement with
Grant's. As a reader of the Daily Reckoning you've be
invited to receive a free trial subscription to the
GrantsInvestor.com website. Today, he tells me the link
he provided for you... well, it didn't work. So he's
posed an alternative. If you'd like to accept Grant's
offer, go to the GrantsInvestor home page.
Where it says "Received An Invitation?" type in this
reservation number: 107202149.
*** Today in 1889 the Moulin Rouge - the cabaret most
famed for attracting millions of Americans who believe it
is the quintessential Paris - first opened its doors.
Clichy, the neighborhood in which you'll find it... is
rife with bums, neon lights and tourist buses... but
there are no slot machines. More below.
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I can look out my hotel room and see the Eiffel Tower, as
I mentioned yesterday. Or the day before, I can't
remember. In any case, it is right down the road from an
Egyptian obelisk.
What a city! There is a giant concrete sphinx...a glass
Egyptian pyramid...another pyramid modeled after the
Mayan form...a replica of what appears to be Angor Wat...
a fairytale castle and the statue of liberty all within
walking distance.
Not to be upstaged by the wonders of the ancient world,
there is a huge TV screen set up on the marquis of MGM's
"City of Entertainment" colossus nearby. Even at a
distance of a quarter of a mile I can watch various news
clips and other attractions designed to lure me into the
MGM play world. Further down the street, there is a
smaller version of the Chrysler Building echoing the
Manhattan skyline...and the Seattle space tower off to
the right.
All of these architectural calamities are part of the
world of illusion that is Las Vegas, making it America's
premier New Era city. Here, as in the rest of Nasdaq
Nation, gaudy wealth knows no limits.
The city is remarkable - spread out in the desert for no
reason other than there doesn't seem to be anything to
stop it. It sits in an empty stretch of barren, hot
ground. Neither mountains, rivers, arable farmland,
borders, good taste, laws, modesty, money or dignity have
stood in its way.
People from all over the world come to gawk in wonder -
as they also do at the Eiffel Tower in Paris and the real
pyramids in Egypt. A Japanese couple walked through the
lobby of the Four Seasons yesterday. They seemed stunned,
shell-shocked. They walked nervously, as if they had
accidentally taken a wrong turn and ended up in an
amusement park in hell.
All around them clusters of shiny slot machines rang,
clicked, hummed and buzzed. Dreary-eyed retirees and
vacationers from Gary, Indiana, hunched over the
whirring, flashing lights, occasionally raising their
right arms to feed tokens into the infernal machines.
The gamblers did seem to be having a good time. But, who
could fail to enjoy himself in a town that is like a
giant circus - running 24-hours a day?
As soon as you get off the airplane, you're greeted by
slot machines. I don't know of any other airport in the
world that offers people a chance to get rich while
waiting for their connecting flight.
Quick and easy is the name of the game in Las Vegas. The
city was originally home to miners who hoped to strike it
rich...and then a boomtown when the Hoover Dam was built.
Quickie divorce laws offered people a fast way to undo
past mistakes. No-wait marriages gave them an opportunity
to make new ones.
But what really put Las Vegas on the map was gambling,
air-conditioning and low-cost air travel. You can get
here cheaply and gamble in comfort. As a result, Las
Vegas is now twice a big as Baltimore...and growing fast.
And the gaudier and more bombastic it gets - the more
people like it. They are drawn to it the way a crowd
gathers around an auto wreck - greedy for cultural
mayhem.
A friend of mine took us up to show us the suite of rooms
he is occupying on the top floor of the Mandalay Bay
building. The luxury apartment is furnished in expensive
medium-hip style with a vaguely oriental motif. It
overlooks the city at night - with a spectacular view of
its bright lights reaching out for miles in every
direction.
"No one pays to stay here," he explained. This was an
accommodation given free to high rollers - who come to
Vegas and lose big sums of money.
In fact, you get a lot for your money in Las Vegas. Even
for those who are not big spenders, hotel rooms that
would cost $300 in other cities - are just $150. Low room
rates are a little like penny stocks - they give the
illusion of a bargain. Ordinary people feel a bit like
high rollers themselves - and spend their money as if
they were Midwestern Trumps or California Icahns.
Gambling is not a bad way to lose money. Our host last
night told us that his father had won $500,000 gambling
back in the '60s - real money back then. And one of the
casinos advertises that it returns 96.5% of the money put
into its slots. That gives investors, I mean gamblers, an
average loss of only 3.5%, for as long as they choose to
play.
Nasdaq gamblers, by contrast, have already lost about 4
times that much this year - and none got a free room or a
floor show. Las Vegas at least gives its clients the
illusion that they are having a good time.
Not only do the buildings in Vegas pretend to be
something they are not, the people are phonies too. One
club advertises that it is the home of Elvis imitators...
"endorsed by Elvis-O-Rama," no less. Another offers
people impersonating stars such as Madonna, Gloria
Estefan and Charlie Daniels. Why people would want to see
these stars in person, let alone their imposters, is
never explained. There is even a special guest appearance
by Michael Colby, whoever he is, pretending to be Ricky
Martin, whoever he is.
And no entertainment fraud would be complete without
someone passing himself off as Michael Jackson - a role
Mr. Jackson usually claims for himself.
Meanwhile, I see that Wayne Newton is still alive in
Vegas - pretending to be immune to aging. And Rodney
Dangerfield is still at the Hollywood Theatre. Thank God
Barbra Streisand has moved on.
There are also a number of prestidigitators and animal
acts, offering their own illusions. And a number of clubs
offer adult shows, such as 'Booty Magic' and 'Crazy
Girls.' If I were sticking around for a few days, I would
certainly want to catch the 'Midnight Fantasy' at the
Luxor.
We had dinner last night in the House of Blues restaurant
on the top of Mandalay Bay. The d‚cor might be described
as Early Hippie Nightmare...or Bad Trip Chic. The walls
were covered with fabric from India. Bright red, orange,
yellow and blue, studded with bits of glass and bauble,
it reminded me of a San Francisco head shop from the
'60s. The retro-effect was heightened by incense burning
in a statue of Buddha that stood at the doorway...all it
lacked was Ravi Shankar on the sitar in the background.
In addition to the Buddha, there were various bits and
pieces that looked as though they had been looted from
Hindu temples - including what looked like an entire
miniature temple, complete with elephant heads and
dancing female figures. But all the major religions were
represented - there was also a Madonna and Child painting
hanging in the corridor on the way to the bathroom.
Another restaurant in the Mandalay Bay complex offers
thrill seekers a central wine storage column 3 stories
high. When you order a bottle of wine, a woman is
strapped into a harness and hoisted up the column to
retrieve the wine.
Everything is fast and easy in Las Vegas. A friend of
mine met a beautiful young woman last night. Learning
that he was a plastic surgeon, she hiked up her skirt to
show the work she had done on her left buttock.
"Can you do better than that?" she asked.
"Uh..." replied my friend, taken by surprise, "I don't
know. Let me see the other one."
Your reporter...just telling you what I see and hear...
Bill Bonner
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Last modified: April 01, 2001
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