Tenacious as a leech on steroids, Hillary Clinton now appears to be lining up her ducks for 2016 with a brazen pitch to become Barack Obama's vice president. A dream ticket? Maybe for Republicans, since it would pair a presidential candidate with almost no leadership experience with a running mate who is roundly despised by nearly half the voters. But don't expect such concerns to even slow Hillary down, much less remove her permanently from the political stage. She reminds us of a girl we went to high school with who, from the time she was four years old, would have done absolutely anything to become Miss America. "Joan" cut her beauty pageant teeth when she won the Miss Columbus Day tiara in Atlantic City at the age of 15. Several years later, as a student at Barnard College, she exhausted New York-area competitions with what for her must have been a disappointing reign as Miss Staten Island. Not to be thwarted by this seeming dead end, Joan transferred to the University of Nevada at Las Vegas, where, with relatively sparse competition, she finally won the state beauty title that would enable her to compete as a hometown favorite in the Miss America Pageant that fall. Similarly, Hillary, after spending her college years at Ivy League schools, re-routed her career through the boondocks of Arkansas, where she would toil for the next two decades at getting her lovable lug-of-a-husband elected President. Like Joan, Hillary must have been absolutely confident all along that she would return home someday in triumph. Who knew, when the Clintons first moved into the White House, that the title of First Lady was not nearly what she had in mind? Mothballing Her Tiara Joan's ambitions, though insatiable, were at least finite, and when her lifelong quest to
June 2008
Vulnerability To Bad News
– Posted in: Current ToutsWe had projected a moderate rally as the week began, based solely on subtly bullish signs that were noticeable in the S&P's intraday charts. Alas, it was not to be, and the mini-S&P futures were unable, even, to push above Friday's relatively subdued highs. Granted, the big news of the day was not exactly upbeat, since it concerned rating cuts for Lehman, Merrill Lynch and Morgan Stanley by the newly religious Standard & Poor's. But when was the last time bad news kept the stock market from rallying? For months, bad news has been treated on Wall Street as good news, based on the not implausible notion that it would scare the banks into putting their respective houses in order. At least, that was the theory of it. In practice, however, regaining stability might require the banks to do quite a bit more than they have done already. Remember, the banking system is not merely illiquid, as Paulson, Bernanke et al. would have us believe; rather, it is insolvent, with risk exposure that still greatly exceeds the total capitalization of all the banks put together. The charts of the bank stocks themselves belie the notion that the worst is past. Over the weekend, we sent subscribers a dozen or so such charts, many with price targets so far below current levels as raise the question of whether some of them will even survive. Goldman, General Electric, Bank of America and Deutsche Bank evidently will, at least according to our technical runes, since their respective bear market targets sit well above the zero axis. But possibly not Citigroup, Fannie Mae, Merrill Lynch, Lehman and UBS, all of which appear headed toward salvage value. We could be wrong, of course. It occasionally happens that a stock seemingly headed for oblivion reverses unexpectedly
Quiet Summer Most Unlikely
– Posted in: Current ToutsLast week's suffocating tedium on Wall Street may have seemed like prelude to yet another boring and eventless summer, but we all know better. There are too many stalking monsters out there for the next three months to pass quietly. Real estate values can only continue to fall, except perhaps in the realm of argument, and energy prices to rise. Gasoline looks like it's headed seasonally above $4 a gallon no matter what happens on the futures exchanges, and it's possible that by September we'll look back on $4 regular with nostalgia. Will we feel nostalgia as well for a recession that remained statistically deniable even with real estate prices deflating more rapidly, as they in fact have been, than during the Great Depression? The pundits seem to be growing increasingly confident in predicting there will be no recession. Make a mental note of who these Pied Pipers are, since we wouldn't want to lose track of them six months from now when they attempt to scurry back into the hive of anonymity. Most recently, they drum-rolled an upward revision in first quarter GDP as reason to infer that the worst is past for the U.S. economy. GDP growth for Q1 was originally reported as 0.6%, but a downward revision in inventories allowed the Commerce Department to nudge the figure up to 0.9%. We see little cause for celebration in this, however, since, like the surreal employment data that we are fed each month, inventory figures seem all too easy to manipulate. Born-Again Savers To get a better idea of what's going on, we'd suggest watching corporate profits and consumer spending. The former fell 6.8% in the first quarter, while the latter grew a feeble 1.0% -- well below the 2.5% pace of the fourth quarter. Whence will the inevitable collapse
