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"Exceeding even the most optimistic forecasts, the cost of living increased only 0.5% in November, while wholesale prices fell an unprecedented 1.8%. The average shows an also unparalleled 0.7% drop for the so-called combined prices." The country? Argentina. Repeat: Argentina.
Ontario Hydro, the largest electric utility in North America, is a fossil of the last great inflation. It is debt-laden, inefficient, unpopular, cash-flow negative and (because the Province of Ontario, Canada's most populous province, stands behind its debt) double-A rated.
"I got fired by a client over the weekend who happened to be my mother," a bearish hedge-fund investor confessed on Election Day. "But that's not the best part. The best part is that the only money she had in the fund is the money I gave her." When the blood is running in the bearish streets, wise bulls take notice.
With all the talk about "character" in politics, people have forgotten about character in the Treasury market. Who is the marginal buyer of short-dated securities today? Is it a grandmother or a bank trust-department officer or a highly leveraged, highly hopeful speculator?
"The 1980s' real-estate guys, what they're saying is, 'I'm back,' " Frederick E. "Shad" Rowe, Dallas money manager and Grant's correspondent reported the other day. "NationsBank -- you know, formerly NCNB, 'No Cash for Nobody' -- NationsBank is out looking for loans. I'm telling you, it's unbelievable."
To the average American, who can make no more sense out of the European Monetary System than he can of the battle lines in Bosnia-Herzegovina, the question is how European interest rates may affect U.S. investments. To a European, who only knows that America is cheap, the question is whether low dollar interest rates are exportable.
The omission by Chairman Alan Greenspan of any mention, however fleeting or subtle, of the dollar exchange rate in his prepared Humphrey-Hawkins testimony before the Senate Banking Committee on July 21 must have annoyed the foreign central bankers who had spent good money trying to reverse the dollar's fall only the day before.
Risk fairly oozes from the market in interest-rate swaps and financial derivatives. So say E. Gerald Corrigan, president of the Federal Reserve Bank of New York, and Alexandre Lamfalussy, general manager of the Bank for International Settlements... So says everybody, in fact, except for the people who make the markets.
H. Ross Perot, the undeclared Ten Commandments candidate for the presidency, has sold short Citicorp, RJR and the Japanese stock market (or so it appears). He was opposed to the Iraq war, and he has kept his 10-figure fortune despite a demonstrated weakness for undeveloped Texas land in the midst of a worldwide asset deflation. Altogether, he seems a man of parts.
The bigger the deficit, traders will say, the better it is for the Treasury market. The more deflationary the business climate, the more accommodative the Federal Reserve. Therefore, a big deficit in a recession is better than a little deficit in an expansion. This is the trading floor gospel, but it has not produced many trading profits in 1992.
All of them, components of the Commodity Research Bureau spot price index, have rallied lately.. So has the price of gypsum wallboard, the long- depressed house-building staple (page two). And so, incredibly, for one complete day, April 21, did the price of gold, the even-longer-depressed monetary staple....
Our July 6, 1990, story on Olympia & York seemed heretical when it was published, and John E. Zuccotti, president of O&Y Cos. (U.S.A.), fired off a rocket in reply. After upbraiding us on certain factual matters, Zuccotti turned to the broader, philosophical issues. We have never quoted from that letter -- until now.
With your indulgence, we will now compare the coins of Renaissance Florence to the dollars of modern, GOP America. We will appraise the space-age dollar -- a mere photon on a computer net -- alongside the fiorino d'oro, which weighed 3.53 grams and clinked when dropped on a counter.
On Sunday night, a group of Mexican investors won a privatization auction for a medium-sized Mexican bank with an astonishing bid of $846 million, or 29 times last year's earnings. —The next day, the euphoria disappeared with the disclosure that the leading investor had overbid andsdf had to back out of the deal.
In 1991, the nation's big banks bought government securities and issued equity capital. In New York, the big six banks (formerly seven) cut the growth in their operating expenses to an annual rate of 6%. Down from an average of almost 15% a year in the second half of the late, great 1980s. In general, banks last year became more liquid and less fragile. Did they therefore become less disaster-prone?
When the Feshbach brothers, flamboyant bears, bought an airplane late in 1990 to lighten the burden of their intercity travel, that was a sign that the cottage industry of short-selling was ripe for a setback. The "setback" turned out to be one of the greatest bull markets in the history of stocks and bonds.
It is no special indictment of Bretton Woods to say that it failed. Every earthly system falls by the wayside eventually. What superseded Bretton Woods was inflation, turmoil and muddling through. It was no system at all, and it produced no brilliant financial results.
Although the customers of HPSC went to dental school, which is some-what similar to medical school, which trains the professionals who have staffed some of the nation's great biotech companies, the over-the-counter leasing company has none of the Mach 2 properties of a typical health-care stock. q
One of the only stocks in America that has not been going up is the money stock. M-1, the narrowly defined, bill-paying aggregate (cash, demand deposits, NOW accounts), is the exception that proves the rule. Over the latest three months, it has risen at the brisk annual rate of 12.9%.