Archives

Bad news finally reached the point of diminishing returns in Europe on Tuesday as the threat of nuclear obliteration by the leader of the Russian Liberal Democratic Party, Vladimir Zhirinovsky, hit government securities prices. Bad news is the ancient bond tonic -- to a trader, there is nothing like a depression -- but Zhirinovsky proved that there can be too much of even a very good thing.

Now that the price of nickel has vaulted by 30% in a matter of weeks, the world would like to know if global ind1istrial recovery can be far behind.

Two pithy and (from the bondholders' point of view) appalling comments on business inventories from the National Federation of Independent Business: "Seasonally adjusted, inventories have never been 'tighter' than in November." And: "Nobody has any inventories -- a very 'lean' position."

The calendar no longer says 1987 -- we established that fact in the last issue -- but certain boom-like tendencies are increasingly apparent in 1993. Altogether, the inhibitions of the penitential period in American credit ( 1990-92) are fading away fast.

In 1993, the Year of the Mutual Fund, brokers are well accustomed to receiving unsolicited phone calls from hopeful strangers. Tom Waldeck, a broker with Rodman & Renshaw, New York, recently has been getting some of this attention, but he calls the experience new and astonishing. There is one key difference: Waldeck is a commodities broker.

Ever since it went public in July 1992, Encore Wire, a plain business with a self-explanatory NASDAQ symbol (WIRE), has been battling deflationary head winds.

So successful a purveyor of mutual funds is First Federal Savings & Loan Association, Waterbury, Conn., that the American Banker recently reported on its exploits. "The $2 billion-asset bank has doubled its fund sales in each of the four years since it launched the program," the paper said. "The tally for this year is expected to hit $40 million."

Now that the Chicago Board Options Exchange is preparing to list an option on gambling stocks -- a play within a play if there ever was one -- and farmers in Tunica, Miss., are gleefully selling prime cotton land to casino developers at 100 times more than the land was priced on last year's tax rolls, a skeptical investor will ask again if the financial-assets bull market may not be overdone.

Growth in bank loans last month was the strongest in at least two years, according to some preliminary and unironed data.

The correct, Grant's-approved direction of things -- higher interest rates, stronger commodity prices, lower price-earnings multiples -- is not the invariable, everyday market outcome.

First bankers say "yes," and then they say "no," and that, in brief, is the credit cycle. They said 'yes' for much of the 1920s and 'no' (with diminishing degrees of finality) in the 1930s and 1940s. They were none too approachable in the early 1950s, either....

David Braver, president of Braver, Stern Securities Corp., does what some of us have decided we cannot, or should not, do. He buys bonds by the job lot with borrowed money.

On a decade's evidence, money­center banks are better at trading money than at lending it out and getting it back: again.

Boston Chicken, the jet-propelled IPO, has managed to annoy at least two different people for separate reasons. Each complaint says something unforgettable about 1993.

Downsizing, the No. 1 management concept of the 1990s, was field-tested and proven during the 1980s. Does anybody remember the tax-driven railroad-equipment boom of the 1970s? In 1979, American manufacturers produced 100,000 railcars. In 1983, they made only 5,000. Now they are racing to keep up with demand in what is shaping up as the best railcar year since 1981....

From the November 22 Advertising Age: "NBC is teaming up with Kidder, Peabody & Co. and GE Capital to form a new unit that will barter ad time on the network...

The People's Democratic Republic of Algeria is not the most important oil-producing country, but it may be the OPEC member with the best chance of blowing up in the immediate future.

Concerning Big Entertainment, a start-up that went public on November 12 with a market capitalization of $31 million, Grant's in the last issue incorrectly stated...

Proof that a modern paper money system can deliver an outright, Old Testament deflation is forthcoming almost daily from Japan.

Fremont, Ohio, the Grant's Interest Rate Observer poster-town for November (see page two), is sadly the exception, not the rule, in the world economy this Thanksgiving.

Fremont, Ohio, population 19,000, is the hometown of Bowlus Trucking Co. and the county seat of Sandusky County. Bowlus, a third-generation, family-owned business that serves eight states within a 350-mile radius of Toledo, has just put through its first across-the-board price increase in 12 years. It was 5%, and it stuck.

"In the latest sign of banks' push to get into the mutual-fund business," The Wall Street Journal reported last Friday, "Dreyfus Corp. said it has held but terminated talks with a possible merger partner, understood to be Mellon Bank Corp., Pittsburgh." The news carried more than one Grant's reader back to yesteryear...

Mutual funds constitute the banking industry's No. 1 obsession, but loans against the collateral of fixed­-income securities evidently represent its fastest-growing class of asset.

For the handful of Grant's subscribers who did not attend the colossal and unprecedented 10th anniversary conference last week at the Hudson Theater in midtown Manhattan (very close to Broadway), Seth Klarman, value investor and author, led off the day with a wistful reference to his incisive 1991 book. Its title was "The Margin of Safety." If only he had thought to name it "The Safety of Margin," he said, it might have changed his life.

"My story starts in the 16th century.... " So Simon C.B. Hunt, chairman of Brook Hunt & Associates, began his analysis of the base metals markets at the Grant's conference. Starting after the medieval period (a time of remarkable price stability, as he was able to show), Hunt made his way up to 1993 and a provocative, bearish view of the industrial future.

Lisa Hess, who manages bonds for Loews Corp. and its CNA Insurance subsidiary, confessed that she and the market recently have been ships in the night. "We've been too bearish for at least a couple of years," she said.

David Stockman, formerly the Reagan budget director and currently a Blackstone Group investment banker, weighed in on the bullish side of the conference agenda. Concerning the state of the budget, and of fiscal politics, he declared himself an optimist...

Michel David-Weill, the senior partner of Lazard Freres, rose at the Grant's conference, to speak on cash, the humblest class of asset, for which he confessed a longstanding fondness...

James S. Chanos, general partner of Kynikos Associates, turned to the stock market. He invited the Grant's conference attendees to consider the historical record: "There hasn't been an IPO boom that ... hasn't been followed by, if not by a bear market, at least by a very serious correction..."

The purchase of an out-of-favor base metal, nickel, and an obscure, value­laden equities market, India's, were the investment ideas offered up to the Grant's conference-goers by Marshall Auerback, the general partner of T/A Pacific Select Investments Ltd., New York, a transpacific hedge fund.

Is someone noting that in popular futurology, 'credits' are discredited and ingots are in?"

Bears may not build mansions on Fifth Avenue, but last Friday the editor of this publication bought a brown stone in Brooklyn.

On the eve of the presumptive triumph of free, or semi-free, markets in the shape of the North American Free Trade Agreement, documents slipped to the Dow Jones News Service show that Alan Greenspan was concerned recently about the vulnerability of the Federal Reserve to political assault.

For our extra-gala tenth anniversary issue, therefore, it is only meet and right to record the recent healing in American credit and to venture an idea of what it means.

Five traders, mostly one-time Salomon Brothers employees, and a pair of award-winning, market-wise college professors, are seeking $2.5 billion with which to buy low and sell high in almost any market under the sun.

Sky lands Park Management, would-­be developer of the future home of the New Jersey Cardinals baseball team of the New York-Penn League, went public on September 24. It is a start-up company with professional management, a NASDAQ symbol (SKYP) and revenues in the high four figures: $7,862 (seven thousand, eight hundred and sixty-two dollars).

Gray, dusty and environmentally incorrect, cement hardly ever stops the financial presses. However, it will hold the interest of an inflation-sensitive bondholder because its price -- in this, the Age of Gluts -- is rising.

Talley Industries Inc. is virtually the 1993 economy in miniature. It is the United States, or a large portion of it, under one corporate roof. In this sense, perhaps, it may constitute another one of those cyclical economic indicators that is not subject to government revision.

As the field turned for home in the fifth race at Aqueduct last Saturday, it was Captain Moonlight, Holy Mountain and My Quincy battling for the lead. "But from the rail," came the announcer's call, "Money of the Mind comes on through and opens up. Money of the Mind drawing off by three or four. Captain Moonlight, then Holy Mountain. Money of the Mind five lengths clear on the wire!"

Department of unforgettable bull­market facts: Of the individuals who represent the 520,700 new customer accounts opened at Charles Schwab through the first nine months of this year, 45% had no prior brokerage relationship (although many have held mutual funds or owned IRAs).

In France, the battle lines are drawn between those who would suffer deflation and those who would stamp it out. A lengthening list of deflationary symptoms, there is.

From a November 1 press release: "Moody's Investors Service today released a special comment highlighting new risks that investors face when investing in securitized commercial real estate transactions...

In a perfect world -- no inflation, no deflation, no Federal Open Market Committee -- prices would be rising and falling all the time. The difference is they would not be rising or falling in unison....

Kent Holden, a Paine Webber broker in Chicago, was reluctant to enroll in the company 401(k) but his wife insisted, and he finally sent off the paper. A day or two later...

In Texas, more existing homes were sold in the 12 months ended August than in any 12-month period since 1980, according to the real estate center at Texas A&M University.

Inventory, a versatile word, means merchandise on Main Street but securities on Wall Street. Such is the alignment of monetary forces in 1993 that Main Street wants less inventory while Wall Street can't get enough.

The New Age Media Fund is a blind pool dedicated to the electronic superhighway and all who travel on it. The prospectus holds out the promise of an opportunity even greater than the $100 billion personal computer market.

A Kidder Peabody analyst contemplates Discovery Zone's entry into Mexico...

To the list of labor crises in America, add the carpenter shortage.

To answer a reader's question, three million Japanese yen bear warrants are listed on the American Stock Exchange. The warrants -- first cousins to puts -- go up as the yen goes down against the dollar and go down as the yen goes up vs. the dollar.

Generally unremarked in President Clinton's address on Haiti last week was the wisp of a new banking policy. "I will also be imposing additional unilateral sanctions such as...

Errata from the last issue.

In a week in which the broadly defined money stock, M-2, rose by $4.2 billion, the market capitalization of 17 big telecommunications and telephone companies was raised by $16.2 billion. The monetary comparison is important because common equity has become a new kind of corporate currency.

If a deflationary virus has incapacitated the banking system, why has it not also put the securities markets into a funk? If the bank-lending business is demoralized, how can the equity-buying industry be euphoric?

What the September employment report will almost certainly gloss over is the growing number of people who are not driving trucks....

The favorite monetary metal of the Populist Party in 1893 has made an emotional round-trip in 1993, from bearish to bearish. At its low in March, silver traded at $3.51 an ounce. At its high in August, it fetched $5.45.

The nation's most richly valued discount brokerage house does not happen to be Charles Schwab Corp. Valuation honors go instead to a small but rising competitor of Schwab's (and a Wall Street neighbor of ours), Waterhouse Investor Services.

"A former senior civil servant in the Italian Health Ministry is having difficulty explaining how he came to possess gold bars, coins and jewelry worth some L200 billion...

A decade ago, when the yen was low and the dollar was high, American exporters feared not only for their markets but also for their solvency.... One million and one newspaper editorials deplored the decline of American "competitiveness." Today, everything is different and yet also -- déjà vu as seen in a mirror -- the same.

The mighty yen has laid low the great Nintendo.

Tailor-made options are sold in the stock market, too -- brokerage firms and banks write them, and then hedge them -- and the readers of Grant's have been field-testing the puts.

In September, the Clearing House Interbank Payments System, the monetary-data superhighway that facilitates dollar-denominated currency trading among 121 banks worldwide (and that Sumner Redstone only wishes he owned) logged daily transactions that averaged some $1,142,664,000,000, a total greater than the sum of currency...

In another corner of the industrial ­commodity markets, linerboard prices have plunged, reportedly to $270 a ton, a disastrous leg down from the $300-plus quotations prevailing this summer....

Expertly appraising the present value of the future earnings stream of a pair of truck-stop/casino/hotels situated on either side of Interstate 15 at the California-Nevada border, 20 miles from the nearest fire station, the stock market has settled on the sum of $1 billion.

Three euphoric years in the stock market have not improved the stature of short-sellers. Far worse than being condemned as antisocial, they are now perceived to be unprofitable.

Except for the Brewers, the lowest of the low in baseball's American League Eastern division, Milwaukee currently has no recession, let alone depression, let alone deflationary debt contraction. Bankers are competing to lend, in fact, according to the Milwaukee Business Journal...

Bulls may agree on the decade, but not on the relevant historical analogy to the decade. Do the 1990s most closely resemble the 1930s, 1950s or 1960s? Wall Street wants to know. (If you are prepared to suggest the stagflating 1970s, you are not bullish and are, therefore, not consulted.)

The surprise jump in August housing starts -- to an annual rate of 1,323,000, the highest pace since the 1,437,000 reported for February 1990 -- is compatible with the bulging order book of Republic Gypsum Co., Dallas (see page 1), but not with the theory that the Federal Reserve is merely pushing on a string.

Panicked buyers believe that the world is running out of bonds, and they hold that opinion in the special corner of the mind where lovers store each other's telephone numbers.

Currency trading is one of the world's few growth industries, yet shares of the little First Mercantile Currency Fund change hands at a 24.4% discount to net asset value.

The day's burning monetary question is whether bank deposits are reinventing themselves as mutual fund shares. Is money fleeing 2% in a bank for the promise of 15% in the market, as a youth might flee Pittsburgh for Paris? No, it is not, we think.

To commemorate the first anniversary of the 1992 devaluation of the British pound, The Times of London has slashed its newsstand price to 30 pence from 45, and the overall U.K. inflation rate has made a 29-year low: retail prices rose by only 1.4% in July....

A money manager recently was asked by a Long Island neighbor if things were jumping on Wall Street. Assured that they were, she replied that she had guessed as much. Her father, at his wits' end over the lower­case interest rate he was earning at the bank, had plunked half of his life's savings into a mutual fund, even though, she added, he had never owned a share of stock before in his life....

First USA, another stock-market valuation miracle, was part of the salvage of MCorp, the sunken Texas bank holding company. Organized as MCorp's credit-card and retail-banking subsidiary in 1985, the company was sold to Lomas & Nettleton Financial Corp. in 1986 and to its own management in a leveraged buyout in 1989.

To elaborate on the results of the August survey of the members of the National Federation of Independent Business (see page 1), they were miserable. The Federation, which numbers 600,000 firms nationally, canvasses a random sample of its members each month; 828 responded in August.

U.S. commercial banks turned in the second-most-profitable quarter in their long and often deplorable history, the FDIC reported Tuesday.

Not even President Clinton himself would claim that the 13-year decline in global interest rates is the direct result of the new tax legislation, even if his staff would swear to it. Perhaps Americans in every walk of life are too ready to impute overarching significance to domestic events...

Interest rates have fallen in the United States despite the Clinton administration and its deficit "reduction" plan and the Federal Reserve and its monetary policy. They have fallen in Europe despite the European Exchange Rate Mechanism and the Bundesbank. Last month in Europe, as a matter of fact, the two best-performing bond markets were Italy's and Britain's, markets and currencies that used to be among the standout worst­-performers.

Copper stacked in London Metal Exchange warehouses does not represent 20 weeks worth of consumption, as reported in the last issue of Grant's. It amounts to approximately three weeks worth. The error forces an analytical issue. If the higher number was bearish, as the Grant's argument had it, how can the lower number not be bullish?

The gold bull market (long and far may it run!) has produced a new interest-bearing, gold-indexed preferred.

Turnover averaged $1,087 billion -- a shade over one trillion -- a day.

It will be interesting to hear the Clinton White House explain away the bond market if interest rates should ever go up.

A market that closes its eyes and buys 100-year corporate bonds at a yield pickup of only 80 or 95 basis points to 30-year Treasurys is not one that conscientiously stays at home at night in a flannel robe to study The Bond Buyer. It is not the kind of market that thinks as much as it should about taxable municipal bonds.

Rally's Inc., the nation's largest double drive-thru hamburger chain, widened the vistas of corporate financial reporting the other day by speculating on how profitable the second quarter might have been if there had been no interest expense to pay.

In London, the summer's composite deflationary economic message is posted at the Polo Ralph Lauren shop on New Bond Street. "Sale" says a discreet sign on the front door. "Office to let" says a bolder sign one flight up. To judge by the relative size of the lettering, real estate is in even greater oversupply than designer apparel.

The underwriters must be crestfallen. CVD Financial, which is being formed to lend to companies that have been denied in the credit contraction, wants to raise $57.5 million.

Swiss banks, formerly discreet and anti-gold, may be becoming a little less of each.

"The McDonough view of the world is that things are better every day than the day before," said the new president of the Federal Reserve Bank of New York, William J. McDonough, at the press conference to announce his appointment two weeks ago....

We take it as gospel that the $500 billion "deficit reduction" measure proposed by the Clinton administration would, if passed, enlarge the deficit by taxing the growth out of enterprise. However, that is not the mainstream creditor view, and the bond market has been levitating, according to the financial press, on the gas of fiscal hope. Therefore, a question: What if the budget doesn't pass?

It is a vintage moment in credit, and someone ought to bottle it.

Like any good Price Club shopper, the Federal Reserve Board buys in bulk, and it has recently been laying in by the hogshead, job lot, carload or club pack. Always, it buys with money that didn't exist before, in this way creating new credit...

Citibank's well-advertised offer two weeks ago to provide $1 billion in credit to American small business elicited a response "beyond my wildest expectations." So Kapo Kasanda, managing director in charge of community business lending in the New York region, tells Grant's.

M.I.M., which stands for Mount Isa Mines, is Australia's largest copper producer, one of the world's top lead and zinc producers and a sizable silver and (for the time being) gold producer.

On Wall Street, perception and reality are rarely identical, and the frequent divergences between the two present an opportunity to effect an arbitrage. In effect, a speculator may "buy" reality and "sell" perception.

As the bottom fell out of the gold and speculative oil stocks in Toronto on July 8, investors reached for a telephone. The Dow Jones Industrial Average was going up, but the Toronto Stock Exchange Index was going down. Was something wrong with Canada?

What is the trend in producer prices of a country that ignominiously left the ERM last fall, cut its interest rates and devalued its currency? If that country is Britain, the answer is "under control."

The French government of Edouard Balladur set out to issue 40 billion francs of partially tax-advantaged, privatization-linked bonds this month. Instead it sold 110 billion, thereby making the Ballabonds the greatest success in the annals of French public finance, at least from the government's side.

The downtown Chicago real estate market took another body blow Monday with the announcement of a foreclosure suit against a bastion of Chicago's financial community...

Celestial Seasonings common, which was priced at $20 on Monday and closed at $29.25 on Tuesday (the planned offering range was $15.50 to $17.50), has a hard act to follow in Snapple...

The new chief of the People's Bank of China may not know Alan Greenspan but the two are connected through the gold market.

In the ordinary course of business, low interest rates eventually bring about high interest rates. Nowadays the cry is that the times are out of joint and that low rates pose no danger to anyone except for the luckless short sellers.

The IPO market is as hot as the Fourth of July.The new offering calendar is record­setting: IPOs, secondaries and convertible offerings have been running at $3 billion a week.

Securities analysts may carp at Black Hawk Gaming & Development -- at its losses, its auditor's caveats, its balance sheet, its income statement -­ but the buyers of the company's units have doubled their money through the gift of faith.

Nine months after the 1992 European currency crisis, central banks are poorer, speculators are richer and certain currencies are, in the official euphemism, "newly floating." In other words, the British pound and the Italian lira are no longer anchored to the European Rate Mechanism, but unhinged from it.

Like other great forces in the history of American real estate -- George Washington, Thomas Jefferson, the Northern Pacific Railroad, Citibank -- Donald J. Trump has been tempered by adversity, not defeated by it....

In Serbia-Yugoslavia, the inflation rate is arching toward one million percent a year (vs. the quaintly moderate rate of 19,800% only last January)...

Last week, for the first time in 26 years, official French short-term interest rates fell below German levels, but an even more epochal event occurred in German labor relations. ...

How does Kevin Parker of Morgan Stanley's equity derivatives trading desk in Tokyo get an edge?

"It is quite impossible to get bank financing for any project at all in Guandong Province. As for existing loans...

A bull on commodity prices must acknowledge the bearish facts: an index of Canadian commodity prices is setting new lows...

Thanks to the Investment Company Institute and to the Grant's statistical apparatus, the latest mutual-­fund data come into sharp and dazzling relief.

The trouble with the consumer price index is that it has no financial­assets component. It is without a NASDAQ, call option or junk-bond subindex. Americans buy securities just as they buy gasoline and "Jurassic Park" T-shirts... Yet the rising cost of mutual funds was nowhere reflected in the allegedly benign May CPI report.

Minnesota Mining & Manufacturing Co. turned bearish on the U.S. economy last week and Women's Wear Daily issued a downbeat appraisal this week. However, to give equal time to the other side of the argument, Allied Capital, for the first time in about three years, has turned bullish.

Ferrous scrap metal -- rusty railcars, worse-for-wear auto bodies, miscellaneous industrial junk -- may be the perfect commodity.

Adam Glick, a still-solvent New York real estate investor, is out of practice at buying buildings, having chiefly stood on the sidelines and watched the market drop for the past five or six years. But now, he says, his company is on the verge of buying a property in Raleigh, N.C.

Lending officers at Bank of Boston are placing cold calls to real estate developers...

Are you, personally, a taxable entity? Are you not now paying federal income tax at the alternative minimum rate, but at a higher rate? Do you happen to be bullish on natural gas? And, finally, could you bring yourself to buy anything legally classified as a "tax shelter" after the shelter-related loss, recrimination and litigation of the past decade? If so, read on.

Effective June 9, minimum margin on the Standard & Poor's 500 futures contract on the Chicago Mercantile Exchange was reduced, with the size of the cut varying by contract type. In one speculative category, a $12,000 minimum became a $9,000 minimum.

Anti-inflationary forces are reportedly fanning out over mainland China to beat back rising prices -- and, it would seem, free markets.

Back in January, Grant's wrote about a potentially revolutionary rechargeable battery technology that, if successful, would put a dent in the highly leveraged balance sheet of Duracell...

Buried in a recent Saturday edition of the Financial Times was a six-paragraph story about the strong and surprising recovery of the Brazilian economy...

In the inflationary 1970s, the Club of Rome preached the gospel of perpetual global shortages. In the disinflationary 1990s, the consensus of opinion has...

One of our new best commodity friends, the soybean market, has been having its troubles, but one remains authoritatively bullish...

Thanks to the revival of nonfinancial commercial-paper issuance, short-­term business credit is expanding again. Business loans are still contracting, but the sum of loans and paper issuance is decisively growing...

As a professional courtesy, bears raided the gold, silver and soybean markets last Tuesday rather than on the day of the Grant's conference, the prior Thursday.

Western Mining Corp. (WMC), based in Melbourne, Victoria, Australia, is a Depression baby. It was founded in 1933. Later it diversified out of its original gold mining business into aluminum and nickel and other commodities that the world nowadays cannot seem to find enough warehouse space to contain.

The macroeconomic portion of the Grant's field day was rich in fact and color and contradiction. Van Hoisington, Gert von der Linde and Paul Kasriel all weighed in on the big picture...

After speaking at length on the future of Asia, Marc Faber, the Hong Kong-based thinker and doer, was asked how to invest there. His answer was admirably direct. "I would tell you one vehicle I would not use," he began,

In April 1981, Leon G. Cooperman, then in the advisory end of the investment business, issued a bullish call on interest rates, and he couched it in the form of a question: "Can a Case Be Made for Certificates of Confiscation?"

Thomas N. Farmakis, executive vice president of SwissRe Advisers, U.S. investment manager to the world's second-largest reinsurance group, spoke to the Grant's conference about the fine art of not losing money.

House prices in Beverly Hills ... the NASDAQ ... Canadian stocks and bonds ... the Food Marketing Institute ...

For whatever it may say about the U.S. economic recovery, the number of Americans receiving food stamps climbed to a record 27.4 million in March, up 474,000 from February (there is no seasonal adjustment factor; the number was just up).

Gold can't talk but economists can, and the dismal scientists are trying to explain the rally in the barbarous relic.

"Man's gotta eat" is now the second most passionately held idea in the stock market, just behind "anything but 3%."

To the bearish thrust, "New York Stock Exchange margin debt has never been higher," there is a bullish parry, "It has and it hasn't."

The ruination of the credit of the United States government is a long­running, bipartisan work, and the new program to shorten the maturity of the debt constitutes another step on the road to embarrassment. It is not the bankruptcy court itself.

From the May 13 San Francisco Chronicle: California could face the worst credit crunch of any government since New York City in the 1970s...

The buyers of cable-television junk bonds hold certain truths to be self-­evident. No. 1, the investing public demands yield above all other things. No. 2, junk-bond funds are in the business of giving the people what they want. No. 3, ...

Until further notice, no Citicorp officer may utter the words "free market" in any public forum except in an ironic or self-effacing context....

Barring revisions, April will mark a small monetary milestone. For the first time since last September, M-1, M-2 and M-3 will have risen simultaneously in one month...

In flight from 3%, a person may buy a cat or a dog instead of a yield. Wall Street will always sell what comes to hand. We are thinking now of Stone Container Corp., the highly leveraged, highly wrecked paper company, with its bank debt, senior debt, subordinated debt, preferred stock and equity. But there are other fixed­-income anomalies, and we will get around to them.

In February 1990, Delta Air Lines guaranteed a $481 million private placement of unsecured notes for its Employee Stock Ownership Program, and perhaps Delta regarded this pledge as innocuous.

Eight percent of the Canadian land mass is covered by water, and 92% is covered by debt. More than 92% would be so covered, in fact, except that a significant portion of the Canadian public debt is held abroad.

Currency may or may not travel well, but it travels frequently. An unpublished Federal Reserve study offers support for the claim (quoted gingerly in the last issue) that as much as 60% of U.S. currency may be held outside the United States. The number is as provocative as it is fantastic­-sounding.

Repeatedly and without provocation, Grant's misspelled the name of the former Lazard Freres partner and current farmland bull who was quoted in the last issue. He is Disque Deane.

Equal time for bulls Hold that yield! Ceremony of the creditors Green shoots in Japan

We observe precious few interest rates for a publication with our particular name, Ron Ryan, proprietor of Ryan Labs, was saying the other day.

The financial implications of a Clinton administration are only beginning to dawn on the mutual-fund-buying public. A lower dollar exchange rate is one of them. Higher regulation and lower corporate profits make a second. And a higher inflation rate is a third.

The Federal Reserve's assets continue to grow, but so, too — let's all remember the art of accounting — do its liabilities.

"First of all," says Disque Deane, former senior partner at Lazard Freres, founding partner of Corporate Property Investors and paid-up subscriber to Grant's, "I don't know what I'm talking about."

In Germany, the intransigence of central bankers is matched only by the secretiveness of corporate executives. As the Bundesbank refuses to yield to the misery of the recession, so Deutsche Bank (to pick only one illustrious name) declines to make an official declaration of its true net worth. Now, or so a knowledgeable observer contends, change is afoot.

From the April 15 Journal of Commerce: WASHINGTON — A Department of Transportation proposal to classify bulk shipments of salad oil as hazardous material has brought a firestorm of protest....

Very scrutable, perhaps Italy resplendent Inflation resurgent Malaysian bacchanal Last director, last fund?

Falling base-metals prices, weak money-supply growth and stagnant bank lending: The data on these pages do not universally support the Grant's inflation hypothesis.

Where is the world economy going? Not knowing, an investor may occupy himself instead with a more profitable question: What in the world is cheap?

If anarchists had money, the price of Italian assets would be going up.

It's a good thing for the creditor class that the commodity futures markets are so lightly patronized.

All at once, Stone Container Corp., the nation's No. 3 paper producer, has become a riskier, less desirable short-sale candidate.

Adjusted for the lack of even one green shoot on the wintry field of the M-2 money supply, James L. Hebe, president and CEO of Freightliner Corp., gave a credible talk on the risks of rising prices before the Truck Maintenance Council last month.

No human rights, either Korean storm warnings Winter in Ontario Too many vacations Inflation capital Too much metal

Competitive currency devaluation is gaining as much legitimacy as the Clinton administration can possibly lend to it.

As much as Alan Greenspan, as much, even, as the Merrill Lynch sales force, fate guides speculative destiny. We are thinking of the planned relocation of Eurodollar futures trading to bigger quarters at the Chicago Mercantile Exchange this summer.

Our reader, who lives an affluent, non-shopping kind of Manhattan existence, was thunderstruck by the low prices and the manifest efficiencies of the largest American retailer.

The germ of an investment idea is contained in these facts. Since 1973, the price per ounce of Hershey chocolate has climbed by 266%, whereas the price of cocoa has hardly risen at all ...

On March 2, Rally's Inc., America's largest chain of "double drive-thru restaurants," teamed up with PaineWebber, America's No. 5 brokerage house, to bring to market $85 million's worth of 9-7/8% unsecured senior notes ...

USG Corp., which ended decades of uneventful solvency by overleveraging itself in the boom, filed for bankruptcy protection on March 17.

Up with Dresdner What? Green shoots? China boils over Another Eastern straw Order from chaos?

For months, Grant's has been trying to understand, even to rationalize, the weakness in M-2. We have written about finance-company lending, which the conventional banking data do not incorporate, and the unfathomable speed with which electronic dollars change hands today...

It won't surprise President Clinton, but the 50-day moving average of the dollar-weighted put-call ratio for the Treasury-bond futures contract is making a low.

This piece examines the other side of the inflation argument, and it employs words, numbers and a map.

It is banks (the commercial banks aided and abetted by the central bank) that lend too much or too little, and that create an excess of money or a scarcity. Having said "no" for so many months, are the banks now prepared to say "yes?" Can they say it with feeling?

Two days after the conference disbanded, NationsBank, the country's No. 4 bank holding company, disclosed a plan to rev up its small-business lending. Like the rise of lumber prices or the fall in bond yields, the news fired the cyclical imagination.

The accompanying graph (another James Bianco production) plots the rise and fall of the CRB commodity futures index alongside the size of Washington's favorite book, the Federal Register. The fatter the Register, the more active the federal enterprise.

If there was ever a market in which a loss-making integrated steel company could hope to raise equity capital, it is this market, but an investor might ask a question or two anyway.

As if it were afraid of what the bond market might do if it were left alone with its morbid thoughts, the Clinton administration keeps talking to it.

Nobody can pass judgment on the Fed merely by reviewing the expansion of its earning assets.

"Whether they wanted to be in the market was irrelevant," said Van Siler, a managing partner at R.J. Walls & Co., Princeton, N.J., in the white heat of Tuesday's bond rally. "They can't stand the pain," he added, describing the state of mind of the surviving bears.

Paul Isaac is, in fact, according to the people who know him, a kind of one-man New York Stock Exchange member firm, a trading, investment, taxable-bond, derivatives, municipal-bond, research, due diligence and back-office department all in one pair of sleeves.

The patron saint of the Clinton "call to arms" is Franklin D. Roosevelt, and it was to Hyde Park, N.Y., that the new President traveled last week to lay down a wreath and a gauntlet.

Overpriced distressed securities constitute one of the top financial oxymorons, but John Boland, editor and publisher of Bankruptcy Values notes that the bond market has created a number of them.

'Actually, I'm not hungry' D-marks on the lam Glittering, hard to tax Internationally manic First recorded loss

"We have 12 years of data showing that higher yen rates do nothing to improve the U.S.-Japan electronics trade balance... There is no discernible relationship." Nevertheless, the dollar stands at an all-time low against the yen. To what end? To raise American wages? To stimulate the domestic economy? To stir the political pot?

In light of the boomerang record of journalistic consensus, one strategy for mutual funds in 1993 presents itself instantly: Don't buy one.

President Reagan's order prohibiting federal employment for striking members of the Professional Air Traffic Controllers in August 1981 made Labor Day that year grim for American unions. But by the end of the next month the Treasury bond market stopped going down and began to turn up....

Would you believe that the fastest­ growing segment of the U.S. population is that portion over age 100?

Never say 'sell' China's new inflation That sucking sound Junk-bond jubilee Deconstructing Crandall

The issue is not the Fed's intentions. It is the banking system's capacity, and will, to lend.

Like winter in the Northeast, which imitates November, the financial markets this season are hatless and coatless. The speculative weather, for the bulls, is ideal: no inflationary over-heating and no deflationary cold snap.

The No. 1 investment characteristic of gold bullion is that it pays no interest. Like a checking account or a surgical glove, it is sterile. The No. 2 characteristic is that it depreciates, but No. 2 is a corollary of No. 1. In a time of low inflation and high real interest rates, people want yield.

J.S.G. Boggs is an artist who paints one-sided bank notes that look a little like the Treasury's.

The Federal Reserve may or may not be pushing on a string. The People's Bank of China has no string to push on. Inflation in the urban centers of the world's 11th-largest economy is climbing at double-digit rates.

Now, in 1993, comes this interesting development: Duracell, the leveraged battery maker, is getting some new competition.

Airlines still labor Russia meets Brazil Taking the pledge Mountains of stuff

Bond-market rallies in Japan and the United States have official monetary sponsorship. In the U.S., aid takes the form of double-digit growth in the Federal Reserve's government securities portfolio....

Citizens may recriminate over the 1997 fiscal year, but Wall Street is focusing on the brilliant outlook for the next fiscal quarter.

Town & Country, which is to finance what Grant's is to weekend living in Bucks County, Pa., asks on its January cover, "Who Are America's Top 10 Brokers?"

A notable division has formed in the ranks of the big U.S. money market mutual funds: Some will, and some won't, buy the certificates of deposit of the big Japanese banks.

You watched him play. You read his book. Now, unless speculation is going out of style this month, you'll be able to buy his stock. Wilt Chamberlain, the basketball giant and Lothario, has licensed the use of his "name, likeness and persona" to a restaurant company that plans to go public at a market capitalization of some $40 million.

The adjective "bearish" no longer does justice to the silver market. Some of the younger traders who stand around in the Comex pit six hours a day in a state of suspended animation are bearish.

From 1985 to 1991, finance­-company business loans nearly doubled, while commercial-bank business loans rose by only 24%. In 1990, 1991 and again in 1992, finance-company business lending went up (if only a little), while commercial-bank business lending went down. These facts prompt a question....

From the Grant's economics workshop, a pair of indicators, one old and one new.

Jim Schwartz, a Procter & Gamble spokesman, last month confirmed to Supermarket News that something odd was indeed about to happen...

Never say 'sell' China's new inflation That sucking sound Junk-bond jubilee Deconstructing Crandall

The monetary picture gives precious little help to an economic bull.