Weekend Cocktail Chatter
Who even knew that anyone still cared about things like trade deficits? I
mean, the United States has been borrowing tens of billions of dollars every
month from foreign investors for so long that I thought it was just something
everyone--with the exception of Pat Buchanan and people looking for reasons to
bash China--accepted. But apparently there are still some numbers that can
scare even the most dedicated stock buyers, so that yesterday's news that the
trade deficit soared to $24 billion for the month sent stock prices tumbling
(well, relatively speaking).
Concerns about the suddenly weak dollar, worries about the trade deficit,
rumblings that defaults on high-yield bonds are rising: What decade is this,
again? And where's Robert Rubin? Just kidding, Larry. The truth is that a lot
of these anxieties feel like just that: anxieties without any real object.
After all, bond yields fell by more than a quarter point this week, assuaging a
lot of concerns about the impact of rising interest rates on stock prices. So
all the victims of the fears of August just had to find something new to fret
about.
A bit Pollyanna-ish? No doubt. But something real has got to change before
all this talk about a suddenly fragile economy will make any sense. So go buy
something and keep the boom going. Here's Chatter for this week.
1. "According to IDC Asia-Pacific, 800,000 home PCs were sold in
China last year. At that rate, it will take a mere 500 years until every
family in China has a PC."
2. "In a week in which bad company after bad company filed for bankruptcy,
satellite-phone company Iridium also filed for Chapter 11 , which it had
insisted it would never do. Let's see: Its huge, clunky, hard-to-operate phones
cost $3,000. It cost $7 a minute to use the phones. And the service often
didn't work. How could they have missed?"
3. "Sears is abandoning its 'Come see the softer side of Sears' slogan, in
favor of a campaign that focuses more on Sears' strength as an affordable
mid-tier retailer . Among possible slogans that were considered: 'We're not
Bergdorf Goodman, but hell, we're not the Dollar Store, either'; 'We sold
washboards to your great-grandmother: That's gotta count for something'; and
'Come for the batteries, stay for the home furnishings.'"
4. "Reader's Digest announced that it had doubled its earnings
in its most recent quarter. Who would have thought that letting Chris Rock
write the 'Laughter Is the Best Medicine' column would have made such a
dramatic difference?"
5. "Rather remarkably, the Japanese yen just keeps getting stronger
despite the fact that interest rates there remain at about zero. That means
that even though there's no demand for money in Japan , which in turn
means that it's hard to see how economic growth is going to be sustained there,
investors are wagering that the Japanese economy is coming back. Or it could
mean that ... Actually, the whole thing is probably just a conspiracy. Just
like everything else."
6. "The Texas Pacific Group--it's just a group of investors--is on the verge
of spending $650 million to acquire Piaggio Veicoli , the Italian company
that makes Vespas. Why? Listen, if you have to ask, then you'll never
understand."
7. "Planet Hollywood at long last has filed for bankruptcy , and has
apparently negotiated a refinancing deal that will wipe out the value of all
its current shareholders and trade 70 percent of the equity in the company for
a measly $80 million. Of course, the company is now and will forever be
effectively worthless. So on second thought, $80 million is probably
overpaying."
