by Gene Callahan and Stu Morgenstern
In a week that the market would rather forget, the Dow industrials shed a record 821 points, or 7.7 percent. The S&P 500 was down 6.7 percent for the week. Stu’s portfolio handed out dollars faster than Puffy Daddy to a crowd of nightclub patrons, and Gene is going to have to cancel his order for that new Uni-mog.
The losses came in a week marked by investor uncertainty about Fed interest rate moves, and about whether they’d have to clean all of their Napster downloads off of their hard disks, leaving them nothing to listen to during the trading day.
Setting the tone for the debacle, the market entered the week still nervous about the warfare between National Review Online and LewRockwell.com. Fears were rampant that the dispute would disturb Lawrence Kudlow’s hair style, leaving the NRO and CNBC star unable to make his daily, televised request for Fed rate cuts.
Amid all-day rumors that Bob Murphy might attempt another piece of psychoanalytic deconstructionism on Jonah Goldberg, the Dow Jones Industrial Average tumbled 436.37 points, its fifth-largest point decline in history. Meanwhile, the long-beleaguered Nasdaq Composite shed another 6.3% and ended at 1923.38, its lowest close since the last time it was down there. At 2.1 billion shares, over-the-counter action was heavier then when Oprah Winfrey orders at Bob’s Big Boy.
On Tuesday, the market overcame its early sheepishness about having behaved so badly on Monday to end solidly higher. The Dow Jones Industrial Average rose 0.8%, the S&P 500 gained 1.5% and the Nasdaq Composite added a robust 4.8%. A sour note in an otherwise upbeat day was word of intensified fighting on the border between Kosovo and Macedonia, which sent shares of Macedonian ADRs plunging.
On Wednesday, the market arose in a spirit of optimism, only to have its breakfast spoiled by finding, for the first time in months, no pictures of Jennifer Lopez in any of its morning papers. Now in a glum mood, the market opened the trading day sharply lower. Throughout the day it anxiously awaited television reports from the Sean “Puff Daddy” Combs gun-possession trial, hoping to catch some historical footage showing Lopez in that damned green dress. When it became apparent later in the afternoon that there would be no pictures of Ms. Lopez broadcast that day, the market closed very agitated, with the Dow falling over 300 points and the Nasdaq down 43.
Things grew even grimmer on Thursday, when the sudden disappearance of all Starbucks coffee shops, combined with the fact that its wife brought up that one-night stand from last fall yet again, made the market irritable and ready to “bag this whole securities thing and open that beachfront restaurant in St. Lucia with my brother.” A neighbor on the trading desk reported “the market had a distinct odor of stale beer and cigarettes about him when he staggered in this morning – just minutes before the open, might I add.”
Word also hit the street that capitulation is in. As market watchers anxiously speculate about when the market’s flirtation with “heroin chic” will end, “capitulation” – from the Latin caput (head) and ulatium (the act of beating on something with a thorny club), roughly meaning the point at which people’s favorite mutual fund is a coffee can buried in the backyard – has become the term on everyone’s lips.
“I started it,” said Jim Cramer. “I used to use it a lot until it caught on – so there. Now it’s a complete Godot capitulation,” said Cramer, referring to the Samuel Becket play, “Waiting for Godot.” “Investors are undertaking a deep ontological exploration of tensions inherent in attempting to ground human life on an absurdist cosmology.” In the mean time, we recommend saving those coffee cans.
As fighting spread on the border of Kosovo and Macedonia, the market looked for guidance as to what the future held for an area that is an increasingly vital cog in the global economy. The market expressed fears that full-scale conflict might break out in the region. It is thought that the resulting shortage of pan flutes could send prices rocketing skyward and re-ignite inflation.
Seeking to clarify the Balkan situation, German Foreign Minister Joschka Fischer said the West “[is] not ready to accept any violent changing of borders. Such a thing is out of the question, except when, you know, it is NATO who is doing the changing.” When asked if the West would allow the borders to be changed by any non-violent method, Fischer replied, “None of that either! You little beetle-browed people down there will learn to behave yourselves and stay where we put you, or you will be taught a harsh lesson.” Archduke Franz Ferdinand was not available for comment.
Thoroughly dispirited by the dark shadow being cast from the Balkans onto the future of the West, the market couldn’t “take this crap any longer.” “Screw it,” the market said, “I’m gonna get in one more three-day weekend before ski season ends,” and it chartered a quick flight up to Burlington. This wanton irresponsibility panicked investors, and all major indices plunged again, with the Dow falling over 200 points.
A trader at a major brokerage firm, who spoke on the condition of anonymity, but who is actually Joe Lombardi of Salomon Brothers, said: “In the bigger picture what you got is a market that is very, very unhappy. Its self-esteem is like s&*t – and with all this recession talk, it’s no friggin’ wonder. What the market needs right now is a weeklong retreat at one of those teamwork-building wilderness adventures, maybe with Alan Greenspan and George Bush. Or get out on the town and get laid, for God’s sake. Just stop moping around and complaining.”
March 19, 2001