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Gata getting frustrated/Lashing out.

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    8,035 posts.
    e Metropole Members,

    The King Report
    M. Ramsey King Securities, Inc.
    Wednesday June 26, 2002 - Issue 2447

    "Independent View of the News"

    Globex SPUs [at press] 950.50, -24.00; USUs 105.12, +2.06 $=120.30yen; euro = .9871 Gold is +$4.30

    Enter The Pain

    After the close, GE announced they would hold a conference
    call on July 18 and reaffirm earnings guidance for this quarter. That's ridiculous - GE already made the
    announcement. It's a transparent ploy to produce a
    perceived double benefit for GE stock, which is in steep descent. SPUs rallied after the ploy. But the surprises
    are negative in a bear market, and this is a super/secular
    bear.

    Yesterday's session had the smell of bankruptcy anxiety in
    the air. WCOM, Amtrak, US Air, UAL, LU were cascading on
    fear debt would sink them. After GE's gambit, CNBC
    reported that according to WCOM insiders, the company had
    cooked earnings the last 5 quarters. The stock fell to
    .35 in after-hour trading. WCOM faces the abyss. Will
    it take LU, TLAB, and others with it? What about the
    bankers and debt holders? Two large JPM blocks traded
    after the news; SPUs and NDUs fell precipitous...Micron's
    after-the-close report of a 4-cent loss also is
    contributing to after-hour and overnight trading distress.

    The due bill has arrived for Easy Al and others' duplicity
    and malfeasance. As we keep harping, that's what happens
    after a busted bubble. Monetary policy is ineffective,
    except for a brief rally that allows insiders and the
    astute to exit. More money is lost on the resultant
    'death march' decline than on the initial bubble burst.
    The financial violence worsens. Debt keeps growing;
    its unserviceability crushes the economy. The panicky
    liquidity cannot get into the economy efficiently. A
    daisy chain of bankruptcies ensues; a debt deflation
    spiral occurs. It takes years to remedy the excess
    debt and capacity.

    The hellish consequences of Easy Al and Slick's '90s bubble
    are arriving with increasing frequency and intensity.
    Long-time readers know we constantly lambasted the corruption, fraud, and chicanery of the late '90s. Bubbles don't
    occur by accident. The bubble was partly designed to keep
    Slick out of jail. Many people thought our continual
    bashing of Slick was solely political, but as we tried
    to articulate, we were disgusted at the massive corruption
    that permeated virtually every facet of US society. We
    often mentioned that the US would pay dearly for the
    venality of the '90s. That is now transpiring in the
    military, intelligence agencies, Justice, corporate
    America, the Church, stocks, etc.

    Slick posted a for-sale sign on the US, and every insider
    and wise guy knew it. Everything was for sale, and ethics
    were discarded for quick profits. Non-financial profits
    peaked in 1997, but accounting chicanery kept the game
    going. The government manipulated economic data. Fraud
    was ubiquitous. It was obvious; and the consequences
    weren't a forecast; they were a certainty.

    As bankruptcies proliferate, Congress and Bush will be
    pressured to act. They will select winners and losers,
    since everyone can't be saved. What telecom, techs, etc.
    will be given Chrysler-like sustenance?

    US banks will resemble Japanese banks. Soon, politicians, academicians, media, etal can issue the same bromides
    to US banks that they arrogantly hurled at the Japanese.

    In overnight trading, bonds are up a deuce, stocks futures
    are cascading, gold is up $4, and the dollar is tanking.
    Today will be coyote ugly. Critical technical support
    levels will be obliterated. As we kept warning, stocks
    were sick, but misguided traders kept usurping the necessary purging. We also stated that market action implied that something or someone was 'in trouble'. The news that
    WCOM's CFO was fired 48 hours ago is just one factor that
    has emerged. They are undoubtedly many othe...There will
    be various and sundry rumors as to who 'is in trouble';
    some will be true. The obligatory purging is commencing.
    And as we warned, the final stage is vicious; prices
    decline to unfathomable levels due to forced liquidation…
    When or will the Plunge Protection Team surface?

    Euros are up sharply overnight. The market is starting to
    price in a rate cut. This is extremely bad news as the rate cuts are innocuous for both the economy and stock market,
    but are anathema to the dollar.

    Federal Express cut next quarter guidance, triggering a
    collapse in rails. The rails had been huge post-9/11
    winners as the obvious alternative to airlines and as a
    key beneficiary of the widely heralded economic rebound.
    FDX's pronouncement is a more prescient economic forecast
    than an econometric model. So much for the LEI and other
    overly dependent-on-monetary-policy indicators.

    Treasury's announced cancellation of the 2-year auction,
    due to Congressional inaction on raising the debt ceiling, boosted bonds and crippled stocks.

    Please disregard talk about how sentiment is so negative
    it signals a massive rally. Just as bullish sentiment goes
    and stays at extremes in bubbles, the reciprocal occurs in
    bear markets. But most importantly, as we keep saying, valuations are the true indicator of sentiment. When tech stocks still trade at 60 to 80 PEs and major market indices sport historically high PEs, sentiment is still extremely bullish.

    CNET reports, "Apple Computer, which initially could not meet demand for its new flat-panel iMac, now appears to have the opposite problem. Retailers and distributors who had to wait weeks after the product's January introduction to get their hands on the desk lamp-shaped desktops now find the machines piling up as the consumer PC market slows to a crawl."

    The Chicago Tribune, citing the Illinois Association of Realtors, says housing prices are up 15.1% in Q1 for the
    Chicago area. Some areas, like Oak Park are up 27.3%.
    But that won't show in CPI.

    You know that housing price surge? Well if LU goes, parts
    of New Jersey and Chicago western suburbs won't have to
    worry about the housing bubble. This will be repeated throughout the US - where ever teetering corporations
    and depended entities are domiciled.

    For the past 20 years, Wall Street and others bragged
    that 'just in time' inventory management made US business
    and the economy more efficient. Yesterday, the WSJ had
    a front-page article blaming the erstwhile-trumpeted
    practice for retarding the recovery.

    There will be even more Congressional hearings into the
    ways and means of the financial fraud and carnage that
    is still unfolding. But when will hearings into
    Congressional and Executive fraud occur?

    We said it many times over the past several years, and
    we'll say it again. "The level of speculation in a
    society is directly proportional to the level of corruption."
    We don't recall the quote's originator.





    Le Metropole Cafe

    All the best,

    Bill Murphy
    Le Patron
    www.LeMetropoleCafe.com

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