Sorry about that, but obvious as it is, it just seemed too apt to resist. So why don't
* we try another catchy phrase to launch this screed (catchy phrases are so called - we're probably revealing a trade secret here-because they're supposed to catch the reader's attention). Okay? So how about this: The only injury he ever sustained in his wrestling days was a permanent headlock.
The "he," of course, is Del)"nis Hastert, and the head lock reference is prompted by the fact that in words and deeds he comes across as a tad slow, even after making due allowance for the fact he's a congressman. And some years before he became Speaker of the House of Repre sentatives, he was a high-school wrestling coach, a job he snared, we suspect, mostly because of his bulk (he loomed large as a wrestling coach should).
In fact, either catchy phrase would do fine as a grabber, since Mr. Hastert is the nominal boss man of the House of Representatives, which, we blush to re mind you, is the site of the blossoming page scandal. From that lofty position, with an eye on next month's elections, he allegedly sought to sweep the dastardly behavior of Mark Foley, the disgraced and very much ex congressman, under the rug. Mr. Hastert's efforts on this sCOre came to naught, because it was so crowded under that rug there was, alas, no room for Mr. Foley.
Quoting Harry Truman (but not by name; he identi fied the late president as "someone"), Mr. Hastert told a press conference that he was "taking responsibility be cause, as someone once said, the buck stops here." As it turns out, for Mr. Hastert, not only does the buck stop there, but so do any consequences, and he resolutely refused to step down as speaker. And we sympathize with him: it isn't as if, on Mr. Hastert's. watch, Mr. Foley had been appointed co-chair of the House unit charged with looking after the well-being of the country's last group of indentured servants-congressional pages.
Besides his unnatural interest in teen-age pages, Mr.
Foley suffered a more common malady that in the end proved his undoing-a compulsion to communicate his unwholesome interest to his intended targets via e-mail. As more than one former executive of Hewlett Packard could tell him-to say nothing of any number of errant corporate types whiling away their days in the slammer-the "e" in e-mail stands not for electronic but for exposure. We're all very lucky, really, that the criminal mind can't seem to grasp the notion that e-mail doesn't disappear forever with a tap of the delete button.
~Ir. Hastert blamed a truly evil combo-the media, ,he Democrats and George Soros (riot necessarily in that order. we hasten to add)-for all the fuss over the able passion for drink; so we can only assume that in claiming such an addiction he hopes to expiate his de praved actions by giving alcoholism a bad name.
The question, of course, is what impact-if any-the Foley scandal will have on next month's elections, whose outcome is fraught with potential to exercise a mighty influence on ,yhat happens the lie:\1: couple of years, not only in the real world, but even in places as far removed from the real world as Wall Street. One lmintended effect that should provide some ruefuL comfort to the Republicans is that it has tended to elbow Iraq off the front pages, and Iraq, if the polls are right (always a dubious proposition) seems of no little concern to the voters. That the administration felt the need to dispatch Secretary of State Rice on another of her unscheduled drop-ins to Iraq speaks to its worry about how the war is going and possible repercussions in the voting booth.
Frankly, though, we have our doubts that the Foley dis closure will have very much impact at all. That strictly non partisan conclusion is based in part on the ease with which the citizenry shrugged off Mr. Clinton's dalliance ",ith Mon ica Lewinsky. Granted that there were differences, not the least of which were the sexual preference of the exploiters and the ages oUhe exploited. Too, the affair with Monica was ostensibly consensual, although how an affair between a president and a star-struck intern qualifies as truly con sensual eludes us.
And we have a sneaking suspicion that had Mt. Clinton been running for reelection, the electorate might not have been so forghing. But there's no arguing the fact that his pop
ularity never dimmed very much, nor that he has had the most in credibly prosperous post-presi dential career.
But the strongest reason for our belief that the tawdry Foley episode will not change too many minds or, more to
the point, votes, come the first Tuesday in November is our· sense that increasingly nothing that Washington, and especially the Congress, does can possibly surprise, much less shock, the citizens of this great land.
SCANDAL, SHMANDAL. Wall Street, we're happy to report, reacted to the Foley fracas as it reacts to just about every disturbance outside its special ambit these days - by ignoring it. Instead, much to its credit, it kept on doing what it has been doing so strikingly for the past six weeks or so-enthusiasically buying stocks. Last week, moreover, as we have a hunch you may have noticed, the Dow soared from one newall-time high to the next, before taking a bit of a breather on Fridav.
a surprise, since that's what the Dow's made of), but small-caps, which have taken a back seat in this latest upswing, finally joined the party, if some what disappointingly, without then erstwhile elan.
It was, by any standard, a splendid week in the stock market and left all the major stock indexes palpably higher on the year.
So what exactly were investors cele brating? Well, we suppose you can cite the seeming disposition of Bernanke & Co. to cease tightening and the inevitable heightened expectations that they'd soon be cutting interest rates. Or, anticipation that third-quarter corporate earnings, the massive flood of reports on which is just beginning to trickle in, would make very stimulating reading. The rather sud den and sharp reversal in the price of crude-and commodities generally helped by sending the always scary spec tel' of inflation back into the shadows. And, of course, despite every chance to do so, the world hasn't come to an end.
What's more, as the astonishing growth in hedge funds and private-eq uity outfits illustrates, there's a lot of loose change out there, eager or even desperate to be put to work. By its very nature, it's oYel'\\"helmingly restless and demanding money. and what it demands most of all are high returns, unmindful of economic or investment trends. It sure isn't smart mone:.~ but it's undeniably big money and there's umelenting pres sure on its managers to invest. It has been great for the market, adding huge gobs ofliquidity via takeovers and lever aged buyouts and the like, but it's intrin sically bad for the market when the tide runs out; just how bad will only become evident during the next serious break.
When searching for the answer to the inevitable and unanswerable question as to precisely why a market suddenly takes off in the absence of any signal trigger, you can't underestimate the market it self: nothing more tickles the speculative fancy than rising share prices. And this bull move, coming as it did amid growing skepticism about the investment outlook, is a perfect example of the power of conta gion in coaxing investors off the sidelines and dissipating fear and ultimately pru dence.
Since our crystal ball is in the shop for repairs, we're unable to tell you how ex actly far this rally can carry or what will bring it up short. But we can venture that since it's being propelled more by money than mind and more by emotion than fun damentals, it's not for long, let alone for ever. So enjoy it while you can.
WHAT WE ESPECIALLY like about Fred Hickey, apart from the fact that he's the smart est tech analyst ex tant, 'is that he's nothing if not forthright. Ask his opinion and you get a swift and unedited response. Here's a for instance: in the course of chatting with him (which usually means listening to him) last week, we asked how he's doing. Unhesitatingly, he owned up to having had a truly punk September (his put options went the wrong way), turning his best-ever year into merely a good one.
Fred puts out an absolute gem of a monthly newsletter, The High-Tech Strategist, which at hundred and twenty bucks a year is a steal (he lives in New Hampshire, so he can afford to be a bit more restrained in what ,he charges; anyway, that's the end of the commer cial). He also, of course, graces our Roundtable. The secret of his success is twofold: he's smart as as a whip and he a fiendish worker. On the latter score, there's no better proof than that he rou tinely listens to and reads the transcripts of dozens on dozens of tech company con ference calls, a tribute both to his stamina (they can bore you to death) and dedica tion. Thanks to such onerous labor, he's able to extract nuggets of invaluable in formation from the torrent of blather.
Thus, in monitoring the Q&As with analysts and other semi-awake inter ested parties he discovered that the ap parently strong quarters of the elec tronic retailing giants, Best Buy (ticker: BBY) and Circuit City (CC), were not so very strong after all. Rather, the two companies turned to some ex traordinary measures to cut costs and help the bottom line, like mandating less corporate travel, cutting down on mar' keting expense and, even, in the case of Circuit City, delaying deployment of a new point-of-sale IT system.
As a result, they were able to beat an alysts' estimates lor the quarter, even though foot traffic and sales growth in their stores were not up to snuff. More importantly, it told Fred the excitement on the Street over supposed upbeat re tail business, which presumably re flected strength among high-end con s umers, was so much piffle. In fact, he re lates, demand for flat-panel TVs, whose price tags run in the thousands and have
* been a very hot item, is noticeably ebb ing. A trend confirmed by last week's dis mal quarterly report by another nation wide chain, Tweeter, whose comparable store sales dropped 13%.
And Fred points out that the loss of appetite for these big-ticket electronic items is symptomatic of what's happen ing in home improvement ( Home Depot and Lowe's) and new cars (GM and Ford) as well. He scornfully suggests that the Street has been mistaking good comps by "the sweater sellers," occa sioned by fortuitous weather, for strength in retailing as a whole that's strictly a mirage.
The reality, he contends, is that "we're likely at an exciting inflection point in the economy, where the long running U.S. consumer binge has come to a halt." And he fingers the collapse of housing and the drying up of the vast res ervoir of cash via equity withdrawals houses provided as the culprit.
As a kind of unrelated ES. here, we'd like to note that another valued Round table stalwart and valued old friend, Art Samberg, of Pequot, disclosed that the SEC has essentially dropped its probe of his and his fund's trading. No surprise, since there was never any reason in the first place for the SEC to investigate, aside from wild accusations by an overzealous SEC staff lawyer who was canned, pres sure by a few silly senators (is that redun dant?) and the hyperventilating coverage by our olleagues at the New York Times.
