A LONG DAY

THE DAILY RECKONING

LONDON, ENGLAND

WEDNESDAY, 6 JUNE 2001

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*** No inflation...no worries. Stocks up again. Will the
Dow hit a new high? Maybe. Crazier things have happened.

*** And wouldn't Mr. Bear be delighted! All those
suckers...I mean, investors...with their picnic backets.

*** Productivity, sales, debt, juice, Trotskyites...and the
usual stuff!


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*** Long bonds, gold, and the gap between inflation indexed
bonds and regular 10-year treasury notes all are down -
apparently confirming Mr. Greenspan's observation that
inflation is no problem.

*** No inflation, No worries. Or so investors seemed to be
saying yesterday, as they rushed in to buy stocks. The Dow
Jones Industrial Average powered ahead 114 points and the
NASDAQ jumped 78 points, or 3.6%.

*** Among the winners on the day were stocks that have been
big losers all year. Names like Lucent, Cypress
Semiconductor and Xilinx topped the leader-and in board.
Xilinx, the specialty semiconductor chipmaker, cheered
investors by reporting that its rapidly deteriorating
profitability is deteriorating less rapidly. The stock rose
10%.

*** Meanwhile, back in Reality Land, the NAPM's services
index fell once again in May and April factory orders
plunged 3%.

*** What kind of miracle economy is this? "The productivity
of U.S. workers logged its sharpest fall in eight years ."
declares a Reuters report, "while signs of wage pressure
emerged with the largest gain in labor costs in more than a
decade."

*** Productivity of workers outside the farm sector fell at
an annual rate of 1.2 percent during the first three months
of the year. Unit labor costs, meanwhile, shot up at a 6.3%
annual.

*** This month's issue of Red Herring offers "66 Experts
Predict When The Economy Will Recovery." The experts are
sure it won't take long - overwhelmingly expecting recovery
with 9 months. But wait..what's this...they've got Mary
Meeker, the dot.com shill, and, oh my God, Ira Magaziner,
Hillary Clinton's health care sidekick, included as
'experts."

*** And for now, no amount of bad news seems to dim
investor optimism. After all, the stock market is "looking
ahead," or so we are told. Is it looking ahead like a 4-
year-old looks ahead to his birthday party? Or rather, like
the driver in a careening racecar looks ahead to a brick
wall?

*** "The bulls' numbers are growing, bolstered by a feeling
that the economy may be bottoming out after a marked
slowdown," the Journal story stated. "All told, investors
in April put $21 billion into stock mutual funds, after net
withdrawals of $20.6 billion in March, according to Lipper
Inc. Inflows continue in May."

*** The latest investor sentiment indicators confirm the
ebullient mood. ISI's survey of institutional investors
finds that they are more bullish than they have been at any
time in the last five years.

*** The Chicago Board Options Exchange produces a nifty
index known as the "VIX" that tracks option pricing to
gauge the mood of investors. And the VIX currently signals
the highest level of bullishness since last August. The
current VIX reading is close to the extreme levels reached
immediately before previous market peaks like that of July
1998 and March of last year.

*** In May, Wall Street brought out more than $49 billion
in new stocks [offerings].the most since October 2000.

*** Charles Biderman, editor of Liquidity Trim Tabs sees
the record issuance of new stocks and bonds as a negative
for the stock market - the thinking being that the more
investors buy these new issues, the less they buy the
stocks that are already trading. And if folks don't buy
existing stocks because they are busy buying new ones, the
stock market will have a tough time gaining ground.

Eric Fry

And more notes.

*** Clickety clack, clickety clack. The Eurostar doesn't
really make much in the way of noise. In fact, it's quiet
on the 7:15 to London. Not like 18 months ago - when
business were passing each other investment tips and loudly
yucking it up over how much money they were making.

*** I picked up a copy of The Times... The English papers,
I'm happy to report, don't pretend to the same high-minded
seriousness as their American counterparts. Instead, in the
first few pages we find stories murder, mayhem, jealous
lovers and tearful tales of tiny tots drowned in backyard
pools. My favorite is a report of two men who worked as
counselors for sex offenders at a prison. They became so
discomfited that they sued the Prison Service and were
awarded more than half a million dollar in damages for the
"psychological horrors" they suffered.

*** In a Paris newspaper, Liberation, I am promised a
shocking revelation from Lionel Jospin's past. I imagine
pedophilia..necromania.Republican tendencies...instead I
discover that the Prime Minister was once a member of
Trotskyite wing of the loony left. Weren't nearly all
France's soft socialists - when they were younger, of
course - connected to more radical factions?

*** And here, dear reader, I feel the need to make a full
disclosure - lest it come out later whilst I am in the
middle of a presidential campaign or running hard for the
post of master-at-arms at some looney, futile right wing
romance. I, too, once attended a meeting of the Trotskyite
Revolutionary Workers League..or was it the Revolutionary
Trotskyite Proletarian Alliance?.

*** I remember it well. I was student at the time; I
thought it would be a good place to meet girls.. The
clandestine meeting - held in what appeared to be a school
auditorium - was chock-a-block with gabby intellectuals and
a very few genuine 'workers.' The building had no smoke
alarm system, of that I was sure, so thick was the pall of
smoke from gauloise cigarettes. Beyond that, there were
endless tiresome speeches.and then everyone rose, raised
his right fist and joined in singing the "International" -
the theme song of the group. I decided then and there that
I wanted nothing more to do with a group that sang that
badly and had so few good looking women...

*** This may be a good summer to visit Europe - while the
dollar is still strong. (I realize that I gave this same
advice last summer. The euro has not risen, but it has not
fallen either...so the bargains remain.)

*** "If you're looking for a castle somewhere," Forbes
quotes Sotheby's head of International Realty, "and don't
want to spend a lot of money," look to the Loire Valley.
You can "still find a little chateau - yes, a chateau - for
about $500,000," gushes Forbes. On the second point, Forbes
is right. You can buy a chateau for $500,000. But like so
much information, it is dangerously misleading. Once you
have paid for your chateau, your expenses are just
beginning.

*** In fact, If you want to see for yourself, both the joys
and pitfalls of owning a chateau in France, you may want to
join one of the groups that is coming to stay in my money
pit this summer. International Living is bringing a group
on June 24th. Follow this link...

Gourmet France
http://www.ildiscoverytours.com/tours/ins/gfrance.html

Then, the Oxford Club has a group coming in July... If
you're interested in the Oxford tour, please contact
Jacqueline Corum-Jackson by e-mail at: JJackson@agora-
inc.com.

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["A Long Day" was written during a visit to the Normandy
Beaches in April of last year. Today is the 57th anniversary
of D-Day.]

A LONG DAY

I thought of the famous painting by Norman Rockwell. A
deeply furrowed and weathered farmer from out on the plains
sits on the runner of his pickup truck, while his son
awaits the train. The son is going off to college and is
full of the bright expectations of youth. The father is
more concerned with how he will get the next crop in
without his son's help. The picture appeared to be from the
late `30s.

There, in section D of the American cemetery, on the bluff
overlooking the English Channel, was the simple cross that
marked the grave of Nils Wennberg, private first class,
from South Dakota. Is that what happened to the boy, I
wondered.

The 6th and 7th of June, 1944, were black days for the
Nindel family of Indiana. The crosses at Omaha Beach record
that two Nindel boys, Preston and Robert, died within 24
hours of each other on those two days - two of the nearly
10,000 American casualties.

Also of interest was the grave of Jimmie Montcrieth - whose
heroism on the 6th of June was so remarkable that he was
awarded a Medal of Honor - posthumously. Montcrieth ran
from position to position, exposing himself to enemy fire,
rallying his troops and managing somehow to advance against
the German bunkers. He was killed - but the bunkers were
taken.

"All I remember," said Stanley, a stout oysterman and
carpenter, and D-Day veteran, whom I worked with back in
the `60s, "was jumping in the water and running up to the
beach. I had never been shot at before. I didn't care for
it. Guys were getting shot all around me. And I has so much
sh...[gear] hanging off me, I could barely move. But I made
it to the beach and crouched behind the dunes and started
shooting back. I didn't know what I was shooting at. But I
hoped to hell I hit some son of a bitch in a German
uniform."

"Stanley," I once asked during the terminal phase of the
Vietnam War...when the draft lottery numbers were being
handed out, "couldn't you have gotten out of it? Didn't you
have polio or something?" Stanley had had polio as a child
and walked with a limp.

"Hell no. I didn't tell them about the polio. Besides I
didn't want to be sitting around here with my thumbs up my
[bleep] while everybody else was getting their [themselves]
shot up. Of course, it was different back then...."

I walked along the beach where Stanley must have come
ashore. I tried to imagine what it was like. The German's
reinforced concrete bunkers are still there. They still
look massive, impregnable and unassailable. How could
anyone have gotten to safety across the open beach and up
the sandy bluff? And yet, they did. By the end of the day
on June 6, there were 150,000 troops on the continent. As
Hitler remarked, "The God of War has gone over to the other
side."

The God of War had indeed changed allegiance. Rommel, in
charge of the German defense west of the Seine, committed
suicide. His successor, Kluge, followed in his footsteps -
shooting himself a few months later.

Less obedient to the God of War was von Choltitz, in charge
of the German garrison in Paris. Hitler ordered him to
destroy the city. But von Choltitz may have been in Paris
too long. He disobeyed orders. He surrendered Paris,
intact.

The American cemetery at Omaha Beach is the setting of the
first and last scenes of "Saving Private Ryan." As in the
film, there were a number of WWII vets wandering among the
crosses and stars of David. Like the father in the Rockwell
painting, they wore baseball caps - often with indicators
of their military affiliations - and bore the creases of
age and hardship. Accompanied by younger relatives, they
walked slowly, reverentially.

Most were very friendly and open - relaxed, as Americans
tend to be. One older guy seemed to be stunned, though. It
was as though he was trying so hard to recall something,
that he had forgotten where he was and what he was doing.

I wondered what they were thinking...and what memories they
brought with them. And how things could have changed so
much...so that even though these events happened during
their lifetimes - it is as if they happened a thousand
years ago.

I thought, too, about how all the great changes and
challenges of our century were over before I was born. The
baby boomers have faced nothing like the Depression, or
Electrication, or Automobilization, or National Socialism,
or WWII. We have had an easy time of it. Let's hope it
stays that way.

Your very humble correspondent,

Bill Bonner

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