Key supports were breached Thursday (June 14) in several vehicles tracked by Black Box Forecasts, suggesting that sellers have not yet spent their energy for the near-term. Because Friday is a so-called triple-witching expiration, we should be on our guard for something more unsettling than a run-of-the-mill, 150-point drop in the Dow Industrials. Technical weakness aside, investors seem to be reckoning with the economy's increasingly obvious failure to signal a possible recovery in the remaining months of 2001. This may come as a shock to CNBC viewers, but anyone with his ear to the ground will already know there is powerful anecdotal evidence suggesting the economy is quickly deteriorating into statistical recession.
My own anecdotes are too painful to tell, since all too many of them concern close friends who are involved in such far-flung businesses as wine importing, public relations, investment banking and software engineering, among others. One of the very few upbeat stories I've heard lately comes from a buddy in the laundry business. He washes sheets, napkins, table cloths, pillowcases and such for some of the Atlantic City casinos and recently built a state-of-the-art plant that can process hundreds of tons of linens each day. (At a high school reunion at Trump's a few years back, he encouraged me to soil as many napkins as possible, since each was worth 7 cents of gross revenue to him.) Even if his business should fall off because of lower hotel occupancy rates, he is optimistic that it will be more than offset by new casino customers.
A Dot-Com Winner
Another anomalous world-beater is about to launch, of all things, a dot-com designed to compete with some very big players in the financial field. I was skeptical about the idea when asked six months ago to come aboard as a consultant. But the entrepreneur, a young Eastern European with impressive credentials in an arcane realm of mathematics, has succeeded in raising a pile of money and gaining the backing of some corporate giants. (I will be in New York next week to meet with him, incidentally, and therefore will not be publishing a newsletter for Friday.)
A more typical story is unfolding practically in my back yard. Just a couple of miles from me, in Broomfield, is the year-old Flatiron Crossing Mall, a $250 million complex that seems geared to a population boom that would amount to several times what the rapidly growing Boulder area has experienced over the last few years. Only a developer made giddy by the consumption orgy of the 1990s could have summoned the optimism and courage to build such an edifice so late in an economic cycle. Worse yet, there are additional mini-complexes springing up all around it, anchored by such retailers as Best Buy, Nordstrom's Rack, Men's Wearhouse.
Adding to the gustatory glut are three new brewpubs that have opened within a two-mile radius, each with impressive rows of stainless fermentation tanks in their front windows. And although several national theater chains are in bankruptcy, it has not stopped AMC from building a 12-plex within a couple of miles of its own 24-plex in Westminster. The nearest competitor, a Colony 12-plex that emerged from the Mann bankruptcy, just installed stadium-type seats, but they are of cheap construction and already showing wear and tear from the low-born, tatooed-and-pierced mutants who are wont to use them as footrests. Meanwhile, didn't we read that commercial realtors were already having trouble finding tenants to fill the shit boxes that Wal-Mart left behind in cities where they've upgraded to superstores? Add to that glut three or four thousand over-the-hill movie theaters throughout suburban America and it's not difficult to see a softening in commercial leasing in the outlands, especially in the strip-mall category. Even the business of crime seems to be declining, with statistics released this week implying that the nation's drug kingpins are bumping off fewer rivals. Perhaps the turf simply isn't worth fighting for these days?
But the Schwan's truck still comes to my cul-de-sac every week, bearing frozen pizzas, rib-eye steaks, chicken Kiev and some of the world's best vanilla ice cream -- all at prices that seem too good to be true. How they are able to undersell Costco and all the others remains a mystery to me. Perhaps it's because they have none of the overhead or grandiosity associated with operating a Web site, as did the late, great WebVan.com.