As with last week, this began with a bank holiday. It was Labour Day in the States and people celebrated work by staying at home. It gave the hard-pressed Dow a little breathing space and, because Asian markets traded well before Europeans got to their desks, we were able to start the week on a slightly more optimistic note.
Of course, as far as Britain was concerned, the major news was the BSkyB bid for Manchester United which gave dealers ample opportunity to give their considered opinions on every football club under the sun. Not that this doesn't happen every day anyway, but at least this time the heated conversations could be filed under the heading of work. The result was that shares in the other publicly-listed clubs zipped higher as takeover fever gripped the market. (Although if I were a Spurs holder I might be inclined to sell into the rally.) S&P obviously feels that BSkyB is overvaluing the assets because its reaction was to put the Murdoch company on negative credit watch. An ex-colleague of mine bought United shares for her father as a birthday present some years ago. It was a bit of a dismal present then because the shares went down. Nice birthday present now though - and, once again, it proves that when it comes to equity markets, just like in the football season, it's a marathon not a sprint.
The entire emerging markets problem is certainly a marathon. Attention focused on Malaysia where, eschewing the solutions of the IMF in the meltdown scenarios, they decided to revert to exchange controls to sort out the economy. Unfortunately this smacks of treating the symptoms not the cause and will certainly restrict inward capital flows in the future. But I suppose the Malaysians are working on the principal that they may not have a future. There is the question of politics, of course. Back in May, tensions surfaced between Prime Minister Mahathir and Deputy Prime Minister Anwar, with Anwar calling for political reform. Mahathir moved quickly to promote others in the cabinet and clamp down on the media. A number of newspaper editors and TV station chiefs resigned. By August, so had the governor and deputy governor of the central bank, Bank Negara. At that point, currency controls were put in place which was completely against Anwar's policies and, since he wasn't going to resign, he was sacked by Mahathir.
The reason given was "unsuitability" and Anwar is now under investigation on charges of criminal conduct. Meanwhile a book entitled Fifty Reasons why Anwar cannot become Prime Minister alleged that he fathered an illegitimate child - which has since been disproved by blood tests. And Bill Clinton thinks he has problems.
Well, Bill does have problems, of course. Although expect to hear the sound of glasshouse panes being shattered in the States as retaliatory strikes on who has had the most extra-marital affairs reverberate through Washington. The market couldn't care less about this story. Or, at least, the market doesn't want to care about this story but we're being forced to assess the economic fallout of Clinton being given the push.
I got caught up in a bit of Clinton fallout myself on Friday because I had a day off and was dodging the road closures caused by the Presidential visit. I'd forgotten about Bill's trip, naturally, when I decided that Friday 4th would be a good day to abandon the markets. I carefully judged my trips on the motorway and thought I was doing really well. Then I reached Artane and discovered that Friday 4th was the day they'd decided to restrict access to the roundabout because of road-works. So, having managed to avoid all of the delays I was anticipating, I still managed to get stuck in traffic.
Meanwhile, Alan Greenspan and his colleagues are carefully considering the challenges to the erstwhile invincible US economy. The Fed has had a tightening bias towards interest rates for some time, based on the strength of the domestic economy. But fears of global recession have made them rethink its view and now the market is eagerly looking forward to the next meeting of the Fed's policy-making body which is scheduled for September 29th. The prospect of lower rates has weakened the dollar, making it cheaper to fill your bags with bargains on that shopping trip to the States you promised yourself.
Which is exactly what my friends did on a recent visit. There has been some talk lately about the prices of designer goods in British and Irish shops. I'm not a designer freak myself although I've occasionally been tempted by Ralph Lauren. But I don't think I could justifiably fork out £150 for an item that's on sale in the US for $50. Especially when the exchange rate is moving in my favour. The word from the States is that, despite worries Greenspan might have, the tills are still ringing in the malls right now.
Anyway, you'll be pleased to know that Aer Lingus is still handing out male refresher kits to its female passengers on business class transatlantic flights. That's three times in a row they haven't had a female kit, although one allegedly exists. It's not that there are so many women travelling business class that they keep running out, is it? I can't imagine that's the case but if it is, then our national airline should keep itself well-stocked with female kits. If not, is it that they don't care about the female traveller? (Mind you, I'm still intrigued to find out the difference between the two.)
I know that The Irish Times is not the place where I should be conducting correspondence, but I received a letter some time ago from an old friend who has returned to Ireland having spent time working in Japan. She actually predicted the troubles in the banking system very well as she found it almost impossible to execute any business while she was there and was very negative on Japanese banks. The most efficient part of the Japanese banking system, she told me, was that the image of a little woman who is on all their ATM machines changed from her summer to her winter kimono on exactly the right date each year.
However, in writing to me with her new Irish address, she omitted to give any more detailed instructions than the area where she now lives. That might have worked back in the 1980s when, once you lived outside Dublin, everyone knew your house - but not in the high-flying 1990s. So, if you're reading this Marion, I can't reply until you send your exact address!
Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers
