In a last-ditch attempt to make it onto the Sunday Times Rich List, I withdrew cash from my deposit account (interest rate somewhere below half a per cent) and wagered it on some nag in the Grand National which by now has doubtless finished munching on the grass at the starters' line and has ambled home for a good rub-down and a pail of oats.
Am I bitter? Not at all. I will never appear on the Rich List for the reason that I tend to spend my money on ridiculous things that don't enhance my wealth one iota. Instead of buying property at knock-down prices when I was old enough to approach my bank manager, I squandered my cash on fast cars. Instead of investing in bank shares, I bought a new wardrobe (not the furniture which would be antique by now - the clothes, which I threw out before they became fashionable again). Instead of being in the right place at the right time, I was lounging under a parasol with a glass of Sangria in my hand and Cosmo instead of the Wall Street Journal in the other. I haven't had the right streak of ruthlessness to make it onto the Rich List and bunging a fistful of cash on a dodgy prospect isn't likely to change matters. However, there's always next year!
The ECB's 50 basis points cut in rates - which was definitely more than the market had expected - means that people are more and more likely to bung their cash into dodgy prospects to enhance the return on their money. No matter how much Wim Duisenberg protests that this cut is the last cut - "this is it" being an exact quote, there is always a possibility that once is not enough.
While pretty much everyone had expected rates to ease, the deeper than expected move probably just highlights how much political considerations got in the way of the ECB making the cut in the first place. Standing strong against Oskar Lafontaine must have been an interesting moral dilemma if the governing council truly believed that Europe needed rates 50 base points lower.
The ECB reiterated concerns about overall growth prospects in Europe as part of the justification for the cut, pointing to weakness in the manufacturing sector and deceleration in job creation. It will be interesting to see how different regions approach the benefits and pitfalls of lower rates. Monetary policy has been dictated by Europe - fiscal policy is in the hands of the politicians.
This week the first item the market focused on was Compaq Computer's profits warning which was announced late on Friday. The company blamed this on greater competition and disappointing sales of its most profitable computers. This is becoming an annual event with Compaq as it also warned of below-expected sales in last year's first quarter. The result is a net income of about 15 cents a share instead of analysts' predictions of around 32 cents a share.
This sort of thing is not what Wall Street wants to hear and there was heavy selling of Compaq after hours. Being 50 per cent away from your original estimate earnings is guaranteed to give your shares a pasting. But it is the uncertainty that it brings to the volatile technology sector which has people worried. Dell and Intel were also fallers at first when the news was announced even though Dell had (only the day before) called demand for PCs "healthy".
Everyone was jittery on Monday morning as the profits warning had come too late to affect prices on Friday evening and there were all sorts of dire predictions for the equity market. The Nasdaq index, home of technology shares, lost 2.5 per cent straight away. However, despite all this, the Dow still closed up 165.6 on Monday.
Meanwhile, bond markets continue to be jumpy, albeit at higher levels, and there's been general nervousness as rumour and counter-rumour regarding the Balkans conflict hits the screens.
One of the recent scary stories was that Russia had ordered all its nuclear missiles to be targeted at NATO countries. The bund slipped on the news but recovered on the denials. Then it fell again on President Yeltsin's reported comments that we could be looking at the third World War. Actually it didn't fall that far which was amusing in itself - if we were about to be vaporised by a succession of nuclear weapons was it the right reaction for the bund to fall back by 10 ticks? I think not! The market tries to price in all available information but I suppose it's difficult to process the information that you're staring mutually assured destruction in the face.
Nobody in Dublin is too concerned about being vaporised just yet. People are still too interested in spending their cash. I visited the local builder's yard on Saturday to pick up a few bags of coloured pebbles (don't ask). This is a family-run type of business rather than something like Atlantic or Woodies and it has a small sales office which probably hasn't changed too much since it first opened. The shelves are laden with interesting looking tins, boxes of nails and the occasional oblong brick. There isn't a lot of room for the casual shopper and so the queue of people waiting to place orders stretched out the door.
The hardy DIY enthusiast in front of me was ordering cement, sand, blocks and goodness knows what else for the construction of a patio and driveway. Someone else wanted to know how soon a few tonnes of gravel could be delivered. If you can't move, then improve seems to be the motto. A couple of weeks ago I was looking at the possibility of upgrading my kitchen which would probably be rated CCC by Moody's. I don't spend a lot of time in it so we're talking just decorative effect here. Not before the millennium, by the looks of things. Kitchen people are very well bid at the moment. I might be downgraded again before I get anyone to look at it!
Still, maybe I'll spend the money on a cheaper computer instead.
Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers
