It's still all about the consumer in the United States. Last Friday, the University of Michigan released its August consumer confidence figure which was, as most people had expected, lower again. Unemployment continues to rise and the Philadelphia Fed's manufacturing survey reported declines in new orders as well as comments from employers that they weren't looking to hire new workers.
None of this is cheering at a time when United Airlines finally blinked and filed for Chapter 11 bankruptcy protection, as American Airlines announced another 7,000 job losses. The six largest airlines in the US have lost $6.9 billion (€7.1 billion) between them from October 2001 to June 2002. Obviously something had to give.
It's quite extraordinary to see the operations of the two completely different ends of the market. United, BA, Aer Lingus are all desperately trying to formulate plans for survival; Ryanair, Southwest, EasyJet are all trying to cope with ever-greater demand for their product. I do sometimes yearn for air travel to be about comfort and caring again but the bottom line is that it's about getting to your destination on time. Once the airline can provide that, most people are happy, which is why the discount model is the model for the future.
I wonder would Jack Grubman's career have ended any differently if he'd been an airlines rather than a telecoms analyst? I mentioned Jack and his $100,000 donation to the Democrats last week - maybe he wishes he'd hung on to the cash because he's now resigned from his position at Salomon Smith Barney.
Actually he doesn't really need the $100,000 - he's leaving with around $32 million in cash and stock, enough to buy him a few telecom companies of his own. Jack's resignation letter was full of regret. Not regret that he'd recommended stocks that had shone brightly for a couple of halcyon years and then sunk without trace, but that he found it impossible to perform his work to the standards his clients deserve in the "current climate of criticism".
Which makes me wonder what, exactly, Mr Grubman's clients deserved. Well, they were institutional investors who deserved to know whether or not the companies he recommended were performing well, had decent management and a stable performance model.
As it turned out, though, what they really wanted to know was "will this share keep going up?" And Jack said yes, it would. So they piled in and bought more and - guess what - the shares went up. So did Jack's bonuses. And so did Salomon's fee income, despite those Chinese walls that everyone likes to talk about. In fact, according to Money magazine, Salomon Smith Barney made $1.8 billion in telecom investment banking fees from 1998 to 2001. So everyone was happy.
Until the day Jack said that WorldCom shares were still a buy but they fell. And kept falling. So that suddenly, Jack's predictions weren't looking like sure-fire bets any more. And suddenly the institutional investors (who might have deserved better, but sure as hell knew that Jack was only telling them what they wanted to hear) began to question his calls and look at the numbers themselves. And they didn't like what they saw.
Thing is, though Jack may be feeling the pain (at least, according to his letter, his family are "hurt" by the media's slating of him), he still has the cash. A lot of people have felt a damn sight more pain and don't have $32 million to ease it. Which is why sympathy for Jack's currently unemployed status is a little hard to find among investors.
Another person who might find sympathy a little hard to find is Martha Stewart. Certainly Ken Johnson of the House Energy and Commerce Committee in the US was less than sympathetic to her request for them to issue a statement clearing her name on insider-dealing allegations.
Martha seemed to think that because she's a lifestyle doyenne in the US, the rules might be a little different for her. In case it's passed you by, Ms Stewart is accused of selling 4,000 shares in ImClone the day before the FDA announced that it wasn't going to approve the company's application for a new drug, which caused the shares to tank.
And while I will confess to a sliver of sympathy for Jack Grubman (after all, when you're an analyst, everyone wants you to say good things all the time and he was doing the job that his bosses wanted him to do), my feelings for Martha are less benevolent. I'm not a fan of the lifestyle gurus.
I hate being told that it's all about sun-dried tomatoes, parmesan shavings and the right shade of blue paint on the walls. (Besides, they change their minds about what's "in" quicker than an an analyst trots out a buy recommendation.)
Martha Stewart has preached at millions of American women for years about home-made jams and tartan rugs and all sorts of bloody ridiculous stuff that Martha has decided is important in making your home a wonderful place to be. Clearly, though, most American women would've preferred a bit of Martha's stock-picking savvy rather than her blueberry- jam recipes. After all, she was holding 4,000 shares in ImClone, which were worth $240,000 when she sold them. Today, 4,000 shares in ImClone are worth about $33,000. You can buy a lot of apple pies for $207,000.
Normally not without a few things to say, Martha has remained remarkably comment-free about her current problems. Other than to assure us, of course, that nothing improper has gone on, although she has so far refused to allow investigators to interview her. Her defence is that she had a standing order to sell her shares if the price fell below $60. Unfortunately her broker's assistant, Douglas Faneuil (having first backed up her story), said that wasn't the case.
It's probably small comfort to her right now that biotechnology company shares can go up and down, but a good apple pie recipe is worth its weight in gold.
