Macro

Bank of New England seized; RTC property liquidations continue

Salomon Brothers disclosed that traders had submitted false bids to corner US Treasury note auctions, triggering a federal investigation. The scandal threatened the firm's primary dealership and raised questions about integrity in the world's most important debt market. Salomon's stock and funding access came under severe pressure.

The finance sector is under pressure this month, weighed down by Citicorp’s significant loss and dividend cancellation amid mounting real estate-related write-downs. While broader financial conditions remain stable, the setback at a major institution has dampened overall sentiment, though not enough to shift the sector into broadly negative territory given limited contagion so far.

Desert Storm oil crash eases chemical feedstock costs

Gulf War begins, uncertainty

Desert Storm's quick victory crashed oil $10/bbl (fuel-cost relief), the recession bottomed in March, and the Dow crossed 3,000 — but recovery was a slow, jobless grind.

The coalition declared a ceasefire after a 100-hour ground campaign liberated Kuwait, ending the Gulf war. Retreating Iraqi forces set more than 600 Kuwaiti oil wells on fire, yet ample Saudi output kept crude prices subdued. The removal of war risk underpinned the 1991 equity rally.

Energy sentiment is neutral despite heightened geopolitical tensions, as the initial plunge in oil prices following the start of the Gulf War was offset by a subsequent rebound after failed Baker-Aziz talks stoked war fears. The two bearish events—military action causing a $10 oil price drop and diplomatic failure leading to market anxiety—canceled each other out, resulting in a net flat movement. The sector remains volatile but directionally balanced, with supply concerns from conflict offset by demand destruction fears from escalation.

Gulf War victory crashes oil, gas relief

Desert Storm victory showcases smart weapons, lifts exports

IBM unveiled plans to reorganize into more autonomous units, take a roughly $3 billion charge and cut some 20,000 jobs as mainframe revenue eroded. The announcement confirmed that the computing industry's profit pool was shifting to PCs and software. IBM shares, a bellwether Dow component, continued their historic decline.

The tech sector remains neutral this month despite a high-profile alliance between IBM and Apple aimed at challenging Microsoft-Intel dominance, which provided a modest sentiment lift. While the partnership signals a potential shift in competitive dynamics, its immediate impact is limited, keeping broader sector momentum in check. The overall environment remains cautious amid ongoing execution risks and lack of near-term revenue catalysts.

Fed to 3.5%, rate-driven rally

Peak biotech mania: Amgen's EPO and Neupogen drove the biotech index to a euphoric high and big pharma minted record profits. But by late year, candidate Clinton's health-reform rhetoric began to chill my outlook.