A year ago, I
- We saw a 3.25% yield on the 10-year Treasury note. There was further deterioration in AOL's ( TWX) subscriber base, and Steve Case was ousted. The European economy was moribund during 2003's first half. The New Jersey Nets basketball team enjoyed surprising success. General Electric ( GE) had lower earnings guidance. Democratic aspirant Al Gore bowed out of the presidential race. There were no major terrorist acts in the U.S. U.N. inspectors found no evidence of a weapon buildup in Iraq.
3. Facing rising energy prices, the automobile industry's fortunes erode dramatically as the consumer is nonresponsive to further incentives. Ford ( F) loses more than $1 billion in the second quarter of the year. William Ford Jr. steps down. 4. With the cost of capital declining to unprecedented low levels, a relatively quick restoration of order in South America and the emergence of an overall calm in Iraq (as President Bush orders more troops in to stabilize that country), merger activity explodes and stock prices follow suit. The world equities markets end the year nearly 30% higher than the May lows and close at about 15% higher than year-end 2003 levels. Financial stocks and, briefly, oil stocks are the principal market leaders, but technology stocks languish throughout the entire year (portability proves to be a nonevent) and end the year slightly lower than at 2003's year end. Internet stocks prove to be one of the worst performing sectors of the market, after New York Attorney General Spitzer sues eBay ( EBAY) and Amazon ( AMZN) for nonpayment of state sales taxes. Despite a widespread belief that housing activity will fall off the cliff, the rise in home prices (fueled by ever-lower mortgage rates) continues apace and begins to resemble the bubble in the Nasdaq of the late 1990s. 5. Beginning at midyear, Genworth Financial, the General Electric spinoff, embarks on a series of high-profile acquisitions (which include CNA Financial ( CNA), Fidelity Financial and H&R Block ( HRB)), spurring an unprecedented round of industry consolidation in the financial sector. 6. After the minipanic in the markets in the first half, and in response to Genworth Financial's takeover announcements, the following acquisitions are announced and consummated:
- Merck ( MRK) acquires Schering-Plough ( SGP). Fidelity acquires Janus ( JNS). News Corp. ( NWS) and MGM Mirage ( MGG) acquire a loss-ridden DreamWorks. J.P. Morgan ( JPM) acquires Countrywide Credit. Fifth Third Banks ( FITB) acquires National Commerce Financial ( NCF). Wachovia ( WB) acquires First Tennessee ( FTN). GrupoTelevisa ( TV) acquires Univision ( UVN). Wells Fargo ( WFC) acquires Capital One ( COF). Tyco ( TYC) acquires Toll Brothers ( TOL). Citigroup ( C) acquires Alliance Capital ( AC). Polo Ralph Lauren ( RL) is acquired in a leveraged buyout. Nike ( NKE) acquires Gap Stores ( GPS).
7. The IPO and secondary markets launch a meaningful comeback during the second half of the year. Indeed, the IPO market heats up and, like rising home prices, begins to resemble the bubble of 1999-early 2000 (something no one presumed likely!). 8. Fidelity goes public in an IPO that doubles in the first day of trading. 9. A well-known and large hedge fund fraudulently misprices its portfolio of private investments and has a run on its assets. Calls for stricter regulation of hedge funds gain momentum as the Senate conducts public hearings. 10. Time Warner sells its AOL division to Kohlberg Kravis Roberts in a leveraged buyout during the third quarter after settling SEC charges in early January 2004 and as subscriber losses moderate. 11. Marsh & McLennan ( MMC) sells its Putnam subsidiary to Warren Buffett's Berkshire Hathaway ( BRKa). Marsh shares rise by more than 50% in the aftermath of the sale. 12. A low-cost airline carrier, which turned out to scrimp on maintenance and pilot training, crashes. 13. Tiger Management's Julian Robertson re-emerges as a major force in the hedge fund community -- after raising more than $5 billion for a new partnership. 14. Eliot Spitzer announces that he has no intention to run for public office and enters the private sector. 15. Robert Rubin leaves Citigroup and replaces an aging Hank Greenberg as AIG's ( AIG) chairman. 16. A unified Democratic Party rallies behind Mass. Sen. John Kerry after three state primaries. However, President George Bush wins the presidential election in one of the largest pluralities in history as Sen. Kerry wins only two states in the general election. 17. SunTrust ( STI) distributes its 122 million shares of Coca-Cola ( KO) in a secondary offering.
18. Freddie Mac's ( FRE) former executives are jailed, precipitating more restrictive rules governing derivative accounting at government-sponsored agencies and at other financial institutions. Rudy Giuliani is appointed FRE's chairman. 19. Bernie Ebbers, Dennis Kozlowski and Scott Sullivan receive maximum-length jail sentences. 20. Disney's ( DIS) Michael Eisner is replaced by an executive at Procter & Gamble ( PG). Federal Reserve Chairman Alan Greenspan resigns owing to poor health. 21. The New York Stock Exchange, in a stunning reversal , goes fully electronic by year end. John Reed remains as chairman and orchestrates the transformation. Goldman Sachs ( GS) takes a $6.7 billion goodwill impairment charge off its 2000 acquisition of Spear Leeds, and LaBranche ( LAB) liquidates its assets. 22. Henry Blodgett is hired as a research analyst by a second-tier Wall Street firm. 23. There are no major terrorist acts in the U.S. and limited disturbances outside our country during the year.