Beneath the Surface, It’s Not Business as Usual as Mideast Deadline Nears : Tension: U.S. financial markets are subdued. Large corporations discreetly step up security measures. And workers try to focus their attention on their jobs.
From the crowded floor of the New York Stock Exchange to the offices of Lloyd’s of London to a livestock farm in Western Illinois, an almost surreal quiet blanketed the world of business and commerce in the final hours before the deadline for Iraq to leave Kuwait.
U.S. financial markets, given to spectacular gyrations in recent days, were subdued. Large corporations discreetly stepped up security measures. Employees, meanwhile, gamely performed work tasks that seemed trivial compared to the monumental events unfolding in the Middle East.
“It’s kind of like watching the world fall through the ice; it’s struggling as you watch but you’re not able to help,” said Kenneth Nugent, an oil trader at the Paine Webber investment firm in San Francisco.
In New York trading Tuesday, crude oil futures actually dropped 71 cents a barrel. The stock market was almost paralyzed, with the Dow Jones industrial average barely moving for most of the day. It closed up 6.68 points.
The U.S. dollar, often a magnet for investors in times of crisis, was little changed on currency exchanges, while gold actually finished lower in some New York trading. The Tokyo financial markets were closed Tuesday for a holiday. When they reopened today, however, stock prices fell sharply, dropping more than 3% in a morning session of moderate trading. Oil prices were up $1.50 a barrel in Far Eastern markets.
Outside the financial world, companies had a variety of responses to the growing possibility of war.
“We have strengthened security in the majority of our offices inside and outside the United States,” said Deborah Land, a spokeswoman for Fluor Corp. in Irvine, which has construction and engineering projects in 80 countries, including “a number” in Saudi Arabia.
Since last week, Fluor has prohibited employees from traveling anywhere in the Middle East without approval from senior management.
San Francisco-based Levi Strauss & Co., which employs 4,000 workers in El Paso, announced plans to provide support groups for those with friends and family members in the gulf. “The intention is to hold them as often as necessary,” said David Samson, a spokesman for the blue jeans maker.
At Lloyd’s of London, where nearly all of the world’s war-risk insurance is written, brokers and underwriters went about their business matter-of-factly for most of the day, offering no overt signs that momentous events were nearing. Lloyd’s and other insurers continued to make plans for the event of war, which would cause rates for gulf shipping to soar.
The sober calculations pointed to the paradox between growing dangers in the world--notably the Middle East and the Soviet Union--and attempts by business to grind forward.
“These enormous, vast, cosmic dramas take place, and meanwhile life goes on,” said Robert Heilbroner, an economist at the New School for Social Research in New York. “Everybody’s living with this terrible sense of being in the presence of something called a historical moment--with a capital M.”
Although most people tried to conduct business as usual, there were many reminders that unusual forces indeed were loose in the world.
In downtown San Francisco, office workers peered out of their windows at a traffic jam caused when anti-war protesters swarmed onto the Bay Bridge Tuesday afternoon.
“Everybody’s talking about it, but we have no choice but to continue working,” said Konni Dee, accounting manager of the California Bankers Clearing House Assn., which tracks movements of checks and funds among banks. “War or not, the Fed still want to know how much money is out there on the loose.”
Sales clerks at an Orange County map store moved a Middle East map to a more prominent position up front, following a flood of phone calls and requests. “We got tired of walking people back to the Asia section,” explained Gina Ferrara, sales associate in the Rand McNally map store at South Coast Plaza in Costa Mesa.
On a day when attention was focused on the midnight deadline for Iraqi withdrawal, some companies pointed to problems already caused by the crisis: United Airlines Chairman Stephen M. Wolf announced that the carrier expects to have the biggest quarterly operating loss in company history, due in part to “the alarming increase in the price of fuel.”
In other parts of the world, the public was drawn into more serious disruptions due to the troubles in the Middle East.
There have been lines this week of a mile or longer at gas stations in Romania as a deadline approached for a new gasoline rationing program, brought on by higher oil prices. In Italy, shoppers jammed into grocery stores to stock up on food staples, despite assurances that war-induced shortages were not expected.
Yet in much of the world, life was peculiarly normal. On an 1,100-acre livestock farm near Liberty, Ill., Randy Sims closed the accounting books on 1990, the third good year in a row for the farm that has been in his family since the Civil War.
“Things are going fairly well,” said Sims, 43, who dabbles in the commodities market and keeps a personal computer on his desk.
Asked about the possibility of war, he said: “I’m a conservative Midwestern farmer, and I hope and pray it can be avoided. But I’m also of the opinion that a situation such as this has to be confronted. The sooner a person such as this can be stopped, the less blood will be spilled.”
There was no panic among investors Tuesday as wild swings of recent days were absent in the stock market. Thomas Walsh, chief stock trader at Nikko Securities in New York, described the mood among traders as “somber. . . . There’s guarded judgment and guarded optimism . . . but somber is the realistic word,” he said.
“I have a funny feeling inside, one that I haven’t experienced in some time, maybe since the day after the (1987 market) crash,” he said.
On the floor of the New York Stock Exchange, staffers have been wearing American flags on their security badges for the last week, said Richard Rosenblatt, a floor trader. The NYSE employs many war veterans, and a black POW/MIA flag from the Vietnam era has hung for several years over the main exchange floor.
Wall Street’s view, repeated now by virtually all money managers almost like a religious chant, is that the market has “discounted” the war by now--that investors have sold all they plan to sell, will wait for the first sign of victory and jump back in. A quick U.S. victory, many insist, is a virtual certainty.
“People were leaning slightly to the positive side,” hoping that some last-minute solution would avert war, Rosenblatt said of Tuesday’s trading. But volume was just 110 million shares, a very light day for the NYSE.
Contributing to this report were staff writers Tom Petruno in Los Angeles, Anne Michaud in Orange County, Donald Woutat in Detroit, Victor Zonana in San Francisco, Leslie Helm in Tokyo and correspondent Jeffrey Kaye in London.
MIDEAST UPDATE Highlights of the economic and business developments related to the Persian Gulf crisis: Mobil asked wholesale buyers of its gasoline and heating oil to limit purchases voluntarily to avoid supply shortages from panic hoarding.
Phillips 66 said it will assess a 10-cent surcharge on every gallon that wholesale marketers buy over their monthly quota.
United Airlines blamed high fuel costs in part for fourth-quarter losses it said would be the worst in its history. America West also attributed an estimated $50-million net quarterly loss to skyrocketing fuel prices.
The U.K. is planning to provide war-risk insurance to ship owners if it becomes unavailable or prohibitively expensive from private sources.
The Philippines suspended deployment of workers to Saudi Arabia.
Venezuela has beefed up security at its oil installations against terrorist attack.
Holding Pattern Dow Jones Industrial index, every 30 minutes Monday close: 2,483.91 Tuesday close: 2,490.59, up 6.68
