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Five Things You Need to Know: Existing-Home Sales Continuing to Stabilize In Terms of Plummeting, 10.7, Yen for Yen?, What Are They So Afraid Of?, What Are We So Afraid Of?


What you need to know (and what it means)!


Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Existing-Home Sales Continuing to Stabilize In Terms of Plummeting

Existing-home sales in the U.S. declined in December by 0.8%, the first drop in three months, the National Association of Realtors reported.

2. 10.7

No, that's not Five Things' "Proof", it's the 2006 percentage gain for China's economy during 2006.

  • China's economy expanded by 10.7% last year, its fastest rate of growth in more than a decade.
  • The growth rate, released by China's National Bureau of Statistics, came in above the recent estimates by Chinese officials of 10.5% and compares with 10.4% in 2005.
  • Why should you care about this?
  • Two reasons:
    China has recently implemented measures to rein in economic expansion, including two interest rate hikes, increasing bank reserve requirements and targeting banks that have been aggressive lenders to businesses.
    2) China's CPI surged to 2.8% year-over- year in December, up from 1.9% in November, despite lower world oil prices and largely due to an increase in food prices.
  • Could China possibly raise rates again? If so, they will join the Bank of Japan, Bank of England and the European Central Bank.

3. Yen for Yen?

The yen rose the most in two months against the dollar overnight and has now tacked on gains three days in a row. What gives?

  • First, the Yen has been a topic of concern for European central bankers who have recently leaked word that it may be an area of focus for the upcoming G7 meeting.
  • Japanese Finance Minister Koji Omi said today that he had not heard that the G-7 meeting would discuss the yen's exchange rate, however.
  • More recently, Bank of Japan board member Miyako Suda last night said policy makers shouldn't spend too long examining economic data before raising interest rates, Bloomberg reported.
  • "If we spend too long examining data, a rate increase would be too late and could cause a risk that the bank will have to hasten the pace of rate increases later,'' Suda said in a speech according to Bloomberg.
  • The Bank of Japan kept interest rates unchanged on Jan. 18 in a 6-3 vote after pressure from politicians to keep the economic recovery afloat.
  • Speculation in the past few days has increased that the February meeting may indeed see a rate increase despite relatively muted economic data, and the yen has risen accordingly as the carry trade has begun to be unwound.

4. What Are They So Afraid Of?

This week more than 2,300 high-powered executives and politicos are meeting in the exclusive luxury resort town of Davos, Switzerland at the annual meeting of the World Economic Forum.

  • Chief among topics of discussion at the World Economic Forum are global risks for 2007.
  • These risks were carefully outlined in a recent report prepared by the World Economic Forum in collaboration with Citigroup, Marsh & McLennan, Swiss Re and the Wharton School Risk Center.
  • So what are World Economic Forum attendees afraid of?
  • Everything!
  • Seriously.
  • Below are 23 "core" global risks identified in the report.
    1) Oil Price Shock
    2) US Current Account Deficit
    3) Chinese Economic Hard Landing
    4) Fiscal Crises Caused By Demographic Shift
    5) Blow Up In Asset Prices/Excessive Indebtedness
    6) Climate Change
    7) Loss of Freshwater Services
    8) Tropical Storms
    9) Earthquakes
    10) Inland Flooding
    11) International Terrorism
    12) Proliferation of Weapons of Mass Destruction
    13) Interstate Civil Wars
    14) Failed States
    15) Transnational Crime and Corruption
    16) Retrenchment from Globalization
    17) Middle East Instability
    18) Pandemics
    19) Infectious Diseases
    20) Chronic Diseases
    21) Liability Regimes
    22) Breakdown of Critical Information Infrastructure
    23) Emergent Nanotechnology Risks

5. What Are We So Afraid Of?

While the World Economic Forum list may seem comprehensive, there are quite a few global risks that weren't mentioned. We sat down and took inventory of our deepest global fears. Below are 23 things we fear.

23 Things We Also Fear
1) Credit Card Declined
2) Trapped In Mobile Home During Tornado
3) Drinking Beer Before Liquor (or is it liquor before beer?)
4) Clowns
5) Johnny Law
6) Bugs
7) Heights
8) The Attic
9) The Cellar
10) Old Man Jergunsen's Place
11) The Reaper
12) Fear Itself
13) Side Effects
14) Anvils
15) People With Lots of Crazy Tattoos
16) That our "FUND IN SUSPENSE ACCOUNT AT THE CENTRAL BANK OF NIGERIA APEX BANK" won't get here by the time our rent is due.
17) Irony
18) Painful Itching and Burning
19) Not Having Correct Change
20) Selling At the Bottom
21) Buying At the Top
22) Being Around People
23) Being Alone

No positions in stocks mentioned.

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