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Five Things You Need to Know: Quiet Before the Storm, OPEC Calls Emergency Meeting to Discuss Recent Meeting, Chinese Oil Demand, Where's My Pie?, WalMart Blog Causes Nearby Mom-and-Pop Blogs to Shut Down


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


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

1. Quiet Before the Storm

While today is relatively quiet on the data front, things begin to take shape for the final run into year-end beginning tomorrow with the hardcore data fully wrapped up by Thursday afternoon.

  • A number of questions will likely be cleared up this week.
  • First off, beginning at noon today a stream of Fed consciousness will hit the tape with Fed Chairman Bernanke, the Fed's Poole, and the Fed's Yellen all scheduled to speak.
  • Tomorrow will be key, however, with the Producer Price Index in the morning at 8:30 EST.
  • We want to see how input prices are faring, if there is a continued gap between early stage prices and finished goods showing a continued inability to pass through costs.
  • Last month we saw the biggest drop in PPI core prices since April 2003, near the height of the deflation scare.
  • Moreover we saw prices for finished goods decline for a second consecutive month even as intermediate goods prices in the earlier stages of production rose by 0.5%.

2. OPEC Calls Emergency Meeting to Discuss Last Week's Meeting

The Organization of Petroleum Exporting Countries said this weekend that it would hold an emergency meeting Thursday in Qatar to review the market situation and discuss production quotas, the New York Times reported.

  • Qatar's Energy Minister Abdullah bin Hamad al-Attiyah said OPEC members will talk about ''the possibility of reducing total oil output by 1 million barrels a day to stop any further decline in prices," the Associated Press reported.
  • Last week, OPEC President and Nigeria Oil Minister Edmund Daukoru said members had agreed to trim global production by 1 million barrels a day.
  • Despite last week's announced production cuts, crude fell 1.4%.
  • Since mid-July crude is down more than 25% even as there has been no agreement reached with Iran and N. Korea has reportedly tested a nuclear weapon.
  • Still, crude is slightly lower in the early morning session, with front month futures back above 60, but down 0.3%.

3. Surging Chinese Oil Demand

A puzzling aspect of the 25% decline in crude prices since mid-July is the enormous - and growing - Chinese appetite for oil.

  • China oil imports surged to a record in September.
  • Meanwhile, the country announced it will begin piping crude into tanks at its second reserve by the end of the year, the Associated Press reported.
  • Chinese officials cited by the Economic Observer said the oil reserves would be filled gradually, with the government bearing the costs for construction, operation and stockpiling the reserves, which Beijing views as necessary for the country's economic security, the AP reported.
  • This is important to note: China's foreign reserves, which reached $987.9 billion by the end of September, cannot directly be used to buy energy assets, the official newspaper Securities Times cited People's Bank of China vice governor Wu Xiaoling as saying.
  • This means that purchases of such resources have to be made by buying foreign exchange from the central bank in exchange for yuan.
  • China imports around 3.3 million barrels of oil per day and consumes around 7 million barrels.
  • Key question: Why does crude remain flat to lower despite "geopolitical" turmoil, America's steady demand and China's surging demand?

4. Where's My Pie?

Five years into a relatively robust economic expansion, many American workers feel that they are not getting their fair share of the pie, the New York Times asserted on Sunday.

  • The share of the economy devoted to workers' wages and benefits, perhaps the broadest measure of worker's portion of economic growth, has eroded in the United States over the last five years, the newspaper reported.
  • The numbers are based on how many workers are employed and how much they are paid.
  • In the United States, wages, health insurance and pension benefits, declined 2.5 percentage points from 2000 to 2005, to 56.5 percent of gross domestic product, according to the United States Bureau of Economic Analysis.
  • But this is not necessarily new, the Times says. The overall trend since the 1970's has been downward in most industrialized countries.
  • The most recent period when that downtrend stopped in the U.S. was between 1995 and 2000 when workers' share of the economy grew 2.3 percentage points.
  • Part of the decline, of course, is due to the change in the composition of the economy, the newspaper notes.
  • In 1975, manufacturing accounted for 28 percent of output, while finance accounted for 18 percent, the OECD says.
  • By 1995, however, that relationship had inverted with finance accounting for 27 percent and manufacturing 22 percent.

5. WalMart Blog Causes Nearby Mom-and-Pop Blogs to Shut Down

A pro-Wal-Mart blog called "Wal-Marting Across America," supposedly launched by a couple of average Americans reporting on their RV-travels and lodging experiences in Wal-Mart parking lots across the country, turned out to be nothing but a misleading, promotional tactic engineered by Wal-Mart's public relations firm Edelman, it was reported late last week.

  • The blog, launched Sept. 27, was profiled recently in BusinessWeek, which exposed the site as a promotional tactic engineered by Working Families for Wal-Mart (WFWM), an organization launched by Wal-Mart's public relations firm Edelman.
  • WFWM paid for the RV and all travel expenses, MediaPost reported.
  • Although the blog featured a link to WFWM, it did not identify the organization as a paid sponsor.
  • In a related fumble, Wal-Mart shut down its MySpace competitor The Hub after only 10 weeks after users complained the site was too promotional and had too many fake user profiles.
  • As large companies struggle to come to terms with the Internet as an underground, viral marketing tool, Wal-Mart isn't the only company to struggle with antiquated brick-and-mortar notions of "honesty" and "integrity" versus "advertising" and "marketing."
  • Minyanville has identified a number of other blogs that strike us as a bit suspicious.
  • Cooking with Pepto Bismol! Possibly a fake blog produced by Procter & Gamble (PG).

  • Foiled Again! A suspicious blog possibly produced by Alcoa (AA).
No positions in stocks mentioned.

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