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Five Things You Need to Know: Productivity, Nah, We're Good, You Can't Afford NOT to Buy!, McNuts Roasting On an Open Fire?, Ode to the Empire


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. Productivity

Productivity growth fell to 0% in the third quarter, the 17,347 employees in the Labor Department "guesstimated" Thursday.

  • C'mon, lighten up, it's just a "bureaucracy" joke.
  • The real story behind the story today is that Unit Labor Costs increased at an annualized rate of 3.8%, exceeding expectations of 3.4%.
  • Meanwhile, productivity has slowed on a year-over-year basis to 1.3%, the slowest growth since 1997.
  • Productivity is an economic measure of how much an employee produces per hour.
  • The combination of slowing productivity and rising unit labor costs means we are reaching an important "inflationary" inflection point.
  • Typically, a company faced with this cocktail - slowing productivity, rising labor costs - responds by raising prices.
  • The dilemma is that over the past six years companies have demonstrated little if any pricing power.
  • Headlines are screaming: "U.S. Stock-Index Futures Fall as Labor Costs Spark Concern Over Inflation."
  • No, U.S. stock index futures are falling because the combination of labor costs and productivity are sparking concerns over deflation.

2. Nah, We're Good

The European Central Bank kept interest rates unchanged at 3.25 per cent as forecast.

  • The European Central Bank kept its primary interest rate unchanged at 3.25 per cent today.
  • The bank did signal to markets it intends to raise rates again in December, however.
  • Data yesterday showed that inflation in October dropped to an annual 1.6 per cent, from 1.7 per cent in September, below the ECB's target of 2%.
  • The key area to watch, however, is Germany, Europe's largest economy.
  • This morning it was reported that German unemployment fell to a two-and-a-half-year low in October.
  • Not to worry, Jean-Claude Trichet, ECB president, reaffirmed that the central bank would remain "strongly vigilant."

3. You Can't Afford NOT to Buy!

Abbey, the UK's second-largest home loans provider, has raised the standard amount it will lend homebuyers to five times their joint salaries, according to the Financial Times.

  • UK homebuyers are now marketing mainstream mortgages of up to five times joint salary levels as they attempt to win first-time buyers, the Financial Times says.
  • The "five times salary" mark eclipses the traditional borrowing levels of around three and a half times salary for joint incomes.
  • In addition to Abbey, last month the Bank of Ireland's UK mortgage arm said it would lend a single applicant up to five times their income, or a couple up to 4.5 times joint income.
  • Meanwhile, according to the Guardian, Northern Rock will let certain couples borrow up to 5.9 times their combined salaries if they have a good credit score and sign up for a longer-term fixed-rate mortgage.
  • Abbey has also relaxed other borrowing criteria such as the level of cash deposits required and the criteria for "fast-tracking" mortgage approvals that do not require proof of income.
  • In some cases Abbey will now lend couples five times each of their salaries without requiring confirmation of earnings, the FT said.
  • Abbey said its latest research found that more than 17 million adults cannot buy a property, according to the Guardian.
  • Traditionally, these people who could not afford to buy a home were called "renters" until they saved enough money to become homeowners.
  • Now they are apparently called "under-serviced mortgage customers."

4. McNuts Roasting On an Open Fire?

An increasing number of McDonald's customers can now eat their McFood while curled up in leather chairs near roaring fireplaces, according to the Denver Post.

  • Some McDonald's restaurants are being remodeled or rebuilt as part of a national effort the chain hopes will encourage customers to view it as a destination rather than a spur-of-the-moment snack stop, the Denver Post says.
  • Among other changes, the restaurants are adding plasma TVs, wireless Internet and outlets for laptop computers.
  • Nationally, McDonald's has remodeled 5,000 locations since 2002.
  • The new McDonald's design features black, granite-like tiles on the walls, maple-finished wood and a variety of seating options, including tall tables with bar stools.
  • "The idea is to make the consumers a little more comfortable - to have them sit and drink their coffee and stay awhile," Oliver Kemp, an operations manager for McOpCo, which operates McDonald's company-owned restaurants told the Denver Post.
  • And sure enough, customers do seem to be staying awhile in the new McDonald's restaurants, at least until the realization sets in, "Dude, I'm hanging out at McDonald's."

5. Ode to the Empire

Remember that old-timey Latin book you never read in school about the dude who supposedly traveled all over the ancient world and fought epic battles and got shipwrecked and all that stuff? No, the other one, you're thinking of Odysseus. No, no, that was a Coen Brothers movie starring George Clooney. Give up? The Aeneid by Virgil! Well, a new translation by Robert Fagles is being released today. Here's why you should care.

  • The Aeneid is the story of Aeneas, a Trojan who traveled to Italy and became known as the father of Rome.
  • The Aeneid is a poem about empire and was commissioned by the emperor Augustus to celebrate the spread of Roman civilization.
  • Robert Fagles, the translator responsible for this new version of The Aeneid, has previously translated Homer's Iliad and The Odyssey, both of which were unexpected best sellers, according to the New York Times.
  • So why now? Why the Aeneid?
  • "It's also a tale of exhortation. It says that if you depart from the civilized, then you become a murderer," Fagles told the Times. "The price of empire is very steep, but Virgil shows how it is to be earned, if it's to be earned at all. The poem can be read as an exhortation for us to behave ourselves, which is a horse of relevance that ought to be ridden."

No positions in stocks mentioned.

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