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Five Things You Need to Know: The Dollar Sleeps With the Fish, OPEC, Giant Oil Field for Make Benefit Glorious Nation of Kazakhstan, Buy Yourself Something Pretty, Investor Competition


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. The Dollar Sleeps With the Fish

The dollar fell to its lowest level against the euro in 20 months, its lowest level against the yen in three months, and at one point reached a record low against the yuan this morning.

  • The U.S. dollar index, a trade-weighted index of the dollar versus major currencies, has fallen about 2.3 percent since Thanksgiving.
  • Reasons for the dollar's fall versus other major currencies are (take your pick):
    - Huge U.S. trade deficit.
    - Huge current account surpluses in Asia.
    - Foreign central banks diversifying forex reserves away from dollars.
    - Speculation that U.S. Federal Reserve may be forced to cut interest rates.
    - German IFO business confidence reached a 15-year high in November.
    - Likely ECB rate hike on December 7.
  • We could go on, but the point is that it is more difficult to ponder why the U.S. dollar has not yet collapsed than to consider the reasons it is now (finally) going down. (See also: Five Things about the U.S. dollar).
  • French Finance Minister Thierry Breton said, "The recent depreciation (of the dollar) requires our great collective vigilance."
  • Wu Xiaoling, a deputy governor of China's central bank, was quoted as saying there is growing "depreciating risk" for assets held by central banks in East Asia as a result of weakness in the U.S. dollar, the Wall Street Journal reported.
  • Last week, the New York Times reported that U.S. Treasury Secretary Henry Paulson has enlisted the accompaniment of Federal Reserve Chairman Ben Bernanke in a journey to China by a U.S. delegation next month.
  • Bloomberg noted that former Fed Chairman Alan Greenspan accompanied Treasury Secretary Robert Rubin in a similar delegation to Asia in the late 1990s.
  • Similarly, in 1972 former consigliore Tom Hagen enlisted the accompaniment of Luca Brasi in a Coreleone delegation to Los Angeles to visit producer Jack Woltz and pressure him for a part for Johnny Fontane in his next movie.

2. OPEC. Again with the production cuts.

Saudi Arabia's oil minister said his country may support a second cut in OPEC's output this year, according to Bloomberg.

  • The Organization of Petroleum Exporting Countries (OPEC) may trim production next month, the London- based newspaper Al-Hayat reported yesterday according to Bloomberg.
  • In October OPEC agreed to reduce output by 1.2 million barrels a day to "stabilize'' prices.
  • The next potential production cut is estimated to be about half the October level, or 600,000 barrels per day, Bloomberg said.
  • Saudi oil minister Ali al-Naimi said OPEC would prefer to keep crude oil prices at around $60 a barrel.
  • Since the October 20 meeting where OPEC announced the previous 1.2 million barrel per day decrease in production, crude oil prices have fallen about 1%.
  • Front-month Crude futures this morning are trading near $60 at $59.92 as of 10 a.m. EST.

3. Giant Oil Field for Make Benefit Glorious Nation of Kazakhstan

Kazakhstan's giant Kashagan oil field will produce 25 percent more oil than expected once it hits peak production, international companies developing the field have found, according to the Financial Times.

  • Kazakhstan's Kashagan oil field will produce 25 percent more oil than previously expected once it hits peak production.
  • The Kashagan oil field, operated by Eni, Italy's biggest oil and gas group, is the largest and most important oil field discovered in more than 30 years.
  • Previous forecasts were for a yield of 13 billion barrels.
  • The extra production is nearly equivalent to all the oil produced in Sudan last year, the FT reported.
  • But wait, there's a catch. Obtaining the oil contained in the field is very complex, making the Kashagan field the most expensive energy project in the world.
  • "Steamy summer conditions, winter temperatures of -40 degrees centigrade, a sensitive environment and high quantities of poisonous hydrogen sulfide make Kashagan perhaps the world's most complicated field," the FT reported.

4. Buy Yourself Something Pretty

Some retail shopping estimates show retail sales on Friday increased 6% year-over-year. Except at Wal-Mart.

  • The National Retail Federation predicts holiday sales increased 5% this year to $457.4 billion, with the biggest sales gains Friday in electronics.
  • Wal-Mart, however, said its same-store sales declined 0.1% for the four weeks ended Friday, the worst performance since April 1996, and only the second time in 27 years the retail giant has registered such a decline.
  • Last year Wal-Mart reported a 4.3% increase in the pace of sales.
  • More worrisome (at least for those of us not busy trampling one another on Friday morning) is the fact that Wal-Mart has in the past three months cut prices on everything from toys, electronics and appliances to groceries and prescription drugs.
  • Of course, the shopping season is increasingly about us, or rather, me.
  • The nation's shoppers view Black Friday as a time to buy big-ticket items for themselves, often at deep discounts, Wayne Best, senior vice president of business and economic analysis for Visa USA, told the Wall Street Journal. "You don't go out and buy a flat-panel TV for someone else."

5. Investor Competition

Wealthy investors are finding they have to resort to devious tactics to get the latest must-have: a stake in the world's best hedge funds.

Wealthy investors are finding they have to resort to devious tactics to get the latest must-have: a stake in the world's best hedge funds.
  • The flood of money pouring into the hedge fund industry has seen many of the best fund managers shut their doors to new money, according to the Financial Times.
  • Stevie Cohen of SAC Capital, Paul Tudor Jones of Tudor Investments, Louis Bacon of Moore Capital, Steve Mandel of Lone Pine Capital and many others do not need to raise more money and even believe more cash would hurt their returns, the newspaper said.
  • As a result, some wealthy investors are taking unusual steps to get their cash into so-called "closed" funds.
  • Several funds have seen individuals transfer money to their depository bank, triggering automatic issuance of units in the fund.
  • Minyanville has learned that some wealthy investors are even resorting to disguises to gain access to top hedge funds.

Hedge fund investor kit

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No positions in stocks mentioned.

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