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Five Things You Need to Know: New Home Sales, 2Q GDP Revised to Upward to Surrealism from Dadaist, Dudley Named Markets Chief by Fed, Dudley Actually Named to Handle That Thing in Brooklyn by Fed, 4Q GDP Boosted by TV Catchphrase Compilation


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. New Home Sales

New Home Sales for October fell 3.2% versus the expected decline of 2.4%. Again, however, as with Existing Home Sales yesterday, the key components are inventories and pricing.

  • New Home Sales fell 3.2% in October, worse than expected, and are now down 25.4% year-on-year.
  • Unlike Existing Home Sales, which showed a rise in inventory and a decline in year-on-year pricing, New Home Sales came in slightly better.
  • Median sales prices were up 2% year-on-year.
  • Inventories dipped 0.7%, the third consecutive decline.
  • However, prior sales were revised lower from the 5.3% rise to 3.7%.
  • Perhaps all those builder incentives are finally working!
  • For example, Ryland (RYL) is rolling back prices... to 1967.

2. 2Q GDP Revised Upward to Surrealism from Dadaist

U.S. economic growth was revised higher to a 2.2% annual pace in the third quarter, a bit faster than the initial estimate of 1.6%, the Commerce Department reported this morning.

  • U.S. Gross Domestic Product (GDP), a broad measure of everything that's wrong with this country - from the excessive output of cringe-inducing and mind-numbing reality television shows to the production of mass quantities of Flowbee Precision Haircutting Systems - was revised upward to 2.2% for the third quarter.
  • S&P and Nasdaq futures loved the report, spiking to morning highs on the release without bothering to read any of it.
  • Sadly, we read the entire release, earning very little for our efforts except a strong desire to drive an icepick into the side of our head and join the dreamscape of a Salvador Dali painting, such as the Persistence of Memory.
  • Why the Persistence of Memory? Because, for some strange reason, we remember this statement from Federal Reserve Chairman Ben Bernanke's speech way back when back in the 19-20 hours ago time period: "The strength of the labor market and the associated increases in wage and salary income have supported consumer spending."
  • We remembered that even as we saw this in today's GDP release: Wage and salary disbursements were revised downward by $100.3 billion in the second quarter.
  • And this: Real disposable incomes fell 1.5% in the second quarter rather than rising 1.7% as previously reported.

Third Quarter GDP by Salvador Dali

3. Dudley Named Markets Chief by Fed

The Federal Reserve Bank of New York is expected to announce today that William Dudley, currently an advisory director of Goldman Sachs, will become executive vice president for markets on Jan. 1, the Wall Street Journal reported.

  • Mr. Dudley, 53, had until last year spent 10 years as chief U.S. economist for Goldman, the newspaper reported.
  • Dudley's new position at the New York Fed will make him manager of the central bank's Open Market Account.
  • The Open Market Account and operations are the means by which the Federal Reserve implements monetary policy.
  • They implement policy chiefly by buying and selling government securities or other instruments.
  • In addition to advising the Federal Open Market Committee (FOMC) on market developments and likely responses by the markets to specific Fed monetary policy decisions, the market's chief acts as a point person when the Fed needs to intervene during periods of market turmoil.
  • According to the Journal, in his role at Goldman Sachs, Mr. Dudley frequently advised Goldman's traders on how to react to economic news.

4. Dudley Actually Named to Handle That Thing in Brooklyn by Fed

Good lord, what a load of gibberish all that stuff above was. Open market account? Chief manager? Market turmoil? What?

  • Look, think of the Fed as like The Sopranos. Ben Bernanke is basically Tony Soprano.
  • Now, the Federal Reserve has two main offices, one at Satriale's Pork Store and the other at the Bada Bing Club. The FOMC usually meets at the Bada Bing while the Federal Reserve as a whole hangs out at Satriale's.
  • So, say Phil Leotardo, who is acting head of the Lupertazzi family while Johnny "Sack" Sacrimoni does time, decides to whack one of Tony's crew members, Vito Spatafore.
  • This is like China selling dollars to diversify its forex reserves.
  • Because Vito was a good earner for Tony, there has to be some kind of retaliation. Otherwise, competitors (like the European Central Bank, for example) will think they can do whatever the hell they want.
  • So Tony calls a meeting at the Bada Bing and is advised by his consigliere Silvio "Sil" Dante (the equivalent of Federal Reserve Vice Chairman Donald Kohn) to blow up one of the Lupertazzi bookmaking operations in Brooklyn (read: stoke inflation fears and mechanically pick up the slack in the market by buying or selling bonds to maintain the appearance of control over monetary policy and short-term interest rates).
  • Here is where Dudley comes in. Now Tony (Bernanke) can't physically go out and blow up the Lupertazzi bookmaking joint. He's the boss, after all. So instead Tony gets Paulie Walnuts, the equivalent of Dudley, one of his soldiers, to arrange to have the joint blown up.
  • This is a very loose analogy, of course.

5. 4Q GDP Boosted by TV Catchphrase Compilation

The TV Land cable network has compiled a list of the 100 greatest catchphrases in TV, according to the Associated Press.

  • TV Land cable network (The TV Cable Network About Cable TV!) will air a countdown special, "The 100 Greatest TV Quotes & Catch Phrases," over five days starting Dec. 11.
  • According to TV Land, noteworthy TV catchphrases include: "Dyn-o-mite" (J.J., "Good Times"), "I know nothing!" (Sgt. Schultz, "Hogan's Heroes"), "Let's be careful out there" (Sgt. Esterhaus, "Hill Street Blues") and "Whatchoo talkin' 'bout, Willis?" (Arnold Drummond, "Diff'rent Strokes").
  • Separately, and coincidentally, Minyanville has compiled a few of the worst TV catchphrases of all time; quotes and sayings that, for whatever reason, simply failed to catch on in the popular imagination of television viewers.
  • Among the worst TV Catchphrases of all time: "That's not mustache wax, Mrs. Romano." (Schneider, "One Day at a Time"), "Let's do this doggie style!" (Jonathan Chase, "Manimal"), "Hey pollack!" (Earl Bunker, "All in the Family: The Next Generation").

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