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Five Things You Need to Know: Payrolls, Sorry, Canceled Checks, Gamblers Descend on Louisville for Horse Racing Mayhem, Five Horses You Need to Know

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

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

1. Payrolls

Finally, we're looking at payrolls in the rear view mirror. The October release came in at 92,000 versus 123,000 forecast.

  • Despite the somewhat strong ADP number on Wednesday, a less-than-expected 92,000 jobs were added in September.
  • However, the headline unemployment rate came in at 4.4%, a sharp improvement over the 4.6% rate that was expected.
  • By pure coincidence, this has to be good news not just for the economy, but for anyone who is facing reelection next week.
  • I'm sorry, did we write that out loud? Ignore us.
  • P.S. Did we mention that the 92,000 number is accurate to within +/-52,000?
  • Similarly, our forecast is for the S&P 500 to finish the year at about 1365, give or take 500 points.


2. Sorry!

Richard Fisher, the president of the Federal Reserve Bank of Dallas, said that because of faulty inflation data, the Fed kept interest rates too low for too long earlier this decade, fueling speculative housing activity. Sorry!

  • Minyan Mike Shedlock was all over this admission in his Global Economic Trend Analysis commentary yesterday.
  • "If ever a case could be made to abolish the Fed and to let the market set interest rates, that case was made today," Shedlock wrote.
  • "Ironically enough the case against the Fed was made by Richard W. Fisher, a current Fed Governor."
  • In his speech yesterday before the New York Association for Business Economics Fisher said, "poor data led to a policy action that amplified speculative activity in the housing and other markets."
  • But wait, there's more. "Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country,: Fisher added.
  • "It is complicating the task of achieving our monetary objective of creating the conditions for sustainable non-inflationary growth."
  • That's a shame.


3. Canceled Checks

At a semiannual housing forecast conference last week in Washington, D.C., economists said that contract-cancellation rates for big builders were running around 40% -- about twice as high as last year's levels, the Wall Street Journal reported.

  • Some of the cancellations are by people who signed new-home contracts at one price months ago, haven't yet closed, and are now stunned to see the builder drastically cutting prices on identical properties, the Journal said.
  • And some are by people trapped in a chain reaction: They can't sell their old home -- or the buyer has canceled the contract -- so they are being forced to cancel the deal on a new house they are buying somewhere else.
  • D.R. Horton (DHI) says its cancellation rate is currently 40%, compared with 29% a year ago.
  • Meritage Homes (MTH) is reporting a 37% kickout rate, compared with 21% a year ago.
  • Standard Pacific (SPF) says that 50% of its contracts fell through in the third quarter of this year, compared with 18% for the same period last year.
  • Well, that's just new homes. At least cancellations for existing homes aren't up because that would mean the housing market may be seeping into other areas of the economy.
  • Oops. In September nearly half of the 454 agents responding to an online NAR survey said they had recently experienced cancellation rates higher than the historic 2% range.
  • Which just proves the old saying: If they're not buying when you're selling, a cardboard box will be your dwelling. (Cf. You can buy more real estate in a day than you can sell in a lifetime.)


4. Gamblers Descend on Louisville for Horse Racing, Mayhem

The 23rd Breeders' Cup World Championships will take place in Louisville, KY tomorrow. Below is what you need to know about it.

  • Each year on the first Saturday in May, no shortage of unsuspecting rubes will make their way to Louisville for the Kentucky Derby to lose the content of their wallets, and in the infield most of their clothes, to a savage mob of local bootleggers and gamblers.
  • But it's all in good fun, a wink and a smile, a nudge and a tout, which is why no one ever complains about the fleecing. That and the fact the fleeced innocent only discover the larceny days later safely back home in Chicago, or Detroit, or New York. "Hey, where are my shoes? Have you seen my wallet? Why do I have Stephen Foster's business card stapled to my underwear?" Good, clean fun.
  • But no casual fan goes to the Breeders' Cup. The Kentucky Derby is usually the next to last race on an 11-race card with nobody much paying attention to what happens until the race. Imagine the World Series played in a single inning with lots of batting practice, tobacco spitting, a hot dog eating contest and beer chugging to fill the dead time and you have an image of any three of the Triple Crown races.
  • But not the Breeders' Cup. The Breeders' Cup is eight straight races in less than five hours featuring the fastest, most dangerous horses on the planet each running for more than $2 million dollars within their own specialized world; sprinters, two-year old colts, milers on the turf, classic distances.
  • The Triple Crown is glitz and glamor and a lottery ticket to the world of six-figure stud fees. The Breeders' Cup is strictly business. It is a day of reckoning.
  • The Breeders' Cup was created in 1982, the brainchild of the late John Gaines.
  • Gaines envisioned a day of racing that would unite the industry and create a sort of Super Bowl for horses.
  • The location for the Breeders' Cup changes every year. This is the sixth time it has been held in Louisville at Churchill Downs. Last year it was held in New York at Belmont. Next year it will be held at Monmouth Park in New Jersey.
  • All eight Breeders' Cup races will be televised tomorrow on ESPN beginning at Noon.
  • You can see the full fields for each race with jockey, trainer and morning line odds at Daily Racing Form.


5. Five Horses You Need to Know

In the old days, when I made a living as a professional handicapper, Breeders' Cup day was my favorite day of the year. It was like I imagined horse racing must have been in the 1930s with Seabiscuit and War Admiral. Back when any given Wednesday at Belmont would find 25,000 people in attendance. It was also a day that features more novice money in the pools than normal, where favorites' chances are overestimated and longshots' chances are underestimated. Below are five horses you need to know for tomorrow's big day.

  • Juvenile Colts. The favorite in the race is a horse called Scat Daddy, with a morning line of 4-1. Meanwhile, there is a horse that is just as fast who will break from the inside post and enjoy a nice, ground-saving trip under jockey Calvin Borel. His name is Street Sense. Morning line 20-1.
  • Filly & Mare Turf. Ouija Board will be the odds on favorite. From that standpoint the race is not a betting race, but is worth watching because this mare might be one of the best turf horses in a generation. If she wins tomorrow she will certainly rate up right up there with the best. In Europe this year she has been running against colts for most of the year, beating them on a number of occasions. She is fearless and will likely dominate this group of fellow female horses.
  • Sprint. This year's Sprint may have the fastest field (in Speed Figure terms) of any field in Breeders' Cup history. But Churchill Downs is a quirky course. The six furlong sprint is actually a little more than 6-and-a-quarter furlongs because of the track's configuration. This year only one horse in the field has a victory at Churchill, where it helps horses to have some local knowledge. Kelly's Landing is a local horse who may not be fast enough on paper but he has won twice at Churchill and may pick up the pieces of a potentially blistering pace.
  • Mile. The Breeders' Cup Mile is often a free-for-all because Churchill's turf course has relatively tight turns and the horse who lucks into the best trip may find him or herself in front at the end be default. Typically, the European runners bring their own jocks. It's not that they aren't great riders, they are. But European racing is far different from U.S racing both in pace and configuration. Sleeping Indian is as fast as any of the European runners in the race but may own a slight edge in that he gets an American jockey, Alex Solis.
  • Classic. Bernardini has been brilliant so far. But this is the largest, most talented field he's ever faced. If he wins he'll have truly earned his accolades. Meanwhile, the European import George Washington has been very fast on turf and may prefer that surface but he wouldn't be here unless his connections thought very highly of him. His grandfather was Danzig, no slouch as a sire of classic distance dirt horses himself. And on his dam's side was Alysheba. Also, we like the idea that if a European horse is going to win the Classic he's at least named after our first president.


Ouija Board

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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