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Five Things You Need to Know: When Doves Cry...; And Now, the Dollar...; Daily Subprime Disaster Datapoint; Just Lucky I Guess!; A Very Special Valentine's Day Romantic Greeting From an Ayn Rand Objectivist!


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. When Doves Cry...

This morning Federal Reserve Chairman Ben Bernanke is delivering his semi-annual congressional testimony, loosely titled, "When Doves Cry."

  • After reading the testimony, there are a couple of important things that stand out.
  • First off, year-on-year core inflation is currently running at around 2.2%.
  • Off the top of your head, any idea what the Fed's expectations for inflation in 2007 were based on the July 2006 semi-annual testimony? Anyone?
  • Let's take a look:
    "As measured by the price index for personal consumption expenditures excluding food and energy, inflation is projected to be 2.25% to 2.5% this year and then to edge lower, to 2% to 2.25% percent next year," Bernanke said last July.
  • Ok, Fed takes the early lead 1-0.
  • What about future Fed inflation expectations?
  • Bernanke said the Fed is looking for core inflation - as measured by the price index for personal consumption expenditures excluding food and energy - to be 2% to 2.25% this year and to edge lower, to 1.75% to 2%, next year.
  • Here's the second important thing to take away from today's testimony.
  • In July 2006, Bernanke said the Fed was looking for 3% to 3.25% real GDP growth.
  • The Fed this morning took those numbers down significantly, looking for real GDP growth of 2% to 3%.

Federal Reserve Chairman's Semi-Annual Congressional Testimony Excerpt

2. And Now, the Dollar...

No sooner had Prince finished his Semi-Annual Congressional Testimony halftime performance then, just like that, the dollar found itself at a significant technical juncture.

  • Below is the dollar on a daily chart...
  • And here is a link to the dollar on a point and figure chart. After today it will show a double bottom sell signal at 84.25.
  • Does this change our long-term bullish view of the dollar? No.
  • Take a look at the monthly chart. Does this look toppy or bottomy to you?

3. Daily Subprime Disaster Datapoint

Accredited Home Lenders (LEND) this morning reported earnings that failed to not disappoint those who were expecting a dramatic disappointment.

  • Accredited Home Lenders reported a quarterly loss three times larger than Wall Street expected this morning.
  • The game of subprime mortgage musical chairs resulted in a fourth quarter net loss of $37.8 million, $1.49 a share.
  • In 2005 the company reported a profit of $1.96 a share thanks to a thriving business selling subprime loans.
  • The company said it set aside $42 million more reserves in the fourth quarter to fend off rising delinquencies.
  • As well, lending volumes declined, with mortgage originations falling 18%.
  • The company will not issue a 2007 forecast, and noted that "market turbulence" is expected to persist through the first half of the year.

4. Just Lucky I Guess!

Democratic members of Congress yesterday requested copies of correspondence between the White House and Sallie Mae (SLM) after noting some pretty well-timed stock sales by SLM CEO Albert Lord just before the release of President Bush's budget proposal.

  • President Bush's budget proposal, released on February 5, announced plans to introduce widespread budget cuts to the student loan industry.
  • Meanwhile, Sallie Mae CEO Albert Lord managed to dump 400,000 shares of SLM stock worth more than $18 million on Feb. 1 and 2, just days ahead of the budget release.
  • Sallie Mae spokesman, Tom Joyce, said that the timing of the stock sale was completely coincidental, according to the New York Times.
  • Also coincidental, all those letters between the White House and Sallie Mae urging company officials to sell the stock ahead of student loan budget cuts.

5. A Very Special Valentine's Day Romantic Greeting From an Ayn Rand Objectivist!

In honor of Valentine's Day, click here to view a very special Valentine's Day Romantic Greeting From an Ayn Rand Objectivist!
No positions in stocks mentioned.

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