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Five Things You Need to Know for Wednesday


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


Five things you need to know to stay ahead of the pack on Wall Street.

1. Consumer Price Index

  • For January, CPI came in .7% month-over-month compared to .5% expected
  • Ex-food & energy because, hey, who needs 'em, month-over-month, CPI was .2%, which was expected
  • CPI year-over-year, 4.0%, versus 3.8%
  • CPI year-over-year, ex. food & energy, 2.1% versus 2.2%

    Now, what does all that mean? According to initial news commentary, conventional wisdom is that higher-than-expected January data will be enough keep the Fed on course for its expected rate hike at the next meeting in late March. Meanwhile, the Wall Street Journal takes the spin that "underlying price pressures remain largely contained," while pointing out that "inflation may be overstated" due to a "quirk" in the CPI calculation.

    What is the "quirk?" It's the Bureau of Labor Statistics "Seasonal Adjustment" process.

2. Alaska Reaches Natural Gas Pipeline Pact With XOM, BO, COP

After decades of negotiations, Alaska has reached an agreement with XOM, BP and COP to build a huge natural gas pipeline from the North Slope to N. America, the WSJ reported

  • It will be the largest civil-engineering project ever undertaken, according to the Wall Street Journal
  • The deal was cemented when Alaska Gov. Frank Murkowski submitted legislation to replace the state's oil-production tax with a profit-linked levy that received the blessing of the three companies
  • The Republican governor's bill would set the tax rate at 20 percent of profit earned from oil and gas production, while providing a 20 percent tax credit for profits reinvested in Alaska and other breaks aimed for small producers, Reuters said
  • The pipeline will not be completed until 2012-2014
  • Although pegged at $20 billion, that figure is based on 2001 steel prices, which have nearly doubled since then.

3. Port Authority?

President Bush vows to veto any legislation aimed at stopping the Dubai UAE Port deal, according to the New York Times

  • Bush issued the threat after the Senate majority leader, Bill Frist, and the House speaker, J. Dennis Hastert, publicly criticized the deal and said a thorough review was necessary to ensure that terrorists could not exploit the arrangement to slip weapons into American ports
  • Meanwhile, the WSJ takes a more sober view of the Port Deal on the editorial pages, noting that a bidding war between the British company (P&O) that currently manages the ports has been ongoing since last fall, and the board of that company accepted Dubai's offer last month
  • Meanwhile, a Florida company that is partners with P&O last week filed a suit to block the purchase

4. The Nikkei Sway?

The Nikkei 225 has been freaking out lately, up 400, down 200, up a couple hundred, then back down a couple hundred, or so it seems. Yesterday the Nikkei was down .7%. What is really going on?

  • Even today, however, more than a decade past the all-time high, the Nikkei remains 60% below that peak.
  • Everyone believes Japan is back, and here are three big reasons why.
  • Wait, just who do you mean by "everyone"? Maiko Asaba, for one. If you don't know who she is, you're out of the loop.

5. Taiwan On and Forget the Chinese

Iran and Russia and nukes? Big Deal. Some vague hints at nuclear retaliation and strikes here and there, who can say for sure? Moving beyond vague hints, however, to publicly outlined and explicit threats of force is China vs. Taiwan.

  • Taiwan President Chen Shui-bian confirmed his commitment to scrap guidelines on unification with rival China, a measure likely to anger Beijing, according to reports.
  • China and Taiwan split amid civil war in 1949, but Beijing still occasionally threatens the use of force if the self-ruled island moves toward formal independence.
  • China is likely to see Chen's plan to abolish the guidelines, first mentioned last month, as a step in the direction of formal independence.
  • Chen told U.S. Congressman Rob Simmons that the National Unification Council and 15-year-old guidelines on unification with China were "absurd products of an absurd era," according to the Washington Post.
  • Chen's remarks followed newspaper reports that he had snubbed a special U.S. envoy, refusing to go back on his decision to scrap the council and the guidelines.


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