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Five Things You Need to Know for Friday


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. Saudi Arabia Oil Refinery Explosions

Al- Arabiya TV reported armed clashes and an explosion at Saudi Arabia's Abqaiq complex. Witnesses reported gunfire near the oil gathering center in Abqaiq. Saudi security officials said they foiled two car bomb attacks at the Abqaiq oil refinery. April Crude is trading up more than 2%. Is this a big deal?

  • Saudi Arabia has been battling periodic waves of terror from what are reported to be Al-Qaeda militants since 2003.
  • The Abqaiq field where the refinery is located produces 500,000 bpd and is expected to continue doing so until 2015.
  • More importantly, however, the Abqaiq field is located very near Ghawar, the world's largest oil field.
  • Ghawar produces more than 5 million bpd.
  • Military analysts have been concerned about terrorist activity near Abqaiq escalating in response to the Iran nuclear standoff.

2. Durable Goods Orders, a Headline Writer's Nightmare

DURABLE GOODS ORDERS PLUMMET IN JANUARY, CNNMoney reported. Headline number comes in at -10.2%, compared to expectations of a decline of just 2%. A decline of 10.2%, scary stuff, right? Minyanville is typically the last place you'll find a positive spin on economic data, but not so fast Sir KneeJerkalot.

  • Ex-Transportation, durable goods orders came in at .6%, versus .5% expectations.
  • The six-month average is .55%, so slightly ahead of expectations.
  • But what about the plunge in transports? Well, as we noted yesterday in, ahem, Five Things You Need to Know... both Boeing (BA) and Airbus warned that 2006 aircraft orders would fall by 61% this year. Guess they were serious, because...
  • Aircraft orders fell by 68.2% in January after averaging three times the normal level from October through December.
  • Bookings were healthier elsewhere in the durable goods industries, but the performance was mixed across sectors.

3. A Fed Head Here, a Fed Head There, Everywhere a Fed Head

Between 11:30 a.m. EST and 5:30 p.m. EST, no fewer than three Fed heads, including recently resigning Vice-Chairman Roger Ferguson and new Chairman Ben Bernanke, are set to be speaking words of wisdom, let it be, let it be...

  • Federal Reserve Vice-Chairman Roger Ferguson speaks at 11:30 on Education at Johns Hopkins University.
  • Ferguson announced this week he is resigning effective April 28.
  • St. Louis Fed President William Poole speaks at 12:45 to St. Louis Forum in Clayton, Missouri.
  • Chairman Ben Bernanke speaks at 17:30 on Central Banking at Princeton University.
  • If recent history based on the minutes of the recently released January FOMC meeting holds true, if the Fed heads touch on the economy and interest rate policy at all, they will note alternately that
    -interest rate policy seems to be where it needs to be
    -that inflation pressures remain well contained
    -but that additional hikes may be necessary and...
    -inflation pressures continue to pose a risk to price stability
  • If they were handicapping a horse race, this would be the equivalent of saying they are betting on every horse in the race.

4. Resistance is Futile

While the DJIA continues to plow ahead on the short chart (the short chart is the one which leaves out everything that happened between 1999 and 2003), the S&P 500, and the Nasdaq-100 still face significant resistance levels overhead.

  • The Dow break above 11,050 was a significant push above resistance and puts the Dow Industrials back on par with the Transportation Average.
  • What happens today will likely affect perception over the weekend.
  • A break by the SPX and NDX to join the recent Dow push above 11,050 would create some excitement among many technicians and market pundits.
  • The SPX level most are watching is 1300
  • The equivalent NDX level is a bit farther down the road, near 1760.

5. Stars Are People Too, and Their Homes Are Just As Overvalued as Our Homes

Brad Pitt and Jennifer Aniston have slashed the asking price of their former Beverly Hills home together, from $28 million down to $24.95 million.

  • The vintage 1935 French Normandy-style house, which sits on 1 1/3 acres has five bedrooms, and nine bathrooms.
  • The real estate went on the market in October.
  • Pitt and Aniston will share the proceeds from the sale.
  • They purchased the residence in 2001 and spent three years on renovations that include a screening room and pub, and ended up living in it for less than two years.
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