Five Things You Need to Know for Tuesday
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. Data in the Hizzouse, Part Two
We told you it would be a busy week with housing data. Yesterday was the Commerce Department's new-home sales. Today we get existing-home sales at 10 a.m. EST, and tomorrow we hear from the Office of Federal Housing Enterprise Oversight. Oh, and sorry about that whole "hizzouse" thing... again. But by Wednesday maybe it will be what they call a "rake bit.1"
- Yesterday January sales of new homes fell 5 percent, to an annual pace of 1.23 million, its lowest level in a year.
- Inventory of unsold new homes rose to a record level - to 528,000 in January, up 1.2 percent from December and more than 20 percent from a year ago.
- New home sales make up 15 percent of all transactions and are volatile because a small data set is used.
- Today's existing-home sales make up 85% of all transactions.
- Existing-home sales have shown a more consistent pattern of slowing, falling 5.7 percent in December, 1.3 percent in November and 2.7 percent in October.
- Consensus ranges are 6.59 mln to 6.75 mln.
2. Here's a TIP, the Guy in the Hat Did Something Very Bad
Bond traders are divided on the outlook for inflation. The black hat guys are focusing on the two-year versus 10-year spread. the white hat guys are focusing on the yield difference between the 10-year and the 10-year Treasury inflation protected security, or TIP.
- Since December, the spread between two-year and 10-year Treasurys has been "inverted."
- Inverted means the two-year note is yielding more than the 10-year.
- Why is that bad? Typically, investors are paid more for holding longer-term debt because that money will be "locked-up" for a longer period.
- An inverted yield curve is associated with inflation expectations short-term, and slower growth long-term, which is why it is said to "foreshadow" a recession.
- On the other hand, Treasury inflation-protected securities (TIPS) offer investors a guaranteed rate of return over inflation, making it possible to track inflation expectations by looking at the difference between yields on standard Treasury notes and on TIPS.
- While 2's vs. 10's are inverted, the 10-year vs. the 10-year TIP spread is wide, about where it was when the Fed began raising interest rates in June 2004
- Minyanville Prof. Bennet Sedacca offered the chart below, courtesy Bloomberg, to show the current 10-year note and 10-year TIP spread. "This cannot exist for long," he noted.
3. The iPresence of Your iCompany is iRequested...
According to MacDaily News, last week Apple sent invitations to select (read: not Minyanville) media outlets for a product show to be held today at the company's Cupertino, CA headquarters. The vague invite has, er, invited speculation on what new product the company plans to unveil.
- "The smart money is on movies," Owen Thomas writes in Business 2.0.
- Why movies? Well, contrary to Hollywood fears, Apple's efforts at digital distribution seem to be complementing, not replacing, Hollywood's traditional business.
- Among rumored products:
-Video iPod - larger screen covering entire surface area.
-Intel Mac Mini - natural follow-up to Intel-based Macs.
-iTunes movie store - ties all products together.
- Some Apple products Minyanville would like to see:
-iPodpod - an iPod that organizes our iPods.
-iForaneye - utlimate vengeance machine, tracks down, destroys enemies, fast click wheel weapon selection.
4. Microsoft Folds Paper Computer Blueprints, Calls it Origami
Hammered by Apple's iPod on one side, beaten by Google on the other, Microsoft turns to the Japanese art of paper folding to salvage its waning tech leadership role.
- Although still a few weeks away, the PR circuits are being hit hard by Microsoft in advance of its Origami Project debut.
- MSFT's Origami Project is reportedly about a very small tablet computer that is priced near $600 and less.
- The company first showed off an Origami-like prototype at last year's Hardware Engineering Conference.
5. It's Fat Tuesday, Mon Cher
Just six months after Hurricane Katrina devastated the area, New Orleans is intent on letting Mardi Gras festivities continue.
- Mardi Gras is French for "Fat Tuesday" and is always held the Tuesday before Ash Wednesday, just before the beginning of Lent.
- Like Lent, the date of Mardi Gras is dependent on the date of Easter.
- Mardi Gras was first celebrated in the U.S. by the LeMoyne brothers in the late 17th century, who were sent by King Louis XIV to defend France's claim to Louisiana.
- Mardi Gras is a legal holiday in Louisiana.
- This year in New Orleans, there are about 10,000 fewer hotel rooms due to Katrina.
- Although the party is going on as planned, the lower 9th Ward remains without electricity and water and piles of debris are still scattered throughout.
1. A "rake bit," according to Kung Fu Monkey, is "Something that's funny, goes on too long so it's not funny, then goes on so long that it becomes INCREDIBLY funny."
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