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Five Things You Need to Know for Monday


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. Look, our little central banker is all grown up!

Seems like only yesterday Ben Bernanke was running around the Federal Reserve under the feet of Alan Greenspan. Beginning today he chairs his first Federal Open Market Committee meeting.

  • The two-day FOMC meeting begins today.
  • An interest rate decision and policy statement will be released Tuesday at 2:15 p.m.
  • Fed Funds futures are predicting a nearly 100% probability of another 25 basis point hike to 4.75%.
  • The market is pricing in about a 70% probability of another 25 basis point hike to 5% on May 10, down from 80% late last week.

Federal Reserve Chairman
Ben Bernanke, circa 1982

Federal Reserve Chairman
Ben Bernanke today

2. Whoa, back up. What makes Fed Funds Futures players so smart?

Above, we noted that Fed Funds Futures are "predicting a 100% probability of another 25 basis point hike to 4.75%." How do they know?

  • The owner of a fed funds futures contract is obliged to take delivery of the interest paid on a principal amount of $5 million overnight fed funds held for 30 days.
  • The price of a fed funds futures contract is 100 minus the average fed funds rate during the contract month. For example, during a month when the fed funds rate averaged 4.5%, the fed funds futures contract would settle at 95.50.
  • The prices of fed funds futures contracts imply expectations for the fed funds rate.
  • Tired of having us point out the Fed Funds rate expectations? Want to see for yourself? The Chicago Board of Trade has a page just for you!,3206,991+23425,00.html
  • If you are smarter than us, you might have an interest in this 2001 Cleveland Fed Paper, titled: "How Well Does the Federal Funds Futures Rate Predict the Future Federal Funds Rate?"

3. Three's company; 500,000's a crowd.

Why would 500,000 people, among the largest demonstrations for any cause in U.S. history, march through downtown Los Angeles? And why should you care?

  • More than 500,000 protesters marched through downtown Los Angeles Saturday.
  • The protesters are demanding that Congress abandon attempts to make illegal immigration a felony and to build more walls along the border.
  • In addition to Los Angles, an estimated 50,000 protesters marched in Denver Saturday, an estimated 20,000 marched in Phoenix and more than 10,000 marched in Milwaukee.
  • The U.S. House of Representatives has passed legislation that would make it a felony to be in the U.S. illegally, impose new penalties on employers who hire illegal immigrants, require churches to check the legal status of people they help, and erect fences along one-third of the U.S.-Mexican border. The Senate is to begin debating the proposals on Tuesday.
  • Senate Majority Leader Bill Frist, says national security concerns should drive immigration reform.
  • President Bush sides with business leaders who want to let some of the estimated 12 million undocumented immigrants stay in the country and work for a set period of time.
  • The Hispanic population of the United States is an estimated 40 million, constituting approximately 13.7% of the total population.

4. Beware the Trilateral Commission.

Wait, you thought we meant the Trilateral Commission formed in 1973 between the U.S., Europe and Japan? Sorry, that's so... AFL. The NFL-equivalent is the trilateral format of the Russia-China-India Business Council set to meet for the first time at the end of this month.

  • The first session of the Russia-China-India Business Council will be held at the end of March in Delhi.
  • India made the offer to host the newly constituted business council at a meeting of foreign ministers in Vladivostock last year.
  • Last week, Russia and China signed an agreement on Russian gas supplies to China amounting to 60 to 80 billion cubic meters annually from eastern and western Siberia through pipelines that will become operational by 2011.
  • India would like to obtain a similar deal, making energy the primary focus of the meeting of the Business Council.
  • Following on President Bush's recent visit to India, and the Bush administration's desire to make India a regional alliance to counter-balance the emerging growth of China, the meeting will be watched closely for clues about how this new trilateral council intends to move forward.

5. Just enslave us all now and get it over with.

A number of employees for, an Ohio company, have agreed to have identity chips implanted in their skin.

  • The implanted chips are radio frequency identification chips (RFID), and are about the size of a grain of rice.
  • The implantation was voluntary and allows the employees to pass through security readers at the company's data center without holding up a key chain or ID card.
  • A doctor implanted the chip, which took only a few seconds and was not painful.
  • Their company, maintains cameras to monitor high-crime areas in six cities.
  • Although the implants were voluntary, the Constitution does not include an express right of privacy.



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