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. Magnum, PPI
Higgins is concerned about Thomas Magnum's spiralling entertainment budget. TC is worried about the increasing costs of helicopter fuel. Rick can't find quality workers for the King Kamehameha Club, given labor shortages. What does this mean? One word: inflation.
- The producer price index for finished goods rose 0.5% on a seasonally adjusted basis last month after an unrevised 1.4% decline in February, according to the Labor Department.
- U.S. wholesale prices grew in March at their fastest pace in three months.
- Excluding food and energy costs, however, the core producer price index increased 0.1% in March, its slowest advance since November.
- (Yes, it is painful to write the words "excluding food and energy prices".)
- Wall Street economists had expected the overall PPI to rise 0.4% during the month and the core PPI to rise 0.2%.
- Another key bit of data, home construction fell for the fourth time in six months during March.
- The good news: raw materials prices dropped 2.7% in March.
- Consumer prices will be released tomorrow morning.
- Meanwhile, to close the circle we opened in our headline, in 1980, the year Magnum P.I. debuted on television, gold hit its all-time peak of $850, inflation fears were rampant, and Hawaiian shirts, big mustaches and red Ferraris were all the rage. Just like now!
2. Inside the Ides of March
Back in March - remember March? - the Federal Reserve met and raised rates for the 15th straight time. What really happened in that meeting? The market will search for clues in the release of the minutes today at 2 p.m.
- In March the Fed raised their benchmark rate for the 15th consecutive time to 4.75%.
- The two-day meeting was also Ben Bernanke's first as Fed Chairman, succeeding Alan Greenspan.
- That is one reason these minutes may receive a little extra scrutiny.
- That, and the fact that the Fed statement produced from the meeting noted that "additional policy tightening may be needed."
- Everyone expects the Fed to raise rates a 16th time in May, so anything in the minutes which suggests the May meeting will conclude the series of rate hikes or that still more may be needed is what the market will be searching for.
3. Japanese Bond Yields Rise
Yields on 10-year Japanese government bonds hit 2% today, their highest level in nearly seven years.
- With economic figures improving, and consumption increasing, the Bank of Japan last month ended its ultra-loose monetary policy known as "quantitative easing."
- The BOJ also signaled it will start raising rates sometime in the future, many predicting those increases could come in late summer or autumn.
- Levels on the 10-year Japanese government bond hit 2% today, their highest yield since August 1999.
- Ah, but every silver lining must have a cloud. Finance Minister Sadakazu Tanigaki warned that recent gains in bond yields are too rapid and undesirable for the nation's economy.
- "Japan is still in mild deflation," Tanigaki told reporters, according to Reuters.
4. The Hu Launches U.S. Tour in Seattle
Chinese President Hu Jintao kicks off his four-day U.S. tour with a visit to Microsoft today.
- After visiting the Microsoft "campus" in Seattle, Mr. Hu will later attend a dinner at the home of Microsoft Chairman Bill Gates.
- The dinner at Mr. Gates home will be hosted by Washington state Governor Christine Gregoire.
- Mr Hu will also next visit the Boeing factory just outside Seattle before heading to Washington for a meeting with President Bush on Thursday.
- On the agenda for the visits with Microsoft and Boeing are intellectual property rights issues.
- Companies such as Microsoft have encountered major piracy troubles in China.
- Recently, China's government formally issued a directive requiring computers be pre-loaded with legitimate software.
- Lenovo Group, China's largest personal computer maker, will buy $1.2 billion worth of Windows in the next year, according to the Financial Times.
- On a final note, we would point out that Mr. Hu will meet with Microsoft's Bill Gates and company officials at Boeing before meeting with President Bush.
- If we were writing such a scenario in our book, we would use Mr. Hu's sequence of meetings (Microsoft - Boeing - Bush) as a subtle bit of foreshadowing designed to hint at the level of importance China is attaching to each meeting. But that's just us.
5. Finnish Monster Rock Band Lordi Poised to Sweep Eurovision Song Contest!
Don't be so dismissive. We could hear you snort with derision from here. But friend, don't judge us until you feel the mega monster rock power of Finland's Lordi.
- First, you must know about Eurovision Song Contest, yes? If not, you will soon enough, NBC is reportedly producing an American version. Think American Idol but weirder.
- Begun in 1956, the Eurovision Song Contest has grown to more than 280 artists from 39 participating countries.
- This years' finals of the 51st Eurovision Song Contest will be held on Saturday 20 May at the Olympic Indoor Arena, Athens.
- The most covered song to emerge from a past Eurovision Song Contest? Volare.
- Anyway, back to Lordi. Lordi is Finland's entrant in the contest.
- They have eight-foot retractable latex Satan wings and a song called "Chainsaw Buffet."
- The band members include lead singer Lordi; Kita, an alien- man-beast predator who plays flame- spitting drums from inside a cage; Awa, a blood-splattered ghost who howls back-up; Ox, a zombie bull who plays bass; and Amen, a mummy in a rubber loincloth who plays guitar.
- They won a trip to the Eurovision Song Contest thanks to their song, "Hard Rock Hallelujah," an anthem reminescent of KISS.
- Representative lyric from "Hard Rock Hallelujah": "Wings on my back/I got horns on my head/my fangs are sharp/ and my eyes are red."
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