Five Things You Need to Know: No Asian Contagion; Supply In Control; Supply In Control, Part Two; Mystery of Great Pyramid Solved!; Minyanville Theorizes
What you need to know (and what it means)!
Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. No Asian Contagion
Other than the market's collective yawn over jobless claims, it's a rather quiet day here in the US. Overseas, however, a couple of interesting developments in Asia.
- Financial Contagion? It won't start with Southeast Asia this time.
- ASEAN finance ministers representing the 10-member Association of Southeast Asian Nations are meeting in Thailand to discuss measures to avoid any potential repeat of the 1997-98 financial crisis.
- Among items on the table include ways to boost Southeast Asian economic integration, and a discussion the recent gains of local currencies against the dollar.
- While the U.S. if focused on China's yuan, the Thai baht, Indonesian rupiah, Singaporean dollar and Philippine peso have all sharply appreciated against the dollar over the past year.
- China raises bank reserve ratio for sixth time in 12 months
- China again raised the reserve ratio for banks by half a percentage point to 10.5% effective April 16, it's sixth such move in a year.
- The half a percentage point increase removes about 170 billion yuan ($22 billion) from the financial system, reducing the funds banks have available to lend, according to Bloomberg.
- M2 in China grew 17.8% in February, the fastest pace in six months, while outstanding loans climbed 17.2%.
2. Supply In Control
Closer to home, the number of homes listed for sale in 18 major U.S. metropolitan areas at the end of March increased 6.5% from a month earlier, according to data compiled by ZipRealty Inc., the Wall Street Journal reported.
- The increase of 6.5% compares to the average increase from February to March over the past 22 years of just 1.7%, according to Credit Suisse.
- Spring is a seasonally strong time for home sales, so inventories typically rise as sellers put homes on the market to cater to families seeking summer moves.
- The metro areas seeing the biggest increases in inventories were Los Angeles (12.8%), San Francisco (12.2%) and Washington, D.C. (9.4%).
- As one would expect, a rise in home inventories couple with slowing sales (last week mortgage applications reportedly fell 3.2%) create a recipe for declining prices.
- The chart below, courtesy Wall Street Journal and ZipRealty, shows both the increase in home inventories and decrease in home prices among the major metropolitan areas tracked.
3. Supply In Control, Part Two
According to the equity bullish percent indicators we follow, supply remains firmly in control of equities. (For more about the bullish percent concept, click here.)
Here is where we stand this morning with the major bullish percent indicators (links go to the charts available at Stockcharts.com):
- NYSE Bullish Percent: Os (Negative), 69.38%, up 0.22% yesterday
- S&P 500 Bullish Percent: Os (Negative), 72.28%, up 0.20% yesterday
- Nasdaq Composite Bullish Percent: Os (Negative), 54.36%, up 0.42% yesterday
- Nasdaq-100 Bullish Percent: Xs (Positive), 63%, up 1.6% yesterday
The NYSE Bullish Percent remains very close to a reversal to Xs, which would show demand back in control of that portion of the market, but we're not quite there yet. Meanwhile, the Nasdaq Composite Bullish Percent remains very far away from a potential reversal to positive, as does the S&P 500 Bullish Percent.
So even if there is a positive reversal by the NYSE Bullish Percent that would hardly be enough to bail out the major stock indices, especially the S&P 500, and Nasdaq Composite.
As well, taking a look at the diverse bullish percents at Investor's Intelligence, we see the Russell 2000 Bullish Percent remains negative, the S&P 400 Midcap Bullish Percent remains negative, the S&P 600 Small Cap Bullish Percent remains negative and the Wilshire 5000 Bullish Percent remains negative.
The bottom line is risk remains extremely high across all segments of the market and supply is still very much in control.
4. Mystery of Great Pyramid Solved!
According to the BBC, a French architect claims he has solved the mystery of how Egypt's Great Pyramid was built.
- French architect Jean-Pierre Houdin studied the problem for eight years and used a computer model to simulate the method he believes was used to construct the pyramid.
- Houdin says the 4,500-year-old pyramid outside of Cairo, Egypt was built using an inner ramp to lift massive stones.
- "This goes against both main existing theories," Egyptologist Bob Brier told Reuters after Houdin unveiled his theory.
- Houdin said the pyramid could have been built by just 4,000 people using his technique instead of the 100,000 suggested by other theorists.
5. Minyanville Theorizes
That Great Pyramid stuff is Interesting! Very interesting! But totally wrong.
- The mystery of the great pyramids has long fascinated scientists and skeptics alike.
- We asked Minyanville's crack team of interns to take a stab at solving the mystery of the construction of the great pyramid using all available technology and mathematics.
- The results may surprise you.
Minyanville Theory: How the Great Pyramid Was Built
Step One: The Design
No construction project can succeed without a strong design. The Great Pyramid is no different. In Ancient Eqypt, Pharaoh Khufu (known as Cheops) initially proposed constructing the pyramid based on a design by his chief architect Hetepehres in 2578 BC. However, Hetepheres was killed when his chariot exploded in his driveway upon ignition, so Pharaoh Khufu replaced the Hetepheres design with one by little known Cairo architect Salvatore "The Easel" Maranzano.
Great Pyramid design, as proposed by Hetepheres
Great Pyramid design, as proposed by Salvatore "The Easel" Maranzano
Step Two: The Materials
Approximately 2,400,000 stones were used to construct the Great Pyramid. The stones originally were gathered and delivered by Djedefra Egyptian Rock & Quarry Supply Company and stacked outside the area where the Great Pyramid now stands. However, on the night before construction was to begin, the stones mysteriously disappeared and by strange coincidence the Djedefra Egyptian Rock & Quarry Supply Company was destroyed by fire. Pharaoh Khufu opened up the bidding for new materials across all of north-eastern Africa, but only one company submitted a bid: The Gambino Pyramid Materials Supply & Cartage Company.
Step Three: The Construction
Initially, Sphinx Brothers was the construction team contracted to build the pyramid and complete it within seven years at a cost of 1.2 million bags of barley ($2.37 billion USD), but the company's 100,000 workers simultaneously contracted a symptomless flu and all phoned in sick. Faced with no workers, Pharaoh Khufu agreed to turn over the construction to Phillip "Milwaukee Phil" Capesso.
Milwaukee Phil took the 1.2 million bags of barley as payment and sub-contracted the job for $650,000 barley bags to Jimmy "The Turk" Torello, leader of the International Brotherhood of Teamsters local no. 10.
The construction was fraught with difficulties and delays. Jimmy the Turk was unable to get necessary building permits from Sean "Ice Pick" Donnelly. Eventually, Jimmy the Turk was run over by a chariot in a hit and run accident. The driver of the chariot was never identified.
Jack "Handsome Jack" O'Leary took over as IBT Local No. 10 President and immediately fired all IBT workers who had been loyal to Jimmy the Turk, replacing them with his own men, the Forty Thieves gang. Handsome Jack sent word back to Pharaoh Khufu that the price for construction was no longer 1.2 million bags of barley, but 4.5 million bags of barley, and that the job would take a little longer than 5 years, possibly as long as 20 years.
At first Pharaoh Khufu balked at the new price tag, but later acquiesced, some say due in no small part to a series of unexplained fires in the Pharaoh's liquor stores and bookmaking operations on Cairo's North Side.
Consequently, what we know today as the Great Pyramid is a marvel of workmanship and architectural achievement!
The Great Pyramid today.
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