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Five Things You Need to Know: OECD, Ford Payday Loan, Housedaq, Avian Whatever, The French


What you need to know (and what it means).


Minyanville's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. OECD Pours the ECB Some Gin & Juice

With so much drama from the OECD it's kinda hard bein' Pres. of the ECB. But somehow, someway he keeps comin' up with funky rate hikes like every 30 days.

  • Sorry Snoop Trichet, we feel your pain. On the one hand the OECD says you have encouraging economic growth, raising their 2006 forecast from 2.1 percent to 2.2 percent.
  • On the other hand, you have high oil prices, which have fortunately been muted somewhat by the euro's strength against the U.S. dollar in which crude is priced.
  • Can you imagine eurozone inflation rate if the dollar hadn't cooperated by falling 7.4% this year?
  • There's also this little matter of the German VAT hike, not to mention the German increase in the "wealth tax", which raises the top rate of income tax to 45%, both of which are expected to contribute to slowing growth next year while pushing forward consumption this year, contributing to near-term inflationary pressures.
  • In fact, German GDP figures show that domestic demand and private consumption are actually doing quite well.
  • German business investment in plant and machinery expanded to 2.2% quarter-over-quarter and 4.6% year-over year.
  • So, naturally Jean-Claude Trichet got his mind on their money and their money on his mind, walking a tightrope between raising rates to quell inflation and overdoing it and stomping growth. It's enough to turn a man to gin and juice, which the OECD pours with a heavy hand... we are told.
  • Fortunately, OECD Jean-Phillipe Cotis is thinking of a number for you between 0 and 1 for second quarter growth. 0.7% and above? A proper recovery, hike away. Below 0.7%? You got a rip in your couch.

2. Ford Motor Credit Successfully Obtains Payday Loan

Ford Motor Credit is offering investors $2.5 billion of bonds coming due in 2010 and 2011 that pay interest of 10.6%, plus $1.3 billion in cash, in exchange for bonds that begin maturing in October with rates as low as 4.95%, according to Bloomberg.

  • This marks the highest interest rate and lowest price on any Ford bond in the last century.
  • At Minyanville, we are all too aware of the risks of short-term payday loans, so we asked ourselves, "Selves, is Ford doing the right thing here?"
  • We picked a random payday loan site, the first one to pop up in the browser search, called to see if, based on the No-Fax-Payday-Loan criteria, Ford really qualifies for such dire financing.

    1. Is Ford in need of fast cash for an emergency?
    Bondholders are due $57 billion over the next five years. Meanwhile, the company lost $1.2 billion in the first quarter. We'll go with a "yes" on that one.

    2. Does Ford have any unexpected bills?
    You would think not since the company is cutting costs by firing 30,000 workers and closing 14 plants by 2012. But cost cutting actually costs money it turns out. The company is facing $1.7 billion in one-off restructuring charges. So, we're going have to go with a "yes" on that one too.

    3. Has Ford fallen short on cash due to unexpected car repairs?
    We asked Ford this in our minds, and Ford said: "Totally. Dude, that is totally it. Stupid cars, we hate them!"

  • Fortunately for Ford the application at No-Fax-Payday-Loans is short, takes only 30 seconds, and can deliver cash via Western Union in as soon as 24 hours at an interest rate reasonably competitive with the 10.6% 2010-2011 bonds.

3. Welcome to Housedaq 2000

Apparently, it's a buyer's market in Vegas, baby, Vegas, Toll Brothers (TOL) is cutting its outlook and Florida is becoming a speculators graveyard.

  • According to figures from the Las Vegas, baby, Vegas Sun:
    - A record number of resale houses - 18,467 in April - are on the market, along with another 4,000 new homes.
    - Resale houses are taking longer to sell - up to three or four months.
    - Builders are offering purchase incentives - including free lawn maintenance, swimming pools, washers and dryers - worth as much as $100,000.
    - Contract cancellations have reached 38% in some new subdivisions.
    - At least 30 houses are entering the market daily.
  • Toll Brothers this morning lowered its outlook for the year.
  • The sales warning is the company's third since November.
  • According to the Palm Beach Post, speculators in Florida are facing a familiar buyers' refrain: "They come, they look, they give a low-ball offer and they leave," the newspaper reported a "house flipper" said.
  • "We had a fantastic boom that was kind of unrealistic," he said. "It was like the Internet bubble."

4. Bird Flu: Backwater Hype or the New Plague?

So what's the deal? Is bird flu for real? Or just a serious disease for backwater countries with poor infrastructure and inferior health defenses?

  • The Houston Chronicle asks the skeptics: [Bird Flu is] a great story, a disease that can wipe out mankind as we know it," says Dr. Gary Butcher, a University of Florida veterinarian specializing in avian diseases. "Fortunately, the facts are contrary to what's being reported."
  • Meanwhile, last week the United Nations' chief pandemic flu coordinator confirmed that the flu virus known as H5N1 largely has been contained in Asian countries.
  • The H5N1 virus has killed nearly 57 percent of its 217 confirmed human carriers, but many say the key figure there is 217 - as in only 217.
  • Initial reports late last week were that World Health Organization investigators looking at the deaths of five Indonesian family members were unable to rule out human-to-human transmission, which would indicate the virus has mutated.
  • But here in the Ville, we're hedgers. On the one hand, we see the numbers - the probabilities are right now low that the virus will become a full-blown pandemic. On the other hand, we do note that the U.S. is sending a stockpile of the antiviral drug Tamiflu to Asia, a clear sign officials want to stop the spread of the disease and are taking it quite seriously.
  • See also: Minyanville Guide to Avian Flu

5. Bonjour! We are now prepared to tolerate you.

France on Monday announced a charm offensive to persuade foreign investors that there was never a better time to do business in the country, according to the International Herald Tribune.

  • Prime Minister Dominique de Villepin has announced a number of new measures designed to make the lives of foreign executives easier and hopefully spur foreign business and investment in the country.
  • One measure in the new package is the abolition of a "foreign trader license" that dates back to the days of Napoleon.
  • It required required foreign importers and exporters to go through a lengthy bureaucratic process, providing everything from a high school diploma to their latest vaccine report.
  • Customs forms will also be streamlined, reducing paper work by 30 percent and giving companies the option to fill in the forms online starting in 2008.
  • Foreign executives welcomed the new measures, but many said what they were really looking for were changes in the labor code and tax system.
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