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Five Things You Need to Know: Don't Take it Personal, Snow, Dr. Evil, Jet Streamin', Remember


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. Personal Income / Spending Data today

Released at 8:30amET
Personal Income (April) was 0.5% vs 0.7% cons
Personal Spending (April) was 0.6 vs 0.6% cons
PCE Deflator (YoY) was 2.9% vs 2.9%cons
PCE Core (MoM) was 0.2% vs 0.2% cons
PCE Core (YoY) was2.1% vs 2.1% cons

Released at 8:30amET Personal Income (April) was 0.5% vs 0.7% cons Personal Spending (April) was 0.6 vs 0.6% cons PCE Deflator (YoY) was 2.9% vs 2.9%cons PCE Core (MoM) was 0.2% vs 0.2% cons PCE Core (YoY) was2.1% vs 2.1% cons
  • PCE Deflator is something the Fed is watching closely, and is its preferred inflation indicator.
  • PCE is the amount of money individuals spend on goods and services. It's also the single largest component of GDP.
  • Difference between CPI & PCE Deflator? According to the BLS the difference between the two is the formulas used. The CPI is computed using a Laspeyres index and the PCE Deflator is computed using a Fisher Ideal index. I'll be honest, I don't know what the heck that means.
  • The two indexes also have different underlying concepts. The BLS product measures the prices paid by urban consumers, while the BEA product measures the prices of final consumption goods, wherever they are purchased.
  • Basically, we want to see how closely the PCE Deflator matches up with the CPI. If the recent unexpected increase in core CPI were matched by a stronger than expected PCE Deflator then inflation would appear to be more of a reality. PCE and deflator increases were in-line with expectations.
  • Bernanke told the Joint Economic Council on Wednesday that the core CPI is more stable than prices overall.
  • Markets reacted favorably to the report, even with everything being near cons.

2. Snowfall in June?

WSJ Online yesterday afternoon reported that Treasury Secretary John Snow is set to leave his post after the G8 meetings in Russia June 9-10

  • The report said the Bush administration had closed in on choosing Snow's successor.
  • President Bush last night said Snow had made no mention of resigning and that he's doing a fine job.
  • Snow replaced Paul O'Neill in Feb '03 and the White House is said to want a more effective salesman for the president's economic policies
  • To this day, nobody has ever seen John Snow and Peter Boyle in the same room at the same time.
  • Names mentioned to take over the position include:

    Stephen Friedman, former chief exec at Goldman Sachs and director for Bush's National Economic Council

    Don Evans, Bush's former commerce secretary and good friend

    David Mulford, U.S. ambassador to India and former undersecretary for international affaris at the Treasury during George H.W. Bush's tenure.

    Robert Zoellick, Deputy Secretary of State is considered a long shot and has made it known if he doesn't get the job he will leave his post for Wall St. He was reportedly seen touring Merrill Lynch offices recently.

3. Dr. Evil would be proud

$1.5 bln and $1.4 bln (that's beeelion). Those are the paychecks believed to be brought home by hedge fund managers James Simons and T. Boone Pickens last year, according to Institutional Investor's Alpha magazine.

  • Hedge fund returns in '05 were about 9.2%, double the S&P 500 and about the same as '04.
  • Average pay for the top 26 hedge fund earners climbed 45% in '05 to $363 mln.
  • Goldman Sachs' Henry Paulson was the highest paid Wall St exec, earning $38.3 mln in salary, stock and options, a 28% increase from '04.
  • Ladies and gentlemen, this morning's Top 10 List…

    1. James Simons $1.5 bln Renaissance Technologies
    2. Boone Pickens $1.4 bln BP Capital Management
    3. George Soros $840 mln Soros Fund Management
    4. Steven Cohen $550 mln SAC Capital Advisors
    5. Paul Tudor Jones $500 mln Tudor Investment
    6. Edward Lampert $425 mln ESL Investments
    7. Bruce Kovner $400 mln Caxton Associates
    David Tepper $400 mln Appaloosa Management
    9. David Shaw $340 mln D.E. Shaw
    10. Stephen Mandel $275 mln Lone Pine Capital

4. Would you like to see a desert menu?

According to the AP, deserts around the globe are expanding due to jet stream shifts.

  • I know, I know. Global warming is nothing new, but I found it interesting that over the past 25 years, the two jet streams have moved about 70 miles closer to the Earth's poles, widening the tropics by 140 miles.
  • Deserts in the American Southwest, southern Australia and the Mediterranean basin are expanding and creeping toward populated areas. Droughts that affect the Sahara could begin affecting the Mediterranean area.
  • To our surprise, Iceland is green and Greenland is full of ice.
  • Time to get a camel. Great, that means another market where you'll have to ask yourself, "to buy or rent?"

5. Time to remember those who died for you

Everyone is well aware that Monday is Memorial Day and the long weekend it brings along is the unofficial start to the summer.

  • Memorial Day is a day of remembrance for those who have died serving our nation in the Armed Forces and was originally called Decoration Day and is always the last Monday in May.
  • According to The Hirsch Organization, the markets have a negative bias leading up to Memorial Day and a positive bias afterward. Average movement of the DJIA since '90 on the Friday before: (0.16%).
  • About 84% of Americans will be hitting the road this Memorial Day Holiday says the Automobile Association of America. And about 21 mln people will take to the sky according to the Air Transport Association.
  • Be prepared to wait in lines, whether on the road or in the airport, and don't complain. By choosing to travel on busy holidays you lose all complaining privileges.
  • Thinking I accidentally walked into a tryout for a Village People cover band last night with so many in uniform at the bar, I was reminded that it's Fleet Week here in NYC. If you're near NYC, I recommend checking out some of the ships.
  • Also this weekend? NCAA Lacrosse Championship weekend. It's the only sport that has D1, D2 & D3 championships all at the same venue in the same weekend. Meehan's (resident MV lacrosse correspondent) pick? He thinks UVA finishes off an undefeated season over a surprise UMass team on Monday. Salisbury brings home its 4th consecutive D3 title.
No positions in stocks mentioned.

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