Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Five Things You Need to Know: Fannie Loses Free Lunch, Copper, Ethanol, Hummers and Five Men Named Slim


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. No More Free Lunch for Fannie, Freddie; Cost of Doing Business to Rise

  • In July the Federal Reserve will stop providing intraday credit to Fannie Mae (FNM) and Freddie Mac (FRE).
  • The Fed two years ago said it would end an agreement to provide credit to the government-sponsored enterprises (GSE's) for payments on their debt securities made through the central bank.
  • Those payments have been as much as $80 billion a day.
  • A report on the New York Fed's Website, "Alternative Arrangements for the Distribution of Intraday Liquidity," says that intraday credit "indirectly'' boosts money in the banking system.
  • What that means is that banks will now have to borrow more from the Fed to meet their own funding needs.
  • "Once the Fed discontinues its provision of daylight credit to the GSEs, the overall amount of intraday funds is likely to shrink,'' report author James McAndrews wrote. "As a consequence, the average cost of intraday liquidity for banks may well rise as banks make greater use of daylight overdrafts and incur the associated fees.''

2. New Copper High on Own Supply Woes

BHP Biliton Ltd. (BHP) today said demand for copper continues to outpace current supplies due to production restraints and disruptions.

  • Melbourne Australia-based BHP Biliton is the world's largest mining company.
  • John Crofts, BHP's base metals marketing director, said a copper surplus many expected to show up later this year or in early 2006 looks increasingly doubtful for 2007.
  • Copper prices have doubled from levels of a year ago and this morning reached a new high, above $3.50 a pound.
  • Copper prices have risen by 60% this year alone.
  • An escalation in the volume of speculative trading, and the growing use of commodities as a diversification for pension funds away from equities and bonds, has contributed to the price increase.
  • Investments in commodities may reach more than $120 billion by 2008 from $80 billion last year, Barclays Plc estimated last month.
  • Crofts said he can't predict when demand from investment funds will end.

3. Brazilian Ethanol Program a Model for China

China is seeking a possible trade deal with Brazil that would allow it to replicate that country's success with ethanol, the Asia Times reports. Why Brazil? Read on, McDuff.

  • In 1975, Brazil imported about 85% of its oil needs.
  • Now, Brazil is one the world's largest ethanol producer and its ethanol program is the largest commercial application of biomass alternative energy use in the world.
  • China, with its reported 10% growth rate and increasing crude oil imports, recognizes it must find a way to reduce its reliance on imported energy.
  • According to a 2004 report, Brazil's ethanol program over the course of 22 years resulted in hard currency savings of $1.8 billion USD per year and replaced 200,000 barrels of gasoline per day.
  • For Brazil's ethanol program to be cost effective, it was estimated in 2004 that the price of oil needed to be around $30/bbl. Today crude oil is $71/bbl.

4. Between the Haves and Have Nots, a Hummer Idles

Despite oil priced over $70 a barrel, General Motors said sales of its Hummer SUV were up 231 percent in April.

  • What is wrong with people, don't they know gas is approaching record highs?
  • According to a story from the Baltimore Business Journal, Larry Tyne, a Hummer salesman at a dealership near Baltimore says, "Sales are just fine because the people who are buying them aren't concerned about gas prices."
  • National Hummer sales nearly tripled from 2,220 sales in March 2005 to 6,125 in March 2006, according to research by Autodata Corp.
  • Meanwhile, JD Power & Associates said 25% of the vehicles sold this year from January to March were eight-cylinder engine vehicles.
  • The Hummer full-size SUV gets about 13 miles per gallon.
  • A person who drives an average of 40 miles per day will spend $3369 a year in Hummer fuel costs.
  • By comparison, a person who drives an average of 40 miles per day will spend $973 a year in VW Jetta fuel costs.
  • Bottom Line: The Hummer is a way of saying, "I can afford the gas."

5. Minyanville Takes "A Closer Look" at Five Slims You Need to Know

This morning it occurred to us that we need one more thing to make today's "Five Things You Need to Know..." not "Four Things You Need to Know..." So we asked ourselves, "Why are there so many famous people named "Slim"? The answer is, we don't know. Be that as it may, below are Five Slims You Don't Necessarily Need to Know, But Which Might Be Useful in the Context of a Weird Trivia Game.
  • Iceberg Slim: Born Robert Lee Maupin, Iceberg Slim was a former pimp-turned-writer whose books were popular in the early 1970s. His first work, Pimp: The Story of My Life, was a fictionalized autobiography.
  • Carlos Slim: The world's third richest man, Carlos Slim has a fortune reported to be worth $30 billion, and which includes a Latin American Telecom empire. Lately, he has been traveling Mexico preaching economic reforms, though he is not a candidate in the upcoming July 2 presidential election.
  • Memphis Slim: John Chatman was a world famous blues pianist from, naturally, Memphis. Like Carlos Slim, Memphis Slim was not a pimp. He was reportedly "a big man with a big voice" so the name Memphis "Slim" was likely a product of late night irony.
  • Vanilla Slim: Bob Armstrong's memoir about his life as a white pimp in San Francisco.
  • Filmore Slim: Former pimp-turned blues singer Clerence Sims, also starred in the 1999 documentary American Pimp.


Minyanville contributors may trade securities that are discussed on the site, both before and after the articles are published and/or may have a position in such securities for either personal or firm account(s). Minyanville contributors will indicate whether he or the firm has a position in stocks or other securities in any of the companies he discusses in an article. He will not disclose his or the firm's ownership of any securities issued by companies that are not discussed in an article. The disclosures will be accurate as of the time of publication of an article and may change at any time thereafter without notice to the reader.

The information on this website reflects an analysis of market conditions by Minyanville contributors and should not be interpreted as or deemed to be a recommendation to any investor or category of investors to purchase, sell or hold any security. Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Minyanville contributors will not respond to requests for individual and specific investment advice.

The views expressed on this website are solely those of the writers whose articles appear on this site and do not necessarily reflect the views of the Fund or of any other person except where expressly indicated.

Copyright 2006 Minyanville Publishing and Multimedia, LLC. All Rights Reserved.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos