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Five Things You Need to Know: Boom Over, 50 Basis Points, RUBLE not Rubble, Hindi Rider, Orgasmatron


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. Good News! Economic "Boom" Over.

In the linear world, we could conclude that today's "weak" jobs report is just what equities and bonds needed.

  • Headline: "Jobs Growth Falters in May; Futures Bounce On Fed Rate Hike Pause"
  • True enough, the 75,000 jobs created in May was apparently the lowest since last October. Also, job gains in February and March were revised lower.
  • This is all seen as "good" news for financial markets because it allows the Fed room to "cut rates" at the next meeting, and causes a bit of unwind in Fed Funds futures, which as of last night were pricing in a better than 70% probability of another 25 basis points hike.
  • Wait, did you say "cut rates"?
  • Yes. When you're in a cycle where 16 consecutive 25 basis point rate hikes becomes the norm, a pause at 17 is as good as cut in our book.
  • Meanwhile, despite the new probabilities that the Fed indeed takes a "breather" at 17, look for the coming shift in inflation expectations to shift to outright deflation concerns as the housing unwind continues.

2. 50 Basis Points

The Economic Cycle Research Institute index of eurozone inflation showed underlying price pressures in the euro zone have reached a 5-1/2 year high.

  • The institute's Eurozone Future Inflation Gauge (EZFIG) rose to 103.4 in April from March's 102.2.
  • The ECRI inflation index reportedly attempts to anticipate cyclical swings in inflation rates by measuring underlying inflationary pressures, rather than actual inflation rates.
  • Eurozone consumer prices, reported earlier this week, showed annual euro zone inflation at a higher-than-expected 2.5 percent in May.
  • Although everyone expects the ECB to raise rates at its meeting next week (June 8), there is growing speculation, namely, by us, that the data is suggesting the ECB hikes by a greater-than-expected 50 basis points.
  • On a somewhat related note, the ECRI also has a similar inflation index for Japan. And surprise, surprise, it was flat at 98.6, and actually down from February's eight-year high of 98.9 - which isn't saying much.

3. Russian Rubble Rises to Six-Year High

According to a report from Bloomberg, Russia's rubble has risen to a six-year high.

  • For reasons that remain unclear, rubble in Russia has risen by nearly 7 percent compared to...what? Hold on just a second, MV Staff is saying something to me.
  • What! What! I told you never to interrupt me when I'm doing Five Things. What is it!
  • Oh. Yes, I see what you mean. I agree. It is a little embarrassing, yes.

3. Russian RUBLE rises to Six-Year High

According to a report from Bloomberg, Russia's RUBLE has risen to a six-year high.

  • The Russian RUBLE has risen to a six-year high against the dollar.
  • The RUBLE has risen almost 7 percent against the dollar this year, while it has fallen a little more than 1 percent against the euro.
  • Although the Bloomberg article indicated the Russian central bank is seeking a stronger currency to curb inflation, an article from the Moscow Times earlier this week caught our attention:

    Wednesday, May 31, 2006

    Currency Controls to Be Scrapped

    By Artyom Danielyan and Gleb Bryanski

    The Central Bank said on Tuesday that it would scrap currency reserve requirements and special accounts on July 1 in a further step toward Russia's goal of making the ruble fully convertible. President Vladimir Putin this month gave the government until July 1 to complete its work on ruble convertibility.

  • What is currency convertibility? Convertibility refers to the ease with which a currency can be converted into another currency... or even (gulp) gold.
  • For many, many years, the RUBLE has been inconvertible, not traded outside of Russia.
  • Russian President Vladimir Putin had previously set a goal of RUBLE convertibility by Jan. 1, 2007, but recently moved it forward to July 1.
  • The major restrictions on the RUBLE still in place affect foreign loans to Russian companies and foreign investments in Russian securities.
  • Of course, inflation remains a significant barrier to true convertibility that is not strictly "formal." In other words, simply removing convertibility restrictions is not enough to stimulate convertibility in terms of foreign demand.
  • What might stimulate foreign demand? Hmmm, a weak or unstable dollar might stimulate demand.
  • Also, did you catch this item from last week? The Russian Trading System, Russia's premier stock market, announced Monday that it would start trading in gold, oil and oil products on June 8, according to Novosti.

Russian rubble, not RUBLE

4. A Man Went Looking For India... and Couldn't Find it Anywhere.

Pulled into Bangalore, was feeling 'bout half-past dead. Just need some place, where I could lay my head. "Hey, mister, can you tell me, mujhe kahan jaana chahiye to find a bed?"
He just grinned and shook my hand, and "Nahin!", was all he said.

  • India has 500 million hippies people under the age of 25 who want to head out on the highway, looking for adventure and whatever comes their way. Harley Davidson has a plan to profit from it.
  • Harley executives have been holding discussions with Indian officials, looking to get past the two major barriers to the motorcycle manufacturer entering India - strict emissions standards and extraordinarily high tariffs of more than 90%.
  • Harley Davidson, which reported global revenues of $5.34 billion in 2005 and net income of $960 million, has been focusing on foreign markets (it recently opened a dealership in Beijing), and CEO Jim Ziemer has said that he believes international sales growth will continue to outpace domestic growth.
  • According to the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales increased by 17.1% in 2005 and reached 5.8 million units, representing a market of nearly $4 billion, according to the Asia Times.
  • What the Harley Davidson brand might represent to Indians remains unclear. In America, it represents freedom. But, according to George Hanson, representing freedom and actually being free are two different things. "I mean, it's real hard to be free when you are bought and sold in the marketplace," Hanson said. "Of course, don't ever tell anybody that they're not free, 'cause then they're gonna get real busy killin' and maimin' to prove to you that they are. Oh, yeah, they're gonna talk to you, and talk to you, and talk to you about individual freedom. But they see a free individual, it's gonna scare 'em."

Hindi Angels?

5. Orgasmatron

Today is the first, and probably the last, time that Minyanville's Five Things will use the word "orgasm" in a sentence.

  • Dr. Stuart Meloy, while working on a device to treat chronic pain (yeah, right), accidentally discovered that the pain relief device can also cause an orgasm in female patients.
  • According to ABC News, Dr. Meloy said, "The device is the use of a pre-existing device called a spinal cord stimulator," he said. "Instead of treating chronic pain with the stimulator, we're treating orgasmic dysfunction," he said.
  • Meloy conducted a study of 11 women, six of which had never experienced an orgasm before and submitted his results for publication to the Journal of the American Society of Anesthesiologists. Also, Penthouse Forum.
  • Meanwhile, a Texas company also claims to have invented a kind of Orgasmatron for women.
  • Unfortunately, the device does not actually produce an orgasm the way Dr. Meloy's device does, it just gets a woman ready for an orgasm, the company claims. Bo-ring!

Orgasmatron Orgasm Addict

No positions in stocks mentioned.

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