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Five Things You Need to Know: Where's the Inflation?, Countrywide Slowdown, China Does Europe, Big Brother is Watching, Meet the Mets!


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. Where's the Inflation? Exactly.

The Consumer Price Index increased 0.2 percent in August, in-line with expectations, the Bureau of Labor Statistics reported today.

  • August's 0.2% gain follows a 0.4% gain in July.
  • Prices excluding food and energy rose 0.2%, the same as July.
  • Energy prices rose a mere 0.3% in August, after a 2.9% rise in July.
  • Owners' Equivalent Rent, which makes up 23.4% of CPI, was also lower than most expectations at 0.3% versus 0.4% expected.
  • Treasury's were bid higher after the release.
  • The US Dollar Index (DX/Y) was higher as well.
  • So, where's the inflation? That's precisely our point.

2. Countrywide (slowdown, that is)

Countrywide Financial (CFC) said Thursday that mortgage loan fundings in August fell 24 percent year-over-year to $40 billion, due to the slowdown in the housing market.

  • Average daily mortgage loan application activity for the month fell 17 percent to $2.6 billion.
  • More worrisome, the mortgage loan pipeline totaled $64 billion at Aug. 31, down from $78 billion a year earlier. That's an 18% slide.
  • Their mortgage loan servicing portfolio totaled $1.2 trillion at month-end, up 20 percent from the prior-year period.
  • The $40 billion was an increase over July, however, when it funded $36 billion.
  • Mortgage loans for consumers buying homes fell to $19 billion in August, from $25 billion in August 2005.

3. China Does Europe

The European Union replaced the United States as China's biggest trading partner last year, according to Xinhua's China View News.

  • The EU has replaced the United States as China's biggest trading partner last year, according to Xu Kuangding, Chairman of the China Federation of Industrial Economics (CFIE).
  • Xu's remarks came in a speech delivered at the second Hamburg Summit -- "China meets Europe."
  • Xu said Sino-European trade, with a volume of 217.3 billion U.S. dollars, has exceeded the Sino-U.S. trade volume by some 5.7 billion dollars.
  • European companies such as Airbus, Siemens, Nokia and Volkswagen, made the EU the fourth largest investor in China and China's most important supplier of technology.

Sure, Europe may have replaced us as China's most important supplier of technology, but I'd like to see them try and replace us as China's most important supplier of these:

4. Big Brother is Watching

The resignation of Hewlett-Packard's Chairwoman Patricia Dunn following an HP board of directors spying scandal may have directors across the country questioning whether they should trust their chairs.

  • With increasing regularity, companies are relying on surveillance to monitor everyone in the firm, from cubicle to corner office to boardroom, according to Forbes.
  • More than 75% of employers monitor their workers' Web site connections, according to a survey by the American Management Association and ePolicy Institute.
  • About half of all workplaces store and review computer files.
  • And 36% track keystrokes and the time spent at the keyboard.
  • In this age of high-tech surveillance, how do you protect your sensitive conversations and computer data from corporate snoops?
  • Below are some Minyanville privacy tips:
    - Always look over your shoulder to make sure no one is standing over it .
    - Most "experts" say you should use a password that is difficult for others to guess. But that is exactly what hackers and surveillance experts are expecting you to do. Instead, use a password that is easy to guess.
    - Shred all documents as soon as they arrive and before they are opened. Remember, if you can see it, a surveillance expert can see it.

5. Meet the Mets!

Yesterday afternoon we learned that the future of the market hinges on one thing: The New York Mets:

Dear Minyanville-

Your comments about deflation and the direction of the market are very compelling, but did you ever notice that the years in which the NY Mets played in the World Series proved to be important turning points in the market?

If you had sold the market on Friday in the first week of November after the NY Mets played in the World Series, you would have very impressive results:

1969NY Mets vs. Baltimore Orioles
Sold on 11/7/69 Closing Dow 860.48, Market high 871.77, Market Low 627.44 on 5/29/70 – potential 27% gain, tiny draw down

1973 NY Mets vs. Oakland A's
Sold on 11/3/73 Closing Dow 935.28 , Market high 971.25, Market Low 573.22 on 10/4/74 – potential 38% gain, 4% drawdown

Sal Bando

1986NY Mets vs. Boston Red Sox
(This one required excellent money management rules )
Sold on 11/7/86 Closing Dow 1774.18, Market high 2746 in Aug '87, Still the Market did make a low @ low 1616 on 10/87 – 8.8% gain, whopping draw down if no money mgmt.

2006? It sure looks like the Mets are going to make it into the world series – can't wait.

Best regards,
Minyan Joe

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