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Five Things You Need to Know: NAHB, Facial TIC, Diet Deflation Pepsi, What I Own, She Don't Lie... Cocaine


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. NAHB Housing Index

The key piece of data today will be the NAHB Housing Index scheduled for release at 1 p.m.

  • According to the NAHB Web page, the Housing Market Index is based on a monthly survey of NAHB members designed to take the pulse of the housing industry, especially the single-family industry.
  • The HMI is a weighted average of separate diffusion indices, calculated for three key single family series in the survey:
    - Present Sales of New Homes
    - Sale of New Homes Expected in the Next 6 Months
    - Traffic of Prospective Buyers in New Homes
  • The first two items are rated on a scale of Good, Fair and Poor and the last is rated on a scale of Very High to High, Average and Low to Very Low.
  • If all respondents answer "Good/High" then the index is 100.
  • If all respondents answer "Poor/Low" then the index is 0.
  • If equal numbers of respondents answer "Good/High" and "Poor/Low" then the index is 50.
  • Consensus expectations are for a reading of 31.
  • The HMI became a widespread datapoint for trading radars after a recent report from Merrill's David Rosenberg noted the increased .79% correlation between the HMI and the S&P 500 on a 12-month lag. See the original note here in Five Things Number 5 from August 21.


2. Net Foreign Purchases of Securities

International investors slowed purchases of U.S. securities in July and demand for Treasury notes fell markedly, the Treasury Department reported in their monthly Treasury International Capital (TIC) System report.

  • Net holdings of Treasury notes, corporate bonds, stocks and other financial assets increased $32.9 billion, down from June's revised $75.1 billion and smallest gain since May last year, the Treasury Department said, according to Bloomberg.
  • The investments were insufficient to cover July's $68 billion trade deficit.
  • Purchases of Treasury securities rose a net $6.6 billion, the least since April, down from $27 billion in July.
  • Agency debt rose $18.5 billion, compared with $22.9 billion a month earlier.
  • Caribbean banking centers raised net holdings to $68.9 billion, Bloomberg said.

3. Diet Deflation Pepsi

PepsiAmericas Inc. (PAS) this morning cut its earnings outlook for the full year 2006 due to lower-than-expected net pricing and a higher cost of goods sold in its U.S. business.

  • It looks like a minor release in the grand scheme of things. PepsiAmericas is, after all, the number two bottler of PepsiCo (PEP).
  • But the company this morning cut earnings outlook for the full year due to two important reasons:
    1) Lower-than-expected net pricing
    2) Higher costs of goods
  • In the first instance, the company cited increased sales of lower-margin packaged products - 12, packs, 18 packs, bulk packaged goods - which carry lower margins than single serve beverages.
  • In the second instance, the company said they are simply facing a higher cost of goods sold in the U.S.
  • The company said they see worldwide net pricing up 1 percent going forward, but costs of goods sold rising 4 percent.
  • That spells pricing power - a lack of it.
  • It is also how inflation sows the seeds for deflation.

4. Here is a List of All the Stuff I Own

Somewhere between "Keeping Up With the Joneses" and "The One With the Most Toys Wins" lies the Web site, a social "networking" site devoted to lists of the possessions of young consumers.

  •, a new Web site devoted to lists of everyday possessions of young consumers, went live last Tuesday the New York Times reported, and somehow has compiled a user base of some 4 million people since January when its private Beta test began.
  • Zebo is in many ways a social networking site, the Times says, with several of the same features as MySpace.
  • While billing itself as "the world's largest repository of what people own," is designed to be a shopping community and e-commerce site, the Times reports.
  • There are member profiles that include each user's relationship status, interests and location, along with photographs and links to their friends.
  • Members can also fill in blanks on their profiles about their "celebrity style" and the shopping areas in which they feel they need improvement, the Times says.
  • The Times notes that "people don't normally compile a list of their possessions for reasons other than to file an insurance claim or to compose a rap song - unless they are extreme materialists."
  • "For the youth, you are what you own," Zebo founder Roy de Souza said. "They list these things because it defines them."
  • Funny, we always thought you are what you eat.

5. She Don't Lie, She Don't Lie, She Don't Lie...

Last week a new energy drink called "Cocaine" (I swear) was spotted in various party locales in New York City during Fashion Week.

  • Cocaine Energy Drink boasts the highest energy content of any energy drink on the market today, according to their Website.
  • They say the beverage contains 350% more than Red Bull!
  • Mysteriously, though, they fail to detail 350% more of what.
  • According to the New York Post, the drink's inventor, Tony Montana Jamey Kirby, says the drink contains a throat-numbing ingredient designed to emulate the drug itself.
  • How energetic is the new Cocaine Energy Drink?
  • So energetic the beverage is able to create and control its own profile page!
  • The drink company's slogan is - "Cocaine - Instant Rush. NO Crash!"
  • Just like the stock market.

Say hello to my little friend.

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No positions in stocks mentioned.

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