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Five Things You Need to Know: Very Right or Very Wrong, In Debt We Trust, We're Makin' Money... for The Man, Adios Dollar, Close Shave


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. Very Right or Very Wrong?

Minyanville Professor Bennet Sedacca this morning on the Buzz and Banter notes that recent Commitment of Trader's data shows commercial (the so-called smart money) accounts getting very short the 10-year Treasury note futures contract.

  • Take a look at this chart, courtesy Bloomberg, of commercial positions in the 10-year Treasury futures contract showing a very large short position.
  • According to Sedacca, "I do not recall a time in the past five or six years that commercials have made this big of a bet and not been proven correct."
  • "Someone is going to be very right and someone is going to be seriously wrong," he added.
  • What is it they see? Some sort of re-acceleration in inflation from economic activity or a potential buyer's strike on the part of foreigners, Sedacca asks?
  • Bill Gross sees a bull market for bonds continuing, however, according to Sunday's New York Times.
  • "A typical bull market in bonds has been about 250 basis points, 2½ percent," he said. "So were this to follow historical parameters, you might see the 10-year fall from 5¼ to as low as 3 percent at some point, maybe in 2008."
  • Meanwhile, the inverted yield curve continues to be... inverted. The 10-year/Fed Funds spread is now at negative 50 basis points.
  • That's right where it was in August 2000, Merrill's David Rosenberg notes.

2. In Debt We Trust

The 45 million young people in the nation's work force today face a choppy job market in which entry-level wages have often trailed inflation, making it hard for many to cope with high housing costs and rising college debt loads, the New York Times reported.

  • Entry-level wages for college and high school graduates fell by more than 4 percent from 2001 to 2005, after factoring in inflation, according to an analysis of Labor Department data by the Economic Policy Institute, the New York Times article said.
  • Median income for families with at least one parent age 25 to 34 fell $3,009 from 2000 to 2005, sliding to $48,405, a 5.9 percent drop, after having jumped 12 percent in the late 1990's.
  • As well, far more college graduates are borrowing to pay for their education, and the amount borrowed has jumped by more than 50 percent in recent years, largely because of soaring tuition, the Times said.
  • Just one-third of workers with high school diplomas receive health coverage in entry-level jobs, down from two-thirds in 1979.
  • Mark Zandi, chief economist at Moody's, told the newspaper that it was surprising how deeply young workers were going into debt to maintain the living standards they want.
  • While everyone by now knows that we've had a negative personal savings rate in the U.S. for 16 consecutive months, this little nugget is quite shocking: For households under 35, the saving rate has plunged to negative 16 percent.

3. We're Makin' Money... for The Man

During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. Yet over the same period the median family's income slid by 2.9%, according to the BBC.

  • The recent five-year figures are a stark contrast to the gains seen in the second half of the 1990s, the BBC noted.
  • In the five-year period ending in 1999 the median family income gained 11.3%.
  • The Economic Policy Institute, a liberal research group, suggest that the weak employment and wages situation is due to the low minimum wage and waning labor union influence.
  • However, the BBC notes, the downward pressure on wages is likely coming from other sources. Among them: immigration and globalization.
  • There's also productivity to consider. Productivity, which is the measure of the output of the economy per worker employed, grew by 16.6% during the five years between 2000 and 2005.
  • Looks like we're working our way right out of a job!

4. Adios, Dollar

Brazil and Argentina have taken this week the first effective step since the foundation of Mercosur in 1991, towards the creation of a common currency, a project aimed at not using the US dollar as a bilateral interchange currency, the Dominican Republic News reported.

  • Brazil and Argentina have taken steps toward the creation of a common currency, a project aimed at not using the US dollar as a bilateral interchange currency.
  • Starting 2007 their bilateral interchange will be compensated in pesos and reales.
  • Both Ministers said the protectionism shown in world commerce, forces the South American countries to protect their own, hoping this pilot program will integrate other Mercosur partners.
  • Mercosur was created in 1991 to promote free trade among Brazil, Argentina, Uruguay, Paraguay and Venezuela.
  • Meet your new friend, America. The Wheelbarrow Wallet.

Salude a su nuevo amigo, la carpeta de la carretilla, Americanos.

5. Close Shave

Shaving less than once a day could increase a man's risk of having a stroke by around 70%, researchers have found, according to the BBC.

  • The link between needing to shave infrequently and stroke risk emerged from a 20-year study of over 2,000 men aged 45-59 in Caerphilly, South Wales, the article said.
  • Well, maybe people don't shave as much because they wanna look all stubbly and scraggly... like Toddo... or Don Johnson from Miami Vice?
  • Sorry, turns out the study began in the late 70s when the prevailing trend was to be clean-shaven, so infrequent grooming is unlikely to be due to a desire for designer stubble.
  • Researchers from the University of Bristol say it is more likely to be because a man needed to shave infrequently, due to having less testosterone in their bodies.
  • It was also found that 45% of men who shaved less frequently died from all causes during the course of the study, compared to 31% of daily shavers.
  • We're not sure what all this means, but if you stop by MVHQ over the next week or so expect to see a bunch of clean-shaven men.

This cooling shave

will never fail

to stamp

its user

first-class male

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