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Five Things You Need to Know: Bernanke Says 'Sell Your Gold Jewelry for Cash' (Paraphrasing)


Bernanke said the Federal Reserve will "strongly resist" any surge in inflation expectations.


Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Bernanke Says There's Never Been a Better Time to Sell Your Gold Jewelry for Cash

Good news: Federal Reserve Chairman Ben Bernanke yesterday said the risk of the economy slipping into a "substantial downturn" has decreased in the past month. Of course, Bernanke made the comments in New York while standing on 44th and Lexington Ave. working "to pick up a little extra dough" by handing out fliers urging passersby to raise cash by selling their unwanted gold and silver jewelry to a pawnbroker, but that doesn't mean the Fed isn't serious about fighting inflation.

Bernanke said the Federal Reserve will "strongly resist" any surge in inflation expectations. Then he shoved a flier into my hands which read, "With gold prices near an all-time high, there has never been a better time to get rid of unwanted or broken gold jewelry."

This created a "conundrum" for me. I didn't really want the flier, but I also didn't want to appear rude and throw it away right in front of the guy. He is, after all, the Chairman of the Federal Reserve. Clearly, he must feel it is very important that I sell my gold and silver jewelry for extra cash. I mean, Ben Bernanke wouldn't be standing out here in a dark suit in this heat wearing a "Sell Your Gold Jewelry for Cash Now" sandwich board and pushing fliers for something he didn't really believe in.

I looked at the flier again. "I would have never imagined that a handful of mismatched earrings could amount to over $30.00, but it did!," read a testimonial by "Marci."

I had to admit, perhaps Bernanke and "Marci" had a point. Milk's nearly $8 a gallon, good luck finding a decent ear of corn for less than 75 cents, and did I really still need that thick, gold rope chain with the Kool Moe Dee medallion I bought back in 1987? I suppose I could use the extra cash. "I'll check this out when I get home," I lied as I folded the flier up and slipped it into my back pocket.

Bernanke continued to pass out the sell your gold jewelry fliers while noting that the pass-through of high raw materials costs "has been limited," in part because of softening domestic demand. Also, he added, did you know it takes 2.4 ounces of 10K gold and 1.714 ounces of 14K gold to equal one ounce of pure gold? I had to admit, I did not.

But what I really wanted to know was if it bothered him when people, instead of accepting the fliers, let them fall to the ground as trash the way so many seemed to be doing? He launched into an answer that I at first thought must be a parable of sorts, but which disappointingly turned out to be part of something he had apparently memorized about how the "unanchoring" of inflation expectations "would be destabilizing for growth as well as for inflation."

Man, I thought, It's tough to move this guy off message. But, in fairness, he was working.

2. Third Quarter Hiring Plans at Five-Year Low

Manpower Inc. (MAN), the temporary workforce provider, released its employment outlook survey showing its employment index fell to 12 for the third quarter, the lowest level since the fourth quarter of 2003. Manpower's index subtracts the percentage of employers planning to cut jobs from those who plan to add staff, and then seasonally adjusts the results.

As an aside, mining was the only industry that projected an increase in jobs.

3. USDA: Corn Harvest Will Drop 10%

Circling back to corn (and those pesky inflation expectations) for a moment, saw a Bloomberg story this morning detailing the U.S. Department of Agriculture corn forecast.

Farmers will produce 11.735 billion bushels of corn, down from 13.074 billion last year and a May forecast of 12.125 billion, the U.S. Department of Agriculture said, according to Bloomberg. The USDA also cut its estimate of inventories before the 2009 harvest by 12% to the lowest since 1996

The yield decline is due mainly to a combination of heavy rains an cooler-than-expected Midwest weather and a 20% jump in Soybean production.

Apart from the obvious impact on corn prices, why should we care about this? For one reason, corn costs directly impact the cost of feeding hogs. This affects processors such as Smithfield (SFD) and Pilgrim's Pride (PPC). Also, ethanol producers, such as Archer Daniels Midland (ADM), could see margins crimped by rising costs.

4. You Say Tomato, I Say Salmonella

More food fodder. While everyone by now has been warned to lay off Roma, plum and round tomatoes potentially contaminated by salmonella, USA Today has a story on the growing economic cost of the scare.

  • McDonald's (MCD) temporarily eliminated sliced tomatoes from their sandwiches and pulled fresh tomato salsa from Taco Bell.
  • Supermarkets have pulled the three tomato types the USDA is advising may be responsible. This includes Safeway (SWY), Wal-Mart (WMT), Winn-Dixie (WINN) and Whole Foods (WFMI).
  • And Sysco (SYY), the largest food-service distributor in North America, pulled the three implicated tomato types from its distribution chain on Saturday, USA Today reported.

Meanwhile, according to Reuters, the impact in Florida's economy, already battered by the real estate bust, could mean as much as $40 million worth of tomatoes go unsold. Florida is the largest tomato-producing state, with a crop valued at $500 million to $700 million annually, according to Reuters. The state produces more than 90% of the nation's tomatoes this time of year.

5. Socionomics of Debt: Stress Creating Health Issues

As social mood continues to build against debt, the national move toward savings and thrift continues with a renewed focus on the health problems associated with managing excessive debt.

When people are dealing with mountains of debt, they're much more likely to report health problems,according to an Associated Press-AOL Health poll detailed in USA Today.

Among people reporting high debt stress in the poll:

  • 27% had ulcers or digestive tract problems, compared with 8% of those with low levels of debt stress.
  • 44% had migraines or other headaches, compared with 15%.
  • 29% suffered severe anxiety, compared with 4%.
  • 23% had severe depression, compared with 4%.
  • 6% reported heart attacks, double the rate for those with low debt stress.
  • More than half, 51%, had muscle tension, including pain in the lower back. That compared with 31% of those with low levels of debt stress.
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