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Five Things for Monday, May 18


Incoming Data Watch; OpenTable Tests IPO Appetites; FOMC Minutes and more.

1) Incoming! Data Watch for the Week Ahead

It's relatively quiet on the data front with just a couple of things to watch this coming week: Housing Starts this Tuesday, the Federal Reserve Open Market Committee Minutes on Wednesday and The Conference Board's Leading Indicators on Thursday. This Friday the bond market will close early ahead of Memorial Day.

Let's take a look at Housing Starts first.

Housing Starts are pretty widely viewed as a key gauge of economic strength. In simple terms, Housing Starts measures the number of new residential constructions projects during the month.

Why does it matter? While the recent run in the stock market may be indicative of a stock market bottom, most economists believe it will take a housing bottom before the economy turns around. But remember, the stock market and the economy are not the same thing. Homebuilders continue to suffer from a massive inventory overhang. If all housing starts halted today, it would still take more than two years to work through the inventory at the current pace of sales.

Current consensus estimates call for housing starts to be 523k compared to 510k the prior period. A more reasonable estimate is something south of 500k.

2) FOMC Minutes

On Wednesday at 2:00 the Federal Reserve will release the minutes of the most recent FOMC meeting from three weeks ago.

Why does it matter? Market participants will be paying attention to why the Fed added this new sentence, below, to its statement:

"The committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets."
The Conference Board's Leading Indicators

3) Leading Indicators

On Thursday, The Conference Board will release its economic leading indicators index, LEI.

Why does it matter? The index is composed of ten economic indicators that give a reasonable barometer of overall economic activity.

But be careful in how you view this report. Current estimates call for the LEI to come in at 0.8% compared to -0.3% from the prior reporting period, with most economists expecting something between 0.6% and 0.8%. If that range is correct, it would be the first gain in nearly a year, so the headline has already been written:

Leading Economic Indicators Point to Recovery!

Meanwhile, among the categories buried in the report is one called Real Money Supply. Real Money Supply since last August has been a significant contributor to the LEI even though we know that velocity has not increased.

4) OpenTable IPO to Test Appetites

Keep an eye on the Initial Public Offering market this week, particularly OpenTable (Nasdaq Symbol: (OPEN)). San Francisco-based OpenTable, an online restaurant reservations booking platform, is the first Silicon Valley Internet start-up to test the IPO waters since... well, since before any of us knew acronyms like ABCP, TALF, TARP, etc.

The company, which plans to raise $16.1 million, assuming a price of $13 per share, saw sales climb 36 percent in 2008 after adding restaurant partner relationships.

Here in NYC, OpenTable is my preferred choice for making restaurant reservations. It's free for the diner to use. Everything happens online; you can see available time slots and, best of all, no unpleasant dealings with snooty reservation takers on the phone, something that has always left a bitter taste in my mouth. Of course, in this, the Age of Austerity, the booked-solid restaurant is increasingly a thing of the past.

5) News & Weirdness

Indian Stocks Have Record Gain After Singh's Victory; Rupee, Bonds Surge - Bloomberg
How does a 17% gain in the Sensex in one day sound? Explains the T-Shirt I saw this morning: I Voted for Barack Obama and All I Got Was This Stinking Stock Market.

Madoff "Victims" Investigated - ($)WSJ
Jeffry Picower and Stanley Chais, two philanthropists who invested heavily with Mr. Madoff, and Carl Shapiro, one of the money manager's oldest friends, are among at least eight Madoff investors and associates being scrutinized by the U.S. attorney's office in Manhattan. A civil lawsuit alleges Picower and Chais sought better returns than thousands of other Madoff investors, in some cases their returns reaching 300% or 950% a year.

Hearing Today Will Examine How Donald Trump Values His Empire
- ($)WSJ
According to height.

Wal-Mart (WMT) Makes Push to Compete Against Best Buy (BBY) and Amazon (AMZN) in Electronics - ($)WSJ
Retailer hopes to capitalize on an increase in (formerly) affluent shoppers now turning into Wal-Mart shoppers.

Department of Fail: For the Wealthy, Evolving in a Recession - NYT
Worth Magazine, started by Fidelity Investment in 1992, hopes to focus on issues affecting the rich, such as the pitfalls of philanthropy, all the while becoming more of a "luxe" magazine, with matte paper and artsy covers. Good luck with that.

Deflation Watch:
Japan's Special Melons only $5,200 a Pair - MSNBC
Sounds pricey. But last year's winning bid was $26,000. In 2007 the winning bid was $20,000.

Hotel Crimes Rise in Recession
- USA Today
It's much safer to sleep in your car.

Economy Limiting Services of Local Police - USA Today
Ooops! Perhaps we should take our chances with the hotel after all.

Suze Orman Is Having a Moment - NYT Magazine
Suze is just like us, except for the getting-out-of-disastrous-debt-by-scoring-a-client-who-paid-us-$250k-in-one-month-part, but other than that, she's one of us.
No positions in stocks mentioned.

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