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Five Things You Need to Know: GD...p; Return of the Good Old Days; Return of the Interventionists; How Do You Think it Feels?; Traffic

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What you need to know (and what it means)!

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

1. GD...p

Gross Domestic Product rose at a seasonally adjusted 0.6% annual rate in the first quarter, below expectations for an increase of 0.8%.

  • Gross Domestic Product rose at a seasonally adjusted 0.6% annual rate January through March in the Commerce Department's revised estimate of first-quarter GDP.
  • This was the smallest quarterly increase for GDP since the third quarter of 2001 when the economy was in a recession.
  • While consumer spending was revised higher, imports and a drawdown in business inventories led to the downward revision to GDP.
  • U.S. imports rose 5.7%, more than double the 2.3% pace originally reported.
  • Business spending increased more than expected, however, rising 2.9% versus the 2% earlier estimated.
  • The bottom line is this report does little to impact the Fed's view going forward.
  • The three things to watch going forward are potentially weakening consumer spending, strengthening capital expenditures, and the impact of housing.


2. Return of the Good Old Days

An interesting article on Bloomberg this morning says S&P 500 stocks are 45% less expensive relative to historical profits than when the index last peaked in March 2000.

  • The S&P 500 gained 0.8% yesterday to close at 1530.23.
  • That level eclipsed the previous closing high of 1527.46 set back on March 24, 2000.
  • Meanwhile, according to Bloomberg article on valuations, estimated profit at companies in the S&P 500 at the end of the first quarter represented a yield of 6.53%.
  • That compares to 10- year U.S. Treasuries yield of 4.65%.
  • That 1.88-percentage-point spread was the biggest since 1986, Bloomberg said.
  • As of yesterday's close, the spread was 1.24 percent.


3. Return of the Interventionists

Frustrated by China's refusal to adjust the yuan at a faster pace, Senate leaders are close to finalizing legislation that would reverse the U.S.'s longstanding policy against direct currency intervention and manipulation.

  • The Senate bill will be introduced next month, according to the Financial Times, and will mandate the US Treasury intervene in currency markets if they become "fundamentally misaligned."
  • The US has not intervened in currency markets since 2000 and has thwarted co-ordinated action by European ministers at the G7, the FT said.
  • Why the fuss... why the demand for currency intervention?
  • U.S. lawmakers have accused China of manipulating its currency, subsidizing exports and refusing to crack down on piracy.
  • They contend China's mercantilist policies have cost American companies billions of dollars in sales and resulted in massive job losses in manufacturing.
  • Of course, the inherent danger in currency intervention is obvious, especially if one's currency is THE currency - the anchor currency, or reserve currency, or the international pricing currency - as the U.S. dollar has been for more than 30 years now.
  • We are, after all, a market economy, are we not?
  • Oh yeah, one last thing Congress and the Senate should consider.
  • If we're intervening in currency markets against the likes of China, Japan etc., we'll need some cash.


4. How Do You Think it Feels?

The battle over trade policy, the weak dollar and renewed calls for currency manipulation remind us of a time long, long ago, when we were the ones being accused of subsidizing our exports, unfairly manipulating our currency and implementing unfair trade practices. Ah yes, the good old days. Take a look:




5. Traffic

The Web site Alexa ("The Web Information Company") gathers and processes information about the Web, including traffic details and related data.

  • Visit the site and you can plug in any Web site URL, and if it's in the top 100,000 on the Internet you can see a chart of detailed traffic statistics going back a little more than five years.
  • The charts can be instructive. For example, take a look at the chart below.
  • That's a chart of E*Trade.com's daily page views over the past five years.
  • By comparison, take a look at the chart below.
  • That's a chart of the E*Trade Financial (ETFC) stock price over the same period.
  • Below are some additional traffic charts and stock charts worth pondering.
  • How is Ebay.com doing in terms of Alexa traffic rankings?
  • What about the stock?
    Ebay (EBAY) daily
  • Google's (GOOG) traffic rankings are interesting.
  • When compared to the stock chart over the same period.
    Google (GOOG) daily
  • Curious about WalMart's (WMT) holiday shopping season? Take a look at the spikes in traffic leading up to Christmas each year.
  • Minyan Garrett this morning sent us a chart of the gold and silver-focused website Kitco.com. Note the traffic peaks.
  • Compare the traffic rankings to the price of gold.
    Gold, daily
No positions in stocks mentioned.

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