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Five Things You Need to Know: Big Brown Triple Crown? Or Big Brown Triple Crayon?


Tomorrow we will likely see the first Triple Crown winner in 30 years; the rush to cash in is on.


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

1. Central Bank "Surprise" Hammers Dollar

The FT reports that "in a surprise move," the European Central Bank signaled it was preparing for a July quarter percentage point increase in its main interest rate, which has stood at 4% for a year. Consider this a warning shot across the bow.

Interestingly, it follows on the heels of Richmond Federal Reserve President Jeffry Lacker's recent comments in Europe questioning the Federal Reserve's policy of creating lending programs to securities firms. This is likely behind the rise in the dollar today, not the employment report.

Prior to this hawkish statement by the ECB, interest rate expectations globally were (and in many places continue to be) falling. We believe any program of rate increases by the ECB will likely be taken away by year's end.

2. Echo Effect Part Two

Job losses in U.S. continued for a fifth month and the unemployment rate increased by half a percentage point to 5.5%, the largest rise since 1986, according to data this morning from the Labor Department.

The report showed the pace of factory job losses slowed with just 26,000 jobs lost, compared to 49,000 in April, but service industry job gains also slowed, more than offsetting factory loss improvements, adding just 8,000 versus 72,000 in April.

It will be tough to pull Goldilocks out of this report. In fact, it further emphasizes the echo effect Five Things discussed yesterday - the initial strain of this recession that began within the fixed income trading desks on Wall Street are now reverberating across Main Street. Later, in 2009, it will echo again back on Wall Street.

3. Maybe Last Year Was Opposite's Year?

Interesting Bloomberg story this morning points out that investors who who followed the advice of analysts of brokerage firms and banks lost 17% in the past year, twice the loss posted by the Standard & Poor's 500 Index. Even following the advice of the top-ranked brokerage analyst in Institutional Investor's annual survey, cost investors 17%, according to the data compiled by Bloomberg.

4. Villainous-Looking Man Who Really Looks Like He Should Be Indicted for Something Indicted


5. Big Brown Triple Crown? Or Big Brown Triple Crayon?

Tomorrow we will likely see the first Triple Crown winner in 30 years as Big Brown takes on nine other horses in the Belmont Stakes. In fact, in my opinion this is the best chance for a Triple Crown winner since Real Quiet was robbed of a Triple Crown by a mere nose at the wire in 1998.

Meanwhile, the rush to cash in is on. Kelly Wietsma, president of Equisponse, a horse racing marketing agency that represents Big Brown's owner, IEAH Stables, said, "I want every kid in America to be able to walk into a Wal-Mart (WMT) and buy a Big Brown shirt or a Big Brown Beanie Babie."

One would think that with a name like Big Brown UPS (UPS) would leap at the chance to secure exclusive sponsorship rights to the horse. After all, Big Brown's jockey, Kent Desormeaux, has ridden in the Derby and the Preakness with UPS plastered on his pants. But no. "UPS wanted to be the exclusive sponsor and we offered them every possible way to do [that], and they basically turned it down," Wietsma said.

That's why tomorrow in the Belmont Stakes Desormeaux will ride Big Brown not only with UPS (UPS) on his silks, but also Hooter's. Classy. Hey, it's the "sport of kings," what else would you expect?

Hedge Your Bets With a Big Brown Triple Crayon T-Shirt!

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No positions in stocks mentioned.

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