To make dough put warm water in a medium size bowl and sprinkle 2 tsp sugar and yeast over it. Let sit a couple of minutes and mix well. Put bowl in a warm place until yeast is bubbly (about 10 minutes). Sift together in a large bowl flour, sugar, nutmeg and salt. Combine yeast mixture, warm milk, egg yolks, extract, and margarine. Add wet ingredients to dry ingredients slowly forming dough to soft dough stage. Knead dough on floured surface for 10-15 minutes adding additional flour so dough will not be sticky. Dough has been kneaded enough when it is smooth and elastic to the touch. Grease large bowl, place dough ball in bowl and roll until it is also greased. Cover bowl with towl and place in a warm spot until dough doubles in size (about 1-2 hours). Punch dough down and roll into a cylinder shape. Sprinkle with cinnamon. Twist dough cylinder and form into an oval ring shape on a greased cookie sheet. Pinch ends together. Insert an unshelled clean pecan into the underside of dough ring. Cover dough and set in a warm place until it doubles (about 1 hour). Preheat oven 375?. Brush cake with beaten egg and bake for 30 minutes or until cake is golden brown. Cool on wire rack. While cake is cooling, make colored sugars. Put cooled cake on paper covered cardboard or platter.