November 1, 2012 Update

Micro

• SPZ: trading in a tight spread as investors await for the overload of economic data to be released.
• Volumes are still suspected to be affected by Hurricane Sandy.
• Earnings: Exxon Mobil Corp. (NYSE: XOM) expected lower profit of $1.95 a share, Pfizer (NSYE: PFE) forecasted an EPS of $0.53, AIG projected an EPS of $0.86, Starbucks (NASDAQ: SBUX) expected $0.45 EPS.
• Crude oil prices and gold rose.

Macro

• Asian Markets: Chinese manufacturing data optimistic, but poor performance from Japan’s Sharp Corp.
• European Markets: stocks are pushing high from China data gain and from a lead in banks and miners.
• US economic growth forecasted at 2%.
• Jobless claims are likely to remain at 360,000, indicating weak economic recovery.
• Construction spending is estimated to rise 0.5% in September.
• Auto sales are forecasted at 14.8 million in October, an 11.5% increase that shows consumer confidence.
• ADP, the largest handler of US payrolls, will issues first report on monthly employment using a new calculation.
• Conference Board’s index of consumer confidence forecasted to rise to 73.0 in October from September’s 70.3.
• Institute for Supply Management’s survey of manufacturing executives is not suspected to improve in October with projections down to 50.5% from September’s 51.5%.

Yesterday’s Biggest Winners

• Warnaco Group (NYSE: WRC) +38.72% (+$19.70) to $70.58 from the confirmation that it will be acquired by PVH Corp. for $2.9 billion.
• Opnet Technologies (NASDAQ: OPNT) +31.01% (+$9.95) to $42.05 from the affirmation that Riverbed Tech will purchase OPNT for a 34% closed premium over Friday’s close.
• Red Robin Gourmet Burgers (NASDAQ: RRGB) +21.51% (+$5.91) to $33.39 from a reported increase of traffic in same-store sales.

Yesterday’s Biggest Losers

• Western Union (NYSE: WU) -29.01% (-$5.20) to $12.73 due to lowering its guidance, prompting a set of downgrades.
• Facebook (NASDAQ: FB) -3.79% (-$0.83) to $21.11 because 229 then-employee held million shares will put for sale.
• WellCare Health Plans (NYSE: WCG) -13.81% (-$7.63) to $47.60 from a 57% decline in Q3 earnings.

Sandy’s Other Destructive Side
While the immediate effects of Sandy can be visibly observed through a simple drive down any New York City suburban road, the havoc she will wreak on the American economic and political systems are not yet known for certain. However, the forecasts are not so sunny. New York City alone has estimated a loss of roughly $200 million a day and has dished out $29.2 million in emergency preparations alone (Reuters). Eqecat, an insurance risk consultant, estimated that the hurricane caused between $10-$20 billion in gross economic damage and $5-$10 billion in insurance losses, with 30-40% strictly in the five boroughs. Most homeowners’ insurance policies do not cover flooding. However, 5.6 million Americans are covered by the federal flood-insurance program and 450,000 (8%) of the holders are in the tristate area, equaling to billions of federal tax dollars. It is also important to keep in mind that election day is six days away, and whether society will be functioning in the Northeast as usual is unknown. According to The Economist, bad weather on election day can aid conservative candidates. School closures can sway low income Americans against voting, as the cost of child care outweighs the right to vote, and those who take public transportations (non-vehicle owners) will most likely not venture out to vote in treacherous states.Whilst it is distinctly possible the visible effects of Sandy will be cleared by November 6th, this must be taken into account and noted that early voters will be impacted.