November 12, 2012 Update

DJIA: 12815  NASDAQ: 2904  10-YR TRS: 1/32, yield 1.613%  Oil: $86.07 EURO: $1.2711 YEN: 79.49

Micro

• SPZ: seeing early gains as investors hope the American holiday will return focus to the European finance minister meeting, and from earning reports from US homebuilders.
• Earnings: D.R. Horton (NYSE: DHI) forecasted to $0.28 EPS for FQ4, Beazer Homes (NYSE: BZH) FQ4 EPS of -$2.57 which missed forecast by $1.35. 
• W.W. Grainger (NYSE: GWW) will be updating investors on October sales, stock is up 4% LTM.    
• Leucadia is discussing an all-stock deal with Jefferies (NYSE: JEF), in which Leucadia will purchase all of the Jeffrey's shares that it does not currently own. As of Frifay, Jefferies was valued at roughly $2.9billion.  
• Annaly Capital Management (NYSE: NLY) confirmed a $12.50 bid to purchase the rest of CreXus Investment’s shares (NYSE: CXS) that NLY does not already own (currently owns 12.4%).
• Best Buy (NYSE: BBY) is rumored to name Sharon McCollam, who will come out of retirement, as CFO to replace Jim Muehlbauer.
• Microsoft (NASDAQ: MSFT) and Motorola will be in court this week arguing over MSFT’s claims that Google (NASDAQ: GOOG) attempted to overcharge them for standards-essential patents for Motorola’s streaming technology. 
• The New York Times (NYSE: NYT) will start their new CEO, Mark Thompson, today as planned. Thompson faces NYT’s issues of considerable pension liabilities, decreasing print advertising, and investor requests for dividend payout. 
• Target (NYSE: TGT) has decided to open doors for Black Friday at 9:00 PM on Thanksgiving. Last year’s heated protests for opening the doors too soon persuaded this year’s 9:00 PM decision. 
• Analysts at Citi upgrade Walt Disney Company (NYSE: DIS) to a buy based on the company’s claims that they are transitioning from an investment phase to company growth. 

Macro

• Asian Markets: Chinese markets rose from higher than expected trade surplus, and Japanese markets fell from poor results from economic data. Japan’s  economy has shrunk 0.9% from July to September. 
• European Markets: flat market as Greece passes its 2013 budget by Eurogroup meeting. 
• U.S. bond markets closed for today’s holiday.
• Negotiations about the fiscal cliff will take place in congress this week, markets are expected to react erratically. 
• Iraq hopes to raise oil production to 9 million bdp from 3.25 million bpd by 2018 through an investment of $130B-$150B. Oil Minister Abdul Kareem is encouraging foreign investment. 

The Fiscal Cliff

Originally coined by Ben Bernanke, the fiscal cliff has been ominously looming since the reelection of President Barack Obama. With only 50 days until the expirations of the Bush Tax Cuts, Americans are concerned about the impact and repercussions the fiscal cliff will have on their everyday lives if left unsolved by congress. In reality, the possibility of reaching the fiscal cliff is dubious since neither party wants tax increases on record during a recession. An extension of what exists now will most likely be agreed to continue into 2013 until after the re-inauguration of President Obama. Nevertheless, if congress cannot come to an agreement by the end of the year and the combination of spending cuts and tax increases goes into effect the Congressional Budget Office predicts a recession and unemployment to soar to 9.1% ( +1.2%). Left avoided, tax breaks and increase in spending is forecasted by the CBO to cause a 1.7% uptick in U.S. economic growth (down from FQ3’s 2% rate). The expiration of a variety of tax cuts, including Bush Tax Cuts and part of Obama’s stimulus, will lead to a rise in income-tax rates that will be felt by all Americas by an average of 20%.  Federal income tax rates, specifically, will increase from 19% to 24% for the average joe to the big corporation. If Congress cannot reach a deal to avoid hitting the fiscal cliff this year, the federal budget deficit would be $503 billion higher than it would have otherwise have been in fiscal 2013, and $682 billion high in fiscal 2014. Congressional unity is more important than ever in order to negotiate a conclusion that will aggrandize the entire nation and, as such, have a positive affect on the global economy.