November 27, 2012 Update

DJIA:12,967 NASDAQ:2,976 10-YR TRS:8/32, yield 1.664% Oil:$87.74 EURO:$1.2973 YEN:82.07 

Micro

• SPZ: trading in a tight spread, but going lower, as Greek-aid deal, fiscal cliff, and economic data provides investors with little confidence and much uncertainty. 
• Wall-Mart (NYSE: WMT) finally terminated an agreement with a factory in Bangladesh that is ominous for fire hazards, they are responsible for the fire last Saturday that killed 100 workers. 
• Dollar General (NYSE: DG) inclusion to the S&P is believed by Citigroup to inflate shares by 6%. 
• Ralcopr Holdings (NYSE: RAH) was acquired by ConArga Foods (NYSE: CAG) for $90 per share, creating the biggest packaged food company in North America. 

Macro

• Asian Markets: Shanghai equities roughly reached a four year low, while the rest of Asia saw a small rally from the Greek-aid deal. 
• European Markets: bullish after the IMF, ECB, and European finance ministers confirmed the arrival of Greece’s next round of aid valued at $57 billion.
• News on Greek deal driven the EUR past $1.30 earlier this morning. 
• Crude prices pushed up six cents for January futures contracts. 
• Durable-goods orders for October will be released at 8:30am, expected to decline 0.4% after September’s 9.9% gain. 
• September’s S&P/Case-Shiller home price index is due at 9:00am, an increase in data will portray whether housing market is actually recovering. 
• The Conference Board will announce November’s consumer-confidence index at 10:00am which is forecast to be steady after big previous gains.

Yesterday’s Biggest Winners

• eBay (NASDAQ: EBAY) +4.88% (+$2.39) to $51.40 due to sales from Cyber Monday. 
• Facebook (NASDAQ: FB) +8.09% (+$1.94) to $25.39 after an upgrade by Bernstein analysts based on the belief that the street is underestimating its potential. 
• Apple Inc. (NASDAQ: AAPL) +3.15% (+$18.03) to $589.53 from Citigroup setting a new target price of $675. 

Yesterday’s Biggest Losers

• Aeropostale, Inc. (NYSE: ARO) -4.71% (-$0.68) to $13.77 from a downgrade by Janney based on belief that it cannot complete with its competitors. 
• BancorpSouth, Inc. (NYSE: BXS) -4.06% (-$0.55) to $13.01 after confirmation of the board’s appointment of James D. Rollins III as CEO. 
• Chico’s Fas, Inc. (NYSE: CHS) -2.77% (-$0.52) to $18.24 from a downgrade by FBR Capital. 

The Tobacco Tax Thieves

As state governments build debt, officials tend to increase tax rates on alcohol and cigarettes. Virginia, a state who historically identifies with tobacco use, charges the second lowest tax of 30 cents on a single carton of cigarettes. On the other hand New York, a state that prides themselves in liberal thinking and good health, charges consumers a sin tax of $4.35 per pack; equaling to the highest tax rate in the country. Gangsters have found a way to use the discrepancy between Virginia and New York state cigarette tax rates to build a $10 billion dollar domestic cigarette smuggling industry! The act of reselling cigarettes to make a profit is illegal, but is almost impossible to prove in court. In the rare event that one is actually found guilty, the maximum sentence of five years is a rather light punishment when compared to a life in prison from the resale of other more serious forms of contraband. The New Jersey Treasury Department estimates that 40% of all cigarettes are smuggled into the state, costing New Jersey millions every year. One solution would be to charge a flat tax per cigarette carton, which is unpopular as the move would infringe on states’ rights. Another solution would be to charge no tax at all, which is also unfeasible as health lobbies would cry out for consumer health protections. The question then, is not only how to stop cigarette smuggling in the United States, but also commerce based on an arbitrage legal drug market is illegal; because, after all, isn’t that what capitalism is all about?