December 19, 2012 Update

DJIA:13,350 NASDAQ:3,054 10-YR TRS: 19/32, yield 1.827% Oil:$87.93 EURO:$1.3229 YEN:84.20

Micro

• SPZ: trading higher driven by hopes of resolving the fiscal cliff and that today housing data will provide an optimistic outlook for the US economy. 
• Earnings: Learning Tree International (NASDAQ: LTRE) FQ4 EPS of -$0.37. 
• Yum! Brand (NYSE:YUM) and McDonalds (NYSE:MCD) are attracting negative attention in China, where a television show has just exposed the poor quality food products used by fast food companies. Both companies have apparently been pumping their livestock with antibiotics and growth hormones that have yet to be government approved. 
• Fitch ratings warns that if the fiscal cliff is not resolved, they will rip the AAA rating from the US.
• Greenbrier (NYSE:GBX) turned out offer to be acquired for $543M by American Railcar Industries’ (NASDAG:ARII) under the premises that the bid undervalues the company. 
• Altria (NYSE:MO), Reynolds American (NYSE:RAI), and Lorillard (NYSE:LO) will finally receive over $1.5B in credits (as a reimbursement) for the 1998 settlement that pressured these companies into paying over $200B in tobacco related health costs.

Macro

• Asian Markets: trading in an upward trend, driven by financial equities after the bank upgrade. 
• Eu ropean Markets: US budget optimism drove Japan’s Nikkei 225 index past the 10,000 threshold for the first time in eight months, 
• John Boehner’s “Plan B” of increasing taxes on high incomes of $1M and above is likely to face political opposition. 
• The annualized rate of housing starts will be released at 8:30 am, and is forecast at 865,000 for November, dropping from October’s 894,000 (Hurricane Sandy is believe to be a driving catalyst).

Yesterday’s Notable Winners

• Arbiton (NYSE:ARB) +23.63% (+$8.99) to $47.03 from the confirmation that Niesel Holdings will purchase company for 26% premium to Friday’s close.
• Vanda Pharmacy (NASDAQ:VNDA) +18.94% (+$0.61) to $3.83 as a result of positive discoveries from a study on the treatment for a certain circadian rhythm disorder. 
• Greenbrier (NYSE:GBX) +7.38% (+$1.40) to $20.37 after Carl Ichan offered to buy the company for $20 a share.

Yesterday’s Notable Losers

• The Bancorp (NASDAQ:TBBK) -9.02% (-$1.09) to $11.00 after IPO priced at 9% discount to Monday’s close. 
• RAIT Financial Trust (NYSE:RAS) -8.7% (-$0.52) to $5.46 after releasing nine million more shares.
• FactSet Research Systems (NYSE:FDS) -4.36% (-$4.20) to $92.19 after company reported decaying client gains and dismaying forecasts.

Strength in Numbers

When Stephen Schuler and Dan Tierney, two Chicago floor traders, began Getco Securities in 1999, I wonder the vision the founders had for their revolutionary small high frequency trading firm. Within the past decade, Getco has grown from only trading US equity futures to having a presence in international markets, developing a multi-asset class trading portfolio; which will, apparently, soon include the trading products that Knight Capital once called their own. After Getco increased the cash portion of their bid to $3.75 a share, thanks to financing from Jefferies, a deal was struck - leaving Virtu’s all cash offer of $3.20 per share untouched. Knight Capital is responsible for approximately a tenth of all US equity transactions, which is largely due to their algorithm products that are used by a diverse cliental. Once the acquisition of Knight Capital is complete, Getco will not only have the largest market-making operation (measured by company representation) on the floor of the NYSE, but the deal has given Getco’s 400 employee trading operation the potential to become one of the largest US electronic trading and market-making companies on Wall Street.