December 3, 2012 Update

DJIA:13,025 NASDAQ:3,010 10-YR TRS: 25/32, yield 1.607% Oil: $88.91 EURO: $1.2986 YEN:82.47 

Micro

• SPZ: trading higher as investors await data on the ISM, constructing spending, and motor vehicle sales-all believed to be distorted by Sandy but have investors' confidence nonetheless. 
• Knight Capital will meet today to review the bids made by Getco and Virtu to acquire the firm.
• Goldman Sach’s analysts upgraded Dell (NASDAQ: DELL) to “buy” and set a twelve month target price to $13 (up $4), spurring a premarket rally in the technology equity. 
• S.A.C. Capital has until February 15 to persuade investors against pulling out their investments from the firm. Societe Generale has already withdrawn while Morgan Stanley teeters. The blind faith many investors have in Steven Cohen is expected to impact decision. 
• News Corp. (NASDAQ: NWS) has confirmed that it plans to complete the break-up process, completing the set up of two different companies by 2013.
• Ford (NYSE: F) confirms plans to withdraw from an advertising campaign that features Abraham Lincoln to aid Lincoln Motor Company sales. 
• Cerebus has said that it will consider purchasing the entirely of Supervalu (NYSE: SVU), or at least some of their assets. 

Macro

• Asian Markets: ended lower, especially in Chinese markets, as the fiscal cliff arguments continue. 
• European Markets: China’s positive PMI data spurred heavyweight resource stocks, Stoxx Europe 600 rose 0.3%. 
• Institute of Supply Management’s manufacturing index (ISM) will release data at 10:00am and is forecast to remain at 51.7% for November.
• October’s construction spending data will also disclose at 10:00am and is expected to rise to 0.5%, reflecting the expanding housing market.
• November sales from motor vehicles is forecast to rise to 14.7 million.
• PMI Manufacturing index will be released at 8:58
• HSBC’s China manufacturing purchasing managers’ index showed rose, matching government data that was released this weekend. 
• Markit euro zone’s PMI contracted for the 16th straight month in November. 
• French Manufacturing PMI rose to 44.5 in November, up from October’s 43.7. 

Correlation is Not Causation

Is it coincidental that Switzerland, a country known for chocolate production, has the most Nobel laureates relative to their population? According to a study done by The New England Journal of Medicine, the relationship is far from accidental. The publication found a strong linear correlation coefficient of 0.791 between the relationship of countries’ annual per capita chocolate consumption and the number of Nobel laureates per 10 million population (see graph below). The study has many takeaways, but none prove that eating chocolate causes increased Nobel recognition. Dietary flavonoids found in chocolate has been scientifically proven to have positive effects on cognitive function. Despite this, the results are not conclusive; to measure a country’s intelligence by its number of Nobel laureates (an award subject to various outside bias) is an unfounded conclusion. For instance, many people are highly intelligent but poorly educated. Furthermore, while one may measure the chocolate consumption of a country per capita, the resultant value does not mean anything unless one contextualizes it with the chocolate consumption of Nobel laureates (an excellent example of the ecological fallacy). Therefore, I conclude that increasing chocolate consumption has a higher probability to result in diabetes than winning a Nobel Prize; correlation does not equal causation.