January 11, 2013 Update

DJIA:13,471 NASDAQ:3,121 10-YR TRS: 12/32 yield 1.894% Oil:$93.82 EURO:$1.3269 YEN:88.78

Micro

• Earnings: Wells Fargo & Co (NYSE: WFC) forecast Q4 EPS of $0.87
• Dividends: Wallgreen Company (NYSE: WAG) declared quarterly dividend of $0.275 payable March 26.
• Santander (NYSE: SAN) expects profits to rally this year after provisions to debt contracts that has gone bad in 2012 thanks to the collapse in the Spanish housing market. Q3 net profit fell to €100M from €1.8B.
• JP Morgan has downgraded 3M (NYSE: MMM) to “sell” and set a target price of $97.
• The FAA is investigating Boeing’s (NYSE: BA) 787 Dreamliner after multiple problems with the aircraft, including a crack in the cockpit windshield that appeared during a flight. Although BA believes it is safe. Trading down .1% premarket. 
• Goldman Sachs has upgraded Philip Morris (NYSE: PM) to a “buy” on the belief that the company has the best combination of growth and yield amongst competitors in the consumer staples sectors.

Macro

• SPZ: trading slightly lower following yesterday’s performance of the S&P hitting a five year high and from Chinese inflation report that is leading investors to believe that China will not be able to receive additional stimulus. .
• Asian Markets: mostly traded lower from news of an increase in Chinese inflation, although Japan experienced a rally as the value of the Yen declined. 
• European Markets: trading in a tight spread from influences from yesterday’s highs and news of stimulus package in Japan
• Chinese inflation rose to 2.5% (a 2% increase from last month) driven by rising food prices which are accelerating 4.2%. 
• Trade data will be released at 8:30am, the US trade deficit is forecast to narrow by $41.3B in November but October’s $42.2B from deceases in energy prices- the West Coast strike is likely to have effected results. 
• The US Department of Labor will released figures on import prices at 8:30am, which is expected to have risen for December by 0.1% following November’s decline of 0.9%.
• The Treasury Department will release the federal budget statement at 2pm, the CBO believes the US government ran a $1B deficit. 
• The US dollar is trading up, especially when compared to the Yen which is declining after the Japanese government approved a ¥10.3 trillion ($116 billion) stimulus plan. 
• Yesterday’s announcement of an acceraltion of December sales in China boosted automakers total vehicle sales to a 4.1% gain to 19.3M units for 2012. 
• Gold futures pull back from pressure of a stronger dollar.  

The Future of the Mobile Phone Industry

Apple’s newest version of the iPod Touch allows users to iMessage, Facetime, email, and use other communication applications (such as Snapchat and Skype) without having a telephone contract. As long as an internet connection is available, iPod Touch owners can freely and openly communicate with cellphone users internationally without a mobile contract or having to pay a monthly fee. With WiFi connection being highly accessible at multiple locations in both cities and suburban towns, one has to wonder about the relevance of a cellphone in the modern world. The iPod Touch is a mobile device of its own. This time last year, Apple had its most successful quarter ever- driven by sales from the iPhone 4S, iPad 2, and iBooks 2. For Q1 of 2013 (scheduled to be released 1/23 before the close), Apple has forecast its diluted EPS of $11.75 per share with revenue of $52B. If this outlook becomes reality, Apple will experience its healthiest quarter yet. Although many are bearish on the long term future on the tech company, it is important to remember innovations like these that have the ability to further transform industries and sectors. It will be interesting to see if this trend picks up, and how mobile carriers choose to compete.