January 2, 2013 Update

DJIA:13,104 NASDAQ:3,019 10-YR TRS: 14/32 yield 1.759% Oil:$91.82 EURO:$1.3195 YEN:86.75

Micro

• In 2012 there were only 751 IPOs that raised $113.1B, which is 25% less capital when compared to 2011’s 1,277 IPOs. Facebook (NASDAQ:FB) is solely responsible for 15% of the capital collected for 2012.
• Why do customers have to pay for TV channels they would rather not have? Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) are companies attempting to fix this problem with their version of TV (although it is proving to be exceedingly hard). Intel plans on launching their version in Q3 or Q4 of 2013 and are facing issues negotiating with service providers.  
• Viacom (NYSE:VIA) has decided to keep its contract with Cablevision (NYSE:CVC). Disney (NYSE:DIS) is signing a carriage deal with Charter (NASDAQ:CHTR). Time Warner Cable (NYSE:TWC) is keeping channels it was originally intending to drop, including AMC Networks’ (NASDAQ:AMCX) IFC and WE and Crown’s (NASDAQ:CRWN) Hallmark. 
• Avis Budget (NYSE:CAR) purchased Zipcar (NYSE:ZIP) for $12.25 per share (49% premium to Monday’s close). The deal is forecast to close in the spring of 2013 and raise the value of CAR to $500M.
• In 2012 Macau’s casino revenues rose 13.5% to $38B, but growth fell reflecting a slowdown in the Chinese economy. Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), and MGM (NYSE:MGM) all have a major presence in Macau.

Macro

• SPZ: ripping on news of a budget deal!
• Asian Markets: traded up from American budget deal, China’s manufacturing Purchasing Managers’ Index remained unchanged for December hovering at 50.6 (below expectations).
• European Markets rallying from budget deal with financial equities being the biggest winners. 
• The Institute for Supply Management will be released at 10:00 am, index is expected to rise in December to 50.3% from November’s 49.5%.
• Construction-spending data will also be released at 10:00 am and is forecast to rise 0.8%, down from October’s 1.4%. 
• New-vehicle registrations are forecast to expand to 15.3M in 2013 from 14.4M in 2012. Figures for 2012 will be released tomorrow. 
• According to the CBO, the fiscal cliff deal will add roughly $4T to the deficit over the next decade.  Taxes will increase for over 75% of American households. The debt ceiling, which has two months until expiration, and long-term spending cuts are not included in the budget deal.

Questions About The Budget Deal

It is no secret that the US economy is driven by consumption. A decrease in our animal spirits would be devastating for both the domestic and international economy. Congress has reached a deal, largely supported by the Democrats, to avoid the drastic spending cuts and tax increases that were set to go into effect this year. Many are relieved that the US will not go over the “cliff,” hoping the deal will result in an increase in consumer confidence and a boost in the financial markets. However, one has to wonder not only about the quality of the budget deal but also how efficient our government is. Politicians knew for years what 2013 would bring. Why did lawmakers wait until the last minute to make a decision? Voters should not be pleased a deal was reached, but should only be satisfied by success. Any college student will confirm that an assignment completed in the eleventh hour is usually not of A grade. Could it be possible the budget agreement is both logical and effective? Why is the debt ceiling and long-term spending cuts not included in the bill? Americans are known in the global economy as the consumers of last resort, and if we stop spending the world turns at a slower pace. Lets hope the budget deal raises American animal spirits because a slowdown in consumption is an omen that no one can afford.