January 23, 2013 Update

DJIA:13,712 NASDAQ:3,143 10-YR TRS: 2/32, yield 1.835% Oil:$96.24 EURO:$1.3322 YEN:88.71

Micro

• Earnings: AM Check Point Software Technologies Ltd. (NASDAQ: CHKP) Q4 EPS of $0.91 which beat forecast by $0.03, Apple (NASDAQ: AAPL) Q1 EPS of $13.43 per share, McDonalds (NYSE: MCD) Q4 EPS forecast of $1.33 per share, Netflix (NASDAQ: NFLX) expects a loss of $0.13 for Q4 EPS, SanDisk Corp. (NASDAQ: SNDK) forecast Q4 EPS of $0.76 per share, United Technologies Corp. (NYSE: UTX) Q4 EPS forecast of $1.03 per share, US Airways Group Inc. (NYSE: LCC) Q4 EPS forecast of $0.19 per share, General Dynamics Corp. (NYSE: GD) Q4 EPS of $1.88 per share, Coach Inc. (NYSE: COH) Q2 EPS of $1.28 per share, Motorola Solutions Inc. (NYSE: MDI) Q4 EPS of $1.02 per share, Amgen Inc.  (NASDAQ: AMGN) Q4 EPS of $1.38 per share, Abbott Laboratories (NYSE: ABT) expected to post Q4 EPS of $1.50 per share. 
• The demand for truck drivers is going to double by the end of the year according to FDR Associates. Companies are struggling to hire more than 100,000 new drivers due to rules that add restrictions to work hours.
• SAP (NYSE: SAP) 2013 operating profits are forecast to be between €5.85-5.95B vs consensus of €5.57-6.11B. The company has predicted that revenue will from software and other related products will grow 11-13%.
• Barclays (NYSE: BCS) is cutting 2,000 jobs, which is 8.6% of their total headcount of 23,000, as part of a strategy to boost the bank’s results which will be released in February. 

Macro

• SPZ: fighting for direction from optimism regarding a fresh round of earning releases which is being cancelled out by pessimism and uncertainty about the budget vote.  
• Asian Markets: trading lower as a whole, with Japanese equities getting killed after the yen soared from the BOJ’s policy announcement. 
• European Markets: trading in a tight spread as the US budget talks kept investors uncertain while earnings report from heavyweights are keeping market participants optimistic. 
• U.K. jobless claims reported -12,000 for December which is bearish compared to the flat forecast.
• The Bank of England’s Monetary Policy Committee voted 8-1 in favor of not adding to its QE program, with the exception of one member wishing to add €25B. MPC decided to keep interest rates at 0.5%
• President Obama is likely to approve a GOP proposal, which is back by Harry Reid, to push back the debt ceiling until May 19. The measure will be voted upon today and requires both chambers to pass budgets by April 15. The failure to do so will result in salary delays. 

The Fallacies of Human Reason

Why is it that when people are invested in something, they find it difficult to cut their losses and walk away? Humans are more negatively impacted by a loss than positively affected by a gain. Let's face it, we are afraid of failure. And because we tend to emotionally invest in our decisions, it becomes difficult to cut our losses and pull out of an investment. Reason convinces risk takers that an outcome “makes sense” and allows us to justify our actions or beliefs, even if they’re immoral or harmful. Rather than using logical thinking to weigh facts, human beings are prone to submitting to emotional bias. Identifying risk is becoming increasingly more important than focusing on strategy when deciding to make an investment. Although the ability to reason is what distinguishes the human race, impassive logic is a far more powerful tool when deciding to dabble in the markets.