December 18, 2012 Update

DJIA:13,235 NASDAQ:3,010 10-YR TRS: 16/32, yield 1.763% Oil:$87.20 EURO:$1.3163 YEN:83.89 

Micro

• SPZ: trading up as the thought of the U.S. avoiding the fiscal cliff slowly becomes reality.
• Earnings: Oracle (NASDAQ:ORCL) forecast Q2 EPS of $0.61, Jefferies (NYSE:JEF) forecast Q4 EPS of $0.33, Sanderson Farms (NASDAQ:SAFM) forecast Q4 EPS of $0.35, FactSet Research Systems (NYSE:FDS) forecast Q1 EPS of $1.11
• Amgen (NASDAQ:AMGN) is expected to pledge guilty to accusations of mis-branding (which usually means the promotion of contraband without approval). AMGN expects to pay a fine of roughly $780M, including the $150M worth of criminal penalties. 
• Gold is trading up from investor confidence about the hope of avoiding the fiscal cliff. 

Macro

• Asian Markets: in the green from optimism about the progression towards avoiding the fiscal cliff.
• European Markets: trading up as American investor optimism ripples, U.K rally led by bank stocks.
• Bad loans held by Spanish banks rose in October to 11.23% of outstanding portfolios soaring from September’s 10.7%. More disturbing, however, is the €182.2B rise in debt that will never be repaid- marking a new record high.
• China targeted GDP growth of 7.5% and a 3.5% inflation rate for 2013 (note: below 10% GDP growth rate country experience in the past decade, portraying the strive toward a “quality” expansion).
• The Treasury is rumored to dwindle TARP in 2013 by selling its shares in roughly 2/3 of the 218 banks that remain in the program, and begin to demand full repayment from banks. Synovus Financial (NYSE:SNV), the bank with the largest outstanding debt in TARP, owes $967.8M to the program.  
• According to the International Energy Agency, U.S. coal consumption is forecast to drop 14% from 2011-2017, driven by international pressures to switch to shale gas. The opposite is happening in China and India, where the demand for coal is remarkably high. For U.S corporations coal consumption has become as habit due to how cheap it is to import, explaining the reluctance to switch. IEA expects the sector to restructure and job loss as a result. 

Yesterday’s Notable Winners

• Tenet Healthcare (NYSE:THC) +1.8% (+$0.55) to $31.18 from an upgrade by Deutsche Bank who raised the target price to $38. 
• Caribou Coffee (NASDAQ:CBOU) +30.68% (+$3.78) to $16.10 after an agreement by Joh. A. Benckiser to take the company private for a 30% premium to Friday’s close. 
• Compuware (NASDAQ:CPWR) +12.91% (+$1.23) to $10.76 from the purchase of the company for a 15% premium to Friday’s close by Elliot Management. 

Yesterday’s Notable Losers

• Tranzyme (NASDAQ:TZYM) -19.05% (-$0.14) to $0.60 hence the termination of a trail treatment for diabetes patients. 
• Clearwire (NASDAQ:CLWR) -13.65% (-$0.46) to $2.91 after Sprint chose to buyout the company for $2.97 per share.
• Smith & Wesson (NASDAQ:SWHC) -5.2% (-$0.48) to $8.66 as a result of political talks about tighter gun regulation.  

Reconsidering our Reactions to Tragedy

Being 20 years old myself, I can verify that twenty years is enough life experience to engrave an identity. While I have been lucky enough to have been positively influenced, many children are not as fortunate. Adam Lanza was a perfect example. For whatever reason, his twenty years of life have motivated him to mass murder children, elementary school teachers, his mother, and himself. The incident has attracted international attention to American gun laws, which state that bearing an arm is a constitutional right. History has proven that it takes a tragedy to bring attention to an impaired policy. However, what if our gun regulation is not what’s impaired? Someone as determined to kill as Adam Lanza is not going to be stopped because of an altered gun law. I am willing to bet that if a gun was not available, Adam Lanza, like many serial killers before him, would have found an alternative weapon to murder the children he was determined to kill. What if we, instead, focused our attention to the upbringing of American youth. Mr. Lanza was clearly disturbed. I argue that something from his past must have caused him to be this way. What if there was a regulation that required a closer observation of the mental health of all school children, including those enrolled in both home school programs and in private and public schools. Wouldn’t inventing a policy that promoted the stability of the next generation be a better use of time than arguing about the polarized issue of the second amendment?