December 20, 2012 Update

DJIA:13,251 NASDAQ:3,044 10-YR TRS: 8/32, yield 1.8% Oil:$89.91 EURO:$1.3227 YEN:84.40

Micro

• SPZ:  fiscal cliff negotiations causing a steady movement. 
• Earnings:  Bed Bath and Beyond (NASDAQ:BBBY) Q4 EPS forecast at $1.60-.67, AM KB Home (NYSE:KBH) declared Q4 EPS of $0.10 beating forecast by $0.04, ChinaEdu Corportation (NASDAQ:CEDU) Q3 EPS of $0.115.
• ICE (NYSE:ICE) in is talks with NYSE Euxonext (NYSE:NYX) and Intercontinential Exchange Inc., negotiating the possible acquisition of the NYX.
• France Telecom (NYSE:FTE) is rumored to be in talks with Alcatel-Lucent’s (NYSE:ALU) undersea cable-laying unit which is estimated to be worth $100-150M. 

Macro

• Asian Markets: trading lower, Hong Kong stocks getting killed lead by resource and property sectors.
• European Markets: worries about the fiscal cliff caused markets to trade lower.  
• The Labor Department will release weekly jobless-claims at 8:30 am, forecast to rise to 360,000 from last week’s 343,000. 
• The government’s expectation for Q4 GDP growth will be released at 8:30, estimated to be around 2.9%.
• The National Association of Realtors’ data for November existing home sales will release at 10:00 am, forecast to rise from October’s 4.79M to 4.9M.
• The Conference Board’s leading economic index will release at 10:00 am, expected to decline at a 0.2% rate following October’s 0.2% rise. 
• The Federal Reserve Bank of Philadelphia’s gauge on regional manufacturing activity will release at 10:00 am, forecast at -4 for December, jumping from November -10.7 (distorted from Sandy).

Yesterday’s Notable Winners

• Delphi Automotive (NYSE:DLPH) +3.48% (+$1.20) to $35.65 from announcement of company being added to the S&P 500.
• General Motors (NYSE:GM) +6.63% (+$1.69) to $27.18 after the Treasury confirmed it will sell the entirety of its holding in the next 12-15 months. 
• Alterra Capital Holdings (NASDAQ:ALTE) +21.73% (+$5.03) to $28.18 after Markel confirmed it will buy company for a 34% premium to Tuesday’s close. 

Yesterday’s Notable Losers

• Navistar International (NYSE:NAV) -8.45% (-$1.93) to $20.92 from a Q4 loss and weak sales.
• Team Health Holdings (NYSE:TMH) -3.44% (-$1.03) to $28.95 after confirming the release of 8M shares at a discount price. 

When Too Much Volume Caused the NYSE to Close 

“The sharp increase in stock market trading during 1967 and 1968 astonished Wall Street observers and forced unprecedented closing of the New York Stock Exchange to enable brokers to catch up with attendant paperwork,” as reported in New York Stock Exchange Trading in Perspective* by Charles M. Studness in 1968. While technology is one reason the floor no longer has to close for being too busy, this was impossible to foresee in the 1960s. Because of limited technological advances, there was no way to understand the relationship between computerization and the dwindle of human thought.  Instead, the author blames traders being subject to too many regulations and the American economy no longer being in a stage of development for the decrease in volatility from 1900-10 (250% turnover rate) to 1940 (15% turnover rate), which he then uses to describe his thoughts for the future. Sound familiar? Interesting enough, these factors are concerns investors still have in modern times. I argue this is not a coincidence, rather another example that the more things change, the more things stay the same.

*For a copy of this paper, please email cdockery92@gmail.com