January 3, 2013 Update

DJIA:13,412 NASDAQ:3,112 10-YR TRS: 23/32 yield 1.839% Oil:$93.12 EURO:$1.3185 YEN:87.34

Micro

• Earnings: Family Dollar (NYSE:FDO) Q1 EPS of $0.69 missing forecast by $0.06.
• Costco Wholesale Corp. (NASDAQ:COST) same-store sales rose 9% and total sales rose 12% to $11.21B. 
• Nymex crude oil futures are trading at $92.00 a barrel, falling $0.56.
• Gold futures are trading at $1,684.80 an ounce, down $4.00.
• Sterne Agee upgraded Citigroup (NYSE:C) to a “buy” from “neutral.”
• Gap (NYSE:GPS) is acquiring Intermix, a high end women’s fashion boutique, for $130M. This is Gap’s first purchase since 2008. Intermix’s annual revenue of $130M is expected to give Gap a better presence in the luxury market.
• Delta (NSE:DAL) CEO, Richard Anderson, promised employees to control spending and improve operations in 2013 in order to expand company position. 

Macro

• SPZ: trading in a tight spread, mostly in the red, as investors await a decision from the Federal Reserve regarding the next monetary policy. 
• Asian Markets: ended mostly higher, Australian stocks soaring to 20-month highs as miners react to improved commodity prices. Hong Kong ended lower after an end of the day sell off.
• European Markets: trading in a mixed fashion, the benchmark index going higher amid a rally in Swiss equities. 
• Automatic Data Processing Inc. will report private sector payrolls at 8:15 am, data is forecast to rise in December to 149,000 compared to November’s 118,000.
• U.S. jobless-claims data will be released at 8:30 am, expected to show that benefits rose to 360,000 for the week ending December 29. The previous week was 350,000. 
• British banks plan on increasing loans to companies and consumers, following their decision to provide more mortgages in Q4. 
• German unemployment grew by 3K to 2.942M in December, which is the ninth consecutive month of increasing data. Jobless rate remained unchanged, hovering at 6.9%. 

Yesterday’s Notable Winners

• Zipcar (NYSE:ZIP) +47.82% (+$3.94) to $12.18 from the acquisition by Avis Budget Group for a 49% premium to Monday’s close. 
• U.S. Steel (NYSE:X) +8.55% (+$2.04) to $25.89 after Credit Suisse declared near-term fundamentals as “positive” for US steel companies.
• MetLife (NYSE:MET) +6.71% (+$2.21) to $35.15 after the budget deal sent Treasury yields soaring. 

Yesterday’s Notable Losers

• Dole Foods (NYSE:DOLE) -13.43% (-$1.54) to $9.93 from downbeat earnings guidance for the new year. 
• Ascena Retail Group (NASDAQ:ASNA) -4.41% (-$0.82) to $17.66 from a downgrade and target price cut by Citi.
• Consol Energy Inc. (NYSE:CNX) -3.4% (-$1.09) to $31.01 after shares of natural-gas dropped as investors worry about the warmer then expected winter. 

Deconstructing Testosterone

John Coates (Ph.D. from Cambridge) believes that there would be fewer stock market bubbles and crashes if women and older man handled the majority of trading activity. In an attempt to prove this theory true and to understand the relationship between testosterone levels and financial risk taking, Coates conducted an experiment on a trading floor where he took saliva samples from 250 men. The results were conclusive. Coates found when morning levels of testosterone were high, traders’ confidence was also high. As winning trades were made, testosterone levels rose even higher- leading to profits in the afternoon. Men began to feel infallible so they engaged in more risky behavior, such as buying overvalued stocks. Eventually, too much testosterone and impaired judgments would drive markets to unsustainable heights. The cycle would end and overvalued stocks would crash and testosterone levels would return to normal. In conclusion, testosterone explains irrational exuberance.