February 26, 2013 Update. The Final Docket

DJIA:13,784 NASDAQ:3,116 10-YR TRS: 21/32 yield 1.895% Oil:$93.11 EURO:$1.3062 YEN:91.82

On Cycles

Everything we know or consider to be true is only because someone has experienced it and confirmed it to be factual. Think about it. Market participants have observed the boom-bust cycle and, as a result, understand how it works and know when to invest. Science has proven that energy moves in patterns; constantly transforming into different mediums and never disappearing. Americans came to the harsh realization during the 2008 financial crisis that one person’s asset is another person’s liability when the country experienced the rippling effects of bad debt. However, I cannot help but wonder if anything truly has an end. For instance, how can one be certain that death exists if no one has ever lived to tell the tale? It appears to me that we exist in a world of recycled creation in which one “end” simply leads to another “beginning.” When it comes down to it, like the business cycle, the transformation of energy, and the credit market, life is all about timing. Man has yet to discover an end to any cycle, so what makes our lives any different? Recent studies have shown that brain cells stay active after a person has “deceasd.” Therefore, just because the deal has failed does not mean the market stops trading. 

Domestic News

• Market Update. Futures are trading up as the markets rebound from yesterday’s bloodbath sparked by the Italian elections. Investors will remain focused on Bernanke’s semi-annual conference with the senate banking committee today. 
• The S&P will release its S&P Case/Shiller Home Price index for December at  10:00am, and is expected to show a rise of 0.5% versus November’s 0.6% increase. 
• President Obama is meeting with Republican Senators John McCain and Lindsey Graham today to discuss immigration reform. No word of progress regarding the sequestor. 
• Ben Bernanke will be meeting with the senate banking committee today and tomorrow. It is likely Bernanke will be asked to clarify about the Fed $3.1T balance sheet and how it will effect inflation expectations and an exit from the stimulus program.

International Updates

Asia

• Market Update. Markets traded down as Italian political fears worry investors. 

Europe

• Market Update. European markets are trading lower as political chaos reigns in Italy. 
• Political paralysis in Italy resulted in a surge in Italian 10-year bonds. The escrows rose 48 basis points to 4.842%.
• The most recent results from the Italian election portray the Five Star “non-party” winning the most states with a 25.5% share in the lower house. A center-left Democratic Party will hold power in the chamber. 

Corporate

• A jury will determine if Johnson & Johnson (JNJ) should pat for the damages caused to a South Dakota patient that she incurred through the use of JNJ’s Gynecare Prolift vaginal mesh. Yesterday, JNJ was ordered to pay Linda Gross $3.5B. 
• Intel Corp.  (INTC.O) has agreed to manufacture chips on behalf of Altera (ALTR.O). Many believe this is the first step toward opening a massive manufacturing technology to customers on a larger scale, including Apple (AAPL).