November 5, 2012 Update

 

DJIA: 13,093 NASDAQ: 2,982 10-YR TRS: 8/32, yield 1.728% Oil: $84.86 EURO: $1.2838 YEN: 80.43

Micro

• SPZ: trading in tight ranges as uncertainty in the US presidential election builds and weighs on international markets, investors also awaiting consumer spending data report.
• Earnings: IntercontinentialExchange (NYSE: ICE) forecasted $1.72 EPS, Tesla Motors (NASDAQ: TSLA) expected to lose $0.90 a share, Humana (NYSE: HUM) Q3 $2.62 exceeding forecast by $0.57, McDermott (NYSE: MDR) forecasted $0.24 EPS, AM TE Connectivity (NYSE: TEL) Q3 $0.76 EPS beats forecast by $0.02, Time Warner Cable (NYSE: TWC) Q3 $1.41 EPS which missed forecast by $0.02.
• Consumer spending is forecasted to increase 0.7%, compared to September’s 0.5% rise.
• Humana (NYSE: HUM) agreed to acquire Metropolitan Health Networks (NYSE: MDF) in a deal that is valued at $850 million, not including transaction costs.
• Gold futures pushed up $5.10 to $1,680.40 an ounce.
• BG Group ( BG.LN) announced five-year plan plans of building a $3 billion syndicated credit facility, replacing $2.3 billion of terminating bilateral committed credit lines.
• Gap (NYSE: GPS) may be in trouble in 2013 with worrisome plans of expansion.
• HSBC (NYSE: HBC) Q3 net income fell 52%.
• Interpublic (NYSE: IPG) contemplating replacing their CEO, McCann, and DraftFCB advertising due to failing revenues. Rumors of Nick Brien to be next CEO.

Macro

• Asian Markets: uncertainty about U.S. upcoming presidential election weighed on markets making South Korean carmakers and Hong Kong’s resource stocks the biggest losers.
• European Markets: worries about the upcoming Greek parliamentary vote on austerity measures and doubt about U.S. presidential election also stresses markets, HSBC weigh on London’s markets.
• Analysts believe a victory for Romney would lead to bullish equity markets, and a bond rally for Obama.
• Greece confirmed the rumor that it will indeed be forced to leave the EU if austerity measures are not approved.
• Haitian agricultural badly damaged by Hurricane Sandy, leaving 500,000 hungry.

Romney Endorsement
The Economist, Mayor Michael Bloomberg, Warren Buffet, Bill Gates, and George Soros (all figures this newsletter considers to possess reputable intelligence and wit) have publicly endorsed President Barack Obama under claims of climate change, gay marriage, women’s rights, and wealth redistribution (all rational concerns). However, The Economist in this week’s issue said they would rather “stick with the devil it knows, and re-elect him (Obama)” than vote for Romney. Dockery’s Daily Docket disagrees with this argument. First off, the United States has never been more divided. With a dangerously dissociated Congress, fiscal dilemmas, social unrest, and a massive debt to tackle, I am not certain this country will flourish under four more years of Obama gridlock. Obama disregarded his own engineered bipartisan Bowles-Simpson deficit commission, neglected his campaign promises of confronting climate change and immigration issues, and created the overly generous “Obamacare” bill in order to provide 40 million Americans with healthcare, but failed to construct a workable plan to foot the unaffordable cost. Obama’s overly generous capabilities are clear, while Romney has strategically chosen to stay mysterious. As a successful businessman, it appears that Romney would run the country as just that- his business (similar to what Mayor Bloomberg did with New York). Unlike Obama, I believe Romney would be able to balance the budget, raise employment through opportunity creation by allocating more rights to the states, and alleviate the financial markets of counter-productive regulation. Under Romney’s control, The United States could function as successfully as Massachusetts did during Governor Romney’s reign. While Obama has a better reputation in regard to foreign policy, Romney’s belief in the free market and smaller federal government will generate stronger growth and bipartisanship. Just to be clear, not voting for a candidate based on their ethnicity, personal wealth, or religion is ignorant and utterly ludicrous. This leads me to my question for The Economist: Why vote for “the devil” that has been known to fail? I argue voters should be more willing to take on risk and vote for the unknown devil, because, after all, reward itself does not exists without risk. For whatever it’s worth and however much creditability this newsletter has, Dockery’s Daily Docket is joining the forces of Scott Brown, John Catsimatidis, Carly Fiorina, and Meg Whitman to endorse Governor Mitt Romney as the 45th President of the United States.

November 1, 2012 Update

Micro

• SPZ: trading in a tight spread as investors await for the overload of economic data to be released.
• Volumes are still suspected to be affected by Hurricane Sandy.
• Earnings: Exxon Mobil Corp. (NYSE: XOM) expected lower profit of $1.95 a share, Pfizer (NSYE: PFE) forecasted an EPS of $0.53, AIG projected an EPS of $0.86, Starbucks (NASDAQ: SBUX) expected $0.45 EPS.
• Crude oil prices and gold rose.

Macro

• Asian Markets: Chinese manufacturing data optimistic, but poor performance from Japan’s Sharp Corp.
• European Markets: stocks are pushing high from China data gain and from a lead in banks and miners.
• US economic growth forecasted at 2%.
• Jobless claims are likely to remain at 360,000, indicating weak economic recovery.
• Construction spending is estimated to rise 0.5% in September.
• Auto sales are forecasted at 14.8 million in October, an 11.5% increase that shows consumer confidence.
• ADP, the largest handler of US payrolls, will issues first report on monthly employment using a new calculation.
• Conference Board’s index of consumer confidence forecasted to rise to 73.0 in October from September’s 70.3.
• Institute for Supply Management’s survey of manufacturing executives is not suspected to improve in October with projections down to 50.5% from September’s 51.5%.

Yesterday’s Biggest Winners

• Warnaco Group (NYSE: WRC) +38.72% (+$19.70) to $70.58 from the confirmation that it will be acquired by PVH Corp. for $2.9 billion.
• Opnet Technologies (NASDAQ: OPNT) +31.01% (+$9.95) to $42.05 from the affirmation that Riverbed Tech will purchase OPNT for a 34% closed premium over Friday’s close.
• Red Robin Gourmet Burgers (NASDAQ: RRGB) +21.51% (+$5.91) to $33.39 from a reported increase of traffic in same-store sales.

Yesterday’s Biggest Losers

• Western Union (NYSE: WU) -29.01% (-$5.20) to $12.73 due to lowering its guidance, prompting a set of downgrades.
• Facebook (NASDAQ: FB) -3.79% (-$0.83) to $21.11 because 229 then-employee held million shares will put for sale.
• WellCare Health Plans (NYSE: WCG) -13.81% (-$7.63) to $47.60 from a 57% decline in Q3 earnings.

Sandy’s Other Destructive Side
While the immediate effects of Sandy can be visibly observed through a simple drive down any New York City suburban road, the havoc she will wreak on the American economic and political systems are not yet known for certain. However, the forecasts are not so sunny. New York City alone has estimated a loss of roughly $200 million a day and has dished out $29.2 million in emergency preparations alone (Reuters). Eqecat, an insurance risk consultant, estimated that the hurricane caused between $10-$20 billion in gross economic damage and $5-$10 billion in insurance losses, with 30-40% strictly in the five boroughs. Most homeowners’ insurance policies do not cover flooding. However, 5.6 million Americans are covered by the federal flood-insurance program and 450,000 (8%) of the holders are in the tristate area, equaling to billions of federal tax dollars. It is also important to keep in mind that election day is six days away, and whether society will be functioning in the Northeast as usual is unknown. According to The Economist, bad weather on election day can aid conservative candidates. School closures can sway low income Americans against voting, as the cost of child care outweighs the right to vote, and those who take public transportations (non-vehicle owners) will most likely not venture out to vote in treacherous states.Whilst it is distinctly possible the visible effects of Sandy will be cleared by November 6th, this must be taken into account and noted that early voters will be impacted.