Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called to open higher this morning. This is what's happening today:

• A manufacturing gauge in China rose to a seven-month high in November, data released Dec. 1 showed. China may maintain its annual economic growth target at 7.5% next year, according to analysts. China’s official Purchasing Managers’ Index was 50.6 in November, while a private gauge of manufacturing climbed to 50.5;

• US Treasury Secretary Timothy F. Geithner said Republicans in Congress will be responsible for hurting the economy if they refuse to raise tax rates on the highest-income earners as part of a deal. House Speaker John Boehner said the White House is wasting time;

• Gold rose 0.3% to $1,719.65 an ounce as investors boosted holdings in exchange-traded products backed by bullion to a record 2,621.73 metric tons on Nov. 30;

• 10-year Italian debt is yielding 4.492%, 10-year Spanish debt is yielding 5.30% and 10-year Portuguese debt is yielding 7.538%;

• Brent is trading at $111.58/barrel;

• Gold is tradig at $1719.45/ t oz;

• Apple closed the session at $585.28

A impressive performance in the US markets in the month of November. At one point we were down 6% on the S&P for the month after Obama was re-elected and worries about the fiscal cliff. However, things quickly turned around with the S&P closing positive for the month. The index closed up 0.3%.

Here is an interesting summary by Deutsche Bank this morning on the markets in November. 'Fiscal cliff posturing had spurred fund managers to cut positioning to extreme lows (Big Underweight As Fiscal Cliff Looms, Nov 12 2012). Modest covering pushed the S&P 500 back to near pre-election levels but overall equity positioning (composite beta) is still near three year lows. Mutual and hybrid funds are still 4-5pp underweight while macro hedge funds and long-short equity funds are already back to neutral. The last three years saw overall equity positioning move to neutral at year-end and two-sided fiscal cliff risks argue for the same. A repeat of the typical year-end pattern would see mutual and hybrid funds raise exposure and equities rally.

As underweights were covered and the market rallied US equity flows also snapped back, with a large $11b inflow last week following on $36b of outflows since September. EM equity and bond inflows remained strong while corporate HG and HY flows slowed. Money market inflows were $72b in November, the largest since December 2008. Significant cash on the sidelines and a turn in US equity sentiment should bode well for December equity inflows, which have been sizeable in 4 of the last 5 years.'

Whole Foods Market announced that its Board of Directors has declared a special cash dividend on Whole Foods Market common stock of $2.00 per share payable December 21, 2012, to shareholders of record on the close of business on December 10, 2012. The aggregate amount of payment to be made in connection with this special dividend will be approximately $370 million.

Declared Dividend Changes for S&P 500 Companies in November are as following

Declared Prior Pct. Indicated

Dividend Payment Chg. Dividend

Per Share Yield

• JCI Johnson Controls Inc 0.19 0.18 5.6 2.75

• EMR Emerson Electric Co 0.41 0.40 2.5 3.24

• FAST Fastenal Co 0.50 0.21 138.1 1.99

• SNA Snap-on Inc 0.38 0.34 11.8 1.90

• NKE NIKE Inc 0.42 0.36 16.7 1.70

• CCL Carnival Corp 0.50 0.25 100.0 2.59

• IGT International Game Techno 0.07 0.06 16.7 2.01

• SBUX Starbucks Corp 0.21 0.17 23.5 1.62

• BEN Franklin Resources Inc 3.00 0.27 1011.1 0.81

• WMB Williams Cos Inc/The 0.33 0.31 4.0 3.99

• NOV National Oilwell Varco In 0.13 0.12 8.3 0.74

• SYY Sysco Corp 0.28 0.27 3.7 3.56

• COST Costco Wholesale Corp 7.00 0.28 2445.5 1.08

• WFM Whole Foods Market Inc 2.00 0.14 1328.6 0.86

• HRL Hormel Foods Corp 0.17 0.15 13.3 2.21

• MKC McCormick & Co Inc/MD 0.34 0.31 9.7 2.10

• BF/B Brown-Forman Corp 0.26 0.23 9.3 1.45

• BDX Becton Dickinson and Co 0.49 0.45 10.0 2.57

• DGX Quest Diagnostics Inc 0.30 0.17 76.5 2.06

• ABC AmerisourceBergen Corp 0.21 0.13 61.5 2.02

• AVP Avon Products Inc 0.06 0.23 -73.9 1.74

• EL Estee Lauder Cos Inc/The 0.72 0.53 37.1 1.24*

• PRU Prudential Financial Inc 1.60 1.45 10.3 3.09*

• LNC Lincoln National Corp 0.12 0.08 50.0 1.95

• DIS Walt Disney Co/The 0.75 0.60 25.0 1.51*

• MRK Merck & Co Inc 0.43 0.42 2.4 3.85

• TMO Thermo Fisher Scientific 0.15 0.13 15.4 0.94

• PRGO Perrigo Co 0.09 0.08 12.5 0.35

• HCN Health Care REIT Inc 0.77 0.74 3.4 5.18

• BXP Boston Properties Inc 0.65 0.55 18.2 2.54

• HST Host Hotels & Resorts Inc 0.09 0.08 12.5 2.45

• MCHP Microchip Technology Inc 0.35 0.35 0.3 4.67

• ADP Automatic Data Processing 0.43 0.40 10.1 3.09

• STX Seagate Technology PLC 0.38 0.32 18.8 5.07

• T AT&T Inc 0.45 0.44 2.3 5.30

• UNP Union Pacific Corp 0.69 0.60 15.0 2.24

* = Annual dividend payment.

I remain of the view that investors should be in and not out of the markets. There are many arguments why investors should be overweight equities at this point in time. Please contact your advisor to be able to discuss a portfolio which fits your risk-reward ratio.

Stock to watch: Whole Foods Market (Price $93.36, Price Target $105)

Deutsche Bank comments – We rate the shares Buy. We believe the company's efforts on the price front, coupled with its attractive health/wellness niche will translate into 7% ID sales growth in FY13 and beyond. We expect Whole Foods to grow the top line and EPS at double-digit rates due to a combination of profitable new store growth (+8-10% per year) and above-average comps, driving operating margin expansion. In addition, the company has a strong balance sheet and positive FCF, which provide flexibility to step up share repurchases, increase the dividend, invest in store growth, or to pursue acquisitions.

For further information on Whole Foods Market or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli