Dear Friends,
Tangents:
March 1st, 1954: US sets off H-Bomb on Bikini Atoll
One thousand times more lethal than the bomb that destroyed Hiroshima in 1945, the most powerful thermonuclear explosion ever detonated by the United States went off at 6:45 a.m. in Pacific Proving Grounds, on Bikini Atoll in the Marshall Islands. The 10.7-tonne device – code-named Operation Castle Bravo – carried a yield of 15 megatons, nearly three times what scientists had predicted. The fireball was visible 450 kilometers away, and its mushroom cloud contaminated some 7,000 square miles of ocean. Proving ground, indeed: although Bikini had been evacuated, the debris sickened thousand on surroundings island and the 23-man crew of the inaptly named Lucky Dragon 5, a Japanese fishing trawler. But the fallout also catalyzed a growing and ultimately successful movement to ban atmospheric testing. –Michael Posner, Globe & Mail, March 1, 2012.
I thought love was only true in fairy tales
Meant for someone else but not for me
Ah, love was out to get to me
That’s the way it seemed
Disappointment haunted all my dreams.
The Monkees, “I’m a Believer”
Davy Jones (30 December 1945 – 29 February 2012)
photos of the day
March 1, 2012
Luna, a black lab mix, frolics in the snow in East Derry, N.H. New Hampshire is expected to receive about a foot of snow from a winter storm.
Charles Krupa/AP
People sit in the sunshine in St James’s park in central London.
Paul Hackett/Reuters
Market Closes for March 1, 2012:
North American Markets
| Market
Index |
Close | Change |
| Dow
Jones |
12980.30 | +28.23 |
| +0.22%
|
||
| S&P 500 | 1374.09 | +8.41
|
| +0.62%
|
||
| NASDAQ | 2988.97 | +22.08
|
| +0.74%
|
||
| TSX | 12723.46 | +79.45
|
| +0.63%
|
International Markets
| Market
Index |
Close | Change |
| NIKKEI | 9707.37 | -15.87
|
| -0.16%
|
||
| HANG
SENG |
21387.96 | -292.12 |
| -1.35%
|
||
| SENSEX | 17583.97 | -168.71 |
| -0.95%
|
||
| FTSE 100 | 5931.25 | +59.74
|
| -+1.02%
|
Bonds
| Bonds | % Yield | Previous % Yield |
| CND.
10 Year Bond |
2.006 | 1.989 |
| CND.
30 Year Bond |
2.614 | 2.598 |
| U.S.
10 Year Bond |
2.0261 | 1.9722 |
| U.S.
30 Year Bond |
3.1476 | 3.0808 |
Currencies
| BOC Close | Today | Previous |
| Canadian $ | 1.01446 | 1.01048 |
| US
$ |
0.98575 | 0.98963 |
| Euro Rate
1 Euro= |
Inverse
|
|
| Canadian
$
|
1.31226 | 0.76193 |
| US
$
|
1.33129 | 0.75115 |
Commodities
| Gold | Close | Previous |
| London Gold
Fix |
1721.00 | 1695.90 |
| Oil | Close | Previous
|
| WTI Crude Future | 108.85 | 106.88 |
Market Commentary:
Canada
By Matt Walcoff
March 1 (Bloomberg) — Canadian stocks rose as Royal Bank of Canada and Toronto-Dominion Bank, the nation’s biggest lenders, paced gains among financial companies after boosting their dividends following higher-than-estimated earnings.
Royal Bank gained 2 percent, and TD rallied 1.5 percent.
Bombardier Inc., a maker of trains and airplanes, slumped 9.5 percent after missing analysts’ average sales estimate for a third straight quarter. Ithaca Energy Inc., which explores for oil and gas in the North Sea, jumped 13 percent after saying it received more interest in a possible takeover.
The S&P/TSX Composite Index advanced 79.45 points, or 0.6 percent, to 12,723.46.
“The markets were clearly surprised,” Andrew Pyle, an associate money manager on a Bank of Nova Scotia team that oversees about C$200 million ($200 million), said in a phone interview from Peterborough, Ontario. “A lot of investors thought the financials would keep money tight to the vest.”
The S&P/TSX gained 5.8 percent in January and February, its best start to a year since 2004, as U.S. unemployment dropped to the lowest in almost three years, Greece agreed to terms for a second bailout and oil prices advanced on tension between Iran and Western countries.
Royal Bank’s first-quarter earnings beat the average analyst estimate in a Bloomberg survey by 9.7 percent, excluding certain items. The company raised its quarterly dividend 5.6 percent. TD, its largest domestic rival, surpassed forecasts excluding certain items by 5.1 percent and increased its payout
5.9 percent.
The S&P/TSX Financials Index rallied to the highest level since July. Royal Bank climbed 2 percent to C$56.80, extending its streak of gains, the longest in two years, to eight days. TD rose 1.5 percent to C$82 after closing at the highest since July yesterday. Manulife Financial Corp., North America’s third- largest insurer, gained 2.1 percent to C$12.64.
Raw-materials producers advanced as gold rebounded from yesterday’s 4.3 percent plunge and copper climbed on the Comex in New York.
Goldcorp Inc., the world’s second-largest gold producer by market value, rose 2 percent to C$48.91. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, gained 3.5 percent to C$23.43 after China reported manufacturing growth accelerated last month. Ivanhoe Mines Ltd., Rio Tinto Group’s majority-owned partner in Mongolia’s Oyu Tolgoi project, rallied 5.5 percent to C$18.11.
China Gold International Resources Corp. tumbled 8.1 percent to C$3.98 as the metal fell 3.9 percent in Shanghai.
Bombardier sank 9.5 percent, the most since March 2009, to
C$4.30 after reporting fourth-quarter sales that trailed the average analyst estimate in a Bloomberg survey by 9 percent. The company forecast a fifth straight annual decline in aircraft deliveries this year.
Timothy James, an analyst at TD, cut his rating on the shares to hold from buy. Cameron Doerksen of National Bank of Canada reduced his rating on Bombardier to sector perform from outperform, meaning the shares will perform in line with the industry over the next 12 months.
Oil and gas producers advanced as crude oil touched $110 a barrel in electronic trading in New York.
Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, increased 1.9 percent to C$37.41. Cenovus Energy Inc., Canada’s fifth-biggest company in the industry by revenue, climbed 1.3 percent to C$38.95.
Precision Drilling Corp., the country’s largest drilling company, rallied 5.2 percent to C$12.60.
Ithaca Energy soared 13 percent to C$3.20, the highest close since January 2008, after saying it has “received unsolicited interest from a number of third parties.” The company said Jan. 23 it had received a takeover proposal.
Research In Motion Ltd. fell 4.9 percent to C$13.35 after Peter Misek, an analyst at Jefferies Group Inc., said the BlackBerry maker is likely to estimate quarterly earnings below the average analyst forecast. Misek cut his 12-month price estimate on RIM’s U.S.-traded shares to $12 from $15.
Calfrac Well Services Ltd. advanced 8.7 percent to C$35.15 after Moody’s Investors Service raised its credit rating to Ba3 from B1. Ratings in the Ba category have “substantial” credit risk rather than “high” risk as in the B category. Terry Marshall, an analyst at Moody’s, cited higher spending by oil and gas producers as a reason for the upgrade in a note.
Calfrac shares have jumped 26 percent since Feb. 27 for the biggest three-day gain since March 2004.
Yoga-wear retailer Lululemon Athletica Inc. increased 5.4 percent to a record C$69.86 after Jim Duffy, an analyst at Stifel Financial Corp., boosted his 12-month price forecast on its U.S. shares to $77 from $70. Stifel’s checks have found “positive consumer response to new styles and color palettes”
as well as changes to Lululemon’s website, Duffy wrote in a note to clients. The company’s market value surpassed C$10 billion.
US
By Rita Nazareth
March 1 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level since 2008, amid a rally in financial shares and after government data showed that jobless claims declined to a four-year low.
JPMorgan Chase & Co. and Bank of America Corp. climbed at least 1.8 percent as Spanish and French borrowing costs fell.
ConocoPhillips added 2.2 percent, pacing gains in energy producers, as crude oil traded near $110 a barrel. Gap Inc., the largest U.S. apparel chain, increased 7.2 percent as same-store sales exceeded estimates. General Motors Co. jumped 1.7 percent after the automaker reported a surprise U.S. sales gain.
The S&P 500 added 0.6 percent to 1,374.09 at 4 p.m. New York time, after a three-month gain. The Dow Jones Industrial Average rose 28.23 points, or 0.2 percent, to 12,980.30.
“We’re not lighting the world on fire, but we’re seeing improvement in the economy,” said Mark Masterson, managing director and partner at HighTower’s Masterson, Emma & Associates in Naples, Florida. Hightower has over $25 billion in assets.
“The risk from the European situation has been reduced. I don’t know that it’s been eliminated. Best I can say at this point is that it appears to have been postponed.”
Equities rose as the number of Americans filing first-time claims for jobless benefits fell to a level matching a four-year low, more evidence the labor market is healing. Gains in Europe also helped lift the S&P 500 after Spain and France sold 12.5 billion euros ($16.7 billion) of bonds as the European Central Bank’s long-term refinancing operation of lending to banks helped spur demand.
Financial shares had the biggest gain in the S&P 500 among
10 industries, adding 1.2 percent. JPMorgan increased 2.9 percent, the most in the Dow, to $40.37. Bank of America had the second-largest advance in the 30-stock gauge, climbing 1.9 percent to $8.12.
Goldman Sachs Group Inc. jumped 5.2 percent to $121.13. The fifth-biggest U.S. bank by assets agreed to buy Ariel Holdings Ltd.’s Bermuda-based insurance and reinsurance businesses to expand property and casualty coverage.
Benchmark gauges briefly pared gains as oil jumped after a report of an explosion on a pipeline in Saudi Arabia. A government official said late today there was no sabotage to its oil facilities in the Qatif region. Energy shares in the S&P 500 added 0.9 percent as a group. ConocoPhillips gained 2.2 percent to $78.22.
“U.S. stocks and economic data appear to be moving at least two steps forward for every step back which, we believe, leads to a strengthening trend for both,” said Kully Samra, who manages U.K.-based clients for Charles Schwab Corp., which has
$1.6 trillion of assets globally. “Rising oil prices are a risk to global growth, but we’re optimistic the improved environment will keep the recovery in motion.”
Gap surged 7.2 percent, the most in the S&P 500, to $25.05.
Sales climbed 4 percent, beating the average projection for a
1.4 percent drop from analysts surveyed by Retail Metrics Inc.
Unseasonably warm weather boosted purchases of spring merchandise.
Car companies had the biggest gain in the S&P 500 among 24 industries, rallying 2.1 percent. GM added 1.7 percent to $26.47 as deliveries rose 1.1 percent in February to 209,306 cars and light trucks, beating analysts’ estimates for a 4.8 percent drop. Ford Motor Co. climbed 2.3 percent to $12.66 after sales also topped analysts’ estimates.
Advanced Micro Devices Inc. climbed 2.2 percent to $7.51.
The second-largest maker of processors for personal computers said it will pay $334 million to buy SeaMicro Inc., a chip designer with expertise in servers, adding technology that can help it compete with Intel Corp. in the market for data centers.
Monster Worldwide Inc. surged 15 percent to $8.01. The world’s largest online-recruiting company said it’s considering “all other strategic alternatives” to boost shareholder value.
Apple Inc. rose 0.4 percent to a record $544.47, gaining for a sixth day. Now that its market value has exceeded $500 billion, the biggest challenge for the maker of iPads may be staying there. It’s the sixth U.S. company crossing the threshold, data compiled by S&P show. The others are Microsoft Corp., General Electric Co., Cisco Systems Inc., Intel Corp. and Exxon Mobil Corp., in chronological order.
All five companies were below $500 billion a year after reaching that pinnacle, according to data compiled by Bloomberg.
GE was the only one to surpass that value afterward.
Today’s advance extended this year’s rally in the S&P 500 to 9.3 percent. Yet the index trades at about 14.2 times reported earnings, compared with the average since 1954 of 16.4 times, according to data compiled by Bloomberg.
The S&P 500 has the potential to reach 1,700 before the end of the year should the economy surprise investors the same way falling bond rates did in 1995, Birinyi Associates Inc. said.
An expansion that beat forecasts would help stocks rally after economists tempered their estimate for growth in 2012 to
2.2 percent from 2.3 percent earlier in the year, according to Laszlo Birinyi, who was among the first to suggest buying stocks in 2009. The potential for surprise is similar to 1995, when the yield on the 30-year U.S. Treasuries fell 1.93 percentage points, even as Wall Street predicted they would gain.
“In 1995, the consensus trade was higher yields, today it is tepid economic growth and the market is suggesting — perhaps insisting — an alternative to that consensus,” Birinyi wrote.
“We would encourage a more aggressive posture.”
UBS AG raised its forecasts for the S&P 500 and its companies earnings amid a “dramatic” improvement in the economy. Jonathan Golub’s year-end forecast for the benchmark gauge rose to 1,475 from 1,325. He estimates earnings-per-share of $103 this year and $112 in 2013. The previous forecasts were
$99 and $111, respectively.
A measure of homebuilders in S&P indexes lost 0.9 percent.
PulteGroup Inc. slumped 2.6 percent to $8.59. KB Home fell 1.3 percent to $11.27.
Sotheby’s tumbled 9.1 percent to $35.75. The publicly traded auctioneer of fine arts and collectibles said fourth- quarter profit fell 26 percent as sales slid.
Smaller companies trailed larger stocks in the U.S. in February, a sign that the S&P 500’s longest monthly rally in a year may be losing momentum, according to Bespoke Investment Group LLC.
The Russell 2000 Index, which tracks companies with an average market value of $738 million, added 2.3 percent last month, compared with a 4.1 percent gain in the S&P 500, whose members average $25.9 billion in value. The underperformance accelerated in the second half of the month, with the Russell
2000 rising on two of the last nine days and the S&P 500 gaining during seven.
“Small caps are cyclical in nature, and typically perform better during market rallies,” Justin Walters, Bespoke’s co- founder, wrote in a note yesterday. “They haven’t been rallying recently, which should be cause of concern for market bulls.”
Have a wonderful evening everyone.
Be magnificent!
First of all, accept yourself.
When you do not accept yourself and imagine yourself to be someone different,
a conflict arises between what you believe you are and what you really are.
-Swami Prajnanpad, 1891-1974
As ever,
Carolann
We must dare, and dare again, and go on daring.
-Georges Jacques Danton, 1759-1794
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President &
Senior Investment Advisor
