June 13, 2011 Newsletter
Dear Friends,
Birthday: William Butler Yeats, June 13, 1865.
Sailing To Byzantium
I
That is no country for old men. The young
In one another’s arms, birds in the trees
—Those dying generations—at their song,
The salmon-falls, the mackerel-crowded seas,
Fish, flesh, or fowl commend all summer long
Whatever is begotten, born, and dies.
Caught in that sensual music all neglect
Monuments of unageing intellect.
II
An aged man is but a paltry thing,
A tattered coat upon a stick, unless
Soul clap its hands and sing, and louder sing
For every tatter in its mortal dress,
Nor is there singing school but studying
Monuments of its own magnificence;
And therefore I have sailed the seas and come
To the holy city of Byzantium.
III
O sages standing in God’s holy fire
As in the gold mosaic of a wall,
Come from the holy fire, perne in a gyre,
And be the singing-masters of my soul.
Consume my heart away; sick with desire
And fastened to a dying animal
It knows not what it is; and gather me
Into the artifice of eternity.
IV
Once out of nature I shall never take
My bodily form from any natural thing,
But such a form as Grecian goldsmiths make
Of hammered gold and gold enamelling
To keep a drowsy Emperor awake;
Or set upon a golden bough to sing
To lords and ladies of Byzantium
Of what is past, or passing, or to come.
-William Butler Yeats
Photos of the day
June 13, 2011 
Kate, Duchess of Cambridge, the Duchess of Cornwall, (l.), and the Earl of Derby watch the procession pass at the Order of The Garter Service in Windsor, England. The annual service is held in St George’s Chapel at Windsor Castle.
Kirsty Wigglesworth/AP
People in traditional Bavarian clothes attend a church service to commemorate the 1886 death of Bavarian King Ludwig II, also known as Mad King Ludwig, in Berg, Germany.
Michael Dalder/Reuters
Market Commentary:
Canada
By Inyoung Hwang
June 13 (Bloomberg) — Canadian stocks retreated, extending two straight weeks of losses, as energy companies declined amid concern a weakening global economy will trim demand for oil.
Canadian Natural Resources Ltd. dropped 2.6 percent as crude oil slid before reports this week that may show Chinese industrial production and U.S. retail sales slowed. Goldcorp Inc. declined 1.8 percent as the price of the metal sank. TMX Group Inc. gained 0.4 percent after Maple Group Acquisition Corp. urged shareholders to reject a rival takeover bid.
The Standard & Poor’s/TSX Composite Index lost 146.72 points, or 1.1 percent, to 12,937.28 at 1:45 p.m. in Toronto.
“We have many problems that are continuing on — both concerning the economy and remarks out of the Fed,” said Michael Smedley, who helps manage about C$1.2 billion ($1.23 billion) as a money manager at Morgan Meighen & Associates Ltd. in Toronto. Oil remains around $100 a barrel “with no clear evidence as to whether there’s a shortage of oil. It was a rotational event after gold and silver had been dominating commodities for so long.”
Canadian stocks fell 3.2 percent last week, the biggest drop since March. Energy and metal producers led the slump after al-Hayat newspaper reported Saudi Arabia will raise oil production to 10 million barrels a day next month. The S&P/TSX fell 5.4 percent from May 30 through June 10 as U.S. economic reports trailed economists’ forecasts and U.S. Federal Reserve Chairman Ben Bernanke called his country’s recovery “frustratingly slow.”
Energy stocks dropped 1.9 percent today, the biggest loss out of 10 groups in the S&P/TSX. Crude futures slid as much as 3.2 percent before economic reports on the U.S. and China, the two largest crude consumers. Canadian Natural Resources, the country’s second-largest energy company, erased 2.6 percent to C$38.32. Encana Corp. dropped 2.4 percent to C$30.95 as prices for natural gas fell 2.5 percent.
U.S. advance retail sales are forecast to drop 0.5 percent in May, following a 0.5 percent gain in April, according to the median estimate of economists surveyed by Bloomberg News ahead of Commerce Department data tomorrow. China’s industrial production growth may have slowed to 13.1 percent in May from 13.4 percent in April, according to a separate Bloomberg survey.
Material stocks had the second-biggest decline out of the 10 groups as the prices of gold, silver and copper all fell. Goldcorp declined 1.8 percent to C$45.36. Silver Wheaton Corp. sank 5.3 percent to C$29.78.
TMX advanced 0.4 percent to C$43.97 as Maple Group Acquisition said TMX shareholders must vote against a takeover bid from London Stock Exchange Group Plc on June 30 for Maple Group’s rival takeover plan to proceed. Maple Group, which includes 13 Canadian financial-services companies and pension funds, sent documents to TMX shareholders supporting its unsolicited cash-and-stock takeover bid that it values at C$3.7 billion ($3.8 billion).
Valeant Pharmaceuticals International Inc. rose 0.1 percent to C$51.80, after rising as much as 3.1 percent. The Canadian drugmaker and GlaxoSmithKline Plc won U.S. approval for an epilepsy drug designed as an add-on therapy for patients who aren’t helped by current treatments. The Food and Drug Administration cleared the medicine, ezogabine, which will be marketed as Potiga.
Uranium stocks sank after Italy voted to ban nuclear power. Uranium One Inc. slumped 6.8 percent to C$2.62. The Vancouver- based company has fallen for 11 straight days as reports last week said Japan’s 54 nuclear reactors may go idle next spring and Germany said in May it would close its nuclear reactors by 2022.
US
By Nikolaj Gammeltoft and Inyoung Hwang
June 13 (Bloomberg) — U.S. stocks rose, rebounding from six weeks of losses, as a pickup in takeovers and the cheapest valuations in almost a year helped offset concerns about a slowdown in the economic recovery.
Transatlantic Holdings Inc., the reinsurer formerly owned by American International Group Inc., surged 9.5 percent after agreeing to merge with Switzerland’s Allied World Assurance Company Holdings AG. Timberland Co. rallied 44 percent as VF Corp. said it will buy the footwear maker for $1.8 billion.
Halliburton Co. and Freeport-McMoRan Copper & Gold Inc. slumped at least 1.2 percent amid falling commodity prices.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,271.83 at 4 p.m. in New York after dropping as much as 0.4 percent. The Dow Jones Industrial Average climbed 1.06 points, or less than 0.1 percent, to 11,952.97 after sliding for six straight weeks, the longest stretch since 2002. The Russell 2000 Index of small companies slipped 0.3 percent to 777.20 after erasing its gain for the year on June 10. About three stocks fell for every two that rose on U.S. exchanges.
“Corporate managers are more positive on their prospects than investors, which we see expressed in the deals today,” said Tim Hoyle, director of research at Radnor, Pennsylvania- based Haverford Trust, which manages $6.5 billion. “People came in this morning and saw these good deals,” he said. More than $1 trillion has been erased from U.S. equity markets since the S&P 500’s peak on April 29, leaving the measure trading at about 12.8 times its companies’ estimated earnings for 2011. That’s the cheapest valuation since August.
The S&P 500 fell 6.8 percent from the end of April through June 10 as sales of existing homes unexpectedly declined, the unemployment rate rose and concern about the European debt crisis increased. General Electric Co., the benchmark’s fifth- largest company by weighting, retreated 15 percent from this year’s high on Feb. 17. Bank of America Corp. plummeted 27 percent in the same period.
Transatlantic rallied 9.5 percent to $48.19 after agreeing to merge with Allied World Assurance in a $3.2 billion deal that creates a reinsurer with operations in 18 countries. Allied will exchange 0.88 of a share for each Transatlantic share to create TransAllied Group Holdings AG, with Transatlantic’s shareholders owning about 58 percent of the combined company, the insurers said yesterday in a statement.
Timberland climbed 44 percent to $43.20 after agreeing to be bought for $43 a share. VF, the world’s largest apparel maker, said the boards of both companies voted to approve the deal and its stock advanced 10 percent to $101.01.
Graham Packaging Co. jumped 17 percent to $25.63. The maker of plastic containers controlled by Blackstone Group LP said it has received an unsolicited proposal from an unidentified bidder to acquire all of its shares for $25 a share in cash. The company agreed to be bought by Silgan Holdings Inc. in April for about $4.1 billion including debt.
Ness Technologies Inc. jumped 14 percent to $7.60 after the Israeli computer-services provider agreed to be acquired by Citi Venture Capital International for $307 million in cash.
About $428.3 billion in mergers and acquisitions targeting U.S. companies have been announced so far this year, a 24 percent increase compared with the same period last year, according to data compiled by Bloomberg. More than two dozen deals totaling $6.9 billion were announced today.
Energy shares fell 1.4 percent, the most among 10 S&P 500 industry groups. Materials producers lost 0.6 percent, the second-most in the benchmark index. Crude oil for July delivery fell 2 percent to $97.30 a barrel on the New York Mercantile Exchange, after declining to $96.13, the lowest intraday level since May 20. The Thomson Reuters/Jefferies CRB Index of commodities slipped 1 percent.
Halliburton, the world’s second-largest oilfield services provider, retreated 2.4 percent to $46.86. Freeport, the world’s largest publicly traded copper producer, slipped 1.2 percent to $48.33.
Stocks retreated before rebounding and oil extended losses as S&P cut Greece’s credit rating to the world’s lowest debt grade. Greece had its credit rating cut by three levels to CCC and the rating company said today the nation is “increasingly likely to restructure its debt.” A restructuring would likely “result in one or more defaults under our criteria,” S&P said. The downgrade follows Moody’s Investors Service’s decision this month to grade Greece only one level higher.
European Central Bank President Jean-Claude Trichet and German Finance Minister Wolfgang Schaeuble remain at odds over investors’ role in the second Greek rescue in 14 months. The dispute turns on how politicians make good on a promise to push creditors to pay some of the cost, a step that Trichet said on June 9 could be an “enormous mistake.”
Finance ministers have called a special meeting tomorrow as they try to avoid what European Economic and Monetary Affairs Commissioner Olli Rehn called a “Lehman Brothers catastrophe on European soil.”
New York University professor Nouriel Roubini warned in an interview that a “perfect storm” of fiscal woe in the U.S., a slowdown in China, European debt restructuring and stagnation in Japan may converge on the global economy.
A Commerce Department report tomorrow may show U.S. retail sales fell for the first time in 11 months in May. A 0.5 percent drop in purchases would follow a 0.5 percent gain in April, according to the median forecast of 62 economists surveyed by Bloomberg. Other data might show inflation eased.
“We’re between data points as we approach a technically important level of support in the 1,250 to 1,260 range on the S&P 500,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “Investors are testing this channel of support for the market place, and we’ve been looking at that level as a place where we could get a relief rally if it holds. Below this level we may go into a void down to the 1,200 range.”
Have a wonderful evening everyone.
Be magnificent!
If a man does not of his own free will put himself last among his creatures,
there is no salvation for him.
-Mahatma Gandhi, 1869-1948