June 16, 2011 Newsletter
Dear Friends,
Tangents:
Today is Bloomsday, celebrating Irish writer James Joyce, and specifically his masterpiece, Ulysses :
-from Wikipedia:
Bloomsday is a commemoration observed annually on 16 June in Dublin and elsewhere to celebrate the life of Irish writer James Joyce and relive the events in his novel Ulysses, all of which took place on the same day in Dublin in 1904. Joyce chose the date because his first outing with his wife-to-be, Nora Barnacle happened on that day, when they walked to the Dublin urban village of Ringsend. The name derives from Leopold Bloom, the protagonist of Ulysses.
-from Ulysses:
A man of genius makes no mistakes. His errors are volitional and are the portals of discovery.
I was blue mouldy for the want of that pint. Declare to God I could hear it hit the pit of my stomach with a click.
Come forth, Lazarus! And he came fifth and lost the job.
Ineluctable modality of the visible.
History is a nightmare from which I am trying to awake.
Greater love than this, he said, no man hath that a man lay down his wife for a friend. Go thou and do likewise. Thus, or words to that effect, saith Zarathustra, sometime regius professor of French letters to the University of Oxtail.
Photos of the day
June 16, 2011
People attend the White Dinner event in front of the Notre Dame Cathedral in Paris on Thursday. Participants attending the dinner, which takes place at a different place in Paris every year, are required to be dressed in white and bring their own food, drink, and cutlery to the event. Gonzalo Fuentes/Reuters.
A National History Museum employee shows an ancient coin during official presentation of 21,000 pieces of cultural artifacts, ancient coins, jewelry and other antiquities originating from Bulgaria, which are being unveiled at Sofia, Bulgaria, on Thursday. A Canadian court ruling decided that the antiquities were illegally exported from Bulgaria to Canada and will be returned and put in the care of the National History Museum. Valentina Petrova/AP.
A woman poses in her hat on Ladies Day, the third day of racing at Royal Ascot in southern England on Thursday. Suzanne Plunkett/Reuters.
Market Commentary:
Canada
By Matt Walcoff
June 16 (Bloomberg) — Canadian stocks fell for a second day as raw-materials producers declined on concern Europe’s worsening debt crisis will slow the global economic recovery.
Goldcorp Inc., the world’s second-biggest producer of the precious metal by market value, slipped 2.6 percent as the U.S. dollar gained. Teck Resources Ltd., Canada’s largest base-metals and coal producer, dropped 2.4 percent after Greek Prime Minister George Papandreou sought a confidence vote, risking passage of budget cuts and asset sales. Potash Corp. of Saskatchewan Inc. lost 2.5 percent as the U.S. Senate voted to end an ethanol tax credit.
The Standard & Poor’s/TSX Composite Index decreased 106.46 points, or 0.8 percent, to 12,865.57 at 2:43 p.m. in Toronto.
“If you’re having European countries with large debt that they’re not able to address, that impacts global economic growth, and right now, the focus is on seeing economic growth deteriorate,” said Jennifer Dowty, the Toronto-based manager of the C$844.1 million ($856.4 million) Manulife Growth Opportunities Fund.
The Canadian stock benchmark slumped 6 percent this month through yesterday as U.S. employment and manufacturing data missed economists’ forecasts. Oil, copper, gold and silver all fell as the U.S. dollar gained.
The S&P/TSX Materials Index fell to the lowest intraday level since September. Twenty-nine of 33 gold stocks dropped, extending the S&P/TSX Gold Index’s year-to-date decline to 15 percent.
“There’s a lot of risk-aversion,” Dowty said. “People do not want to hold a gold stock, simply because it’s a stock. There’s company risk. There’s market risk.”
Goldcorp fell 2.6 percent to C$45.53. Kinross Gold Corp., Canada’s third-biggest producer of the metal, slipped 2.8 percent to C$14.69. Iamgold Corp., which mines in West Africa, South America and Quebec, declined 5.1 percent to C$18.32.
European Goldfields Ltd., which is developing gold and base- metals mines, slumped 8.2 percent to C$9.02, the lowest intraday since August.
China Gold International Resources Corp. rallied 4.6 percent to C$3.61 after closing at an 11-month low yesterday. Shares of the mining company had tumbled 22 percent in the two weeks ending yesterday as Sino-Forest Corp., which also operates in China, battled a short seller’s assertions of financial manipulation. Sino-Forest gained 3.4 percent from a five-year low to C$3.33 today.
For a second-straight day, all major base metals traded on the London Metal Exchange retreated.
Teck lost 2.4 percent to C$44.30. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 3.2 percent to C$117.50. Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia with Rio Tinto Group, slipped 4.1 percent to C$21.71. Energy and financial stocks rose after the U.S. reported fewer initial jobless claims and more housing starts and building permits than most economists had forecast.
Evertz Technologies Ltd., which makes electronics for broadcasters, sank 19 percent, the most in 39 months, to C$13.13 after reporting fourth-quarter earnings that missed the average analyst estimate by 35 percent, excluding certain items.
Potash Corp., the world’s largest fertilizer producer by market value, slid 2.5 percent to C$51.41 as corn futures fell for a fourth day. The U.S. Senate voted to eliminate a 45-cent- a-gallon tax credit.
Air Canada jumped 7 percent to C$2.15 after reaching a tentative agreement with the Canadian Auto Workers to end a strike of call-center, check-in and gate staff. The shares surged as much as 9 percent intraday, the most in 10 months.
US
By Rita Nazareth
June 16 (Bloomberg) — U.S. stocks rebounded, a day after the Standard & Poor’s 500 Index declined to a three-month low, as better-than-estimated housing starts and jobless claims reports tempered concern about a slowdown in the economy.
A gauge of 12 homebuilders in S&P indexes rallied 1.6 percent. Kroger Co. advanced 4.5 percent after the largest U.S. grocery chain raised its full-year profit forecast. Southern Union Co. soared 18 percent as Energy Transfer Equity LP agreed to buy it for $4.2 billion in the largest purchase of a pipeline company this year. Benchmark indexes erased gains earlier today amid concern big banks will face larger capital increases to comply with proposed international regulations.
The S&P 500 rose 0.2 percent to 1,267.64 at 4 p.m. in New York. The benchmark gauge for American equities is still up 0.8 percent this year. The Dow Jones Industrial Average advanced 64.25 points, or 0.5 percent, to 11,961.52 today.
“We’re bullish,” said Linda Duessel, the Pittsburgh-based equity market strategist at Federated Investors, which oversees $354.9 billion. “The market doesn’t believe that we’re going into a recession. It’s a soft patch. We should bounce back up.”
The S&P 500 has fallen 7 percent from this year’s high at the end of April amid concern about an economic slowdown.
Equities slumped as reports showed business activity cooled more than forecast, sales of existing homes unexpectedly declined and growth in industrial production stopped. The S&P 500 yesterday traded at 12.7 times forecast 2011 earnings, the lowest multiple in almost a year, according to data compiled by Bloomberg.
“We’re really oversold,” Steven Leuthold, founder of Leuthold Group LLC, said in an interview with Betty Liu on “In the Loop” on Bloomberg Television. “We’ve gone too far, too fast. There’s going to be some kind of a shift in confidence here. We’re probably close to an area where we’re going to get some significant bounce.”
Stocks rose after a report showed that jobless claims declined by 16,000 to 414,000 in the week ended June 11. Economists surveyed by Bloomberg News projected 420,000 filings, according to the median forecast.
Work began on 560,000 houses at an annual pace, up 3.5 percent from the prior month and exceeding the 545,000 median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. Building permits, a sign of future construction, also increased.
Stocks briefly erased gains after a report showed that manufacturing in the Philadelphia region unexpectedly shrank in June for the first time in nine months, raising the risk that factory production may contribute less to the expansion.
Homebuilders advanced. D.R. Horton Inc. rose 1.6 percent to $10.96. Lennar Corp. climbed 2.1 percent to $17.24. Home improvement retailers also gained. Home Depot Inc. increased 1.8 percent to $34.50.
Kroger rose 4.5 percent to $23.99. Earnings will be as much as $1.95 a share, Cincinnati-based Kroger said today. That compares with a previous forecast of up to $1.92. Analysts on average anticipate $1.90, according to a Bloomberg survey.
Southern Union soared 18 percent to $33.21. Shareholders of Houston-based Southern Union will get new units worth $33 each, representing a 17 percent premium to yesterday’s closing price. Energy Transfer also will assume $3.7 billion of debt.
Stocks also erased gains earlier today after people familiar with the matter said international financial supervisors are considering capital surcharges of as much as 3.5 percentage points on the largest banks if they grow bigger.
Draft plans circulated before a meeting next week of the Basel Committee on Banking Supervision would subject banks to a sliding scale depending on their size and links to other lenders, said the people, who declined to be identified because the proposals aren’t public. Banks wouldn’t initially face the highest surcharge, which is intended as a deterrent to expansion, one person said. The largest banks may face a 3 percentage point levy at their current sizes, the person said.
Citigroup Inc. retreated 1 percent to $37.63. JPMorgan Chase & Co. declined 0.8 percent to $40.36.
“We need the banks for the economy to recover,” said Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York. “If the capital requirements are too restrictive, some banks may have to raise more capital. If restrictions are more severe than expected, that may also prevent banks from lending as much as people want them to do.”
Finisar Corp. slumped 16 percent to $14.84. The maker of fiber-optic transmission gear reported fourth-quarter revenue of $236.9 million, missing the average analyst estimate of $243 million. Rivals JDS Uniphase Corp. declined 5.8 percent to $15.57, while Ciena Corp. dropped 4.7 percent to $17.26.
Pandora Media Inc. tumbled 24 percent to $13.26, erasing yesterday’s gain, amid concern that competition may stymie efforts by the online-radio company to reach profitability.
Individual investors and newsletter writers are the most bearish on U.S. stocks since at least August, a sign the six- week slump may be nearing an end, according to analysts who use charts to predict markets.
The 7.2 percent drop in the S&P 500 since its April high through yesterday has turned more investors pessimistic as economic reports stoked concern the economy is slowing. A survey from the American Association of Individual Investors showed bears outnumbering bulls by the biggest margin since August. The ratio of bullish-to-bearish publications in Investors Intelligence’s survey was the lowest since September.
“We have some fear in the market,” Katie Stockton, MKM Partners’ chief market technician, said in an interview from Greenwich, Connecticut. “It’s a good thing from a contrarian perspective in that a market low typically is established when there is fear in the market.”
Have a wonderful evening everyone.
Be magnificent!
We have at the present moment everybody claiming the right of conscience without going through any discipline whatsoever that there is so much untruth being delivered to a bewildered world.
Truth is not to be found by anybody who has not got a sense of humility.
If you would swim on the bosom of this ocean of Truth
you reduce yourself to a zero.
-Mahatma Gandhi, 1869-1948
As ever,
Carolann
“The artist, like the God of creation, remains within orbehind or beyond or above his handiwork, invisible, refinedout of existence, indifferent, paring his fingernails.”
-James Joyce, 1882-1941
A Portrait of the Artist as a Young Man