June 24th, 2011 Newsletter
Dear Friends,
Tangents: I read this article recently and thought it interesting; hope you do too.
The King’s Visit
by Peter Grier
During his state visit to Britain May 24-26, President Obama gave Queen Elizabeth II a leather-bound album of mementos from her parents’ trip to the United States in 1939. The queen seemed to like it, and even stuffy British commentators thought the gesture classy. But little news coverage noted that the 1939 royal tour of America—which occurred 72 years ago this week—was a triumph of public relations and one of the most important diplomatic events in the history of US-British relations. If it were made into a movie, “The King’s Visit” could be just as dramatic and moving as “The King’s Speech.”
It would be the same king in both films, of course – King George VI. The darkening atmosphere would be the same, as the night of World War II was drawing across Europe. But the pivotal character would be Franklin D. Roosevelt instead of speech therapist Lionel Logue. The prime obstacle to be overcome would be, not a stammer, but Americans’ historical memory of the redcoats.
No reigning British monarch had ever set foot on US soil until King George and his wife, Queen Elizabeth, crossed the border from Canada on June 7, 1939. Many US voters were isolationist and wanted no part of a European war. FDR thought the sight of a real king might change their minds. “I think it would be an excellent thing for Anglo-American relations,” he said in his breezy invitation to “My dear King George.”
The canny FDR was right. Crowds lined D.C. streets for a glimpse of the modest king. Newsreels noted that the last time the British had marched through the streets of Washington, they burned the White House. This time, they burned only a few hot dogs, the dish President Roosevelt famously served the royal couple during their visit to his home in Hyde Park, N.Y.
Three months later, Britain and Germany were at war. Americans sympathized with Britain’s plight, due in no small part to the royal visit, according to the FDR library’s history of the visit. “Britons were no longer strangers or the evil colonial rulers from the past but familiar friends and relatives with whom Americans could identify,” concludes the history.
First Lady Michelle Obama addressing graduates of Spelman College earlier this month:
That is the story of Spelman College: that unyielding presumption of promise, that presumption of brilliance, that presumption that every woman who enrolls at this school has something infinitely valuable to offer this world….That legacy is now your inheritance. And I’ve chosen that word – inheritance – very carefully, because it’s not an entitlement that you can take for granted. It’s not a gift with which you can do whatever you please. It is a commitment that comes with a certain set of obligations, obligations that don’t end when you march through that arch today….
I want you to think about women like [Spelman graduates] Marian Wright Edelman and Janet Bragg….Instead of focusing on what they didn’t have, they focused on what they did have: their intellect, their courage, their determination, their passion. And with few advantages and long odds, with doors closed to them and laws stacked against them, still they achieved, still they triumphed, still they carved a glorious path for themselves in this world. And graduates, every single one of you has an obligation to do the same.
Photos of the day
June 24, 2011
President Barack Obama signs a robot after speaking at Carnegie Mellon University in Pittsburgh.
Carolyn Kaster/AP
A visitor looks at a LEAP turbine during the 49th Paris Air Show at the Le Bourget airport near Paris. LEAP is next-generation engine family for single-aisle jets selected by Airbus to power A320neo. Gonzalo Fuentes/Reuters
Market Commentary:
Canada
By Matt Walcoff
June 24 (Bloomberg) — Canadian stocks fell for a third day, led by energy companies, as gold futures dropped to a five- week low and crude oil failed to rebound from yesterday’s 4.6 percent plunge.
Goldcorp Inc., the world’s second-biggest gold producer by market value, fell 2.8 percent as concern Greece’s debt crisis will spread to other European countries boosted the U.S. dollar.
Nexen Inc., an oil and gas producer with operations on five continents, lost 2 percent a day after the International Energy Agency said it will release of 60 million barrels of crude.
The Standard & Poor’s/TSX Composite Index slipped 70.69 points, or 0.5 percent, to 12,908.89 at 4 p.m. in Toronto. It gained 0.9 percent this week.
“Two things are going on: The risk trade is starting to come off a bit — when that happens there’s a movement toward safer currencies such as the U.S. dollar — and then the worry that Greece is going to default,” said Tony Demarin, chief investment officer at BCV Asset Management in Winnipeg, Manitoba, which oversees C$300 million ($305 million).
The S&P/TSX broke a three-week losing streak as investors speculated Greece will be able to enact austerity measures and avoid default. European leaders meeting in Brussels today attempted to stanch the crisis, vowing to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week.
Base-metals producers climbed this week, while gold companies rebounded from a two-year low relative to prices of the metal. Gold and silver retreated today as the U.S. dollar gained for a third day against a basket of world currencies. The cost to insure against a sovereign-debt default in Europe rose to a record as Moody’s Investors Service said it may cut its ratings on 13 Italian banks.
Goldcorp fell 2.8 percent to C$46.24. Silver Wheaton Corp., Canada’s fourth-largest precious-metals company by market value, dropped 3.4 percent to C$31.34. Iamgold Corp., which mines in West Africa, South America and Quebec, lost 4.4 percent to C$17.73, a five-month low.
Crude oil futures have fallen four straight weeks.“The rest of the world seems to believe we need lower oil prices in order for the economy to start growing again,” Demarin said. “Opening up the petroleum reserve is something they don’t do all that often.” Nexen declined 2 percent to C$19.49, extending its three- day drop to 5.6 percent. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, slipped 1.6 percent to C$38.26.
Niko Resources Ltd., which produces energy in South Asia, lost 3.2 percent to C$62.85 after agreeing to plead guilty to a Canadian charge of bribing a Bangladeshi official. The shares closed at the lowest level since May 2009.
Copper futures advanced as much as 2.5 percent in New York after the U.S. reported a bigger increase in durable-goods orders for May than most economists had forecast.
First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, climbed 3.2 percent to C$127.45. Teck Resources Ltd, the country’s biggest base-metals and coal producer, rose 0.9 percent to C$45.95.
BlackBerry maker Research In Motion Ltd. decreased 3.1 percent to C$28.23, trimming its weekly gain to 3.6 percent. Speculation that RIM may be acquired is unwarranted, Kris Thompson, an analyst at National Bank of Canada, said in a note to clients.
US
By Rita Nazareth and Cecile Vannucci
June 24 (Bloomberg) — U.S. stocks retreated, sending the Standard & Poor’s 500 Index lower for a third straight day, as concern about the European debt crisis intensified and Oracle Corp. dragged down technology shares.
Technology companies in the S&P 500 dropped 1.8 percent as a group. Oracle, the largest maker of database software, sank 4.1 percent after reporting lower hardware sales. Micron Technology Inc. tumbled 14 percent as the maker of computer- memory chips reported sales and profit that missed estimates.
Bank of America Corp. and JPMorgan Chase & Co. slumped at least 1.4 percent, following losses in European lenders.
The S&P 500 fell 1.2 percent to 1,268.45 at 4 p.m. in New York, extending its drop in June to 5.7 percent. The Dow Jones Industrial Average declined 115.42 points, or 1 percent, to 11,934.58 today. More than 10.1 billion shares changed hands on U.S. exchanges as of 5 p.m., the highest since March, as investors bought and sold shares to match Russell Investments’ annual changes to its equity indexes. Russell says about $3.9 trillion is benchmarked to its global stock-market measures.
“The market has been in a correction mode for the month of June,” said Timothy Ghriskey, chief investment officer at the Solaris Group LLC in Bedford Hills, New York, which manages $2 billion. “The focus really has been on the European debt crisis, on Greece and on the potential for contagion.”
The S&P 500 has retreated 7 percent from this year’s high at the end of April amid weaker-than-estimated economic data and concern about Europe’s debt crisis. The index is still up 0.9 percent in 2011 on government stimulus measures and better-than- expected earnings.
Stocks fell as banks dragged on Europe’s benchmark index after Moody’s Investors Service said it may downgrade 13 Italian lenders because they would be vulnerable to a cut in the government’s credit rating. The euro dropped a third day and bond yields rose in Spain and Italy. Declines in the financial and technology companies overshadowed faster-than-forecast growth in U.S. durable-goods orders and European leaders’ pledge to support Greece if the nation approves austerity measures.
Equity futures rose earlier after the Commerce Department said orders for durable goods, or equipment meant to last at least three years, rose 1.9 percent, beating the median economist forecast of 1.5 percent. Demand for non-military capital equipment also beat expectations after revised April readings showed a smaller decline than previously reported.
“We’re getting indications that this is only a temporary soft spot for the economy,” said Burt White, who helps oversee $284 billion as chief investment officer at LPL Financial Corp. in Boston. “I do see a better economic picture in the back half of this year.”
A gauge of technology companies in the S&P 500 dropped 1.8 percent as 70 of its 74 stocks retreated. Oracle slumped 4.1 percent to $31.14. Chief Executive Officer Larry Ellison bought Sun Microsystems Inc. last year to capitalize on demand for the servers and databases used in data centers. While the hardware results may reflect Oracle’s effort to pare less-profitable machines from the lineup, they were disappointing enough to overshadow better-than-predicted performance in profit and sales of new software licenses.
Micron Technology tumbled 14 percent to $7.21. The price of dynamic random access memory, or DRAM, for personal computers dropped as supplies increased and demand from makers of consumer laptops and desktop PCs remained sluggish, the Boise, Idaho- based company said. Orders are also slowing for chips used in inexpensive mobile phones, pushing down prices, Micron Chief Executive Officer Steve Appleton said.
The KBW Bank Index of 24 stocks fell 1 percent. Bank of America, the largest U.S. lender by assets, retreated 1.8 percent to $10.52. JPMorgan declined 1.5 percent to $39.49.
The pace of profit growth by U.S. companies will slow as the cost of labor increases and stock investors should be wary of sovereign-debt concerns, according to Citigroup Inc.’s Tobias Levkovich. “The rate of growth is going to diminish meaningfully,” said Levkovich, Citigroup’s New York-based chief U.S. equity strategist, in an interview today on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene. “Margin pressures are driven by labor-cost changes, so as we’re starting to come and bring on some workers back, this is actually starting to chop into margins.”
Levkovich recommended avoiding consumer-discretionary stocks, including retail and media companies, as well as health- care shares as the government considers budget cutbacks. He said investors should be cautious about buying equities until there’s more clarity on the debt situations in Greece and the U.S.
Have a wonderful weekend everyone.
Be magnificent!
The healing of the mind takes place gradually on contact with nature,
with the orange on the branch, the blade of grass eating its way into the cement,
and the hills hidden by the clouds.
-Krishnamurti, 1895-1986
As ever,
Carolann
It pays to be obvious, especially if you
Have a reputation for subtlety.
-Isaac Asimov,1920-1992