July 12th, 2011 Newsletter
Dear Friends,
Tangents:
Lady Gaga complained that the U.S. is allowing Iran and North Korea to get nukes and we have to stop
them. Before the White House makes any decision, they’re waiting to hear from Britney Spears.
– Jay Leno
MORE TITLES FOR THE SUMMER’S BEST READS:
Non-Fiction:
THE HOUSE IN FRANCE by Gully Wells
Knopf Doubleday
A memoir by the daughter of a privileged London couple who owned a beloved summer home in France is an engaging glimpse into the lives of interesting Europeans in the 1960s.
THE MOST BEAUTIFUL WALK IN THE WORLD: A Pedestrian in Paris by John Baxter
HarperCollins
Film critic and biographer John Baxter takes readers on various strolls through the streets of Paris, tracking both the city’s history and the many celebrated figures who have savored the art of walking in one of the world’s most beautiful cities.
Photos of the day
July 12, 2011
Flutes are played around a bonfire as the Orange Order celebrates a divisive annual holiday called The Twelfth in Glenarm, Northern Ireland. Paul Faith/AP
Former Nepalese Crown Princess Himani Shah offers prayers by lighting a butter lamp at the temple of Lord Ganesh in Kathmandu, Nepal. Navesh Chitrakar/Reuters
Market Commentary:
Canada
By Matt Walcoff
July 12 (Bloomberg) — Canadian stocks rose for the first time in three days as gold advanced for a sixth-straight session and mining companies gained as investors sought havens from the European debt crisis.
Goldcorp Inc., the world’s second-largest producer of the metal by market value, increased 2.9 percent. Westport Innovations Inc., which develops natural-gas engine technologies, jumped 8 percent after energy producer Chesapeake Energy Corp. said it will form a fund to invest in its industry. Alimentation Couche-Tard Inc., the owner of Mac’s convenience stores, climbed 3 percent after beating analysts’ profit forecasts.
The Standard & Poor’s/TSX Composite Index increased 83.94 points, or 0.6 percent, to 13,263.69 at 2:26 p.m. in Toronto after sinking as much as 0.6 percent earlier today.
“There’s risk aversion with respect to what’s happening in Europe,” said Andrew Pyle, who helps manage C$200 million ($207 million) as an associate money manager at Bank of Nova Scotia’s ScotiaMcLeod unit in Peterborough, Ontario. “We’re seeing two streams of safe-haven flows right now, one to the U.S. dollar, and you’ve got gold going up.”
The S&P/TSX dropped the most in five weeks yesterday as investors speculated the European crisis will spread to Italy and oil and base metals fell. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value, according to Bloomberg data.
The euro touched a four-month low against the U.S. dollar today as European finance officials considered remedies that would put Greece into temporary default, a move opposed by the European Central Bank.
In the U.S., President Barack Obama rejected Republican Party efforts to focus on a scaled-down deficit-reduction deal, saying the country needs to both cut spending and raise taxes.
Stocks extended their advance after the U.S. Federal Open Market committee minutes showed some members at its June 21-22 meeting said more stimulus may be necessary.
Gold stocks contributed the most to the S&P/TSX’s rise among industries in the index as the metal rallied 0.8 percent.
Goldcorp gained 2.9 percent to C$50.23. Barrick Gold Corp., the world’s largest producer, advanced 2.4 percent to C$45.55. Rubicon Minerals Corp., which explores for gold in Ontario, rebounded 9 percent from a 22-month low to C$3.39.
Silver Wheaton Corp., the country’s fourth-biggest precious-metals company by market value, increased 5.1 percent to C$35.69 as silver rose in electronic trading.
Uranium One Inc., a mining company controlled by Moscow- based ARMZ Uranium Holding, climbed 5.4 percent to C$2.95 after David A. Talbot, an analyst at Dundee Securities Corp., said uranium companies are “showing positive momentum” four months after Japan’s earthquake and nuclear disaster.
“We are starting to see more positive news coming from the sector — indications that despite Fukushima, not all that much has changed regarding the supply-demand fundamentals of the sector,” Talbot wrote in a note to clients, referring to the stricken Japanese nuclear power plant.
Westport Innovations surged 8 percent to C$25.41 after Oklahoma City-based Chesapeake said it will invest $1 billion in companies that develop infrastructure or technology to increase the use of gas as a motor fuel. Westport shares have soared 20 percent since June 27, the day before it said it will work with General Motors Co., the largest U.S. automaker, on engine technologies.
Alimentation Couche-Tard Inc., the owner of Mac’s and Circle K convenience stores, rallied 3 percent to a record C$28.94 after reporting profit that beat the estimates of analysts in a Bloomberg survey. The company also raised its quarterly dividend by 25 percent.
An index of S&P/TSX telecommunications companies rose the most in three weeks as Canadian Radio-Television and Telecommunications Commission held hearings on BCE Inc.’s proposal to impose usage-based billing on independent Internet service providers. Tom Pentefountas, the CRTC’s vice chairman for broadcasting, asserted the union-backed organization fighting the changes is as self-interested as the large companies, the CBC said on its website.
BCE gained 1.4 percent to C$38.29. Rogers Communications Inc., the cable television provider and wireless carrier, advanced 1.8 percent to C$38.57.
US
By Nikolaj Gammeltoft and Victoria Stilwell
July 12 (Bloomberg) — A late rally in U.S. stocks faded, dragging the Standard & Poor’s 500 Index to a third straight loss, after Ireland’s downgrade to junk added to concern Europe is losing control of the credit crisis and overshadowed evidence the Federal Reserve hasn’t ruled out more stimulus.
Semiconductor-related shares slumped, with Intel Corp.falling 1.8 percent after Novellus Systems Inc. forecast lower- than-estimated third-quarter earnings. Alcoa Inc. slipped 1.3 percent after second-quarter profit missed analyst estimates. Cisco Systems Inc. jumped 1.1 percent after two people familiar with the matter said it would announce job cuts.
The S&P 500 dropped 0.4 percent to 1,313.64 at 4 p.m. in New York, after the index fluctuated between gains and losses throughout the day. The Dow Jones Industrial Average lost 58.88 points, or 0.5 percent, to 12,446.88.
“There’s not a whole lot of conviction in the market,” said Jason Brady, a managing director at Thornburg Investment Management in Santa Fe, New Mexico, which oversees about $80 billion in assets. “Most investors are following Europe, and they are waiting to see if the earnings season will be good enough for them to get excited about equity prices. If that doesn’t happen, then you can add corporate performance to the ugly mix.”
The benchmark index for U.S. equities gave up 2.5 percent during the previous two sessions, the most for the S&P 500 since March, as concern grew that Europe’s debt crisis will spread and American lawmakers failed to agree on cutting the deficit. The gauge had climbed 5.9 percent over the previous two weeks, its biggest gain since October 2009. The rebound in July came after the S&P 500 tumbled 3.2 percent in May and June amid disappointing economic data.
The S&P 500 rallied as much as 0.6 percent today following the 2 p.m. release of minutes from the Federal Open Market Committee’s June meeting. The Fed report said policymakers continued to debate whether additional stimulus will be needed if the outlook for economic growth remains weak. Some members noted that the committee might need to consider further stimulus, while others voiced concern about an increased inflation risk that might warrant tighter monetary policy.
“The market rallied on the news that the Fed is certainly not ruling out further stimulus to further inflate the economy,” said Burt White, who helps oversee $330 billion as chief investment officer at LPL Financial Corp. in Boston. “We think it’s probably more hope than reality,” he said. “The backdrop is still difficult with the mess in Europe and a bumpy start to the earnings season with Alcoa.”
The rally fizzled late in the day as Ireland’s credit rating was cut to non-investment grade by Moody’s, joining Portugal and Greece to become the third euro-area country to be lowered to junk. Equities had recovered from losses of as much as 1.8 percent before the market opened on signs of progress in Europe.
Luxembourg Finance Minister Luc Frieden said selective default on Greek debt is not an option envisioned by euro-region finance ministers, while European Union Economic and Monetary Affairs Commissioner Olli Rehn said officials reached agreement that investors should play a role in a second bailout of Greece. EU President Herman Van Rompuy said he didn’t rule out calling an emergency summit on Greece, although no decision has been taken.
“We’re in a very volatile period for markets and investors are almost paralyzed because they don’t know where the safe haven is,” said George Feiger, chief executive offer of Contango Capital Advisors Inc., a San Francisco-based wealth management firm with about $3.5 billion in assets. “It’s caused by a conjunction of factors, including the risk that Europe and the U.S. can’t deal with their debt issues effectively.”
The S&P 500 is trading near the level of 1,316 that represents the convergence of the index’s mean price over the last 50 and 100 days, data compiled by Bloomberg show. Moving averages are cited by analysts who use price charts as points where buying may pick up or selling snowball as investors reconsider past decisions. The gauge’s 200-day level is 1,274, based on intraday swings.
Alcoa, the largest U.S. aluminum producer, swung between gains and losses after second-quarter profit excluding certain items of 32 cents a share missed the 33-cent average estimate of 14 analysts surveyed by Bloomberg. The stock lost 1.3 percent to $15.71 after rising as much as 1.2 percent. Alcoa unofficially started the earnings season in the U.S. after exchanges closed yesterday. Others reporting this week include JPMorgan Chase & Co., Citigroup Inc. and Google Inc. S&P 500 profits are forecast to have grown 13 percent in the quarter, the smallest increase in two years, according to data compiled by Bloomberg.
Utility companies and health-care stocks gained the most among 10 S&P 500 groups today, climbing 0.5 percent and 0.1 percent, respectively, while industrials performed the worst, dropping 1 percent.
Novellus tumbled 11 percent to $31.75. Chairman and Chief Executive Officer Rick Hill said yesterday that profit before certain costs in the current period will be 60 cents to 75 cents a share for the maker of machinery used in semiconductor production. That compares with the average analyst estimate of 84 cents, based on a Bloomberg survey. Sales will be $300 million to $340 million, Hill said on a conference call, while analysts had predicted $360.7 million.
Chipmakers are showing a more cautious tone in orders from San Jose, California-based Novellus, and may hold off purchases until 2012, Hill said.
Semiconductor companies fell the most among 24 groups in the S&P 500, losing 2.8 percent. Intel, the world’s largest chipmaker, decreased 1.8 percent to $22.45. Microchip Technology Inc. tumbled 12 percent to $32.93 for the biggest retreat in the S&P 500. The maker of analog chips said sales and earnings for the quarter ended in June missed its forecasts.
Cisco, the largest networking-equipment company, rallied 1.1 percent to $15.60 for the biggest gain in the Dow. The company may cut as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, according to two people familiar with the plans. Motorola Solutions Inc. dropped 1.5 percent to $43.50.
Morgan Stanley cut the maker of bar-code scanners, walkie- talkies and other emergency-communication equipment to “equalweight” from “overweight.” Radiant Systems Inc. surged 30 percent to $27.99. The maker of software for retailers was acquired by NCR Corp. for $28 a share.
Have a wonderful evening everyone.
Be magnificent!
When one lives with concepts one never learns. The concepts become static.
You may change them but the very transformation of one concept to another is still static, is still fixed.
But to have the sensitivity to feel, seeing that life is not a movement of two separate activities,
the external and the inward, to see that it is one, to realize that the inter-relationship is this movement,
is this ebb and flow of sorrow and pleasure and joy and depression, loneliness and escape,
to perceive nonverbally this life as a whole, not fragmented, nor broken up, is to learn.
-Krishnamurti, 1895-1986
As ever,
Carolann
In the end, we will remember not the words
of our enemies, but the silence of
our friends.
-Martin Luther King Jr., 1929-1968