August 23rd, 2011 Newsletter
Dear Friends,
Tangents:
A tale never loses in the telling. ~ English Proverb, mid-16th century.
We were in Seattle on the weekend to attend a production Porgy and Bess on Saturday night – it was fabulous and great performances by all. It began with Angle Blue singing Summertime. She is amazing. Coincidentally, the next day, I was reading the Sunday NY Times and the reaction to Stephen Sondheim’s criticism last week of a new version of Porgy and Bess being staged by American Repertory Theatre in Cambridge, Mass. pre-Broadway was so torrential, it warranted half of page of readers’ comments. Here’s a sampling:
“With all due respect to Mr. Sondheim, I find this odd coming from someone who himself has turned the whole of musical theater on its head, and not without a certain amount of arrogance, chutzpah and, of course, brilliance. What’s not to say that the current creative team of ‘Porgy and Bess’ may in fact end up creating something brilliant? Or not. The wisest comment I’ve read in this discussion was the early-on-assertion that perhaps we should reserve judgment until we’ve seen the production. And even that said – and with all due respect to all of us artists who pour our hearts and souls into our work – it is just a production. Whether it is successful or not, once it has run its run, it’ll be gone, and the whole of ‘Porgy and Bess’ will remain intact and unmolested for the next creative team to take on its challenges.” -Gregg Brevoort, Los Angeles
“Throughout history we have applauded our forefathers for their artistic brinkmanship. Virgil takes on Homer; Dante takes on Virgil; Cervantes takes on everyone. Has not Mr. Sondheim wrestled with Shakespeare, Bergman and the Brothers Grimm?” –Julie Crosby, producing artistic director, Women’s Project Theater
…and so it goes.
If you are heading down to Seattle anytime soon, a neat thing to do is to head to Ballard on Sunday morning. The main street is closed and there is a fantastic farmers’ market – really great. There are buskers to entertain – there was even a men’s choral concert happening by the side of the road. I couldn’t help noticing how much cheaper all the fruit, vegetables and dairy products are than here. Milk, eggs, cheese, are almost half to a third of the price they are here. Ballard was an old Icelandic fishing village, and the vestiges of that history are apparent everywhere.
Photos of the day
August 23, 2011
Mo the dog sits in the front seat of a convertable with his owner as they leave a supermarket in Gelsenkirchen, Germany. The pilot goggles protect Mo’s eyes from the wind. Martin Meissner/AP.
Market Commentary:
Canada
By Matt Walcoff
Aug. 23 (Bloomberg) — Canadian stocks rose for a second day as lenders gained after Bank of Montreal reported earnings that beat the average analyst estimate and energy companies advanced with oil and natural gas.
Bank of Montreal, Canada’s fourth-largest lender by assets, increased 4.3 percent. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, climbed 6 percent as forecasts for hotter U.S. weather boosted gas futures. Goldcorp Inc., the world’s second-largest gold producer by market value, fell 5.3 percent as the metal dropped from a record.
The Standard & Poor’s/TSX Composite Index rose 269.97 points, or 2.2 percent, to 12,338.33, with financial shares accounting for 41 percent of the gain.
“Out of the gate, the first bank to report looks like a positive signal and above what people were anticipating,” Cameron Webster, managing partner at Sandstone Asset Management Inc. in Calgary, said in a telephone interview. The firm oversees about C$200 million ($202 million).
The index plunged 11 percent in the month ending yesterday as its bank stocks declined to an 11-month low and its energy stocks retreated to the lowest relative to forecast earnings since March 2009. Banks and energy companies make up 15 percent and 25 percent, respectively, of Canadian stocks by market value, according to Bloomberg data.
Bank of Montreal gained 4.3 percent, the most since August 2009, to C$59.80. Third-quarter profit increased 19 percent from a year earlier, boosted by higher investment-banking earnings, the Toronto-based lender said today. The profit surpassed the average estimate in a Bloomberg survey by 4.2 percent, excluding certain items.
Bank of Nova Scotia, Canada’s third-largest lender by assets, climbed 4.5 percent to C$51.43 after closing at a 13- month low yesterday. Royal Bank of Canada, the country’s biggest bank, advanced 3.3 percent from a two-year low to C$50.06.
Natural gas rose 2 percent in New York after settling at a five-month low yesterday. Crude oil for October delivery advanced for a second day, gaining 1.2 percent, amid speculation the Federal Reserve will bolster efforts to stimulate the economy.
Canadian Natural, which closed at the lowest since September 2009 yesterday, increased 6 percent to C$34.88. Suncor Energy Inc., Canada’s largest oil and gas producer, climbed 4.4 percent to C$30.10. Canadian Oil Sands Ltd., the largest owner of the Syncrude project, soared 7 percent, the most since May 2009, to C$21.88.
Gold futures fell 1.6 percent after touching an intraday record of $1,917.90 an ounce in New York. Dennis Gartman, the economist and editor of the Gartman letter, said in his report today he is selling gold because prices became “too frothy.”
Goldcorp dropped 5.3 percent to C$50.79 after closing at a record high yesterday. Barrick Gold Corp., the world’s largest producer of the metal, declined 3 percent to C$50.10. Extorre Gold Mines Ltd., which explores in Argentina, sank 9.7 percent to C$9.84.
Centerra Gold Inc., which mines in Kyrgyzstan and Mongolia, slumped 12 percent, the most since December 2008, to C$19.21 after Trevor Turnbull, an analyst at Scotiabank, cut his rating on the shares to “sector perform” from “sector outperform.”
Turnbull said in a note to clients that the shares were near his one-year price estimate. Centerra soared 49 percent from June 16 to yesterday.
Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, advanced 6.1 percent to C$53.81 as corn and wheat rose for a third day. Agricultural futures have gained on speculation dry U.S. weather will limit yields. The portion of the U.S. corn crop in good or excellent condition fell to 57 percent last week from 60 percent a week earlier, according to a U.S. Agriculture Department report released yesterday.
Copper climbed after a preliminary reading indicated an HSBC Holdings Plc and Markit Economics index of Chinese manufacturing may rise. An index of S&P/TSX base-metals and coal producers gained after ending yesterday at the lowest close since September.
Teck Resources Ltd., Canada’s largest company in the industry, advanced 5.2 percent to C$39.54. Grande Cache Coal Corp., which mines in Alberta, surged 9.7 percent to C$6.91.
Ivanhoe Mines Inc., which is building a copper and gold mine in Mongolia with Rio Tinto Group, soared 20 percent, the most since August 2009, to C$20.62.
Craig Miller, an analyst at Toronto-Dominion Bank, boosted his rating on the shares to “speculative buy” from “hold.”
In a note to clients, Miller cited recent the recent retreat in the shares’ price and progress at the Oyu Tolgoi mine in Mongolia.
Yoga-wear retailer Lululemon Athletica Inc. rebounded 11 percent to C$50.02 after tumbling 22 percent in the previous six days. Imax Corp., the maker of giant-screen movie-projection systems, rallied 13 percent, the most since December 2008, to
C$15.71 after a 23 percent plunge in the previous five sessions.
US
By Rita Nazareth and Jeff Sutherland
Aug. 23 (Bloomberg) — Global stocks rallied, snapping three days of declines after valuations reached the cheapest levels since 2009, as investors speculated the Federal Reserve will act to spur the economy. Oil jumped while the dollar fell.
The MSCI All-Country World Index added 2.3 percent at 7:17 p.m. in New York, as weaker-than-anticipated U.S. economic data increased optimism for stimulus measures. The Standard & Poor’s 500 Index jumped 3.4 percent to 1,162.35, paring gains briefly after an earthquake shook New York and Washington. Oil rallied 1.2 percent. The Dollar Index fell 0.3 percent. The yen slid against the U.S. currency after Moody’s Investors Service cut Japan’s sovereign-credit rating. Gold sank the most since May.
The MSCI gauge of global equities is rebounding from the lowest level since September before central bankers meet this week in Jackson Hole, Wyoming. Last year, Fed Chairman Ben S. Bernanke’s hint of a second round of asset purchases, or quantitative easing, spurred a 28 percent jump in the S&P 500.
Financial stocks in the S&P 500 rallied 3.2 percent, recovering from an earlier decline, after the Federal Deposit Insurance Corp.’s list of “problem” banks fell in the second quarter for the first time since 2006 as the cost for bad loans eased.
“The reason for the rebound today might be in the bad economic data that we saw earlier this morning,” Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which oversees about $355 billion, said in a telephone interview. “What investors are reading is that the Fed has got to do something.”
Optimism about more Fed stimulus grew after the Fed Bank of Richmond’s business activity index dropped to minus 10 in August, the weakest since June 2009. The monthly survey of producers in the region covering the Carolinas, Maryland, Virginia and West Virginia corroborated factory reports from Philadelphia and New York that pointed to weakness in the industry. Also, the Commerce Department said sales of new U.S. homes declined more than projected in July to the lowest level in five months.
“Speculation of another form of the ‘Bernanke Put’ is growing with each new data point that suggest the economy continues to weaken,” Miller Tabak Roberts Securities LLC strategist Adrian Miller wrote in a note to clients today. “We caution the market on getting ahead of itself as the cost/benefit analysis the Fed has used in the past in determining whether another QE program is warranted in not favorable at this point.”
A four-week global equity rout has wiped about $8 trillion from companies’ market value as Europe’s sovereign debt-crisis and worsening economic reports in the U.S. raised concern the global economic recovery is faltering. The S&P 500 fell 16 percent from July 22 through the end of last week in its biggest four-week loss since March 2009. Companies trade at an average 11.3 times estimated earnings, near the lowest level in 2 1/2 years.
U.S. stocks are cheap after suffering the biggest losses since March 2009, said Byron Wien, a senior managing director at Blackstone Group LP, the world’s biggest private equity firm.
“You got the market down to 11 times earnings,” Wien said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “Usually it sells at around 15. That makes a number of stocks attractive here.”
The S&P 500’s rally, its biggest advance since Aug. 11, was paced by companies most-tied to the economy, with energy and technology shares climbing at least 3.9 percent. All 10 industries in the benchmark gauge advanced. The Morgan Stanley Cyclical Index gained 2.9 percent, breaking a five-day losing streak.
Financial shares in the S&P 500 rose after dropping 1.3 percent earlier as the cost to protect debt issued by Bank of America Corp. surged to a record. Bank of America lost 1.9 percent, paring its decline from 6.4 percent. Goldman Sachs Group Inc. gained 0.3 percent after losing as much as 3.2 percent.
Financial institutions in the S&P 500 tumbled 25 percent in 2011 through yesterday, the most among 10 groups, amid speculation the government debt crisis in Europe will spur banking losses. The industry has the second-biggest weighting in the benchmark measure of U.S. shares at 14 percent. Goldman Sachs and Bank of America slumped 37 percent and 52 percent, respectively, the most since 2008, this year through yesterday.
Stocks briefly pared gains after the 5.8-magnitude earthquake in Virginia rattled Washington and New York. More than 66 million shares changed hands on U.S. exchanges at 1:55 p.m. New York time following the earthquake in Virginia, more than any minute since just after the market opened at 9:30 a.m.
The Stoxx Europe 600 Index rose for a second day, climbing 0.8 percent, after a preliminary purchasing-managers index compiled by HSBC Holdings Plc and Markit Economics showed Chinese manufacturing may contract at a slower pace in August as the world’s second-biggest economy weathers slumping global confidence. The report helped ease concern that the economic slowdown is deepening.
UBS AG rose 2.1 percent after Switzerland’s biggest bank said it plans to cut 3,500 jobs to trim costs. Charter International Plc, a welding and automation-equipment maker, jumped 20 percent after saying it’s in talks with a potential bidder other than Melrose Plc.
The Stoxx 600 has still lost 18 percent this year, driving valuations down to 9.4 times estimated profits, near the lowest level since March 2009, according to data compiled by Bloomberg.
Treasury 10-year yields rose five basis points to 2.15 percent. The government sold $35 billion in two-year notes today at a record low yield of 0.22 percent. The securities are the first of the maturity to be sold after S&P on Aug. 5 downgraded the U.S. AAA long-term sovereign rating. The offering was the first of three note sales this week totaling $99 billion. The Treasury will sell $35 billion in five-year debt tomorrow and $29 billion of seven-year notes on Aug. 25.
The Dollar Index, which tracks the greenback against currencies including the euro, yen and pound, fell 0.3 percent, as optimism over possible Fed moves to boost the U.S. economy damped demand for safer assets. The New Zealand and Australian dollars led gains against the U.S. currency, rising 1.4 percent and 1.1 percent, respectively.
The euro climbed 0.6 percent versus the dollar, to $1.4444, maintaining gains after a report showed German investor confidence fell more than economists forecast. The yen weakened 0.1 percent to 76.73 per dollar after Moody’s lowered Japan’s grade by one step to Aa3, with a stable outlook.
Oil rallied for a second day, climbing 1.2 percent to settle at $85.44 in New York after an earlier decline of 1.2 percent, as equities advanced and the dollar weakened. Oil also increased as fighting continued in Libya, damping hopes the country is close to resuming crude exports. Rebels said they entered Libyan leader Muammar Qaddafi’s compound of Bab Al Aziziya in the capital, Tripoli, and raised their flag, Al Arabiya reported.
Gold dropped as much as 3.5 percent in after-hours electronic trading. The metal posted its first decline in seven sessions, as some investors sold the metal after signs of slowing growth spurred a rally to a record $1,917.90 an ounce.
The relative-strength index of futures in New York has topped 70 since Aug. 8, a signal to some investors that prices were poised to decline. Bullion has jumped 14 percent in August.
S&P’s GSCI Index of 24 raw materials rose 1 percent. Copper climbed the most since Aug. 11, gaining 1 percent. Imports of refined copper by China, the world’s largest user, rose for a second month in July, customs data showed yesterday. Inbound shipments of scrap copper jumped 14 percent from a year earlier.
The Markit SovX Western Europe Index of credit-default swaps insuring the debt of 15 governments rose 2 basis points to 299. Greek government bonds slumped, with 10-year yields climbing to 17.43 percent, the highest level in a month, amid uncertainty over the details of a new loan package for the Mediterranean nation. Greece’s two-year note yield jumped 120 basis points to 39.61 percent, driving the difference with benchmark German securities to the most since at least 1998.
The MSCI Emerging Markets Index rallied 2 percent, after falling to a one-year low yesterday. China’s Shanghai Composite Index advanced 1.5 percent, Taiwan’s Taiex climbed 3.3 percent and South Korea’s Kospi jumped 3.9 percent.
Have a wonderful evening everyone.
Be magnificent!
We must learn to love those who think exactly opposite to us.
We have humanity for the background, but each must have his own individuality and his own thought.
Push the sects forward and forward till each man and woman are sects unto themselves.
We must learn to love the man who differs from us in opinion.
We must learn that differentiation is the life of thought.
We have one common goal,
and that is the perfection of the human soul, the god within us.
-Swami Vivekananda, 1863-1902