September 1st, 2011 Newsletter
Dear Friends,
Tangents:
September 1, 1939, world War ll begins…
September….The seventh month from March, when the year formerly commenced. The old Dutch name was Herstmaand, “autumn month”, and the Anglo-saxon Hoerfesmonath, “harvest month”, or after the introduction of Christianity, Haligmonath, “holy month”, the nativity of the Virgin Mary being on the 8th, the Exaltation of the Cross Day on the 14th and St. Michael’s Day on the 29th. In the French Revolutionary Calendar, the equivalent month was Fructidor, “fruit month”, corresponding to the period from 19 August to 22nd of September. –from Brewster’s
Hurricane Irene wasn’t that bad. In fact, it was downgraded to a tropical storm. Even our hurricanes are
getting downgraded. Maybe Irene owed money to China, too?
– Jay Leno
Photos of the day
September 1, 2011
A rainbow rises over Peter and Pavel Fortress after a rainstorm in St. Petersburg, Russia. Alexander Demianchuk/Reuters
Polish veteran Josef Ladrowski, 90, reacts during a wreath laying ceremony at the Polish war monument, in Berlin to commemorate the German attack on Poland in 1939. The invasion of Poland by the German Wehrmacht on Sept. 1, 1939 marked the start of World War II. Markus Schreiber/AP
Market Commentary:
Canada
By Matt Walcoff
Sept. 1 (Bloomberg) — Canadian stocks fell for the first time in five days as consumer-discretionary and energy shares dropped on concern that the economic recovery is faltering.
Crescent Point Energy Corp., a western Canadian oil and gas producer, declined 2.1 percent after saying it will sell shares.
Shaw Communications Inc., Canada’s biggest cable and satellite television provider by subscribers, slumped 3.6 percent after saying it won’t build a traditional wireless telephone network.
Toronto-Dominion Bank gained 1.5 percent after reporting profit that beat the average analyst estimate in a Bloomberg survey.
The Standard & Poor’s/TSX Composite Index slipped 67.96 points, or 0.5 percent, to 12,700.74. The S&P/TSX advanced as much as 0.2 percent earlier after the Institute for Supply Management said U.S. manufacturing expanded in August.
“You can talk all you want about the ISM,” Gareth Watson, vice president of investment management and research at Richardson GMP Ltd. in Toronto, said in a telephone interview.
“But the credit picture has not changed. The monetary picture in the U.S. has not changed. So even if we get a couple of good data points, the market is not going to rally back to where we were before.”
The S&P/TSX lost 1.4 percent last month for its sixth- straight monthly retreat, the longest slump since the 2008-2009 bear market. The stock benchmark fell 9.7 percent from Feb. 28 to yesterday as energy companies tumbled on concern about a slowing global recovery and sovereign debt in Europe and the U.S.
The U.S. is scheduled to release monthly employment data tomorrow. The report will show the country added less than one- fourth as many jobs last month as it did in July, economists at Goldman Sachs Group Inc. forecast today.
Energy stocks retreated as natural gas futures decreased 0.4 percent after soaring 3.7 percent yesterday. Cooling demand in the U.S. may be 22 percent below normal from Sept. 7 through Sept. 11, said David Salmon, a meteorologist at Weather Derivatives in Belton, Missouri, in a note to clients today.
Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, lost 2 percent to C$36.26. Oil-sands developer MEG Energy Corp. slumped 2.8 percent to C$45.76. Crescent Point fell 2.1 percent to C$43.52. after saying it will sell 8.63 million shares at C$43.50 a share.
Shaw slid 3.6 percent to C$21.59 after scrapping plans to build a mobile-phone service. The company, based in Calgary, will instead offer a wireless Internet service using Wi-Fi technology. Peter MacDonald, an analyst at GMP Capital Inc., cut his rating on Shaw to “hold” from “buy.”
Magna International Inc., Canada’s largest auto-parts maker, slipped 3.1 percent to C$36.05 as its largest customer, General Motors Co., tumbled 4.2 percent. In a note to clients, Adam Jonas, an analyst at Morgan Stanley, said GM’s inventory may be too high if U.S. auto sales don’t recover.
TD said third-quarter profit increased 23 percent from a year earlier and raised its quarterly dividend 3 percent to 68 Canadian cents a share. Canadian Imperial Bank of Commerce, Bank of Montreal, National Bank of Canada and Bank of Nova Scotia topped analysts’ estimates this quarter, while Royal Bank of Canada missed forecasts. TD gained 1.5 percent to C$78.60 today.
Other banks declined after the S&P/TSX Banks Index had surged 4.5 percent in the previous three days. Royal Bank, Canada’s largest lender by assets, fell 2 percent to C$49.10.
Bank of Montreal, the No. 4 bank, dropped 1.1 percent to C$60.71. Manulife Financial Corp., Canada’s largest insurer, slipped 1.8 percent to C$13.15.
Gold stocks advanced after Barclays Capital said the metal is unlikely to plunge like silver did in May when CME Group Inc. raised margin requirements. Margin requirements as a percentage of the contract value of gold are below that for commodities including silver and corn, and gold is less volatile than silver, Barclays said today in an e-mailed report.
Also today, David Wilson, a metals analyst at Societe Generale SA, said in a Bloomberg Television interview that the metal is poised to top $2,000 an ounce by year end.
Goldcorp Inc., the world’s second-largest gold producer by market value, increased 2.2 percent to C$52.13. Eldorado Gold Corp., which mines in China and Turkey, climbed 2.1 percent to C$19.91. Osisko Mining Corp., which began commercial production at its Malartic mine in Quebec in June, rallied 3.1 percent to C$14.76 after Don MacLean, an analyst at Paradigm Capital Inc., boosted his rating on the shares to “buy” from “speculative buy.”
Lumber producer Canfor Corp. slumped 6.2 percent to C$10.13 after the U.S. said construction spending fell the most in six months in July.
Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia with Rio Tinto Group, dropped 4.5 percent to C$21.50 after surging 15 percent in the previous four days.
Copper futures declined the most in two weeks after a gauge of export orders in the Chinese Purchasing Managers’ Index decreased for the first time in two years.
US
By Rita Nazareth
Sept. 1 (Bloomberg) — U.S. stocks retreated, snapping a four-day advance for the Standard & Poor’s 500 Index, as banks fell and investors speculated that tomorrow’s jobs report will show the world’s largest economy continues to struggle.
Financial stocks dropped the most within 10 groups in the S&P 500, sliding 2.4 percent. Goldman Sachs Group Inc. slumped 3.5 percent after agreeing to pay future Federal Reserve penalties and write down $53 million of mortgage loans in New York to gain approval for its sale of Litton Loan Servicing LP. Caterpillar Inc. and Alcoa Inc. fell at least 2.4 percent, pacing losses among companies most-tied to economic growth.
The S&P 500 declined 1.2 percent to 1,204.42 at 4 p.m. in New York. The benchmark gauge rallied 5.1 percent during a four- day streak through yesterday. The Dow Jones Industrial Average lost 119.96 points, or 1 percent, to 11,493.57.
“There is some reserve and perhaps some hesitance going into tomorrow’s jobs report,” Robert Pavlik, chief market strategist at Banyan Partners LLC in New York, said in a telephone interview. The firm manages over $1 billion. “The administration has a huge task in front of it. Business leaders are hesitant to hire and spend money. That’s why the stock market generally hasn’t done anything.”
Stocks fell before a Labor Department report tomorrow that may show non-farm payrolls climbed by 68,000 after a 117,000 increase in July, according to the median forecast of economists surveyed by Bloomberg News. Goldman Sachs Group Inc.’s Jan Hatzius cut his forecast for the gain to 25,000 from 50,000.
Brian Jones, an economist at Societe Generale, lowered his prediction to an increase of 9,000 from 67,000. Shares rose earlier after the Institute for Supply Management’s factory index fell to 50.6, beating the median economist projection of 48.5. The data helped ease concern spurred by Federal Reserve data in August showing manufacturing slowed in the New York, Philadelphia and Richmond, Virginia, regions. The S&P 500 climbed yesterday, paring its August decline to 5.7 percent, the biggest monthly drop since May 2010.
Stocks trimmed losses at the end of last month after Federal Reserve Chairman Ben S. Bernanke said during an Aug. 26 speech in Jackson Hole, Wyoming, that the central bank still has tools to stimulate the economy without signaling he will use them. Last year, he foreshadowed a $600 billion bond-purchase program at the same event, helping to stoke a 30 percent surge in the S&P 500 through April 29. Since then, the index has fallen as much as 18 percent amid economic concern.
“Every time you get some positive data for the economy, people think the Fed will take the possibility of a QE3 off of the table,” Thomas Nyheim, a Greenville, Delaware-based money manager for Christiana Trust, which oversees $7.5 billion, said in a telephone interview about a third round of so-called quantitative easing from the central bank. “We may not like it, but we’ll probably need to get used to slower growth.”
Stock futures swung between gains and losses before the open of regular trading as a report showed that applications for U.S. unemployment benefits fell last week as the influence of the strike at Verizon Communications Inc. waned, showing the job market is making little headway more than two years after the recession ended.
All 10 groups in the S&P 500 fell today, with losses being led by financial, industrial and raw-material companies. The KBW Bank Index slid 3 percent as all of its 24 stocks retreated.
Goldman Sachs slumped 3.5 percent to $112.16. The Fed ordered Goldman Sachs to conduct an independent review of Litton’s foreclosures in 2009 and 2010 to address a “pattern of misconduct and negligence,” the regulator said today in a statement. Litton’s sale to Ocwen Financial Corp. was completed today after reaching accords with the Fed and New York state regulators, according to a Goldman Sachs statement.
The shares also fell after the bank was downgraded to “hold” from “buy” at ISI Group. The 12-month share-price estimate is $135.
Gap Inc. lost 3 percent to $16.03. The largest U.S. apparel chain reported sales at its stores open more than one year fell 6 percent, more than the 3.9 percent drop estimated by analysts.
The Morgan Stanley Cyclical Index of companies most- sensitive to economic activity dropped 2 percent. Caterpillar decreased 2.7 percent to $88.55, while Alcoa slid 2.4 percent to $12.49.
Concerns that the S&P 500 will plunge amid slowing earnings growth are overblown, according to Liz Ann Sonders of Charles Schwab Corp.
The benchmark measure of U.S. equities surged as much as 102 percent from a 12-year low in March 2009 through the end of April this year as earnings beat analysts’ estimates. Profits at S&P 500 companies are forecast to grow to $124.11 a share in 2013, according to analyst estimates compiled by Bloomberg.
That’s more than double the annual increase during the 2008-2009 financial crisis.
“There is this misperception that the minute the peak of earnings happens, the market is going to fall out of bed,” Sonders, New York-based chief investment strategist at Charles Schwab, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “The market tends to continue to fare pretty well unless you get some sort of massive collapse in earnings, which I don’t think is in the cards this time.”
Have a wonderful evening everyone.
Be magnificent!
How does seeing the difference permit unity?
Quite simply, because physically speaking there cannot be unity, since the physical plane consists of shapes,
and all shapes are different.
Unity only exists in the heart. It is a feeling: love.
And in love the notion of self disappears; only the other remains.
-Swami Prajnanpad, 1891-1974
As ever,
Carolann
If you’re not failing every now and again,
it’s a sign you’re not doing anything very
innovative.
-Woody Allen, 1935-