September 2nd, 2011 Newsletter

Dear Friends,

Tangents:

DIRECTION

West is the river

flowing like stop-

light-less traffic

and it murmurs a gentle

riddle to you

standing alone on its profitless bank:

Tomorrow is a

slender boat

sailing beyond your

purposeless grasp.

Just then a casual breeze touches

your sunlit face

and all that you

want to believe in

holds sudden truth.

                                   -Susan Scutti

Photos of the day

September 2, 2011

Naval cadets watch a ceremony commemorating the 66th anniversary of the surrender of Japan during World War Two, in Russia’s far eastern port of Vladivostok. Japan officially surrendered on September 2, 1945 when a formal surrender ceremony was held in Japan’s Tokyo Bay aboard the battleship USS Missouri, marking the end of hostilities during the war. Yuri Maltsev/Reuters

Shadow of a person is seen on the sea at summer last dusk on Laredo beach, northern Spain, Thursday evening. Alvaro Barrientos/AP

Market Commentary:

Canada

By Matt Walcoff

Sept. 2 (Bloomberg) — Canadian stocks fell, paring a weekly gain for the Standard & Poor’s/TSX Composite Index, after the U.S. said employment was unchanged in August.

Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, dropped 3.3 percent as crude oil plunged as much as 4 percent. Teck Resources Ltd., the country’s largest base-metals and coal producer, lost 3.5 percent as copper declined. Goldcorp Inc., the world’s second-biggest gold producer by market value, rose 2.8 percent as precious metals surged.

The S&P/TSX retreated 81.88 points, or 0.6 percent, to 12,618.86 at 1:31 p.m. in Toronto, trimming its weekly advance to 2.4 percent.

“The payroll data clearly was below the consensus and even some of the whisper numbers that were coming out from some of the larger U.S. brokers,” Timothy Lazaris, chief executive officer of Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$54 million ($55 million). “It’s difficult to put risk on with declining U.S. data and with problems continuing to persist in Europe.”

The S&P/TSX has decreased as much as 18 percent from its 2011 high on April 5 amid concern the global economic recovery is faltering. The jobless rate in the U.S. was unchanged at 9.1 percent in August, up from 8.8 percent in March and as low as 4.4 percent in 2006-2007. Seventy-five percent of Canada’s exports went to the U.S. last year, according to Statistics Canada.                      

Nonfarm payrolls were unchanged last month, the U.S. Labor Department said today. Eighty-three of 86 economists in a Bloomberg survey had forecast an increase. Payrolls had gained in each of the 10 previous months.

Crude futures fell the most in two weeks and natural gas the most in four weeks in New York. Canadian Natural dropped 3.3 percent to C$35.07. Suncor Energy Inc., Canada’s largest oil and gas producer, declined 2.7 percent to C$30.17. Precision Drilling Corp., the country’s biggest drilling company, tumbled 5.6 percent to C$12.91. Aluminum, copper, lead, nickel and zinc retreated on the London Metal Exchange.

Teck lost 3.5 percent to C$41.41. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 7.1 percent to C$22.49, ending a six-day streak of gains. Coal and base-metals producer Sherritt International Corp., slumped 6.2 percent to C$5.19. Uranium One Inc., a mining company owned by Moscow-based ARMZ Uranium Holding, sank 5.8 percent to C$2.45 after earlier today touching C$2.43, the lowest intraday since June 2010.

The country’s six largest banks and three biggest insurers each retreated. Toronto-Dominion Bank, Canada’s second-largest lender by assets, fell 1.3 percent to C$77.58. Bank of Nova Scotia, the country’s third-biggest lender, dropped 1.4 percent to C$53.42. Manulife Financial Corp., North America’s fourth- largest insurer, declined 2.1 percent to C$12.87.

Gold futures surged as much as 3 percent in New York, boosting the S&P/TSX Gold Index to a 2011 high. Goldcorp rose 2.8 percent to C$53.60. Barrick Gold Corp., the world’s largest producer of the metal, gained 3.6 percent to C$52.25. Semafo Inc., which mines in West Africa, jumped 7.2 percent to C$8.66.

Silvercorp Metals Inc., which mines in China, plunged 14 percent to C$7.10 on record volume after saying an assertion of accounting fraud mailed anonymously to Canadian regulators is false.

US

By Rita Nazareth

Sept. 2 (Bloomberg) — U.S. stocks slumped, wiping out the weekly gain for the Standard & Poor’s 500 Index, as a government report showing employment stagnated last month stoked concern the world’s largest economy may fall into a recession.

The S&P 500 declined 2.5 percent to 1,173.92 at 4 p.m. in New York, falling 0.2 percent this week. All 10 of its main groups slid, led by financial stocks.

“The jobs report was just ugly,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “We’ve been watching deceleration of economic activity on a global basis. Does that increase the odds of a recession? It’s a coin toss at this point, 50-50. This will probably push the Federal Reserve over the edge.”

The S&P 500 slid as much as 18 percent from a three-year high on April 29 amid concern the economy was weakening. The index fell 5.7 percent in August, for the biggest monthly drop since May 2010. Stocks trimmed losses at the end of last month as Federal Reserve Chairman Ben S. Bernanke said in an Aug. 26 speech in Jackson Hole, Wyoming, that the central bank has tools to stimulate growth without signaling he will use them.

Employment in the U.S. stagnated in August and the jobless rate held at 9.1 percent as American employers became less confident in the strength of the recovery.

 Payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, Labor Department data showed. The median forecast in a Bloomberg News survey called for a rise of 65,000. Hourly earnings and hours worked both declined. The August data included a 48,000 drop in information industry jobs, mostly reflecting striking Verizon Communications Inc. workers.

“Another disappointing report that speaks to a severe unemployment crisis that, unfortunately, is becoming even more stubbornly embedded,” Mohamed A. El-Erian, the chief executive officer at Pacific Investment Management Co. in Newport Beach, California, wrote in an e-mail. Pimco is the world’s largest bond-fund manager. “Along with Europe’s dislocations, this fuels concerns about the global economic outlook and the growing risk of a recession.”

Bearish bets against the S&P 500 rose to a nine-month high as short sellers increased speculation stocks may decline amid concerns over the strength of global economic growth.                        

The proportion of S&P 500 shares outstanding sold short on Aug. 29 rose to 3.03 percent, the most since the end of November and up from 2.37 percent at the beginning of August, according to New York-based Data Explorers, which provides research on short sales and stock lending. Short selling of the gauge reached a three-year high of 5.52 percent in August 2008, before the worst financial crisis since the 1930s drove the stock index to a 12-year low in March 2009.

Short selling increased in August after S&P downgraded the U.S. government’s credit rating and yields on Greek debt surged to record highs. Investors made bearish wagers on equities and shifted holdings to havens such as Treasuries, which posted the highest returns since December 2008.

“We’ve had inadequate policy responses to the problem of too much debt, and that makes people concerned,” Mark Travis, chief executive officer of Jacksonville Beach, Florida-based Intrepid Capital Management Inc., said in a telephone interview.

“Investors and advisers are doing more now on the short side to protect their capital and they’re trying to find alternatives to flat market returns,” said Travis, who manages $1.3 billion and uses short selling as an investment strategy.

Have a wonderful weekend everyone.

Be magnificent!

Love can come into being only when there is total self-abandonment.

-Krishnamurti, 1895-1986

As ever,

Carolann

The cell is an ideal place to learn to know yourself;

it gives you the opportunity to look daily into your conduct,

to overcome the bad and develop what is good in you.

Never forget that a saint is a sinner who keeps

on trying.

            -Nelson Mandela, 1918-

from  a letter from Robben Island Prison

to his second wife, Winnie, in Kroonstad Prison, February 1, 1975.