Friday September 9th, Newsletter

Dear Friends,

Tangents:

Battle of Marathon, September 9, 490 BC

Leo Tolstoy’s Birthday, September 9, 1828

Photos of the day

September 9, 2011

A heavily armed Port Authority police officer stand guard next to the North Pool at the World Trade Center memorial site in New York. Just days before the 10th anniversary of the Sept. 11 attacks, US counter-terrorism officials are chasing a credible but unconfirmed al-Qaida threat to use a car bomb on bridges or tunnels in New York City or Washington. Mary Altaffer/AP

Bavarian farmers, followed by their cows, walk along a road in Oberstaufen, south of Munich. At the end of the summer season, farmers move their herds down from the Alps to the valley into winter pastures. Michaela Rehle/Reuters

Market Commentary:

Canada

By Matt Walcoff

Sept. 9 (Bloomberg) — Canadian stocks fell, erasing a weekly gain, as mounting concern over the possibility of a Greek default boosted the U.S. dollar and weakened fuels, metals and shares of financial companies.

Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 3.2 percent as crude oil declined. Royal Bank of Canada, the country’s largest lender by assets, decreased 3 percent.

BlackBerry maker Research In Motion Ltd. lost 4.7 percent after an analyst at Jefferies Group Inc. cut his rating on the company. The Standard & Poor’s/TSX Composite Index fell 296.42 points, or 2.3 percent, to 12,387.54. The index dropped 1.7 percent for the week.

 “The situation in Europe is not getting better,” Stephen Gauthier, a money manager at Fin-XO Securities in Montreal, said in a telephone interview. The firm oversees C$600 million ($602 million). “Oil and gas is quite a big sector, so if you continue to see oil being affected by what’s happening around the world, it’s not great news for the Canadian market.”

The S&P/TSX has retreated 6.9 percent this quarter, second- least among developed countries’ stock benchmarks behind New Zealand’s. Energy stocks in the Canadian index have sunk 13 percent and gold companies have surged 23 percent on concern over sovereign debt in Europe and the U.S. and a slowing global recovery.                      

Canadian employment declined by 5,500 positions in August, Statistics Canada said today. Twenty of 22 economists in a Bloomberg survey had forecast a gain in jobs. The unemployment rate climbed to 7.3 percent from 7.2 percent, the first increase since January.

Fuels and metals fell as the U.S. dollar gained against 15 of 16 other major currencies. The euro dropped as much as 1.8 percent, a day after the European Central Bank cut its 2011 and 2012 growth forecasts.

The ECB said today that Juergen Stark resigned from its executive board, suggesting policy makers are divided over how to fight the debt crisis. Stocks extended their declines after three German officials said Chancellor Angela Merkel’s government is preparing plans to shore up banks in the event that Greece defaults.

The S&P/TSX Energy Index completed its biggest loss in three weeks.

Suncor declined 3.2 percent to C$29.45. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, decreased 4.4 percent to C$34.15. Cenovus Energy Inc., the country’s fifth-biggest company in the industry, slid 6.4 percent to C$31.78, the lowest close since January.Precision Drilling Corp., Canada’s largest drilling company, sank 7.3 percent to C$11.85.                       

Forty-one of 43 S&P/TSX financial companies retreated. Royal Bank of lost 3 percent to C$47.47. Manulife Financial Corp., North America’s fourth-largest insurer, lost 4.2 percent to a one-year low of C$12.32. Toronto-Dominion Bank, Canada’s second-biggest lender by assets, fell 2.7 percent to C$74.22.

The S&P/TSX Gold Index dropped for the first time in six days after closing at a record yesterday. Yamana Gold Inc., Canada’s fourth-largest producer of the metal by market value, declined 1.7 percent to C$16.90. Northgate Minerals Corp., the mining company that has agreed to be bought by AuRico Gold Inc., slumped 7.7 percent from a four-year high to C$3.98.

Harry Winston Diamond Corp., the co-owner of the Diavik mine featured on the TV show “Ice Road Truckers,” sank 6 percent to C$13.52 in the second trading day after reporting earnings that trailed the average analyst estimate in a Bloomberg survey, excluding certain items.

Copper futures retreated the most in a month in New York.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, slipped 4.6 percent to C$40.58. First Quantum Minerals Ltd., the country’s second-biggest publicly traded copper producer, fell 6.4 percent to C$20.81.

RIM lost 4.7 percent to C$29.52 after Peter Misek, a Jefferies analyst, reduced his rating on the shares to “underperform” from “hold.” A Jefferies survey found “lackluster” retail sales of new BlackBerry phones, Misek wrote in a note to clients.

US

By Rita Nazareth

Sept. 9 (Bloomberg) — U.S. stocks fell, erasing a weekly gain for the Standard & Poor’s 500 Index, on speculation Greece could default on its debt and deepen an economic slowdown.

Financial stocks tumbled as Germany set plans to shore up the nation’s banks in the event Greece defaults, according to three coalition officials who spoke on condition of anonymity.

JPMorgan Chase & Co. and Citigroup Inc. slumped at least 4.2 percent. Chevron Corp. and Alcoa Inc. lost more than 3.2 percent as a rising dollar undermined the appeal of commodities.

McDonald’s Corp. fell 4 percent as sales trailed estimates. The S&P 500 retreated 2.7 percent to 1,154.23 at 4 p.m. in New York, the lowest since Aug. 22. The benchmark measure fell for a second straight week, sinking 1.7 percent since Sept. 2.

The Dow Jones Industrial Average declined 303.68 points, or 2.7 percent, to 10,992.13 today. The 30-stock gauge has posted triple-digit moves in 19 of the past 24 trading days.

“We’re dealing with a confidence crisis,” Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4 billion, said in a telephone interview. “You look at the possibility of a Greek default. Investors are making a decision now that they don’t want to be long over the weekend. A lot of people think that Germany will pull out a rabbit from the hat and fix Greece. Germany is fighting its own issues. It cannot be the sugar daddy for all of Europe.”

The S&P 500 has fallen as much as 18 percent from a three- year high on April 29 on concern about Europe’s debt crisis and an economic slowdown. It closed as low as 1,119.46 on Aug. 8, within 29 points of a bear market, or a 20 percent drop.

Questions over Greece’s ability to meet the terms of its rescue package are dogging the nation as bondholders weigh whether to participate in a debt exchange that’s crucial to a second bailout. The nation is seeking preliminary responses from bond investors to the proposed swap. Greece has no plans to publish details of anticipated participation in its debt-swap program this week or next, said Petros Christodoulou, head of the country’s debt management office.

Greece is committed to “full implementation” of its bailout agreement, the country’s finance ministry said in a statement. The country rejected default talk as “organized speculation,” according to the statement.

 In a sign officials are increasingly split over the best way to fight Europe’s debt crisis, Juergen Stark resigned from the European Central Bank’s Executive Board. Stark stepped down after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting.

Stocks also fell on speculation Congress won’t pass President Barack Obama’s $447 billion plan to boost the economy.

The president, speaking before a joint session of Congress yesterday, demanded six times that lawmakers act “right away” on a plan that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners.

“For people hoping for a quick injection of economic activity, that’s not what Obama’s plan portends,” Peter Sorrentino, a senior money manager at Huntington Asset Advisors in Cincinnati, said in a telephone interview. The firm oversees $14.8 billion. “There’s a perception that it’s going to be difficult to pass it. Some people are concerned that it might not have worked last time. So, why would this be any better?”

 Benchmark gauges fell yesterday as Federal Reserve Chairman Ben S. Bernanke disappointed investors by not detailing new plans to boost growth in a speech to economists in Minneapolis. Bernanke repeated points from his speech on Aug. 26 in Jackson Hole, Wyoming.                           

All 10 groups in the S&P 500 declined today. The Morgan Stanley Cyclical Index of companies most-tied to economic growth dropped 2.9 percent. The KBW Bank Index of 24 stocks slid 3.4 percent.

JPMorgan declined 4.3 percent to $32.08. Citigroup fell 4.4 percent to $26.74. Chevron lost 3.3 percent to $95.19. Alcoa retreated 3.7 percent to $11.58.

McDonald’s, the world’s largest restaurant chain, slumped 4 percent to $85.03. Sales at stores open at least 13 months rose 3.5 percent in August, the Oak Brook, Illinois-based company said today in a statement. Analysts projected a gain of 5 percent, the average of seven estimates compiled by Bloomberg.

U.S. sales advanced 3.9 percent, missing analysts’ estimates for a 4.5 percent gain. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, soared 12 percent, the most since Aug. 18, to 38.52.                       

The S&P 500 may sink to as low as 970 because Wall Street analysts’ earnings estimates are too optimistic, according to MKM Partners LLC’s Michael Darda.

The 2012 forecast for S&P 500 company profits of about $108 a share may have to come down by as much as 30 percent, said Darda, chief market strategist at the Stamford, Connecticut- based research and trading firm. He cited the history of U.S. business cycles and the relationship between bond yields and earnings in making the prediction.

“We believe the S&P 500 will fall to 970-1,030 before bottoming,” Darda wrote in today’s report titled “Profit Squeeze Coming.” He added, “If conditions are less favorable than average, the S&P 500 could surely fall more.”

Have a wonderful weekend everyone.

Be magnificent!

We are fragmented.  We are one person at the office and another at home,

we speak of democracy and are autocrats in our hearts;

we speak of love for our neighbors even as we kill that love with our competitive spirit;

one part of us works, watches, and acts independently of the other.

Are you conscious of the fragmentation of your existence?  Is it possible for a mind

that has splintered the structure of its thoughts to perceive the broad field of consciousness?

-Krishnamurti, 1895-1986

As ever,

Carolann

Never look down on anybody unless

you are helping him up.

                    -Jesse Jackson, 1941