November 3rd, 2011 Newsletter

Dear Friends,

Tangents:

-from Globe Life:

Go easy on yourself

From a Daily Beast review of 30 Lessons for  Living: Tried and True Advice from the Wisest Americans, by gerontologist Karl Pillemer:  “If you don’t get it right the first time, don’t wallow in regrets.  Make like the legendary Kitty Carlisle Hart, who adhered to a daily ritual.   As soon as she woke up, she looked squarely into the mirror and said out loud: ‘Kitty, I forgive you.’  She lived to be 96.”

Photo of the day 

November 3, 2011

Saint Peter’s Basilica is pictured in front of the moon in Rome , Italy. Alessandro Bianchi/Reuters.

Market Commentary:

Canada

By Matt Walcoff

Nov. 3 (Bloomberg) — Canadian stocks rose for a second day after Greece halted a vote on its bailout, the European Central Bank cut its main interest rate and profit at companies including Canadian Natural Resources Ltd. beat estimates.

Canadian Natural, Canada’s second-biggest energy company by market value, jumped 9.3 percent as crude oil and natural gas climbed. Valeant Pharmaceuticals International Inc., the country’s largest drugmaker, rallied 13 percent after its third- quarter profit excluding certain items surpassed the average analyst estimate by 15 percent. Yamana Gold Inc., Canada’s fourth-biggest gold producer by market value, gained 4.4 percent after raising its dividend.

 The Standard & Poor’s/TSX Composite Index increased 226.59 points, or 1.9 percent, to 12,468.35.

“The earnings are good — not phenomenal, but good,” Arthur Salzer, chief executive officer of Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million ($198 million). “And any time you bring down interest rates to the low levels there are, any risk assets become a lot more attractive.”

The index had slipped this week after surging 5.4 percent in October as Greek Prime Minister George Papandreou said he will subject his country’s bailout plan to a referendum. The S&P/TSX is set to underperform the S&P 500 for the first year since 2003 as energy stocks have declined on concern the global economy will slow. Canada is the world’s sixth-largest oil producer, according to the U.S. Energy Department.                         

The ECB lowered its main refinancing rate to 1.25 percent from 1.5 percent. Among 55 economists in a Bloomberg News survey, six had forecast a cut. Stocks extended their gains today after Greek Finance Minister Evangelos Venizelos said the country won’t hold the referendum.

Crude oil advanced to a three-month high and natural gas climbed for the first time in three days on the New York Mercantile Exchange. PetroBakken Energy Ltd., a western Canadian energy producer, increased 7.6 percent to C$9.20.

Canadian Natural gained 9.3 percent to C$38.23 after reporting third-quarter earnings that beat the average estimate of analysts in a Bloomberg survey by 19 percent, excluding certain items. Suncor Energy Inc., the country’s largest oil and gas producer, rose 4.4 percent to C$33.20 after its profit excluding certain items topped the average analyst estimate by 39 percent.

Valeant surged 13 percent, the most since January, to C$44.08. SXC Health Solutions Corp., a pharmacy-benefits manager, jumped 6 percent to C$47.99 after beating the average analyst estimate for third-quarter adjusted earnings by 2.3 percent and raising its 2011 forecasts for earnings and revenue.                     

Dundee Precious Metals Inc., which operates in Bulgaria and Armenia, rallied 12 percent, the most since October 2009, to C$8.91 after surpassing its average profit estimate by 24 percent, excluding certain items.

Among companies that missed analysts’ earnings estimates, Sun Life Financial Inc., Canada’s third-largest insurer, fell 4.8 percent to C$22.85, the lowest in 31 months, after reporting its first quarterly loss in two years. Manitoba Telecom Services Inc., a Winnipeg, Manitoba-based phone company, sank 7.2 percent, the most since August 2010, to C$30.37 after missing the average forecast by 10 percent.

Industrial Alliance Insurance and Financial Services Inc.  lost 6.8 percent to C$26.80, the lowest since July 2009, after analysts at BMO, Canaccord Financial Inc. and National Bank of Canada cut their ratings on the company. The shares plunged 11 percent yesterday after the insurer’s earnings missed the average analyst estimate by 31 percent, excluding certain items.                          

 Gold stocks in the S&P/TSX climbed as the metal advanced to a six-week high after the ECB decision.

Barrick Gold Corp., the world’s largest company in the industry, increased 2.4 percent to C$52.40. Yamana Gold rose 4.4 percent to C$16.28 after boosting its quarterly dividend 11 percent. Lake Shore Gold Corp., which mines in Ontario, soared 16 percent to C$1.89.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, rallied 9 percent to C$22.35.

The company’s Enterprise nickel project in Zambia may produce 40,000 to 70,000 metric tons a year, First Quantum said in a statement today.

Most financial companies other than Sun Life and Industrial Alliance gained. Bank of Nova Scotia, Canada’s third-largest lender by assets, advanced 1.9 percent to C$52.93. Bank of Montreal, the No. 4 lender, increased 1.1 percent to C$58.70.

Manulife Financial Corp., North America’s fourth-largest insurer, surged 4.5 percent to C$13.11.

US

By Rita Nazareth

Nov. 3 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second straight day, as Greece moved closer to accepting a bailout and the European Central Bank unexpectedly lowered interest rates.

Qualcomm Inc. jumped 7.5 percent as the biggest maker of mobile-phone chips forecast sales that beat analysts’ projections. Kraft Foods Inc. added 3.3 percent after raising its earnings estimate. Estee Lauder Cos. jumped 18 percent after the maker of Clinique skin care raised its profit forecast, boosted its dividend and set plans for a stock split.

The S&P 500 climbed 1.9 percent to 1,261.15 at 4 p.m. in New York, extending its two-day gain to 3.5 percent and erasing its 2011 decline. The Dow Jones Industrial Average increased 208.43 points, or 1.8 percent, to 12,044.47 today.

“They’re pushing the Greeks to the wall,” Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.5 billion of assets, said in a telephone interview. “It’s a sobering up moment. On top of that, the ECB’s decision to cut rates will take some of the pressure off of the upcoming financing for the Spanish and Italian markets.”

Stocks tumbled earlier this week as Greek Prime Minister George Papandreou announced on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact. A two-day slump sent the S&P 500 to the level where three rallies stopped in August and September, the top of a price range that prevailed for 10 weeks. The index rose above that level last week amid progress on Europe’s bailout plans.

Greek Finance Minister Evangelos Venizelos, speaking to party lawmakers in Parliament in Athens today, said the nation won’t hold a referendum. Just hours after saying Greeks need to decide on whether their future is in the euro, Papandreou said the country belongs in the currency bloc.

     “Papandreou absolutely blinked in this game of chicken,”

Michael Holland, chairman and founder of New York-based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion. “The interesting thing is that it took him so long to blink. The world’s markets told him he was wrong and he still persisted for an extended period of time. It was insane.”

Global stocks also rose as ECB officials unanimously lowered the benchmark interest rate by 25 basis points to 1.25 percent, confounding 51 of 55 economists in a Bloomberg News survey. ECB President Mario Draghi said the rate cut happened partly because “what we’re observing now is slow growth heading toward a mild recession.”                       

Earlier today, benchmark gauges erased a rally as a report showed that service industries in the U.S. expanded at a slower pace and consumer confidence plunged, supporting Federal Reserve Chairman Ben S. Bernanke’s forecast yesterday that the economic recovery will be “frustratingly slow.”

A Labor Department report today showed first-time claims for unemployment benefits declined last week to a one-month low of 397,000. Employment probably cooled in October, indicating the U.S. recovery remains too weak, economists said before a report tomorrow. Payrolls climbed by 95,000 workers after a 103,000 September increase, according to the median forecast of economists surveyed by Bloomberg News.

All 10 groups in the S&P 500 rallied as energy and industrial shares had the biggest gains, adding at least 2.4 percent. Gauges of utility, health care and consumer staples companies advanced less than the benchmark gauge.

Optimism about corporate earnings also helped send stocks higher. About three quarters of the S&P 500 companies that reported results since Oct. 11 beat analysts’ projections, according to data compiled by Bloomberg.                         

Qualcomm jumped 7.5 percent to $56.11. The company, which gets most of its profit from licenses on technology used in so- called 3G phones, is benefiting as more consumers switch to the technology — especially in developing countries.

Kraft added 3.3 percent to $35.78. Food companies such as Kraft, Sara Lee Corp. and General Mills Inc. have raised prices on many products this year to make up for higher costs for ingredients such as corn, coffee and sugar.

Estee Lauder jumped 18 percent, the biggest advance in the S&P 500, to $118.92. The company said it will split its common stock 2-for-1 in January, and raise the annual dividend to $1.05 a share. Sales in the fiscal first quarter gained 18 percent, helped by stronger demand in all of the company’s markets and a weaker U.S. dollar that aided results overseas.

DirecTV climbed 6.2 percent to $47.63. The largest U.S. satellite-television provider reported a 7.7 percent increase in third-quarter profit after a football promotion helped it gain U.S. subscribers.

Jefferies Group Inc. lost 2.1 percent to $12.01, paring an earlier decline as it said it has no “meaningful net exposure” to European sovereign debt. Its shares plunged as much as 20 percent, triggering stock-market circuit breakers. Egan-Jones Ratings Co. cut the firm’s credit grade, citing a “changed environment” after the collapse of MF Global Holdings Ltd. and concern that Jefferies’s $2.7 billion in “sovereign obligations” on Aug. 31 is large relative to equity.

Abercrombie & Fitch Co. tumbled 20 percent, the most in the S&P 500, to $59.26. The New Albany, Ohio-based teen-clothing retailer reported a slowing trend for same-store sales in Europe, including flagship stores that had declines. Japan and Canada same-store sales also dropped.

The S&P 500 is caught in a “battle” between technical measures sending conflicting signals on whether stocks will rise or fall, Janney Montgomery Scott LLC said.

 The biggest monthly rally since 1991 failed to keep the benchmark measure of U.S. equities above its 200-day average, according to data compiled by Bloomberg. At the same time, its 50-day average began rising for the first time since June. The index closed at 1,237.90 yesterday, 2.8 percent below its 200- day level and 3.8 percent above the 50-day figure.

The charts “underscore the battle we’re seeing between the market’s longer-term declining moving averages and its short- term rising moving averages,” Dan Wantrobski, the Philadelphia- based director of technical research at Janney, wrote in a report yesterday. “Due to the close proximity the price action of each benchmark now shares with these indicators, we will likely have an answer soon.”

Have a wonderful evening everyone.

Be magnificent!

The supreme consideration is man.

-Mahatma Gandhi, 1869-1948

As ever,

Carolann

Generosity is giving more than you can,

and pride is taking less than you need.

                 -Kahlil Gibran, 1883-1931