November 10th, 2011 Newsletter
Dear Friends,
Tangents: Full moon tonight.
Birthday: November 10th, 1983, Microsoft releases Windows.
Noteworthy: November 10, 1871, Stanley finds Livingstone.
Some markets are closed tomorrow for Remembrance Day; bond markets are closed.
Lest we forget…
In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place: and in the sky
The larks still bravely singing fly
Scarce heard amid the guns below.
We are the dead: Short days ago,
We lived, felt dawn, saw sunset glow,
Loved and were loved: and now we lie
In Flanders fields!
Take up our quarrel with the foe
To you, from failing hands, we throw
The torch: be yours to hold it high
If ye break faith with us who die,
We shall not sleep, though poppies grow
In Flanders fields
Composed at the battlefront on May 3, 1915
during the second battle of Ypres, Belgium
On May 2, 1915, John McCrae’s close friend and former student Alexis Helmer was killed by a German shell. That evening, in the absence of a Chaplain, John McCrae recited from memory a few passages from the Church of England’s “Order of the Burial of the Dead”. For security reasons Helmer’s burial in Essex Farm Cemetery was performed in complete darkness.
The next day, May 3, 1915, Sergeant-Major Cyril Allinson was delivering mail. McCrae was sitting at the back of an ambulance parked near the dressing station beside the YserCanal, just a few hundred yards north of Ypres, Belgium.
As John McCrae was writing his In Flanders Fields poem, Allinson silently watched and later recalled, “His face was very tired but calm as he wrote. He looked around from time to time, his eyes straying to Helmer’s grave.”
Within moments, John McCrae had completed the “In Flanders Fields” poem and when he was done, without a word, McCrae took his mail and handed the poem to Allinson.
Allinson was deeply moved:
“The (Flanders Fields) poem was an exact description of the scene in front of us both. He used the word blow in that line because the poppies actually were being blown that morning by a gentle east wind. It never occurred to me at that time that it would ever be published. It seemed to me just an exact description of the scene.”
Photos of the day
November 10, 2011
Crosses commemorating British military casualties in Afghanistan are seen in the Field of Remembrance outside Westminster Abbey in central London. Suzanne Plunkett/Reuters.
Market Commentary:
Canada
By Matt Walcoff
Nov. 10 (Bloomberg) — Canadian stocks fell for a second day as precious metals dropped after Italian bond yields declined from euro-era records, indicating more confidence in the country’s ability to pay its debts.
Silver Standard Resources Inc., which mines in Latin America, plunged 21 percent after cutting its resources estimate at its Pirquitas mine. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, lost 7.9 percent after two analysts reduced their ratings on the shares.
TransCanada Corp., the owner of the country’s biggest pipeline system, decreased 1.8 percent after the U.S. government delayed a decision on the company’s proposed Keystone XL pipeline.
The Standard & Poor’s/TSX Composite Index slipped 47.35 points, or 0.4 percent, to 12,108.87, the lowest close since Oct. 21.
“The golds are getting whacked,” David Cockfield, a money manager at Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$225 million ($221 million). “Things are settling down in Europe. The Greek situation, they’ve named a new prime minister, and the Italians have sort of settled on somebody.”
The index lost 2.7 percent yesterday, extending its 2011 retreat to 9.6 percent, as Italian bond yields surged after LCH Clearnet SA raised deposit requirements for trading the debt securities. Energy, materials and financial companies in the S&P/TSX have fallen in part on concern the European debt crisis will weaken the global economy.
Italian bonds gained today after the country sold 5 billion euros ($6.8 billion) in one-year bills, the maximum for the auction. Demand was 1.99 times the amount on offer.
Italian Foreign Minister Franco Frattini said today Mario Monti, the top candidate to replace Silvio Berlusconi, “has an international reputation nobody can deny.” Italy’s president, Giorgio Napolitano, named Monti, a former European Union competition commissioner, a senator for life yesterday. Berlusconi has pledged to resign after the country’s parliament passes austerity measures.
In Greece, President Karolos Papoulias named Lucas Papademos, a former European Central Bank vice president, to succeed George Papandreou as prime minister. The country’s political parties had debated for four days who would lead a unity government.
Gold futures fell the most in three weeks on the Comex in New York on reduced demand for havens from the debt crisis.
Kinross Gold Corp., Canada’s third-largest gold producer by market value, dropped 2.4 percent to C$14.06. European Goldfields Ltd. slumped 5.5 percent to C$10.12 after reporting twice as large of a quarterly loss as the average estimate in a Bloomberg survey of analysts, excluding certain items.
Silver Standard sank 21 percent, the most since July 2002, to C$15.44 after reducing the estimates from the Pirquitas mine in Argentina. The shares closed at the lowest price since December 2008.
Lake Shore Gold Corp., which mines in Canada, rallied 10 percent to C$1.71 after reporting a new discovery at its Timmins Mine in Ontario.
Gold explorer Tanzanian Royalty Exploration Corp. tumbled 33 percent, the most since August 1998, to C$2.31 after a fund placed an order to sell its stake in the company, according to Jim Sinclair, Tanzanian Royalty’s chief executive officer.
First Quantum dropped 7.9 percent to C$18.20 after analysts at Cormark Securities Inc. and Numis Corp. cut their ratings on the shares. First Quantum tumbled 14 percent yesterday after reporting earnings that missed the average analyst estimate by 46 percent, excluding certain items.
TransCanada retreated for a fifth day, slipping 1.8 percent to C$39.85 after the U.S. State Department said it would study an alternative route for the company’s planned pipeline from Alberta to the Gulf of Mexico. The department cited environmental concerns in an e-mailed statement.
ShawCor Ltd., which provides pipeline products and services, lost 9 percent, the most since January 2009, to C$23.58. The company reported third-quarter profit that trailed the average analyst estimate in a Bloomberg survey by 63 percent, excluding certain items.
The six largest S&P/TSX banks fell after Andre-Philippe Hardy, an analyst at Royal Bank of Canada, cut his fourth- quarter profit estimates for each lender except his own, which he doesn’t cover.
Canadian Imperial Bank of Commerce, the country’s fifth- largest lender by assets, dropped 1.6 percent to C$71.45. Bank of Montreal, Canada’s fourth-biggest bank, declined 0.8 percent to C$56.87.
Canadian National Railway Co., the country’s biggest railroad, gained 2 percent to C$80.60. Total U.S. rail traffic climbed 3.8 percent in the week ended November 5, the latest for which data from the Association of American Railroads are available. Intermodal goods, which can move by highway, rail and sea, rose 4.6 percent and commodity carloads advanced 3.1 percent, according to Bloomberg Industries.
US
By Michael P. Regan and Rita Nazareth
Nov. 10 (Bloomberg) — Stocks rose, with the Standard & Poor’s 500 Index rebounding from its worst drop since August, as jobless claims fell while a retreat in Italian bond yields and the selection of a new Greek premier tempered concern about Europe’s crisis. The euro gained and Treasuries slid.
The S&P 500 rose 0.9 percent to close at 1,239.7 at 4 p.m. in New York. Italy’s 10-year bond yield, which surged to a record yesterday, dropped 36 basis points to 6.89 percent today as the European Central Bank bought the country’s debt and the nation sold all the bills planned at an auction. The euro appreciated 0.4 percent to $1.3601. Cotton and oil rose at least 1.8 percent to lead commodities higher. Ten-year Treasury yields lost six basis points.
U.S. equities resumed gains after falling earlier amid a surge in French bond yields. Stocks recovered as S&P said it did not cut France’s credit rating, clarifying a statement that suggested the rating had changed. Equities rallied as U.S. initial jobless claims decreased to the lowest level in seven months, Italy sold 5 billion euros ($6.8 billion) of one-year bills and former vice president of the European Central Bank Lucas Papademos was named Greece’s interim leader.
“I’m not willing to step up and proclaim all clear, but we’re moving in the right direction,” Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees about $47 billion, said in a telephone interview. “The new Greece premier was a great start and the fact that bond yields came back down is great for Italy. The most positive news of the day, though, was the jobless claims data showing that the U.S. economy is slowly getting better.”
Gauges of energy, health-care and industrial companies rose more than 1 percent for the biggest gains among the 10 main industries in the S&P 500, all of which advanced. Merck & Co. surged 3.5 percent after increasing its dividend, while Cisco Systems Inc. rallied 5.7 percent after earnings topped analyst estimates. The two stocks led the Dow Jones Industrial Average to an advance of 112.92 points, or 1 percent, to 11,893.86. Apple Inc. slumped 2.6 percent as Cleveland Research Co. reduced its earnings forecast and iPad-shipment estimates.
More than $1 trillion was erased from the value of global equities yesterday, with the S&P 500 sliding 3.7 percent, as a surge in Italy’s bond yields to euro-era records signaled Europe’s sovereign debt crisis was intensifying. The nation’s Senate today rushed to pass debt-reduction measures that clear the way for establishing a new government that may be led by former European Union Competition Commissioner Mario Monti.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.4 percent after advancing as much as 0.3 percent. The U.S. currency weakened against 12 of 16 major peers, with Brazil’s real and the South African rand climbing 1 percent for the biggest gains.
The 10,000 drop in jobless claims to 390,000 compared with the median forecast of economists in a Bloomberg News survey for 400,000 new claims. Another report showed the U.S. trade deficit unexpectedly narrowed in September to the lowest level this year as exports surged to a record high.
Federal Reserve Chairman Ben S. Bernanke said the central bank is concentrating “intently” on reducing unemployment and projects inflation to stay under control for the “foreseeable future.”
“For a lot of people, I know, it doesn’t feel like the recession ever ended,” even with the economy growing for two years, Bernanke said today in remarks at a town hall-style meeting at Fort Bliss in El Paso, Texas. “These problems are very serious, and we at the Federal Reserve have been focusing intently on supporting job creation.”
Treasuries fell as the U.S. sold $16 billion in 30-year bonds amid weaker-than-average demand. The bonds drew a yield of 3.199 percent, compared with the average forecast of 3.148 percent in a Bloomberg News survey of eight of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio was 2.4 percent, compared with an average of 2.68 percent for the past 10 sales.
Existing 30-year bond yields increased eight basis points to 3.11 percent.
Among commodities tracked by the S&P GSCI, 10 rose and 14 retreated. Oil climbed 2.1 percent to $97.78 a barrel in New York, the highest level in more than three months. Delta Air Lines Inc. lost 4.8 percent to lead the NYSE Arca Airline Index down 1.6 percent amid concern about higher fuel costs. Copper fell 1.9 percent. Gold for December delivery lost 1.8 percent to $1,759.60 an ounce.
The Stoxx Europe 600 Index slipped 0.4 percent, erasing an earlier 0.8 percent gain. Credit Agricole SA lost 2.3 percent to help lead banks lower as French bond yields rose. Vedanta Resources Plc led a drop in mining shares, tumbling 9.5 percent.
Air France-KLM Group retreated 5 percent after forecasting a full-year loss.
French 10-year bond yields climbed 27 basis points to 3.47 percent, a four-month high, and reached a euro-era record of 169 basis points above benchmark German bunds.
The cost of insuring against default on French government debt rose to a record. Credit-default swaps on France rose six basis points to 203, according to CMA prices, surpassing the record closing price of 202 set Sept. 22. The Markit iTraxx SovX Western Europe Index increased for a fifth day, climbing 2.4 basis points to 343.
S&P confirmed that France remains rated AAA with a stable outlook after a technical error caused the ratings company to send a headline suggesting it may have been downgraded. S&P is investigating the cause of the technical error, it said in a statement.
France may have its credit grade lowered by Egan-Jones Ratings Co. because the euro-region’s second largest economy is becoming one of its weakest.
France’s rating is “probably heading south” on France’s rating, Sean Egan, the firm’s president and founding principal, said in a radio interview on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. A list of Europe’s weaker countries “might extend also to France,” he said. Egan-Jones currently rates France AA-, he said in response to an e-mailed question after the interview.
The Italian two-year note yield slid 80 basis points to 6.40 percent, after jumping 82 basis points yesterday.
The ECB bought Italian government bonds today, according to three people familiar with the transactions, who declined to be identified because the deals are confidential. The ECB wasn’t immediately available for comment when contacted by telephone by Bloomberg.
European efforts to speed the setup of a permanent rescue fund have lost momentum amid a clash between Germany and France over provisions to force bondholders to share losses, three people involved in the negotiations said.
The European Commission cut its euro-region growth forecast for next year by more than half and said it sees the risk of a recession. Gross domestic product may grow 1.5 percent this year and 0.5 percent in 2012, the Brussels-based commission said today. It had earlier projected the 17-nation region to expand 1.6 percent and 1.8 percent this year and next, respectively. In 2013, the economy may expand 1.3 percent, the commission said.
The MSCI Emerging Markets Index slipped 2.5 percent. The MSCI Asia Pacific Index declined 3.3 percent, the most since Sept. 22. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong tumbled 5.7 percent as China’s export growth slowed.
Have a wonderful evening everyone.
Be magnificent!
The soul is the home of all living beings;
and from the soul all living beings derive their strength.
There is nothing in the universe that does not come from the soul.
The soul dwells within all that exists;
it is the truth of all that exists.
You, my son, are the soul.
-Chandogya Upanishad
As ever,
Carolann
Per ardua ad astra.
Through adversity to the stars.
-Latin motto of the RCAF