December 12, 2011 Newsletter

Dear Friends,

 Tangents:

 An amazing full moon/lunar eclipse weekend over.

 La Virgen De Guadalupe day in Mexico today.

December 12th is the feast day of the Virgin of Guadalupe, and attracts millions of pilgrims to the Basilica in Northern Mexico City where the image of the Virgin Mary is displayed.

History

As the story goes, in December of 1531, peasant farmer Juan Diego encountered a vision of the Virgin Mary while walking on a hill in Northern Mexico City. The apparition told Juan Diego to build a church in her honor on that site.  When Juan Diego informed the local Bishop of this, the Bishop asked for proof.  So Juan Diego returned to the hill where Mary told him to pick the roses growing on the hillside, which were of a variety native to Spain, and out of season, to boot.  Juan Diego gathered the roses in his Tilma, (a large cloth worn by men at the time and also used as a satchel) to take to the Bishop.

Upon returning to the Bishop, he presented the roses only to find that they had been miraculously replaced by an image of the Virgin that was painted on the cloth.  That did it for the Bishop, who ordered the construction of the Basilica, which is still standing (barely) today at the foot of the hill where Juan Diego first saw the vision.

The Basilica

The image of the Virgin has since been moved to a newer Basilica (shown left), also called La Villa de Guadalupe, which was constructed in the mid 1970s, right next to the original. The new Basilica holds 10,000 plus, and is the second most visited Catholic site outside of the Vatican. Visitors can view the Virgin up close, which is on display behind the altar, by riding rows of moving sidewalks situated directly underneath the image.

Guadalupano is one who follows or believes in the Virgin of Guadalupe. An interesting part of the Mexican culture and religion is that while a person may not consider themselves religious, they may call themselves a Guadalupano, or follower of the Virgen.

Lupe, Lupita, Lupito are all nicknames of someone who may be actually named Guadalupe, or their family may have specified the Virgin as their patron saint, or they may have even been born on December 12th (like yours truly).  In many cases, regardless of who your patron saint is, their feast day can be considered a second birthday.  So, to all who were born on the 12th of any month, ¡Feliz día de santo!              -from Mexico City Spanish.com

Photos of the day

December 12, 2011

A Pilgrim performs a traditional dance during the celebration of Virgin of Guadalupe Day at Basilica’s square in Mexico City. Edgard Garrido/Reuters.

The bull and bear bronze statue stands outside the stock market in Frankfurt, Germany. Michael Probst/AP.

Market Commentary:

Canada

By Matt Walcoff

Dec. 12 (Bloomberg) — Canadian stocks fell, sending the country’s benchmark stock index to its lowest level this month, as commodity shares dropped after Moody’s Investors Service said it will review its ratings on all European Union countries.

Goldcorp Inc., the world’s second-biggest gold producer by market value, declined 3.3 percent as the U.S. Dollar Index rose the most in two weeks. Suncor Energy Inc., the country’s largest energy oil and natural gas producer, lost 2.7 percent as the fuels retreated. Royal Bank of Canada, the country’s largest lender by assets, dropped 1.8 percent after Moody’s said last week’s EU summit failed to produce “decisive policy measures” to end the region’s debt crisis.

The Standard & Poor’s/TSX Composite Index fell 126.86 points, or 1.1 percent, to 11,907.89, the lowest closing level since Nov. 29. “The fundamentals investors would normally watch can easily be trumped by some of the political decisions in Europe as well as ratings-agency decisions,” said Andrew Pyle, an associate portfolio manager at Bank of Nova Scotia in Peterborough, Ontario. Pyle’s team oversees about C$200 million ($195 million). “A severe recession in the European economy will have an impact on other regions.”

The index has slumped 11 percent this year, led by financial, energy and materials companies, as the European debt crisis has intensified. The three industries make up 76 percent of Canadian stocks by market value, according to Bloomberg data. 

Leaders of EU countries excluding the U.K. agreed last week to form a closer fiscal union that would limit budget deficits in an attempt to save the euro. “Moody’s believes that the announcement offers few new measures and points out that many are similar to previously announced ones,” the ratings company said in a statement today. Bond yields climbed in Italy and Spain.

 Stocks extended their fall after Fitch Ratings said in a statement that “a ‘comprehensive solution’ to the current crisis is not on offer” after the summit. The Thomson Reuters/Jefferies CRB commodity index declined to the lowest level since Oct. 5 as the euro slipped. Gold futures retreated to the lowest in almost seven weeks.

Goldcorp lost 3.3 percent to C$49.52. Barrick Gold Corp., the world’s largest company in the industry, decreased 2.9 percent to C$49.23. Kinross Gold Corp., Canada’s third-biggest producer of the metal, dropped 4.2 percent to C$13.04. China Gold International Resources Corp. plunged 9 percent to C$2.54, the lowest since January 2010.                      

Centerra Gold Inc., which mines in Kyrgyzstan and Mongolia, tumbled 4.4 percent to C$21.07 after the Sunday Times said it has offered to buy European Goldfields Ltd. The London-based newspaper cited unnamed sources. John Pearson, a spokesman for Centerra, said yesterday the company doesn’t comment on market speculation. European Goldfields advanced for a fifth day, increasing 4.4 percent to C$13.43.

Natural gas futures fell to the lowest since September 2009 on forecasts for above-normal temperatures in parts of the U.S. Crude oil futures dropped on the New York Mercantile Exchange.

Suncor declined 2.7 percent to C$29.06. Encana Corp., the country’s biggest natural gas producer, lost 2.8 percent to C$19.01. Trican Well Service Ltd., Canada’s largest oilfield- services company, slumped 6.1 percent to C$16.47.

Producers of base metals and coal fell as all major industrial metals traded on the London Metal Exchange dropped after China reported the slowest export growth since 2009, excluding distortions in January and February.                        

Teck Resources Ltd., Canada’s largest company in the industry, decreased 2.3 percent to C$37.05. Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi copper project in Mongolia, retreated 4.2 percent to C$21.28. SouthGobi Resources Ltd., Ivanhoe Mines’ Mongolian coal-mining unit, tumbled 5.3 percent to C$6.61.

 An index of S&P/TSX banks declined. Royal Bank fell 1.7 percent to C$48.64. Bank of Montreal, Canada’s fourth-largest lender by assets, slipped 1.2 percent to C$56. Manulife Financial Corp., North America’s fourth-biggest insurer, dropped 3.6 percent to C$10.91.

Sun Life Financial Inc., Canada’s third-largest insurer, surged 8.4 percent, the most since July 2009, to C$19.86 after Peter A. Rozenberg, an analyst at UBS AG, raised his rating on the shares to “buy” from “neutral.” The stock has fallen too far below the company’s book value, Rozenberg wrote in a note to clients. Sun Life closed at 75 percent of book value per share on Dec. 9.

US

By Rita Nazareth

Dec. 12 (Bloomberg) — U.S. stocks fell, after a two-week rally, as Moody’s Investors Service and Fitch Ratings said last week’s summit did little to ease pressure on Europe’s struggling governments and Intel Corp. cut its revenue forecast.

Financial shares had the biggest decline among 10 groups in the Standard & Poor’s 500 Index as Morgan Stanley and Citigroup Inc. sank more than 5.3 percent. Intel dropped 4 percent as the world’s largest chipmaker said a shortage of hard-disk drives was causing computer makers to reduce orders of other parts. Alpha Natural Resources Inc. tumbled 8.8 percent, while Halliburton Co., Alcoa Inc. and Newmont Mining Corp. decreased more than 2.4 percent as commodities slumped.

The S&P 500 declined 1.5 percent to 1,236.47 at 4 p.m. New York time, after rising 8.3 percent over the previous two weeks. The Dow Jones Industrial Average fell 162.87 points, or 1.3 percent, to 12,021.39. About 6.5 billion shares changed hands on U.S. exchanges, or 19 percent below the three-month average.

“This is not heaven,” Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $10.5 billion, said in a telephone interview. “The European stopgap may not be successfully implemented. In order for this program to be successful, there’s going to have to be a lot of belt tightening. That means that the European economy is not going to do well at all. That would have negative impact on other countries around the globe.”

Stocks rose last week as European leaders agreed to boost a rescue fund and reports spurred optimism about the U.S. economy. Today, equities joined a global slump as Moody’s said that last week’s EU summit failed to produce “decisive policy measures.” Fitch said a comprehensive solution has not yet been offered and predicted a “significant economic downturn” in the region.                    

“Did the European summit do enough to stave off these downgrades or not?” Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, which oversees more than $39 billion, said in a telephone interview. “Most people come to the conclusion that downgrades on the region’s sovereigns are easily justifiable. If the rest of the world is slowing down, we too would feel some of that impact.”

All 10 groups in the S&P 500 today fell as financial, commodity, industrial and technology gauges slid at least 1.5 percent. The Morgan Stanley Cyclical Index slumped 1.9 percent amid concern about a global economic slowdown.

The KBW Bank Index declined 2.5 percent as 23 of its 24 stocks fell. A gauge of European lenders in the benchmark Stoxx Europe 600 Index declined 3.9 percent. Morgan Stanley slid 6.1 percent to $15.38. Citigroup decreased 5.4 percent to $27.22. Bank of America Corp. lost 4.7 percent, the most in the Dow, to $5.45. JPMorgan Chase & Co. erased 3.4 percent to $32.04.                         

Intel tumbled 4 percent, the biggest decline since Aug. 18, to $24. While PC sales will rise in the fourth quarter from the previous three months, customers are cutting back on their stockpiles of parts because they expect hard-disk shortages to reduce output, Intel said. Those shortages, resulting from the worst flooding in Thailand in 70 years, will continue into the first quarter, it said.

Energy and raw material shares slumped as commodities retreated amid concern about slower global demand and as the U.S. dollar rose. The Market Vectors-Coal ETF, an exchange- traded fund, tumbled 4.2 percent.

Alpha Natural Resources Inc., a coal producer, sank 8.8 percent to $21.39. Halliburton, an oilfield services provider, fell 4.5 percent to $32.56. Alcoa, the largest U.S. aluminum producer, sank 3 percent to $9.35. Newmont Mining, the largest U.S. gold producer, slid 2.5 percent to $65.27.

Salesforce.com Inc. tumbled 6.3 percent to $116.07. The largest maker of online customer-management software was cut to “underperform” from “neutral” at Cowen and Company LLC.

 Two of the world’s biggest companies fell even after boosting their dividends. Pfizer Inc., the largest drugmaker, authorized a new share buyback program for as much as $10 billion and said the quarterly dividend was increased to 22 cents a share from 20 cents. Boeing Co. raised its quarterly dividend 4.8 percent to 44 cents a share, the first increase since 2008 at the world’s largest aerospace company. A Bloomberg projection called for a new total of 45 cents.

Pfizer dropped 0.8 percent to $20.39. Boeing retreated 1.4 percent to $70.90.

Thomas Lee, chief U.S. equity strategist at JPMorgan, estimated the S&P 500 will rally to 1,430 next year and recommended financial stocks. Lee’s forecast is 14 percent higher than the last closing level on Dec. 9. He estimated combined profit by companies in the benchmark equity gauge will be $105 a share in 2012 and $110 in 2013.                           

“The consensus view is that visibility remains murky and with significant tail risks” such as Europe’s debt crisis and fiscal tightening in China, Lee said. “2012 may look a bit like 2009,” he wrote. “Emergence from a financial crisis and the potential for acceleration of the business cycle driven by Europe exiting a recession and China easing” may boost cyclical stocks. Financials, which may be helped by Republican gains in the U.S. election, are his “top pick,” he said.

Financials have plunged 21 percent in 2011, the most of the 10 groups in the S&P 500, as investors fled banks and insurers on concern Europe’s debt crisis will spread. Raw-material and industrial shares had the next biggest declines, falling 13 percent and 5 percent, respectively.

From the S&P 500’s bear-market bottom on March 9, 2009, through the end of that year, financials surged 131 percent, while consumer discretionary, industrial and raw-material companies jumped at least 83 percent.                       

Unemployment at the lowest level in more than two years and manufacturing running at the fastest pace in five months may dissuade Federal Reserve Chairman Ben S. Bernanke and fellow central bankers from pursuing a third-round of large scale asset purchases. The Federal Open Market Committee will issue a statement after its meeting tomorrow with any updated outlook.

Vulcan Materials Co. surged 15 percent, the biggest gain in the S&P 500, to $38.70. Martin Marietta Materials Inc. is seeking a hostile takeover of Vulcan in an all-stock transaction valued at $4.7 billion that would create the world’s largest aggregates supplier.

Monster Worldwide Inc. added 1 percent to $8.05. The company, which has been the subject of at least 20 takeover rumors in the past five years, may finally be cheap enough to lure a private equity buyer, according to a Bloomberg News report. The world’s largest online-recruiting company has plunged 66 percent this year, the most in the S&P 500, as American businesses remained reluctant to hire. New York-based Monster is now trading at a 7 percent discount to sales, cheaper than 90 percent of U.S. Internet software and services companies, according to data compiled by Bloomberg. It’s also generating twice as much cash relative to its share price as the industry median, the data show.

Have a wonderful evening everyone.

Be magnificent!

The fact that there are so many men still alive in the world

shows that it is based not on the force of arms but on the force of truth or love.

Therefore, the greatest and most impeachable evidence of success of this force

is to be found in the fact that, in spite of all the wars of the world,

it still lives on.

-Mahatma Gandhi, 1869-1948

As ever,

Carolann

There are four ways, and only four ways,

in which we have contact with the world. 

We are evaluated and classified by these

four contacts: what we do, how we look,

what we say and how we say it.

                -Dale Carnegie, 1888-1955