January 10th, 2012 Newsletter
Dear Friends,
Tangents:
It was wonderful to open The New York Times on January 1st last week and see Yoko Ono’s full page ad with the message, Imagine Peace….and the world will live as one, written in every language, signed, Lots of love, yoko. Imagine, indeed.
WISH TREE
Make a wish
Write it down on a piece of paper.
Fold it and tie it around a branch of a wish tree.
Ask your friend to do the same.
Keep wishing.
Until the branches are covered with wishes.
-Yoko Ono
Tribute to peace
The “Wish Tree” is a tribute to Yoko Ono and John Lennon’s campaign for world peace.
Since Lennon’s death in 1981, “Wish Tree” has been exhibited throughout the world.
Over 700,000 wishes have been collected from art exhibits, emails and letters over the past 30 years, according to the Imagine Peace website.
The wishes are sent to the Imagine Peace Tower in Reykjavik, Iceland. The tower, which features a pillar of light, was unveiled on October 9, 2007– what would have been Lennon’s 67th birthday.
Ono’s “Wish Tree” was inspired by her childhood in Japan. When visiting a temple, she would write a wish on a piece of paper and attach it to a tree branch.
Market Commentary:
Canada
By Matt Walcoff and Ksenia Galouchko
Jan. 10 (Bloomberg) — Canadian stocks rose for a second day as commodity producers gained after slower Chinese import growth led to speculation the country will ease monetary policy.
Nexen Inc., an oil and gas producer with operations on five continents, advanced 7.8 percent after saying Chief Executive Officer Marvin Romanow is leaving the company. Potash Corp., the world’s largest fertilizer producer by market value, advanced
4.1 percent after an analyst recommended the stock. Yoga-wear retailer Lululemon Athletica Inc. rallied 11 percent after boosting its fourth-quarter earnings forecast.
The Standard & Poor’s/TSX Composite Index climbed 73.94 points, or 0.6 percent, to 12,270.66, the highest close since Nov. 11.
“What’s probably helping Canada is ongoing speculation that we could get some monetary stimulus in China to combat what appears to be a slowing-down there,” Gareth Watson, vice president of investment management and research at Richardson GMP Ltd. in Toronto, said in a telephone interview. The firm oversees about C$16 billion ($16 billion). “If you can kick- start it again and get raw-material inputs demand increasing, it bodes well for commodity prices, which bodes well for the TSX.”
The index rose 2.6 percent this month on economic data indicating strengthening manufacturing in the U.S., U.K. and China. Materials companies account for 21 percent of Canadian stocks by market value, with the energy industry making up another 27 percent, according to data compiled by Bloomberg.
Chinese imports climbed 11.8 percent last month from a year earlier, a government report said today in Beijing. All 21 economists in a Bloomberg survey had forecast a bigger increase.
Crude oil gained for the first time in four days on the New York Mercantile Exchange.
Suncor Energy Inc., Canada’s largest oil and gas producer, advanced 2.9 percent to C$32.82 to extend its streak of increases to eight days, the longest since July 2006. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, rallied 0.7 percent to
C$12.49 after saying it will spend $500 million less on drilling this year compared with 2011.
Nexen surged 7.8 percent to C$18.40 after disclosing that Chief Financial Officer Kevin Reinhart is replacing Romanow.
“The current helm change addresses Nexen’s ineffective growth strategy,” John Herrlin, an analyst at Societe Generale SA, wrote in a note to clients. Shares of the Calgary-based company sank 29 percent last year as it failed to meet production targets at its Long Lake oil-sands project.
DeeThree Exploration Ltd. rose 11 percent to C$2.70 after announcing the launch of a second rig in late January.
Pacific Rubiales Energy Corp., which explores for oil in Colombia, had the biggest gain in the S&P/TSX after forecasting a 2012 production increase of as much as 35 percent. The shares surged 9.9 percent to C$21.98. Petrominerales Ltd. rose 6.8 percent to C$18.78 after reporting yesterday output from its operations in Peru and Colombia rose 5 percent in December from November.
Lululemon surged 11 percent to C$60.68 after raising its fourth-quarter earnings-per-share forecast by 7 cents a share to a range of 47 cents a share to 49 cents a share. Analysts had estimated the company would report profit of 42 cents a share, according to the average forecast in a Bloomberg survey.
Agrium Inc. and Potash Corp. of Saskatchewan Inc. climbed after Joel Jackson, an analyst at Bank of Montreal, said fertilizer demand will rebound this quarter.
Agrium, a fertilizer producer and farm retailer, gained 3.5 percent to C$75.16 after Jackson raised his rating on the shares to “outperform” from “market perform.” Potash Corp., the world’s largest fertilizer producer by market value, advanced
4.1 percent to C$44.36 after Tim Tiberio, analyst at Miller Tabak & Co. LLC, initiated coverage of the company with a “buy” and price estimate of $60 (C$60.95).
Base-metals and coal producers climbed as copper futures rose. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 7 percent to C$23.10.
Teck Resources Ltd., the country’s biggest company in the industry, gained 2.7 percent to C$38.65.
Pharmacy-benefits manager SXC Health Solutions Corp.
rallied 6.5 percent to a record C$63.47 after David H. Shove, an analyst at BMO, raised his price estimate on the U.S. shares to
$71 from $59, citing expectations of “double-digit earnings growth from all companies in the space.”
US
By Rita Nazareth
Jan. 10 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest level since July, amid bets that China may act to spur economic growth.
All 10 groups in the S&P 500 advanced as financial, commodity and industrial shares had the biggest gains. Bank of America Corp. and Caterpillar Inc. rallied at least 2.9 percent.
Alcoa Inc., the first company in the Dow Jones Industrial Average to report quarterly results, pared a rally of as much as
4.5 percent. Tiffany & Co. tumbled 10 percent after the luxury jewelry retailer reduced its annual earnings forecast.
The S&P 500 climbed 0.9 percent to 1,292.08 at 4 p.m. New York time. The index rose to the highest level since July 29, a week before the U.S. was stripped of its AAA credit rating by S&P. The Dow gained 69.78 points, or 0.6 percent, to 12,462.47.
The Russell 2000 Index of small companies jumped 1.5 percent, rallying above its average price of the last 200 days.
“Earnings don’t have to knock the ball out of the park to push equities higher,” Jack Ablin, who helps oversee $55 billion as chief investment officer for Chicago-based Harris Private Bank, said in a telephone interview. “Expectations are low.” On the international front, “there’s a growing sense that China will ease policy and, to the extent that Europe can muddle, it’s probably net positive news.”
Stocks rose as a drop in China’s import growth bolstered forecasts for monetary easing. Equities pared gains as Alcoa, the largest U.S. aluminum producer, tumbled from today’s peak.
The S&P 500 has ended the earnings season higher 75 percent of the time when Alcoa rises in the session after reporting its results, according to a Bespoke Investment Group study of 34 quarters going back to 2003.
Alcoa added 0.2 percent to $9.44. Sales rose 6 percent to
$5.99 billion, beating estimates by 5.1 percent. It had a loss excluding restructuring costs of 3 cents a share, matching the average projection from 18 estimates compiled by Bloomberg.
Aluminum jumped, pacing gains in commodities, after the company also forecast a global production deficit.
The Morgan Stanley Cyclical Index of companies most- dependent on economic growth gained 1.7 percent. The Dow Jones Transportation Average added 1.4 percent. The KBW Bank Index rallied 1.9 percent. Bank of America climbed 5.7 percent, the biggest gain in the Dow, to $6.63. Caterpillar, the world’s largest construction and mining-equipment maker, increased 3 percent to $99.96.
BorgWarner Inc. rose the most in the S&P 500, soaring 12 percent to $72.25. The maker of turbochargers forecast annual profit that topped analysts’ estimates.
“Most companies will surprise on the upside and markets will react positively to that provided that there’s not any further negative news coming from the rest of the world,” David Kelly, who helps oversee $394 billion as chief market strategist for JPMorgan Funds in New York, said in a telephone interview.
“The U.S. economy seems to have momentum.”
The S&P 500 has jumped 18 percent from its 2011 low amid better-than-expected economic data. The rally has brought the index to the top of the trading range it has be stuck in since August.
Eastman Kodak Co. gained the most in the Russell 2000, advancing 50 percent to 60 cents. The unprofitable 131-year-old imaging company simplified its management structure and created a chief operating office to reduce costs.
Tiffany slumped 10 percent to $59.94. The company, which generates almost half of its sales outside of the U.S., is selling fewer $65,000 diamond necklaces as volatile stock markets prompt European consumers to curb spending. Asian shoppers also are restraining purchases of luxury goods.
Goodyear Tire & Rubber Co. tumbled 8.3 percent to $14.01.
The largest U.S. tiremaker said it’s experiencing softness in global demand. Sales of replacement tires in North America, where Goodyear got 44 percent of its revenue in 2010, fell about
3 percent in last year’s final quarter, Chief Financial Officer Darren Wells said at an investor conference today in Detroit.
Liz Claiborne Inc. tumbled 13 percent, the biggest drop since Aug. 8, to $8.64. The apparel maker cut its profit forecast for the coming year and said its chief financial officer is departing.
Rallying stocks have done little to entice professional money managers back to U.S. equities. A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 44.5 last week from 43.9 at the end of 2011, holding close to the lowest level since 2009, according to International Strategy & Investment Group. Compared with the price of the S&P 500, managers’ so-called net exposure is close to the lowest since June 2008, the data show.
Speculators have been cutting equities since the index peaked in February 2011 at 54.2, concerned Europe’s credit crisis will spread and curb global economic growth. They stayed bearish after October when the S&P 500 began a 17 percent rally that has restored $2 trillion to the value of American equities.
Investors have struggled to profit amid record stock market volatility. Hedge funds, largely unregulated investment vehicles that aim to make money whether markets rise or fall, lost 4.9 percent last year as fear that the European sovereign-debt crisis would spread deterred them from buying risky assets including stocks, according to the Bloomberg aggregate hedge- fund index.
“Hedge funds have made massive mistakes,” George Feiger, chief executive officer of Contango Capital Advisors Inc., the San Francisco-based wealth management arm of Zions Bancorporation, said in a telephone interview on Jan. 6. He manages $3.3 billion at Contango and Western National Trust Co.
“We are less and less willing to invest with these people because at the point when you need them the most, they’re worth the least.”
Have a wonderful evening everyone.
Be magnificent!
The universe is the energy of the soul; and from this energy comes life, consciousness, and the elements.
The universe is the will of the soul; and from this will comes the law of cause and effect.
From the soul one became many; but in the soul many are one.
Mundaka Upanishad
As ever,
Carolann
The heads of strong old age
are beautiful beyond all grace
of youth.
-Robinson Jeffers, 1887-1962
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President &
Senior Investment Advisor
Queensbury Securities Inc.,
St. Andrew’s Square
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7
Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
Fax: 778.430.5838