March 15th, 2011 Newsletter
Dear Friends,
As we look at the devastation caused by the massive earthquake in Japan, the grace under pressure shown by the Japanese people continues to draw praise. This is a culture whose industrial philosophy is summed up by the word “kaizen” – continuous improvement. Rebuilding will give Japan a 21st century infrastructure. It will also give Japan a massive economic stimulus program certain to pull it out of the doldrums it has been in for the past two decades. The past has shown the Japanese remarkably able to rise from the ashes.
And of course we remember this as the day – the ides of March – that Julius Caesar died in 44 BC. So why not a small tribute to that great writer of a most famous speech from one of the more remarkable plays ever written:
Friends, Romans, countrymen, lend me your ears; I come to bury Caesar, not to praise him. The evil that men do lives after them. The good is oft interred with their bones…
-William Shakespeare
By the way, I was reading in the paper the other day, that the playhouse where Shakespeare’s plays were performed, in Stratford-Upon-Avon, has been completely renovated. Queen Elizabeth officially opened the new playhouse last week. Something to remember for your next trip to England.
photos of the day
March 15, 2011
Former Olympic champions, American track and field athlete Carl Lewis and Romanian gymnast Nadia Comaneci, pose for the cameras in front of London’s Tower Bridge as they take part in a media event to launch 500 days until the start of the London 2012 Olympic games and the beginning of the sale of 6.6 million tickets for the games in London. Alastair Grant/AP
The Mudyug icebreaker, (l.), leads a ship named the Federal Danube as men fish in the frozen Gulf of Finland, 25 miles west of St. Petersburg, Russia. Icebreakers have been called in to free dozens of ships that have been trapped. The eastern Gulf of Finland has not seen such thick ice since 1992, according to the federal agency. Dmitry Lovetsky/AP
Market Commentary:
Canada
By Matt Walcoff
March 15 (Bloomberg) — Canadian stocks fell for a second day, led by precious-metal producers, as some investors sold metals to raise cash following declines in world equity markets.
Barrick Gold Corp., the world’s largest producer, dropped 2.4 percent as the metal dropped the most since Jan. 4. Teck Resources Ltd., Canada’s biggest base-metal and coal producer, rose 4.3 percent after the U.S. Federal Reserve said the recovery is gaining strength. Manulife Financial Corp., which had 120 life insurance sales offices in Japan on Dec. 31, lost 4.2 percent as the costs of the country’s earthquake mounted.
The Standard & Poor’s/TSX Composite Index declined 72.23 points, or 0.5 percent, to 13,546.96, the lowest level since Jan 31. The S&P/TSX has retreated 4.2 percent this month after eight months of gains.
“People are uncertain about what’s going to happen in Japan,” said David Baskin, president of Toronto-based money manager Baskin Financial Services Inc., which manages about C$400 million ($406 million). “They’re worried, so they’re fleeing to safety. They’re buying U.S. dollars, U.S. Treasury bills and selling pretty much everything else.”
The Canadian stock benchmark fell 4.1 percent last week as the U.S. reported an increase in initial jobless claims and oil dropped from a post-2008 high. The index sank as much as 2.8 percent in the first five minutes of trading today on concern the earthquake, tsunami and nuclear emergency in Japan will cripple Canada’s fourth-biggest export market.
Shoppers grabbed water, food and batteries from store shelves in Tokyo as the death count from last week’s events climbed to 2,734. A third explosion occurred at the nuclear power plant north of the city where the cooling system failed after the March 11 earthquake and tsunami.
The Thomson Reuters/Jefferies CRB Commodity Price Index declined the most in four months. Gold dropped 2.3 percent to $1,392.80 an ounce in New York.
Barrick slipped 2.4 percent to C$48.45. Semafo Inc., which mines gold in Africa, declined 5.4 percent to C$8.08 a day before it is to release fourth-quarter financial results. Silver reseller Silver Wheaton Corp. lost 3.7 percent to C$39.06 as that metal decreased 4.8 percent.
Alamos Gold Inc., which mines in Mexico, retreated 6.3 percent to C$15.86 after saying it crushed less ore in January and February than it had planned. This should lead to a smaller profit than previously forecast for the first quarter, Anita Soni, an analyst at Credit Suisse Group AG, wrote in a note to clients.
Uranium One Inc., a mining company controlled by Moscow- based ARMZ Uranium Holding, fell 14 percent to C$3.72 as the Japanese crisis jeopardized a renaissance in nuclear power. The shares have plunged 37 percent this week.
Producers of other raw materials rebounded after the Fed’s Open Market Committee, for the first time since September, issued a statement that did not call the recovery “disappointingly slow.”
Teck gained 4.3 percent from a three-month low to C$51.71.
First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, advanced 2.3 percent to C$113.71 before the scheduled release of its fourth-quarter financial results.
Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, climbed 2.7 percent to C$53.14 after touching a 2011 intraday low.
“The market’s saying the selloff has been overdone; agricultural fundamentals remain strong,” Edlain Rodriguez, a New York-based analyst with Gleacher & Co., said today in a telephone interview. “We’ve seen sell-offs like this before, and then the rebound as people come to their senses.”
Thirty-five of 43 stocks in the S&P/TSX Financials Index declined. The Bank of Japan has injected 23 trillion yen ($284 billion) into money markets this week to try to contain investors’ panic.
Manulife, North America’s fourth-largest insurer, lost 4.2 percent to C$16.04 even after saying it doesn’t expect property and casualty reinsurance claims related to the earthquake and tsunami to be material to full-year results.
Royal Bank of Canada, the country’s largest lender by assets, decreased 0.8 percent to C$59.58. Thomson Reuters Corp., the financial news and information provider, retreated 2.6 percent to C$37.86.
Aerospace and defense contractor MacDonald, Dettwiler & Associates Ltd. surged 7.5 percent, the most since Oct. 28, to C$52.63 after winning an agreement the parties valued at more than $280 million to service Intelsat SA satellites.
US
By Rita Nazareth
March 15 (Bloomberg) — U.S. stocks escaped the brunt of a global selloff that sent Tokyo shares to their worst two-day decline since 1987, paring losses as Japanese officials made progress in stabilizing damaged nuclear reactors and the Federal Reserve said the American economy is improving.
The Standard & Poor’s 500 Index fell 1.1 percent at 4 p.m.
New York time, rebounding from a 2.7 percent slump, even as the MSCI All-Country World Index of shares in 45 nations lost 2.3 percent. The benchmark measure for U.S. equities retreated to its lowest level of the day six minutes after trading began.
Raw-material, energy and industrial shares in the S&P 500 advanced more than 2.2 percent from that point.
“The more positive tone of the Fed brought some relief especially on a jittery day like this one,” said Richard Sichel, who oversees $1.5 billion as chief investment officer at Philadelphia Trust Co. “Still, there’s an overhang from exogenous factors. Yes, we’ve had a big drop, but I wouldn’t jump in right away. I would wait until the market calms down to take a fresher look at some stocks and industries.”
The S&P 500 closed at 1,281.87. The Dow Jones Industrial Average slid 137.74 points, or 1.2 percent, to 11,855.42 after plunging 296.91 points. Japan’s Nikkei 225 Stock Average fell 11 percent today and is down 16 percent this week, the biggest two- day drop since the October 1987 stock market crash.
General Electric Co., which is in talks to sell reactors to India, fell 1.6 percent. Dow Chemical Co. and Anadarko Petroleum Corp. slumped at least 1.7 percent. Intel Corp. slid 3.2 percent, the most in the Dow, after Nomura Holdings Inc. cut its rating for the chipmaker. Aflac Inc., the insurance company which gets most of its revenue in Japan, sank 5.6 percent.
U.S. stocks pared losses as radiation readings fell below harmful levels at reactors in Japan and as the Fed said the American economy is on “firmer footing,” while reaffirming plans to buy $600 billion of Treasuries through June. Thomas Lee, U.S. equity strategist at JPMorgan Chase & Co., and Mary Ann Bartels of Bank of America Corp. both said the slide in the S&P 500 may be a buying opportunity.
The iShares MSCI Japan Index Fund tracking 323 securities fell 0.2 percent to $10.03, paring an earlier drop of 8.1 percent. That compares with the 9.1 percent plunge in the MSCI Japan Index earlier, data compiled by Bloomberg show.
“We’re getting black-swan events almost every week now,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, who helps manage $252 billion. “The risks stemming from the Japanese nuclear disaster to the Middle East turmoil are unquantifiable. What happens if we have a meltdown?,” he said. Volatility is on the rise.’’
The Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of using options as insurance against declines in the S&P 500, surged 15 percent to 24.32, the highest level since Aug. 31. The index’s 2011 closing low was 15.46 on Jan. 14, as the S&P 500 advanced to its highest level in two years.
The S&P 500 has fallen 4.6 percent since rising to this year’s high on Feb. 18 amid unrest in Libya and the Middle East and concern about the aftermath of Japan’s worst earthquake. The decline pared the gain in 2011 to 1.9 percent. Still, the measure has risen 89 percent from its March 2009 low amid government stimulus measures and as corporate earnings beat analysts’ estimates for eight straight quarters.
GE sank 1.6 percent to $19.61. The Fukushima plant consists of six reactors based on GE designs, three of which were built by the company, according to its website. Energy and raw-materials producers in the S&P 500 declined.
The S&P’s GSCI spot index of 24 commodities dropped 3.8 percent, falling for a fourth day, the longest losing streak since Aug. 24. Oil tumbled the most in almost five months, closing at $97.18 a barrel.
Dow Chemical, the largest U.S. chemical maker, declined 1.8 percent to $35.96. Anadarko fell 1.7 percent to $75.87.
Intel retreated 3.2 percent to $20.18. The world’s largest chipmaker was cut to “neutral” from “buy” at Nomura, which cited weak personal-computer demand.
Aflac led declines among the 22 companies in the S&P 500 Insurance Index. Aflac declined 5.6 percent to $50.89. Hartford Financial Services Group Inc. dropped 4.6 percent to $25.60.
Stock-index futures maintained losses before exchanges opened even as a report showed that manufacturing in the New York region accelerated in March at the fastest rate in nine months. The Federal Reserve Bank of New York’s general economic index rose to 17.5 from 15.4. Economists projected an increase to 16.1, based on the median forecast in a Bloomberg News survey. Readings greater than zero signal expansion in the so- called Empire State Index.
Separately, the Labor Department said that prices of goods imported into the U.S. rose more than forecast in February, led by gains in crude oil and food. The 1.4 percent increase in the import-price index exceeded the 0.9 percent median forecast in a survey and followed a 1.3 percent rise in January. Prices excluding fuel rose 0.3 percent. Food costs over the past 12 months posted the biggest gain since records began in 1977.
Have a wonderful evening everyone. Be magnificent!
Live your own life. That is to say, where you are, as you are, with what you are, and with who you are… Accept the situation in which you find yourself and try, at the same time, to adapt to it.
You cannot escape from it. -Swami Prajnanpad, 1891-1974
As ever,
Carolann
If you are not criticized, you may not be doing much. -Donald H. Rumsfeld, 1932-