April 12th, 2011 Newsletter
Dear Friends,
I was discussing books with one of my clients today – a conversation that began because she was reading a novel when I arrived to meet her in the waiting room and I asked her about it….Anyway I was telling her about a book I just finished reading on the weekend entitled The Forgotten Garden by Kate Morton and how much I loved it. So, my friends, I’m telling you about it too with the hope that you will read it and enjoy it as much as I did. It is the story of a little girl left with a little white suitcase on a wharf in Australia after sailing from Britain just before the First World War. She was told by the “authoress” to wait for her, that she would take care of her, but the authoress never did re-board the ship in London before it set sail. When she is a young woman about to be married, the little girl learns that she is not who she thought she was. Many years later, a descendant is left an unusual inheritance – a cottage high on a Cornish cliff top. It is part of a vast estate, and within the cottage walls is a garden, forgotten for over a hundred years, that holds many secrets of the authoress, who was a writer of dark Victorian fairy tales…
BOOK: Like paper, originally made of papyrus, a book originally described the thing from which it was made, namely the beech tree (in Old English, bok), whose bark provided writing material to arly scribes in northern Europe.
photos of the day
April 12, 2011
Spectators watch fireworks organized to celebrate the 50th anniversary of Yuri Gagarin’s historic space flight, in Moscow’s Victory Park.
Nikolay Korchekov/Reuters
Two girls pose on a chair during the International Furniture Fair in Milan.Alessandro Garofalo/Reuters
Market Commentary:
Canada
By Matt Walcoff
April 12 (Bloomberg) — Canadian stocks fell, completing the biggest two-day plunge since June, as commodity producers dropped after two more earthquakes hit Japan and the Asian country raised the severity rating of its nuclear disaster.
Suncor Energy Inc., Canada’s biggest oil and gas producer, lost 3.4 percent as crude futures slipped. Teck Resources Ltd., the country’s biggest base-metals and coal producer, declined 3.6 percent as copper retreated the most in a month. Toronto- Dominion Bank, Canada’s second-largest lender by assets, decreased 2 percent as an index of S&P/TSX financial companies slipped to a three-week low.
The Standard & Poor’s/TSX Composite Index dropped 195.46 points, or 1.4 percent, to 13,801.40.
“The aftershocks that Japan is getting and the fact they’re now saying this is a Chernobyl-like situation is being badly received by the markets,” said Doug Davis, vice chairman of Toronto money manager Davis-Rea Ltd., which manages about C$425 million ($441 million). “People are selling indexes, and that affects all the stocks.”
The S&P/TSX fell 1.5 percent yesterday after the International Monetary Fund cut its growth estimate for the U.S.
The index has trailed the S&P 500 this year, gaining 2.7 percent to the U.S. stock benchmark’s 4.5 percent, after outperforming the S&P 500 for seven straight years.
Japan’s Nuclear and Industrial Safety Agency raised the severity rating of the country’s nuclear crisis to 7 today, the same as the 1986 Chernobyl disaster, from 5. The change came as two earthquakes stronger than magnitude 6 hit the country and Kaoru Yosano, the economic and fiscal policy minister, said the March 11 quake might hurt Japan’s economy more than forecast.
Oil declined 3.3 percent after losing 2.5 percent yesterday. The two-day slide was the biggest since May. Fifty- eight of 61 companies in the S&P/TSX Energy Index dropped as the index slid the most in a day since August.
Suncor decreased 3.4 percent to C$42.05. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, retreated 2.7 percent to C$44.34. Talisman Energy Inc., which produces oil and gas in North America, the North Sea and Indonesia, fell 3.1 percent to C$22.33.
All major base metals traded on the London Metal Exchange dropped.
Teck declined for a fifth day, losing 3.6 percent to C$51.87. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 4.7 percent to C$124.90. Mercator Minerals Ltd., which produces copper and molybdenum in Arizona, slumped 8.9 percent to C$3.36 after agreeing to buy Creston Moly Corp. for about C$195 million.
Precious-metals producers fell as gold futures dropped for a second day after climbing to a record.
Kinross Gold Corp., Canada’s third-largest producer of the metal, declined 1.8 percent to C$15.09. Silver reseller Silver Wheaton Corp. lost 3.2 percent to C$40.84 as that metal retreated for the first time in seven days. First Majestic Silver Corp., which mines in Mexico, tumbled 8.6 percent to C$19.77 after sliding 8.1 percent yesterday.
Uranium-mining companies slipped after Japan boosted the severity rating of the Fukushima Dai-Ichi nuclear plant accident.
Uranium One Inc., a mining company controlled by Moscow- based ARMZ Uranium Holding, sank 5.1 percent to C$3.75. Denison Mines Corp. plunged 6.9 percent to a five-month low of C$2.16.
Canada’s seven largest banks all fell. TD declined 2 percent, the most this year, to C$82.67. Bank of Nova Scotia, Canada’s third-largest bank, slipped for a sixth day, losing 0.9 percent to C$57.50. Manulife Financial Corp., North America’s fourth-biggest insurer, dropped 1.4 percent to C$16.46.
Gildan Activewear Inc., Canada’s largest clothing maker, surged 7 percent, the most in 16 months, to C$32.80 after agreeing to buy Newton, North Carolina-based sock supplier Gold Toe Moretz Holdings Corp. for about $350 million.
Claude Proulx, an analyst at Bank of Montreal, raised his 12-month share-price estimate on Gildan’s U.S. shares to $40 from $36. The purchase will “allow the company to expand into retail channels it is not currently serving,” he wrote in a note to clients.
US
By Rita Nazareth and Jeff Kearns
April 12 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a fourth day, as Japan raised the severity rating of its nuclear crisis to the highest level, oil plunged and Alcoa Inc.’s sales missed estimates.
Chevron Corp. and Freeport-McMoRan Copper & Gold Inc.declined at least 3.1 percent as commodity prices slumped on speculation investors may avoid riskier assets after Japan’s radiation alert matched the 1986 Chernobyl disaster. Alcoa, the largest U.S. aluminum producer, tumbled 6 percent after saying first-quarter earnings were curbed by a weaker U.S. dollar and higher energy and raw-material costs.
The S&P 500 declined 0.8 percent to 1,314.16 at 4 p.m. in New York. The benchmark index had the longest losing stretch since November. The Dow Jones Industrial Average retreated 117.53 points, or 1 percent, to 12,263.58 today. Crude oil slumped 3.3 percent to $106.25 a barrel. 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, climbed 3 percent to 17.09.
“We’ve gone from a period of knocking the cover off the ball to just treading water,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $60 billion. “We’ve been approaching the earnings season with trepidation because high energy and commodity prices are going to crimp profit margins. Not only will higher costs crimp profits but it will also prompt consumers to cut back on discretionary spending.”
The S&P 500 has risen 4.5 percent in 2011 amid government stimulus measures and higher-than-estimated corporate profits.
In the first three months of last year, 78 percent of S&P 500 companies topped the average projection, according to data compiled by Bloomberg. The figure was the second-highest ever, trailing only the 80 percent recorded in the third quarter of 2009. Since then, the percentage approached the historical average of 60 percent. The fourth-quarter figure, 68 percent, was the lowest for the current bull market.
The MSCI All-Country World Index of shares in 45 countries fell 1.2 percent, the biggest decline in about a month. Japan’s Nuclear and Industrial Safety Agency today raised the rating for its nuclear crisis to 7. The accident at the Fukushima Dai-Ichi station was previously rated 5 on the global scale, the same as the 1979 partial reactor meltdown at Three Mile Island in Pennsylvania.
The stricken nuclear plant, located about 220 kilometers(135 miles) north of Tokyo, is leaking radiation in Japan’s worst civilian nuclear disaster after a magnitude-9 quake and tsunami on March 11. Tokyo Electric Power Co. said its plant, which has withstood hundreds of aftershocks, may spew more radiation than Chernobyl before the crisis is contained.
“Investors are taking some risk off the table,” said Madelynn Matlock, who helps oversee $14.4 billion at Huntington Asset Advisors in Cincinnati. “Every time you mention the word radiation, you end up scaring people. I don’t think there were any illusions that Japan was not one of the most serious nuclear accidents we’ve seen.”
Japan’s Economic and Fiscal Policy Minister Kaoru Yosano said the March 11 earthquake may result in a larger hit to the economy than previously seen, indicating a greater appetite for stimulus one month after the disaster.
Prices of goods imported into the U.S. rose in March at the fastest pace since June 2009, led by a gain in crude oil and the biggest jump in food costs since 1994. The 2.7 percent increase in the import-price index exceeded a 2.1 percent median forecast in a Bloomberg News survey. Prices excluding fuel rose 0.6 percent.
Directors at Federal Reserve regional banks saw the economy improving even as energy prices rose and governments at all levels cut spending, according to minutes of Board of Governors’ meetings in February and March.
“Federal Reserve Bank directors generally viewed recent information as showing the economic recovery was progressing,” the minutes said, adding that directors saw “downside risks posed by rising energy and commodity prices and by increased fiscal stringency.”
Energy and raw-material producers had the two biggest declines in the S&P 500 within 10 industries today, falling at least 1.3 percent. Chevron, the second-largest U.S. energy company, dropped 3.3 percent to $104.18. Freeport, the largest publicly traded copper producer, lost 3.1 percent to $53.70.
Alcoa slumped 6 percent, the most in the Dow average, to $16.70. The company’s sales increased 22 percent from a year earlier to $5.96 billion, Alcoa said yesterday in a statement. That trailed the $6.06 billion average estimate of eight analysts in a Bloomberg survey.
U.S. banks such as JPMorgan Chase & Co. and Bank of America Corp. may report weak revenue for the first quarter after lending by the industry dropped in almost every category. Bank loans and leases fell $87.4 billion to $6.97 trillion from the end of 2010 through March 30, or 1.3 percent, according to Federal Reserve data. Deposits at U.S. banks rose the same percentage to $7.97 trillion, showing households and businesses are still hoarding cash instead of borrowing, analysts said.
“While loan growth tends to be seasonally weak in the first quarter, this quarter is tracking worse than seasonality would suggest,” Barclays Capital Inc. analysts led by Jason Goldberg wrote in an April 8 report. “We fear companies have been disappointed.”
Investors will get their first look at the quarter’s results tomorrow when New York-based JPMorgan, ranked second by assets in the U.S., is scheduled to report. The biggest lender, Charlotte, North Carolina-based Bank of America, will report April 15, followed next week by New York-based Citigroup Inc. and San Francisco-based Wells Fargo & Co., ranked third and fourth by assets.
Have a wonderful evening everyone.
Be magnificent!
Do not believe a thing simply because it has been said.
Do not put your faith in traditions only because they have been honored by many generations.
Do not believe a thing because the general opinion believes it to be true or because it has been said repeatedly.
Do not believe a thing because of the single witness of one of the sages of antiquity.
Do not believe a thing because the probabilities are in its favor,
or because you are in the habit of believing it to be true.
Do not believe in that which comes to your imagination,
thinking that it must be the revelation of a superior Being.
Believe nothing that binds you to the sole authority of your masters or priests.
That which you have tried yourself, which you have experienced, which you have recognized as true,
and which will be beneficial to you and to others;
believe that, and shape your conduct to it.
-Buddha
As always,
Carolann
I think that somehow, we learn who we really are
and then live with that decision.
-Eleanor Roosevelt, 1884-1962
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President &
Senior Investment Advisor