April 14th, 2011 Newsletter
Dear Friends,
Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship.
A daisy floats in a rain barrel on April 14 in Kaufbeuren, southern Germany. (Karl Josef Hildenbrand/AFP/Getty Images)
Market Commentary:
Canada
By Matt Walcoff
Most Canadian stocks fell as U.S. initial jobless claims topped forecasts and concern over European debt intensified.
Canadian Natural Resources Ltd. (CNQ) declined 2 percent, leading energy shares lower. Research In Motion Ltd. (RIM) retreated 3.3 percent after reviewers from the Wall Street Journal, New York Times and Wired criticized its PlayBook tablet computer.
Barrick Gold Corp. (ABX), the world’s largest gold producer, rose 2.5 percent as precious metals gained.
The Standard & Poor’s/TSX Composite Index climbed 0.27 point points, or less than 0.1 percent, to 13,833.91 at 3:13 p.m. in Toronto. Among S&P/TSX stocks, 111 advanced, 131 declined and six were unchanged.
“Over in Europe, we’ve seen spreads widen on the bonds, and people are wondering if there will be restructuring of debt,” said Jeffrey Bradacs, a Toronto-based senior investment analyst for a team at Manulife Asset Management that oversees C$1.7 billion ($1.8 billion). “Some people seeing the risk of that are pulling back” from equities and commodities.
The index lost 2.6 percent this week through yesterday after four straight weekly gains. Oil and copper stocks have declined after the International Monetary Fund cut its growth forecast for the U.S. and investors speculated China may raise further tighten credit.
Die Welt today quoted German Finance Minister Wolfgang Schaeuble as saying Greece may need to renegotiate its debt burden if an audit in June raises doubt on its ability to pay creditors. Greek bond yields climbed to the highest since 1998 and the cost to insure against defaults on Greek government debt increased to a record.
In the U.S., 412,000 people filed first-time jobless claims last week, the Labor Department said in Washington. The figure exceeded all 49 forecasts in a Bloomberg survey of economists.
Canadian factory sales retreated 1.5 percent in February, Statistics Canada said. Economists had forecast a decrease of 0.5 percent, according to the median of 21 estimates in a Bloomberg survey.
Canadian Natural dropped 2 percent to C$42.67 for a fourth- straight loss. Pacific Rubiales Energy Corp. (PRE), which produces oil in Colombia, declined 1.8 percent to C$27.94. Talisman Energy Inc. (TLM), an oil and gas producer with operations in North America, the North Sea and Indonesia, decreased 0.8 percent to C$22.19.
Precious Metals
Gold and silver advanced as the U.S. dollar retreated to a 16-month low against a basket of world currencies.
“People, when they look around the globe, with the concern in Europe and concern with the U.S. dollar and its deficit, are attracted to gold,” Bradacs said.
Barrick increased 2.5 percent to C$51.38. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, climbed 2.2 percent to C$51.81.
Nautilus Minerals Inc. (NUS), which explores for gold and copper on the ocean floor, surged 14 percent to C$3.34 after jumping 18 percent yesterday. Nautilus said it has formed a joint venture with Bremen, Germany-based shipping company Harren & Partner to operate a vessel that will serve as Nautilus’s operational base.
Pan American Silver Corp. (PAA), which produces silver and base metals in Latin America, sank 9.8 percent to C$35.70 after Nicolas Fernandez, a spokesman for Bolivia’s state mining company, said the country will expropriate mines privatized by previous governments. The shares’ tumble was the biggest in a day since August 2009.
Base Metals
Teck Resources Inc., Canada’s largest base-metals and coal producer, fell 1 percent to C$50.39 as copper dropped after the China Securities Journal said the country is likely to raise reserve requirements for banks in the “near future.” Teck shares have declined seven straight days, the longest streak since January 2009.
First Quantum Minerals Ltd., the country’s second-largest publicly traded copper producer, lost 1.8 percent to C$119.16, extending its weekly drop to 13 percent.
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, decreased 1 percent to C$53.95. Wheat futures retreated for a fourth day as meteorologists forecast rain for drought-stricken Kansas.
RIM, Canada’s largest technology company, retreated 3.3 percent to a five-month low of C$51.07. David Pogue of the New York Times called the first version of the PlayBook “half- baked,” while Mike Isaac of Wired said it has “serious gaps in key areas like app selection and Flash stability.”
Shaw Communications Inc. (SJR/B), the country’s biggest cable and satellite television provider by subscribers, dropped 2.5 C$19.30 after slumping 3.7 percent yesterday. The company reported second-quarter sales yesterday that trailed analyst estimates. At least five analysts reduced their share-price estimates on Shaw today.
US
By Rita Nazareth
U.S. stocks rose, erasing an early slump, as the House approved a spending bill that will avert a government shutdown and Supervalu Inc. (SVU) led a rally in consumer- staples shares after earnings topped analysts’ estimates.
Supervalu surged 17 percent for the top gain in the Standard & Poor’s 500 Index after the owner of Save-A-Lot and Albertsons grocery stores also projected full-year profit that beat projections. Exxon Mobil Corp. (XOM) and Chevron Corp. climbed at least 0.3 percent as oil rose for a second day on reports that Saudi Arabia reduced output this month. Goldman Sachs Group Inc. (GS) slid 2.7 percent after Senator Carl Levin requested a federal probe of the bank’s dealings in mortgage securities.
The S&P 500 increased less than 0.1 percent to 1,314.52 at 4 p.m. in New York, erasing an earlier 0.9 percent decline. The benchmark gauge yesterday halted a four-day slump, its longest since November, as a Federal Reserve report fueled optimism about the economy. The Dow Jones Industrial Average climbed 14.16 points, or 0.1 percent, to 12,285.15 today.
“The government is still running,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. “That’s a sigh of relief. Investors are focusing on the good economic fundamentals and solid corporate earnings. Yes, we do have global issues, European debt concern, higher commodities prices. Still, the stock market is very resilient.”2011 Performance
The S&P 500 has risen 4.5 percent in 2011, extending last year’s 13 percent gain, amid government stimulus measures and higher-than-estimated corporate profits. The index, which has gained as much as 99 percent since March 2009, last week rose to near the highest closing level for the rally, according to data compiled by Bloomberg. The S&P 500 advanced to 1,335.54 on April 6, or 7.47 points below the high on Feb. 18. Since then, it has fallen 2.1 percent through yesterday.
Earlier declines came after more Americans unexpectedly filed first-time claims for unemployment insurance last week, reflecting greater-than-normal volatility at the end of the quarter. Applications for jobless benefits rose 27,000 in the week ended April 9 to 412,000, the most in two months, Labor Department figures showed. Economists projected claims would be little changed at 380,000, according to the median estimate in a Bloomberg News survey.
Have a wonderful evening everyone.
Be magnificent!
As ever,
Nishma for Carolann
The wisest people follow their own direction
–Euripides (480 BC – 406 BC)
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President & Senior Investment Advisor