June 10, 2011 Newsletter
Dear Friends,
HAPPY DAYS
I had been lucky enough in my 20s to stumble into the life I might have dreamed of as a boy: a great job writing on world affairs for Time magazine, an apartment on Park Avenue, enough time and money to take vacations in Burma, Morocco, El Salvador. But every time I went to one of those places, I noticed that the people I met there, mired in difficulty and often warfare, seemed to have more energy and even optimism than the friends I’d grown up with in privileged, peaceful Santa Barbara, Calif., many of whom were on their fourth marriages and seeing a therapist every day. Though I knew that poverty certainly didn’t buy happiness, I wasn’t convinced that money did either.
So, as post-1960s cliché decreed, I left my comfortable job and life to live for a year in a temple on the back streets of Kyoto. My high-minded year lasted all of a week, by which time I’d noticed that the depthless contemplation of the moon and composition of haiku I’d imagined from afar was really more a matter of cleaning, sweeping and then cleaning some more. But today, more than 21 years later, I still live in the vicinity of Kyoto, in a two-room apartment that makes my old monastic cell look almost luxurious. I have no bicycle, no car, no television I can understand, no media – and the days seem to stretch into eternities, and I can’t think of a single thing I lack.
-PICO IYER, from “The Joy of Less”
Secretary of State Hillary Rodham Clinton watches a cultural dance as she is welcomed at Lusaka International Airport in Lusaka, Zambia.
Susan Walsh/AP
A seven-month-old yellow baboon drinks milk as it plays with a Galagos, also known as a bushbaby, at the Animal Orphanage in the Kenya Wildlife Service headquarters in Nairobi. Yellow baboons inhabit savannas and light forests in the eastern Africa, while Galagos are small, nocturnal primates native to continental Africa.
Thomas Mukoya/Reuters
Market Commentary:
Canada
By Inyoung Hwang
June 10 (Bloomberg) — Canadian stocks fell, headed for a second straight week of losses, as energy and metals producers led declines amid concern the global recovery is slowing and after a report said Saudi Arabia will raise oil production.
Suncor Energy Inc. dropped 2.2 percent as the price of crude tumbled the most in four weeks. Barrick Gold Corp. and Goldcorp Inc., the two biggest producers of the metal by market value, dropped at least 1.3 percent as the price of gold fell on a stronger U.S. dollar. Research In Motion Ltd. lost 1.8 percent as Morgan Stanley said the company may cut forecasts and Goldman Sachs Group Inc. recommended investors sell the shares.
The Standard & Poor’s/TSX Composite Index retreated 200.47 points, or 1.5 percent, to 13,055.27 at 1:42 p.m. in Toronto, below its 200-day moving average. The S&P/TSX rose yesterday after declining seven straight days, the longest streak of losses since June 2006.
“Investors are getting nervous that what’s driven the markets for the last nine months — easy monetary policy and the expectation that the economy is healing itself — has waned,”
said Todd Johnson, who helps oversee C$230 million ($228 million) as a money manager at BCV Asset Management in Winnipeg, Manitoba. “You throw in commodity inflation and the potential for a Chinese slowdown, and it’s a summer of discontent perhaps.”
Commodity prices and global stocks fell today after China reported a less-than-estimated trade surplus in May. Stocks also fell after the Bank of Korea raised interest rates for a third time this year to rein in inflation.
Canadian stocks fell even after a Statistics Canada said today in Ottawa the country’s jobless rate unexpectedly declined in May to the lowest since January 2009 as the economy added workers for the seventh time in eight months.
The S&P/TSX fell 4.2 percent from May 30 through yesterday as U.S. statistics on employment and manufacturing trailed economists’ forecasts and U.S. Federal Reserve Chairman Ben S. Bernanke called his country’s economic recovery “frustratingly slow.”
Suncor fell 2.2 percent to C$37.96. Canadian Natural Resources Ltd. declined 2 percent to C$39.64. Crude oil tumbled to $99.20 a barrel, the most since May 11 after al-Hayat newspaper reported Saudi Arabia will raise oil production to 10 million barrels a day next month. London-based al-Hayat cited unidentified senior OPEC and industry officials as the sources of the Saudi output plan.
Barrick Gold declined 1.7 percent to C$44.52, while Goldcorp slid 1.3 percent to C$45.81. Gold futures fell the most in a week as lower energy costs eroded the appeal of the precious metal as a hedge against inflation.
Base-metals and coal producer, including Teck Resources Ltd. and First Quantum Minerals Ltd, also fell. Teck, the country’s largest company in the industry lost 3.8 percent to C$45.69. Vancouver-based First Quantum slid 1.7 percent to C$120.30.
“There’s a lot of fast money in commodities,” Johnson said. “The trade where the U.S. dollar falls and you put your money in commodities is a popular investment. Perhaps there’s just too much money in that area and when the trade turns out, there’s a lot of people wanting to get out quickly.”
Research In Motion erased 1.8 percent to C$35.96. The Blackberry smartphone maker has slumped 38 percent this year after missing profit estimates and cutting forecasts. Morgan Stanley said the company may reduce its forecast for 2012 and that estimates for the second quarter will be disappointing.
Separately, Goldman Sachs recommended selling shares ahead of the first quarter earnings report on June 16.
Financial stocks also declined as the S&P/TSX Financials Index slumped 1.2 percent to 1,693.15. Toronto-Dominion Bank fell 1.5 percent to C$78.61, while Bank of Nova Scotia erased 1.5 percent to C$57.36.
The biggest Canadian athletic-wear retailer Lululemon Athletica Inc. rallied 5 percent to C$88.12 after the company forecast profit in 2010 to be at least $2.10 a share, up from an earlier guidance of no more than $2 and exceeding the average analyst estimate of $2.05.
US
By Rita Nazareth
June 10 (Bloomberg) — U.S. stocks fell, extending the longest weekly Dow Jones Industrial Average slump in more than eight years, amid concern the global economy is slowing.
Caterpillar Inc. and Boeing Co. dropped at least 2 percent, pacing losses among companies most-tied to economic growth.
Exxon Mobil Corp. fell 1.7 percent as crude oil tumbled the most in four weeks. A gauge of banks in the Standard & Poor’s 500 Index fell 0.3 percent, paring a 2.2 percent slump, after CNBC reported that international regulators are considering toning down proposed capital rules for large banks.
The S&P 500 fell 1.4 percent to 1,270.98 at 4 p.m. in New York. It has retreated six straight weeks, the longest slump since 2008. The Dow dropped 172.45 points, or 1.4 percent, to 11,951.91. Its last six-week slump ended in October 2002, the start of a five-year bull market. The Russell 2000 Index and the Nasdaq Composite Index erased their 2011 gains today.
“It’s a shortage of buyers,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1 billion in New York. “The economically sensitive stuff is going to be weak while the data is weak. In addition, we’re going to go through a period of over-regulation of the large banks. It’s going to lead to significantly less profitability.”
About $1 trillion was erased from American equity markets between the S&P 500’s peak on April 29 and yesterday amid weaker-than-expected economic reports. The index has retreated 6.8 percent since the end of April as sales of existing homes unexpectedly declined, growth in industrial production stopped and the unemployment rate rose.
Federal Reserve Chairman Ben S. Bernanke said this week that the U.S. recovery was “frustratingly slow.” He also said the central bank should maintain record monetary stimulus, while giving no indication he was planning a third round of asset purchases known as quantitative easing, or QE3.
Global stocks fell today after China reported a lower-than- estimated $13.1 billion trade surplus in May, as surging imports signaled the nation’s demand may support global growth while adding pressure for higher interest rates. Stocks also fell after U.K. manufacturing dropped more than economists forecast as an extra public holiday for the royal wedding hurt orders and the impact of the Japanese earthquake hit supplies.
Have a wonderful weekend everyone.
Be magnificent!
What is the world? It is the earth below and the sky above and the air in space that connects them.What is light? It is fire below and the sun above – and the lightning that connects them.What is education? It is the teacher above and the disciple below – and the wisdom that connects them.
Taittiriya Upanishad
As ever,
Carolann
Confidence is contagious. So is lack of confidence.
-Vince Lombardi, 1913-1970
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President & Senior Investment Advisor