April 26th, 2011 Newsletter
Dear Friends,
Great to be back though I’m already missing the several days of much warmer weather – 26 degrees in London, same in Paris. Lots of excitement in the air…I think the world is just so tired of all the negativity – earthquakes, tsunamis, nuclear contamination, political unrest in North Africa and the Middle East – anything positive and optimistic like a Royal wedding is a welcome reprieve. On a more somber note, today marks the anniversary of the Chernobyl nuclear reactor disaster in 1986 and more importantly, the 1937 massacre in Guernica, Spain, which inspired one of the greatest paintings of the last century, Guernica by Picasso. Guernica was painted by Pablo Picasso in response to the bombing of Guernica, Basque Country, by German and Italian warplanes at the behest of the Spanish Nationalist forces, on 26 April 1937, during the Spanish Civil War. The Spanish Republican government commissioned Pablo Picasso to create a large mural for the Spanish display at the Exposition Internationale des Artes et des Techniques dans la Vie Moderne , 1937, Paris International Exposition in the 1937 World’s Fair in Paris. Guernica shows the tragedies of war and the suffering it inflicts upon individuals, particularly innocent civilians. This work has gained a monumental status, becoming a perpetual reminder of the tragedies of war, an anti-war symbol, and an embodiment of peace. On completion Guernica was displayed around the world in a brief tour, becoming famous and widely acclaimed. This tour helped bring the Spanish Civil War to the world’s attention. Go to Smarthistory.org and find Picasso under Artists and listen to a wonderful piece on this painting.
photos of the day
April 26, 2011
A red-tailed hawk sits atop her three newly hatched young at the The Franklin Institute in Philadelphia. Two of the three hatched Sunday and the third on Monday. It’s the third straight year a mating couple has returned to its unusual urban nest on a ledge at the city’s science museum.
Matt Rourke/AP
Officers march with a wreath during a memorial ceremony for Chernobyl victims to mark the 25th anniversary of the disaster, in Minsk, Belarus, Tuesday.
Vasily Fedosenko/Reuters
Market Commentary:
Canada
By Matt Walcoff
April 26 (Bloomberg) — Canadian stocks rose, led by railroads and insurers, after companies including UBS AG, United Parcel Service Inc. and Ford Motor Co. beat analysts’ profit estimates.
Canadian National Railroad Co., the country’s biggest railroad, advanced 1.2 percent before the release of its first- quarter financial results. BlackBerry maker Research In Motion Ltd. gained 3.1 percent after an analyst at Royal Bank of Canada said the company’s PlayBook tablet computer is selling more quickly than some had forecast. Silver Wheaton Corp., Canada’s fourth-largest precious-metals company by market value, lost 4.8 percent as silver retreated for the first time in nine days.
The Standard & Poor’s/TSX Composite Index increased 1.78 points, or less than 0.1 percent, to 13,909.10. Among S&P/TSX companies, 128 advanced, 117 dropped and three were unchanged.
“It’s a fairly credible rally,” said Bob Decker, a money manager at Aurion Capital Management in Toronto, which oversees
C$5.7 billion ($6 billion). “You’ve got relatively good value, especially as compared to fixed-income alternatives, and you’ve got a very benign interest rate environment. That’s supportive for equity valuations and a steady recovery in the economy.”
Since the current earnings-reporting season began April 11, 122 of 154 S&P 500 companies and six of 12 S&P/TSX companies that have reported financial results have surpassed their average analyst estimate. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.
CN and Canadian Pacific Railway Ltd. gained as North American transportation stocks advanced after Ryder System Inc. and UPS boosted their full-year profit forecast. CN climbed for a fifth day, increasing 1.2 percent to C$71.
The company is scheduled to release first-quarter earnings at 4 p.m. in Montreal. CP rose 2.2 percent to C$61.67.
RIM rose 3.1 percent to C$52.60 after Mike Abramsky, an analyst at Royal Bank, said 14 percent of the Best Buy Co.stores Royal Bank has checked have sold out of the version of the PlayBook with 16 gigabytes of memory. RIM shares plunged 26 percent from Feb. 18 to yesterday.
S&P/TSX financial companies advanced after companies including UBS, Switzerland’s largest bank, and Ford, the No. 2 U.S. automaker, beat analysts’ profit forecasts.
Manulife Financial Corp., North America’s fourth-largest insurer, gained 1.1 percent to C$17. Sun Life Financial Inc., Canada’s third-biggest insurance company, increased 2 percent to C$30.85. Brookfield Asset Management Inc., the country’s largest real estate company, climbed 1.4 percent to C$31.66.
Fed Chairman Ben S. Bernanke is scheduled to speak to reporters at 2:15 p.m. tomorrow in Washington after a Federal Open Market Committee meeting.
Gold lost 0.4 percent from a record settlement to $1,503.50 an ounce on speculation the U.S. Federal Reserve will take steps to prevent inflation. Silver sank 4.4 percent, the most since March 15.
Silver Wheaton decreased 4.8 percent to C$37.32. Goldcorp Inc., the world’s second-largest gold producer by market value, retreated 1.2 percent to C$51.90. First Majestic Silver Corp., which mines in Mexico, sank 7.5 percent to C$19.61, extending its two-day slide to 12 percent.
Barrick Gold Corp., the world’s biggest gold-mining company, fell 3.5 percent to C$47.75 after David Haughton, an analyst at Bank of Montreal, cut his rating on the shares to “market perform” from “outperform.” In a note to clients, Haughton cited Barrick’s agreement to buy Equinox Minerals Ltd., saying copper-mining companies trade for less relative to earnings than do gold-mining companies.Yesterday, Barrick slumped 6.7 percent after saying it will buy Equinox for C$8.15 a share.
Equinox dropped 3.1 percent to C$8.11 after surging 11 percent to a record yesterday. Minmetals, which had bid C$7 a share for Equinox, said Barrick’s offer “is above our most optimistic assessment of value,” according to a statement from Chief Executive Officer Andrew Michelmore.
First Quantum Minerals Ltd., which, like Equinox, mines copper in Africa, slumped 2 percent to C$133.75 after rallying 5 percent yesterday.
Colossus Minerals Inc., which explores for precious metals in Brazil, surged 6.9 percent to C$8.81 after reporting drilling results. In a note to clients, Ron Stewart, an analyst at Dundee Securities Ltd., called the results “nothing short of extraordinary.”
Lumber producers West Fraser Timber Co. and Canfor Corp. rebounded after sinking 12 percent and 18 percent, respectively, this month through yesterday. West Fraser, Canada’s largest lumber producer, jumped 4.5 percent to C$55.27. Canfor rose 5.5 percent to C$12.87.
US
By Rita Nazareth and Stephen Kirkland
April 26 (Bloomberg) — Stocks surged, sending the Standard & Poor’s 500 Index to its highest level since June 2008, as earnings at companies from Ford Motor Co. to 3M Co. beat analysts’ estimates. Treasuries rose, the dollar fell versus the euro for a sixth day and commodities were little changed.
The S&P 500 increased 0.8 percent to 1,346.47 at 1:59 p.m. in New York and the Stoxx Europe 600 Index gained 0.3 percent.
The dollar matched the longest losing streak versus the euro in almost two years amid speculation the Federal Reserve will consider measures to keep interest rates low. Ten-year Treasury yields slipped five basis points to 3.32 percent, the lowest level in a month. Oil was little changed near $112 a barrel and gold and silver retreated.
Before today, the S&P 500 had failed to top its 2011 high reached on Feb. 18 even as it closed less than 1 percent below the peak on eight days in April. Stocks rallied today as Ford, 3M and United Parcel Service Inc. joined the 79 percent of S&P 500 companies that have topped analyst earnings estimates since April 11. Investors also awaited the end of a Fed meeting tomorrow to gauge the central bank’s outlook for interest rates and its economic stimulus program known as quantitative easing.
“Corporate performance is excellent,” said Stephen Wood, the New York-based chief market strategist for Russell Investments, which manages about $155 billion. “The underlying economic performance in the United States has been a pleasant surprise. Our expectation is that the Fed ends QE2 in the summer and the growth baton will be handed from policy to the private economy. That’s providing rationale for the stock market to move forward.”
The Dollar Index, used to track the U.S. currency against six trading partners, traded near the lowest since August 2008 on speculation the Fed will signal it plans to keep interest rates close to zero for an extended period. Twelve of 16 major counterparts climbed against the U.S. currency, with the euro strengthening 0.4 percent to $1.4640.
The S&P 500 rose for the fourth time in five days, erasing yesterday’s decline. Industrial companies rose 1.8 percent as a group to lead gains among all 10 of the index’s main industries.
Ford, the second-largest U.S. automaker, advanced 2.4 percent after first-quarter profit increased 22 percent to the most in the period since 1998 amid higher prices for fuel-efficient models.
3M Co. said it had first-quarter profit of $1.49 a share, topping the average analyst estimate of $1.44 a share. The stock rose 2.3 percent. UPS, the world’s largest package-delivery company, climbed 1 percent after also boosting its full-year forecast amid increasing demand for international shipping.
Stocks extended gains after confidence among U.S. consumers increased more than forecast in April, signaling the improving labor market is helping Americans weather rising fuel costs. The Conference Board’s confidence index rose to 65.4 from a revised
63.8 reading in March. The median forecast of economists surveyed by Bloomberg News projected an advance to 64.5. Another report showed residential real estate prices dropped in February by the most in more than a year.
Treasury two-year note yields lost two basis points to 0.62 percent, the lowest level since March 23, even after the U.S. sold $35 billion of the securities at a higher-than-forecast yield. The notes drew a yield of 0.673 percent, compared with a forecast of 0.669 percent in a Bloomberg News survey of 8 of the Federal Reserve’s 20 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with amount of securities offered, was 3.06, below the 3.42 average at the past 10 sales.
Five stocks climbed for every two that fell in the Stoxx Europe 600. UBS AG, Switzerland’s largest bank, rallied 3.9 percent after attracting the highest wealth management inflows since the end of 2007 in the first quarter. Parmalat SpA jumped 11 percent after Groupe Lactalis bid for holdings in Italy’s biggest dairy company it doesn’t already own.
The MSCI Emerging Markets Index was little changed after China’s Shanghai Composite Index slid 0.9 percent. Industrial & Commercial Bank of China Ltd. lost 0.3 percent in Hong Kong after the world’s largest lender by market value and three rivals were told last month to maintain capital adequacy ratios of at least 11.8 percent in 2011, one person said, declining to be identified as the plan isn’t public. Agricultural Bank of China Ltd., the nation’s fourth biggest, should target 11.7 percent, two people said.
Yields on government securities from Greece, Ireland and Portugal reached records amid speculation the heavily indebted nations won’t be able to avoid restructuring. Costs to insure Greek and Portuguese debt climbed to records.
The yield on Irish two-year government notes climbed to a euro-era record of 12.08 percent. Portuguese two-year yields touched a euro-era record of 11.74 percent.
The yield on Greece’s 10-year bonds rose as much as 47 basis points to 15.38 percent. Greece’s 2010 budget gap was 10.5 percent of gross domestic product, more than a percentage point wider than the government estimated, according to figures from Europe’s statistics agency today.
Credit-default swaps on Greek government bonds increased 13 basis points to 1,345 basis points and Portuguese swaps climbed six basis points to 666.
Have a wonderful evening everyone.
Be magnificent!
This glorious soul we must believe in. Out of that will come power.
Whatever you think, that you will be. If you think yourselves weak, weak you will be;
if you think yourselves strong, strong you will be; if you think yourselves impure, impure you will be;
if you think yourselves pure, pure you will be. This teaches us not to think ourselves as weak, but as strong, omnipotent, omniscient. No matter that I have not expressed it yet, it is in me.
All knowledge is in me, all power, all purity, and all freedom. Why cannot I express this knowledge?
Because I do not believe in it. Let me believe in it, and it must and will come out.
This is what the idea of the Impersonal teaches.
-Swami Vivekananda, 1863-1902
As ever,
Carolann
There is a coherent plan in the universe,
though I don’t know what it’s a plan for.
-Fred Hoyle, 1915-2001
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President &
Senior Investment Advisor