Category: Newsletters

 

Dear Friends,

Tangents:

I spent the afternoon at a seminar held in Vancouver on “The Current State of the Canadian Economy,” hosted by Bloomberg and CFA/Vancouver. The keynote speaker was Dr. Farid Novin from the Bank of Canada.  In spite of recent market turmoil, Dr. Novin is optimistic on the Canadian economy and specifically B.C.’s future economic growth prospects.  He was more cautious in his comments on the current European situation.  Ken Hoffman spoke on commodities and Timothy Lee spoke on fixed income.   All agreed the current state of the  financial world is unprecedented.  Mr. Lee remarked this month marks the 40^th anniversary that Nixon severed the dollar’s to gold.   

  This year is also the 150^th birthday of the US dollar.  The FT recently wrote, ”After a stormy childhood, it spent much of its 20^th century prime as the unquestioned linchpin of global finance, particularly during the Bretton Woods era when it was tied to gold.  Today the greenback is the primary reserve currency, largely because of tradition and lack of alternatives.

  In 1861 people getting paid in the untried new paper currency initially were wary, sending its value sharply lower versus specie.  The phrase ‘not worth a Continental’ – a reference to paper dollars issued to finance the Revolutionary War eight decades earlier – showed their skepticism about fiat currency.  They feared the dollar, created to finance the Union’s war against 11 rebel states that had issued their own dollar three months earlier, would suffer the same fate.

  In fact the dollar almost vanished several times.  Yet the flowering of the US economy in subsequent decades, and the need for liquidity during panics, revived its fortunes.  The longer it hung around, them more it became accepted as ‘legal tender’.  Federal Reserve notes, a 20^th-century development, eventually replaced original greenbacks backed by the Treasury, but the name stuck….Hard-money types say that (when the dollar’s link to gold was severed) began the dollar’s decrepitude, but perhaps they are wrong…”

 Gary brought home some wonderful ripe peaches last night that picked up on his way home from work.  He was telling me that when he was a kid growing up on Ellen Street in Kitchener – there were so many kids around – and the Heller’s, who lived on Ellen Street, had a peach tree in their back yard, and cherries and…they used to steal the peaches.  And they did other things like walk on the posts that separated the lawns from the road, trying to balance themselves in a straight line, and climb up on roof tops in winter and jump off the roofs into the snow piles below.  And he was wondering aloud – now why would we do that?   I suggested it was a way to expend the pent-up energy of youth and maybe if there were more ways for kids to do stuff like that today, society wouldn’t have as many angry young people doing the stuff they’re doing today.

Photos of the day 

August 18, 2011

Egyptian children play as their family awaits Iftar, the meal to break their fast at sunset, during the holy month of Ramadan inside the Al-Azhar mosque, in Cairo, Egypt. Tara Todras-Whitehill/AP.

 

Market Commentary:

Canada

By Matt Walcoff

Aug. 18 (Bloomberg) — Canadian stocks fell, led by energy producers, after the U.S. reported bigger increases in initial jobless claims and consumer prices than most economists had forecast and Morgan Stanley cut its forecast for global growth.

Suncor Energy Inc., Canada’s largest oil and gas producer, lost 6.5 percent as crude futures sank 5.9 percent. Teck Resources Ltd., the country’s biggest base-metals and coal producer, dropped 6.7 percent as copper fell. Royal Bank of Canada, the country’s largest lender by assets, decreased 2.4 percent on concern that European banks lack sufficient capital.

The Standard & Poor’s/TSX Composite Index fell 392.9 points, or 3.1 percent, to 12,186.71.

“We haven’t seen the job numbers in the States pick up,”

Robert “Hap” Sneddon, president of money manager CastleMoore Inc. in Oakville, Ontario, and the Canadian Society of Technical Analysts, said in a telephone interview. “If we have a double- dip in the States, it’s going to affect Canada.”

The index dropped 2.8 percent this month through yesterday as oil futures lost 8.5 percent with data indicating a slowdown in the global recovery. The S&P/TSX’s August decline was the second-smallest among major developed-market stock benchmarks behind Australia’s S&P/ASX 200 as a surge in gold stocks partially canceled out retreats in other industries.

First-time unemployment claims in the U.S. totaled 408,000 last week, the Labor Department said today in Washington.

Thirty-seven of 41 economists in a Bloomberg survey had forecast a lower number. The U.S. consumer-price index rose 0.5 percent in July, the department said. Economists had estimated inflation of 0.2 percent, according to the median forecast in a Bloomberg survey.                       

Crude oil fell the most in more than a week and copper lost 1.7 percent in New York. Suncor dropped 6.5 percent to C$29.67, the lowest since April 2009. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, declined 5.1 percent to C$34.29. Cenovus Energy Inc., Canada’s fifth-biggest energy company, slumped 7.1 percent, the most since it began trading in November 2009, to C$32.92.

Trican Well Service Ltd., the country’s largest oilfield- services company, tumbled 8.3 percent, the most since July 2009, to C$21.69. Precision Drilling Corp., Canada’s biggest drilling company by market value, plunged 9.6 percent to C$12.41.

Teck decreased 6.7 percent to C$39.49. Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia with Rio Tinto Group, retreated 6 percent to C$19.15. Sherritt International Corp., which produces base metals, coal and oil, sank 9 percent, the most since June 2009, to C$5.13.

 Forty-one of 43 S&P/TSX financial companies fell after Lars Frisell, chief economist at Sweden’s financial regulator, said it won’t take much for interbank lending to freeze and the Wall Street Journal reported that U.S. regulators were scrutinizing the American operations of Europe’s largest lenders to assess their vulnerability. Morgan Stanley cut its forecast for global growth this year to 3.9 percent from 4.2 percent.                        

 Royal Bank declined 2.4 percent to C$50.45. Toronto- Dominion Bank, Canada’s second-biggest lender by assets, lost 3.3 percent, the most since May 2010, to C$74. Manulife Financial Corp., North America’s fourth-largest insurer, decreased 6.1 percent to C$13.07.

Stocks extended their losses after the U.S. National Association of Realtors said existing-home sales fell to the lowest level since November last month and the Federal Reserve Bank of Philadelphia’s monthly index of its regional manufacturing industry dropped to the lowest since March 2009.

Semiconductor designer Mosaid Technologies Inc. soared 23 percent to a 10-year high of C$39.22 after technology-patent owner Wi-LAN Inc. made an unsolicited bid of C$38 a share for the company. In a statement, Mosaid said it is evaluating the offer. Wi-LAN decreased 5.9 percent to C$6.67.

Fertilizer producers retreated as corn and wheat futures fell. Potash Corp. of Saskatchewan Inc., the world’s largest company in the industry by market value, dropped 4.2 percent to C$51.90. Agrium Inc., a fertilizer producer and farm retailer, declined 3.9 percent to C$78.19.

Contract electronics manufacturer Celestica Inc. lost 8.5 percent, the most since February 2009, to C$7.44. North American technology stocks retreated after NetApp Inc., a maker of data- storage products, reported first-quarter sales that trailed the average estimate of analysts in a Bloomberg survey and Hewlett- Packard Co. forecast fourth-quarter earnings below its average estimates.

Open Text Corp., Canada’s largest software company, rallied6 percent to C$54 after Bloomberg News reported that  it is in talks to buy Autonomy Corp. After markets closed, HP said it will purchase the Cambridge, England-based software maker.

Yoga-wear retailer Lululemon Athletica Inc. slumped 7.8 percent to C$47.47, extending its three-day retreat to 17 percent, the most since May 2009. Urban Outfitters Inc. Chief Executive Officer Glen T. Senk said Aug. 15 he is “a little concerned” about sales at the company’s Anthropologie chain of women’s clothing stores. Executives at Abercrombie & Fitch Co., the teen-clothing retailer, said yesterday expenses will keep rising this year.

US

By Rita Nazareth

Aug. 18 (Bloomberg) — U.S. stocks tumbled, sending the Dow Jones Industrial Average down more than 400 points for the fourth time this month, on concern the global economy is slowing and speculation that European banks lack enough capital.

Caterpillar Inc. and FedEx Corp. fell at least 4.9 percent, pacing losses in stocks most-tied to the economy, as a Philadelphia-area manufacturing index sank to the lowest since 2009, jobless claims and consumer prices rose, and existing home sales slid. Bank of America Corp. and Citigroup Inc. fell more than 6 percent, following a plunge in European lenders. Hewlett- Packard Co. sank 6 percent after cutting its earnings forecast.

The Standard & Poor’s 500 Index slumped 4.5 percent to 1,140.65 at 4 p.m. in New York. All 10 groups in the S&P 500 dropped at least 1.2 percent, and only 10 stocks in the benchmark gauge advanced. The Dow fell 419.63 points, or 3.7 percent, to 10,990.58. Treasuries rallied, pushing 10-year yields to a record low. About 11.6 billion shares changed hands on U.S. exchanges as of 4:27 p.m., 44 percent more than the three-month average, according to data compiled by Bloomberg.

“It’s almost like a worldwide buyers strike,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “There’s a general malaise on global economic activity. People continue to downgrade their expectations on growth. There’s concern about funding problems. That’s making us very nervous and we want to take risk out of portfolios at least for the immediate future.”

Today’s stock rout erased more than $600 billion of U.S. market value. The S&P 500 has tumbled 16 percent from its April 29 high, matching the retreat between April 23 and July 2, 2010, previously the biggest contraction of the bull market that began in March 2009. The decline from April 29 through Aug. 8 left the S&P 500 within 29 points of entering a bear market. European shares and the Russell 2000 Index entered a bear market last week, falling at least 20 percent from their previous highs.

“The massive exodus from risk markets reflects heightened concerns with a possible recession and the accelerated loss of trust in policymakers,” Mohamed El-Erian, chief executive officer and co-chief investment officer at Pacific Investment Management Co., the world’s biggest manager of bond funds, wrote in an e-mail. “Importantly, such worries will now be compounded by concerns about technical damage to key markets. The risk is of a rapidly deteriorating negative feedback loop of weakening fundamentals, inadequate policies and bad technicals.”

Global stocks tumbled today after Morgan Stanley cut its forecast for global growth this year, citing an “insufficient” policy response to Europe’s sovereign debt crisis, weakened confidence and the prospect of fiscal tightening. The bank estimates expansion of 3.9 percent, down from a previous forecast of 4.2 percent, according to a report dated today.

     The U.S. and Europe are “dangerously close to recession,”

Morgan Stanley analysts including Chetan Ahya said in the note.

“Recent policy errors, especially Europe’s slow and insufficient response to the sovereign crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets and eroded business and consumer confidence.”

 U.S. equities slumped after a report showed that the Federal Reserve Bank of Philadelphia’s general economic index plunged to minus 30.7 this month, the lowest since March 2009, from 3.2 in July. The August gauge exceeded the most pessimistic projection in a Bloomberg News survey in which the median estimate was 2. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.     Government data also showed that more Americans than forecast filed applications for unemployment benefits last week, while the cost of living climbed in July by the most in four months. Separately, the National Association of Realtors said that sales of U.S. previously owned homes unexpectedly dropped in July, reflecting an increase in contract cancellations due to strict lending rules and low appraisals.

 The Morgan Stanley Cyclical Index of companies most-tied to economic growth slumped 6.8 percent as all of its 30 stocks retreated. The Dow Jones Transportation Average of 20 stocks, also considered a proxy for the economy, tumbled 6.1 percent. A gauge of homebuilders in S&P indexes declined 6.7 percent.

Caterpillar, the world’s largest construction and mining- equipment maker, slumped 4.9 percent to $83.33. FedEx, operator of the world’s biggest cargo airline, sank 5.9 percent to $74.46. PulteGroup Inc., the largest U.S. homebuilder by revenue, decreased 11 percent to $4.16.                      

 American banks tumbled, following losses in European financial shares, as Sweden’s financial regulator said his country’s lenders must do more to prepare for a worsening in Europe’s debt crisis. The KBW Bank Index of 24 stocks retreated 5.6 percent. Bank of America, the largest U.S. lender by assets, sank 6 percent to $7.01. Citigroup dropped 6.3 percent to $27.98.

Banks also slumped after the Wall Street Journal reported that American regulators are intensifying scrutiny of the U.S. arms of Europe’s largest banks amid concern about the region’s debt crisis, citing people familiar with the matter.

Hewlett-Packard dropped 6 percent to $29.51 after jumping as much as 8.3 percent earlier. The world’s largest computer maker forecast fiscal fourth-quarter and full-year earnings that missed analysts’ estimates as lackluster consumer spending failed to offset corporate purchases of printers, computers and servers. Hewlett-Packard confirmed it’s considering a spinoff for its PC business and that it has agreed to buy software maker Autonomy Corp. for $10.3 billion.      Gauges of energy and raw-material producers slid at least 5.6 percent. Oil, wheat and copper led declines in commodity markets on concern that slower economic growth will weaken demand for raw materials. Gold surged to a record as investors fled stocks for the perceived safety of the metal.

Alcoa Inc., the largest U.S. aluminum producer, decreased 6.1 percent to $11.51. Exxon Mobil Corp. fell 4.3 percent to $70.94.

Treasuries surged, pushing yields to record lows, as investors seek a refuge in the world’s safest securities on concern global growth is slowing and speculation inflation will remain subdued.

     “The bond market is indicating certainty of a recession,”

Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus & Co., which oversees more than $115 billion in client assets, said in a telephone interview.

“Uncertainty regarding recession risk puts S&P 500’s earnings estimates in peril of drastic cuts, repricing stock market valuations and expectations lower.”

Since the third quarter of last year, companies in the S&P 500 have earned $774.3 billion, according to data compiled by Bloomberg, pushing per-share profit to $91.44 as of yesterday from $74.97 on July 2, 2010.

 Analysts have underestimated U.S. earnings for eight straight quarters, with S&P 500 companies beating forecasts by an average of 5.1 percent in the three months ended in June. At the start of the last recession, their projections for overall profit proved 8.2 percentage points too high in the third quarter of 2007, and 33.5 points too high in the fourth. That was the biggest miss ever, according to data compiled by Bloomberg.

Most U.S. stocks declined yesterday, wiping out an earlier advance, amid speculation that the Fed may not consider another economic stimulus program to avert a recession.

Bernanke’s pledge last week to keep interest rates near zero percent until mid-2013 was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said yesterday in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

Dallas President Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.

“It’s ugly out there,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $550 billion. “It’s a combination of concern of a potential recession and the lack of policy tools to fight it. Until people see a bottom, they are not going to buy stocks. There will be pressure on the equity market until we see a solid policy response.”

 U.S. stocks may slip to new lows in the next few weeks, setting the stage for a rally of more than 20 percent in the S&P 500, Tom DeMark, the creator of indicators meant to identify turning points in markets, said in an Aug. 16 interview. The S&P 500, which closed at 1,193.89 yesterday, will probably drop below the 11-month low of 1,119.46 set on Aug. 8 before surging above 1,363.61, its peak on April 29, according to DeMark.

U.S. and European options gauges surged. The VIX, as the Chicago Board Options Exchange Volatility Index is known, jumped 35 percent to 42.67. The VStoxx Index, which measures the cost of protecting against declines in the Euro Stoxx 50 Index, snapped a five-day losing streak. It climbed 35 percent, the most since May 2010, to 47.17. Volatility gauges in Hong Kong, South Korea, Japan and India also rose.

The selloff in U.S. stocks may be close to ending with valuations so low they could withstand a 15 percent decline in profits, said Barton Biggs, the hedge fund manager who said this month he was selling shares. The tumble in stocks shows that investors expect a slowing economy to spur analysts to lower earnings estimates, he said.

Earnings at S&P 500 companies are forecast to climb 17 percent to $99.08 a share in 2011 and 14 percent to $112.90 in 2012, estimates compiled by Bloomberg show. The index is trading at 12.4 times profits in the last 12 months, 24 percent below its five-decade average.

“It’s very possible, in the grand scheme of things, that what we’re seeing is the classic retest of the lows of 10 days ago,” Biggs said on Bloomberg Television today. “We may be in the process of making an important bottom.”

Have a wonderful day everyone.

Be magnificent!

In your veins, and in mine, there is only one blood,

The same life that animates us all!

Since one unique mother begat us all,

Where did we learn to divide ourselves?

-Kabir, 1440-1518

As ever,

Carolann

The glow of inspiration warms us;

it is a holy rapture.

            -Ovid, 43 BC- 18 AD 

 

 

 

Dear Friends,

 

Tangents: 

 

Everybody should do at least two things each day that he hates to do, just for practice. – William James, 1842-1910

 

Smiling

 

It’s interesting that we smile when we’re happy but also when we’re anxious and afraid.  We revel in our smiles when laughter descends and pull them out of the psychological drawer to fend off anxiety or if there’s no one around to give us a much-needed hug.  This makes the smile a Darwinian arrow of optimism through the DNA of humanity.  Smiling is all there is left when your breath leaks away. –Don Kieran, The Book of Idle Pleasures.

 

Piecing together a masterpiece

 

 On the surface, it’s a simple remastering of a masterpiece: The Chinese landscape scroll “Dwelling in the Fuchan Mountains,” normally kept in two pieces, has been brought together for the first time in 360 years at Taiwan’s National Palace Museum.

  Some critics call the nearly 23-foot long painting one of the Top 10 works of Chinese art, and this month, museumgoers can finally see why.  “It’s a model of the landscape paintings done since the Song Dynasty using simple, pure  strokes to express an artist’s idea or feeling,” says curator He Chuan-hsin. 

  More than 90,000 people have already braved lines to see the scroll made in 1350 by Huang Gongwang.  Back then, an adoring collector ordered that the scroll be burned at his death.  The fire claimed 7% before the rest was saved – in two pieces.  A nearly 21-foot long segment landed in the Qing Dynasty’s imperial collection and was taken to Taiwan after the Chinese civil war in 1949.  The smaller piece stayed in China.  “I should think it wouldn’t be easy at all to keep both parts separate for so long,” said museum visitor and high school teacher Yao Lifang, from China.

  Mr. Yao’s government sees the scroll as a metaphor for China and Taiwan after more than 60 years of political separation,  Beijing claims the self-ruled island as its own.  The museum near Shanghai, China, that houses the smaller piece suggested uniting the pieces in 2008 following the election of a conciliatory president in Taiwan.  The small piece returns to China in September, however, and Taiwanese are not keen to reconcile.  –Ralph Jennings, correspondent.

Photos of the day 

August 17, 2011

While it’s summer in some parts of the world…

Children play in a fountain at sunset near the beach in Tel Aviv, Israel. Baz Ratner/Reuters.

Snow-covered fields are seen in Argentina’s Patagonian resort town of San Martin de Los Andes.Patricio Rodriguez/Reuters.

Market Commentary:

Canada

By Matt Walcoff

Aug. 17 (Bloomberg) — Canadian stocks rose, led by financial and precious-metals stocks, as companies including Target Corp. and AP Moeller-Maersk A/S reported earnings that beat their average analyst estimates and gold gained.

Bank of Nova Scotia, Canada’s third-largest lender by assets, advanced 1.3 percent as bank stocks erased their losses for the month. Kinross Gold Corp., the country’s third-biggest gold producer, increased 2.4 percent as the metal climbed for a third day. Valeant Pharmaceuticals International Inc., Canada’s largest drugmaker, surged 6.8 percent.

The Standard & Poor’s/TSX Composite Index gained 87.95 points, or 0.7 percent, to 12,618.66 at 3:11 p.m. in Toronto. “The Canadian market has been pretty resilient to a lot of the fears and concerns out there, especially the problems in Europe and debt-ceiling issue in the U.S.,” Gerry Brockelsby, a money manager at Marquest Asset Management Inc. in Toronto, said in a telephone interview. The firm oversees C$250 million ($255 million). “It’s not a direct hit on our banking system.”

The S&P/TSX declined 3.2 percent this month through yesterday, the least among major developed-market stock benchmarks. Besides the rebound in bank shares, gold stocks surged on concern over U.S. and European sovereign debt.

The eight S&P/TSX banks and three largest insurers advanced. Scotiabank rallied 1.3 percent to C$54.03. Bank of Montreal, the country’s fourth-largest lender by assets, increased 1 percent to C$60.14. Manulife Financial Corp., North America’s fourth-biggest insurer, rose 1.5 percent to C$13.91.                         

  Precious-metals producers climbed as the U.S. Dollar Index slipped to an August low and the U.S. reported higher wholesale inflation for July than most economists had forecast.

Kinross gained 2.4 percent to C$16.36. Barrick Gold Corp., the world’s largest gold producer, advanced 0.8 percent to C$49.65. Lake Shore Gold Corp., which mines in Ontario, soared 5.1 percent to C$2.28 to extend its two-day surge to 17 percent, the most since 2009. The company reported a new discovery yesterday.

Valeant rallied 6.8 percent to C$41.85. The shares have rebounded 10 percent since Aug. 5, the day after the company reported second-quarter net income that trailed analysts’ forecasts, as at least seven insiders bought shares.

Progressive Waste Solutions Ltd., the waste-management company formerly known as IESI-BFC Ltd., surged 6.6 percent, the most since April 2010, to C$20.83 after saying it will buy back shares.

Neo Material Technologies Inc., which makes rare-earths and zirconium products, increased 6.4 percent to C$9.53. The shares have climbed 33 percent since Aug. 8 after closing at the lowest level relative to earnings since March 2009.

US

By Jeff Sutherland and Rita Nazareth

Aug. 17 (Bloomberg) — Most U.S. stocks fell, wiping out an earlier rally, as Dell Inc. forecast weaker sales and two Federal Reserve officials warned against applying too much stimulus to the economy. Treasuries, commodities and the Swiss franc climbed.

About 21 stocks retreated for every 20 that advanced on U.S. exchanges. The Standard & Poor’s 500 Index rose 0.1 percent to 1,193.88 at 4 p.m. in New York, after jumping as much as 1.3 percent and falling as much as 0.7 percent. The yield on 30-year Treasury bonds dropped 11 basis points after stocks erased their rally. The S&P GSCI index of 24 commodities advanced 1 percent as oil jumped 1.1 percent. The franc strengthened against most of its 16 major peers.

Technology shares fell the most among S&P 500 groups, losing 0.9 percent as Dell said slower spending on PCs and consumer technology crimped its sales forecast. Charles Plosser and Richard Fisher, two Fed officials who dissented from the central bank’s latest policy statement, spoke out against unnecessary stimulus measures. The Swiss National Bank said it will expand liquidity, refraining from tougher moves such as adopting a currency target.

“People started to reevaluate the odds of a QE3,” James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion, said in a telephone interview. “There are a lot of people that have been saying we’re going to get a QE3,” he said, using a nickname for a third round of quantitative easing. “The fact that Fisher came out today with a very explicit comment brought some selling in. It reduces the odds of a QE3. Dell’s figures are important because they say something about the consumer.”                      

 The S&P 500 dropped 1 percent yesterday after rallying 7.5 percent over the three prior days amid a decline in jobless claims, an increase in retail sales and better-than-estimated profits. The S&P 500 is down 13 percent from April 29 on concern about Europe’s debt crisis and an economic slowdown.

Dell, the second-largest personal-computer maker, sank 10 percent. Lackluster demand from consumers and market-share gains by Apple Inc. weighed on its results, offsetting stronger corporate orders for server computers. Renewed concerns that the economy will fall back into recession also may be curbing spending.

Rival Hewlett-Packard Co. dropped 3.7 percent. The biggest personal-computer maker was cut to “market perform” from “outperform” at BMO Capital Markets. Apple fell less than 0.1 percent while Microsoft Corp. lost 0.4 percent. Target gained 2.4 percent. The second-largest U.S. discount retailer said profit jumped 3.7 percent in the second quarter on higher sales.

Per-share earnings increased 17 percent among the S&P 500 companies that have released quarterly results since July 11, according to data compiled by Bloomberg. About three-quarters of the companies have topped the average analyst profit forecast, the data show.

Stocks reversed earlier gains on investor speculation that the Fed may not consider another economic stimulus program to avert a recession. The Fed finished its second round of so- called quantitative easing at the end of June. The program helped propel a rally of as much as 28 percent in the S&P 500 after Fed Chairman Ben S. Bernanke foreshadowed the plan on Aug. 27, 2010.

Bernanke’s pledge last week to keep interest rates near zero percent until mid-2013 was “inappropriate policy at an inappropriate time,” Plosser, president of the Fed Bank of Philadelphia, said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. Dallas President Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.                        

Stocks rose earlier after producer prices advanced 0.2 percent in July, following a 0.4 percent drop in June, the Labor Department said today. Economists in a Bloomberg survey forecast a 0.1 increase. The report showed the cost of crude goods dropped in July for a third consecutive month, led by declining petroleum and food prices.

Slowing sales and the drop in raw-materials mean companies will be less likely to raise prices, which may give Fed policy makers more room to act to spur growth after the world’s largest economy almost stalled. Bernanke may announce policy intentions at a conference in Jackson Hole, Wyoming, on Aug. 26.

The extra yield Treasury investors get to hold 30-year bonds instead of two-year notes shrank to the narrowest in a week on speculation the U.S. economic recovery is stalling.

The difference between yields on two-year notes and 30-year bonds fell to 3.37 percentage points at 2:45 p.m. in New York, from 3.48 yesterday. The spread was the narrowest since Aug. 10, when it was the smallest since October 2010. 

 The yield on 10-year Treasury notes slipped six basis points to 2.16 percent.

Crude rose to the highest level in almost two weeks as the dollar fell against the euro, increasing the appeal of dollar- denominated commodities as an investment. Futures climbed as much as 2.7 percent before trimming their advance to settle 1.1 percent higher, following an unexpected increase in U.S. inventories.

Gold advanced to a record for the second day, gaining 0.5 percent to settle at $1,793.80. Copper increased. Wheat futures climbed 0.8 percent to a two-month high on speculation that dry weather in the U.S. Great Plains will cut acreage of winter crops set to be planted next month.

In Europe, Carlsberg A/S sank 17 percent as the world’s fourth-largest brewer cut its profit forecast because of faltering sales in Russia. Deutsche Boerse AG lost 5.8 percent and London Stock Exchange Group Plc fell 2.8 percent after French President Nicolas Sarkozy said France and Germany will propose a financial-transaction tax.

German Chancellor Angela Merkel and Sarkozy rejected an expansion of a 440 billion-euro ($633 billion) rescue fund yesterday and rebuffed calls for joint euro borrowing.

The MSCI Emerging Markets Index rose 0.5 percent. Russia’s Micex Index added 1.9 percent, and India’s Sensex Index climbed 0.7 percent. Dell suppliers in Taiwan slid, helping to push the Taiex Index down 0.7 percent. Quanta Computer Inc. sank 4.3 percent and Compal Electronics Inc. dropped 4 percent.

The franc rose against most of its major peers. The currency advanced 0.9 percent against the dollar and 0.6 percent versus the euro. The Swiss National Bank said it will expand banks’ sight deposits to 200 billion francs ($253 billion) from 120 billion francs. It will also continue to repurchase outstanding SNB bills and use foreign-exchange swap transactions.

The yield on two-year Greek notes rose 55 basis points to 34.98 percent. Portuguese two-year securities yielded 11.85 percent, up eight basis points from yesterday. The cost of insuring sovereign debt increased, with the Markit iTraxx SovX Western Europe Index of credit-default swaps linked to 15 governments climbing one basis point to 278 basis points.

Have a wonderful evening everyone.

Be magnificent!

To love is to understand and feel that the other person is different.

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Stop worrying  

nobody gets out of this world alive.

          -Clive James, 1939- 

 

 

 

Dear Friends,

Tangents:

A friend just e-mailed me and remarked that Elvis died on this day in 1977 at 42 years of age.  It brought back a few fond memories for me….One of my best summers ever was drawing to an end that year.  I had been travelling around Europe by myself in the summer of 1977 –  I was meeting lots of interesting people, having great experiences.  On August 16^th, I was on my way back to France after spending some time in the Cyclades with a group of friends whom I had met in the south of Italy.  They were from England and were going to spend the winter in North Africa after our sojourn in Greece.  I had to get back to Montreal in time for my final year as an undergraduate; my flight was out of Paris and as I was hustling through the Athens airport, I recall so vividly a young American woman around my age rushing up to me and asking, “Did you hear???”  I told her I had just arrived from a tiny Greek island and hadn’t heard any news and then she told me that Elvis had died that day.  So, I’ll always remember where I was and what I was thinking on that day, August 16^th, 1977.

The Globe & Mail ran a headline today, “GOLD DISCOVERED IN THE KLONDIKE” on August 16^th, 1896.  “Tens of millions of dollars in gold were taken before the rush ended in 1899, with production fading off over the next decade but the thrill of gold-rush days long remembered.”

As I write this, I’m looking at my Bloomberg terminal and watching gold march up over $30/ounce in after hours trading –looks like it’s heading to $1800.

It is fascinating stuff.  From an article I was reading recently:

In any era, understanding gold’s worth as a commodity requires some magical thinking.  You can’t eat it.  You can’t put it in your gas tank.  It won’t keep you warm at night.  It’s not as immediately useful as, say, cattle, which preceded gold as a widely accepted unit of wealth.  (Gold’s value was originally pegged to the worth of cows.  The Latin word for money, pecunia, comes from pecus, which means cattle, while the Indian rupee is derived from rupa, or cattle in Sanskrit.

Billionaire investor Warren Buffett addressed the fundamental strangeness of gold during a 1998 talk at Harvard University.  “It gets dug out of the ground….then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it,” he said.  “It has no utility.  Anyone watching from Mars would be scratching their head.”

Photos of the day 

August 16, 2011

People relax in the last ray of the setting sun near the Kremlin Wall in Moscow, Russia. Alexander Zemlianichenko/AP.

A man looks at the crooked-looking architecture of the Neuer Zollhof building, designed by Frank Gehry in Duesseldorf, Germany. Martin Meissner/AP.

Market Commentary:

 

Canada

By Matt Walcoff

Aug. 16 (Bloomberg) — Canadian stocks fell for the first time in six days, led by energy and base-metals producers, after the European Union reported a bigger slowdown in economic growth than most economists had forecast and U.S. homebuilding dropped.

Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, declined 2.4 percent as crude oil lost 1.4 percent. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 6.3 percent as the metal slumped in New York. Toronto- Dominion Bank, Canada’s second-biggest lender by assets, slipped 0.8 percent after an analyst at Macquarie Group Ltd. cut his rating on the shares.

The Standard & Poor’s/TSX Composite Index decreased 152.9 points, or 1.2 percent, to 12,530.71.

“The economic stats, they haven’t given us anything to get excited about,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($1 billion).

“It’s certainly causing investors to pause a bit.”

The S&P/TSX surged 8.7 percent in the five days ending yesterday, the most since the beginning of the bull market in March 2009, as the U.S. reported a decline in initial jobless claims and a gain in retail sales. Crude oil jumped after sinking to a 10-month low, boosting energy stocks, the second- biggest part of the index.                       

 Gross domestic product in the 17 countries that use the euro rose 0.2 percent in the second quarter, the EU’s statistics office said, trailing most economists’ forecasts in a Bloomberg survey. Germany’s economy grew 0.1 percent, less than all 33 estimates.

U.S. housing starts fell to a 604,000 annual rate in July, down from a revised 613,000 in June, the Commerce Department said today in Washington. Building permits totaled 597,000, compared with a median forecast of 605,000 in a Bloomberg survey of economists.

In Canada, manufacturing sales dropped in June for a third month, Statistics Canada said today. The decline exceeded all 19 forecasts in a Bloomberg survey.

Sixty of 67 S&P/TSX energy companies declined. Canadian Natural lost 2.4 percent to C$36. Suncor Energy Inc., Canada’s biggest oil and gas producer, decreased 1.7 percent to C$31.89.

Encana Corp., the country’s largest natural gas producer, retreated 3 percent to C$24.99 as the fuel slumped to a five- month low.  Base-metals and coal producers fell as copper futures lost 1 percent in New York. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, dropped 6.3 percent to C$23.05.Teck Resources Ltd., the country’s biggest company in the industry, slipped 3.8 percent to C$42.14. Quadra FNX Mining Ltd., which produces base metals in the U.S., Canada and Chile, sank 6.1 percent to C$12.10.

Grande Cache Coal Corp., which mines in Alberta, slumped 6.7 percent to C$6.81 after reporting first-quarter profit that missed the average estimate of analysts in a Bloomberg survey by 37 percent, excluding certain items.

Uranium producers declined after Ux Consulting Co. said prices of the nuclear fuel decreased 1.9 percent the week ending yesterday. Cameco Corp., the world’s largest uranium producer, fell 4.3 percent to C$22.35. Denison Mines Corp., which operates in Canada, the U.S. and Africa, dropped 7.7 percent to C$1.55.

Alacer Gold Corp., which mines in Turkey, rallied 7.9 percent to C$10.07 a day after reporting second-quarter earnings that beat the average estimate in a Bloomberg survey by 62 percent, excluding certain items. Lake Shore Gold Corp., which operates in Ontario, jumped 11 percent to C$2.17 after disclosing a new discovery at its Bell Creek Mine.

The country’s seven largest banks and three biggest insurers each fell after Sumit Malhotra, an analyst at Macquarie, said in a note to clients that banks’ 2012 earnings are likely to trail most other analysts’ estimates.

TD dropped 0.8 percent to C$76.26 after Malhotra cut his rating on the stock to “neutral” from “outperform.” National Bank of Canada, the country’s sixth-biggest lender by assets, declined 0.8 percent to C$72.81. Great-West Lifeco Inc., the country’s second-biggest insurer, lost 2.5 percent to C$22.68.

Sino-Forest Corp., the forestry company fighting a short seller’s assertions of financial manipulation, tumbled for a second day after saying the independent investigation it initiated into the assertions will take until the end of the year. The shares plunged 12 percent to C$5.34 after retreating 8.4 percent yesterday.

Directory publisher Yellow Media Inc. plunged 9.1 percent to C$1.10 after gaining 64 percent in the previous three days.

Shares of the Verdun, Quebec-based company have slumped 82 percent this year on concern it will be unable to retain profitability as fewer people use printed phone books.

Yoga-wear retailer Lululemon Athletica Inc. declined 7.2 percent to C$53.26. Glen T. Senk, Urban Outfitters Inc.’s chief executive officer, said on a conference call yesterday that he is “a little concerned” about sales at the company’s Anthropologie chain of women’s clothing stores.

US

By Rita Nazareth

     Aug. 16 (Bloomberg) — U.S. stocks fell, following the biggest three-day rally since 2009, as German and French leaders proposed a financial-transaction tax and rejected selling euro bonds to halt a debt crisis threatening economic growth. NYSE Euronext and Nasdaq OMX Group Inc., two of the biggest exchange operators in Europe, dropped more than 2.7 percent.

Caterpillar Inc., Deere & Co. and 3M Co. declined at least 1.4 percent, pacing losses in companies most-tied to the economy, as Europe’s economic growth trailed estimates and U.S. housing starts slumped. Citigroup Inc. and Bank of America Corp. slipped more than 4.2 percent after billionaire John Paulson’s hedge fund said it reduced positions in both lenders.

The S&P 500 fell 1 percent to 1,192.76 at 4 p.m. in New York. The benchmark gauge advanced 2.2 percent yesterday, erasing last week’s decline. The Dow Jones Industrial Average slid 76.97 points, or 0.7 percent, to 11,405.93 today.

“Europe will continue to be an overhang until they come up with realistic policies,” Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “We’ve already got disappointing economic numbers out of Europe earlier today. Then, you have a program which is not really doing anything to address that.” The S&P 500 has fallen 13 percent since April 29 on concern about an economic slowdown and Europe’s widening debt crisis.

Gauges of S&P 500 companies least-tied to economic growth, including utilities and sellers of consumer staples, fell less than the index during the slump, losing 1.7 percent and 4.5 percent, respectively. The index had rallied 7.5 percent over the three days before today amid a decline in jobless claims, an increase in retail sales and corporate takeovers.

Earlier losses in stocks today followed a report showing European economic growth slowed more than forecast in the second quarter as Germany’s recovery almost ground to a halt amid the worsening debt crisis. Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, the worst performance since the euro region emerged from a recession in late 2009. Economists had forecast growth of 0.3 percent, according to the median of estimates in a Bloomberg News survey.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said they’ll press for closer euro-area economic integration with tougher deficit rules and stricter supervision to stamp out the debt crisis. Merkel and Sarkozy rejected euro bonds and expanding the 440 billion-euro ($633 billion) rescue fund. They also proposed a plan to resubmit a financial- transaction tax, which was rejected in 2010.

They proposed debt limits be written into national law and establishing a “euro council” to be headed by European Union President Herman van Rompuy as part of a planned “economic government” for Europe. While joint euro-region bond sales may come eventually, their introduction now would put the most stable countries of the euro zone in grave danger, Sarkozy said.

NYSE Euronext, which operates stock and derivatives exchanges in Paris, Amsterdam, Brussels, Lisbon and London, fell 8.4 percent to $26.54. Nasdaq OMX, the operator of Nordic and Baltic bourses, slumped 2.8 percent to $22.97. The Bloomberg World Exchanges Index of 25 companies lost 1.6 percent.

Concern about Europe’s crisis overshadowed a report showing industrial production in the U.S. climbed in July by the most this year. The 0.9 percent increase in production at factories, mines and utilities followed a revised 0.4 percent gain that was more the previously estimated, figures from the Federal Reserve showed. Economists projected a 0.5 percent rise in July, according to the median estimate in a Bloomberg News survey.            

Fitch Ratings affirmed its AAA credit rating for the U.S. and said the outlook is stable, citing the nation’s central role in the global financial system and the flexible, diverse economy. Fitch had put the rating under review after lawmakers reached a compromise Aug. 2 on a debt-limit agreement that prevented a U.S. default. S&P on Aug. 5 cut its U.S. credit rating to AA+ from AAA, saying lawmakers failed to cut spending enough to reduce record deficits.

“People are desperate for stability in unpredictable times,” Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4 billion, said in a telephone interview. “The economy and consumers are not as strong as people thought regardless of how bad they wanted the market to go up. Europe is a mess. There’s no easy answer on how to get economic growth going again.”

The Morgan Stanley Cyclical Index of companies whose earnings are most-tied to growth slumped 1.7 percent as 27 of its 30 stocks retreated. Caterpillar, the largest construction and mining-equipment maker, decreased 2.2 percent to $89.35. Deere slid 1.8 percent to $75.16. 3M fell 1.4 percent to $82.13.

Financial stocks had the biggest decline in the S&P 500 within 10 groups, falling 1.9 percent.

Citigroup slid 4.3 percent to $29.94, while Bank of America sank 4.6 percent to $7.40. Paulson & Co. sold 7.8 million shares of New York-based Citigroup in the second quarter, leaving the fund with 33.5 million shares as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. The fund sold 63.2 million shares of Charlotte, North Carolina-based Bank of America, leaving it with 60.4 million, according to the filing.

Financial companies posted the worst performance among 10 industry groups in the S&P 500 in the second quarter, losing 6.3 percent. The KBW Bank Index of 24 companies fell 19 percent from June 30 through yesterday, with Citigroup and Bank of America plummeting 25 percent and 29 percent, respectively.

Gauges of energy and raw-material companies in the S&P 500 slumped at least 1.4 percent as oil and copper fell. Exxon Mobil Corp. decreased 1.1 percent to $73.50. Alcoa Inc. dropped 2.4 percent to $12.26.                      

 Wal-Mart Stores Inc. gained 3.9 percent to $51.92. The world’s largest retailer boosted its profit forecast for the year after second-quarter earnings rose and the Sam’s Club wholesale chain helped the company halt a decline in sales at its U.S. stores.

Home Depot Inc. added 5.3 percent to $33.12. The largest U.S. home improvement retailer raised its full-year profit forecast after second-quarter profit exceeded analysts’ estimates, spurred by increased traffic and spending by customers.

“Corporate America is in much better shape than the public sector,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $48 billion, said in a telephone interview. “Still, the soft patch remains the central focus right now.”                         

 U.S. stocks may slip to new lows in the next few weeks, setting the stage for a rally of more than 20 percent in the S&P 500, said Tom DeMark, the creator of indicators meant to identify turning points in the price of securities. The index, which closed at 1,204.49 yesterday, will probably drop below the 11-month low of 1,119.46 set on Aug. 8 before surging above 1,363.61, its peak on April 29, DeMark said during an interview in London today.

The rebound may last two to three months and also push the Dow average and Nasdaq Composite Index above their 2011 highs, DeMark said. European banks including Societe Generale SA “look like buys” after the shares tumbled this month, he said.

“We’re at the point right now where the next trip down will probably generate a buy signal,” said DeMark, the founder of Market Studies LLC. “Everything we follow is indicating the Dow Jones and the S&P should make a minor new recovery high, and probably the Nasdaq, too.”

Have a wonderful evening everyone.

 

Be magnificent!

Expansion is life; contraction is death.

Love is life, hatred is death.

We began to die the day we began to contract, to hate others

and nothing can prevent our death,

until we come back to life, to expansion.

 

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Chance favours only those who court her.

                   -Charles Nicolle, 1866-1936 

 

 

Dear Friends,

 

 

Tangents,

-Fitting for today’s photo I think:

 

“…A wise old owl sat on an Oak,

 

The more he sat, the less he spoke…

 

The less he spoke, the more he heard…

 

Why aren’t we like that wise old bird?…”

Photo of the Day:

 

 

 

An ornithologist releases a Krestel (Falcon) in the great Hungarian Plain, East of Budapest. -Laszlo Balogh (REUTERS)

Market Commentary

Canada

By Matt Walcoff and Victoria Taylor

Aug. 12 (Bloomberg) — Canadian stocks rose, completing their biggest weekly gain since July 2010, as medium-sized energy companies advanced after the U.S. reported an increase in retail sales.

Baytex Energy Corp., a western Canadian oil and gas producer, climbed 5.2 percent. Goldcorp Inc., the world’s second-largest gold producer by market value, fell 1.9 percent as the metal dropped a second day. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, rose

5.1 percent after JPMorgan Chase & Co. recommended the stock.

The Standard & Poor’s/TSX Composite Index rose 2.4 points, or less than 0.1 percent, to 12,542.20, extending its weekly rally to 3.1 percent. The index rebounded after dropping to an 11-month low on Aug. 8 as gold advanced to a record and the U.S. reported a decline in initial jobless claims.

“The panic seems to be going out of the market,” David Cockfield, a managing director at Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$225 million ($227 million). “The debt ceiling thing really shook a lot of people, but they’re basically saying that’s a problem that’s behind us, and those employment numbers didn’t look too bad.”

The S&P/TSX has lost less than all other developed-market equity benchmarks this month, slipping 3.1 percent through yesterday. Precious-metals stocks make up 14 percent of Canadian equities by market value, according to Bloomberg data.

Medium-sized energy stocks gained after companies including Celtic Exploration Ltd. and Bonterra Energy Corp. reported quarterly financial results that surpassed some analysts’ estimates.

Recent economic data have encouraged investors to seek riskier assets such as shares of smaller companies, Robert McWhirter, a money manager at Selective Asset Management Inc. in Toronto, said in a telephone interview.

“The big debate revolved around, ‘Are we going into a double-dip recession?’” said McWhirter, who oversees C$140 million. “You’ve seen the U.S. consumer having at least spent a little bit of money.”

Baytex increased 5.2 percent, the most in two years, to C$50.24. Celtic advanced 8.2 percent to C$22.91 as at least four analysts raised their price estimates on the shares. Bonterra rallied 5.4 percent to C$52.71 after Ken F. Lin, an analyst at Paradigm Capital Inc., raised his rating on the shares to “buy” from “hold” after the company’s cash flow topped his estimate.

Gold futures fell 0.5 percent in New York after the U.S. said retail sales increased the most in four months in July. Goldcorp dropped 1.9 percent to C$49.48. Barrick Gold Corp., the world’s largest producer of the metal, slipped 1.3 percent to C$49.12. China Gold International Resources Corp. slumped 9.9 percent to C$3.92. Romarco Minerals Inc., which is developing a mine in South Carolina, sank 11 percent to C$1.45, the lowest since February 2010. First Quantum jumped 5.1 percent to C$23.96 after Ian Henderson, a money manager at JPMorgan, said copper may advance to a record due to supply disruptions and demand from emerging markets.

Valeant Pharmaceuticals International Inc., Canada’s largest drugmaker, climbed 4.1 percent to C$39.97 after tumbling 27 percent this month through yesterday. In a note to clients dated Aug. 10, Annabel Samimy, an analyst at Stifel Financial Corp., said the shares “fell victim to severe dislocation in the market” and that the company will successfully integrate acquisitions.

Directory publisher Yellow Media Inc. increased a record 19 percent to 94 Canadian cents. The shares plunged 87 percent this year through yesterday on concern it will be unable to maintain profitability as fewer people use printed phone books.

US

 

By Daniel Tilles and Rita Nazareth

Aug. 12 (Bloomberg) — U.S. stocks rose, capping a week of record swings for the Standard & Poor’s 500 Index, as an increase in retail sales tempered concern the economy is slowing. European shares extended a rebound from a two-year low after some nations banned short-sales. Treasuries gained.

The S&P 500, which fell or rose at least 4.4 percent in the previous four sessions, climbed 0.5 percent to 1,178.81 at 4 p.m. in New York to trim its weekly drop to 1.7 percent. The Stoxx Europe 600 Index jumped 3.7 percent as banks climbed for a second day, surging 4.5 percent as a group after sinking 6.7 percent on Aug. 10. The yield on the 10-year Treasury note fell nine basis points to 2.24 percent. The Swiss franc slid against all 16 major peers as the nation considers pegging it to the euro.

About $6.8 trillion was wiped off the value of global equity markets from July 26 through yesterday after S&P downgraded U.S. debt for the first time, riots swept across Britain and Europe’s debt crisis deepened. Government data today showed retail sales climbed in July by the most in four months, further easing concern about the economy following an unexpected drop in jobless claims yesterday. France, Spain, Italy and Belgium banned short-selling, or bearish bets placed with borrowed stock.

“You’ve got a couple of positive data points over the past week, including retail sales,” Stephen Wood, who helps oversee $163 billion as the New York-based chief market strategist for Russell Investments, said in a telephone interview. “Any information about the health of the consumer is important,” he said. “The short-selling ban in Europe may be providing some temporary relief to the market today. But it’s mostly another attempt to buy time to address larger structural issues.”

The swings in U.S. equities this week were unprecedented in the history of the American stock market, according to data compiled by Birinyi Associates Inc., Bloomberg and Howard Silverblatt, senior index analyst at S&P.

The S&P 500 plunged 6.7 percent on Aug. 8, its biggest slump since December 2008, in the first trading session after the U.S. was stripped of its AAA credit rating at S&P. The index rebounded 4.7 percent the next day as the Federal Reserve said it will leave its benchmark interest rate at a record low through at least the middle of 2013. The gauge then fell 4.4 percent on Aug. 10 and rebounded 4.6 percent yesterday. Never before has the index reversed moves that large each day over four sessions, the data show.

The S&P 500 rallied 5.2 percent over the past two sessions for its biggest back-to-back gain since March 2009. The index is down about 14 percent from a three-year high at the end of April. A gauge of retailers in the S&P 500 climbed 1.5 percent, as

26 of its 30 stocks advanced. Caterpillar Inc. added 2.9 percent, pacing gains among companies most-tied to the economy.

Hewlett-Packard Co. advanced 4.1 percent after Jefferies Group Inc. raised its recommendation for the shares.

The 0.5 percent increase in retail sales reported by the Commerce Department matched the median forecast of 81 economists surveyed by Bloomberg News and followed a 0.3 percent increase in June that was larger than previously estimated. Excluding auto sales, purchases rose more than projected.

The S&P 500 briefly erased gains today after confidence among U.S. consumers plunged in August to the lowest level since May 1980, adding to concern that weak employment gains and volatility in the stock market will prompt households to retrench. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. The gauge was projected to decline to 62, according to the median forecast in a Bloomberg News survey.

Have a Wonderful Weekend Everyone!

As Always,

 

Kyle, for Carolann.

 

Dear Friends,

Tangents: 

 

I was reading Robert Fulford’s column last night from yesterday’s Globe & Mail, The Great Gatsby – F. Scott Fitzgerald remains very much with us.  I was intrigued because Fitzgerald  is probably my favourite 20^th century writer and The Great Gatsby, one of my favourite books.   It appears I am not alone.  Fulford writes, “In 2002, a trade magazine asked a group of authors, editors and agents to name the most powerful character in literature since 1900.  They chose Jay Gatsby and, in second place, Holden Caulfield, from J.D. Salinger’s The Catcher in the Rye.  It was Holden who famously told us ‘I was crazy about The Great Gatsby.  That killed me.’  So Fitzgerald came both first and second in the same poll.  (Third and fourth were, respectively, Nabokov’s Lolita and Joyce’s Leopold Bloom.)”

August 10, 1945: Japan surrenders.

August 10, 1945, James Lees-Milne wrote in his Diary, Prophesying Peace:

I had lunch with Charles Fry my publisher at the Park Lane Hotel.  He was late, having just got up after some orgy à trois….He is terribly depraved and related every detail, not questioning whether I wished to listen.  In the middle of the narration I simply said, “Stop!  Stop!”  At the same table an officer was eating, imbibing every word.  I thought he gave me a crooked look for having spoilt his fun.

  My delight in Churchill’s defeat, disapproval of the Socialists’ victory, detestation of the atom bomb and disgust with the Allies’ treatment of Germany are about equal.  Muddle.

Photos of the day 

August 10, 2011

In Athens, Greece, a butterfly touches down on a flower. Petros Giannakouris/STR/AP.

An Indian farmer weeds her rice field near Kankopur Village, about 75 kilometers east of Allahabad, India. Rajesh Kumar Singh/STR/AP.

Market Commentary:

 

Canada

By Victoria Taylor

Aug. 10 (Bloomberg) — Canadian stocks rose, outperforming their U.S. peers by the most since October 1987, as gold producers rallied amid concern that the U.S. economic recovery is stalling and Europe won’t be able to contain its debt crisis.

Barrick Gold Corp., the world’s largest producer, rose 6.2 percent as the precious metal climbed to a record. Crude oil surged to its biggest one-day gain in three months in New York amid speculation the Federal Reserve will buy more assets to bolster the economy. Manulife Financial Corp. fell 5.2 percent the day before the insurer is scheduled to report earnings.

The Standard & Poor’s/TSX Composite Index rose 89.63 points, or 0.7 percent, to 12,198.89 at 4:10 p.m. in Toronto.

The Canadian equity benchmark beat the S&P 500 index by 5.16 percentage points, the most since the day known as Black Monday, Bloomberg data show. The figures don’t include days after one of the markets was closed. Energy and raw material companies make up 48 percent of Canadian stocks by market value.

 “Investors are looking more at oil and gold and decided to buy stocks that are basic materials-related,” Stephen Gauthier, a money manager at Fin-XO Securities in Montreal, said in a telephone interview. Fin-XO Securities oversees C$600 million ($620 million). “The perception is the gold is going up, oil is going up, so resources are doing well.”

The S&P/TSX rallied the most since May 2009 yesterday after the U.S. Federal Reserve pledged to keep its interest rate at a record low. Policy makers said they were prepared to use a range of tools to boost the economy that is “considerably slower” than expected. The S&P cut the U.S. credit rating for the first time on Aug. 5.                          

The cost of insuring French debt rose to a record today as Europe’s debt crisis made investors wary of lending to any nation other than Germany. The European Central Bank bought Italian and Spanish bonds for a third day as it tried to halt a market rout.

The S&P/TSX financial stock index fell 1.1 percent after rising the most since May 2009 yesterday. Toronto-Dominion Bank, Canada’s second-largest lender by assets, declined 1.5 percent to C$73.93 in Toronto trading. Royal Bank of Canada, the country’s biggest bank, declined 1 percent to C$49.73. A gauge of financial stocks in the Standard and Poor’s 500 Index fell 7.1 percent.

“Either the financials are reacting a little too much in the U.S. or in Canada, people aren’t paying enough attention to what’s happening internationally,” Gauthier said.

Manulife Financial, North America’s fourth-largest insurer, retreated 5.2 percent to C$12.50, the lowest price since Oct. 15. Macquarie Capital Markets Canada Ltd.’s Sumit Malhotra said in a note dated today that the company’s second-quarter earnings report “won’t be great” and that the company will have a loss in the third quarter. Manulife discloses results tomorrow.

Gold rose as high as $1,801 an ounce as the S&P/TSX gold stock index surged the most since February 2010. Goldcorp Inc., the world’s second-largest producer of the metal, advanced 6.5 percent to C$50.31. Barrick rose 6.2 percent to C$49.72 in Toronto trading.

Yamana Gold Inc., the country’s fourth-largest producer, gained 7.3 percent, the most since November 2009, to C$14.86.

Agnico-Eagle Mines Ltd. advanced 5.2 percent to C$62.48. Canada’s fifth-largest gold producer rose for a fourth day, the longest streak of gains since May 30.

 Molybdenum producer Thompson Creek Metals Co. slumped 4.5 percent to C$7.45 after soaring 12 percent yesterday.

Silver gained 3.8 percent. First Majestic Silver Corp., which mines in Mexico, climbed 12 percent to $21.22, its biggest gain since April.

US

By Rita Nazareth

Aug. 10 (Bloomberg) — U.S. stocks tumbled, sending the Dow Jones Industrial Average to the lowest level since September, as banks slumped on concern that Europe will fail to contain its debt crisis and that the economy is faltering.

All 10 groups in the Standard & Poor’s 500 Index fell at least 2 percent. Bank of America Corp. and Citigroup Inc. dropped more than 10 percent, pacing losses in financial shares, as the costs to protect the government debt of Greece, Italy, Spain and France rose. Walt Disney Co., the largest theme-park company, tumbled 9.1 percent on concerns that the slowing economy and consumer confidence may hurt its businesses.

The S&P 500 fell 4.4 percent to 1,120.76 at 4 p.m. in New York. The benchmark gauge jumped 4.7 percent yesterday as the Federal Reserve said it would keep borrowing costs at an all- time low and was prepared to use a range of tools to bolster the economy. The Dow declined 519.83 points, or 4.6 percent, to 10,719.94. About 15 billion shares changed hands at 4:15 p.m., almost twice the three-month average, Bloomberg data show.

“The message is that the market is concerned about the financial industry,” Kevin Caron, market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., said in a telephone interview. His firm has $115 billion in client assets. “The banks are exposed to a deteriorating economy. The European debt crisis has a whole set of issues. The concern is about a spillover effect of that.”

The S&P 500 has fallen 18 percent from this year’s high on April 29 on concern about Europe’s debt crisis and a political battle over the U.S. debt ceiling that prompted S&P to cut the country’s credit rating. Both European shares and the Russell 2000 Index of small companies entered a so-called bear market this week, falling at least 20 percent from their previous highs. Yesterday’s gain in the S&P 500 pared a 6.7 percent slide on Aug. 8 following the cut of the U.S. credit rating.

Stocks fell across the globe today as the benchmark Stoxx Europe 600 Index lost 3.8 percent to 223.50. A gauge of European banks tumbled 6.7 percent. BNP Paribas SA options prices rose to the highest level since at least 2005 and Societe Generale SA’s reached a two-year high as the cost of insuring French government bonds increased. The shares plunged.

France’s top credit grade was affirmed by S&P, Moody’s Investors Service and Fitch Ratings as yields on the nation’s debt climbed on concern that Europe’s sovereign debt crisis is intensifying.

“European banks are putting pressure on stocks,” Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview.

“The focus still remains over there, even if it had shifted a bit to the debt-ceiling concern in the U.S. It’s not a concern that the banks are going out of business. It’s just a concern that the cost of operation is going up. We’ve been watching financial stocks getting killed over here.”

The KBW Bank Index of 24 stocks slumped 8.2 percent. Banks, insurers, brokerages and investment firms in the S&P 500 led gains yesterday, jumping 8.2 percent.

Stocks briefly pared losses after Bank of America’s Chief Executive Officer Brian T. Moynihan said he is comfortable with the company’s capital. “The fundamentals are so much better in our country and in our company and in our industry than they were four years ago, when the financial crisis hit,” Moynihan said today during a conference call hosted by mutual fund manager Bruce Berkowitz.

Bank of America dropped 11 percent to $6.77, extending its decline for the year to 49 percent. Citigroup Inc. retreated 10 percent to $28.49.                         

 Treasuries rose, pushing yields on two- and 10-year notes toward record lows reached yesterday. Gold rallied to a record for a third straight day. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, soared 23 percent to 42.99, after tumbling 27 percent yesterday.

Companies whose earnings are most-dependent on economic growth also helped lead the declines in the S&P 500. The Morgan Stanley Cyclical Index of 30 stocks slid 4.7 percent.

Walt Disney plunged 9.1 percent, the most since 2008, to $31.54. Wunderlich Securities cut its rating on the stock to “hold” from “buy” following its quarterly earnings report.

TV station advertising sales are down by a mid-single digit percentage this quarter, the company said yesterday on a conference call after the market closed. Net income rose 11 percent to $1.48 billion, or 77 cents a share, in the period ended July 2.

The 2.28 percent dividend yield of S&P 500 companies topped the 2.11 percent yield of 10-year Treasury notes for the first time since May 2009, according to data compiled by Bloomberg.

While the likelihood that the U.S. economy will contract is low, investors should buy stocks with dividend yields that are higher than the 10-year Treasury yield and have strong earnings growth until equity markets recover, Thomas J. Lee, the New York-based chief U.S. equity strategist at JPMorgan Chase & Co. wrote yesterday.

U.S. stocks most-tied to the economy will perform better than the overall market as profit growth in the S&P 500 is fueled by global demand, according to Bank of America Corp.

David Bianco, the New York-based head of U.S. equity strategy at the firm, lifted his ratings for energy, materials and industrial stocks to “overweight” from “market weight.”

He maintained his “overweight” on technology companies. He cut his recommendations for consumer and health-care stocks to “underweight,” citing a government-spending drop and weak consumption, and he has an “underweight” rating on telecommunications companies.

Bianco raised his rating for utility companies to “market weight” from “underweight,” saying that’s his “preferred defensive sector” because of low risk and high dividend yields.

He kept his “market weight” recommendation for financial stocks and noted that the group may catch up to the rest of the market in the rest of the year if the S&P 500 has a strong rally.

Bianco forecasts the benchmark measure for U.S. stocks will climb to 1,400 by the end of 2011, higher than the 1,389 average estimate of 13 strategists surveyed by Bloomberg News.

Have a  wonderful evening everyone.

Be magnificent!

You are unique as you are here and now.

You are never the same.  You will never be the same again.  You have never before been what you are now.

You will never be it again.

 

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Success seems to be connected with action.

Successful people keep moving.

They make mistakes, but they don’t quit.

                    -Conrad Hilton, 1887-1979 

 

 

Dear Friends,

Tangents:   

Tomorrow is another day.

English proverb, early 16^th century

 

Since it’s summer vacation time, think about…

Forgetting

Sometimes we need to release our mental burden and just to ourselves: forget it.  Let all the memories, good or bad, gently flow out of our consciousness.  “to close the doors and windows of consciousness for a time, “ wrote Nietzsche.  “To remain undisturbed by the noise of utility organs working with and against one another…to make room for new things…that is the purpose of active forgetfulness, which is like a doorkeeper, a preserver of psychic order, repose and etiquette.”  Furthermore, said Nietzsche of important pleasure:  “It will be immediately obvious how there could be no happiness, no cheerfulness, no hope, no pride, no present, without forgetfulness.”  -Tom Hodgkinson, The Book of Idle Pleasures

Photos of the day 

August 4, 2011

The old district of Kashgar contrasts with modern high rises in Xinjiang province, China. The ‘renovation’ of the old Kashgar center is a prime example of China’s modernizing campaigns in minority ethnic regions. Many city residents have mixed feelings about the disappearance of the narrow streets and adobe homes once hailed as the best surviving example of Central Asian architecture. Carlos Barria/Reuters

A vendor arranges watermelons for sale along the side of a road in Kolkata, India. Rupak De Chowdhuri/Reuters

Market Commentary:

 

Canada

By Matt Walcoff

Aug. 4 (Bloomberg) — Canadian stocks fell the most in 25 months, led by oil and metals producers, as commodity prices tumbled on a stronger U.S. dollar and concern the global economy is stalling.

Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 4.4 percent as crude erased its 2011 gain. Directory publisher Yellow Media Inc. plunged 43 percent after cutting its dividend 77 percent. Valeant Pharmaceuticals International Inc., Canada’s largest drugmaker, slumped 20 percent after reporting net income that missed analysts’ estimates.

The Standard & Poor’s/TSX Composite Index decreased 435.9 points, or 3.4 percent, to a 10-month low of 12,380.13. Among S&P/TSX stocks, 3.1 percent advanced, the least in a day since January 2008.

“The market is really starting to understand we’re not going to have a normal economic recovery, and the political uncertainty we see both in Europe and the U.S. isn’t doing anything for confidence,” Arthur Salzer, chief executive officer of Northland Wealth Management, said in a telephone interview. The firm oversees C$200 million ($205 million).

The stock benchmark fell 5 percent from July 22 to yesterday as data on U.S. and Canadian gross domestic product, as well as indexes of U.S. manufacturing and service-industry businesses, trailed most economists’ forecasts.

The U.S. dollar rose as much as 1.6 percent, gaining against 15 of 16 other major currencies. The Bank of Japan sold yen after that currency gained 11 percent from April 6 to yesterday. Switzerland’s central bank took steps to slow advances in the franc yesterday.

Crude oil futures dropped for a fifth day, sliding the most since May 5. Natural gas retreated below $4 per million British thermal units for the first time since April after the U.S. reported stockpiles increased more than most analysts in a Bloomberg survey had forecast.

Suncor declined 4.4 percent to C$33.12. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, lost 1.7 percent to C$36.19 for an eighth-straight retreat, the longest streak since 2002. Encana Corp., Canada’s largest natural gas producer, slid 5.3 percent to a 29-month low of C$25.72.

Athabasca Oil Sands Corp., PetroChina Co.’s partner in oil sands development, slumped 11 percent, the most since it began trading in April 2010, to C$13.88. The company released well results that Chad Friess, an analyst at UBS AG, and Phil Skolnick, an analyst at Canaccord Financial Inc., each called “mixed” in notes to clients.

An index of S&P/TSX raw-materials producers dropped the most since June 2009 as all major base metals traded on the London Metal Exchange retreated and gold slipped from a record.

Teck Resources Ltd., the country’s largest base-metals and coal producer, decreased 6.7 percent to C$42.90. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, fell 7.4 percent to C$116.19. Lundin Mining Corp., which mines base metals in Europe, dropped 15 percent to C$5.67, extending losses after reporting earnings that missed its average analyst estimate on July 29.

 Barrick Gold Corp., the world’s largest gold producer, slipped 4.1 percent to C$45.38. Silvercorp Metals Inc., which mines in China, declined 12 percent to C$8.78 as silver decreased the most since May.

A gauge of financial shares slid to the lowest level since September. Bank of Nova Scotia, the country’s third-biggest lender by assets, fell 1.8 percent to C$52.30. Manulife Financial Inc., North America’s fourth-largest insurer, decreased 3.3 percent to C$13.93. Brookfield Asset Management Inc., Canada’s biggest real estate company, dropped 3.5 percent to C$28.05.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, declined 4.9 percent to C$52.47 as wheat futures decreased the most in five weeks.

Uranium producers retreated after Cameco Corp., the world’s largest producer of the nuclear fuel, cut its global demand estimates, citing Japan’s nuclear crisis and Germany’s decision to close reactors. Cameco lost 3.4 percent to C$23.76. Uranium One Inc., a mining company controlled by Moscow-based ARMZ Uranium Holding, retreated 9.9 percent to C$3.09.               

 Yellow Media sank a record 43 percent, extending its 2011 tumble to 82 percent, to C$1.10 after cutting its dividend and suspending stock buybacks. The company also withdrew its profit and sales forecasts and said it will no longer provide such estimates.

Shares of the Verdun, Quebec-based company have plunged this year on concern the company will be unable to maintain profit levels as fewer people use printed phone books.

Valeant slumped 20 percent, the most since July 2007, to C$40.22 after reporting earnings excluding some items that beat the average analyst estimate in a Bloomberg survey by 1.9 percent. Net income of $56.36 million missed the average projection by 51 percent.                       

The pharmaceutical company forecast earnings for the third quarter that missed some analysts’ expectations and would represent a decline from the second quarter, Corey Davis, an analyst at Jefferies Group Inc. said in an e-mail.

SXC Health Solutions Corp. lost 7.5 percent, the most since April 2009, to C$53.46. The pharmacy-benefits manager posted second-quarter profit that trailed the average analyst estimate in a Bloomberg survey by 1.3 percent, excluding certain items.

US

By Rita Nazareth

Aug. 4 (Bloomberg) — U.S. stocks plunged, driving the Standard & Poor’s 500 Index to the biggest decline since February 2009, as concern the global economy is weakening prompted a global rout.

Only three out of 500 stocks in the benchmark measure of American equities rose. Losses exceeded 10 percent for 13 of the companies including Alpha Natural Resources Inc. and Gap Inc., which fell after the retailer’s sales missed estimates. All 10 S&P 500 groups slumped, led by losses topping 5.3 percent for energy, material and industrial shares. Chevron Corp. and Alcoa Inc. fell more than 5.7 percent as Japan sold its currency, driving down commodities priced in the dollar.

The S&P 500 decreased 4.8 percent to an eight-month low of1,200.07 at 4 p.m. in New York. It has retreated 11 percent since July 22, the biggest loss over the same amount of time since March 9, 2009, when the equity bull market began. The Dow Jones Industrial Average declined 512.76 points, or 4.3 percent, to 11,383.68 today, erasing its 2011 gain. Almost 14 billion shares changed hands on U.S. exchanges at 4:27 p.m., 90 percent higher than the three-month average.

“It’s unbelievable,” David Joy, Boston-based chief market strategist at Ameriprise Financial Inc., said in a telephone interview. His firm oversees $693 billion in assets. “The emotional aspect of this is ticking higher. It’s left everybody with this mindset that things are not good. The situation in Europe is getting everyone concerned. We had the impact of the Japan intervention in the currency market. The flight-to-quality trade is going to pick up.”                 

 Global stocks had their biggest one-day rout since March 2009. A measure of global equities fell more than 10 percent from this year’s high in May, entering a correction amid concern about a recession. The MSCI All-Country World Index of stocks in developed and emerging markets slid 4.1 percent to 311.60, falling 13 percent from its May 2 high.

Stocks tumbled from Hong Kong to London and Sao Paulo as the yen dropped by the most since October 2008 against the dollar after Japan sold its currency to stem gains that threaten the nation’s economic recovery. The euro fell against the dollar after European Central Bank President Jean-Claude Trichet said policy makers will offer banks additional cash to ease tensions in financial markets.

Trichet indicated the ECB is reluctant to shelve further rate hikes even as investors reduce bets on the ECB adding to its two rate moves in 2011. While acknowledging a “particularly high” level of uncertainty, rates are still “accommodative” and inflation risks “remain on the upside,” he said.                         

“The mood right now is gloomy,” Mike Ryan, the New York- based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $774 billion. “The burden of proof is for better data that show the economy is not falling into recession.”

U.S. stocks rose yesterday amid speculation the Federal Reserve may consider another economic stimulus program to avert a recession. The Fed finished its second round of so-called quantitative easing, nicknamed “QE2” by investors, at the end of June. The program helped propel a rally of as much as 28 percent in the S&P 500 after Fed Chairman Ben S. Bernanke foreshadowed the plan on Aug. 27.

Stock-futures maintained losses before the open of regular trading as a report showed that initial claims for unemployment insurance payments in the U.S. fell last week to a level that shows limited improvement in the labor market. Employers added 85,000 workers in July, economists project a Labor Department report to show tomorrow, failing to reduce a jobless rate that’s holding above 9 percent.

“Tomorrow’s payroll report is crucial,” UBS’s Ryan said.

“If we see another disappointment, the stock market will have significant downside from here.”

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, soared 35 percent, the most since February 2007, to 31.66. The S&P 500 moved in a 4.8 percentage-point range between today’s intraday high and low, the widest range since a 20-minute rout on May 6, 2010, erased $862 billion from the value of U.S. shares before prices rebounded. Today’s swing is more than double the 1.59 percentage-point average range in the past four weeks.

“It’s not a flash crash,” Michael Shaoul, chairman of Marketfield Asset Management in New York, said in a telephone interview. His firm oversees $1 billion. “It’s much more orderly and I don’t see any weird prints like we saw that day in individual issues. It’s a plain and simple liquidation of equities and commodities.”

Bank of New York Mellon Corp., the world’s largest custody bank, will charge clients a 13 basis point fee for “extraordinarily high” cash deposits. A basis point is one- hundredth of a percent.

“We have seen a growing level of deposits on our balance sheet from clients seeking a safe haven in light of the global interest rate and credit environment,” the company said today in an e-mailed statement.

The Morgan Stanley Cyclical Index of companies most-tied to economic growth tumbled 6.7 percent as all of its 30 stocks retreated. The Dow Jones Transportation Average of 20 stocks, considered a proxy for the economy, slumped 5.1 percent.

“The market’s essentially pricing in a greater risk of a recession,” New York-based Kevin Shacknofsky, who helps manage about $6 billion for Alpine Mutual Funds, said in a telephone interview. “It’s the cyclical, economically sensitive parts of the economy that are getting hurt the most.”

Energy and raw-material shares led the declines in the S&P 500, falling at least 6.6 percent. Chevron, the second-largest U.S. oil company, slid 5.8 percent to $96.84. Alcoa, the largest U.S. aluminum producer, sank 9.3 percent to $12.94.

Gap decreased 12 percent to $16.98. The retailer said July same-store sales fell 5 percent, compared with analysts’ estimates for a decline of 0.6 percent.

Only three stocks in the S&P 500 rose today. Motorola Mobility Holdings Inc., the handset maker spun off from parent Motorola Inc., rallied 3.6 percent to $23.09. Vulcan Materials Co., the producer of crushed stone, gained 1.6 percent to $33.54. PG&E Corp., the San Francisco-based utility owner, advanced 0.4 percent to $40.65.

The rout since July 22 dragged the S&P 500’s valuation to13.2 times reported earnings, the cheapest level since April 2009, a month after the bull market began, according to data compiled by Bloomberg.

Laszlo Birinyi, one of the first investors to recommend buying stocks when the bull market began, said he remains optimistic about U.S. equities even after the biggest nine-day slump since March 2009. “Our view continues that we’re in a long-term bull market, and in long-term bull markets you have downdrafts,” he said in a Bloomberg Radio interview today. “Everything that we’ve built our bullish case on continues to exist.”

Have a wonderful evening everyone.

Be magnificent!

What is it exactly that hurts you?

Open your heart and speak.  Open your eyes and see.

At the moment that you look with your eyes wide open,

everywhere you will find differences, an infinite variety.

 

-Swami Prajnanpad, 1891-1974

 

As ever,

Carolann

Applause is the spur of noble minds,

the end and aim of weak ones.

  -Charles Caleb Colton, 1780-1832

 

 

Dear Friends,

Tangents:  In memory of my  father, whose birthday it is today, and who was the most brilliant gardener during his lifetime.  He loved dahlias and gladioli.

DAHLIAS AND GLADIOLI

Two of the showiest blooms in the average garden

Two celebrated and serious-minded women of letters from either side of the Atlantic, Bloomsbury stalwart Vita Sackville-West (1892-1962) and New Yorker editor Katharine S. White (1892-1977), took on the topic of gardening during the twentieth century, each working in a breezy style that brought the arcane poetics of soil and seed to a broad new audience.  They besieged their readers with tips – what to plant, when, and how, down to the Epsom salts Sackville-West used to keep rabbits from eating her pinks.  And they waxed romantic.  White rhapsodized over the colonial-era apple trees and the wildflowers of her girlhood, while Sackville-West suggested her Observer readers resurrect the old English word “garth,” for a small piece of enclosed ground, and use floraison, French for “in full bloom.”  But both writers were at their best when debating gaudiness in the garden, and what to do with razzle-dazzle flowers such as dahlias and gladioli.

  White, a true-blue New Englander who worked at The New Yorker for more than thirty years, despised ostentation, though she was plenty stylish.  She refused, as her husband writer E. B. White (1899-1985) explained, “to dress down to a garden,” and dug up plant beds on their thirty-six-acre Maine farm in a tailored tweed skirt and her Ferragamo shoes.  But her experiment with a big, bright dahlia crossed the line.  “The dahlia is a flower I have never been able to make up my mind about,” she admitted.  The results were simply “embarrassing.”  The flowers were so enormous, one was bright red and the other bronze, and both were as big as dinner plates,” she reported.  “The only word for them was vulgar.”

  Sackville-West, who wrote about her gardening triumphs and travails at Sissinghurst Castle in Kent, loved a flourish.  “I believe in exaggeration,” she declared in 1938.  “I believe in big groups, big masses.”  She stalked weeds while wearing a loosely tailored jacket, jodhpurs, high-laced boots, and her signature strand of pearls.  Sackville-West’s aristocratic lineage and androgynous allure inspired her lover Virginia Woolf’s Orlando.  She was, as one wit put it, “Lady Chatterley and her lover rolled into one.”

  But even for the bold Sackville-West, the brazen gladiola was “problematic.”  Despite its good points (it was “as  showy as the dahlia and far less of a nuisance,” invaluable for keeping the garden going into fall, and “supreme in the late summer flower shows, yes, in those great peacock-tail displays like swords dipped in all hues of sunrise, sunset and storm”), the gladiola was top-heavy and suffered a “florist-shop look.”  Try as she might to romance them, recalling Pliny’s thoughts on the flower and remembering the wild gladioli she picked once “at sunset off a mountain in Persia,” they never fit the fantasy of her celebrated gardens.

  At the start of World War II, as Sackville-West converted the ruined Tudor castle she shared with her husband, writer Harold Nicholson, into a bunker (stashing away a suicide pill in case of German invasion), she became mesmerized by the idea of an all-white garden – the ultimate chic – dreaming of the white magnolias, white tulips, white roses, and white lilies she’d plant there.  “Let us plant and be merry,” she wrote to Nicholson, “for next autumn we may all be ruined.”

  It wasn’t until the winter of 1949 that she got her plans under way.  “It may be a terrible failure,” she demurred, describing her all-white strategy in her column.  “All the same, I cannot help hoping that the great ghostly barn-owl will sweep silently across a pale garden, next summer, in the twilight-pale garden that I am now planting under the first flakes of snow.”  The white garden at Sissinghurst, one of the most elegant gardens in the world, is now open to the public and hits its floraison in June. –Jessica Kerwin Jenkins

Photos of the day 

August 3, 2011

A girl plays in a fountain on a summer’s day in London.

Suzanne Plunkett/Reuters.

 

A rider performs on his motorcycle during FMX, a freestyle motocross event, in Prague, Czech Republic. David W. Cerny/Reuters.

 

 

Market Commentary:

 

Canada

By Matt Walcoff and Victoria Taylor

Aug. 3 (Bloomberg) — Canadian stocks rose for the first time in three days as gold climbed to a record, boosting mining stocks, while financial companies rebounded on speculation the U.S. Federal Reserve may return to stimulus policies.

Barrick Gold Corp., the world’s largest gold producer, increased 1.4 percent as the metal jumped 1.3 percent. Toronto- Dominion Bank, Canada’s second-largest lender by assets, rose 1.9 percent as financial companies advanced. Suncor Energy Inc., Canada’s largest oil and gas producer, slipped 1.8 percent after an index of U.S. non-manufacturing businesses decreased more than most economists had forecast.

The Standard & Poor’s/TSX Composite Index gained 63.71 points, or 0.5 percent, to 12,816.03, after falling as much as 1.5 percent in the morning.

“In the last hour there was some very aggressive buying,” Greg Taylor, a money manager at Aurion Capital Management in Toronto, which oversees about C$5 billion ($5.2 billion) said in a telephone interview. “There’s a lot of cash on the sidelines. People are waiting to invest that cash. And there’s always the fear that you missed the bottom.”

The S&P/TSX plunged 5.5 percent in the six days ending yesterday to an eight-month low after data on U.S. and Canadian gross domestic product, as well as U.S. durable-goods orders and consumer spending, trailed most economists’ forecasts. The stock benchmark closed yesterday at its lowest level relative to earnings since July 2010.                      

 Gold increased to $1,666.30 an ounce, after hitting a record of $1,675.90, as the signs of slowing growth and concern over budget deficits in Europe and the U.S. led investors to seek havens.

 Barrick rose 1.4 percent to C$47.31. Yamana Gold Inc., the country’s fourth-largest gold producer, gained 2.6 percent to C$13.28. Silver Wheaton Corp., Canada’s fourth-biggest precious- metals company by market value, advanced 2.4 percent to C$36.87.

 “It’s wonderful that we have gold,” Doug Davis, vice chairman of Toronto money manager Davis-Rea Ltd., said in a telephone interview. Davis-Rea manages about C$456 million. “The idea of the U.S. currency as a reserve currency is becoming less popular and countries are scouting around to see where else they can put their money.”

The S&P/TSX Financials Index rallied from the lowest close since October after the Wall Street Journal said three former top officials at the Fed believe the central bank may consider a new round of securities purchases to bolster growth.                        

TD increased 1.9 percent to C$76.79. Royal Bank of Canada, the country’s largest lender by assets, climbed 2 percent to C$51.30. Great-West Lifeco Inc., Canada’s second-biggest insurer, rose 2.6 percent to C$23.38 before the scheduled release of its second-quarter financial results.

Energy companies fell for a sixth day after the Institute for Supply Management’s index of U.S. non-manufacturing businesses declined to the lowest since February 2010. Crude oil dropped to a five-week low after the U.S. reported an increase in gasoline inventories more than five times the median analyst estimate in a Bloomberg survey.

Suncor lost 1.8 percent to C$34.65. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, slipped 0.8 percent to C$36.83. Enbridge Inc., Canada’s biggest pipeline company, decreased 0.9 percent to C$30.95.

BlackBerry maker Research In Motion Ltd. rose 5.1 percent to C$24.42 after closing at a five-year low yesterday. The company is releasing its first new smartphone models since August 2010 to try to regain market share it has lost to Apple Inc.’s iPhone.

Imax Corp. gained 5.4 percent to C$17.72 after dropping 27 percent in the previous three sessions. James C. Goss, an analyst at Barrington Research Associates Inc., wrote in a note to clients that the developer of widescreen projection technology is executing a “winning formula.”  Technology-patent owner Wi-LAN Inc. sank 13 percent, the most since October 2008, to C$8.15 after losing a court ruling to LG Electronics Inc. Shares of the Ottawa-based company soared 163 percent in the year ending yesterday.

Dundee International Real Estate Investment Trust, which owns commercial properties in Germany, increased 2 percent to C$10.20 in its first day of trading after its initial public offering.

US

By Rita Nazareth

Aug. 3 (Bloomberg) — U.S. stocks advanced, preventing the longest Dow Jones Industrial Average slump since 1978, amid speculation the Federal Reserve may consider another economic stimulus program to prevent a recession.

MasterCard Inc., the second-biggest payments network, gained 13 percent after profit rose 33 percent as customers’ spending increased. Coca-Cola Co. and General Electric Co. added at least 1.5 percent, leading the Dow’s gain. Technology stocks in the Standard & Poor’s 500 Index climbed 1.2 percent, the most among 10 groups. Sprint Nextel Corp. jumped 3.8 percent as Macquarie Group Ltd. raised its recommendation for the shares.

The Dow rose 29.82 points, or 0.3 percent, to 11,896.44 at 4 p.m. in New York after posting a 166-point loss earlier, which was the ninth straight drop. The S&P 500 advanced 0.5 percent to 1,260.34, snapping a seven-day decline.

 “Every time we see economic weakness, there will be discussion about more stimulus,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in telephone interview. “That could be the case given the fairly weak economic figures we’ve had. In addition, the market has given back a lot recently and people started to look at some bargains.”

Stocks rebounded after the Wall Street Journal reported that three former top officials at the Fed said the central bank should consider a new round of securities purchases to bolster economic growth. The Fed finished its second round of so-called quantitative easing, nicknamed “QE2” by investors, at the end of June. The program helped propel a rally of as much as 28 percent in the S&P 500 since Fed Chairman Ben S. Bernanke foreshadowed the plan on Aug. 27.

The S&P 500 erased its 2011 gain yesterday and its valuation sank to 13.8 times reported earnings, the cheapest level since July 2010. Growing concern that the U.S. economy is faltering has erased $1.07 trillion from American equities in less than two weeks, according to data compiled by Bloomberg.

The S&P 500 plunged 2.6 percent yesterday, its biggest one- day loss in a year and giving the index the longest losing streak since October 2008, in the depths of the financial crisis caused by Lehman Brothers Holdings Inc.’s bankruptcy. Investors sought the safety of Treasuries, gold and the Swiss currency even as President Barack Obama signed a plan to raise the federal debt limit before a possible default.

Attention has shifted to weakening economic data, including yesterday’s 0.2 percent decrease in consumer spending, the slowest growth in personal incomes since November and an index of American manufacturing sinking to a two-year low.

Stocks fell earlier today after a report showed service industries expanded in July at the slowest pace since February 2010 as orders and employment cooled, a sign the biggest part of the U.S. economy had little momentum entering the second half.

The Institute for Supply Management’s index of non-manufacturing businesses dropped to 52.7 from 53.3 in June. Readings above 50 signal expansion, and economists projected 53.5 for July, according to the median forecast in a Bloomberg News survey.

Companies in the U.S. added 114,000 workers to payrolls in July, according to figures from ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for an advance of 100,000. The data comes two days before a government report projected to show an increase of 85,000 jobs.

“This is what slow growth is going to feel like,” Charles Stamey, a managing director at Manning & Napier Advisors Inc. in St. Petersburg, Florida, said in a telephone interview.

His firm oversees $42 billion “We’re seeing lots of persistent headwinds that we are going to have to adjust to. The stock market should look cheaper because we’re not having the growth that we’ve historically had.”

U.S. stocks have become a “strong buy” following declines in the past seven days, according to Barton Biggs, managing partner and co-founder of Traxis Partners LP in New York. Biggs spoke on Bloomberg Television’s “InsideTrack” with Erik Schatzker and Deirdre Bolton.

“I do feel right now this is not the time to put out any shorts and I am very tempted to think this is a time to be buying stocks pretty aggressively,” said Biggs, whose firm manages $1.4 billion.

Per-share earnings increased 17 percent and sales rose 12 percent among the S&P 500 companies that have released quarterly results since July 11, according to data compiled by Bloomberg.

About 77 percent of the 363 companies have topped the average analyst profit forecast, the data show.

MasterCard rallied 13 percent to $338.47. Net income rose to $608 million, or $4.76 a share, from $458 million, or $3.49, in the same period a year earlier. The average estimate of 29 analysts surveyed by Bloomberg was for $4.23 a share.                         

Sprint gained 3.8 percent to $4.15. The third-largest U.S. mobile-phone carrier was raised to “neutral” from “underperform” at Macquarie. The 12-month share-price estimate is $4.60.

CBS Corp. climbed 1.6 percent to $26.70. The owner of the most-watched U.S. television network said second-quarter profit soared, beating analysts’ estimates as sales of reruns and fees from cable TV systems increased.

The seven-day plunge in the S&P 500 caused the most pronounced herd mentality among investors in four months. The Chicago Board Options Exchange S&P 500 Implied Correlation Index jumped to 64.80 yesterday, the highest level since the March sell-off prompted by Japan’s record earthquake and tsunami. It uses equity-derivative prices to measure traders’ expectations for how much S&P 500 stocks will move in tandem during the next 30 days.

“The world is much more focused on macro events,” Nelson Saiers, chief investment officer of Alphabet Management LLC, said in a telephone interview yesterday. The New York-based volatility hedge fund manages $635 million and is up 8.9 percent this year. “People are more nervous, and you can see that in implied correlation.”

Have a wonderful evening everyone.

Be magnificent!

The intellectual aspect is, that love sees and understands.

The emotional aspect is to feel as one with the other person.

Love is unity.  There is no “me” in love, only “you.”

The behavioral aspect is, that love inspires us to give.

There is no expectation; we do not expect to receive.

Such love is wisdom and liberation in itself.

 

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Are you bored with life?  Then throw yourself into

some work you believe in with all your heart, live for it,

die for it, and you will find happiness that you had

thought could never be yours.

                -Audrey Hepburn, 1929-1993 

 

Dear Friends,

Tangents:

ON THE NATURE OF UNDERSTANDING

Say you hoped to

tame something

wild and stayed

calm and inched up

day by day. Or even

not tame it but

meet it halfway.

Things went along.

You made progress,

understanding

it would be a

lengthy process,

sensing changes

in your hair and

nails. So it’s

strange when it

attacks: you thought

you had a deal.

-Kay Ryan

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A

democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the

public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the

public treasury, with the result that every democracy will finally collapse due to loose fiscal policy…

                                                             – Alexander Fraser Tytler, Scottish lawyer and writer, 1770

 

August 1^st, 1944, Anne Frank pens her last diary entry, The Globe & Mail reminds us today.  “Anne Frank’s final diary entry reveals a panache and emotional maturity beyond the author’s 15 years,  It came near the end of two years that the Jewish girl and her family spent hiding from the Nazis in an apartment behind her father’s offices in Amsterdam.  Just three days after she wrote it, they were discovered by the Gestapo and sent to concentration camps.  The diary remained behind  and Anne’s father, the family’s sole survivor, had it published after the war.  For generations of readers, the document became a testament to the human desire to thrive in the face of unimaginable terror.”  -Adrian Morrow

The last entry ends…

…If I’m being completely honest, I’ll have to admit that it does matter to me, that I’m trying very hard to change myself, but that I’m always up against a more powerful enemy. A voice within me is sobbing, “You see, that’s what’s become of you. You’re surrounded by negative opinions, dismayed looks and mocking faces, people who dislike you, and all because you don’t listen to the advice of your own better half.”
Believe me, I’d like to listen, but it doesn’t work, because if I’m quiet and serious, everyone thinks I’m putting on a new act and I have to save myself with a joke, and then I’m not even talking about my own family, who assume I must be ill, stuff me with asprins and sedatives, feel my neck and forehead to see if I have a temperature, ask about my bowel movements and berate me for being in a bad mood, until I just can’t keep it up any more, because when everybody starts hovering over me, I get cross, then sad, and finally end up turning my heart inside out, the bad part on the outside and the good part on the inside, and keep trying to find a way to become what I’d like to be and what I could be if . . . if only there were no other people in the world.
Yours, Anne M. Frank

Photos of the day 

August 2, 2011

A boat passes a sculpture of a giant mermaid designed by German artist Oliver Voss on the river Alster in Hamburg, Germany. The sculpture, made of styrofoam and steel, will be on exhibit for ten days. Axel Heimken/AP.

In this image from House Television, Rep. Gabrielle Giffords, D-Ariz., appears on the floor of the House of Representatives Monday night in Washington for the first time since her shooting earlier this year to attend a vote on the debt standoff compromise. House Television/AP.

Market Commentary:

 

 Canada

By Inyoung Hwang

Aug. 2 (Bloomberg) — Canadian stocks fell to the lowest level in more than eight months after a gauge of U.S. consumer spending dropped unexpectedly, fueling concern the global recovery is slowing.

Bank of Nova Scotia, Canada’s third-largest lender by assets, lost 3 percent. Extendicare Real Estate Investment Trust, which owns senior-care centers in the U.S. and Canada, plunged 19 percent, the most among Canadian stocks, after cuts to Medicare payments. Saputo Inc., the country’s largest food producer, erased 6 percent after reporting first-quarter profit that missed estimates.

The Standard & Poor’s/TSX Composite Index sank 193.31 points, or 1.5 percent, to 12,752.32 at 4 p.m. in Toronto, the lowest level since Nov. 17. Industrial and consumer discretionary companies had their steepest declines since August. Stocks extended declines after the U.S. Senate passed legislation on raising the nation’s debt limit.

“Investors are waiting for the next shoe to drop,” Irwin Michael, who helps manage C$1 billion ($1 billion) as a money manager at ABC Group of Funds in Toronto, said in a telephone interview. “It’s a bit of a hangover from what happened last week in the U.S. trying to settle the debt ceiling impasse.”

The S&P/TSX fell the most in a year last week as the U.S. reported a drop in durable-goods orders and the U.S. economy grew less than forecast in the second quarter. Lawmakers there failed last week to reach an agreement to raise the country’s debt ceiling. The U.S. House of Representatives approved a measure to do so yesterday, and the Senate voted to ratify the plan today.

The index traded at 17.9 times earnings, the lowest price- to-earnings multiple in more than a year.

The U.S. debt-limit compromise will avert a default even as it defers decisions on the nation’s finances to a bipartisan panel. It raises the national debt ceiling enough to fund the government until 2013 and threatens automatic spending cuts to enforce a goal of slashing $2.4 trillion over the next decade.

The U.S. Commerce Department figures today showed purchases decreased 0.2 percent, after a 0.1 percent gain the prior month. It was the first drop in consumer spending in almost two years.

The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase. Incomes grew at the slowest pace since November and the savings rate climbed.

Nine out of 10 groups in the S&P/TSX declined today.

Industrial stocks fell 2.7 percent, while consumer discretionary companies lost 2.3 percent.

Financial shares in the Canadian equity index slid 2.2 percent today, the biggest fall since June 1. Manulife Financial Corp., Canada’s biggest insurer, declined 4 percent to C$14.57. Bank of Nova Scotia declined 3 percent to C$52.54. Royal Bank of Canada, the country’s largest lender, fell 2.2 percent to C$50.29.

“People are thinking that once the economy starts to weaken, banks could be underestimating the bad loans on their books,” Michael said.

Health-care companies were the worst performers in the S&P/TSX, falling 4.2 percent as a group. Medicare, the U.S. health plan for the elderly and disabled, announced an 11.1 percent rate cut for nursing-home operators for next year. Extendicare plunged 19 percent to C$8.28, the most since October 1999.

Saputo lost 6 percent to C$42.05, the most since November 2008. The company, which manufacturers dairy and grocery products, posted profit in the first quarter of 61 Canadian cents a share excluding some items, missing the average analyst estimate by 2 cents.

Energy companies declined as the price of crude oil slumped to a five-week low. Suncor Energy Inc., Canada’s largest oil and gas producer, declined 3.7 percent to C$35.28.

Centerra Gold Inc. erased 4.5 percent, the most since March 10, to C$17.88. The mining company with operations in Kyrgyzstan and Mongolia was cut to “neutral” from “overweight” by Sabrina Grandchamps, an analyst at HSBC Securities USA Inc.

US

By Stuart Wallace and Rita Nazareth

Aug. 2 (Bloomberg) —  Stocks tumbled as the Standard & Poor’s 500 Index had its biggest one-day loss in a year and erased its 2011 gain, while Treasury yields fell to the lowest levels since November, after an unexpected drop in consumer spending added to concern the economy will slide into a recession. Gold and the Swiss franc rallied.

The S&P 500 fell 2.6 percent to 1,254.05 at 4 p.m. in New York, dropping for a seventh straight day in its longest slump since 2008. The Stoxx Europe 600 Index declined 1.9 percent to an 11-month low. Yields on 30-year bonds dropped 17 basis points to 3.91 percent in the biggest decrease since May 2010. The Swiss franc advanced against all 16 major peers as 10-year Italian and Spanish bond yields climbed to euro-era records and gold set an all-time high of $1,661.90 an ounce.

 Investors sought the safety of Treasuries, gold and the Swiss currency even as President Barack Obama signed a plan to raise the federal debt limit before a possible default.

Attention has shifted to weakening economic data, including today’s 0.2 percent decrease in consumer spending, the slowest growth in personal incomes since November and an index of American manufacturing sinking to a two-year low.

“We have a stubbornly slow economy,” Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm manages about $6.5 billion. “The economy is stuck in a very slow growth mode, which means that it’s more susceptible to any external shocks.”

The odds of another U.S. downturn are rising amid cutbacks in spending by consumers and the government, according to five of the nine members of the panel that dates recessions. Harvard University economics professor Martin Feldstein, one of the members of committee at the National Bureau of Economic Research, said he sees a 50 percent chance that the U.S. will relapse into another recession.

“Nothing has given us much growth,” Feldstein said today in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene.

Today’s retreat was the biggest for the S&P 500 since Aug. 11 and left the index down 0.3 percent in 2011 following a rally of as much as 8.4 percent through the end of April. All 10 industry groups fell today, led by declines of more than 3.4 percent in industrial and consumer-discretionary companies.

Pfizer Inc., General Electric Co. and Home Depot Inc. lost at least 4.2 percent to lead declines in all 30 stocks in the Dow Jones Industrial Average. The Dow sank 265.87 points, or 2.2 percent, to 11,866.62 for its biggest loss since June 1. The S&P 500 closed at its lowest level since Dec. 20, while the Dow ended the day at its weakest since March 18.

Archer Daniels Midland Co., the world’s largest grain processor, tumbled 6.2 percent as earnings trailed projections after corn and tax expenses rose. MetroPCS Communications Inc., the pay-as-you-go mobile-phone carrier, lost 36 percent for the biggest decline in the S&P 500 as sales fell short of analysts’ forecasts.

Two-year Treasury yields decreased five basis points to 0.32 percent and 10-year yields sank 13 points to 2.61 percent.

The difference between two- and 10-year yields shrank to 2.29 percentage points, the narrowest since November, as demand reduced the extra yield investors require to hold longer- maturity debt.

Fitch Ratings said the U.S. remains under a review as the nation’s debt burden increases at a pace that isn’t consistent with an AAA sovereign credit rating. The U.S. needs to confront “tough” choices on tax and spending against a weak economic backdrop if the budget deficit and government debt is to be cut to safer levels over the medium term, Fitch said.

President Obama signed a debt-limit compromise that prevents a U.S. default on the day the Treasury had warned the nation’s borrowing authority would expire, ending a months-long debate that reinforced partisan divisions over federal spending.

The Senate voted 74-26 for the measure, which raises the nation’s debt ceiling until 2013 and threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years. It won backing from 45 Democrats, 28 Republicans and one independent. The House passed the plan yesterday.

The S&P 500 capped a 3.9 percent weekly loss on July 29, its worst slump in a year, as the Commerce Department reported gross domestic product rose a less-than-forecast 1.3 percent annual rate in the second quarter following a 0.4 percent gain in the prior quarter that was less than previously estimated.                        

 Investors also looked ahead to the government’s employment report at the end of the week. The nation is forecast to have added 85,000 jobs in July, according to the median estimate of economists surveyed by Bloomberg, and the unemployment rate is projected to hold steady at 9.2 percent.

“Maybe we’ll get a positive number on Friday, but I wouldn’t be shocked if we got a negative one, and I don’t see any strong job growth at all for the next few months until we get a little bit of momentum in terms of final demand,” David Kelly, the chief market strategist at JPMorgan Funds, said in a Bloomberg Television interview. “You need to have sustained growth of one-and-a-half percent even to produce positive payrolls.”

Fourteen stocks fell for each that gained in the Stoxx Europe 600 Index. Pandora A/S plunged 65 percent as the Danish maker of charm bracelets cut its forecast and Chief Executive Officer Mikkel Vendelin Olesen quit. Metro AG, Germany’s largest retailer, slid 7.5 percent as earnings missed estimates.

The Swiss franc strengthened more than 2.6 percent to a record 1.08467 per euro and appreciated 2.2 versus the dollar.

The Dollar Index, which tracks the U.S. currency against those of six trading partners, rose 0.3 percent.

The yield on the Italian 10-year bond jumped as much as 25 basis points to 6.25 percent, driving the extra yield investors demand to hold the securities instead of benchmark German bunds to as high as 3.84 percentage points, a euro-era record. The Spanish 10-year yield surged as much as 26 basis points to 6.46 percent, also the highest since the euro was introduced in 1999.

Finance Minister Giulio Tremonti led a meeting of Italy’s stability committee and determined that the recent turmoil on Italian financial markets reflects “international uncertainty.”

“Analysis has shown that despite the efforts to progressively reduce the budget deficit, there are tensions in Italian markets deriving from international uncertainty,” the committee said in a statement after the meeting in Rome.

Credit-default swaps tied to Spain’s debt surged 15 basis points to 405 and Italy’s jumped 25 to 358,  according to CMA.

The Markit iTraxx SovX Western Europe Index of contracts on 15 governments jumped 13 basis points to 291, approaching the record closing price of 306.5 set July 18.                 

 “In this U.S.-versus-Europe ugly contest, it’s hard to decide where to start from,” analysts at BNP Paribas wrote in a research note. “The economic slowdown is blatantly obvious in the large drop in U.S. manufacturing. And the issue of a U.S. downgrade remains open. Things are looking less comfy in Europe too, with Italy spreads again under severe pressure.”

The Standard & Poor’s GSCI index of 24 commodities lost less than 0.1 percent for a fifth straight decline. Crude oil fell to a five-week low, dropping 1.2 percent to $93.79 a barrel. Sugar lost 2.8 percent and gasoline slipped 1 percent. Corn surged the most in three months, jumping the exchange limit of 30 cents, or 4.4 percent, to close at $7.1575 a bushel.

A government report showed adverse weather eroded U.S. crop conditions. Soybeans had the biggest gain in almost three weeks, and wheat jumped to an eight-week high.

The Australian dollar slid 1.6 percent versus the greenback and the yen after the central bank kept its benchmark interest rate unchanged, citing an “acute sense of uncertainty in global financial markets.” Reserve Bank Governor Glenn Stevens held the overnight cash rate target at 4.75 percent in Sydney for a record eighth-straight meeting.

 The MSCI Emerging Markets Index of equities lost 2 percent, the steepest drop since May 23. South Korea’s Kospi Index fell 2.4 percent, the most since May 23. The Shanghai Composite Index declined 0.9 percent after an official Xinhua News Agency website said China may boost borrowing costs next week. The Bombay Stock Exchange Sensitive Index dropped 1.1 percent after Reserve Bank of India Governor Duvvuri Subbarao said yesterday that interest rates would have to rise further.

Have a wonderful evening everyone.

Be magnificent!

I am proud to tell you that I belong to a religion in whose sacred language,

the Sanskrit, the word exclusion is

untranslatable.

 

-Swami Vivekananda, 1863-1902

As ever,

Carolann

The stories of past courage can teach, they can

offer hope, they can provide inspiration.  But

they cannot supply courage itself.  For this each

man must look into his own soul.

                   -John F. Kennedy, 1917-1963

 

Dear Friends,

Tangents:

Something to read and contemplate over the long weekend:

 

The 12 Common Causes and Proven Cures for Unhappiness

                                              Posted by Marc, May 29, 2011

For the average person happiness is a choice, yet numerous people are unhappy.  There are many reasons, but it all boils down to one simple principle:  They choose something else over happiness.  Because it often takes less effort to be unhappy.

For example, instead of seeking happiness, they…

• Lazily follow the path of least resistance.
• Refuse to accept change.
• Aimlessly try to control the uncontrollable.
• Etc. etc. etc.

Averting these poor choices and the negative attitudes that accompany them is the key.  The list below will give you some ideas on how to do just that.

Most people are about as happy as they make up their minds to be.
– Abraham Lincoln

1.  Lack of meaning in one’s day to day life.

Franklin D. Roosevelt once said, “Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”  With the modern 9 to 5 work schedule it’s so easy to trap yourself into doing what you don’t want to do for 40 hours every week and then mindlessly waste all your free time being lazy.

Sure you have responsibilities.  And no, you won’t be able to do what you want to do every waking minute of your life.  But you almost always have a choice to do more of what you really want to do – to work on something that matters to you – something that moves you and gives your life meaning.

You must leave time to follow your inner curiosity and passion.  The Happiness Project is a great read on this topic.

2.  Obsession with the past or future.

Right now is life.  If you dwell on things that happened in the past, or obsess yourself too much with the things that might happen in the future, you’ll miss everything.

Focus on the present, not yesterday or tomorrow.  As Helen Keller once said, “When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us.”

Oftentimes we fixate our minds on the way things can be, should be, or will be someday.  But life always takes place in the present.  You never know what the future holds – whether or not you and your loved ones will still have good health or even be alive.  The opportunity to enjoy life is now.  Make time to do so.

3.  Feeling out of shape and unhealthy.

Remember, your health is your life, and your body is the greatest tool you’ll ever own.

If you are a little overweight, cut back on some of the fatty foods, get outside and take a two mile walk every day.  Losing extra body fat decreases your health risks, makes you look and feel better, and generally increases your self-esteem and happiness.

Don’t go on binge diets and crash exercise regimens.  Instead, gradually change the way you eat and live so you create new health habits that can be sustained for a lifetime.  Read The 4-Hour Body for a solid, entertaining read on getting in shape.

4.  Unfavorably comparing oneself to others.

When you catch yourself comparing yourself to a colleague, neighbor, friend, or someone famous, stop!  Realize that you are different, with different strengths – strengths these other people don’t possess.  Take a moment to reflect on all the awesome abilities you have and to be grateful for all the good things in your life.

The problem with many of us is that we think we’ll be happy when we reach a certain level in life — a level we see others operating at – your boss with her corner office, that friend of a friend who owns a mansion on the beach, etc.  Unfortunately, it takes awhile before you get there, and when you get there, you might have a new destination in mind.

Instead, appreciate where you are and what you have right now.  Try comparing yourself to those who have less, those who are dealing with tragedy, and those who are struggling to survive. Hopefully it opens your eyes to all the things you should be grateful for.  PS:  Help people who have less if you’re able… you’ll see why.

5.  Focusing on negatives.

You can’t control everything that happens to you, but you can control how you react to things.  Everyone’s life has positive and negative aspects — whether you’re happy or not depends greatly on which aspects you focus on.  For instance:

• Did you get catch a head cold?  At least it’s only a temporary virus and nothing life-threatening.
• Did you lose a basketball game?  Thankfully you got to spend the afternoon with friends doing something fun and healthy.
• Did your stock market savings go down?  It’ll bounce back in the long-term.  And besides, it’s great that you’ve been diligent and fortunate enough to save a nest egg of savings when many people are barely making ends meet.

You get the idea — almost everything in life has a positive side, and focusing on these positives injects happiness into your atmosphere.  So stop concentrating on how difficult things are and why you don’t want to do them.  Focus instead on the benefits these things have and the opportunities they will create for you — the positives.

6.  Avoiding personal accountability.

Either you take accountability for your life or someone else will.  And when they do, you’ll become a slave to their ideas and dreams instead of a pioneer of your own.

You are the only one who can directly control the outcome of your life.  And no, it won’t always be easy.  Every person has a stack of obstacles in front of them.  You must take accountability for your situation and overcome these obstacles.  Choosing not to is choosing a lifetime of mere existence.

7.  Perfectionism and fear of failure.

If you work hard, do your best and then condemn yourself for not achieving perfection, you’re sabotaging your future.  Likewise, if your fear of failure, or of not being perfect, has driven you to take the safe road of doing nothing, you have already failed.

Perfect is the enemy of good.  Learn to accept the good – learn to love things when they are less than ‘perfect.’

If you find yourself at a point of intense decision making where you’re caught in a spiral of over-analysis and you’re making no progress, take a deep breath, break the spiral, make an educated guess on the next logical step, and take it.  Even if you get it wrong you’ve learned something, which is better than doing nothing.  Your failures along the road to your goals are simply opportunities to learn and grow.

Remember, the real world doesn’t reward perfectionists; it rewards people who get things done.

8.  A low self-esteem.

Don’t belittle yourself and don’t put up with people who try to belittle you.

Marcus Aurelius once said, “Very little is needed to make a happy life; it is all within yourself, in your way of thinking.”  Boost your self-esteem by recognizing your accomplishments and celebrating them.  Acknowledge your positive qualities, and when you come across a quality in yourself that you aren’t proud of, don’t sulk in your sorrows, proactively work on correcting it.
How you view yourself and your world are conscious choices and habits.  The lens you choose to view everything through determines how you feel about yourself and everything that happens around you.

9.  Financial debt.

The only way to get out of debt is to understand why you’re in debt in the first place.

But the sad truth is, if you’re a spendthrift…

You will not save money when you get your next raise.  You will not save money when your car is paid off.  You will not save money when your kids are supporting themselves someday.  And you wouldn’t even save a dime if I handed you $100,000 in cash right now.

How do I know this?

Because saving money has very little to do with the amount of money you have.  In fact, you will only start to save money when saving becomes an emotional habit – when you start treating the money you handle everyday differently.  The Millionaire Next Door is an excellent read on eliminating debt and building wealth.

In general, live a comfortable life, not a wasteful one.  Do not spend to impress others.  Do not live life trying to fool yourself into thinking wealth is measured in material objects.  Manage your money wisely so your money does not manage you.  Always live well below your means.

10.  All work and no play.

Fun is way underrated.  With all of our responsibilities, fun seems like an indulgence.  It shouldn’t be.  It should be a requirement.  Ponder what you did to have fun when you were younger and go do it again.  Leave the house messy and the yard un-mowed for a weekend and get out on the town.  When you’re older, you will remember the fun, not the clean house or yard.

Go to a carnival, play a card game, shoot darts with a friend, play catch with a kid, etc.

Make time for fun!

11.  Neglecting personal relationships.

The quality of our personal relationships correlates directly with our overall sense of worth and happiness.  Sometimes in the midst of life’s chaos we forget to do the little things that remind us we’re part of something greater than ourselves.  We need a certain amount of meaningful contact with other people to feel fully alive.

Make time for people, even if it’s just a quick meal at lunchtime.  It’s worth sacrificing a few minutes here and there to experience life outside your own inner bubble.

And remember, you don’t need a certain number of friends, just a number of friends you can be certain of.

12.  Procrastination.

Nothing is so draining and stressful as the eternal presence of an unfinished task.

There are plenty of ways to sabotage your personal happiness, dreams and desires.  Procrastination, however, is the number one killer.  Procrastinators self-destruct.  They hinder their own potential by placing colossal road-blocks along the path to happiness and success.  In other words, they subconsciously choose to fail.

Do you put off doing things that would bring you closer to your desired goals?  I know I do at times.  But why are we so foolish?

It has something to do with how our daily responsibilities overwhelm us.  In the midst of all the important things we know we need to do, we somehow convince ourselves that none of these things need to be done right now.  In other words, we decide that some peace and relaxation in the short term is what’s most important.

So we take another break, read another blog post, watch another TV show and just kick back and relax.  And life is blissfully dandy… for a little while.  But then suddenly the inevitable deadline has arrived.  Ahhh!  It’s panic time!

By taking the time and initiative to understand your own reasons for procrastinating and devoting a little energy to take the necessary steps to move forward, you can beat procrastination.  We all can.  In fact, simply writing this article was a testament to this.  I kept procrastinating on writing it because I lacked focus.  So I locked myself in my bedroom, eliminated all distractions, kept the end in mind and started writing.  And as usual, starting was the hardest part.  Now I’m done.

Read Eat That Frog for practical advice on conquering procrastination.

Photo of the day 

July 29, 2011

A couple kisses on the ‘Slinky springs to fame’ bridge in Oberhausen, Germany. The new bridge over the Rhine-Herne canal is by German artist Tobias Rehberger. Martin Meissner/AP.

Market Commentary:

 

Canada

By Matt Walcoff and Victoria Taylor

July 29 (Bloomberg) — Canadian stocks fell, completing their worst weekly decline in a year, as commodity producers and financial companies slid after Canada and the U.S. reported economic growth figures that trailed economists’ forecasts.

Royal Bank of Canada, the country’s largest lender, dropped 1.3 percent after Canada reported the biggest monthly decline in gross domestic product in two years. Suncor Energy Inc., Canada’s largest oil and gas producer, slipped 1.3 percent as crude slumped 1.8 percent to $95.70 a barrel. Barrick Gold Corp. and Goldcorp Inc., the biggest producers of the precious metal, declined after analysts cut their price estimates.

The Standard & Poor’s/TSX Composite Index decreased 102.15 points, or 0.8 percent, to 12,945.63 at 4:00 p.m. in Toronto, extending its weekly retreat to 4.1 percent, the most since July 2, 2010.

“The macro scene dominates today,” Marcus Xu, Vancouver- based director of equity investments at Genus Capital Management, said in a telephone interview. Genus oversees C$1.7 billion. “For the overall general economy to recover, you need the price of oil” to fall to the $80-a-barrel range and “stay low,” he said.

The index fell 3.3 percent over the past four days as U.S. lawmakers failed to reach a deal to raise the country’s debt ceiling and that country reported a decline in durable-goods orders. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.                        

U.S. gross domestic product rose at a 1.3 percent annual rate in the second quarter after a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed today. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase.

Canada’s gross domestic product fell 0.3 percent, missing every economist forecast, as production in the mining and oil and gas sector declined, government data showed. Output fell 0.3 percent in May to C$1.26 trillion ($1.32 trillion). The median growth estimate in a Bloomberg survey was 0.1 percent.

A gauge of financial companies in the S&P/TSX fell to the lowest level since December 2010.

National Bank of Canada, country’s sixth-largest bank, declined 2.3 percent to C$74.05. Royal Bank of Canada dropped 1.3 percent to C$51.40. Bank of Nova Scotia, Canada’s third- biggest lender by assets, decreased 1.3 percent to C$54.18.                       

 Crude oil futures fell for their first weekly drop since June, on concern that the failure to reach a debt deal in the U.S. threatens the economy of the biggest crude consumer. The index of energy companies in the S&P/TSX slipped 0.7 percent.

Suncor Energy slipped 1.3 percent to C$36.62. Capital Power Corp., an electricity generator, fell 1.9 percent to C$24.45, the lowest price since Feb. 8. Trilogy Energy Corp., a western Canadian oil and gas producer, dropped 2.4 percent to C$27.20.

Goldcorp, fell 1.7 percent to C$45.69 as its price estimate was cut by HSBC Securities USA Inc., Scotia Capital Inc., UBS AG and Cormark Securities Inc. following a reduction in its production forecast. It dropped 11 percent this week, its biggest loss since January 2009. Gold gained 0.7 percent after dropping for two days.

“Investors continue to flock to the safety of the gold bullion in a risk-off play, and not to the gold stocks because of their equity market exposure,” said Kenneth Mack, an analyst and trader at Stone Asset Management in Toronto in an e-mail. Stone Asset Management oversees about C$850 million.

Barrick slid 0.7 percent to C$45.55, after the 12-month price estimate on its U.S. shares was trimmed to $60 from $64 at UBS AG, which cited an increase in capital spending estimates. The shares were cut to “market perform” from “buy” by an analyst at Cormark.                       

“The mining sector is getting bigger and bigger in Canada and it is getting to be more important,” Genus’s Xu said. “High energy prices will impact them as well.”

Dundee Precious Metals Inc., a gold producer with mines in Bulgaria and Armenia, lost 3.2 percent to C$8.29. Silver Wheaton Corp., Canada’s fourth-largest precious-metals company by market value, fell 2.4 percent to C$34.41.

Gildan Activewear Inc., the country’s biggest clothing maker, tumbled 7.3 percent to C$28.64, the most in the S&P/TSX. Susan Anderson, an analyst at Citigroup Inc., cut the stock to “sell” from “hold,” saying the company will have to cut prices to drive sales.

Potash Corporation of Saskatchewan Inc. dropped 1.9 percent to C$55.16. The world’s largest fertilizer producer by market value was cut to “sector perform” from “sector outperform” by Scotia Capital, even after its second-quarter earnings beat the average analyst estimate by 14 percent. Potash’s earnings have risen to levels that are unsustainable beyond 2015-2016, Scotia analysts led by Ben Isaacson wrote in a report.

Imax Corp., which makes widescreen projection technology, tumbled 6.4 percent to C$18.19. The shares fell 33 percent this week, the most since August 2006. The company said “disappointing film performance” contributed to a drop in second quarter profit.

US

By Nikolaj Gammeltoft

July 29 (Bloomberg) — U.S. stocks slid, pushing the Standard & Poor’s 500 Index to its biggest weekly loss in a year, as economic growth trailed forecasts and investors awaited the outcome of negotiations to avoid a federal default.

Energy and materials stocks led declines in the S&P 500 after the report on gross domestic product sent the gauge tumbling as much as 1.4 percent. Exxon Mobil Corp. and DuPont Co. dropped at least 1.6 percent. Merck & Co. fell 2.3 percent as the drugmaker said it plans to slash its workforce by an additional 12 to 13 percent by 2015. Insurers MetLife Inc. and Genworth Financial Inc. gained more than 3.5 percent on better- than-estimated earnings.

The S&P 500 fell 0.7 percent to 1,292.28 at 4 p.m. in New York. The benchmark for U.S. equities extended declines for a third straight month, the longest slide since 2008. The Dow Jones Industrial Average lost 96.87 points, or 0.8 percent, to 12,143.24 after slumping as much as 157 points.

“The economy appears to be almost at stall speed, which means the politicians are playing with fire because any type of event could push us into a recession,” Tim Hoyle, director of research at Radnor, Pennsylvania-based Haverford Trust which manages $6 billion, said in a telephone interview. “Today’s GDP number is a bigger concern to us as long-term investors than when a bill is going to get passed in Congress, but this mess is hurting business and consumer confidence.”

The S&P 500 has tumbled 3.9 percent this week as concern mounted that lawmakers will fail to agree to increase the U.S. debt ceiling by the Treasury Department’s Aug. 2 deadline.

President Barack Obama said Republicans and Democrats are in “rough agreement” on their plans to raise the U.S. debt limit with just four days before a threatened U.S. default and the time for compromise is “now.”

House Republicans said they have secured the votes to pass House Speaker John Boehner’s plan today. Obama opposes that plan. Senate Majority Leader Harry Reid said he will take action to move to a vote on his competing plan, and at the same time held out hope for a deal with Republican leaders.

“If we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills — we do — but because we didn’t have a AAA political system to match our AAA credit rating,” Obama said at the White House.

Equities retreated today as the Commerce Department reported GDP rose at a 1.3 percent annual rate in the second quarter following a 0.4 percent gain in the prior quarter that was less than previously estimated. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, climbed 0.1 percent.

In a separate report, the Institute for Supply Management- Chicago Inc. said today its business barometer fell to 58.8 in July, lower than forecast, from 61.1 the prior month. Figures greater than 50 signal expansion.

“There are a lot of moving parts to this market from economic reports to this drama over the debt ceiling,” Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York, said in telephone interview. “Investors and traders seem to feel confident that a deal will get done in Washington.”

Investors last week pulled more money from money-market mutual funds than any week this year as U.S. lawmakers failed to resolve the impasse over raising the debt ceiling.

Withdrawals reached $37.5 billion, with about 70 percent of the redemptions coming from institutional funds that invest in U.S. government securities, according to data from the Investment Company Institute, a Washington-based trade group.                    

The S&P 500 has declined 5.2 percent from an almost three- year high in April amid speculation that the sovereign debt crisis in Europe is spreading and concern that U.S. lawmakers will fail to reach a deal on raising the nation’s debt limit. The gauge has rallied 91 percent since reaching a 12-year low in March 2009.

“Earnings look good, but macro uncertainty remains. The macro data has to turn,” Binky Chadha, Deutsche Bank AG’s chief U.S. equity strategist in New York, said in a telephone interview. “This market hasn’t moved up since the low in March 2009 unless the two key boxes of earnings and macro are checked.”

The standoff in Washington has overshadowed an earnings season that has seen per-share profit top analyst estimates at about 78 percent of the 305 companies in the S&P 500 that released results since July 11, data compiled by Bloomberg show. Net income has grown 20 percent and sales have increased 13 percent for the group, the data show.

Merck dropped 2.3 percent to $34.13 for the second-biggest decline in the Dow. The second-largest U.S. drugmaker said it plans to slash its workforce by an additional 12 to 13 percent by 2015, expanding a restructuring program to save as much as $4.6 billion a year.

Newmont Mining Corp. retreated 3.7 percent to $55.61. The largest U.S. gold producer reported second-quarter profit that trailed analysts’ estimates as mining costs increased.Energy stocks decreased 1.2 percent, the most among 10 S&P 500 groups.

Southwestern Energy Inc., the biggest natural-gas producer in Arkansas’ Fayetteville Shale, fell the second-most in the S&P 500, losing 6.1 percent to $44.56 after production declined at some of its wells in the second quarter.

Exxon Mobil, the largest U.S. oil company, slipped 2.1 percent to $79.79 as the price of oil fell, capping its first weekly drop since June.

Yahoo! Inc. sank 3 percent to $13.10, after rising as much as 4.2 percent. Alibaba Group Holding Ltd. reached an agreement with its largest shareholders Yahoo, ending a four-month spat over how to compensate investors after an ownership change in China’s most-popular online-payment service.

Starbucks Corp. rose 0.3 percent to $40.09 after climbing as much as 2.3 percent. The world’s largest coffee-shop operator reported third-quarter earnings that exceeded analysts’ estimates as customer traffic increased in the U.S. Profit was 36 cents a share, compared with the average estimate of analysts surveyed by Bloomberg of 34 cents. Insurance companies gave a boost to financial stocks, which dropped the least among S&P 500 groups, losing 0.3 percent.

Genworth Financial rose 6.4 percent to $8.32. The mortgage guarantor and life insurer reported second-quarter sales of $2.66 billion, beating the average analyst estimate of $2.63 billion in a Bloomberg survey. Chief Executive Officer Michael Fraizer also said he is weighing a split of the company and the possibility of share buybacks.

MetLife increased 3.5 percent to $41.21. The biggest U.S. life insurer posted second-quarter results that beat analysts’ estimates as profit climbed outside its home market. MetLife has freed up $1 billion in capital by selling operations in Venezuela and Taiwan and portions of the businesses in Japan and the U.K., Chief Executive Officer Steven Kandarian said.

Real estate investment trusts that buy mortgage debt tumbled the most in more than a year on concern the markets that finance them will be roiled if the U.S. government defaults on its debt.

A Bloomberg index of the shares of 32 mortgage REITs, including New York-based Annaly Capital Management Inc. and Atlanta-based Invesco Mortgage Capital Inc., dropped 2 percent after falling as much as 8.5 percent, the most since May 2010.

The companies fell as the cost of overnight repurchase agreements, or repo, financing for government-backed mortgage securities jumped 0.09 percentage point to 0.2 percentage point as of 9:35 a.m., the highest since Jan. 19, according to data from ICAP Plc.                     

 Newell Rubbermaid Inc. gained 8 percent to $15.52. The maker of Sharpie pens and Rubbermaid containers reported second- quarter profit excluding some items of 46 cents a share, 9 percent higher than the average analyst estimate, Bloomberg data show.

Expedia Inc. climbed 9.3 percent to $31.69 for the biggest gain in the S&P 500. The online travel site reported second- quarter earnings excluding some items of 55 cents a share, beating the average analyst estimate by 12 percent, Bloomberg data show.

“Valuations remain supportive and earnings are fairly strong, but we’re not out of the woods yet,” Liz Ann Sonders, who helps oversee about $1.7 trillion as New York-based chief investment strategist at Charles Schwab Corp., said in a telephone interview. “Our base case is still that we’re looking for a stronger second half of 2011, but we’re in a standstill until we get this nonsense in Washington out of the way because it’s such a confidence crush.”

Have a wonderful weekend everyone.

Be magnificent!

 

We cross the infinite with every step, and encounter the eternal with every second.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

The greatest discovery of our generation is that

human beings can alter their lives by altering their

attitudes of mind. 

As you think, so shall you be.

               -William James, 1842-1910

 

Dear Friends,

Tangents:

 

-from The Book of Idle Pleasures,

Good Company

The evening closes in on a warm summer’s day.

The wine is coursing through you and through

your friends but not down into the tributary of

political discourse that can end up in an almighty

row, but down the waterfalls of laughing

memory.  Long forgotten stories and cackles

emerge of times past while grand plans are made

for the future still to be lived.  Sharing bread,

barbeques and those generous anecdotes –

the simple gentleness of caring for the people you

love.

               -Dan Kieran

Photos of the day

July 28, 2011

Hot-air balloons float in the sky at Chambley-Bussieres, France, Wednesday during an attempt to set a world record for collective taking-off during an international hot-air balloon meeting. Alexandre Marchi/L’est Republicain/AP

People drive vintage Citroen 2cv cars during the 19th World Meeting of the 2cv’s friends in Salbris, central France. About 5,000 Citroen gathered from all over the country to participate in the event. Thibault Camus/AP

Market Commentary:

 

Canada

By Matt Walcoff and Victoria Taylor

July 28 (Bloomberg) — Canadian stocks rose for the first time this week as better-than-forecast economic reports from the U.S. offset concern that lawmakers there won’t be able to reach an agreement to raise the debt ceiling and avoid default.

Manulife Financial Corp., Canada’s largest insurer, rose 1.3 percent, as financial shares gained after U.S. jobless claims and home sales figures beat expectations. Goldcorp Inc., the second-biggest producer of the metal by market value, dropped 3.6 percent as bullion futures retreated from a record and the company cut its production forecast.

The Standard & Poor’s/TSX Composite Index gained 15.11 points, or 0.1 percent, to 13,047.78 at 4 p.m. in Toronto. It had fallen as much as 0.8 percent and risen as much as 0.6 percent.

“You have an investment base right now that is pretty unsettled because of the prospect of what could happen if there isn’t a decision next week,” Gareth Watson, vice president of investment management at Richardson GMP Ltd. in Toronto said in a telephone interview. Richardson oversees about C$16 billion

($16.6 billion).

The stock benchmark sank 3 percent in the previous two sessions, the most for a two-day period in almost 13 months, as U.S. lawmakers fought over rival plans to raise the country’s debt ceiling and that country reported a decline in durable- goods orders. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.

An index of financial shares in the S&P/TSX rose after closing yesterday at a seven-month low. U.S. Labor Department figures showed that applications for unemployment benefits dropped last week to the lowest level since April, signifying that the weakness in the labor market is fading. Another report showed the number of contracts to buy previously owned homes unexpectedly increased in June.

Royal Bank of Canada, the largest Canadian lender, gained 1.4 percent to C$52.05. Manulife Financial, North America’s fourth-largest insurer, increased 1.3 percent to C$15.34.

Canadian Pacific Railway Ltd. increased 4.8 percent to C$60.81. The company reported second-quarter net income of 75 Canadian cents a share, beating the 72-cent average of analysts’ estimates compiled by Bloomberg. The shares were raised to “top pick” from “outperform” at RBC Capital Markets.

Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 2.8 percent to C$37.09 after its second-quarter profit trailed the average estimate in a Bloomberg survey by 7.2 percent, excluding certain items.

Talisman Energy Inc. retreated 4.1 percent to C$17.99. The Calgary-based oil and gas producer cut its full-year output forecast, including Colombian volumes, to 430,000 to 440,000 barrels of oil equivalent a day, citing delays at the Yme, Kitan and Eagle Ford projects.

OceanaGold Corp., which explores in New Zealand and the Philippines, sank 17 percent, the most since January 2009, to C$2.35, after cutting its production forecast and raising its estimate of cash costs per ounce.

Goldcorp lost 3.6 percent to C$46.50 after cutting its 2011 production estimate to a range of 2.5 million to 2.55 million ounces, from the previous forecast of between 2.65 million and 2.75 million ounces.

Romarco Minerals Inc. fell 6.8 percent to C$1.64 after it was cut to “sector underperformer” from “sector performer” at CIBC. Extorre Gold Mines Ltd. decreased 3.7 percent to C$11.94.                         

 Rubicon Minerals Corp., the developer of a gold mine in Ontario, surged 29 percent to $3.94 after Agnico-Eagle Mines Ltd. agreed to buy 21.7 million of its shares at C$3.23 a share. Rubicon closed at its lowest price since August 2009 yesterday.

Thomson Reuters Corp. increased 3.7 percent, the most since September 2009, to C$33.10. The financial news and information provider said second-quarter profit increased 93 percent, bolstered by rising revenue from the legal-data and tax and accounting divisions.

Magna International Inc., Canada’s largest auto-parts maker, rallied 2.2 percent to C$46.59 after Auburn Hills, Michigan-based peer BorgWarner Inc. said second-quarter profit almost doubled.

Imax Corp. dropped 16 percent, the most since November 2006, to C$19.43. The maker of widescreen projection technology reported second-quarter adjusted earnings of 7 cents a share, missing the average analyst estimate of 19 cents a share.

US

By Nikolaj Gammeltoft

July 28 (Bloomberg) — U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower for a fourth day, as lawmakers indicated they were no closer to reaching an agreement to increase the debt ceiling and avoid default.

The Dow Jones Industrial Average erased an advance of as much as 82 points after Senate Majority Leader Harry Reid said House Speaker John Boehner’s plan to cut the deficit would be defeated in the Senate. Exxon Mobil Corp. slipped 2.5 percent as its earnings trailed analysts’ estimates. Technology stocks led gains in the S&P 500, with Cisco Systems Inc. climbing 2.5 percent after Goldman Sachs Group Inc. advised buying the stock.

The S&P 500 lost 0.2 percent to 1,302.85 at 3:32 p.m. in New York after tumbling 2 percent yesterday. The Dow slipped 37.57 points, or 0.3 percent, to 12,264.98.

“There is no positive news on the debt discussions out of Washington,” Brad Pleimann, head of equity trading at Piper Jaffray & Co. in Minneapolis, wrote in an e-mail. “Everyone believes, or at least hopes, that a deal will get done, but as we approach the close with no new news traders begin to unwind risk.”

The S&P 500 retreated 3 percent over the previous three days amid concern lawmakers will fail to agree on an increase in the U.S. debt ceiling by an Aug. 2 deadline in order to avoid a default.

Stocks and Treasuries are moving in tandem twice as often as they normally do, a sign investors are growing convinced the U.S. will lose its AAA credit rating and that the impasse among lawmakers on the debt ceiling may spur losses in both markets.

The S&P 500 has risen or fallen together with 10-year Treasury notes 80 percent of the time in the last 10 days, compared with the average since 2000 of 41 percent, according to data compiled by Bloomberg. The yield on the 10-year note fell three basis points today to 2.95 percent.

The S&P 500 rallied as much as 0.9 percent earlier as Labor Department figures showed jobless claims declined by 24,000 to 398,000 last week, the lowest since April. The median estimate of economists in a Bloomberg News survey called for a drop to 415,000. There were no special factors associated with the decrease other than the usual volatility that occurs each year in July, a Labor Department spokesman said.

Stocks also climbed earlier as the number of contracts to purchase previously owned U.S. homes unexpectedly rose in June as buyers tried to take advantage of lower prices and borrowing costs. The 2.4 percent rise in the index of pending home resales followed an 8.2 percent May gain, the National Association of Realtors said today in Washington. Economists forecast a 2 percent drop, according to the median estimate in a Bloomberg News survey.

D.R. Horton advanced 1.1 percent to $11.73 after reporting a third-quarter profit of 9 cents a share as it benefited from cutting costs. Analysts expected a profit of 6 cents a share.                   

 Before the jobless claims data was released at 8:30 a.m. Washington time, stock futures dipped after Exxon reported its results. The company’s second quarter profit fell short of analyst estimates as a slump in international refining profits limited the benefit of higher oil prices. Net income rose to

$2.18 a share from $1.60 a share a year earlier. The world’s largest publicly traded oil company had been expected to earn $2.32 a share, based on the average estimate of seven analysts in a Bloomberg survey. Exxon fell 2.5 percent to $81.24.

Exxon is among about 60 companies in the S&P 500 releasing results today. About 77 percent of companies in the gauge that have reported earnings since July 11 have exceeded analyst estimates, according to data compiled by Bloomberg.

DuPont Co. increased 1.7 percent to $53.19 after raising its full-year earnings forecast and posting second-quarter profit that beat analysts’ estimates because of rising sales of paint pigment and biotech-crop seeds.

Technology companies increased 0.8 percent for the biggest gain as a group in the benchmark index for U.S. equities. Cisco gained 2.5 percent to $16.08 for the biggest increase in the Dow. The largest maker of networking gear was raised to “buy” from “neutral” at Goldman Sachs Group, which cited the outlook for higher earnings estimates.

LSI Corp. rose the most in the S&P 500, rallying 15 percent to $7.40. The maker of chips used in computer disk drives forecast third-quarter sales from continuing operations of $535 million to $565 million. Analysts had predicted $510.7 million on average.

Akamai Technologies Inc., which operates a server network that helps websites load faster, slumped 18 percent to $24.24 after third-quarter revenue and earnings forecasts missed estimates. Profit will be 31 cents to 34 cents a share, excluding some items, said Akamai Chief Financial Officer J.D. Sherman on a conference call late yesterday. That compares with analysts’ estimates of 38 cents.

The S&P 500 Telecommunication Services Index fell the most among 10 groups in the benchmark gauge, losing 1.6 percent.

Sprint Nextel Corp. retreated 17 percent to $4.29 after the third-biggest U.S. mobile-phone carrier reported a loss for the 15th consecutive quarter as more customers dropped their contracts.

BMC Software Inc. fell 8.3 percent to $44.84 after the maker of business software said sales were $502.4 million, missing the average estimate of $508.3 million predicted by analysts in a Bloomberg survey.

“In the last couple of quarters we saw how the bulls had the ball on earnings,” Ryan Bend, who oversees $1.3 billion as money manager at Federated Investors Inc.’s Prudent Bear Fund, said in a telephone interview from Pittsburgh. “Now we’re seeing stocks getting hit if they don’t take numbers up or if they miss they’ll get crushed, and that’s a bearish signal for us.”

Have a wonderful evening everyone.

Be magnificent!

Only the intelligence of love and compassion can solve all problems of life.

-Krishnamurti, 1895-1986

As ever,

Carolann

The road that is built in hope is more pleasant

to the traveler than the road built in despair,

even though they both lead to the same

destination.

        -Marion Zimmer Bradley, 1930-1999