Category: Newsletters

 

Dear Friends,

Tangents:  

I picked up a couple of CDs at a record store in Healdsburg last week for listening as we drove through the valley.  One of them which I’d recommend is Robbie Robertson’s latest (came out a few months ago) How to become Clairvoyant.   Eric Clapton is featured on a couple of tunes.

More on travel…. Last Sunday, The New York Times had a piece on The Van Dusens of New Amsterdam: Fifteen generations spread outward from one of the earliest settlers of Manhattan.  It featured stories on different members of this family from many generations, thanks to the fact that for some in the family, genealogy has become an obsession, even a calling.  I thought this piece was insightful:

A rendering of an Ohio River flat-boat, similar to the one Abraham Van Dusen used when he went west.

A rendering of an Ohio River flat boat, similar to the one Abraham Van Dusen used when he went West.

A rendering of an Ohio River flat boat, similar to the one Abraham Van Dusen used when he went West.

ABRAHAM VAN DUSEN

      (1755-1836)

        Flat-boater

 

THEY called 1816 “The Year Without a Summer.”

New York had snow in June. Intense fog, now thought to be the residue of volcanic action in Indonesia, made it hard for sunlight to penetrate the atmosphere for months on end. Crops froze on several continents, spreading famine.

Abraham, a 60-year-old grandson of Abraham Pieterszen’s grandson Abraham, had moved in 1806 or 1807 to Jerusalem Township, N.Y., paying $250 for a piece of farmland where Keuka College sits today. He found work as an “overseer of highways.”

But with the extreme weather threatening starvation, he was among many upstate residents who decided they could not afford to stay put. In April 1817, he found a buyer for the land, packed up the family — 11 children, in addition to uncountable numbers of cousins, in-laws and grandchildren — and headed west.

Their journey was as audacious as it was innovative. First, they traveled 100 miles overland to meet the Allegheny River in Olean, N.Y. There, they built flat-bottomed boats that resembled oversize rafts with roofs and piled on their belongings: horses, cattle and children. Using the current, they floated 325 miles downstream to Pittsburgh, where they met the Ohio River, then continued 475 miles on to Covington, Ky., according to Herbert D. Simons.

“The children of Israel could scarcely have presented a more motley array of men and women, with their ‘kneading troughs’ on their backs, and their ‘little ones,’ than were assembled on their way to the new land of promise,” one observer wrote of the flat-boaters in a compilation the Carnegie Library did for Pittsburgh’s centennial.

Two of Abraham’s sons, Robert and Isaac, were entitled to land in Indiana for having fought in the War of 1812, according to Mr. Simons. Like many others, the family stripped the lumber from their boats to build cabins on the land.

At least 100 of Abraham’s kin from 22 related households accompanied him or completed similar voyages by 1820, judging from census records. By 1830, many of these same families coalesced in or around Sand Creek, Ind.      

Photos of the day 

July 27, 2011

A reporter leans over the edge of the catwalk during the media preview for the ‘EdgeWalk’ on the CN Tower in Toronto. Participants are strapped into a harness that is attached to a guard rail while walking around the catwalk on the structure 1,168 feet off the ground.Mark Blinch/Reuters

The Olympic Stadium with the figure 1 mowed into the grass marks one year to go until the start of the London 2012 Olympic Games in this undated photo released today. LOCOG/Handout/Reuters

Market Commentary:

 

Canada

By Matt Walcoff and Victoria Taylor

July 27 (Bloomberg) — Canadian stocks fell the most in 11 months, led by oil and raw material producers, as the U.S. stalemate on raising the debt limit persisted.

Suncor Energy Inc., Canada’s largest oil and gas company, declined 2.7 percent as oil fell after an unexpected increase in U.S. supplies. Barrick Gold Corp., the world’s biggest producer of the metal, dropped 2.1 percent as bullion futures fluctuated after three days of gains. Toronto-Dominion Bank, Canada’s second-largest lender by assets, decreased 2.1 percent as investors including BlackRock Inc. and Franklin Templeton Investments said the U.S. faces losing its top-level debt rating from Standard & Poor’s or Moody’s Investors Service.

The Standard & Poor’s/TSX Composite Index retreated 267.89 points, or 2.0 percent, to 13,032.67 at 4 p.m. in Toronto, the biggest decline since Aug. 11.

 “It’s a reflection of the jitteriness we’re seeing,” Laura Wallace, a money manager in the private client division at Scotia Asset Management, said in a telephone interview. Scotia oversees C$10 billion ($10.5 billion). “We don’t have a resolution to the debt and there is concern about what the impact of an S&P downgrade would be.”

The S&P/TSX slipped less than 1 point this month through yesterday as gold producers rose and financial companies dropped while U.S. politicians debated rival plans to raise the country’s debt ceiling. U.S. Treasury Secretary Timothy F. Geithner has said the U.S. will run out of options to prevent a default on Aug. 2. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.                      

 Crude oil lost 2.2 percent in New York after the U.S.

Energy Department said inventories increased last week. Eleven of 13 analysts in a Bloomberg survey had forecast a drop in supplies.

Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, fell 2.8 percent to C$39.48. Canadian Oil Sands Ltd., the largest owner of the Syncrude project, declined 3.7 percent to C$26.55. Talisman Energy Inc., which operates in North America, the North Sea and Indonesia, lost 2.3 percent to C$18.75. Suncor declined 2.7 percent to C$38.14. Uranium One Inc., an explorer for the metal, sank 6.8 percent to C$3.43.

The S&P/TSX index that measures utilities fell 1.9 percent, the most since June 2010. Fortis Inc., Canada’s largest publicly traded utility, dropped 2.4 percent, the most since November 2010, to C$31.69. The S&P/TSX index of consumer discretionary stocks declined 2.2 percent, the most since August 2010. Magna International Inc., Canada’s largest auto-parts maker, lost 4.1 percent to C$45.61 for its biggest drop since February.                        

Gold futures fell 0.2 percent after advancing to a record earlier, while the U.S. Dollar Index rebounded from a two-month low.

Barrick lost 2.1 percent to C$46. Goldcorp Inc., the world’s second-largest producer of the metal by market value, decreased 3.4 percent to C$48.23. Silver Wheaton Corp. fell 4.9 percent to C$35.35. Avalon Rare Metals Inc. tumbled 10 percent to C$5.78 after pricing a $43.7 million offering of stock. Orvana Minerals Corp. slumped 12 percent, the most since March 2009, to $2.06 after saying it plans a $17 million stock offering.

 Copper, lead and zinc fell on the London Metal Exchange after the U.S. Commerce Department reported a drop in durable goods orders in June. Teck Resources Ltd., Canada’s biggest base metals producer, lost 4.8 percent to $47.29. Ivanhoe Mines Ltd. slipped 2 percent to C$25.23.

Sino-Forest Corp. rose 8 percent to C$7.69, gaining for a seventh day after New Zealand billionaire Richard Chandler said he raised his stake in the Chinese tree-farm operator to 15 percent to become the largest shareholder.

     An index of financial shares in the S&P/TSX declined to a seven-month low. Toronto-Dominion fell 2.1 percent to C$77.00. Royal Bank of Canada dropped 1.4 percent to C$51.33. Bank of Nova Scotia lost 2 percent to C$54.82.

Fertilizer producers slumped along with corn futures after meteorologists forecast rain for the U.S. Midwest. Potash Corp. of Saskatchewan Inc., the world’s largest maker of the crop nutrient by market value, declined 2.3 percent to C$56.28. Rival producer Agrium Inc. lost 1.8 percent to C$84.33.

Research In Motion Ltd., which makes BlackBerry smartphones, dropped 5.6 percent to C$24.37, its lowest price since August 2006, after UBS lowered its price target to $30 from $41, saying that the company is losing ground to competitors.

US

By Nikolaj Gammeltoft

July 27 (Bloomberg) — U.S. stocks fell, dragging the Standard & Poor’s 500 Index down the most in almost two months, as lawmakers indicated they were no closer to reaching a compromise on the federal debt limit.

Technology and industrial stocks led declines among 10 S&P 500 groups. Caterpillar Inc. and General Electric Co. decreased more than 2.4 percent after a government report showed orders for durable goods unexpectedly decreased. Corning Inc. dropped 7.2 percent after reducing its forecast for glass demand amid lower television-sales projections. Amazon.com Inc. rallied 3.9 percent after its Kindle e-reader and digital-media services helped second-quarter results beat analysts’ estimates.

The S&P 500 slipped 2 percent, its biggest decline since June 1, to 1,304.89 at 4 p.m. in New York. The Dow Jones Industrial Average retreated 198.75 points, or 1.6 percent, to 12,302.55. Treasury yields, which dropped yesterday on speculation lawmakers would reach an accord on the nation’s debt ceiling, rose today as the political stalemate continued.

“The macro events are clearly driving the market,” Sarah Hunt, portfolio manager at Alpine Mutual Funds in Purchase, New York, said in a telephone interview. Alpine oversees about $6.5 billion. “Beyond the fact that we have this political squabble, which never makes people feel better, you also have an underlying potential softening in the economic data.”

The S&P 500 has fallen 3 percent this week, its biggest three-day decline since June 3, as Republicans and Democrats sparred over separate plans to raise the federal debt limit and avoid a default by Aug. 2. S&P, Moody’s Investors Service and Fitch Ratings have said they may downgrade the U.S.’s top AAA rating if lawmakers fail to resolve the stalemate. Stocks rallied 2.2 percent last week as corporate profits topped analysts’ estimates.                        

 Equities declined today as an agreement remained elusive.

House Speaker John Boehner’s reworked deficit-cutting plan was gaining support among Republicans, while Senate Majority Leader Harry Reid said his competing proposal to avert a potential U.S. default is the only “true compromise.”

The non-partisan Congressional Budget Office said Reid’s plan would cut $2.2 trillion over 10 years, shy of its $2.7 trillion target. The savings also fall below the $2.4 trillion needed to meet Republican demands that a debt-limit extension be accompanied by an equal amount of savings. President Barack Obama is insisting on a debt-limit increase large enough to last through the 2012 elections.

CBO said Boehner’s plan would save just $850 billion rather than its advertised $3 trillion, forcing him to make revisions and round up backing among fiscal conservatives after Republican leaders postponed a vote scheduled for today.                     

 Rates on six-month Treasury bills due Aug. 4 climbed 10 basis points to 0.15 percent, the highest since February, according to Bloomberg Bond Trader data, a signal investors are growing more concerned that lawmakers will fail to reach an agreement on the nation’s debt. The bills are the first government debt securities to mature after the deadline to increase the $14.3 trillion borrowing limit passes on Aug. 2.

Benchmark Treasury 10-year note yields increased two basis points to 2.98 percent.

Stock futures retreated earlier as the U.S. Commerce Department said bookings for goods meant to last at least three years fell 2.1 percent in June after a 1.9 percent gain the prior month that was smaller than last reported. The median forecast of 76 economists surveyed by Bloomberg News projected a 0.3 percent increase.

Stocks lost further ground in the afternoon after the Federal Reserve said the U.S. economy grew at a slower pace in more parts of the country since the beginning of June as shoppers restrained spending and factory production eased.

“Economic activity continued to grow,” the Fed said in its Beige Book survey released today in Washington. “However, the pace has moderated in many districts.” Growth slowed in eight of the Fed’s 12 regions, compared with four in the last survey, the central bank said.

The S&P 500 Industrials Index lost 2.7 percent, the second- most among 10 groups in the benchmark gauge for U.S. equities.

Caterpillar, the world’s largest maker of construction and mining equipment, slipped 3.7 percent to $101.34. General Electric decreased 2.4 percent to $18.11.

Boeing Co. rose the most in the Dow, adding 0.7 percent to $70.63, as the airplane maker lifted its forecast for full-year earnings. Net income rose 20 percent to $941 million, or $1.25 a share, buoyed by higher commercial sales. The average estimate of 22 analysts surveyed by Bloomberg was for 97 cents. Full-year profit will be $3.90 to $4.10 a share, Boeing said, a jump of 10 cents at each end of its previous range.                         

“It’s a tug of war between the headline risk of the debt ceiling issue and earnings,” Matthew DiFilippo, who helps manage $1 billion as director of research at Stewart Capital Advisors LLC in Indiana, Pennsylvania, said in telephone interview. “The volatility may create buying opportunities because corporate earnings are coming in strong, and the market does appear to be cheap compared to the underlying earnings power.”

Since July 11, about 81 percent of S&P 500 companies that have released quarterly results beat estimates for earnings per share, according to data compiled by Bloomberg.

Technology companies lost 3 percent, the most among 10 groups in the S&P 500 today.

Corning slumped 7.2 percent to $16.04. The maker of glass for flat-panel televisions lowered its outlook for the global glass market and slashed its full-year sales forecast for its Gorilla Glass by 20 percent to $800 million.

Juniper Networks Inc. plunged 21 percent to $24.66. The second-largest maker of Internet networking equipment posted second-quarter profit excluding certain costs of 31 cents a share. Analysts on average projected profit of 33 cents a share, according to data compiled by Bloomberg.

Cisco Systems Inc., the largest maker of networking equipment, declined 3.7 percent to $15.69.Amazon.com gained 3.9 percent to $222.52. The world’s largest online retailer reported second-quarter net income of $191 million, or 41 cents a share, topping the 34-cent average analyst estimate. Net sales rose to $9.91 billion, compared with the average prediction for $9.38 billion.

Total System Services Inc. had the biggest gain in the S&P 500, adding 5.3 percent to $19.13. The credit-card processor said it earned 28 cents a share from continuing operations in the second quarter. That’s 1 cent more than the average analyst estimate in a Bloomberg survey. Barclays Plc raised the stock’s rating to “overweight” from “equal weight.”                        

Delta Air Lines Inc. fell 5.1 percent to $7.61. The world’s second-largest airline plans further seating-capacity cuts after higher fuel and maintenance costs pulled second-quarter profit below analysts’ estimates.

Dunkin’ Brands Group Inc. surged 47 percent to $27.85 on the first day of trading. The operator of Dunkin’ Donuts coffee shops sold 22.3 million shares at $19 each in an initial public offering.

“It’s a very mixed market environment,” Michael C. Aronstein, who manages $1.1 billion as president of New York- based Marketfield Asset Management LLC, said in a telephone interview. “There are sectors, companies and countries that are doing really well, while there are others that are very distressed.”

Have a wonderful evening everyone.

Be magnificent!

The word duty indicates compulsion.

The word responsibility indicates freedom.

Duties lead one to demand rightfully.

Responsibilities lead one to command respectfully.

Sense of duty is out of attachment.

Sense of responsibility is out of love.

Duties can be thrust upon others.

Responsibilities are taken up by oneself.

There can be unwillingness in performing one’s duty.

Responsibility is always taken up willingly.

 

-Maa Purnananda

As ever,

Carolann

When everything seems to be going against you,

remember that the airplane takes off against

the wind, not with it.

        -Henry Ford, 1863-1947 

 

Dear Friends,

Tangents: Summertime and the Living is Easy…

from The Book of Humorous Anecdotes, The Folio Society, London:

Kathleen Simons on holiday-

Family bonding – forget it.  Instead of being a large extended family on a rural idyll in upstate Vermont, think Deliverance without the banjos and you’re getting close.  This holiday feels more like a survival course we should have trained for.  Spending time with blood relatives, at least two of whom hate you with a loathing that most people reserve for intestinal parasites, is not something you should undertake without specialist counselling, and perhaps a stiff drink.

  There is a monosyllabic teenage girl whose hobby is slamming doors, and a squeaky-voiced 14-year-old who spends his time rocking to the beat of an invisible drum, relayed through earphones that seem to be permanently joined to his head.  There’s the old family retainer – a Mexican housekeeper so ancient that the notion of her actually doing anything around the house is met with shocked silence.

  Surely we are the only people who go on holiday with a cook who is purely decorative.  Asking her to make a sandwich would be like asking the Queen Mother to trim your….Instead we serve her, planning our meals to make allowances for her high cholesterol and applauding her when she manages to put a plate of hot dogs on the table, as though Gordon Ramsay himself had cooked us dinner.

  Then there’s my mother-in-law, who embraces her advancing deafness with the ardour of a naked starlet for a fluffy mink coat.  My father-in-law calls me Sweetie through gritted teeth, except after lunch when two or three gin and tonics create an alcoholic good humour.  Then he just doesn’t talk to me at all.

  My two children, meanwhile, are welded to my leg, whining piteously about the dearth of television channels and the profusion of wildlife.  Snakes lurk in the long grass, woodchucks, raccoons, squirrels and chipmunks proliferate, usually dead at the side of the road, and we’ve already been visited by Pepe Le Pew….

  We can’t get  a signal on the television, and the radio is permanently tuned to 1973.  If I hear ‘Stand by Me’ again I’m going to make a mad dash for freedom, through the poison ivy, over the electric fence and straight to the nearest Dunkin’ Donuts.                                                                                                                                                                                 -The  Times, 24^th August, 2000

Photos of the day

July 26, 2011

 

Lovers clip padlocks onto the fence on the Pont des Arts bridge over the River Seine during summer holidays in Paris. Eric Gaillard/Reuters

Meagan Williamson runs through a wheat field in Kirby Hill, northern England. Nigel Roddis/Reuters

Market Commentary:

 Canada

By Matt Walcoff

July 26 (Bloomberg) — Canadian stocks fell for a second day as financial companies dropped after President Barack Obama warned of a “deep economic crisis” if lawmakers there can’t agree on a plan to raise the debt ceiling by Aug. 2.

Toronto-Dominion Bank, Canada’s second-largest lender by assets, decreased 1.9 percent. Rogers Communications Inc., Canada’s largest wireless carrier, retreated 3.5 percent after reporting a decline in profits from its wireless unit. Canadian National Railway Co., the country’s biggest railroad, lost 4.2 percent after an analyst at Dahlman Rose & Co. cut his rating on the shares.

“We have this issue in the U.S. that seems to be hanging around for a while,” Sadiq Adatia, chief investment officer at Sun Life Global Investments in Toronto, said in a telephone interview. The unit of Sun Life Financial Inc. manages C$2.3 billion ($2.4 billion) for clients. “Canada’s looking over its shoulder at the U.S. If they have an issue down there, it’s going to affect us as well.”

The Standard & Poor’s/TSX Composite Index dropped 135.39 points, or 1 percent, to 13,300.56. The S&P/TSX rose 1 percent this month through yesterday as the European debt crisis and U.S. debt-ceiling deadlock led to gains in gold stocks and drops in financial companies’ shares.

The S&P/TSX Financials Index, the biggest part of the equity benchmark, is on pace to fall for a fourth-straight month for the first time since February 2009.     Canada’s six largest banks each retreated as Obama battled with U.S. Republicans over how to cut the country’s debt. TD decreased 1.9 percent to C$78.68. Bank of Nova Scotia, Canada’s third-biggest lender by assets, fell 2.1 percent, the most in 11 months, to C$55.91. Manulife Financial Corp., North America’s fourth-largest insurer, slipped 1.4 percent to C$15.60.

S&P/TSX energy stocks retreated for the first time in six days as natural gas futures dropped. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, lost 1.9 percent to C$40.62. TransCanada Corp., the owner of Canada’s largest pipeline system, retreated 1.3 percent to C$40.25. Canadian Oil Sands Ltd., the largest owner of the Syncrude project, declined 2.4 percent to C$27.57.                     

Rogers dropped 3.5 percent, the most since October, to C$36.50. Profits excluding certain items from its wireless operations declined more than most analysts had estimated, Maher Yaghi, an analyst at Desjardins Securities, said in a note to clients.

CN lost 4.2 percent, the most in two years, to C$72.05 after reporting second-quarter earnings excluding certain items that surpassed the average analyst estimate in a Bloomberg survey by 0.6 percent. The profit trailed the forecast of Jason H. Seidl, an analyst at Dahlman Rose, by 3.1 percent. He cut his rating on CN to “hold” from “buy,” citing its share price and economic uncertainty. The shares had rallied 13 percent this year through yesterday.

Inmet Mining Corp., which produces copper and zinc in Turkey, Spain and Finland, plunged 4.9 percent to C$66.60. The company’s second-quarter profit trailed the average estimate in a Bloomberg survey by 30 percent, excluding certain items. Orest Wowkodaw, an analyst at Canaccord Financial Inc., cut his 12- month price estimate on the shares to C$87 from C$90.                       

 Sino-Forest Corp., the forestry company fighting a short seller’s assertions of financial manipulation, rose 12 percent to C$7.12. The shares have doubled since July 18, the day before New Zealand billionaire Richard Chandler increased his stake in the company.

Cardiome Pharma Corp., which develops heart drugs, soared 28 percent to C$5.27 after saying it will transfer the North American development and commercialization rights for vernakalant (IV), also known as Kynapid, to Merck & Co. In a note to clients, Neil Maruoka, an analyst at Canaccord Financial Inc., raised his rating on the shares to “buy” from “hold.” “The addition of Cardiome’s long-standing partner to this program provides new clarity of the potential path to approval for this drug,” Maruoka wrote in a note to clients.

US

By Nikolaj Gammeltoft

July 26 (Bloomberg) — U.S. stocks fell for a second day amid wrangling between lawmakers over plans to raise the federal debt limit and forecasts from 3M Co. and United Parcel Service Inc. that disappointed investors.

3M lost 5.4 percent, the most in the Dow Jones Industrial Average, after projecting full-year earnings that trailed analysts’ estimates. UPS, the world’s largest package-delivery company, dropped 3.3 percent after saying the third quarter will be “fairly slow.” AK Steel Holding Corp. tumbled 17 percent, the most since 2008, as the steelmaker’s profit missed the average analyst estimate. Lexmark International Inc. rose 18 percent after reporting better-than-estimated earnings.

The S&P 500, which rallied 2.2 percent last week, dropped 0.4 percent to 1,331.94 at 4 p.m. in New York. The Dow lost 91.50 points, or 0.7 percent, to 12,501.30.

“We have multiple sources of uncertainty, including what’s happening in Washington with the debt ceiling,” Mark Freeman, co-chief investment officer at Westwood Management Corp. in Dallas, said in a telephone interview. His firm oversees $14 billion. “The longer the uncertainty goes on, the greater the risk is that it will negatively affect businesses.”

Negotiations over the nation’s debt limit have whipsawed stocks. Republicans and Democrats are sparring over separate plans to raise the federal debt limit and avoid a government default. House Speaker John Boehner said today his debt-limit plan can pass both chambers of Congress. President Barack Obama’s administration threatened a presidential veto of the two-step plan to raise the debt ceiling and cut $3 trillion in government spending.                   

 Obama, in an address last night from the White House, said he remains confident that the stalemate can be resolved if both sides compromise. Both S&P and Moody’s Investors Service are weighing a downgrade of the U.S. credit rating. “The uncertainty over the debt ceiling issue is pushing the market down,” Sandy Villere III, who helps manage the Villere Balanced Fund at New Orleans-based St. Denis J. Villere & Co., said in a telephone interview. The firm oversees $1.5 billion and the fund has beat 97 percent of peers in the past five years. “But people will eventually peel off the layers of the onion and look at the good earnings that are still being produced.”               

The S&P 500 rallied last week, erasing 81 percent of its loss since April 29 as Europe pledged support for Greece to end the region’s debt crisis and corporate profits topped analysts’ estimates. Since July 11, about 80 percent of S&P 500 companies that have released quarterly results beat projections, according to data compiled by Bloomberg.    

Industrial shares led losses among eight of the 10 main groups in the S&P 500 today, falling 1.9 percent. 3M dropped 5.4 percent to $89.93 after the maker of Post-It Notes projected 2011 earnings that fell short of analysts estimates as lower demand for LCD televisions curbed sales in its display and graphics business, the company’s third-biggest unit.

UPS, a bellwether of the economy that handles goods ranging from financial documents to pharmaceuticals and industrial parts, tumbled 3.3 percent to $71.59 after saying in a conference call that the third quarter will be “fairly slow” before demand picks up in the last three months of 2011.

Equities pared losses as a report showed confidence among consumers unexpectedly rose in July from an eight-month low, led by a rebound in the outlook for jobs over the next six months.

The Conference Board’s index of consumer confidence climbed to 59.5 from a revised 57.6 reading in June that was lower than previously estimated. Economists predicted the July gauge would fall to 56, according to the median forecast in a Bloomberg News survey.

All 12 stocks in a gauge of homebuilders declined after a separate report from S&P/Case-Shiller showed home prices in 20 metropolitan areas declined 4.5 percent in May from the same month last year. The year-over-year decrease was the biggest since November 2009, adding to evidence the housing market is struggling. Other data showed sales of new homes unexpectedly declined for a second month in June.

AK Steel Holding, the third-largest U.S. steelmaker by sales, plunged 17 percent to $12.81 as it reported second- quarter profit excluding some items of 32 cents a share, missing the average analyst estimate by 36 percent, Bloomberg data show.

Netflix Inc. dropped 5.2 percent to $266.91 after its third-quarter sales and profit forecast missed estimates and the company said a price increase was crimping new-user signups.

Supervalu Inc. gained 6.9 percent to $9.11 as the supermarket chain reported first-quarter earnings of 35 cents a share, beating the average analyst estimate in a Bloomberg survey of 33 cents.

RadioShack Corp. surged 20 percent to $15.69 as the consumer-electronics retailer said it will provide Verizon Wireless products in its stores starting Sept. 15 and it was “comfortable with the range of analysts’ earnings estimates for the remainder of 2011.”                     

Baidu Inc., the owner of China’s most popular Internet search engine, climbed 5 percent to $164.36. The company said third-quarter sales will be at least $611.1 million, compared with the average analyst forecast for $568.4 million, Bloomberg data show.

Broadcom Corp., the supplier of communications chips for Apple Inc.’s mobile devices, rallied 9.4 percent to $38.20 after forecasting third-quarter sales that topped analysts’ predictions on booming demand for iPhones and iPads.

Lexmark International surged 18 percent, the biggest gain since 2000 and the most in the S&P 500, to $33.93. The maker of laser and inkjet printers reported second-quarter profit excluding some items of $1.36, beating the average $1.03 estimate of analysts surveyed by Bloomberg on strong demand from corporate customers.

Have a wonderful evening everyone.

Be magnificent!

No matter how insignificant the thing you have to do,

do it as well as you can,

give it as much of your care and attention as you would give to the thing

you regard as most important.

 

-Mahatma Gandhi, 1869-1948

 

As ever,

Carolann

One doesn’t have a sense of humor.

It has you.

    -Larry Gelbart, 1928-2009

 

Dear Friends,

 Tangents:

Smile:  I received a form back in the mail from a client with a post-it note attached to it which reads:  I meditate.  I burn candles.  I drink green tea.  And still I want to smack someone.

 We were at the David Foster Foundation charity fundraiser last week in Napa and it was a fantastic event.  One of the singers was a young woman who will be singing in Seattle Opera’s Porgy and Bess next month, with show times from August 2^nd– 20^th.  She sang Summertime and it was an extraordinary performance.  So, if you can, you will be well rewarded by going to see the show in Seattle.  The Canadian Tenors also performed and they were also outstanding.  

All in all, there was awesome talent and money raised for a good cause – children needing organ transplants.  I finally managed to meet Margrit Mondavi in person and tell her how much I love the cookbook she put together with her daughter Annie.   It is entitled Annie and Margrit and contains some of the easiest and best recipes including the best ever crostini, ceviche and so much more; it’s probably my favorite recipe  book.

 Photos of the day:

July 25, 2011

Hot air balloons rise into the early-morning sky over London. Seven balloons took part in the flight as part of a collaboration between the London Sky Orchestra project, the 30th anniversary of the London International Festival of Theatre, and the Greater London Authority which is marking a year to go before the 2012 Olympic Games. Andrew Winning/Reuters

 Japanese children take pictures as they arrive at Budapest International Airport in Hungary. The children will spend their summer holiday in the eastern-Hungarian town of Hodmezovasarhely, which launched an outreach program for disaster-stricken Japanese communities. Bernadett Szabo/Reuters

Market Commentary:

 Canada

By Matt Walcoff and Victoria Taylor

uly 25 (Bloomberg) — Canadian stocks fell for the first time in five days, led by materials and financial companies, as U.S. lawmakers failed to reach an agreement to raise the country’s debt ceiling.

Research In Motion Ltd., the maker of the BlackBerry smartphone, fell 4.8 percent after the company said it plans to cut about a tenth of its workforce, or 2,000 jobs. Royal Bank of Canada, the nation’s largest lender, fell 0.8 percent as U.S.

Republicans and Democrats prepared rival plans to cut the country’s debt. The Standard & Poor’s/TSX Composite Index decreased 58.68 points, or 0.4 percent, to 13,435.95 at 4 p.m. in Toronto.

“That’s creating a bit of uncertainty going into this week,” Youssef Zohny, a portfolio manager at Van Arbor Asset Management Ltd. in Vancouver, said in a phone interview. Van Arbor oversees about C$50 million ($51 million). “We’re not seeing too large a move in the market, so the market seems to be taking those talks in stride. If the U.S. talks become a little more constructive, that could definitely help stocks.”

The S&P/TSX increased 1.8 percent in the previous four sessions to a seven-week high as investors speculated the U.S. would raise the debt ceiling and European leaders agreed on a new bailout for Greece. U.S. Treasury Secretary Timothy F. Geithner has said the government will run out of options to prevent a default on Aug. 2 unless the debt ceiling is increased.                     

 Republican U.S. House Speaker John Boehner’s two-step plan would raise the U.S. borrowing limit by up to $1 trillion and later by $1.6 trillion while requiring larger spending cuts, according to Republican aides.

Democratic Senate Majority Leader Harry Reid’s proposal would cut $2.7 trillion in spending and give President Barack Obama the full $2.4 trillion in additional borrowing authority he seeks, enough to get through the 2012 elections.

Royal Bank of Canada fell 0.8 percent to C$52.82. Toronto- Dominion Bank, Canada’s second-largest lender by assets, declined 0.6 percent to $80.16. Sun Life Financial Inc., the country’s third-biggest insurer, fell 1.3 percent to C$27.19.                           

RIM dropped 4.8 percent to C$25.19. The job cuts will leave the Waterloo, Ontario-based company with about 17,000 employees, RIM said in a statement. Sales have slowed as the company loses market share in the U.S. to competitors like Apple’s iPhone, in part because RIM has not released a new major BlackBerry model since August.

Toronto-based Romarco rose 6.4 percent to C$1.82 after reporting drilling results at its Haile Gold Mine in South Carolina. Kirkland Lake Gold Inc. dropped 4.5 percent to C$16. Gold producers in the S&P/TSX declined 1.2 percent, even as gold futures surged to a record.

“Gold companies could be telling us gold is ready for a fall,” Tony Demarin, chief investment officer of BCV Asset Management in Winnipeg, Manitoba said. BCV oversees C$300 million. “The equity investors are signaling that the bullion price has kind of peaked and will start to decline shortly.”

Quadra FNX Mining Ltd. gained 5.5 percent to C$15.89 after the base-metals producer reported its second-quarter production.

Teck Resources Ltd., Canada’s biggest base-metals and coal producer, gained 0.5 percent to C$50.22. First Uranium Corp. fell 1.7 percent to 58 Canadian cents after the company said in a statement that the South African National Nuclear Regulator ordered a halt to the depositing of material at mine-waste storage facilities.

Imax Corp., the operator of large-screen movie theaters, fell 13 percent to C$23.60. The Mississauga, Ontario-based company had its U.S. share-price estimate reduced to $27 from$32 at Stifel Nicolaus & Co., which said earnings expectations for the second half are “too optimistic.”

Bombardier Inc. fell 2.9 percent to $5.94 after two trains were involved in a fatal high-speed rail crash in China. One of the trains was built by a Bombardier venture with CSR Corp.

Bombardier’s Beijing-based spokeswoman Flora Long said she was unable to comment because she was traveling. Calls to the Canadian company’s office in the city went unanswered.

US

By Nikolaj Gammeltoft

July 25 (Bloomberg) — U.S. stocks retreated, pulling the Standard & Poor’s 500 Index down from a two-week high, as Republicans and Democrats wrangled over separate plans to raise the federal debt limit and avoid a government default.

Phone companies led losses among 10 groups in the S&P 500, losing 1.4 percent. Kimberly-Clark Corp. slipped 2.1 percent after reporting a decline in second-quarter profit, hurt by higher commodity prices. E*Trade Financial Corp. jumped 5.6 percent after agreeing to hire Morgan Stanley to explore a sale.

The S&P 500 fell 0.6 percent to 1,337.43 at 4 p.m. in New York after slumping as much as 1 percent. The index rallied to within 1.4 percent of a three-year high last week. The Dow Jones Industrial Average lost 88.36 points, or 0.7 percent, to 12,592.80 today.

“The market is trying to balance the macro risks of the debt ceiling negotiations and European contagion with good company earnings,” Rafi Zaman, managing director of global equities at DuPont Capital Management in Wilmington, Delaware, said in a telephone interview. His firm oversees about $26 billion. “The market is so volatile and moving depending on what’s in the forefront.”

Negotiations over the nation’s debt limit have whipsawed stocks. The S&P 500 jumped 1.6 percent on July 19, the biggest gain since March, amid optimism President Barack Obama and congressional Republicans would agree to raise the ceiling before the Aug. 2 deadline. Stocks fell the next day on concern a Senate plan to help the nation avoid default faced resistance from House Republicans.

U.S. equities rallied last week as Europe pledged support for Greece to end the region’s debt crisis and companies from Apple Inc. to Morgan Stanley and Advanced Micro Devices Inc. beat earnings projections. The S&P 500 closed at 1,345.02 on July 22. When the measure climbed to 1,363.61 on April 29, it was the highest level since June 2008.

The S&P 500 Index pared its decline to less than 0.1 percent from as much as 1 percent earlier today. Stocks resumed declines as Senator Charles Schumer criticized House Speaker John Boehner’s two-step plan to cut the federal deficit, fueling concern lawmakers were no closer to a compromise. The Republican plan would allow a debt-limit increase of $1 trillion, to be followed later by about $1.6 trillion, while larger spending cuts would be required.                  

“This plan is far from perfect, but it adheres to our principles of ensuring that spending cuts are greater than any debt hike and it includes no tax increases,” Boehner, an Ohio Republican, said in a statement.

Top Senate Democrat Harry Reid readied a separate plan which would hand Obama the full $2.4 trillion in additional borrowing authority he has requested tied to $2.7 trillion in spending cuts that would leave Medicare and Medicaid untouched.

Both S&P and Moody’s are weighing a downgrade of the U.S. credit rating. Even if the country defaults on some obligations after Aug. 2 and pays bondholders, S&P said short- and long-term interest rates would rise by 0.50 percentage point and 1 point, respectively.

“Missing the Aug. 2 deadline would be a serious issue and could result in a ratings downgrade,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc. in Boston, wrote in an e-mail. “Though some politicians’ comments this morning are giving markets a sliver of hope that they actually get it done.”

Senate Bob Corker, a Tennessee Republican, said investors should “chill out” and not worry that Congress will allow a default to occur.

“I would sort of chill out and not worry so much anymore about the debt-ceiling issue,” Corker said on CNBC. “We have a lot of things that we know will keep us from ever defaulting on our debt.”                

The S&P 500 erased 81 percent of its loss since April 29 through last week as corporate profits topped analyst estimates.

Since July 11, 83 percent of S&P 500 companies that released quarterly results beat the average analyst earnings estimate, according to data compiled by Bloomberg. Between July 20 and July 22, analysts boosted estimates for S&P 500 income during the final three months of 2011 by 2.3 percent. That’s the biggest two-day increase for the quarter after the current one in data going back to 2006.                    

“There are great companies that are making a ton of money underneath this cloud of uncertainty from the debt ceiling debate,” Frank Ingarra, who helps manage the CAN SLIM Select Growth Fund at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a telephone interview. His firm oversees $1.5 billion. “Everyone’s conflicted over this politicking and that’s why we’re oscillating.” 

The S&P 500 Telecommunication Services Index sank 1.4 percent, the most among 10 industries within the S&P 500. Research In Motion Ltd. dropped 4.4 percent to $26.67. The maker of the BlackBerry smartphone said it’s cutting 2,000 positions and Chief Operating Officer Don Morrison, currently on temporary medical leave, is planning to retire after 10 years with the company.  A gauge of consumer staples companies retreated 1 percent.

Kimberly-Clark fell 2.1 percent to $66.48. The maker of Scott toilet paper and Huggies diapers said net income fell 18 percent. Chief Executive Officer Tom Falk is raising prices on most items the company sells in North America to make up for rising costs for pulp, oil and other raw materials. In April, it more than doubled its estimate for raw materials expense inflation for this year.

Lorillard Inc. fell 4.5 percent to $107.29. The cigarette maker reported second-quarter sales of $1.16 billion, missing the average analyst estimate of $1.17 billion in a Bloomberg survey.

Kroger Co. declined 1.9 percent to $24.82, while Safeway Inc. slipped 2.1 percent to $20.50. Goldman Sachs Group Inc. cut its recommendation on the grocers to “sell” from “neutral,” citing the possibility of accelerating inflation.

Financial stocks lost 0.8 percent as a group. Bank of America dropped 1.2 percent to $10.01, while JPMorgan Chase & Co. slumped 1.2 percent to $41.69.

Utility companies rose 0.3 percent for the biggest gain among 10 groups in the S&P 500. NRG Energy Inc. climbed 2.7 percent to $25.41 after being upgraded to “buy” from “neutral” at Bank of America Corp.

E*Trade rallied 5.6 percent to $16.52. The online brokerage plans to hire Morgan Stanley to explore a sale after its largest shareholder, Citadel LLC, said the company needed to take action to reverse “catastrophic losses” for investors.

The board of TD Ameritrade Holding Corp. plans to discuss a possible bid for E*Trade, the Wall Street Journal reported, citing people familiar with the matter. Kim Hillyer, a spokeswoman for TD Ameritrade, said it was the company’s practice not to comment on rumors or speculation. Ameritrade added 1.8 percent to $19.96.

Have a wonderful evening everyone.

Be magnificent!

Civilization, in the real sense of the term, consists not in the multiplication but in the deliberate and voluntary restriction of the wants.

This alone promotes real happiness and contentment, and increases the capacity for service. A certain degree of physical harmony and comfort is necessary, but above that level, it becomes a hindrance instead of a help.

Therefore the ideal of creating an unlimited number of wants and satisfying them seems to be a delusion and a snare.  The satisfaction of one’s physical needs, even the intellectual needs of one’s narrow self, must meet at a point a dead stop before it degenerates into physical and intellectual voluptuousness.  A man must arrange his physical and cultural circumstances so that they may not hinder him in his service of humanity, on which all his energies should be concentrated.

 -Mahatma Gandhi, 1869-1948

 

 

As ever,

Carolann

 

A celebrity is a person who works hard all his life

to become well known, then wears dark glasses

to avoid being recognized.

            -Fred Allen, 1894-1956

 

 

Dear Friends,

 “…People are like stained-glass windows. They sparkle and shine when the sun is out, but when the darkness sets, their true beauty is revealed only if there is a light from within…”

-Elizabeth Kubler Ross

Photo of the day:

Veterinary physiotherapist Livia Pereira (L) applies cream on a paralyzed lion Ariel as the veterinary chiropractic Camila Morandini works on it at the living room of Pereira’s home in Sao Paulo July 20, 2011. Pereira’s home has turned into a hospital since the 3-year-old lion started a landmark treatment to cure a rare autoimmune disease which paralyzed his legs about a year ago. Through an internet campaign launched on social networking websites such as Facebook and Twitter, Borges has been managing to raise funds to pay for his $11,000 monthly hospital bills. Nearly 60,000 people have clicked on the “like” button on Facebook and hundreds of others made donations to two bank accounts linked to Borges’ foundation aimed at helping abandoned animals. The 310-pound (140-kg) lion started limping over one year ago prompting doctors to carryout a surgery to remove a herniated disc which they believed was causing the problem. But the procedure only made things worse and his rear legs were soon paralyzed as well. As Ariel grew weaker, Borges decided to turn to alternative methods such as chiropractic therapy and acupuncture. According to Pereira, head of the team of vets who have been treating the lion, he has so far responded well to the procedures.

(REUTERS) 

Market Commentary:

Canada

Canada’s inflation rate slowed more than economists forecast in June as carmakers offered larger discounts, hotel rates declined and gasoline prices eased.

The consumer-price index increased 3.1 percent from a year earlier, Statistics Canada said today in Ottawa, following a May increase of 3.7 percent that was the fastest since March 2003. The lowest prediction in a Bloomberg survey of 24 economists was 3.4 percent, with a median forecast of 3.6 percent.

The core inflation rate, which excludes eight volatile items such as gasoline, unexpectedly slowed to a 1.3 percent pace in June from May’s 1.8 percent. Economists forecast it would accelerate to 1.9 percent.

Bank of Canada Governor Mark Carney said this week that inflation will exceed 3 percent, the top of his target range, in “the short term,” while keeping his key interest rate at 1 percent to foster an economic recovery. Policy makers are weighing rising prices against the risks posed by Europe’s debt crisis and slow U.S. growth.

“It certainly gives the Bank of Canada a little bit more flexibility to stay on the sidelines,” said Sal Guatieri, a senior economist at Bank of Montreal in Toronto.

The Canadian dollar fell 0.7 percent to 94.99 cents per U.S. dollar at 12:55 p.m. in Toronto. One Canadian dollar buys $1.0527. The two-year Canadian government bond yield fell six basis points to 1.50 percent.

Currency Weakens

The currency weakened from about 94.35 cents to 94.65 cents during the 40 minutes before Statistics Canada released the CPI data at 7 a.m. Toronto time.

“There was, once again, heavy speculation about the number before the release,” said Sebastien Galy, a senior foreign- exchange strategist at Societe Generale SA in London, via e- mail.

Canada’s statistics agency made economic data available to companies licensed to distribute its data up to 59 seconds before the official publication time for more than six years, according to a KPMG LLP report published yesterday on Ottawa- based Statistics Canada’s website.

“KPMG contacted a number of licensed distributors and concluded that it is unlikely that any data were actively released to their clients prior to the official release time,” a Statistics Canada summary of the report said.

KPMG Investigation

The KPMG investigation was ordered in December by then- Industry Minister Tony Clement after the agency, Canada’s primary source of economic information, said it had allowed distributors to get information as much as 59 seconds before it was released to the public. The agency stopped the practice on Nov. 25 after being alerted to it by Bloomberg News.

“Statistics Canada applies strict security procedures during media lockups to prevent release of protected information prior to official release time,” Peter Frayne, head of Statistics Canada’s media relations in Ottawa, said in an e- mail. “These procedures were followed during this morning’s lockup and we have no indication that anything unusual occurred.”

The currency reached the strongest in more than three years yesterday on speculation the Bank of Canada will increase its policy interest rate this year. The central bank’s statement at its July 19 rate decision dropped the word “eventually” from a phrase about when policy makers will move.

“It’s comforting in so far that some of the immediate pressure on the Bank of Canada” to raise interest rates is lifted, said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit.

Monthly Data

On a monthly basis, consumer prices fell 0.7 percent in June and the core measure fell 0.6 percent. Economists forecast consumer prices would drop 0.2 percent from May and that core prices would be unchanged.

Gasoline prices fell 3.7 percent on the month in June, slowing the year-over-year advance to 28.5 percent from May’s 29.5 percent, Statistics Canada said.

The main factor behind the decline in the annual inflation rate was a 3.1 percent drop in passenger vehicle prices that was due to “larger discounts given by some manufacturers,” the report said.

Traveler accommodation prices fell 2.9 percent in June from a year earlier, compared with a May gain of 3.3 percent.

The Bank of Canada two days ago raised its inflation forecast over the next nine months, saying consumer prices will average 2.8 percent from July through September and slow to 1.9 percent in the second quarter of next year. They also said the core rate, which excludes eight volatile items, will peak at 2.1 percent in the first quarter of 2012.

Underlying Pressures

“The underlying inflationary pressures are stronger in Canada than they are in the United States,” said Paul Fenton, chief economist at Caisse de Depot et Placement du Quebec, Canada’s biggest pension-fund manager and a former Bank of Canada economist, before the report. “Starting to raise interest rates in the fall is the most likely outcome,” he said, adding the central bank “will go at a measured pace.”

Statistics Canada also said today that retail sales rose 0.1 percent in May, compared with economist predictions for a 0.3 percent decline. Gasoline receipts were the highest in almost three years and building material and gardening store sales rose 3.3 percent.

(Bloomberg)

 US

U.S. technology stocks rallied on improving earnings, sending the Nasdaq-100 Index to a 10-year high and extending a weekly gain for the Standard & Poor’s 500 Index, while lower-than-estimated results at Caterpillar Inc. dragged the Dow Jones Industrial Average lower.

AMD rose 19 percent after the chipmaker forecast more sales than analysts estimated. Technology stocks in the S&P 500 gained 1.2 percent, the most among 10 industries, as SanDisk Corp. added 9.6 percent after earnings beat projections. Caterpillar slid 5.8 percent as profit trailed projections because of Japan’s record earthquake and slower demand from China. C.R. Bard Inc. declined 12 percent, the most in the S&P 500, after reporting a loss in the second quarter.

The S&P 500 rose 0.1 percent to 1,345.01 at 4 p.m. in New York and gained 2.2 percent for the week. The Dow Jones Industrial Average dropped 43.25 points, or 0.3 percent, to 12,681.16. Gains in technology stocks pushed the Nasdaq-100 Index up 1.1 percent to a 10-year high.

“You’re seeing fast money gravitate to the large-cap tech names, viewing them as better able to withstand slower economic growth,” said Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York in a telephone interview. “There are a couple stocks weighing on the Dow where the earnings came out a little less than expected but overall, earnings have been pretty good. All eyes are on the budget deficit discussion. It’s not a market people really want to short.”

Aid for Greece

Stocks surged yesterday after euro-area leaders eased the terms of loans for cash-strapped nations and announced the latest aid for Greece after eight hours of talks yesterday. Officials empowered their 440-billion euro ($635 billion) rescue fund to buy debt across stressed nations, helping to erect a firewall around Spain and Italy even as they risked temporary default to lighten the Greek debt burden.

“Policy makers have made an important step,” said Jeffrey Palma, global equity strategist at UBS AG, in an interview on Bloomberg Television’s “In the Loop.” “Is this the be-all end-all package? No, and I think we need to be concerned still that there are medium-term challenges, but I do think it eliminates some of those tail risks.”

Quarterly reports from corporations have helped boost U.S. stocks this week. Among 122 S&P 500 companies that have reported earnings since July 11, 83 percent exceeded the average analyst estimate, according to data compiled by Bloomberg. The S&P 500 climbed 2.1 percent this week through yesterday.

(Bloomberg)

Have a Wonderful Weekend!

 

  

As Always,

 

Kyle, for Carolann.

 

Dear Friends,

 

 “Life is really simple, but we insist on making it complicated.”

– Confucius

Photo of the Day:

Acrobats from the Shenyang Acrobatic Troupe (Circus of China) perform during a rehearsal of Sky Mirage II in Sao Paulo, Brazil. – The Globe and Mail.

Market Commentary:

 

 Canada

 Canada’s dollar appreciated to the strongest in more than three years versus the greenback after statements this week from the Bank of Canada led investors to raise bets interest rates will increase this year.

 The loonie, as the currency is commonly called, weakened against the euro for a second day on reports of progress in addressing the Greek debt crisis. Crude oil, Canada’s largest source of export revenue rose for a third day.

“It’s getting harder and harder for the Bank of Canada to justify the low interest rates as inflation starts to creep up higher,” said Aaron Fennell, a futures specialist at Bank of Nova Scotia’s Scotia McLeod unit, by phone from Toronto. “At some point, they’re going to have to start raising rates and they may have to raise rates quite a bit before we’re said and done to get to a more normal interest rate. Long-term, you have to be bullish the Canadian dollar.”

 The currency rose as much as 0.5 percent to 94.23 cents per U.S. dollar, the strongest level since Nov. 9 2007, and traded at 94.47 cents at 3:04 p.m. in Toronto. It ended yesterday at 94.74 cents. One Canadian dollar buys $1.0585.

Crude oil futures gained 1.2 percent to $99.31 a barrel in New York.

 European Discussions

 European leaders met in Brussels seeking solutions for their 21-month sovereign debt crisis.

French President Nicolas Sarkozy reiterated support for the euro after the summit closed, saying it’s an “irreplaceable” achievement of Europe. He said a bailout fund will operate in secondary markets. Greece will receive additional aid of 109 billion Euros ($157 billion), according to the European Union.

Spooked by a bond market selloff last week, leaders empowered their 440-billion euro rescue fund to buy debt across stressed euro nations after eight hours of talks in Brussels. The fund can also aid troubled banks and offer credit-lines to repel speculators. Leaders pledged a 160 billion euro aid package for Greece, eased the terms of its existing loans and cajoled bondholders into footing part of the bill.

“All eyes are on euro and what’s going on over there and their discussions,” C.J. Gavsie, managing director for foreign exchange trading at Bank of Montreal, said by phone from Toronto.

 Bonds Fall

 Canadian government bonds fell, pushing the yield on benchmark 10-year bonds five basis points higher to 3 percent. The price of the 3.25 percent security due in June 2021 fell 46 cents to C$102.15.

Consumer prices advanced 3.6 percent in June from a year earlier, after a 3.7 percent gain in May, Statistics Canada may report tomorrow in Ottawa, according to the median forecast of 24 economists in a Bloomberg News survey.

The Bank of Canada on July 19 kept its benchmark policy rate at 1 percent and said borrowing costs will rise, omitting the word “eventually,” which had appeared in previous statements. The bank also raised its forecast for inflation.

 “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn,” Bank of Canada Governor Mark Carney said in remarks at a press conference yesterday.

The loonie has weakened 1.2 percent this year versus the currencies of nine other developed nations, according to Bloomberg Correlation-Weighted Currency Indexes.

 The S&P/TSX Capped Energy led gains among the benchmarks, adding 1.5% as oil jumped 73 cents, or 0.7%, to settle at $99.13 a barrel. Shares of Suncor Energy Inc.  gained 2.5%. The S&P/TSX Capped Financial Index rose 1.1% as shares of the Bank of Montreal added 1.2%.

 Industrial metals stocks tempered the gains, falling after HSBC’s China manufacturing Purchasing Managers’ Index fell to a 28-month low in July. China makes up a large portion of Canadian commodity exports. 

 The S&P/TSX Capped Metals and Mining Index lost 0.1% as copper futures lost 5 cents, or 1.2%, to settle at $4.38 a pound.

 (Reuters/Marketwatch)

  US

 U.S. stocks rallied, extending a weekly gain for the Standard & Poor’s 500 Index, as European officials announced a plan that will give additional aid to Greece and Morgan Stanley’s results beat estimates.

 Morgan Stanley jumped 11 percent after the world’s largest brokerage posted a smaller-than-estimated loss as trading revenue rose from the first quarter. Motorola Mobility Holdings Inc. soared 12 percent after Carl Icahn urged the handset maker to explore alternatives for its patents. Medco Health Solutions Inc. advanced 14 percent after Express Scripts Inc. agreed to buy the pharmacy-benefits manager for $29.1 billion.

 The S&P 500 added 1.4 percent to 1,343.80 at 4 p.m. in New York, extending its gain this week to 2.1 percent. The Dow Jones Industrial Average climbed 152.50 points, or 1.2 percent, to 12,724.41.

 “It’s a sigh of relief,” said Joseph Veranth, chief investment officer at Dana Investment Advisors in Brookfield, Wisconsin, which manages $3.3 billion. “Progress on Europe’s debt situation is allowing the market to remain at these levels. All of the other satellite countries are looking to see how the EU settles the debt situation in Greece because it has ramifications for the European banks. It’s the framework for a package and the markets have reacted positively.”

Greece will receive additional aid of 109 billion euros ($157 billion), according to the European Union. Italian Prime Minister Silvio Berlusconi said the total value of a second Greek bailout is 160 billion euros. French President Nicolas Sarkozy said that measures agreed by euro-region leaders today to aid Greece will not be replicated to help other countries.

 Euro, Stocks

 The euro and equities strengthened as European Union said Greece will receive aid worth 160 billion euros ($230 billion) and leaders agreed to increase the power of their regional rescue fund to allow it to act on a precautionary basis, finance the recapitalization of banks and buy bonds in the secondary market.

The S&P 500 extended gains as the New York Times reported that President Barack Obama and House Speaker John Boehner were close to a “major budget deal,” boosting optimism the world’s biggest economy will avoid defaulting on its debt. Spokesmen for Obama and Boehner denied the report.

 The S&P 500 had its biggest rally since March on July 19 as Obama endorsed a bipartisan deficit-reduction plan from the so- called Gang of Six senators. The index declined 2.8 percent from a three-year high in April through yesterday amid speculation the sovereign debt crisis in Europe is spreading and concern U.S. lawmakers will fail to reach a deal on raising the debt limit before the Aug. 2 deadline, pushing the government closer to default.

S&P reiterated today that there is a 50 percent chance it will lower the U.S. credit rating within three months as lawmakers struggle to reach agreement.

 Earnings Season

 Earnings results have boosted U.S. stocks this week. Of the 100 S&P 500 companies that have reported earnings since July 11, 86 percent have exceeded analyst estimates, according to Bloomberg data.

Stock futures maintained gains after a report said more Americans than forecast filed claims for unemployment benefits last week. Applications for jobless benefits increased 10,000 last week to 418,000, Labor Department figures showed. Economists forecast 410,000 claims, according to the median estimate in a Bloomberg News survey.

 The Conference Board’s index of U.S. leading economic indicators rose 0.3 percent in June, topping the 0.2 percent median forecast in a Bloomberg News survey of economists, and a Federal Reserve gauge of manufacturing in the Philadelphia region showed stronger-than-forecast growth.

 (Bloomberg)

Have a wonderful evening everyone!

  

As Always,

  

 Kyle, for Carolann.

 

 

Dear Friends,

  

“If you have built castles in the air…

Your work need not be lost…

That is where they should be…

Now put foundations under them…”

-Henry David Thoreau

 

  

Photo of The Day:

 

Cyclists compete in the final leg of the 2011 Tour De France Championship (REUTERS)

  

Market Commentary

 Canada

Canada’s dollar advanced to the highest since May 2 against its U.S. counterpart on speculation the central bank will raise its benchmark rate from 1 percent as soon as September amid quickening inflation.

 The loonie, as the currency is also known, approached a three and a half-year high, as optimism that policy makers in Europe and the U.S. will address debt conflicts drove demand for higher-yielding assets. Bank of Canada Governor Mark Carney reiterated in a statement today that monetary stimulus will be withdrawn.

“The reality is that 1 percent is not a sustainable rate,” Firas Askari, head currency trader at Bank of Montreal’s BMO Capital unit, said by phone from Toronto. “It’s an emergency, accommodative rate, and Canada is not in a position that it requires this any further. The inflation numbers are concerning. In my mind there’s a high likelihood of a rate hike, if not two, by the end of this calendar year.”

 The Canadian currency gained 0.3 percent to 94.77 cents per U.S. dollar at 3:49 p.m. in Toronto, compared with 95.01 cents yesterday. It touched 94.57, close to the 94.46 it reached on April 29, the strongest since November 2007. One Canadian dollar buys $1.0552.

 Less Stimulus

 “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn,” Carney said in opening remarks to today’s press conference after the release of the quarterly monetary policy report.

Yields on two-year Government of Canada bonds rose four basis points to 1.52 percent. The securities yielded 115 basis points more than equivalent-maturity Treasuries, from 102 basis points before the Bank of Canada statement. The spread was as wide this year as 121 basis points in January.

Today’s statement echoed another made yesterday when the central bank maintained its target rate for overnight loans between commercial banks at 1 percent, where it’s been since September. Previous statements had used the word “eventually” to describe the timing of rate increases.

 Rate Signal

 “The market’s initial take on the bank announcement yesterday was that the removal of the word eventually signaled some sort of intent,” Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets unit, said by phone from Toronto. “What the time frame on that is, who knows, but obviously it was taken out for a reason.”

Enright predicted the Canadian dollar could appreciate beyond the highs of 94.46 cents seen in April.

 “With the perception of our shift on the bank’s monetary policy outlook, I think the loonie can see 92 cents by the end of the summer,” BMO’s Askari said.

Inflation will average 2.8 percent between July and September and slow to 1.9 percent in the second quarter of next year, the Ottawa-based central bank said in its Monetary Policy report today. The so-called core rate, which excludes eight volatile items, will peak at 2.1 percent in the first quarter of 2012.

“We still think early 2012 before the Bank of Canada tightens,” Shaun Osborne, chief currency strategist at Toronto- Dominion Bank, said in an e-mail. He predicted the Canadian dollar will depreciate to parity by year-end.

Europe’s Bonds

 Spanish and Italian bond yields fell a second day before a summit tomorrow of European officials. The Dollar Index dropped after President Barack Obama praised a bipartisan Senate proposal yesterday for a $3.7 trillion debt-cutting plan as U.S. lawmakers intensify efforts for a compromise on government spending less than two weeks before a threatened default.

“Even if we do have a few headlines which appease investors and calm the bonds markets in the short term, then we should see a bit of a risk rally,” said UBS’s Walker.

 Canadian wholesale sales increased 1.9 percent to C$47.6 billion ($50 billion) in May, the fastest rate in 18 months as sales of agricultural supplies and farm equipment surged, Statistics Canada said. Economists predicted sales would rise 0.1 percent, the median of 15 responses compiled by Bloomberg News.

“It was a big beat on wholesale sales in May and it should add to the optimism,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone from Toronto. “Canada’s dollar is further supported by the global risk backdrop, which is pointing decidedly higher.”

 Chris Fournier (Bloomberg)

US

 U.S. stocks fell, a day after the best rally since March for the Standard & Poor’s 500 Index, as concern the government will fail to increase the debt limit overshadowed higher-than-estimated earnings at United Technologies Corp.  lost 1.8 percent as Boeing Co.  picked a rival engine maker to upgrade its 737 jet. Yahoo! Inc., Altria Group Inc.  and Johnson Controls Inc. lost at least 2.4 percent as results disappointed investors. Apple jumped 2.7 percent after record sales of iPads and iPhones lifted profit, helping the company join 89 percent of S&P 500 members topping estimates so far in the earnings season.

 The S&P 500 slipped 0.1 percent to 1,325.84 at 4 p.m. in New York after the yesterday surging 1.6 percent as President Barack Obama endorsed a bipartisan deficit-reduction plan from the so-called Gang of Six senators. The Dow Jones Industrial Average decreased 15.36 points, or 0.1 percent, to 12,572.06 after surging 202 points yesterday in its biggest gain of 2011.

 “There have been a couple of companies that have had some nice beats,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., which oversees about $80 billion, said in a telephone interview. “But the macro environment is weighing on things and people are still worried about the U.S. debt situation.”

 The S&P 500 has declined 2.8 percent from a three-year high in April amid speculation the sovereign debt crisis in Europe is spreading across the region and concern U.S. lawmakers will fail to reach a deal on raising the debt limit before the Aug. 2 deadline.

 Deficit Talks

 The proposal for a $3.7 trillion debt-cutting plan praised by Obama is facing resistance from House Republicans, as lawmakers intensify efforts for a compromise on government spending less than two weeks before a threatened default. Obama plans to renew talks at the White House this week with congressional leaders as the Democratic-led Senate and Republican House pursue divergent paths toward ending the stalemate.

Blackstone Group LP’s Byron Wien said today in an interview on Bloomberg Radio that investors in the stock market do believe U.S. lawmakers will reach a deal on raising the nation’s debt limit as the likelihood that tax increases will be part of the plan increases.

 “There’s a residual feeling on the part of investors that somehow this will be solved,” said Wien, the vice chairman of Blackstone Advisory Partners, whose parent, New York-based Blackstone Group LP, is the world’s largest private-equity firm. “The point that the market was so excited about yesterday was that since it was a bipartisan group of six there was a possibility there could be revenue increases in addition to spending cuts – that’s key to getting an agreement.”

 Inyoung Hwang (Bloomberg)

Have a wonderful evening everyone!

  

As Always,

  

Kyle, for Carolann.

 

 

 

 

Dear Friends,

Photo of the Day:

Performers take part in the opening ceremony of the 14^th FINA World Aquatic Championships in Shanghai. REUTERS/Issei Kato.

Market Commentary:

CANADA

Canadian stocks rose, led by energy producers, after U.S. housing starts surged and companies including Mosaic Co. beat analysts’ profit estimates.

Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, gained 3.2 percent as crude oil advanced as much as 2.7 percent. Teck Resources Ltd., Canada’s biggest base-metals and coal producer, increased 2.2 percent as copper futures climbed to a three-month high. Potash Corp. of Saskatchewan Inc. rose 2.8 percent after U.S. peer Mosaic surpassed its average earnings estimate by 9.5 percent, excluding certain items.

The Standard & Poor’s/TSX Composite Index gained 78.12 points, or 0.6 percent, to 13,332.26 at 1:48 p.m. in Toronto.

“We’ve got the first positive economic surprise in a long time in housing starts this morning,” Keith McLean, who oversees C$200 million ($211 million) as a managing partner at GMP Investment Management in Toronto, said in a telephone interview. “Even the bears coming into this period were expecting earnings to be solid, but the bears were looking for negative commentary on guidance, and we’re just not seeing that.”

The S&P/TSX rallied 52 percent from the first quarter of 2009 to yesterday as at least two-thirds of S&P 500 companies topped the average profit estimate in each quarter since then, according to Bloomberg data. Since July 11, 31 of 36 S&P 500 companies and all 5 S&P/TSX companies that have reported financial results have beaten the average forecast.

Beating Estimates

Companies including Bank of New York Mellon Corp., International Business Machines Corp., Novartis AG and UnitedHealth Group Inc. reported earnings that surpassed their average analyst estimates in Bloomberg surveys since the close of trading yesterday.

U.S. builders began work on 629,000 new homes in June, the most since January, compared with a revised 549,000 in May, the Commerce Department said today in Washington. Economists had forecast a rate of 575,000, the median of 71 estimates in a Bloomberg survey. Building permits increased 2.5 percent, more than 50 of 51 forecasts.

Fifty of 67 S&P/TSX energy companies advanced as crude futures climbed.

Canadian Natural increased 3.2 percent to C$40.75. Suncor Energy Inc., Canada’s largest oil and gas producer, rose 2.3 percent to C$38.42. Nuvista Energy Ltd., a western Canadian oil and gas producer, jumped 6.8 percent to C$9.91 after soaring as much as 8.8 percent, the most intraday in a year, earlier today.

Record Gain

PetroBakken Energy Ltd., which explores for light oil in Canada, rallied a record 14 percent to C$14.15, after closing yesterday at the lowest price since it began trading in October 2009. Petrobank Energy and Resources Ltd., PetroBakken’s parent company, surged 14 percent to C$14.97.

The country’s six largest banks each advanced as the S&P/TSX Banks Index rebounded from the lowest close since January.

Royal Bank of Canada, the country’s biggest lender by assets, increased 0.9 percent to C$52.93 for its first gain since July 4. Toronto-Dominion Bank, its largest competitor, climbed 0.6 percent to C$78.77. Manulife Financial Corp. , North America’s fourth-biggest insurer, rallied 1.2 percent to C$15.75.

An index of S&P/TSX base-metals and coal stocks rose as copper gained as much as 2.1 percent. Teck advanced 2.2 percent to C$50.09. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 3.5 percent to C$136.64.

Potash, Agrium

Fertilizer producers climbed after Mosaic reported earnings and the U.S. said crop conditions in the country worsened last week. Potash Corp., the world’s largest fertilizer producer by market value, rose 2.8 percent to C$57.86. Agrium Inc., which also sells agricultural products, gained 2 percent to C$86.06.

The S&P/TSX Gold Index retreated the most in three weeks as the metal slipped after 10 days of gains in New York. Goldcorp Inc., the world’s second-largest producer by market value, lost 2.2 percent to C$51.63. Agnico-Eagle Mines Ltd., the fifth- largest Canada-based gold-mining company by revenue, decreased 4 percent to C$60.53. Silver Wheaton Corp., the country’s fourth- biggest precious-metals company by market value, fell 2.9 percent to C$36.93 as silver dropped.

Lake Shore Gold Corp., which operates in Ontario, plunged 14 percent to C$2.91 after cutting its 2011 production forecast by as much as 32 percent. Earlier today, the shares sank 19 percent, the most intraday since December 2008.

Forestry companies soared after the U.S. housing report indicated demand may strengthen.

West Fraser Timber Co., Canada’s largest forestry company, increased 4.2 percent to C$48.99. Canfor Corp., its biggest domestic peer, jumped 11 percent, the most intraday in 23 months, to C$11.86 a day after at least three analysts raised their ratings on the company. Sino-Forest Corp. (TRE), the Hong Kong- and Toronto-based company fighting a short seller’s assertions of financial manipulation, climbed 14 percent to C$4.02 after tumbling 13 percent yesterday.

-Matt Walcoff (Bloomberg)

US

Stocks surged, sending the Standard & Poor’s 500 Index to its biggest gain in four months, and Treasuries rallied amid optimism lawmakers were moving closer to a deal that would cut the U.S. budget deficit and avoid default. Oil helped lead gains in commodities and the dollar fell.

The S&P 500 jumped 1.6 percent to 1,326.73 at 4 p.m. in New York, its biggest gain since March 3. The S&P GSCI Index of 24 commodities advanced 1 percent as oil surged 1.6 percent to $97.50 a barrel. Ten-year Treasury note yields lost six basis points to 2.87 percent and the Dollar Index, a gauge of the currency against six major peers, slipped 0.4 percent.

Stocks added to an early advance and Treasuries climbed after President Barack Obama endorsed a deficit-cutting proposal by a bipartisan group of senators known as the “Gang of Six.” Earlier gains in global equities were triggered by higher-than- estimated results at companies from International Business Machines Corp. to Coca-Cola Co. and Novartis AG. “We’re getting positive news flow on two fronts today: the political front related to the national debt ceiling and we have the reports coming out of the earnings season,” Keith Wirtz, who helps oversee $18 billion as chief investment officer for Fifth Third Asset Management in Cincinnati, said in a telephone interview. “IBM’s release is one of the tone-setters for this week. A good earnings season might put a floor in this stock market.”

The S&P 500 erased yesterday’s 0.8 percent slide and rebounded from a three-week low. S&P 500 technology shares climbed 2.7 percent as a group, the most in a year, to lead gains among all 10 of the index’s main industries.

Earnings Season

IBM jumped 5.7 percent to an all-time high of $185.21 to lead gains in the Dow Jones Industrial Average, which surged 202.26 points, or 1.6 percent, to 12,587.42 in its first gain of more than 200 points this year. Coca-Cola Co. climbed 3.3 percent, Wells Fargo & Co. added 5.7 percent and Harley-Davidson Inc. rallied 8.9 percent after each reported higher-than- estimated results.

Goldman Sachs Group Inc. lost 0.7 percent after the fifth- biggest U.S. bank by assets reported second-quarter profit that trailed analysts’ estimates. Goldman Sachs was one of only five S&P 500 companies to post quarterly results that trailed estimates since the reporting season started. Per-share earnings have topped analysts’ estimates at 31 of the 36 companies in the S&P 500 that released earnings since July 11, according to Bloomberg data.

“Profits are finally shining through some of the daunting headlines and investors are taking notice,”Jack Ablin, chief investment officer for Chicago-based Harris Private Bank, which oversees $55 billion, said in a telephone interview. “IBM was a big one,” he said. It sent “a strong signal that companies can still thrive in an uncertain economic environment.”

Housing Starts

All 12 stocks in an S&P gauge of homebuilders advanced after U.S. housing starts increased more than forecast in June to the fastest pace in five months. Work began on 629,000 houses at an annual pace, up 14.6 percent from the prior month, figures from the Commerce Department showed. Housing starts were projected to rise to a 575,000 annual rate

News Corp.  shares rallied 5.5 percent. Chairman and Chief Executive Officer Rupert Murdoch told U.K. lawmakers that he wasn’t responsible for the phone-hacking scandal at the company’s News of the World newspaper, saying that the blame lies with the “people that I trusted to run it.”

Thirty-year U.S. bonds rallied, sending their yield down 13 basis points to 4.18 percent, after Obama endorsed a bipartisan deficit-cutting proposal as “broadly consistent” with his administration’s approach. The plan to shave about $3.7 trillion from the debt over 10 years put forward by the senators is “a very significant step,” Obama said. While the administration hasn’t yet had a chance to review the Senate proposal in depth, “we’re in the same playing field,” he said.

Deficit Plan

“We don’t have any more time to posture,” Obama said in remarks at the White House. Time is running out to raise the debt limit before Aug. 2, when the Treasury Department has said the U.S. risks going into default, a step that would roil financial markets, he said.

Cotton and corn rallied at least 1.5 percent to help lead gains in 18 of 24 commodities tracked by the S&P GSCI Index amid concern that hot, dry weather will hurt crop output. Gold futures lost $1.30 to settle at $1,601.10 an ounce after reaching an intraday record of $1,610.70 an ounce yesterday following a 10-day streak of gains, the longest rally since 1980.

Inyoung Hwang; Michael Regan (Bloomberg)

“The future belongs to those who believe in the beauty of their dreams.”

-Eleanor Roosevelt

   

As Always,

 Kyle, for Carolann.

 

 Please note that Carolann will be away from the office, returning on Monday, July the 25^th. 

Although out of town, she is easily accessible VIA mobile phone, should you require any assistance during this time.

 

 

 Photo of the Day:

A hare runs across the sixth green during the first round of the BritishOpen golf championship at Royal St George’s in Sandwich, southern England July 14, 2011. REUTERS/Kieran Doherty

Market Commentary:

Canada

(Reuters)

Toronto’s main stock market index retreated on Monday morning as sovereign debt fears triggered an exodus from riskier assets, though a record high for safe-haven gold tempered the decline.

European bank stress test results last Friday did little to calm fears that the euro zone crisis is getting worse, weighing on U.S. equities and other riskier assets. Concerns about the impact of the debt crises on global growth pushed down the price of oil, hitting Canadian oil and gas producers.

Energy shares slipped 0.5 percent and financials dropped 1.1 percent as investors focused Thursday’s emergency meeting of EU leaders to discuss a second bailout package for Greece.

In the United States, investors are nervous about the stalemate in Washington as the August 2 deadline looms for an increase in the statutory $14.3 trillion borrowing limit.

Royal Bank of Canada led the decliners, falling 1.4 percent to C$52.29, followed by Bank of Nova Scotia, down 1.4 percent at C$56.26 and Canadian Natural Resources, off 1.1 percent at C$39.32. “With the U.S. markets down so much it’s going to be hard for us to make headway. The one bright spot has been gold,” said John Kinsey, portfolio manager at Caldwell Securities, though he noted that the gold mining shares are still lagging the price of the commodity.

Gold prices rallied above $1,600 an ounce in Europe as spooked investors bought the metal as a haven from risk.

Goldcorp Inc was the most influential climber, up 2.3 percent at C$52.76, while Barrick Gold was close behind, advancing almost 2 at C$47.01.

 US

(Bloomberg)

U.S. stocks fell, extending losses from last week for the Standard & Poor’s 500 Index, amid concern American lawmakers will fail to reach a deal on the nation’s debt limit two weeks before a deadline.

Financial shares slumped the most among 10 S&P 500 industry groups, with European leaders planning a summit this week as they seek to contain the region’s debt crisis. News Corp. fell 3.7 percent after two people familiar with the matter said independent directors are questioning whether a leadership change is needed after a phone-hacking scandal. LinkedIn Corp. slid 5.7 percent after JPMorgan Chase & Co. cut its rating.

The S&P 500 lost 1.1 percent to 1,301.83, the lowest level on a closing basis since June 28, at 3:23 p.m. in New York. The Dow Jones Industrial Average slumped 129.50 points, or 1 percent, to 12,350.23. A default by the U.S. would cause more panic than the collapse of Lehman Brothers Holdings Inc. in 2008, former Treasury Secretary Larry Summers told CNN in an interview broadcast yesterday.

“It looks like more partisan fighting is delaying any debt-ceiling resolution,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc. in Boston, wrote in an e-mail. “Words being thrown around like ‘catastrophe and Armageddon’ are certainly not soothing investors’ confidence.”

House Speaker John Boehner, a Republican from Ohio, said his party wouldn’t accept any tax increases as he worked on a deal to lower the deficit. As negotiators near the Aug. 2 deadline for raising the $14.3 trillion U.S. debt ceiling, President Barack Obama, a Democrat, is pushing to close tax loopholes for the richest Americans and corporations and cut discretionary spending by government.

S&P 500’s Tumble

The bankruptcy of Lehman Brothers prompted the biggest collapse of global financial markets since the Great Depression. It drove the S&P 500 down 46 percent between September 2008 and March 2009. The index dropped 2.1 percent last week amid concern the debt crisis in Europe is spreading and American lawmakers are putting the nation’s top credit rating in jeopardy.

Equities declined today as Goldman Sachs Group Inc. economists led by Jan Hatzius, based in Germany, cut their forecasts for real U.S. economic growth to 1.5 percent in the second quarter and 2.5 percent in the third quarter, from 2 percent and 3.25 percent, respectively. Hatzius’s team, in a report received after markets closed on July 15, cited lower-than-estimated economic data including a drop in the Thomson Reuters/University of Michigan consumer sentiment index to “territory normally associated with recession.” The gauge decreased in July to 63.8, the weakest level since March 2009.

Dow Stocks Fall

The VIX, as the Chicago Board Options Exchange Volatility Index is known, surged as much as 12 percent to 21.93 today, heading for its highest close in a month. Last week, the index, which measures the cost of using options as insurance against declines in the S&P 500, soared 22 percent, the most in a week since May 6. Even with today’s drop, the S&P 500 is up 3.6 percent for 2011.

“We still think that the intermediate term trend is positive, but when the risk fears are out there, you’ve got these gap down days like today, all the bears come out and the fears are there,” Timothy Ghriskey, the chief investment officer at the Solaris Group LLC in Bedford Hills, New York, which manages $2 billion, said in a telephone interview.

Bank Stocks

Of the 30 stocks in the Dow, Bank of America Corp. the Charlotte, North Carolina-based bank, fell the most, sinking 2.7 percent to $9.74.

Other bank shares also tumbled after eight European lenders failed stress tests last week, driving the region’s bank shares below the value of their tangible assets for the first time in two years. Citigroup Inc. fell 2.4 percent to $37.45. Genworth Financial Inc. fell the most in the S&P 500, dropping 8.4 percent to $8.99.

The 81-member S&P 500 Financials Index which lost the most last week since Nov. 12, retreated 1.6 percent. Financial shares in the S&P 500 are trading at 12.6 times earnings, the lowest level since December 2007, data compiled by Bloomberg show.

Goldman Sachs Group Inc., Bank of America and Wells Fargo & Co. are all scheduled to report tomorrow morning that quarterly earnings grew at least 5 percent from a year ago.

More Earnings

More than 100 companies in the S&P 500 are scheduled to report quarterly results this week, including International Business Machines Corp. today, according to data compiled by Bloomberg. Technology companies from Yahoo! Inc. to Apple Inc. are set to post results tomorrow.

Among the 17 S&P 500 companies that posted results since July 11, 14 beat the average analyst estimate for per-share profit, data compiled by Bloomberg show.

MGIC Investment Corp. reported a per-share loss excluding some items that was almost eight times bigger than the average analyst estimate. Shares of the largest U.S. mortgage insurer declined 22 percent after sinking 27 percent, the most intraday since May 2009, to $4.66.

WebMD Health Corp., the medical-information company, fell 30 percent to $32.65 after reducing its 2011 forecast for profit and sales, citing an anticipated decline in advertising revenue.

‘Dead Money’

News Corp. slumped 3.7 percent to $15.06. Chairman and Chief Executive Officer Rupert Murdoch is struggling to control the destiny of the company he began building six decades ago after a trusted deputy was arrested and Scotland Yard’s top official quit.

“The company is at risk right now,” Porter Bibb, managing partner at Mediatech, a New York-based investment bank, said on Bloomberg Television’s “In Business with Margaret Brennan.” “News Corp. is a very good, very strong, very profitable company, but it’s in jeopardy, and the Street has called investing in News Corp. today dead money.”

LinkedIn fell 5.7 percent to $103.72 after JPMorgan cut its rating to “neutral” from “overweight.” The website focused on job seekers and recruiters has more than doubled since the shares began trading in May, and JPMorgan said it downgraded the stock based on “valuation rather than fundamental concerns.”

“To reach a port we must sail..Sometimes with the wind and sometimes against it..But we must not drift or lie at anchor..”
       – Oliver Wendell Holmes

 

 

Have a wonderful evening!

 

 Kyle, for Carolann

Dear Friends,

“Life is like a game of cards. The hand that is dealt you represents determinism; the way you play it is free will…”

-Jawaharal Nehru

  

  Photo of the Day:

Japan’s players celebrate with the trophy after the victory against the US in the Womans World Cup of Soccer Finale in Frankfurt. (REUTERS- Kai Pfaffenbach)

  

MARKET COMMENTARY

Canada

(Baystreet.ca)

The Toronto stock market hung onto a small gain late morning Friday amid rising oil prices.

 The S&P/TSX Composite Index approached noon ahead 34.83 points to 13,287.75 The Canadian dollar surged 0.64 cents to 104.78 cents U.S.

The energy sector rose as Suncor Energy climbed 34 cents to $37.94 and Canadian Natural Resources was ahead 32 cents to $39.62.

Copper futures were four cents higher $4.42 U.S. a pound and the base metals sector gained. Teck Resources rose 93 cents to $49.63 while Sherritt International declined 18 cents to $6.69.

 The gold sector was up as nervous investors pushed bullion prices further into record high territory for a ninth session. Kinross Gold added 12 cents to $16.49.

The financial sector was down as Royal Bank shed 51 cents to $52.84. CIBC said it will acquire a 41% equity interest in American Century Investments for $848 million U.S. Kansas City-based American Century is a major U.S. asset management company with $112 billion U.S. under management. CIBC shares gained 37 cents to $74.99.

 On the economic slate, Statistics Canada revealed that manufacturing sales fell by 0.8% in May from April, much worse than expected, with the auto industry not bouncing back yet from an April tumble, lent momentum by the earthquake and tsunami in Japan.

 The TSX Venture Exchange extended its gains by 11.34 points to 2,002.29, while the Nasdaq Canada index gained 4.85 points to 556.41.

In Toronto, losing subgroups outnumbered gainers eight to five. Health-care sagged 1%, while consumer discretionaries slipped 0.5% and telecoms fell 0.4%. Energy led the gainers, up 1.3%, metals and mining surged 1.2% and materials gained 0.5%. Utilities were flat at noon hour. Oil for August delivery added $1.51 to $97.20 U.S. a barrel.

Gold futures for August delivery dropped $3.40 to $1,585.90 U.S. an ounce.

   

US

 (Reuters) – Anxiety over the results of European bank stress tests drove down the euro against the dollar on Friday and kept a lid on equities on both sides of the Atlantic, despite strong earnings from Google and Citigroup.

 Gold slipped after hitting record highs this week, with some of the recent risk aversion easing. Worries about the persistent euro zone debt woes have weighed on markets, along with the prospect of a U.S. debt default.

 The stress tests on European banks are expected to show that as many as 15 lenders need more capital to withstand a prolonged recession, with criticism growing that the tests do not encompass the impact of a Greek default. The results are to be published at about 1600 GMT. 

Investors remain deeply concerned by Europe’s inability to find a broader solution to a debt crisis that could eventually lead to a series of sovereign defaults and have wide-ranging implications for public finances and banks worldwide.

“There’s a general sense of nervousness prevailing because of the stress tests,” said Boris Schlossberg, director of FX research at GFT in New York.

 The euro edged lower to $1.41251, down 0.1 percent, while on the week, the euro was down 0.6 percent versus the dollar.

 The FTSEurofirst 300 index of leading European shares was down 0.1 percent, while the MSCI All-Country World Index rose 0.1 percent.

 Wall Street stocks opened higher after both Citigroup and Google reported stronger-than-expected earnings, adding to optimism about corporate results for the second quarter. But the market pared gained on concern over the European bank stress tests and signs of weakness in the U.S. economy.

 U.S. consumer sentiment in early July fell to its lowest since March 2009 and manufacturing in New York state contracted unexpectedly, according to data released on Friday. Indexes are down for the week.

 The Dow Jones industrial average was up 23.72 points, or 0.19 percent, at 12,460.84. The Standard & Poor’s 500 Index was up 4.41 points, or 0.34 percent, at 1,313.28. The Nasdaq Composite Index was up 17.94 points, or 0.65 percent, at 2,780.61. 

Overnight in Asia, Japan’s Nikkei average closed 0.4 percent higher.

 The dollar was supported by some safe-haven buying due to the contraction in the New York state’s manufacturing index in July and the drop in a U.S. consumer sentiment index spurred some safe-haven buying of the greenback. The euro and some risk-sensitive currencies such as the Australian and New Zealand dollars fell against the dollar.

 But the focus remained squarely on the critical euro zone bank stress tests. They are expected to show that around 10-15 lenders have insufficient capital to withstand a prolonged recession.

 Traders, however, cited talk that banks in the euro zone failing the tests could actually be more than 20. “The key number is 15. If the number is higher than 15 banks, then that would create a disturbance in euro/dollar,” said Schlossberg of GFT.

 The euro has borne up relatively well against the dollar due to parallel concerns over the United States’ own debt troubles and hints further monetary easing could yet be on the cards there, potentially flooding global markets with dollars.  

Worries the euro zone debt crisis was spreading to Italy have driven Italian bond yields up half a percent since last Friday and slashed valuations of financial sector firms across the region.

U.S. Treasury prices rose as worries over the fallout from the prolonged debt crisis in Europe and stalled U.S. budget and deficit talks bolstered the safe-haven appeal of U.S. government debt.

 Benchmark 10-year Treasury notes US10YT=RR were trading 8/32 higher in price to yield 2.93 percent, down from 2.96 percent late Thursday.

 Spot gold was bid at $1,583.49 a troy ounce from $1,586.75 an ounce late in New York on Thursday when the precious metal hit a record high of $1,594.16.

(Additional reporting by Dominic Lau, Atul Prakash, William

James, Jessica Mortimer and Simon Jessop in London, and Edward

Krudy in New York; Graphics by Scott Barber and Vincent

Flasseur; Editing by Leslie Adler)

 

As Ever,

Kyle, for Carolann.

 

 

 

Dear Friends,

Tangents:

France celebrates Bastille Day today and it is a national holiday.  Bastille was a medieval fortress and prison in east Paris, the symbol of Bourbon despotism.  When it was stormed by a Parisian mob on this day in 1789, there were only 7  prisoners, but lots of gunpowder to fuel the French Revolution.  Its destruction came to have a unique place in French revolutionary ideology as marking the end of the ancient régime. 

On July 14^th, 1906, A.C. Benson wrote in his diary:  The scent and sound of the great lime tree, full of flowers and bees, came softly to us in the still afternoon.  How strange it is that the lime tree smells so perilously sweet, and yet that single blossom has hardly any fragrance – only a vegetable catkin sort of smell.

Here’s a great idea – saw it in today’s Globe & Mail:

Book lovers’ paradises

“Twice annually, Bill Gates schedules a week-long ‘reading retreat’ during which he does nothing but pore over the books and papers he’s set aside during the year,” Salon says.  “He’s not alone: The idea seems particularly popular in the U.K., where you can sign up at London’s School of Life to receive a customized book list (they have ‘bibliotherapists’ on staff to compile one based on a telephone consultation) and lodging in one of several modern country houses.”

 Photos of the day 

July 14, 2011

Nathalie zu Sayn-Wittgenstein of Denmark, riding Digby, competes in the FEI Grand Prix CDIO competition at the World Equestrian Festival CHIO in Aachen, Germany. Ina Fassbender/Reuters

A girl stands next to a section of a sand sculpture titled Andy Warhol by sculptors Inese Valtere-Ulande and Pedro Mira at the Festival of Sand Sculptures 2011 under the topic Masterpieces of World Culture at a beach near the Peter and Pawel Fortress in St. Petersburg, Russia. Alexander Demianchuk/Reuters

Market Commentary:

 

Canada

By Matt Walcoff

July 14 (Bloomberg) — Canadian stocks dropped for the first time in three days as energy and raw-materials producers fell on speculation the U.S. is unlikely to restart stimulus policies immediately.

Copper producer First Quantum Minerals Ltd. lost 3.1 percent after receiving a “reduce” rating from an analyst at Arbuthnot Banking Group Plc. Gabriel Resources Ltd., which is developing a gold and silver mine in Romania, surged 9.3 percent after getting government approval of its archaeological review.

BlackBerry maker Research In Motion Ltd. retreated 3.3 percent after an analyst at Needham & Co. cut his profit estimates for the company.

The Standard & Poor’s/TSX Composite Index slipped 72.02 points, or 0.5 percent, to 13,252.92. The index had advanced 0.6 percent before U.S. Federal Reserve Chairman Ben S. Bernanke said the central bank won’t soon begin a third round of bond purchases, a strategy known as quantitative easing.

“Some people were paying attention to Bernanke’s comments yesterday that he was ready to ease monetary policy if the economy did slow,” Jeff Bradacs, senior investment analyst on a Manulife Asset Management team that oversees about C$1.7 billion ($1.8 billion), said in a telephone interview. “People were expecting QE3 from those comments, and now not.”

The S&P/TSX gained 0.7 percent yesterday as Bernanke told a Congressional committee the bank might renew stimulus policies if the economy stalls.                           

Speculation that the Fed might return to stimulus policies helped propel gold futures to a record high yesterday. The S&P/TSX Materials Index rallied 6 percent this month through yesterday as gold advanced 5.5 percent. Precious-metals companies make up 13 percent of Canadian stocks by market value, according to Bloomberg data.

Bernanke told a U.S. Senate committee today that higher inflation will discourage the central bank from restarting quantitative easing quickly. “We’re not prepared at this point to take further action,” he said.

Precious-metals producers fell as gold fluctuated after seven days of gains. Barrick Gold Corp., the world’s largest gold producer, decreased 1.3 percent to C$46.01. Agnico-Eagle Mines Ltd., Canada’s fourth-biggest company in the industry by market value, slipped 1.4 percent to C$62.07. Extorre Gold Mines Ltd., which explores in Argentina, slumped a record 14 percent to C$12.57 after Michael Gray, an analyst at Macquarie Group Ltd., cut his rating on it to “neutral” from “outperform.”                   

 Gabriel Resources Ltd., which is developing a gold and silver mine in Romania, soared 9.3 percent, the most since November, to C$8 after saying the country’s government has signed off on the company’s archaeological review of historic mining activity on the site.

Base-metals companies fell as copper and zinc futures dropped. Teck Resources Ltd., Canada’s largest producer of industrial metals and coal, declined 2.1 percent to C$48.70. HudBay Minerals, Inc., which mines copper and zinc in Canada, lost 2.3 percent to C$14.59.

First Quantum decreased 3.1 percent to C$131.21 after Gavin Wood, an analyst at Arbuthnot in London, set a 12-month price estimate for its U.K.-traded shares 14 percent below their closing price yesterday.

In a note to clients, Wood cited the shares’ performance since 2009 — they gained four times as much as the FTSE 300 Mining Index through yesterday — and the chance they may slump if copper retreats or new mines are delayed.                      

 Energy stocks declined as crude oil futures retreated the most in three weeks in New York. Suncor Energy Inc., Canada’s largest oil and gas producer, lost 1.2 percent to C$37.60. Talisman Energy Inc., which operates in North America, the North Sea and Indonesia, decreased 2.1 percent to C$18.05.

The S&P/TSX Insurance Index slumped to the lowest level since June 17. Manulife Financial Corp., North America’s fourth- biggest insurer, lost 1.1 percent to C$16.03. Sun Life Financial Inc., Canada’s No. 3 insurer, fell for a seventh day, slipping 2 percent to an eight-month low of C$27.54 in Toronto Stock Exchange trading.

RIM declined 3.3 percent to C$26.18 after Charlie Wolf, an analyst at Needham & Co., cut his 2012 and 2013 profit estimates on the company. Unless the company improves its sales in the consumer market, “RIM is likely to become a shadow of its former self,” Wolf wrote in a note to clients.

Gildan Activewear Inc., Canada’s largest apparel maker, sank 4.6 percent, the most in seven months, to C$32.91. In a note to clients, Kenneth M. Stumphauzer, an analyst at Sterne Agee Group Inc., said his firm’s surveys indicate Gildan’s wholesale sales volumes dropped more than 10 percent in June.

US

By Nikolaj Gammeltoft and Victoria Stilwell

July 14 (Bloomberg) — U.S. stocks fell, driving the Standard & Poor’s 500 Index to the lowest level of the month, as Federal Reserve Chairman Ben S. Bernanke said he’s not prepared to take immediate action to stimulate the economy.

Raw-material producers, technology and industrial companies lost the most among the 10 main industries in the S&P 500 Index, which erased a gain of as much as 0.7 percent. Marriott International Inc. dropped 6.6 percent on a lower-than-estimated earnings forecast. JPMorgan Chase & Co. rallied 1.8 percent after investment banking profit surged and more customers paid their credit-card bills on time.

The S&P 500 slipped 0.7 percent to 1,308.87 at 4 p.m. in New York, its lowest level since June 29, as a stalemate continued in Washington on negotiations over the U.S. debt ceiling. The Dow Jones Industrial Average dropped 54.49 points, or 0.4 percent, to 12,437.12 after surging 90 points following JPMorgan’s report.

“The market is going to be volatile until we get the situation in Washington resolved,” said Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees about $48 billion. “Earnings have been coming in pretty good and corporate balance sheets are in great shape,” he said in a telephone interview. “The economic data reports were positive.”

Bernanke testified for a second day before lawmakers after saying yesterday he’s prepared to provide more stimulus if needed. Bernanke said today that inflation now is “higher” and “closer” to the central bank’s informal target than was the case in August and that’s one reason why the Fed won’t immediately embark on a third round of bond-buying. “We’re not prepared at this point to take further action,” he told the Senate Banking Committee.

The S&P 500 has rallied 93 percent since March 2009 as the Fed used large-scale asset purchases to buoy the economy and companies posted earnings that beat analysts’ estimates. The index has still fallen 4 percent since April 29 this year on concern the economic recovery is at risk and as Europe’s sovereign-debt crisis grows.

Stocks were also pressured today after Moody’s Investors Service said late yesterday the U.S. government may lose the Aaa credit rating it’s held since 1917 on concern the country’s debt limit will not be raised in time to prevent a missed payment of interest or principal. President Barack Obama is considering summoning congressional leaders to Camp David this weekend to work on a plan to raise the debt ceiling after yesterday’s negotiations on a deficit-cutting plan of at least $2 trillion stalled, two people familiar with the matter said.

“Rating agencies don’t tell us anything we don’t know, but Moody’s warning underlines the seriousness of the situation and the game of chicken at Capitol Hill,” said Philip Marey, senior U.S. economist at Rabobank in Utrecht, the Netherlands.

Equities gained early in the day as government data showed retail sales unexpectedly increased and jobless claims fell more than economists estimated. The 0.1 percent increase in retail sales reported by the Commerce Department compared with the median forecast of a 0.1 percent drop in the Bloomberg News survey of 80 economists. Excluding auto sales, purchases were little changed, the weakest performance since July 2010.

Separate data showed initial jobless claims fell by 22,000 to 405,000 last week. Industrial and technology companies retreated 1 percent each, while materials producers lost 0.9 percent.

Earnings are gaining attention as more companies post second-quarter results. S&P 500 profits are forecast to have grown 13 percent in the quarter, the smallest increase in two years, according to data compiled by Bloomberg.

Google Inc. jumped 11 percent to $585.97 at 4:58 p.m. in after-market trading in New York. The owner of the world’s largest Internet search engine reported sales and profit that topped analysts’ estimates, a sign the company is benefiting from an effort to expand into mobile and display advertising.

“The market is being driven by macro events such as the U.S. and European debt crises,” Giri Cherukuri, who helps manage $2.6 billion as money manager and head trader at Oakbrook Investments in Lisle, Illinois, said in a telephone interview.

“But we’re heading into the heart of earnings season, and people are getting ready for a change towards a market that’ll be focused on the earnings reports of major companies.”

Citigroup Inc., the third-largest U.S. bank, and Mattel Inc., the world’s largest toy maker, are among companies reporting earnings tomorrow.

JPMorgan, the second-largest U.S. bank, advanced 1.8 percent to $40.35 after the New York-based bank reported its highest half-year profit ever, at almost $11 billion. Second- quarter net income climbed 13 percent from a year earlier, to $5.43 billion, or $1.27 a share, six cents higher than the average estimate of analysts surveyed by Bloomberg.

MBIA Inc. jumped 9.2 percent to $10.02. Bank of America Corp., the biggest U.S. bank, has made a preliminary offer to the bond insurer aimed at settling a legal dispute tied to defective mortgages, according to two people briefed on the discussions.

ConocoPhillips jumped 1.6 percent to $75.61. The Houston, Texas-based oil company said it will separate its refining and marketing and exploration and production businesses.

Yum! Brands Inc. climbed 1.4 percent to $56.37 as the owner of the KFC and Pizza Hut restaurant chains boosted its earnings forecast for the year on increasing customer traffic at restaurants in China.

Hartford Financial Services Group Inc. declined 2.8 percent to $24.88. The seller of life insurance and property-casualty coverage said second-quarter net income plunged on catastrophe claims and the cost of asbestos liabilities.

Marriott International Inc. declined 6.6 percent to $34.69 after forecasting earnings that fell short of estimates. The largest publicly traded U.S. hotel chain said third-quarter earnings won’t be higher than 29 cents a share, missing the 30- cent average analyst projection.

Have a wonderful evening everyone.

Be magnificent!

“We ask ourselves

is it possible to break through this heavy conditioning of centuries immediately

and not enter into another conditioning – to be free,

so that the mid can be altogether new, sensitive,

alive, aware, intense, capable?”

 

-Krishnamurti, 1895-1986

As ever,

Carolann

 “Never let a problem to be solved become

more important than the person to be

loved.”

         -Barbara Johnson, 1947-2009