December 1, 2011 Newsletter
Dear Friends,
Tangents:
On this day,
Actor, filmmaker, Woody Allen, was born in 1935:
How to make God laugh: Tell him your future plans. ~Woody Allen.
1891: Basketball created.
1955: Rosa Parks was arrested.
I dwell in Possibility-
A fairer House than Prose-
More numerous of Windows-
Superior – for Doors –
Of Chambers as the Cedars-
Impregnable of Eye-
And for an Everlasting Roof-
The Gambrels of the Sky-
Of Visitors – the fairest-
For Occupation – This –
The spreading wide my narrow Hands-
To gather Paradise-
-Emily Dickinson
Photo of the Day
A member of dancer-illusionists company Momix performs during a press rehearsal of its latest show called ‘reMIX’ in Madrid. Sergio Perez/Reuters.
Market Commentary:
Canada
By Kaitlyn Kiernan
Dec. 1 (Bloomberg) — Canadian stocks fell for the first time in four days, led by banks and commodity producers, as a contraction in Chinese manufacturing and an increase in U.S. jobless claims revived concern that growth will slow.
Gildan Activewear Inc. lost 33 percent, the most in the benchmark equity index, after forecasting a quarterly loss. Bank of Nova Scotia, Canada’s third-biggest lender by assets, fell 2.5 percent. First Quantum Minerals Ltd., the country’s second- largest publicly traded copper producer, erased 3.1 percent. The Standard & Poor’s/TSX Composite Index fell 90.82 points, or 0.7 percent, to 12,113.29.
“We had a very impressive rally yesterday, so it’s not unexpected that the market is off ever so slightly today,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($982 million). “Everyone has to digest a little bit the actions taken by the central banks, because it was very similar to the announcements made in the fall of 2008, and we all know what happened in the markets at that point.”
The S&P/TSX rallied 4 percent in the biggest one-day gain since March 2009 yesterday after central banks in Europe, Asia and North America cut lenders’ borrowing costs to bolster the financial system. The S&P/TSX fell 17 percent in October 2008 after the U.S. Federal Reserve cut the Fed Funds Target rate to 1 percent from 2 percent.
A purchasing managers’ index compiled by the China Federation of Logistics and Purchasing slid to 49 in November, lower than all but two of 18 forecasts in a Bloomberg News survey. Readings below 50 signal a contraction.
U.S. jobless claims climbed by 6,000 to 402,000 in the week ended Nov. 26 that included the American Thanksgiving holiday, Labor Department figures showed today in Washington. The median forecast of 43 economists in a Bloomberg News survey called for a drop to 390,000.
Gildan Activewear dropped 33 percent, the most in a day since 2008, to C$16.54. The company forecast a loss in the first quarter of 40 cents a share, citing high cotton prices, distributor destocking and discounting.
Lululemon Athletica Inc. slumped 5.7 percent, the most since Oct. 3, to C$47.88. The yoga-wear retailer reported third- quarter sales that trailed analysts’ estimates. Revenue increased 31 percent to $230.2 million, missing the average analyst estimate of $235.3 million.
Magna International Inc., Canada’s largest auto-parts maker, fell 2.2 percent to C$35.60.
Banks fell for the first time in four days even after Toronto-Dominion Bank and Canadian Imperial Bank of Commerce reported quarterly results that beat analyst estimates.
Toronto-Dominion, country’s second-largest lender by assets, fell 1.5 percent to C$71.90. The bank said fourth- quarter profit rose 58 percent to C$1.57 billion ($1.54 billion), or C$1.69 a share. Earnings excluding some items of C$1.77 a share exceeded the average analyst estimate of C$1.55 a share.
CIBC, the country’s fifth-largest lender, declined 1.3 percent to C$72, after its earnings excluding some items beat the average analyst estimate by 3.5 percent. Bank of Nova Scotia lost 2.5 percent to C$50.24. Royal Bank of Canada, the country’s largest lender, declined 0.5 percent to C$47.03.
Mining companies slumped as gold erased earlier gains and as copper dropped. Barrick Gold Corp., the largest producer of the precious metal, slipped 1.3 percent to C$53.38. Goldcorp Inc., the world’s second-largest gold producer by market value, fell 1.2 percent to C$54.32. First Quantum erased 3.1 percent to C$19.96.
US
By Rita Nazareth
Dec. 1 (Bloomberg) — U.S. stocks declined as better-than- forecast manufacturing growth and a rally in French and Spanish bonds were not enough to extend the biggest three-day gain in the Standard & Poor’s 500 Index since March 2009.
Financial stocks fell the most in the S&P 500 among 10 industries, dropping 1 percent, as Massachusetts sued some of the largest lenders over foreclosure practices. Alcoa Inc. lost 2.1 percent as commodities retreated. Kohl’s Corp. slumped 6.4 percent after November sales missed estimates. Yahoo! Inc. advanced 3.3 percent as a group including Alibaba Group Holding Ltd. was said to prepare a bid for the company.
The S&P 500 slid 0.2 percent to 1,244.58 at 4 p.m. New York time. The index rallied 4.3 percent yesterday as six central banks took action on Europe’s debt crisis by making it cheaper for lenders to borrow in dollars. The Dow Jones Industrial Average decreased 25.65 points, or 0.2 percent, to 12,020.03. Trading volume on U.S. exchanges dropped to about 6.8 billion shares, or 16 percent below the three-month average.
“Pressures on the financials are still out there,” Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York, said in a telephone interview. “The economic data was positive, but Europe is still a concern. The coordinated central bank action is not a solution. It buys them some time.”
Stocks rose earlier today as Spain and France sold 8.1 billion euros ($10.9 billion) of bonds, sending yields lower across Europe. In the U.S., manufacturing expanded in November at the fastest pace in five months.
Equities reversed gains as JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. were among five banks sued by Massachusetts for allegedly conducting unlawful foreclosures and deceiving homeowners.
The KBW Bank Index lost 0.8 percent after yesterday’s 7.2 percent jump. JPMorgan decreased 1.7 percent to $30.46. Citigroup slipped 1.8 percent to $26.99. Bank of America added 1.7 percent to $5.53, reversing an earlier decline.
Gauges of commodity shares in the S&P 500 fell at least 0.6 percent after a contraction in China’s manufacturing fueled concern Europe’s crisis is damaging the global economy as yesterday’s moves by central banks were viewed as only a temporary fix. Alcoa, the largest U.S. aluminum producer, dropped 2.1 percent to $9.81.
Kohl’s fell the most in the S&P 500, erasing 6.4 percent to $50.37. The department-store chain said sales at stores open at least one year decreased 6.2 percent in November. Analysts on average estimated an increase of 2.1 percent.
Barnes & Noble Inc. plunged 16 percent, the most since Aug. 19, to $14.59. The largest U.S. bookstore chain reported second- quarter sales that missed the average analyst estimate by 4.3 percent, according to Bloomberg data.
Stocks pared declines in the afternoon as investors awaited tomorrow’s jobs report. Payrolls may have climbed by 125,000 workers in November, after rising 80,000 the prior month, economists surveyed by Bloomberg projected ahead of the Labor Department report.
“People are looking for catalysts,” Peter Jankovskis, who helps manage about $2.4 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “One catalyst may be additional signs of strength in the U.S. You may have some people wanting to make sure that they are in because they are expecting a big number on the jobs front.”
Yahoo rallied 3.3 percent to $16.23. Alibaba Group and Softbank Corp. are in advanced talks with Blackstone Group LP and Bain Capital LLC about making a bid for all of Yahoo, said three people with knowledge of the matter.
A bid may value Yahoo at more than $20 a share because of tax savings tied to the Internet company’s stakes in Alibaba and Yahoo Japan, said two of the people, who declined to be identified.
Clearwire Corp. rallied 14 percent to $2.03. The money- losing wireless carrier paid creditors $237 million in interest after striking a new network-sharing agreement with partner Sprint Nextel Corp.
The S&P 500 will end next year at 1,250 as a stagnating U.S. economy damps valuation increases for equities, Goldman Sachs Group Inc.’s David Kostin said.
The strategist lifted his estimate for earnings by companies in the benchmark measure to $100 a share in 2012 from $98, according to a note dated yesterday. He boosted his projection for combined profit this year by $1 to $97.
The S&P 500 declined 0.9 percent this year through yesterday amid concern European officials will fail to tame the region’s debt crisis, triggering a global recession. The gauge’s price-earnings multiple based on estimated profit for the next year has averaged 12.9 times this year and fell as low as 11 times on Oct. 3, according to data compiled by Bloomberg.
“The U.S. economy remains in stagnation,” Kostin said. “This fact will limit any significant rally or sustained P/E expansion in the S&P 500 in 2012. The high degree of political uncertainty coupled with downside policy tail risk drives our view that equity investors should focus on the underlying fundamentals and position portfolios for the worst while hoping for the best.”
Have a wonderful evening everyone.
Be magnificent!
Your reactions are shared by all humanity.
Your brain is not yours,
it has evolved through centuries of time.
So we are questioning deeply whether there is an
individual at all. We are the whole of humanity,
we are the rest of mankind.
-Krishnamurti, 1895-1986
As ever,
Carolann
Everything that irritates us about others
can lead us to an understanding about
ourselves.
-Carl Jung, 1875-1961