December 13, 2011 Newsletter

Dear Friends,

Tangents:

When I arrived at home last night, I picked up Benjamin Zander’s book, The Art of Possibility, which I’ve been reading lately.   I mentioned to you before that he is probably one of the most inspirational men I’ve ever met.  Benjamin Zander has been the conductor of the Boston Philharmonic since its formation in 1979, though he has appeared as a guest conductor with orchestras around the world.

The chapter  I was reading last night was on “Giving an A.”  Michelangelo is often quoted as having said that inside every block of stone or marble dwells a beautiful statue; one need only remove the excess material to reveal the work of art within.  Zander and his co-author wife, Rosamund, thought this was a visionary concept to apply to education.  Instead of comparing one child to another with A’s, B’s. C’s, D’s or F’s, all the energy would be focused on chipping away at stone, getting rid of whatever is in the way of each child’s developing skills, mastery, and self-expression.

Zander decided to apply this vision to his own teaching, telling every student on the first day of classes at the New England Conservatory that they will get an A for the course.  He tells them, “however, there is one requirement that you must fulfill to earn this grade:  Sometime during the next two weeks, you must write me a letter dated next May, which begins with the words, ‘Dear Mr. Zander, I got my A because…,’ and in this letter you are to tell, in as much detail as you can, the story of what will have happened to you by next May that is in line with this extraordinary grade.  I tell them I want them to fall passionately in love with the person they are describing in their letter.”

This is one of those letters from a young trombonist; I’ll share a few more with you over the next few days:

Dear Mr. Z

Today the world knows me.  That drive of energy and intense emotion that you saw twisting and dormant inside me, yet alas, I could not show in performance or conversation, was freed tonight in a program of new music composed for me….The concert ended and no one stirred.  A pregnant quiet.  Sighs:  and then applause that drowned my heart’s throbbing.

  I might have bowed – I cannot remember now.  The clapping sustained such that I thought I might make my debut complete and celebrate the shedding of

the mask and skin

that I had constructed

to hide within,

by improvising on my own melody as an

encore – unaccompanied.  What followed is

something of a blur.  I forgot technique,

pretension, tradition, schooling, history –

truly even the audience.

What came from my trombone

I wholly believe, was my own

Voice.

Laughter, smiles,

a frown, weeping

Tuckerspirit

did sing.

                               Tucker Dulin

Photos of the day 

December 13, 2011

Walkers look out over heavy seas in the English Channel at Beachy Head in East Sussex in southern England.  Toby Melville/Reuters.

Market Commentary:

Canada

By Matt Walcoff and Ksenia Galouchko

Dec. 13 (Bloomberg) — Canadian stocks fell, led by raw- materials shares, as Rio Tinto Group said it won’t buy all of Ivanhoe Mines Ltd., European growth concerns persisted and the U.S. Federal Reserve refrained from new economic stimulus.

Ivanhoe Mines, Rio Tinto’s partner in the Oyu Tolgoi copper project in Mongolia, plunged 22 percent. Goldcorp Inc., the world’s second-largest gold producer by market value, declined 2.9 percent as the metal fell on a stronger U.S. dollar.

PetroBakken Energy Ltd. rose 5.8 percent after reporting a production increase. The Standard & Poor’s/TSX Composite Index slipped 147.95 points, or 1.2 percent, to 11,759.94 at 4:10 p.m. Toronto time. The market extended its loss after the Federal Open Market Committee made few changes from its Nov. 2 statement in its comments today and didn’t announce a third round of asset purchases, known as qualitative easing.

“There was chatter earlier today, ‘There’s always a chance they might mention QE3 given what we’re seeing in Europe,’” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($53 million). “They didn’t hint at that whatsoever. That’s when we saw the market sell off.”

The S&P/TSX is set to underperform the S&P 500 for the first time in eight years in 2011 as stocks most-closely tied to economic growth have declined on concern the European debt crisis will lead to a new recession. Indexes of financial, energy and materials companies each lost at least 9.8 percent this year. The three industries make up 75 percent of Canadian stocks by market value, according to Bloomberg data.                         

Ivanhoe Mines sank 22 percent to C$16.57 after an arbitrator’s ruling that Rio Tinto can incrementally add to its stake in Ivanhoe Mines without having its holdings diluted under a shareholder rights plan. Rio Tinto, which owns 49 percent of Vancouver-based Ivanhoe Mines, “currently has no intention of making a full takeover bid for Ivanhoe’s shares,” the London- based company said in a statement.

The S&P/TSX Gold Index fell as the U.S. dollar climbed to an 11-month high against the euro. The European currency slid after two officials with knowledge of the discussion said Chancellor Angela Merkel told German coalition lawmakers the 500 billion euro ($654 billion) cap on Europe’s planned permanent bailout fund will stay in place. The officials spoke on condition of anonymity because the talks are private.                         

Goldcorp dropped 2.9 percent to C$48.10. Barrick Gold Corp., the world’s largest company in the industry, lost 1.9 percent to C$48.29. Detour Gold Corp., which is developing a mine in Ontario, slumped 8.5 percent to C$25.42 after saying it will raise about C$10 million through the sale of flow-through shares.

PetroBakken Energy Ltd., a Western Canadian oil producer, gained 5.8 percent to C$10.57 after saying production has increased 23 percent from third-quarter levels. Average production will climb another 15 percent next year, the company said in a statement. Petrobank Energy and Resources Ltd., PetroBakken’s majority shareholder, rose 2.1 percent to C$8.95.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 1.1 percent to C$41.74 as wheat futures gained for the first time in a week.

Barclays Plc named Potash Corp. to its list of top picks for 2012. In a note to clients, the bank said Potash Corp. should benefit from low supply and strong demand for the crop nutrient.                         

BlackBerry maker Research In Motion Ltd. decreased 3.8 percent to C$16.01, the lowest price since January 2004, after Rod Hall, an analyst at JPMorgan Chase & Co., said in a note to clients that the company is likely to delay the release of new smartphones. RIM has tumbled 72 percent this year.

Canadian National Railway Co., the country’s largest railroad, slipped 1.5 percent to C$77.44 after Walter Spracklin, an analyst at Royal Bank of Canada, cut his rating on the shares to “sector perform” from “outperform.” Spracklin said CN’s shares are more expensive than those of its peers relative to earnings.

US

By Rita Nazareth

Dec. 13 (Bloomberg) — U.S. stocks retreated, reversing an earlier advance for the Standard & Poor’s 500 Index, after Federal Reserve policy makers refrained from taking new actions to bolster growth at the world’s largest economy.

Nine out of 10 groups in the S&P 500 declined, led by companies most-dependent on economic growth. Sears Holdings Corp., Alcoa Inc. and Bank of America Corp. slumped at least 2.3 percent. Best Buy Co., the largest consumer-electronics retailer, tumbled 15 percent as discounts hurt gross margin. Amazon.com Inc. dropped 4.8 percent as Goldman Sachs Group Inc. said estimates for the biggest Internet retailer need to fall.

The S&P 500 slid 0.9 percent to 1,225.73 at 4 p.m. New York time, reversing a gain of 1.1 percent and falling to the lowest level since Nov. 29. The Dow Jones Industrial Average retreated 66.45 points, or 0.6 percent, to 11,954.94. The Russell 2000 Index of small companies lost 2.1 percent to 718.06.

“The disappointment was due to a minority expecting QE3,” Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., said in a telephone interview, referring to a third-round of asset purchases or quantitative easing. His firm oversees about $355 billion. “We don’t think that’s warranted. The economy is accelerating. If the economy collapses or the threat of deflation becomes more apparent, then the Fed may change its mind.”

The S&P 500 has struggled to stay above its 2010 closing level of 1,257.64 since topping it during the last week of October after slumping below it for almost three months. The index is down 2.5 percent for the year, led by a 21 percent slide in financial shares.

Stocks fell today as the Fed said the U.S. economy is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs. The Fed statement repeated a warning at the two previous meetings that “strains in global financial markets continue to pose significant downside risks to the economic outlook.”

The central bank said it would continue its exchange of $400 billion of short-term debt with long-term securities to lengthen the average maturity of its holdings, a move dubbed Operation Twist. The Fed also did not alter its policy of reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities.

“Operation twist remains in effect but there was no mention of a QE3, or further coordinated action with the ECB, which may have disappointed investors,” Mark Bronzo, who helps manage $23.5 billion at Security Global Investors in Irvington, New York, said in an e-mail, referring to coordinated action with the European Central Bank.                      

The Morgan Stanley Cyclical Index slumped 2.3 percent, while the Dow Jones Transportation Average declined 1.6 percent amid concern about global economic growth. The KBW Bank Index fell 1.6 percent as 22 of its 24 stocks retreated. Sears Holdings dropped 5.1 percent to $53.71. Alcoa erased 3.3 percent to $9.04. Bank of America decreased 2.4 percent to $5.32.

MBIA Inc. pared a rally of as much as 11 percent, rising 0.7 percent to $11.48. A settlement with Morgan Stanley ended credit-default swap guarantees on commercial-mortgage debt and the bank said it will withdraw from a lawsuit challenging the bond insurer’s 2009 restructuring. Morgan Stanley, which jumped 7.6 percent earlier today, lost 1.4 percent to $15.17.

Retailers in the S&P 500 dropped 2.7 percent as a group and were the biggest drag among 24 industries after the government said sales rose in November at the slowest pace in five months, indicating American consumers were trying to live within their means heading into the holiday shopping season as wages dropped.

Best Buy tumbled 15 percent, the most since 2002, to $23.73. The shares also had the biggest decline in the S&P 500. The retailer’s third-quarter profit declined more than analysts estimated, hurt by discounts to lure Black Friday shoppers.

Amazon.com slumped 4.8 percent to $180.51, the lowest since Aug. 22. Goldman Sachs said 2012 estimates for the Internet retailer need “material downward revisions.” The firm resumed coverage of Amazon’s shares with a “neutral” recommendation.

Netflix Inc. dropped 4.2 percent to $72.11, reversing a rally of as much as 3.1 percent. Verizon Communications Inc., the second-largest U.S. phone company, hasn’t discussed making a bid for Netflix, according to two people with knowledge of the situation.

Yesterday, Netflix gained 6.2 percent after Deal Reporter, a trade publication, said that Verizon is considering an offer for the Los Gatos, California-based movie streaming service. Steve Swasey, a Netflix spokesman, and Torod Neptune, a spokesman for Verizon, declined to comment on the reports.

FactSet Research Systems Inc. erased 6.9 percent to $88.24. The provider of financial data to investment managers and banks fell the most since August after a decline in subscribers overshadowed a higher-than-estimated profit forecast.

Urban Outfitters Inc. climbed 5.3 percent to $27.87 for the biggest increase in the S&P 500. The operator of about 400 namesake, Anthropologie and Free People clothing stores gained the most in more than a month after saying fourth-quarter retail sales are rising.

U.S. stocks can avoid the effects of Europe’s intensifying sovereign-debt crisis, leading ABN Amro Private Banking to remain positive on the world’s largest economy, according to Chief Investment Officer Didier Duret.

The bank that manages 164 billion euros ($217 billion) for clients cut its overall allocation to equities to an “underweight” stance on Nov. 11, taking advantage of its positive stance from the middle of August. The wealth manager has maintained its “overweight” allocation in U.S. stocks, citing the prospects for corporate profit growth and faster job creation in the country.

“The job machine is probably back in the U.S.,” Duret said in a phone interview from Amsterdam yesterday. “There is more resilience in the U.S. market from an earnings perspective. In Europe, you are seeing earnings being downgraded, but in the U.S. this is not the case.”

Have a wonderful evening everyone.

Be magnificent!

The characteristic of my nation is this transcendentalism,

this struggle to go beyond, this daring to tear the veil off the face of nature

and have at any risk, at any price,

a glimpse of the beyond.

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Human beings are perhaps never more frightening

than when they are convinced beyond doubt that

they are right.

                   -Laurens Van der Post, 1906-1996