December 14, 2011 Newsletter

Dear Friends,

Tangents:

Benjamin Zander on giving an A to students on day one of his course:  “This A is not an expectation to live up to, but a possibility to live into.”

Another letter from a student:

Dear Mr. Zander,

A got my A because I had the courage to examine my fears and I realized that they have no place in my life.  I changed from someone who was scared to make a mistake in case she was noticed to someone who knows that she has a contribution to make to other people, musically and personally….Thus all diffidence and lack of belief in myself are gone.  So too is the belief that I only exist as a reflection in other people’s eyes and the resulting desire to please everyone….I understand  that trying and achieving are the same thing when you are your own master – and I am.

  I have found a desire to convey music to other people, which is stronger than the worries I had about myself.  I have changed from desiring inconsequentiality and anonymity to accepting the joy that comes from knowing that my music changes the world.

                                                            -Giselle Hillyer

Photos of the day

December 14, 2011

Norwegian Prime Minister Jens Stoltenberg joins three polar adventurers heading to the South Pole to mark the 100th anniversary of explorer Roald Amundsen’s victory in the race to the bottom of the globe. Several expeditions skied across Antarctica to attend the ceremony though many were delayed and had to be flown the last stretch. Ole Mathismoen/Pool/AP.

Market Commentary:

Canada

By Matt Walcoff

Dec. 14 (Bloomberg) — Canadian stocks fell for a third day, led by producers of raw materials and energy, as increased funding stress in Europe fueled concern the region’s debt crisis will sap global growth.

Barrick Gold Corp., the world’s largest gold producer, lost 3.8 percent as the metal declined for a third-straight session. Suncor Energy Inc., the country’s biggest energy company, decreased 3.2 percent as crude oil and natural gas retreated. Royal Bank of Canada, the country’s largest lender by assets, slipped 0.8 percent as financial stocks fell.

The Standard & Poor’s/TSX Composite Index dropped 216.89 points, or 1.8 percent, to 11,543.05, the lowest close since Nov. 23. The cost for European banks to borrow in dollars rose for a fifth day, reaching the highest level in two weeks, according to money-market indicators.

“Europe is still a big part of global” gross domestic product, Bruce Cooper, head of equities at TD Asset Management, said in a telephone interview. The unit of Toronto-Dominion Bank oversees about C$190 billion ($182 billion). “Uncertainty will lead to lower growth. Ultimately, this could translate to lower demand for” commodities, he said.

The stock index has decreased 9.6 percent since Aug. 31 as the Thomson Reuters/Jefferies CRB commodity index has sunk 14 percent. The U.S. dollar has advanced and most commodities in the CRB index have declined as the European debt crisis weakens the euro. Energy and raw-materials companies make up 47 percent of Canadian stocks by market value, according to data compiled by Bloomberg.

The euro slipped below $1.30 for the first time since Jan. 12 after the European Union’s statistics office said industrial production in the euro region fell 0.1 percent in October from the previous month. Economists had forecast no change, according to the median estimate in a Bloomberg survey. The Munich-based Ifo institute cut its 2012 growth forecast for the German economy, Europe’s largest, to 0.4 percent from 2.3 percent.

The S&P/TSX Materials Index slumped to the lowest level since August 2010 as gold dropped the most since September.

Barrick declined 3.8 percent to C$46.47, a fifth-straight retreat. Osisko Mining Corp., which operates in Quebec, plunged 10 percent, the most since February 2009, to C$9.35. Silver Wheaton Corp., Canada’s fifth-largest precious-metals company by market value, lost 5.4 percent to C$30.23 as silver futures sank 7.4 percent.                        

Energy stocks fell after the Organization of Petroleum Exporting Countries agreed to raise its production ceiling and the U.S. reported a smaller decrease in crude oil inventories than most analysts in a Bloomberg survey had forecast. Crude futures decreased the most since September and natural gas dropped to the lowest since September 2009. Suncor declined 3.2 percent to C$28.13. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 4.6 percent to C$35.02. Tourmaline Oil Corp., a western Canadian natural gas and oil producer, tumbled 5.1 percent to C$27.05.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, lost 3.5 percent to C$40.27, the lowest since August 2010, after Agrium Inc. said it will raise its potash-mining capacity 50 percent through an expansion of its Vanscoy project. UBS AG cut its price forecasts for the crop nutrient today, citing capacity expansions in a note to clients.

Karnalyte Resources Inc., which is developing a potash project in Saskatchewan, sank 22 percent, the most since it began trading in December 2010, to C$9.80 after canceling a share offering. The company said it couldn’t address regulators’ comments about a resource estimate in time to file a final short-form prospectus.

The S&P/TSX Commercial Banks Index retreated for a third day. Royal Bank fell 0.8 percent to C$48.19. Toronto-Dominion Bank, Canada’s second -largest lender by assets, slipped 0.9 percent to C$72.40. Great-West Lifeco Inc., the country’s second-biggest insurer, dropped 2.8 percent to C$19.17.

US

By Rita Nazareth

Dec. 14 (Bloomberg) — U.S. stocks retreated, sending the Standard & Poor’s 500 Index lower for a third straight day, as growing funding stress in Europe fueled concern the region is struggling to contain its sovereign debt crisis.

Exxon Mobil Corp. and Newmont Mining Corp. fell at least 1.3 percent, as commodities dropped the most in almost 11 weeks. Chevron Corp. and Transocean Ltd. sank more than 2.9 percent as they were asked by Brazilian federal prosecutors to suspend all activity in Brazil. Joy Global Inc. tumbled 11 percent as the maker of mining equipment said demand for raw materials will remain slow. First Solar Inc. plunged 21 percent after reducing profit estimates and saying it will cut about 100 jobs.

The S&P 500 declined 1.1 percent to 1,211.82 at 4 p.m. New York time. The benchmark measure for American equities fell 3.5 percent in three days. The Dow Jones Industrial Average dropped 131.46 points, or 1.1 percent, to 11,823.48. The Nasdaq Composite Index slumped 1.6 percent to 2,539.31 as Apple Inc., the largest technology company, lost 2.2 percent. “It’s very frustrating,” John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview.

The firm oversees about $220 billion. “There’s just a hypersensitivity to stories coming out of Europe. Any indication is seen as something as a basis to trade. Nobody sees a way through this at the moment.”

Stocks joined a global slump as Italy had to pay the most in 14 years to sell five-year bonds and the cost of insuring against default on European sovereign debt approached a record.

Federal Reserve Chairman Ben S. Bernanke told Republican senators the Fed has no plan to provide aid to European banks, according to two lawmakers who attended the meeting.                      

Bernanke also told U.S. senators that a worsening in the European crisis may harm the U.S. economy, according to a senator who attended the meeting. Equities fell yesterday after the Fed refrained from taking new actions to bolster growth at the world’s largest economy. A three-day drop extended this year’s decline in the S&P 500 to 3.6 percent.

All 10 groups in the S&P 500 retreated today, led by declines in companies most dependent on economic growth. The Morgan Stanley Cyclical Index sank 1.8 percent, while the Dow Jones Transportation Average lost 1.5 percent. The KBW Bank Index slid 0.5 percent, after gaining 0.9 percent earlier.

“It’s all about the risk-off trade,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $715 billion. “It’s continued concern about the euro zone. There’s nothing constructive. You also start to see now concern about what the impact will be on U.S. corporate earnings.”

Gauges of energy and raw material shares in the S&P 500 decreased at least 1.1 percent as the U.S. dollar rose, reducing the appeal of commodities. Exxon declined 1.4 percent to $79.44. Newmont Mining, the largest U.S. gold producer, erased 2.4 percent to $61.62.

Chevron sank 3 percent to $100.53, while Transocean retreated 3.9 percent to $40.19. Both companies should halt operations in Brazil and pay 20 billion reais ($10.7 billion) in damages after an oil spill last month, prosecutors urged a federal court.

Joy Global slumped 11 percent, the biggest decline since February 2009, to $75.44. Slowing global growth is tempering commodity demand, the company said. Sales for the latest quarter increased 27 percent to $1.34 billion from $1.05 billion, $10 million lower than the $1.35 billion average of 11 analysts’ estimates compiled by Bloomberg.                       

 Other industrial companies declined. Caterpillar Inc., the largest construction and mining-equipment maker, dropped 4.4 percent, the biggest decline in the Dow, to $87. Cummins Inc. retreated 1.9 percent to $87.51.

First Solar plunged 21 percent, the most in the S&P 500, to $33.45. The stock fell to the lowest since 2007. The company said global production of solar panels has tripled in recent years as more companies, including Chinese suppliers, enter the market. Government subsidies for solar power, especially in Europe, have declined as those nations have trimmed budgets in an economic decline, Chairman and Acting Chief Executive Officer Michael Ahearn said.

Avon Products Inc. rallied 5.1 percent, the biggest gain in the S&P 500, to $16.96. The world’s biggest door-to-door cosmetics seller said it will search for a new chief executive officer next year to replace Andrea Jung. Jung, 53, who has run Avon since 1999, will remain chairman and work with the board to recruit a replacement, the 125-year-old, New York-based company said yesterday in a statement.

Investors should consider buying shares of BlackBerry maker Research In Motion Ltd., according to Laszlo Birinyi, who advised clients to buy equities before they bottomed in March 2009.

“It is a long shot, but it is an idea which no one has considered,” Birinyi, founder of Westport, Connecticut-based Birinyi Associates Inc., said in an interview today on Bloomberg Television’s “In The Loop” with Betty Liu. “They still have some patents, they still have a product, they still have a brand,” he said. “Every once in a while you want to go out there and take a shot.”

RIM shares fell 73 percent this year in U.S. trading through yesterday. The company said this month that third- quarter revenue missed its forecast amid accelerating market- share losses for BlackBerrys and PlayBook tablets to Apple. RIM lost 2.6 percent to $15.08 today, while Apple declined 2.2 percent to $380.19.

Have a wonderful evening everyone.

Be magnificent!

When water joins with water, it is not

a meeting but a unification.

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Our fears are more numerous than our dangers, and

we suffer more in our imagination than in reality.
                                  -Seneca, 4 BC- 65 AD