January 5th, 2012 Newsletter
Dear Friends,
Tangents: First day back after the holiday break and wish to extend my very best wishes to you and yours for a HAPPY AND PROSPEROUS NEW YEAR!
We arrived back from South East Asia yesterday afternoon, where preparations for the Chinese New Year (January 23rd this year), are well underway. This is the Year of the Dragon: “A symbol of power, strength and luck, the dragon is an auspicious figure in Chinese mythology. In the Year of the Dragon, one can expect harmony and fulfillment, riches and longevity. It is a time to reflect on one’s good fortunes, as the Year of the Dragon may bring about a significant breakthrough; it may even be the dawn of a new era.”
…and may it be so.
Photos of the day
January 5, 2012
Mount Etna spews volcanic ash during an eruption on the southern Italian island of Sicily. Mount Etna is Europe’s tallest and most active volcano. Antonio Parrinello/Reuters
Market Commentary:
Canada
By Matt Walcoff
Jan. 5 (Bloomberg) — Canadian stocks rose for a fifth day, the longest winning streak since August, as gold’s four-day rally spurred gains in raw-material producers.
Iamgold Corp., which mines in West Africa, South America and Quebec, advanced 4.3 percent as tension increased between Western nations and Iran over the country’s threat to block the Strait of Hormuz. Canadian Natural Resources Ltd., the country’s second-largest energy company by value, lost 1.3 percent as natural gas and oil futures dropped. First Quantum Minerals Ltd. rallied 4.4 percent after settling an African legal dispute.
The Standard & Poor’s/TSX Composite Index climbed 10.93 points, or 0.1 percent, to 12,237.40.
“Gold is still in a long-term uptrend,” said Robert “Hap” Sneddon, president of money manager CastleMoore Inc. in Oakville, Ontario, and president of the Canadian Society of Technical Analysts. “People have been waiting for any sort of correction or stability from $1,900 down to start to pick away. When people look at gold producers at this level, people say the risk/reward is pretty good if we get back to those record highs.”
The index has gained 4.3 percent in the last five days as raw-materials and energy stocks advanced after economic data in the U.S., Europe and China surpassed economists’ forecasts. The two industries make up 48 percent of Canadian equities by market value, according to data compiled by Bloomberg. The S&P/TSX tumbled 11 percent in 2011 on concern the European debt crisis will limit global growth.
Gold futures extended their streak of advances to the longest in 10 weeks after U.K. Defense Secretary Philip Hammond said the country may take military action against Iran if it blocks the Strait of Hormuz.
Iamgold increased 4.3 percent to C$17.48. Osisko Mining Corp., which produces gold in Quebec, climbed 3.4 percent to C$10.39. Gabriel Resources Ltd., which is developing a gold project in Romania, rebounded 8.5 percent to C$6.67 after sinking 7 percent yesterday.
Oil futures retreated on the New York Mercantile Exchange after settling at the highest price since May yesterday. Natural gas fell to the lowest settlement price since September 2009.
Canadian Natural decreased 1.3 percent to C$39.34. Crescent Point Energy Corp., a western Canadian oil and gas producer, slipped 1.5 percent to C$45.43. Talisman Energy Inc., an oil and gas company with operations in North America, the North Sea and Indonesia, dropped 1.6 percent to C$13.41.
Enbridge Inc., Canada’s largest pipeline company, gained 1.6 percent to C$37.89. In a note to clients dated yesterday, Matthew Akman, an analyst at Bank of Nova Scotia, raised his 12- month price estimate on the shares to C$42 from C$40, writing that Enbridge’s expansion may lead to faster growth than the company has forecast.
Artek Exploration Ltd., an energy producer with operations in Canada, surged 27 percent, the most since September 2009, to C$2.90 after selling some assets in Alberta for C$19.5 million ($19.1 million). First Quantum jumped 4.4 percent to C$21.98. Eurasian Natural Resources Corp. agreed to acquire the company’s assets in the Democratic Republic of Congo for $1.25 billion, ending a legal dispute between the two over the Kolwezi copper project.
Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, advanced 1.2 percent to C$43.96 after Plymouth, Minnesota-based peer Mosaic Co. said it expects record global potash shipments in 2012.
Coal producer Cline Mining Corp. soared 21 percent, the most since May 2010, to C$2.07 after saying it won regulatory approval to mine the Blue Seam at its New Elk coal property in Colorado.
US
By Nikolaj Gammeltoft and Ksenia Galouchko
Jan. 5 (Bloomberg) — Most U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third day, as a rally by banks and improving jobs data offset reduced profit forecasts at companies including Target Corp. and J.C. Penney Co.
Citigroup Inc. and JPMorgan Chase & Co. rallied at least 1.2 percent after Deutsche Bank AG saw “encouraging signs” for the industry’s fourth-quarter earnings. Bank of America Corp. soared 8.6 percent amid speculation that the Obama administration may introduce a nationwide loan refinancing program. Target and J.C. Penney lost more than 2.6 percent. Chevron Corp. slipped 1 percent as oil prices tumbled.
About three shares rose for every two that fell on U.S. exchanges as of 4 p.m. New York time. The S&P 500 climbed 0.3 percent to 1,281.06, after tumbling as much as 0.9 percent earlier. The Dow Jones Industrial Average dropped 2.72 points, or less than 0.1 percent, to 12,415.70 today.
“We’re starting to see better data in the U.S. as opposed to the obsession with Europe that we’ve seen all of last year,” Donald Selkin, the chief market strategist at National Securities Corp. in New York, said in a telephone interview. “People are seeing that our economy will definitely not fall into the recession. Now you can see that there’s a separation between what’s happening here, which is better, and Europe, which is still projected to go into recession.”
The S&P 500 closed at a two-month high yesterday and the Dow Jones Industrial Average reached its highest level since July after gaining during the first two trading sessions of the year on signs of manufacturing growth and improving sales at carmakers and retailers.
Financial shares rose the most among 10 S&P 500 groups today, reversing earlier losses. The KBW Bank Index added 2.2 percent. JPMorgan increased 2.1 percent to $35.68, Citigroup added 1.2 percent to $28.51, while SunTrust Banks Inc. rallied 5.4 percent to $19.66.
Fourth-quarter earnings reports from the largest U.S. banks should include some “encouraging signs” including accelerating loan growth, higher mortgage revenues and improving credit, Deutsche Bank analyst Matt O’Connor said in a note to clients.
Bank of America soared 8.6 percent, the most in the Dow and the biggest advance since October, to $6.31. The shares tumbled 1.7 percent in after-market trading as an administration official with knowledge of the matter said the White House has no plans for a new mass mortgage refinancing program. The Morgan Stanley Cyclical Index rose 0.4 percent, while the Dow Jones Transportation Average slipped 0.2 percent. Boeing Co. dropped 1.1 percent to $73.53. Walt Disney Co. jumped 1.7 percent to $39.50.
Target and J.C. Penney tumbled as retailers announced mixed December same-store sales results. Gap Inc., Target and Kohl’s Corp. reported sales that trailed analysts’ estimates after mistiming promotions or running out of inventory during a projected record holiday shopping season.
J.C. Penney dropped 2.7 percent to $33.97. The retailer forecast fourth-quarter earnings of 65 cents to 70 cents a share, less than the average analyst estimate of $1.08 a share.
Target lost 3 percent to $48.51. The second-largest U.S. discount retailer cut its fourth-quarter profit forecast to no more than $1.43 a share, below the average analyst estimate of $1.48, according to a Bloomberg survey. Macy’s Inc. added 3.9 percent to $33.92. The Cincinnati- based retailer reported a 6.2 percent increase in same-store sales, topping the 4.6 percent estimate.
Alcoa Inc. is scheduled to mark the unofficial start of the fourth-quarter earnings season on Jan. 9. Profit at S&P 500 companies rose 6.2 percent during the September-December period, according to analyst estimates compiled by Bloomberg, which would mark the slowest growth since the third quarter of 2009.
Stock futures pared early losses after ADP Employer Services said payrolls increased by 325,000 last month, topping the median economist forecast for growth of 178,000 jobs. Applications for jobless benefits decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department figures showed today.
The median estimate of 38 economists in a Bloomberg News survey forecast 375,000 claims. The data comes before tomorrow’s payrolls report from the Labor Department.
“On the surface these are positive numbers ahead of tomorrow’s jobs report,” James Gaul, a money manager at Boston Advisors LLC in Boston, said in a telephone interview. His firm oversees about $2 billion. “The market is trying very hard to be constructive here,” he said. “Everything is still seen in the context of whether the austerity measures taken in Europe force a global recession that will impact U.S. businesses.”
Global stocks fell earlier as France sold 7.96 billion euros ($10.2 billion) of debt, with borrowing costs rising in its first auction of the year. UniCredit SpA retreated for a second day after Italy’s biggest bank yesterday announced plans to hold a rights offer to boost capital. The lender is selling shares at a 43 percent discount because of a deepening in the debt crisis, Chief Executive Officer Federico Ghizzoni told Il Sole 24 Ore.
Monsanto Co. rose 5.5 percent to $76.68. The world’s largest seed company posted first-quarter earnings that exceeded estimates as Latin American farmers grew more genetically modified corn and said U.S. orders are ahead of last year.
LSI Corp. gained the second-most in the S&P 500, rallying 7.7 percent to $6.70. The maker of chips used in computer disk drives was raised to “outperform” from “neutral” at Wedbush Securities, which cited better-than-estimated hard drive disk shipments last quarter.
Energy companies had the biggest drop as a group among 10 S&P 500 industries, losing 0.6 percent. Chevron slipped 1 percent to $109.10 as oil prices tumbled 1.4 percent.
Tesoro Corp. fell 5.9 percent to $22.60. The largest independent refiner on the U.S. West Coast said it lost 55 cents to 80 cents a share in the fourth quarter, missing analysts’ forecasts for a profit.
MetroPCS Communications Inc. sank 8.9 percent to $8.01 for the biggest drop in the S&P 500. The Texas-based pay-as-you-go wireless carrier said it added 197,000 net new users in the fourth quarter. Analysts predicted 223,000 on average.
Eli Lilly & Co. slumped 1 percent to $40.30. The maker of the antipsychotic Zyprexa provided a 2012 earnings forecast that missed analyst estimates.
Barnes & Noble Inc. tumbled 17 percent to $11.24. The largest U.S. bookstore said it will lose as much as $1.40 a share in fiscal 2012, after previously projecting a loss of a maximum of 50 cents a share. Sales of its Nook Simple Touch trailed its estimates during the holiday shopping season.
U.S. stocks will return at least 10 percent in 2012, beating foreign markets for a third year, while Treasury yields climb, according to BlackRock Inc.’s Bob Doll. The S&P 500 may exceed 1,350 this year, he said at a BlackRock presentation in New York today. The stock index ended 2011 at 1,257.60.
Health-care and energy stocks will perform better than utilities and financials, he said. Doll expects dividends and stock buybacks to rise by 20 percent or more this year. “If companies continue to deliver — and there are a lot of reasons why they are — stocks should continue to do well,” Doll said.
Have a wonderful evening everyone.
Be magnificent!
All humanity shares the sunlight; that sunlight is neither yours nor mine.
It is the life-giving energy, which we all share.
The beauty of a sunset, if you are watching it sensitively, is shared by all human beings.
-Krishnamurti, 1895-1986
As ever,
Carolann
In the realm of ideas, everything depends on
enthusiasm; in the real world, all rests on
perseverance.
-Johann Wolfgang von Goethe, 1749-1832