July 25, 2011 Newsletter
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 2nd– 20th. 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