July 28, 2011 Newsletter
Dear Friends,
Tangents:
-from The Book of Idle Pleasures,
Good Company
The evening closes in on a warm summer’s day.
The wine is coursing through you and through
your friends but not down into the tributary of
political discourse that can end up in an almighty
row, but down the waterfalls of laughing
memory. Long forgotten stories and cackles
emerge of times past while grand plans are made
for the future still to be lived. Sharing bread,
barbeques and those generous anecdotes –
the simple gentleness of caring for the people you
love.
-Dan Kieran
Photos of the day
July 28, 2011
Hot-air balloons float in the sky at Chambley-Bussieres, France, Wednesday during an attempt to set a world record for collective taking-off during an international hot-air balloon meeting. Alexandre Marchi/L’est Republicain/AP
People drive vintage Citroen 2cv cars during the 19th World Meeting of the 2cv’s friends in Salbris, central France. About 5,000 Citroen gathered from all over the country to participate in the event. Thibault Camus/AP
Market Commentary:
Canada
By Matt Walcoff and Victoria Taylor
July 28 (Bloomberg) — Canadian stocks rose for the first time this week as better-than-forecast economic reports from the U.S. offset concern that lawmakers there won’t be able to reach an agreement to raise the debt ceiling and avoid default.
Manulife Financial Corp., Canada’s largest insurer, rose 1.3 percent, as financial shares gained after U.S. jobless claims and home sales figures beat expectations. Goldcorp Inc., the second-biggest producer of the metal by market value, dropped 3.6 percent as bullion futures retreated from a record and the company cut its production forecast.
The Standard & Poor’s/TSX Composite Index gained 15.11 points, or 0.1 percent, to 13,047.78 at 4 p.m. in Toronto. It had fallen as much as 0.8 percent and risen as much as 0.6 percent.
“You have an investment base right now that is pretty unsettled because of the prospect of what could happen if there isn’t a decision next week,” Gareth Watson, vice president of investment management at Richardson GMP Ltd. in Toronto said in a telephone interview. Richardson oversees about C$16 billion
($16.6 billion).
The stock benchmark sank 3 percent in the previous two sessions, the most for a two-day period in almost 13 months, as U.S. lawmakers fought over rival plans to raise the country’s debt ceiling and that country reported a decline in durable- goods orders. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.
An index of financial shares in the S&P/TSX rose after closing yesterday at a seven-month low. U.S. Labor Department figures showed that applications for unemployment benefits dropped last week to the lowest level since April, signifying that the weakness in the labor market is fading. Another report showed the number of contracts to buy previously owned homes unexpectedly increased in June.
Royal Bank of Canada, the largest Canadian lender, gained 1.4 percent to C$52.05. Manulife Financial, North America’s fourth-largest insurer, increased 1.3 percent to C$15.34.
Canadian Pacific Railway Ltd. increased 4.8 percent to C$60.81. The company reported second-quarter net income of 75 Canadian cents a share, beating the 72-cent average of analysts’ estimates compiled by Bloomberg. The shares were raised to “top pick” from “outperform” at RBC Capital Markets.
Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 2.8 percent to C$37.09 after its second-quarter profit trailed the average estimate in a Bloomberg survey by 7.2 percent, excluding certain items.
Talisman Energy Inc. retreated 4.1 percent to C$17.99. The Calgary-based oil and gas producer cut its full-year output forecast, including Colombian volumes, to 430,000 to 440,000 barrels of oil equivalent a day, citing delays at the Yme, Kitan and Eagle Ford projects.
OceanaGold Corp., which explores in New Zealand and the Philippines, sank 17 percent, the most since January 2009, to C$2.35, after cutting its production forecast and raising its estimate of cash costs per ounce.
Goldcorp lost 3.6 percent to C$46.50 after cutting its 2011 production estimate to a range of 2.5 million to 2.55 million ounces, from the previous forecast of between 2.65 million and 2.75 million ounces.
Romarco Minerals Inc. fell 6.8 percent to C$1.64 after it was cut to “sector underperformer” from “sector performer” at CIBC. Extorre Gold Mines Ltd. decreased 3.7 percent to C$11.94.
Rubicon Minerals Corp., the developer of a gold mine in Ontario, surged 29 percent to $3.94 after Agnico-Eagle Mines Ltd. agreed to buy 21.7 million of its shares at C$3.23 a share. Rubicon closed at its lowest price since August 2009 yesterday.
Thomson Reuters Corp. increased 3.7 percent, the most since September 2009, to C$33.10. The financial news and information provider said second-quarter profit increased 93 percent, bolstered by rising revenue from the legal-data and tax and accounting divisions.
Magna International Inc., Canada’s largest auto-parts maker, rallied 2.2 percent to C$46.59 after Auburn Hills, Michigan-based peer BorgWarner Inc. said second-quarter profit almost doubled.
Imax Corp. dropped 16 percent, the most since November 2006, to C$19.43. The maker of widescreen projection technology reported second-quarter adjusted earnings of 7 cents a share, missing the average analyst estimate of 19 cents a share.
US
By Nikolaj Gammeltoft
July 28 (Bloomberg) — U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower for a fourth day, as lawmakers indicated they were no closer to reaching an agreement to increase the debt ceiling and avoid default.
The Dow Jones Industrial Average erased an advance of as much as 82 points after Senate Majority Leader Harry Reid said House Speaker John Boehner’s plan to cut the deficit would be defeated in the Senate. Exxon Mobil Corp. slipped 2.5 percent as its earnings trailed analysts’ estimates. Technology stocks led gains in the S&P 500, with Cisco Systems Inc. climbing 2.5 percent after Goldman Sachs Group Inc. advised buying the stock.
The S&P 500 lost 0.2 percent to 1,302.85 at 3:32 p.m. in New York after tumbling 2 percent yesterday. The Dow slipped 37.57 points, or 0.3 percent, to 12,264.98.
“There is no positive news on the debt discussions out of Washington,” Brad Pleimann, head of equity trading at Piper Jaffray & Co. in Minneapolis, wrote in an e-mail. “Everyone believes, or at least hopes, that a deal will get done, but as we approach the close with no new news traders begin to unwind risk.”
The S&P 500 retreated 3 percent over the previous three days amid concern lawmakers will fail to agree on an increase in the U.S. debt ceiling by an Aug. 2 deadline in order to avoid a default.
Stocks and Treasuries are moving in tandem twice as often as they normally do, a sign investors are growing convinced the U.S. will lose its AAA credit rating and that the impasse among lawmakers on the debt ceiling may spur losses in both markets.
The S&P 500 has risen or fallen together with 10-year Treasury notes 80 percent of the time in the last 10 days, compared with the average since 2000 of 41 percent, according to data compiled by Bloomberg. The yield on the 10-year note fell three basis points today to 2.95 percent.
The S&P 500 rallied as much as 0.9 percent earlier as Labor Department figures showed jobless claims declined by 24,000 to 398,000 last week, the lowest since April. The median estimate of economists in a Bloomberg News survey called for a drop to 415,000. There were no special factors associated with the decrease other than the usual volatility that occurs each year in July, a Labor Department spokesman said.
Stocks also climbed earlier as the number of contracts to purchase previously owned U.S. homes unexpectedly rose in June as buyers tried to take advantage of lower prices and borrowing costs. The 2.4 percent rise in the index of pending home resales followed an 8.2 percent May gain, the National Association of Realtors said today in Washington. Economists forecast a 2 percent drop, according to the median estimate in a Bloomberg News survey.
D.R. Horton advanced 1.1 percent to $11.73 after reporting a third-quarter profit of 9 cents a share as it benefited from cutting costs. Analysts expected a profit of 6 cents a share.
Before the jobless claims data was released at 8:30 a.m. Washington time, stock futures dipped after Exxon reported its results. The company’s second quarter profit fell short of analyst estimates as a slump in international refining profits limited the benefit of higher oil prices. Net income rose to
$2.18 a share from $1.60 a share a year earlier. The world’s largest publicly traded oil company had been expected to earn $2.32 a share, based on the average estimate of seven analysts in a Bloomberg survey. Exxon fell 2.5 percent to $81.24.
Exxon is among about 60 companies in the S&P 500 releasing results today. About 77 percent of companies in the gauge that have reported earnings since July 11 have exceeded analyst estimates, according to data compiled by Bloomberg.
DuPont Co. increased 1.7 percent to $53.19 after raising its full-year earnings forecast and posting second-quarter profit that beat analysts’ estimates because of rising sales of paint pigment and biotech-crop seeds.
Technology companies increased 0.8 percent for the biggest gain as a group in the benchmark index for U.S. equities. Cisco gained 2.5 percent to $16.08 for the biggest increase in the Dow. The largest maker of networking gear was raised to “buy” from “neutral” at Goldman Sachs Group, which cited the outlook for higher earnings estimates.
LSI Corp. rose the most in the S&P 500, rallying 15 percent to $7.40. The maker of chips used in computer disk drives forecast third-quarter sales from continuing operations of $535 million to $565 million. Analysts had predicted $510.7 million on average.
Akamai Technologies Inc., which operates a server network that helps websites load faster, slumped 18 percent to $24.24 after third-quarter revenue and earnings forecasts missed estimates. Profit will be 31 cents to 34 cents a share, excluding some items, said Akamai Chief Financial Officer J.D. Sherman on a conference call late yesterday. That compares with analysts’ estimates of 38 cents.
The S&P 500 Telecommunication Services Index fell the most among 10 groups in the benchmark gauge, losing 1.6 percent.
Sprint Nextel Corp. retreated 17 percent to $4.29 after the third-biggest U.S. mobile-phone carrier reported a loss for the 15th consecutive quarter as more customers dropped their contracts.
BMC Software Inc. fell 8.3 percent to $44.84 after the maker of business software said sales were $502.4 million, missing the average estimate of $508.3 million predicted by analysts in a Bloomberg survey.
“In the last couple of quarters we saw how the bulls had the ball on earnings,” Ryan Bend, who oversees $1.3 billion as money manager at Federated Investors Inc.’s Prudent Bear Fund, said in a telephone interview from Pittsburgh. “Now we’re seeing stocks getting hit if they don’t take numbers up or if they miss they’ll get crushed, and that’s a bearish signal for us.”
Have a wonderful evening everyone.
Be magnificent!
Only the intelligence of love and compassion can solve all problems of life.
-Krishnamurti, 1895-1986
As ever,
Carolann
The road that is built in hope is more pleasant
to the traveler than the road built in despair,
even though they both lead to the same
destination.
-Marion Zimmer Bradley, 1930-1999