July 8th, 2011 Newsletter
Dear Friends,
Tangents: Summer Reading –The List – Authors’ all-time favorite books:
Book critic and editor J. Peder Zane asked 125 writers – among them Stephen King, Jonathan Franzen, and Margaret Drabble – to pick their favorite books. Here are the five most mentioned:
- ANNA KARENINA, by Leo Tolstoy. Many readers consider Tolstoy’s 1876 story of a Russian society woman who leaves her loveless marriage for a dashing paramour the single greatest novel ever written.
- MADAME BOVARY, by Gustave Flaubert. A bored, beautiful housewife is at the center of this 1857 tale of provincial adultery. Some 150 years later, readers of both sexes still find themselves and their neighbors in its pages.
- WAR AND PEACE, by Leo Tolstoy. The book’s length (1,000-plus pages) may intimidate some, but many fans of this 1869 story of aristocratic Russian families and the Napoleonic invasion say they wish it would never end.
- LOLITA, by Vladimir Nabokov. This 1955 novel about a middle-aged literary scholar obsessed with a 12-year old girl is at least as infamous and it is famous.
- ADVENTURES OF HUCKLEBERRY FINN, by Mark Twain. His 1884 story of a boy traveling down the Mississippi with a runaway slave is widely considered the masterpiece of American literature. And its language still makes it the book most challenged in US libraries.
-Marjorie Kehe
Photos of the day
July 8, 2011
The space shuttle Atlantis STS-135 lifts off from launch pad 39A at the Kennedy Space Center in Cape Canaveral, FL. The 12-day mission to the International Space Station is the last mission in the Space Shuttle program. Pierre Ducharme/Reuters
The pack passes under a bridge near Onzain during the seventh stage of the Tour de France cycling race over 135.5 miles starting in Le Mans and finishing in Chateauroux, central France. Christophe Ena/AP
Market Commentary:
Canada
By Matt Walcoff
July 8 (Bloomberg) — Canadian stocks fell, trimming a weekly gain, as oil and base-metals prices slipped after the U.S. reported an increase in its unemployment rate.
Teck Resources Ltd., Canada’s largest base-metals and coal producer, dropped 1.6 percent after the U.S. Labor Department said non-farm employment increased last month by the least since September. Canadian Natural Resources Ltd., Canada’s second- biggest energy company by market value, declined 3.1 percent as crude oil lost the most in two weeks. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 2.6 percent as corn and wheat gained.
The Standard & Poor’s/TSX Composite Index decreased 34.3 points, or 0.3 percent, to 13,371.70, reducing its weekly advance to 0.5 percent.
The jobs data “put a real damper on the market,” said David Cockfield, senior vice president and managing director at Northland Wealth Management in Toronto, which oversees C$200 million ($208 million). “People were expecting better. There were various excuses for previous bad numbers — Japan, bad weather — and those excuses are starting to run off.”
The S&P/TSX rose seven of the previous eight days as European leaders took action to prevent a Greek default and a gauge of U.S. manufacturing surpassed economists’ forecasts. The index slumped 5 percent from the end of March as U.S. unemployment increased in April and May. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.
U.S. payrolls rose by 18,000 in June, less than all 85 economist estimates in a Bloomberg survey. The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent.
Unemployment in Canada was unchanged at 7.4 percent, the lowest since January 2009.
Crude oil futures retreated 2.5 percent after the release of the U.S. jobs report. Canadian Oil Stands Ltd., the largest owner of the Syncrude project, decreased 1 percent to C$28.01. Bonavista Energy Corp., a western Canadian energy producer, fell3.2 percent to C$28.15.
Canadian Natural slumped 3.1 percent to C$40.36 after Thomas R. Driscoll, an analyst at Barclays Plc, cut his rating on the shares to “equal weight” from “overweight.” About 70 percent of the company’s capital spending “may be devoted to assets with unexciting rates of return,” Driscoll said in a note to clients.
All major base metals traded on the London Metal Exchange dropped, with copper declining from a 10-week high. Teck lost 1.6 percent to C$50.15. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 2.2 percent to C$136.20.
Corn rose 3.5 percent, extending the first weekly gain since May, as forecasts for hot, dry weather in the U.S. Midwest led to concern crops may suffer. Wheat advanced 2.6 percent.
Potash Corp. increased 2.6 percent to C$56.89. Agrium Inc., Canada’s second-largest fertilizer producer, climbed 1.5 percent to C$86.30. Viterra Inc., Canada’s biggest grain handler, rose 1.9 percent to C$10.92.
European Goldfields Ltd., which is developing mines in Europe, surged 11 percent to C$13.65 after receiving environmental approval for its projects in Greece. Shares of the Whitehorse, Yukon-based company soared 35 percent this week, the most since 2003.
Directory publisher Yellow Media Inc. tumbled 11 percent to C$2.40 after Scott Cuthbertson, an analyst at Toronto-Dominion Bank, cut his rating on the shares to “reduce” from “hold.”
US
By Nikolaj Gammeltoft
July 8 (Bloomberg) — U.S. stocks sank, pulling down the Standard & Poor’s 500 Index from a two-month high, as the weakest American job growth in nine months hurt companies most tied to the economy.
Financial and industrial companies led losses among 10 S&P 500 groups, dropping more than 1.2 percent. General Electric Co. and Bank of America Corp. fell at least 1.6 percent, the most in the Dow Jones Industrial Average, after the Labor Department reported job growth that was about one-sixth the median economist forecast. Google Inc. lost 2.7 percent as Morgan Stanley downgraded the shares.
The S&P 500 dropped 0.7 percent to 1,343.80 at 4 p.m. in New York, after falling as much as 1.4 percent. The index rose 0.3 percent this week, extending its two-week rally to 5.9 percent, the most since October 2009. The Dow Jones Industrial Average lost 62.29 points, or 0.5 percent, to 12,657.20 today.
“The report is exceedingly disappointing,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “It fell short of just about everyone’s expectations and it certainly has to disappoint equity investors. It wasn’t just a miss, it was a complete whiff.”
The S&P 500 Index retreated from within 0.8 percent of a three-year high after U.S. payrolls increased by 18,000 in June, less than the most pessimistic forecast in a Bloomberg News survey of economists, which called for growth of 105,000 on average. The jobless rate rose to a 2011 high of 9.2 percent.
Losses in companies reliant on economic growth today represented a reversal from the past three weeks. The Morgan Stanley Cyclical Index tracking manufacturers, commodity producers and transportation stocks rose 10 percent between June 16 and yesterday, beating the Morgan Stanley Consumer Index of drugmakers and grocers by 6.6 percentage points. Amid concern the debt crisis in European nations including Greece would slow global growth, the consumer index outperformed the cyclical index by 9.7 points between Feb. 17 and June 16.
The S&P 500 had climbed 6.7 percent since the start of last week as Greek lawmakers passed a five-year austerity package, qualifying the country for further aid, and yesterday’s report from ADP Employer Services showed U.S. companies added twice as many jobs as forecast in June.
The Morgan Stanley index of 30 cyclical stocks slumped 1.1 percent today, reversing two days of gains. Financial and industrial stocks lost 1.3 percent and 1.2 percent, respectively, the most among 10 industries in the S&P 500.
Shares of commodity companies slipped 0.7 percent.
Bank of America declined 2 percent to $10.70 and General Electric Co. fell 1.6 percent to $18.99 for the biggest losses in the Dow. Cisco, the world’s largest maker of networking equipment, slumped 1 percent to $15.74. Caterpillar Inc., the world’s largest maker of construction equipment, dropped 1.1 percent to $110.41.
Staffing companies declined after the U.S. job report showed that hiring by companies was the weakest since May 2010. Monster Worldwide Inc. sank 3.2 percent to $14.65. Manpower Inc. dropped 4.3 percent to $56.13.
“It means that we’re still a ways off from getting to where we should be,” Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., said in an interview from Sun Valley, Idaho, with Bloomberg Television’s Betty Liu on the “In the Loop” program. “How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip.”
The job report damped optimism about prospects for profit growth before the second-quarter reporting period starts next week. The earnings season unofficially kicks off on July 11 with Alcoa Inc., the first Dow company to release results. Corporate profits are forecast to have grown by 13 percent in the period, the smallest increase in two years, according to analyst estimates compiled by Bloomberg.
“We’ve had a very benign earnings pre-season without a lot of negative earnings warnings,” said Tim Hoyle, director of research at Radnor, Pennsylvania-based Haverford Trust, which manages $6.5 billion. “We remain positive on second-quarter earnings,” he said. “But if the jobs situation continues to be weak as it has been in the last two months, then there’s definitely going to be a downward revision.”
President Barack Obama said the job report shows that “we still have a long way to go and a lot of work to do to give people the security and opportunity they deserve.”
“We still have a big hole to fill” in replacing jobs lost during the recession, Obama said in a statement from the White House Rose Garden.
Google dropped 2.7 percent to $531.99 after the world’s biggest search engine had its analyst rating cut to “equal weight” from “overweight” at Morgan Stanley, which cited the risk of declining profit margins in 2011 and 2012 because of higher employee compensation costs and the uncertainty over the return on investments in social media.
Archer Daniels Midland Co. rose 1.9 percent to $31.04. Buffett may look at the world’s largest grain processor as Berkshire Hathaway seeks more acquisitions. ADM, based in Decatur, Illinois, is the “kind of company we look at,” Buffett said. General Dynamics Corp. and Exelon Corp. are also the types of companies he finds attractive, Buffett said in the Bloomberg Television interview.
Yahoo! Inc. slipped 1.3 percent to $15.61. Greenlight Capital Inc., the hedge fund run by David Einhorn, sold its stake in the Internet company for a “modest loss” over doubts surrounding the value of the company’s investment in China-based Alibaba Group Holding Ltd. Yahoo, Alibaba’s biggest investor, has lost 15 percent since May 10, the last day of trading before the Alibaba transaction was disclosed.
Have a wonderful weekend everyone.
Be magnificent!
“Thought is crooked
because it can invent anything
and see things that are not there.
It can perform the most extraordinary tricks,
therefore it cannot be depended upon.”
-Krishnamurti, 1895-1986
As ever,
Carolann
“History is a collection of
agreed upon lies.”
-Voltaire, 1694-1778