June 14, 2011 Newsletter

Dear Friends, 

“Congratulations, class of 2011,” words that have been repeated many times in the past few weeks.  I love reading the commencement speeches this time of year….lots of inspiring words.  The Nobel Peace Prize laureate, Elie Wiesel, addressed Washington University graduates in St. Louis: 

        The greatest commandment – to me – in the Bible is not the Ten Commandments.  First of all, it’s too difficult to observe.  Second, we all pretend to observe them.  My commandment is, “Thou shall not stand idly by.”  Which means when you witness an injustice, don’t stand idly by.  When you hear of a person or a group being persecuted, do not stand idly by.  When there is something wrong in the community around you – or far away – do not stand idly by.  You must intervene.  You must interfere.  And that is actually the motto of human rights….When you are now going into a world which is hounded, obsessed with so much violence, often so much despair – when you enter this world and you say the world is not good today, good!  Correct it!  That’s what you have learned here for four years from your great teachers.  Go there, and tell them what you remember.  Tell them that the nobility of the human being cannot be denied.

Photos of the day

June 14, 2011

Przewalski’s horses graze on a meadow at a farm in the village of Dolni Dobrejov near the city of Tabor, Czech Republic. Przewalski’s Horse or the Dzungian Horse – is one of the last wild horses in the world. Petr Josek/Reuters

Racegoers wait for The St James’s Palace Stakes on the first day of the Royal Ascot race meeting in southern England. Eddie Keogh/Reuters

Elderly men talk each other while looking at the bronze head of Bucephalus, the horse of Alexander the Great, behind a fence of a construction site on the main square in Macedonia’s capital Skopje. Boris Grdanoski/AP

Market Commentary:

 Canada

By Matt Walcoff

June 14 (Bloomberg) — Canadian stocks advanced for the first time in three days after the U.S. reported a smaller drop in retail sales than most economists had forecast.

Royal Bank of Canada, the country’s largest lender by assets, gained 0.8 percent after the U.S. Commerce Department said retail sales slipped 0.2 percent in May, less than 67 of 81 economists’ estimates in a Bloomberg survey. Suncor Energy Inc., Canada’s biggest oil and gas producer, rose 1.1 percent as crude climbed from a four-week low. Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 2.2 percent after Chinese factory production topped economists’ forecasts.

The Standard & Poor’s/TSX Composite Index rallied 90.89 points, or 0.7 percent, to 13,030.61 at 9:38 a.m. in Toronto after closing at the lowest level since November yesterday.

The S&P/TSX plunged 6.3 percent this month through yesterday, the most among 24 developed-market stock benchmarks, as economic data have reflected a slowing global recovery. The index has not ended a month with a decline that large since February 2009.

Shares of the following companies may have unusual moves in Canadian trading tomorrow.

Artis Real Estate Investment Trust (AX-U CN): The owner of 157 commercial properties in Canada and the U.S. said it will sell 6.4 million units at C$14.10 a unit, according to a press release on Marketwire. Artis rose 1.4 percent to C$14.25 before the announcement.

Brigus Gold Inc. (BRD CN): The gold producer with operations in Ontario said it lost 2 cents a share, excluding certain items, in the first quarter. Richard Gray, an analyst at Cormark Securities Inc., had estimated a loss of 5 cents a share.

Cadente Copper Corp. (DNT CN): The developer of a copper, gold and silver project in Peru received a “speculative buy” rating in new coverage from Chris Chang, an analyst at Laurentian Bank of Canada.

 US

By Nikolaj Gammeltoft

June 14 (Bloomberg) — U.S. stocks rallied and the Standard & Poor’s 500 Index advanced the most in almost two months after better-than-estimated data on American retail sales and Chinese industrial production.

Home Depot Inc. advanced the most in the Dow Jones Industrial Average, gaining 4.5 percent. Best Buy Co., the world’s largest consumer electronics retailer, surged 4.6 percent after profit exceeded analysts’ forecasts on rising demand for smartphones. J.C. Penney Co. soared 17 after naming Ron Johnson, Apple Inc.’s retail head, as its chief executive officer. Energy shares rallied the most among 10 groups in the S&P 500 as oil rebounded from its lowest in a month.

The S&P 500 rose 1.3 percent, the most since April 20, to 1,287.87 at 4 p.m. in New York. The Dow increased 123.14 points, or 1 percent, to 12,076.11.

“The China numbers were fine and the retail sales report was pretty much in line,” said Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.4 billion. “We got ourselves into a short-term oversold condition and the market wants to bounce back now. That’s indicative of the trading range we will be in for a while. There’s a change in tone in the data as it has been coming in slower, but on the other hand valuations are relatively low.”                        

Stock futures extended their gains after a Commerce Department report showed sales at retailers fell 0.2 percent in May, less than forecast and indicating that American consumers are overcoming elevated gasoline costs. The median forecast of economists surveyed by Bloomberg News was a drop of 0.5 percent.

China reported that industrial production climbed more than estimated in May, while the country’s inflation last month accelerated to the fastest pace in almost three years. Production gained 13.3 percent from the year before, exceeding the median economist forecast of 13.1 percent in a Bloomberg survey. The 5.5 percent annual gain in consumer prices matched estimates.

U.S. stocks rose yesterday, rebounding from six weeks of losses, as a pickup in takeovers and the cheapest valuations in almost a year helped offset concern that the economic recovery is faltering.  More than $1 trillion was erased from U.S. equity markets from the S&P 500’s peak on April 29 through yesterday, leaving the measure trading at about 12.8 times its companies’ estimated earnings for 2011. That’s the cheapest valuation since August. The index is still up 2.4 percent for 2011.

The S&P 500 fell 6.8 percent from the end of April through June 10 as sales of existing homes unexpectedly declined, the unemployment rate rose and concern escalated that one or more European countries will fail to repay all their debt.

Birinyi Associates Inc.’s Jeffrey Yale Rubin said the firm is bullish on equities this year, while Dean Curnutt of Macro Risk Advisors said the performance of stocks depends on the actions by the Federal Reserve.

“For the remainder of the year, we’re positive,” Rubin said today at a panel discussion on equities at the Bloomberg Money Managers conference in Boston. For the S&P 500, “we have a target of 2,100 but that’s not this year, that’s not next year. When we look at stock markets that go on for a long period of time, that start off quickly — 1974, 1982, 2009 — those markets are not ones that end quickly. If you also look at those markets during this period, phase two of the market, it runs into difficulty.”

Curnutt, the New York-based chief executive officer of Macro Risk, said the firm’s view on stocks is “largely conditional” on the next policy response by the U.S. central bank. The Fed’s $600 billion program of buying Treasuries to stimulate the economy is ending this month. The S&P 500 could rise to 2,100 if the Fed decided it wanted it to, he said at the conference.

Wholesale costs in the U.S. rose more than forecast in May, led by higher prices for fuel and the fastest rise in 30 years for apparel and textiles. The 0.2 percent increase in the producer-price index compares with the 0.1 percent median estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington.

Home Depot, the largest U.S. home-improvement retailer, added 4.5 percent to $34.75. Best Buy gained 4.6 percent to $30.13 after net income fell 12 percent to $136 million, or 35 cents a share, in the quarter ended May 28. Analysts predicted 33 cents, the average estimate in a Bloomberg survey.

J.C. Penney rallied 17 percent to $35.37. The department- store owner named Johnson, 52, as CEO to help revive sales. He will take his role on Nov. 1 and report to current CEO Myron Ullman, who will become executive chairman. Johnson, a former Target Corp. executive, was hired by Apple Chief Steve Jobs to help build the company’s retail operation in 2000.

Apple climbed 1.8 percent to $332.44 as the maker of the iPhone and iPad agreed to pay an undisclosed sum and royalties to Nokia Oyj, settling all patent litigation between the two companies. The Finnish mobile-phone maker filed a lawsuit in October 2009, accusing Apple of infringing its patents. Apple will pay Nokia royalties for the term of the agreement.

Energy shares gained 2 percent, the most among 10 S&P 500 industry groups, as oil rose for the first time in three days in New York. Crude for July delivery gained $2.07 to settle at $99.37 a barrel in the biggest one-day increase since May 18.

Caterpillar Inc., the world’s largest maker of construction and mining equipment, climbed 2.5 percent to $97.86 for the second-biggest gain in the Dow. Industrial companies rallied the third-most as a group in the S&P 500, materials producers gained the second-most. All ten groups in the benchmark gauge for U.S. equities advanced.

McGraw-Hill Cos. gained 2.6 percent to $41.79. The publisher and provider of financial data said it retained Morgan Stanley to pursue the divestiture of its broadcasting group. Dollar Thrifty Automotive Group Inc., the third-biggest U.S. car-rental company, slumped 9.3 percent to $72.43. Avis Budget Group Inc., which has been bidding against Hertz Global Holdings Inc. for Dollar Thrifty, agreed to buy Avis Europe Plc, the second-biggest car-rental company on the continent. The announcement left investors wondering if Avis could buy both companies. Avis rose 7.6 percent to $17.17, while Hertz rose 9.1 percent to $15.40.

Kellogg Co. fell 0.8 percent to $54.96. The largest U.S. breakfast cereal maker was warned by U.S. regulators after listeria was found in an inspection of a plant that had flies and pools of water. 

Have a wonderful evening everyone. 

Be magnificent! 

Hold the reins of your mind, as you would hold the reins of a restive  horse.

 -Svetasvatara Upanishad

As ever,

 Carolann

 It’s wonderful what we can do if we’re always doing.  

                         -George Washington, 1732-1799