June 29th, 2011 Newsletter
Dear Friends,
Tangents: I attended an event this afternoon to celebrate the life of a client of mine who passed away recently. One of her relatives wrote a poem on May 9th, 1903, and the hand written poem was in a frame on a table with some old photos. I think it is lovely:
The friends who leave us do not feel the sorrow of parting,
as we feel it who must stay
lamenting day by day and knowing,
when we wake upon the morrow,
we shall not find in its accustomed place
the one beloved face.
For Christians, today is the feast day of St. Peter and St. Paul.
Photos of the day
June 29, 2011
Pope Benedict XVI leads a solemn mass to celebrate the feast of Saints Peter and Paul in Saint Peter’s Basilica at the Vatican. Tony Gentile/Reuters
A child with mud on his face smiles after celebrating Asar Pandhra festival in Bhaktapur. Farmers in Nepal celebrate the festival to mark the commencement of rice crop planting in paddy fields. Navesh Chitrakar/Reuters
Market Commentary:
Canada
By Matt Walcoff
June 29 (Bloomberg) — Canadian stocks rose for a third day, led by raw-materials producers, as copper climbed after Greece’s parliament passed an austerity package and Canpotex Ltd. reached a potash-supply deal with Sinofert Holdings Ltd.
Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 2.5 percent. Potash Corp. of Saskatchewan Inc. advanced 2.1 percent after Canpotex, which represents North American potash sellers overseas, agreed to a deal that boosts prices. Rubicon Minerals Corp. slid 24 percent after releasing a preliminary economic assessment of its Phoenix Gold Project in Ontario.
The Standard & Poor’s/TSX Composite Index rose 83.96 points, or 0.6 percent, to 13,188.94.
“The risk-on trade is coming back,” said Greg Taylor, a money manager at Aurion Capital Management in Toronto, which oversees about C$5 billion ($5.2 billion). “The fear of the Greek vote not passing is behind us.” The S&P/TSX dropped 7.2 percent this quarter through yesterday, which would be the biggest quarterly loss since 2008.
World equities have declined on concern Greece won’t be able to pay its debts. S&P/TSX energy companies slumped 11 percent as crude oil sank 13 percent. The energy industry makes up 27 percent of Canadian stocks by market value, according to Bloomberg data.
The Greek Parliament approved a 78-billion-euro ($112 billion) package of budget cuts and asset sales today amid violent protests in Athens.
A U.S. index of pending home sales increased 8 percent in May from April, signaling the residential real estate market in Canada’s main trading partner may be rebounding. Economists had forecast a 3 percent increase, according to the median estimate in a Bloomberg News survey.
The U.S. dollar dropped against 15 of 16 other major currencies. The Canadian dollar rallied 1.1 percent after the country reported that inflation jumped to an eight-year high last month.
Gold advanced 0.7 percent and silver 3.3 percent in New York. Barrick Gold Corp., the world’s largest producer of the metal, increased 1.5 percent to C$43.80. Kinross Gold Corp., Canada’s third-biggest company in the industry, climbed 0.9 percent to C$15.03. Iamgold Corp., which mines in West Africa, South America and Quebec, rallied 3 percent to C$18.38.
Rubicon Minerals sank 24 percent, the most in 10 years, to C$3.56. The company forecast mining costs higher than Bank of Montreal had forecast, Andrew Kaip, an analyst at BMO, wrote in a note to clients.
Potash Corp. gained for a fifth day after Canpotex said its agreement with Sinofert, a Hong Kong-based fertilizer manufacturer, for the second half of the year boosts potash prices by $70 a metric ton. Also today, analysts at UBS AG named Potash Corp. one of nine “most-preferred” chemicals stocks, citing its “balanced exposure to potash, phosphate and nitrogen fertilizers.”
Shares of the Saskatoon, Saskatchewan-based company rose 2.1 percent to C$55.13.
Base-metals producers advanced as copper rallied the most in a month. Teck increased 2.5 percent to C$48.55. Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia with Rio Tinto Group, climbed 5.6 percent to C$24.52. Capstone Mining Corp., a copper producer with operations in Yukon and Mexico, jumped 16 percent to C$3.44 for its first gain in six days. Mercator Minerals Ltd., which mines copper and molybdenum, surged 9.8 percent to C$2.70.
Fifty of 67 S&P/TSX energy companies gained today as crude futures advanced after the U.S. reported a bigger drop in inventories than all 12 analysts in a Bloomberg survey had forecast.
Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, rose 1.4 percent to C$39.99. Cenovus Energy Inc., the country’s fifth-biggest energy company, increased 2.4 percent to C$35.44. Canadian Oil Sands Ltd., the largest owner of the Syncrude project, climbed 3 percent to C$27.76.
TMX Group Ltd., the owner of the Toronto Stock Exchange, rallied 1.5 percent to C$44.20 after London Stock Exchange Group Plc withdrew its C$3.29 billion bid for the company. In a statement, the companies said they were unlikely to obtain enough shareholder votes for approval at a meeting scheduled for tomorrow.
Maple Group Acquisition Corp., which has offered C$3.73 billion in cash and shares for TMX, said it will continue to pursue regulatory approvals for its bid.
Directory publisher Yellow Media Inc. gained for the first time in seven days, rising a record 18 percent to C$2.69. The shares had plunged 52 percent to a record low from May 17, the day San Francisco banned the unsolicited distribution of phone books, to yesterday.
Exfo Inc., which makes equipment for the telecommunications industry, tumbled 17 percent to C$7.22 after forecasting fourth- quarter profit below analysts’ estimates. Shares of the Quebec City-based company have fallen 44 percent from a post-2002 high on March 8.
US
By Rita Nazareth and Cecile Vannucci
June 29 (Bloomberg) — U.S. stocks rose, giving benchmark indexes the biggest three-day gain since March, as Greece passed austerity measures and the Federal Reserve moved to set a less- severe limit on debit-card swipe fees than previously proposed.
Visa Inc. and MasterCard Inc., the biggest consumer-payment networks, jumped more than 11 percent, as the Fed moved to cap debit-card transaction fees at 21 cents. Bank of America Corp. advanced 3 percent after agreeing to pay $8.5 billion to resolve claims over soured mortgages. Monsanto Co., the largest seed company, climbed 5 percent after net income jumped 77 percent. U.S. Steel Corp. paced a rally in steelmakers, rising 5.9 percent, as Deutsche Bank AG predicted demand rebound.
The Standard & Poor’s 500 Index rose 0.8 percent to 1,307.41 at 4 p.m. in New York, adding 3.1 percent in three days. The Dow Jones Industrial Average added 72.73 points, or 0.6 percent, to 12,261.42 today.
“Greece is kicking the can down the road,” said Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “That’s certainly an important first step. On top of that, the economy has a number of catalysts that could help push the market higher over the next few weeks. We’ve came down a lot on price. It seems a bit overdone.”
The S&P 500 has fallen 2.8 percent in June, and headed for the second straight monthly loss, amid concern about the European debt crisis and weaker-than-expected economic data. The index is still up 4 percent in 2011 on government stimulus measures and better-than-estimated profits.
Global stocks rose for a third day, the longest advance in a month, as Greek Prime Minister George Papandreou clinched enough votes to pass the first part of an austerity plan aimed at meeting European Union aid requirements and staving off default for his debt-laden nation. Papandreou is now on track to secure a bill setting out the strategy for a 78 billion-euro($112 billion) package of budget cuts and asset sales that is the condition for further rescue funds.
“It relieves a certain amount of uncertainty related to outsized risks that would come with a default,” said Kevin Caron, market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has $115 billion in client assets. In addition, “it was good to see that home sales rose more than expected. That was a positive sign.”
More Americans than forecast signed contracts in May to buy previously owned homes. The index of pending home resales increased 8.2 percent from April after a revised 11 percent drop the prior month that was smaller than initially reported, the National Association of Realtors said. Economists forecast a 3 percent increase, according to the median estimate in a Bloomberg News survey.
Financial shares had the biggest gain in the S&P 500 within 10 industries, rising 2.1 percent. Visa soared 15 percent, the most since March 2008, to $86.57. MasterCard surged 11 percent to $309.70, the highest since June 2008.
“This is a big win for Visa and MasterCard,” said Giri Cherukuri, lead trader and portfolio manager for Lisle, Illinois-based Oakbrook Investments, which manages about $2.7 billion. “They’ve been arguing for a long time that these regulations are too onerous. Definitely good news for them.”
Bank of America added 3 percent to $11.14. The stock rose even after the bank said its settlement will contribute to a second-quarter loss of $8.6 billion to $9.1 billion, or 88 cents to 93 cents a share.
Citigroup Inc. advanced 3.4 percent to $41.50. Bank of America raised the stock to “buy” from “neutral,” saying potential earnings should lift the shares.
Gauges of raw material and energy shares in the S&P 500 gained at least 1.1 percent. The S&P GSCI Index of 24 commodities advanced 2.1 percent as oil and metals rallied.
Monsanto climbed 5 percent to $70.26. The world’s largest seed company reported fiscal third-quarter earnings that topped analysts’ estimates and raised its full-year profit forecast on higher sales of Roundup weed killer and genetically modified crop seeds. Profit excluding some items will rise to $2.84 to $2.88 a share in the fiscal year through August. Its previous forecast was for $2.72 to $2.82.
U.S. Steel rallied 5.9 percent, the biggest increase since July 2010, to $45.85. Deutsche Bank AG said demand and prices for the metal will rise. Steel producers in the U.S. will benefit as Chinese inventories empty and industrial activity picks up in the second half of 2011, analysts including David Martin and Jorge Beristain wrote in a research note yesterday.
Deutsche Bank raised its ratings on Pittsburgh-based U.S. Steel and AK Steel Holding Corp., the third-largest U.S. steelmaker, to “buy” from “hold.”
BJ’s Wholesale Club Inc. climbed 4.6 percent to $50.29 as Leonard Green & Partners LP and CVC Capital Partners agreed to buy the warehouse-club chain for $2.8 billion. Its investors will receive $51.25 a share in cash for each common stock they hold, the companies said. That’s 6.6 percent more than the closing price yesterday.
The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, tumbled 9.9 percent, the most since March, to 17.27.
A gauge of homebuilders in S&P indexes slumped 2.3 percent.
KB Home tumbled 15 percent, the most since September 2008, to $10.08. The Los Angeles-based homebuilder that targets first- time buyers reported a wider second-quarter loss as new orders and revenue decreased amid weak demand for new houses.
PulteGroup Inc. declined 3.9 percent to $7.58. D.R. Horton Inc. fell 3.2 percent to $11.37.
Have a wonderful evening everyone.
Be magnificent!
Meditation is movement without any motive, without words, and the activity of thought.
It must be something that is not deliberately set about.
Only then is it a movement within the infinite, measureless to man, without a goal, without an end,
without a beginning. And that has a strange action in daily life, because all life is one,
and then becomes sacred.
-Krishnamurti, 1895-1986
As ever,
Carolann
It’s not that I’m so smart, it’s just that
I stay with problems longer.
-Albert Einstein, 1879-1955