June 5, 2013 Newsletter
Dear Friends,
Tangents:
On this day in 1933, the US officially went off the gold standard in an attempt to discourage hoarding and end bank runs. –Steven Russolillo, WSJ, 06/05/13.
Also on this day in 1968, Robert F. Kennedy was assassinated.
06/05/1981 – AIDS was first noted.
06/05/1878 – Revolutionary Pancho Villa was born.
Don’t let it end like this. Tell them I said something. –Pancho Villa.
Of note: In 1983, in Northern Ireland, at the height of the civil disturbances known as the Troubles, a group of photographers created “Belfast Exposed”, a community project and gallery aimed at reclaiming the city’s image. Thirty years on, the now-renowned gallery is celebrating its anniversary with an exhibition of three decades of photography from Northern Ireland. The show ranges from shocking and familiar press-commissioned images of violence to a newer, more gallery-influenced style of photography developed by artists such as Paul Graham whose “Union Jack Flag in Tree, County Tyrone, 1985” is featured.
‘Union Jack Flag in Tree, County Tyrone, 1985’
Talking about his “Troubled Land” series, Graham once said: “Each photograph was booby-trapped….with a small device that launched it into a political area.” Visit www.belfastexposed.org. –from the FT.
Photos of the Day –June 5th, 2013
Residents of the village of Mlekojedy sit in front of the flooded road to their homes, near the city of Litomerice, Czech Republic. Petr Josek/Reuters
Gallery employee Charlotte Hogg poses in front of a tapestry by Grayson Perry titled, ‘Expulsion From 8 Eden Close’ during the media preview of the Summer Exhibition at the Royal Academy of Arts in central London. Andrew Winning/Reuters
Market Closes for June 5th, 2013
Market
Index |
Close | Change |
Dow
Jones |
14960.59 | -216.95
-1.43% |
S&P 500 | 1608.90 | -22.48
-1.38% |
NASDAQ | 3401.477 | -43.782
-1.27% |
TSX | 12443.65 | -150.32
|
-1.19%
|
International Markets
Market
Index |
Close | Change |
NIKKEI | 13014.87 | -518.89
|
-3.83%
|
||
HANG
SENG |
22069.24 | -216.28
|
-0.97%
|
||
SENSEX | 19568.22 | +22.44
|
+0.11%
|
||
FTSE 100 | 6419.31 | -139.27
|
-2.12%
|
Bonds
Bonds | % Yield | Previous % Yield |
CND.
10 Year Bond |
2.045 | 2.085 |
CND.
30 Year Bond |
2.620 | 2.638 |
U.S.
10 Year Bond |
2.0892 | 2.1462 |
U.S.
30 Year Bond |
3.2463 | 3.3114 |
Currencies
BOC Close | Today | Previous |
Canadian $ | 0.96662 | 0.96697
|
US
$ |
1.03453 | 1.03415 |
Euro Rate
1 Euro= |
Inverse
|
|
Canadian
$
|
1.35409 | 0.73850 |
US
$
|
1.30889 | 0.76400 |
Commodities
Gold | Close | Previous |
London Gold
Fix |
1403.30 | 1397.50 |
Oil | Close | Previous
|
WTI Crude Future | 93.74 | 93.31 |
BRENT | 102.82 | 103.25
|
Market Commentary:
Canada
By Eric Lam
June 5 (Bloomberg) — Canadian stocks fell for a fourth day, the longest streak in two months, after data showed U.S. jobs and factory orders rose less than forecast and investors weighed the U.S. Federal Reserve’s stimulus plans.
BCE Inc. dropped 1.3 percent to a February low, after Macquarie Group Ltd. said that phone shares are vulnerable amid increased regulation. Canadian Pacific Railway Ltd. lost 4.4 percent to extend losses to a fourth day after its largest shareholder said it will sell part of its stake. WestJet Airlines Ltd. slid 2.3 percent after a measure of customers on its flights declined. A gauge of real estate investment trust fell for a seventh day, the longest streak in three years.
The Standard & Poor’s/TSX Composite Index fell 1.2 percent to 12,443.65 at 4 p.m. in Toronto. The index has lost 2.4 percent in the past four days and closed at a one-month low.
Trading volume was 13 percent higher than the 30-day average.
“The market in the U.S. and Canada is pausing here, it’s run out of momentum,” said John Kinsey, fund manager with Caldwell Securities Ltd. in Toronto. He helps manage about C$1 billion ($966 million). “The economic numbers, some of them have been disappointing, to put it mildly. There seems to be a difference of opinion among Fed members. When they have a problem, the market has a problem.”
Federal Reserve Bank of Dallas President Richard Fisher, among the most vocal critics of additional easing, and Fed Bank of Kansas City President Esther George, who has dissented against record stimulus at every policy meeting this year, separately called for a reduction in the central bank’s $85 billion in monthly bond purchases yesterday. Atlanta Fed President Dennis Lockhart said earlier this week that “very mixed” economic data makes him “more cautious” about a near- term reduction.
The 135,000 increase in U.S. employment in May followed a revised 113,000 gain in April that was smaller than initially estimated, the ADP Research Institute reported today. The median forecast of 40 economists surveyed by Bloomberg called for a May advance of 165,000.
All 10 groups in the S&P/TSX retreated, led by industrial stocks, which sank 2.6 percent as a group for the biggest slide since September. U.S. factory orders rose 1 percent in April as demand for non-durable goods dropped. The median forecast among economists surveyed by Bloomberg was for a 1.5 percent increase.
Canadian Pacific slid 4.4 percent to C$126. William Ackman’s Pershing Square Capital Management LP said on June 3 it plans to sell as many as 7 million shares of the company beginning June 10.
The New York hedge fund instigated a turnaround at the company after installing Hunter Harrison as the new chief executive officer last year. The stock has fallen 9.3 percent in the past four days.
Chartwell Retirement Residences sank 2.6 percent to C$10.33 and Allied Properties Real Estate Investment Trust declined 0.8 percent to C$31.89. The S&P/TSX Capped REIT Index has fallen seven straight days, dropping 6.4 percent during its longest losing streak since February 2010.
WestJet Airlines lost 2.3 percent to C$22.18. The company’s passenger load factor, which measures the percentage of seats filled on flights, declined to 78.5 percent in May from 79.2 percent a year earlier.
BCE retreated 1.3 percent to C$45.57. The stock has fallen in six of the past seven days, slipping 5 percent in that time.
Canadian regulators yesterday squashed a proposed deal between Telus Corp. and Mobilicity due to competition concerns, and regulators have introduced a code of conduct allowing consumers to break contracts after two years with no penalty.
Greg MacDonald, analyst with Macquarie Group, said in a note today telecommunications stocks will continue to fall through the summer due to the recent regulatory reforms, including a delay of the next wireless spectrum auction until 2014.
Telus decreased 1.9 percent to C$35.14 and Rogers Communications Inc., Canada’s largest wireless carrier, fell 1.4 percent to C$45.78.
US
By Lu Wang and Nikolaj Gammeltoft
June 5 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index to a one-month low, as jobs and factory data missed estimates and investors speculated whether the Federal Reserve will taper bond purchases.
All 10 S&P 500 industry groups retreated. Alcoa Inc. and Bank of America Corp. dropped at least 2 percent, as raw- materials and financial companies fell the most. An index of homebuilders slumped 1.6 percent as mortgage applications dropped for a fourth straight week. Intel Corp. plunged 2.6 percent for the biggest slide in the Dow Jones Industrial Average. Walgreen Co. climbed 1.3 percent as sales exceeded analysts’ estimates.
The S&P 500 dropped 1.4 percent to 1,608.90 at 4 p.m. in New York, the lowest since May 2. The Dow declined 216.95 points, or 1.4 percent, to 14,960.59. More than 6.9 billion shares traded hands on U.S. exchanges today, 10 percent higher than the three-month average.
Today’s economic data “may throw some cold water on this economic growth story continuing,” Bill Schultz, who oversees about $1.1 billion as chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, said by phone. “So you got this contrast in what the Fed should do. All those cross- currents throw on some caution on the whole market. Investors are taking a pause and a more look-and-see approach than they have in the past, where equities are the only place to be.”
Investors considered mixed data today, as a report from ADP Research Institute showed companies in the U.S. hired fewer workers than projected in May amid federal budget cuts and higher taxes. Separate data from the Commerce Department showed U.S. factory orders in April fell short of estimates. A gauge of service industries, which covers almost 90 percent of the economy, rose more than forecast.
Stocks maintained losses after the Fed’s Beige Book showed the economy expanded at a “modest to moderate” pace in 11 of 12 central-bank districts, with broad-based gains ranging from business services to construction and manufacturing. The survey is based on data collected by Fed regional banks on or before May 24.
A Labor Department report on June 7 may show employers added 165,000 people to payrolls last month after a gain of 165,000 in April, according to the median of 85 economists’ estimates in a Bloomberg survey.
The S&P 500 has dropped 3.6 percent since closing at a record high on May 21 as Fed policy makers continue to debate whether the economy is strong enough to begin reducing monetary stimulus.
Fed Bank of Dallas President Richard Fisher, among the most vocal critics of additional easing, and Fed Bank of Kansas City President Esther George, who has dissented against record stimulus at every policy meeting this year, separately called for a reduction in the central bank’s $85 billion in monthly bond purchases yesterday. Atlanta Fed President Dennis Lockhart said earlier this week that “very mixed” economic data makes him “more cautious” about a near-term reduction.
The Fed stimulus and better-than-expected corporate earnings have propelled the bull market in U.S. equities into a fifth year and driven the S&P 500 up 138 percent from a 12-year low in 2009.
The Chicago Board Options Exchange Volatility Index, or VIX, climbed 7.6 percent today to 17.50. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, reached a six-year low in March and has since surged 55 percent.
All 10 groups in the S&P 500 fell more than 0.9 percent.
Raw-materials and financial companies sank more than 1.7 percent. Alcoa dropped 2.2 percent to $8.20 and Bank of America declined 2 percent to $13.09 for a fourth straight day of losses.
An S&P index of homebuilders sank 1.6 percent as all but one of its 11 members fell. The Mortgage Bankers Association’s index slumped 11.5 percent last week as the highest borrowing costs in more than a year led to a plunge in refinancing.
“Be careful what you wish for,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an interview. His firm oversees $8 billion. “Would you rather have higher rates and a stronger economy or a crappy economy and QE forever? I for one would like higher rates and a stronger economy, but I think people are most concerned with how much just a small uptick in rates had on the home-building sector and everything attached to it.”
D.R. Horton Inc. dropped 1.2 percent to $22.65 for a fourth day of declines. Toll Brothers Inc. slid 1.7 percent to $32.36, an eighth straight loss that left the stock at its lowest since April 22. Home Depot Inc., the largest U.S. home-improvement retailer, was among the biggest drops in the Dow, losing 2 percent to $75.10.
Apple Inc. dropped 0.9 percent to $445.11 after a U.S. trade agency said it infringed a patent owned by Samsung Electronics Co. The decision was the first patent ruling against Apple in the U.S. that affects product sales. It covers the iPhone 4 and iPad 2 3G sold for use on networks operated by AT&T Inc., T-Mobile US Inc. and two regional carriers.
Joy Global Inc., the largest maker of underground mining equipment, retreated 2.2 percent to $52.87. Goldman Sachs downgraded its recommendation on the stock to neutral from buy, citing a weaker outlook for after-market demand.
General Motors Co. slid 2.7 percent to $34.02. The U.S.
Treasury said it plans to sell 30 million additional shares of the carmaker’s common stock. The Treasury offering, which will include 20 million shares from the UAW union’s GM retiree health-care trust, coincides with the automaker’s inclusion in the S&P 500 as of the close of trading tomorrow.
Fastenal Co. slumped 6.3 percent to $47.70 for the biggest decline in the S&P 500. The retailer of nuts, bolts and other fasteners said daily sales increased 5.3 percent last month.
That missed the growth rate of at least 6.5 percent estimated by analysts, according to Wunderlich Securities Inc. Walgreen advanced 1.3 percent to $48.63. The largest U.S. drugstore chain reported a 2.8 percent increase in May sales at stores open at least one year. That beat the average 1.6 percent gain expected by analysts.
Juniper Networks Inc. jumped 6.6 percent to $18.54 for the biggest gain in the S&P 500. The second-biggest maker of computer-networking equipment is “tracking above historical pattern” so far this quarter as routing spending by service providers picked up, Chief Executive Officer Kevin Johnson said in a presentation at a conference hosted by Bank of America.
Have a wonderful evening everyone.
Be magnificent!
The divine music is incessantly going on within ourselves,
but the loud senses drown the delicate music,
which is unlike and infinitely superior to anything we can perceive with our senses.
Mahatma Gandhi, 1869-1948
As ever,
Carolann
If you are really thankful, what do you do?
You share.
-W. Clement Stone, 1902-2002
Carolann Steinhoff, B.Sc., CFP®, CIM, FCSI
Senior Vice-President &
Senior Investment Advisor
Queensbury Securities Inc.,
St. Andrew’s Square
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7