March 8th, 2011 Newsletter

Dear Friends,

Today is International Women’s Day!! To all the hard working, beautiful, successful women out there – you go girls!

From the Globe and Mail:

Royal officials have launched a website to offer regular updates on the upcoming marriage of Prince William and Kate Middleton.

Officials at Prince William’s office, St. James’ Palace, say the website will offer information for anyone interested in the April 29th wedding.

The palace says it will be updated regularly with photos, links and videos.

Also in the Globe and Mail today – Movie rentals will be coming to Facebook.

Warner Bros is making some of its films available on Facebook, opening up a new revenue source for the Internet social network and signaling new competition for online entertainment companies.

Consumers can pay for the movies using Facebook Credits, a virtual currency so far used mainly in social games on the site, according to Warner Bros, a unit of Time Warner Inc, on Tuesday.

What next?

Female members of the Ugandan police march as part of the International Women’s Day celebrations at Kololo Airstrip, in Kampala, Uganda. The head of the new United Nations women’s agency said there has been ‘remarkable progress’ since International Women’s Day was first celebrated a century ago, but gender equality remains a distant goal because women still suffer widespread discrimination and lack political and economic clout.

Britain’s Prince William watches as Kate Middleton flips a pancake at a display by the charity Northern Ireland Cancer Fund for Children outside City Hall in Belfast, Northern Ireland. Police kept watch from the rooftops for a visit that brought the center of Belfast to a standstill. The crowd around the couple swelled to several hundred as shoppers realized something special was happening.

Market Commentary

Canada

Bloomberg: By Jennifer A. Johnson

Canadian stocks slumped for a second day as oil and gold producers dropped along with prices for the commodities.

Suncor Energy Inc. (SU), Canada’s biggest energy producer, fell 4.2 percent as members of the Organization of Petroleum Exporting Countries discussed whether to hold a special meeting to discuss increasing production as unrest in Libya continued. Barrick Gold Corp. (ABX) declined 1.4 percent after the precious metal fell. Canadian Natural Resources Ltd., the nation’s second- largest energy company, slumped 3.4 percent after oil dropped.

“If you look at the actual oil supply, it hasn’t actually changed that much,” said Jennifer Radman, who helps oversee about C$1 billion ($1.03 billion) as a money manager at Caldwell Investment Management Ltd. in Toronto. “A lot of the spike in prices has been in anticipation of things going wrong. Until you see the actual supply lessening, you are going to have limitations on how much higher oil can climb.”

The Standard & Poor’s/TSX Composite Index declined 79.38 points, or 0.6 percent, to close at 14,012.97 in Toronto, the lowest level since Feb. 24.

A subgroup of 58 energy producers in the Canadian benchmark equity index advanced 8.4 percent from Feb. 11 through March 4 on concern unrest in Libya and the Middle East would disrupt oil supply. The group has fallen 3.6 percent since March 4.

Stockpiles of crude oil probably rose 1.13 million barrels from 346.4 million the prior week, according to a Bloomberg survey. Eight of the analysts forecast a gain and six projected a decrease. The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.

In Washington, President Barack Obama said NATO is debating a “wide range” of options in Libya, and his press secretary, Jay Carney, said that providing arms to the rebels is among them. Arab Gulf nations advocated a no-fly zone and U.K Foreign Secretary William Hague said the United Nations Security Council is discussing how to set a “clear trigger” for UN action to ground Muammar Qaddafi’s air force.

“I think the Libyan situation is somewhat cooling the market,” said Robert “Hap” Sneddon, president of Oakville, Ontario, money manager Castlemoore Inc. and vice president of the Canadian Society of Technical Analysts. “If things do calm down and Qaddafi does end up leaving, you may get other areas start to heat-up again.”

Suncor Energy dropped 4.2 percent to C$43.67, the lowest level since Feb. 16. Petrobank Energy and Resources Ltd., which explores for oil and natural gas in Alberta, Canada, declined 5.4 percent to C$23.19, the biggest slide in the S&P/TSX Index. Canadian Natural fell 3.4 percent to C$46.46.

A subgroup of gold producers in the S&P/TSX Index slumped 1.3 percent. Twenty-six of the 34 members in the group declined.

Barrick slumped 1.4 percent to C$50.80. Goldcorp Inc. fell 1.5 percent to C$47.89. Gold futures for April delivery declined 0.5 percent to $1,427 an ounce in New York, as a stronger dollar and dropping energy prices eroded the appeal of the previous metal as an alternative asset and inflation hedge.

Rogers Communications Inc. (RCI/B), Canada’s largest wireless carrier, advanced 1.4 percent to C$34.00, the biggest gain since Feb. 16. The Toronto-based company plans to sell as much as $1.8 billion ($1.85 billion) of senior unsecured debt in a two-part offering, according to a person familiar with the transaction.

Celtic Exploration Ltd. (CLT) dropped 5.9 percent to C$20.93, the second-biggest decline in the Canadian benchmark equity index. The oil and natural gas producer was cut to “sector perform” from “sector outperform” at Scotia Capital Inc. The 12-month price estimate is C$24.00.

US

Bloomberg: By Rita Nazareth

U.S. stocks advanced, snapping a two-day decline for benchmark indexes, as crude oil retreated and Bank of America Corp. (BAC) sparked a rally in financial shares after saying its home-loan business is in “recovery mode.”

Bank of America jumped 4.7 percent, leading a gauge of financial shares to the biggest gain among 10 Standard & Poor’s 500 Index industries. Sprint Nextel Corp. (S) climbed 4.9 percent after people with knowledge of the matter told Bloomberg News that Deutsche Telekom AG held talks to sell its T-Mobile USA unit to the company. PulteGroup Inc. climbed 8.4 percent after the homebuilder reported “good traffic and sign-up rates.”

The S&P 500 increased 0.9 percent to 1,321.82 at 4 p.m. in New York. The benchmark gauge had fallen 1.6 percent over the previous two trading days. The Dow Jones Industrial Average advanced 124.35 points, or 1 percent, to 12,214.38. Crude oil declined 0.4 percent to $105.02 a barrel in New York.

“We’re in an economic recovery and the stock market is reflecting that,” said John Carey, a Boston-based money manager at Pioneer Investments, which oversees about $250 billion. “Companies are flush with cash and there’s been a pick-up in M&A activity, which is an indication of corporate confidence. In addition to that, crude oil prices are down and people can relax a bit about energy costs not going through the roof.”

The S&P 500 yesterday erased last week’s gain as oil reached a 29-month high. The gauge rallied 5.1 percent this year as companies reported earnings that topped analysts’ estimates for the eighth straight quarter and the Federal Reserve kept interest rates at a record low.

Crude oil fell as members of the Organization of Petroleum Exporting Countries discussed whether to hold a special meeting and Libyan rebels prepared an offensive to regain a town. Kuwait’s oil minister said OPEC members are considering whether to convene an “urgent meeting.”

Nouriel Roubini, who predicted the global financial crisis, said an increase in oil prices to $140 a barrel will cause some advanced economies to slide back into recession. Underlying how fragile the recovery is, Roubini said the European Central Bank may be making a mistake by raising interest rates “too soon” when debt-ridden countries on the euro region’s periphery struggle to restore the competitiveness of exports.

Stock-index futures erased gains before the open of exchanges as European Central Bank Governing Council member Axel Weber said he doesn’t want to correct market expectations for as many as three quarter-point increases in the bank’s benchmark interest rate this year.

“One of the biggest fears is that the developed nations have gotten themselves into a zero rate trap,” said Peter Sorrentino, who helps oversee $14.4 billion at Huntington Asset Advisors in Cincinnati. “So, if they start to raise rates, the market will begin to move beyond their control.”

Financial shares in the S&P 500 rose 2.2 percent, collectively, the biggest gain within 10 groups. The KBW Bank Index added 2.7 percent, as all of its 24 stocks gained.

Bank of America jumped 4.7 percent, the most in the Dow, to $14.69. The largest U.S. lender said its commercial- and investment-banking businesses are already transitioning this year and may post what the company considers normalized earnings in 2012 and 2013.

Chief Executive Officer Brian T. Moynihan, hosting the lender’s first investor day since 2007, is seeking to assure investors the bank will return to profitability as the economy stabilizes and the company recovers from disputes with investors over soured mortgages. The company’s net loss last year was driven by writedowns at credit-card and home-lending units acquired by Moynihan’s predecessor, Kenneth D. Lewis.

“We are changing the culture of the company from a company that was built upon acquisitions and consolidation,” Moynihan said today in New York. “We are again a growth company.”

Sprint gained 4.9 percent to $4.70. Deutsche Telekom has held talks to sell its T-Mobile USA unit to Sprint in exchange for a major stake in the combined entity, said people with knowledge of the matter. Talks have been on and off, and a deal may not be reached, said the people, who spoke on the condition of anonymity because the talks are private.

“In general, all options are open in the U.S. — the sale of the whole business or of parts,” Deutsche Telekom Chief Financial Officer Timotheus Hoettges said in an e-mail today. He said the company could also find a partner, sell shares in the market or form a network agreement.

Bill White, a spokesman for Overland Park, Kansas-based Sprint, declined to comment.

Announced takeovers of U.S. companies have totaled $186.4 billion so far in 2011, 21 percent more than in the same period last year, according to data compiled by Bloomberg.

A gauge of homebuilders in S&P indexes rallied 4.8 percent. PulteGroup jumped 8.4 percent, the most in the S&P 500, to $7.09. The largest U.S. homebuilder by revenue said it signed up 2,674 homes for sale in the first two months of the year. The orders showed “demand continues to stabilize and slightly improve entering the current spring selling season,” JPMorgan Chase & Co. said in a note.

The Bloomberg U.S. Airlines Index of 12 stocks jumped 7.3 percent, as the retreat in crude oil prices eased concern about higher energy costs. US Airways Group Inc. (LCC) climbed 12 percent to $9.28. Delta Air Lines Inc. (DAL) added 9.7 percent to $11.07.

Energy shares had the only decline in the S&P 500 among 10 industries, falling 0.6 percent, collectively. Occidental Petroleum Corp. (OXY) slumped 2.1 percent to $100.92. ConocoPhillips (COP) decreased 1.1 percent to $78.32.

McDonald’s Corp. (MCD) fell 1 percent, the most in the Dow, to $75.54. The world’s biggest restaurant chain reported sales rose 2.7 percent at stores open at least 13 months in the U.S. last month, missing analysts’ estimates. Analysts had projected a gain of 4 percent, according to the average of three estimates compiled by Bloomberg.

Urban Outfitters Inc. (URBN) had the biggest decline in the S&P 500, tumbling 17 percent to $31.66. The operator of the namesake and Anthropologie clothing chains said profit margins shrank last quarter. Gross margin, or the percentage of sales after the cost of goods sold, narrowed 2 percentage points to 39.7 percent in the quarter ended Jan. 31, the Philadelphia-based company said yesterday. Profit amounted to 45 cents a share, trailing the 52-cent average of estimates compiled by Bloomberg.

The past two years have shown that stock investors need to focus on “the beaten-up areas of the market” when prices rebound, according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist.

Auto stocks set the S&P 500’s pace since March 9, 2009, according to data compiled by Bloomberg, as the industry-group index more than quintupled in the period through yesterday. Grocery and drugstore stocks had the smallest gain, at 34 percent. The two industries’ rankings were almost exactly the opposite in the preceding bear market, which lasted 17 months. The S&P 500 Automobiles and Components Index tumbled 84 percent, more than any other industry except banks. The S&P 500 Food and Staples Retailing Index did best by losing only 26 percent.

“Fears of a Great Depression reenactment provided investors with a powerful trading opportunity over the past two years,” Levkovich wrote today. The auto industry is among those most closely linked to the economy’s performance, while food and drug retailers had less to gain from economic growth.

With warmest regards,

Chelsey for Carolann

“I’ve learned that you shouldn’t go through life with a catcher’s mitt on both hands; you need to be able to throw something back. ”

Maya Angelou (April 4, 1928-