May 17th 2011, Newsletter

Dear Friends, Full moon tonight! Be wary.
photos of the day
May 17, 2011

Sahara the leopard Gecko turned up safe and well after hitching a 2-day, 100-mile ride inside an envelope following an internet shopping mix-up. Sahara sneaked into an open parcel at his owner, Lisa Richardson’s, home in Sedgeford, England, last Wednesday, and popped out again in front of a shocked Phillipa Durrant, in Finchampstead, England, who had been expecting the parcel to contain a belt she had bought on internet shopping site eBay from Richardson.
Ian Nicholson/AP
Buddhists carry candles while encircling a large Buddha statue during Vesak Day, an annual celebration of Buddha’s birth, enlightenment and death, at a temple in Nakhon Pathom province on the outskirts of Bangkok, Thailand. This year is the 2600th anniversary of Buddha’s enlightenment.
Chaiwat Subprasom/Reuters

Britain’s Queen Elizabeth II meets students and staff at Trinity College in Dublin, Ireland. The Queen set foot on Irish soil at the start of a historic state visit which will herald a new era in relations between Britain and the Republic. Politicians on both sides of the Irish Sea have described the four-day event as momentous.
Tony Maxwell/AP

Market Commentary:

Canada
By Matt Walcoff

May 17 (Bloomberg) — Canadian stocks rose for a second day as banks gained and producers of fertilizers and base metals advanced.
Toronto-Dominion Bank, Canada’s second-largest lender by assets, increased 1.1 percent as banks climbed for a third day.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, rallied 2 percent as corn and wheat rose. Cenovus Energy Inc., Canada’s fifth-biggest energy company, lost 0.7 percent as wildfires in northern Alberta shut down a pipeline.

The Standard & Poor’s/TSX Composite Index increased 40.34 points, or 0.3 percent, to 13,431.34 at 2:56 p.m. in Toronto after falling to about a six-month low relative to earnings yesterday.

“It looks like time that the selling has died down. Maybe I can step in and buy a few stocks,” said David Cockfield, a money manager at MacNicol & Associates Asset Management Inc. in Toronto, which oversees C$300 million ($308 million). “One of the easy places to put your money is back into the banks.”

The S&P/TSX declined 5.1 percent this quarter through yesterday as fuels and metals dropped on economic data indicating a slowing U.S. recovery, a stronger U.S. dollar, concerns about inflation in China and higher CME Group Inc. margin requirements for some commodities. Energy and raw- materials companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

The eight S&P/TSX banks each rose. TD gained 1.1 percent to C$83.14. Bank of Nova Scotia, Canada’s third-biggest lender by assets, increased 1 percent to C$58.21. National Bank of Canada, the country’s No. 6 bank, advanced 1.4 percent to C$81.02.

Potash Corp. increased 2 percent to C$51.96 as corn climbed for a fourth day on speculation wet weather will delay planting in the U.S. David Pupo, an analyst at Macquarie Group Ltd., began coverage of the company with an “outperform” rating.

Copper rose after Bonnie Liu, a Macquarie analyst in Shanghai, said shrinking copper stocks and a pickup in Chinese imports may lead to higher prices for the metal in the second half of the year.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, gained 2.4 percent to C$46.29. Inmet Mining Corp., which produces base metals in Europe, advanced 2.7 percent to C$65.79. HudBay Minerals Inc., which mines copper, zinc and gold, rallied 2.4 percent to C$14.22 after reporting drilling results.

Exploration Orbite VSPA Inc., which is developing an alumina project in Quebec and extraction technology, jumped 17 percent to C$2.72 after plunging 24 percent yesterday. The company said today it “is not aware of any undisclosed development that would account for the unusual share trading yesterday.”

The shares probably tumbled yesterday on “baseless rumors” of problems with the company’s technology, Matthew Gowing, an analyst at Mackie Research Capital Corp., said in a telephone interview.
Energy companies with operations in northern Alberta fell as wildfires in the Slave Lake area interrupted transportation and production.
Cenovus dropped for a sixth day, slipping 0.7 percent to C$32.43. Penn West Petroleum Ltd. declined 0.9 percent to C$24.54. Trican Well Service Ltd., Canada’s largest oilfield- services company, lost 4.9 percent to C$21.07.

Enerplus Corp., an oil and gas producer with operations in Canada and the U.S., surged 3.5 percent to C$30.17 after agreeing to sell some of its natural gas properties in the U.S. for about $575 million. Analysts at Bank of Nova Scotia, TD and Canaccord Financial Inc. raised their ratings on the shares.

Railroad shares retreated after the U.S. reported industrial production was unchanged last month. Economists had forecast an increase of 0.4 percent, according to the median of 77 estimates in a Bloomberg survey.

Canadian National Railway Co., the country’s largest railroad, decreased 1.1 percent to C$72.81. Canadian Pacific Railway Ltd. slipped 1.3 percent to C$58.98.

Magna International Inc., Canada’s biggest auto-parts maker, retreated for a sixth day, falling 2.8 percent to C$47.07. A.T. Kearney Inc., a New York-based consulting firm, said parts shortages related to the Japanese earthquake and tsunami will reduce 2011 U.S. new vehicle sales by 200,000 units.

US

By Rita Nazareth

May 17 (Bloomberg) — U.S. stocks retreated, sending benchmark indexes to one-month lows, as a reduced sales forecast at Hewlett-Packard Co. and an unexpected decline in housing starts damped optimism about the economic recovery.

Hewlett-Packard, the biggest personal-computer maker, tumbled 7.3 percent after also missing analysts’ profit projections as consumers shunned PCs. D.R. Horton Inc. and KB Home fell at least 1.8 percent, pacing declines in homebuilders.

Caterpillar Inc. and 3M Co. slumped more than 1.6 percent after figures from the Federal Reserve showed that industrial production in the U.S. unexpectedly stalled in April.

The Standard & Poor’s 500 Index declined less than 0.1 percent to 1,328.98 at 4 p.m. in New York, falling 1.5 percent over the last three days. The Dow Jones Industrial Average retreated 68.79 points, or 0.6 percent, to 12,479.58 today.

“There’s just not a whole lot to drive the stock market higher right now,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co.

“The housing improvement has been pushed down the road. Some big companies are cutting forecasts. The European debt crisis is in everyone’s minds. We were off for a good start this year. I see some pause as investors turn a bit more defensive.”

The S&p;P 500 has extended a two-week decline amid investors’
concern that Greece may have to restructure its debt and as economic data missed forecasts. Citigroup Inc.’s U.S. Economic Surprise Index, which gauges the rate at which data is exceeding or trailing economists’ estimates, turned negative in May and is at its lowest level since August. The index had climbed to a record in March.

Still, analysts have raised full-year earnings estimates in the S&P 500 index by 2.2 percent since April as more than two thirds of companies that reported earnings beat projections.

The S&P 500 closed above its average price of the last 50 days of 1,323.74 after dropping below it earlier today. A close below that level could have signaled the potential for further decline, according to analysts who study charts.

“There’s potential support at that level,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati. “We see some bottom-picking going on.
It looks like the buyers are coming in here because we got oversold in key leadership areas.”

Industries that had led the S&P 500 rally from its 2009 bottom have lagged behind since this year’s low on March 16.
Commodity producers, financial and technology companies have underperformed the benchmark during that period. The S&P 500 has advanced 5.7 percent since March 16.

Stock futures turned lower today after government data showed that work began in April on 523,000 houses at an annual pace, down 11 percent from the prior month and less than the 569,000 median forecast of economists surveyed by Bloomberg News. Figures from the Commerce Department also showed that building permits, a sign of future construction, decreased.

Output at factories, mines and utilities was unchanged after a 0.7 percent gain in March, figures from the Federal Reserve showed, led by a drop in auto production after parts supplies were disrupted by the earthquake and tsunami in Japan.

European finance ministers for the first time floated the idea of talks with bondholders over extending Greece’s debt- repayment schedule, saying that last year’s 110 billion-euro ($156 billion) rescue has failed to restore the country to financial health. Europe would consider “reprofiling” Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Luxembourg Prime Minister Jean-Claude Juncker said late yesterday.

The probability of Greece defaulting or restructuring its debt has increased since the arrest of International Monetary Fund head Dominique Strauss-Kahn, Pacific Investment Management Co.’s Mohamed El-Erian said.

“Don’t underestimate how important Dominique Strauss-Kahn was in coordinating action” among European nations, El-Erian, the chief executive officer of Pimco, said in a Bloomberg Television interview on “In the Loop” with Betty Liu. “It’s the worst possible time to lose your general. You need the IMF to coordinate this global healing.”
Hewlett-Packard tumbled 7.3 percent to $36.91. Full- year sales will be $129 billion to $130 billion and earnings excluding some items will be at least $5 a share, Palo Alto, California-based Hewlett-Packard said.

Analysts estimated sales of $130.3 billion and earnings of $5.24, the average projections in a Bloomberg survey.

The predictions came a day after Bloomberg News reported Chief Executive Officer Leo Apotheker had sent a downbeat memo warning his staff of “another tough quarter” in the period through July. Hurt by competition from tablet computers such as Apple Inc.’s iPad and falling profitability at its services unit, Hewlett-Packard may need to reduce jobs to lower expenses.

“They probably have to do some cost cutting,” said Kulbinder Garcha, an analyst at Credit Suisse Group AG in New York. “They’ll have to drive for further efficiency. Can they do that easily? No, it’ll probably take some time.”

A gauge of homebuilders in S&P indexes fell 0.8 percent as 10 of its 12 stocks retreated. D.R. Horton, the second-largest U.S. homebuilder by revenue, declined 1.8 percent to $11.46. KB Home slumped 2.2 percent to $10.91.
Industries most-tied to economic growth led the declines in the

S&P 500. The Morgan Stanley Cyclical Index of 30 stocks dropped 1.5 percent.

Caterpillar, the world’s largest maker of construction equipment, slid 3.8 percent to $102.08. 3M, the maker of products including Scotch tape and Post-it Notes, fell 1.7 percent to $93.86.
JPMorgan Chase & Co. rose 2.2 percent to $43.81. Chief Executive Officer Jamie Dimon said banks are starting to lend again. Dimon also said four businesses may add more than $500 million each to profit during the next five to seven years: commercial banking, commodities, private-client services and international expansion.

“We have enormous growth opportunities both in the U.S. and overseas,” Dimon said at the New York-based company’s annual shareholders’ meeting in Columbus, Ohio. He said the bank plans to open 20 international branches next year for wealthy customers and corporations with investments overseas.

Home Depot Inc. added 1.1 percent to $37.40. The largest U.S. home-improvement retailer said first-quarter profit rose 12 percent, meeting analysts’ estimates, as operating expenses fell faster than sales. Home Depot cut expenses including payroll and advertising in the quarter, countering a slight drop in revenue.

Have a wonderful evening everyone.

Be magnificent!

Ever tell yourself, I am He.
These words that will burn up the dross that is in the mind, words that will bring out the tremendous energy which is within you already, the infinite power which is sleeping in your heart.

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Our life’s a stage, a comedy: either learn to play
and take it lightly, or bear its troubles patiently.
– Palladas, 4th century AD