November 17th, 2011 Newsletter

Dear Friends,

Tangents:

NATURE POETRY

Concrete, glass, steel –

Meaning limestone, silica, gypsum, sand,

Manganese, sodium, sulfur, ore –

Anything unnatural here?

              -Meg Kearney

Photo of the day 

November 17, 2011

Denis Sinyakov/Reuters

Market Commentary:

Canada

By Matt Walcoff

Nov. 17 (Bloomberg) — Canadian stocks fell to a four-week low, led by raw-materials companies, as oil, metals and world equities declined on concern that the European debt crisis will curb growth.

Barrick Gold Corp., the world’s largest gold producer, decreased 3.8 percent after futures dropped the most in seven weeks as investors sold precious metals to cover losses in other assets. Agrium Inc., a farm retailer and fertilizer producer, tumbled 6.5 percent as corn and wheat retreated. Royal Bank of Canada, the country’s biggest lender by assets, dropped 2.6 percent as Spanish bond yields surged to a euro-era high.

 The Standard & Poor’s/TSX Composite Index fell 258.93 points, or 2.1 percent, to 11,915.43, the lowest level since Oct. 20. “Two real countries are in the midst of a massive funding crisis,” Keith McLean, a managing partner at GMP Investment Management in Toronto, said in a telephone interview, referring to Italy and Spain. McLean oversees about C$200 million ($195 million). “Everyone knows the exit price for gold, oil, copper, everything is higher. But if we go into an ‘08 scenario, those prices go a lot lower before they go a lot higher, even gold.’’

The S&P/TSX has dropped 11 percent this year as stocks in the index’s three biggest industries –finance, energy and raw materials — have declined. Equities most-closely tied to the economy had retreated in part on concern the European crisis will lead to sovereign-debt defaults or a recession.                          

Spanish bond yields rose today as the country’s Treasury failed to meet its maximum target of 4 billion euros ($5.4 billion) of notes in a sale. The Madrid-based Treasury sold 3.56 billion euros in bonds at an average yield of 6.975 percent.

The European Financial Stability Facility has no plans for financial assistance for Italy, Reuters quoted an unnamed euro- zone official as saying today. Italian bonds yields also rose this month to highest level since the introduction of the euro.

Precious-metals companies in the S&P/TSX fell today as gold dropped and silver declined the most since Sept. 23 on the Comex in New York.

Barrick lost 3.8 percent to C$50.66. Goldcorp Inc., the world’s second-largest gold producer by market value, slipped 1.9 percent to C$52.51. Silver Wheaton Corp., Canada’s fourth- biggest precious-metals company by market value, decreased 6.5 percent to C$33.19.

Avion Gold Corp., which mines in Africa, slumped 11 percent to C$1.64. The shares have plunged 25 percent since the company cut its 2011 production forecast on Nov. 15.                         

Corn futures retreated the most since Sept. 30 after the U.S. Agriculture Department said exports of the crop fell to the lowest since June 2004 last week. Profercy, a Leamington Spa, England-based firm that provides research on the fertilizer industry, said natural gas prices will fall in Ukraine, which would reduce a cost advantage for North American producers of nitrogen-based fertilizers.

Agrium dropped 6.5 percent, the most since October 2009, to C$72.26. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, declined 4.3 percent to C$44.11 for a fourth-straight loss.

The S&P/TSX Commercial Banks Index closed at the lowest level since February 2010. Royal Bank decreased 2.6 percent to C$43.95, the lowest price since May 2009. Bank of Nova Scotia, Canada’s third-largest lender by assets, retreated 3.2 percent to C$49.32. Manulife Financial Corp., North America’s fourth- biggest insurer, fell 2.6 percent to C$11.49.                        

Energy stocks declined as crude oil erased yesterday’s 3.2 percent gain, dropping under $99 a barrel. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 3.9 percent to C$37.19. Suncor Energy Inc., Canada’s biggest oil and gas producer, slipped 2.8 percent to C$31.82. Precision Drilling Corp., Canada’s largest contract driller, slumped 6.8 percent to C$11.45.

Iberian Minerals Corp., a base-metals producer with operations in Spain and Peru, soared 38 percent, the most since July 2003, to C$1.09 after agreeing to be bought by Trafigura Beheer BV. The Amsterdam-based oil and metals trading company said it would pay C$1.10 a share for the 52 percent of Iberian it doesn’t already own.

Pharmacy-benefits manager SXC Health Solutions Corp. climbed 7.6 percent to C$54.40 after saying it will buy Greenwood Village, Colorado-based peer HealthTrans LLC. SXC will pay $250 million for HealthTrans, which has about $270 million in annual revenue, SXC said in a statement.

US

By Rita Nazareth

Nov. 17 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index to the lowest level in a month, as concern grew that Europe’s debt crisis will worsen and lawmakers will fail to agree on plans to cut the American deficit.

Commodity and technology shares had the biggest declines among 10 groups in the S&P 500, falling at least 2.1 percent.

Sears Holdings Corp. slid 4.6 percent as the retailer reported a steeper loss. Applied Materials Inc., a producer of chipmaking equipment, sank 7.5 percent as forecasts trailed estimates. Jefferies Group Inc. retreated 2 percent and dropped below $10 intraday for the first time since March 2009.

 The S&P 500 lost 1.7 percent to 1,216.13 at 4 p.m. in New York. Losses accelerated after it fell below 1,229.10, its closing level on Nov. 9 after sinking 3.7 percent. The gauge dropped below its 100-day average. The Dow Jones Industrial Average sank 134.86 points, or 1.1 percent, to 11,770.73.

“It’s a risk-off day,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1 billion, said in a telephone interview. “There’s a lot of liquidation in the commodity space. You have the obvious story of European yields. The supercommittee may disappoint, but I don’t think this is going to be a main driving force behind this market. There’s too much stuff going on.”

Stocks fell as Reuters reported a euro-area official as saying there are no aid plans for Italy from the European Financial Stability Facility. Spanish bonds sank, driving 10- year yields to the highest since the euro was introduced, as borrowing costs climbed at an auction. Republicans and Democrats on Congress’s supercommittee hardened their positions with less than a week until the deadline to propose deficit cuts.                      

Today’s decline sent the benchmark measure of American equities below its average price of the past 100 days of 1,226, which could be a harbinger of more losses, according to Ryan Detrick, at Schaeffer’s Investment Research.

 “It’s a bad sign for the bulls,” Detrick, the senior technical strategist at Schaeffer’s, said in a telephone interview from Cincinnati. “It’s a sign that the bears are once again trying to take charge and push things lower here. It’s a little discouraging when the market shrugs off good economic news and focus on other things.”

Earlier today, economic reports helped push stocks higher. The fewest Americans in seven months filed for unemployment benefits. Builders broke ground on more homes than forecast in October and construction permits climbed to the highest level since March 2010. Another report showed that manufacturing in the Philadelphia region expanded less than forecast in November as orders and sales cooled.                    

Handheld computers used by traders on the floor of the New York Stock Exchange malfunctioned near the end of session and the closing process was extended past 4 p.m., NYSE Euronext spokesman Rich Adamonis said.

More than seven stocks fell for every two that gained on U.S. exchanges. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, rose 3 percent to 34.51, surging 15 percent in four days.

Concern about global growth drove down commodity shares as China’s central bank said prices haven’t stabilized enough to loosen monetary policy. The Morgan Stanley Cyclical Index slumped 2.4 percent. Alcoa Inc., the largest U.S. aluminum producer, retreated 3.5 percent to $9.62. Intel Corp., the world’s biggest chipmaker, lost 2.4 percent to $24.34.

Sears slumped 4.6 percent to $65.19. Hedge-fund manager Edward Lampert and new Chief Executive Officer Lou D’Ambrosio are emphasizing smaller stores, online commerce and licensing Sears’s brands to turn around the four-year sales slide.

Retailers are having a harder time attracting shoppers, with consumer confidence at the lowest in more than two years.

Applied Materials fell 7.5 percent to $11.53. Profit before certain costs will be 8 cents to 16 cents a share, the company said. Revenue will decline up to 15 percent from the prior quarter, Applied said, indicating sales of as little as $1.85 billion. Analysts on average predicted profit of 18 cents on sales of $2.07 billion, data compiled by Bloomberg show.

Jefferies slumped 2 percent to $10.11. Debt of the New York-based firm tumbled today to levels considered distressed.

Jefferies came under pressure from short sellers after MF Global Holdings Ltd.’s $6.3 billion bet on European debt led to an Oct. 31 bankruptcy and spurred scrutiny of similar stakes at financial firms.

 Chief Executive Officer Richard Handler said turmoil around the investment bank’s shares and publicly traded debt will ease as the fallout dissipates from the collapse of MF.

“It is not surprising that our bonds are under pressure after the assault on our company over the past two weeks,”

Handler said yesterday in an e-mail. “Some bond investors sell first and ask questions later. We expect the market to return to normal pricing once we move beyond the ripple effect of the inaccuracies others have recently disseminated and once investors digest all the information” that Jefferies disclosed.

NetApp Inc. tumbled 12 percent, the most in the S&P 500, to $35.73 The maker of data-storage products forecast third-quarter adjusted earnings of no more than 60 cents a share, 4 cents less than the average analyst estimate.

Angie’s List Inc., the consumer-review website with more than 1 million paying members, surged 25 percent to $16.26 in its trading debut after raising $114 million in an initial public offering.

Have a wonderful evening everyone.

Be magnificent!

Between me and the smallest animal,

the difference is only in manifestation,

but as a principle he is the same as I am,

he is my brother, he has the same soul as I have.

-Swami Vivekananda, 1863-1902

As ever,

Carolann

You don’t stop laughing because you grow

old.  You grow old because you stop

laughing.

          -Michael Pritchard, 1967-