November 4th, 2011 Newsletter

Dear Friends,

Tangents:

I went with a friend to a “Lunch and Learn” today at a place on Fort Street,  The London Chef.  It is a wonderful experience whereby you learn to make certain dishes, orchestrated by chef and co-owner of  The London Chef, Dan Hayes.  We had southern Spanish inspired salad of poached octopus with mint, potatoes and olive oil to start, followed by risotto with fresh chanterelles and squash.  

A couple of  things I learned was that risotto is always stirred anti-clockwise so that, according to the Italians, love pours from the heart into the dish.  And you must always stir in the same direction.  Also, never cut chanterelles, you must rip them up.  Scoop the risotto onto the dish and then lift the dish and bang the bottom with your other hand to spread in on the plate.

Octopus was the starter because of Sandy Mayzell’s crie de coeur, Dancing with the Octopus….

Photo of the day:

People enjoy Autumn sunshine in Victoria Tower Gardens in London. Luke MacGregor/Reuters.

Market Commentary:

Canada

By Matt Walcoff

Nov. 4 (Bloomberg) — Canadian stocks fell, completing a weekly drop, after the country reported a drop in jobs and the Group of 20 failed to agree on boosting the International Monetary Fund’s resources to fight Europe’s debt crisis.

Royal Bank of Canada, the country’s largest lender by assets, decreased 2.4 percent as the unemployment rate rose from a post-2008 low. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 1.3 percent as energy stocks retreated. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, gained 2.1 percent after an analyst at Toronto-Dominion Bank raised his share-price estimate.

The Standard & Poor’s/TSX Composite Index slipped 60.10 points, or 0.5 percent, to 12,408.25. The index extended its weekly decline to 0.9 percent.

“Nothing has changed — it’s all on Europe,” Philip Petursson, managing director of the Portfolio Advisory Group at Manulife Financial Corp.’s money-management unit, said in a telephone interview from Toronto. The unit oversees $210 billion. “This risk of Europe is holding the markets back from an extension of the rally in October. Until we get greater clarity, we’ll still be trading in a range.”

 Financial companies led this week’s S&P/TSX declines as European officials debated the bailout of Greece and companies including Sun Life Financial Inc. reported earnings that trailed analysts’ estimates. Canada’s stock benchmark gauge is set to underperform the S&P 500 for the first year since 2003.                        

Canadian payrolls decreased by 54,000 jobs in October, Statistics Canada said today, in the biggest monthly decline since February 2009. Most economists in a Bloomberg survey had forecast a gain in employment and none estimated a loss of more than 20,000 positions. The unemployment rate climbed to 7.3 percent from 7.1 percent.

Royal Bank fell 2.4 percent to C$45.85 to complete its biggest weekly plunge since February 2009. Toronto-Dominion, Canada’s second-largest lender by assets, declined 1.3 percent to C$72.95. Manulife, the country’s biggest insurer, dropped 2.4 percent to C$12.79.

Mortgage insurer Genworth MI Canada Inc. jumped 7.4 percent, the most since it began trading in July 2009, to C$23.70 after raising its quarterly dividend. The company also said it will pay a special dividend of 50 Canadian cents a share.

G-20 leaders meeting in Cannes, France, were unable to agree on a way to bolster the IMF’s ability to stop the spread of Europe’s debt crisis, German Chancellor Angela Merkel said.                         

The S&P/TSX Energy Index completed its first weekly drop since Sept. 23, ending the longest streak of weekly gains since May 2009. Canadian Natural lost 1.3 percent to C$37.73 after surging 9.3 percent yesterday. Suncor Energy Inc., the country’s largest oil and gas producer, decreased 0.9 percent to C$32.89.

Pacific Rubiales Energy Corp., which operates in Colombia, retreated 5.6 percent to C$21.65 after saying the country’s tax agency inspected its Bogota offices.

Open Range Energy Corp., a natural gas explorer, surged 18 percent from yesterday’s adjusted close to C$2.08 after the spinoff of Poseidon Concepts Corp. became effective. Poseidon, formerly Open Range’s services and supply business, advanced to C$11.52 after opening at C$11.20.

Exall Energy Corp., which explores for oil in Alberta, rallied 31 percent, the most since December 2008, to C$1.86 after reporting a new discovery.

First Quantum increased 2.1 percent to C$22.81, extending its three-day climb to 15 percent. Greg Barnes, an analyst at TD, raised his 12-month share-price estimate to C$29 from C$27, citing the potential of First Quantum’s Enterprise nickel project in Zambia.

Alamos Gold Inc., which mines in Mexico, dropped 5.3 percent to C$17.06 after its third-quarter earnings trailed the average analyst estimate in a Bloomberg survey.

DragonWave Inc., which makes wireless data products, jumped 42 percent, the most since May 2008, to C$5.14 after agreeing to buy Nokia Siemens Networks’ microwave-transport business for 15 million euros ($20.7 million) in cash and shares.

Westport Innovations Inc., which develops natural gas engine technologies, rose 6.4 percent to C$29.79 a day after CNBC’s Jim Cramer recommended the shares.

US

By Inyoung Hwang

Nov. 5 (Bloomberg) — U.S. stocks fell, driving the market to its first weekly drop since September, as Greece’s reluctance to accept another bailout and a disagreement over boosting the International Monetary Fund’s resources threatened Europe’s efforts to halt its debt crisis.

All 10 groups in the S&P 500 fell this week as financial stocks plunged 5.4 percent. Jefferies Group Inc. retreated 18 percent amid concern about its investments in Europe while Bank of America Corp. and JPMorgan Chase & Co. dropped more than 7.4 percent. Abercrombie & Fitch Co. plunged 24 percent, its biggest loss in three years, after the teen-clothing retailer said sales fell at flagship stores in Europe last quarter.

The S&P 500 slid 2.5 percent to 1,253.23, the first weekly decline since the period ended Sept. 30. The benchmark equity index dropped 2.5 percent on Oct. 31, trimming the measure’s biggest monthly rally since 1991 to 11 percent. The Dow Jones Industrial Average retreated 247.87 points, or 2 percent, to 11,983.24 this week.

Stocks declined because of “the ping-pong match going on in Greece,” Chris Hyzy, the New York-based chief investment officer at U.S. Trust Co., which oversees about $360 billion, said in telephone interview. “Investors are very concerned about what that means for counterparty risk around the world and then ultimately how that factors into the broader economy and profits.”                      

Equities plunged worldwide on Oct. 31 and Nov. 1 after Greek Prime Minister George Papandreou scheduled a referendum on the European Union’s expanded rescue plan, spurring concern the deal will unravel. After rallying two straight days, the S&P 500 dropped yesterday when the G-20 disagreed on increasing the IMF’s resources, fueling pessimism European leaders won’t have enough aid to bail out indebted nations. Stocks had rallied throughout October on optimism the crisis would ebb.

After U.S. exchanges closed yesterday, Papandreou won a confidence vote in parliament. He will now attempt to shore up support for an international rescue after Greece’s main opposition party rejected his offer to form a new government.

The S&P 500 lost 0.6 percent yesterday even after the U.S. jobless rate fell to a six-month low of 9 percent. Economists projected the figure would remain at 9.1 percent, according to the median projection in a Bloomberg survey. Payrolls increased by 80,000 in October, missing the economist forecast of 95,000, following gains in the prior two months that were revised up by 102,000, U.S. Labor Department figures showed.

“It’s a seesaw number,” Hyzy said of the payrolls figures. “Revisions being upward have muted the effect of it being below expectations.” He added: “Profits and payrolls are taking the backseat to the third P, which is policy” from governments in the U.S. and Europe.

Per-share earnings beat estimates at about three-quarters of the companies in the S&P 500 that released results since Oct. 11, data compiled by Bloomberg show. Profit grew 16 percent for the group on an 11 percent increase in sales.

The S&P 500 advanced 3.5 percent on Nov. 2 and Nov. 3 after the Federal Reserve said it’s prepared to take action if needed to safeguard the economic recovery and the European Central Bank unexpectedly lowered interest rates.

Financial shares tumbled the most in the S&P 500 this week, losing 5.4 percent, on continued concern about potential losses from Europe.                 

Jefferies dropped 18 percent to $12.07. Egan-Jones Ratings Co. downgraded the investment bank’s debt, citing large “sovereign obligations” relative to equity. The shares added 0.5 percent yesterday after Jefferies said it will increase disclosure of European holdings to counter investor concern the assets could hobble the firm.

MF Global Holdings Ltd. was delisted from the New York Stock Exchange after the futures brokerage filed for bankruptcy on Oct. 31. The company collapsed after revealing a $6.3 billion bet on Italian, Spanish, Belgian, Portuguese and Irish debt, which led to credit downgrades, margin calls and regulators’ demands to boost capital. Its stock fell 79 percent to 26 cents in over-the-counter trading.

Bank of America fell 12 percent to $6.49 and JPMorgan declined 7.4 percent to $33.97, leading this week’s losses in the Dow average.

Raw-material and energy in the S&P 500 companies declined 2.7 percent and 2.5 percent, respectively. Alcoa Inc., the largest U.S. aluminum producer, slumped 5.5 percent to $10.93.

Exxon Mobil Corp., the energy producer that is the world’s most valuable company by market value, lost 3.6 percent to $78.52.

Abercrombie & Fitch had the biggest drop in the S&P 500, falling 24 percent to $58.21. The clothing retailer said it was hurt by a “slowing trend” in Europe and that same-store sales in Japan and Canada continued to decline.

MEMC Electronic Materials Inc. fell 22 percent to $5.19. The second-largest U.S. maker of polysilicon lowered its earnings outlook for this year because of an oversupply of the material used in solar panels.

Suntech Power Holdings Co., the biggest maker of silicon- based solar modules, retreated 11 percent to $2.74. It may reduce manufacturing output in the first quarter because of a seasonal dip in demand. First Solar Inc. slumped 8.2 percent to $49.59.

Have a wonderful weekend everyone.

Be magnificent!

Propaganda can never tell the truth; truth can never be propagated.

-Krishnamurti, 1895-1986

As ever,

Carolann

Man’s loneliness is but

his fear of life.

-Eugene O’Neill, 1888-1953