November 8th, 2011 Newsletter
Dear Friends,
Tangents:
Gary went to a weekend conference in Toronto and took the direct flight from Victoria last Friday morning. He told me that he knew a lot of the passengers on the plane because they were patients of his; they were servicemen who were going east for services to commemorate Veterans Day. Some of them knew of the memorial we had helped establish with Gary’s dad, a WW II Navy Vet, for all Canadian War Veterans in Guelph.
Martinmas, Veterans’ Day, Armistice Day, November 11th:
St. Martin of Tours, France was a popular bishop in the Middle Ages. The English shortened the name of his feast day from Martin’s Mass to Martinmas, and since the day fell at a time when people wanted to celebrate harvesting and wine making, it became a day for feasting and celebration. A goose was often roasted for the occasion. November 11 became Armistice Day in 1918 to mark the armistice between the Allies and the Central Powers that ended World War I. The United States, England, and France celebrated the day jubilantly; many were sure there’d never be another war. Now in England, France and Canada, in particular, the day commemorates those who died in both World War I and II. In 1954, the United States changed the day to Veterans’ Day, to commemorate those who have served in the armed forces during all the country’s wars. –from The Book of Holiday Around the World.
Photo of the day
November 8, 2011
Fallen leaves lay on the ground in a Field of Remembrance in Loughborough, central England. Darren Staples/Reuters.
Market Commentary:
Canada
By Matt Walcoff
Nov. 8 (Bloomberg) — Canadian stocks swung between gains and losses as banks and base-metals shares rose and gold producers fell after Italy’s president said Prime Minister Silvio Berlusconi will resign.
Royal Bank of Canada, the country’s largest lender by assets, advanced 1 percent. TransCanada Corp., the owner of the country’s largest pipeline system, slipped 1.6 percent after a U.S. State Department official said the department is considering whether to seek a rerouting of the proposed Keystone XL pipeline. Teck Resources Ltd., Canada’s biggest base-metals and coal producer, increased 3.2 percent as copper and zinc climbed.
The Standard & Poor’s/TSX Composite Index rose 10.52 points, or 0.1 percent, to 12,472.50 at 3:13 p.m. Toronto time, after falling as much as 0.2 percent earlier.
Berlusconi “has been perceived to be obstructionist with respect to the tougher parts of the austerity program, so him being gone would bring in a caretaker government that could potentially implement the austerity in a way that’s palatable to both the opposition and the governing party,” Bob Decker, a money manager at Aurion Capital Management in Toronto, said in a telephone interview. The firm oversees about C$5.5 billion ($5.5 billion). “The solvency issue is at the heart of the weakness of the markets.”
The S&P/TSX dropped 13 percent from April 5 to yesterday as oil declined 12 percent and copper sank 17 percent in part on concern the European debt crisis will weaken the global economy. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value, according to Bloomberg data.
Financial stocks rose after Italian President Giorgio Napolitano said Berlusconi will resign after the country’s parliament approves the prime minister’s austerity plans.
Royal Bank gained 1 percent to C$46.44. Toronto-Dominion Bank, its largest domestic rival, advanced 0.8 percent to C$73.89. Manulife Financial Inc., North America’s fourth-biggest insurer, increased 1.1 percent to C$12.68.
TransCanada lost 1.6 percent to C$40.97 a day after a State Department official, speaking on condition of anonymity, said the U.S. may try to reroute the Keystone XL pipeline around Nebraska’s Sandhills region. Some environmentalists and property owners oppose the proposed link between Alberta’s oil sands and the Gulf of Mexico.
Canadian Oil Sands Ltd., the largest owner of the Syncrude project, retreated 1.7 percent to C$22.19.
SNC-Lavalin Group Inc., Canada’s largest construction and engineering company, climbed 2.7 percent to C$52.35 after winning a contract worth more than C$650 million for a treatment plant at an oil-sands site.
Niko Resources Ltd., which produces oil and gas in South Asia, surged 5.5 percent to C$57.36 after signing a contract with Diamond Offshore Drilling Inc. to explore offshore Indonesia.
Base-metals companies in the S&P/TSX advanced to the highest intraday since Sept. 9. Teck increased 3.2 percent to C$40.41. First Quantum Minerals Ltd., the country’s second- biggest publicly traded copper producer, climbed 2.7 percent to C$22.68.
Gold stocks in the S&P/TSX retreated from the highest close since Sept. 21 as the metal erased its gains after Napolitano’s statement.
Goldcorp Inc., the world’s second-largest gold producer by market value, slipped 0.6 percent to C$53.97. Silver Wheaton Corp., Canada’s fourth-biggest precious-metals company by market value, decreased 1.1 percent to C$37.18. Minefinders Corp., which produces precious metals in Mexico, slumped 7.7 percent to C$14.78 after reporting earnings that trailed the average analyst estimate in a Bloomberg survey.
China Gold International Resources Corp. gained 5.1 percent to C$3.51 after saying it may acquire a gold and copper mine in Central Asia as early as next month.
Construction company Aecon Group Inc. rallied 7.8 percent to C$9.91 after touching C$10.09, the highest intraday price since March 17. The company reported third-quarter profit that beat the average analyst estimate in a Bloomberg survey by 33 percent, excluding certain items.
US
By Rita Nazareth
Nov. 8 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index higher a second day, as Prime Minister Silvio Berlusconi’s offer to resign boosted optimism Italy will appoint a new leader who can tame the debt crisis.
All 10 groups in the S&P 500 advanced as financial, energy and technology companies rallied at least 1.1 percent. JPMorgan Chase & Co., Occidental Petroleum Corp. and Intel Corp. added more than 1.9 percent. A gauge of homebuilders in S&P indexes jumped 3.8 percent as Toll Brothers Inc. gained 7.4 percent after the luxury-home builder said revenue increased.
The S&P 500 climbed 1.2 percent to 1,275.92 as of 4 p.m. New York time, after falling as much as 0.5 percent earlier today. The benchmark gauge of American equities has increased 1.8 percent in two days. The Dow Jones Industrial Average advanced 101.79 points, or 0.8 percent, to 12,170.18 today.
“Berlusconi is a bit of a cartoon character with respect to world leaders,” Michael Holland, chairman and founder of New York-based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion. “There’s a handful of adults in Europe who are working very hard. The market has a clear view that Berlusconi is not helpful with what Europe needs moving into the future. He is part of the problem, not the solution.”
President Giorgio Napolitano said Berlusconi has agreed to quit after the parliament approves the country’s austerity plans next week. The government has yet to present the final text of the amendment to the budget law with the austerity measures.
Berlusconi’s resignation came after he failed to muster an absolute majority on a routine parliamentary ballot, obtaining only 308 votes in the 630-seat Chamber of Deputies today.
“The reality is Berlusconi is not effective and he needs to go,” Madelynn Matlock, who helps oversee about $14.5 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “It seems to me that any rational prime minister would realize that he shouldn’t be prime minister of Italy anymore.”
Greece prepared for a new prime minister to lead an interim government of national unity as state-run NET TV and To Vima newspaper reported that former central banker Lucas Papademos will accept the post. Prime Minister George Papandreou said a Greek national unity government will be named “soon” and told his ministers to get ready to resign, spokesman Elias Mosialos said today in Athens.
Stocks rose yesterday as the European Central Bank’s Juergen Stark said the region’s debt crisis will be under control in two years. Benchmark gauges dropped last week amid concern Europe’s crisis was worsening as the Group of 20 nations failed to agree on increasing the International Monetary Fund’s resources to fight the crisis.
The KBW Bank Index rose 2.4 percent, reversing an earlier loss of as much as 0.1 percent. The Morgan Stanley Cyclical Index added 1.2 percent on speculation that steps taken by European leaders to solve their debt crisis will avert a global recession. The Dow Jones Transportation Average of 20 stocks gained 1.2 percent. JPMorgan advanced 2.3 percent to $35.02.
Occidental Petroleum climbed 2.8 percent to $101.29. Intel rose 1.9 percent to $24.75.
Toll Brothers gained 7.4 percent to $19.43, the highest level since August. Homebuilding revenue for the three months ended Oct. 31 rose to $427.7 million from $402.6 million a year earlier, the Horsham, Pennsylvania-based company said today in a statement. Analysts expected Toll to have revenue of $414.2 million, the average of 15 estimates in a Bloomberg survey.
Priceline.com Inc. surged 8.6 percent, the most in the S&P 500, to $552.85. The biggest U.S. online travel agency reported third-quarter profit and sales topped analyst estimates.
Excluding some costs, profit was $9.95 a share, compared with the $9.30 average of 20 analyst estimates compiled by Bloomberg.
Rockwell Automation Inc. jumped 6.5 percent to $74.33 after the maker of factory-automation software projected 2012 sales growth that may exceed analysts’ estimates on demand from automobile, food and beverage producers.
DryShips Inc. advanced 9.9 percent to $2.99. The Greek owner of deep-water drilling rigs and vessels that haul iron ore and coal reported third-quarter earnings excluding some items of 16 cents a share, beating the average analyst estimate by 13 percent.
Activision Blizzard Inc. added 1.4 percent to $13.93. The world’s largest video-game maker released its eighth “Call of Duty” game, “Modern Warfare 3.” The game may sell as many as 6 million copies in the first day, according to Arvind Bhatia, an analyst at Sterne Agee & Leach Inc.
After the close of regular trading, the company reported profit that beat analysts’ estimates and raised its full-year forecast, citing new titles including the new “Call of Duty.”
The S&P 500’s failure to keep pace with record corporate earnings may signal the benchmark equity gauge will surge if it returns to its historical relationship with profits.
Four years ago, when the S&P 500 lagged behind trailing 12- month corporate profits, the measure went on to reach an all- time high of 1,565.15. While combined earnings by companies in the index have exceeded the previous peak reached in 2007, the measure itself is 19 percent below that October 2007 record.
Companies have “increased efficiency, productivity and profit margins,” said David Goerz, the chief investment officer at Highmark Capital Management Inc., in a telephone interview yesterday. “That’s resulted in strong performances at a time when investors are very skeptical about the future. It’s not surprising that the market would be trading at a significant discount.” He said, “There’s a lot of upside for the U.S. equity market.”
Russell indexes started updating following an hour-and-a- half outage after Nasdaq OMX Group Inc. resolved a problem.
Measures such as the Russell 2000 Index and Russell 1000 Index resumed updating at 11:04 a.m. New York time, according to data compiled by Bloomberg and a notice on Nasdaq OMX’s website.
Have a wonderful evening everyone!
Be magnificent!
The end to be sought is human happiness combined with full mental and moral growth.
This end can be achieved under decentralization.
Centralization as a system is inconsistent with a non-violent structure of society.
-Mahatma Gandhi, 1869-1948
As ever,
Carolann
You can’t say civilization don’t advance, however,
for in every war they kill you a new way.
-Will Rogers, 1879-1935