October 13th, 2011 Newsletter

Dear Friends,

Tangents:

Birthday: Paul Simon, born October 13, 1941.

October
O hushed October morning mild,
Thy leaves have ripened to the fall;
To-morrow’s wind, if it be wild,
Should waste them all.
The crows above the forest call;
To-morrow they may form and go.
O hushed October morning mild,
Begin the hours of this day slow,
Make the day seem to us less brief.
Hearts not averse to being beguiled,
Beguile us in the way you know;
Release one leaf at break of day;
At noon release another leaf;
One from our trees, one far away;
Retard the sun with gentle mist;
Enchant the land with amethyst.
Slow, slow!
For the grapes’ sake, if they were all,
Whose leaves already are burnt with frost,
Whose clustered fruit must else be lost–
For the grapes’ sake along the wall.

                        -Robert Frost, 1915

Photos of the day 

October 13, 2011

Queen Jetsun Pema and King Jigme Khesar Namgyal Wangchuck pose after they were married at the Punakha Dzong in Punakha, Bhutan. The 31-year-old reformist monarch of the small Himalayan Kingdom wed his commoner bride in a series of ceremonies. Kevin Frayer/AP.

Nona Moumani fixes globes in a display at a booth at the Book Fair in Frankfurt. The world’s largest book fair runs until Sunday. Michael Probst/AP.

Market Commentary:

Canada

By Matt Walcoff

Oct. 13 (Bloomberg) — Canadian stocks fell, breaking a two-day winning streak, as oil and metals prices dropped after lower-than-estimated Chinese exports spurred concern about the global economy.

Barrick Gold Corp., the world’s largest gold producer, fell 2 percent as the metal slipped. Suncor Energy Inc., Canada’s largest oil and gas producer, lost 1.6 percent as crude declined for a second day. Royal Bank of Canada, the nation’s biggest lender, lost 2.1 percent after JPMorgan Chase & Co. reported a slump in investment banking and trading.

The Standard & Poor’s/TSX Composite Index dropped 118.07 points, or 1 percent, to 11,911.89. It’s gained or lost at least 100 points on six straight days, the longest streak since October 2009.

“You had some key import/export data out of China that were somewhat discouraging,” Brian Huen, a money manager at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees C$54 million ($53 million). “If the Chinese economy slows down, demand for commodities like copper, oil, zinc and nickel and all the other stuff we export will be impacted.”

The index gained 7.6 percent in the previous five days after closing at a 14-month low on Oct. 4. During the same period, copper advanced 9.3 percent and crude rallied 13 percent as the U.S. dollar declined. Energy and raw-materials companies make up 47 percent of Canadian stocks by market value, according to Bloomberg data.                       

Chinese exports increased 17 percent in September from last year, and imports climbed 21 percent. Both figures trailed the median estimates of economists in Bloomberg surveys. The U.S.

Dollar Index rebounded from a three-week low. Gold producers in the S&P/TSX dropped for a second day. Barrick declined 2 percent to C$48. Goldcorp Inc., the world’s second-largest producer of the metal by market value, lost 1.5 percent to C$47.90. Silver Wheaton Corp., Canada’s fourth- biggest precious-metals company by market value, decreased 4.4 percent to C$31.89 as silver retreated 3.4 percent.

Premier Gold Mines Ltd., which explores in Ontario and Nevada, plunged 7.2 percent to C$5.30 after saying it will raise C$30.5 million in an equity offering. Volta Resources Inc., which explores for gold in Africa, surged 15 percent, the most since June 2010, to C$1.32 after reporting drilling results.

Copper fell 2.5 percent after rallying 3.1 percent yesterday. First Quantum Minerals Ltd., the country’s second- largest publicly traded copper producer, declined 4.2 percent to C$16.48 after a 31 percent surge in the previous six days. Teck Resources Ltd., Canada’s largest base-metals and coal producer, dropped 1.6 percent to C$35.44. Quadra FNX Mining Ltd., which operates in the U.S., Canada and Chile, slumped 7.2 percent to C$10.22.

West Fraser Timber Co., Canada’s largest forestry company, rallied 6.2 percent to C$39.28 after Paul Quinn, an analyst at Royal Bank of Canada, raised his rating on the shares to “outperform” from “sector perform.”

Crude futures lost 1.6 percent on the New York Mercantile Exchange. Suncor decreased 1.6 percent to C$29.14. Cenovus Energy Inc., the country’s fifth-largest energy company, retreated 1.6 percent to C$34.26. Athabasca Oil Sands Corp., PetroChina Co.’s partner in oil-sands development, fell 3.8 percent to C$12.12 after jumping 17 percent Oct. 11 and yesterday.                        

 Oil-sands developer Ivanhoe Energy Ltd. soared 24 percent, the most since December 2008, to C$1.45. Hilary McMeekin, a company spokeswoman, said she was unaware of the reason for the jump in a telephone interview.

 All S&P/TSX banks and all S&P/TSX insurance stocks retreated. Royal Bank of Canada lost 2.1 percent to C$47.82. Bank of Nova Scotia decreased 1.9 percent to C$52.18. Manulife Financial Corp., North America’s fourth-largest insurer, fell 3 percent to C$12.46.

Magna International Inc., Canada’s biggest auto-parts maker, dropped 4.6 percent to C$37.18 after saying the U.S.

Justice Department has requested documents from Magna’s Cosma International unit as part of an antitrust investigation of the industry. The company is cooperating with the government, Magna said in a statement.

US

By Rita Nazareth

Oct. 13 (Bloomberg) — U.S. stocks fell, paring gains from the best Standard & Poor’s 500 Index rally over seven days since 2009, amid lower earnings from JPMorgan Chase & Co. and concern equities rose too much on optimism about Europe’s debt crisis.

Stocks trimmed losses as chipmakers in the S&P 500 added 1.9 percent and Yahoo! Inc. rose as much as 3.8 percent after people with knowledge of the matter said KKR & Co. and Blackstone Group LP are among firms considering bids for the company. JPMorgan dropped 4.8 percent after reporting a 33 percent profit decline, excluding a $1.9 billion accounting benefit, as investment banking and trading income slumped.

The S&P 500 retreated 0.3 percent to 1,203.66 at 4 p.m. New York time, paring its loss from 1.4 percent. It had rebounded 9.8 percent from a 13-month low on Oct. 3 through yesterday. The Dow Jones Industrial Average decreased 40.72 points, or 0.4 percent, to 11,478.13 today. The Nasdaq Composite Index climbed 0.6 percent, rallying a fourth straight day.

“It’s hard to find a port in the storm,” Barry James, who helps oversee $2.5 billion as president of James Investment Research in Xenia, Ohio, said in a telephone interview. “The announcement today doesn’t make it any better for the banks. We keep getting this back-and-forth in Europe. We’ve had a nice run in stocks and people are taking a bit off the table.”

The S&P 500 rose 4.5 percent over the previous three days after German Chancellor Angela Merkel said European leaders would do “everything necessary” to ensure banks have adequate capital. The rebound had yet to bring the gauge out of a price range where it’s traded for more than two months. The index has fluctuated between 1,074.77 and 1,230.71 since Aug. 5.                       

Technology shares in the S&P 500 rose 1 percent. At 4:29 p.m., following the close of exchanges, Google Inc. added 5.4 percent and Nasdaq-100 Index futures climbed 1.3 percent after the world’s most-popular search engine beat profit estimates.

Yahoo added 1 percent to $15.93 during the regular trading session. KKR and Blackstone may become part of a consortium that would pool the financing needed for a bid, said the people, who asked not to be identified because the review is preliminary and the firms may decide not to make an offer.

“We’re in a bottoming process,” Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. “The question becomes: Do I risk sitting on the sidelines as this thing begins to take off on me?”

U.S. equities followed European stocks lower as the European Central Bank said the involvement of the private sector in euro-area bailouts through enforced investor losses is a risk to financial stability and would have “direct negative effects” on the banking sector. Pacific Investment Management Co. Chief Executive Officer Mohamed A. El-Erian said European leaders are beginning to recognize the need for Greek bondholders to take bigger losses than previously agreed.

“There’s no way to sugarcoat this,” Daniel Genter, who oversees about $3.7 billion as president of RNC Genter Capital Management in Los Angeles. “It’s going to take some pretty severe medicine to solve Europe’s debt crisis.”

The KBW Bank Index slumped 2.9 percent. JPMorgan fell 4.8 percent to $31.60 after revenue at its investment-banking unit fell 13 percent from the second quarter as concern that Greece would default and U.S. lawmakers would fail to raise the debt ceiling roiled markets during the third quarter. The firm said the division will face similar market conditions for the rest of the year.                       

Bank of America Corp., the largest U.S. lender by assets, dropped 5.5 percent to $6.22. Citigroup Inc. declined 5.3 percent to $27.64.

The Morgan Stanley Cyclical Index of companies most-tied to the economy declined 0.9 percent. The Dow Jones Transportation Average retreated 0.6 percent. FedEx Corp. lost 1.7 percent to $73.87. General Electric Co. decreased 1.1 percent to $16.22.

The threat of a bear market is receding after the S&P 500 rallied the most in 31 months, leaving the gauge about 1 percent away from a level where two advances have stopped since August.

The measure climbed 1 percent yesterday. Gains were reduced in the last hour of trading yesterday after the S&P 500 climbed past 1,220, just above levels reached on Sept. 16 and Aug. 31 when declines began.

The lowest prices relative to earnings since 2009 and a shortage of better investment options have boosted equities, according to David Spika, who helps oversee $14 billion as an investment strategist at Westwood Holdings Group Inc. in Dallas.

“It wasn’t going to take much good news to drive the market higher,” Spika said yesterday in a telephone interview.

“You had 30-year Treasuries yielding less than 3 percent, 10- year Treasuries yielding less than 2 percent, and stocks trading at 11 times earnings. You have to believe that at some point it’s not going to take much for investors to get back.”

Have a wonderful evening everyone.

Be magnificent!

Nations cohere because there is mutual regard among

individuals composing them.

Some day we must extend the national law

to the universe,

even as we have extended the family law

to form nations – a larger family.

-Mahatma Gandhi, 1869-1948

As ever,

Carolann

Exaggeration is a department of lying.

        -Baltasar Gracian, 1601-1658