October 25th, 2011 Newsletter

Dear Friends,

Tangents:

A Recent News Story From Reuters:

The world’s 7 billionth person will be born into a population more aware than ever of the challenges of sustaining life on a crowded planet but no closer to a consensus about what to do about it.

To some demographers the milestone foreshadows turbulent times ahead: nations grappling with rapid urbanization, environmental degradation and skyrocketing demand for healthcare, education, resources and jobs.

To others, a shrinking population, not overpopulation, could be the longer-term challenge as fertility rates drop and a shrinking workforce is pushed to support social safety for an aging populace.

“There are parts of the world where the population is shrinking and in those parts of the world, they are worried about productivity, about being able to maintain a critical mass of people,” Babatunde Osotimehin, executive director of the U.N. Population Fund, told Reuters.

“Then there are parts of the world where the population is growing rapidly. Many of these countries face challenges in terms of migration, poverty, food security, water management and climate change and we need to call attention to it.”

The United Nations says the world’s seven billionth baby will be born on October 31.

Market Commentary:

CANADA

By Matt Walcoff and Kaitlyn Kiernan

Oct. 25 (Bloomberg) — Canadian stocks fell for the first time in three days, led by financial and energy shares, as U.S.

home prices and consumer confidence declined and investors awaited a summit of European leaders tomorrow.

Canadian Natural Resources Ltd., the country’s second- biggest energy company by market value, dropped 2 percent as energy shares fell. Toronto-Dominion Bank, the country’s second- largest lender by assets, lost 1.7 percent after the S&P/Case- Shiller index of U.S. home prices declined more than forecast.

Barrick Gold Corp., the world’s biggest gold producer, gained 3.4 percent as the metal climbed for a third day.

The Standard & Poor’s/TSX Composite Index dropped 52.53 points, or 0.4 percent, to 12,109.75. “Uncertainty is still with us until we get better news, and we may not even get certainty tomorrow,” Tony Demarin, the chief investment officer at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$300 million ($295 million). “Gold is an asset class that protects you against the uncertainty of what’s going to happen there.” The S&P/TSX rallied 2.8 percent to a one-month high in the previous two days as investors speculated European leaders will reach a deal to prevent the continent’s sovereign debt crisis from weakening banks and the broader economy. The index is heading for its first monthly gain since February.

Another Summit

The EU finance ministers’ meeting scheduled for tomorrow was canceled because the bank-recapitalization issue cannot be decided before other elements of the rescue package, a person familiar with the matter said on condition of anonymity. Summits of the 27 EU leaders and 17 heads of the euro area will take place as scheduled, EU President Herman Van Rompuy said.

The S&P/Case-Shiller index of U.S. home prices declined 3.8 percent in August from last year, S&P said today. Economists had forecast a retreat of 3.5 percent, according to the median estimate in a Bloomberg survey.

The U.S. Conference Board reported that its gauge of consumer confidence fell to the lowest level since March 2009.

The index trailed all 76 forecasts in a Bloomberg survey of economists. Canadian Natural lost 2 percent to C$33.84. Cenovus Energy Inc., the country’s fifth-biggest energy company by revenue, decreased 2.6 percent to C$35.46. TransCanada Corp., the owner of Canada’s biggest pipeline system, fell 1.1 percent to C$43.46.

Banks Fall

The six largest S&P/TSX banks dropped. TD lost 1.7 percent to C$73.68. Royal Bank of Canada, its bigger domestic rival, slipped 0.8 percent to C$47.70. Mortgage insurer Genworth MI Canada Inc. decreased 3 percent to C$20.73.

Precious metals gained as economic concerns spurred demand for an investment haven. Barrick advanced 3.4 percent to C$48.05. Goldcorp Inc., the world’s second-largest producer of the metal by market value, increased 3.8 percent to C$48.02. Silver Wheaton Corp., Canada’s fourth-biggest precious-metals company by market value, climbed 3.7 percent to C$32.56.

Futuremed Healthcare Products Corp. jumped a record 31 percent to C$8.12 after Cardinal Health Inc. agreed to buy the company for C$8.15 a share in cash. Shares of Concord, Ontario- based Futuremed had plunged 25 percent from July 11 to yesterday and closed at a record-low C$5.60 Oct. 6.

US

By Rita Nazareth

Oct. 25 (Bloomberg) — U.S. stocks slid, halting a three- day rally, amid earnings and economic reports that disappointed investors and uncertainty over how much progress European leaders are making in debt-crisis talks. Treasuries rallied, while oil surged on signs of falling supplies.

The Standard & Poor’s 500 Index tumbled the most in three weeks, losing 2 percent to 1,229.05 as of the 4 p.m. close in New York. The Stoxx Europe 600 Index dropped 0.7 percent while the euro slipped from a six-week high, weakening 0.2 percent to $1.3901. Ten-year Treasury yields fell 13 basis points to 2.11 percent. The S&P GSCI Index of commodities added 0.6 percent as oil rose to a 12-week high. Amazon.com Inc. retreated 15 percent after missing profit forecasts.

The cancellation of tomorrow’s meeting of European Union finance ministers spurred concern that a summit of the region’s leaders will fail to produce agreements on how to tame the debt crisis. 3M Co. slid following lower-than-estimated earnings and United Parcel Service Inc. slipped as international shipping growth began to cool, while a gauge of U.S. consumer confidence sank to the lowest since March 2009.

“It’s hard to get excited in this environment,” Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York, said in a telephone interview. “You have very anemic growth and you have a big a question mark about the debt situation in Europe.”

EU Meetings

The EU finance ministers’ meeting was canceled because the bank-recapitalization issue cannot be decided before other elements of the rescue package, a person familiar with the matter said on condition of anonymity. Summits of the 27 EU leaders and 17 heads of the euro area will take place as scheduled, EU President Herman Van Rompuy said.

The S&P 500 retreated after three straight gains lifted the benchmark index to the highest level since Aug. 3 and trimmed its year-to-date drop to less than 0.3 percent yesterday. 3M slid 6.3 percent for its worst drop in almost three years and biggest loss in the Dow Jones Industrial Average. Alcoa Inc., Bank of America Corp., Hewlett-Packard Co. and JPMorgan Chase & Co. also slid more than 3 percent as the Dow sank 207 points, or 1.7 percent, to 11,706.62.

MF Global Holdings Ltd. plunged 48 percent, the most since March 2008, after the futures broker said its quarterly loss widened on charges tied to deferred tax assets and a restructuring. Netflix Inc. slumped the most in seven years, sinking 35 percent, after the video-rental service posted bigger-than-forecast user losses following a price increase.

Topping Projections

Earnings have topped the average analyst estimate at about 74 percent of the 144 companies in the S&P 500 that have reported results since Oct. 11, Bloomberg data show. Net income has increased 14 percent for the group and sales have risen 10 percent. Earnings have surpassed estimates by an average 5.9 percent, compared with an average 8.5 percent each quarter since 2009, the data show.

After U.S. exchanges closed, Amazon missed the average analyst profit estimate by 42 percent and said it may post an operating loss of $200 million in the fourth quarter, while analysts projected income. Amazon is sacrificing profit margins in search of sales volume and market-share gains against companies such as Apple Inc.

Amazon shares tumbled 15 percent to $193.10 at 4:44 p.m.

New York time.

Extending Losses

Stocks extended losses in early trading as the Conference Board’s consumer-sentiment index decreased to 39.8 from a revised 46.4 reading in September. The S&P/Case-Shiller index of property values in 20 cities fell 3.8 percent from August 2010, the group said today. The median forecast of 30 economists surveyed by Bloomberg was for a 3.5 percent decline.

Oil in New York jumped 2.1 percent to $93.17 a barrel after surging 4.4 percent yesterday. Futures climbed as much as 3.7 percent, erasing this year’s loss. Supplies at Cushing, Oklahoma, the delivery point for West Texas Intermediate, the grade traded in New York, fell last week, a satellite survey showed.

Silver and gold rallied at least 3 percent on demand for the metals as haven investments, leading gains in nine of 24 commodities tracked by the S&P GSCI. Coffee, lead, zinc, hogs and copper fell more than 1.3 percent for the biggest declines.

The euro weakened against eight of 16 major peers, with the South Korean won and Swiss franc strengthening at least 0.4 percent to lead gains. The dollar slipped as much as 0.5 percent against the Japanese currency to touch a post-World War II low of 75.74 yen, before paring losses in half after the Nikkei newspaper reported that policy members will discuss steps to ease the impact of the strong yen on the Japanese economy.

Have a Wonderful Evening Everyone!

Be Magnificent!

As Always,

Kyle, for Carolann