September 27, 2012 Newsletter
On this day in 1822, Jean-Francois Champollion, after studying the Rosetta Stone inscription, announced in a lecture attended by his chief English rival, that he had solved the hieroglyphic alphabet. The stone had been found by Napoleon’s army at a fort in Rosetta, Egypt, in 1799, and seized in 1801 by the British –setting off a race to decipher the hieroglyphics. Using the Greek writing on the trilingual granite, Champollion isolated letters in a pompous 196 BC decree by Ptolemy V Epiphanes. In so doing, the French linguist unlocked history’s longest-spoken language, supplied the key to Tutankhamen’s secrets and fathered Egyptology. The iconic stone has now spent two centuries in London’s British Museum. The French have an oversized replica in Champollion’s hometown. Joy Yokoyama, G & M, September 27th, 2012.
And also on this day in…
1920 – Eight Chicago White Sox players are charged with fixing the 1919 World Series.
1939 – Germany occupies Warsaw as Poland falls to Germany and the Soviet Union.
1942 – Australian forces defeat the Japanese on New Guinea in the South Pacific.
1944 – Thousands of British troops are killed as German forces rebuff their massive effort to capture the Arnhem Bridge across the Rhine River in Holland.
1950 – U.S. Army and Marine troops liberate Seoul, South Korea.
1956 – The U.S. Air Force Bell X-2, the world’s fastest and highest-flying plane, crashes, killing the test pilot.
1964 – The Warren Commission, investigating the assassination of President John F. Kennedy, issues its report, stating its conclusion that Lee Harvey Oswald was the sole gunman.
Singer Andy Williams, who died Sept. 26 at age 84, in his 2009 memoir “Moon River and Me”:
When Bobby [Kennedy] began his run for the presidency, I immediately volunteered to campaign for him and sing at a couple of fund-raisers. He then asked me if I would be one of the California delegates to the Democratic convention. “Shirley MacLaine is going to be one of my delegates, and I’d like you to be one, too.” I told him I’d love to do it, but a couple of weeks later a thought suddenly struck me, and I called Bobby and said, “I hope I haven’t screwed this up, but it’s just occurred to me: I’m a Republican.” He just laughed. “That doesn’t really matter. If you’d still like to do it for me, just go down and register as a Democrat.”
Four Rules For Life: Show up. Pay attention. Tell the truth. Don’t be attached to the results. –Angeles Arrien, 1940-
photos of the day September 27, 2012
A painting attributed to Leonardo da Vinci representing Mona Lisa, is displayed during a presentation in Geneva, Switzerland. The Mona Lisa Foundation, a non-profit organization based in Zurich, presents a painting and historical, comparative and scientific evidence, which demonstrates that there have always been two portraits of the Mona Lisa by Leonardo da Vinci, the ‘Earlier Version,’ made ten years earlier than the ‘Joconde’ that is displayed in Le Louvre in Paris, France.
A site coordinator walks past a Luminarium installation by British designer Alan Parkinson during the British Arts Festival in Wuhan.
Market Closes for September 27th, 2012:
|Bonds||% Yield||Previous % Yield|
10 Year Bond
10 Year Bond
30 Year Bond
|WTI Crude Future||91.85||89.98|
By Eric Lam
Sept. 27 (Bloomberg) — Canadian stocks rose for the first time in six days after Spain announced new austerity measures and commodities rallied on speculation China will introduce stimulus to support economic growth.
Colossus Minerals Inc. advanced 4.4 percent as gold rallied the most in two weeks. Niko Resources Ltd. jumped 8.8 percent as crude climbed the most in eight weeks. Research In Motion Ltd.
added 1.2 percent before posting better-than-expected second- quarter earnings after market close.
The Standard & Poor’s/TSX Composite Index soared 105.99 points, or 0.9 percent, to 12,338.85 in Toronto. Raw-materials stocks rose 1.9 percent to lead gains as eight of 10 industries advanced. The benchmark Canadian gauge is up 3.3 percent this month.
“All the market needed was a little encouragement,” said David Cockfield, managing director with Northland Wealth Management in Toronto, which oversees about C$200 million.
“People say if Spain goes, then what happens to Italy, and how will the banking system hold together? So any solutions suggested would be very positive.”
Spanish Prime Minister Mariano Rajoy’s government announced its fifth austerity package, including a new tax on lottery winnings and a cut in ministries’ spending to shrink the euro area’s third-biggest budget deficit. The Shanghai Securities News, operated by the Xinhua News Agency, said there was speculation the China Securities Regulatory Commission would announce 10 measures to boost equities.
Colossus rose 4.4 percent to C$5.65 and Argonaut Gold Inc. added 4.8 percent to C$10.27. Gold futures for December delivery increased 1.5 percent to $1,780.30 in New York. The S&P GSCI Spot Index, which tracks a basket of 24 major commodities, jumped 1.3 percent to 660.29, its biggest increase in eight weeks.
China is the world’s biggest consumer of copper and a major importer of Canada’s commodity products.
“The markets needed some relief here,” said John Kinsey, a fund manager with Caldwell Securities Ltd. in Toronto. The firm manages about C$1 billion. “The rumors about stimulus in China have been there for some time because the numbers do point to a slowdown in their economy.”
Niko Resources, the worst-performing stock in the S&P/TSX this year, jumped 8.8 percent to C$12.49. Petrobank Energy & Resources Ltd. climbed 2 percent to C$13.46 and PetroBakken Energy Ltd. rose 2.4 percent to C$13.95. Suncor Energy Inc., Canada’s largest energy company by market value, advanced 1.3 percent to C$32.42. Crude for November delivery rallied 2.1 percent to settle at $91.85 a barrel in New York.
Paramount Resources Ltd. soared 8.7 percent to C$29.72 and Trilogy Energy Corp. surged 7.4 percent to C$25.17. The excess of U.S. natural gas inventories has shrunk to 9 percent above the five-year average, compared with the beginning of the refill season in April when inventories were 61 percent above normalized levels, research from Bloomberg Industries shows.
First Quantum Minerals Ltd. increased 3.1 percent to $20.88 and Inmet Mining Corp. gained 3 percent to C$47.44. Copper for December delivery rose 0.9 percent to settle at $3.744 a pound in New York. Prices have risen 8.3 percent this month, heading for the biggest monthly advance since January.
RIM rose 1.2 percent to C$6.96. The company wrapped up its annual developers’ conference in California.
After-market, RIM reported a second-quarter loss of 27 Canadian cents, better than an expected loss of 47 Canadian cents a share from analysts surveyed by Bloomberg. RIM shares rose in extended trading.
By Rita Nazareth
Sept. 27 (Bloomberg) — U.S. stocks advanced, snapping a five-day decline for the Standard & Poor’s 500 Index, as Spain pledged to cut its deficit and speculation grew that China’s government will do more to support economic growth.
General Electric Co., the world’s largest maker of jet engines and diesel locomotives, climbed 2.9 percent after raising its forecast for profit growth at its industrial units.
Goodyear Tire & Rubber Co., the largest U.S. tiremaker, rallied 3.9 percent as Goldman Sachs Group Inc. advised buying the shares. Discover Financial Services added 7.3 percent after the credit-card company’s earnings beat analysts’ estimates.
The S&P 500 rose 1 percent to 1,447.15 at 4 p.m. New York time, after slumping 1.9 percent in five days. The Dow Jones Industrial Average added 72.46 points, or 0.5 percent, to 13,485.97. Volume for exchange-listed stocks in the U.S. was 5.7 billion shares, or 4.4 percent below the three-month average.
“People are still quite sensitive to news out of Europe and macro developments in general,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “Yes, people are encouraged by Spain’s austerity package. On the other hand, one does wonder what cuts will mean for growth. There’s also been speculation of Chinese stimulus.”
Stocks joined a global rally as Spanish Prime Minister Mariano Rajoy’s nine-month-old government announced its fifth austerity package in what may be a move to head off tougher conditions demanded as part of a potential European bailout.
Shanghai Securities News said there was speculation the government would announce market-boosting measures.
In the U.S., fewer Americans than forecast filed first-time claims for unemployment insurance payments last week. Equities rose even after data showed that the U.S. economy grew 1.3 percent in the second quarter, less than previously estimated.
Americans signed fewer contracts than forecast to purchase previously owned homes in August. Another report showed a gain in demand for capital goods such in August failed to make up for declines in the previous two months.
The S&P 500 has risen 2.9 percent in September and is on pace for the fourth monthly gain, the longest streak since March. Investors bought stocks amid better-than-estimated earnings and government measures to stimulate the economy.
If history is any guide, October may be another month of gains for stocks. Over the last 20 years, the Dow has risen an average 1.8 percent in October, with positive returns 70 percent of the time, according to data compiled by Bespoke Investment Group. October has been the third best month for the 30-stock gauge behind November and April, the data shows.
Nine of 10 groups in the S&P 500 rose today as technology, energy and raw material shares had the biggest gains. The Morgan Stanley Cyclical Index of companies most-tied to the economy advanced 1 percent. Commodity producers joined a 1.3 percent rally in the S&P GSCI gauge of raw materials amid speculation that stimulus measures will spur demand from China. Alpha Natural Resources Inc. increased 2.4 percent to $6.75. Monsanto Co. advanced 2.1 percent to $91.36.
“The possibility of more Chinese stimulus is real,” said Peter Jankovskis, who helps manage more than $3 billion at Oakbrook Investments in Lisle, Illinois. “That does provide some hope to the market.”
GE added 2.9 percent to $22.73. Operating earnings at the company’s industrial businesses will rise about 10 percent this year, topping the previous forecast for a gain of 5 percent to 10 percent, according to a presentation today from the Fairfield, Connecticut-based company.
Goodyear increased 3.9 percent to $12.46. Goldman Sachs raised its recommendation to buy from neutral, citing improving replacement tire volume in North America and Europe and lower raw material costs.
Discover Financial Services added 7.3 percent to $39.71.
The credit-card lender that struck a partnership with EBay Inc.’s PayPal unit posted a fiscal third-quarter profit that beat Wall Street estimates as fewer loans soured.
The KBW Bank Index of 24 stocks added 1.1 percent. Bank of America Corp. climbed 1.8 percent to $8.97. JPMorgan Chase & Co. increased 1.1 percent to $40.68.
MetroPCS Communications Inc. jumped 6.2 percent to $11.95.
The prepaid wireless carrier rose as DealReporter said the company has held talks with suitors such as Sprint Nextel Corp. and Dish Network Corp. Deutsche Telekom AG’s T-Mobile USA also participated in talks with MetroPCS, DealReporter said, citing an unidentified source familiar with the matter. Spokesmen for MetroPCS, Dish, Sprint and T-Mobile USA declined to comment.
Sealy Corp. rose 2.3 percent to $2.19 as Tempur-Pedic International Inc. agreed to buy it for about $229 million, combining the two biggest publicly-traded mattress companies.
The offer is 2.8 percent more than Sealy’s closing price yesterday. Tempur-Pedic will also assume or repay all of Sealy’s outstanding and convertible debt, according to a statement.
Knight Capital Group Inc. posted its best two-day gain in almost two months after its new ownership structure forced a rebalancing in equity indexes. The stock climbed 2.3 percent to $2.67 today after rallying 8.8 percent yesterday. A $440 million loss spurred by a trading error Aug. 1 sent the shares plunging 73 percent last month.
Knight’s outstanding shares have increased to about 182 million this month from fewer than 100 million as investors in the company’s $400 million bailout swapped convertible securities for common stock. The Russell 3000 Index and the Russell 2000 Index increased their representation of Knight shares on Sept. 1, according to Russell Investments.
Dollar General Corp. retreated 1.6 percent to $52. The largest U.S. dollar-store chain reported a 30 million-share secondary stock offering.
Cepheid Inc. sank 10 percent to $35.18. The maker of medical tests cut its third-quarter sales forecast. Sales for the quarter will be $79 million to $81 million, the company said in a statement yesterday. Interruptions in the supply of Xpert cartridge parts will postpone more than $5 million in orders past the end of the quarter, Cepheid said.
H.B. Fuller Co. plunged 9.5 percent to $30.22. The U.S. manufacturer of adhesives lowered its outlook for 2012 sales.
The company, based in St. Paul, Minnesota, reported third- quarter results after the close of regular trading yesterday.
Costs to protect against losses in oil jumped to a 16-month high compared with U.S. stocks, a sign the slowing economic recovery may be a greater risk to energy demand than to share prices.
The Chicago Board Options Exchange Crude Oil Volatility Index, tracking 30-day options on the United States Oil Fund LP, reached a two-month high of 36.58 on Sept. 19. The same day, the ratio between the oil gauge and the CBOE Volatility Index for equities rose to its highest since May 2011.
“We continue to get very sloppy economic data out of China and Europe, which are a headwind to oil,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $80 billion, said in a Sept. 24 phone interview. “The economic reality is that demand is likely to remain muted,” he said. “All of this hasn’t really been influencing equities just yet.”
Have a wonderful evening everyone.
What is it exactly that hurts you?
Open your heart and speak. Open your eyes and see.
At the moment that you look with your eyes wide open,
everywhere you will find differences, an infinite variety.
Swami Prajnanpad, 1891-1974
Who, being loved, is poor.
–Oscar Wilde, 1854-1900
Carolann Steinhoff, B.Sc., CFP, CIM, FCSI
Senior Vice-President &
Senior Investment Advisor
Queensbury Securities Inc.,
St. Andrew’s Square
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7