Welcome to 2012

By Marty Cej
The Chase

The week ahead provides a glimpse at the themes that may dominate the new year. Investors will wade through a flood of economic data including Asian export numbers, global manufacturing reports and U.S. unemployment data at the end of the week, all of which will help determine the spillover from the European debt crisis. The heavy political calendar for this year kicks off with the Iowa caucus, which will help thousands of American reporters narrow their focus onto two or three frontrunners in the race to name a Republican challenger to President Obama. Europe and the race for the White House will likely dominate broad price action in 2012.
Today, we'll narrow our own focus on how political, economic and corporate events are likely to drive price action in the stock, bond, currency and commodity markets this year. As we near the open of North American stock markets, U.S. index futures are pointing to modest gains and most European stock markets are trading higher on the back of higher-than-expected manufacturing data out of China, India and Australia. A surprising improvement in German unemployment also helped boost demand for risk assets this morning. A report on U.S. manufacturing due out at 10:00 am Eastern is also expected to show expansion. In fact, a reading of 53.4 on the ISM index – the average expectation among economists surveyed by Bloomberg, would be the fastest expansion in six months. At 2:00 pm, we'll peruse the minutes of the last FOMC meeting along with Republican candidate Ron Paul who is looking for an excuse to abolish the Fed. We'll look for insight, Paul will be looking to incite.
Commodities are kicking off the year on stronger footing after the manufacturing data as well. Crude oil, natural gas, copper, gold and silver are all higher in the early going. Natural gas could be the one to watch this week after tumbling below $3 last week. The CFTC reports that last week's downward slide may have flushed a lot of traders out of their bearish positions. Natural gas plunged more than 30 percent last year, which could lead some producers to rein in their output. Plus, the weather has turned wintery in North America, at least in my office where the atmosphere is particularly Dickensian. Also, keep an eye on gold, which appears poised for a technical breakout after showing considerable stability amid thin trading last week.
In corporate news, we're following Canadian Pacific Railway after the company's Chairman, John Cleghorn, wrote a polite, if firm, letter to hedge fund manager and CP shareholder Bill Ackman, explaining that leaks to the media are counterproductive in his efforts to force change at CP. The letter is in response to reports last week that Pershing Square Capital was agitating for Hunter Harrison to take over as the new CEO of CP. Cleghorn says no invitation has been extended to Harrison and that perhaps Ackman might want to talk face to face about what he wants changed at CP rather than going to the press. The gloves haven't been dropped but the players are jawing.
The National Post reports this morning that Research In Motion is preparing to unveil a boardroom shakeup that would see Mike Lazaridis and Jim Balsillie give up their co-chairmen roles in favour of board member Barb Stymiest. Citing unnamed sources for the story, the Post did not give a timeline. Calls are out to the company.

Last call for 2011

The chase by Noah Zivitz:

This was a year that (as of yesterday’s close) saw Canada’s benchmark stock index shed nearly 12%. Research in Motion trailed furthest among all index members, with still plenty of questions to be answered about whether the Jim and Mike show can regain lost market share in the new year. Even amid the ruins of a year that left the TSX lagging the S&P 500, there were some outsized returns to be had. Trilogy Energy shares surged 206%. Why? And what’s the plan to keep shareholders happy in 2012? And how about other leaders like Westport Innovations, Valeant and Dollarama? Throughout the day, and into next week on The Street, we’ll be reviewing the hits and misses of 2011.

Today is rich in symbolism for anyone who has watched Manulife Financial's volatile post-crisis experience. When former CEO Dominic D'Alessandro announced his retirement in 2009, his pay package generated tremendous criticism. Hearing the outrage loud and clear, D'Alessandro slapped conditions on the package. And now he appears poised to lose out on $10 million in restricted share units with MFC shares well below year-end vesting thresholds. After all of the hedging and de-risking Manulife has undergone over the past couple of it years, it still hasn't climbed back to levels D'Alessandro hoped for. Will patient MFC shareholders be rewarded in 2012? We’ll explore this one today.

And from today’s headlines:
The Globe and Mail is reporting Bill Ackman is reaching out to former CN CEO Hunter Harrison to lead the way at CP. According to the unconfirmed report, Harrison has demonstrated an interest in Ackman’s approach. We’re seeking comments from principals. Let’s also ask shareholders and analysts for perspective on the possibility of the iconic rail boss plying his trade at CP.

Manufacturing activity shrank in China this month, albeit at a slower pace than in November. We need to hear what the source of the PMI softness is, and what policy measures can be expected from Beijing next year. With Hu Jintao nearing the end of his term as president, I’d like to hear more about the country’s next leader.

After a string of losses that left gold in bear market territory at one time yesterday, the metal is staging an end of year rally today. But for how long, and what could support prices early in 2012? The Street gets a trader’s perspective at 8:30, and the technical view at 8:45.
January 3 will be the most important day thus far for candidates seeking to lead the Republican party in the next U.S. presidential race. Today and Tuesday we’ll need to ramp up analysis of what’s at stake in the Iowa caucuses.

We’ll be watching Silvercorp shares after it announced late yesterday two consulting firms have been retained to provide technical reports on a trio of projects to “alleviate” lingering concerns after the company had to fend off fraud allegations earlier this year.