Month: April 2011

Dear Friends, 

 I was discussing books with one of my clients today  – a conversation that began because she was reading a novel when I arrived to meet her in the waiting room and  I asked her about it….Anyway I was telling her about a book I just finished reading on the weekend entitled The Forgotten Garden by Kate Morton and how much I loved it.  So, my friends, I’m telling you about it too with the hope that you will read it and enjoy it as much as I did.  It is the story of a little girl left with a little white suitcase on a wharf in Australia after sailing from Britain just before the First World War.  She was told by the “authoress” to wait for her, that she would take care of her, but the authoress never did re-board the ship in London before it set sail.   When she is a young woman about to be married, the little girl learns that she is not who she thought she was.  Many years later, a descendant is left an unusual inheritance – a cottage high on a Cornish cliff top.  It is part of a vast estate, and within the cottage walls is a garden, forgotten for over a hundred years, that holds many secrets of the authoress, who was a writer of dark Victorian fairy tales…

BOOK:  Like paper, originally made of papyrus, a book originally described the thing from which it was made, namely the beech tree (in Old English, bok), whose bark provided writing material to arly scribes in northern Europe.

photos of the day

April 12, 2011

Spectators watch fireworks organized to celebrate the 50th anniversary of Yuri Gagarin’s historic space flight, in Moscow’s Victory Park.

Nikolay Korchekov/Reuters

Two girls pose on a chair during the International Furniture Fair in Milan.Alessandro Garofalo/Reuters

Market Commentary:

 Canada

By Matt Walcoff

April 12 (Bloomberg) — Canadian stocks fell, completing the biggest two-day plunge since June, as commodity producers dropped after two more earthquakes hit Japan and the Asian country raised the severity rating of its nuclear disaster.

Suncor Energy Inc., Canada’s biggest oil and gas producer, lost 3.4 percent as crude futures slipped. Teck Resources Ltd., the country’s biggest base-metals and coal producer, declined 3.6 percent as copper retreated the most in a month. Toronto- Dominion Bank, Canada’s second-largest lender by assets, decreased 2 percent as an index of S&P/TSX financial companies slipped to a three-week low.

The Standard & Poor’s/TSX Composite Index dropped 195.46 points, or 1.4 percent, to 13,801.40.

“The aftershocks that Japan is getting and the fact they’re now saying this is a Chernobyl-like situation is being badly received by the markets,” said Doug Davis, vice chairman of Toronto money manager Davis-Rea Ltd., which manages about C$425 million ($441 million). “People are selling indexes, and that affects all the stocks.”

The S&P/TSX fell 1.5 percent yesterday after the International Monetary Fund cut its growth estimate for the U.S.

The index has trailed the S&P 500 this year, gaining 2.7 percent to the U.S. stock benchmark’s 4.5 percent, after outperforming the S&P 500 for seven straight years.                        

Japan’s Nuclear and Industrial Safety Agency raised the severity rating of the country’s nuclear crisis to 7 today, the same as the 1986 Chernobyl disaster, from 5. The change came as two earthquakes stronger than magnitude 6 hit the country and Kaoru Yosano, the economic and fiscal policy minister, said the March 11 quake might hurt Japan’s economy more than forecast.

Oil declined 3.3 percent after losing 2.5 percent yesterday. The two-day slide was the biggest since May. Fifty- eight of 61 companies in the S&P/TSX Energy Index dropped as the index slid the most in a day since August.

Suncor decreased 3.4 percent to C$42.05. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, retreated 2.7 percent to C$44.34. Talisman Energy Inc., which produces oil and gas in North America, the North Sea and Indonesia, fell 3.1 percent to C$22.33.

All major base metals traded on the London Metal Exchange dropped.                    

Teck declined for a fifth day, losing 3.6 percent to C$51.87. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 4.7 percent to C$124.90. Mercator Minerals Ltd., which produces copper and molybdenum in Arizona, slumped 8.9 percent to C$3.36 after agreeing to buy Creston Moly Corp. for about C$195 million.

Precious-metals producers fell as gold futures dropped for a second day after climbing to a record.

Kinross Gold Corp., Canada’s third-largest producer of the metal, declined 1.8 percent to C$15.09. Silver reseller Silver Wheaton Corp. lost 3.2 percent to C$40.84 as that metal retreated for the first time in seven days. First Majestic Silver Corp., which mines in Mexico, tumbled 8.6 percent to C$19.77 after sliding 8.1 percent yesterday.

Uranium-mining companies slipped after Japan boosted the severity rating of the Fukushima Dai-Ichi nuclear plant accident.

Uranium One Inc., a mining company controlled by Moscow- based ARMZ Uranium Holding, sank 5.1 percent to C$3.75. Denison Mines Corp. plunged 6.9 percent to a five-month low of C$2.16.

Canada’s seven largest banks all fell. TD declined 2 percent, the most this year, to C$82.67. Bank of Nova Scotia, Canada’s third-largest bank, slipped for a sixth day, losing 0.9 percent to C$57.50. Manulife Financial Corp., North America’s fourth-biggest insurer, dropped 1.4 percent to C$16.46.

Gildan Activewear Inc., Canada’s largest clothing maker, surged 7 percent, the most in 16 months, to C$32.80 after agreeing to buy Newton, North Carolina-based sock supplier Gold Toe Moretz Holdings Corp. for about $350 million.

Claude Proulx, an analyst at Bank of Montreal, raised his 12-month share-price estimate on Gildan’s U.S. shares to $40 from $36. The purchase will “allow the company to expand into retail channels it is not currently serving,” he wrote in a note to clients.

 US

By Rita Nazareth and Jeff Kearns

April 12 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a fourth day, as Japan raised the severity rating of its nuclear crisis to the highest level, oil plunged and Alcoa Inc.’s sales missed estimates.

Chevron Corp. and Freeport-McMoRan Copper & Gold Inc.declined at least 3.1 percent as commodity prices slumped on speculation investors may avoid riskier assets after Japan’s radiation alert matched the 1986 Chernobyl disaster. Alcoa, the largest U.S. aluminum producer, tumbled 6 percent after saying first-quarter earnings were curbed by a weaker U.S. dollar and higher energy and raw-material costs.

The S&P 500 declined 0.8 percent to 1,314.16 at 4 p.m. in New York. The benchmark index had the longest losing stretch since November. The Dow Jones Industrial Average retreated 117.53 points, or 1 percent, to 12,263.58 today. Crude oil slumped 3.3 percent to $106.25 a barrel. The Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of using options as insurance against declines in the S&P 500, climbed 3 percent to 17.09.

“We’ve gone from a period of knocking the cover off the ball to just treading water,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $60 billion. “We’ve been approaching the earnings season with trepidation because high energy and commodity prices are going to crimp profit margins. Not only will higher costs crimp profits but it will also prompt consumers to cut back on discretionary spending.”

The S&P 500 has risen 4.5 percent in 2011 amid government stimulus measures and higher-than-estimated corporate profits.

In the first three months of last year, 78 percent of S&P 500 companies topped the average projection, according to data compiled by Bloomberg. The figure was the second-highest ever, trailing only the 80 percent recorded in the third quarter of 2009. Since then, the percentage approached the historical average of 60 percent. The fourth-quarter figure, 68 percent, was the lowest for the current bull market.

The MSCI All-Country World Index of shares in 45 countries fell 1.2 percent, the biggest decline in about a month. Japan’s Nuclear and Industrial Safety Agency today raised the rating for its nuclear crisis to 7. The accident at the Fukushima Dai-Ichi station was previously rated 5 on the global scale, the same as the 1979 partial reactor meltdown at Three Mile Island in Pennsylvania.

The stricken nuclear plant, located about 220 kilometers(135 miles) north of Tokyo, is leaking radiation in Japan’s worst civilian nuclear disaster after a magnitude-9 quake and tsunami on March 11. Tokyo Electric Power Co. said its plant, which has withstood hundreds of aftershocks, may spew more radiation than Chernobyl before the crisis is contained.

“Investors are taking some risk off the table,” said Madelynn Matlock, who helps oversee $14.4 billion at Huntington Asset Advisors in Cincinnati. “Every time you mention the word radiation, you end up scaring people. I don’t think there were any illusions that Japan was not one of the most serious nuclear accidents we’ve seen.”

Japan’s Economic and Fiscal Policy Minister Kaoru Yosano said the March 11 earthquake may result in a larger hit to the economy than previously seen, indicating a greater appetite for stimulus one month after the disaster.

Prices of goods imported into the U.S. rose in March at the fastest pace since June 2009, led by a gain in crude oil and the biggest jump in food costs since 1994. The 2.7 percent increase in the import-price index exceeded a 2.1 percent median forecast in a Bloomberg News survey. Prices excluding fuel rose 0.6 percent.

Directors at Federal Reserve regional banks saw the economy improving even as energy prices rose and governments at all levels cut spending, according to minutes of Board of Governors’ meetings in February and March.

“Federal Reserve Bank directors generally viewed recent information as showing the economic recovery was progressing,” the minutes said, adding that directors saw “downside risks posed by rising energy and commodity prices and by increased fiscal stringency.”

Energy and raw-material producers had the two biggest declines in the S&P 500 within 10 industries today, falling at least 1.3 percent. Chevron, the second-largest U.S. energy company, dropped 3.3 percent to $104.18. Freeport, the largest publicly traded copper producer, lost 3.1 percent to $53.70.                        

 Alcoa slumped 6 percent, the most in the Dow average, to $16.70. The company’s sales increased 22 percent from a year earlier to $5.96 billion, Alcoa said yesterday in a statement. That trailed the $6.06 billion average estimate of eight analysts in a Bloomberg survey.

U.S. banks such as JPMorgan Chase & Co. and Bank of America Corp. may report weak revenue for the first quarter after lending by the industry dropped in almost every category. Bank loans and leases fell $87.4 billion to $6.97 trillion from the end of 2010 through March 30, or 1.3 percent, according to Federal Reserve data. Deposits at U.S. banks rose the same percentage to $7.97 trillion, showing households and businesses are still hoarding cash instead of borrowing, analysts said.

“While loan growth tends to be seasonally weak in the first quarter, this quarter is tracking worse than seasonality would suggest,” Barclays Capital Inc. analysts led by Jason Goldberg wrote in an April 8 report. “We fear companies have been disappointed.”

Investors will get their first look at the quarter’s results tomorrow when New York-based JPMorgan, ranked second by assets in the U.S., is scheduled to report. The biggest lender, Charlotte, North Carolina-based Bank of America, will report April 15, followed next week by New York-based Citigroup Inc. and San Francisco-based Wells Fargo & Co., ranked third and fourth by assets.

Have a wonderful evening everyone.

 Be magnificent!

 Do not believe a thing simply because it has been said.

Do not put your faith in traditions only because they have been honored by many generations.

Do not believe a thing because the general opinion believes it to be true or because it has been said repeatedly.

Do not believe a thing because of the single witness of one of the sages of antiquity.

Do not believe a thing because the probabilities are in its favor,

or because you are in the habit of believing it to be true.

Do not believe in that which comes to your imagination,

thinking that it must be the revelation of a superior Being.

Believe nothing  that binds you to the sole authority of your masters or priests.

That which you have tried yourself, which you have experienced, which you have recognized as true,

and which will be beneficial to you and to others;

believe that, and shape your conduct to it.

 -Buddha

As always,

 Carolann

 I think that somehow, we learn who we really are

and then live with that decision.

 -Eleanor Roosevelt, 1884-1962

 

 

Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President &

Senior Investment Advisor

Dear Friends,

 A poem I came across today:

 WHY THE WINDOW WASHER READS POETRY

(for Michael, who carried poems in his work shirt pocket)

 He lowers himself on a seat they call a cradle, rocking in harnesses strung long-armed from the roof.

Swiping windows clean he spends his day outside looking in.

Mirrors refract light into his eyes telescopes point down photographs face away, layers of dust unifying everything.

Tethered and counterbalanced these sky janitors hang, names stitched on blue shirts for birds to read.

Squeegees in hand they arc lightly back and forth across the building’s eyes descend a floor, dance again.

While the crew catches up he pauses, takes a slim volume from his pocketand balancing there, 36 stories above the street, reads a poem or two in which the reader is invariably placed inside looking out.

 -Laura Grace Weldon

photos of the day

April 11, 2011

Luna Lutz visits a tree with 9,800 Easter eggs in the garden of pensioner couple Christa and Volker Kraft in Saalfeld, Germany. The Kraft family have decorated their tree for Easter for more than 40 years.

Jens Meyer/AP

The Boeoegg, a snowman made of wadding and filled with firecrackers, explodes atop a bonfire in Sechselaeuten Square in Zurich,Switzerland. As the bells of St. Peter’s church chime six o’clock, the bonfire below the ‘Boeoegg’ is set alight and mounted guildsmen gallop around the pyre to the tune of the Sechselaeuten March. The faster the head of the ‘Boeoegg’ – the symbol of winter – catches fire and explodes, the warmer and more beautiful the summer will be.

Arnd Wiegmann/Reuters

Market Commentary:

Canada

By Matt Walcoff

April 11 (Bloomberg) — Canadian stocks fell the most in a month, led by energy producers, after the International Monetary Fund cut its growth forecast for the U.S. and oil and metals prices dropped.

Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, lost 3.6 percent as crude retreated from a 30-month high. Kinross Gold Corp., Canada’s third-biggest gold producer, decreased 3.3 percent as the metal dropped for the first time in six days. First Quantum Minerals Ltd., the country’s second-largest publicly traded copper producer, slumped 3.7 percent as that metal fell.

The Standard & Poor’s/TSX Composite Index lost 211.57 points, or 1.5 percent, the most since March 10, to 13,996.86.

“Oil is at a pretty high price given the global growth outlook,” said Murray Leith, who helps manage about C$6.5 billion ($6.8 billion) as a money manager at Odlum Brown Ltd. in Vancouver. “You’ve got to expect pullback. There’s fiscal drag now around the world as new stimulus just fades away.”

Coming into this week, the S&P/TSX had gained four straight weeks, the longest streak since October. Over that time, oil surged 12 percent while gold stocks rallied 7.4 percent as the conflict in Libya intensified and the U.S. dollar dropped to a 16-month low against a basket of world currencies.

Higher oil prices will limit U.S. economic growth to 2.8 percent this year, the IMF said in a report today. The organization had earlier forecast 3 percent growth.

Crude declined 2.5 percent in New York, the most since March 15. The S&P/TSX Energy Index tumbled 2.3 percent, the most in eight months.

Suncor Energy Inc., Canada’s largest oil and gas producer, lost 2.6 percent to C$43.51. Canadian Natural decreased 3.6 percent to C$45.56. Encana Corp., the country’s biggest natural gas producer, slumped 3.3 percent to C$31.85.                         

 Gold fell from a record after the African Union said Libyan leader Muammar Qaddafi agreed to a cease-fire. All 33 gold companies in the S&P/TSX declined.

 Barrick Gold Corp., the world’s largest producer of the metal, dropped 2.7 percent to C$50.66. Kinross slipped 3.3 percent to C$15.37. Goldcorp Inc., the world’s second-biggest gold-mining company by market value, lost 2.1 percent to C$51.06.

Silver reseller Silver Wheaton Corp. decreased 6.1 percent to C$42.18 as that metal retreated in electronic trading after the close of floor trading in New York. First Majestic Silver Corp., which mines in Mexico, sank 8.1 percent to C$21.64.

Copper dropped for the first time in a week on concern China might raise interest rates. The country, the world’s largest consumer of industrial metals, reported faster growth in exports and imports than most economists had forecast.

First Quantum declined 3.7 percent to C$131.67. Teck Resources Ltd., Canada’s largest base-metals and coal producer, lost 2 percent to C$53.83. Ivanhoe Mines Ltd., which is developing a copper and gold mine in Mongolia with Rio Tinto Group, decreased 2.2 percent to C$26.38.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, retreated 1.6 percent to C$54.72 after the Fertiliser Association of India said that country does not need to import potash for the monsoon season. The shares have fallen for five-straight days.

Lumber producer TimberWest Forest Corp. soared a record 19 percent to C$6.46 after agreeing to be bought by British Columbia Investment Management Corp. and the federal Public Sector Pension Investment Board. The funds will pay C$6.48 in cash for each so-called stapled unit.

Westport Innovations Inc., which makes natural-gas engines, plunged 13 percent to C$22.45 after Ann Duignan, an analyst at JPMorgan Chase & Co., began coverage of the company with a “neutral” rating. The shares had jumped 21 percent this month through April 8 on speculation the U.S. government will provide incentives for vehicles fueled by natural gas.

 US

By Rita Nazareth

April 11 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index down for a third day, after oil dropped from a 30-month high as the International Monetary Fund cut its growth forecast for the world’s largest economy.

Occidental Petroleum Corp. and Anadarko Petroleum Corp. slumped at least 3.1 percent as crude oil fell 2.5 percent.

General Motors Co. retreated 2.4 percent after China said 2011 car sales may trail forecasts. Tyco International Ltd. rise 3.3 percent as three people with knowledge of the matter told Bloomberg News that Schneider Electric SA is weighing a takeover offer for the maker of security systems.

The S&P 500 dropped 0.3 percent to 1,324.46 at 4 p.m. in New York. The benchmark gauge had the longest losing streak in almost a month. The Dow Jones Industrial Average rose 1.06 points, or less than 0.1 percent, to 12,381.11.

“There’s clearly a defensive tone,” said Bruce McCain, who oversees $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “The IMF report got people concerned,” he said. “The stock market is stuck, trying to break the previous high. There’s hope that the first- quarter earnings season will be good and that we’ll see more takeovers. That would be good for stocks.”

The S&P 500 has risen 5.3 percent in 2011 amid government stimulus measures and as corporate profits beat analysts’ estimates for an eighth straight quarter. Earnings for S&P 500 companies rose 12 percent in the first quarter and will increase 17 percent this year, according to analyst estimates compiled by Bloomberg.

Oil fell from a 30-month high after the International Monetary Fund lowered its forecast for U.S. growth this year, predicting higher oil prices and the pace of job gains will restrain the recovery.

The world’s largest economy will expand 2.8 percent this year, down from the 3 percent projected in January, the IMF said today. Global gross domestic product will grow 4.4 percent in 2011, matching the previous estimate, according to the Washington-based lender’s World Economic Outlook report.

Consumer spending, the biggest part of the U.S. economy, faces headwinds from the rising cost of food and gasoline. Federal Reserve officials last month said the expansion is on “firmer footing,” lessening the need to extend a bond purchase program beyond June.

“Recovery in the labor market remains lackluster,” the IMF said in the report. “The drag on 2011 growth from oil price increases largely offsets the boost from the Federal Reserve’s unconventional policies and from stronger net exports.”

Energy shares in the S&P 500 dropped 1.9 percent, the biggest decline among 10 industries. Occidental Petroleum fell 3.2 percent to $100.42. Anadarko Petroleum slumped 4.3 percent to $81.11.

Automakers had the biggest drop in the S&P 500 within 24 industries, falling 2.2 percent. GM, which sold 28 percent of its cars last year in China, slumped 2.4 percent to $30.77.

China’s passenger-car sales may grow at a slower pace this year than was earlier estimated by a group of the nation’s automakers after the government ended incentives for purchases and raised fuel prices.

Sales growth in China this year may fail to reach a previous estimate by the China Association of Automobile Manufacturers for a 10 percent to 15 percent increase, said Dong Yang, vice chairman of the association.                           

“I am concerned about whether our growth rate is too low,” Dong said at a briefing in Beijing yesterday. “Some automakers’ profitability may be undermined this year and some may even face difficulties in their operations.”

Tyco International climbed 3.3 percent to $48.72. Schneider Electric is weighing a takeover offer for Tyco that would make the French company the world’s biggest maker of security systems, said three people with knowledge of the matter.

Schneider is working with bankers to help it assess a potential acquisition of Tyco, said the people, who spoke on condition of anonymity because the matter is private.

Schneider’s efforts are at an early stage and no deal is imminent, the people said. Tyco, based in Schaffhausen, Switzerland, had a market value of $22.3 billion as of April 8.

Alcoa Inc. slumped 0.8 percent to $17.77. After the close of U.S. exchanges, the largest U.S. aluminum producer reported first-quarter profit that beat analysts’ estimates after prices rose for the lightweight metal. The shares lost 2.9 percent to $17.25 at 4:54 p.m. in New York.                          

Investors should buy May S&P 500 puts or put spreads to protect from U.S. stock declines or use straddles or strangles to bet volatility will increase as earnings season begins, UBS AG said. Fewer companies are likely to beat analysts’ estimates for the past quarter while more may cut forecasts, equity derivatives strategist Mitchell Revsine wrote in a report.

Higher commodity prices may cause companies to miss estimates and reduce forecasts, and Japan’s tsunami will cause some to reduce earnings guidance, Revsine wrote.

“Market volatility may increase during earnings season,” the New York-based strategist said. “We recommend investors buy May Index options for exposure to potential increased market volatility through earnings and/or as a portfolio hedge.”

Have a wonderful evening everyone.

Be magnificent!

To expect something is to look for something pleasant.

Searching for the pleasurable is a form of denial.

You cannot expect anything, because the expectation is within you,

and what you are waiting for is dependent on external forces.

 

-Swami Prajnanpad, 1891-1974

 

As ever,

 Carolann

 He is indebted to his memory for his jests

and to his imagination for his facts.

   -Richard Brinsley Sheridan, 1751-1816

Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President & Senior Investment Advisor

Dear Friends,

 All that we are is the result of what we have thought.

 -Buddha

Today, April 8^th,  is Buddha’s birthday, Siddhartha, “the enlightened one.”

Cherry trees bloom during the National Cherry Blossom Festival along the Tidal Basin in Washington.  (Jonathan Ernst/Reuters)      

Market Commentary:

Canada

By Matt Walcoff

April 8 (Bloomberg) — Canadian stocks rose, completing a fourth-straight weekly gain, as metals and oil advanced.

Goldcorp Inc., the world’s second-largest gold producer by market value, climbed 2.4 percent as the metal rose for a fifth day on a falling U.S. dollar. Suncor Energy Inc., Canada’s biggest oil and gas producer, gained 3.2 percent as fires burned in Libya’s Sarir oil field. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, dropped 1.7 percent after the U.S. forecast larger corn stockpiles than most analysts had estimated.

The Standard & Poor’s/TSX Composite Index advanced 100.66 points, or 0.7 percent, to 14,208.43. The index climbed 0.6 percent this week. Crude climbed 2.3 percent to $112.79 a barrel in New York today.

“Oil back above $110 a barrel is obviously going to juice the Canadian market,” said Andrew Pyle, who helps manage C$200 million ($209 million) as an associate portfolio manager for Bank of Nova Scotia in Peterborough, Ontario. “It’s absolutely an energy and materials day.”

The S&P/TSX’s streak of weekly increases is the longest since October. It has risen 3.9 percent during the period, led by metals producers, as the U.S. dollar has dropped to a 16- month low against a basket of world currencies.

The Thomson Reuters/Jefferies CRB Commodity Price Index gained for a seventh day today to a 30-month high. The U.S. dollar declined against all 16 other major currencies as the euro advanced after German exports increased more than economists forecast and the British pound climbed as U.K. producer prices for March surpassed their estimates.                          

Gold futures increased 1 percent to settle at $1,474.10 an ounce in New York. Goldcorp rose 2.4 percent to a record C$52.15. Eldorado Gold Corp., which mines in China and Turkey, gained 4.9 percent to C$17.29.

Pan American Silver Corp. had the biggest gain in the S&P/TSX, surging 8.4 percent to C$40.85 as the metal touched the highest price since 1980 and the company held an analyst day in Toronto.

Oil and gas producers advanced as crude futures rallied to a 30-month high on the conflict in Libya.

Suncor increased 3.2 percent to C$44.67. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, climbed 1.9 percent to C$47.28. Cenovus Energy Inc., the country’s fifth-biggest energy company, rose 2.5 percent to C$38.46.                      

Open Range Energy Corp., which produces natural gas in Alberta, soared 24 percent to a 31-month high of C$4.42 after increasing its forecast for cash flow from operations.

Contract driller Stoneham Drilling Trust jumped 33 percent to a four-year high of C$22.69 after agreeing to be bought by Western Energy Services Corp. for cash and shares. The companies valued the deal at C$24 a unit.

Potash Corp. lost 1.7 percent to C$55.60 after the U.S.

Agriculture Department estimated corn stockpiles will total 675 million bushels on Sept. 1. Analysts had forecast supplies of 589 million bushels, according to the average forecast in a Bloomberg survey.

Transportation stocks retreated as fuel prices climbed.

Canadian National Railway Co., the country’s largest railroad, slipped 1.2 percent to C$70.70. Canadian Pacific Railway Ltd. decreased 1.8 percent to a seven-month low of C$60.30. Air Canada, the country’s biggest airline, fell for a sixth day, dropping 3.5 percent to a seven-month low of C$2.20.

 US

By Rita Nazareth

April 8 (Bloomberg) — U.S. stocks fell, preventing the third straight weekly gain for the Standard & Poor’s 500 Index, as oil’s rally to a 30-month high drove down transportation shares and investors speculated the federal government may shut for the first time since 1996.

FedEx Corp., which runs the world’s biggest cargo airline, slumped 2.9 percent. United Continental Holdings Inc. tumbled 5.8 percent as the NYSE Arca Airlines Index slid to the lowest level since September. Expedia Inc. surged 13 percent after the world’s biggest online travel agency said it will split in two.

The S&P 500 fell 0.4 percent to 1,328.17 at 4 p.m. in New York, after gaining as much as 0.5 percent. The Dow Jones Industrial Average decreased 29.44 points, or 0.2 percent, to 12,380.05. The U.S. dollar fell 1.2 percent to $1.4472 per euro, helping drive up prices of commodities traded in dollars.

“As oil rises, the synchronized trade is to de-risk,”said Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus & Co., which oversees $110 billion in client assets. “Higher commodities prices raise concern about future inflation and consumption. One should keep a careful eye on companies’ forecasts and on input costs in particular.”

The S&P 500 has risen 5.6 percent in 2011 as government stimulus measures and higher-than-estimated profits boosted investors’ optimism. U.S. stocks fell yesterday, dragging the Dow average down from an almost three-year high, as another earthquake shook Japan and a dispute over the federal budget threatened to shut down the American government.

Equities also fell as Democratic and Republican leaders in Congress remained divided over a federal budget, hours away from the first U.S. government shutdown in more than 15 years.

Democratic leaders say Republicans are refusing to accept federal funding for Planned Parenthood. Republicans say the dividing issue is the amount of spending cuts.

Commodities rose for a seventh day. Gold and tin climbed to records. The S&P GSCI Spot Index of 24 raw materials reached the highest level since August 2008.

Oil rose above $112 a barrel in New York for the first time since September 2008 and surpassed $126 a barrel in London as a fire burned at Libya’s Sarir field, bolstering concern that unrest in the region will further reduce supply.

“We’re not in a bubble,” said Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which manages $358.2 billion. “You’ve got multiple drivers that are resulting in this commodities rally. There’s a weaker dollar versus the euro in response to European monetary policy. There’s also inflation concern. The third and most important one is the improvement of global economic growth, which is resulting in more demand. That’s positive for stocks.”

The dollar dropped against most of its major counterparts on speculation the Federal Reserve will trail other central banks in raising interest rates and as signs of global growth damped demand for haven assets.

Fed Bank of Dallas President Richard Fisher said the central bank faces a “significant” risk of providing record stimulus for too long and should weigh curtailing its $600 billion bond-purchase plan.

“We at the Fed are near a tipping point,” the 62-year-old regional bank chief said in the text of a speech today in Dallas. “Just as we pressed on in doing our duty through extraordinary, exigent measures, we must now discipline ourselves to just as persistently normalize our operations in a timely way.”                   

Billionaire investor George Soros said the European Central Bank’s decision to raise its benchmark lending rate was “quite inappropriate” because several euro member countries are suffering from too much debt.

“It is not appropriate in current circumstances when you have a number of countries that are suffering from too much debt and high interest rates,” Soros said today in an interview with Bloomberg Television’s Michael McKee and Sara Eisen at the Bretton Woods conference in New Hampshire.

European Central Bank President Jean-Claude Trichet raised the benchmark interest rate to 1.25 percent yesterday from a record low of 1 percent, where it had been since May 2009.

Policy makers will bring the rate to 1.5 percent in July and 1.75 percent in October, according to the median of 20 estimates in a Bloomberg News survey.

The Dow Jones Transportation Average slumped 1.7 percent as 19 of 20 stocks retreated. The NYSE Arca Airline Index of 15 stocks slumped 2.7 percent.                         

FedEx lost 2.9 percent to $91.16. United Continental tumbled 5.8 percent to $19.79, dropping for a seventh straight day in the longest losing streak since June.

Expedia surged 13 percent to $25.30. The company will split into two businesses, letting investors own shares of TripAdvisor, which includes 19 travel and advertising businesses. The move will let the shareholders benefit from TripAdvisor’s growth while Expedia pumps money into marketing and hiring to fend off competition from Priceline.com Inc. that has curbed earnings, said Fred Moran, a Benchmark Co. analyst.

Seagate Technologies Plc advanced 7.8 percent to $15.84.

The world’s largest maker of computer disk drives said it will pay its first dividend since 2009.

CVS Caremark Corp. added 2.1 percent to $36.23. The largest U.S. provider of prescription drugs could be worth $25 billion more if the company split itself up, using its rivals’ valuations, according to data compiled by Bloomberg.

Have a wonderful weekend everyone.

Be magnificent!

To know our soul apart from our ego is the first step toward accomplishing the supreme deliverance.

It is necessary that we know with absolute certainty that in essence we are spirit.

And we can only arrive at this knowledge if we render ourselves masters of our ego, if we rise above all pride, all appetite, all fear, by knowing that material losses and the death of the body can never take away the truth and the greatness of our soul.

-Rabindranath Tagore, 1861-1901

As ever,

 Carolann

Depend not on fortune, but on conduct.

-Pubililius Syrus, 1rst Century BC

 Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President & Senior Investment Advisor

                

Dear Friends,

Today is William Wordsworth’s birthday, born on April 7^th, 1770, so I thought it fitting to remember him with one of his beloved poems:

 The Daffodils

 I wandered lonely as a cloud

That floats on high o’er vales and hills,

When all at once I saw a crowd,

A host of golden daffodils,

Beside the lake, beneath the trees

Fluttering and dancing in the breeze.

 Continuous as the stars that shine

And twinkle on the milky way,

They stretched in never-ending line

Along the margin of a bay:

Ten thousand saw I at a glance

Tossing their heads in sprightly dance.

 The waves beside them danced, but they

Out-did the sparkling waves in glee:

A poet could not but be gay

In such a jocund company!

I gazed – and gazed – but little thought

What wealth the show to me had brought:

For oft, when on my couch I lie

In vacant or in pensive mood,

They flash upon that inward eye

Which is the bliss of solitude;

And then my heart with pleasure fills,

And dances with the daffodils.

                 -William Wordsworth

photos of the day

April 7, 2011

The sculpture ‘Rainforest tree,’ at 141 feet, towers over the space in the Gasometer in Oberhausen, Germany. The giant tree, by artist Wolfgang Volz, transforms the industrial colossus into a cathedral of nature and is part of the new UNESCO exhibition ‘Magic places – nature and culture monuments of the world.’ Martin Meissner/AP

During a photocall at the London Zoo, a Bolivian squirrel monkey checks sunglasses with bitter apple smeared on them to deter monkeys from stealing visitors’ sunglasses. Zookeepers decided to train the monkeys to stop them from grabbing people’s sunglasses as monkeys don’t like the taste of anything sour. Matt Dunham/AP

Market Commentary:

Canada

By Matt Walcoff

April 7 (Bloomberg) — Canadian stocks fell for a second day after European Central Bank President Jean-Claude Trichet suggested interest rates may increase further and a new earthquake hit Japan.

Bank of Montreal lost 1 percent after the ECB boosted its benchmark interest rate by 0.25 percentage point. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, decreased 1.6 percent after a Mosaic Co. executive said shareholders may sell as much as 35 percent of Mosaic’s stock. MKS Inc., which makes software for computer programmers, soared 37 percent after agreeing to a takeover offer.

The Standard & Poor’s/TSX Composite Index slipped 94.88 points, or 0.7 percent, to 14,107.77.

“The third-largest economy in the world just had a 7.1 earthquake,” said Keith McLean, who oversees C$150 million

($156 million) as a money manager at GMP Investment Management in Toronto. “If this is indicative there could be more geological instability, it could lead to more problems.”

The index had rallied 4.8 percent from March 15 to yesterday as gold and copper futures surged at least 4.7 percent as the U.S. dollar dropped against 14 of 16 other major currencies. The greenback had declined on speculation the U.S.

Federal Reserve will raise interest rates more slowly than other central banks.

The European Central Bank boosted its benchmark interest rate to 1.25 percent from 1 percent today in a move forecast by all 57 economists in a Bloomberg survey. In a press conference, Trichet said inflation risks remain and the bank will “always do what is necessary to deliver price stability over the medium term.”

Stocks extended their losses after the earthquake struck Japan. The U.S. Geological Survey measured today’s tremor as magnitude 7.1, the strongest since the devastating magnitude-9 temblor of March 11.

The S&P/TSX Financials Index fell for a third day. Canadian Imperial Bank of Commerce, Canada’s fifth-largest lender by assets, declined 1 percent to C$83.92. Bank of Montreal, the country’s No. 4 bank, lost 1 percent to C$62.70. Toronto- Dominion Bank, the second-biggest lender, decreased 1.1 percent to C$84.50.

Fertilizer producers retreated after Mosaic Chief Financial Officer Larry Stranghoener said as many as 157 million shares might be sold in a secondary offering next month as part of Cargill Inc.’s plan to sell its controlling stake.                        

Potash Corp. fell 1.6 percent to C$56.55. Agrium Inc., Canada’s second-largest fertilizer producer, dropped 1 percent to C$88.54.

Gold stocks declined for the first time in four days as the commodity fluctuated. Barrick Gold Corp., the world’s largest gold producer, lost 1 percent to C$51.50. Eldorado Gold Corp., which mines in China and Turkey, decreased 1.3 percent to C$16.48. Agnico-Eagle Mines Ltd., Canada’s fifth-largest gold producer, slipped 1.2 percent to C$62.80.

An index of base-metals and coal producers retreated the most in eight days. Teck Resources Ltd., Canada’s largest company in the industry, retreated 2 percent to C$55.06.

SouthGobi Resources Ltd., which mines coal in Mongolia, fell 2.9 percent to C$13.92.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, dropped for the first time in eight days, slumping 4.9 percent to C$135.09. The shares had risen to their highest price relative to earnings since 2009.

MKS surged 37 percent to C$26.01, the highest level since August 2000, after Parametric Technology Corp. agreed to buy the Waterloo, Ontario-based company for C$26.20 a share in cash. The shares’ rally was their biggest one-day advance ever.

Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, declined 1.8 percent to C$46.40.

In a letter dated yesterday, U.S. Sen. Ron Wyden asked the Federal Trade Commission to investigate the pricing policies of Canadian oil shippers including Canadian Natural.

Brookfield Asset Management Inc., the country’s biggest real estate company, lost 2.9 percent to C$30.70. The shares have slumped 3.6 percent since April 4, when Bloomberg News reported that Brookfield is among companies that have expressed interest in buying properties from Charter Hall Office REIT.

Bankers Petroleum Ltd., which produces oil and gas in Albania, jumped 5.5 percent to C$8.82 after releasing an operations update. The company is producing more fuel than David Dudlyke, an analyst at Stifel Financial Corp., had forecast, Dudlyke wrote in a note to clients.

US

By Rita Nazareth

April 7 (Bloomberg) — U.S. stocks fell, dragging the Dow Jones Industrial Average down from an almost three-year high, as another earthquake shook Japan and a dispute over the federal budget threatened to shut down the American government.

Caterpillar Inc., the largest maker of construction equipment, slid 1 percent to lead declines in the Dow. The iShares MSCI Japan Index Fund, an exchange-traded security tracking the nation’s equities, fell 0.8 percent. Gap Inc. dropped 1.5 percent as the largest U.S. apparel chain reported a 10 percent slump in same-store sales. KLA-Tencor Corp. sank 4.6 percent after Citigroup Inc. advised selling rival semiconductor-equipment maker Lam Research Corp.

The S&P 500 lost 0.2 percent to 1,333.51 at 4 p.m. in New York, after dropping as much as 0.7 percent. The Dow, which climbed yesterday to the highest level since June 2008, slipped 17.26 points, or 0.1 percent, to 12,409.49 today.

“It’s body blow after body blow,” said Matt McCormick, a Cincinnati-based money manager at Bahl & Gaynor Inc., which oversees $3.6 billion. “The market has faced a series of black swans. We don’t know the impacts of the Japan situation. We don’t know what will happen in the Middle East. In addition, people are skittish because of all the budget discussion and concern about the future of monetary and fiscal policies.”                  

 The S&P 500 has risen 6 percent in 2011 as government stimulus measures and higher-than-estimated profits boosted investors’ optimism. The benchmark gauge fell on April 5 as minutes from the Federal Reserve’s last meeting spurred speculation central bankers may begin removing record stimulus measures enacted to ensure the economy recovered from recession.

A 7.1-magnitude earthquake spared the stricken Fukushima Dai-Ichi nuclear plant in Japan, although workers struggling to cool radioactive fuel were evacuated, Tokyo Electric Power Co. said based on its initial assessment. The aftershock was the second-strongest since a record 9-magnitude earthquake and tsunami on March 11. No unusual conditions were observed at the plant afterward, the utility, known as Tepco, and Japan’s Nuclear and Industrial Safety Agency said in statements.

Crude rose above $110 a barrel for the first time in 30 months as a fire burned at Libya’s Sarir field, bolstering concern that unrest in North Africa and the Middle East will spread, curbing shipments. NATO said forces loyal to Muammar Qaddafi caused a fire at the field, according to Al Arabiya television. The conflict in Libya is currently in a stalemate, said Army General Carter Ham, the U.S. commander for Africa.

The U.S. House approved a stopgap spending bill to keep the government open through next week, although President Barack Obama said he would veto the measure and a shutdown still looms.

The measure, passed 247-181, would cut another $12 billion in spending this year and fund the Pentagon at current levels through Sept. 30. Senate Majority Leader Harry Reid, a Nevada Democrat, called the bill a “non-starter.”

House Speaker John Boehner said there was no agreement on a budget reached at a White House meeting with President Obama and Senate Majority Leader Reid. “We’re not there yet,” Boehner, an Ohio Republican, said outside the White House. Reid, a Nevada Democrat, said he was “disappointed” that negotiations haven’t resolved the issue.

A failure by Congress to extend the government’s spending authority, which expires tomorrow, would force the closure of national parks, monuments and museums. Federal agencies — such as the National Labor Relations Board — that don’t protect lives, property or national security also would be shuttered.

Stock futures fell before the open of exchanges as European Central Bank President Jean-Claude Trichet said today’s interest-rate increase is not necessarily the start of a series. “We did not decide that it was the first of a series of interest-rate increases,” Trichet said at a press conference in Frankfurt after the ECB raised its benchmark rate to 1.25 percent from a record low of 1 percent.

The S&P 500 has closed every session this month less than 1 percent below its 2011 high of 1,343.01 set on Feb. 18, causing investors to question whether the index will set a new high or head lower in a so-called double top.

“The big question with the indexes is, will this be a double top or not?” said Kurt Kinker, chief market analyst at Mirus Futures in Chicago. “We’re holding these 1,330s in the S&Ps. And whether they can break out above the February highs or whether they’ll head south, that’s the question.”                           

Gap slumped 1.5 percent to $22.72. Same-store sales dropped 10 percent, compared with the estimated decline of 7.3 percent.

Last month’s earthquake and tsunami in Japan, where the retailer has more than 150 stores, cut into results, Chief Executive Officer Glenn Murphy said in a statement.

KLA-Tencor fell the most in the S&P 500, sinking 4.6 percent to $44.06. Lam Research dropped 5 percent to $53.52. The maker of chip-manufacturing equipment may disappoint investors when reporting earnings for the current quarter as demand slows, Citigroup wrote in a note, in which it added the idea of selling the shares its Top Picks Live! list.

Bed Bath & Beyond Inc. gained 10 percent to $54.55. The home furnishings retailer forecast annual earnings of $3.38 to $3.53 a share. That compares with the average analyst projection of $3.33, Bloomberg data show.

Costco Wholesale Corp. rose 3.8 percent to $77.82. The largest U.S. warehouse-club chain reported total comparable sales rose 13 percent in March, beating the 7.4 percent estimate.

Fewer Americans filed first-time claims for unemployment insurance last week. Applications for jobless benefits fell 10,000 in the week ended April 2 to 382,000, the fewest since Feb. 26, Labor Department figures showed. Economists projected claims would be little changed at 385,000, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls and those collecting extended payments decreased.

Consumer confidence in the U.S. rose for a second consecutive week as an improving job market helped ease the burden of higher fuel costs. The Bloomberg Consumer Comfort Index climbed to minus 44.5 in the period ended April 3 from minus 46.9 the prior week. A measure of Americans’ views of their own finances increased to the second-highest level since January 2010, while a gauge of perceptions of the economy advanced from a two-year low.

“The economy is certainly improving,” said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages about $3 billion in San Antonio. “There’s a glimmer of hope that the jobs market is getting better. The consumer seems to be back.

The two wild cards will be monetary and fiscal policies.”

 Have a wonderful evening everyone.

 Be magnificent!

                   The Upanishad tells us:  Know the soul that is your own.

In other words:  Realize the grand unique principle of the whole that is in all men.

 -Rabindranath Tagore, 1861-1901

As ever,

Carolann

I am not afraid of the pen, or the scaffold,

or the sword.  I will tell the truth wherever

I please.

             -Mother Jones, 1837-1930

 

Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President & Senior Investment Advisor