Month: May 2011

Dear Friends, Friday the thirteenth….Thirteen was regarded as an unlucky number even among the Romans, who held it as a sign of death and destruction.  The origin of the idea that sitting down thirteen at a table is unlucky is said to be that, at a banquet in Valhalla, Loki once intruded, making 13 guests and Balder was slain.  The superstition was confirmed in  Christian countries by the Last Supper of Christ and the 12 apostles.  In the Middle Ages, witch covens were believed always to have 13 members.   The 13^th of any month is widely regarded as an inauspicious day on which to undertake any new enterprise, and it is traditionally thought to be unlucky for a ship to begin a voyage on the 13^th.

In ancient Rome, Friday was called dies Veneris, day of Venus, hence the French Vendredi.  The northern nations adopted the same nomenclature and the nearest equivalent to Venus was Frigg or Freyja, hence Friday (old English frigedoeg).  Friday was regarded by the Norsemen as the luckiest day of the week when weddings took place, but among Christians it has been regarded as the unluckiest, because it was the day of the crucifixion.  Friday is the Sabbath for Muslims, who hold that Adam was created on a Friday and that it was on Friday that Adam and Eve ate the forbidden fruit and on Friday that they died.  It is also held unlucky among Buddhists and  Brahmans.

  In England, it is not unlucky to be born on this day since “Friday’s child is loving and giving.”

  -from Brewer’s Dictionary of Phrase & Fable

photos of the day 

May 13, 2011

The experimental aircraft Solar Impulse takes off for its first international flight to Brussels from the airbase in Payerne, Switzerland. The solar-powered plane has the wingspan of a Boeing 777.

Laurent Gillieron/Keystone/AP

A two-month-old leopard cub peers out of a cage at Suvarnabhumi airport in Bangkok. Thai police arrested a UAE citizen just after midnight as he was preparing to fly first class from Bangkok to Dubai with various rare and endangered animals in his suitcases including four leopards, a Malayan sun bear, a white-cheeked gibbon, a black-tufted marmoset, an Asiatic black bear and two macaque monkeys.

Damir Sagolj/Reuters

Market Commentary:

Canada

By Matt Walcoff

     May 13 (Bloomberg) — Canadian stocks fell for a fourth day, completing a weekly decline, as energy shares retreated after the U.S. dollar strengthened.

     Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, decreased 1.5 percent as the U.S. dollar rose against 15 of 16 other major currencies.

Manulife Financial Corp., North America’s fourth-largest insurer, lost 1.3 percent as a gauge of financial stocks retreated for a third day. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer, advanced 1.5 percent as corn futures advanced.

     The Standard & Poor’s/TSX Composite Index slipped 12.26 points, or 0.1 percent, to 13,377.16, extending its weekly drop to 1.4 percent.

     “Speculative money is being run out of the commodity markets,” said Gerry Brockelsby, a money manager at Marquest Asset Management Inc. in Toronto, which oversees C$250 million

($259 million).

     The S&P/TSX retreated for a third week for the first time since January 2010. The index decreased 4.2 percent from April 21 through yesterday as oil, copper and silver each plunged at least 10 percent. Energy and raw-materials companies make up 47 percent of Canadian stocks by market value, according to Bloomberg data.

     The U.S. dollar gained against the euro today after Reuters quoted European Central Bank President Jean-Claude Trichet as saying inflation was at a “peak.” The news service later corrected its story to say Trichet referred to a “hump” in inflation as he had in previous interviews.

     “The catalyst was the remarks that Trichet made this afternoon our time that suggested that growth was not going to be maybe what people had anticipated,” said Laura Wallace, senior manager for a team at Scotia Asset Management that oversees C$11 billion for private clients.

     Canadian Natural fell for a fifth day, sliding 1.5 percent to C$39.41. Canadian Oil Sands Ltd., the largest owner of the Syncrude project, dropped 1.8 percent to C$30.98.

     Petrominerales Ltd., which produces oil and gas in Colombia, slumped 3.9 percent to C$28.89 after Rafi Khouri, an analyst at Raymond James Financial Inc., cut his rating on the shares to “underperform” from “market perform.” In a note to clients, Khouri cited a decline in production.

     Shares of the Bogota- and Calgary-based company have retreated nine straight days.

     Canadian financial shares declined along with U.S. banks amid concern about Europe’s debt crisis.

     Manulife, the owner of John Hancock Financial Service Inc., lost 1.3 percent to C$17.25. Sun Life Financial Inc., Canada’s third-largest insurer, decreased 0.8 percent to C$30.18.

Brookfield Asset Management Inc., Canada’s biggest real-estate company, slipped 0.7 percent to C$31.28.

     Fertilizer producers climbed as corn futures rose on signs demand for U.S. exports is increasing. Potash Corp. gained 1.5 percent to C$49.92. Agrium Inc., Canada’s second-biggest fertilizer producer, advanced 2.2 percent from a seven-month low to C$78.

     Neo Material Technologies Inc., which makes rare-earth and zirconium products, sank 9.4 percent, the most since December 2008, to C$8.69 after saying it will sell $200 million in debt that can be converted into stock.

     Sino-Forest Corp., the largest Canada-based forestry company by market value, tumbled 6.3 percent, the most since June, to C$19.20. In a phone interview, Sino-Forest Chief Financial Officer Dave Horsley said the shares were dropping on speculation the company was late filing first-quarter financial results, which he said was not the case.

US

By Inyoung Hwang

     May 13 (Bloomberg) — U.S. stocks fell, erasing a weekly gain, as CA Inc. led technology shares lower after earnings missed estimates and banks slid amid concern about Europe’s debt crisis and closer government scrutiny.

     CA, the second-largest maker of software for mainframe computers, tumbled 8.6 percent for its biggest drop since 2009.

Nvidia Corp. dropped 11 percent after the company’s rating was cut at Needham & Co., which cited slower growth. Janus Capital Group Inc. lost 4.5 percent to lead financial companies to the biggest decline among 24 industries.

     The Standard & Poor’s 500 Index fell 0.8 percent to 1,337.77 at 4 p.m. in New York, leaving it down 0.2 percent on the week. The Dow Jones Industrial Average dropped 100.17 points, or 0.8 percent, to 12,595.75. Stocks extended losses as the Dollar Index rallied, gaining 0.7 percent.

     “You’re seeing liquidity drain off — people have had a good year so far and rather than get tagged for staying too long at the party, they’re exiting,” said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which manages $14.8 billion. “With all the liquidity out there needing a home, it’s a tug of war back and forth between inflation fear and a need to keep that money invested.”

     The S&P 500 fell 1.9 percent this month as gauges of energy and raw-material producers slumped with metal and oil prices.

The gauge has still climbed 6.4 percent this year as government stimulus measures and corporate earnings boosted confidence in the economic recovery.

     U.S. data today showed the cost of living climbed in April by 0.4 percent, led by gains in food and fuel prices. That follows a 0.5 percent gain in March.

     Consumer confidence climbed more than forecast in May, with the Thomson Reuters/University of Michigan preliminary consumer sentiment index rising to 72.4, a three-month high, from a final reading of 69.8 in April. The gauge was projected to rise to 70, according to the median forecast of 62 economists surveyed by Bloomberg News. Reports in Europe earlier showed Germany and France powered economic growth in the euro area in the first quarter as booming exports fueled domestic spending in the bloc’s core, offsetting sovereign debt concerns.

     The view that “the West is in trouble” is wrong when nations including Germany, Sweden and Canada are performing strongly, said Jim O’Neill, chairman of Goldman Sachs Asset Management, in a Bloomberg Television broadcast in Hong Kong.

Investors should “stop worrying so much.”

     Germany is waiting for the conclusion of a European and International Monetary Fund mission to Greece before making any decision on whether further steps may need to be taken to help the first victim of the debt crisis, a German government spokesman said.

     Germany, the European Commission and the IMF back an extension of maturities on Greek bonds because of the worsening deficit situation in Greece, Die Welt newspaper reported in an advance copy of an article in tomorrow’s edition, without saying where it got the information.

     “People are fearful that bad news will come out of Europe over the weekend,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion. “There’s general concern about weekend news that’s keeping a lid on the market.”                  

     Technology companies were the two worst-performing stocks in the S&P 500. Nvidia, the maker of three-dimensional graphics processors, sank 11 percent, the biggest slump in benchmark equity index to $18.26. The company had its rating cut to “hold” from “buy” at Needham & Co., which cited slower growth in its core graphics processing business and increased competition in the tablet computer and smartphone markets, among other things.

     CA erased 8.6 percent to $22.90 for the second-biggest retreat in the S&P 500. The software company posted fourth- quarter sales and profit that missed the average analyst estimates, Bloomberg data show.

     Yahoo! Inc. slumped 3.6 percent to $16.55, the lowest price since April 19. The owner of the largest U.S. Web portal said Alibaba Group Holding Ltd. spun off its Alipay online-payment business to a different company without the knowledge or consent of its board or shareholders.

     Financial stocks declined 1.5 percent, the biggest drop out of 10 groups in the S&P 500, as Republicans on the House Financial Services Committee advanced three bills today to reshape the Consumer Financial Protection Bureau.

     Janus Capital slumped 4.5 percent to $10.91. JPMorgan Chase & Co. slid 2.1 percent to $43.15.

     Republicans are pushing changes to the Dodd-Frank Act, the regulatory overhaul they targeted since taking control of the House in January. Republicans have proposed about a dozen bills to revise the new rules, which they were nearly unanimous in opposing when Dodd-Frank was passed in July.

     Goldman Sachs Group Inc. tumbled 3.5 percent yesterday, the most since January, after the bank was cut to “sell” from “neutral” by Richard Bove, an analyst with Rochdale Securities, who cited pressure on the Justice Department to file a criminal lawsuit against Goldman Sachs.                   

     Consumer-staple and health-care companies were the best performing groups in the benchmark equity index today.

    “The markets are going to struggle,” said Michael Vogelzang, chief investment officer at Boston Advisors LLC, which manages $1.8 billion. “The rotation internally has been away from risk and toward more stability. You’re starting to see staples and health-care outperformance — groups that have underperformed for a significant period of time.”

     JPMorgan’s strategy team, led by Thomas Lee, raised their recommendation for health care to “overweight” from “neutral,” citing improving fundamentals, stable regulatory risk and “attractive” valuations. Aetna Inc. rose 2.4 percent to $43.85, while Cigna Corp. added 1.3 percent to $48.69.

     UnitedHealth Group Inc. and WellPoint Inc. were named in the bank’s list of 18 “best ideas.”

Have a wonderful weekend everyone.

Be magnificent!

The human soul travels from the law to love,

from discipline to freedom,

from the moral plane to the spiritual plane.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

Destiny is carried out,

fate is suffered.

-J. Christopher Herold, 1919-1964

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

Senior Vice-President &

Senior Investment Advisor

Dear Friends,

I just returned from the Bloomberg Canada Economic Summit in Toronto where many of the country’s political and corporate leaders, including the Minister of Finance, James Flaherty, Barrick Gold Chairman Peter Munk, Magna founder Frank Stronach, among many others gave their views on a wide range of topics such as the future of the dollar, where commodity prices are heading, Canadian markets, global government debt ramifications etc., etc.  All in all, it was extremely informative and useful.  More on that topic later.…I’m sending this Newsletter late (Friday morning instead of Thursday night) because my flight got in last night and I bypassed stopping at the office to get this out, truth be told.

May 12^th is Limerick Day, it being the birthday of one of its champions, Edward Lear.  The limerick, which dates from the early 18^th century, has been described as the “only fixed verse form indigenous to the English language.”  It gained its greatest popularity following the publication of Edward Lear’s Book of Nonsense.

There was an Old Man of the coast,

Who placidly sat on a post;

But when it was cold

He relinquished his hold

And called for some hot buttered toast.

photos of the day 

May 12, 2011

Actress Diane Kruger walks the red carpet before the screening of the film ‘Sleeping Beauty,’ at the 64th Cannes Film Festival in France. Twenty films are competing in the May 11 to 22 cinema showcase.

Eric Gaillard/Reuters

A child wears a scarf during a sandstorm in Harbin, Heilongjiang province, China.

China Daily/Reuters

Jessi Miley-Dyer of Australia competes in the women’s Association of Surfing Professionals Billabong Rio Pro championship at Barra da Tijuca beach in Rio de Janeiro.

Sergio Moraes/Reuters

Market Commentary:

Canada

By Matt Walcoff

     May 12 (Bloomberg) — Canadian stocks fell for a third day, led by raw-materials producers, as China raised banks’ reserve requirement for the fifth time this year and wheat futures declined.

     Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, dropped 2.1 percent a day after the U.S. Agriculture Department forecast higher supplies than most analysts had estimated. Eastern Platinum Ltd., which mines in South Africa, plunged 13 percent after saying striking workers sabotaged equipment. BCE Inc., Canada’s largest phone company, rose 2.6 percent after beating analysts’ average profit estimate.

     The Standard & Poor’s/TSX Composite Index fell 30.32 points, or 0.2 percent, to 13,389.42.

     “Some disappointing economic data, coupled with commodity volatility, has essentially created some risk aversion,” said Youssef Zohny, a money manager at Van Arbor Asset Management Ltd. in Vancouver, which oversees C$50 million ($52 million).

     The S&P/TSX dropped 4.9 percent this quarter through yesterday after surging 62 percent in the prior two years. Gold has declined from a record and oil from a 31-month high this month as the U.S. Dollar Index has rebounded after five months of losses. The U.S. currency gained on speculation the European Central Bank will be slower than previously forecast to raise interest rates and that Greece may need to restructure its debt.

     China’s central bank raised reserve requirements to a record 21 percent, effective May 18. The U.S. today reported more initial jobless claims from last week than most economists in a Bloomberg survey had forecast.

     Thirty percent of investors in a Bloomberg Global Poll released today said they intend to reduce commodity holdings.

     Fertilizer producers dropped as wheat declined. Potash Corp. lost 2.1 percent to C$49.17. Agrium Inc., Canada’s second- largest fertilizer producer, slumped 2.4 percent to seven-month low of C$76.31.

     Uranium producers retreated as nuclear regulators met in Europe and the U.S. to discuss power-plant safety. Cameco Corp., the world’s largest producer of the nuclear fuel, decreased 4.9 percent to C$25.37, the lowest price since August. Uranium One Inc., a producer controlled by Moscow-based ARMZ uranium holding, fell 7.6 percent to C$3.65.

     Silver fell 2 percent, extending its monthly tumble to 28 percent. Gold dropped in electronic trading.

     Barrick Gold Corp., the world’s largest gold producer, slipped 0.9 percent to a nine-month low of C$43.44. Eldorado Gold Corp., which mines in China and Turkey, retreated 1.5 percent to C$14.72.

     Sherritt International Corp., which produces coal and industrial metals, rallied 6.1 percent from an eight-month low to C$7.49 as base metals advanced.

     Eastplats plunged 13 percent to 90 Canadian cents, the lowest closing price since July. The company said it has suspended operations at its Crocodile River Mine after members of the National Union of Mineworkers damaged electrical, pumping and ventilation systems.

     Lesiba Seshoka, a National Union of Mineworkers spokeswoman, said by phone that the union is unaware of any property damage at the mine.

     Tim Hortons Inc., Canada’s largest fast-food chain, dropped 4.5 percent, the most since November 2008, to C$45.70 after its first quarter profit trailed the average of 12 analyst estimates by 6.4 percent, excluding certain items.                         

     Finning International Inc., BCE and Linamar Corp. rallied after their earnings beat their average analyst estimates.

     Finning, which says it is the world’s largest Caterpillar dealer, soared 8.5 percent to C$28.08, ending a seven-day streak of losses. BCE, Canada’s biggest phone company, increased 2.6 percent to a 29-month high of C$37.89 after raising its 2011 profit forecast. Linamar, the country’s second-largest auto- parts maker, climbed 5.9 percent to C$21.71.

     Nevsun Resources Ltd., which mines precious and base metals in Africa, rallied 8.3 percent to C$5.36 after Rahul Paul, an analyst at Canaccord Financial Inc., raised his rating on the shares to “speculative buy” from “hold.” In a note to clients, Paul said Nevsun’s first-quarter financial results “demonstrate a smooth ramp-up” of its Bisha mine.

US

By Michael P. Regan and Rita Nazareth

     May 12 (Bloomberg) — U.S. stocks rose and commodities erased losses, while the Dollar Index retreated, as riskier assets recovered from an early slump amid speculation that recent declines were excessive. Treasuries slid after an auction of 30-year bonds drew the weakest demand in six months.

     The Standard & Poor’s 500 Index advanced 0.5 percent to 1,348.65 at 4 p.m. in New York after slumping as much as 0.8 percent. The S&P GSCI Index of commodities climbed less than 0.1 percent after tumbling as much as 2.3 percent. Sugar, hogs and soybeans led gains and oil rose 0.8 percent to $98.97 a barrel.

The Dollar Index, which tracks the currency versus six major peers, lost 0.2 percent to reverse an early gain. Yields on 30- year Treasuries rose four basis points to 4.35 percent.

     Declines in energy and raw material prices yesterday and early today threatened to wipe out a two-day rebound in the S&P GSCI Index from last week’s 11 percent slump, its worst since 2008. Shares of oil and mining companies dragged the S&P 500 last week to its biggest drop since March. Steven A. Cohen, the billionaire founder of hedge fund SAC Capital Advisors LP, said the sell-off in commodity markets makes this a good time to buy stock in energy companies.

     “We’re seeing a reversal of the trend of commodities taking a hit as the dollar rises,” said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages about $3 billion in San Antonio. “There was nothing fundamental about what happened over the last few days. It was just a reversal of a trend. The economic recovery is in place and there will be demand for commodities and riskier assets.”

     The U.S. Oil Fund and Market Vectors Agribusiness ETF attracted more money than any other U.S. exchange-traded fund in the past week following the biggest retreat in commodity prices in more than two years.

     The ETF that tracks the price of oil drew $514.4 million in the past week, according to data from New York-based research firm XTF Inc. The agriculture fund, which tracks the share prices of 46 companies such as Deere & Co. and Syngenta AG, got $500.9 million, the data show.

     Investors “are not yet willing to give up on the weak dollar and inflation trade,” said Nicholas Colas, the New York- based chief market strategist at BNY ConvergEx Group LLC. “They are cycling into agriculture and energy-oriented investments, even though the price action is choppy.”                     

     Energy is “an interesting sector,” SAC’s Cohen said yesterday at the SALT, or SkyBridge Alternatives, Conference in Las Vegas. “I think that energy stocks are discounting oil prices much lower than where we are trading today.”

     The S&P GSCI commodity gauge had rallied 20 percent and the S&P 500 had risen 8.4 percent before last week’s rout. Earlier losses in stocks today came after China moved to curb lending and Cisco Systems Inc. forecast earnings that trailed analysts’ estimates.

     International Business Machines Corp., Merck & Co. and Coca-Cola Co. climbed at least 1.5 percent to lead gains in 21 of 30 stocks in the Dow Jones Industrial Average today.

     Freeport-McMoRan Copper & Gold Inc. and Schlumberger Ltd. rose, reversing declines. Symantec Corp., the world’s biggest maker of security software, climbed 5.2 percent after forecasting higher revenue than analysts estimated. Tyson Foods Inc. added 4.6 percent after the biggest U.S. meat processor announced a stock buyback.

     Goldman Sachs Group Inc. declined the most since January, losing 3.5 percent. Richard X. Bove, analyst at Rochdale Securities LLC, told investors to sell the stock on concern that the Department of Justice faces growing pressure to bring claims against the firm.

     Treasuries extended losses after the government’s $16 billion sale of 30-year bonds. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount offered, was 2.43, the least since November and down from an average of 2.7 at the past 10 sales. The bonds drew a yield of 4.38 percent, compared with an average forecast of 4.343 percent in a Bloomberg News survey of eight of the Federal Reserve’s 20 primary dealers. The sale was the final of three auctions this week totaling $72 billion.

     In economic data, the Labor Department said jobless claims fell to 434,000 in the week ended May 7, compared with 430,000 claims forecast in a Bloomberg survey. Other reports showed the producer price index increased 0.8 percent, more than estimated, while retail sales increased 0.5 percent, the slowest pace since July.

     The Stoxx Europe 600 Index slid 0.7 percent, the biggest drop in a week. Losses were led by energy and basic-resources companies, with European exchanges closing before the rebound in commodities.                   

     The MSCI Emerging Markets Index fell 1.5 percent, heading for the lowest close since March 29. China’s Shanghai Composite Index retreated for a second day, losing 1.4 percent. South Korea’s Kospi Index sank 2 percent, the biggest drop since March 15. Russia’s Micex Index lost 1.5 percent.

     Global investors have tempered their optimism about the U.S. and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey found.

     Almost one in three of those questioned say they will hold more cash, while 30 percent intend to reduce investments in commodities, according to a quarterly Bloomberg Global Poll of 1,263 investors, analysts and traders who are Bloomberg subscribers. Both results were the highest since the survey began asking the question last June.

     A plurality — 40 percent — expects oil prices to fall in the next six months, the first time respondents felt that way since the inception of this poll in July 2009.

     Most global investors predict China’s yuan will be convertible into other currencies by 2016, with 50 percent seeing it joining the dollar, yen and euro as a reserve currency within a decade, the Bloomberg poll indicated.

Have a wonderful day everyone.

Be magnificent!

Nature’s law dictates that, in order to survive, bees must work together

As a result, they instinctively possess a sense of social responsibility.

They have no constitution, no law, no police, no religion or moral training but,

because of their nature, the whole colony survives.

We human beings have a constitution, laws and a police force.

We have religion, remarkable intelligence, and hearts with a great capacity to love.

We have many extraordinary qualities but, in actual practice,

I think we are behind those small insects.

In some ways, I feel that we are poorer than the bees.

-His Holiness, the XIVth Dalai Lama

As ever,

 Carolann

 The dictionary is the only place

that success comes before work. 

Hard work is the price we must pay

for success.  I think you can

accomplish anything if you’re

willing to pay the price.

        -Vince Lombardi, 1913-1970

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

Senior Vice-President &

Senior Investment Advisor

Dear Friends,

There is always music amongst the trees in the garden, but our hearts must be still to hear it.

 

 

Space photos of the day: Spitzer Space Telescop

This new view of the North America nebula obtained on Feb. 16 combines both visible and infrared light observations, taken by the Digitized Sky Survey and NASA’s Spitzer Space Telescope, respectively, into a single vivid picture. The nebula is named after its resemblance to the North American continent in visible light, which in this image is represented in blue.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actress Melanie Laurent poses during a photo call in Cannes, France. Laurent will be the master of ceremonies for the opening ceremony of the 64th Cannes Film Festival which runs from May 11 to 22nd

Market Commentary:

Canada

By Matt Walcoff

Canada’s dollar snapped three days of gains against the greenback as crude oil slid after a report showed U.S. inventories rose to a two-year high and stocks fell, sapping demand for higher-yielding assets.

The loonie, as the Canadian dollar is also known for the image of the aquatic bird on the C$1 coin, weakened a day after Finance MinisterJim Flaherty said the government wants to avoid extreme currency fluctuations. Two-year government bonds rose after an auction of the debt.

“The primary driver for the decline in the Canadian dollar is the midmorning selloff in oil,” said George Davis, Toronto- based chief technical analyst for fixed-income and currency strategy at Royal Bank of Canada. “That points to a risk-off environment, which tends to be negative for the Canadian dollar.”

The loonie depreciated 0.5 percent to 96.19 cents versus the greenback at 5 p.m. in Toronto, from 95.68 cents yesterday. One Canadian dollar buys $1.0396. The currency touched 94.46 cents on April 29, the strongest level since November 2007.

Crude oil for June delivery fell 5.1 percent to $98.60 a barrel. The Standard & Poor’s 500 Index slid 1.1 percent. The S&P/TSX Composite Index dropped 1.6 percent.

Supplies of crude in America, Canada’s biggest trading partner, jumped by 3.78 million barrels to 370.3 million in the week ended May 6, the U.S. Energy Department said. The median forecast of 16 analysts in a Bloomberg News survey was for inventories to climb by 1.5 million barrels. The increase puts supplies at the highest level since May 8, 2009.

Loonie Versus Euro

The loonie advanced 1 percent to C$1.3652 against the euro on speculation Greece may restructure its debt while Canada’s economy grows stronger. The Canadian currency touched C$1.3636, the strongest level since April 1.

“In the context of trouble in the euro region, we’re seeing flows into Canada,” said Rahim Madhavji, president at Knightsbridge Foreign Exchange Inc. in Toronto. “Canada has what everyone wants. It has a sound and growing economy and fiscal prudence.”

Canadian employers added a net 58,300 jobs in April after a decrease of 1,500 in the previous month, Statistics Canada reported last week. The median forecast of 25 economists in a Bloomberg News survey was for an increase of 20,000. The jobless rate unexpectedly dropped to 7.6 percent.

The nation reported a fourth straight trade surplus in March, the longest stretch since November 2008 and a sign that exporters are recovering from the global recession.

Trade Surplus

The surplus widened to C$627 million ($658 million), Statistics Canada said today, larger than the C$400 million median forecast in a Bloomberg survey of 21 economists. The agency also raised the combined total surplus for the prior two months by C$1.33 billion.

The Conservative Party will use its election victory last week to ensure the nation erases its budget deficit in three years, Flaherty said yesterday at the Bloomberg Canada Economic Summit in Toronto.

While Flaherty said a strengthening currency is a reflection of confidence in the Canadian economy, he added that the government wants to avoid “jerky” movements in the Canadian dollar and said the government wouldn’t intervene in currency markets without an extreme cause. Flaherty also said he doesn’t want to see increasing “weakness” in the U.S. dollar.

A gain today in two-year Canadian government bonds pushed the yield down three basis points, or 0.03 percentage point, to 1.69 percent. The price of the 1.75 percent security maturing in March 2013 increased 5 cents to C$100.10.

Canada sold C$3.5 billion ($3.7 billion) of two-year debt, drawing an average yield of 1.873 percent. The government received bids of C$8.8 billion for the 2 percent securities maturing in August 2013, according to a statement on the Bank of Canada’s website.

Canadian Finance Minister Jim Flaherty said his governing Conservative Party will use its decisive election victory last week to ensure the nation erases its budget deficit in three years.

Speaking at the Bloomberg Canada Economic Summit, Flaherty said the Conservatives will introduce a budget next month that will forecast a balance by 2014, even as the country moves ahead with planned corporate income tax cuts to help sustain the expansion.

“We have a majority government in Canada now,” Flaherty said late yesterday in Toronto. “Businesses can rest assured we will stay on track.”

Prime Minister Stephen Harper won a majority of seats in Parliament for the first time on May 2, giving him a mandate to bolster the economic recovery with additional tax cuts and erase the deficit with curbs on government spending.

The Conservatives’ election victory ended seven years of minority governments that have fueled government spending, and put the party in control of the federal agenda for the first time since the early 1990s.

Harper pledged to balance Canada’s budget with a review of government spending to find C$4 billion ($4.3 billion) in annual savings. TheConservative platform, which commits to reintroduce measures from the 2011 fiscal plan that wasn’t passed before the election was called, projects a C$2.8 billion surplus in the fiscal year that begins April 2014.

Re-introduce Budget

The government will re-introduce the budget that was rejected by opposition parties before the May 2 election, with some minor adjustments, Flaherty said yesterday.

Flaherty spoke a week after investors knocked $99 billion off the value of commodities, products that are among Canada’s biggest exports. The Bloomberg Canada Economic Summit featured 11 panels including Frank Stronach, the founder of Aurora, Ontario-based Magna International Inc. (MG), Peter Munk, chairman of Toronto based Barrick Gold Corp., and Donald Guloien, CEO of Toronto-based Manulife Financial Corp. (MFC)

Goldcorp Inc. Chairman Ian Telfer said at the summit he expects commodity prices to rise this year. He said he is “bullish” on the price of gold, which he said will reach $2,000 per ounce by the end of 2011. He also predicted copper averaging $4 to $4.50 per pound and uranium around $65 to $70 per pound over the same period. His Vancouver-based company is the world’s second-largest producer of gold.

Canada is the only G-7 economy that is a major exporter of commodities.

Not Draconian

Eliminating the budget deficit is a priority and Canada won’t make “draconian” moves to reduce it, Flaherty said separately in a Bloomberg Television interview, adding he wanted to ensure sustainable economic growth that he estimated at about a 3 percent annual rate this year and next. Other Group of Seven countries must also deal with their deficits and debt, he said in the interview.

Flaherty has been finance minister since 2006 without the government holding a majority, meaning he’s had to rely on support from opposition lawmakers to pass laws. Under Flaherty, program expenditures have increased by 40 percent to C$245 billion as he sought to placate opposition parties and win favor with voters.

“One of the realities of minority governments is you have to run two tracks at the same time,” Flaherty said referring to the need to formulate policy while ensuring at the same time the government can retain power.

“It makes planning very difficult,” he said.

Income Splitting

The Conservative government’s most expensive pledge during the campaign was a measure that would let families with children under 18 split up to C$50,000 in income for tax purposes. It would come into effect in 2014 and cost C$4 billion through March 2016.

The Conservative platform also budgets C$2.2 billion in compensation to Quebec for harmonizing its sales tax with the federal government. There is also new funding for the Canadian Coast Guard, crime legislation, fishing and agriculture.

The Conservative platform projects a 2011-12 deficit of C$30.3 billion, C$20.1 billion in 2012-13, and C$7.7 billion in 2013-14. The federal government’s fiscal year begins April 1.

While Flaherty said a strengthening currency is a reflection of confidence in the Canadian economy, he added the government wants to avoid “jerky” movements in the Canadian dollar, and said the government wouldn’t intervene in currency markets without an extreme cause. Flaherty also said he doesn’t want to see increasing “weakness” in the U.S. currency. The Canadian government has proposed legislation for the country’s covered bond market to increase disclosure for investors while setting minimum standards in the C$30 billion ($31 billion) market.

The proposals include a framework for bond issuance and establishing an agency that would oversee the rules, the Department of Finance said today in a discussion paper on its website. The Canadian government pledged to set up legislation governing the covered bond market in its 2010 budget.

The government is proposing that borrowers set up a separate special purpose vehicle to hold the assets that back the covered bonds. The assets would be sold by the issuing company to the separate entity, according to the proposed legislation.

Canadian banks have issued more than C$30 billion in covered bonds since 2007, tapping a market that dates back 230 years in Europe. In comparison, the outstanding stock of Canada Mortgage Bonds is about C$170 billion.

Comments on Canada’s proposals should be received by June 10, the finance department said.

Covered bonds are typically backed by mortgages or public- sector loans and the collateral underlying the debt remains with the borrower, which also guarantees the debt.

US

By Rita Nazareth – May 11, 2011 1:57 PM PT

U.S. stocks slumped, giving the Standard & Poor’s 500 Index its biggest decline since March, as commodities tumbled amid a strengthening dollar and concern that accelerating global inflation may curb economic growth.

Freeport-McMoRan Copper & Gold Inc. (FCX) and Halliburton Co. (HAL) fell at least 4 percent as data from China raised expectations about higher interest rates. Yahoo! Inc. dropped 7.3 percent on concern that its stake in a Chinese Internet business may lose value after a transfer of ownership in the company’s online payment business. Walt Disney Co. (DIS), the biggest theme-park operator, slumped 5.4 percent after profit missed estimates.

The S&P 500 dropped 1.1 percent to 1,342.08 at 4 p.m. in New York, snapping a three-day rally. The Dow Jones Industrial Average slid 130.33 points, or 1 percent, to 12,630.03. Oil fell below $100 as a report showed that U.S. supplies surged.

“Inflation seems to be rearing its ugly head,” said Cliff Remily, a money manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees $80 billion. “Some countries are raising interest rates as a way to combat inflation. That’s putting pressure on stocks. We’ve got a lot of the consumer staples. These are the companies you want to be in this kind of environment. We’ve avoided materials.”

The S&P 500 has fallen 1.6 percent this month, as gauges of energy and raw-materials producers have slumped at least 4.3 percent. Indexes of companies less-tied to economic growth, including utilities, health care, consumer staples and phone, outperformed the benchmark. The S&P 500 is still up 6.7 percent this year amid government stimulus measures and higher-than- estimated corporate profits.

Inflation in China

Global stocks and commodities prices fell as figures showed inflation in China stayed above the government’s target, stoking concern about further monetary tightening that may curb demand. Chinese inflation remained higher than 5 percent in April and lending exceeded analysts’ estimates.

The pound rose as Bank of England Governor Mervyn King said inflation remains “uncomfortably high” and officials signaled they may raise rates later this year. Reports showed growth in prices in Germany topped estimates and Poland unexpectedly increased its benchmark rate.

“Governments around the world will be a little less accommodative,” said Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York. “People are concerned that we may see slower growth because of that. In addition, we’re seeing some unwinding of that trade of people buying commodities and the euro, while selling the dollar.”

Euro Slides

The euro slipped against the majority of its most-traded peers on speculation European leaders are slowing the drive to grant Greece additional aid, fueling concern the nation may be forced to restructure its debt. German Chancellor Angela Merkel said yesterday that Greece needs to stay the course on budget cuts to deserve an extension of the 110 billion-euro ($158 billion) lifeline granted last year.

The MSCI All-Country World Index of shares in 45 nations fell 0.6 percent. The Thomson Reuters/Jefferies CRB Index of commodities slumped 3 percent.

Energy and raw-material producers had the biggest declines within 10 S&P 500 groups, falling at least 2.7 percent. Freeport, the world’s largest publicly traded copper producer, dropped 5.6 percent to $48.27. Halliburton, the second-largest oilfield services provider, fell 4.1 percent to $46.43.

CME Suspends Trading

CME Group Inc. (CME) suspended trading of gasoline, crude and heating oil on the Nymex for five minutes starting at 12:06 p.m., said Laurie Bischel, a spokeswoman for the exchange in Chicago. Trading was stopped after June-delivery gasoline fell 25 cents, the daily limit. Limits were widened to 50 cents a gallon for gasoline and heating oil and $20 a barrel for crude.

Equities also fell after the U.S. trade deficit widened more than forecast in March as the highest oil prices in more than two years boosted imports, eclipsing record exports. The trade gap rose 6 percent to $48.2 billion, the biggest since June, from $45.4 billion in February, the Commerce Department reported. The median forecast of 72 economists surveyed by Bloomberg News projected it would widen to $47 billion. Sales abroad climbed by the most in 17 years.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, jumped 6.5 percent to 16.95.

‘Lighten Up’

“Lighten up on risk-taking now and don’t wait for October 1 as previously recommended,” Jeremy Grantham, the chief investment strategist for Boston-based Grantham, Mayo, Van Otterloo & Co., which manages more than $108 billion, wrote in a report today. The S&P 500 “may still get to 1,500 before October, but I doubt it, especially without a QE3,” he wrote. “And whether it will reach 1,500 or not, the environment has simply become too risky.”

The S&P 500 has rallied 26 percent since Fed Chairman Ben S. Bernanke suggested on Aug. 27 that he would pursue a second round of asset purchases to stimulate the economy, a tactic known as quantitative easing.

Yahoo fell 7.3 percent to $17.20. The payment business of Alibaba Group Holding Ltd., which is partly owned by Yahoo, was restructured so that a different company now holds 100 percent of its outstanding shares.

The transfer may diminish the value of Yahoo’s holding in Alibaba, Jordan Rohan, an analyst at Stifel Nicolaus & Co. in New York, wrote in a research note. In a worst-case scenario, profit from the payment business could be diverted to the new entity, away from Alibaba Group, he wrote.

Park Shortfall

Walt Disney declined 5.4 percent, the most in the Dow, to $41.52. The world’s biggest theme-park operator reported less second-quarter profit than analysts estimated as a shrinking box-office, a park shortfall and the Japanese tsunami overshadowed gains in TV.

Macy’s Inc. (M) jumped 7.7 percent to $28.36. The retailer reported first-quarter earnings that exceeded analysts’ estimates and increased its annual profit forecast as sales accelerated faster than expected.

Intel Corp. (INTC) gained 1.7 percent to $23.41. The world’s largest chipmaker raised its dividend for the second time in six months as increasing corporate spending on technology boosts its earnings. The quarterly payout rises 16 percent to 21 cents a share. On Nov. 12, it raised the dividend to about 18 cents.

Deutsche Bank AG’s Bankim Chadha boosted his profit estimates for companies in the S&P 500 for 2011 and 2012, citing first-quarter profit margins and sales that have beaten estimates. Combined earnings by stocks in the benchmark gauge this year will be $99 a share, up from an earlier forecast of $96, Chadha wrote in a note dated yesterday. Profit in 2012 will be $106 a share, a $4 increase from his previous prediction.

Earnings-per-share have beaten analyst estimates at 72 percent of the 425 companies in the S&P 500 that reported results since April 11.

Be magnificent!

Warm Regards,

Summer for Carolann

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

Senior Vice-President &

Senior Investment Advisor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dear Friends,  the flowers are blooming…and another day has come upon us.

Space photos of the day: Looking deeper 

NASA’s Moon Mineralogy Mapper, an instrument on the Indian Space Research Organization’s Chandrayaan-1 mission, took this image of Earth’s moon. It is a three-color composite of reflected near-infrared radiation from the sun, and illustrates the extent to which different materials are mapped across the side of the moon that faces Earth. Small amounts of water were detected on the surface of the moon at various locations. This image illustrates their distribution at high latitudes toward the poles.

Bring sunshine into your spring shade garden with Hylomecon japonica, a small perennial woodland plant that will bode well in our climate.

 

 

 

 

 

 

 

 

 

 

 

 

Market Commentary:

Canada

By Matt Walcoff

Canada’s economy is seen by economists as able to withstand any weakness in commodity prices as it taps strengths that include political stability and the best fiscal outlook of any Group of Seven country.

Prime Minister Stephen Harper’s election victory last week allows him to move ahead with his deficit-cutting plans, and provide certainty in policy making that will help support Canada’s currency, said David Rosenberg, chief economist at Gluskin Sheff + Associates in Toronto.

“Canada as an attractive place to invest transcends the commodity story and a lot of that has to do with political stability and fiscal integrity,” Rosenberg said in a telephone interview, adding “the long-term trend line” for commodities “is still pointing up.”

Jim Flaherty, Harper’s finance minister, will speak today at the Bloomberg Canada Economic Summit in Toronto, in his first major remarks following an election that came the same week investors knocked $99 billion off the value of commodities. Other speakers include Frank Stronach, the founder of Aurora, Ontario-based Magna International Inc., Peter Munk, chairman of Toronto-based Barrick Gold Corp. (ABX), and Donald Guloien, CEO of Toronto-based Manulife Financial Corp. (MFC)

The Bloomberg Canada Economic Summit will feature 11 panels with topics ranging from the outlook for Canadian equities, to the global influence of Canada’s banks, to the climate for foreign investment.

Major Commodity Exporter

The Standard & Poor’s GSCI Index of 24 raw materials fell 11 percent last week, the most since December 2008, as slower growth in U.S. services and fewer German manufacturing orders stoked concern the economic recovery is faltering. The index rose as much as 2.8 percent yesterday after Goldman Sachs Group Inc. said commodities may recover.

Canada is the only G-7 economy that is a major exporter of commodities. Canada is the biggest foreign supplier of oil to the U.S., and as recently as January was supplying the country with twice what Saudi Arabia does.

“Commodities have cooled off but I don’t necessarily see that this is a horrible thing long-term,” said Stephen Lingard, senior vice president of Franklin Templeton Multi-Asset Strategies in Toronto, which oversees about C$8.3 billion ($8.6 billion) in assets. “Even producers don’t want to see oil at $130, $140 or $150 a barrel because it will begin to weigh on some of these big export markets from a demand scenario.”

Canadian Dollar

Since May 2, Canada’s dollar has gained 2 percent against the euro, while declining against the U.S. dollar like most other major currencies. The currency appreciated 0.1 percent to 96.08 cents versus the U.S. dollar at 10:51 a.m. in Toronto, from 96.18 cents yesterday. One Canadian dollar buys $1.0480. “If we get down close to par on the Canadian dollar I think it’s going to become a screaming buy” in the longer term, Rosenberg said.

The victory by Harper, 52, came three weeks after the International Monetary Fund predicted the world’s 10th largest economy will expand 2.8 percent this year, while inflation will end the year near the Bank of Canada’s 2 percent target. An average unemployment rate of 7.6 percent will be bettered only by Japan and Germany in 2011. Canada’s net debt, a measure of indebtedness that takes into account the value of assets such as government pension funds, is the lowest in the G-7 and half the level in the U.S.

Political Certainty

Certainty in policy making sets Canada apart from other major industrialized countries, Rosenberg said. The U.K. and Germany are run by coalition governments, French President Nicolas Sarkozy and Japan’s Prime Minister Naoto Kan have become unpopular with their electorates, while in the U.S., Democratic President Barack Obama must negotiate with a Republican-run House of Representatives.

“Canada is viewed as a bastion of political stability,” Rosenberg said.

Harper’s Conservatives won 167 districts, above the 155 needed to take control of the 308-seat legislature.

“You can do away with some of that uncertainty with respect to Canadians being sent back to the polls on a fairly regular basis, so we have a better outlook for fiscal spending from this side,” said David Tulk, Chief Macro Strategist at TD Securities in Toronto. Canada’s fiscal health is “night and day” compared with the “situation to the U.S. and many other developed markets.”

Weathering Recession

Canada weathered the financial crisis better than the rest of the G-7 even as pressures from abroad tipped it into recession and sent its jobless rate to a four-year high of 8.7 percent in August 2009. Toronto-based Royal Bank of Canada and the country’s other 20 banks received no public money during the credit turmoil, and the country’s financial regulations have inspired regulatory overhauls elsewhere.

Harper pledged during the campaign a review of government spending to find C$4 billion in annual savings, which would be used to balance the budget in three years and finance election promises. Control of the legislature may make it easier for him to move ahead with spending curbs, said Mark Chandler, head of Canadian currency and rates strategy at Royal Bank of Canada’s RBC Capital Markets in Toronto.

“I suspect the end game for this is to try to get down the deficit a little bit quicker,” Chandler said in a May 3 telephone interview. “You probably have more scope to do that under a majority government.”

Harper has been in power since 2006 without holding a majority, meaning he’s had to rely on support from opposition lawmakers to pass laws. Under Harper, program expenditures have increased by 40 percent to C$245 billion as the Conservative leader sought to placate opposition parties and win favor with voters.

The Conservative platform, which commits to reintroduce measures from the 2011 fiscal plan that wasn’t passed before the election was called, projects a C$2.8 billion surplus in the fiscal year that begins April 2014.

US

Mexican President Felipe Calderon said he’s “very comfortable” with the peso’s strength and inflation remains under control even as the economy grows faster this year than the government previously expected.

Calderon, in an interview, said a 6.7 percent rally in the currency this year is a “natural phenomenon” stemming from near-zero interest rates in the U.S. Stress tests performed by the nation’s banks indicate Mexico will be able to withstand any “hard movements” in global capital flows if rates in the U.S. rise or the European Union’s debt crisis expands, he said.

“If you analyze the beginning of the crisis until now Mexico’s peso is probably the currency that has appreciated the least,” Calderon said in an interview at Bloomberg’s headquarters in New York. “I feel very comfortable.”

Even as growth in Latin America’s second-biggest economy accelerates, policy makers have bucked a regional trend of rising interest rates and kept borrowing costs at a record-low 4.5 percent for more than a year. Inflation in April quickened to 3.36 percent, nearly half the 6.51 percent rate in Brazil.

The peso extended gains and rose 0.4 percent to 11.5621 per dollar at 3:08 p.m. New York time. The Mexican currency gained 6.7 percent this year to date, matching the gains by the Colombian peso, the best performer among seven Latin American currencies tracked by Bloomberg.

Calderon said that Mexican economic growth quickened to more than 5 percent in the first quarter from 4.6 percent in the fourth, and stands to gain considerably from an even mild recovery in the U.S. The Mexican president said manufacturing, especially of automobiles, jumped 50 percent last year as a result of stronger exports to the U.S., which buys 80 percent of the country’s sales abroad.

U.S. Demand

“The demand in the United States looks to me like it’s starting to recover — not enough, and my perception is that the American economy will suffer,” said Calderon. “However, even with a very small growth in the demand sector, it will be very positive for us.”

Mexico’s economy should grow 4.3 percent this year, more than a previous government estimate of 3.9 percent, Calderon said. The International Monetary Fund and private economists expect gross domestic product to expand by as much as 5 percent in 2011, he said. Mexico’s GDP grew 5.5 percent in 2010.

Calderon said he’s fighting monopolies and seeking to open the oil industry to more private investment to improve Mexico’s competitiveness. Antitrust legislation he signed yesterday aims to end “monopolistic behavior” by big companies including ones in the telecommunications industry owned by billionaire Carlos Slim, the Mexican president said.

Slim

While many of Slim’s companies follow “good practices” there are “big enterprises” in Mexico, including in telecommunications, that need to be better regulated for anti- competitive behavior, Calderon said.

“I really respect Carlos Slim, or any other Mexican enterprise,” he said. “But at the same time, I am the authority and I need to regulate the market in order to avoid monopolistic practices.”

In addition to tougher legislation, the Supreme Court ruled this month that Slim’s wireless carrier and biggest company by market value, America Movil SAB, can’t use injunctions to stave off cuts in the fees it charges competing carriers to connect calls. The ruling may let rivals reduce prices for consumers.

Calderon said he would consider selling shares in state- owned oil producer Petroleos Mexicanos as part of a bill he plans to submit to “modernize” the company and arrest six years of declining production.

Petrobras, Statoil Models

New legislation Calderon plans to present to Congress which convenes in September would seek to remake Pemex along the lines of Brazil’s Petroleo Brasileiro SA (PETR4) or Norway’s Statoil ASA (STL), he said.

“That could be an alternative,” said Calderon, when asked about a possible share sale for Pemex, in the Bloomberg Television interview.

Pemex, Latin America’s largest oil producer, is offering foreign oil companies performance-based contracts as it seeks technologies to extract oil from mature fields and stem six straight years of declines.

“My plan is to try another legal reform in order to modernize Pemex in a way similar to what Petrobras did 10 years ago,” said Calderon, a former energy minister. “It’s going to be difficult, but I think we are moving the perception of public opinion of how important it is to modernize the enterprise.”

Be magnificent! 

Warm Regards,

Summer for Carolann

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

Senior Vice-President &

Senior Investment Advisor

Dear Friends,  I saw an amazing film at the UVic cinema on Saturday night.  It is director Xavier Beauvois’s 2010 film Of Gods and Men which is the true story of a group of French Trappist monks living in a remote village in the Algerian mountains in the 1990’s.  The story is haunting and the music is mesmerizing.  It is truly an unforgettable film so do try to see it sometime.

From The Globe & Mail:  “Last month, the Boston Globe reports, Britain’s Astronomer Royal  Sir Martin Rees told a gathering at The Royal Institution of Great Britain: ‘Our sun formed 4.5 billion years ago, but it’s got six billion more before the fuel runs out.  It won’t be humans who witness the sun’s demise.  It will be entities as different from us as we are from a bug.’”

Jay Leno

Prince William and Kate Middleton are now planning their honeymoon.  They say they want to go somewhere where they can have complete privacy and be assured that no one in the country would give away their location.  So I think they’re going to Pakistan.

David Letterman

Well, the Republicans were so pleased by the Osama bin Laden raid that today, they granted President Obama full citizenship.

Jimmy Fallon

President Obama is going to host a poetry night at the White House next week.  Obama will recite some Yeats, Hillary will recite some Frost, and Biden will recite some Seuss.

 Today’s Lyrics

With your kiss my life begins,

You’re spring to me, all things to me,

Don’t you know, you’re life itself.

    -David Bowie, Wild is the Wind

photos of the day

May 9, 2011

A worker sets up a giant canvas of the official poster of the 64th Cannes Film Festival, featuring US actress Faye Dunaway, on the facade of the Festival Palace in Cannes, France. The Cannes film festival runs from May 11 to 22.

Eric Gaillard /Reuters

Shaven-headed young boys wearing 3-D glasses touch smart phones at SK Telecom Ubiquitous Museum in Seoul, South Korea. A group of children entered the main temple of Korean Buddhism’s Chogye Order to experience a monk’s life for a month to celebrate Buddha’s birthday on May 10.

Lee Jin-man/AP

Market Commentary:

Canada

By Matt Walcoff

     May 9 (Bloomberg) — Canadian stocks rose for a second day, led by raw-materials and energy producers, as an index of commodities rebounded from its biggest weekly drop since 2008.

     Goldcorp Inc., the world’s second-biggest gold producer by market value, increased 2.2 percent as precious metals rallied.

Suncor Energy Inc., Canada’s largest oil and gas producer, climbed 1 percent as oil gained the most in two months. Forzani Group Ltd., Canada’s largest sporting-goods retailer, soared 49 percent after agreeing to be bought by Canadian Tire Corp.

     The Standard & Poor’s/TSX Composite Index gained 110.53 points, or 0.8 percent, to 13,677.13.

     “Things got overdone in the short term,” said Doug Davis, vice chairman of Davis-Rea Ltd. in Toronto, which manages C$450 million ($465 million). “The economy is still recovering, both in Canada and the U.S.”

     The S&P/TSX fell 2.7 percent last week as the Thomson Reuters/Jefferies CRB Commodity Price Index plunged 9 percent.

Precious metals dropped as CME Group Inc., the owner of the Comex exchange, raised the amount of cash that must be deposited when borrowing from brokers to trade silver futures. Fuels declined after the U.S. reported a decline in gasoline consumption and increase in natural gas inventories.

     Producers of precious metals gained today as investors speculated last week’s 4.2 percent retreat in gold and 27 percent tumble in silver were overdone.

Barrick Gold Corp., the world’s largest producer of the metal, advanced 1.2 percent to C$45.96. Goldcorp increased 2.2 percent to C$48.42. Silver Wheaton Corp., Canada’s fourth- biggest precious-metals company by market value, climbed 2.4 percent to C$35.47. First Majestic Silver Corp., which mines in Mexico, jumped 8.1 percent to C$19.02.

     Crude oil, which sank 15 percent last week, rose 5.5 percent today after Germany said exports advanced to a record last month.

     Canadian Oil Sands Ltd., the largest owner of the Syncrude project, increased 3.2 percent to C$31.85. Suncor advanced 1 percent to C$40.66. Oilfield-services company Flint Energy Services Ltd. soared 12 percent, the most since June 2009, to C$15.47 before the release of its first quarter financial results.

     Contract driller Ensign Energy Services Inc. climbed 4 percent to C$17.71 after reporting first-quarter earnings that beat the average of 10 analyst estimates by 36 percent, excluding certain items.

     Nexen Inc., an oil and gas producer with operations on five continents, declined 2.7 percent to C$23.14. The company said it has suspended operations in Yemen due to a strike and that its North Sea Buzzard oil field is operating at reduced rates due to problems with the platform’s cooling system.                       

 Industrial-metals producers rose as copper rallied from a five-month low.

     First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, gained 3.1 percent to C$127.50.

Ivanhoe Mines Ltd., which is developing a copper and gold mine in Mongolia with Rio Tinto Group, advanced 5.7 percent to C$24.67. Taseko Mines Ltd., which produces copper in British Columbia, jumped 5.2 percent to C$4.90.

     Molybdenum Producer Thompson Creek Metals Co. sank 5.2 percent to a seven-month low of C$10.30 after cutting its 2011 production forecast.

     Copper Fox Metals Inc., which is developing a base- and precious-metals project in British Columbia, jumped 18 percent to C$2.38. On May 6, two federal-government agencies said a proposed power line to the region “is not likely to cause significant adverse environmental effects.”                     

     Forzani surged a record 49 percent to C$26.25 after agreeing to be bought by Canadian Tire, the country’s largest general-goods retailer, for C$26.50 a share in cash. Canadian Tire rose 2.7 percent to C$60.19.

     Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, increased 1.6 percent to C$52.62 as corn and wheat rose. Viterra Inc., Canada’s biggest grain handler, climbed 3.8 percent to C$11.50.

     Manulife Financial Corp., North America’s fourth-largest insurer, rose 1.4 percent to C$17.71 after surging 5.1 percent May 6. On May 5, the company reported first-quarter profit that topped the average analyst estimate by 56 percent, excluding certain items.

     BlackBerry maker Research In Motion Ltd. fell 2.6 percent from a four-year low to C$43.39 after T. Michael Walkley, an analyst at Canaccord Financial Inc., reduced his 12-month price estimate on RIM’s U.S.-traded shares to $49 from $61. In a note to clients, Walkley cited RIM’s market-share losses to Apple Inc.’s iPhone and smartphones using Google Inc.’s Android operating system.

US

By Rita Nazareth

     May 9 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second straight day, as commodity prices rebounded from the biggest weekly drop since 2008 and McDonald’s Corp. rallied after sales topped estimates.

     Newmont Mining Corp. and Halliburton Co. added at least 1.7 percent as oil halted a five-day retreat and metal prices climbed. McDonald’s, the world’s biggest restaurant chain, increased 0.8 percent as smoothies and McCafe beverages drew U.S. customers in April. Dollar Thrifty Automotive Group Inc. surged 14 percent as Hertz Global Holdings Inc. made a $2.08 billion offer. Citigroup Inc., the most-traded U.S. stock in 2011, slumped 2.3 percent following a 1-for-10 reverse split.

     The S&P 500 rose 0.5 percent to 1,346.29 at 4 p.m. in New York. It snapped a four-day slide on May 6 amid stronger-than- forecast growth in jobs. The Dow Jones Industrial Average climbed 45.94 points, or 0.4 percent, to 12,684.68 today.

     “Commodities look oversold as we get more evidence that the economy is rebounding,” said Peter Jankovskis, who helps manage about $2.8 billion at Oakbrook Investments in Lisle, Illinois. “The jobs report we got on Friday and McDonald’s sales provided further evidence that the recovery is in place.

The equity market is in a reasonable position given where earnings are.”

     The S&P 500 fell 1.7 percent last week following a rout in raw materials that knocked off $99 billion of market value from commodities. The S&P 500 was still up 7.1 percent this year amid government stimulus measures and higher-than-projected corporate profits. Earnings-per-share have beaten analyst estimates at 72 percent of the 421 companies in the S&P 500 that reported results since April 11, Bloomberg data show.

     U.S. trading slowed following Citigroup’s reverse stock split. The bank accounted for 6 percent of U.S. trading in 2011 through last week, with average daily volume of 464.8 million shares, according to data compiled by Bloomberg. Volume on exchanges today totaled less than 5.8 billion shares, second only to the day after Easter as the slowest trading day of the year. Citigroup slumped 2.3 percent to $44.16.

     “We’ve seen anemic volume,” said Bruce McCain, who oversees $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “A reverse stock- split reminds you of how much you can lose when a stock craters.

It probably shifts a little bit of the buying that might otherwise have gone into Citigroup, particularly for those who like to purchase low-priced shares in the hopes of rebound.

Those investors will probably refocus on other parts of the market.”

     Commodities rose, with the S&P GSCI Index of raw materials up 3.6 percent in its biggest gain since 2009 after plunging 11 percent last week, amid signs that an improving U.S. economy may boost raw-material demand and on speculation last week’s selloff was excessive.

     Gauges of stocks of energy and raw-material producers rallied at least 1.5 percent, the two biggest gains in the S&P 500 within 10 industries.

     Newmont Mining, the largest U.S. gold producer, added 1.8 percent to $54.68. Halliburton, the world’s second-largest oilfield services provider, rose 3 percent to $48.06.

     U.S. oil companies’ profits have grown so fast that they’ve become the cheapest equities in the S&P 500, just as the debate about taxing crude producers heats up.                       

     Energy suppliers in the S&P 500 have earned $481.1 billion since 2006, more than last year’s gross domestic product of Argentina, according to data compiled by Bloomberg. The 41 drillers, refiners and oilfield service providers may generate another $134.8 billion in 2011, based on analyst estimates that jumped 8.5 percent in April. The growth reduced valuations to 11.5 times projected income from 13.7 in March.

      McDonald’s gained 0.8 percent to $79.31. The world’s biggest restaurant chain said sales at stores open at least 13 months rose 6 percent in April as smoothies and McCafe beverages drew customers in the U.S. Analysts projected comparable-store sales would rise 4.1 percent, according to the average of seven estimates compiled by Bloomberg News. Sales in the U.S. climbed 4 percent, the Oak Brook, Illinois-based company said today.

     Dollar Thrifty surged 14 percent to $79.27. Hertz offered $72 a share in cash and stock for Dollar Thrifty, 24 percent more than Avis’s offer and 18 percent higher than the 60-day average share price. The offer values Dollar Thrifty at 3 percent more than the company’s closing value on May 6.

     Sysco Corp. jumped 11 percent, the most in the S&P 500, to $31.57. The biggest North American distributor of food to restaurants rose as much as 15 percent, the most since 1987, after sales beat projections and Chief Executive Officer William DeLaney said he’s focused on acquisitions.

     Stock-index futures reversed early gains before the open of U.S. exchanges after Greece’s credit rating was cut two levels to B from BB- by S&P, which said further reductions are possible as the risk of default rises. Another cut would make Greece the lowest-rated country in Europe as today’s reduction, the fourth by S&P since April 2010, left it even with Belarus.

     “The impact of Greece’s downgrade is psychological,” said Brian Lazorishak, money manager at Chase Investment Counsel Corp., which manages more than $1.5 billion in Charlottesville, Virginia. “It just reminds investors that there are more problems over there.”

     Tyson Foods Inc. dropped 6 percent to $17.75. The largest U.S. meat processor posted fiscal second-quarter profit that missed analysts’ estimates as higher feed costs partially offset gains in beef and chicken prices.

     Chipmakers slumped after Wells Fargo & Co. said the industry’s inventory rose during the first quarter and memory prices continued to fall last week. Intel Corp. fell the most in the Dow, sliding 2.1 percent to $22.76. Micron Technology Inc sank 3.8 percent to $10.46.

Have a wonderful evening everyone.

Be magnificent!

A diamond is lost in the mud;

all are seeking it.

Some go to the East – or to the West,

Wishing to find it.

Is it lost in the river?

Or in the rocks?

Kabîr, your servant, appreciates it

for its just value.

He will take it away,

warmly sheltered

in a corner of his heart.

     -Kabir, 1440-1518

As ever,

Carolann

 Silence is one of the hardest arguments

to refute.

                 -Josh Billings, 1818-1885

 

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,  I had a client bring me some fresh salmon yesterday that he caught in the morning which I’m soon on my way home to cook.   He had caught two large salmon in no time at all he said, fishing off Beecher Bay. Salmon is brain food so consume lots of it now that salmon fishing season is here.  A recipe a devised a few years ago is really simple and is wonderfully Canadian.  I put the oven on broil, with the grate about 5 inches below the element;  I rub the salmon very lightly with olive oil, and drizzle 100% Canadian maple syrup over it; squeeze a few lemon drops over it, and surround it with vegetable broth (or white wine).  It takes about 7 minutes, but keep watching it – every oven is different and it may be more or less time, depending on your oven.

 

I wanted to tell you about an interesting book I read last weekend entitled Those Who Save Us, by Jenna Blum.  This was Blum’s first novel; and even more remarkable because of that fact.  The story takes place in Weimar, Germany during the second World War; it is the story of a young German Christian civilian girl named Anna Schlemmer who hides her Jewish lover in 1939 and has his child while he is incarcerated in the Buchenwald camp.  It gives a glimpse of what the war was like for ordinary civilians living in Germany at that time.  The story is written with somewhat of a covert empathy which is extraordinary given that Blum is a descendant of German Jewish Holocaust survivors and worked for the Steven Spielberg Shoah Foundation interviewing Holocaust survivors for four years.

Eventually, Weimar is liberated by the Americans and Anna and her daughter move with an American soldier to New Heidelberg, Minnesota.  Anna’s experience in New Heidelberg reminds me of the stories my husband has told me about growing up in Kitchener (originally New Berlin), Ontario –  how most of the Germans repressed, stifled, their heritage and language, something I could never understand ….anyway, it is worth the read.

photos of the day

May 6, 2011

 

 

 

 

 

 

As many as 768 Croats in Zagreb, Croatia, broke the Guinness World Record for the world’s biggest human smiley. The previous record had 551 participants and was reached in the Latvian capital of Riga.

Nikola Solic/Reuters

 

 

 

 

 

Villagers take part in a ritual celebrating the pagan god Yurya in the village of Pogost, Belarus. People believe that Yurya protects their harvest.

Vasily Fedosenko/Reuters

Melida Horn watches one of the races before the 137th running of the Kentucky Oaks horse race at Churchill Downs in Louisville, Ky.

Darron Cummings/AP

Market Commentary:

Canada

By Matt Walcoff

May 6 (Bloomberg) — Canadian stocks rose, trimming a second straight weekly decline, after the nation added three times more jobs than economists estimated and U.S. employment also topped projections.

Suncor Energy Inc., Canada’s largest oil and gas producer, gained 1.7 percent after the U.S. added the most jobs in five years. Manulife Financial Corp., North America’s fourth-largest insurer, advanced 5.1 percent after at least three analysts raised their ratings on the shares. Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 2.1 percent.

The Standard & Poor’s/TSX Composite Index gained 111.22 points, or 0.8 percent, to 13,566.60.

“The key driver is the economic data we’re getting both out of the U.S. and Canada,” said Jennifer Dowty, the Toronto- based co-manager of the C$873.1 million ($909.3 million) Manulife Growth Opportunities Fund. “The payrolls out of the U.S. was a lot stronger than expected, and in Canada it was a similar story.”

The S&P/TSX lost 2.7 percent this week to decline for consecutive weeks for the first time since July. The benchmark stock index retreated as crude oil tumbled 15 percent and silver plunged 27 percent, the most for a week since at least 1975.

Energy and raw-materials companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

Canadian employment increased by 58,300 in April, Statistics Canada said today. Forecasts among 25 economists in a Bloomberg survey had ranged from 5,000 to 40,000. The U.S. added 244,000 jobs last month, surpassing the median economist forecast of 185,000 in a Bloomberg survey.

The S&P/TSX Energy Index advanced from a three-month low as natural gas gained in electronic trading.

Suncor increased 1.7 percent to C$40.26 after falling 10 percent, the most since July 2009, in the previous three days.

Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, climbed 2.5 percent to C$42.30.

Oilfield-services provider Pason Systems Inc. gained for the first time in eight days, surging 5.4 percent to C$15.33.

Penn West Petroleum Ltd., a western Canadian oil and gas producer, jumped 5.9 percent to C$24.17 after Fergal Kelly, an analyst at Royal Bank of Canada, boosted his rating on the company to “outperform” from “sector perform.” Yesterday, the Calgary-based company reported a first-quarter profit more than four times as large as the average analyst estimate.

Gold narrowed its biggest weekly slide since May 2010.

Kinross Gold Corp., Canada’s third-largest producer of the metal, increased 1.5 percent to C$14.54. China Gold International Resources Corp., which explores in China, climbed 6.5 percent to C$4.58. First Majestic Silver Corp., which mines in Mexico, rallied 7.4 percent to C$17.60.

Minefinders Corp., which explores for gold in Mexico, slumped 5.3 percent to C$12.78 to extend its weekly plunge to 20 percent, the biggest since 2008. Brian Christie, an analyst at Desjardins Securities Inc., and Steven J. Green, an analyst at Toronto-Dominion Bank, cut their ratings on the shares.

Romarco Minerals Inc., which is developing a gold mine in South Carolina, rallied 13 percent, the most in eight months, to C$1.88. Shares of the Toronto-based company had fallen 28 percent this year, nearly twice as much as an index of gold explorers.

Industrial-metals and coal companies rose as zinc and copper gained in London. Teck advanced 2.1 percent to CS48.80.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 2.1 percent to C$123.72.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 2.1 percent from a 2011 low to C$51.80. Earnings at CF Industries Holdings Inc., the second-biggest maker of nitrogen fertilizer, surpassed the average of 12 analyst estimates by 27 percent, excluding certain items.

Manulife surged 5.1 percent to C$17.47 a day after reporting first-quarter profit that fell less than analysts expected as higher premiums in the U.S. and Canada countered claims from the earthquake in Japan. Analysts at Royal Bank of Canada, Bank of Nova Scotia and National Bank of Canada raised their ratings on the insurer.

“The risk premium that the market currently applies to Manulife’s stock has not adjusted to the company’s reduced risk position and improved fundamentals,” Peter Routledge, a National Bank analyst, wrote in a note to clients.

Magna International Inc., Canada’s largest auto-parts maker, advanced 3.8 percent to C$50.51. The company said it earned $1.34 a share in the first quarter, excluding certain items, beating the average of 15 analyst estimates by 18 percent as vehicle production rebounded.

BlackBerry maker Research In Motion Ltd. retreated 2.6 percent to a four-year low of C$44.56. Market-research firm ComScore Inc. said smartphones using Google Inc.’s Android operating system surpassed BlackBerry in U.S. market share in the first quarter.

RIM now trades at a record-low 7.2 times its past four quarters of earnings.

US

By Rita Nazareth

May 6 (Bloomberg) — U.S. stocks advanced, paring the biggest weekly decline for the Standard & Poor’s 500 Index since March, as stronger-than-forecast growth in jobs bolstered confidence in the world’s largest economy.

DuPont Co. and Boeing Co. rose at least 1.1 percent to help lead gains in the Dow Jones Industrial Average. Kraft Foods Inc., the world’s second-largest food company, and Fluor Corp., the biggest publicly traded U.S. construction company, climbed more than 2 percent after beating analysts’ earnings estimates.

Stocks trimmed gains after two people familiar with the situation said European finance officials are meeting in Luxembourg to discuss restructuring Greek debt.

The S&P 500 advanced 0.4 percent to 1,340.20 at 4 p.m. in New York, after earlier rallying as much as 1.4 percent. The benchmark gauge for American equities dropped 1.7 percent this week as commodities slumped the most since 2008. The Dow gained 54.57 points, or 0.4 percent, to 12,638.74 today.

“The jobs report was pretty solid,” said Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., which oversees $3.65 trillion as the world’s largest asset manager. “It gave people more conviction that the economic recovery is still on pace.

Investors started to doubt the sustainability of the rebound and commodities naturally took the hit. The rally is a partial reversal of that sentiment. There’s more room for stocks to move higher during the course of the year.”

Gauges of energy and raw-material companies fell more than

4.4 percent through yesterday to lead the S&P 500’s retreat from an almost three-year high reached on April 29. The plunge in commodity shares led the index to a 2.1 percent retreat over the first four days of this week. Including today’s rebound, the index is up 6.6 percent this year amid higher-than-forecast profits and government stimulus efforts.

One year ago today the Dow average had the biggest slide since 1987, as a mutual fund’s hedging strategy set off a chain reaction. Almost 1.3 billion shares traded on U.S. markets in a 10-minute span starting at 2:40 p.m. New York time on May 6, 2010, six times the average, sending prices lower on trading venues from New York to New Jersey and Chicago. The Dow slumped almost 1,000 points intraday before paring losses.

Stock futures extended gains before the start of regular trading today after a government report showed that the U.S. economy added more jobs than forecast in April, easing concern that higher fuel prices are slowing the economic recovery.

Payrolls increased by 244,000 workers last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said. Economists projected an April rise of 185,000, according to the median estimate in a Bloomberg News survey. Employment excluding government jobs jumped the most in five years. The jobless rate rose to 9 percent, the first increase since November.

“The very positive jobs report was just what we needed after all the bad news of the last few days,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion. “The market is going to focus on the change in private payrolls which was excellent.

That will more than offset a slight increase in the unemployment rate. If oil continues to fall, we’ll see higher consumer spending and a very good environment for stocks.”

Bill Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., said U.S. growth isn’t sufficient to support asset and labor markets nor enough to compensate for the nation’s growing debt level.

“The private economy is moving ahead as evidenced by today’s number but at a measured pace,” Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene. “Year- over-year real gross domestic product is holding at 2 percent, while nominal GDP is only 3.9 percent. That’s hardly sufficient to support both asset and labor markets in combination, nor is it sufficient to grow our way out of a steadily increasing debt to GDP ratio. It’s not enough.”

While employment growth will probably be strong the next few months, investors will need to see whether that is sustainable once the Federal Reserve’s policy of quantitative easing ends in June, according to Gross. The S&P 500 has rallied 28 percent since Fed Chairman Ben S. Bernanke suggested on Aug. 27 that he would pursue a second round of asset purchases to stimulate the economy.

The euro extended losses versus the dollar as European finance officials held an unscheduled meeting in Luxembourg where they may discuss proposals for restructuring Greek debt, according to two European officials familiar with the situation.

A German official said the discussions would include a German paper on options for confronting Greece’s growing debt load, which has spurred speculation by investors that a restructuring was a likely outcome.

Earlier, Der Spiegel magazine reported that ministers are convening an emergency meeting after Greece threatened to withdraw from the euro region. Greece rejected the report, according to a finance ministry statement, and German Chancellor Angela Merkel’s chief spokesman “categorically” denied that any discussions on a Greek exit were under way. He declined to comment when asked whether officials are meeting tonight.

“We’re seeing some knee-jerk reaction in the currency market,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co. “The dollar gets a bid as a haven when there’s concern about risks. As investors bid the dollar, they sell other things, like commodities and stocks.”

A gauge of industrial companies in the S&P 500 rose 0.8 percent, the most within 10 groups. DuPont, the third-biggest U.S. chemical maker, added 1.4 to $54.63. Boeing gained 1.1 percent to $79.31.

Kraft rose 2.1 percent, the most in the Dow, to $34.08.

Food and beverage companies such as Kraft, Sara Lee Corp. and Kellogg Co. have raised prices on many products to cope with rising costs for commodities such as wheat, corn, and coffee.

Kraft, led by Chief Executive Officer Irene Rosenfeld, said yesterday that price increases helped make up for rising costs.

Fluor jumped 7.9 percent to $70.87. The largest publicly traded U.S. construction company said first-quarter profit rose 2.3 percent as higher metal prices spurred mining projects. A rebound in commodity demand and higher oil prices have boosted mining and energy contracts, helping Fluor reach record backlog of $37.2 billion.

Earnings per share beat estimates at 73 percent of the 416 companies in the S&P 500 that reported quarterly results since April 11, according to data compiled by Bloomberg.

 

Have a wonderful weekend everyone.

 

Be magnificent!

 

To go from opinion to perception,

from imagination to fact, from illusion to reality,

from something that is not there,

to something that is;

that is the way forward.

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Three o’clock is always too late

or too early for anything you

want to do.

-Jean-Paul Sartre, 1905-1980

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

Senior Vice-President &

Senior Investment Advisor

Dear Friends,  I spent the last two days at UBC’s Sauder School of Business and I am happy to say it was the last course necessary to complete my Certificate in Business Family Advising.  However, the final step before graduating later this year, is to work on an actual case study and present the analysis to the Faculty.  When I returned to Victoria last night,  I went to a reception which was given by The Victoria Conservatory of Music  as an expression of appreciation for its supporters.  Several of the students from the Conservatory performed and it was just incredible to witness the remarkable talent of these young musicians.  There were two violinists, a classical guitarist, a pianist, an incredible vocalist – just amazing.   While I was there, I ran into one of my clients and as we were chatting before the performance began, he mentioned that he was going to New York next week for a cultural break.  I told him I had just read an article in The New Yorker about a painting and an exhibit at the Frick that he should try to see and that I would scan and e-mail the article to him this morning, which I did.  I thought I’d share it with you too in case you have the opportunity soon to go to New York in the near future. Here it is:

CRITIC’S NOTEBOOK

MASTER STROKES

Is the Frick’s Rembrandt “Self-Portrait” of 1658 the best painting in New York?

Its return from a revelatory cleaning coincides with a fine show, “Rembrandt and His School: Masterworks from the Frick and Lugt Collections.”  Bankrupt by the age of fifty-two, the artist casts himself as a sick and tired potentate of the studio, enthroned in an archaic golden-yellow jerkin and a floppy black hat.  An almost subliminal drama smolders.  Rugged brushwork – prodigious, even for Rembrandt – details aging flesh as much by touch as by sight.  A shadow falls across the eyes.  (A tiny dot of white on one eye ignites the painting.)  The high belting of the jerkin lends the figure a busty, maternal air.  The barely indicated knees bemuse; given a chair jammed up to the picture plane, they should protrude  into the room.  (Are we sitting in Rembrandt’s lap?)  The artist doesn’t doubt his powers.  How could he?  But, in disgrace, he seems to wonder what they’re worth.  He isn’t much good to himself any longer.  He’s ours, if we want him – in a fire sale of the soul.

                                     -Peter Schjeldahl

 

 

 

 

 

Army musicians stand in front of a World War II monument in Russia’s southern city of Volgograd, once known as Stalingrad. Russia prepares to mark the 66th anniversary of the 1945 victory over Nazi Germany on May 9. Stalingrad saw perhaps the greatest number of casualties in the history of warfare during its long 1942 seige.

Sergey Karpov/Reuter

 

 

 

 

 

 

A cat looks at demonstrators shouting slogans during a march by animal rights activists in Bucharest, Romania. A parliamentary committee has passed a draft law that says stray dogs can be killed. Protesters called for stray dogs to be sterilized, saying it is cheaper and more humane. Romania has long had a problem with stray dogs, with an estimated 30,000 of them in the capital alone.

Vadim Ghirda/AP

Market Commentary 

Canada

By Matt Walcoff

     May 5 (Bloomberg) — Canadian stocks fell for a fourth day, briefly erasing the 2011 gain for the nation’s benchmark index, as the worst global commodities slump in two years bled into equities.

     Suncor Energy Inc., the country’s largest oil and gas producer, lost 5.3 percent as crude oil declined the most since 2009. Kinross Gold Corp., the country’s third-largest gold producer, retreated 3.7 percent as the U.S. Dollar Index rose the most in six months. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, decreased 4.7 percent as the metal sank to the lowest price this year.

     The Standard & Poor’s/TSX Composite Index slumped 155.94 points, or 1.2 percent, to 13,455.38. The retreat reduced the index’s advance for the year to 0.1 percent. It fell as low as 13,415.95, below its Dec. 31 level of 13,443.22.

     “I view this as a wake-up call to investors who believe the commodity trade only goes one way,” said Barry Schwartz, a money manager at Baskin Financial Services Inc. in Toronto, which oversees C$400 million ($415 million).

     The S&P/TSX index has fallen 3.5 percent this week as the Thomson Reuters/Jefferies CRB Commodity Price Index had the biggest weekly drop in 26 months. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value.

     Energy and metals declined after the U.S. reported more initial jobless claims than most economists had forecast. Crude oil reached a seven-week low a day after the U.S. reported a decrease in gasoline consumption, while natural gas fell the most in a year after the U.S. said inventories rose more last week than most economists in a Bloomberg survey had forecast.

     The S&P/TSX Energy Index fell from a three-month low.

     Suncor retreated 5.3 percent to C$39.60 to complete the stock’s biggest three-day decline since July 2009. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, dropped 2.6 percent to C$41.25. Cenovus Energy Inc., the fifth-biggest energy company by revenue, lost 2.9 percent to C$33.73. Contract driller Major Drilling Group International Inc. slumped 7.2 percent to C$14.74.

     Sterling Resources Ltd., which explores for oil and gas in Europe, tumbled 22 percent, the most since November 2008, to C$3 after reporting drilling results.

     Gold futures dropped for a third day after European Central Bank President Jean-Claude Trichet signaled the ECB will wait until after June to raise interest rates, boosting the U.S. dollar against the euro. The U.S. dollar-euro exchange rate accounts for 58 percent of the U.S. Dollar Index.

     Kinross decreased 3.7 percent to C$14.33. Goldcorp Inc., the world’s second-largest gold producer by market value, slipped 3.2 percent to C$47.21. Novagold Resources Inc., which is developing gold and base-metal properties in Alaska and British Columbia, slid 7.7 percent, the most in 10 months, to C$10.50.

     Silvercorp Metals Inc., which mines in China, tumbled 8.6 percent to C$10.43 as silver completed its biggest four-day plunge since 1983. CME Group Ltd., the owner of the Comex exchange, has enacted five increases in two weeks to the minimum amount of cash that must be deposited when borrowing from brokers to trade silver futures.

     Minefinders Corp., which produces precious metals in Mexico, sank 8.7 percent to C$13.50 after Trevor Turnbull, an analyst at Bank of Nova Scotia, cut his 12-month price estimate on the company’s U.S.-traded shares to $17 from $18. Turnbull cited Minefinder’s report of lower-quality ore grades at its Dolores mine for the change. The shares’ decline was the biggest since June 2009.

     Base-metals and coal producers retreated as all major industrial metals traded on the London Metal Exchange fell.

First Quantum dropped 4.7 percent to C$121.20. Northern Dynasty Minerals Ltd., Anglo American Plc’s partner in the Pebble project in Alaska, declined 5.7 percent to a 2011 low of C$11.35.

     Pharmacy-benefits manager SXC Health Solutions Corp.

rallied 5.9 percent to a record C$56.15 after raising its 2011 profit forecast. At least four analysts raised their 12-month price estimate on the shares.

     Telus Corp., Canada’s third-largest wireless carrier, gained 3.6 percent to a three-year high of C$51.77 after boosting its quarterly dividend.

US

By Rita Nazareth

     May 5 (Bloomberg) — U.S. stocks tumbled, sending the Standard & Poor’s 500 Index down for a fourth straight day, as shares of energy and raw-material companies slumped following the biggest plunge in commodities in almost two years.

     Freeport-McMoRan Copper & Gold Inc. and Exxon Mobil Corp.

slid at least 2.5 percent as metal prices sank and oil fell below $100 a barrel for the first time since March 17. General Motors Co. slumped 3.1 percent after saying that Chinese sales declined. The NYSE Arca Airline Index jumped 3.2 percent as crude extended its loss since April 29 to 12 percent. FedEx Corp., operator of the biggest cargo airline, added 2.9 percent.

     The S&P 500 retreated 0.9 percent to 1,335.10 at 4 p.m. in New York. The benchmark gauge for American equities has declined

2.1 percent this week. The Dow Jones Industrial Average decreased 139.41 points, or 1.1 percent, to 12,584.17 today.

     “It’s driven by fear,” said James Gaul, a money manager at Boston Advisors LLC in Boston, which oversees about $1.8 billion. “Fear of losing of money on positions for the short- term traders to long-term concerns that the economy is weakening and risky assets aren’t performing as well as they have done, which you can extrapolate into oil prices. Big price moves like these are most often sentiment-driven.”

     Gauges of energy and metal producers fell at least 4.4 percent since April 29, leading the declines in the S&P 500. The index pared this year’s gain to 6.2 percent. Before that, the S&P 500 had risen to the highest level since June 2008 amid government stimulus measures and higher-than-forecast profits.

     The MSCI All-Country World Index of shares in 45 nations fell 1.1 percent. The MSCI EM Index dropped 0.8 percent.

     European Central Bank President Jean-Claude Trichet said the bank will monitor upside inflation risks “very closely,”

suggesting it may wait until after June to raise interest rates again. The Bank of England kept its benchmark rate at a record low of 0.5 percent today. In the U.S., the Federal Reserve last week retained its pledge to keep rates “exceptionally low” for an “extended period” to bolster the world’s largest economy.

     Monetary policy elsewhere is becoming tighter. Central banks in the Philippines and Malaysia today raised interest rates, and India this week increased its borrowing costs for the ninth time since March 2010. Rates in China, Asia’s biggest economy, may rise further after its central bank said yesterday that taming inflation is its top priority.

     “The big risk building in global asset markets was this massive crowding into commodity and emerging markets,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1 billion in New York. “Sooner or later monetary tightening would bring this down. They might be in the process of losing leadership from this point on. Losing their leadership probably means losing a decent amount of value in the process.”

     Stock-futures fell after a report showed that more Americans unexpectedly filed first-time claims for unemployment insurance payments last week, pushed up by three factors that normal seasonal variations failed to take into account, the Labor Department said.

     Applications for jobless benefits jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed today. A spring break holiday in New York, a new emergency benefits program in Oregon and auto shutdowns caused by the disaster in Japan were the main reasons for the surge, a Labor Department spokesman said as the data was released to the press.

     “The jobs market is going to lag in this recovery,” said said David Sowerby, a Bloomfield Hills, Michigan-based money manager at Loomis Sayles & Co., which oversees $150 billion.

“There’s concern about inflation and what that can do with global interest-rates. I wouldn’t be surprised to see a modest selloff in stocks in the near-term.”

     U.S. consumer confidence dropped to a five-week low as the highest gasoline prices in almost three years soured Americans’

views of the buying climate. The Bloomberg Consumer Comfort Index decreased to minus 46.2 in the week ended May 1, the lowest level since the end of March, from minus 45.1 the prior period. The buying climate gauge slumped to its second-lowest level in 15 months.

     Indexes of energy and raw-material producers in the S&P 500 fell at least 1.2 percent. Freeport-McMoRan, the largest publicly traded copper producer, declined 2.5 percent to $49.85.

Exxon slumped 2.6 percent to $82.62.

     Murphy Oil Corp. slumped 6.4 percent to $68.57 for the second-biggest loss in the S&P 500. The operator of gasoline- filling stations said second-quarter earnings will be as low as $1.50 a share, trailing the average estimate of $1.75 among analysts in a Bloomberg survey.                           

     “Commodities had a big run and nobody expected prices to remain at those levels,” said James Dunigan, chief investment officer in Philadelphia for PNC Wealth Management, which oversees $110 billion. “It’s not a bad thing that oil and other commodities are down. That will put less pressure on prices, which is good for consumption. The economy is on firmer footing.”

     General Motors slumped 3.1 percent to $32.02. The biggest overseas automaker in China reported sales fell in April, the first decline since December, as the removal of government incentives dented demand.

     GM sold 203,367 vehicles in China last month, the Detroit- based company said in a statement today. That compares with sales of 213,112 units last April. The decline follows delivery growth of 1.2 percent in March and a 6 percent increase in February.             

     The NYSE Arca Airline Index climbed 3.2 percent as 13 of its 15 stocks advanced.

     The Dow Jones Transportation Average rallied 1.1 percent.

FedEx added 2.9 percent to $95.29.

     Con-way Inc. advanced 5.2 percent to $39.54, the highest price since May 2010. The biggest U.S. trucking company by sales reported first-quarter profit that topped analysts’ estimates as revenue at its freight division increased.

     Electronic Arts Inc. added 8.8 percent to $21.68, the highest price since August 2009. The second-largest U.S. video- game producer posted a fivefold gain in fourth-quarter profit, after the shooting title “Dead Space 2” helped sales surpass analysts’ estimates.

     Earnings-per-share beat estimates at 73 percent of the 398 companies in the S&P 500 that reported results since April 11, according to data compiled by Bloomberg. 

Have a wonderful evening everyone. 

Be magnificent 

Find the Unique and possess the Whole.

This truly is our highest, most sublime privilege.

It is in the law of this unity that is, as long as we understand it,

our immutable force.  Its living principle is the force that resides in truth –

Truth is one.

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

To Suffering there is a limit;

to fearing, none.

  -Sir Francis Bacon, 1561-1626

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.  – Confucius (551 BC – 479BC)

Photos of the Day

 

 

 

 

 

 

 

 

 

 

 

Yorkshire terrier Ryota, left, greets miniature pinscher Pin-chan during their encounter in Tokyo.

 

 

 

 

 

 

Japanese astronaut Satoshi Furukawa (r.), US astronaut Michael E. Fossum (l.) and Russian cosmonaut Sergey Volkov smile for the camera during a training exercise in the Soyuz capsule simulator in the Russian cosmonaut training centre at Star City outside Moscow. The three man team is scheduled to leave for the International Space Station on June 7.

Market Commentary:

Canada

By Matt Walcoff

Canadian stocks fell for a third day as earnings at companies including Talisman Energy Inc. (TLM) trailed analyst estimates and a gauge of U.S. service industries showed the weakest expansion in eight months.

Talisman, an oil and gas producer with operations in North America, the North Sea and Indonesia, dropped 5.9 percent after its first-quarter profit excluding certain items missed the average analyst forecast by 50 percent. Agrium Inc. (AGU), Canada’s second-largest fertilizer producer, lost 3.7 percent after forecasting second-quarter profit below the average estimate. Iamgold Corp. (IMG) rose 5.7 percent after reporting a resources increase at its Niobec niobium mine in Quebec. 

The Standard & Poor’s/TSX Composite Index slipped 81.05 points, or 0.6 percent, to 13,611.32.

“Weaker corporate earnings are definitely going to have some weight on the market,” said Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, which oversees C$1.7 billion ($1.8 billion).“We’re starting to see some big companies miss.”

The S&P/TSX decreased 2.2 percent from the beginning of the current earnings-reporting season on April 11 to yesterday while the S&P 500 advanced 2.4 percent. Earnings for companies in the Canadian stock benchmark trailed analysts’ estimates by 1.6 percent, while those of S&P 500 companies surpassed forecasts by 8 percent, according to Bloomberg data.

The Institute for Supply Management’s index of non- manufacturing companies fell to 52.8 in April from 57.3 in March. The figure trailed all 73 forecasts in a Bloomberg survey.

Forecast Bottom

Talisman retreated 5.9 percent, the most since June 2009, to C$21.11. Weather delays on the Yme project in Norway “are pushing us to the bottom” of the company’s production-forecast range, Chief Executive Officer John A. Manzoni said in a press release.

Other energy shares dropped as natural gas futures declined on forecasts for cooler-than-normal weather in the U.S. South. Crude oil slipped for a third day as the U.S. Energy Department said inventories increased more last week than most analysts in a Bloomberg survey had forecast.

Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, slumped 2 percent to C$42.34. Cenovus Energy Inc. (CVE), Canada’s fifth-biggest energy company, lost 1.6 percent to C$34.72. Imperial Oil Ltd. (IMO), the owner of Canada’s Esso chain of gas stations, retreated 1.4 percent to C$47.70.

Financials Fall

Canada’s six biggest banks all fell after the release of the ISM data.

Toronto-Dominion Bank (TD), which has more than 1,000 U.S. branches, dropped 0.7 percent to C$81.39. Royal Bank of Canada, its bigger rival, declined 1.2 percent to C$58.23. Bank of Nova Scotia, Canada’s third-largest lender by assets, slipped 1.1 percent to C$57.73.

Base-metal and coal producers fell as all major industrial metals traded on the London Metal Exchange dropped.

First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, decreased 2.1 percent to C$127.20. Teck Resources Ltd. (TCK/B), Canada’s biggest base-metals and coal producer, retreated 1.7 percent to C$49.62.

Uranium One Inc. (UUU), a mining company controlled by Moscow- based ARMZ Uranium Holding, rose 5.7 percent to C$4.44 as prices of the nuclear fuel increased. Shares of the Vancouver-based company have jumped 14 percent this week.

Missing Estimates

Agrium Inc., a fertilizer producer and agricultural- products retailer, declined 3.7 percent to a five-month low of C$80.47. The company provided a first-half forecast that indicated it will earn $3.37 a share to $3.87 a share in the second quarter, excluding certain items, compared with the average analyst estimate in a Bloomberg survey of $3.97 a share. 

I amgold surged 5.7 percent to C$19.77. The company reported a 691 percent increase in the measured and indicated mineral resource at the Niobec project. Niobium is a metal used in steel production and superconductors.

Kinross Gold Corp. (K) and Loblaw Cos. rose after reporting earnings that beat analyst estimates. Kinross, Canada’s third- largest gold producer, rallied 4.9 percent from a 29-month low to C$14.88 after raising its 2011 production forecast. Loblaw, the country’s biggest grocery chain, surged 4.6 percent, the most since November 2009, to C$41.90.

Publisher Tumbles

Torstar Corp. (TS/B), the owner of the Toronto Star, plunged 9.5 percent, the most in 23 months, to C$12.35. The publisher reported first-quarter earnings that missed the average of six analyst forecasts by 15 percent, excluding certain items.

West Fraser Timber Co., Canada’s largest lumber producer, sank 5.3 percent to C$51 after its first-quarter revenue of C$687 million trailed analysts’ estimates of C$690 million and C$717 million.

“Prices for the company’s construction products are expected to remain volatile until the U.S. housing industry experiences sustainable recovery,” West Fraser said in a press release.

US

By Rita Nazareth

May 4 (Bloomberg) — John Silvia, chief economist at Wells Fargo Securities LLC, talks about the ADP Employer Services report for April and its implications for the U.S. economic recovery. Companies added 179,000 workers last month signaling the labor market is strengthening, data from the private report based on payrolls showed today. Silvia speaks with Betty Liu and Michael McKee on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

U.S. stocks fell, with commodity producers driving a third straight loss for the Standard & Poor’s 500 Index, as lower-than-estimated reports on service industries and job growth damped optimism in the economy.

Caterpillar Inc. (CAT) and DuPont Co., among companies most-tied to the economy, fell at least 1.7 percent to help lead declines in the Dow Jones Industrial Average. Freeport-McMoRan Copper & Gold Inc. (FCX) and Occidental Petroleum Corp. (OXY) led commodity producers lower, dropping more than 2.4 percent, as oil and metals sank. Las Vegas Sands Corp. (LVS), the U.S. casino company expanding in Asia, slumped 7.3 percent after reporting profit that missed estimates.

The S&P 500 lost 0.7 percent to 1,347.32 at 4 p.m. in New York. The index has dropped every day since closing at the highest level since June 2008. The Dow fell 83.93 points, or 0.7 percent, to 12,723.58 today. Oil for June delivery declined 1.6 percent to $109.24 a barrel in New York.

 “We’ve seen some tempering of economic statistics,” said Michael Mullaney, who manages $9.5 billion at Fiduciary Trust in Boston. “We’re going to see some sloppiness in the market until we get a clear indication on whether the sluggishness in economic activity is temporary. Employment growth is critical for the economy becoming self-sustaining.”

The S&P 500 extended its drop since April 29 to 1.2 percent. Oil, metal and chemical companies have led the market’s slump. Silver futures have plunged 19 percent, the biggest three-day drop since 1983, as increases in Comex margins spurred investor sales. Oil has slumped 4.1 percent.

Earnings Reports

The S&P 500 has trimmed its 2011 gain to 7.1 percent. The index rallies since Dec. 31 amid higher-than-estimated profits and economic reports. Earnings-per-share beat estimates at 73 percent of the 359 companies in the S&P 500 that reported results since April 11, according to data compiled by Bloomberg.

Stocks extended losses after a report showed that service industries in the U.S. expanded in April at the slowest pace in eight months as higher fuel prices prompted companies to cut back. The Institute for Supply Management’s index of non- manufacturing companies declined to 52.8 last month from 57.3 in March. Readings greater than 50 signal growth, and the median forecast of economists surveyed by Bloomberg News called for a gain to 57.5. A gauge of new orders dropped by the most since record-keeping began in 1997.

Stock-index futures fell before the start of trading as an ADP Employer Services report showed that employment at U.S. companies increased by 179,000 in April. The median estimate in a survey called for a 198,000 increase this month. Estimates ranged from a gain of 164,000 to 240,000, according to the Bloomberg survey of 34 economists.

Employment probably increased for a seventh straight month in April, economists in a survey said before a U.S. Labor Department report on May 6.

Caterpillar, the world’s largest maker of construction equipment, dropped 2.2 percent to $110.77. GE retreated 1.8 percent to $20.27.

U.S. equities also followed European and Asian shares lower amid concern central banks will need to lift interest rates to fend off accelerating inflation.

The Federal Reserve may start raising its benchmark interest rate late this year, Miguel Savastano, the deputy director for Western Hemisphere at the International Monetary Fund, told reporters today in Santiago.

‘Critical’

The People’s Bank of China said stabilizing prices and managing inflation expectations are “critical” after policy makers from India and Brazil yesterday signaled further tightening is possible. Interest-rate futures are indicating European Central Bank President Jean-Claude Trichet may signal more increases at the end of a policy meeting tomorrow.

Gauges of raw-material and energy producers led the declines in the S&P 500 within 10 industries, falling at least 1.5 percent. Gold declined after a report that Soros Fund Management LLC may have cut metal holdings. Crude oil dropped to a two-week low as a U.S. Energy Department report showed supplies surged.

Freeport-McMoRan, the largest publicly traded copper producer, slumped 3.9 percent to $51.14. Occidental Petroleum declined 2.5 percent to $108.89 

Las Vegas Sands fell 7.3 percent to $42.53. The casino operator reported a first-quarter adjusted profit of 37 cents a share, missing the average analyst estimate of 44 cents, amid lower winnings from table games in Nevada.

First Solar Tumbles

First Solar Inc. (FSLR) tumbled 6.2 percent to $126.31. The largest maker of thin-film solar modules reported first-quarter profit fell 33 percent as competition from Chinese manufacturers increased and prices declined in Europe, its largest market.

Varian Semiconductor Equipment Associates Inc. (VSEA) surged 51 percent to $61.36. Applied Materials Inc. (AMAT), the world’s largest producer of chipmaking equipment, agreed to buy Varian for $4.9 billion in cash. Applied Materials will pay $63 a share, a 55 percent premium over yesterday’s closing price.

Ralcorp Holdings Inc. (RAH) rose 4.9 percent to $87.39, paring a gain of as much as 8.2 percent. The maker of Raisin Bran and Grape-Nuts cereal spurned a $4.9 billion offer from ConAgra Foods Inc. (CAG) and adopted a shareholder rights plan to bar its suitor from gaining control of its shares.

“We’re seeing a lot of M&A deals,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “I expect that trend to continue as many of these companies have a huge amount of cash on their balance sheets.”

 Global Deals 

About $834.3 billion in takeovers have been announced globally so far in 2011, a 23 percent increase from the same period in 2010, according to data compiled by Bloomberg. 

Bank of America Corp. boosted forecasts for S&P 500 earnings in 2011 and 2012, citing more manufacturing and business spending, as well as gains from higher foreign profits, commodity prices and a weaker U.S. dollar.

David Bianco, the bank’s New York-based chief U.S. equity strategist, said S&P 500 companies will earn a total of $97 a share in 2011, up from a prior projection of $95. In 2012, they will post profit of $104, said Bianco, who had estimated $102.

Credit Suisse Group AG boosted its year-end forecast for the S&P 500 to 1,275 from 1,250 while lifting the earnings-per- share estimate for the benchmark to $94 from $91.

Have a wonderful evening everyone 

Success is how high you bounce when you hit the bottom

-George S. Patton (November 11, 1885 – December 21, 1945)

Be magnificent!

As ever,

Nishma for Carolann

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. If a man speaks or acts with an evil thought, pain follows him. If a man speaks or acts with a pure thought, happiness follows him, like a shadow that never leaves him.                   – Buddha

Photo of the day, May 3^rd, 2011

Market Commentary:

Canada

By Matt Walcoff

Canadian stocks fell the most in more than seven weeks, led by producers of energy, metals and fertilizer, as commodities dropped after China’s central bank signaled it may tighten credit even as growth cools.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, declined 5.6 percent after cutting its production forecast. Goldcorp Inc. (G), the world’s second-biggest gold producer, lost 2.9 percent as the metal slumped the most since March 15. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, decreased 3.1 percent as corn futures retreated to the lowest price since March 31.

“Commodities are going through a correction,” said Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, which manages C$1.6 billion ($1.7 billion). “China is really starting to try to slow down their economy. That will take some enthusiasm off the commodity market for a while.”

The Standard & Poor’s/TSX Composite Index fell 242.14 points, or 1.7 percent, to 13,692.37, the biggest decline since March 10.

The S&P/TSX dropped 1.9 percent from April 8 to yesterday as the Thomson Reuters/Jefferies CRB Commodity Price Index slipped from a 30-month high. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value, according to Bloomberg data.

Inflation Priority

The People’s Bank of China said in a report today that controlling inflation is its top priority. China raised reserve requirements for its largest lenders to a record 20.5 percent last month.

Crude oil dropped 2.2 percent in New York a day before a U.S. supplies report that analysts estimate will show inventories at a six-month high, according to the median forecast in a 

Bloomberg survey. 

Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, declined 2 percent to C$43.20. Talisman Energy Inc. (TLM), which produces oil and gas in North America, the North Sea and Indonesia, lost 2.4 percent to C$22.43 a day before it is to release first-quarter earnings. Petrominerales Ltd. (PMG), which operates in Colombia, decreased 6.4 percent, the most since September, to C$33.91.

Suncor slumped 5.6 percent, the most in 15 months, to C$41.55 after cutting its 2011 production forecast by 30,000 barrels of oil equivalent a day to a range of 520,000 to 570,000 barrels of oil equivalent a day. In a press release, the company cited the conflict in Libya.

Upgrader Maintenance

Investors may also be concerned oil-sands upgrader maintenance will take longer than the company estimates, Phil Skolnick, an analyst at Canaccord Financial Inc., said in an e- mail message. Suncor said today an upgrader at the Syncrude project will undergo six weeks of maintenance in September and October and work on a second upgrader will take place earlier than previously scheduled.

The S&P/TSX Materials Index tumbled the most in seven weeks. Gold futures slipped 1.1 percent as the U.S. dollar gained the most against the British pound since January.

Silver plunged 7.6 percent, completing the biggest two-day slide since October 2008, after CME Group Inc., the owner of the Comex exchange, raised silver margin requirements for the second time in a week. The requirements specify the minimum amount of cash that must be deposited when borrowing from brokers to trade silver futures. 

Goldcorp dropped 2.9 percent to C$48.69 after sinking 5.2 percent yesterday. Eldorado Gold Corp. (ELD), Canada’s fifth-largest gold producer by market value, declined 7.4 percent, the most since June 2009, to C$15.98. China Gold International Resources Corp., which explores for gold in China, tumbled 6.6 percent to a seven-month low of C$4.28.

Corn Declines 

Potash Corp. and Agrium Inc. (AGU) slumped to 2011 lows as corn futures retreated after exchange data showed that Archer Daniels Midland Co., the largest grain processor, delivered 1.96 million bushels of corn against expiring May futures. Potash Corp. lost 3.1 percent to C$51.46. Agrium, a fertilizer producer and agricultural-products retailer, decreased 2.9 percent to C$83.55. 

Thirteen of 16 base-metals and coal producers in the S&P/TSX dropped. China is the world’s largest user of industrial metals.

First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, declined 3.1 percent to C$129.92. Teck Resources Ltd. (TCK/B), the country’s biggest base-metals and coal producer, lost 2.7 percent to C$50.47. Northern Dynasty Minerals Ltd. (NDM), Anglo American Plc’s partner in the Pebble project in Alaska, sank 4.7 percent to C$12.52.

Canada’s eight-largest banks and three biggest insurers each retreated.

Manulife Financial Corp. (MFC), North America’s fourth-largest insurer, decreased 4 percent to C$16.80 two days before it is to release first-quarter financial results. In a note to clients dated yesterday, Joanne Smith, an analyst at Bank of Nova Scotia, reduced her 2011 earnings forecast for the company, citing the March earthquake in Japan.

US 

By Rita Nazareth and Jeff Sutherland 

U.S. stocks retreated, sending the Standard & Poor’s 500 Index lower for a second straight day, as declines in oil and gold prices drove commodity producers down and Sears Holdings Corp. (SHLD) led a drop in retailers. 

Freeport-McMoRan Copper & Gold Inc. (FCX) and ConocoPhillips paced losses in metal and energy companies, slumping at least 2.1 percent. Sears, the largest U.S. department-store chain, tumbled 9.9 percent after saying it lost money last quarter. Pfizer Inc. (PFE) slid 2.8 percent as sales of its Lipitor cholesterol pill, the world’s best-selling drug, missed estimates. MasterCard Inc. (MA), the second-biggest bank-card network, rallied 2.6 percent after earnings topped analysts’ estimates. 

The S&P 500 declined 0.3 percent to 1,356.62 at 4 p.m. in New York after falling as much as 0.9 percent at 4 p.m. The Dow Jones Industrial Average rose 0.15 point, or less than 0.1 percent, to 12,807.51. Both gauges fell yesterday after rising to the highest levels since 2008 amid higher-than-estimated corporate earnings and economic data. 

“People are taking some chips off the table,” said Michael Strauss, who helps oversee $27 billion as chief investment strategist at Commonfund in Wilton, Connecticut. “We’ve had good numbers, but we also had a good run in the equity markets. In addition, there’s concern about the path of inflation and interest rates. Investors are treating things here more cautiously.”

Earnings Scorecard 

The S&P 500 has risen 7.9 percent this year. Earnings-per- share beat estimates at 74 percent of the 336 companies in the S&P 500 that reported results since April 11, according to data compiled by Bloomberg. 

The MSCI Emerging Markets Index dropped 1.7 percent today as India’s central bank raised interest rates by a more-than- estimated 0.5 percentage point after forecasting inflation will stay at an “elevated level.”

Stocks fell even after orders placed with U.S. factories rose 3 percent in March on increasing demand for machinery and computers, topping the median economist estimate in a Bloomberg News survey for a gain of 2 percent.

Sears Holdings declined 9.9 percent to $75.88, the worst drop in almost a year. The retailer said it lost $1.35 to $1.81 a share in the first quarter, compared with the 3-cent average profit estimate from analysts, as appliance sales dropped.

Gauges of energy and raw-material producers led declines in the S&P 500, falling 2.4 percent and 1 percent, respectively, as oil, silver and gold retreated. Silver futures tumbled, capping the biggest two-day slide since October 2008, after margin requirements on the Comex increased for the second time in less than a week. Gold fell the most since mid-March.

Freeport, Chesapeake

Freeport-McMoRan, the largest publicly traded copper producer, dropped 2.1 percent to $53.20. ConocoPhillips (COP) lost 3.8 percent to $74.53.

Chesapeake Energy Corp. (CHK) retreated 5.7 percent to $31.33. The most-active U.S. natural-gas driller reported a first- quarter loss, saying lost $725 million from energy hedging contracts used to lock in oil and gas prices.

Pfizer, the world’s biggest drugmaker, slumped 2.8 percent to $20.44. Lipitor had sales of $2.39 billion in the first quarter, missing the $2.55 billion average estimate of five analysts surveyed by Bloomberg. Sales will decline by more than half next year after generic-drug makers flood the U.S. market with cheaper copies, according to eight analysts surveyed.

Pfizer Chief Executive Officer Ian Read is selling units and cutting jobs to prepare for the loss of U.S. patent protection of Lipitor in November.

Four-Day Streak

The S&P 500 broke a four-day winning streak yesterday as declines in commodity producers led the market lower following an early rally spurred by the death of Osama bin Laden, leader of the al-Qaeda terrorist network.

“We’re seeing a defensive move today,” said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion. “There’s some fear about terrorist retaliation. Still, you just cannot knock this thing down too much. Profits have been fantastic and most economic reports tell us there is economic momentum.”

MasterCard gained 2.6 percent to $282.38. Profit excluding some items was $4.29 a share, beating the average analyst estimate of $4.09, as consumers stepped up spending.

MetroPCS Communications Inc. (PCS) rose 10 percent, the most in the S&P 500, to $18.15. The pay-as-you-go U.S. wireless provider reported first-quarter subscriber additions of 725,945. That beat the estimates of 475,000 from Jason Armstrong, an analyst with Goldman Sachs Group Inc., and 350,000 by Todd Rethemeier of Hudson Square Research.

Record Options Trading

Alcoa rallied 2.6 percent, the most in the Dow, to $17.67 and bullish options volume surged to a record amid speculation Rio Tinto Group will make a takeover offer for the largest U.S. aluminum producer. More than 360,000 calls to buy Alcoa shares changed hands, eight times the four-week average and the fourth- largest call volume on U.S. exchanges, according to data compiled by Bloomberg.

Mark Kelly, an analyst at Olivetree Securities in London, said he was skeptical about “unsubstantiated” speculation today that Rio has secured a syndicated loan it may use to make a bid for Alcoa for $25.50 a share. Rio has “generally been happy” to focus on smaller purchases, such as Australian coal miner Riversdale Mining Ltd., Kelly said today in a report.

Tony Shaffer, a spokesman for Rio, and Alcoa’s Michael Belwood said separately that their companies don’t comment on market speculation.

The debate over U.S. borrowing limits may drive equity markets down as much as 7 percent in July, according to Tobias Levkovich of Citigroup Inc.

No Catastrophe 

The U.S. government is approaching the $14.29 trillion limit that it’s allowed to borrow. A growing number of Republican lawmakers such as Senators Pat Toomey and Jim DeMint and Representative Joe Walsh are rejecting warnings that failing to raise the debt limit would trigger a financial catastrophe. 

“I’m concerned that the debt-ceiling debate can get somewhat rancorous and nasty as the Republicans really want to push for something important in terms of spending cuts,” Levkovich, the chief U.S. equity strategist at the New York- based firm, said in an interview today on Bloomberg Television’s “InBusiness” with Margaret Brennan. “Markets could get very unsettled already in July.”

 Have a wonderful evening everyone.

The world is the great gymnasium where we come to make ourselves strong.

–Swami Vivekananda (January 12, 1863–July 4, 1902) 

Be magnificent!

 As ever,

 Nishma for Carolann

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,  Hope everyone had  a nice weekend….the beautiful month of May has arrived.  And I always think of Christopher Marlowe’s poem where he references the delights of May mornings…