Month: January 2012

Dear Friends,

 

Tangents:

 

Today is the Holiday of the Three Hierarchs, Greece.  The three Hierarchs are Basil the Great, Gregory the theologian and John Chrysotom.  Maybe their spirits can intervene to help positively the attempt at debt restructuring.

I was speaking with a client today who is a former teacher and she brought up the term “free-range kids,” which I hadn’t heard before.  She was emphasizing the need for children to have time, to let their imaginations flourish.   I told her about an article I read this week in a magazine on the need for kids to have free time and just play.  I dug it up.   John Yemma wrote, “Standardized testing, helicopter parenting, a society obsessed with good colleges and successful careers – there are plenty of reasons why time for make-believe and play-acting  has been shrinking….Free time and make-believe boost physical development, socialization, and – most important – the imagination.  A huge amount of what we value as a civilization comes from the what-if side of us.  While we must follow rules and recipes, train ourselves and test our skills, our artistic side needs time to wonder, improvise, and dream.  Productive writers from Shakespeare to Charles Dickens, Dr. Seuss to J.K. Rowling, have coupled imagination with discipline.  Wolfgang Amadeus Mozart talked of musical ideas emerging when he was alone, sometimes when he was sleepless or taking a walk after a good meal.  To muse and mull and eventually hear a symphony in his head, he said, ‘is perhaps the best gift I have my Divine Maker to thank for.’  Mozart might have been the most overprogrammed child of the 18^th century.  Under his father’s tutelage, he was by the age of 5 adept at violin and keyboard, and composing and performing for European royalty.

By today’s standards, he would have been locked up and loaded for the Juilliard School while he was still in diapers.  It takes both imagination and discipline to produce works as original as ‘The Magic Flute.’  That twinning combination is true not just of literature, music, and painting but of science as well.  The scientific method is meant to prove or disprove a hypothesis.   But the hypothesis – the hunch, the what-if – had to come from  somewhere.  Angels must be entertained.”

photos of the day

January 30th, 2012

Members of a group of skiers using traditional ski equipment prepare for a competition in Skofja Loka, Slovenia.

Srdjan Zivulovic/Reuters

People release sky lanterns to celebrate the traditional Chinese Lantern Festival in Pingxi, Xinbei city, northern Taiwan. Believers gathered to release sky lanterns as a form of prayer for good luck and blessings. The tradition of releasing lanterns began during the Ching Dynasty when bands of outlaws frequently raided villages, forcing local residents to seek refuge in the mountains. The lanterns were signals used by the village watchmen to inform the refugees that their houses were safe again.

Pichi Chuang/Reuters

 

Market Closes for January 30th, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12653.72	-6.74 -.05%
S&P 500	1313.01	-3.32 -0.25%
NASDAQ	281194	-4.61 -0.16%
TSX	12436.42	-30.08 -0.24%

 

International Markets   Close Change NIKKEI 8793.05 -48.17 -0.54% HANG SENG 20160.41 -341.26 -1.66% SENSEX 16863.30 -370.68 -2.15% FTSE 100 5671.09 -62.36 -1.09% CAC 40 3265.64 -53.12 -1.60% DAX 6444.45 -67.53 -1.04% Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	1.938	1.986
CDN. 30 year bond	2.548	2.599
U.S. 10-year bond	1.8439	1.8910
U.S. 30-year bond	2.9989	3.0582

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.00262	1.00081
US $	.99739	.99920

 

Euro  Rate 1 Euro=		Inverse
Canadian $	1.31747	0.75903
US $	1.31402	0.76102

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1730.00	$1737.70

 

Oil	Close	Previous
WTI Crude Future	$98.98	$99.63

Market Commentary:

Canada

By Matt Walcoff

Jan. 30 (Bloomberg) — Canadian stocks fell, led by producers of raw materials, after German Chancellor Angela Merkel said European leaders won’t complete a second aid program for Greece at a summit today.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, lost 5.6 percent as copper dropped the most in three weeks. Semafo Inc., which mines gold in West Africa, plunged 12 percent after saying production may decline this year. Ruggedcom Inc., which makes communications equipment used in industry, soared 25 percent after agreeing to be bought by Siemens AG.

The S&P/TSX Composite Index decreased 30.08 points, or 0.2 percent, to 12,436.42 in Toronto.

“We’ve gotten a pretty robust move out of the blocks,”

Gerry Brockelsby, a money manager at Marquest Asset Management Inc. in Toronto, said in a telephone interview. The firm oversees about C$250 million ($250 million). “It’s understandable the market may take a pause, especially in the face of continuing concern about Europe regarding the Greece settlement.”

The S&P/TSX gained each of the previous six weeks, the longest streak since April 2009, as improving U.S. manufacturing and employment data and the U.S. Federal Reserve’s plan to keep interest rates at historical lows until at least late 2014 overshadowed the European debt crisis.

Today’s summit won’t complete the Greek aid program because talks with banks over debt reduction aren’t completed, Merkel told reporters before the summit in Brussels today. Greek finance minister Evangelos Venizelos yesterday rejected the idea of European intervention in the country’s budget policy, citing “national dignity.”

U.S. personal spending was unchanged in December, the Commerce Department said today in Washington. Most economists in a Bloomberg survey had forecast an increase.

The S&P/TSX Materials Index retreated from the highest close since Dec. 1 as the U.S. Dollar Index climbed the most since Jan. 13.

First Quantum lost 5.6 percent to C$21.74. Goldcorp Inc., the world’s second-largest gold producer by market value, slipped 0.9 percent to C$48.78. Ivanhoe Mines Ltd., Rio Tinto Group’s majority-owned partner in Mongolia’s Oyu Tolgoi copper project, decreased 4.5 percent to C$16.29.

Semafo sank 12 percent to C$7.04 after forecasting 2012 production of 235,000 to 260,000 ounces. The company, based in Montreal, produced 250,100 ounces of gold last year. Josh Wolfson, an analyst at Stifel Financial Corp., cut his rating on the shares to “hold” from “buy.”

Financial companies in the S&P/TSX dropped for a fifth day, the longest streak since July. Bank of Nova Scotia, the country’s third-largest lender by assets, declined 0.7 percent to C$51.96. Bank of Montreal lost 0.6 percent to C$58.18, while Manulife Financial Corp., North America’s fourth-largest insurer, decreased 0.5 percent to C$11.81. Great-West Lifeco Inc., Canada’s second-biggest insurance company, lost 1.1 percent to C$21.72.

Ruggedcom jumped 25 percent to a record C$32.85 after Siemens agreed to buy the Concord, Ontario-based company for

C$33 a share. Belden Inc., based in St. Louis, had made an unsolicited offer of C$22 a share last month.

Mood Media Corp., the owner of Muzak Holdings LLC, rallied

21 percent, the most since September 2009, to C$2.85. The company estimated fourth-quarter earnings before interest, taxes, depreciation and amortization of $34 million, beating the average analyst forecast of $32.1 million, according to a Bloomberg survey. It was Mood Media’s first gain since Jan. 12.

US

By Rita Nazareth

Jan. 30 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as European leaders sparred with Greece over a second rescue program.

Equities pared declines as some of the biggest technology companies rallied. Apple Inc. and Microsoft Corp. added at least

1.2 percent. Bank of America Corp. fell 3 percent after Goldman Sachs Group Inc. cut its recommendation. Halliburton Co. and Chesapeake Energy Corp. dropped more than 1.1 percent as oil slumped. Gannett Co., the owner of 82 newspapers including USA Today, tumbled 6.9 percent as its profit plunged 33 percent.

The S&P 500 decreased 0.3 percent to 1,313.01 at 4 p.m. New York time. The benchmark index for American equities trimmed a decline of as much as 1.2 percent. The Dow Jones Industrial Average retreated 6.74 points, or 0.1 percent, to 12,653.72.

“The low hanging fruit has been picked and now it’s a more difficult slog to get substantive changes in Europe,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co, which has more than $107 billion in client assets. “There are near term doubts over the willingness of Greece and perhaps other countries to accept fiscal reforms.

Anything that could interrupt further progress in the euro area could be met with an opportunity for traders to sell.”

Today’s decline follows a four-week rally in the S&P 500, which was driven by the Federal Reserve’s plans to keep interest rates low through at least late 2014 and better-than-estimated earnings. Of the 171 S&P 500 companies that reported results since Jan. 9, 113 posted per-share earnings that beat projections, Bloomberg data show.

Greek Finance Minister Evangelos Venizelos rejected reports of plans to appoint a European Union commissioner to oversee the nation’s budget, citing “national dignity.” French President Nicolas Sarkozy said Greek debt-swap talks with private bondholders are “going in the right direction” and the issue should be settled in the next few days.

“The question isn’t whether or not Europe goes into a recession, but how deep that recession is going to be,” Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a telephone interview. “Greece as it stands currently is untenable. The market is getting comfortable with some sort of Greek default, whether it’s orderly or disorderly.”

Financial shares had the biggest decline in the S&P 500 among 10 industries, falling 1 percent as a group. Bank of America dropped 3 percent to $7.07 after Goldman Sachs cut its recommendation for the shares to “neutral” from “buy.”

A measure of energy shares in the S&P 500 retreated 0.4 percent. Halliburton slumped 1.2 percent to $36.67. Chesapeake decreased 1.6 percent to $21.69.

Nabors Industries Ltd. gained 3.5 percent, the most in the S&P 500, to $18.56. Traders in the options market are betting the world’s largest land-drilling contractor may be a takeover candidate after the departure of its 81-year-old chief executive officer. In the past two weeks, calls priced 10 percent above Nabors’ stock rose the most in 18 months versus puts on one- month contracts, signaling traders are anticipating an acquisition, said JonesTrading Institutional Services LLC.

Gannett tumbled 6.9 percent to $14.17. Revenue from the publishing division, the largest unit, declined 5.3 percent as advertising and circulation fell. The newspaper industry overall has continued to lose ad business to Internet companies such as Google Inc. and Facebook Inc.

Staples Inc. declined 4.9 percent to $15.23. The world’s largest office products company was cut to “sell” from “neutral” by Goldman Sachs, which cited a “tough” outlook for the global printing segment.

Measures of telephone and technology companies in the S&P

500 rallied. Apple added 1.3 percent to $453.01. Microsoft gained 1.3 percent to $29.61. Verizon Communications Inc. rose

1.1 percent to $37.61.

Pep Boys — Manny, Moe & Jack surged 24 percent to $14.93 after agreeing to go private in an acquisition by Gores Group LLC valued at about $791 million. The cash offer of $15 a share is 24 percent higher than Pep Boys’ closing price on Jan. 27, the companies said today in a statement.

US Airways Group Inc. rallied 4.2 percent to $8.52. Delta Air Lines Inc. is studying a bid as North American carriers assess possible combinations after the bankruptcy of American Airlines parent AMR Corp., people familiar with the matter said.

Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market.

Analysts estimate profits in the S&P 500 will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P

500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.

Battered by the 14 percent decline in the S&P 500 since 2000, the worst financial crisis since the Great Depression and the flash crash 21 months ago, investors are staying away from stocks, even after record profits, 10 quarters of U.S. economic growth and promises by the Federal Reserve to keep interest rates near zero through 2014. Of the $37 trillion erased from global equities in the credit crisis, $24 trillion has been restored.

“After two significant bear markets, the flash crash and the lost decade, many have simply said, ‘No mas,’” Howard Ward, who helps oversee $35 billion at Gamco Investors Inc. in Rye, New York, said in an e-mail on Jan. 24. “Of course, bull markets have a history of climbing a wall of worry. And it is happening again.”

 

Have a wonderful evening everyone.

 

Be magnificent!

There is an orderliness in the universe, there is an unalterable law governing everything

and every being that exists or lives.

-Mahatma Gandhi, 1869-1948

As ever,

 

Carolann

 

If you can’t change your fate,

change your attitude.

-Amy Tan, 1952-

 

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

 

Tangents:

Today  is Montreal author Mordecai Richler’s birthday. January 27^th, 1931.  Martin Levin writes in The Globe & Mail, “For young Mordecai Richler, the choice was always between the shtetl and the street, the rabbinic and the writerly.  Child of a distinguished religious clan that somehow made its way from Galicia to Montreal, he chose the street, and the writing life.  The street was St. Urbain, beating heart of emergent Jewish life in Canada, and Richler gave us a peerlessly detailed, often comic mapping of its terrain – psychological, social and emotional as much as physical – in such works as The Street and The Apprenticeship of Duddy Kravitz.  Richler may be said to have been shaped by two things: From the orthodoxy he rejected, he salvaged the search for moral values: from the Nazi destruction of European Jewry, he formed the will to be a truth-teller, a fearless witness to his age.”

I absolutely loved his writing and I’ve read everything he has ever written.  I used to go walk the streets in his novels when I lived in Montreal, and still do when I visit the city savoring nostalgia.

The National Post today has an article entitled Heroines of Auschwitz, written by Bernie M. Farber, the former CEO of the Canadian Jewish Congress and the son of a Holocaust survivor.    He writes, “On Jan. 27, 1945, 67 years ago today, the Soviet Army liberated Auschwitz.  From 1942 to late 1944, the concentration camp became the center of the wholesale murder….Yet within Auschwitz’s horror there were unique acts of bravery from which we must always take heart.  The courage of Anna (Wajcblum) Heilman and the women of the Auschwitz munitions factory is one such story.”  It is a very moving story of the heroics of these women.

photos of the day

January 27, 2012

Ultra-orthodox Jewish men pray at the Western Wall, the holiest site where Jews can pray, in Jerusalem’s Old City.

Bernat Armangue/AP

Denmark’s Prince Joachim and French-born princess Marie showed off their newborn princess for the first time to the public at Rigshospitalet in Copenhagen, Denmark. The baby was born Tuesday morning and weighed 6.45 pounds and measures 19.6 inches. The newborn is the couple’s second child and is 10th in line to Denmark’s throne.

Joachim Adrian/AP

Market Closes for January 27th, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12,660.46	-74.17 -.58%
S&P 500	1316.32	-2.11 -0.16%
NASDAQ	2816.55	+11.27 +0.40%
TSX	12,466.50	+2.18 +.02%

 

International Markets   Close Change NIKKEI 8,841.22 -8.25 -.09% HANG SENG 20,501.67 +62.53 +0.31% SENSEX 17233.98 +156.80 +.92% FTSE 100 5733.45 -61.75 -1.07% CAC 40 3318.76 -44.47 -1.32% DAX 6511.98 -27.87 -0.43% Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	1.986	2.015
CDN. 30 year bond	2.599	2.626
U.S. 10-year bond	1.8910	1.9313
U.S. 30-year bond	3.0582	3.0902

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.00081	1.00284
US $	.99920	.99717

 

Euro  Rate 1 Euro=		Inverse
Canadian $	1.32367	.75547
US $	1.32261	0.75608

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1737.70	$1719.70

 

Oil	Close	Previous
WTI Crude Future	$99.63	$99.86

Market Commentary:

Canada

By Matt Walcoff

Jan. 27 (Bloomberg) — Canadian stocks rose, extending a sixth-straight weekly advance, after borrowing costs fell at an Italian debt sale and the U.S. dollar declined for a fifth day against the euro.

Barrick Gold Corp., the world’s largest gold producer, gained 1.6 percent as metal climbed after settling at a seven- week high esterday. Toronto-Dominion Bank, Canada’s second- biggest lender by assets, dropped 0.5 percent as financial stocks declined for a fourth day. Celestica Inc., which makes electronics for companies including Research In Motion Ltd., surged 5.1 percent after its fourth-quarter earnings beat the average analyst estimate.

The S&P/TSX Composite Index gained 38.78 points, or 0.3 percent, to 12,503.06 at 1:52 p.m. Toronto time, extending its weekly advance to 0.9 percent.

“The euro has come under so much pressure in the past few months, and indications out of Europe have turned a little more constructive,” Andrew Pyle, an associate portfolio manager at Bank of Nova Scotia in Peterborough, Ontario, said in a telephone interview. Pyle’s team oversees about C$200 million

($200 million). “Maybe the euro has found a bottom against the U.S. dollar, and that would help support gold.”

The index’s streak of weekly gains would be the longest since April 2009. Gold stocks rallied this week after the U.S.

Federal Reserve said it plans to keep interest rates at historical lows until at least late 2014 and the U.S. dollar retreated. Raw-materials companies make up 21 percent of Canadian equities by market value, according to Bloomberg data.

Italy’s Treasury sold 8 billion euros ($10.5 billion) of 182-day bills today at the lowest yields since May. It also sold

3 billion euros of 331-day bills. The U.S. dollar fell for a fifth day against the euro.

The S&P/TSX Gold Index headed for its biggest weekly rally since October. Barrick Gold Corp., the world’s largest producer of the metal, increased 1.6 percent to C$49.76. Yamana Gold Inc., Canada’s fourth-biggest company in the industry by market value, climbed 2 percent to C$17.46 to extend its weekly surge to 13 percent, which would be the most since October 2009.

Premier Gold Mines Ltd., which said yesterday it intends to enter a joint venture with Newmont Mining Corp. in Nevada, jumped 10 percent to C$5.83. Christos Doulis, an analyst at Stonecap Securities Inc., raised his 12-month price estimate on the shares to C$8.85 from C$8.50, citing the joint venture in a note to clients.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, gained 2.5 percent to

C$47.12 after Robert B. Winslow, an analyst at National Bank, boosted his rating on the shares to “sector perform” from “underperform.” Winslow raised his earnings estimates for the company, citing “the potential for near-term upward pressure on grain prices” in a note to clients.

Financial stocks in the S&P/TSX fell after the U.S. said its gross domestic product increased at an annualized rate of

2.8 percent in the fourth quarter. Economists had forecast a 3 percent increase in GDP, according to the median estimate in a Bloomberg survey.

TD dropped 0.5 percent to C$77.46. Royal Bank of Canada, its larger domestic rival, slipped 0.5 percent to C$52.45.

Canadian Imperial Bank of Commerce, the country’s third-biggest lender by assets, declined 0.6 percent to C$74.83.

Celestica surged 5.1 percent to C$8.11 after its fourth- quarter profit surpassed the average estimates of analysts in a Bloomberg survey by 28 percent, excluding certain items. Gus Papageorgiou, an analyst at Scotiabank, increased his rating on the shares to “sector outperform” from “sector perform.”

US

By Rita Nazareth

Jan. 27 (Bloomberg) — U.S. stocks erased losses as banks rallied after the Obama administration said it will relax rules on a loan-modification program and optimism grew that Greece will reach a debt-restructuring agreement with bondholders.

Wells Fargo & Co. and Regions Financial Corp. added at least 2 percent, pacing gains among banks. Ford Motor Co.

slumped 3.6 percent as profit missed estimates on overseas challenges. Chevron Corp., the second-largest U.S. energy company, slid 2.2 percent after reporting its biggest earnings decline in two years. T. Rowe Price Group Inc., the asset manager that has posted a profit every quarter since going public in 1986, dropped 1.8 percent as earnings fell.

The Standard & Poor’s 500 Index advanced 0.1 percent to

1,319.35 as of 3:45 p.m. New York time, after earlier declining as much as 0.5 percent. The Dow Jones Industrial Average retreated 43.67 points, or 0.3 percent, to 12,690.96 today.

The revised Home Affordable Modification Program, or HAMP, would pay Fannie Mae and Freddie Mac to forgive debt on homes that have lost value. The government-owned companies so far have refused to reduce principal, citing cost. Greek Finance Minister Evangelos Venizelos said the government was “one step away”

from completing talks on a voluntary debt swap and was negotiating with international creditors on the terms for a second financing package at the same time.

A gauge of banks rallied 1.2 percent, the biggest gain in the S&P 500 among 24 industries. Wells Fargo added 2 percent to $29.62. Regions Financial rose 2.3 percent to $5.29.

The rally in banks helped the market overcome earlier losses triggered by lower-than-forecast growth in the U.S.

economy. Gross domestic product, the value of all goods and services produced, climbed at a 2.8 percent annual rate following a 1.8 percent gain in the prior quarter. The median forecast of 79 economists surveyed by Bloomberg News called for a 3 percent increase. Growth excluding a jump in inventories was

0.8 percent.

Benchmark gauges rose earlier this week as Federal Reserve officials said they were concerned about the economy’s lack of vigor two years after the recession ended, prompting a pledge to keep interest rates low at least until late 2014. The Fed also didn’t rule out bond purchases to bolster the economy.

“Having the world’s economic locomotive showing signs of strain is adding to investors concern worldwide,” Jack Ablin, who helps oversee $55 billion as chief investment officer for Chicago-based Harris Private Bank, said in a telephone interview. “The GDP report creates doubt about how solid the recovery is. It’s a very difficult environment to assess.”

The S&P 500 has risen 4.8 percent this year through yesterday, poised for the best January since it gained 6.1 percent during the first month of 1997, according to data compiled by Bloomberg. Of the 169 S&P 500 companies that reported results since Jan. 9, 112 posted per-share earnings that beat projections, according to data compiled by Bloomberg.

Solar shares gained as chief executive officers from Suntech Power Holdings Co. and Trina Solar Ltd. said China may double its installations of solar panels this year, absorbing excess production that depressed prices and margins in 2011.

Suntech added 6.8 percent to $3.46. Trina rose 7.4 percent to $8.68. First Solar Inc. climbed 12 percent to $45.73 for the biggest gain in the S&P 500.

Newell Rubbermaid Inc. gained 8 percent to $18.83. The maker of Sharpie pens and Graco car strollers reported fourth- quarter earnings of 40 cents a share, excluding some items, beating the average analyst estimate of 38 cents.

Eastman Chemical Co. rallied 6.4 percent to $50.12 after agreeing to buy Solutia Inc. for about $4.7 billion, including debt, to drive expansion into higher-margin specialty plastics and chemicals. Solutia surged 40 percent to $27.36.

The S&P 500 Automobiles & Components Index dropped 2.1 percent, the most among 24 industries. Ford slumped 3.6 percent to $12.28. In the fourth quarter, the Dearborn, Michigan-based automaker was hamstrung by a weakening European market and flooding in Thailand that wiped out profits in its Asian operations, Chief Financial Officer Lewis Booth said today.

Chevron slid 2.2 percent to $104.28. Chief Executive Officer John Watson has been selling oil refineries and filling stations in Europe and Africa to focus on higher-profit crude production and gas-liquefaction projects.

T. Rowe Price retreated 1.8 percent to $59.93. Net income decreased 1.7 percent to $188.4 million, or 73 cents a share, from $191.6 million, or 72 cents, a year earlier, the Baltimore- based company said today in a statement. Earnings per share increased as the number of outstanding shares fell 2.7 percent.

The average estimate of 12 analysts surveyed by Bloomberg was for profit of 69 cents a share.

 

 

Have a wonderful weekend everyone.

 

Be magnificent!

Man has lost his inner perspective, he measures his greatness by his size

and not by his vital attachment to the infinite ; he judges his activity by his own movement

and not by the serenity of perfection, not by the peace that exists in the starry vault,

in the rhythmic dance of incessant creation.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

Man is able to do what he is

unable to imagine.

-Rene Char, 1907-1988

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

 

Tangents:

Tomorrow is Mozart’s birthday, January 27, 1756.  To celebrate, the Seattle radio station, King FM (98.1 on the radio) has been playing Mozart all month, at least one composition an hour in their tribute program, Mozart Month – 31 days of Mozart.  I turn it on when I wake up and it has been a wonderful way to greet the day.  There are still five more days to go, so listen in.

Seattle Opera is doing Verdi’s Attila right now, so I am looking forward to this weekend.  The final performance is Saturday night.   Gary left for Toronto this morning for a few days at an Amgen meeting, so I’m taking a friend.  Exciting time for Amgen; their monoclonal antibody drug has received approval for prostate cancer, breast cancer and osteoporosis.

photos of the day

January 26, 2012

A car’s headlights illuminate the A9 dual carriageway approach to on a clear starry night near Inverness, Scotland.

Russell Cheyne/Reuters

A tourist swims in a lagoon at the entrance of La Cueva de los Peces (Cave of the Fish) along the coast of Playa Giron, near the Bay of Pigs, 100 miles south-east of Havana, in central Cuba. The Arab Spring, changes in US policy and economic reforms at home are driving a tourist rush that is giving communist-run Cuba one of its best seasons ever and stretching its ability to accommodate demand.

Reuters

Market Closes for January 26th, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12,734.63	-22.33 -.18%
S&P 500	1,318.43	-7.62 -0.57%
NASDAQ	2,805.28	-13.03 -.46%
TSX	12,464.32	-74.89 -.60%

 

International Markets   Close Change NIKKEI 8,849.47 -34.22 -.39% HANG SENG 20,439.14 +328.77 +1.63% SENSEX 17077.18 +81.41 +.48% FTSE 100 5,795.20 1.26% CAC 40 3,322.65 -15.77 -0.47% DAX 6,539.85 +118.00 +1.84% Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	2.015	2.082
CDN. 30 year bond	2.626	2.665
U.S. 10-year bond	1.9313	2.0564
U.S. 30-year bond	3.0902	3.1419

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.00284	1.0108
US $	.99717	.9900

 

Euro  Rate 1 Euro=		Inverse
Canadian $	1.31314	0.76153
US $	1.30936	0.76373

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1719.70	$1,665.10

 

Oil	Close	Previous
WTI Crude Future	$99.86	$99.15

Market Commentary:

Canada

By Matt Walcoff

Jan. 26 (Bloomberg) — Canadian stocks fell from a four- month high as financial companies dropped after the U.S. reported a decline in monthly new-home sales.

Manulife Financial Corp., North America’s fourth-largest insurer, lost 5.1 percent after an analyst at UBS AG reduced his rating on the shares. Goldcorp Inc., the world’s second-largest gold producer by market value, gained 2.2 percent as the metal advanced for a second day after the U.S. Federal Reserve extended its low-interest-rate pledge. Encana Corp., Canada’s biggest natural gas producer, lost 4.9 percent as the fuel retreated for the first time in five days.

The S&P/TSX Composite Index slipped 74.89 points, or 0.6 percent, to 12,464.32 after rallying as much as 0.6 percent before the release of the housing data.

The home-sales number “is just a trigger,” Bob Decker, a money manager at Aurion Capital Management in Toronto, said in a telephone interview. The firm oversees about $5.5 billion.

“Stocks are erasing their gain because people are wondering what lies ahead. We’re in a sell-on-news mode. It’s a second sober thought people are having about whether this Fed move indicates something more nefarious about their analysis.”

Canada’s benchmark stock gauge has gained 0.5 percent this week after advancing each of the five previous weeks. The S&P/TSX rose 7.8 percent from Dec. 16 to yesterday as employment and manufacturing data improved in the U.S. and the Fed said it expects to keep its benchmark interest rate near a record low until at least late 2014. Seventy-five percent of Canada’s exports went to the U.S. in 2010, according to Statistics Canada.

U.S. new-home sales fell 2.2 percent in December, the Commerce Department said today in Washington. All but six of 75 economists in a Bloomberg survey had forecast an increase.

The S&P/TSX Financials Index dropped the most in two months. Bank of Nova Scotia, Canada’s third-largest lender by assets, declined 1.5 percent to C$52.73. Toronto-Dominion Bank, the country’s No. 2 lender, lost 1.1 percent to C$77.86. Bank of Montreal, the fourth-biggest bank, slipped 1.7 percent to C$59.64.

Manulife and Sun Life Financial Inc. declined after Peter A. Rozenberg, an analyst at UBS AG, cut his ratings on the stocks to “neutral” from “buy.” Low interest rates will hold back profit, Rozenberg wrote in a note to clients.

Manulife lost 5.1 percent to C$11.91. Sun Life, the country’s third-biggest insurance company, slumped 5 percent to C$20.05.

Gold futures climbed to a seven-week high on the Comex in New York. Goldcorp rose 2.2 percent to C$48.75. Franco-Nevada Corp., which owns royalties on precious-metals production, gained 3.6 percent to C$44.50. Gabriel Resources Ltd., which is developing a gold mine in Romania, soared 8.7 percent to C$6.13 for its first gain since Jan. 16.

Natural gas retreated after rebounding 18 percent from a nine-year low over the previous four days. The fuel fell today on speculation a larger-than-average inventory decrease in the U.S. last week won’t be enough to resolve a supply glut.

Encana decreased 4.9 percent to C$19.74 after Thomas R. Driscoll, an analyst at Barclays Plc, reduced his price estimate on its U.S.-traded shares to $17 from $22. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, slipped 2.9 percent to C$11.90.

Oilfield-services company Calfrac Well Services Ltd. tumbled 5 percent to C$25.70.

US

By Rita Nazareth

Jan. 26 (Bloomberg) — U.S. stocks fell, reversing a rally that sent the Dow Jones Industrial Average toward its highest level since 2008 earlier today, as banks tumbled and a report showed that sales of new homes unexpectedly declined.

Banks had the biggest drop in the Standard & Poor’s 500 Index among 24 groups on concern about the industry’s ability to boost profits after the Federal Reserve yesterday pledged to keep the benchmark interest rate low. Wells Fargo & Co. and Fifth Third Bancorp slumped at least 3 percent.

PulteGroup Inc. and Lennar Corp. retreated more than 2.3 percent to pace losses in homebuilders. AT&T Inc., the largest U.S. phone company, slid 2.5 percent as its profit forecast trailed estimates.

The S&P 500 lost 0.6 percent to 1,318.43 at 4 p.m. New York time, reversing a gain of as much as 0.6 percent. The Dow fell 22.33 points, or 0.2 percent, to 12,734.63, after earlier rising to the highest level on a closing basis since May 2008.

“It’s a little bit of cold water in the face,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a telephone interview. “We’re in risk territory because we’ve come a long way in the market and in terms of optimism on the economy. It’s premature to think that we’ve solved all problems.”

The S&P 500 has risen 4.8 percent so far this year, poised for the best January since it gained 6.1 percent during the first month of 1997, according to data compiled by Bloomberg.

Stocks are extending the measure’s 11 percent rally in the October-December period, its best fourth-quarter increase since 2003, as improvements in hiring, manufacturing and home sales bolstered confidence in the world’s largest economy.

Equities reversed gains today after a report showed that sales of new U.S. homes unexpectedly declined in December for the first time in four months, capping the slowest year on record for builders. Claims for U.S. jobless benefits rose last week, displaying the usual volatility around holidays that has masked an improvement in the labor market. Orders for U.S. durable goods advanced more than forecast in December.

Benchmark gauges rose yesterday as the Fed signaled low rates through at least late 2014 and didn’t rule out bond purchases to bolster the economy. Investors also watched earnings reports. Of the 151 S&P 500 companies that reported results since Jan. 9, 103 posted per-share earnings that beat projections, according to data compiled by Bloomberg.

A measure of banks in the S&P 500 slumped 3.3 percent.

Wells Fargo lost 3.8 percent to $29.05. Fifth Third Bancorp slid 3 percent to $13.08.

The Fed’s low interest rate pledge may hurt lenders’ profits as they struggle to find loans or securities with yields high enough to support their net interest margins, a gauge of profitability that measures the difference between the cost of funds and what they earn on assets.

“The statement itself was market friendly in terms of reiterating that the Fed is going to remain largely accommodative,” Ryan Larson, Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in a telephone interview. His firm oversees $250 billion in assets.

“When you talk about the banking environment and some of these companies that are directly tied to interest rates, it’s going to probably put a cap on some of those companies going forward until rates start to increase.”

A gauge of homebuilders in S&P indexes slumped 3.4 percent.

PulteGroup retreated 2.4 percent to $7.80. Lennar decreased 2.9 percent to $22.13.

AT&T lost 2.5 percent to $29.45, the biggest decline in the Dow. The carrier projected “mid-single-digit or better earnings growth” for 2012. Analysts predicted 11 percent on average.

AT&T also reported a fourth-quarter net loss of $6.68 billion because of a pretax charge of about $4 billion for the failed takeover of T-Mobile USA, and expenses for revaluing benefit plans and other assets.

E*Trade Financial Corp. tumbled 15 percent, the most in the S&P 500, to $7.99 after the online brokerage reported results that missed analyst estimates and Sandler O’Neill & Partners LP cut its rating.

SanDisk Corp. dropped 11 percent to $46.39. The biggest maker of flash-memory cards gave a sales forecast that fell short of estimates, citing lower prices for chips that store data in mobile phones.

Caterpillar Inc. rallied 2.1 percent, the biggest gain in the Dow, to $111.31. The largest construction and mining- equipment maker posted fourth-quarter earnings and forecast full-year profit that topped analysts’ estimates as demand rose for shovels and trucks.

3M Co. added 1.3 percent to $87.58. The maker of Post-it Notes and fuel system tuneup kits reported higher profit than analysts had estimated as demand increased for aerospace and auto industry products.

Netflix Inc. surged 22 percent, the most since January 2010, to $116.01. The online and mail-order video-rental service reported fourth-quarter profit that topped analysts’ estimates and forecast improving margins in its streaming business.

J.C. Penney Co. climbed 19 percent to $40.72 after saying cost reductions from new Chief Executive Officer Ron Johnson’s turnaround plan may boost 2012 profit more than analysts estimated.

Time Warner Cable Inc. advanced 7.8 percent, the biggest gain since April 2009, to $74.51. The second-largest U.S. cable- television provider reported fourth-quarter profit that beat analysts’ estimates and said it would repurchase $4 billion in shares.

“The backdrop that is coming forth is a nightmare for those who are way underinvested,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a phone interview. His firm manages $300 billion. “Earnings continue to come in better than expected, our economy is improving. In addition, it looks like the ‘euro-quake’ situation appears at least in the short term to be on the backburner.”

European stocks advanced, climbing 20 percent from a September low and entering a bull market. The Stoxx Europe 600 Index added 1.1 percent to 257.86 today.

The S&P 500’s best January rally since 1997 has pushed a pair of momentum and sentiment gauges to levels seen only 6 percent of the time since 1993, a sign the market is due for a pullback, BTIG LLC said.

The benchmark index’s 14-day relative strength index, which measures the degree that gains and losses outpace each other, rose above 70 yesterday for the first time since Feb. 18, according to data compiled by Bloomberg. Some technical analysts consider RSI readings above 70 a sign that stocks have risen too far, too fast. The Chicago Board Options Exchange Volatility Index, a gauge known as the VIX, fell below 20 for the first time since July on Jan. 19.

The last time RSI exceeded 70 while the VIX stayed below 20, 11 months ago, the S&P 500 reached a 32-month high before dropping 6.4 percent over the next month, data compiled by Bloomberg show. The VIX is the benchmark gauge of S&P 500 options prices.

“We’re definitely in a rare spot,” Josh Dollinger, Chief quantitative and technical strategist at BTIG in New York, said in a telephone interview. “These are extreme readings. They more often than not prove to be exhaustion tops.”

 

Have a wonderful evening everyone.

 

Be magnificent!

What does it matter if we do not understand the exact meaning of the grand harmony?

Is it not like the bow player who touches a string and at once releases every resonance?  This is the language

of beauty, this is the caress that comes from the heart of the world and goes straight to our hearts.

-Rabindranath Tagore,1861-1901

As ever,

 

Carolann

 

The art of listening needs its highest development in listening

to oneself.  Our most important task is to develop an ear that

can really hear what we’re saying.

-Sydney J. Harris, 1917-1986

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

 

Tangents:

On this day, January 25^th, in 1915, Alexander Graham Bell made the first transcontinental telephone call from New York to San Francisco.

The AT&T long-distance telegraph network begun in 1885 finally reached from New York to San Francisco, allowing Alexander Graham Bell in New York and Thomas J. Watson in San Francisco to participate in the first transcontinental telephone call.

“Four locations participated in the first call. Alexander Graham Bell, inventor of the telephone and co-founder of AT&T, led a group of dignitaries in New York. His one-time assistant Thomas Watson, led a group in San Francisco. AT&T President Theodore Vail spoke from Jekyll Island, Ga. And U.S. President Woodrow Wilson spoke from the White House.

At one point during the call, someone asked Professor Bell if he would repeat the first words he ever said over the telephone. He obliged, picking up the phone and repeating ‘Mr. Watson, come here, I want you.’ To which Watson, in San Francisco, replied, ‘It would take me a week now.’ ”

 

Today:

“E-mail has turned office workers into no more than lab rats desperately craving ‘pellets of social interaction,’ a leading expert has claimed.  Increasing levels of information overload from computer and smart phone screens cause a ‘bottleneck’ in the brain and prevent any deep thought, according to Nicholas Carr, former executive editor of the Harvard Business Review.…The natural impulses that helped early humans find food and avoid predators are causing us to regress to a state no more sophisticated than a rat in a laboratory, he said….For each bit of new information we find our brain releases a dose of dopamine, a pleasure-inducing chemical which has been linked to addictive behavior….’What makes digital messages all the more compelling is their uncertainty.  There’s always the possibility that something important is waiting for us in our inbox,’ Mr. Carr told Esquire magazine.” –fromThe Daily Telegraph

photos of the day

January 25, 2012

A woman walks in a park with a baby in a pram in the southern Russian city of Stavropol.

Eduard Korniyenko/Reuters

Kashmiri boats man paddles his Shikara or traditional gondola in the Dal Lake, on the outskirts of Srinagar, Indian.

Dar Yasin/AP

Market Closes for January 25th, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12,758.85	+83.10 +0.66%
S&P 500	1,326.06	+11.41 +0.87%
NASDAQ	2,818.31	+31.67 +1.14%
TSX	12,539.21	+143.97 +1.16%

 

International Markets   Close Change NIKKEI 8,883.69 +98.36 +1.12% HANG SENG 20,110.37 +167.42 +0.84 SENSEX 17,077.18 +81.41 +0.48% FTSE 100 5,723.00 -28.90 -0.50% CAC 40 3,312.48 -10.17 -0.31% DAX 6,421.85 +2.63 +0.04% Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	2.044	2.043
CDN. 30 year bond	2.651	2.646
U.S. 10-year bond	1.9787	1.999
U.S. 30-year bond	3.1346	3.15

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.0046	1.0108
US $	.9955	.9900

 

Euro  Rate 1 Euro=		Inverse
Canadian $	1.31629	0.75971
US $	1.31029	0.76319

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,711.90	$1,665.10

 

Oil	Close	Previous
WTI Crude Future	$99.82	$99.15

Market Commentary:

Canada

By Matt Walcoff

Jan. 25 (Bloomberg) — Canadian stocks rose the most in three weeks, led by gold producers, after the U.S. Federal Reserve said it will keep its benchmark interest rate at “exceptionally low levels” until at least late 2014.

Barrick Gold Corp., the world’s largest producer of the metal, increased 5.8 percent as the metal advanced. Royal Bank of Canada, the country’s biggest lender by assets, fell 1 percent after the European Central Bank was said to oppose taking losses on its Greek debt holdings. Encana Corp., Canada’s largest natural gas producer, gained 10 percent as the fuel rose for a fourth day.

The S&P/TSX Composite Index climbed 143.97 points, or 1.2 percent, to a four-month high of 12,539.21.

“Gold is always an alternative to the paper currency, and when you’re going to debase and devalue your own currency by cheap, cheap money, all of a sudden people look for another store of value,” Tony Demarin, chief investment officer at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$335 million ($333 million).

The S&P/TSX dropped 1 percent yesterday, its biggest decline this month, as talks to determine how much in losses holders of Greek debt will accept reached a stalemate. The index gained 4.7 percent this month through Jan. 23 as improving employment and manufacturing data in the U.S. overshadowed the European debt crisis.

The U.S. central bank extended its pledge to keep rates low from its previous end of the middle of 2013, citing “low rates of resource utilization and a subdued outlook for inflation.”

The U.S. Dollar Index fell and precious metals rallied after the Fed released its statement. The S&P/TSX Gold Index surged the most since Nov. 30.

Barrick gained 5.8 percent, the most since December 2009, to C$48.60. Goldcorp Inc., the world’s second-largest producer of the metal by market value, advanced 6.4 percent to C$47.71.

Tahoe Resources Inc., which explores for silver in Guatemala, soared 13 percent to C$21.49. Iamgold Corp., which mines in West Africa, South America and Quebec, jumped 9.6 percent, the most since May 2010, to C$17.04.

The eight lenders in the S&P/TSX each dropped after two people familiar with the stance of the ECB’s Governing Council said the central bank is opposed to joining private-sector investors in accepting losses on Greek debt. The people declined to be identified because the matter is confidential.

Royal Bank lost 1 percent to C$53.23. TD, its biggest domestic rival, dropped 0.7 percent to C$78.73. Canadian Imperial Bank of Commerce, the country’s fifth-largest lender by assets, slipped 1 percent to C$76.88.

Mutual-fund company AGF Management Ltd. slumped 4.4 percent to C$16.15 after reporting fourth-quarter earnings that trailed the average analyst in a Bloomberg survey by 23 percent.

Natural gas futures on the New York Mercantile Exchange extended their four-day gain to 18 percent. The fuel has rebounded from the lowest price since 2002 as Chesapeake Energy Corp., the second-largest U.S. producer, said it will cut production and reduce spending Jan. 23.

Encana Corp., the country’s largest natural gas producer, rallied 10 percent, the most since November 2008, to C$20.75.

Enbridge Inc., Canada’s biggest pipeline company, climbed 1.4 percent to C$37.21. Tourmaline Oil Corp., which produces oil and gas in Canada, advanced 6.8 percent to C$24.95 after increasing its production forecast for 2012.

BCE Inc., Canada’s largest phone company, decreased 1.5 percent to C$40.95 after Drew McReynolds, an analyst at Royal Bank, cut his rating on the stock to “sector perform” from “outperform.” Some other telecommunications and media companies in Canada cost less relative to earnings and will grow as fast or faster than BCE, McReynolds said in a note to clients.

BlackBerry maker Research In Motion Ltd. rebounded 8.1 percent to C$16.40 on speculation its 15 percent plunge in the previous three days was overdone. Chief Executive Officer Thorsten Heins, who replaced Jim Balsillie and Mike Lazaridis Jan. 22, said the following day he plans no “drastic change”

at the Waterloo, Ontario-based company.

US

By Rita Nazareth

Jan. 25 (Bloomberg) — U.S. stocks rose, sending the Dow Jones Industrial Average to the highest level since May, as the Federal Reserve signaled low rates through at least late 2014 and didn’t rule out bond purchases to bolster the economy.

A measure of commodity shares in the Standard & Poor’s 500 Index added 1.6 percent after gold rallied as record-low rates may boost its appeal as a hedge against inflation. Banks had the biggest drop in the S&P 500 among 24 groups as the industry may face pressure on margins from the Fed’s policy on rates. Apple Inc. climbed 6.2 percent to an all-time high as profit more than doubled. Textron Inc., the maker of Cessna planes, surged 15 percent after forecasting higher-than-estimated earnings.

The S&P 500 added 0.9 percent to 1,326.06 at 4 p.m. New York time, after dropping 0.5 percent earlier. The Dow gained

83.10 points, or 0.7 percent, to 12,758.85. The Nasdaq-100 Index rose 1.3 percent to 2,465.66, the highest since 2001.

“The Fed is saying that money will stay easy and the cost of money will stay low,” Madelynn Matlock, who helps oversee about $14.5 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “The ability for businesses to find the money they need to grow and for consumers to find the money they need to buy things is going to be easier. That makes the growth path a little simpler.”

Benchmark gauges reversed losses as the Fed extended its previous pledge to keep rates low at least until the middle of

2013 as more than two years of economic growth have failed to push unemployment below 8.5 percent. Fed Chairman Ben S.

Bernanke said central bankers are still debating additional asset purchases.

Investors also watched earnings reports. Of the 112 S&P 500 companies that reported results since Jan. 9, 74 posted per- share earnings that beat projections, according to data compiled by Bloomberg. Earnings probably grew 3.4 percent for S&P 500 companies in the fourth quarter, the data show. The projection has fallen from 6.2 percent at the end of last year.

The Morgan Stanley Cyclical Index of companies most- dependent on economic growth added 1 percent. The Dow Jones Transportation Average advanced 1.5 percent. All 10 groups in the S&P 500 gained.

Gold producers rallied as the metal climbed to a six-week high. Newmont Mining Corp., the largest U.S. gold producer, jumped 4.8 percent to $60.25. Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, climbed 4.8 percent to $46.08.

Apple rallied 6.2 percent, the most since May 2010, to $446.66. The company sold 37 million iPhones in the period ended Dec. 31, with customers snapping up the new 4S model that went on sale in October, a week after the death of co-founder Steve Jobs. Record revenue vaulted Apple ahead of Hewlett-Packard Co.

as the world’s biggest computer maker by sales and quelled concern that the company’s allure may dim as it embarks on a new era with Chief Executive Officer Tim Cook at the helm.

Textron surged 15 percent, the most in the S&P 500, to $24.76. Chief Executive Officer Scott Donnelly is working to leverage the company’s businesses with measures such as having Cessna and Bell share overseas service centers and sales forces.

Textron is winding down its finance unit, which struggled during the recession.

The Bloomberg U.S. Airlines Index of 11 companies jumped

4.5 percent. Delta Air Lines Inc. and US Airways Group Inc.

reported fourth-quarter profits that topped analysts’

projections. Delta Air climbed 6.2 percent to $9.96. US Airways rallied 17 percent to $7.52.

Illumina Inc. surged 46 percent to $55.15. Roche Holding AG offered $5.7 billion in a hostile bid for Illumina to bolster sales of gene-mapping equipment and services. Roche proposed paying $44.50 a share, 18 percent more than yesterday’s close.

Walter Energy Inc. gained 3.9 percent to $70.14. The company may finally lure buyers willing to bet on a recovery in coal prices with the industry’s cheapest stock. After losing almost half its value in the past year, the producer of steelmaking coal sold for 9.3 times earnings this week, according to data compiled by Bloomberg. That was less than any North American coal-mining company with $1 billion in market capitalization.

Walter Energy, which bought Western Coal Corp. for $5.3 billion in April, is an attractive target because it produces high-grade steelmaking coal, Brean Murray Carret & Co. said. A buyer could spend double Walter Energy’s closing price of $67.54 a share yesterday and still get the company for less relative to earnings than any coal takeover in the past year, data compiled by Bloomberg show.

Banks had the biggest decline in the S&P 500 among 24 industries, falling 0.3 percent. Bank of America Corp. and Citigroup Inc. are among lenders that may find it harder to boost profits and capital after the Fed’s pledge on low rates.

Bank of America rose 0.8 percent to $7.35. Citigroup added 0.2 percent to $29.96.

“This is a very dovish Fed,” David Kelly, who helps oversee $394 billion as chief market strategist for JPMorgan Funds in New York, said in a telephone interview. “It’s an attempt to push down long-term interest rates. They are pushing the rates down to a level where consumers should find them very attractive, but banks will find them very unattractive.”

Corning Inc. tumbled 11 percent, the biggest decline in the S&P 500, to $13.05. The largest maker of glass for flat-panel televisions said glass prices contributed to a 53 percent drop in fourth-quarter profit and are still sinking.

Xerox Corp. slumped 9.9 percent to $7.81. The provider of printers and business services gave earnings forecasts that trailed some analysts’ estimates as Europe weakens.

WellPoint Inc. decreased 4.8 percent to $66.10. The largest U.S. health insurer by enrollment forecast 2012 earnings and reported fourth-quarter profit that were less than analyst estimates on higher medical costs.

“It’s going to be a mediocre earnings season,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., said in a phone interview. His firm oversees $3.5 trillion as the world’s largest asset manager. “We’re not going to see robust growth this year and this is being reflected in corporate outlooks.”

 

Have a wonderful evening everyone.

 

Be magnificent!

At our first meeting with beauty, we see it in its gaudy faded finery jarring us with its garish tones,

its frills and flounces, even its deformed shapes.  But when we get to know it better,

the apparent discord reveals itself to us as rhythmic modulation.

At first, we isolate beauty from all that is around it; we detach it from the rest;

but in the end, we understand its harmony with the whole.

-Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the

big choices in life.  Because almost everything, all external expectations, all pride, all fear of embarrassment

or failure – these things just fall away in the face of death, leaving only what is truly important.

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have

something to lose.  You are already naked.  There is no reason not to follow your heart.

-Steve Jobs, 1955-2011, Stanford commencement speech, June 2005

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

Tangents:

–from Globe Life:

Return of the gladiators

“Accountants and bank clerks in Germany’s oldest city have decided to forsake their familiar beer and sausages for tunics and swords instead and have joined the country’s latest sports craze – gladiator dueling….This is no mere re-enactment.  Many of those joining in the fun in Trier’s 2,000-year-old Roman arena end up with bruises and some with a broken nose.  Courses at the gladiator school in the city have been devised with the help of historians to come as close as possible to the practices of ancient Rome.  They combine martial arts training with the wielding of battle axes, swords, spears, daggers and casting nets.  At the beginner’s level, the participants use wooden weapons.  These are replaced with real, albeit blunt ones when the participants have acquired enough skill to prevent serious injuries.”

 

A poem,

 

Memorial

He who was so boastful and anxious

And used to nip home deafened by weapons

To stand in full armour in the doorway

Like a man rushing in leaving his motorbike running

All women loved him

His wife was Andromache

One day he looked at her quietly

He said I know what will happen

And an image stared at him of himself dead

And her in Argos weaving for some foreign woman

He blinked and went back to his work

Hector loved Andromache

But in the end he let her face slide from his mind

He came back to her sightless

Strengthless expressionless

Asking only to be washed and burned

And his bones wrapped in soft cloths

And returned to the ground

 

Extract from ‘Memorial’ by Alice Oswald

photos of the day

January 24th, 2012

Artist Frank Buckley poses in the house he has built out of 1.4 billion euros in decommissioned euro notes from the Irish Central Bank’s mint, in Dublin. Bricks of money make up the walls and shredded bills carpet the ground on the first floor of the empty office building for let on Coke Lane in Smithfield where Buckley has set up camp. He has been building for 12 hours every day, and living on-site since Dec. 1, 2011.

Cathal McNaughton/Reuters

A spider silk shawl, designed by Simon Peers and Nicholas Godley, is seen on display at the Victoria and Albert Museum in London. The shawl is woven and embroidered in Madagascar and is made from the silk of more than a million female Golden Orb Weaver spiders collected in the highlands of Madagascar. The hand-woven textile is naturally golden in color and took over four years to create.

Sang Tan/AP

Market Closes for January 24th, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12,675.75	-33.07 -.26%
S&P 500	1,314.63	-1.37 -0.10%
NASDAQ	2,786.64	+2.47 +0.09%
TSX	12,395.24	-126.4660 -1.01%

 

International Markets   Close Change NIKKEI 8,785.33 +19.43 +0.22% HANG SENG 20,110.37 +167.42 +0.84 SENSEX 16,995.77 +244.04 +1.46% FTSE 100 5,751.90 -30.66 -0.53% CAC 40 3,322.65 -15.77 -0.47% DAX 6,419.22 -17.40 -0.27% Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	2.082	2.085
CDN. 30 year bond	2.665	2.665
U.S. 10-year bond	2.0564	2.0511
U.S. 30-year bond	3.1419	3.1297

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.0108	1.00897
US $	.9900	.99.111

 

Euro  Rate 1 Euro=		Inverse
Canadian $	1.31563	0.76009
US $	1.3025	0.76775

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,665.10	$1,679.20

 

Oil	Close	Previous
WTI Crude Future	$99.15	$99.93

Market Commentary:

Canada

By Matt Walcoff

Jan. 24 (Bloomberg) — Canadian stocks fell for the first time in five days, led by banks, as talks between European finance ministers and holders of Greek debt reached a stalemate.

Toronto-Dominion Bank, the country’s second-largest lender by assets, declined 1.2 percent. Canadian National Railway Co., the country’s largest railroad, dropped 3.9 percent after forecasting a smaller earnings increase this year than most analysts in a Bloomberg survey had estimated. Semiconductor designer Gennum Corp. soared 119 percent after agreeing to be bought by Semtech Corp. for about C$500 million ($494 million).

The S&P/TSX Composite Index slipped 134.15 points, or 1.1 percent, to 12,387.55 at 1:45 p.m. Toronto time after closing at a four-month high yesterday.

“The clock is really ticking for the Greeks,” Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, said in a telephone interview. The firm oversees about C$1.7 billion. “If it’s finally confirmed that one of the euro members actually defaults, the next question is, ‘Who’s next?’”

The index gained 4.7 percent this month through yesterday as improving employment and manufacturing data in the U.S. overshadowed the European debt crisis. The S&P/TSX slumped 11 percent in 2011 as concern the crisis would hamper global growth led to declines in commodity producers’ shares.

European finance ministers refused to increase their offer of 130 billion euros ($169 billion) in public funds for a second Greek debt program. They sought to make bondholders accept lower interest rates on new bonds than the investors want.

The S&P/TSX Financials Index declined for the first time in seven days. TD lost 1.2 percent to C$79.19. Royal Bank of Canada, its bigger rival, slipped 0.7 percent to C$53.89. Bank of Nova Scotia, Canada’s third-largest lender by assets, decreased 1.3 percent to C$53.85.

Canadian National retreated 3.9 percent to C$76.50 after forecasting earnings of as much as C$5.32 a share, excluding certain items, in 2012. Analysts had estimated profit of C$5.39, according to the average estimate in a Bloomberg survey.

Barrick Gold Corp., the world’s largest gold producer, fell 2.5 percent to C$46.10 after Stephen D. Walker, an analyst at Royal Bank, cut his rating on the shares to “sector perform” from “outperform.” Walker had had an “outperform” rating on Barrick since June 2009.

Alacer Gold Corp., which mines in Turkey, tumbled 7.3 percent to C$10.10 after issuing a 2012 production forecast that trailed the estimate of David Haughton, an analyst at Bank of Montreal.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, dropped 2.6 percent to C$44.73 after Jeffrey Zekauskas, an analyst at JPMorgan Chase & Co., reduced his rating on the stock to “neutral” from “overweight.” In a note to clients, Zekauskas cited the 18 percent gain in the company’s U.S.-traded shares from Dec. 19 to yesterday and a preference for shares of Agrium Inc.

Gennum surged 119 percent, the most since at least 1987, to C$13.44 after Camarillo, California-based Semtech agreed to buy it for C$13.55 a share. Last month, Sterling Partners bought Ottawa-based Mosaid Technologies Inc., which licenses semiconductor patents, for about C$590 million.

Westport Innovations Inc., which develops natural-gas engine technology, rallied 6.4 percent to C$38.15 after closing at a 10-year high yesterday. U.S. President Barack Obama may call for a goal for natural gas production in his State of the Union address today, the Wall Street Journal reported, citing unnamed people familiar with the plans.

US

By Rita Nazareth

Jan. 24 (Bloomberg) — U.S. stocks retreated, ending a five-day advance in the Standard & Poor’s 500 Index, amid a stalemate between European finance ministers and Greek bondholders over how to resolve the nation’s debt crisis.

Travelers Cos., the only insurer in the Dow Jones Industrial Average, sank 3.8 percent as earnings fell.

McDonald’s Corp. slid 2.2 percent as the restaurant chain said foreign-currency fluctuations will cut 2012 profit. Verizon Communications Inc. lost 1.6 percent after the phone company reported a loss. Peabody Energy Corp., the biggest U.S. coal producer, dropped 1.7 percent as earnings missed estimates.

The S&P 500 fell 0.1 percent to 1,314.63 at 4 p.m. New York time, after rising 2.1 percent over the previous five days. The Dow lost 33.07 points, or 0.3 percent, to 12,675.75.

“It’s all about the negotiations of Greek debt,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $715 billion. “There’s concern that, if it spills over, it undermines some of the progress being made. I’m still not convinced that they solved all of their problems. The next question, of course, is how deep of an impact that will have on corporate earnings and how the markets price that in.”

Global stocks slumped as European finance ministers pushed bondholders to provide greater debt relief for Greece, spurring concern the nation may fail to make a March 20 bond payment. The International Monetary Fund cut its forecast for the global economy. President Barack Obama tonight will lay out what he calls a “blueprint” for revitalizing the economy in his third State of the Union address before a joint session of Congress.

The Federal Reserve began a two-day policy meeting.

The S&P 500 yesterday capped its longest rally since December as data bolstered confidence in the economy and most quarterly reports exceeded forecasts. Of the 74 companies in the S&P 500 that reported results since Jan. 9, 48 posted per-share earnings that beat projections, Bloomberg data show.

Travelers retreated 3.8 percent, the most in the Dow, to $58. The insurer said fourth-quarter profit fell on lower investment income and a smaller reserve benefit, capping the company’s least profitable year since 2004.

McDonald’s declined 2.2 percent to $98.75. The company, which gets about 60 percent of its revenue outside the U.S., said profit may be trimmed as the European debt crisis sinks the region’s currency. Foreign-exchange fluctuations may cut 2012 profit by as much as 18 cents a share and first-quarter earnings by as much as 3 cents, Chief Financial Officer Peter Bensen said today on a conference call.

A measure of phone companies had the biggest loss in the S&P 500 among 10 groups, slumping 1.3 percent. Verizon slid 1.6 percent to $37.79. The second-largest U.S. phone company reported a fourth-quarter loss after booking a pension charge and having higher subsidy costs for rising iPhone sales. On a conference call, Verizon gave a 2012 earnings-forecast range whose bottom trailed analysts’ estimates. AT&T Inc. lost 1 percent to $30.09.

Peabody retreated 1.7 percent to $36.86. The coal producer reported fourth-quarter profit that missed analysts’ estimates because of lower output at its Australian operations.

Zions Bancorporation had the biggest loss in the S&P 500, falling 7.6 percent to $17.15. The Salt Lake City-based bank was cut to “hold” from “buy” at Stifel Nicolaus & Co. after reporting fourth-quarter earnings that missed the average analyst estimate.

Coach Inc. jumped 5.8 percent to $67.97. The largest U.S. luxury handbag maker reported a 15 percent increase in quarterly profit that topped analysts’ estimates, driven by holiday sales in North America as consumer confidence rose to an eight-month high in December.

EMC Corp. advanced 7.3 percent to $25.14 after reporting a 32 percent increase in fourth-quarter earnings as data growth spurs demand for its products and software from majority-owned VMware Inc.

Waters Corp. soared 8 percent, the most in the S&P 500, to $85.04. The maker of laboratory products and instruments posted quarterly profit and sales that beat analysts’ estimates.

Earnings probably grew 3.4 percent for S&P 500 companies in the fourth quarter, according to a Bloomberg survey of analysts.

The projection has fallen from 6.2 percent at the end of last year. The global economy is forecast to grow 2.3 percent in 2012, according to the median projection in a survey of economists, down from the estimate of 3.4 percent in July.

“The market is not terribly disappointed by what appear to be soft earnings compared to where we’ve been,” David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., said in a telephone interview. His firm oversees $600 billion. “There’s a creeping sense of optimism that things are going to improve. That lessens the fear that along with softness in Europe we’ll have a global recession.”

Collective Brands Inc. rallied 6.4 percent to $15.89. The company may extract the biggest takeover premium of any apparel retailer in the world as the maker of Saucony and Sperry Top- Sider shoes lures private equity buyers.

Collective Brands, which said in August it was reviewing options to boost shareholder value, may attract interest from buyout firms and rivals such as Wolverine World Wide Inc. when bids are due next week, according to people familiar with the process. The company, which also owns the Payless ShoeSource chain, could be worth as much as $27 a share based on the value of its separate businesses, Morningstar Inc. said.

While the 87 percent premium would be the largest of any deal in the industry worth at least $100 million, it still allows acquirers to get Collective Brands at half the price of its competitors relative to sales, according to data compiled by Bloomberg. In a breakup, an apparel company could keep the wholesale brands, which boosted sales by 25 percent in the first nine months of 2011, while a private equity firm would run the Payless chain for its cash flow, Auriga USA LLC said.

“On the retail side of the business, this seems like almost a perfect set-up for a private equity company,” R.J. Hottovy, director of consumer research at Chicago-based Morningstar, said in a telephone interview. “The wholesale brands alone would be an attractive acquisition target for any of the major branded footwear players.”

 

Have a wonderful evening everyone.

 

Be magnificent!

A man is a universe in miniature, and the universe, a giant living body;

the cosmos is similar to a large man,

and a man is similar to a small cosmos; so say the Sufis.

-Kabir, 1440-1518

As ever,

 

Carolann

 

Anxiety is the dizziness of freedom.

-Soren Kierkegaard, 1813-1855

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

 

Tangents:

Went to see the movie The Iron Lady on the weekend.  Meryl Streep’s acting as Margaret Thatcher now, in her advance years wrestling with dementia, and when she was younger, as a politician, and eventually Prime Minister, is just amazing.  She should win another Oscar for this role.

In the Globe & Mail today, there was an article on exercising and the brain.   It is becoming increasingly clear that exercise can prevent Alzheimer’s especially if you’re predisposed to the disease.

It would appear that exercising can also help memory.  Dave McGinn writes,

“The effect of exercise on the brain has become a hot topic in research circles.  Many recent studies have revealed a link between active living and improved memory.

How can exercise improve memory?  Irish scientist may have come up with the answer in a study published last fall in the journal Physiology & Behavior.  Male college students took a memory test and then one half of the volunteers rode an exercise bike until they were exhausted, while the other half sat idle.  Both groups took the test again.  The bike riders did much better, while those who rested showed no improvement.  Those who exercised were found to have increased levels of a protein called brain-derived neurotrophic factor, which promotes the health of nerve cells.

In a 2010 study published in the Proceedings of the National Academy of Sciences, researchers from the University of Cambridge and the National Institute on Aging in Baltimore, Md., found that mice that had access to a running wheel performed nearly twice as well on memory tests than mice with no access.

Moreover, the running mice were found to have grown an average of 6,000 new brain cells per cubic millimeter in the hippocampus, which researchers hypothesized was due to the fact exercise increases blood flow to the brain.”

photos of the day

January 23, 2012

A performer dressed in traditional costume and wearing make-up prepares to take part in Chinese new year celebrations at the 700-year-old Dongyue Temple in Beijing. The temple is the largest of its kind in northern China for the Zhengyi school of Taoism, and was originally built by Taoist monks in the 14th century. The Lunar New Year, or Spring Festival, begins on Jan. 23 and marks the start of the Year of the Dragon, according to the Chinese zodiac.

David Gray/Reuters

Japan Aerospace Exploration Agency astronaut Soichi Noguchi dives in a space suit during a refresher training exercise at the Cosmonaut training center at Star City, outside Moscow.

Sergei Remezov/Reuters

 

Market Closes for January 23rd, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12,708.82	-11.66 -.09%
S&P 500	1,316.00	+0.62 +0.05%
NASDAQ	2,784.17	-2.53 -0.09%
TSX	12,521.70	+124.60 +1.01%

 

International Markets   Close Change NIKKEI 8,765.90 -0.46 -.01% HANG SENG Closed SENSEX 16,751.73 +12.72 +0.08% FTSE 100 5,782.56 +54.01 +0.94% CAC 40 3,338.42 +16.92 +0.51% DAX 6,436.62 +32.23 +0.50% Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	2.085	2.064
CDN. 30 year bond	2.665	2.628
U.S. 10-year bond	2.0511	2.0263
U.S. 30-year bond	3.1297	3.1006

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.00897	1.0126
US $	.99111	.98756

 

Euro  Rate 1 Euro=		Inverse
Canadian $	1.31197	0.76221
US $	1.30031	0.76905

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,679.20	$1,660.60

 

Oil	Close	Previous
WTI Crude Future	$99.93	$98.46

Market Commentary:

Canada

By Matt Walcoff

Jan. 23 (Bloomberg) — Canadian stocks rose to a four-month high, led by energy producers and banks, as oil and gas futures gained and European finance ministers gathered in Brussels to discuss new budget rules and a Greek debt swap.

Encana Corp., the country’s largest gas producer, advanced 7.4 percent as the price of the fuel jumped after Chesapeake Energy Corp. announced immediate output cuts. Minefinders Corp., which produces gold and silver in Mexico, soared 22 percent after agreeing to be bought by Pan American Silver Corp. for C$1.5 billion ($1.49 billion). BlackBerry maker Research In Motion Ltd. declined 9.1 percent after new Chief Executive Officer Thorsten Heins said he doesn’t plan “drastic change.”

The S&P/TSX Composite Index increased 124.60 points, or 1 percent, to 12,521.70 at 4 p.m. Toronto time, the highest level since Sept. 8.

“Natural gas did a 360 today,” Irwin Michael, a money manager at ABC Funds in Toronto, said in a telephone interview.

The firm oversees about C$1 billion. “You got the first of production cuts. You start to get that people are a little more adventuresome.”

The index climbed each of the last five weeks, the longest streak since October 2010, as U.S. data indicated strengthening employment and manufacturing in the country that bought 75 percent of Canada’s exports in 2010.

Crude oil gained 1.3 percent on the New York Mercantile Exchange after settling at a one-month low Jan. 20. Natural gas rallied the most in two years after Chesapeake said it will “immediately curtail” output of 500 million cubic feet a day and will cut planned spending in gas fields by 70 percent from 2011 levels to $900 million.

Encana advanced 7.4 percent to C$19. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, increased 3.2 percent to C$40.21. PetroBakken Energy Ltd., an oil and gas producer with operations in Canada, climbed 3.4 percent to C$16.28 after saying it received a C$150 million increase to its credit facility.

Pan Orient Energy Corp., which produces oil and gas in Thailand, surged 27 percent to C$3.43 after reporting exploration results. Ithaca Energy Inc., which explores in the North Sea, rallied 14 percent to C$2.84 after saying it received a confidential, non-binding takeover offer.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, advanced 1.4 percent to C$45.93. Some nitrogen fertilizers produced by competitors require natural gas to manufacture. Corn and wheat futures climbed on the Chicago Board of Trade.

The S&P/TSX Financials Index rose for a sixth day, the longest streak in 11 months. Royal Bank of Canada, the country’s biggest lender by assets, gained 1.8 percent to C$54.82.

Toronto-Dominion Bank, its largest domestic rival, advanced 1.3 percent to C$80.17. Manulife Financial Corp., North America’s fourth-biggest insurer, increased 0.9 percent to C$12.76 to extend its monthly rally to 18 percent.

Minefinders surged 22 percent, the most since November 2008, to C$14.06 after Pan American Silver agreed to buy the Vancouver-based company for cash and shares. Pan American slumped 10 percent to C$22.40. Fortuna Silver Mines Inc., which operates in Peru, climbed 11 percent to C$6.28.

B2Gold Corp., which mines in Nicaragua, rose 6.4 percent to C$3.49 after saying production may increase as much as 11 percent this year.

Augusta Resource Corp., which is developing a copper project in Arizona, sank 11 percent, the most since Sept. 30, to C$2.89 after the U.S. Environmental Protection Agency called for a review of the project’s draft Clean Water Act permit.

RIM tumbled 9.1 percent to C$15.67 after Heins announced no significant strategy changes on a conference call. Heins replaced former co-CEOs Jim Balsillie and Mike Lazaridis today after shares of the Waterloo, Ontario-based company plunged 75 percent last year.

US

By Rita Nazareth

Jan. 23 (Bloomberg) — The Standard & Poor’s 500 Index rose for a fifth day, capping its longest rally since December, as energy and bank shares advanced and investors weighed developments in Europe’s efforts to tame its debt crisis.

Chesapeake Energy Corp. surged 6.3 percent, pacing gains in energy companies, as the second-largest U.S. natural-gas producer said it will cut production and reduce spending. Bank of America Corp. added 2.6 percent as Chief Executive Officer Brian T. Moynihan said the lender may reduce annual costs by as much as an additional $3 billion. Procter & Gamble Co. slumped

1.9 percent after Stifel Nicolaus & Co. cut its recommendation for the largest consumer-products company.

The S&P 500 added 0.1 percent to 1,316 at 4 p.m. New York time, gaining 2.1 percent in five days. The Dow Jones Industrial Average declined 11.66 points, or 0.1 percent, to 12,708.82, after earlier rising above the highest closing level since May.

“The bulls were able to flex their muscles a bit and the bears can’t really point to a whole lot of tangible news that’s really going to change matters much,” Hayes Miller, who helps oversee about $43 billion as the Boston-based head of asset allocation in North America at Baring Asset Management Inc., said in a telephone interview. “There’s a general relief about U.S. growth and Europe’s ability to solve its debt crisis. I don’t really buy into the overbought argument that much.”

The S&P 500 rose all four days U.S. exchanges were open last week as data bolstered confidence in the economy and companies from Goldman Sachs Group Inc. to Union Pacific Corp.

topped analysts’ income projections. Of the 52 companies in the S&P 500 that reported results since Jan. 9, 34 posted per-share earnings that beat projections, Bloomberg data show.

Equities turned lower early today after the S&P 500 reached 1,322.28, a level close to a downward trendline connecting the index’s all-time high in 2007 with its peak last year in April and its May and July highs, according to Ari Wald, a New York- based technical strategist at Brown Brothers Harriman & Co.

The index’s 14-day relative strength index, which measures the degree that gains and losses outpace each other, has stayed above 65 since Jan. 17, matching the longest streak since February, according to Bloomberg data. Some technical analysts consider RSI readings above 70 a sign that stocks have risen too far, too fast.

Germany and France said talks between Greece and bondholders on negotiations for a debt swap were making progress, while an official in Berlin said Germany may be open to combining Europe’s two bailout mechanisms and boosting their funding limit. Finance ministers meeting in Brussels today agreed on all aspects of the European Stability Mechanism in a deal to be signed on Jan. 30, Martti Salmi, an aide at Finland’s Finance Ministry in Helsinki, said by telephone.

A gauge of energy shares had the biggest gain in the S&P 500 among 10 groups, rising 0.7 percent. Chesapeake plans to cut output, idle drilling rigs and reduce spending in gas fields by 70 percent after prices for the fuel hit a 10-year low. Natural gas soared today, while Chesapeake surged 6.3 percent to $22.28.

Cabot Oil & Gas Corp. increased 6.5 percent to $65.08.

Range Resources Corp. added 9.2 percent to $59. Southwestern Energy Co. jumped 10 percent to $32.46. The oil and gas company was raised to “outperform” from “market perform” at BMO Capital Markets.

Financial stocks in the S&P 500 swung between gains and losses today before closing 0.3 percent higher.

Bank of America jumped 2.6 percent, the biggest gain in the Dow, to $7.25. The lender, which already targeted $5 billion in expense cuts from retail and back-office operations, may reach total savings of $6 billion to $8 billion a year, Moynihan said during a Jan. 19 employee meeting.

Procter & Gamble fell 1.9 percent, the second-most in the Dow, to $65. The company was lowered to “hold” from “buy” at Stifel Nicolaus.

Netflix Inc. sank 6.3 percent to $93.96. The owner of the streaming and DVD-by-mail service is likely to provide a first- quarter forecast that’s “well below” analysts’ estimates, according to Wedbush Securities.

Research In Motion Ltd. tumbled 8.5 percent to $15.56. The BlackBerry maker shook up its top management, replacing co-Chief Executive Officers Jim Balsillie and Mike Lazaridis, who guided the company for two decades and struggled to compete against Apple Inc. Thorsten Heins, a chief operating officer who joined RIM four years ago from Siemens AG, will replace the pair in the CEO post effective immediately.

Trading in U.S. stocks fell to the lowest level since at least 2008 amid mutual fund withdrawals and Wall Street job cuts.

An average of 6.69 billion shares changed hands on U.S. exchanges in the 50 days ended Jan. 18, the fewest on record in Bloomberg data starting three years ago that excludes over-the- counter venues. On the New York Stock Exchange, volume has tumbled to the lowest level since 1999, the data show.

The slowdown in trading shows that investors remain skittish after five years of withdrawals from mutual funds that buy U.S. equities and one of the most volatile years on record for the Standard & Poor’s 500 Index. While the benchmark index is having its best January rally since 1997, securities firms around the world cut more than 200,000 jobs last year.

“Investor confidence is shaky at the very least,” Mark Turner, head of U.S. sales trading at Instinet Inc. in New York, said in a telephone interview on Jan. 20. His firm handles about

4 percent of the total daily U.S. equity volume. “We need to see the U.S. economy improve. We need to see some sort of a plan in place to deal with Europe’s debt crisis before the market gains some confidence. At that point, we’ll start to see an increase in volume.”

 

Have a wonderful evening everyone.

 

Be magnificent!

In this world there are two orders of being,

the perishable and the imperishable.

The perishable is all that is visible.  The imperishable

is the invisible substance of all that is visible.

The Bhagavad Gita

As ever,

 

Carolann

 

 

It’s all trial and error, friends,

Trial and error…

-Sarah Burke, 1982-2012

A tweet on Jan. 6

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

Senior Vice-President &

Senior Investment Advisor

 

Dear Friends,

 

Tangents:

 

The weather has been the hot topic this week.  A friend who lives in West Vancouver told me this morning she was taking the afternoon off to go tobogganing on Grouse Mountain.   Sounds like a great way to spend a Friday afternoon to me.

 

The artist Andrew Millner wrote in Speak for the Trees:

What is “NATURE”?  What is “NATURAL”?  These questions are increasingly more difficult to answer as the borders between the natural and the artificial blur.   In my work I have notated the simple outlines of leaves, branches, and limbs, by hand-drawing their outlines with an electronic pen and tablet.  The drawing is a collection of moments…thousands of casual, quick outlines that transform a botanical world into a mathematical language of line.

The final drawing is culled from looking at the tree in different seasons, at different scales, and from multiple points of view.  These digital tools facilitate greater intimacy and prolonged time for investigation.  Paradoxically, they suggest evidence of our estrangement from the natural.

 

The realm of the born – all that is nature – and the realm of the

made – all that is humanly constructed – are becoming one.

Machines are becoming biological and the biological is becoming

engineered.

-Kevin Kelly

photos of the day

January 20, 2012

A thick coat of ice is seen on tree branches in Tacoma, Wash. Thick ice brought down trees and power lines in the region overnight, following two days of snow and ice storms. A powerful Pacific Northwest storm knocked out power to about 250,000 electric customers around Seattle, Tacoma, and Olympia after it coated much of Washington in ice and swelled Oregon rivers.

Ted S. Warren/AP

A butterfly rests on a flower petal at a park in Hyderabad, India.

Mahesh Kumar A./AP

 

Market Closes for January 20th, 2012

North American Markets

 

Market  Index	Close	Change
Dow Jones	12,720.48	+96.50  +0.76%
S&P 500	1,315.38	+0.88  +0.07%
NASDAQ	2,786.70	-1.63  -0.06%
TSX	12,397.10	+16.41  +0.13%

 

International Markets

 

	Close	Change
NIKKEI	8,766.36	+126.68  +1.47%
HANG SENG	20,110.37	+167.42  +0.84%
SENSEX	16,739.01	+95.27  +0.57%
FTSE 100	5,728.55	-12.60  -0.22%
CAC 40	3,321.50	-7.44  -0.22%
DAX	6,404.39	-11.87  -0.18%

 

Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	2.064	2.008
CDN. 30 year bond	2.628	2.572
U.S. 10-year bond	2.0263	1.9700
U.S. 30-year bond	3.1006	3.0313

 

Currencies

 

BOC Close	Today	Previous
Canadian   $	1.0126	1.0120
US   $	.98756	.98815

 

Euro Rate  1 Euro=		Inverse
Canadian $	1.30919	0.76383
US  $	1.29290	0.77346

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,660.60	$1,655.30

 

Oil	Close	Previous
WTI Crude Future	$98.46	$100.39

Market Commentary:

Canada

By Matt Walcoff

Jan. 20 (Bloomberg) — Canadian stocks rose, completing a fifth-straight weekly gain, as financial companies advanced after the country reported slower inflation.

Royal Bank of Canada, the country’s largest lender by assets, climbed 1.4 percent after the country reported prices climbed less in 2011 than all 23 economists in a Bloomberg survey had forecast. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, decreased 5.7 percent after a private report indicated manufacturing contracted in China.

The S&P/TSX Composite Index increased 16.41 points, or 0.1 percent, to 12,397.10, extending the weekly gain to 1.4 percent.

“All of the news in terms of inflation under control, the general economy getting better, that erases the pressure of lower margins for the banks,” Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, said in a telephone interview. The firm oversees about C$1.7 billion ($1.7 billion).

The S&P/TSX has posted the longest streak of weekly gains since October 2010 as data have shown stronger employment and manufacturing in the U.S. Seventy-five percent of Canada’s exports went to the U.S. in 2010, according to Statistics Canada.

The S&P/TSX Financials Index rose for a fifth day, the longest streak since July, after Statistics Canada said the country’s year-over-year inflation rate slowed to 2.3 percent in December from 2.9 percent in November. The Canadian dollar fell for the first time this week against the U.S. currency.

Royal Bank increased 1.4 percent to C$53.85. Toronto- Dominion Bank, the country’s second-largest lender by assets, advanced 1.2 percent to C$79.15. Manulife Financial Corp., North America’s fourth-biggest insurer, climbed 2.6 percent to C$12.65 capping its fifth-straight weekly gain.

A purchasing managers’ index released by HSBC Holdings Plc and Markit Economics indicated manufacturing contracted for a third month in China, the world’s largest user of industrial metals. Copper futures fell for the first time this week on the Comex in New York.

Base-metals and coal producers in the S&P/TSX retreated the most this month. First Quantum slumped 5.7 percent to C$22.55.

Lundin Mining Corp., which produces base metals in Europe, declined 4 percent to C$5.09.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, decreased 1.8 percent to C$45.28 after Lindsay Drucker Mann, an analyst at Goldman Sachs Group Inc., said a proposed reduction in Indian subsidies may hurt the company. The country’s government plans to reduce payments for potash and phosphorus fertilizers because prices of the nutrients may decline, Hindu Business Line reported Jan. 18 without citing anyone.

B2Gold Corp., which mines in Nicaragua, surged 6.5 percent to C$3.28 after reporting drilling results from its Primavera project.

Niko Resources Ltd., which produces oil and gas in South Asia, rose 5.3 percent to C$53.37 extend its three-day rally to 13 percent. The company said Jan. 17 it signed a $250 million credit facility with Royal Bank and Bank of Nova Scotia.

New Zealand Energy Corp., which explores for oil and gas in that country, soared 18 percent to C$1.71 after Bill Newman, an analyst at Mackie Research Capital Corp., began coverage of the Vancouver-based company with a “speculative buy” rating. The closing price was the highest since the company’s initial public offering in August.

US

By Rita Nazareth

Jan. 20 (Bloomberg) — Most U.S. stocks rose, erasing a loss for the Standard & Poor’s 500 Index in the final minutes of trading, as banks gained and results from International Business Machines Corp. to Intel Corp. boosted technology shares.

JPMorgan Chase & Co. and Bank of America Corp. added at least 1.1 percent. IBM, Intel and Microsoft Corp. rose more than 2.9 percent as results beat projections. General Electric Co.

closed unchanged, rebounding from a 2.5 percent slump, as profit topped estimates while sales were curbed by Europe. Google Inc. tumbled 8.4 percent as earnings missed projections. American Express Co. slid 1.8 percent on lower-than-forecast sales.

Seven stocks gained for every five falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 rose 0.1 percent to 1,315.38, extending its gain since Jan. 13 to 2 percent. The index rose for a third week, capping the longest streak since October. The Dow Jones Industrial Average climbed 96.50 points, or 0.8 percent, to 12,720.48. IBM, which comprises 11 percent of the share-price weighted Dow, added 60.55 points to the index.

“It’s a mixed bag of earnings,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees $85 billion, said in a telephone interview.

“Earnings growth is going to decline, but that’s already built into the market to a certain extent. If earnings don’t collapse, it won’t be a problem.”

S&P 500 companies, which beat profit estimates in the previous 11 quarters, will report a 3.4 percent increase in per- share earnings during the September-December period, analysts’ forecasts compiled by Bloomberg show. Of the 51 companies in the S&P 500 that reported results since Jan. 9, 33 posted per-share earnings that beat projections, Bloomberg data show.

Sales of previously owned U.S. homes rose for a third month in December to the highest level since January 2011, a sign the housing market ended last year with momentum. Greek officials and private creditors entered a third day of negotiations on a debt swap deal that’s crucial to lowering the country’s borrowings and freeing up a second round of international aid.

Financial shares had the biggest gain among 10 S&P 500 groups, adding 0.7 percent. JPMorgan rose 1.2 percent to $37.36.

Bank of America advanced 1.6 percent to $7.07.

“The upturn is around the corner,” Chris Hyzy, the New York-based chief investment officer at U.S. Trust Co., which oversees about $325 billion, said in a telephone interview. The rebound in banks “is a good sign. The financials have become a more stable sector. That’s the first sign that within six to nine months you could start to see the turnabout in the financial sector.”

IBM gained 4.4 percent to $188.52 after forecasting 2012 earnings that beat analysts’ estimates as fourth-quarter profit rose 4.4 percent because of rising software demand.

Intel increased 2.9 percent to $26.38. The chipmaker predicted first-quarter revenue that may top analysts’ estimates, signaling that the shortage of disk drives that throttled personal computer production may be ending.

Microsoft added 5.7 percent to $29.71. The company’s Xbox business got a boost from Christmas shoppers, who snapped up its video-game consoles and Kinect sensor controllers, and signed up for the Xbox Live online service.

GE closed unchanged at $19.15. Profit topped estimates after the company’s industrial order backlog rose to a record $200 billion even as weaker demand in Europe hindered sales in health care.

Google tumbled 8.4 percent to $585.99. Chief Executive Officer Larry Page is moving into new markets to ignite growth outside Google’s traditional search-based business. That effort contributed to an 8 percent drop in the average price Google gets when users click an ad, because it charges less for ads on mobile devices and in emerging markets, said Herman Leung, an analyst at Susquehanna Financial Group.

American Express lost 1.8 percent to $50.04. The company reported fourth-quarter revenue of $7.74 billion, missing the average analyst projection of $7.9 billion, data compiled by Bloomberg show. Profit excluding some items beat analysts’ estimates as card spending reached a record.

Capital One Financial Corp. slumped 5.6 percent to $46.03.

The credit-card issuer seeking approval to purchase ING Groep NV’s U.S. online bank said fourth-quarter profit fell 42 percent as expenses rose.

Fifth Third Bancorp sank 2.9 percent to $13.17. Ohio’s largest lender reported fourth-quarter sales of $1.46 billion, missing the average analyst estimate of $1.52 billion, data compiled by Bloomberg show.

U.S. stocks are caught in “a vicious circle” of slower trading and bigger swings in prices, according to Pierre Lapointe, Brockhouse & Cooper Inc.’s global macro strategist.

Trading for the 50 days ended yesterday was the slowest since at least 2008, when Bloomberg started compiling the data, at 6.67 billion shares a day.

Similar averages for companies in the S&P 500 and the Dow declined this week to the lowest levels since 1999 and 2000, respectively, according to Bloomberg’s figures. They reflect trading totals for each stock on the New York Stock Exchange or Nasdaq Stock Market, depending on where it’s listed.

“Getting in or out of a stock causes more price variation” because fewer shares are trading, Lapointe and Alex Bellefleur, a financial economist, wrote yesterday in a report from their Montreal-based firm. “This increases volatility.”

The Chicago Board Options Exchange Volatility Index, or the VIX, closed above 20 for almost six months before dropping below the threshold yesterday. The time period was the longest for the benchmark gauge of U.S. stock options since 2009.

 

Have a wonderful weekend everyone.

 

Be magnificent!

The lamp is empty; the oil is used up.

The tambourine is dead, the dancer lies down,

The fire is out, and no smoke rises from it.

The soul is absorbed into the Unique, and there is no longer a duality.

~ Kabir,1440-1518

As ever,

 

Carolann

 

Beware the fury of the

patient man.

-John Dryden, 1631-1700

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

Senior Vice-President &

Senior Investment Advisor

Tangents:

I read an interview with Pierre Dukan, the diet guru (since Carole Middleton told a journalist that she followed his high-protein diet, sales of his book have soared in the UK, North America and even China) in the Financial Times last night. Can’t say I agree with him. However it is the time of year to check resolutions. This is interesting:

Lessons from a 16^th-century dieting bestseller

One of the most successful diet books, The Art of Living Long by a Venetian merchant named Luigi Cornaro (1464-1566), is still in print more than 450 years after it was first published in Padua in 1558.

It was an instant success, went through many editions, and was translated into many languages. Contemporaries such as Elyot, Boorde, Vaughan and Markham, concerned with what they perceived to be the problem of excessive eating and drinking, had read Cornaro’s “admirable diet”, a diet not far removed from the simple peasant food they all advocated.

A 1903 edition of The Art of Living Long was still advising its readers to take good heed of Cornaro’s work, and recommending the spirit of his approach, if not his life-and-death method, the strictness of which could, as today’s neurobehaviourists recognize, sometimes backfire….The first rule of Cornaro’s diet is to regain self-control. Gluttony, he believed, was not merely a personal sin but also a killer. He saw it as an almost apocalyptic force: it “kills every year…as great a number as would perish during the time of a most dreadful pestilence, or by the sword or fire of many bloody wars.” Citing the ancients, Galen Hippocrates, Plato and Cicero, he insisted with the zeal of a convert, on living a regular life with moderation…Physic , or medicine, was, for the most part, nothing but a substitute for the actual weight loss necessities of exercise and temperance.

People should eat little and frugally (today’s calorie restrictors are Cornaro’s direct dieting descendants) he advised, and he recommended a diet consisting of 12oz a day in bread, soups, yolks of new-laid eggs, meat, plus about 14oz of wine.

 

Extracted from ‘Calories and Corsets by Louise Foxcroft, published this month by Profile Books.

 

photos of the day

January 19, 2012

The Houses of Parliament are seen in early morning mist in central London.

Stefan Wermuth/Reuters

Ukrainians dance during celebration to mark the Epiphany in Kiev, Ukraine. Orthodox believers celebrate the holiday of the Epiphany on Jan. 19, and traditionally bathe in holes cut through thick ice on rivers and ponds to cleanse themselves with water deemed holy for the day.

Sergei Chuzavkov/AP

 

Market Closes for January 19th, 2012

North American Markets

 

Market  Index	Close	Change
Dow Jones	12,623.98	+45.03  +0.36%
S&P 500	1,314.50	+6.46  +0.49%
NASDAQ	2,788.33	+18.62  +0.67%
TSX	12,380.69	+53.17  +0.43%

 

International Markets

 

	Close	Change
NIKKEI	8,775.19	+224.61  +2.63%
HANG SENG	19,942.95	+256.03  +1.30%
SENSEX	16,643.74	+192.27  +1.17%
FTSE 100	5,741.15	+38.78  +0.68%
CAC 40	3,328.94	+64.01  +1.96%
DAX	6,416.26	+61.69  +0.97%

 

Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	2.008	1.957
CDN. 30 year bond	2.572	2.528
U.S. 10-year bond	1.9700	1.8966
U.S. 30-year bond	3.0313	2.9554

 

Currencies

 

BOC Close	Today	Previous
Canadian   $	1.0120	1.0127
US   $	.98815	.98886

 

Euro Rate  1 Euro=		Inverse
Canadian $	1.31227	0.76204
US  $	1.29649	0.77131

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,655.30	$1,660.80

 

Oil	Close	Previous
WTI Crude Future	$100.39	$101.04

Market Commentary:

Canada

By Ksenia Galouchko

Jan. 19 (Bloomberg) — Canadian stocks rose for a second day, led by financial and energy companies, as Bank of America Corp. reported a profit and U.S. unemployment claims fell to the lowest level in almost four years.

Bank of Nova Scotia, Canada’s third-largest bank, gained 2.6 percent after saying it is considering a sale of its Scotia Plaza office tower. PetroBakken Energy Ltd. increased 3.9 percent after selling an asset for C$105 million ($104 million).

Teck Resources Ltd., Canada’s largest copper producer, rallied 3.6 percent as the metal rose on prospects of demand from China.

The S&P/TSX Composite Index rose 44.07 points, or 0.4 percent, to 12,371.59 at 1:46 p.m. Toronto time.

“Investors are feeling a little bit more confident in the outlook for the financials,” Michael Sprung, president of Sprung & Co. Investment Counsel Inc. in Toronto, said in a phone interview. “They have been a harbor for the investors.”

The index climbed 0.8 percent in the two weeks ended yesterday as base-metals producers and financial companies gained as Goldman Sachs Group Inc. reported better-than-forecast earnings and copper imports to China rose to a record. The S&P/TSX trailed the S&P 500 last year for the first time since 2003 as drops in commodity prices held back the Canadian stock benchmark gauge.

S&P/TSX banks rose after Bank of America, the second- largest U.S. lender by assets, swung to a fourth-quarter profit and Morgan Stanley reported a smaller fourth-quarter loss than analysts estimated. The U.S. Labor Department reported jobless claims plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008.

Royal Bank of Canada, the country’s biggest lender by assets, gained 1 percent to C$52.96, after rising to C$53.18, the highest intraday price since July 22. Toronto-Dominion Bank, the country’s second-largest lender, increased 1.5 percent to C$78.45. National Bank of Canada gained 2.2 percent to C$75.55 after advancing to C$75.71, the highest intraday price since July 28.

Bank of Nova Scotia gained 2.6 percent to C$53.92 after rising to C$54.07, the highest intraday price since Sept. 27.

Canada’s third-largest bank said it is considering a sale of its Scotia Plaza office tower, one of the largest skyscrapers in Toronto’s financial district.

Financial companies comprise 28 percent of Canadian equities by market value, the most of any 10 industry groups, according to Bloomberg data.

PetroBakken Energy gained 3.9 percent to C$15.56 and rose to C$15.87 earlier, the highest intraday price since June 6, after selling its interest in the southeast Saskatchewan Weyburn unit to an undisclosed buyer. The shares were raised to “outperform” from “sector perform” at Alta Corp Capital Inc.

Petrobank Energy & Resources Ltd., the majority owner of PetroBakken, advanced 5.4 percent to C$13.75.

Bankers Petroleum Ltd. rallied 3.5 percent to C$5.38 after rising as much as 4 percent earlier, after Tudor Pickering said it sees the company as “viable” acquisition target.

Copper increased to a 17-week high in New York on speculation China will ease credit controls as growth slows, potentially bolstering demand prospects in the world’s largest user of the metal. Copper imports into China rose to a record and fourth-quarter economic growth in the country topped economists’ estimates, figures showed this month.

“The sentiment in respect to the growth in China seems to be a driving force in the Canadian market and the commodities gains,” Sprung said. “Any sign that growth there won’t contract is taken as a positive sign.”

Lundin Mining Corp., which produces base metals in Europe, climbed 2.6 percent to C$5.17, after rising to C$5.23, the highest intraday price since Sept. 8.

Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi project in Mongolia, rallied 1.5 percent to C$19.60. Teck Resources rallied 3.6 percent to C$42.38.

HudBay Minerals Inc., which mines copper, gold and zinc, rallied 4.2 percent to C$11.46.

Finning International Inc. rose 3.3 percent to C$26.97 after climbing to C$27.27, the highest intraday price since Aug.

2. The world’s biggest Caterpillar dealer had its rating raised to “outperform” from “market perform” at Raymond James Financial Inc.

Grande Cache Coal Corp. fell 6.5 percent to C$9.28 after dropping 12 percent, the most since October. The Calgary-based coal producer fell after Winsway Coking Coal Holdings Ltd., a Chinese miner that agreed to buy Grande Cache in October, was targeted by a short seller. Winsway, which denied the allegations by Jonestown Research that it imported less coal than reported, declined 8.6 percent in Hong Kong.

A gauge of gold stocks in the S&P/TSX fell for a third day as the declined from a five-week high after the drop in the unemployment benefits claims revived prospects for economic growth and eroded the appeal of precious metals as a hedge.

Barrick Gold Corp. fell 3.2 percent to C$46.98 after declining to C$46.96 earlier, the lowest intraday price since Jan. 3. Kinross Gold Corp., Canada’s third-largest gold producer, tumbled 3.6 percent to C$10.16 after falling to C$10.10, the lowest price since 2008.

North American Palladium Ltd. fell 10 percent to C$2.42, declining to C$2.35 earlier, the lowest intraday price since Oct. 6

US

By Rita Nazareth

Jan. 19 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a third straight day, as Bank of America Corp. rallied after swinging to a profit and jobless claims plunged to the lowest level in almost four years.

Bank of America, the second-largest U.S. lender, climbed 2.4 percent. Morgan Stanley added 5.4 percent after the owner of the largest brokerage reported a smaller-than-estimated loss.

Union Pacific Corp. jumped 2.2 percent to the highest level since 1980 as the biggest U.S. railroad’s profit beat forecasts.

Eastman Kodak Co. tumbled 46 percent in over-the-counter trading after the photography pioneer filed for bankruptcy.

The S&P 500 added 0.5 percent to 1,314.50 at 4 p.m. New York time. The Dow Jones Industrial Average gained 45.03 points, or 0.4 percent, to 12,623.98. The Nasdaq-100 Index rose 0.7 percent to 2,441.70, the highest level since 2001. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against losses in the S&P 500, declined below 20 for the first time since July.

“There has been some relief that financials might be along for the ride,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. “A lot of the pessimism has been baked into the cake. We’re more likely to see positive surprises.”

Of the 35 companies in the S&P 500 that reported results since Jan. 9, 22 posted per-share earnings that beat projections, according to data compiled by Bloomberg. The S&P 500 has gained 4.5 percent so far in 2012, the most since it rose 4.8 percent over the first 12 days in 1997, according to data compiled by Bloomberg.

Today’s rally in stocks was helped by optimism that the U.S. economy will be able to weather Europe’s debt crisis.

Claims for jobless benefits last week dropped to the lowest level since April 2008, pointing to an improvement in the U.S. job market that may help bolster spending in the new year.

“We’re in a fragile economy, we’re not going to have robust growth, but it’s going to take us a lot of things to derail,” Richard Weeks, the Vienna, Virginia-based managing director and partner at HighTower’s VWG Wealth Management. His firm oversees about $20 billion. “You’ve seen big corporations navigate through very difficult times.”

The Dow Jones Transportation Average, a proxy for the economy, increased 1.6 percent. Gauges of diversified financial and transportation shares added at least 1.5 percent, leading the gains among 24 industries in the S&P 500.

Bank of America rallied 2.4 percent, the most in the Dow, to $6.96. Chief Executive Officer Brian T. Moynihan is cutting assets, expenses and staff while raising capital to meet demands from regulators for a larger cushion against unexpected losses.

Morgan Stanley climbed 5.4 percent to $18.28. Morgan Stanley posted the only increase in trading revenue excluding accounting gains among the five largest Wall Street banks in 2011, making progress toward Chairman and Chief Executive Officer James Gorman’s goal of boosting market share.

Union Pacific gained 2.2 percent to $112.18. Carloads advanced 3 percent in the quarter, with auto and chemical shipments leading gains as a strengthening recovery boosted demand. Energy and industrial products deliveries also rose.

EBay Inc. jumped 3.9 percent to $31.51. The largest Internet marketplace reported sales and profit that topped analysts’ estimates, buoyed by a campaign to promote its expanded retail offerings and broader use of the PayPal online- payments service.

Some of the largest technology companies reported results after the market closed today.

Intel Corp., the biggest chipmaker, predicted revenue that may top estimates. International Business Machines Corp., the largest computer-services provider, and Microsoft Corp., the biggest software maker, reported earnings that beat forecasts.

Google Inc., owner of the most popular Internet search engine, reported revenue that fell short of analysts’ projections.

Intel rose 0.4 percent to $25.73, while IBM added 2.5 percent to $185.01, and Microsoft jumped 1.8 percent to $28.62 at 5:09 p.m. New York time. Google tumbled 8.5 percent to

$585.26 after the close of regular trading.

Sears Holdings Corp. advanced 9.8 percent to $43.35 following a report that CIT Group Inc. will approve financing for the retailer’s vendors as soon as today. CIT is looking for more detailed information on Sears’s financing and may require letters of credit for all orders, Women’s Wear Daily reported, citing unidentified people familiar with the plan. CIT is the largest U.S. company that provides what’s known as factoring.

Credit Suisse Group AG’s Andrew Garthwaite lifted his 2012 forecast for the S&P 500 to 1,400, citing the European Central Bank’s refinancing plans for banks as a “potential game changer.” Garthwaite, the London-based global equity strategist at the firm, had previously estimated the benchmark gauge for U.S. equities would climb to 1,340 at the end of 2012.

Eastman Kodak Co. slumped 46 percent to 30 cents in over- the-counter trading. The Rochester, New York-based company, which traces its roots to 1880, listed assets of $5.1 billion and debt of $6.8 billion in Chapter 11 documents filed in U.S.

Bankruptcy Court in Manhattan. The company’s stock symbol changed today to “EKDKQ” from “EK.”

Johnson Controls Inc. plunged 8.8 percent to $32.46. The largest U.S. auto supplier lowered its forecast for profit for the fiscal year on weakening demand for replacement batteries and a reduced outlook for vehicle assembly in Europe.

Solar companies slumped after Germany said it will make monthly subsidy cuts to slow demand for panels in the country, the world’s largest market. Suntech Power Holdings Co., the biggest solar-panel maker, fell 14 percent to $3.20. First Solar Inc. declined 10 percent to $38.70.

 

Have a wonderful evening everyone.

 

Be magnificent!

There are thousands of lives in one single life.

-Swami Prajnanpad,1891-1974

As ever,

 

Carolann

 

Life is occupied in both perpetuating itself and in

surpassing itself. If all it does is maintain itself,

then living is only not dying.
-Simone de Beauvoir, 1908-1986

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

Senior Vice-President &

Senior Investment Advisor

Dear Friends,

 

Tangents:

A couple of interesting things reported today in the science world:

“Scientists confirmed on Tuesday that 15 pounds of rock collected recently in Morocco fell to Earth from Mars during a meteorite shower last July. This is only the fifth time in history scientists have chemically confirmed Martian meteorites that people witnessed falling. The fireball was spotted in the sky six months ago, but the rocks weren’t discovered on the ground in North Africa until the end of December.”

“British scientists have found scores of fossils that evolutionary theorist Charles Darwin and his peers collected but that had been lost for more than 150 years. Dr. Howard Falcon-Lang, a paleontologist at Royal Holloway, University of London, said Tuesday that he stumbled upon the glass slides containing the fossils in an old wooden cabinet that had been shoved in a ‘gloomy corner’ of the massive, drafty British Geological Survey.”

 

photos of the day

January 18, 2012

Ballerinas from the Paris Opera Ballet of France dance during the full dress rehearsal for “Giselle” at the Esplanade Theatre in Singapore Jan. 18, 2012. The ballet will be performed from Jan. 19 – 21.

Chrystalleni Trikomiti of Cyprus competes at the International Rhythmic Gymnastics event in east London. The competition is part of the testing programme for the London 2012 Olympic Games, called ‘London Prepares’.

Eddie Keogh/Reuters

Market Closes for January 18th, 2012

North American Markets

 

Market Index	Close	Change
Dow Jones	12,578.95	+96.88 +0.78
S&P 500	1,308.04	+14.37 +1.11%
NASDAQ	2,769.71	+41.63 +1.53%
TSX	12,327.52	+94.69 +0.77%

 

International Markets

 

	Close	Change
NIKKEI	8,550.58	+84.18 +0.99%
HANG SENG	19,686.92	+59.17 +0.30%
SENSEX	16,451.47	-14.58 -0.09%
FTSE 100	5,702.37	+8.42 +0.15%
CAC 40	3,264.93	-5.06 -0.15%
DAX	6,354.57	+21.64 +0.34%

 

Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	1.957	1.918
CDN. 30 year bond	2.528	2.502
U.S. 10-year bond	1.8966	1.8566
U.S. 30-year bond	2.9554	2.9000

 

Currencies

 

BOC Close	Today	Previous
Canadian $	1.0127	1.0137
US $	.98886	.98653

 

Euro Rate 1 Euro=		Inverse
Canadian $	1.29981	0.76934
US $	1.28533	0.77801

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,660.80	$1,652.30

 

Oil	Close	Previous
WTI Crude Future	$101.04	$100.94

Market Commentary:

Canada

By Matt Walcoff and Ksenia Galouchko

Jan. 18 (Bloomberg) — Canadian stocks rose, led by energy and financial companies, as the International Monetary Fund proposed increasing funds to contain the European debt crisis and U.S. factory production climbed.

Suncor Energy Inc., Canada’s largest oil and gas producer, gained 1.9 percent as the IMF proposed as much as $500 billion more in lending capacity to help insulate the global economy.

National Bank of Canada rallied 1.4 percent. BlackBerry maker Research In Motion Ltd. dropped 3.8 percent after Samsung Electronics Co. said it won’t buy the company. TransCanada Corp., owner of the Keystone XL pipeline, fell 1.7 percent after people familiar with the matter said the Obama administration will reject the project.

The S&P/TSX Composite Index rose 79.81 points, or 0.7 percent, to 12,312.64 at 1:22 p.m. Toronto time.

“Efforts are at least under way to stabilize the European situation — that’s encouraging,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said in a phone interview. “We are generally seeing positive economic numbers.

The manufacturing increase was very strong and suggests that the U.S. economy is recovering.”

Factories in the U.S. churned out more computers, cars and construction material in December as manufacturing remained at the center of the expansion. Output climbed 0.9 percent last month, the biggest gain since December 2010, according to Federal Reserve data issued today in Washington.

The S&P/TSX climbed 0.2 percent in the two weeks ending yesterday as gains by base-metals producers and financial companies were offset by declines in energy stocks as natural gas prices plunged to a nine-year low. The S&P/TSX trailed the S&P 500 last year for the first time since 2003 as drops in commodity prices held back the Canadian stock benchmark gauge.

Energy and raw-materials companies make up 47 percent of Canadian equities by market value, according to Bloomberg data.

Global stocks rose as the International Monetary Fund proposed to boost its lending capacity. The Washington-based lender is aiming to increase its resources after identifying a potential need for $1 trillion in financing in coming years, an IMF spokesman said in a statement.

Greece is close to a deal with private creditors that would give them cash and securities with a market value of about 32 cents per euro of government debt, said Bruce Richards, who is on the creditors’ committee and chief executive officer for Marathon Asset Management LP.

S&P/TSX banks rose, reversing three days of losses after Goldman Sachs Group Inc., the fifth-largest U.S. bank by assets, beat analysts’ average earnings forecast in a Bloomberg survey by 50 percent. Royal Bank of Canada, the country’s biggest lender by assets, gained 1.4 percent to C$52.52. Bank of Nova Scotia rose 1.1 percent to C$52.40. National Bank of Canada gained 1.4 percent to C$74.11.

Oil and natural gas stocks in the S&P/TSX rose for a third day. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, rose 1.3 percent to C$38.23.

Suncor Energy rose 1.9 percent to C$33.84 after climbing to C$33.96, the highest intraday price since Aug. 4. Petrobakken Energy Ltd. gained 4.4 percent to C$14.71. Petrobank Energy & Resources Ltd., the majority owner of PetroBakken, advanced 4.5 percent to C$12.82, after rising to C$13.25, the highest intraday price since Aug. 5.

The gauge of base metals in the S&P/TSX advanced for the third day. Teck Resources, Canada’s largest copper producer, rallied 2.7 percent to C$40.91 after rising to $41, the highest intraday price since Oct. 31. Thompson Creek Metals Co. rallied 5.7 percent to C$8.11 after touching C$8.13, the highest intraday since Sept. 8.

Uranium One Inc., a mining company controlled by Moscow- based ARMZ Uranium Holding, climbed 6.2 percent to C$2.76.

TransCanada fell 1.7 percent to C$41.63 after sliding as much as 4.8 percent, the most intraday since May 2010. The Obama administration probably will announce rejection of TransCanada’s Keystone XL pipeline later today or tomorrow, according to two people familiar with the matter. The administration will let TransCanada submit a new application for an alternate pipeline route, a person familiar with the administration’s plans said.

Finning International Inc. jumped 4.8 percent to C$25.58.

The world’s largest dealer of Caterpillar Inc. equipment agreed to buy a distribution and support business from the U.S. manufacturer for about $465 million.

RIM lost 3.8 percent to C$17.09 after Samsung denied a report from the BGR blog that the Suwon, South Korea-based company is interested in buying RIM. Shares of the Waterloo, Ontario-based smartphone maker rallied 5.3 percent yesterday.

US

By Rita Nazareth

Jan. 18 (Bloomberg) — U.S. stocks rose, giving the Standard & Poor’s 500 Index its best start to a year since 1987, after confidence among homebuilders topped forecasts, Goldman Sachs Group Inc. rallied and concern about Europe eased.

Goldman Sachs climbed 6.8 percent as earnings beat estimates amid lower compensation costs. Bank of America Corp. and JPMorgan Chase & Co. jumped at least 4.6 percent, leading the gains in the Dow Jones Industrial Average.

PulteGroup Inc. and Lennar Corp. added more than 4.3 percent, pacing an advance in homebuilders. A measure of chipmakers rose the most in the S&P 500 among 24 industries, rallying 3.9 percent.

The S&P 500 increased 1.1 percent to 1,308.04 at 4 p.m. New York time, closing above 1,300 for the first time since July.

The Dow advanced 96.88 points, or 0.8 percent, to 12,578.95. The Nasdaq Composite Index climbed 1.5 percent to 2,769.71. The Russell 2000 Index jumped 1.8 percent to 779.26.

“It’s great to see the market up,” John Carey, a Boston- based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $220 billion. “People are realizing that Europe is important, but it’s not the whole world. They are looking at the economic numbers in the U.S. and seeing that we’re not going back into a recession. The economy is still growing. We might be all right at the end of the day.”

The S&P 500 has risen 4 percent this year as measures of commodity, financial and industrial shares rallied at least 6.4 percent. The Morgan Stanley Cyclical Index of companies most- tied to the economy has surged 11 percent in 2012, with Alcoa Inc. and Caterpillar Inc. soaring at least 15 percent.

Stocks climbed today as confidence among U.S. homebuilders rose in January to the highest level since 2007. Equities extended gains as an official told reporters that Greece’s government could forge an agreement with private creditors by the end of this week after talks resumed in Athens today. The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to safeguard the economy.

“Investors need a new excuse to commit more capital,”

Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1.3 billion, said in a telephone interview. “The acute stress of Europe has moderated. Given that we already have good economic data, the most obvious new excuse is earnings. I would expect a decent earnings season.”

Companies in the benchmark index, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September- December period, analysts’ estimates compiled by Bloomberg show.

Nine out of 10 industries in the S&P 500 rallied as financial and technology gauges advanced at least 1.6 percent. A gauge of homebuilders in S&P indexes climbed 4.6 percent.

PulteGroup added 5.9 percent to $7.94. Lennar jumped 4.4 percent to $23.

Goldman Sachs rose 6.8 percent to $104.31. Chief Executive Officer Lloyd C. Blankfein cut compensation 21 percent in 2011 as he reduced costs and focused on international growth to offset a slowdown in trading, which contributes most of the firm’s revenue. Goldman Sachs’s higher-than-estimated earnings contrasted with previous reports from Citigroup Inc., which fell short of analysts’ estimates, and JPMorgan, which matched projections.

Some of the largest financial companies also climbed. Bank of America advanced 4.9 percent to $6.80. JPMorgan added 4.7 percent to $36.54.

Bank of New York Mellon Corp. fell 4.6 percent to $20.30.

The world’s biggest custody bank said fourth-quarter earnings declined 26 percent on a restructuring charge and lower revenue from businesses tied to financial markets.

The Philadelphia Semiconductor Index surged 5 percent as all of its 30 stocks advanced. Linear Technology Corp. jumped 12 percent, the most in the S&P 500, to $33.32. The maker of semiconductors for industrial equipment and cars forecast fiscal third-quarter sales that would beat analysts’ estimates.

Yahoo! Inc. gained 3.2 percent to $15.92 as Jerry Yang’s exit may remove a barrier to find a buyer or negotiate a sale of stakes in Asian assets valued at more than $10 billion. Now that the co-founder and one-time chief executive officer has cut his leadership ties to Yahoo, newly appointed CEO Scott Thompson has freer rein to unwind the company’s part-ownership of Alibaba Group Holding Ltd. and Yahoo Japan Corp.

U.S. companies that beat analysts’ earnings estimates are an exception, rather than the rule, for the fourth-quarter reporting season getting under way. Only 47.1 percent of companies in the S&P 500 that posted quarterly results between Dec. 1 and yesterday exceeded the average projection, according to data compiled by Bloomberg.

So-called positive surprises have surpassed 50 percent at a comparable point in every other quarterly reporting period for the past four years. The previous low was 51.5 percent in the third quarter of 2008, when a global financial crisis was taking hold.

“Early reporters’ results” are one of two reasons to expect the current earnings season to be disappointing, Thomas M. Doerflinger, a strategist at UBS AG, wrote yesterday in a report. The other is that many companies are likely to cut estimates for this year.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

Man progresses, from epoch to epoch, toward the full realization of his soul,

of this soul that is greater than all the riches he can accumulate,

than all the actions he can accomplish and all the theories he can set forth,

this soul that continues onward, never ending in death or dissolution.

-Rabindranath Tagore, 1861-1901

 

As ever,

 

Carolann

 

Do not condemn the judgment of another

because it differs from your own. You

may both be wrong.

-Lao Tzu, 570-490 BC

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

Senior Vice-President &

Senior Investment Advisor

Dear Friends,

 

Tangents:

Birthday: Benjamin Franklin, January 17, 1706; some of his words of wisdom:

There is no little enemy.

Don’t throw stones at Your neighbors if your own windows are glass.

Be slow in choosing a friend, slower in changing.

Necessity never made a good bargain.

The definition of insanity is doing the same thing over and over and expecting different results.

I received an e-mail from a client on the weekend with this cogent message:

 

“We spend January 1 walking through our lives, room by room, drawing up a list of work to be done, cracks to be patched. Maybe this year, to balance the list, we ought to walk through the rooms of our lives… not looking for flaws, but for potential.” ~ Ellen Goodman

 

photos of the day

January 17, 2012

A jogger runs along a street during a snowfall in Vienna.

Heinz-Peter Bader/Reuters

A woman walks past portraits on a street in Lisbon, Portugal. The photos are part of French photographer Joanne Gatefield’s large-scale art project called ‘Inside Out Lx,’ which aims to spread joy by showing laughing people.

Hugo Correia/Reuters

Market Closes for January 16th, 2012

North American Markets

 

Market  Index	Close	Change
Dow Jones	12,472.07	+60.01  +0.48
S&P 500	1,293.67	+4.58  +0.36%
NASDAQ	2,728.08	+17.41  +0.64%
TSX	12,232.83	-25.77  -0.21%

 

International Markets

 

	Close	Change
NIKKEI	8,466.40	+88.04  +1.05%
HANG SENG	19,627.75	+615.55  +3.24%
SENSEX	16,466.05	+276.69  +1.71%
FTSE 100	5,693.95	+36.51  +0.65%
CAC 40	3,269.99	+44.99  +1.40%
DAX	6,332.93	+112.92  +1.82%

 

Bonds

 

Bonds	%Yield	Previous %Yield
CDN. 10 year bond	1.918	1.933
CDN. 30 year bond	2.502	2.511
U.S. 10-year bond	1.8566	1.8775
U.S. 30-year bond	2.9000	2.9161

 

Currencies

 

BOC Close	Today	Previous
Canadian   $	1.0137	1.01532
US   $	.98653	.98491

 

Euro Rate  1 Euro=		Inverse
Canadian $	1.29964	0.76945
US  $	1.28212	0.77996

 

Commodities

 

Gold	Close	Previous
London Gold Fix	$1,652.30	$1,654.20

 

Oil	Close	Previous
WTI Crude Future	$100.94	$99.83

 

Market Commentary:

Canada

By Matt Walcoff and Ksenia Galouchko

Jan. 17 (Bloomberg) — Canadian stocks fell as Kinross Gold Corp. plunged after saying it expects to record a goodwill writedown on its Tasiast mine in Africa and banks slipped as Citigroup Inc. reported a decline in profit.

Kinross, Canada’s third-largest gold producer by market value, dropped 21 percent. Cenovus Energy Inc., the country’s fifth-biggest energy company by revenue, rose 4.4 percent after an analyst at Canaccord Financial Inc. raised his share-price estimate on the company. Research In Motion Ltd. gained 5.3 percent after a report that Samsung Electronics Co. may be interested in buying the company.

The Standard & Poor’s/TSX Composite Index slipped 25.77 points, or 0.2 percent, to 12,232.83 today.

“There was concern from day one as to this purchase of Tasiast,” Greg Eckel, a fund manager with Morgan Meighen & Associates Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($975 million). The acquisition “seemed a little excessive and now you’re seeing that they’re having to pull back and digest what they’ve done.”

The index gained 4.5 percent from Dec. 28 to yesterday as gold stocks rebounded from the lowest level since July 2010.

Gold companies make up 11 percent of Canadian stocks by market value, and eight of the world’s 21 largest companies in the industry are Canadian, according to data compiled by Bloomberg.

Kinross plunged 21 percent, the most since its initial public offering in 1993, to C$10.40 after saying it will review development plans for three projects, including Tasiast. Kinross acquired the mine in Mauritania when it bought Red Back Mining Inc. for C$8 billion ($7.9 billion) in September 2010.

Barrick decreased 2.1 percent to C$48.75 after Steven Butler, an analyst at Canaccord Financial Inc., cut his rating on the shares to “hold” from “buy” in a note to clients dated yesterday. Butler cited Barrick’s higher share price relative to net assets than its peers and a “relatively flat production profile over the next few years” in the note.

Agnico-Eagle Mines Ltd. fell 5.4 percent to C$36.11 after at least three analysts, including Anita Soni of Credit Suisse Group AG, cut the stock’s price estimates.

S&P/TSX banks retreated for a third day after Citigroup, the third-largest U.S. bank by assets, missed analysts’ average earnings forecast in a Bloomberg survey by 26 percent. Royal Bank of Canada, the country’s biggest lender by assets, dropped 0.5 percent to C$51.82. Toronto-Dominion Bank, its biggest rival, slipped 0.1 percent to C$77.71, ending a six-day streak of gains. Scotiabank fell 0.1 percent to C$51.81.

Cenovus rallied 4.4 percent to C$35.06 after Phil Skolnick, an analyst at Canaccord, boosted his 12-month price estimate on the shares to C$45 from C$42. Skolnick cited a higher forecast for oil prices.

Natural gas futures closed at the lowest price in almost 10 years as above-normal temperatures and rising production contributed to a growing surplus of the furnace and power-plant fuel.

Peyto Exploration & Development Corp., which produces oil and gas in Canada, fell 4.9 percent to C$19.97. Tourmaline Oil Corp., a western Canadian natural gas and oil producer, tumbled 4.9 percent to C$22.44. Progress Energy Resources Corp., which produces natural gas and oil in Canada, slumped 1.3 percent to C$11.01, the lowest price since October 2010.

Petrominerales Ltd., an energy producer with operations in Colombia, climbed 6.4 percent to C$19.35, the biggest gain in the S&P/TSX.

Whiterock Real Estate Investment Trust, which owns commercial properties in Canada and the U.S., soared 12 percent to a record C$16.08 after agreeing to be bought by Dundee Real Estate Investment Trust. Dundee REIT slipped 3.3 percent to C$33.93.

Uranium producer Denison Mines Corp. slumped 10 percent to C$1.72 after Craig Miller, an analyst at TD, cut his rating on the shares to “reduce” from “hold.”

“The company continues to incur significant development expenditures, which we believe are not sustainable from operating cash flows alone,” Miller wrote in a note to clients.

The shares jumped 19 percent yesterday after Uranium One Inc. reported a 45 percent production increase.

Chinese gross domestic product increased 8.9 percent in the fourth quarter from a year earlier, down from 9.1 percent in the previous three months, the National Bureau of Statistics said today in Beijing.

All major base metals traded on the London Metal Exchange gained, and copper futures advanced on the Comex in New York.

First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, rallied 4.8 percent to C$23.91.

North American Palladium Ltd. tumbled 13 percent to C$2.69 after forecasting “modest growth” for 2012 production and saying it is discontinuing production at its Sleeping Giant mine due to insufficient operating margin.

RIM rose 5.3 percent to C$17.76, the highest level since Dec. 1. Samsung may be interested in buying the maker of the Blackberry smartphone, and no deal has been made because Waterloo, Ontario-based RIM is asking too much, the blog BGR reported today, without identifying its sources.

Celestica Inc., the maker of electronic parts for companies including RIM, gained 3.5 percent to C$8.07.

Primero Mining Corp., which owns a gold and silver mine in Mexico, tumbled 15 percent to C$3.18 after releasing a 2012 production forecast that trailed the estimates of David Haughton, an analyst at Bank of Montreal.

US

By Rita Nazareth

Jan. 17 (Bloomberg) — U.S. stocks advanced, sending the Dow Jones Industrial Average to the highest level since July, after reports bolstered optimism in the American and German economies and Spain’s borrowing costs decreased at an auction.

Equities pared gains as financial shares slumped, with Citigroup Inc. losing 8.2 percent amid an unexpected drop in earnings. Wells Fargo & Co., the largest U.S. bank by market value, gained 0.7 percent amid record profit. Sears Holdings Corp. surged 9.5 percent, the most in the Standard & Poor’s 500 Index, on speculation that the company may seek to go private.

Carnival Corp. tumbled 14 percent after the Costa Concordia cruise ship ran aground off the coast of Italy on Jan. 13.

The S&P 500 increased 0.4 percent to 1,293.67 at 4 p.m. New York time, paring an earlier gain of as much as 1.1 percent. The Dow rose 60.01 points, or 0.5 percent, to 12,482.07.

“The economic data broadly exceeded expectations,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion, said in a telephone interview. “That’s why we had an immediate lift to the market,” he said. “What the auction in Spain tells me is that the market is ahead of the rating companies.”

Stocks gained as manufacturing in the New York region expanded in January at the fastest pace in nine months. German investor confidence rose the most on record in January. Spanish borrowing costs fell at an auction as investors ignored S&P downgrades last week. China’s economy expanded at the slowest pace in 10 quarters, sustaining pressure on Premier Wen Jiabao to ease monetary policy.

The S&P 500 is up 2.9 percent in 2012 for its best start to a year since 2003, according to data compiled by Bloomberg. At least 48 companies in the benchmark index are scheduled to report quarterly results this week. S&P 500 companies, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September-December period, analysts’ estimates compiled by Bloomberg show.

Nine out of 10 groups in the S&P 500 gained. Among the biggest companies, Apple Inc. added 1.2 percent to $424.70.

Exxon Mobil Corp. advanced 1 percent to $85.69.

Wells Fargo added 0.7 percent to $29.83. Profit beat analysts’ estimates as mortgage financing improved. New mortgages rose 35 percent to $120 billion from the three months ended September at Wells Fargo, the biggest U.S. home lender, while dropping 6 percent from a year earlier.

Sears surged 9.5 percent to $36.75. Sears, working to turn around four years of declining sales, has lost ground as shoppers have flocked to such rivals as Macy’s Inc. Edward Lampert, who owns about 60 percent of Sears and serves as chairman, may seek new capital and to reorganize operations, said Paul Swinand, an analyst with Morningstar Inc. in Chicago.

“Restructuring is often easier taken under private hands,” Swinand said today in a telephone interview. “Anything that gives you more flexibility is an advantage.”

Kraft Foods Inc. added 1 percent to $38.13. The food company said it will realign its U.S. sales organization and cut 1,600 jobs in North America throughout 2012 as part of its move to divide its snacks and grocery businesses.

Dish Network Corp. rallied 1.2 percent to $29.10. AT&T Inc. is under so much pressure to add wireless spectrum after its failed $39 billion bid for T-Mobile USA that it may be compelled to pay the highest premium in more than a decade to secure Dish.

With the industry facing network constraints and a scarcity of new spectrum that’s making Dish a target, President and Chief Executive Officer Joe Clayton says the company is open to future acquisitions.

At $50 a share, cited as a reasonable price by Alpine Mutual Funds, AT&T would have to pay a 77 percent premium for Dish, the highest in an acquisition greater than $5 billion by a telecommunications company since 2000, according to data compiled by Bloomberg.

The S&P 500 Diversified Financials Index retreated 2.2 percent for the biggest decline among 24 groups. Citigroup lost

8.2 percent to $28.22. Trading declines mirrored results at JPMorgan, which said last week that revenue in every investment- banking business fell from a year earlier.

Carnival tumbled 14 percent, the most since 2001, to $29.60. The Costa Concordia was carrying more than 4,200 people when it ran aground hours after leaving a port near Rome to continue a Mediterranean cruise. The accident has left at least 11 people dead.

Royal Caribbean Cruises Ltd., the second-biggest cruise line, fell 6.2 percent to $26.97.

Investors began to put cash back to work in January, buying U.S. stocks, as expectations for global growth climbed to a six- month high, a Bank of America Corp. survey showed.

A net 27 percent of the 214 respondents, who together manage $655 billion in assets, said they were overweight cash.

That’s down from a net 35 percent in December. Asset allocators became the most bullish on American equities since April 2010, with the U.S. replacing emerging markets as their most favored region for equities.

“We have started the new year with investors much less pessimistic on global growth,” said Gary Baker, BofA’s head of European equity strategy at a press briefing in London. “This has translated into greater risk appetite. The U.S. has shown fairly consistent improvement, largely exceeding expectations.”

 

Have a wonderful evening everyone.

 

Be magnificent!

 

As ever,

 

Carolann

 

Never let the fear of striking out get in your way.

-Babe Ruth, 1895-1948

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

Senior Vice-President &

Senior Investment Advisor