March 5, 2012 Newsletter

Dear Friends,

Tangents:

Sir Winston Churchill’s Iron Curtain speech took place on this day in 1946:

“From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has been descended across the continent…”

And as I responded in the affirmative to my client’s request below, please have a look:

Hey Carolann,

Hope you’re doing well.

I wondered if you could include our Dancing with the Octopus video contest info in your next newsletter please?

Here is the link:

http://www.youtube.com/watch?v=0TVTTpWv754&list=UUGYf_zBbS3eLgyjfwEb2V8w&index=1&feature=plcp

Announcing Dancing with the Octopus Video Contest!

First Prize $500. Deadline March 31, 2012

“What would it look like if your government was 75% women?”  Show us in 2 minutes or less.

Dancing with the Octopus is a portal to ‘start the conversation’ about equal representation of women and men in government. We want to hear what you have to say! Tell a story, draw a picture, write a skit, just keep it under two minutes. The top 5 videos will be judged by a panel of lady politicians from four of Canada’s federal parties. All the details at dancingwiththeoctopus.com

photos of the day

March 5, 2012

Supporters of the United States wait for the start of their Algarve Cup group B, third round, women’s soccer match with Japan at the Algarve stadium outside Faro, southern Portugal.

Armando Franca/AP

Britain’s Prince Harry watches a parade of students at a youth rally and cultural show at the National Stadium in Nassau, Bahamas. The Prince is on a week-long tour through Central America and the Caribbean acting as an ambassador for Britain’s Queen Elizabeth as part of her Diamond Jubilee.

Suzanne Plunkett/Reute

Market Closes for March 5, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Matt Walcoff

March 5 (Bloomberg) — Canadian stocks fell for a second day, led by raw-materials and energy producers, after China cut its economic growth target and a purchasing managers’ survey showed a decline in euro-region services and factory output.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, lost 5.4 percent as the metal retreated for a second day. Silver Wheaton Corp., the country’s third-biggest precious-metals company by market value, decreased 3.1 percent after an analyst at Macquarie Group Ltd. reduced his rating on the shares. Suncor Energy Inc., Canada’s largest oil and gas producer, slipped 1.8 percent as natural gas futures dropped on the New York Mercantile Exchange.

The S&P/TSX Composite Index declined 119.87 points, or 1 percent, to 12,523.95 at 4 p.m. in Toronto.

“It’s an open question how much China is going to grow for three or four years,” Todd Johnson, a money manager at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$340 million ($342 million).

“It’s important to the commodity sector because they’re the net price-setter on lots of materials: copper, iron ore, even oil.”

The S&P/TSX lost 0.6 percent last week as oil dropped the most since Jan. 13 on easing Middle East tensions and gold slumped the most since Dec. 16 on a stronger U.S. dollar. Energy and raw-materials companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

China reduced its annual growth target to 7.5 percent from 8 percent. The country needs to shift to a more sustainable and efficient economic model, Premier Wen Jiabao told the National People’s Congress today.

A composite index of euro-area services and manufacturing purchasing managers’ surveys dropped to 49.3 last month from 50.4 in January, London-based Markit Economics said today. The firm published an initial figure of 49.7 on Feb. 22. Readings below 50 indicate contraction.

Base-metals and coal producers in the S&P/TSX fell the most since Dec. 13. First Quantum dropped 5.4 percent to C$21.95.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, sank 6 percent to C$36.20. Inmet Mining Corp., a copper and zinc producer, slumped 8.1 percent to C$60.

Among gold producers, Goldcorp Inc., the world’s second- biggest by market value, lost 1.9 percent to C$47.65 as the precious metal retreated. Barrick Gold Corp., the world’s largest company in the industry, decreased 1.1 percent to C$46.38. Semafo Inc., which mines in West Africa, fell 5.1 percent to C$6.21.

Silver Wheaton fell 3.1 percent to C$36 after Tony Lesiak, an analyst at Macquarie, cut his rating on the shares to neutral from outperform. A neutral rating means the shares will return within 5 percentage points of their benchmark over the next 12 months.

Primero Mining Corp. may reduce its reserves estimate for its San Dimas gold and silver mine in Mexico, Lesiak wrote in a note to clients. Silver Wheaton has agreed to buy the silver produced at the mine. Primero slipped 1.4 percent to C$2.76.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, declined 3.1 percent to C$44.72 after P.J. Juvekar, an analyst at Citigroup Inc., said Citigroup’s checks of fertilizer dealers found  “significant dealer caution regarding demand post the planting season.”         Juvekar made the comment in a note to clients about CF Industries Holdings Inc.

Energy companies in the S&P/TSX retreated as natural gas futures dropped to a six-week low on forecasts for mild weather in the U.S. Suncor lost 1.8 percent to C$34.81. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, slipped 2 percent to C$35.61. Progress Energy Resources Corp., a western Canadian natural gas producer, tumbled 5.7 percent to C$10.85.

Cancer-drug developer Aeterna Zentaris Inc. soared 23 percent, the most intraday since September 2009, to C$2.13.

Investors may be speculating the company will soon release successful results from the third phase of the trial of Perifosine, Reni Benjamin, an analyst at Rodman & Renshaw LLC, said in a telephone interview.

US

By Rita Nazareth

March 5 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest two-day loss since January, as China cut its economic growth target and orders to American factories decreased for the first time in three months.

Commodity, technology and industrial shares dropped the most among 10 groups in the S&P 500. Alcoa Inc. and Caterpillar Inc. fell at least 2.1 percent. Apple Inc. slumped 2.2 percent, snapping a seven-day advance. Bank of America Corp. and Citigroup Inc. dropped more than 1.2 percent. International Business Machines Corp. closed above $200 on a split-adjusted basis for the first time, after rallying 9.1 percent in 2012.

The S&P 500 retreated 0.4 percent to 1,364.33 at 4 p.m. New York time, dropping 0.7 percent in two days. The Dow Jones Industrial Average decreased 14.76 points, or 0.1 percent, to 12,962.81. The Nasdaq Composite Index dropped 0.9 percent to 2,950.48. About 6.1 billion shares changed hands on U.S. exchanges, or 9 percent below the three-month average.

“It’s wise to take a little money off the table,” said David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc. His firm oversees $631 billion. “Some of the easy gains have already been made. We’re back to focusing on the economic fundamentals. China saying that they are targeting 7.5 percent growth raises concern of a hard landing.”

Equities joined a global slump as China pared its growth target to 7.5 percent from an 8 percent goal in place since 2005. In the U.S., data on orders to factories signaled manufacturing is cooling. Bookings fell 1 percent in January after a revised 1.4 percent gain in December that was larger than previously estimated.

A drop in Citigroup’s Economic Surprise Index for the U.S.is one of several concerns for the market in the short-term, according to Tobias Levkovich, chief U.S. equity strategist at Citigroup. The index, which measures the extent to which economic reports beat or miss forecasts, fell to 45.10 on March 2 from 83.70 on Feb. 3. The S&P 500 rose 8.5 percent this year amid better-than-estimated economic data.

“Too many data points are signaling near-term caution, and sticking to our disciplines always trumps emotions,” Levkovich wrote. Because the gauge is based on performance compared with estimates, “one does not have to predict any bad economic data in the months ahead to believe the surprise index will move lower from current extended levels,” which “may put some near- term downward pressure on stock prices.”

Companies most-tied to the economy slumped, sending the Morgan Stanley Cyclical Index down 1.3 percent. Alcoa, the biggest U.S. aluminum producer, lost 3.6 percent to $9.87.

Caterpillar, the largest construction and mining-equipment maker, slid 2.1 percent to $110.09.

The KBW Bank Index declined 1.3 percent. Bank of America slumped 2 percent to $7.97. Citigroup lost 1.2 percent to $33.68 after naming board member Michael O’Neill to be chairman to succeed Richard Parsons, who is stepping down after overseeing the company’s recovery from near-collapse in 2008.

Apple sank 2.2 percent to $533.16, sending its market capitalization below $500 billion. The stock rallied 6.3 percent in seven days as investors anticipated a sales boost from the company’s latest iPad tablet computer, due on March 7.

Zynga Inc. tumbled 4.9 percent to $13.97. The biggest developer of games for social-networking sites was cut to neutral from overweight by JPMorgan Chase & Co., meaning the shares are expected to perform in line with the stocks the analyst covers over the next six-to-twelve months.

MetroPCS Communications Inc. decreased 5.7 percent to $9.96, while Leap Wireless International Inc. retreated 7.5 percent to $9.76. Sanford C. Bernstein & Co. cut its recommendation for the shares.

CF Industries Holdings Inc. fell 5.5 percent to $177.98 after being cut to “neutral” from “buy” at Citigroup Inc. and removed from the firm’s “Top Picks Live” list.

IBM, the world’s biggest computer-services provider, rose for a third day. The shares added 0.9 percent to $200.66.

American International Group Inc. rallied 2 percent to $30.39. The insurer that received a bailout after the collapse of Lehman Brothers Holdings Inc. is selling $6 billion of AIA Group Ltd. shares to help pay back the U.S. government.

Big Lots Inc. climbed 3.4 percent to $44.15. The discount retailer was raised to “buy” from “neutral” at Northcoast Research. The 12-month share-price estimate is $53.

Corporate profits that doubled since 2009 have left the S&P 500 cheaper than at all 34 peaks since 1989, even as options traders push the cost of protecting against losses to the highest in four years.

The S&P 500 rose 102 percent since March 2009 to an almost four-year high last week. Valuations are lower than at every 52- week peak since 1989. Traders have pushed the price of contracts that pay should the S&P 500 drop 20 percent to the most since 2007 compared with ones betting on a rally of the same size.

Rising oil prices and concern European leaders have yet to contain the credit crisis are keeping investors from paying more for profits, which are projected to reach annual records through 2013. Bears say equities aren’t cheap because the profit estimates are too optimistic. Bulls say shrinking price-earnings ratios provide a margin of safety should gains in the U.S. economy fail to match forecasts.

“Stocks have just gotten too cheap,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $160 billion. “We were worrying about a Chinese hard landing that didn’t happen. We worried about a U.S. double dip and that didn’t happen. We worried about Europe disintegrating, that didn’t happen. The worst risks have passed.”

Have a wonderful evening everyone.

Be magnificent!

When a man begins to have a vision larger than his own truth,

when he realizes that it is much larger than it at first seemed, he begins to become conscious of his moral nature.

His perspective on life necessarily changes, and his will takes the place of his desires.

So comes about the conflict between our inferior self and our superior self,

between our desires and our will, between our greed for objects that appeal to our senses

and the purpose that comes from the bottom of our heart.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

The walls we build around us to keep sadness out

also keep out the joy.

-Jim Rohn, 1930-2009

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7