March 15, 2012 Newsletter

Dear Friends,

Tangents:

March 15, 44 BC: Julius Caesar assassinated.

Men at some times are masters of their fates,  the fault, dear Brutus, is not in our stars.  But in ourselves, that we are underlings.  –William Shakespeare.

“…Not only had there been fearful portents in the night sky, but Julius Caesar’s spouse had dreamed of his death and – what does it take to make this guy listen?  – a soothsayer had warned:  ‘Beware the Ides of March.’  The great Roman general headed off to the Senate on March 15^th anyway, where he was promptly assassinated by conspirators who feared he wanted to become king.  Even Caesar’s best friend – ‘Et tu, Brute?’ – was in on it.  But the plot to prevent tyranny was for naught:  After a whole lot of bloodshed and a memorable affair between one rival for power, Antony, Egypt’s Cleopatra, Octavian – Caesar’s self-styled heir – became Augustus, and the Roman republic became an empire…” –John Ibbitson, G & M, March 15, 2012.

photos of the day

March 15, 2012

A woman poses for photos among some of the 10,000 clay flowers that form artist Fernando Casasempere’s ‘Out of Sync’ installation in the court at Somerset House in central London. Casasempere’s installation will be on show until April 27.

Andrew Winning/Reute

A woman wears a hat to the Cheltenham Festival horse racing meet in Gloucestershire, western England.

Stefan Wermuth/Reuters

Market Closures for March 15, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

March 15 (Bloomberg) — Canadian stocks rebounded from the biggest drop in a week as financial shares gained after U.S. economic data was better than forecast and Quebec said it plans to approve the takeover of the Toronto Stock Exchange’s owner.

TMX Group Inc. gained 3.1 percent after the province’s financial markets authority said it plans to approve the proposed C$3.73 billion ($3.76 billion) purchase by Maple Group Acquisition Inc., a group of pension funds and banks. Royal Bank of Canada, the nation’s biggest lender, advanced 0.8 percent.

China Gold International Resources Corp. increased 2.1 percent on speculation that low interest rates will spur investment in gold.

The S&P/TSX Composite Index increased 77.92 points, or 0.6 percent, to 12,455.82 in Toronto.

“The approval of the TMX deal is certainly a plus,” Stephen Gauthier, a money manager at Fin-XO Securities in Montreal, said in a telephone interview. The firm oversees about C$600 million. “Strength in the U.S. market, especially in financials, is also having a positive effect on the Canadian market today. It’s definitely helped the banks.”

The index has increased 1.3 percent since March 6, the day of its largest decline of the year, as stronger-than-forecast American jobs data and Greece’s debt restructuring helped offset concern over China’s lower growth target and Europe’s economic contraction. The U.S. accounted for 74 percent of Canada’s exports last year.

Canadian banks and insurers rose after the Federal Reserve Bank of New York said manufacturing in the region expanded in March at the fastest pace since June 2010 and the Labor Department said claims for jobless benefits fell last week, matching the lowest level in four years. The Federal Reserve Bank of Philadelphia’s general economic index increased to 12.5 in March from 10.2 last month, beating economists’ estimates.

Royal Bank of Canada rose 0.8 percent to C$58.18. Bank of Nova Scotia, Canada’s third-biggest lender, advanced 2.1 percent to $55.35.

TMX Group gained 3.1 percent to C$45.09. Maple said today it was in discussions to extend its offer for Toronto-based TMX beyond the planned April 30 completion date as it pursues regulatory approval from provincial authorities and Canada’s Competition Bureau.

Materials stocks in the S&P/TSX rebounded from a three-day decline, led by gold companies, as futures for the precious metal rallied on signs that investors are stepping up purchases as an alternative to a weaker dollar.

China Gold, which focuses on Asian gold development and exploration, increased 2.1 percent to C$4.32. Barrick Gold Corp., the world’s largest gold-mining company, rose 1.5 percent to C$43.54. Yamana Gold Inc., Canada’s third-largest company in the industry by market value, gained 1.8 percent to C$15.60.

US

By Stephen Kirkland and Rita Nazareth

March 15 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index above 1,400 for the first time since 2008, as reports on manufacturing and jobless claims bolstered optimism in the economy. Treasuries trimmed losses.

The S&P 500 climbed 0.6 percent to close at 1,402.6 at 4 p.m. in New York and the Dow Jones Industrial Average gained 58.66 points to 13,252.76, its highest close since December 2007. The 10-year Treasury yield added one basis point to 2.28 percent after gaining as much as eight basis points. Crude pared losses as an Obama official denied a report the U.S. and U.K. planned to release oil from strategic reserves.

Nine of 10 industries in the S&P 500 advanced as U.S. jobless claims matched the lowest level in four years and manufacturing in the New York region expanded at the fastest pace since June 2010. Other reports showed consumer confidence climbed to the highest level since 2008 and international demand for U.S. financial assets increased more than forecast.

“The stock market is not terribly cheap, but reasonably priced,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston.

The S&P 500 is trading for about 14.5 times its companies reported earnings, the highest valuation since July while still below the five-decade average multiple of 16.4. Financials, commodity producers and industrial companies led gains among the 10 main industry groups in the S&P 500 today.

Bank of America Corp., JPMorgan Chase & Co. and General Electric Co. rose at least 1.9 percent to lead gains in the Dow.

Cisco Systems Inc. slipped 1.4 percent after the largest maker of equipment for computer networks agreed to buy NDS Group Ltd. in a deal valued at about $5 billion to add software used in next-generation video services.

Economic reports today showed the Bloomberg Consumer Comfort Index rose to the highest since 2008, reaching minus 33.7 from minus 36.7 in the week ended March 11. An economic index from the Philadelphia Fed showed manufacturing in eastern Pennsylvania, southern New Jersey and Delaware expanded at the fastest pace in 11 months as factory employment picked up.

The S&P 500 closed at its highest level since June 5, 2008.

On that date, the index climbed 2 percent to 1,404.05, led by a 7.8 percent rally in Lehman Brothers Holdings Inc. The New York- based securities firm had lost a third of its value in the previous month and filed for bankruptcy in September 2008. The S&P 500 went on to plunge 52 percent before bottoming in March 2009.

Oil slipped 0.3 percent to $105.11 a barrel today, the lowest settlement since March 6. Futures rebounded from a 1.6 percent drop after an Obama administration official said there has been no agreement with Britain on a release of oil. The official spoke on condition of anonymity. Reuters reported earlier that the two nations would cooperate in an effort to cut rising gasoline prices.

The Stoxx Europe 600 Index closed up 0.3 percent, erasing earlier losses and reaching the highest level since July. Hennes & Mauritz AB advanced 2.4 percent after Europe’s second-largest clothing retailer reported an unexpected gain in sales. Aixtron SE surged 15 percent as Deutsche Bank AG recommended the shares.

Pernod-Ricard SA slid 2.1 percent as Groupe Bruxelles Lambert SA sold a 499 million-euro ($651 million) stake.

Ten-year Treasury yields climbed for a seventh day, the longest stretch since 2006. The rate rose to as high as 2.35 percent, the highest since Oct. 28. The average yield on 1,277 government debt securities in Merrill Lynch’s Global Sovereign Broad Market Plus Index climbed to 1.743 percent yesterday from 1.647 percent on March 7. The yield was 2.274 percent a year ago.

While Treasury yields are rising, the 10-year rate is about 1.5 percentage points less than last year’s high of 3.77 percent reached on Feb. 9. The yield averaged 3.87 percent in the past decade.

International demand for U.S. financial assets rose more than forecast in January. Net buying of long-term equities, notes and bonds totaled $101 billion during the month, compared with net purchases of $19.1 billion in December, the Treasury Department said. Six economists surveyed by Bloomberg News had forecast net buying of $38.5 billion of long-term assets, according to the median estimate.

The pound fell versus 11 of 16 major peers and borrowing costs rose at a bond auction after Fitch Ratings said the U.K. risks losing its AAA rating.

The 10-year U.K. gilt yield climbed three basis points to 2.37 percent, while sterling depreciated 0.3 percent against the euro. The U.K. sold 2 billion pounds ($3.1 billion) of bonds maturing in December 2042 at an average yield of 3.431 percent, up from 3.287 percent at an auction of similar-maturity debt in December.

The Spanish 10-year bond yield rose one basis point to 5.18 percent as the government sold 3 billion euros of bonds, compared with a maximum target of 3.5 billion euros it set for the sale. The bid-to-cover ratio for notes maturing in April 2016 was 4.13, compared with 2.21 when the notes were sold in January.

The 10-year French bond declined for the second day, with the yield rising four basis points to 2.97 percent, as the debt office auctioned sold 8.46 billion euros of notes, at the top end of the 8.5 billion euros targeted.

The euro strengthened versus eight of 16 major peers, climbing 0.4 percent to $1.3087 to halt a two-day slide versus the dollar.

The International Monetary Fund approved a 28 billion-euro ($36.6 billion) loan for Greece as part of a second bailout with the euro area that requires more austerity and steps up controls over the country’s spending. The Washington-based IMF said 1.65 billion euros will be immediately available under the new arrangement.

The Swiss franc strengthened 0.9 percent against the dollar and 0.5 percent versus the euro as the Swiss central bank kept its cap on the franc unchanged and said deflation still threatens the economy even as growth shows signs of stabilizing.

The Swiss National Bank, led by interim Chairman Thomas Jordan, maintained the franc ceiling at 1.20 francs per euro, as forecast by all 14 economists in a Bloomberg News survey. The Zurich-based central bank said in an e-mailed statement today that it also kept its benchmark interest rate at zero.

The MSCI Emerging Markets Index was little changed. The Shanghai Composite Index slipped 0.7 percent after foreign direct investment in China dropped for a fourth straight month, taking its two-decline to 3.3 percent, the most since Aug. 9.

The BSE India Sensitive Index lost 1.4 percent, its first retreat in five days, as the central bank kept rates on hold.

Have a wonderful evening everyone.

Be magnificent!

Man  has accepted conflict as an innate part of daily existence

because he has accepted competition, jealousy, greed, acquisitiveness and aggression

as a natural way of life.

-Krishnamurti, 1895-1986

As ever,

Carolann

Try to be better than yourself.

-William Faulkner, 1897-1962

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