April 9, 2012 Newsletter

Dear Friends,

Tangents:

Returned from Japan last night, after a wonderful journey.  The cherry blossoms are in bloom….visited many Shinto shrines and Buddhist temples and encountered fabulous food –  Tokyo now has more 3 Michelin starred restaurants than Paris!  We attended a formal Japanese tea ceremony in Kyoto – very beautiful,  spent some time with a Zen master who emphasized to us the importance of meditation for at least 30 minutes every day (begin by focusing on your posture, close your eyes, pay attention to your breathing, begin counting…).

But the unexpected highlight was a visit to the  I.M. Pei  designed Miho Museum southeast of Kyoto, near the town of Shigaraki.  The feeling as you walk across the bridge (part of the design of the museum) to the museum is that you may have discovered Shangri-La.   It is perched high on a mountain amidst trees with a bell tower in the distance in Misono (also designed by Pei) and a Shumei temple close by.  These are the only two visual interruptions in the forested landscape.  It truly is an aesthetic and architectural marvel, housing some of the most beautiful art from antiquity.

photos of the day

April 9, 2012

A woman takes a photograph of illuminated cherry blossoms in full bloom along the Chidorigafuchi moats in Tokyo.

Yuriko Nakao/Reuters

A woman picks tea leaves at a tea plantation in Moganshan, Zhejiang province. China is the world’s largest tea producing country with an output of 1.4 million tonnes and a 33 percent share of the world’s total.

Carlos Barria/Reuters

Market Closes for April 9, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 9 (Bloomberg) — Canadian stocks fell to their lowest level of the year, led by energy and financial companies, after U.S. employers added fewer jobs than forecast in March.

Manulife Financial Corp., North America’s third-largest insurer, retreated 3.1 percent. Encana Corp., the country’s largest natural gas producer, lost 1.3 percent. Avion Gold Corp., which explores for the metal in Mali, surged 9.3 percent after the military junta that seized power in the West African country last month agreed to step down.

The Standard & Poor’s/TSX Composite Index declined 84.61 points, or 0.7 percent, to 12,018.50 in Toronto.

“It’s a bit of a knee-jerk reaction to the Friday news in the face of very thin markets,” Irwin Michael, a money manager at ABC Funds in Toronto, said in a telephone interview.

Michael’s firm oversees C$1 billion ($1 billion). “A good deal of the negativity in the market is a function of the fact that U.S. employment numbers disappointed people.”

The benchmark equity gauge rose 3.7 percent in the first quarter this year as economic data surpassed estimates and investors speculated that the euro area would contain its sovereign-debt crisis. The Canadian index had its biggest weekly drop of the year last week. The market was closed on April 6 for the Good Friday holiday. The index fell 2 percent in March, after two straight months of increases.

Financial stocks in the S&P/TSX fell for a fourth straight day after U.S. employers added 85,000 fewer jobs in March than economists projected, the biggest shortfall since the report released on July 8, according to data compiled by Bloomberg. The Labor Department’s April 6 statement spurred concern about the pace of American growth.

Royal Bank of Canada dropped 0.7 percent to C$56.55.

Manulife Financial decreased 3.1 percent to C$12.73. Sun Life Financial Inc., Canada’s third-biggest insurance company, fell

3.3 percent to C$22.77. Sun Life got 45 percent of its revenue from the U.S. in 2011, according to Bloomberg data.

Canadian energy companies decreased as oil fell for the third time in four days after Iran agreed to resume talks on its nuclear program and economic reports from the U.S. and China raised concern about fuel demand.

Cenovus Energy Inc., Canada’s fifth-largest energy company, declined 1.2 percent to C$33.92. Penn West Petroleum Ltd., a western Canadian oil and gas producer, dropped 2.1 percent to C$17.62. Encana Corp. lost 1.3 percent to C$18.47.

Avion Gold surged 9.3 percent to 94 Canadian cents. The company produced 26,256 ounces of gold from its Tabakoto/Segala operations in Mali in the first three months of 2012, a quarterly record, according to a statement today.

The Economic Community of West African States lifted sanctions against Mali yesterday after the military junta that seized power in the country last month agreed to hand over power to a civilian government that will hold elections.

Harry Winston Diamond Corp., a diamond-mining company and jewelry retailer, increased 1.4 percent to C$13.93 after being raised to hold from sell at Desjardins Securities.

US

By Whitney Kisling and Inyoung Hwang

April 9 (Bloomberg) — U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower following its worst week of 2012, after employers added fewer jobs than forecast in March.

Caterpillar Inc. and General Electric Co. sank more than

1.5 percent, pacing declines among industrial shares. Financial shares lost 1.6 percent among 10 groups in the S&P 500. Bank of America Corp. and Citigroup Inc. erased at least 2.4 percent.

Alcoa Inc., scheduled to report earnings tomorrow, slipped 0.3 percent. AOL Inc. soared 43 percent after agreeing to sell and license patents to Microsoft Corp.

The S&P 500 slumped 1.1 percent to 1,382.20 at 4 p.m. New York time, after losing 0.7 percent last week. The Dow Jones Industrial Average dropped 130.55 points, or 1 percent, to 12,929.59. About 5.5 billion shares changed hands on U.S.

exchanges today, 19 percent below the three-month average.

Equity markets were shut for Good Friday on April 6, when the employment report was released.

“At the moment, the one big news story that people have to focus on is the jobs number so there’s a focus on the disappointment there,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “The economy does continue to grow, but slowly, and I think that’s been the source of frustration for a lot of investors, that we haven’t had the big forward movement in the economy like we have in the past.”

Equities slumped last week after the Federal Reserve signaled it will refrain from further monetary stimulus and concern about Europe intensified. The U.S. Labor Department said April 6 that employers added 120,000 jobs, the fewest in five months and less than the median economist forecast of 205,000 in a Bloomberg survey. The amount had exceeded 200,000 for three straight months.

“This is a real shock,” Donald Selkin, the New York-based chief market strategist at National Securities Corp., which manages about $3 billion, said last week after the jobs report.

“Everybody is so hung up on the 200,000 increase.”     The U.S. jobs report presents a challenge that stocks have overcome nine times during the bull market that’s driven the S&P

500 up 107 percent in three years. The government’s monthly tally of U.S. hiring missed the median projection by 85,000, according to data compiled by Bloomberg. While the S&P 500 averaged losses of 0.8 percent in the day after shortfalls of this magnitude since March 2009, the benchmark gauge cut its decline in half a week later and was up 0.9 percent after two weeks, the data show.

The Morgan Stanley Cyclical Index of stocks most tied to the economy slipped 1.9 percent for a fourth straight day of losses, the longest streak since Nov. 25, data compiled by Bloomberg show. The Dow Jones Transportation Average of airlines, trucking companies and shipping stocks lost 1.7 percent.

Economists forecast the U.S. economy expanded 2 percent in the first quarter, after growing 3 percent in the last three months of 2011, according to the average compiled by Bloomberg.

Industrial stocks fell 1.6 percent for the biggest drop as a group in the S&P 500. Caterpillar, the world’s largest construction and mining-equipment manufacturer, retreated 2.2 percent to $103.57, while General Electric, the maker of jet engines and power generation equipment, declined 1.5 percent to $19.20.

The KBW Bank Index dropped 1.9 percent, with all 24 of its components falling at least 0.9 percent. Bank of America lost

3.3 percent to $8.93, the biggest retreat in the Dow. Citigroup erased 2.4 percent to $33.97.

Raw-material stocks had the third-biggest retreat in the S&P 500, falling 1.5 percent. DuPont Co., the most valuable U.S.

chemical maker, slumped 1.4 percent to $51.95. Alcoa slipped 0.3 percent to $9.60. The largest U.S. aluminum producer is scheduled to disclose first-quarter results after the close of trading tomorrow, the first company in the Dow average to report. The average estimate of 19 analysts in a Bloomberg survey is for an adjusted loss of 4 cents a share.

Earnings for companies in the S&P 500 increased 0.8 percent last quarter, according to estimates compiled by Bloomberg. They exceeded forecasts by 3.4 percent in the fourth quarter of 2011 for the 12th straight period of better-than-estimated results, data compiled by Bloomberg show.

Shutterfly Inc. sank 4.3 percent to $28.21. The operator of a website that offers photo-related products dropped after Facebook Inc. agreed to buy the Instagram photo-sharing application for about $1 billion.

AOL soared the most since at least November 2009, adding 43 percent to $26.40. The Internet company, under shareholder pressure to make strategic changes as revenue declines, agreed to sell and license more than 800 patents to Microsoft in a deal worth $1.06 billion. Microsoft fell 1.3 percent to $31.10.

Apple Inc. advanced 0.4 percent to $636.23. The world’s most valuable company erased an earlier decline of as much as

1.3 percent. The Cupertino, California-based company was cut to neutral from buy by BTIG LLC, which said investors should “take a breather” on expected strength this quarter.

Equities are failing to build on the S&P 500’s best first- quarter rally since 1998. The U.S. jobless rate fell to 8.2 percent, the lowest since January 2009, from 8.3 percent, the Labor Department said. Faster employment growth that leads to bigger wage gains is needed to propel consumer spending that accounts for about 70 percent of the economy. Americans worked fewer hours and earned less on average, helping explain why the Fed says interest rates may need to stay low at least through late 2014.

Fed Chairman Ben S. Bernanke has kept rates near zero since

2008 and expanded the central bank’s balance sheet with two rounds of asset purchases totaling $2.3 trillion. S&P 500 rallies during the first quarter of 2010 and 2011 stalled in April both years, with the index sinking as much as 16 percent and 19 percent, respectively, amid concern the Fed would stop stimulating the economy.

The S&P 500 surged 12 percent from January through March of this year as data on manufacturing, real estate and the labor market boosted optimism about the world’s largest economy.

Reports last week showed manufacturing in the U.S. expanded at a faster pace than forecast while jobless claims dropped to the lowest level in four years.

Dennis Gartman, an economist and newsletter editor, said he abandoned his bullish view of stocks in March because of the possibility the market will retreat.

“The only things that I own at this point are a few shipping companies and a little natural gas, and I have those completely hedged with S&P futures,” Gartman, the editor of the Suffolk, Virginia-based Gartman Letter, said today in an interview on Bloomberg Radio’s “Bloomberg Surveillance.”

Have a wonderful evening everyone.

Be magnificent!

To live completely, fully, in the moment is to live with what is, the actual, without any sense of condemnation

or justification – then you understand it so totally that you are finished with it.

When you see clearly the problem is solved.

-Krishnamurti, 1895-1986

As ever,

Carolann

It’s ok to make mistakes – in fact, it’s expected.  That is the way

we live and learn.

-Hughie J. Kline, 1915-2012

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

Senior Vice-President &

Senior Investment Advisor