April 11, 2012 Newsletter

Dear Friends,

Tangents:

On this day:

In 1814, Napoleon abdicates and is exiled to Elba.

In 1945, US troops liberated Buchenwald.

In 1961, Bob Dylan performs for the first time in Greenwich Village, NYC, singing Blowin in the Wind.

Question of the day: What do you wish you spent more time doing five years ago?

TITANIC 1912-2012

A notice in today’s Globe & Mail invites everyone to “explore all new Titanic Records free until May 31^st” at ancestry.ca/globe or by calling 1-800-442-9153 for details.  The site has passenger lists, crew records, Halifax gravesites, fatality reports…”To mark the 100^th anniversary of history’s most famous maritime disaster – the sinking of RMS Titanic – Ancestry .ca is offering FREE ACCESS to our complete Titanic records now until May 31^st, 2012.”

photos of the day

April 11, 2012

Emirates Team New Zealand compete with their multihulls during the America’s Cup World Series regatta in Naples, Italy.

Alessandro Bianchi/Reut

Employees of the Friends of the Earth environmental campaign group dressed up as bees Charlotte Chan, (l.), and Debbie O’Dowd pose for photographs in a temporary wildflower meadow on the south bank of the River Thames London. The publicity event was held to help raise awareness of the claims that Britain has lost over half the honey bees kept in managed hives and wild honey bees are nearly extinct as a result of the loss of their natural habitat and intensive farming.

Matt Dunham/AP

Market Closes for April 11, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 11 (Bloomberg) — Canadian stocks rose for the first time in six days as energy companies gained with oil prices on signs that Europe will act to slow the region’s debt crisis.

Suncor Energy Inc., Canada’s largest oil and gas producer, gained 1.8 percent as crude climbed from its lowest close in almost two months. Canadian Natural Resources Ltd., the country’s third-largest energy company by market value, rose 1.7 percent. Royal Bank of Canada, the country’s biggest lender, increased 0.9 percent as financial shares rebounded from a five- day skid.

The Standard & Poor’s/TSX Composite Index rose 97.83 points, or 0.8 percent, to 12,033.12 at 2:40 p.m. in Toronto.

“It’s a technical bounce off a pretty oversold market in the last few days,” Danielle Park, a money manager at Venable Park Investment Counsel Inc. in Barrie, Ontario, said in a telephone interview. The firm manages at least C$1 million ($1

million) each for more than 200 clients. “It’s exactly what we’ve seen the last two years. A crescendo into April in terms of risk rally for a few months, and then economic data starts a sell-off the other way.”

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 on renewed concern over Europe as French borrowing costs rose and Spain’s Prime Minister Mariano Rajoy said the nation faces “extreme difficulty.”

Canadian energy shares increased as oil rose after the U.S.

Energy Department said fuel stockpiles declined and a European Central Bank official signaled that the lender may restart bond purchases for Spain.

Suncor Energy Inc. gained 1.8 percent to C$30.17. Canadian Natural Resources Ltd. rose 1.7 percent to C$31.81. Niko Resources Ltd., which produces oil and gas in South Asia, rose

7.1 percent to C$35.24.

Financial companies in the S&P/TSX rose for the first time since April 2. Banks and insurance companies had declined on economic concerns as U.S. reports on factory orders and job growth missed forecasts.

Royal Bank of Canada increased 0.9 percent to C$56.47. Bank of Nova Scotia, Canada’s third-biggest lender by assets, rose 1 percent to C$54.91. Mutual-fund company IGM Financial Inc.

gained 1.2 percent to C$46.26.

Dollarama Inc. surged 7.1 percent to C$51.80 and rose 9.2 percent earlier, the most intraday since the stock went public in October 2009. The Canadian discount retailer posted fourth- quarter profit that topped analysts’ estimates and raised its dividend.

Wi-Lan Inc. rose 7.6 percent to C$5.80 after climbing 9.7 percent, the most intraday since March 7. The U.S. validated the technology-licensing company’s V-Chip patent after a re- examination.

US

By Rita Nazareth

April 11 (Bloomberg) — U.S. stocks advanced, halting a five-day decline for the Standard & Poor’s 500 Index, after Alcoa Inc. reported an unexpected first-quarter profit.

Alcoa, the first company in the Dow Jones Industrial Average to announce quarterly results, climbed 6.2 percent. Bank of America Corp. and JPMorgan Chase & Co. added at least 2.4 percent to pace gains in financial shares. A measure of 11 homebuilders in S&P indexes jumped 4.8 percent as Wells Fargo & Co. said a survey of sales managers showed 63 percent of the respondents reported better-than-expected orders.

The S&P 500 increased 0.7 percent to 1,368.71 at 4 p.m. New York time, after dropping 4.3 percent over the past five days.

The Dow advanced 89.46 points, or 0.7 percent, to 12,805.39 today. The Russell 2000 Index of small companies climbed 1.6 percent to 796.59. About 6.4 billion shares changed hands on U.S. exchanges today, 6.5 percent less than the three-month average and 23 percent below yesterday’s volume.

“Alcoa helped dampen the dark mood in the market,” said Frederic Dickson, who helps oversee $28 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. “It’s always nice to see the first company out of the box with an earnings surprise. It’s time to see how this progresses and reassess when to put some money back in.”

Almost $800 billion was erased from U.S. equity values in the five days leading up to the first-quarter earnings season.

The S&P 500 yesterday capped the longest drop since November on concern about Europe’s debt crisis and the U.S. jobs market. The decline drove the gauge to about 14 times reported earnings yesterday, below the average since 1954 of 16.4.

Today’s gain extended this year’s rally in the S&P 500 to 8.8 percent as investors bought stocks amid better-than- estimated economic and corporate data. While S&P 500 per-share profit growth slowed to 0.8 percent during the first three months of the year from 4.9 percent in the fourth quarter, it will accelerate to 8.3 percent during all of 2012, according to analyst estimates compiled by Bloomberg.

Analysts’ estimates for S&P 500 earnings growth in the first quarter have declined from 4.1 percent in January, Bloomberg data showed. For Lawrence Creatura at Federated Investors Inc., earnings expectations are still low and profit surprises may drive the market higher.

“This isn’t a phantom bounce,” Creatura, who helps oversee $369.7 billion as a Rochester, New York-based fund manager at Federated, said in a telephone interview. “It seems reasonable to expect positive surprises as we move through the earnings season. Management teams have done a good job of keeping expectations contained.”

Alcoa climbed 6.2 percent to $9.90. The earnings were “driven by higher-than-expected profitability from every operating segment,” Brian Yu, an analyst at Citigroup Inc. in San Francisco, said in a note. “Good cost control likely played a major role.” The stock dropped 48 percent in the 12 months through yesterday, the biggest decline in the Dow.

A rally in Alcoa shares following its earnings reports has been an indicator of gains for the S&P 500, according to Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati. Since 2005, the gauge has risen an average 4 percent in the three-month period that followed a positive reaction to Alcoa’s earnings, he said.

Financial shares had the biggest gain in the S&P 500 among 10 industries today, rallying 1.6 percent. Bank of America rose

3.8 percent to $8.86. JPMorgan jumped 2.4 percent to $44.01.

Investors will get a first look at banks results when JPMorgan and Wells Fargo kick off earnings, about an hour apart, on April 13. Citigroup Inc. is set to announce results April 16, followed by Goldman Sachs Group Inc., Bank of America and Morgan Stanley.

The results may disappoint investors who piled into banking stocks on a bet the industry was inexpensive and set to benefit from a strengthening economy. The six largest U.S. lenders may post an 11 percent drop in first-quarter profit, according to a Bloomberg survey of analysts. The KBW Bank Index of 24 companies climbed 26 percent in the first three months of the year, led by Bank of America’s 72 percent gain.

“You can’t expect bank stocks to go straight to the moon,” said Peter Kovalski, a money manager at Alpine Woods Capital Investors LLC in Purchase, New York, which manages about

$5 billion. “You have to expect fundamentals to catch up, and there are some headwinds facing the industry.”

On top of earnings data, investors also watched the Federal Reserve’s Beige Book business survey today, published two weeks before the Federal Open Market Committee meets to set monetary policy. The Fed said the economy maintained its expansion in all

12 of its regions as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices.

The Morgan Stanley Cyclical Index of companies most-tied to the economy added 1.2 percent. FedEx Corp., an economic bellwether as it carries everything from mobile devices to pharmaceuticals, rose 1.5 percent to $87.91. Homebuilder PulteGroup Inc. advanced 9.1 percent to $8.39.

Apple Inc. reversed a gain of as much as 1.3 percent, falling 0.4 percent to $626.20. The U.S. Department of Justice sued Apple, Macmillan and Pearson Plc’s Penguin in New York today, claiming the publishers colluded to fix e-Book prices.

Three other publishers, CBS Corp.’s Simon & Schuster, Lagardère SCA’s Hachette Book Group and News Corp.’s HarperCollins, also named in the government’s antitrust lawsuit, settled their cases, according to court filings.

Owens-Illinois Inc. rose 6.9 percent to $23.52. The glass- bottle maker said first-quarter earnings will rise more than 35 percent from a year earlier on higher prices and lower costs.

Genworth Financial Inc. gained 3.2 percent to $7.54. The life insurer and mortgage guarantor was rated buy in new coverage by BTIG LLC, which said the stock is trading at “too steep a discount” to the company’s inherent value.

Titan Machinery Inc. surged 17 percent to $32.05, the highest since June 2008. The owner of full-service agricultural and equipment stores forecast annual earnings of at least $2.55 a share, beating the average analyst estimate of $2.06.

U.S. shares of Nokia Oyj tumbled 16 percent to $4.24. The Espoo, Finland-based mobile phone maker reported an operating loss for its mobile-phone division and forecast earnings won’t recover this quarter as emerging market handsets sales slumped and margins on smartphones shrank.

VMWare Inc. slumped 2.5 percent to $107.61. The software maker announced a management shuffle including the departure of Chief Financial Officer Mark Peek. Earnings have more than doubled to $723.94 million since 2008, the first full year after Peek joined. The company is initiating a search to replace him.

Computer Sciences Corp. fell 2.8 percent to $27.39. The technology contractor for governments and companies said earnings excluding certain costs in the quarter ended March 30 were 19 cents to 21 cents a share. Analysts predicted 97 cents, the average of estimates compiled by Bloomberg.

U.S. stocks will probably see a short-term relief rally before extending their retreat next week, according to the head of technical analysis at Credit Suisse Group AG. The S&P 500 may climb to as much as 1,382, London-based David Sneddon wrote today. The measure will then be poised to drop more than 3 percent next week to the 1,339 low from March 6, he said.

“With a classic bearish momentum and on-balance volume divergence reinforcing the more bearish scenario, we expect further weakness to extend,” Sneddon wrote in a note dated yesterday. So-called on-balance volume shows a security’s momentum by looking at the relationship between price and the number of transactions taking place.

Have  a wonderful evening everyone.

Be magnificent!

What is change?

One form appears, and another disappears.

Can we say that the butterfly used to be a caterpillar?

A substance in the caterpillar takes on the form of the butterfly.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

All money is a matter of belief.

-Adam Smith, 1723-1790

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

Senior Vice-President &

Senior Investment Advisor