April 13, 2012 Newsletter

Dear Friends,

Tangents:

Friday the 13^th: Thirteen was regarded as an unlucky number even among the Romans, who held it as a sign of death and destruction.  The origin of the idea that sitting down 13 at a table is unlucky is said to be that, at a banquet at Valhalla, Loki once intruded, making 13 guests and Balder was slain.  The superstition was confirmed in Christian countries by the Last Supper of Christ and the 12 apostles.  In the Middle Ages witch covens were believed always to have 13 members.

Addison writes:

I remember I was once in a mixed assembly that was full of noise and mirth, when on a sudden an old woman unluckily observed there were thirteen of us in company.  This remark struck a panic terror into several who were present, insomuch that one or two of the Ladies were going to leave  the room: but a friend of mine, taking notice that one of our female companions was big with child, affirmed there were fourteen in the room, and that, instead of portending one of the company should die, it plainly foretold one of them should be born.  Had not my friend found this expedient to break the omen, I question not but half the women in the company would have fallen sick that night. – On popular superstitions, Spectator, March 8, 1711.

The thirteenth of any month is widely regarded as an inauspicious day on which to undertake any new enterprise, and it is traditionally thought to be unlucky for a ship to begin a voyage on the 13^th, especially if it happens to be Friday the thirteenth.  –from Brewar’s Dictionary of Phrase and Fable.

Speaking of ships, expect to see lots of stuff on the 100^th anniversary of the sinking of the Titanic this weekend.  Haven’t spoken with anyone yet who has seen James Cameron’s re-release of the movie in 3d….should be good.

April 14^th, 1912 – The passenger liner Titanic – deemed unsinkable – strikes an iceberg on her maiden voyage and begins to sink.  The ship will go under the next day with a loss of 1,500 lives.

Birthday: April 13^th, 1743, Thomas Jefferson, 3^rd President of the USA. He wrote his own epitaph and insisted that only his words and none other be inscribed:

Here was buried

Thomas Jefferson

Author of the Declaration of Independence

Of the State of Virginia for Religious Freedom

& Father of the University of Virginia

photos of the day

April 13, 2012

A giant US flag is stretched across the outfield as players line the first and third base lines during a pre-game ceremony prior to the New York Yankees season home opening MLB American League baseball game against the Los Angeles Angels at Yankee Stadium in New York.

Mike Segar/Reuters

A visitor looks at a work by South Korean artist Kang Hyung-Koo at China International Gallery Exposition 2012 in Beijing.

Jason Lee/Reuters

Market Closes for April 13, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 13 (Bloomberg) —  Canadian stocks fell, sending the main equity index to the longest weekly losing streak since 2008, as financial companies and commodity producers retreated after China reported the slowest growth in almost three years.

Toronto-Dominion Bank, the country’s second-largest lender, dropped 1.9 percent. Bank of Nova Scotia, Canada’s third-biggest lender by assets, declined 2.2 percent. Barrick Gold Corp., the world’s largest producer of the metal, fell 1.2 percent. First Quantum Minerals Ltd., a copper producer that has surged for two weeks on takeover speculation, dropped 3.6 percent.

The Standard & Poor’s/TSX Composite Index fell 174.26 points, or 1.4 percent, to 12,040.39 in Toronto. It slipped 0.5 percent since April 6, falling for the seventh straight week.

“There are worries about a soft landing for the Chinese economy,” Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, said in a telephone interview. The firm oversees about C$1.8 billion ($1.8 billion). “Our market is very much influenced by commodities, whose performance is primarily determined by the outlook for Asia.”

The benchmark 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 measure started this week with two days of declines following a weaker-than-forecast U.S. jobs report.

Financial shares retreated as American consumer confidence dropped and the cost of insuring against a Spanish default reached a record high. Prime Minister Mariano Rajoy is struggling to prevent the nation from becoming the fourth euro- region member to need a bailout after prices for the country’s credit-default swaps rose to a record high rose 17 basis points to 498.

Toronto-Dominion Bank dropped 1.9 percent to C$81.95. Bank of Nova Scotia declined 2.2 percent to C$54.10. TD and Bank of Nova Scotia get 27 percent and 15 percent of their revenues from U.S. operations, according to Bloomberg data.

Materials companies in the S&P/TSX declined, driven by metals shares, as China said its gross domestic product in the first quarter expanded 8.1 percent from a year earlier, the slowest in almost three years. Before today, gold rose 3.1 percent this week on expectations that central banks may take more steps to boost their economies and concern that Europe’s debt crisis may worsen.

Barrick fell 1.2 percent to C$41.49. First Quantum Minerals dropped 3.6 percent to C$21.61. Silver Wheaton Corp., the country’s third-biggest precious-metals company by market value, decreased 2.4 percent to C$31.13.

Energy companies in the S&P/TSX fell on concern over China and Saudi Arabia’s oil minister’s comment that the kingdom is determined to see lower prices. There’s no shortage of oil supply, and Saudi Arabia is working toward damping prices, Ali al-Naimi said today.

Suncor Energy Inc., Canada’s largest oil and gas producer, slipped 1.6 percent to C$30.45. Pacific Rubiales Energy Corp., which explores for oil in Colombia, declined 1.6 percent to C$28.49. Canadian Natural Resources Ltd., the country’s third- largest energy company, fell 3.3 percent to C$31.91.

SNC-Lavalin Group Inc., Canada’s biggest construction and engineering company, dropped 4.2 percent to C$38.40. The company’s Montreal headquarters were searched by the Royal Canadian Mounted Police. The investigation is related to “certain individuals who are not or are no longer employed by the company,” SNC-Lavalin said.

US

By Rita Nazareth

April 13 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest weekly decline in 2012, as consumer confidence dropped, China’s growth slowed and the cost of insuring against a Spanish default rose to a record.

Financial shares dropped the most among 10 industries in the S&P 500, following a plunge in European lenders. JPMorgan Chase & Co. and Bank of America Corp. retreated at least 3.6 percent. Technology shares, which account for 21 percent of the S&P 500, fell 1.6 percent as a group today and had the first weekly slump this year. Google Inc. tumbled 4.1 percent as the world’s largest Internet-search company plans a new stock structure that gives management more leeway in issuing shares.

The S&P 500 slid 1.3 percent to 1,370.26 at 4 p.m. New York time, extending its weekly decline to 2 percent. It fell a second week for the longest losing streak since November. The Dow Jones Industrial Average lost 136.99 points, or 1.1 percent, to 12,849.59. About 6.2 billion shares changed hands on U.S.

exchanges today, or 9 percent below the three-month average.

“Let’s not get overly concerned, but yes, there are concerns out there that we need to look at,” Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp., which has $1.81 trillion in client assets, said in a telephone interview. “China has been disappointing, U.S. consumer confidence adds to the pressure and Europe is not out of the woods yet.”

Stocks fell as confidence among U.S. consumers cooled in April from a one-year high. China’s growth slowed to the least in almost three years. Credit-default swaps on Spain surged as Prime Minister Mariano Rajoy struggles to prevent the nation from becoming the fourth euro-region member to need a bailout.

Today’s decline in stocks follows the biggest two-day rally in 2012. The S&P 500, which had the best first-quarter since 1998, was still up 9 percent this year as investors bought stocks amid better-than-estimated economic data and expectations that Europe would tame its debt crisis.

“The first quarter was a relief that things were not going to be as bad,” said Virginie Maisonneuve, head of global equities at Schroder Investment Management Ltd., which oversees

$291 billion, said in a phone interview from London. “Since then, there are question marks of liquidity. We have a lot of liquidity in the world, but what next?”

Concern about the global financial system drove banks lower even after JPMorgan and Wells Fargo & Co. reported earnings that beat estimates. The KBW Bank Index slumped 3.1 percent as all of its 24 stocks retreated. Bank of America sank 5.3 percent, the most in the Dow, to $8.68. JPMorgan lost 3.6 percent to $43.21.

Wells Fargo dropped 3.5 percent to $32.84.

Quarterly reports scheduled for next week include Citigroup Inc., Goldman Sachs Group Inc., Bank of America and some of the largest technology companies. International Business Machines Corp., which comprises 12 percent of the Dow; Intel Corp., the world’s biggest chipmaker; and Microsoft Corp., the largest software maker, are due to announce their results. Yum! Brands Inc., which surged 2.8 percent to $72.86 today for the biggest gain in the S&P 500, is also scheduled to report.

While S&P 500 per-share profit growth slowed to 1.7 percent during the first three months of the year from 4.9 percent in the fourth quarter, it will accelerate to 8.6 percent during all of 2012, according to analyst estimates compiled by Bloomberg.

Google tumbled 4.1 percent to $624.60 even as earnings beat estimates. The bid to preserve control for founders Larry Page and Sergey Brin raised concern among corporate-governance watchdogs. Google unveiled a plan that lets the company issue new shares without diluting the founders’ voting power.

The stock change would create a new class of nonvoting shares that will be distributed to existing shareholders in what is effectively a 2-for-1 stock split. For investors, the result is a lack of input on decision making, said Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance.

“Shareholder voting rights are pretty limited in Google,”

he said. “And this basically perpetuates that reality.”

Apple Inc. sank 2.8 percent, the most since October, to $605.23. After rising to a record on April 9, the most valuable technology company fell for a fourth day in the longest losing streak since December.

Coinstar Inc. surged 7.3 percent to $65.78. The owner of the Redbox movie-rental kiosks said first-quarter sales and profit exceeded its previous projection and lifted its earnings forecast for 2012 to at least $4.40 a share.

Dow Chemical Co. advanced 1.6 percent to $33.20. The largest U.S. chemicals producer increased its quarterly dividend to 32 cents a share from 25 cents.

Safeway Inc. rose 2.5 percent to $21.19. The grocer may be considering options such as a leveraged buyout or Reverse Morris Trust, according to JPMorgan.

Johnson Controls Inc. added 2.3 percent to $32.57. The largest U.S. auto supplier was boosted to buy from hold at Deutsche Bank AG.

Concern about the global financial system’s stability has grown so much during the past two weeks that investors ought to take less risk, according to Bank of America’s Merrill Lynch unit.

Forty market-related gauges go into the Bank of America indicator, and 10 of them surged far enough to send a so-called critical stress signal three days ago. The “risk-off” warning was the first since July 12, just before a second-half retreat in stocks got under way.

“We recommend caution,” Benjamin Bowler, head of global derivatives research, and two colleagues wrote in a report two days ago. The MSCI All-Country World Index declined by an average of 3.8 percent in periods when the signal was in place since 2000, the report said.

The stress index’s components reflects the potential worsening of a euro-region debt crisis, according to Bowler, based in San Francisco, and Anders Armelius and Abhinandan Deb, his London-based colleagues.

Credit-default swap rates for government borrowers are showing the most stress, according to their data. A CDS-based based indicator was at 4.1 three days ago. Readings above zero show stress is higher than normal.

Have a wonderful weekend everyone.

Be magnificent!

Life is like a garden.  Quite naturally, leaves wither and flowers fade.

Only if we clear the decay of the past

then and there can we really enjoy the beauty of the new leaves and flowers.

Likewise, we must clear the murkiness of past bad experiences from our minds.

Life is remembrance in forgetfulness.

Forgive what ought to be forgiven; forget what ought to be forgotten.

Let us embrace life with renewed vigor..

We should be able to face every moment of life with renewed expectation, like a freshly blossomed flower.

Mata Amritanandamayi, 1953-

As ever,

Carolann

You can tell the character of every man when

you see how he receives praise.

-Seneca, circa 3 BC -65 AD

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

Senior Vice-President &

Senior Investment Advisor