April 27, 2012 Newsletter

Dear Friends,

Tangents:

On this day in,

4977 B.C. – The Universe is created, according to German mathemetician Johannes Kepler (1571-1630); apparently he was off by 13.7 billion years

1994, Richard Nixon was laid to rest beside his Presidential library.

1813 – American forces capture York (present-day Toronto), the seat of government in Ontario.
1989 – Protesting students take over Tiananmen Square, in Beijing, China
1978 – The Afghanistan Revolution begins

photos of the day

April 27, 2012

India’s PSLV C-19 lifts off carrying its first indigenous radar imaging satellite RISAT-1 at the Satish Dhawan Space Center in Sriharikota, India. The satellite has the capability to take images of the earth during day and night as well as in cloudy conditions and will facilitate agriculture and disaster management, according to a news agency.

Arun Sankar K./AP

Passengers are pictured during the inauguration trip of the new regional two-floor train of the Swiss Federal Railways (SBB) connecting Geneva and Lausanne in Coppet near Geneva.

Valentin Flauraud/Reuters

Market Closes for April 27, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 27 (Bloomberg) — Canadian stocks advanced, capping their second straight weekly gain, as metal and natural gas producers rose with prices for the commodities.

Agnico-Eagle Mines Ltd., a gold producer that operates in Canada, Mexico and Finland, gained 9.6 percent after reporting profit that beat analyst estimates. Encana Corp., the country’s biggest natural gas producer by volume, increased 3.8 percent.

Petrominerales Ltd., a Calgary-based oil company that operates in Latin America, plunged 18 percent after saying an exploration well was dry.

The Standard & Poor’s/TSX Composite Index increased 91.90 points, or 0.8 percent, to 12,237.75 in Toronto, for a 0.7 percent weekly gain. Natural gas futures rose to a three-week high and copper and gold increased as the U.S. dollar weakened following government data showing the American economy grew at a slower-than-forecast rate of 2.2 percent, even with the biggest gain in consumer spending in more than a year.

“You’re finally seeing the private sector pick up the slack while government stimulus trails off,” Barry Schwartz, a money manager at Baskin Financial Services Inc. in Toronto, said in a telephone interview. The firm oversees about C$400 million ($400 million). “I think there’s a big possibility for a rebound.”

The benchmark gauge had its first weekly gain in almost two months in the five days ending April 20, snapping its longest losing streak since 2008. Canadian stocks have rallied this week on better-than-forecast corporate earnings and U.S. housing data that exceeded expectations.

Materials companies increased along with gold futures, which advanced for the second straight day as the dollar declined, increasing demand for the metal as an alternative investment.

Agnico-Eagle Mines gained 9.6 percent to C$38.66 after reporting earnings excluding some items of 59 cents a share, exceeding the average analyst estimate of 37 cents. Barrick Gold Corp., the world’s largest producer of the metal, climbed 1.4 percent to C$39.88.

Energy stocks in the S&P/TSX increased as natural gas rallied on forecasts of colder-than-normal weather in the eastern and central U.S. that may boost demand for the heating fuel.

Encana increased 3.8 percent to C$20.18. Cenovus Energy Inc., the oil sands company spun off by Encana, advanced 3.4 percent to C$35.17. Canadian Natural Resources Ltd., the country’s third-largest energy company, rose 2.1 percent to C$33.31.

Petrominerales plunged 18 percent to C$14.09 after the company said it found no hydrocarbons at the La Colpa 2X well on Block 126 in Peru after completing testing.

Progressive Waste Solutions drove in index of Canadian industrials lower, dropping 4.5 percent to C$21.44. The nation’s biggest waste-management company reported earnings excluding some items of 20 cents per share, falling short of the average analyst estimate of 23 cents.

TMX Group Inc., the Canadian exchange owner facing a C$3.73 billion takeover by a group of Canadian banks and pension funds, rose 4.6 percent to C$44.70 after an antitrust regulator said its “serious concerns” on the sale may be mitigated by proposed rules governing the bourse.

US

By Rita Nazareth

April 27 (Bloomberg) — The Standard & Poor’s 500 Index capped the best week in a month, as retailers surged to a record, after improving corporate earnings and consumer confidence tempered lower-than-forecast economic growth.

Retailers in the S&P 500 climbed 3.5 percent for the biggest gain among 24 groups. Amazon.com Inc., the largest Internet retailer, and Expedia Inc., an online-travel company, surged at least 15 percent as earnings beat estimates. A gauge of homebuilders in S&P indexes rallied 3 percent to the highest level since October 2008. Starbucks Corp. tumbled 5.3 percent as same-store sales trailed analysts’ projections.

The S&P 500 added 0.2 percent to 1,403.36 at 4 p.m. New York time. The benchmark gauge for U.S. equities rallied 1.8 percent since April 20 for a back-to-back weekly gain. The Dow Jones Industrial Average gained 23.69 points, or 0.2 percent, to 13,228.31. About 6.2 billion shares changed hands on U.S. exchanges, or 7 percent below the three-month average.

“It all tells me that the economy continues to grow at a slow, steady pace,” said Jeffrey Layman, chief investment officer of BKD Wealth Advisors in Springfield, Missouri. His firm has $1.9 billion under management. “Consumers are feeling more confident and it’s a good thing. We’re pleased with the overall improvement in earnings.”

About 75 percent of the companies in the S&P 500 that reported results since April 10 have topped analysts’ estimates, according to data compiled by Bloomberg. Per-share profits are forecast to have grown 5.3 percent in the first-quarter, Bloomberg data show. That’s up from the 0.8 percent growth projection before the earnings season started.

Equities rose even after data showed the U.S. economy expanded at a 2.2 percent annual rate in the first quarter, less than the 2.5 percent increase forecast by economists. Confidence among U.S. consumers climbed in April to the highest level in a year, according to a separate report.

Pacific Investment Management Co.’s Mohamed El-Erian said lower-than-forecast U.S. growth suggests additional monetary stimulus remains on option for the Federal Reserve even though there is no immediate need for action.

“If we continue this weakening trend, the Fed will come back in and try to sustain this market and this economy,” El- Erian, the chief executive officer of the world’s largest manager of bond funds, said during an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “I don’t think there is an immediate need now.”

Today’s rally trimmed this month’s decline in the S&P 500 to 0.4 percent. If the index erases its April drop, it will cap the fifth straight month of gains, the longest winning streak since 2009. The gauge has gained 12 percent so far this year.

Six out of 10 groups in the S&P 500 rose today as companies that rely on consumer discretionary spending and industrial shares had the biggest gains. Ten of 11 stocks in a measure of homebuilders in S&P indexes advanced.

Amazon surged 16 percent, the biggest advance since October 2009, to $226.85. The company posted earnings-per-share that quadrupled the average analyst estimate. Chief Executive Officer Jeff Bezos is looking to add customers by pouring money into new versions of the Kindle and warehouses that are equipped to send out products faster.

Expedia soared 24 percent, the most in the S&P 500, to $40.31. “Gross bookings and revenue growth were again driven by strength in our hotel business with global room-nights growing 24 percent, a nice acceleration from the 19 percent we saw for the fourth quarter,” Dara Khosrowshahi, the company’s chief executive officer, said on a conference call yesterday.

Vivus Inc. jumped 3 percent to $25.15, the highest since 1997. A Vivus pill that is supposed to provide erections within 15 minutes, about half the time or less than Pfizer Inc.’s Viagra, won U.S. regulatory approval.

Starbucks retreated 5.3 percent, the most since Aug. 18, to $57.43. Sales at stores open at least 13 months rose 7 percent globally in the quarter. Analysts projected a gain of 8.2 percent, the average of 17 estimates compiled by Consensus Metrix. Such sales fell 1 percent in Europe, the Middle East and Africa amid “slight decreases” in transactions and average check, Starbucks said.

Customers in Europe “are just cautious, as you would expect, not unlike what they were like in the U.S. three and four years ago,” Chief Financial Officer Troy Alstead said in an interview. Starbucks “is not immune from that,” he said.

Procter & Gamble Co. slumped 3.6 percent to $64.44 for the biggest loss in the Dow. The world’s largest consumer-products company reduced its full-year earnings forecast amid higher costs for raw materials.

Ford Motor Co. dropped 2.3 percent to $11.60. The company seeking a second investment-grade credit rating said first- quarter profit fell 45 percent on a higher tax rate and as overseas losses ate into growing income from North America.

Allscripts Healthcare Solutions Inc. plunged 36 percent, the most in the Russell 1000 Index, to $10.30. The maker of clinical software slashed its earnings forecast for 2012. Chief Financial Officer Bill Davis will leave the company effective May 18, and three board directors resigned after disagreeing with a decision to terminate Chairman Phil Pead.

Utilities are poised to become the only one of the S&P 500’s 10 main industry groups whose investors receive dividends on every stock. AES Corp. and NRG Energy Inc., two independent power producers, plan to introduce payouts during the second half. They are the only utilities in the S&P 500 that don’t already provide dividend income.

The industry currently has the fourth-highest percentage of dividend-paying shares. Raw-material producers, makers of food, beverages and other consumer staples, and industrial companies are the top three, in that order.

More than 80 percent of S&P 500 companies pay dividends, said Howard Silverblatt, a New York-based senior index analyst at S&P. The figure is the highest since January 2000. Nasdaq OMX Group Inc. sent the percentage above that threshold two days ago by declaring a quarterly payout of 13 cents a share.

AES plans to distribute $120 million a year, starting in the fourth quarter. That’s equivalent to an annual dividend of about 16 cents a share. The Arlington, Virginia-based company’s most recent payout was in 1994, four years before joining the S&P 500, according to data compiled by Bloomberg.

NRG, a component of the index since 2010, plans to begin paying dividends in the third quarter. Investors would receive 36 cents a share annually. The company, based in Princeton, New Jersey, made a similar proposal in 2007 that was scrapped after a bid to refinance debt failed.

Have a wonderful weekend everyone.

Be magnificent!

There is no master, there is no instructor,

there is no person to tell you what you must do.

-Krishnamurti, 1895-1986

As ever,

Carolann

Income tax returns are the most imaginative

fiction being written today.

-Herman Wouk, 1915-

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