April 13th, 2011 Newsletter

Dear Friends, 

 Gary and I are going away for  the next week or so, leaving tonight for London….I wish you and yours a very Happy Easter or Passover – whatever you are celebrating this time of year, may it be with family and friends and may you find peace and joy.  My team is here to help you and will be in contact with me throughout. 

 photos of the day

April 13, 2011

Cyclists ride during the first stage of the Tour of Castilla and Leon cycling race over 108 miles between Medina de Rioseco and Palencia, Spain.I. Lopez/AP

The sun rises over the Ob River in the early morning, near the city of Novosibirsk, about 1,750 miles east of Moscow.

Ilnar Salakhiev/AP

Opera singer Alla Vasilevitsky performs on the Bridge of Strings at the entrance to Jerusalem. Four Israeli female opera singers, including Vasilevitsky, braved unfamiliar territory by standing at the prominent outdoor Jerusalem landmark to sing classical arias in the midday traffic to promote an upcoming opera festival.

Ronen Zvulun/Reuters

Market Commentary:

Canada

By Matt Walcoff

April 13 (Bloomberg) — Canadian stocks rose for the first time in three days, led by banks, as the U.S. reported a ninth- straight monthly increase in retail sales.

Royal Bank of Canada, Canada’s largest lender by assets, advanced 1 percent after U.S. retail sales excluding automobiles and service stations rose more than most economists had forecast. Teck Resources Ltd. fell 1.9 percent as copper dropped the most since March 9. BlackBerry maker Research In Motion Ltd. climbed 2.3 percent after DigiTimes said the company “has placed large-volume orders” for its PlayBook tablet computer from manufacturers.

The Standard & Poor’s/TSX Composite Index gained 32.24 points, or 0.2 percent, from a three-week low to 13,833.64.

The retail sales report “shows there is some form of recovery down south of us,” Arthur Salzer, who helps oversee C$300 million ($312 million) as a money manager at MacNicol & Associates Asset Management Inc. in Toronto.

The stock benchmark tumbled 2.9 percent April 11 and yesterday for the biggest two-day drop since June. Oil declined 5.8 percent and copper lost 2.6 percent as the International Monetary Fund cut its growth forecast for the U.S. and Japan raised the severity rating of its nuclear crisis to the highest level.

“With the oil price coming down a little bit, people are being more optimistic it’s not going to have a negative impact on the economy,” said Jennifer Radman, who helps oversee C$1 billion as a money manager at Caldwell Investment Management Ltd. in Toronto. “When we get oil prices above a certain level, in the $110 mark, you really start to see an economic drag.”                        

The S&P/TSX Financials Index rose the most in two weeks after the U.S. Commerce Department released the retail-sales data.

Royal Bank gained 1 percent to C$60.42. Canadian Imperial Bank of Commerce, Canada’s fifth-largest lender by assets, advanced 0.7 percent to C$83.87, ending a six-day streak of losses. Mutual-fund company IGM Financial Inc. increased 1.7 percent to C$48.50.

RIM climbed 2.3 percent from a five-month low to C$52.79 after DigiTimes said Quanta Computer Inc. may ship more than 1 million PlayBook tablets a month in the third quarter. The Taipei-based business-news website cited unnamed sources from component makers.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose for the first time in seven days, climbing 0.9 percent to C$54.47. Wheat rebounded from yesterday’s 4.9 percent plunge on speculation dry weather will reduce yields in the U.S.

All major base metals traded on the London Metal Exchange retreated on concern China, the world’s biggest user of the raw materials, will take more steps to tighten credit and fight inflation.

Teck fell for a sixth day, losing 1.9 percent to C$50.90.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 2.9 percent to C$121.30 to extend its weekly drop to 11 percent. European Goldfields Ltd., which mines zinc, lead and silver, sank 6.7 percent to C$10.55, the lowest price since September.

Most S&P/TSX energy companies gained as natural gas advanced 1.1 percent and crude oil 0.8 percent.

Enbridge Inc., Canada’s largest pipeline company, increased 1 percent to C$60.05. Cenovus Energy Inc., Canada’s fifth- biggest energy company, climbed 0.6 percent to C$36.34. Oil- sands developer BlackPearl Resources Inc. surged 6.1 percent to C$7.81.

First Majestic Silver Corp., which mines in Mexico, soared 12 percent to C$22.14 as the metal rebounded from a 1.3 percent decline yesterday. Shares of the Vancouver-based company had plunged 16 percent in the previous two days.

 US

By Rita Nazareth

April 13 (Bloomberg) — U.S. stocks rose, halting the longest Standard & Poor’s 500 Index slump since November, as a Federal Reserve report fueled optimism the economy can weather President Barack Obama’s plan to cut spending and raise taxes.

Caterpillar Inc. and Kraft Foods Inc. led gains in the Dow Jones Industrial Average as the Fed said most of its districts reported improvements in the economy were widespread across sectors. Riverbed Technology Inc. soared 12 percent as the computer networking company’s profit beat analyst estimates.

Lockheed Martin Corp. and Raytheon Co. dropped at least 2.5 percent as Obama proposed cutting $400 billion from the Pentagon’s budget through 2023.

The S&P 500 snapped a four-day slump, rising less than 0.1 percent to 1,314.41 at 4 p.m. in New York. The Dow average increased 7.41 points, or 0.1 percent, to 12,270.99 today.

Benchmark indexes fell earlier as details of Obama’s plan emerged, then turned higher after the Fed’s Beige Book said the economy and labor markets improved.

“The economy is in good shape,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which had about $110 billion in client assets.

“The evidence of the last few years has been that whenever the government leads in spending money, the private sector follows.”                    

 The S&P 500 has risen 4.5 percent in 2011, extending last year’s 13 percent gain, amid government stimulus measures and higher-than-estimated corporate profits. The index has surged 26 percent since Fed Chairman Ben S. Bernanke’s suggested on Aug. 27 that he would pursue a second round of asset purchases to stimulate the economy, a tactic known as quantitative easing.

Obama, presenting his second plan in as many months to reduce the nation’s long-term debt today, vowed to cut $4 trillion in cumulative deficits within 12 years through a combination of spending cuts and tax increases.

Equities began reversing losses after the Fed said the economy expanded at a “moderate” pace across much of the U.S. in February and March, led by manufacturing, with labor markets showing improvements in most regions.

“While many districts described the improvements as only moderate, most districts stated that gains were widespread across sectors,” the Fed said today in its Beige Book report.

While higher commodity costs compelled sellers to try to raise prices, pressures to increase wages were “weak or subdued.”

 Earlier gains in stocks today came as sales at U.S. retailers in March indicated the improving job market is helping Americans cope with higher costs for fuel and food. Purchases increased 0.4 percent following a 1.1 percent February gain that was larger than previously estimated, Commerce Department figures showed. The median forecast of 82 economists surveyed by Bloomberg News was a 0.5 percent rise. Sales excluding automobiles and gasoline advanced more than projected.

“The tide is still a tide towards normalcy as far as the economy goes,” said David Kelly, who helps oversee $405 billion as chief market strategist at JPMorgan Funds in New York.

“Consumers have a lot more energy than people thought. We’re going to see more positive than negative surprises. Same goes for a steady improvement in corporate profits.” A gauge of consumer and apparel companies in the S&P 500 rose 1.3 percent, the biggest gain within 24 industries.

 Coach Inc., the largest U.S. maker of luxury leather handbags, added 3.6 percent to $53.97. Nike Inc., the world’s largest sporting goods company, rose 1.6 percent to $79.41.

Riverbed Technology soared 12 percent to $34.74. The computer networking technology company said that, excluding some items, it earned at least 19 cents a share in the first quarter.

That topped the average analyst estimate of 18 cents in a Bloomberg survey.

GameStop Corp. rose 6.6 percent to $25.36, the biggest advance in the S&P 500. The world’s largest video-game retailer is facing a digital transition similar to one undertaken by Netflix Inc., according to Tony Wible, an analyst at Janney Montgomery Scott LLC. Wible cited 10 reasons to buy the company, including increased number of users, digital investments and new game systems.

MGM Resorts International rallied 8.6 percent to $13.70, the most in the Russell 1000 Index. The casino company founded by billionaire Kirk Kerkorian will gain control over its Macau joint venture through steps including an initial public offering of some shares held by partner Pansy Ho.                    

 Military contractors declined as President Obama proposed to cut $400 billion from current and future defense spending.

Lockheed Martin dropped 2.6 percent to $78.31. Raytheon slipped 2.9 percent to $48.68. General Dynamics Corp. fell 1.5 percent to $71.81.

For-profit education stocks dropped as Democrats in Congress agreed to cut Pell grants for students in summer school. “Although the maximum Pell Grant amount is unchanged at $5,550, Congress is about to end year-round Pell Grants,” wrote Arvind Bhatia, an analyst at Sterne Agee & Leach Inc., in an e- mail. Strayer Education Inc. slumped 7.1 percent to $124.38, the biggest decline in the Russell 1000 Index. Apollo Group Inc. retreated 3 percent to $39.88.

Banks had the biggest decline in the S&P 500 within 24 industries, slumping 1.7 percent as a group, as regulators said the 14 largest U.S. mortgage servicers must pay back homeowners of botched foreclosures.

The 14 largest U.S. mortgage servicers must pay back homeowners for losses from foreclosures or loans that were mishandled in the wake of the housing collapse, according to a consent decree released today. The agreement between the servicers and U.S. regulators imposes more substantial penalties than early reports of the deal indicated. It could also help the U.S. Justice Department determine the size and scope of any future fines for the flawed practices, regulators said.

The banks, including JPMorgan Chase & Co. and Wells Fargo & Co., agreed in the settlement to conduct a review of all loans that went into foreclosure in 2009 and 2010. They also agreed to improve their foreclosure, loan modification and refinancing procedures.

JPMorgan Chase & Co. fell 0.8 percent to $46.25, reversing an earlier rally triggered by higher-than-forecast earnings, as Chief Executive Officer Jamie Dimon signaled the lender will not boost dividends in the next couple of quarters.

Have a wonderful evening everyone.

 Be magnificent!

 We gain our freedom when we realize our most true nature.

The man who is an artist gains his artistic freedom when he discovers the true ideal of art.

  -Rabindranath Tagore, 1861-1901

As ever,

 Carolann

 Always bear in mind that your own

resolution to succeed is more important

than any other one thing.

 -Abraham Lincoln, 1809-1865

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

Senior Vice-President &

Senior Investment Advisor