April 10, 2012 Newsletter

Dear Friends,

Tangents:

April 10, 1912: The Titanic sets sail on her maiden voyage.

-from Susan Sontag -excerpted from the forthcoming book “As Consciousness Is Harnessed to Flesh:  Journals and Notebooks, 1964-1980,” by Susan Sontag, edited by David Rieff.

Things I like: fires, Venice, tequila, sunsets, babies, silent films, heights, coarse salt, top hats, large long-haired dogs, ship models, cinnamon, goose down quilts, pocket watches, the smell of newly mown grass, linen, Bach, Louis XIII furniture, sushi, microscopes, large rooms, boots, drinking water, maple sugar candy.

Things I dislike: sleeping in an apartment alone, cold weather, couples, football games, swimming, anchovies, mustaches, cats, umbrellas, being photographed, the taste of licorice, washing my hair (or having it washed), wearing a wristwatch, giving a lecture, cigars, writing letters, taking showers, Robert Frost, German food.

Things I like: ivory, sweaters, architectural drawings, urinating, pizza (the Roman bread), staying in hotels, paper clips, the color blue, leather belts, making lists, wagon-lits, paying bills, caves, watching ice-skating, asking questions, taking taxis, Benin art, green apples, office furniture, Jews, eucalyptus trees, penknives, aphorisms, hands.

Things I dislike: television, baked beans, hirsute men, paperback books, standing, card games, dirty or disorderly apartments, flat pillows, being in the sun, Ezra Pound, freckles, violence in movies, having drops put in my eyes, meatloaf, painted nails, suicide, licking envelopes, ketchup, traversins [“bolsters”], nose drops, Coca-Cola, alcoholics, taking photographs.’

On Intelligence

I don’t care about someone being intelligent; any situation between people, when they are really human with each other, produces “intelligence.”

Don’t worry that children never listen to you; worry that they are always watching you.

-Robert Fulghum

photos of the day

April 10, 2012

Chinese sky lanterns decorate the area around the ArtScience Museum at Marina Bay Sands in Singapore. Some 2,228 lanterns are hung around the museum to commemorate the maiden voyage of RMS Titanic 100 years ago on April 10, 1912, signifying the numbers of passengers onboard.

Tim Chong/Reuters

Jellyfish glide slowly in an aquarium wall of a hotel at Manila Ocean Park, the largest oceanarium in the country, as the media was given a tour during its 2nd anniversary celebration in Manila, Philippines.

Bullit Marquez/AP

Market Closes for April 10, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 10 (Bloomberg) — Canadian stocks declined for a fifth straight day as energy shares slipped before a report tomorrow that may show an increase in U.S. oil stockpiles.

Enbridge Inc., the country’s largest pipeline company, fell 2.5 percent after saying it plans to sell $200 million of preferred shares. Lumber producer Canfor Corp. dropped 5.4 percent after the stock’s rating was cut at BMO Capital Markets.

First Quantum Minerals Ltd., a copper producer that surged last week on takeover speculation, gained 8.8 percent.

The Standard & Poor’s/TSX Composite Index declined 83.21 points, or 0.7 percent, to 11,935.29 in Toronto, its lowest level of the year. The index’s five-day skid is its longest since June.

“It’s no surprise investors are selling off risk assets,” Tony Demarin, chief investment officer at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$335 million ($334 million). “The market in general is due for a pause. We’ve had six months of pretty good financial return in the stock markets around the world, and we’ve hit a little bit of a wall here.”

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.”

Energy stocks in the S&P/TSX declined for a fifth straight day as oil dropped after Chinese crude imports declined and analysts estimated that a report tomorrow will show U.S. stockpiles rose to the highest level for this time of the year since 1990.

Enbridge Inc. fell 2.5 percent to C$38.45 after saying it plans to sell $200 million of preferred shares in a transaction expected to close April 18. Suncor Energy Inc., the country’s largest oil and gas producer, dropped 2.2 percent to C$29.64.

Gold producers increased as the metal rose to a one-week high in New York after European debt concerns spurred demand for a haven investment. Barrick Gold Corp., the world’s largest producer of the metal, gained 2.2 percent to C$41.71. Goldcorp Inc., the second-biggest bullion miner, rose 1.8 percent to C$41.65.

Jaguar Mining Inc., the target of a proposed takeover by China’s Shandong Gold Group Co. in November, surged 15 percent to C$4.65 after Shandong’s shares were suspended from trading pending news. The increase was Jaguar’s biggest since Nov. 16.

First Quantum gained 8.8 percent to C$21.11. Canada’s second-largest copper producer, which jumped the most in four months last week on takeover speculation, is projected to boost earnings before interest, taxes, depreciation and amortization by 84 percent over the next three years, according to analysts’ estimates compiled by Bloomberg.

Canfor Corp. dropped 5.4 percent to C$10.71 after the stock’s rating was cut to market perform from outperform at BMO Capital Markets. The rating means BMO forecasts that Canfor will perform roughly in line with the market.

US

By Rita Nazareth

April 10 (Bloomberg) — U.S. stocks declined for a fifth straight day, giving the Standard & Poor’s 500 Index its longest losing streak since November, as a surge in Spanish and Italian bond yields fueled concern Europe’s debt crisis is worsening.

The Morgan Stanley Cyclical Index of companies most- dependent on the economy lost 2.7 percent. Bank of America Corp.

and Caterpillar Inc. dropped at least 3 percent. Alcoa Inc., which declined 2.9 percent in regular trading, jumped 5 percent at 4:25 p.m. New York time after reporting an unexpected profit.

Best Buy Co., the world’s largest electronics retailer, slumped 5.9 percent as Chief Executive Officer Brian Dunn resigned.

The S&P 500 declined 1.7 percent to 1,358.59, its biggest loss in 2012, at 4 p.m. New York time. The Dow Jones Industrial Average retreated 213.66 points, or 1.7 percent, to 12,715.93.

The Chicago Board Options Exchange Volatility Index surged 8.4 percent to 20.39, rallying for a record eighth day. More than 8.3 billion shares changed hands on U.S. exchanges, the most since March 16 and 21 percent above the three-month average.

“I don’t think there’s any rush to be involved in the stock market,” James Swanson, who oversees about $250 billion as chief investment strategist at Boston-based MFS Investment Management, said in a telephone interview. “Europe is a temporary concern. The market is signaling they haven’t fixed the whole problem. Investors will need more reassurance.”

Stocks fell as Spanish bonds slumped after Economy Minister Luis de Guindos declined to rule out a rescue and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need more capital if the economy weakens more than expected. The Italian 10-year yield rose 23 basis points to 5.69 percent, sending the spread over bunds to 4.04 percentage points, the most since Jan. 31 on a closing basis.

Today’s decline sent the S&P 500 below its average price in the past 50 days of about 1,372. The index, which has dropped 4.3 percent in five days, retreated 1.1 percent yesterday after an April 6 report showed employers added fewer jobs than forecast in March. Federal Reserve Chairman Ben S. Bernanke yesterday said the U.S. economy hasn’t fully recovered.

“Friday’s disappointing report has eroded investor confidence about America’s self-sustaining ability to overcome headwinds from Europe,” Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said in an e-mail.

Investors also awaited the start of the first-quarter earnings season. While per-share profit growth slowed to 0.8 percent 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.

All 10 groups in the S&P 500 declined today as consumer discretionary, financial and industrial shares had the biggest losses. The Dow Jones Transportation Average retreated 2.1 percent. A measure of 11 homebuilders in S&P indexes slumped 4.8 percent. The KBW Bank Index dropped 2.3 percent as all of its 24 stocks declined. Bank of America slipped 4.4 percent, the most in the Dow, to $8.54. Caterpillar fell 3 percent to $100.43.

Alcoa, the first company in the Dow to report quarterly results, lost 2.9 percent to $9.32. The shares rose 5 percent to $9.79 after the close of regular trading. The largest U.S.

aluminum producer reported an unexpected first-quarter profit as customers from automakers to beverage-can manufacturers ordered more of the metal.

Net income fell to $94 million, or 9 cents a share, from $308 million, or 27 cents, a year earlier, the company said today in a statement. Earnings excluding restructuring costs and other items were 10 cents a share, compared with the 4-cent loss that was the average of 19 analysts’ estimates compiled by Bloomberg. Sales increased to $6.01 billion from $5.96 billion.

The average of 12 estimates was for $5.77 billion.

Best Buy slumped 5.9 percent to $21.32 after saying board member G. Mike Mikan is taking the CEO position on an interim basis as the company focuses on smaller stores and Internet sales. The change was a “mutual agreement” that new leadership was needed, the company said. A committee of directors has been created to search for a new CEO, the company said.

PPL Corp. declined 2.2 percent to $27.06. The energy and utility holding company will sell 9.9 million shares in a public offering.

Supervalu Inc. surged 15 percent, the most in the S&P 500, to $6.13. The supermarket and pharmacy chain forecast 2013 earnings excluding some items of at least $1.27 a share, beating the average analyst forecast of $1.19.

“A significant disconnect” between stock valuations and bond yields in the U.S. has made equities relatively cheap, according to Binky Chadha, Deutsche Bank AG’s chief global strategist.

Ten-year Treasury yields would have to rise about 120 basis points to track the estimated price-earnings ratio for the S&P 500 as they did during the first three quarters of 2011, Chadha wrote in an April 5 report. Each basis point amounts to 0.01 percentage point. The government security yielded 2.04 percent as of yesterday.

The differential primarily reflects the Federal Reserve’s plan to keep its benchmark interest rate close to zero at least through late 2014, in his view.

“The Fed’s outlook for unemployment and inflation is therefore key” in determining when the gap might close, Chadha wrote. Policy makers for the central bank are scheduled to meet on April 24-25.

Stocks are a bargain with the S&P 500 at about 13 times analysts’ projected earnings for this year, the New York-based strategist wrote. He cited a December report in which he called the index fairly valued at 15.4 times future profit.

Have a wonderful evening everyone.

Be magnificent!

Life is an aspiration.  Its mission is to strive after perfection, which is self-fulfilment.

The ideal must not be lowered because of our weaknesses or imperfections.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Once the game is over, the king and the pawn

go back in the same box.

-Italian proverb

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