April 12, 2012 Newsletter

Dear Friends,

Tangents:

On this day,

In 1917, Canadians take Vimy Ridge, 3,600 Canadians died.

In 1927, the British Cabinet comes out in favour of voting rights for women.

In 1945, Franklin D. Roosevelt died; Harry Truman became President of the USA.

In 1954, Bill Haley records Rock Around the Clock.

In 1955, Dr. Jonas Salk’s discovery of a Polio vaccine is announced.

In 1961, Yuri Gagarin of the USSR became the first man in space, orbits the earth.

photos of the day

April 12, 2012

Russian Prime Minister Vladimir Putin wears 3D glasses as he visits Moscow’s Planetarium in Moscow. Putin chaired a meeting with officials on building a new space launchpad in Russia’s far east that should become operational by 2018.

Alexei Druzhinin/Government Press Service/AP

Edvard Munch’s ‘The Scream’ is seen as it is hung for display at Sotheby’s Auction Rooms in London. The picture made with pastels is one of four versions of the composition, and dates from 1895, it will be auctioned in the Impressionist and Modern Art Sale in New York on May 2, with an estimated price of 80 million dollars.

Kirsty Wigglesworth/AP

Market Closes for April 12, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 12 (Bloomberg) — Canadian stocks rose the most since the first trading day of the year as metal producers gained on speculation a slowing economy will prompt easing of monetary policy by China.

Teck Resources Ltd., Canada’s biggest base-metal producer, rose 4.4 percent. Goldcorp Inc., the world’s second-biggest bullion miner, gained 2.5 percent. Eldorado Gold Corp. surged 11 percent after saying its costs will be lower than some analysts anticipated. Canadian Natural Resources Ltd., the country’s third-largest energy company, rose 4.2 percent on higher oil, as signals that U.S. interest rates will stay low offset higher- than-forecast American jobless claims.

The Standard & Poor’s/TSX Composite Index rose 187.89 points, or 1.6 percent, to 12,214.65 in Toronto, its biggest gain since Jan. 3. The benchmark measure of Canadian stocks lost 4.6 percent from April 2 through April 10 before rebounding yesterday.

“People shouldn’t put too much stock into one jobless claim data point,” 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).

“The Fed said that the economy is picking up steam, which is what matters. Earnings are growing, the market is reasonably priced and commodity stocks are still at buoyant levels.”

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 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.”

U.S. Fed Vice Chairman Janet Yellen and Fed Bank of New York President William C. Dudley endorsed the central bank’s view that borrowing costs are likely to stay low through 2014.

U.S. central bankers next meet on April 24-25 to debate policy.

Materials companies in the Canadian index increased, driven by gold and copper shares, on speculation that slower economic growth will prompt policy makers to add more stimulus measures in China. A government report tomorrow may show that China’s economy expanded at the slowest pace in almost three years in the first quarter, according to the median estimate of 41 economists surveyed by Bloomberg.

Barrick Gold Corp., the world’s largest producer of the metal, rose 1.8 percent to C$41.98. Goldcorp gained 2.5 percent to C$41.79. Eldorado increased 11 percent to C$14.37. The Vancouver-based mining company expects average cash costs of $350 per ounce of gold produced as it boosts annual output to 1.7 million ounces in 2016.

Teck Resources improved 4.4 percent to C$36.93 as copper rose the most in more than a week. First Quantum Minerals Ltd., a copper producer that surged last week on takeover speculation, rose 4.8 percent to C$22.54 after Goldman Sachs Group Inc. said the company is a “compelling M&A case.”

Energy stocks in the S&P/TSX gained for a second day following five days of declines. Canadian Natural Resources rose 4.2 percent to C$33.01. Suncor Energy Inc., Canada’s largest oil and gas producer, increased 2.8 percent to C$30.95.

US

By Rita Nazareth

April 12 (Bloomberg) — U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest two-day rally in 2012, on policymakers’ signals that interest rates will remain low.

Commodity shares gained the most among 10 S&P 500 groups.

The Dow Jones Transportation Average, a proxy for the economy, added 2.2 percent. Hewlett-Packard Co. surged 7.2 percent, the biggest advance since 2009, after Gartner Inc. said the global personal-computer industry grew in the first quarter as the company remained a market leader. Google Inc. added 1.8 percent at 4:54 p.m. New York time as profit beat estimates.

The S&P 500 advanced 1.4 percent to 1,387.57 at 4 p.m. New York time, rising 2.1 percent in two days. The Dow Jones Industrial Average climbed 181.19 points, or 1.4 percent, to 12,986.58. About 6.3 billion shares changed hands on U.S. exchanges today, or 8 percent below the three-month average.

“We have the ingredients for a better tone to the market,” said Keith Wirtz, who oversees $15 billion as chief investment officer for Fifth Third Asset Management in Cincinnati. “The bar was set low, we might have a good earnings season and a couple of Fed officials are providing some rhetoric. If there’s an erosion of economic conditions, it’s likely that we’re going to see action by the Fed.”

Equities rose today as Federal Reserve Vice Chairman Janet Yellen and New York Fed President William C. Dudley endorsed the central bank’s view that borrowing costs are likely to stay low through 2014. Those comments overshadowed investors’

disappointment after a report showed that more Americans than forecast filed claims for jobless benefits last week.

American stocks also joined a global rally as investors awaited a report at 10 p.m. New York time that’s forecast to show China’s economy expanded 8.4 percent last quarter. The Bloomberg China-U.S. Equity Index of the most-traded Chinese stocks in the U.S. added 2.5 percent.

Today’s gain extended this year’s advance in the S&P 500 to 10 percent as investors piled into 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.

“It’s very difficult to kill a rally that we’ve seen over the last few months in one shot,” said Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $1.6 billion. “Without ‘new’ news it will be very difficult to send this market lower. Ultimately, earnings are going to be important. I would expect good domestic earnings.”

All 10 groups in the S&P 500 rose today as companies most- dependent on economic growth had the biggest gains. The Morgan Stanley Cyclical Index added 2.6 percent. Caterpillar Inc. advanced 4.6 percent to $106.44. Alcoa Inc., which this week reported an unexpected profit, rallied 2.7 percent to $10.17.

JPMorgan Chase & Co. climbed 1.9 percent to $44.84.

Hewlett-Packard jumped 7.2 percent, the most in the Dow, to $25.10. The company accounted for 17.2 percent of worldwide PC shipments, Stamford, Connecticut-based Gartner said yesterday.

Total global PC shipments climbed 1.9 percent to 89 million units, after predictions of a 1.2 percent drop, according to Gartner. Another research firm, IDC, also reported a surprise increase for the quarter.

Google rallied 2.4 percent to $651.01. After the close of regular trading, the shares rose 1.8 percent to $662.60. First- quarter profit before certain costs was $10.08 a share. Analysts had projected $9.64 on average, according to data compiled by Bloomberg.

The company announced plans for what it calls an effective stock split, introducing a new class of nonvoting capital stock.

The shares will be distributed through a stock dividend to existing shareholders.

“The viability of Google is still very, very strong,” said Ron Josey, an analyst at ThinkEquity LLC in New York. He recommends buying the stock, which he doesn’t own himself.

“There’s still a lot of room for growth across its multiple businesses.”

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

AT&T Inc. gained 1.3 percent to $30.84 after the company’s shares were raised to the equivalent of buy at JPMorgan. The 9- month share-price estimate is $33.

McKesson Corp. jumped 3.9 percent to $91.34. The largest U.S. drug distributor based on revenue rose to its highest level since 1998 after the company won a $31.6 billion contract from the Department of Veterans Affairs.

Illumina Inc. slipped 5.8 percent to $49.51. Roche Holding AG, which bid $51 a share to buy the maker of DNA analysis equipment, said publicly available information doesn’t justify a higher price.

Before capping a two-day rally, the S&P 500 had tumbled 4.3 percent from an almost four-year high on April 2. The retreat in the index may not be over, as a gauge of bullishness reached levels that coincided with the market’s peak in 2007 and preceded the biggest pullback in both of the last two years.

The Consensus Bullish Sentiment index on stocks, based on a weekly survey of brokerage strategists and newsletter writers, exceeded 75 percent for seven weeks through April 3, the longest streak since Kansas City, Missouri-based Consensus Inc. began compiling the data in 1983.

The index fell to 69 percent this week as the S&P 500 had the worst five-day drop since November amid concern the recovery in the American labor market is slowing and Europe’s debt crisis is worsening.

Increasing bullishness is considered a contrarian indicator by some analysts who follow price charts to make market predictions, because investors who have bought shares now have less money to purchase stocks.

“We’re concerned at what we view as very complacent bullish sentiment, almost frothy, and it needs to be unwound,” John Kattar, chief investment officer at Eastern Investment Advisors in Boston, which manages $1.7 billion, said in a telephone interview. “We should see some fear creeping back into the market, but we’re a long way from that happening yet.”

Have a wonderful evening everyone.

Be magnificent!

You are never alone because you are full of all the memories, all the conditioning,

all the mutterings of yesterday; your mind is never clear of all the rubbish it has accumulated.

To be alone, you must die to the past.

When you are alone, totally alone, not belonging to any family, and nation, any culture,

any particular continent, there is that sense of being an outsider.

The man who is completely alone in this way is innocent and it is this innocence that frees the mind from sorrow.

-Krishnamurti, 1895-1986

As ever,

Carolann

The trouble with the world is that the stupid are

so confident while the intelligent are full of doubt.

-Bertrand Russell, 1872-1970

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