April 16, 2012 Newsletter

Dear Friends,

Tangents:

The global    cul-de-sac?

“We are living in an isolation that would have been unimaginable to our ancestors, and yet we have never been more accessible,” writes Stephen Marche in The Atlantic.  “In a world consumed by ever more novel modes of socializing, we have less and less actual society.  We live in an accelerating contradiction: The more connected we become, the lonelier we are.  We were promised a global village; instead, we inhabit the drab cul-de-sacs and endless freeways of a vast suburb of information.” –The Globe & Mail, April 16^th, 2012.

There was an excellent article last month in The Financial Times by John McDermott, entitled How to have a conversation.  It’s a dying art, struck down by text, email and messaging, so can we be taught how to talk to each other?

He writes;  what makes a good conversationalist has changed little over the years.  The basics remain the same as when Cicero became the first scholar to  write down some rules, which were summarized in 2006 by The Economist:  “Speak clearly; speak easily but not too much, especially when others want their turn; do not interrupt; be courteous; deal seriously with serious matters and gracefully with lighter ones; never criticize people behind their backs; stick to subjects of general interest; do not talk about yourself; and above all, never lose your temper.”  But Cicero was lucky: he never went on a first date with someone more interested in their iPhone than his company.

And so the writer enrolled in The School of Life, an academy of “self-help” on Bloomsbury’s Marchmont Street, co-founded by philosopher Alain de Botton.  For about 30 pounds per session, students can  take classes with resident “fellow” of the school on a wide range of subjects, including “How to have a conversation.”

I kid you not.

photos of the day

April 16, 2012

Dancers participate in the Persian Day Parade in New York, Sunday. The parade is held in in commemoration of Newroz, the Persian New Year.

Keith Bedford/Reuters

The multi-hulls in competition are seen at the start area during during the America’s Cup World Series regatta in Naples, Italy, Sunday.

Alessandro Bianchi/Reuters

Market Closes for April 16, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 16 (Bloomberg) — Canadian stocks swung between gains and losses as mining shares declined with metal prices while financial and energy shares advanced after a stronger-than- forecast increase in U.S. retail sales.

First Quantum Minerals Ltd., the country’s second-largest publicly traded copper producer, fell 3.5 percent as the metal slipped on concern over the European debt crisis. Suncor Energy Inc., Canada’s largest oil and gas producer, rose 1.3 percent.

Toronto-Dominion Bank, the country’s second-largest lender, climbed 0.8 percent. BlackBerry maker Research In Motion Ltd. declined 0.6 percent as Apple Inc. fell in New York, dragging U.S. equities lower.

The Standard & Poor’s/TSX Composite Index rose 7.23 points, or less than 0.1 percent, to 12,049.62 at 2:48 p.m. in Toronto.

“The initial optimism around retail sales drove futures up,” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($55 million). “Now you’re seeing a big sell-off in Apple, which is a major component of the U.S. market. There’s a bit of a drag on North American markets as  whole as a result of the weakness in the U.S. right now.”

The S&P/TSX had its seventh straight weekly decline for the five days ending April 13, its longest losing streak since 2008, as weaker-than-forecast U.S. jobs numbers and reports of slowing growth in China raised concern that demand may slip for Canadian commodities. The U.S. is the world’s biggest consumer of oil, while China is the number one user of copper.

Energy companies increased today as U.S. retail sales gained 0.8 percent in March, almost three times as much as projected, following a 1 percent advance in February, according to Commerce Department figures. The median forecast of 81 economists surveyed by Bloomberg News called for a 0.3 percent rise. A separate report showed manufacturing in the New York region expanded in April at the slowest pace in five months.

Suncor Energy Inc. rose 1.3 percent to C$30.84. TransCanada Corp., the developer of the proposed Keystone XL pipeline, gained 1.4 percent to C$43.09. Vermilion Energy Inc., which operates in France, Australia, Canada and the Netherlands, increased 0.6 percent to C$45.82.

Financial shares also advanced on the U.S. retail sales figures. Toronto-Dominion Bank climbed 0.8 percent to C$82.64.

Royal Bank of Canada, the country’s biggest lender, increased 0.9 percent to C$56.36.

Materials stocks in the S&P/TSX fell, driven by metal producers, as gold and copper prices retreated. Gold futures declined for a second straight session in New York as a stronger dollar curbed demand for the precious metal as an alternative asset.

Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi Mongolian gold and copper mine, fell 4.6 percent to C$12.17. Detour Gold Corp., which is developing a mine in Ontario, declined 2.3 percent to C$24.21.

Copper fell to a three-month low in New York as rising yields on Spanish government bonds stoked concern that the sovereign-debt crisis in Europe may worsen, potentially curbing demand. First Quantum Minerals Ltd. slid 3.5 percent to C$20.85.

Apple dropped 2.7 percent to $588.92 after falling as much as 3.8 percent, the most intraday since Oct. 19. The world’s biggest technology company fell for a fifth day amid speculation that demand for the iPad may wane and that mobile-phone carriers will cut subsidies for the iPhone, eroding profitability of Apple’s best-selling products.

RIM, Canada’s biggest technology company, slipped 0.6 percent to C$12.78, extending its loss for the year to 14 percent.

US

By Rita Nazareth and Susanne Walker

April 16 (Bloomberg) — Most U.S. stocks rose, following the biggest weekly decline of the year, as Citigroup Inc. led banks higher and stronger-than-forecast growth in retail sales bolstered optimism in the economy. Treasuries trimmed earlier gains and the Dollar Index retreated.

The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,369.57 at 4 p.m. in New York while the Dow Jones Industrial Average increased 71.82 points to 12,921.41. About six stocks rose for every five that fell on U.S. exchanges. Ten-year Treasury yields lost less than one basis point to 1.98 percent and the dollar weakened against 10 of 16 major peers as the euro rose 0.5 percent to $1.3142, reversing a 0.6 percent earlier loss. Spanish 10-year bond yields increased nine basis points to 6.07 percent and jumped as much as 18 basis points.

Citigroup led U.S. banks higher after reporting fixed- income trading revenue more than doubled from the fourth quarter. Commerce Department data showed retail sales increased 0.8 percent in March, almost triple the median forecast of economists in a Bloomberg survey. Equities recovered after most stocks fell earlier as gains in Spanish and Italian bond yields fueled concern Europe’s debt crisis was worsening.

“The U.S. is a better economic story,” said Madelynn Matlock, who helps oversee about $14.6 billion at Huntington Asset Advisors in Cincinnati. “Retail sales showed that consumers are not being overwhelmed by gas prices. On top of that, corporate earnings should be at least respectable.”

The S&P 500 rebounded after tumbling 2 percent last week, its biggest drop of the year. Travelers Cos., Procter & Gamble Co. and Home Depot Inc. rose more than 1.4 percent to lead gains in the Dow. Citigroup Inc. climbed 1.8 percent as 23 of 24 stocks in the KBW Bank Index advanced.

Apple Inc. tumbled 4.2 percent, the most since October, and Google Inc. fell 3 percent as technology shares had the biggest decline among the 10 main S&P 500 groups.

Apple slid for a fifth day, the longest losing streak in six months, amid speculation that demand for the iPad may wane and that mobile-phone carriers will cut subsidies for the iPhone. The stock has lost almost 9 percent since closing at a record high of $636.23 on April 9.

Nasdaq OMX Group Inc. said late on April 13 that Texas Instruments Inc. will replace First Solar Inc. in the Nasdaq-100 Index, the basis for this year’s fifth-most-traded U.S. exchange-traded fund. Because Texas Instruments has a larger market capitalization than First Solar, other stocks in the index are likely to see their proportion shrink, according to Dave Lutz, head of ETF trading and strategy at Stifel Nicolaus & Co.

Apple influences the price of the Nasdaq-100 more than any other stock, accounting for almost 19 percent of its value, according to data compiled by Bloomberg. That’s double Microsoft Corp.’s weighting. Lutz, based in Baltimore, said in an e-mail that Apple shares may be down in part because of Nasdaq OMX’s decision.

“Apple is ubiquitous, it’s well-owned, it’s had a huge run up and people are taking some profits,” Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati, said in a telephone interview. “If you’re concerned about the market being choppy, you look at positions that had the biggest gains and Apple would clearly be one of those candidates.”

U.S. stocks started the session higher, with the S&P 500 climbing as much as 0.7 percent, as Commerce Department data showed U.S. retail sales rose 0.8 percent in March, topping the median economist estimate for 0.3 percent growth.

Treasury yields below zero on an inflation-adjusted basis for only the second time since Dwight D. Eisenhower’s presidency have split Wall Street’s biggest firms, underscoring the relative-value dilemma equity investors face following the biggest first-quarter rally in 14 years.

For Goldman Sachs Group Inc.’s Peter Oppenheimer, U.S. stocks offer a once-in-a-generation buying opportunity after yields on 10-year Treasuries fell to about minus 0.3 percent when the rate of inflation is deducted. Morgan Stanley’s Adam Parker advises caution, saying Federal Reserve stimulus that has led the fixed-income rally can’t last forever.

U.S. 30-year bonds erased gains, with the yield little changed at 3.13 percent after falling as much as four basis points. Rates on two-year notes were little changed at 0.27 percent.

“At least one eye is back on Europe,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “It’s hard to be short Treasuries. You have to be a bit cautious,” he said. “The question is what matters more, what happens here or what happens in Europe.”

The dollar weakened more than 0.6 percent versus the Japanese yen and Norwegian krone. The yuan slid after China doubled the currency’s trading band against the dollar for the first time since 2007.

Auto companies and chemical producers led gains in the Stoxx Europe 600 Index, which climbed 0.3 percent. Vestas Wind Systems A/S rallied 13 percent in Copenhagen as Jyllands-Posten reported that Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co. are considering a bid for the wind- turbine maker.

Spain’s bonds declined as Jaime Garcia-Legaz, a deputy in the Economy Ministry, called on the European Central Bank to buy the nation’s debt to help stem financial-market turmoil. Spain is scheduled to sell bonds tomorrow and on April 19 as the cost of insuring its debt against default touched a record.

The yield on the German 10-year bund retreated two basis points to 1.72 percent. The difference in yield between Spanish 10-year bonds and German securities, Europe’s benchmark, was 11 basis points higher at 435 basis points, or 4.35 percentage points, after earlier widening by as much as 20 by points. The Italian-German yield gap widened by nine basis points to 3.88 percent. French 10-year bonds declined, with the yield advancing seven basis points to 3.02 percent.

Credit-default swaps on Spain jumped nine basis points to 511 after reaching 521 earlier, according to CMA. Contracts on Italy rose about seven basis points to 441, the highest level in almost three months.

Among commodities tracked by the S&P GSCI Index, nickel, gasoline and cotton fell at least 2.5 percent to lead declines among 16 of 24 materials.

Crude oil gained 10 cents to $102.93 a barrel in New York.

The reversal date of the Seaway crude pipeline was moved up, causing the spread between New York-traded futures and Brent in London to narrow to the least since February. Enbridge Inc. and Enterprise Products Partners LP said they would start moving oil from Cushing, Oklahoma, to the U.S. Gulf Coast via the pipeline in May.

Speculators cut bullish wagers on commodities by the most in 2012 on mounting concern that slowing growth in China will curb gains in demand. Money managers lowered net-long positions across 18 U.S. futures and options by 9.3 percent to 1.01 million contracts in the week ended April 10, the biggest reduction since Dec. 20, data from the Commodity Futures Trading Commission show. Copper holdings tumbled 84 percent, the most since November.

Have a wonderful evening everyone.

Be magnificent!

A mind that is burdened with the past is a sorrowful mind.

Krishnamurti, 1895-1986

As ever,

Carolann

All men who have achieved great things have been great dreamers.

-Orisen Swett Marden, 1850-1924

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

Senior Vice-President &

Senior Investment Advisor