April 19th, 2011 Newsletter

Dear Friends,

A group of women take photos of flowers at King Abdullah Park during the Rabih Festival in Dammam, Saudi Arabia

Market Commentary:

 Canada

By Stephen Kleege

 April 19 (Bloomberg) — Canadian stocks rose for the first time in four days as mining shares advanced after Teck Resources Ltd. reported profit that beat estimates and copper rebounded from a six day decline.

 Teck, Canada’s biggest base-metals producer, rallied 5.8 percent after higher coal and copper prices boosted first- quarter results. Potash Corp. of Saskatchewan Inc. rose 3.4 percent as wheat rallied. Research In Motion Ltd. fell 2.2 percent after Business Insider reported AT&T Inc. is blocking RIM’s new tablet from tethering with its BlackBerry smartphones.

 The Standard & Poor’s/TSX Composite Index rose 30.23 points, or 0.2 percent, to 13,732.56 at 2:06 p.m. in Toronto.“You can get some pretty good reaction to earnings,” said David Cockfield, who helps oversee about C$300 million at MacNicol & Associates Asset Management in Toronto, referring to Teck. Earlier this month “we broke through 14,000 in the TSX without any difficulty at all. I still think it’s a resistance level, until we get some reasonably dramatic news that things are improving, particularly in the U.S.”

 The Canadian equity benchmark had fallen 1 percent over the past three days as banks and commodity producers declined on concern economic growth will slow after U.S. jobless claims topped forecasts and Standard & Poor’s lowered its outlook on U.S. debt to negative.

 Teck Rises

 Copper halted its longest slump since June after Freeport- McMoRan Copper & Gold Inc. said it suspended operations at a mine in Indonesia, fanning supply concerns.

 Teck, the world’s second-largest exporter of metallurgical coal, said profit excluding some items was 76 cents a share as coal sales topped its forecast. Earnings beat the 75 cent average estimate of analysts surveyed by Bloomberg. The shares rose 5.8 percent to C$51.75, the first gain in 10 days.

 Quadra FNX Mining Ltd., which explores for copper and other metals in the United States, Canada, and northern Chile, advanced 3.5 percent to C$14.03. Quadra estimated its Victoria project contains 3.4 billion pounds of contained copper equivalent and projected it will start production in 2017.

 Black Diamond Group Ltd., a provider of modular structures for temporary work space and energy services, fell 2.7 percent to C$26.25 after saying it plans to offer 1.8 million shares at C$26.10 each as part of a capital expansion to meet demand from oil-sands developers.

 Potash Corp. rose for the first time in four days, gaining  3.4 percent to C$55.06, as wheat rose on supply concerns after dry weather in the past week hurt crops in the U.S. Agrium, Canada’s No. 2 fertilizer producer, rose 2.3 percent to C$86.92.

 Tethering Issue

 RIM retreated 2.2 percent to C$51.70 after Business Insider said on its website that AT&T’s policy makes the new PlayBook tablet “pretty much useless.”

AT&T said it “only just” received a test version of software that enables e-mail on the Research In Motion Ltd. BlackBerry PlayBook that was released today.

 The issue may be resolved soon and the decline may represent a “short-term buying opportunity.” said Greg Taylor, who helps oversee about C$5 billion ($5.06 billion) as a money manager at Aurion Capital Management in Toronto.

 US

 By Stephen Kirkland and Rita Nazareth

 April 19 (Bloomberg) — Stocks rebounded from the biggest drop in a month after companies from Johnson & Johnson to Burberry Group Plc. reported results that beat analyst estimates. Gold futures touched $1,500 an ounce for the first time as the dollar weakened. Treasuries rose.

 The Standard & Poor’s 500 Index advanced 0.6 percent to 1,312.62 at 4 p.m. in New York as higher-than-forecast housing starts also drove gains. The Stoxx Europe 600 Index increased0.5 percent as Burberry rallied 6 percent. The euro climbed 0.7 percent to $1.4332. Canada’s dollar strengthened versus 14 of 16 major peers as accelerating inflation triggered bets the central bank will boost interest rates.

Johnson & Johnson, the world’s second-biggest seller of health-care products, led gains in the Dow Jones Industrial Average after increasing its full-year forecast. Burberry, Britain’s biggest luxury retailer, said quarterly sales jumped 32 percent and SKF AB, the world’s largest maker of ball bearings, posted record profit. Stocks slid yesterday as S&P cut the long-term U.S. credit outlook to negative.

 “This market has been very resilient,” said Burt White, who helps oversee $284 billion as chief investment officer at LPL Financial Corp. in Boston. “Things are better than people think as far as the economy goes. Today’s housing numbers were pretty good. You’ve got a bellwether such as Johnson & Johnson coming out with good news. The market is excited to see that.”

 Earnings Season

 The S&P 500 rebounded after yesterday dropping 1.1 percent, the most since March 16. J&J climbed 3.7 percent after new drugs and a weaker dollar boosted results. Steel Dynamics Inc. added 5.7 percent as its profit also beat projections. Newmont Mining Corp. helped pace gains in raw-material producers, rising 1.3 percent as gold and copper prices increased.

Goldman Sachs Group Inc. rallied as much as 1.5 percent after earnings topped estimates, before erasing gains and retreating 1.3 percent after Rochdale Securities LLC reduced its rating to “neutral” from “buy.”

About 6.6 billion shares changed hands on U.S. exchanges,15 percent less than the three-month average as trading slowed on the Passover holiday.

 A gauge of homebuilders in S&P indexes gained 2.2 percent as all 12 of its stocks advanced. A report today showed building permits, a proxy for future construction, rose 11 percent to a 594,000 pace. They were projected to rise 1.1 percent to a 540,000 annual pace. Housing starts increased 7.2 percent to 549,000, exceeding the 520,000 median forecast of economists surveyed by Bloomberg News.

About three shares gained for each that fell in the Stoxx 600. SKF rallied 6.4 percent. LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods maker, advanced 4.7 percent as sales beat analysts’ estimates. Novartis AG, the third- biggest stock in the index, gained 3.5 percent after the drugmaker’s sales and profit surpassed projections.

 AAA Rating

 The yield on the 10-year U.S. Treasury note slipped two basis points to 3.36 percent and the 30-year yield lost three basis points to 4.43 percent.

 President Barack Obama began a tour promoting his proposal to cut long-term budget deficits with a new urgency after S&P said yesterday that the nation’s AAA credit rating is in peril.

The divide between Republicans and Democrats in Congress over combating the nation’s debt was spotlighted by S&P’s lowering of the long-term U.S. credit outlook to “negative,” with each side saying the alert bolsters their competing arguments.

 Treasury Secretary Timothy F. Geithner said he’s confident U.S. political leaders will bridge their differences and move toward a long-term plan to narrow record budget deficits and reduce the debt.

 ‘Strong Targets’

 “We have an opportunity now over the next two months to make some real progress,” Geithner said in an interview on Bloomberg Television today. “What we agree on is putting in place strong targets for savings, deficit reduction over a specific time frame with enforceable limits,” he said. Gold for June delivery settled up 0.1 percent at $1.495.10 after earlier reaching $1,500.50.

The dollar weakened against 12 of 16 major peers, losing at least 1 percent versus Norway’s krone and Sweden’s krona. The euro appreciated against 11 of its 16 major counterparts amid speculation the European Central Bank will raise interest rates further.

The loonie, as the Canadian currency is nicknamed, strengthened 0.8 percent to $1.0455 after the consumer price index advanced 3.3 percent in March from a year earlier, compared with a 2.2 percent pace of increase in the previous month, Statistics Canada reported. The median forecast of 25 economists was for a 2.8 percent annual rate.

 Commodities Gain

 Crude oil for May delivery increased for the fourth time in five days, rallying 1 percent to $108.15 a barrel as the weaker dollar lifted commodities. Oil traders have turned $80 crude into the second-biggest bet in the options market as a surge in futures to the highest level since 2008 spurred concern that demand may tumble.

Open interest, the number of contracts held by traders, has more than doubled since January for $80 put options for December 2011 and 2012 as New York futures last week touched a 30-month high of $113.46 a barrel. The two puts, bets that prices will fall, account for 21 percent of the open interest among the top 10 contracts traded on the New York Mercantile Exchange.

 Commodities, Emerging Markets

 The S&P GSCI index of 24 commodities gained 0.3 percent, recouping some of yesterday’s 1.2 percent slide. Cotton retreated 3.9 percent. Wheat futures rose 1.3 percent, a third straight gain, as weather conditions in the U.S. worsened and Germany’s crop estimate was lowered amid a dry spell.

 The MSCI Emerging Markets Index increased 0.6 percent as benchmark gauges in Russia, Turkey, South Africa, Egypt and Hungary rallied more than 1 percent. The Shanghai Composite Index led declines in Asia, sliding 1.9 percent, on concern the U.S. debt outlook may deteriorate further and speculation that China will further tighten monetary policy.

 The MSCI Asia Pacific Index lost 1 percent to the lowest level this month as S&P’s downgrade of the U.S. credit outlook fueled concern that a recovery in the global economy may slow.

 Greece’s two-year yields jumped as much as 39 basis points to a record 20.73 percent as the government sold 1.625 billion euros ($2.33 billion) of bills.

 Have a wonderful evening everyone.

 Hold fast to dreams, for if dreams die, life is a broken, winged bird that cannot fly.

-Langston Hughes (February 1, 1902 – May 22, 1967) 

 Be magnificent!

 As ever,

Nishma for Carolann

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

Senior Vice-President &

Senior Investment Advisor