April 21st, 2011 Newsletter

Dear Friends,

Students pose for a photo with a globe during a campaign to mark World Earth Day in a middle school in Dexing, Jiangxi province, China. World Earth Day falls on April 22 every year.

Market Commentary:

 Canada

By Matt Walcoff

 April 21 (Bloomberg) — Canadian stocks headed for a weekly gain as companies including Morgan Stanley, Apple Inc. and General Electric Co. topped analysts’ profit estimates and the U.S. dollar fell from a 20-month low, boosting materials stocks.

 Bank of Nova Scotia, Canada’s third-largest lender by assets, increased 0.9 percent. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, gained 1.6 percent after Mackie Research Capital Corp. raised its rating on the company. BlackBerry maker Research In Motion Ltd. dropped 1.9 percent after Apple said iPhone unit sales more than doubled in the second quarter from a year earlier.

 The Standard & Poor’s/TSX Composite Index advanced 57.07 points, or 0.4 percent, to 13,954.55 at 2:32 p.m. in Toronto.

For the week, the Canadian stock benchmark has increased 1.1 percent.

 “There is a continuing downward pressure on the U.S. dollar, and that is likely to continue,” said Michael Smedley, who helps manage about C$1 billion ($1.05 billion) as a money manager at Morgan Meighen & Associates Ltd. in Toronto. “The upward power on the commodity prices is related to the weakness in the U.S. dollar. You need more U.S. dollars all the time to buy these things.”

 The S&P/TSX had gained 20 percent in the nine months ending yesterday as the U.S. Dollar Index fell 10 percent. Gold surged 32 percent to a record and silver soared 149 percent to the highest since 1980.

 U.S. Dollar

 The U.S. currency retreated today. The dollar has fallen due in part to concern about the country’s budget deficit, speculation the U.S. Federal Reserve will not follow other central banks in raising interest rates soon and higher oil prices, Camilla Sutton, chief currency strategist at Bank of Nova Scotia, said in a note to clients.

 Gold increased by $4.90 to $1,503.90 in New York, the first settlement over $1,500, while silver rallied 2.3 percent. Barrick Gold Corp., the world’s largest gold producer, climbed 0.9 percent to C$52.79. Goldcorp Inc., the world’s second-largest producer of the metal by market value, rose 0.9 percent to C$52.94. Semafo Inc., which mines gold in Africa, advanced 6.1 percent to C$8.74. 

Newstrike Capital Inc., which explores for gold in Mexico, soared 34 percent to C$2.28, building on yesterday’s record close, after reporting drilling results.

 Teck, Ivanhoe

 Copper climbed for a third day in New York. Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 2.2 percent to C$53.81. Ivanhoe Mines Ltd., which is developing a copper and gold mine in Mongolia with Rio Tinto Group, rose 1.3 percent to C$25.35.

Potash Corp. rallied 1.6 percent to C$55.57 after John Chu, a Mackie analyst, boosted his rating on the shares to “buy”

from “hold.” In a note to clients, Chu cited a recent decline in the shares’ price relative to forecast earnings.     

Ninety-three of 115 S&P 500 companies and four of 10 S&P/TSX companies that have reported earnings since April 11 have beaten their average analyst estimate.    

Canada’s six largest banks and three biggest insurers each advanced. Scotiabank increased 0.9 percent to C$57.74. Toronto- Dominion Bank, Canada’s second-largest lender by assets, climbed 0.8 percent to C$82.93. Manulife Financial Corp., North America’s fourth-biggest insurer, rose 1.5 percent to C$16.93.

Natural Gas

The S&P/TSX Energy Index gained for a third day after the U.S. reported a smaller increase in natural gas stockpiles than most analysts in a Bloomberg survey had forecast. Gas futures advanced 2.3 percent in New York.

Suncor Energy Inc., Canada’s largest oil and gas producer, increased 1.3 percent to C$43.05. Nexen Inc., an oil and gas producer with operations on five continents, climbed 3.3 percent to C$22.92. Oilfield-services provider Trican Well Service Ltd. rose 4 percent to C$22.93. 

RIM dropped 1.9 percent to C$51 after Apple said it sold 18.7 million iPhones last quarter, surpassing the 16.3 million average of 13 analyst forecasts. RIM shares have plunged 31 percent since Feb. 19. 

Celestica Inc., which makes electronics for companies including Research In Motion Ltd., rallied 4.7 percent to C$10.52 after reporting first-quarter earnings that topped the average of 13 analyst estimates.

 US

By Stephen Kirkland and Rita Nazareth

April 21 (Bloomberg) — Stocks rose, with the Dow Jones Industrial Average climbing to an almost three-year high, as better-than-estimated earnings boosted confidence in the global economy. Commodities rallied for a third day and the euro strengthened to a 16-month high against the dollar.

The Dow added 26 points, or 0.2 percent, to 12,479.54 at :21 p.m. in New York, paring gains after a gauge of Philadelphia manufacturing trailed estimates. The MSCI World Index climbed 0.7 percent. Gold rose to a record for a fifth day as silver reached a 31-year high. The Dollar Index tumbled 0.4 percent to the lowest level since August 2008, while the euro rose 0.2 percent to $1.4550 and the Swiss franc climbed to the strongest in at least 40 years versus the U.S. currency.

Equities added to yesterday’s 2 percent advance in the MSCI World, this year’s biggest global rally, as earnings at companies from Apple Inc. to Morgan Stanley topped analysts’ projections. Of the 115 companies in the Standard & Poor’s 500 Index that posted results since April 11, 81 percent beat per- share profit estimates, according to data compiled by Bloomberg.

 “The run rates on both revenue and profits are really coming in strong, so it’s not just cost-cutting,” said James Swanson, chief investment strategist at Boston-based MFS Investment Management, which oversees about $230 billion. “This is finally the evidence the market needs to see that this isn’t a fluke. This is a self-sustaining recovery.”

 Earnings Season

 Earnings-per-share have grown 19 percent for the S&P 500 companies that released quarterly results since April 11, data compiled by Bloomberg show. Sales have risen 5 percent for the group and exceeded estimates at 72 percent of the companies.

The S&P 500 Index rose 0.5 percent today to 1,336.59, less than 0.5 percent below its high for the year set on Feb. 18. The gauge is up 1.3 percent over the past four sessions, poised to snap a two-week losing streak.

Apple gained 2.7 percent and Morgan Stanley advanced 1.5 percent. Qualcomm Inc. rallied 3 percent as the biggest maker of mobile-phone chips reported earnings that topped analysts’ estimates.

U.S. equities pared gains after the Federal Reserve Bank of Philadelphia’s general economic index dropped to 18.5, the lowest level since November and trailing economists’ estimates, from 43.4 the prior month which was the highest level since 1984.  

Treasuries rose, capping a second weekly gain, as the report triggered speculation the economic recovery is faltering. The 10-year yield lost one basis point to 3.40 percent.

Economic Data

 Jobless claims decreased by 13,000 to 403,000 in the week ended April 16, Labor Department figures showed. Economists projected a decline to 390,000, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls and those receiving extended payments declined.

The index of U.S. leading indicators increased for a ninth month in March, signaling higher fuel costs will fail to derail the expansion. The Conference Board’s gauge of the outlook for the next three to six months rose 0.4 percent after a revised 1 percent gain in February that was larger than previously estimated.

 The Stoxx Europe 600 Index gained 0.5 percent as two shares rose for every one that fell. Akzo Nobel NV, the world’s largest paintmaker, climbed 4 percent on better-than-estimated earnings.

William Hill Plc surged 7.5 percent as the bookmaker reported increased sales and operating profit. Royal KPN NV slid 8.3 percent as the biggest Dutch phone company cut its 2011 forecast.

The MSCI Emerging Markets Index gained 0.9 percent to 1,206.05, the highest level since June 2008, as benchmark stock indexes in Taiwan and South Korea jumped more than 1.3 percent.

The S&P GSCI index of 24 commodities advanced 0.5 percent.

Silver rose as much as 2.5 percent to $46.3775 an ounce, the highest price since January 1980, and gold futures jumped to an all-time high of $1,509.60 an ounce.

Dollar Weakens

 The dollar weakened against all but three of its 16 most- traded counterparts. It depreciated 0.7 percent against the pound and slid as much as 1.1 percent versus the Swiss franc, to the weakest level since at least 1971. Sweden’s krona climbed as much as 0.9 percent against the dollar, reaching its strongest level in more than 2 1/2 years.

Greek, Portugal and Irish bond yields surged to records amid speculation divisions are deepening within Europe over how to resolve the sovereign-debt crisis. The yield on the two-year Greek note climbed as much as 131 basis points to 23.33 percent, the highest since before the euro was introduced in 1999.

Credit-default swaps protecting Greek sovereign debt jumped 40 basis points to 1,340 basis points, according to CMA, signaling a 68 percent chance of default within five years. The extra yield investors demand to hold Portuguese 10-year bonds instead of benchmark German bunds jumped 27 basis points to 624 basis points, the most since at least 1997.

 Have a wonderful Eco friendly Easter Holidays everyone.

 Easter is the demonstration of God that life is essentially spiritual and timeless.  Charles M. Crowe

Be magnificent!

 As ever,

 Nishma for Carolann

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

Senior Vice-President &

Senior Investment Advisor