April 23, 2012 Newsletter

Dear Friends,

Tangents:

On this day:

William Shakespeare was born  on this day in 1564and he died on this day in 1616.

1896 – Motion pictures premiere in New York City.

1950 –  Chiang Kai-shek evacuates Hainan, leaving Mainland China to Mao Zedong and the Communists.

1975 – President Ford says that Vietnam War is over for America.

Question of the day:  What personal prisons have you built out of fears?

Ever since happiness heard your name, it has been running through the streets trying to find you.  ~ Hafiz of Persia

photos of the day

April 23, 2012

People take part in a protest outside the proposed location the US clothing retailer Abercrombie & Fitch propose to open a children’s store on Savile Row, the traditional men’s bespoke tailoring street, in the Mayfair district of London. The protest was organized by The Chap magazine, a publication for English gentlemen whose manifesto includes always wearing tweed and cultivating interesting moustaches.

Matt Dunham/AP

The tattooed signature on the neck of Natalia Lobo which Paul McCartney signed during his stadium concert in Recife, Brazil. After he signed the 21-year-old’s neck she immediately headed to a tattoo parlor to immortalize the autograph.

MJ Kim/MPL Communications/AP

Market Closes for April 23, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 23 (Bloomberg) — Canadian stocks fell the most in over a week as materials and energy shares declined after manufacturing shrank in the euro-area and China and the French election heightened concern over Europe’s sovereign debt crisis.

Barrick Gold Corp., the world’s largest producer of the metal, dropped 1.7 percent. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, declined 5.3 percent. MEG Energy Corp., a Calgary-based oil- sands developer, fell 2.1 percent. Baja Mining Corp., which is building the Boleo copper and cobalt mine in Mexico, plummeted 37 percent after saying the project’s cost may be 22 percent higher than forecast.

The Standard & Poor’s/TSX Composite Index decreased 158.33 points, or 1.3 percent, to 11,988.95 in Toronto, its biggest drop since April 13.

“It’s the European numbers, plus another data point confirming that China is slowing,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($1 billion). “It’s a very widespread sell-off. Risk is coming out of the market due to those factors.”

The S&P/TSX had its first weekly gain in almost two months in the five days ending April 20, snapping its longest losing streak since 2008. Canadian stocks rallied after the International Monetary Fund and the Bank of Canada said economic growth would be faster than previously forecast.

Materials companies fell, driven by metals producers.

Copper headed for its biggest loss in more than a week in New York on concern that demand will slow as manufacturing contracts in China, the world’s biggest copper user. The metal also fell on concern that the outcome of French and Dutch elections will disrupt efforts to stem the region’s debt crisis.

Teck Resources Ltd., Canada’s biggest base-metal producer, decreased 3.7 percent to C$35.33.

First Quantum declined 5.3 percent to C$19.83 after being lowered to sector performer from sector outperformer at Canadian Imperial Bank of Commerce, which cited lowered gold and nickel price forecasts for 2012 and 2013. The rating means that the stock is expected to perform in line with its sector during the next 12 to 18 months.

Baja Mining plunged 37 percent, the biggest drop in more than nine years, to 57 Canadian cents. The Boleo project may cost an additional C$246 million after exhausting contingency and cost-overrun facilities, the Vancouver-based company said today in a statement.

Gold declined to a two-week low as a stronger U.S. dollar curbed demand for the metal as an alternative investment. Silver slumped to a three-month low.

Barrick Gold dropped 1.7 percent to C$39.29. Goldcorp Inc., the world’s second-biggest bullion miner, fell 3.4 percent to C$39.65. Silver Wheaton Corp., the country’s third-biggest precious-metals company by market value, decreased 3.6 percent to C$28.12.

Energy stocks in the S&P/TSX fell as oil declined the most in two weeks after preliminary reading of a purchasing managers’ index in China fanned concern that fuel consumption will diminish.

MEG Energy Corp. declined 2.1 percent to C$37.65. Cenovus Energy Inc., Canada’s fifth-largest energy company, dropped 1.2 percent to C$34.20.

Financial shares in the benchmark gauge also decreased for a second day. Toronto-Dominion Bank, the country’s second- largest lender, fell 1.4 percent to C$82.81.

US

By Rita Nazareth

April 23 (Bloomberg) — U.S. stocks joined a global selloff as political uncertainty in France and the Netherlands intensified concern about Europe’s sovereign debt crisis.

Bank of America Corp. fell 2.2 percent, following a drop in European lenders, as Dutch Prime Minister Mark Rutte offered to quit after lawmakers split over austerity and French President Nicolas Sarkozy lost the first round of his re-election bid.

Monsanto Co. and U.S. Steel Corp. slid at least 1.8 percent as European and Chinese manufacturing shrank. Wal-Mart Stores Inc. retreated 4.7 percent amid a bribery probe in Mexico.

The Standard & Poor’s 500 Index fell 0.8 percent to 1,366.94 at 4 p.m. New York time, near its highest level of the day. The Dow Jones Industrial Average slid 102.09 points, or 0.8 percent, to 12,927.17. The Russell 2000 Index retreated 1.5 percent to 791.85. About 6.6 billion shares changed hands on U.S. exchanges, or 2.5 percent below the three-month average.

“Markets are realizing that messy European national politics could aggravate already complex economic and financial conditions,” Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., said in an e-mail today. His company is manager of the world’s largest bond fund.

Equities from Hong Kong to Paris and Sao Paulo slumped as the Dutch prime minister ran out of room to maneuver after budget talks with Geert Wilders’s Freedom Party collapsed, triggering doubts about his country’s ability to retain its AAA credit rating. French President Sarkozy and challenger Francois Hollande will be in a second round of elections, vying to lead a country split over measures to end a debt crisis.

Economic concern grew as euro-area manufacturing fell and data indicated China’s production will contract for a sixth month. Today’s drop trimmed this year’s gain in the S&P 500 to 8.7 percent, which had been driven by better-than-estimated economic and corporate data. Earnings per share have topped forecasts at 84 percent of S&P 500 companies that reported results since April 10, according to data compiled by Bloomberg.

“The financial markets are correcting, but they will do better later in the year,” said Byron Wien, the vice chairman of Blackstone Advisory Partners LP, whose parent, New York-based Blackstone Group LP, is the world’s biggest private-equity firm.

“The U.S. is closer to self-sustaining momentum.” Wien has a forecast of 1,500 for the S&P 500 at the end of 2012, which would imply a 9.7 percent advance.

Economists surveyed by Bloomberg say that Federal Open Market Committee members, who begin a two-day meeting tomorrow, will likely keep monetary policy on hold as the U.S. shows signs of strength following record accommodation.

All 10 groups in the S&P 500 fell today. The Morgan Stanley Cyclical Index of companies most-tied to economic growth lost 1 percent. The Dow Jones Transportation Average, a proxy for the economy, declined 0.9 percent. A measure of homebuilders? in S&P indexes tumbled 2.3 percent.

American banks joined a 3 percent drop in a gauge of European lenders. Bank of America declined 2.2 percent to $8.18.

The shares have risen 47 percent this year. Citigroup Inc. decreased 1.9 percent to $33.25.

A measure of commodity shares in the S&P 500 dropped 1.4 percent. Monsanto, the world’s largest seed company, slid 1.8 percent to $75.74. U.S. Steel, the country’s largest producer of the metal by volume, lost 2.7 percent to $28.22.

Hedge funds cut their bets on higher commodity prices by the most in four months on mounting concern that Europe’s debt crisis will derail global growth and curb demand for raw materials. Money managers lowered net-long positions across 18 U.S. futures and options by 11 percent to 898,022 contracts in the week ended April 17, the most since Dec. 20, data from the Commodity Futures Trading Commission show.

Wal-Mart slumped 4.7 percent, the most in the Dow, to $59.54. Its probe of possible bribery in Mexico may prompt executive departures and steep U.S. government fines if it reveals senior managers knew about the payments and didn’t take strong enough action, corporate governance experts said.

Kellogg Co. tumbled 6.1 percent to $50.70. The largest U.S. maker of breakfast cereal cut its full-year earnings forecast, citing weaker-than-expected results in the first quarter.

Chief Executive Officer John Bryant said Kellogg faced “more significant challenges” in Europe and some categories in the U.S. in the first quarter than was expected. Net sales in the first quarter declined about 1.3 percent while earnings of $1 a share were unchanged from a year earlier, Kellogg said.

“We are obviously disappointed with the performance of the company,” Bryant said in the statement.

Apple Inc., which reports results tomorrow, fell 0.2 percent to $571.70, after swinging between gains and losses.

Since rising to a record on April 9, the shares have lost 10 percent as some investors speculated Apple may not be able to keep growing at the pace that made it the most valuable technology company. On average, the analysts surveyed by Bloomberg estimate fiscal second-quarter earnings of $9.96 a share for the company.

Profits at the maker of iPhones and iPads have beaten analysts’ estimates 97 percent of the time since 2003, Birinyi Associates Inc. said in a note today. The stock rises by an average 2.6 percent from the close prior to earnings to 8 a.m. the next day, the data showed.

Quarterly reports scheduled for this week also include economic bellwether United Parcel Service Inc. and AT&T Inc., the largest U.S. phone company. Caterpillar Inc., the world’s biggest maker of construction and mining-equipment, and Amazon.com Inc., the world’s largest Internet retailer, are due to announce their results.

The analysts surveyed by Bloomberg raised their first- quarter earnings estimates for S&P 500 companies. Per-share profits grew 3.3 percent in the first three months of the year, Bloomberg data showed on April 20. That’s up from the previous week’s projection for a 1.7 percent increase. Earnings per share will grow 8.8 percent during all of 2012, the data show.

SunTrust Banks Inc. jumped 2.8 percent to $23.23. The eighth-largest U.S. lender by deposits reported first-quarter profit that beat analysts’ estimates.

Amylin Pharmaceuticals Inc. rallied 14 percent to $26.06.

The maker of the diabetes drugs Bydureon and Byetta is seeking a buyer after rejecting an unsolicited bid from Bristol-Myers Squibb Co., two people with knowledge of the matter said.

Barnes & Noble Inc. advanced 18 percent to $13.41. Jana Partners LLC, a hedge fund that has pushed for companies to sell off assets, disclosed a 12 percent stake in the largest U.S. bookstore chain.

Have a wonderful evening everyone.

Be magnificent!

All of our selfish impulses, all of our personal desires, obscure our true vision of the soul,

as they only point out our shabby ego.  When we are aware of our soul,

we perceive the inner life that surpasses our ego

and that has profound affinities with the Whole.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Any sufficiently advanced technology is

indistinguishable from magic.

-Arthur C. Clarke, 1917-2008

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