April 26, 2012 Newsletter

Dear Friends,

Tangents:

On this date in,
1986 – Nuclear disaster at the Chernobyl power plant in the Soviet Union
1954 – Polio Vaccine trials begin
1984 – Reagan visits China
1994 – Nelson Mandela wins the presidency in South Africa’s first multi-racial elections
1514 – Copernicus makes his first observations of the planet Saturn
1983 – The Dow Jones Industrial Average breaks 1,200 for the first time

And in 1937, the massacre occurred in Guernica, Spain, for which the art world has one of the greatest paintings of all time, Picasso’s Guernica:

Guernica
Artist	Pablo Picasso
Year	1937
Type	Oil on canvas
Dimensions	349 cm × 776 cm (137.4 in × 305.5 in)
Location	Museo Reina Sofia, Madrid

Guernica is a painting by Pablo Picasso. It was created in response to the bombing of Guernica, Basque Country, by German and Italian warplanes at the behest of the Spanish Nationalist forces, on 26 April 1937, during the Spanish Civil War. The Spanish Republican government commissioned Picasso to create a large mural for the Spanish display at the Paris International Exposition at the 1937 World’s Fair in Paris.

Guernica shows the tragedies of war and the suffering it inflicts upon individuals, particularly innocent civilians. This work has gained a monumental status, becoming a perpetual reminder of the tragedies of war, an anti-war symbol, and an embodiment of peace. On completion Guernica was displayed around the world in a brief tour, becoming famous and widely acclaimed. This tour helped bring the Spanish Civil War to the world’s attention.  -from Wikipedia, the free encyclopedia.

photos of the day

April 26, 2012

A man listens to speeches during the inauguration of the sculpture ‘Agony of Fire’ by Nextor Basterrextea, in Guernica. Guernica is commemorating the seventy fifth anniversary of the aerial bombing by planes from the German Condor Legion, in aid of the nationalist military rebellion lead by General Francisco Franco.

Vincent West/Reuters

A woman lights candles to honor the memory of the victims of the Chernobyl disaster in Kiev, Ukraine. Ukraine marked the 26th anniversary since the Chernobyl power station exploded.

Sergei Chuzavkov/AP

And in tribute to Poetry in a Pocket Day, here is a poem I found in The New Yorker magazine this week that I liked:

RAIN AT THE BEACH

This light makes me think of a house underwater.

Because the ocean has corners

I cannot stop looking for you.

Careful, the red jellyfish

washed up onshore

sting after they’re dead. My mother said

a soul mate is problematic. I imagine a mother and daughter

with dripping wet hair

running down the beach

holding hands.  Left out in the rain,

a painting of a beach house

with a boat parked inside

is still a painting of a house.

Whoever said it’s difficult for artists

to be original

probably wasn’t an artist.

My new vegetarian lover

ate snails

off the house as a kid.

-Jennifer Chapis

Market Closes for April 26, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 26 (Bloomberg) — Canadian stocks rose for a second day as energy shares climbed with fuel prices, outweighing declines by material producers driven by higher-than-forecast U.S. jobless claims and earnings that missed estimates.

Encana Corp. rose 5.9 percent, adding to its 4 percent gain yesterday, when it reported a profit that beat analyst estimates. Canadian Natural Resources Ltd., the country’s third- largest energy company, advanced 0.8 percent to C$32.62.

Goldcorp Inc., the world’s second-biggest bullion producer, and Potash Corp. of Saskatchewan Inc., the biggest fertilizer company, dropped 6 percent and 3.2 percent, respectively, after reporting quarterly profit that trailed analyst forecasts.

The Standard & Poor’s/TSX Composite Index increased 34.79 points, or 0.3 percent, to 12,145.85 in Toronto.

“Oil is up and natural gas had an intraday spike,” Anil Tahiliani, a money manager at McLean & Partners in Calgary, said in a telephone interview. The firm oversees about C$1 billion ($1 billion). “The other news today wasn’t as bad as people thought initially.”

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. The index had its worst decline in a week on April 23, after manufacturing shrank in Europe and China.

Energy producers in the S&P/TSX advanced after crude oil for June delivery rose to a three-week high and gas advanced, before erasing gains after the U.S. Energy Department reported inventories climbed more than forecast last week.

Encana rose 5.9 percent to C$19.44. Canadian Natural Resources advanced 0.8 percent to C$32.62. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, rose 2.3 percent to C$13.03.

Materials stocks in the S&P/TSX declined for the fourth time in five days after the earnings reports from Goldcorp and Potash.

Goldcorp dropped 6 percent to C$38.08 after reporting first-quarter profit excluding some items of 50 cents a share, less than the 53-cent average of 18 analyst estimates compiled by Bloomberg. The company said gold output dropped 39 percent at Red Lake in Ontario, its top producer, because of difficult ground conditions and lower-than-expected grades.

Potash Corp. lost 3.2 percent to C$42.25 as first-quarter net income dropped to 56 cents a share, compared with the 64- cent average of 26 estimates compiled by Bloomberg. Profit in 2012 will be $3.20 to $3.60 a share, the company said in a statement, down from its January projection of $3.40 to $4.

Some gold stocks increased as the metal rose the most in two weeks on speculation that the Federal Reserve may increase stimulus measures to bolster the U.S. economy after the release of the jobless numbers.

Eldorado Gold Corp., a Vancouver-based mining company, climbed 1.5 percent to C$13.99. Agnico-Eagle Mines Ltd., a gold producer that operates in Canada, Mexico and Finland, rose 4 percent to C$35.26.

US

By Rita Nazareth

April 26 (Bloomberg) — U.S. stocks gained, giving the Standard & Poor’s 500 Index its biggest three-day advance since February, after better-than-estimated housing data overshadowed disappointing earnings at United Parcel Service Inc.

A measure of homebuilders in S&P indexes rose 4.8 percent as PulteGroup Inc. rallied 10 percent amid a narrower loss.

Chevron Corp. advanced 2.3 percent as the energy company lifted its dividend. Amazon.com Inc., the largest Internet retailer, surged 12 percent at 4:57 p.m. New York time as revenue beat estimates. UPS, the biggest package-delivery company that is considered a proxy for the economy, retreated 1.8 percent.

The S&P 500 increased 0.7 percent to 1,399.98 at 4 p.m. New York time. It has advanced 2.4 percent in three days. The Dow Jones Industrial Average climbed 113.90 points, or 0.9 percent, to 13,204.62 today. About 6.7 billion shares changed hands on U.S. exchanges, almost in line with the three-month average.

“Things are better,” said Michelle Gibley, director of international research at San Francisco-based Charles Schwab Corp. Her firm has $1.83 trillion in client assets. “We did get several months of better-than-expected economic data. The earnings season has been pretty good.”

Equities rose as data showed that signed contracts to buy U.S. homes increased more than forecast in March. The Federal Reserve yesterday upgraded its estimates for growth and unemployment this year. Policy makers are holding off on additional steps to boost the economy amid signs that the more than two-year expansion is gaining strength. Yet earlier today, data signaled a cooling labor market as more Americans than forecast filed applications for unemployment benefits.

Investors also watched earnings data as profits have topped forecasts at 75 percent of S&P 500 companies reporting since April 10, according to data compiled by Bloomberg. Per-share profits are forecast to have grown 3.3 percent in the first- quarter, Bloomberg data show. That’s up from the 0.8 percent growth projection before the earnings season started.

“The most recent concern of the bears was that earnings this quarter were going to disappoint and take the market lower,” Birinyi Associates Inc., the Westport, Connecticut- based firm founded by Laszlo Birinyi, said in a note to clients.

“That this was a concern last quarter, as well, was conveniently forgotten.”

Today’s gain extended this year’s advance in the S&P 500 to 11 percent and the benchmark gauge for American equities trimmed its monthly decline to 0.6 percent. If the S&P 500 erases its April drop, it will cap the fifth straight month of gains, the longest winning streak since 2009. Financials and energy shares had the biggest losses in April, while telephone companies rose.

All 11 stocks in a measure of homebuilders in S&P indexes gained. PulteGroup jumped 10 percent to $9.58. The largest U.S. homebuilder by revenue, which has reported a loss in six of the last seven quarters, has been focused on cutting costs after the acquisition of Centex Corp. in August 2009.

Chevron rose 2.3 percent to $106.22. The second-largest U.S. energy company boosted its quarterly dividend to 90 cents a share from 81 cents.

More S&P 500 companies are paying dividends than at any time since 2000 after Apple Inc., Nasdaq OMX Group Inc. and six other corporations initiated payouts this year. The number has risen to 401, according to Howard Silverblatt, S&P’s senior index analyst. His estimate for total payouts this year, which Silverblatt said is under review, is a record $279 billion.

Companies are increasing shareholder returns in the form of dividends and buybacks after the 2008 financial crisis led them to hoard cash to a record $1 trillion by the end of 2011. The rise in payouts coincides with a 13th quarter of better-than- estimated earnings.

“Given underlying fundamentals, low payouts and cash reserves, 2012 should set a record high for cash dividend payments,” Silverblatt wrote in an e-mail today.

Amazon surged 12 percent to $220 after the close of regular trading. Chief Executive Officer Jeff Bezos is looking to add customers by pouring money into new versions of the Kindle and warehouses that are equipped to send out products faster. The Kindle Fire tablet is the best-selling item on Amazon’s site, the company said.

Wal-Mart Stores Inc. rallied 2.8 percent, the most in the Dow, to $58.95. The world’s largest retailer rebounded after an

8.2 percent slump in three days, which was triggered by allegations that executives in Mexico paid more than $24 million in bribes to speed expansion.

Citrix Systems Inc. surged 12 percent to $86.76. The software maker forecast earnings in 2012 will be at least $2.75 a share, topping the average analyst estimate of $2.72.

The Dow Jones Transportation Average slid 1.1 percent. UPS dropped 1.8 percent to $78.25. Package volume gains at UPS, an economic bellwether because it carries goods from mobile devices to pharmaceuticals, have slowed in recent quarters as Asian economic growth cools. Average revenue per piece stagnated as the company struggles to raise rates.

FedEx Corp., which operates the world’s biggest cargo airline, last month projected a profit range for this quarter whose low end trailed analysts’ estimates as the company pared its global growth forecast.

Starbucks Corp. slumped 4.5 percent to $57.90 after the market close. The world’s largest coffee-shop chain reported second-quarter same-store sales that trailed analysts’ estimates amid weaker demand in Europe.

Exxon Mobil Corp. declined 0.9 percent to $86.07. The world’s largest energy company by market value said net income fell 11 percent as its biggest first-quarter production decline since 2008 wiped out most of the benefit of record oil prices.

Dow Chemical Co. slumped 3.4 percent to $34.85 after rising costs for oil-based raw materials in Europe and Asia cut earnings in plastics.

Akamai Technologies Inc. plunged 14 percent, the most in the S&P 500, to $33.15 after forecasting profit that missed estimates. The company that helps businesses deliver data at faster speeds over the Internet said Chief Executive Officer Paul Sagan will leave by the end of 2013. Akamai’s sales more than quadrupled during his leadership.

Aetna Inc. plunged 8.2 percent to $45.31. The third-biggest health insurer by sales reported first-quarter profit that missed analyst estimates.

The S&P 500 may lose as much as 10 percent from current levels given the market’s tendency to give back some gains after a “strong” rally, according to Bank of America Corp.’s Mary Ann Bartels.

“We’re in a correction,” Bartels, the New York-based head of technical and market analysis at Bank of America, said in a phone interview yesterday. “We’re starting to get sell signals on our intermediate indicators.”

Industries such as consumer staples, telecommunications and utilities have fallen too much as investors favor more “defensive” industries, Bartels said. Stocks driven by the economy, including materials, energy and industrial shares, have fallen out of favor, pointing to a potential “deeper pullback” for the U.S. equity market, she said.

“The market is still staying away from commodity-sensitive cyclicals,” Bartels said. “As long as that continues, that means the market is more likely to go down.”

Have a wonderful evening everyone.

Be magnificent!

The Upanishad tells us:  Know the soul that is your own.

In other words:  Realize the grand unique principle of the whole that is in all men.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

Life is very nice, but it has no shape.  It is the purpose of art

to give it shape.
-Jean Anouilh, 1910-1987

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