April 5, 2012 Newsletter

Hello All,

Tangents:

Happy Easter!

Why not celebrate by spending the night in a chocolate factory? The Little Chocolate Shop, a chocolate factory in the UK, is offering travelers the opportunity to spend a night among “edible furnishings, a chocolate fountain, and a fancy dress box filled with Wonka-esque accessories”. One night in the four-person suite costs about $150 and all proceeds go to Breast Cancer UK. You can read more here: http://www.cbc.ca/news/yourcommunity/2012/04/chocolate-factory-invites-guests-to-spend-the-night.html

photos of the day

April 5, 2012

Cats rest on a branch of a cherry tree under cherry blossoms in Tokyo.
Shizuo Kambayashi/AP

Pakistani men take a shelter from the sun under a tree, on the outskirts of Islamabad, Pakistan.
Muhammed Muheisen/AP

Market Closes for April 5, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

April 5 (Bloomberg) — Canadian stocks fell, completing their biggest weekly drop this year, as financial, energy and material shares declined on renewed concern over Europe’s debt crisis, even as commodity prices rallied on U.S. jobs data.

Canadian Imperial Bank of Commerce, the country’s fifth- biggest lender, dropped 1.4 percent. Suncor Energy Inc., the country’s largest oil and gas producer, lost 2.6 percent. First Quantum Minerals Ltd. Canada’s second-largest copper producer, rose 7.1 percent on takeover speculation.

The Standard & Poor’s/TSX Composite Index declined 75.55 points, or 0.6 percent, to 12,103.11 in Toronto. The index fell 2.3 percent this week, the worst slide since Dec. 16. The Canadian market is closed tomorrow for the Good Friday holiday.

“People are probably thinking that the strong job numbers are more of an anomaly than a true fact that will carry on for the next few quarters,” Sadiq Adatia, chief investment officer at Sun Life Global Investments in Toronto, said in a telephone interview. The unit of Sun Life Financial Inc. oversees about C$4.4 billion ($4.4 billion) for clients. “If there are issues in Europe, the risk appetite is off and you’ll likely see pressure on the Canadian dollar.”

The benchmark equity gauge rose 3.7 percent in the first quarter this year as economic data surpassed estimates and investors speculated that the euro area would contain its sovereign-debt crisis. Concerns over Europe were revived this week as French borrowing costs rose at an 8.44 billion euro ($11 billion) auction of debt today, and Spanish bonds fell for a third day after Prime Minister Mariano Rajoy said yesterday the nation faces “extreme difficulty.”

CIBC fell 1.4 percent to C$75.37, leading a third-straight day of declines for financial shares in the S&P/TSX. Toronto- Dominion Bank, the country’s second largest lender, decreased 0.4 percent to C$83.34. Royal Bank of Canada, the country’s biggest lender, dropped 0.4 percent to C$56.96.

National Bank of Canada, the country’s sixth-biggest bank by assets, fell 1 percent to C$78.67 after being sued by current and former employees of its Natcan asset management unit, who argue that the bank unfairly bought them out at a discount before selling the business to Fiera Sceptre Inc. Claude Breton, a National Bank spokesman, declined to comment.

Canadian energy shares fell, even as oil futures rose for the first time in three days. Suncor Energy lost 2.6 percent to C$30.45. Canadian Natural Resources Ltd. slipped 2.9 percent to $31.77.

Claims for U.S. unemployment benefits dropped last week to the lowest level in four years, the Labor Department reported today. Canada added the most jobs since 2008 last month.

Employment rose by 82,300 following a decline of 2,800 in February, Statistics Canada said in Ottawa, lowering the jobless rate to 7.2 percent from 7.4 percent.

Canadian Pacific Railway Ltd., the nation’s No. 2 rail carrier declined 0.5 percent to C$75 as Pershing Square Capital Management’s Chief Executive Officer William Ackman pushed the company for a leadership change.

Ackman said CP Rail is losing market share to rivals under Chief Executive Officer Fred Green. The shares have rallied 25 percent since Oct. 27, the day before Pershing Square disclosed its stake.

Materials companies in the benchmark index fell, led by gold shares. Barrick Gold Corp., the world’s largest producer of the metal, declined 2 percent to C$40.36. Goldcorp Inc., the second-biggest bullion miner, dropped 1 percent to C$40.60.

“Investors probably came to the realization that the markets got a little bit ahead of themselves in the first quarter,” Adatia said. “People focused a little too much on the short-term. Now you’ll hopefully start to see people focusing back on the longer-term issues.”

First Quantum gained 7.1 percent to C$19.69 after U.K. newspapers speculated that the company may be a takeover target.

It was the company’s biggest increase in more than four months.

US

By Michael P. Regan and Lu Wang

April 5 (Bloomberg) — Most U.S. stocks fell for a third day while commodities halted a two-day slump as investors weighed optimism about the American job market with renewed concern over Europe’s debt crisis. Treasuries gained while the euro weakened for a fourth day against the dollar.

The Standard & Poor’s 500 Index lost 0.1 percent to close at 1,398.08 at 4 p.m. in New York after dropping as much as 0.4 percent, while about four U.S. companies fell for every three that rose on U.S. exchanges. The Stoxx Europe 600 Index increased 0.1 percent, reversing a 0.9 percent tumble. Ten-year Treasury note yields slipped five basis points to 2.18 percent after declining as much as nine points earlier. Silver, lead and nickel led commodities higher. Canada’s dollar rallied after a report showed employers added the most jobs since 2008.

U.S. jobless claims dropped to the lowest level in four years, a day before a Labor Department report that is projected by economists to show the nation added more than 200,000 jobs for a fourth straight month. Concern about Europe’s debt crisis deepened as French borrowing costs increased at an 8.44 billion euro ($11 billion) auction, while Spanish bonds fell for a third day amid growing concern the nation will follow Greece, Portugal and Ireland in requiring an international bailout.

“You have, certainly, improvement in the labor market in the U.S. but every once in a while we got reminded there still remain problems in Europe,” Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, which manages about $40 billion, said in a telephone interview. “The volatility is going to continue. It’s going to be choppy.”

Alcoa Inc. and General Electric Co. lost at least 1.3 percent to help lead losses in the Dow Jones Industrial Average, which slipped 14.61 points to 13,060.14. Bed Bath & Beyond Inc.

rose as the retail-chain operator’s fourth-quarter profit beat estimates.

The S&P 500 slipped 0.7 percent this week, the biggest of only three weekly losses this year, after the Federal Reserve signaled reluctance to embark on another round of asset purchases unless the economic recovery falters or inflation is less than its 2 percent target.

The index may fall as much as 5 percent to 7 percent before rebounding, according to hedge fund manager Barton Biggs.

“I may want to take a little risk off,” Biggs, founder of Traxis Partners LP, said on Bloomberg Television’s “In the Loop” with Betty Liu. “I am cutting back a little, and I’m tempted to cut back some more,” he said. Equities are “going higher over the course of the next few months, but in the short run here we’ll have a little pause.

Canada’s dollar climbed against all 16 major peers.

Employment rose by 82,300 following a decline of 2,800 in February, Statistics Canada said, lowering the jobless rate to 7.2 percent from 7.4 percent. Economists surveyed by Bloomberg News projected a 10,500 gain in jobs and 7.4 percent unemployment, according to the median forecasts.

Oil rose for the first time in three days, gaining 1.6 percent to $103.07 a barrel. Nickel rallied 3.1 percent and lead and silver rose more than 2 percent as 18 of 24 commodities tracked by S&P GSCI Index advanced, sending the gauge up 0.8 percent.

Gains in mining companies and energy producers led the European benchmark index higher, overshadowing a drop in banks and automobile companies. Xstrata Plc and Rio Tinto PLC rose more than 1.5 percent, while UniCredit SpA, Italy’s biggest bank, fell 3.1 percent. The Stoxx 600 had tumbled 3.1 percent in the previous two sessions.

The extra yield investors demand to hold 10-year French bonds instead of benchmark German bunds reached 125 basis points, or 1.25 percentage point, the most since Feb. 1. The yield spread between Spanish and German 10-year bonds exceeded 4 percentage points for the first time since Dec. 12, and German five-year note yields reached a record low of 0.71 as investors sought the safest bonds.

The euro weakened against 12 of its 16 major peers, driving the currency through the Swiss National Bank’s cap for the first time since it imposed the limit on Sept. 6. The SNB won’t allow the franc to go below 1.20 versus the euro and is ready to buy foreign currencies in unlimited quantities, spokesman Walter Meier said by telephone today.

German industrial output fell 1.3 percent in February from the previous month, dropping more than the 0.5 percent median estimate of economists in a Bloomberg survey.

The cost of insuring against default on European corporate debt rose, with the Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbing 2.5 basis points to 132.2.

Trading in credit-default swaps is dropping as investors reaping the biggest corporate-bond market gains since 2010 reduce bearish bets. Banks, hedge funds and other money managers traded credit swaps tied to a weekly average of $137.2 billion of corporate and sovereign debt in the four weeks ended March 30, according to data from the Depository Trust & Clearing Corp.

That’s down 3.6 percent from $142.3 billion in the same period a year earlier and a 24.5 percent drop from August, when an average $181.7 billion was traded, DTCC data show.

Investors scaled back hedges as corporate bonds globally returned 3.8 percent in the first quarter of 2012, the biggest gains since the period ended September 2010.

The MSCI Emerging Markets Index slipped 0.1 percent. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong retreated 1.4 percent, after returning from yesterday’s public holiday.

Most markets will be closed tomorrow for the Good Friday holiday and U.S. equity index futures will trade until 9:15 a.m.

New York time on CME Group Inc.’s Chicago Mercantile Exchange and Treasuries will trade for part of the day to allow investors to react to the nonfarm payrolls report. There will be spot trading in precious metals.

Have a great Easter Weekend!

Kind regards,

Nadia Aziz

Assistant to Carolann Steinhoff

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7