April 5th, 2011 Newsletter

Dear Friends,

It is Chelsey writing today for Carolann as she visits clients J

Photos for today,

April 5^th:

A male stork prepares a nest on the chimney of an old distillery at sunrise in Nauen-Ribbeck near Berlin, Germany. The male storks arrive a few days earlier than their partners to prepare the nest for raising their chicks in the marsh area that is rich in food for them.

Ferdinand Ostrop/AP

Panda, a rescued stray puppy, strolls on the grass during a protest in Bucharest, Romania, against euthanasia of stray dogs and new regulations to be voted by parliament regarding ways to deal with the stray dog issue. According to protesters gathered outside Romania’s parliament, if voted in, the new law would allow the local administration to put down stray dogs. According to local media, there are 50,000 stray dogs in the Romanian capital of which 60 percent are sterilized.

A man walks down a pier in New York Monday night across from the Empire State Building, lit in white and red as part of a coordinated attempt by several landmark buildings around the world to raise awareness of the disaster in Japan. Lucas Jackson/Reuters

Market Commentary

Canada

By Matt Walcoff

April 5 (Bloomberg) — Canadian stocks rose for a sixth day, led by gold producers, as the metal climbed to a record after Moody’s Investors Service cut Portugal’s long-term credit rating and the U.S. dollar weakened.

Goldcorp Inc., the world’s second-largest producer by market value, advanced 5.8 percent. Manulife Financial Corp., North America’s fourth-largest insurer, lost 2.2 percent after the U.S. Institute for Supply Management’s index of non- manufacturing businesses trailed forecasts. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, increased 1 percent as JPMorgan Chase & Co. raised its rating.

The Standard & Poor’s/TSX Composite Index climbed 52.18 points, or 0.4 percent to 14,270.53, the highest level since June 2008.

“What drives gold is currency movements,” said Robert “Hap” Sneddon, president of money manager CastleMoore Inc. in Oakville, Ontario, and vice president of the Canadian Society of Technical Analysts. “The ISM suggests we’re not as strong as we’d like to be in this recovery. That tilts it toward more stimulus, and more stimulus means a weakening U.S. dollar.”

The S&P/TSX gained 27 percent in the nine months ending yesterday as gold surged 19 percent. Eight of the world’s 19 largest gold companies are Canadian.

Gold rose 1.4 percent to a record $1,452.50 an ounce in New York after Moody’s reduced Portugal’s credit rating to Baa1 from A3.

The U.S. dollar fell the most since Jan. 31 against the British pound after a gauge of U.K. service-sector activity increased faster than all 26 economists in a Bloomberg survey had forecast. The U.S. currency slipped further after the ISM said its service-sector index fell to 57.3 last month from 59.7 in February.

The S&P/TSX Gold Index jumped the most in 10 months, and the S&P/TSX Materials Index closed at a record high.

Goldcorp gained 5.8 percent to a 32-month high of C$50.30.

Barrick Gold Corp., the world’s largest producer of the metal, advanced 5.2 percent to C$52.36. European Goldfields Ltd., which is developing mines in Greece and Romania, increased 9.2 percent to C$12.70.

B2Gold Corp., which mines in Nicaragua, surged 15 percent to a record C$3.42 after Chris Thompson, an analyst at Haywood Securities Inc., raised his 12-month share-price estimate to

C$3.45 from C$3.30.

Silver jumped 1.8 percent, and touched its highest price since February 1980. First Majestic Silver Corp. rallied 8.3 percent to C$24.67 after soaring 9.2 percent yesterday.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, rose 2.4 percent to C$56.38 after surging 7.5 percent yesterday.

S&P/TSX financial and industrial companies declined after the release of the ISM data.

Manulife, the owner of John Hancock Financial Services Inc., dropped 2.2 percent to C$17.01. Toronto-Dominion Bank, which has more than 1,000 U.S. branches, slipped 1 percent to C$85.29. Canadian National Railway Co., which derived 32 percent of its revenue from the U.S. last year, declined 1.4 percent from a record close to C$72.40.

Canadian Natural advanced 1 percent to C$47.95 after Katherine Lucas Minyard, an analyst at JPMorgan, raised her rating on the stock to “overweight” from “neutral.” In a note to clients, Minyard cited higher oil-price forecasts.

Pacific Rubiales Energy Corp., which produces oil in Colombia, jumped 5.5 percent to C$28.13. The shares had tumbled

21 percent this year through yesterday, the most among S&P/TSX oil and gas companies.

Valeant Pharmaceuticals International, Inc., Canada’s largest drugmaker, advanced 1.4 percent to C$52.09 after William Tanner, an analyst at Lazard Ltd., raised his 12-month share- price estimate on the U.S. shares to $58 from $47. The market has yet to fully price in the potential benefit to Valeant of a purchase of Cephalon Inc., Tanner said in a note to clients.

Valeant launched a $5.7 billion unsolicited takeover bid for Cephalon on March 29 and rallied 19 percent over the following four days.

US

By Rita Nazareth

April 5 (Bloomberg) — U.S. stocks erased gains, preventing a third straight advance in the Standard & Poor’s 500 Index, as growing concern that the Federal Reserve will begin removing stimulus measures offset optimism about takeover deals.

Boeing Co. lost 1 percent to help lead the Dow Jones Industrial Average down from an almost three-year high amid concern inspectors will find more problems with the company’s 737 jets. Google Inc. sank 3.2 percent as people familiar with the matter told Bloomberg News that the U.S. government is considering an antitrust probe. National Semiconductor Corp., which led the earlier gain in the S&P 500, surged 71 percent after Texas Instruments Inc. agreed to buy the chipmaker.

The S&P 500 slipped less than 0.1 percent to 1,332.63 at 4 p.m. in New York after climbing as much as 0.4 percent earlier today. The Dow average retreated 6.13 points, or 0.1 percent, to 12,393.90. The Russell 2000 Index advanced 0.5 percent, after rallying to an all-time intraday high.

“Investors are fearful that if they don’t get another round of quantitative easing, the market doesn’t get another shot in the arm,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has about $110 billion in client assets. “I’m not convinced. We have solid economic figures and corporate earnings. The path of least resistance for the market would be higher.”

The S&P 500 has risen 6 percent in 2011 as government stimulus measures, corporate takeovers and higher-than-estimated profits boosted investors’ optimism. Alcoa Inc. starts the earnings reporting season on April 11. The aluminum producer may post net income of $321 million in the first quarter, according to the average analyst estimate compiled by Bloomberg.

Stocks began to reverse earlier gains as minutes from the Fed’s last policy meeting showed central bankers differed over whether to begin removing record stimulus this year as they debated the path of monetary policy after the completion of their $600 billion bond-purchase program.

“A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year; a few others noted that exceptional policy accommodation could be appropriate beyond 2011,” the Federal Open Market Committee said in minutes of its March 15 meeting, released today in Washington. “Almost all” Fed officials also saw no need to “taper” Treasury buying, jettisoning their prior strategy of reducing the pace of purchases while stretching out their duration.

U.S. House Republicans today unveiled a plan to overhaul the federal budget and slash the deficit in coming years by about three-quarters, with a $6 trillion cut in spending and 25 percent cap on tax rates. The proposal would cut the deficit next year to $995 billion from $1.4 trillion now. It would continue to narrow the shortfall to as little as $379 billion in 2018, though it wouldn’t balance the government’s books until 2040.

Boeing fell 1 percent to $73.23. The company said the metal-fatigue cracks that ripped open a hole last week on a Southwest Airlines Co. 737 jet occurred earlier than the planemaker had expected in the life of the aircraft.

Google slipped 3.2 percent to $569.09. The U.S. Federal Trade Commission is considering a broad antitrust investigation of the company’s dominance in the Internet-search industry, two people familiar with the matter said.

KB Home sank 4.2 percent to $11.69. The Los Angeles-based homebuilder that targets first-time buyers reported a wider first-quarter loss than analysts estimated as revenue and new orders plunged amid slumping demand for new houses.

The Philadelphia Semiconductor Index rallied 2.3 percent as 25 of its 30 stocks advanced. A gauge of chipmakers in the S&P 500 added 1.6 percent, the most within 24 industries.

National Semiconductor rallied 71 percent to $24.06 for its biggest gain since at least 1980. Texas Instruments, the second- largest U.S. chipmaker, agreed to buy the Santa Clara, California-based chipmaker for about $6.5 billion, its biggest acquisition as it expands its leadership in analog semiconductors. Texas Instruments will pay $25 a share in the all-cash transaction, a 78 percent premium to National Semiconductor’s previous closing price of $14.07.

Texas Instruments rose 1.7 percent to $34.69.

Abercrombie & Fitch Co. rallied 11 percent to $65.57. The teen retailer announced plans to open stores in China and said it expects to earn $4.75 a share in 2012.

Apple Inc. fell 0.7 percent to $338.89. The company’s representation in the Nasdaq-100 will be cut to 12.33 percent of the index on May 2, from 20.49 percent, Nasdaq OMX Group Inc.

said in a slide show on its website, after previous rules caused its proportion in the gauge to grow disproportionately.

“Apple rebalancing creates another buying opportunity,”

Brian J. White, analyst at Ticonderoga Securities LLC, wrote in a note today. “As these concerns subside and investors again focus on the fundamentals surrounding Apple’s business, we believe the stock will reach new, all-time highs.”

Cisco Systems Inc., the largest provider of networking equipment, gained 0.9 percent to $17.22. Microsoft Corp., the world’s largest software maker, rallied 0.9 percent to $25.78.

Both companies’ weightings will more than double.

A gauge of raw-material producers rallied 1.1 percent, the most in the S&P 500 within 10 industries. Gold futures surged to a record of $1,458.60 an ounce as concern that Europe’s debt crisis will worsen boosted demand for the metal as an alternative asset. Portuguese bonds sank and the cost of insuring the nation’s debt rose to a record as Moody’s Investors Service said a bailout is inevitable.

Newmont Mining Corp., the largest U.S. gold producer, advanced 4.4 percent to $56.98. Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, rallied 1.5 percent to $56.61.

The S&P 500 has rebounded 6 percent from its low for the year on March 16. Individual investors may have helped drive the rally while professional money managers were sellers, Bespoke Investment Group LLC said.

Individual investors enter most transactions at the start of a trading day, while institutional investors trade at the end of the day, according to Bespoke, which tracks the intraday performance of the market on an hourly basis. Since the benchmark’s 2011 low on March 16, the S&P 500 posted its biggest gain in the first half hour of trading, averaging 0.37 percent, while dropping the most during the final hour, losing 0.05 percent, data from the Harrison, New York-based firm showed.

“Nearly all of the market’s gains during the current rally have come in the first hour and a half of trading,” Justin Walters, Bespoke’s co-founder, wrote in a note to clients yesterday. “If anything, the ‘smart money’ has been taking money off the table.”

Have a wonderful evening everyone,

Warm regards,

Chelsey for Carolann

“Action and reaction, ebb and flow, trial and error, change – this is the rhythm of living.

Out of our over-confidence, fear; out of our fear, clearer vision, fresh hope.

And out of hope, progress.” ~Bruce Barton (1886-1967)