Author: Carolann

Dear Friends, 

Tangents:

                                                                Entrance

                Whoever you are: step out in to the evening

  out of your living room, where everything is so known;

  your house stands as the last thing before great space:

                                                     Whoever you are.

    With your eyes, which in their fatigue can just barely

              free themselves from the worn-out thresholds,

                               very slowly, lift a single black tree

             and place it against the sky, slender and alone.

        With this you have made the world.  And it is large

               and like a word that is still ripening in silence.

                  And , just as your will grasps their meaning,

           they in turn will let go, delicately, of your eyes…

                                                   -Rainer Maria Rilke

Market Commentary:

Canada

By Matt Walcoff

     Jan. 11 (Bloomberg) — Canadian stocks fell, led by energy producers, after Germany said its economy probably contracted and natural gas futures sank the most since May on forecasts for milder-than-normal weather in the U.S.

     Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, lost 3 percent as natural gas declined after settling at the lowest price in 28 months yesterday. Barrick Gold Corp., the world’s largest gold producer, gained 1.1 percent as the metal advanced. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, decreased 3 percent after an analyst at Jefferies Group Inc. cut his price estimate on the shares.

     The Standard & Poor’s/TSX Composite Index slipped 9.72 points, or 0.1 percent, to 12,260.94 after closing at the highest level since Nov. 11 yesterday.

     “There’s so many question marks with respect to how they’re going to resolve their debt crisis” in Europe, Danielle Park, a money manager at Venable Park Investment Counsel Inc. in Barrie, Ontario, said in a telephone interview. The firm oversees at least C$1 million ($980,000) each for more than 250 families. “The U.S. dollar is continuing its breakout. The weak-euro story continues to be supportive of the dollar, and as the dollar strengthens, commodities weaken.”

     The S&P/TSX had climbed 11 of the previous 13 days, led by raw-materials and energy producers, as data on U.S. employment, manufacturing and home sales signaled economic growth there. The U.S. accounted for 75 percent of Canadian exports in 2010, according to Statistics Canada.                       

     German gross domestic product declined about 0.25 percent in the fourth quarter from the previous three months, the country’s statistics office said in an unofficial estimate today. The European Union’s statistics bureau cut its estimate of third-quarter euro-area economic growth to 0.1 percent from

0.2 percent today.

     Gas futures fell as the U.S. National Weather Service forecast above-normal temperatures for much of the country for Jan. 18 to Jan. 24. Crude oil dropped 1.3 percent.

     Canadian Natural lost 3 percent to C$38.31. Enbridge Inc., the country’s largest pipeline company, decreased 1.7 percent to C$36.80. Trilogy Energy Corp., a western Canadian natural gas and oil producer, tumbled 9.3 percent to C$32.90 after Grant Hofer, an analyst at Barclays Plc, reduced his earnings estimates for the company.                       

     The S&P/TSX Materials Index climbed as gold futures rose after Hong Kong reported record exports of the metal to Mainland China for November.

     Barrick gained 1.1 percent to C$49.74. Pan American Silver Corp., which mines in Latin America, surged 7.4 percent to C$25.02. Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 1.8 percent to C$39.35 as copper advanced to a four-week high.

    First Quantum retreated 3 percent to C$22.40 after Christopher LaFemina, an analyst at Jefferies, cut his 12-month price estimate on its London-traded shares to 1,700 pence

($26.06) from 1,800 pence. Higher costs will reduce mining companies’ profits in 2012 and 2013, LaFemina wrote in a note to clients.

     St. Elias Mines Ltd., which explores for gold in Peru and British Columbia, plunged 41 percent to 84 Canadian cents, the lowest since March 2010, after reporting drilling results from its Tesoro project in Peru.

     Auto-parts companies Magna International Inc. and Linamar Corp. climbed as General Motors Co. rallied 5.3 percent in New York. The biggest U.S. carmaker may shift more production to Europe to cut costs with its German union, Reuters reported, citing unnamed people familiar with the matter. Alexander E.

Potter, an analyst at Piper Jaffray Cos., raised his rating on GM to “overweight” from “neutral.”

     Magna, which has GM as its biggest customer and operates factories in Europe, gained 3.1 percent to C$39.52. Linamar, which also has plants in Europe as well as North America, jumped

7.4 percent, the most since September 2010, to C$15.45.

US

By Rita Nazareth

     Jan. 11 (Bloomberg) — Most U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a third day, as a rally in banks helped the market recover from an early slump spurred by growing signs Europe may slip into a recession.

     Citigroup Inc. climbed 4.2 percent as analyst Dick Bove said the shares could “easily” triple in five years. Lennar Corp. jumped 7.2 percent, pacing gains in homebuilders, after reporting a jump in new orders. Energy shares had the biggest decline in the S&P 500 among 10 industries as Chevron Corp.

dropped 1.2 percent. Urban Outfitters Inc. tumbled 19 percent as the company’s chief executive officer resigned.

     About seven stocks rose for every five that fell on U.S.

exchanges at 4 p.m. New York time. The S&P 500 increased less than 0.1 percent to 1,292.48. The benchmark index gained 1.2 percent in three days. The Dow Jones Industrial Average retreated 13.02 points, or 0.1 percent, to 12,449.45 today. The Nasdaq Composite Index advanced 0.3 percent to 2,710.76.

     “The U.S. economic backdrop is more favorable even as the international picture becomes murky,” Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4 billion in Raleigh, North Carolina, said in a telephone interview. “Companies most domestically oriented, including financials, are better positioned for this environment. The fundamentals will remain challenging, but valuations are attractive.”

     The S&P 500 recovered from an earlier slump as a group of financial shares rose 1 percent, extending this year’s gain to

6.7 percent. That compares with a 2.8 percent advance in the benchmark measure. The industry slumped 18 percent last year for the biggest decline among 10 groups.

     Citigroup added 4.2 percent to $31.27. “Earnings will skyrocket relative to where they are,” Rochdale Securities LLC’s Bove said today in a Bloomberg Television interview with Tom Keene on “Surveillance Midday.”

     A gauge of homebuilders in S&P indexes jumped 4.1 percent.

Lennar gained 7.2 percent to $22.25. The third-largest U.S.

homebuilder by revenue reported a 20 percent jump in new orders for the fourth quarter from a year earlier.

     Eastman Kodak Co. rallied 36 percent to 82 cents, surging

119 percent in three days. The unprofitable imaging company, seeking to sell or license a portfolio of more than 1,100 patents, sued Apple Inc. and HTC Corp. in an expansion of a legal strategy that may help boost the value of its inventions to fund a turnaround.                      

     Brocade Communications Systems Inc. rallied 2.1 percent to $5.89. The maker of switches for data-storage networks, which had been trying to find a buyer with the help of Frank Quattrone for two years, was valued yesterday at 7.7 times its free cash flow, according to data compiled by Bloomberg. That was the cheapest among its closest competitors and less than half the median of 17 times for comparable companies.

     While Brocade was passed over when Dell Inc. agreed to buy Force10 Networks Inc. in July, the company could give Oracle Corp. a networking product it currently doesn’t offer to businesses and enable it to better compete with Cisco Systems Inc., according to ThinkEquity LLC and Avian Securities LLC.

Brocade, which has more than doubled its free cash flow in the past five years, also makes sense for buyout firms and could command about $8 a share in a takeover, ThinkEquity said.

     Equities fell earlier as Germany’s Federal Statistics Office said the economy probably shrank in the fourth quarter from the third, and the European Union cut euro-area growth to

0.1 percent in the third quarter, from 0.2 percent estimated earlier. The U.S. economic expansion improved last month across most of the country while hiring was limited and housing remained stagnant, the Federal Reserve said in its Beige Book.                       

     “Nothing has really been done to stimulate growth in Europe,” Madelynn Matlock, who helps oversee about $14.5 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “Without growth, you can’t fix this issue.

If Germany slows down, then, you start to have a real problem on how to make that happen. There’s more risk on the earnings side as to how companies are going to come through all this.”

     A measure of energy shares in the S&P 500 fell 1.3 percent as oil dropped on concern that slower global growth may curb demand and natural gas tumbled to a 28-month low. Chevron retreated 1.2 percent to $107.77.

     Producers of natural gas dropped as the commodity sank to a 28-month low in New York after revised forecasts showed milder weather across much of the U.S. through late January, crimping demand for the furnace fuel. Southwestern Energy Inc. lost 8 percent to $29.92. Cabot Oil & Gas Corp. fell 11 percent to $69.62. Range Resources Corp. sank 6.3 percent to $54.36.                      

     Urban Outfitters plunged 19 percent to $23.93. The clothing retailer said Glen Senk resigned as chief executive officer and will be succeeded by co-founder Richard Hayne as the retailer seeks to turn around falling profit.

     Supervalu sank 13 percent to $7.34. Chief Executive Officer Craig Herkert said the company was working to keep prices low amid the “difficult economic environment and pressured consumer.” Supervalu said sales in its fiscal 2012 may be $36.1 billion. The average estimate of 13 analysts was $36.4 billion.

     Rating downgrades from Goldman Sachs Group Inc. also contributed to losses at some of the biggest companies today. 3M Co., the maker of LCD television parts and Scotch-Brite sponges, lost 0.6 percent to $83.77. MasterCard Inc., the world’s second- biggest payments network, slumped 2.1 percent to $341.47.

     Investors may be about to turn toward government bonds and away from stocks and other riskier assets, according to Bob Janjuah, global head of tactical asset allocation at Nomura International Plc. This shift may begin by the end of the week, Janjuah wrote yesterday in a report. Yields on 10-year U.S., U.K. and German notes will be closer to 1.5 percent than 2 percent during the first quarter, he predicted.

     The first quarter “is going to be extremely bearish for risk,” according to Janjuah, based in London. He cited the possibility that Greece may default on its debt before the quarter ends, along with other concerns.

Have a wonderful evening everyone.

Be magnificent!

This universe is like an ocean in perfect equilibrium.

A wave cannot rise in one place, without creating a hollow elsewhere.

The sum total of the energy of the universe remains identical from one end to the other.

If you take from one place, you must give elsewhere.

 

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Penguins mate for life.  Which doesn’t surprise

me that much, because they all look alike – it’s

not like they’re gonna meet a better-looking

penguin one day.

         -Ellen DeGeneres, 1958-

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

Tel: 778.430.5808

(C): 250.881.0801

Toll Free: 1.877.430.5895

Fax: 778.430.5838

www.carolannsteinhoff.com

Dear Friends, 

Tangents: 

 It was wonderful to open The New York Times on January 1^st last week and see Yoko Ono’s full page ad with the message,  Imagine Peace….and the world will live as one,  written in every language, signed, Lots of love, yoko.  Imagine, indeed. 

WISH TREE

Make a wish

Write it down on a piece of paper.

Fold it and tie it around a branch of a wish tree.

Ask your friend to do the same.

Keep wishing.

Until the branches are covered with wishes.

                       -Yoko Ono

Tribute to peace

The “Wish Tree” is a tribute to Yoko Ono and John Lennon’s campaign for world peace.

Since Lennon’s death in 1981, “Wish Tree” has been exhibited throughout the world.

Over 700,000 wishes have been collected from art exhibits, emails and letters over the past 30 years, according to the Imagine Peace website.

The wishes are sent to the Imagine Peace Tower in Reykjavik, Iceland. The tower, which features a pillar of light, was unveiled on October 9, 2007– what would have been Lennon’s 67th birthday.

Ono’s “Wish Tree” was inspired by her childhood in Japan. When visiting a temple, she would write a wish on a piece of paper and attach it to a tree branch.

Market Commentary:

Canada

By Matt Walcoff and Ksenia Galouchko

     Jan. 10 (Bloomberg) — Canadian stocks rose for a second day as commodity producers gained after slower Chinese import growth led to speculation the country will ease monetary policy.

     Nexen Inc., an oil and gas producer with operations on five continents, advanced 7.8 percent after saying Chief Executive Officer Marvin Romanow is leaving the company. Potash Corp., the world’s largest fertilizer producer by market value, advanced

4.1 percent after an analyst recommended the stock. Yoga-wear retailer Lululemon Athletica Inc. rallied 11 percent after boosting its fourth-quarter earnings forecast.

     The Standard & Poor’s/TSX Composite Index climbed 73.94 points, or 0.6 percent, to 12,270.66, the highest close since Nov. 11.

     “What’s probably helping Canada is ongoing speculation that we could get some monetary stimulus in China to combat what appears to be a slowing-down there,” Gareth Watson, vice president of investment management and research at Richardson GMP Ltd. in Toronto, said in a telephone interview. The firm oversees about C$16 billion ($16 billion). “If you can kick- start it again and get raw-material inputs demand increasing, it bodes well for commodity prices, which bodes well for the TSX.”

     The index rose 2.6 percent this month on economic data indicating strengthening manufacturing in the U.S., U.K. and China. Materials companies account for 21 percent of Canadian stocks by market value, with the energy industry making up another 27 percent, according to data compiled by Bloomberg.

     Chinese imports climbed 11.8 percent last month from a year earlier, a government report said today in Beijing. All 21 economists in a Bloomberg survey had forecast a bigger increase.                           

     Crude oil gained for the first time in four days on the New York Mercantile Exchange.

     Suncor Energy Inc., Canada’s largest oil and gas producer, advanced 2.9 percent to C$32.82 to extend its streak of increases to eight days, the longest since July 2006. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, rallied 0.7 percent to

C$12.49 after saying it will spend $500 million less on drilling this year compared with 2011.

     Nexen surged 7.8 percent to C$18.40 after disclosing that Chief Financial Officer Kevin Reinhart is replacing Romanow.

     “The current helm change addresses Nexen’s ineffective growth strategy,” John Herrlin, an analyst at Societe Generale SA, wrote in a note to clients. Shares of the Calgary-based company sank 29 percent last year as it failed to meet production targets at its Long Lake oil-sands project.

     DeeThree Exploration Ltd. rose 11 percent to C$2.70 after announcing the launch of a second rig in late January.                     

     Pacific Rubiales Energy Corp., which explores for oil in Colombia, had the biggest gain in the S&P/TSX after forecasting a 2012 production increase of as much as 35 percent. The shares surged 9.9 percent to C$21.98. Petrominerales Ltd. rose 6.8 percent to C$18.78 after reporting yesterday output from its operations in Peru and Colombia rose 5 percent in December from November.

     Lululemon surged 11 percent to C$60.68 after raising its fourth-quarter earnings-per-share forecast by 7 cents a share to a range of 47 cents a share to 49 cents a share. Analysts had estimated the company would report profit of 42 cents a share, according to the average forecast in a Bloomberg survey.

     Agrium Inc. and Potash Corp. of Saskatchewan Inc. climbed after Joel Jackson, an analyst at Bank of Montreal, said fertilizer demand will rebound this quarter.

     Agrium, a fertilizer producer and farm retailer, gained 3.5 percent to C$75.16 after Jackson raised his rating on the shares to “outperform” from “market perform.” Potash Corp., the world’s largest fertilizer producer by market value, advanced

4.1 percent to C$44.36 after Tim Tiberio, analyst at Miller Tabak & Co. LLC, initiated coverage of the company with a “buy” and price estimate of $60 (C$60.95).

     Base-metals and coal producers climbed as copper futures rose. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 7 percent to C$23.10.

Teck Resources Ltd., the country’s biggest company in the industry, gained 2.7 percent to C$38.65.

     Pharmacy-benefits manager SXC Health Solutions Corp.

rallied 6.5 percent to a record C$63.47 after David H. Shove, an analyst at BMO, raised his price estimate on the U.S. shares to

$71 from $59, citing expectations of “double-digit earnings growth from all companies in the space.”

US

By Rita Nazareth

     Jan. 10 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest level since July, amid bets that China may act to spur economic growth.

     All 10 groups in the S&P 500 advanced as financial, commodity and industrial shares had the biggest gains. Bank of America Corp. and Caterpillar Inc. rallied at least 2.9 percent.

Alcoa Inc., the first company in the Dow Jones Industrial Average to report quarterly results, pared a rally of as much as

4.5 percent. Tiffany & Co. tumbled 10 percent after the luxury jewelry retailer reduced its annual earnings forecast.

     The S&P 500 climbed 0.9 percent to 1,292.08 at 4 p.m. New York time. The index rose to the highest level since July 29, a week before the U.S. was stripped of its AAA credit rating by S&P. The Dow gained 69.78 points, or 0.6 percent, to 12,462.47.

The Russell 2000 Index of small companies jumped 1.5 percent, rallying above its average price of the last 200 days.

     “Earnings don’t have to knock the ball out of the park to push equities higher,” Jack Ablin, who helps oversee $55 billion as chief investment officer for Chicago-based Harris Private Bank, said in a telephone interview. “Expectations are low.” On the international front, “there’s a growing sense that China will ease policy and, to the extent that Europe can muddle, it’s probably net positive news.”

     Stocks rose as a drop in China’s import growth bolstered forecasts for monetary easing. Equities pared gains as Alcoa, the largest U.S. aluminum producer, tumbled from today’s peak.

The S&P 500 has ended the earnings season higher 75 percent of the time when Alcoa rises in the session after reporting its results, according to a Bespoke Investment Group study of 34 quarters going back to 2003.

     Alcoa added 0.2 percent to $9.44. Sales rose 6 percent to

$5.99 billion, beating estimates by 5.1 percent. It had a loss excluding restructuring costs of 3 cents a share, matching the average projection from 18 estimates compiled by Bloomberg.

Aluminum jumped, pacing gains in commodities, after the company also forecast a global production deficit.

     The Morgan Stanley Cyclical Index of companies most- dependent on economic growth gained 1.7 percent. The Dow Jones Transportation Average added 1.4 percent. The KBW Bank Index rallied 1.9 percent. Bank of America climbed 5.7 percent, the biggest gain in the Dow, to $6.63. Caterpillar, the world’s largest construction and mining-equipment maker, increased 3 percent to $99.96.

     BorgWarner Inc. rose the most in the S&P 500, soaring 12 percent to $72.25. The maker of turbochargers forecast annual profit that topped analysts’ estimates.                          

     “Most companies will surprise on the upside and markets will react positively to that provided that there’s not any further negative news coming from the rest of the world,” David Kelly, who helps oversee $394 billion as chief market strategist for JPMorgan Funds in New York, said in a telephone interview.

“The U.S. economy seems to have momentum.”

     The S&P 500 has jumped 18 percent from its 2011 low amid better-than-expected economic data. The rally has brought the index to the top of the trading range it has be stuck in since August.

     Eastman Kodak Co. gained the most in the Russell 2000, advancing 50 percent to 60 cents. The unprofitable 131-year-old imaging company simplified its management structure and created a chief operating office to reduce costs.

     Tiffany slumped 10 percent to $59.94. The company, which generates almost half of its sales outside of the U.S., is selling fewer $65,000 diamond necklaces as volatile stock markets prompt European consumers to curb spending. Asian shoppers also are restraining purchases of luxury goods.                        

     Goodyear Tire & Rubber Co. tumbled 8.3 percent to $14.01.

The largest U.S. tiremaker said it’s experiencing softness in global demand. Sales of replacement tires in North America, where Goodyear got 44 percent of its revenue in 2010, fell about

3 percent in last year’s final quarter, Chief Financial Officer Darren Wells said at an investor conference today in Detroit.

     Liz Claiborne Inc. tumbled 13 percent, the biggest drop since Aug. 8, to $8.64. The apparel maker cut its profit forecast for the coming year and said its chief financial officer is departing.

     Rallying stocks have done little to entice professional money managers back to U.S. equities. A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 44.5 last week from 43.9 at the end of 2011, holding close to the lowest level since 2009, according to International Strategy & Investment Group. Compared with the price of the S&P 500, managers’ so-called net exposure is close to the lowest since June 2008, the data show.

     Speculators have been cutting equities since the index peaked in February 2011 at 54.2, concerned Europe’s credit crisis will spread and curb global economic growth. They stayed bearish after October when the S&P 500 began a 17 percent rally that has restored $2 trillion to the value of American equities.

     Investors have struggled to profit amid record stock market volatility. Hedge funds, largely unregulated investment vehicles that aim to make money whether markets rise or fall, lost 4.9 percent last year as fear that the European sovereign-debt crisis would spread deterred them from buying risky assets including stocks, according to the Bloomberg aggregate hedge- fund index.

     “Hedge funds have made massive mistakes,” George Feiger, chief executive officer of Contango Capital Advisors Inc., the San Francisco-based wealth management arm of Zions Bancorporation, said in a telephone interview on Jan. 6. He manages $3.3 billion at Contango and Western National Trust Co.

“We are less and less willing to invest with these people because at the point when you need them the most, they’re worth the least.”

Have a wonderful evening everyone.

Be magnificent!

The universe is the energy of the soul; and from this energy comes life, consciousness, and the elements.

The universe is the will of the soul; and from this will comes the law of cause and effect.

From the soul one became many; but in the soul many are one.

 

Mundaka Upanishad

As ever,

Carolann

The heads of strong old age

are beautiful beyond all grace

of youth.

   -Robinson Jeffers, 1887-1962

 

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

Tel: 778.430.5808

(C): 250.881.0801

Toll Free: 1.877.430.5895

Fax: 778.430.5838

www.carolannsteinhoff.com

 

Dear Friends, 

Tangents:  Full moon tonight . 

Birthdays today:

Joan Baez turns 71 today.

Simone de Beauvoir, writer,  born January 9^th, 1908.

 No man is an island,

No man stands alone,

Each man’s joy is joy to me,

Each man’s grief is my own.

We need one another,

So I will defend,

Each man as my brother,

Each man as my friend…

When I help my brother,

Then I know that I,

Plant the seed of friendship,

That will never die.

           -Joan Baez

Market Commentary:

Canada

By Matt Walcoff

     Jan. 9 (Bloomberg) — Most Canadian stocks fell as producers of base metals and energy declined with copper and natural gas futures after Germany reported a drop in industrial production and above-normal temperatures continued in the U.S.

     Teck Resources Ltd., Canada’s largest base-metals and coal producer, decreased 1.8 percent after agreeing to buy SilverBirch Energy Corp. for C$435 million ($424 million).

Enbridge Inc., the country’s biggest pipeline company, lost 0.6 percent. Valeant Pharmaceuticals International Inc., Canada’s biggest drugmaker, rose 2.7 percent after at least four analysts raised their price estimates on the shares.

     Among Standard & Poor’s/TSX Composite Index stocks, 134 retreated, 109 advanced and 10 were unchanged. The S&P/TSX increased 8.08 points, or 0.1 percent, to 12,196.72.

     “Things are mixed south of the border, and Europe, even if they add money to the system, they’re still trying to be austere at the same time, which means you either get slowing or potentially negative growth, which doesn’t bode well for the commodity sector,” Arthur Salzer, chief executive officer of Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million.

     The S&P/TSX climbed 2 percent last week, its third straight weekly advance, as raw-materials and energy stocks rose after economic data indicated global manufacturing is strengthening.

The two industries make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

     German industrial production fell 0.6 percent in November, the Economics Ministry said today in Berlin. The drop exceeded most economists’ forecast in a Bloomberg survey.

     Teck slipped 1.8 percent to C$37.65 after the cash portion of its acquisition agreement with SilverBirch amounted to a 32 percent premium relative to the 20-day volume-weighted average price of the target company’s shares, according to Bloomberg data. SilverBirch, which owns a 50 percent stake in the Frontier oil-sands project, soared 33 percent, the most since it began trading in October 2010, to C$9.61.

     Among other base-metals producers, First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper-mining company, fell 2 percent to C$21.58 to end a six-day streak of advances. Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi project in Mongolia, dropped 2.8 percent to C$18.51.                        

     The S&P/TSX Energy Index declined for a third day as crude oil retreated and natural gas slipped on forecasts for above- normal U.S. temperatures. Enbridge lost 0.6 percent to C$37.57.

Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, decreased 2.2 percent to C$12.40 a day before the release of its 2012 financial forecasts.

     Progress Energy Resources Corp., which produces natural gas and oil in Canada, slumped 5.1 percent to C$12.72 after Stacey McDonald, an analyst at GMP Capital Inc., cut her rating on the stock to “hold” from “buy.”

     Valeant gained 2.7 percent to C$50.14 after at least four analysts raised their 12-month price estimates on the shares.

The company forecast cash earnings higher than most analysts had projected on Jan. 6.

     Lennox Gibbs, an analyst at Toronto-Dominion Bank, boosted his forecast to $70 from $60, saying in a note to clients that Chief Executive Officer J. Michael Pearson’s “strong strategic vision and the ongoing execution bode well for value creation at Valeant.”

     The S&P/TSX Financials Index advanced as the country’s three largest banks climbed. Bank of Nova Scotia, the third- biggest lender by assets, increased 0.6 percent to C$51.71.

Canadian Imperial Bank of Commerce, the fifth-largest bank, rose

0.5 percent to C$74.99. Sun Life Financial Inc., Canada’s third- biggest insurer, gained 0.9 percent to C$19.81.

     Trucking company TransForce Inc. rallied 7.7 percent, the most since October 2010, to C$14.85 after Walter Spracklin, an analyst at Royal Bank, raised his rating on the shares to “top pick” from “outperform.”

     “The company has now assembled a group of assets that are high-quality in nature,” Spracklin wrote in a note to clients.

TransForce “shares are not being properly valued by the marketplace.”

     Rare Element Resources Ltd., which is developing a rare- earths project in Wyoming, advanced 18 percent to C$6.85 to extend its six-day surge to 109 percent. The shares jumped after the company said Jan. 4 that it had more resources on its property than previously disclosed. The six-day climb was the biggest since 2001.

     Imax Corp., the maker of giant-screen movie-projection systems, climbed 5.8 percent to C$20.71 after the Wall Street Journal’s “Heard on the Street” column said its profits are likely to increase.

US

By Rita Nazareth

     Jan. 9 (Bloomberg) — U.S. stocks advanced, extending last week’s rally for the Standard & Poor’s 500 Index, as European leaders discussed shoring up the region’s currency and investors awaited the start of the fourth-quarter earnings season.

     Measures of industrial, energy and financial shares had the biggest gains in the S&P 500 among 10 groups. Alcoa Inc., the largest U.S. aluminum producer, increased 2.9 percent before reporting its quarterly results. Broadcom Corp. rallied 2.5 percent as Deutsche Bank AG said soft fourth-quarter results for chipmakers create a buying opportunity for the industry.

     The S&P 500 rose 0.2 percent to 1,280.70 at 4 p.m. New York time. The benchmark gauge for American equities gained 1.6 percent last week, the second-best start of a year since 2006.

The Dow Jones Industrial Average climbed 32.77 points, or 0.3 percent, to 12,392.69. About 6 billion shares changed hands on U.S. exchanges, or 16 percent below the three month-average.

     “We’ll see some earnings growth this year, but not a lot,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co, which has more than $107 billion in client assets. “As long as U.S. fundamentals continue to move in a positive direction and as long as investors are comforted by the actions taken to maintain liquidity in Europe, the markets will be more complacent.”

     Equities rose as German Chancellor Angela Merkel and French President Nicolas Sarkozy sought to craft a plan for rescuing the euro over the next three months. Euro-area leaders may complete their new budget rulebook by Jan. 30, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis.                     

     U.S. corporations ended 2011 with the slowest profit growth in two years as the mending economy was met by a European slump that vexed companies more tied to global sales. S&P 500 companies, which beat analysts’ estimates in the previous 11 quarters, are forecast to report a 6 percent increase in per- share profit during the September-December period, according to projections compiled by Bloomberg.

     American companies “are the cleanest dirty shirt but we have to ask the question to what extent are they being hit on revenue and to what extent can they continue to contain costs,”

Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., the world’s largest manager of bond funds, said during an interview on Bloomberg Television’s “In the Loop” with Betty Liu.                        

     Alcoa, the first Dow company to announce results for the fourth quarter, rose 0.3 percent to $9.45 at 5:09 p.m. New York time, after gaining 2.9 percent to $9.43 in regular trading.

After the market close, Alcoa reported its first quarterly loss in more than two years as aluminum prices tumbled. The loss of 3 cents a share, excluding restructuring costs, matched the average projection from 18 estimates compiled by Bloomberg.

     Seven out of 10 groups in the S&P 500 rose today, led by industries most tied to the economy. Caterpillar Inc. added 1.4 percent to $97.10. Schlumberger Ltd. advanced 1.5 percent to $68.82. Bank of America Corp. increased 1.5 percent to $6.27.

     Semiconductor shares rallied after Deutsche Bank raised the industry to “overweight” from “equalweight.” Broadcom climbed 2.5 percent to $30.88. Intel Corp. gained 0.9 percent to $25.47. The Philadelphia Semiconductor Index rose 2 percent.

     Netflix Inc. surged 14 percent to $98.18, for the biggest advance in the S&P 500. The owner of the streaming and DVD-by- mail service forecast it will attract millions of subscribers within a few years to the Internet film and television service it started in the U.K. and Ireland today, taking on Amazon Inc.’s Lovefilm.

     Inhibitex Inc. soared 140 percent, the biggest gain in the Russell 2000 Index, to $23.70. Bristol-Myers Squibb Co. agreed to buy the Alpharetta, Georgia-based biopharmaceutical firm to boost its position in hepatitis C medicines.

     Other hepatitis C drug developers also rallied. Idenix Pharmaceuticals Inc. surged 37 percent to $9.66. Achillion Pharmaceuticals Inc. jumped 23 percent to $9.72.

     Costco Wholesale Corp. lost 2.6 percent to $79.01 after Sanford C. Bernstein & Co. cut its rating for the largest U.S.

warehouse-club chain to “underperform” from “market perform.”

     GameStop Corp. dropped 3.5 percent to $23.99. The world’s largest video-game retailer cut its fourth-quarter and year comparable sales forecast.

     CareFusion Corp. dropped 8.6 percent, the most in the S&P 500, to $23.28. The maker of infusion pumps and hospital supplies lowered the bottom end of its fiscal year earnings forecast.

     Rallies in stocks and gasoline will push prices toward the highest levels ever in 2012 even as U.S. Treasury yields hold near record lows.

     So say Douglas Kass of Seabreeze Partners Management Inc., Citigroup Inc.’s Edward L. Morse and Christopher Low of FTN Financial, forecasters whose predictions for equities, energy and bonds proved prescient in 2011. Repeating the feat with their calls for 2012 would require an unprecedented breakdown in price relationships across markets after correlations reached the tightest levels ever.

     “They can’t all be right,” Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus & Co., which oversees more than $107 billion in client assets, said in a telephone interview on Jan. 5. “Strategists provide a valuable role in the financial community, but flexibility of institutional and individual investors is paramount.”

Have a wonderful evening everyone.

Be magnificent!

The universe is not ruled by arbitrary, temporary martial law.

No force exists that is powerful enough to derail it, or to continue indefinitely on its own path unregulated,

like an outlaw who disrupts all harmony around him.  On the contrary, every force must return

to a state of equilibrium along a  preordained curve.  Waves rise, each to its own level,

with an apparent attitude of relentless rivalry, but only up to a certain point.  We can thus understand

the vast serenity of the sea, to which all the waves are connected,

and to which they must all subside in the rhythm of marvelous beauty.

 

-Rabindranath Tagore, 1861-1901

As ever, 

Carolann

Fall seven times,

stand up eight.

-Japanese Proverb

 

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

Tel: 778.430.5808

(C): 250.881.0801

Toll Free: 1.877.430.5895

Fax: 778.430.5838

www.carolannsteinhoff.com

Dear Friends,

Tangents: 

Poetry is a packsack of invisible keepsakes.

                                             -Carl Sandburg

Birthdays:

Carl Sandburg, January 6^th, 1878

Joan of Arc, January 6^th, 1412

Kahlil Gibran, January 6, 1883

Your children are not your children.

They are the sons and daughters of Life’s longing for itself.

They came through you but not from you,

And though they are with you yet they belong not to you.

You may give them your love but not your thoughts,

For they have their own thoughts.

You may house their bodies but not their souls,

For their souls dwell in the house of tomorrow, which you

cannot visit, not even in your dreams.

You may strive to be like them, but seek not to make them

like you.

For life goes not backward nor tarries with yesterday.

You are the bows from which your children as living arrows

are sent forth.

                     -Kahlil Gibran, 1883-1931

 

One of the books I read over the holidays is Herta Müller’s The Land of Green Plums, for which she won the Nobel Prize in Literature in 2009.  It is a haunting description of a group of young friends trying to find their way under the oppression of Ceaucescu’s Romania.  Hungary and Romania share the common history of Transylvania so it is disturbing to see what is happening on the political front in Hungary right now.  I was watching the protests in the streets on BBC last night.  I read Müller’s Nobel Prize acceptance speech after I read her novel and it is an amazing speech wherein she uses a handkerchief as a metaphor for so many things in life.  Her mother would always ask her in the morning when she left for school if she had her handkerchief, the metaphor for love. 

The Land of Green Plums is a remarkable insight into life before reforms in Eastern Europe, why we have to maintain steadfastly the fight for individual freedoms and defy the tyrants who would wish them away.  It is a story worth reading.

Market Commentary:

Canada

By Matt Walcoff

     Jan. 6 (Bloomberg) — Canadian stocks fell for the first time in six days after U.S. payrolls rose less than a private report had signaled and German factory orders declined the most in almost three years.

     Talisman Energy Inc., an energy producer with operations in North America, the North Sea and Indonesia, decreased 5.4 percent after an analyst at Sanford C. Bernstein & Co. cut his share-price estimate. Royal Bank of Canada, the country’s biggest lender by assets, declined 0.6 percent as Canada’s unemployment rate increased. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, lost

2.3 percent after extending production cuts.

     The Standard & Poor’s/TSX Composite Index slipped 48.76 points, or 0.4 percent, to 12,188.64, reducing its weekly rally to 2 percent.

     “People had expectations for jobs to surprise to the upside” in the U.S., Philip Petursson, managing director of the Portfolio Advisory Group at Manulife Asset Management, said in a telephone interview from Toronto. The unit of Manulife Financial Corp. oversees about $217 billion. “So there wasn’t any reason to jump up and down and be overly enthusiastic about this jobs number. Global growth is moderating.”

     The index climbed this week as raw-materials and energy stocks gained on economic data indicating strengthening global manufacturing and ADP Employer Services’ U.S. payrolls estimate.

Resources companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data. The U.S. accounted for 75 percent of Canadian exports in 2010, according to Statistics Canada.                         

     U.S. nonfarm employment increased by 200,000 in December as private payrolls grew by 212,000, the Labor Department said today in Washington. ADP had estimated a gain of 325,000 jobs yesterday. Canada’s unemployment rate rose to 7.5 percent from

7.4 percent in November, Statistics Canada said today.

     Orders from German factories slumped 4.8 percent in November, the Economy Ministry said today in Berlin. Economists had forecast a decline of 1.8 percent, according to the median estimate in a Bloomberg survey.

     The S&P/TSX Energy Index retreated as oil futures fell for a second day on the New York Mercantile Exchange. Penn West Petroleum Ltd., a western Canadian oil and gas producer, slipped

2.1 percent to C$21. Oil-sands developer MEG Energy Corp.

declined 2.5 percent to C$40.64.

     Talisman Energy dropped 5.4 percent to C$12.68. Bob Brackett, an analyst at Bernstein, reduced his 12-month share- price estimate to C$14 from C$15, saying in a note to clients that warm weather will weaken demand for natural gas.                        

     Canadian bank and insurance stocks fell. Royal Bank dropped

0.6 percent to C$52.05. Canadian Imperial Bank of Commerce, the country’s fifth-largest lender by assets, lost 0.7 percent to C$74.65. Intact Financial Corp., Canada’s biggest property and casualty insurer, decreased 1.9 percent to C$57.39.

     Potash Corp. lost 2.3 percent to C$42.94 after saying it will shut its Allan, Saskatchewan, mine for four weeks beginning Feb. 4. The company halted production at its Rocanville mine for six weeks on Dec. 25 and plans to suspend its Lanigan mine for eight weeks on Jan. 8.

     Gold futures retreated for the first time in five days as the U.S. Dollar Index climbed to the highest since 2010.

Goldcorp Inc., the world’s second-largest producer of the metal by market value, lost 1.6 percent to C$45.20. Iamgold Corp., which mines in West Africa, South America and Quebec, dropped

2.6 percent to C$17.03.

     Magna International Inc., Canada’s largest auto-parts maker, rallied 7.3 percent to C$37.28. In a note dated yesterday, Neil Forster, an analyst at Bank of Nova Scotia, raised his earnings estimates for the company and boosted his 12-month share-price forecast to $61 from $60. Forster cited General Motors Co. and Ford Motor Co.’s estimates for sales increases this year in a note to clients.

     Rare Element Resources Ltd., which is developing a rare- earths project in Wyoming, soared 18 percent to C$5.83 to extend its weekly surge to 77 percent, the most in three years. The company said Jan. 4 that it had more resources on its property than previously disclosed.

US

By Nikolaj Gammeltoft and Ksenia Galouchko

     Jan. 6 (Bloomberg) — U.S. stocks fell as better-than- forecast jobs growth and a drop in the unemployment rate failed to extend a weekly rally and lift the Standard & Poor’s 500 Index above its October high.

     Goldman Sachs Group Inc. and Morgan Stanley fell more than

1.2 percent after analysts lowered the banks’ fourth-quarter earnings estimates. Bank of America Corp. lost 2.1 percent after surging 8.6 percent yesterday. Alcoa Inc., due to start the earnings season on Jan. 9, slid 2.1 percent after saying it will close 12 percent of its global smelting capacity.

     The S&P 500 fell 0.3 percent to 1,277.81 at 4 p.m. New York time. The index snapped a three-day advance, trimming its gain for the week to 1.6 percent. The Dow Jones Industrial Average dropped 55.78 points, or 0.5 percent, to 12,359.92 today.

     “It’s definitely a solid report, but not a blowout surprise,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about

$44 billion, said in a phone interview. “The drop in the unemployment rate is good news, but it may reflect sluggishness in the labor force growth and it suggests that from a policy perspective we still have a lot of work to do.”

     The S&P 500 has jumped 16 percent from its 2011 low as better-than-expected economic data boosted optimism that the world’s largest economy can weather Europe’s sovereign-debt crisis. The rally has brought the index toward the top of a trading range it has be stuck in since August.                         

     U.S. employers added 200,000 workers to payrolls in December, Labor Department figures showed in Washington, more than the 155,000 gain projected in a Bloomberg News survey. The unemployment rate unexpectedly fell to 8.5 percent, the lowest since February 2009. The growth in payrolls did not beat estimates by as wide a margin as data from ADP Employer Services yesterday that helped trigger gains in equities.

     Equities also dropped earlier as German factory orders fell

4.8 percent, the biggest decline in almost three years, fueling concern that Europe was heading into a recession.     Most U.S. stocks rose yesterday as banks rallied and a private report showed payrolls climbed, offsetting reduced profit forecasts at companies including Target Corp. and J.C.Penney Co.

     Alcoa fell 2.1 percent, the most in the Dow, to $9.16. The biggest U.S. aluminum producer said yesterday it would close 12 percent of its smelting capacity amid falling prices. Alcoa is scheduled to mark the unofficial start of the fourth-quarter earnings season next week. Profit at S&P 500 companies rose 6 percent during the September-December period, according to analyst estimates compiled by Bloomberg, which would mark the slowest growth since the third quarter of 2009.                        

     Financial shares dropped 0.6 percent as a group in the S&P 500. Bank of America lost 2.1 percent, the second-most in the Dow, to $6.18. It surged 8.6 percent yesterday amid speculation the U.S. may introduce a new mortgage refinancing program. The shares retreated today after an Obama administration official, who asked for anonymity, denied that the White House is considering a trillion-dollar plan to refinance home loans.

     Goldman Sachs slipped 1.2 percent to $93.42, while Morgan Stanley lost 2.3 percent to $15.90. The major U.S. banks most reliant on trading had their earnings estimates reduced by analysts at Sanford C. Bernstein & Co. and Ticonderoga Securities LLC as a weak fourth quarter dimmed prospects for a capital-markets rebound in the first half of 2012. Meredith Whitney Advisory Group LLC also cut fourth-quarter estimates on the banks.                     

     Family Dollar Stores Inc. fell 7.5 percent to $53.63 for the biggest retreat in the S&P 500. The discount retailer reported fiscal first-quarter revenue of $2.15 billion, missing the average analyst estimate of $2.17 billion. Comparable store sales increased 4.1 percent, compared with the average analyst estimate of 4.9 percent.

     Stocks of companies that rely on consumer discretionary spending had the biggest gain among S&P 500 industries, rising 0.2 percent as a group.

     J.C. Penney advanced 3.5 percent to $34.96 after being raised to “outperform” from “neutral” at Macquarie Group Ltd. The third-largest department-store chain lost 2.7 percent yesterday after cutting its fourth-quarter profit forecast, citing declining sales and deeper discounts than anticipated during the holiday season.

     Best Buy Co. gained 3.3 percent to $24.22. The world’s largest consumer-electronics retailer posted a same-store sales drop in December that was in line with analysts’ estimates and repeated its forecast for profit this year.

     With the S&P 500 this week approaching its highest closing since Oct. 28 and Aug. 1, chart levels fixated investors today.

     The S&P 500 ended yesterday at 1,281.06, within 0.4 percent of its highest level since Aug. 1. Its relative strength index, a measure of how fast prices have risen in the last two weeks, was 61.2. Readings above 70 are considered by some traders as evidence a rally has been too rapid.

     “The feeling in the market is that we need more catalysts to break above the resistance levels we are bumping up against right now,” Dan McMahon, director of equity trading at Raymond James Financial Inc. in New York, said in a telephone interview.“We’re in the high end of the trading range that we’ve been stuck in since August.”

Have a wonderful weekend everyone.

Be magnificent!

The energy in the world flows from God at the centre, and back to God.

The sages see life as a wheel, with each individual going round and round through birth and death.

Individuals remain on this wheel so long as they believe themselves to be separate;

but once they realize their unity with God, then they break free.

 

                                           -Svetasvatara Upanishad

 

As ever, 

Carolann 

Sometimes, when one person

is missing, the whole world

seems depopulated.

  -Alphonse de Lamartine, 1790-1869

 

 

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

Tel: 778.430.5808

(C): 250.881.0801

Toll Free: 1.877.430.5895

Fax: 778.430.5838

www.carolannsteinhoff.com

 

Dear Friends,

 Tangents:  First day back after the holiday break and wish to extend my very best wishes to you and yours for a HAPPY AND PROSPEROUS NEW YEAR!

We arrived back from South East Asia yesterday afternoon, where preparations for the Chinese New Year (January 23rd this year), are well underway.    This is the Year of the Dragon:  “A symbol of power, strength and luck, the dragon is an auspicious figure in Chinese mythology.  In the Year of the Dragon, one can expect harmony and fulfillment, riches and longevity.  It is a time to reflect on one’s good fortunes, as the Year of the Dragon may bring about a significant breakthrough; it may even be the dawn of a new era.”

…and may it be so.

Photos of the day 

January 5, 2012

Mount Etna spews volcanic ash during an eruption on the southern Italian island of Sicily. Mount Etna is Europe’s tallest and most active volcano. Antonio Parrinello/Reuters

Market Commentary:

Canada

By Matt Walcoff

Jan. 5 (Bloomberg) — Canadian stocks rose for a fifth day, the longest winning streak since August, as gold’s four-day rally spurred gains in raw-material producers.

Iamgold Corp., which mines in West Africa, South America and Quebec, advanced 4.3 percent as tension increased between Western nations and Iran over the country’s threat to block the Strait of Hormuz. Canadian Natural Resources Ltd., the country’s second-largest energy company by value, lost 1.3 percent as natural gas and oil futures dropped. First Quantum Minerals Ltd. rallied 4.4 percent after settling an African legal dispute.

The Standard & Poor’s/TSX Composite Index climbed 10.93 points, or 0.1 percent, to 12,237.40.

“Gold is still in a long-term uptrend,” said Robert “Hap” Sneddon, president of money manager CastleMoore Inc. in Oakville, Ontario, and president of the Canadian Society of Technical Analysts. “People have been waiting for any sort of correction or stability from $1,900 down to start to pick away. When people look at gold producers at this level, people say the risk/reward is pretty good if we get back to those record highs.”

The index has gained 4.3 percent in the last five days as raw-materials and energy stocks advanced after economic data in the U.S., Europe and China surpassed economists’ forecasts. The two industries make up 48 percent of Canadian equities by market value, according to data compiled by Bloomberg. The S&P/TSX tumbled 11 percent in 2011 on concern the European debt crisis will limit global growth.

Gold futures extended their streak of advances to the longest in 10 weeks after U.K. Defense Secretary Philip Hammond said the country may take military action against Iran if it blocks the Strait of Hormuz.                      

Iamgold increased 4.3 percent to C$17.48. Osisko Mining Corp., which produces gold in Quebec, climbed 3.4 percent to C$10.39. Gabriel Resources Ltd., which is developing a gold project in Romania, rebounded 8.5 percent to C$6.67 after sinking 7 percent yesterday.

Oil futures retreated on the New York Mercantile Exchange after settling at the highest price since May yesterday. Natural gas fell to the lowest settlement price since September 2009.

Canadian Natural decreased 1.3 percent to C$39.34. Crescent Point Energy Corp., a western Canadian oil and gas producer, slipped 1.5 percent to C$45.43. Talisman Energy Inc., an oil and gas company with operations in North America, the North Sea and Indonesia, dropped 1.6 percent to C$13.41.                   

Enbridge Inc., Canada’s largest pipeline company, gained 1.6 percent to C$37.89. In a note to clients dated yesterday, Matthew Akman, an analyst at Bank of Nova Scotia, raised his 12- month price estimate on the shares to C$42 from C$40, writing that Enbridge’s expansion may lead to faster growth than the company has forecast.

Artek Exploration Ltd., an energy producer with operations in Canada, surged 27 percent, the most since September 2009, to C$2.90 after selling some assets in Alberta for C$19.5 million ($19.1 million). First Quantum jumped 4.4 percent to C$21.98. Eurasian Natural Resources Corp. agreed to acquire the company’s assets in the Democratic Republic of Congo for $1.25 billion, ending a legal dispute between the two over the Kolwezi copper project.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, advanced 1.2 percent to C$43.96 after Plymouth, Minnesota-based peer Mosaic Co. said it expects record global potash shipments in 2012.

Coal producer Cline Mining Corp. soared 21 percent, the most since May 2010, to C$2.07 after saying it won regulatory approval to mine the Blue Seam at its New Elk coal property in Colorado.

US

By Nikolaj Gammeltoft and Ksenia Galouchko

Jan. 5 (Bloomberg) — Most U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third day, as a rally by banks and improving jobs data offset reduced profit forecasts at companies including Target Corp. and J.C. Penney Co.

Citigroup Inc. and JPMorgan Chase & Co. rallied at least 1.2 percent after Deutsche Bank AG saw “encouraging signs” for the industry’s fourth-quarter earnings. Bank of America Corp. soared 8.6 percent amid speculation that the Obama administration may introduce a nationwide loan refinancing program. Target and J.C. Penney lost more than 2.6 percent. Chevron Corp. slipped 1 percent as oil prices tumbled.

About three shares rose for every two that fell on U.S. exchanges as of 4 p.m. New York time. The S&P 500 climbed 0.3 percent to 1,281.06, after tumbling as much as 0.9 percent earlier. The Dow Jones Industrial Average dropped 2.72 points, or less than 0.1 percent, to 12,415.70 today.

“We’re starting to see better data in the U.S. as opposed to the obsession with Europe that we’ve seen all of last year,” Donald Selkin, the chief market strategist at National Securities Corp. in New York, said in a telephone interview. “People are seeing that our economy will definitely not fall into the recession. Now you can see that there’s a separation between what’s happening here, which is better, and Europe, which is still projected to go into recession.”

The S&P 500 closed at a two-month high yesterday and the Dow Jones Industrial Average reached its highest level since July after gaining during the first two trading sessions of the year on signs of manufacturing growth and improving sales at carmakers and retailers.

Financial shares rose the most among 10 S&P 500 groups today, reversing earlier losses. The KBW Bank Index added 2.2 percent. JPMorgan increased 2.1 percent to $35.68, Citigroup added 1.2 percent to $28.51, while SunTrust Banks Inc. rallied 5.4 percent to $19.66.

Fourth-quarter earnings reports from the largest U.S. banks should include some “encouraging signs” including accelerating loan growth, higher mortgage revenues and improving credit, Deutsche Bank analyst Matt O’Connor said in a note to clients.

Bank of America soared 8.6 percent, the most in the Dow and the biggest advance since October, to $6.31. The shares tumbled 1.7 percent in after-market trading as an administration official with knowledge of the matter said the White House has no plans for a new mass mortgage refinancing program. The Morgan Stanley Cyclical Index rose 0.4 percent, while the Dow Jones Transportation Average slipped 0.2 percent. Boeing Co. dropped 1.1 percent to $73.53. Walt Disney Co. jumped 1.7 percent to $39.50.

Target and J.C. Penney tumbled as retailers announced mixed December same-store sales results. Gap Inc., Target and Kohl’s Corp. reported sales that trailed analysts’ estimates after mistiming promotions or running out of inventory during a projected record holiday shopping season.

J.C. Penney dropped 2.7 percent to $33.97. The retailer forecast fourth-quarter earnings of 65 cents to 70 cents a share, less than the average analyst estimate of $1.08 a share.

Target lost 3 percent to $48.51. The second-largest U.S. discount retailer cut its fourth-quarter profit forecast to no more than $1.43 a share, below the average analyst estimate of $1.48, according to a Bloomberg survey. Macy’s Inc. added 3.9 percent to $33.92. The Cincinnati- based retailer reported a 6.2 percent increase in same-store sales, topping the 4.6 percent estimate.                    

Alcoa Inc. is scheduled to mark the unofficial start of the fourth-quarter earnings season on Jan. 9. Profit at S&P 500 companies rose 6.2 percent during the September-December period, according to analyst estimates compiled by Bloomberg, which would mark the slowest growth since the third quarter of 2009.

Stock futures pared early losses after ADP Employer Services said payrolls increased by 325,000 last month, topping the median economist forecast for growth of 178,000 jobs. Applications for jobless benefits decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department figures showed today.

The median estimate of 38 economists in a Bloomberg News survey forecast 375,000 claims. The data comes before tomorrow’s payrolls report from the Labor Department.

“On the surface these are positive numbers ahead of tomorrow’s jobs report,” James Gaul, a money manager at Boston Advisors LLC in Boston, said in a telephone interview. His firm oversees about $2 billion. “The market is trying very hard to be constructive here,” he said. “Everything is still seen in the context of whether the austerity measures taken in Europe force a global recession that will impact U.S. businesses.”                         

Global stocks fell earlier as France sold 7.96 billion euros ($10.2 billion) of debt, with borrowing costs rising in its first auction of the year. UniCredit SpA retreated for a second day after Italy’s biggest bank yesterday announced plans to hold a rights offer to boost capital. The lender is selling shares at a 43 percent discount because of a deepening in the debt crisis, Chief Executive Officer Federico Ghizzoni told Il Sole 24 Ore.

Monsanto Co. rose 5.5 percent to $76.68. The world’s largest seed company posted first-quarter earnings that exceeded estimates as Latin American farmers grew more genetically modified corn and said U.S. orders are ahead of last year.

LSI Corp. gained the second-most in the S&P 500, rallying 7.7 percent to $6.70. The maker of chips used in computer disk drives was raised to “outperform” from “neutral” at Wedbush Securities, which cited better-than-estimated hard drive disk shipments last quarter.                       

Energy companies had the biggest drop as a group among 10 S&P 500 industries, losing 0.6 percent. Chevron slipped 1 percent to $109.10 as oil prices tumbled 1.4 percent.

Tesoro Corp. fell 5.9 percent to $22.60. The largest independent refiner on the U.S. West Coast said it lost 55 cents to 80 cents a share in the fourth quarter, missing analysts’ forecasts for a profit.

MetroPCS Communications Inc. sank 8.9 percent to $8.01 for the biggest drop in the S&P 500. The Texas-based pay-as-you-go wireless carrier said it added 197,000 net new users in the fourth quarter. Analysts predicted 223,000 on average.

Eli Lilly & Co. slumped 1 percent to $40.30. The maker of the antipsychotic Zyprexa provided a 2012 earnings forecast that missed analyst estimates.

Barnes & Noble Inc. tumbled 17 percent to $11.24. The largest U.S. bookstore said it will lose as much as $1.40 a share in fiscal 2012, after previously projecting a loss of a maximum of 50 cents a share. Sales of its Nook Simple Touch trailed its estimates during the holiday shopping season.                    

U.S. stocks will return at least 10 percent in 2012, beating foreign markets for a third year, while Treasury yields climb, according to BlackRock Inc.’s Bob Doll. The S&P 500 may exceed 1,350 this year, he said at a BlackRock presentation in New York today. The stock index ended 2011 at 1,257.60.

Health-care and energy stocks will perform better than utilities and financials, he said. Doll expects dividends and stock buybacks to rise by 20 percent or more this year. “If companies continue to deliver — and there are a lot of reasons why they are — stocks should continue to do well,” Doll said.

Have a wonderful evening everyone.

Be magnificent!

All humanity shares the sunlight; that sunlight is neither yours nor mine.

It is the life-giving energy, which we all share.

The beauty of a sunset, if you are watching it sensitively, is shared by all human beings.

 

-Krishnamurti, 1895-1986

As ever,

Carolann

In the realm of ideas, everything depends on

enthusiasm; in the real world, all rests on

perseverance.

-Johann Wolfgang von Goethe, 1749-1832 

 

Dear Friends,

“You must take your chance.”

           — William Shakespeare

 

Market Commentary

 

 

Canada

 By Matt Walcoff

 Jan. 3 (Bloomberg) — Canadian stocks rose the most since Nov. 30 as oil and metals gained after indexes of U.S., U.K. and Chinese manufacturing surpassed most economist forecasts and German unemployment fell to a 20-year low.

Suncor Energy Inc., Canada’s largest oil and gas producer, increased 5.5 percent as crude futures advanced after Iran said it produced its first nuclear fuel rod. Barrick Gold Corp., the world’s biggest gold producer, climbed 4.5 percent as the U.S. Dollar Index declined the most in a month. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, rallied 5.1 percent after an analyst at Susquehanna Financial Group raised his rating on the shares.

The Standard & Poor’s/TSX Composite Index rose 253.34 points, or 2.1 percent, to 12,208.43, the highest close since Nov. 15. “Manufacturing globally looks like it’s picking up,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($991 million). “As we get more comfortable the world isn’t going to fall apart, investors will increasingly be tolerant of taking on more risk in their portfolios.”

Canada’s benchmark index retreated 11 percent in 2011, led by raw-materials and energy producers, on concern the European debt crisis will hamper global growth. The two industries make up 47 percent of Canadian stocks by market value, according to Bloomberg data. The Institute for Supply Management’s U.S. manufacturing index advanced to 53.9 in December from 52.7 the previous month, the Tempe, Arizona-based organization said today. Economists had forecast an increase to 53.5, according to the median estimate in a Bloomberg survey.

 The euro gained today after Germany said unemployment dropped to 6.8 percent last month, the lowest since at least 1991, from 6.9 percent in November. Most economists in a Bloomberg survey had forecast no change.

U.K. and Chinese purchasing managers’ indexes exceeded most economists’ estimates in Bloomberg surveys as well. The factory index for China indicated expansion, while all 15 surveyed economists had forecast a second-straight month of contraction. Stocks extended their advances after the U.S. Federal Reserve said some members of its Federal Open Market Committee “indicated that current and prospective economic conditions could well warrant additional policy accommodation” at their Dec. 13 meeting. Crude oil rallied to the highest settlement price since May on the New York Mercantile Exchange. Suncor gained 5.5 percent to C$31. Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, rose 4.5 percent to C$39.86. Oil-sands developer BlackPearl Resources Inc. surged 9.5 percent to C$4.50.

 Vero Energy Inc., a western Canadian oil and gas producer, soared a record 27 percent to C$2.65 after saying it will sell some assets for C$209 million. Gold futures advanced the most in 10 weeks on the Comex in New York. Barrick increased 4.5 percent to C$48.13. Kinross Gold Corp., Canada’s third-largest gold producer by market value, climbed 6.8 percent, the most since May 2010, to C$12.42. Banro Corp., which explores for gold in Africa, jumped 10 percent to C$4.17.

Base-metals and coal producers in the S&P/TSX gained as copper futures advanced for a third day. Teck Resources Ltd., Canada’s largest company in the industry, increased 6.9 percent to C$38.37. First Quantum Minerals Ltd., the country’s second- biggest publicly traded copper producer, rose 4.4 percent to C$20.94. Lundin Mining Corp., which produces base metals in Europe, surged 9 percent to C$4.22.

 Potash Corp. gained 5.1 percent to C$44.26 after Don Carson, an analyst at Susquehanna, boosted his rating on the shares to “positive” from “neutral.” “We see strong grower demand this coming spring based on our expectation of increased corn acreage planted in the U.S.,” Carson wrote in a note to clients. Agrium Inc., a fertilizer producer and farm retailer, rallied 5.5 percent to C$72.11 as corn futures climbed to the highest since November on the Chicago Board of Trade.

The S&P/TSX Financial Index advanced to a two-month high. Royal Bank of Canada, the country’s largest lender by assets, rose 1.6 percent to C$52.82. Bank of Nova Scotia, Canada’s third-biggest lender, increased 1.5 percent to C$51.59. Manulife Financial Corp., North America’s fourth-largest insurer, climbed 3.2 percent to C$11.20.

 BlackBerry maker Research In Motion Ltd. rallied 5.9 percent to C$15.67 after the Financial Post said the company “is preparing to unveil a corporate shakeup.” Barbara Stymiest, a former TMX Group Inc. chief executive officer and current RIM board member, “is believed to be the leading candidate” to replace co-chairmen Jim Balsillie and Mike Lazaridis as head of the board, the Toronto-based newspaper said, citing unnamed sources familiar with the matter. RIM shares plunged a record 75 percent in 2011.

US

 By Stephen Kirkland and Ksenia Galouchko

 Jan. 3 (Bloomberg) — Stocks surged, driving the Dow Jones Industrial Average to the highest level since July, and commodities rallied on signs of increasing manufacturing output around the world. The dollar weakened and U.S. Treasuries fell.

The Dow increased 177.02 points, or 1.5 percent, to 12,394.58 and the S&P 500 jumped 1.5 percent to 1,276.85, the highest level since October, according to preliminary closing figures at 4 p.m. in New York. The Stoxx Europe 600 Index added 1.6 percent and closed at a five-month high. The Dollar Index fell 0.8 percent, while 10-year Treasury yields increased eight basis points to 1.95 percent. Oil settled at an almost eight- month high near $103 a barrel as 23 of 24 commodities tracked by the S&P GSCI Index rose. Financial, industrial and commodity shares led the S&P 500’s gain as the Institute for Supply Management’s factory index topped estimates and government data showed construction spending grew at more than twice the forecast rate. Factory output in Australia grew for the first time in six months and reports in the past two days showed a pickup in Chinese and Indian manufacturing. “You’re starting to see people want to take more risks,”

Frank Ingarra, who helps manage the Can Slim Select Growth Fund at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a telephone interview. His firm oversees $1.4 billion. “Manufacturing data has been pretty decent.”

  All 10 of the main industry groups in the S&P 500 advanced today except for utilities, which climbed 15 percent last year for the biggest gain. Financials, the worst-performing group in 2011 with an 18 percent drop, led gains today. Bank of America Corp., Alcoa Inc., JPMorgan Chase & Co. and Caterpillar Inc. helped the Dow extend its 5.5 percent 2011 advance.

The ISM’s manufacturing index rose to 53.9 in December from 52.7 a month before, above the reading of 50 that signals growth and topping the 53.5 median projection of economists in a survey. Construction spending climbed 1.2 percent in November, Commerce Department data showed. Forecasters at securities firms are more conservative on U.S. stocks than any time in seven years, predicting the S&P 500 will rise 6.4 percent to 1,338 in 2012 as budget deficits around the world limit gains. That’s the smallest predicted return since 2005. Adam Parker of Morgan Stanley, whose estimate for 2011 proved the most accurate among current analysts, forecast a loss of 7.2 percent as Europe’s debt crisis will keep volatility above historical levels. Federal Reserve officials will for the first time make public their own forecasts for the federal funds rate at their Jan. 24-25 meeting, minutes from the December 13 Federal Open Market Committee said today. FOMC “participants decided to incorporate information about their projections of appropriate monetary policy” into their Summary of Economic Projections starting with their next meeting, the minutes said.

 The Stoxx 600 climbed to the highest level since August as the U.K.’s FTSE 100 Index and the Swiss Market Index, both of which were closed yesterday for a holiday, climbed more than 1.9 percent to lead gains in the region.

Rio Tinto Group led a rally in mining companies, gaining 6.4 percent. Afren Plc jumped 20 percent as the U.K. energy explorer focused on Africa said production topped its forecasts. The MSCI All-Country World Index sank 9.4 percent last year, the most since 2008, as Europe’s debt crisis hurt global growth. The S&P 500 Index closed the year almost unchanged, slipping less than 0.1 percent, to beat benchmark indexes in all 24 developed markets except for Ireland.

 A benchmark gauge of U.S. company credit risk dropped to the lowest level in two months. The Markit CDX North America Investment Grade Index of credit-default swaps, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, decreased 1.8 basis points to a mid-price of 118.5 basis points. The index fell as low as 117.6, the least since Oct. 31. Contracts on Bank of America Corp. and Goldman Sachs Group Inc. also fell. The dollar weakened 0.9 percent today to $1.3055 per euro, which appreciated 0.6 percent against the yen after falling to an 11-year low yesterday. The yen weakened against 14 of its 16 most-traded peers monitored by Bloomberg, while the New Zealand dollar strengthened versus all but two of its major counterparts. Moves by the Fed to flood the world with dollars are doing little to dent the currency’s value, bolstering the appeal of U.S. assets at a time when the government needs the support of foreign investors the most.

 The U.S. Dollar Index appreciated 13 percent from a record low in March 2008 through the end of 2011 even as the Fed kept interest rates at about zero and printed cash to buy $2.3 trillion of Treasury and mortgage-related bonds, and is little changed since 1991. The International Monetary Fund said Dec. 30 that the dollar’s share of global foreign-exchange reserves rose in the third quarter by the most since 2008. The 30-year Treasury yield rose 10 basis points to 2.99 percent today as improving economic data damped demand for the relative safety of U.S. government debt. Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs. Led by Japan’s $3 trillion and the U.S.’s $2.8 trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show.

Have a wonderful evening everyone!

 

As Always,

 

Kyle, for Carolann.

 

 

Dear Friends,

  

“…Champions keep playing until they get it right…”

           — Billie Jean King

 

 Photo of the Day:

The New Year’s Eve Ball, which measures 12 feet, weighs 11,875 pounds, and is adorned with 2,688 Waterford crystal triangles of various sizes is tested atop One Times Square in New York December 30, 2011. (Reuters)

Market Commentary 

  Canada

 By Matt Walcoff

 Dec. 30 (Bloomberg) — Canadian stocks rose, paring their first yearly loss since 2008, as financial and energy shares gained.

Toronto-Dominion Bank, Canada’s second-biggest lender by assets, increased 1.2 percent. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, advanced 1.4 percent. Canadian Pacific Railway Ltd., the country’s second-largest railroad, rallied 3.2 percent after a person familiar with the matter said its biggest shareholder urged the company to replace its chief executive officer. The Standard & Poor’s/TSX Composite Index rose 84.62 points, or 0.7 percent, to 11,926.32 at 1:48 p.m. Toronto time. “You’ve had a decline in the market of approximately 12 percent,” Robert McWhirter, a money manager at Selective Asset Management Inc. in Toronto, said in a telephone interview. McWhirter oversees about C$140 million ($138 million). “Meanwhile, earnings in Canada have risen at a time when you have had declining bond yields. That should make yields on bank stocks and stocks in general more attractive.” The S&P/TSX lost 12 percent this year through yesterday as energy and raw-materials producers retreated on concern the European debt crisis will hamper global growth. The index is set to end December with its ninth monthly drop of the year, the most since 1981. The yield on 10-year Canadian government bonds fell to a record-low close on Dec. 19. The S&P/TSX trades at 14.4 times earnings, 23 percent below its 10-year average.

 The S&P/TSX Financials Index narrowed its annual decline. TD rose 1.2 percent to C$76.18, extending a third-straight yearly gain. Royal Bank of Canada, its bigger domestic rival, increased 0.9 percent to C$51.93. Sun Life Financial Inc., Canada’s third-largest insurer, advanced 3.5 percent to C$18.79 after slumping 40 percent this year through yesterday.

 Energy stocks in the S&P/TSX climbed as crude futures completed a third-straight yearly increase. Canadian Natural rose 1.4 percent to C$37.99. Suncor Energy Inc., the country’s largest oil and gas producer, gained 1 percent to C$29.40.

Nexen Inc., an energy producer with operations on five continents, advanced 3.5 percent to C$16.16. Shares of the Calgary-based company are set for their first back-to-back annual losses since 1986. CP rallied 3.2 percent to C$68.64 after the person familiar with the matter said William Ackman’s Pershing Square Capital Management LP wants the railroad to hire Hunter Harrison as CEO. Harrison, the former chief of Canadian National Railway Co., would replace Fred Green, said the person, who asked not to be identified because the details are private. CN, Canada’s largest railroad, climbed for a seventh day, increasing 1.5 percent to C$80.09 after surging 19 percent this year through yesterday.

 US

 By Inyoung Hwang and Katia Porzecanski

 Dec. 30 (Bloomberg) — U.S. stocks fell, leaving the Standard & Poor’s 500 Index little changed for the year, as concern over Europe’s debt crisis overshadowed optimism that the American economy will expand in 2012.

The S&P 500 fell 0.4 percent to 1,257.61 at 4 p.m. New York time, according to preliminary closing data. “Today’s another day of worry for Europe and there’s some concern Europe hasn’t quite gotten their act together yet,” Uri Landesman, who helps oversee more than $1 billion as managing general partner of New York-based hedge fund Platinum Partners LLP, said in a telephone interview.

 An 11 percent rally since the end of September resulted in the best fourth quarter for the S&P 500 since 2003. Both the S&P 500 and the Dow were among the 10 best performers this year among 91 national indexes tracked by Bloomberg. Still, Wall Street strategists’ average forecast at the beginning of the year that the S&P 500 would rise to 1,371 in 2011 proved 9 percent too high, according to a Bloomberg News survey. Forecasters predict the index will advance to 1,348 next year. The S&P 500 started the year with a rally, rising as much as 8.4 percent to a three-year high by the end of April and extending its rebound from a March 2009 bear-market low to 102 percent. The index tumbled throughout the summer as Congress and President Barack Obama struggled over U.S. deficit cuts, and sank further amid concern that Europe’s debt crisis was threatening the global economic recovery. The S&P 500 fell as much as 19 percent from April to its low for the year on Oct. 3.

The market rebounded amid tumbling valuations and data signaling that the world’s largest economy was weathering Europe’s crisis. The U.S. unemployment rate fell to 8.6 percent in November, the lowest since March 2009, after lingering at 9 percent or above for seven straight months.

 The S&P 500’s price-earnings multiple reached the lowest level in more than two years on Oct. 3, falling to 11.6, a 27 percent decline from its high in February of 15.8. The measure’s average valuation was 14.1 in 2011. The S&P 500 rose 1.1 percent yesterday amid further signs of strength in the U.S. economy. Stock fell today after Spain said its budget deficit will reach 8 percent of gross domestic product this year, more than the previous forecast of 6 percent. Luxembourg’s Jean-Claude Juncker, who leads the group of euro- area finance ministers, said economic growth in the euro region “isn’t good” and the world economy is growing only in some Asian and African countries. China’s official Xinhua News Agency reported the world’s second-largest economy may face “downside pressure” next year, even though growth will be more than 9 percent in 2011. “The story of this year is really interesting outperformance of the U.S. equity market versus everything else,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1 billion, said in a telephone interview. “If you strip financials and materials out of the U.S., you had a pretty good year.”

 Happy New Year Everyone! 

 

Dear Friends,

 

  “Fast is fine, but accuracy is everything.”

           — Xenophon

 

   Photo of the Day:

A priest walks inside a snow church in the Bavarian village of Mitterfirmiansreut, December 28, 2011. (Reuters/Peter Josek)

Market Commentary

 Canada

 By Matt Walcoff

 Dec. 29 (Bloomberg) — Canadian stocks rose, trimming the year’s decline, as gold stocks gained after the U.S. Dollar Index erased the day’s gains and financial and energy companies advanced on data indicating a strengthening U.S. economy.

 Barrick Gold Corp., the world’s largest gold producer, rallied 1.8 percent after the Financial Times said European Parliament members proposed a “road map” to the issuance of common euro-region bonds. Royal Bank of Canada, the country’s biggest lender by assets, increased 1.2 percent as an index of U.S. business activity fell less than economists forecast. Suncor Energy Inc., Canada’s largest oil and gas producer, climbed 2 percent as crude futures rose. The Standard & Poor’s/TSX Composite Index gained 113.29 points, or 1 percent, to 11,841.70. “Data has been relatively good when you compare to what people’s expectation was and what’s going on in Europe,” 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$3.3 billion ($3.2 billion) for clients. “The U.S. seems to be a better story. Canada’s biggest trading partner is the U.S. If the U.S. does start to get some traction, that should benefit Canada.” The S&P/TSX has tumbled 12 percent this year, led by energy and raw-materials producers, as the European debt crisis led to reductions in global economic-growth forecasts. The groups make up 47 percent of Canadian stocks by market value.

 The S&P/TSX Gold Index rebounded after closing at the lowest since July 2010 yesterday. The U.S. dollar fell and precious-metals shares gained after the Financial Times said members of the main European Parliament parties have proposed allowing so-called euro bonds as part of a new European Union treaty. The London-based newspaper cited a draft of the proposal and an interview with Guy Verhofstadt, the leader of the parliament’s Liberal group. Barrick rose 1.8 percent to C$46.07. Goldcorp Inc., the world’s second-biggest company in the industry by market value, advanced 2 percent to C$44.42. B2Gold Corp., which mines in Nicaragua, surged 8.8 percent to C$3.08.

 The S&P/TSX Financials Index gained after the Institute for Supply Management-Chicago Inc. said its business barometer retreated to 62.5 from 62.6 in November. Economists had forecast a reading of 61, according to the median estimate in a Bloomberg survey. Readings above 50 signal growth.

 U.S. pending home sales increased 7.3 percent in November, nearly five times as much as the median economist forecast in a Bloomberg survey, the National Association of Realtors said today in Washington. Royal Bank advanced 1.2 percent to C$51.47. Toronto- Dominion Bank, its largest domestic rival, climbed 0.7 percent to C$75.25. Manulife Financial Corp., North America’s fourth- largest insurer, rose 2.2 percent to C$10.68. Energy stocks gained with oil after the release of the U.S. economic data. Suncor advanced 2 percent to C$29.12. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, increased 1.7 percent to C$37.48. Oil- sands developer MEG Energy Corp. rallied 3.1 percent to C$41.08. Ivanhoe Energy Inc., which produces oil in China and Ecuador, jumped 16 percent to C$1.19. Shares of the Vancouver- based company have surged 57 percent since falling to a post- March 2009 low on Dec. 19, the first day after its removal from the S&P/TSX took effect. Robert Friedland, a co-founder of the company, said Dec. 14 that he resigned as chief executive officer.

 

US

 By Michael P. Regan and Rita Nazareth

 Dec. 29 (Bloomberg) — U.S. stocks rose, restoring the yearly gain for the Standard & Poor’s 500 Index, as data signaled the U.S. economy is weathering Europe’s debt crisis. The euro erased an earlier loss and European shares advanced. The S&P 500 climbed 0.8 percent to 1,259.85 at 2:51 p.m. in New York, leaving it up 0.2 percent for the year. The euro was little changed at $1.2942, after losing as much as 0.6 percent, and trimmed a 0.8 percent slide against the yen to 0.3 percent.

 Italy’s 10-year bond yield was up less than three basis points at 7.03 percent after climbing 13 basis points earlier. Ten-year U.S. Treasury rates lost three basis points to 1.89 percent. U.S. equities extended gains as an index of pending U.S. home sales rose more than economists forecast, while other reports showed stronger-than-projected growth in American business activity and a drop in jobless claims over the past month to a three-year low. European stocks fell earlier, while the euro touched a decade low against the yen and a 15-month low versus the dollar, after Italy raised less than its maximum target at a debt auction. “There has been a much better tone in the U.S.,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “We’re optimistic that corporate earnings can continue to be strong and that will be a driver of the market.”

 Financial stocks in the S&P 500 rose 1.2 percent as a group today to lead an advance in all 10 of the main industries as Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. rallied at least 1.8 percent. The group of 80 banks, insurers and investment firms has tumbled 18 percent this year for the worst performance among the 10 industries. PulteGroup Inc. and M/I Homes Inc. rose more than 5 percent to lead gains in all 12 companies in an S&P gauge of homebuilders. The National Association of Realtors’ index of pending home sales increased 7.3 percent to the highest level since April 2010. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg News survey. The four-week moving average for jobless claims, a less volatile measure than the weekly figures, dropped to 375,000 last week, the lowest level since June 2008, Labor Department figures showed. Applications rose for the first time in a month in the week ended Dec. 24, climbing by a more-than-forecast 15,000 to 381,000.

 Other data showed business activity in the U.S. expanded more than forecast in December, prompting companies to boost employment. The Institute for Supply Management-Chicago Inc.’s business barometer was 62.5. Readings above 50 signal growth. Economists forecast the gauge would fall to 61, according to the median of estimates in a survey. Yields on two-year and 30-year Treasuries were also little changed, trading at 0.27 percent and 2.90 percent respectively. U.S. Treasuries are up 9.6 percent in 2011, headed for their best year since 2008, according to Bank of America Merrill Lynch indexes. The ten-year yield reached a record low of 1.67 percent on Sept. 23. The S&P GSCI Index of commodities was little changed as natural gas, cocoa and gold fell at least 1 percent to help lead losses among 12 of 24 commodities. Gold for immediate delivery pared losses after falling as much as 2.1 percent to $1,522.65 an ounce, the lowest price since July. Gold, which is poised to complete its 11th consecutive annual gain, the longest winning streak in at least nine decades, is on the brink of a bear market. Gold for immediate delivery has declined 19 percent from a record close of $1,900.23 on Sept. 5, or 1 percentage point away from a bear- market plunge of 20 percent.

 “We’re still constructive on gold, as a hedge, a store value,” Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC in Philadelphia, told Bloomberg Television. “If investors continue to gravitate toward it as a currency in lieu of other fiat currencies that are in the process of being debased by many central governments around the world.” Oil in New York swung between gains and losses above $99 a barrel after falling 2 percent yesterday. A U.S. government report showed an unexpected increase in inventories as demand declined. The euro weakened against 12 of 16 major peers, losing at least 0.4 percent versus the Australian dollar, Norwegian krone and South African rand.

 The shared European currency is the worst performer among 10 developed-nation currencies this year, declining 1.8 percent, according to Bloomberg Correlation-Weighted Currency Indexes. The euro today touched its lowest level since 2002 against the index. The dollar has advanced 1.8 percent and the yen has gained 4.9 percent. Leaders in the European parliament have proposed including a “road map” for common euro-region bonds in a new European treaty on fiscal discipline, the Financial Times reported, citing amendments submitted to the treaty’s drafters. The amendments, which would not create common bonds immediately, would focus on creating conditions where Germany may support the plan, the newspaper reported on its website. The Stoxx Europe 600 Index increased 0.9 percent today as real-estate firms, utilities and chemical companies led gains. The Stoxx 600 has dropped 12 percent this year, compared with an 18 percent slump in the MSCI Asia Pacific Index. The S&P 500 has drifted above and below its 2010 closing level since the end of October. The MSCI Emerging Markets Index was little changed after falling for three straight day. Russia’s Micex rose 0.4 percent. Indian stocks dropped for a third day, with the Sensex sliding 1.2 percent.

 

Dear Friends,  

  

“Patience is the companion of wisdom.”

           — Saint Augustine

 

  

Photo of the Day:

 

Residents of Davos, Switzerland are pictured skiing on December 28, 2011. (Reuters)

Market Commentary

Canada

By Matt Walcoff

 Dec. 28 (Bloomberg) — Canadian stocks fell for the first time in five days, led by precious-metals producers, as gold futures extended the longest losing streak since October 2009. Barrick Gold Corp., the world’s largest gold producer, decreased 3.6 percent as the metal retreated for a fifth day. Suncor Energy Inc., Canada’s biggest oil and gas producer, lost 2.5 percent as crude futures slipped for the first time in seven days. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, slid 3.6 percent after India said it may re-introduce fertilizer price controls.

The Standard & Poor’s/TSX Composite Index fell 198.26 points, or 1.7 percent, to 11,728.41. “As a hiding place, it served its purpose,” Bob Decker, a money manager at Aurion Capital in Toronto, said of gold in a telephone interview. The firm oversees about C$5.5 billion ($5.4 billion). “As people look to the new year with a little more optimism with regard to the U.S. economy, maybe they’re taking profits in their winning trades.” The S&P/TSX rallied 3.4 percent in the previous four sessions as stronger U.S. economic data boosted energy and bank shares. Canada’s benchmark stock index has slumped 13 percent this year and is set to trail the S&P 500 for the first year since 2003. Canadian markets were closed Dec. 26 and yesterday for the Christmas and Boxing Day holidays.

 Gold imports by India, the world’s largest consumer, may decrease as much as 50 percent this month from last year due to a weaker rupee, the Bombay Bullion Association said yesterday. China restricted spot and futures gold trading to the Shanghai Gold Exchange and the Shanghai Futures Exchange as part of efforts to crack down on illegal buying and selling of commodities, the People’s Bank of China said yesterday. Gold dropped to the lowest settlement price since July and silver to the lowest since January. The S&P/TSX Gold Index tumbled to the lowest close since July 2010. Barrick lost 3.6 percent to C$45.26. Goldcorp Inc., the world’s second-largest producer of the metal by market value, retreated 4.7 percent to C$43.56. Silver Wheaton Corp., Canada’s fifth-biggest precious-metals company by market value, sank 6.1 percent to C$28.37. NovaGold Resources Inc., which is developing gold and precious-metals mines, plunged 9.2 percent to C$8.14. Energy stocks fell as oil futures dropped after settling at a six-week high yesterday. Suncor lost 2.5 percent to C$28.56.

Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, slipped 2.5 percent to C$36.84. Oil-sands developer BlackPearl Resources Inc. decreased 4.6 percent to C$4.16.

 Base-metals and coal producers fell a day after an index of U.S. home prices decreased more than most economists in a Bloomberg survey had forecast and the Federal Reserve Bank of Dallas’s gauge of regional manufacturing declined. Japanese industrial production retreated 2.6 percent in November from the previous month, three times the median estimate in a Bloomberg forecast, the country’s trade ministry said yesterday. Teck Resources Ltd., Canada’s largest company in the industry, lost 3.1 percent to C$35.17. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, decreased 4.4 percent to C$18.71. SouthGobi Resources Ltd., which mines coal in Mongolia, slumped 7.2 percent to C$5.91, the lowest since December 2008. Potash Corp. retreated 3.6 percent to C$41.90 after Srikant Jena, India’s junior fertilizer minister, said in an interview the country is seeking ways to reduce prices. Agrium Inc., a fertilizer producer and farm retailer, fell 2.7 percent to C$68.50, ending a six-day streak of gains. Neo Material Technologies Inc., which makes rare-earths and zirconium products, tumbled 7.6 percent to C$7.15 after China indicated it will leave quotas for rare earths virtually unchanged in 2012. Rare Element Resources Ltd., which owns a project in Wyoming, sank 16 percent to C$3.30, the lowest since August 2010. The S&P/TSX Financials Index dropped as all of its banks declined. Royal Bank of Canada, the country’s largest lender by assets, lost 0.9 percent to C$50.85. Canadian Imperial Bank of Commerce, the fifth-biggest lender in the country, slipped 1 percent to C$72.67. Manulife Financial Corp., North America’s fourth-largest insurer, decreased 1.4 percent to C$10.45.

 US

 By Michael P. Regan and Rita Nazareth

 Dec. 28 (Bloomberg) — The euro slid to a 10-year low versus the yen and stocks fell, halting a five-day rally in the Standard & Poor’s 500 Index, as Italian bonds erased earlier gains and a surge in the European Central Bank’s balance sheet to a record highlighted risks from the region’s debt crisis. The euro lost as much as 1.1 percent to 100.73 yen and decreased 1 percent to an 11-month low of $1.2937. The S&P 500 dropped 1.3 percent to 1,249.64 at 4 p.m. in New York and the Dow Jones Industrial Average lost 139.94 points, or 1.1 percent, to 12,151.41. Ten-year Italian bond yields rose less than one basis point to 6.999 percent after losing as much as 25 basis points. Oil snapped a six-day advance and gold capped the longest slump in two years. U.S. Treasuries rallied. The ECB’s balance sheet soared to a record 2.73 trillion euros ($3.55 trillion) after it lent financial institutions more money last week in an attempt to keep credit flowing to the economy during the debt crisis. Early gains in stocks and U.S. index futures came after Italy’s borrowing costs plunged at an auction of 9 billion euros of six-month bills, while investors turned their attention to the nation’s auction of longer-term bonds tomorrow. “If the euro zone banks are too afraid to lend, that does not bode well for future growth in the region,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. “The banks are not borrowing from the ECB in order to spur lending. It’s to shore up their own balance sheets. That could lead to a credit contraction in the euro zone.”

 The euro weakened against all 16 of its major peers except for the British pound and Danish krone. The pound decreased against all 16 peers, while the dollar strengthened against 13 of 16. The S&P 500 retreated after rising for a fifth straight day yesterday, matching its longest streak of gains of the year. Commodity and energy producers and financial companies led losses in all 10 of the main industry groups in the benchmark index today. Caterpillar Inc., Chevron Corp. and 3M Co. fell more than 1 percent to lead declines in all 30 stocks in the Dow. Treasury 10-year yields slipped eight basis points to 1.92 percent, while the 10-year German bund yield was three basis points lower at 1.89 percent.

 Oil in New York dropped 2 percent to $99.36 a barrel, the first decline in seven sessions. Crude climbed as high as $101.71 earlier amid concern Iran will block the Strait of Hormuz, through which passes about 15.5 million barrels of oil a day, a sixth of global consumption. The U.S. won’t tolerate a disruption to shipping in the strait, Navy spokeswoman Rebecca Rebarich said in an e-mail. Gulf Arab countries are prepared to make up for any loss of Iranian oil from the world market, the Associated Press reported, citing an unidentified Saudi Arabian oil official. Gold for February delivery declined 2 percent to settle at $1,564.10 an ounce, a fifth straight drop.  Cotton trimmed gains after jumping the exchange limit 4 cents, or 4.6 percent, to  91.91 cents in New York as sales dropped by farmers in India, the world’s second-largest grower.

 Germany’s DAX Index lost 2 percent to lead declines among major European markets. The FTSE 100 Index slipped 0.1 percent today in the U.K., where financial markets were shut the previous two days for holidays. The Stoxx Europe 600 Index fell 0.7 percent today and has dropped 13 percent this year, compared with an 18 percent slump in the MSCI Asia-Pacific Index and a loss of 0.6 percent in the S&P 500, which has fluctuated above and below its 2010 closing level since the end of October.

Today’s decline brought the S&P 500 back below its average price over the past 200 days after it climbed above the trend line in the previous two sessions. The Dow is up 5 percent in 2011. Two-year Italian yields slipped seven basis points to 5.00 percent today. Italy sold 179-day bills today at a rate of 3.251 percent, down from 6.504 percent at the last auction on Nov. 25. Demand was 1.7 times the amount offered, compared with 1.47 times last month. Italy will seek to sell bonds maturing in 2014, 2018, 2021 and 2022 tomorrow. The nation’s 10-year bond yields climbed to 7 percent yesterday, the level that foreshadowed bailouts for Greece, Ireland and Portugal. A report tomorrow may show Italian business confidence dipped to the lowest in almost two years.

 Have a wonderful evening everyone.

 

As Always,

 

Kyle for Carolann.

 

Dear Friends,

  “…At Christmas play and make good cheer, for Christmas comes but once a year…”

Photo of the Day:

 

Market Commentary

Canada

 By Matt Walcoff

 Dec. 23 (Bloomberg) — Canadian stocks rose for a fourth day as banks and commodity producers gained after a bigger-than- forecast increase in durable goods orders in the U.S., Canada’s biggest export market. Royal Bank of Canada, Canada’s largest lender by assets, advanced 0.8 percent. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, advanced 2.8 percent after an analyst at Susquehanna International Group LLP raised his rating on the company. The Standard & Poor’s/TSX Composite Index advanced 50.19 points, or 0.4 percent, to 11,926.67, extending its weekly increase to 2.5 percent.

 “Over the past five or six weeks, the somewhat promising signs out of the U.S. have been partially responsible for offsetting some of the mixed news coming out of Europe,” Karl Berger, a money manager at Toron Investment Management in Toronto, said in a telephone interview. The firm oversees about C$400 million ($393 million). “Canadian exports are predominantly U.S. in nature. You feel a little bit different about the Canadian economy if the U.S. economy picks up.”

The S&P/TSX has rallied 3.4 percent in four days, led by energy companies and banks, as U.S. housing starts climbed to the highest level since April 2010, initial jobless claims declined to the lowest since April 2008 and oil supplies plunged the most since 2001. The U.S. accounted for 75 percent of Canada’s exports last year, according to Statistics Canada, and the U.S. imports more oil from Canada than from any other country, according to the U.S. Energy Department.

 Orders for equipment meant to last at least three years rose 3.8 percent in November, the Commerce Department said today in Washington. Economists had forecast a gain of 2.2 percent, according to the median estimate in a Bloomberg survey. The S&P/TSX Commercial Banks Index advanced to the highest level since Oct. 31. Royal Bank climbed 0.8 percent to C$51.30.

Toronto-Dominion Bank, its biggest domestic rival, rose 0.6 percent to C$75.02. Bank of Nova Scotia, Canada’s third-largest lender by assets, increased 0.8 percent to C$50.91. Energy stocks advanced as crude oil gained for a fifth day. Suncor Energy Inc., the country’s largest oil and gas producer, climbed 1.3 percent to C$29.28. Vermilion Energy Inc., which operates in France, Australia, Canada and the Netherlands, increased 2.5 percent to C$45.83. PetroBakken Energy Ltd., a western Canadian oil and gas producer, rose 5.3 percent to C$13.02 to extend its weekly surge to 20 percent.

 Talisman rallied 2.8 percent to C$12.75 after Gray Peckham, an analyst at Susquehanna, boosted his rating on the shares to “positive” from “neutral.” The analyst cited Talisman’s plans to redirect investment toward North American projects.

Oilfield-services company North American Energy Partners Inc. soared 34 percent, the most since November 2008, to C$7.17 after saying it will resume digging and hauling operations at Canadian Natural Resources Ltd.’s Horizon oil-sands project today.

Bombardier Inc., the maker of trains and airplanes, rallied 3.8 percent to C$3.86 after saying it won an order for 90 trains from DB Regio AG worth about 500 million euros ($653 million). Canadian markets are to reopen Dec. 28 after the Christmas and Boxing Day holidays.

US

By Whitney Kisling and Jeff Sutherland

 Dec. 23 (Bloomberg) — U.S. stocks rose, erasing the 2011 decline for the Standard & Poor’s 500 Index, amid further signs of strength in the world’s largest economy. Treasuries declined while commodities advanced.

The S&P 500 added 0.9 percent to 1,265.33 at 4 p.m. New York time. The Dow Jones Industrial Average jumped 1 percent to 12,294, the highest level since July 27. The MSCI All-Country World Index advanced 0.8 percent, rising for a fourth straight day. Copper rallied 1.6 percent and crude oil briefly topped $100 a barrel. Yields on 30-year Treasuries climbed eight basis points and increased the most in a week since October. Orders for U.S. durable goods jumped in November by the most in four months, data showed today, helping to offset weaker-than-forecast consumer spending. Sales of new U.S. homes rose in November to a seven-month high. The U.S. Congress passed a two-month payroll tax cut extension a day after House Republicans surrendered on whether to endorse the measure days before its scheduled Dec. 31 expiration.

“The market’s holding up,” Paul Zemsky, the New York- based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $550 billion.“It’s important to take it all with the totality of the week, we had fantastic data on housing and jobs earlier this week, so overall, this data is weak, but the jobless claims trumps it because it’s more forward-looking.”

 A four-day rally in the S&P 500 erased the index’s decline for the year, giving it a 0.6 percent gain for 2011. The gauge jumped 3.7 percent this week after data on employment, consumer confidence, housing starts and leading economic indicators added to expectations that the U.S. economy can weather Europe’s debt crisis. Wall Street strategists forecast the S&P 500 will end the year at 1,278, or 1 percent higher than today’s close. With four trading days left in 2011, the benchmark index for U.S. equities would need to climb about 0.2 percent each day to reach their projection. On average, the S&P 500 gains 1 percent in the last four days of the year, according to data dating back to 1928 compiled by Bloomberg.

All 10 industries in the S&P 500 advanced at least 0.6 percent today, led by consumer-discretionary stocks, technology and raw materials companies. Verizon Communications Inc. advanced 1.8 percent. Walt Disney Co. and Bank of America Corp. rose at least 2 percent, pacing gains among the largest companies. U.S. markets will be closed Dec. 26 for the Christmas holiday.

 U.S. stocks rose as orders for goods meant to last at least three months rose 3.8 percent in November, as an increase in demand for aircraft outweighed declines in spending on computers and equipment. A separate report showed purchases of single- family properties increased 1.6 percent to a 315,000 annual pace, adding to evidence of stability in the housing market.

Consumer spending rose less than forecast in November as wages declined for the first time in three months. Equities maintained gains after Congress extended a two- percentage-point payroll tax cut, following a month of wrangling among lawmakers. The measure will continue expanded unemployment benefits and head off a reduction in Medicare payments to doctors through February. Lawmakers plan to negotiate on a longer-term extension in the new year.

“That removes probably the biggest domestic threat to the economy in 2012,” David Kelly, who helps oversee $394 billion as chief market strategist for JPMorgan Funds in New York, said in a telephone interview. “As the year ends, some of the extremes in uncertainty are diminishing, and that should allow the market to go up.”

All of us at Queensbury would like to wish you and your family a wonderful Holiday Season for 2011

As Always,

 

Kyle,  for Carolann