February 14, 2012 Newsletter

Dear Friends,

Happy Valentine’s Day!

“Love is never lost.  If not reciprocated, it will flow back and soften and purify the heart.” –Washington Irvine.

I realize that a few of you did not receive the nightly newsletter last week, so please accept my apologies.  Toronto was having trouble with a new server that was installed last weekend, but the problem appears to have been resolved today, so there should be no further interruptions.

Tangents:

-from The 50 Greatest Love Letters of All Time

Edited by David H. Lowenherz, Random House, N.Y.

Dylan Thomas to Caitlin Thomas

Dylan Thomas (1914-1953), Welsh poet and writer; Dylan was a sickly and neurotic child who dropped out of school at age sixteen.  He made a name for himself at twenty with the publication of his first book, Eighteen Poems (1934).    In 1936, the year Twenty-Five Poems was published, he met a young Irishwoman, Caitlin Macnamara, and married her the following year.  Lacking any business acumen, and with a growing family to support (the couple had three children), Dylan quickly fell upon hard times.  It became increasingly difficult to sustain a happy life, especially under the burden of his heavy drinking problem.  After suffering a nervous breakdown in 1947, friends were able to find a cottage for Dylan’s family in Wales.  In 1950, the first of four lecture tours to the United States was arranged, and Dylan gave numerous and well-attended readings.  His letters to Caitlin are often far more passionate than her responses – she no doubt had a hard life with this exceptionally gifted poet.  But long-standing income tax debts, a shaky marriage, and increased drinking contributed to his unhappiness.  After an enormous binge in a New York bar, Dylan collapsed and died just a few days after his thirty-ninth birthday.

March 16^th, 1950

Cat: my cat.  If only you would write to me:  My love, oh cat.  This is not, as it seems from the address above, a dive, joint, saloon, etc., but the honourable  and dignified headquarters of the dons of the University of Chicago.  I love you.  That is all I know.  But all I know, too, is that I am writing into space: the kind of dreadful, unknown space I am just going to enter.  I am going to Iowa, Illinois, Idaho, Indindiana, but these, though misspelt, are on the map.  You are not.  Have you forgotten me?  I am the man you used to say you loved.  I used to sleep in your arms – do you remember?  But you never write.  You are perhaps mindless of me.  I am not of you.  I love you.  There isn’t a moment of any hideous day when I do not say to myself, “It will be alright.  I shall go home.  Caitlin loves me.  I love Caitlin.”  But perhaps you have forgotten.  If you have forgotten, or lost your affection for me, please, my Cat, let me know.  I Love You.

photos of the day

February 14, 2012

Britain’s Catherine Duchess of Cambridge arrives for a visit to Alder Hey Hospital in Liverpool, northern England.

Nigel Roddis/Reuters

A couple embrace as they watch the sunset from a promenade along the Arabian Sea on Valentine’s Day, in Mumbai.

Vivek Prakash/Reuters

Market Closes for February 14, 2012:

North American Markets

Market Commentary:

Canada

By Matt Walcoff

Feb. 14 (Bloomberg) — Canadian stocks fell for the third time in four days, led by raw-materials companies, after U.S. retail sales increased less than forecast and European officials said Greece must do more to cut its debt.

Barrick Gold Corp., the world’s largest gold producer, dropped 0.7 percent as the U.S. Dollar Index rose. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 4.7 percent after saying its Horizon oil-sands upgrader may be out of service until mid- or late March.

The S&P/TSX Composite Index slipped 44.22 points, or 0.4 percent, to 12,354.47, the lowest close since Jan. 18.

“The problems south of the border are still not resolved,” David Cockfield, a managing director at Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million ($200 million). “A lot of people are still waiting on what’s going on in Europe. The earnings season hasn’t been a spectacular one. We’re starting to lose ground here.”

The index gained 5.4 percent in the two months ending yesterday as data from the U.S. signaled an improving economy.

The U.S. accounted for 74 percent of Canada’s exports last year, Statistics Canada said last week.

U.S. retail sales climbed 0.4 percent in January, the Commerce Department said today in Washington. Economists had forecast a gain of 0.8 percent, according to the median estimate in a Bloomberg survey.

Stocks extended their retreat after Luxembourg Prime Minister Jean-Claude Juncker, chairman of the group of euro- region finance ministers, said he “did not yet receive the required political assurances from the leaders of the Greek coalition parties” on budget cuts.

Gold futures fell for a third day on the Comex in New York as the euro dropped against the U.S. dollar. Barrick decreased 0.7 percent to C$47.64. Silver Wheaton Corp., Canada’s third- biggest precious-metals company by market value, declined 1.3 percent to C$35.16 as silver retreated. Eldorado Gold Corp., the country’s fifth-largest company in the industry by market value, slipped 2.1 percent to C$13.02 to extend its streak of losses to eight days, the longest since June.

Volta Resources Inc., which explores for gold in Africa, soared 35 percent, the most since December 2009, to C$1.51 after reporting a discovery.

Base-metals and coal producers in the S&P/TSX fell to the lowest since Jan. 9 as copper futures dropped for a third day on the Comex in New York.

Teck Resources Ltd., Canada’s largest company in the industry, lost 0.8 percent to C$38.97. Inmet Mining Corp., a copper and zinc producer, decreased 3.1 percent to C$63.75.

Lundin Mining Corp., which operates in Europe, slumped 4.5 percent to C$4.86.

Canadian Natural decreased 4.7 percent to C$36.36 after cutting its 2012 production forecast for the Horizon upgrader, which processes oil sands into refinery-ready crude. The company shut the plant on Feb. 5 for maintenance, expecting to complete the work by the end of the month. More damage was found to a unit at the plant than was originally thought, Calgary-based Canadian Natural said today.

Cenovus Energy Inc., Canada’s fifth-biggest energy company, gained 2.3 percent to C$38.60 after Menno Hulshof, an analyst at Toronto-Dominion Bank, raised his rating on the shares to buy from hold. In a note to clients, Hulshof said he based his upgrade in part of the progress of the Christina Lake joint venture with ConocoPhillips.

TransCanada Corp., the owner of the country’s largest pipeline system, advanced 1.6 percent to C$42.15 as natural gas rallied 4.2 percent on the New York Mercantile Exchange on forecasts for colder weather in the western U.S.

Bankers Petroleum Ltd., which operates in Albania, slumped 5.6 percent to C$4.70 after plunging 5.9 percent yesterday, when the company reported a decline in production for January and increased its development-cost estimates. At least six analysts cut their 12-month share-price forecasts today.

Calvalley Petroleum Inc., which operates in Yemen, tumbled 19 percent, the most since October 2008, to C$1.30 after saying it will shut down its Block 9 production due to the strike at Petromasila, the state-run operator of the Masila oil field.

“Certain groups within the region have organized blockades on major roads within the Masila basin,” hampering oil transportation, Calvalley said in a press release.

Imax Corp., the maker of giant-screen movie projection systems, rallied 11 percent to C$24.45 after saying box-office revenue this year through Feb. 12 increased about 45 percent from a year earlier.

Trimel Pharmaceuticals Corp. surged 36 percent to C$3.41 after closing at the highest yesterday since becoming publicly traded through a reverse takeover in July. The company said today its Tefina female sexual dysfunction medicine was successful in a study.

US

By Rita Nazareth

Feb. 14 (Bloomberg) — Most U.S. stocks retreated as an advance in the final half hour spurred by optimism that Greece will commit to budget cuts stopped short of erasing a decline in the Standard & Poor’s 500 Index.

Bank of America Corp. slid 3.3 percent as Citigroup Inc. cut its recommendation. Yahoo! Inc. slumped 4.7 percent as talks on an Asia asset swap are said to have stalled. Masco Corp. tumbled 12 percent after the home improvement and building products maker reported a wider-than-projected loss. Boeing Co.

added 1 percent after signing a 230-aircraft order worth $22.4 billion, setting a record for the planemaker.

The S&P 500 decreased 0.1 percent to 1,350.50 at 4 p.m. New York time, trimming an earlier decline of as much as 0.8 percent. The Dow Jones Industrial Average rose 4.24 points, or less than 0.1 percent, to 12,878.28 today. Almost two stocks declined for each that rose on U.S. exchanges.

“To say that Greece doesn’t matter is probably short- sighted,” David Goerz, chief investment officer at Highmark Capital Management Inc., said in a phone interview from San Francisco. His firm oversees $17 billion. “There’s a lot of skepticism on whether Greece will be successful. They are trying to make it work.”

Equities fell earlier today as European finance ministers canceled a meeting scheduled for tomorrow. After Luxembourg Prime Minister Jean-Claude Juncker canceled the gathering, citing the lack of political assurances from Greek leaders to stick to austerity pledges, a government official in Athens said the leaders of Greece’s two biggest political parties, New Democracy’s Antonis Samaras and Pasok’s George Papandreou, will provide the written commitments demanded.

A report showing that sales at U.S. retailers rose less than forecast in January also drove earlier losses. The 0.4 percent gain reported by the Commerce Department today in Washington was half the 0.8 percent median forecast of economists surveyed by Bloomberg News.

Today’s decline came after the S&P 500 closed less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The index has risen 7.4 percent this year as the U.S. economy showed signs of accelerating and European leaders moved closer to a solution on the region’s debt crisis.

“You’ve had a significant run-up in the market and you haven’t really had any significant pullback,” Paul Simon, chief investment officer at Tactical Allocation Group LLC in Birmingham, Michigan, said in a phone interview. His firm oversees $1.6 billion. “We approached the highs of 2011 and that’s going to be a resistance in the very, very short term.”

The KBW Bank Index fell 1.3 percent as 21 of its 24 stocks retreated. Bank of America lost 3.3 percent, the biggest decline in the Dow, to $7.98. The stock fell after Keith Horowitz, an analyst at Citigroup, cut its rating to “neutral,” meaning he believes there aren’t enough reasons to take a positive or negative view on the stock. His previous rating was “buy.”

The recent rally in shares reflects “capital concerns subsiding, but earnings headwinds persist,” analyst Horowitz wrote in a note today.

Yahoo slumped 4.7 percent to $15.37. Representatives of Alibaba and Softbank Corp., co-owner of Yahoo Japan Corp., are prepared to approach Yahoo Chief Executive Officer Scott Thompson to explore another arrangement that would let companies buy back their stakes, said a person briefed on the matter. Dana Lengkeek, a spokeswoman for Yahoo, didn’t immediately return a phone message seeking comment.

Masco dropped 12 percent, the most in the S&P 500, to $11.63. It reported a fourth-quarter loss from continuing operations of 9 cents a share, wider than the average analyst estimate of a loss of 2 cents.

Goodyear Tire & Rubber Co. sank 5.2 percent to $13.25 after reporting fourth-quarter profit that was less than analysts’ estimates as the number of tires sold declined 5 percent.

First Solar Inc. fell 6 percent to $39.21. The maker of thin-film solar panels may “have the most near term downside risk” under a German proposal to cut subsidies that is likely to be “worse than expected,” Deutsche Bank AG said in a note.

Boeing gained 1 percent, the second biggest advance in the Dow, to $75.56. The accord with Indonesian budget carrier PT Lion Mentari Airlines today at the Singapore Airshow, which solidifies a provisional agreement last year, includes 201 orders for the in-development 737 MAX and 29 for the extended range 737-900.

Avon Products Inc. climbed 1.5 percent to $17.80. The door- to-door cosmetics seller conducting an internal bribery probe said it will cut jobs and identify other ways to reduce costs.

Apple Inc. rose 1.4 percent to $509.46, gaining for an eighth day. That’s the longest winning streak since July 26. The largest technology company yesterday surpassed $500 for the first time.

Dividend-paying stocks are still a “winning theme” for investors even though they have gotten off to a relatively slow start this year, according to Gina Martin Adams, a strategist at Wells Fargo Securities LLC.

While the Standard & Poor’s 500 Dividend Aristocrats Index rose 4.2 percent for the year through yesterday, the gain was 2.6 percentage points smaller than the S&P 500’s advance. By contrast, the indicator fared better than the S&P 500 in the past two years, its first back-to-back wins since 2002. The index is comprised of companies that have raised payouts for at least 25 consecutive years, relative to the S&P 500.

Payout ratios suggest companies can distribute plenty more money to shareholders, Martin Adams wrote yesterday in a report.

She noted that dividends equal 27 percent of S&P 500 earnings, the lowest figure in more than a century, according to data compiled by Yale University Professor Robert Shiller.

“Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend-paying stocks,” the report said.

Have a wonderful evening everyone.

Be magnificent!

Free yourself from anger and desire, which are the causes of sin and conflict,

and thereby make yourself whole.  This is the essence of yoga;

this is the means by which you come to know the soul, and thereby attain the highest spiritual state.

Learn to meditate.  Close your eyes; calm your breathing; and focus your attention

on the center of consciousness.  Thus you will master the senses, the emotions, and the intellect –

and thereby free yourself from desire and anger.

The Bhagavad Gita

As ever,

Carolann

A thankful heart is not only the greatest virtue,

but the parent of all the other virtues.

-Cicero, 106 BC-43 BC

Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President &

Senior Investment Advisor