February 17, 2012 Newsletter

Dear Friends,

Tangents:

“Mobile devices will outnumber humans this year, according to network firm Cisco’s latest analysis of global mobile data traffic,” says BBC News.  “By 2016, it predicts that there will e 10 billion mobile connected devices around the world.”

In New York Diaries: 1609 to 2009, editor Teresa Carpenter has drawn from numerous personal journal entries and collaged together snapshot impressions of New York over the years.  Here are a few of the moments she captures:

“[The natives] all came on board, one after another in their canoes….They had no houses, but slept under the blue heavens, sometimes on mats of bulrushes interwoven, and sometimes on the leaves of trees.”

-Henry Hudson, Sept. 5, 1609

“Once more in Broadway!…Take care of the pigs.  Two portly sows are trotting up behind this carriage, and a select part of half-a-dozen gentlemen-hogs have just now turned the corner.”

-Charles Dickens, March 2, 1842

“Wrote a few lines to my beloved Catherine, an occupation that takes me out of this odious country….Let me die in a ditch in England, rather than in the Fifth Avenue of New York here.”

-Shakespearean actor William Macready, March 6, 1849

“Today I arrived by train in New York City….walked through the grandeur of Grand Central Terminal, stepped outside, got my first look at eh city and instantly fell in love.  [I]nside myself, I yelled: I should have been born here!”

-Journalist Edward Robb Ellis, May 22, 1947

“I am holding in my hands a piece of paper….that I found lying on the ground in the financial district.  It is an expense report from a company called ‘Cantor Fitzgerald’ written by a man named David R. Meyer….How this piece of paper [is] in such good condition, I can only speculate.”

-Writer Eric Rosenfield, Sept. 11, 2011

photos of the day

February 17, 2012

Librarian Alexander Gordin presents parts of influential scientist Sir Issac Newton’s newly digitized theological collection, at Israel’s national library in Jerusalem. Now Israel’s national library, an unlikely owner of a vast trove of Newton’s writings, has digitized his theological collection, some 7,500 pages in Newton’s own handwriting, and put it online.

Sebastian Scheiner/AP

Filipino students Rudy Roa (l.) and Claire Vinzon prepare to scribble a message on the tribute wall for the late American singer Whitney Houston at a shopping mall in suburban Quezon city, northeast of Manila.

Bullit Marquez/AP

Market Closes for February 17, 2012:

North American Markets

Market Commentary:

Canada

By Matt Walcoff

Feb. 17 (Bloomberg) — Canadian stocks fell, trimming a weekly gain, as gold shares dropped for the 10th time in 11 days following slower-than-estimated U.S. inflation and before European finance ministers meet to discuss a Greek bailout.

Barrick Gold Corp., the world’s largest gold producer, dropped 2.4 percent as the metal declined. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, rose 0.8 percent as crude oil and natural gas advanced.

Enbridge Inc., Canada’s largest pipeline company, dropped 4.1 percent after reporting earnings that missed estimates.

The S&P/TSX Composite Index decreased 27.29 points, or 0.2 percent, to 12,458.30, reducing its weekly increase to 0.6 percent. The gauge erased gains after the Wall Street Journal reported the International Monetary Fund will contribute less to a Greek bailout than to previous rescues.

“All eyes are on Greece,” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($55 million). “It’s obviously getting people nervous. Greece is not the only problem in the EU. You’ve got Portugal, you’ve got Spain that are potential problems. If you can’t figure one piece of the puzzle out that’s so small, how are you going to figure out those other problems?”

The index has advanced eight of the past nine weeks as improving U.S. employment, manufacturing and housing data overshadowed the European debt crisis. Seventy-four percent of Canadian exports went to the U.S. last year, according to Statistics Canada.

The IMF is likely to contribute 10 percent of a 130 billion-euro ($171 billion) aid package for Greece, the Wall Street Journal said today, citing people familiar with the matter. The organization paid 27 percent of Greece’s 110 billion-euro bailout in 2010, the newspaper said.

Stocks had risen around the world earlier after Italian Prime Minister Mario Monti, German Chancellor Angela Merkel and Greek Prime Minister Lucas Papademos expressed optimism today that an agreement on a Greece bailout can be reached on Feb. 20.

The S&P/TSX Gold Index slumped 1.6 percent, extending its loss since Feb. 2 to 6.3 percent. U.S. consumer prices increased

0.2 percent in January, the Labor Department said today.

Economists forecast a 0.3 percent rise in the inflation gauge, according to the median estimate in a Bloomberg survey.

Barrick dropped 2.4 percent to C$46.83. Agnico-Eagle Mines Ltd., which operates in Canada, Mexico and Finland, declined 3.6 percent to C$35.27. NovaGold Resources Inc., which is developing projects in Alaska and British Columbia, lost 3.7 percent to C$8.41.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, decreased 2.9 percent to C$38.30 as copper retreated for a sixth day on the Comex in New York, the longest slump since August.

Natural-gas futures on the New York Mercantile Exchange extended their two-day surge to 11 percent a day after the U.S.

reported a bigger drop in inventories than most analysts in a Bloomberg survey had forecast. Crude oil climbed to a nine-month high.

Canadian Natural rose 0.8 percent to C$37.38. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, gained 1.6 percent to C$13.60.

PetroBakken Energy Ltd., a western Canadian oil and gas producer, jumped 5.3 percent to C$15.42 after agreeing to sell some of its Saskatchewan assets to Crescent Point Energy Corp.

for C$427 million. Petrobank Energy & Resources Ltd., PetroBakken’s largest shareholder, rose 5.3 percent to C$15.38.

Crescent Point dropped 1.9 percent to C$45.59.

Calvalley Petroleum Inc., which operates in Yemen, soared

19 percent to C$1.60 after plunging 19 percent Feb. 14. Workers have suspended a strike at the Masila oil field, which had disrupted oil transportation in the country, according to a government official who declined to be identified because he is not authorized to speak on the matter.

Enbridge, Keyera Corp., and Fairfax Financial Holdings Ltd.

retreated after reporting earnings that trailed analysts’

estimates in Bloomberg surveys.

Enbridge lost 4.1 percent, the most since February 2009, to

C$37.58 after reporting fourth-quarter profit that trailed the average analyst estimate by 6.1 percent, excluding certain items. The company also said Noverco Inc. plans to sell a third of its stake in Enbridge. Caisse de Depot et Placement du Quebec and Enbridge together own Noverco.

Keyera, a natural gas marketing company, slumped 5.6 percent, the most since March 2009, to C$44.75 after reporting a fourth-quarter loss. All five analysts in a Bloomberg survey had forecast a profit.

Fairfax Financial, an insurance holding company, slipped

4.3 percent to C$400 after saying it lost $771.5 million in the fourth quarter. The loss was the most in a quarter since at least 2000.

Propane distributor Superior Plus Corp. jumped 8.6 percent to C$6.43 after reporting fourth-quarter financial results.

Unseasonably warm weather in North America reduced cash flow less than analysts may have forecast, Damir Gunja, an analyst at Toronto-Dominion Bank, said in a note to clients.

US

By Rita Nazareth

Feb. 17 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index near the highest level in about three years, amid optimism Greece will get a bailout.

Banks had the biggest gain in the S&P 500 among 24 groups, rallying 1.7 percent. H.J. Heinz Co., the biggest ketchup maker, and Campbell Soup Co., the largest soup maker, climbed at least

2.6 percent as earnings beat projections. Gilead Sciences Inc.

tumbled 14 percent as some patients relapsed on its hepatitis C drug. General Mills Inc., the maker of Cheerios cereal, retreated 3.6 percent after cutting its profit forecast.

The S&P 500 rose 0.2 percent to 1,361.23 at 4 p.m. New York time. The index is 0.2 percent below its April peak of 1,363.61, the highest level since June 2008. The Dow Jones Industrial Average added 45.79 points, or 0.4 percent, to 12,949.87.

“Greece is the word,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a phone interview. “We’re just reacting to what the euro zone is telling us in terms of the state of negotiations. Do I believe that the euro zone will give Greece more money? Yes. Otherwise, Greece defaults.”

Equities rose as euro-area governments closed in on a deal to unlock a 130 billion-euro ($171 billion) aid package for Greece, seeking to avert the region’s first sovereign default.

Germany signaled that finance ministers may be ready to back Greece’s second bailout in two years when they meet Feb. 20.

“The bar has been raised,” Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. “If things don’t go quite smoothly as expected, then the market would experience a fairly steep selloff.”

Today’s gain extended this year’s rally in the S&P 500 to

8.2 percent. Stocks climbed as Europe stepped up efforts to tame its debt crisis and after reports on U.S. manufacturing, housing and jobs bolstered optimism in the world’s largest economy.

Seven out of 10 groups in the S&P 500 rose today as consumer discretionary and financial shares had the biggest gains. The KBW Bank Index of 24 stocks added 1 percent. JPMorgan Chase & Co. advanced 1.2 percent to $38.47. Bank of America Corp. lost 0.9 percent to $8.02. Intel Corp. had the biggest advance in the Dow, rallying 2 percent to $27.37. It’s the highest level since 2007.

Should the S&P 500 rally above its closing peak in April, the gauge would extend its gains, according to Ryan Detrick at Schaeffer’s Investment Research. He said the next target for the S&P 500 would be 1,440, the intraday peak in May 2008.

“It would be a good sign that confidence is coming back,”

Detrick, senior technical strategist at Schaeffer’s, said in a telephone interview from Cincinnati. “People are realizing that things are on much better footing and that should lead to higher equity prices.”

H.J. Heinz gained 4.6 percent to $54.47. The company reported third-quarter earnings excluding some items of 95 cents a share, beating the average analyst estimate of 85 cents.

Campbell Soup added 2.6 percent to $32.90. The company reported second-quarter earnings excluding some items of 64 cents a share. On average, the analysts surveyed by Bloomberg estimated profit of 62 cents.

First Solar Inc. surged 7.3 percent to $42.59. The biggest maker of thin-film solar panels resolved a permitting issue with Los Angeles County for a $1.36 billion power project under construction, paving the way for financing to resume.

Chesapeake Energy Corp. jumped 4 percent to $24.71 after being raised to “buy” from “hold” at Stifel Nicolaus & Co.

The 12-month share-price estimate is $29.

Gilead tumbled 14 percent to $47. Among eight patients with hepatitis C genotype 1 in a clinical trial, six had a viral relapse within four weeks after stopping a 12-week treatment with the medicine, GS-7977, plus ribavirin, Gilead said today in a statement. The two other patients are two weeks out from stopping treatment, and haven’t relapsed, the company said.

General Mills dropped 3.6 percent to $38.34. The company said “weak volume performance” across U.S. retail food categories in December and January hurt results in its fiscal third quarter.

The companies investors hated the most in 2011 have returned twice as much as the S&P 500 this year, burning speculators who bet stocks from Sears Holdings Corp. to Netflix Inc. would keep falling.

The 26 companies in the S&P 500 with the highest so-called short interest relative to shares available for trading rallied

18 percent this year, compared with 8 percent for the full index, data compiled by Bloomberg show. Speculators who borrowed Sears shares and sold them to profit from a drop got hammered as the stock surged 73 percent. Netflix, with short interest of 17 percent at the end of 2011, rose 76 percent.

Banks, commodity and industrial companies, the only groups to post losses last year, are leading stocks higher on signs the U.S. economy is gaining momentum. That’s forcing speculators to cut bearish wagers after pushing them to the highest levels since the market bottomed in 2009, according to a survey by International Strategy & Investment Group.

“It’s been a rotation back into fundamentally sound, economically sensitive companies that had been unduly punished in the second half of last year,” David Spika, who helps oversee $13 billion as an investment strategist at Westwood Holdings Group Inc. in Dallas, said in a telephone interview.

“When the market turns, those shorts have to be covered and that creates momentum.”

Have a wonderful weekend everyone.

Be magnificent!

As long as you pursue pleasure, you are attached to the sources of pleasure;

and as long as you are attached to the sources of pleasure,

you cannot escape pain and sorrow.  The soul shines in the hearts of all living beings.

When you see the soul in others, you forget your own desires and fears,

and lose yourself in the service of others.

The soul shines equally in people on the farthest island, and in people close at hand.

Mundaka Upanishad

As ever,

Carolann

Think of all the beauty still left

around you and be happy.

-Anne Frank, 1929-1945

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

Senior Vice-President &

Senior Investment Advisor