February 24, 2012 Newsletter

Dear Friends,

Tangents:

Beauty and the Traffic

Photographer Rob Whitworth’s time-lapse video of Ho  Chi Minh City not only provides beautiful views of the Vietnamese metropolis but also reveals the sheer volume of traffic that crisscrosses the city by road and boat each day.  Try to stop your heart from leaping into your mouth when some of those Vespa and motorcycle riders weave through the city center.  Watch it at: http://vimeo.com/32958521

Academy Awards this Sunday!

photos of the day

February 24, 2012

A farmer dries cassava while harvesting on a field in Hoa Binh province, outside Hanoi.

Kham/Reuters

A man dressed as the character Spock from the Star Trek TV series and movies waits for tips outside the site of the 84th Academy Awards in Hollywood, California.

Rick Wilking/Reuters

Market Closes for February 24, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Porzecanski and Andrew Theen

Feb. 24 (Bloomberg) — Canadian stocks fell, paring a second weekly gain, as declines by gold companies offset a rally in energy shares after U.S. consumer sentiment and home sales reports bolstered confidence in the global economy.

Goldcorp Inc., the world’s second-biggest producer of the metal, fell 1.4 percent as demand for a haven eased and gold declined. Suncor Energy Inc., the country’s largest oil and gas producer, increased 1.6 percent as crude rose for a seventh day.

Magna International Inc., North America’s largest auto-parts supplier, rallied 5.4 percent after it said fourth-quarter earnings jumped 42 percent.

The S&P/TSX Composite Index slipped 5.51 points, or less than 0.1 percent, to 12,725.77 in Toronto, paring its weekly rally to 2.2 percent.

“Previously there was a concern about a double dip” in the economy, Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($1 billion).

“We’ve had good earnings, a lot of good guidance, and we’ve had some economic numbers over the last several months that are showing that seems like it’s no longer the case.”

Canadian materials and energy companies advanced earlier this week as commodities gained after euro-area finance ministers approved 130 billion euros ($175 billion) in aid for Greece. The index has advanced eight of the past nine weeks as improving economic data from the U.S. overshadowed the European debt crisis. Seventy-four percent of Canadian exports went to the U.S. last year, according to Statistics Canada.

Financial shares gained as purchases of new homes in the U.S. exceeded economists’ forecasts in January and a gauge of consumer confidence topped estimates. Finance ministers and central bank governors from the Group of 20 nations meet tomorrow in Mexico and may discuss committing fresh cash to the International Monetary Fund to defuse the European fiscal crisis.

Toronto-Dominion Bank, Canada’s second-largest lender, gained 0.4 percent to C$79.30. Brookfield Asset Management Inc., the country’s largest real-estate company, gained 1.6 percent to C$31.51.

The S&P/TSX Gold Index fell for the first time this week the metal retreated after its three-day rally. Goldcorp fell 1.4 percent to C$48.64.

“The price of gold has really been a steady riser, and we just haven’t seen much of that carry through in the valuations of gold shares,” Radman said.

Iamgold Corp., which mines in West Africa, South America and Quebec, fell 9.1 percent to C$15.90 after reporting fourth- quarter earnings that missed analysts’ estimates.

Oil climbed for a seventh day, the longest streak of advances since January 2010, as sanctions against Iran made it more difficult for the Persian Gulf nation to sell crude.

Suncor Energy, the country’s largest oil and gas producer, increased 1.6 percent to C$36.97.

Nexen Inc. rose 1.5 percent to C$21.18. The oil and gas producer with operations on five continents said it has begun producing oil from its Usan field off the coast of West Africa.

Enerplus Corp., an oil and gas producer with operations in Canada and the U.S., lost 2.4 percent to C$24.01 after it reported a fourth-quarter loss.

Laramide Resources Ltd., a Canadian uranium-mining company, rose 18 percent to C$1.14 on speculation an election next month in Australia’s Queensland state will lead to the end of a ban on extracting the mineral.

Magna International rallied 5.4 percent to C$47.36 after it said fourth-quarter earnings jumped 42 percent on increased production of cars and light trucks in North America.

US

By Rita Nazareth

Feb. 24 (Bloomberg) — The Standard & Poor’s 500 Index advanced to the highest level since 2008 amid better-than- estimated consumer sentiment and home sales reports.

Salesforce.com Inc., the largest seller of online customer- management software, climbed 9 percent as billings growth beat analysts’ forecasts. American International Group Inc. added 1.5 percent after profit jumped 77 percent. Bank of America Corp.

and Morgan Stanley dropped at least 1.7 percent. FedEx Corp.

retreated 1.9 percent, pacing losses in transportation shares, as oil capped its longest increase since January 2010.

The S&P 500 rose 0.2 percent to 1,365.74 at 4 p.m. New York time, paring a gain of as much as 0.4 percent. The Dow Jones Industrial Average decreased 1.74 points, or less than 0.1 percent, to 12,982.95, after rising above 13,000 earlier today.

“We like U.S. equities,” said James McDonald, chief investment strategist at Northern Trust Corp. in Chicago. His firm manages about $665 billion. “That’s a more defensive way to participate in the global economic recovery. Yet the Dow is flirting with 13,000. While it makes no difference from a valuation standpoint, it can cause some people to say: we’ve had a pretty a big run and I’ll take a bit off the table. From a valuation standpoint, the stock market is still attractive.”

The S&P 500 gained as data showed that purchases of new homes in the U.S. exceeded forecasts in January after climbing a month earlier to a one-year high. The Thomson Reuters/University of Michigan final index of consumer sentiment for February rose to 75.3. Economists projected a reading of 73.

Before today, the S&P 500 twice this week advanced above its highest close since 2008, only to retreat by the end of the trading day. The Dow traded near 13,000 during the week, failing to close above that level. The 30-stock gauge hasn’t closed above 13,000 since May 2008.

Better-than-estimated economic and earnings data put the S&P 500 on pace for a third month of gains, the longest streak in a year. The index rose 4.1 percent in February. Earnings topped analysts’ estimates at 68 percent of the 441 companies in the index that released results since Jan. 9. The S&P 500 trades at 14 times reported earnings, compared with the average since

1954 of 16.4 times, according to data compiled by Bloomberg.

Technology shares, which comprise 20 percent of the S&P 500, had the biggest gain among 10 industries.

Salesforce.com surged 9 percent to $143.64. The amount Salesforce invoiced its customers grew 57 percent in the fourth quarter from a year earlier, topping the 31 percent predicted by Brent Thill, an analyst at UBS AG in San Francisco. Billings rose 29 percent in the third quarter.

AIG gained 1.5 percent to $28.41. The insurer cited a return to “sustainable operating profit” as it booked a tax benefit that fueled record fourth-quarter earnings. AIG is projecting that it will generate enough profit to use tax assets, tied to prior losses, that can limit future payments to the government.

Sears Holdings Corp. jumped 11 percent, the most in the S&P 500, to $68.31. The shares surged 34 percent in three days. The company yesterday announced plans to raise as much as $770 million by selling 11 store sites and separating some smaller- format businesses.

Interpublic Group of Cos. rose 6.5 percent to $11.62. The New York-based advertising company announced a $300 million share buyback program.

A gauge of banks had the biggest decline in the S&P 500 among 24 industries, slumping 1.2 percent. Regions Financial Corp. lost 1.9 percent to $5.80. Bank of America had the largest drop in the Dow, falling 1.8 percent to $7.88. Morgan Stanley dropped 2.5 percent to $18.49.

The Dow Jones Transportation Average, a proxy for economic growth, slid 0.4 percent, reversing an earlier gain of 0.8 percent. FedEx lost 1.9 percent to $90.24.

Gap Inc. retreated 4 percent to $22.57. The largest U.S.

apparel chain forecast profit this year that was less than some analysts estimated as sales declined at its Old Navy stores.

Sprint Nextel Corp. dropped 2 percent to $2.47. Comcast Corp., the largest U.S. cable company, sued a unit of Sprint alleging infringement of four telecommunications patents.

Stocks are in the midst of a “hope phase” that may be as short-lived as one that occurred a year earlier, according to Albert Edwards, a global strategist at Societe Generale SA.

He compares the S&P 500’s performance since October with its year-ago swings. Last year, the index dropped during the second half of February, rebounded to reach its 2011 high in April, and tumbled in a second-half bout of volatility.

This year’s gains reflect anticipation of sustained U.S.

economic growth and a so-called soft landing for the Chinese economy, according to Edwards, based in London. He also cited optimism that Greece’s second bailout and the European Central Bank’s moves to ease bank financing will help the euro region.

“Hope still beats in the breast of equity investors,” he wrote. “The market will rip out that hope and consume it in front of investors’ eyes.”

Corporate earnings may be a catalyst for the abandonment of hope, the report said. Edwards noted that estimates for S&P 500 companies as a group are dropping for the first time since late 2007, when the U.S. economy was sliding into a recession.

Edwards reiterated in September that the index will fall to 400, a plunge of about 70 percent from yesterday’s close, before the next bull market begins. He saw the yield on 10-year Treasury notes falling to 1.5 percent. Last year’s low was 1.67 percent.

Have a wonderful weekend everyone.

Be magnificent!

The craving for position, for prestige, for power, to be recognized by society

as being outstanding in some way, is a wish to dominate others, and this wish to dominate

is a form of aggression.  And what is the reason for this aggressiveness?  It is fear isn’t it?

-Krishnamurti, 1895-1986

As ever,

Carolann

Write the bad things that are done to you in sand, but write

the good things that happen to you on a piece of marble.

-Arabic Parable

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

Senior Vice-President &

Senior Investment Advisor