February 28, 2012 Newsletter

Dear Friends,

Don’t forget – tomorrow is the last day for RSP contributions that can be used to reduce the tax burden for 2011 income.

Tangents:

THE NEW SONG

For some time I thought there was time

and that there would always be time

for what I had a mind to do

and what I could imagine

going back to and finding it

as I had found it the first time

but by this time I  do not know

what I thought when I thought back then

there is no time yet it grows less

there is the sound of rain at night

arriving unknown in the leaves

once without before or after

then I hear the thrush waking

at daybreak singing the new song

-W.S. Merwin

photos of the day

February 28, 2012

A bee collects pollen from an almond blossom in early spring at park in Amman, Jordan.

Ali Jarekji/Reuters

A female Lesser Goldfinch feeds on a pollen cone of a conifer in Santa Clara, Calif.

Marcio Jose Sanchez/AP

Market Closes for February 28, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang and Matt Walcoff

Feb. 28 (Bloomberg) — Canadian stocks climbed to a five- month high as better-than-expected U.S. consumer confidence data bolstered the outlook for raw-materials producers and Bank of Montreal’s earnings lifted financial shares.

Goldcorp Inc., the second-largest gold producer by market value, advanced 2.9 percent as the metal climbed for the first time in three days. BMO, Canada’s fourth-largest lender, rose 1 percent after profit beat analysts’ estimates, helped by U.S.

consumer banking following its takeover of a Wisconsin lender.

SNC-Lavalin Group Inc. tumbled 21 percent after saying 2011 profit missed its projection and opening a probe into inaccurate documentation of payments by its construction unit.

The S&P/TSX Composite Index rose 40.09 points, or 0.3 percent, to 12,740.47, the highest close since Aug. 31. The benchmark measure has jumped 14 percent from an October low as reports on U.S. housing and the labor market bolstered optimism about growth in Canada’s biggest trading partner.

“It’s giving people a little bit of confidence that the economy will gradually improve and the recent run over the past four months in the stock market was not a fakeout,” Irwin Michael, a money manager at ABC Funds in Toronto, said in a phone interview. His firm oversees C$1 billion ($1 billion).

“With good earnings, more mergers and acquisitions — because we see a lot of that happening — we expect the market to be higher than where it is now at the end of the year.”

The S&P/TSX Materials Index rose for the first time in three days, climbing 1.4 percent. Goldcorp increased 2.9 percent to C$49.77. Teck Resources Ltd., Canada’s largest base-metals and coal producer, gained 1.3 percent to C$40.86 as copper rose to a two-week high. First Majestic Silver Corp., which mines in Mexico, surged 6.4 percent to C$21.68 as silver rallied the most since Jan. 3.

Confidence among U.S. consumers climbed to a 12-month high in February, signaling household spending will help sustain the expansion, according to the Conference Board’s index.

BMO, the first Canadian bank to report quarterly results, gained 1 percent to C$58.56. The lender reported first-quarter earnings that beat the average analyst estimate in a Bloomberg survey by 4.3 percent, excluding certain items. Royal Bank of Canada, the country’s biggest lender by assets, climbed for a sixth day, increasing 1.1 percent to C$55.62.

SNC-Lavalin plunged 21 percent, the most since at least 1992, to C$38.43. The company said an outside law firm is assisting in the inquiry after C$35 million of fourth-quarter outlays were found to have been tied to “projects to which they did not relate” and had to be logged as expenses.

Thompson Creek Metals Co. tumbled 16 percent, the most since November 2008, to C$7.30. The molybdenum producer said its Mt. Milligan copper and gold project may cost more than it had estimated. Analysts at Credit Suisse Group AG, Deutsche Bank AG and Toronto-Dominion Bank cut their ratings on the stock.

Calfrac Well Services Ltd., an oilfield-services company, surged 9.4 percent, the most since September 2009, to C$30.39 after its fourth-quarter profit, excluding certain items, surpassed all 14 estimates in a Bloomberg survey.

Ritchie Bros. Auctioneers Inc., which calls itself the world’s largest industrial auctioneer, decreased 7 percent to

C$23.79 after reporting fourth-quarter sales that trailed the average analyst estimate in a Bloomberg survey by 5.4 percent.

Petrominerales Ltd., which produces oil and gas in Colombia, had its share-price forecast cut by at least nine analysts, according to data compiled by Bloomberg. The stock dropped 7 percent to C$17.72, extending its slump after falling

20 percent yesterday, when the company reported drilling results that trailed analysts’ estimates.

US

By Rita Nazareth

Feb. 28 (Bloomberg) — U.S. stocks rose, sending the Dow Jones Industrial Average to its first close above 13,000 since 2008, as better-than-estimated consumer confidence data and a drop in oil bolstered optimism in the world’s largest economy.

Apple Inc. added 1.8 percent and its market capitalization approached $500 billion as it is said to unveil a new iPad next month. Micron Technology Inc. jumped 3.7 percent after buying Intel Corp.’s stake in two wafer factories as the companies expand their venture. Intel advanced 1.3 percent. Priceline.com Inc. surged 7 percent to the highest level since 1999 as profit beat estimates. The Bloomberg U.S. Airlines Index rallied 1.7 percent as oil fell the most in more than five weeks.

The Standard & Poor’s 500 Index increased 0.3 percent to

1,372.18 at 4 p.m. New York time, gaining for a fourth day, the longest streak since Jan. 23. The Dow advanced 23.61 points, or

0.2 percent, to 13,005.12. The 30-stock gauge closed above

13,000 after three unsuccessful attempts over the past week.

“13,000 is just a number,” Malcolm Polley, who oversees about $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania, said in a telephone interview.

“The U.S. economy is in decent shape. The market is not expensive.”

Today’s gain put the Dow on pace for a fifth straight month of gains, the longest rally since April, amid better-than- estimated economic data. Still, the index is 8.9 percent below its all-time high of 14,164.53 in October 2007. The S&P 500 has rallied 4.6 percent in February, poised for a third monthly gain, the longest stretch in a year. The index trades at about

14.1 times reported earnings, compared with the average since

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

Stocks rose as the Conference Board’s index increased to the highest level in a year. The euro strengthened versus the dollar before the European Central Bank provides funds tomorrow to support banks. Earlier today, stocks dropped as orders for U.S. durable goods fell in January by the most in three years.

Separate data showed that home prices in 20 U.S. cities declined more than forecast in December.

“I don’t have rose-colored glasses on, but I think the path of least resistance is up,” Richard Weeks, the Vienna, Virginia-based managing director and partner at HighTower’s VWG Wealth Management, said in a telephone interview. His firm oversees more than $20 billion. “The news is generally good.

Short-term, all signs say that risks have been reduced.”

Seven out of 10 groups in the S&P 500 advanced. Technology shares, which comprise 20 percent of the index, added 0.9 percent as a group.

Apple, the world’s largest technology company, gained 1.8 percent to $535.41. The shares advanced for a fourth straight day to a record. The company will hold a product event on March 7 in San Francisco, where it’s said to be releasing the third generation of its best-selling iPad tablet computer.

“We have something you really have to see. And touch,”

Apple said today in an invitation, which features a picture of an iPad screen. The new device will sport a high-definition display, run a faster processor and work with speedier wireless networks, people familiar with the product said last month.

The Philadelphia Semiconductor Index climbed 1.6 percent as

23 of its 30 stocks increased.

Micron surged 3.7 percent to $8.88. The stock has gained 14 percent over three days. The company will supply Intel products based on a technology called Nand flash memory. The chipmakers will also extend their Nand flash development program, expanding it to include emerging technologies. Intel, the world’s largest chipmaker, added 1.3 percent to $27.24.

Priceline gained 7 percent, the most in the S&P 500, to $632.76. The company has weathered the European debt crisis better than Expedia Inc. and Orbitz Worldwide Inc., and it’s expanding into emerging markets and new businesses.

Ten out of 14 stocks in the Bloomberg U.S. Airlines Index advanced. Crude oil for April delivery fell $2.01 to settle at

$106.55 a barrel on the New York Mercantile Exchange. It was the biggest decline since Jan. 20. US Airways Group Inc. increased

5.9 percent to $7.41. United Continental Holdings Inc. added 2.5 percent to $20.58. Energy shares in the S&P 500 lost 0.2 percent as a group.

Office Depot Inc. increased 19 percent, the most since May 2009, to $3.59. The second-largest U.S. office-supply chain posted earnings excluding some items of 3 cents a share in the fourth quarter. Analysts, on average, expected the company to break even, according to a Bloomberg survey.

Domino’s Pizza Inc. soared 16 percent to $38.82. The pizza- delivery chain announced a debt refinancing that may result in a special dividend.

Apollo Group Inc. fell 16 percent, the most in the S&P 500, to $43.04. The for-profit educator cut its operating profit forecast for 2012 to no more than $725 million, below the previous estimate of as much as $750 million.

Other education shares declined. ITT Educational Services Inc. retreated 5.4 percent to $68.29. DeVry Inc. fell 3.8 percent to $35.41.

The Russell 2000 Index of small companies slid 0.4 percent to 823.80. Sykes Enterprises Inc. dropped 17 percent to $14.28.

The operator of call centers forecast full-year earnings of

$1.20 a share at most, below the average analyst estimate of $1.46.

Warren Buffett’s pursuit of bigger acquisitions makes companies from Stanley Black & Decker Inc. to Parker Hannifin Corp. the most attractive takeover targets, according to data compiled by Bloomberg.

Berkshire Hathaway Inc.’s 81-year-old chairman and chief executive officer said in his annual letter to shareholders on Feb. 25 that he was “on the prowl” for large deals after spending more than $35 billion on companies including Lubrizol Corp. and Burlington Northern Santa Fe in the past two years.

With Berkshire generating $1 billion a month in free cash flow, the world’s most successful investor is eyeing takeovers as near-zero percent interest rates limit returns in fixed- income markets and the Omaha, Nebraska-based company’s cash hoard increased to $37.3 billion.

Stanley Black & Decker, the world’s biggest maker of hand tools, and Parker Hannifin, which controls more than half the market for fluid-powered valves, are among 21 U.S. companies that meet the acquisition criteria in Berkshire’s annual report, data compiled by Bloomberg show.

Stanley Black & Decker and Parker Hannifin “seem very plausible acquisition candidates for Buffett,” said Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. “We would expect him to make a larger deal. He’s a man of his word.”

Have a wonderful evening everyone.

Be magnificent!

How is this dream to be broken,

how shall we wake up from this dream

that we are little men and women,

and all such things?

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Education is not the filling of a

pail, but the lighting of a fire.

-W.B. Yeats, 1865-1939

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

Senior Vice-President &

Senior Investment Advisor