February 3, 2012 Newsletter

Dear Friends,

Tangents:

Today is Gertrude Stein’s birthday, born 1874.

A rose is a rose is a rose.

-Gertrude Stein, 1874-1946

Super Bowl Sunday:  Super Bowl Sunday is the biggest sports gambling day on the calendar. According to RJ Bell, CEO of Pregame.com, $10 billion will be laid down on this year’s Super Bowl. Of that, a paltry $90 million will be wagered in legal Nevada sportsbooks.

(Reuters)

photos of the day

February 3, 2012

The Vince Lombardi Trophy sits between a New York Giants and a New England Patriots helmet during a press conferene for Super Bowl XLVI in Indianapolis, Indiana. Super Bowl XLVI is set for play on February 5.

Gary Hershorn/Reuters

A women swims at the Szechenyi Bath during a winter morning in Budapest. The Hungarian government has ordered a cold alert in eleven counties in Hungary from Friday due to freezing temperatures that are expected to fall under minus 20 degrees in some places, well below the seasonal average.

Bernadett Szabo/Reut

Market Closes for February 3^rd, 2012:

North American Markets

Market Commentary:

Canada

By Matt Walcoff

Feb. 3 (Bloomberg) — Canadian stocks rose, completing a seventh straight weekly advance, as the lowest U.S. unemployment since February 2009 signaled Canada’s biggest trade partner is weathering the European debt crisis.

Toronto-Dominion Bank, Canada’s second-largest lender by assets, gained 1.4 percent. Barrick Gold Corp., the world’s largest gold producer, lost 2.3 percent as the metal retreated the most in five weeks. Canadian Pacific Railway Ltd., the country’s second-biggest railroad, advanced 2.3 percent after an analyst at JPMorgan Chase & Co. raised his rating on the shares.

The S&P/TSX Composite Index increased 23.8 points, or 0.2 percent, to 12,577.28, extending its weekly rally to 0.9 percent. The streak of gains was the longest since a seven-week advance ended April 2009.

“The number was a huge improvement over expectations,” Pat McHugh, senior managing director and Canadian equity strategist at Manulife Financial Corp.’s asset-management unit, said in a telephone interview. The unit oversees about $217 billion. “Almost twice as many jobs were created last month than economists had been predicting. The biggest beneficiary of an improvement in U.S. consumers is the banking system.”

The S&P/TSX has climbed to the highest since September, led by raw-materials producers, as U.S. gains in employment and manufacturing outweighed concern that Europe’s debt crisis will slow world growth. The U.S. accounted for 75 percent of Canada’s exports in 2010, according to Statistics Canada.

U.S. nonfarm payrolls increased by 243,000 jobs in January, the Labor Department said today in Washington. None of the 89 economists in a Bloomberg survey had forecast a gain that big.

The U.S. unemployment rate fell to 8.3 percent from 8.5 percent.

The S&P/TSX Financials Index rose for the third time in four days. TD climbed 1.4 percent to C$78.83. Royal Bank of Canada, its bigger domestic rival, gained 0.7 percent to C$53.32. Manulife Financial Corp., North America’s fourth- largest insurance company, rallied 3.4 percent to C$12.34.

Gold stocks dropped as the metal declined on the Comex in New York after settling at a two-month high yesterday. Barrick lost 2.3 percent to C$48.59.

Goldcorp Inc., the world’s second-largest producer by market value, decreased 2.9 percent to C$47.25. Eldorado Gold Corp., Canada’s fifth-biggest gold company by market value, slumped 5.1 percent to C$14.64.

“The strength in the economy implies that the probability of more Fed easing or another quantitative package is being diminished, and gold’s going to take it on the chin,” McHugh said. “The flight-to-safety movement doesn’t appear to be as important as a result of the stats we’ve seen today.”

Energy stocks in the S&P/TSX advanced for a fourth day as crude oil futures climbed on the New York Mercantile Exchange.

Suncor Energy Inc., Canada’s largest oil and gas producer, increased 1.9 percent to C$34.90. Cenovus Energy Inc., the country’s fifth-biggest energy company, rose 2.9 percent to C$38.80. Petrobank Energy and Resources Ltd. jumped 6.8 percent to C$15.12.

Base-metals companies gained as copper futures advanced the most in two months. Teck Resources Ltd., Canada’s largest company in the industry, increased 2.1 percent to C$43.40. First Quantum Resources Ltd., the country’s second-biggest publicly traded copper producer, climbed 3 percent to C$23.43.

Copper Fox Metals Inc., owner of a mining project in British Columbia, jumped 12 percent to C$1.54 after reporting test results from four exploratory drill holes at its Schaft Creek property.

Canadian Pacific surged 2.3 percent to C$73.47, the highest since May 2008. Thomas R. Wadewitz, an analyst at JPMorgan, boosted his rating on the stock to “overweight” from “neutral,” saying the company is in the early stages of a turnaround.

Shares of the Calgary-based company have soared 59 percent since Sept. 22 as William Ackman’s Pershing Square Capital Management LP bought a stake in the company and began pushing it to replace its chief executive officer.

Canadian National Railway Co., the country’s largest railroad, rose today for a fourth session, gaining 0.9 percent to C$77.91.

Smart Technologies Inc., which makes electronic whiteboards, plunged 12 percent, the most since May, to C$3.66 after cutting its 2012 earnings forecast. At least five analysts reduced their price estimates on the shares.

US

By Rita Nazareth

Feb. 3 (Bloomberg) — U.S. stocks advanced, extending the best start to a year for the Standard & Poor’s 500 Index since 1987, after a report showed that employment growth topped estimates and the jobless rate unexpectedly fell to 8.3 percent.

Bank of America Corp., Caterpillar Inc. and Alcoa Inc. rallied at least 3.2 percent to pace gains among companies most- tied to economic growth. The Dow Jones Transportation Average gained 1.2 percent as FedEx Corp. climbed 1.9 percent. Genworth Financial Inc., a mortgage guarantor and life insurer, surged 14 percent after swinging to a profit. Tyson Foods Inc. rose 4.1 percent as earnings at the meat processor beat estimates.

The S&P 500 added 1.5 percent to 1,344.90 at 4 p.m. New York time. The benchmark gauge has rallied for five straight weeks, the longest streak in a year. The Dow Jones Industrial Average gained 156.82 points, or 1.2 percent, to 12,862.23, the highest level since 2008. The Russell 2000 Index of small companies jumped 2.2 percent to 831.11. The Nasdaq Composite Index rose 1.6 percent to 2,905.66, the highest since 2000.

“Spectacular,” Ron Florance, managing director of investment strategy for Wells Fargo Private Bank, said in a telephone interview from Phoenix. His firm manages $169 billion.

“It’s a very, very strong jobs number. It shows that companies have confidence that they see global demand growth through their products and services. That will support risk assets.”

Stocks and bond yields jumped as the report fueled optimism the economy is weathering Europe’s debt crisis. The 243,000 increase in payrolls was the most since April and beat all forecasts in a Bloomberg News survey. The unemployment rate fell to the lowest since February 2009. Service industries in the U.S. expanded in January at the fastest pace in almost a year.

The S&P 500 has gained 6.9 percent so far this year, the most since it surged 14 percent over the same period in 1987.

The index has recovered after plunging 19 percent between April 29 and Oct. 3 amid better-than estimated economic data and corporate profits. It’s 1.4 percent away from surpassing its peak nine months ago, which would send it to the highest level since June 2008. It has rallied 2.2 percent this week.

Better economic data should help drive solid corporate earnings, said Brad Sorensen at Charles Schwab Corp. Earnings in the S&P 500 are forecast to rise 9 percent this year to $104.68, according to analyst estimates compiled by Bloomberg. At yesterday’s close of $104.68, the index was trading at 12.7 times projected earnings in 2012 and 11.2 times predictions for 2013. It has traded at an average price-earnings ratio of 16.4 since 1954, according to data compiled by Bloomberg.

“It will be a decent year for the stock market,” Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab, said in a telephone interview.

His firm has $1.68 trillion in client assets. “Investors are starting to rotate some money into stocks as they become more confident in the economic outlook.”

The Morgan Stanley Cyclical Index climbed 2.8 percent amid economic optimism. The KBW Bank Index rallied 3.3 percent. A gauge of homebuilders in S&P indexes gained 5.8 percent.

Bank of America added 5.2 percent to $7.84. Caterpillar, the largest construction and mining-equipment maker, increased 3.3 percent to $113.94. Alcoa, the largest U.S. aluminum producer, climbed 3.3 percent to $10.76. FedEx, an economic bellwether as it moves goods from pharmaceuticals to financial documents, jumped 1.9 percent to $94.54.

Genworth Financial soared 14 percent, the most in the S&P 500, to $9.17. Chief Executive Officer Michael Fraizer has scaled back the retirement-products business to conserve capital as Genworth seeks to maintain sales of U.S. mortgage coverage.

Tyson Foods rose 4.1 percent to $19.38. The meat processor reported first-quarter earnings of 42 cents a share. On average, the analysts surveyed by Bloomberg estimated profit of 34 cents.

Gilead Sciences Inc. jumped 11 percent to $54.70. The drugmaker that acquired Pharmasset Inc. last month for its experimental hepatitis C treatments gained after one of the medicines produced positive clinical trial results.

Brocade Communications Systems Inc. rose 1.4 percent to $5.91. Blackstone Group LP is studying a leveraged buyout of the company, said a person with knowledge of the situation. While Blackstone is in talks with Brocade, which has been seeking a buyer since 2009, reaching a deal may be difficult, said the person.

Estee Lauder Cos. lost 2.3 percent to $57.48. The maker of Mac cosmetics and Clinique skin care forecast third-quarter earnings of no more than 32 cents a share, before restructuring charges, missing the average analyst estimate of 41 cents.

Wynn Resorts Ltd. slipped 4.8 percent to $114.98. Wynn Macau Ltd.’s full-year profit missed analysts’ estimates as the Hong Kong-listed unit benefited less than its competitor, Sands China Ltd., from surging gambling revenue in the former Portuguese colony.

Have a wonderful weekend everyone.

Be magnificent!

The freedom of the seed resides in its fulfillment of its dharma, of its nature and its destiny,

which is to become a tree; the failure to achieve this

becomes for the seed a prison.

The sacrifice through which one thing reaches its fulfillment is not a sacrifice that leads to death;

it is the casting off of chains and the attainment of freedom.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

Many men go fishing all of their lives without

knowing it is not fish they are after.

-Henry David Thoreau, 1817-62

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

Senior Vice-President &

Senior Investment Advisor