February 8, 2012 Newsletter

Dear Friends,

Tangents:

I went to see Michaëlle Jean last night with one of my clients who lives in Vancouver.  She spoke for an hour and a half about her life, fleeing Haiti with her family to escape the brutal regime of Papa Doc Duvalier, what it was like to live under the oppression of a tyrant dictator.  She arrived with her parents and sister in Thetford Mines, Quebec, in February!  She and her sister had never seen snow before.  When asked what the greatest gift she ever received was, she replied:  Trust.   What a wonderful thought.

I am off to the distinguished alumni awards at UVic tonight, where one of my friends will be a recipient, very justly so.

photos of the day

February 8, 2012

Skaters ride a stretch of the 11 Cities Tour itinerary as they pass through the village of Hindeloopen, northern Netherlands. Dutch troops are joining a race against time to prepare ice for a legendary 125-mile (200 kilometer) race across frozen waterways in the northern Netherlands that could be staged for the first time in 15 years.

Peter Dejong/AP

Overnight snow covered these crocus that were blooming near Maysville, Kentucky. The area received nearly an inch of snow.

Terry Prather/The Ledger Independent/AP

Market Closes for February 8, 2012:

North American Markets

Market Commentary:

Canada

By Katia Porzecanski and Matt Walcoff

Feb. 8 (Bloomberg) — Most Canadian stocks fell as mining and energy shares declined after gold futures retreated and the U.S. reported a bigger-than-forecast increase in gasoline supplies.

Canadian Natural Resources Ltd., the country’s second- biggest energy company by market value, decreased 1.6 percent.

Goldcorp Inc., the world’s second-largest producer of the metal by market value, lost 1.3 percent as Greek political parties failed to agree on austerity measures and the U.S. dollar strengthened. Agrium Inc., a fertilizer producer and farm retailer, climbed 1.9 percent after its fourth-quarter earnings topped all 23 analyst estimates in a Bloomberg survey.

Of the 253 stocks in the Standard & Poor’s/TSX Composite Index 130 fell, 116 rose and seven were unchanged. The Canadian equity benchmark rose 8.6 points, or 0.1 percent, to 12,521.02 in Toronto, as financial companies gained after housing starts in the country fell less than forecast.

Investors “are waiting for Greece,” Gareth Watson, vice president of investment management and research at Richardson GMP Ltd. in Toronto, said in a telephone interview. The firm oversees about C$16 billion ($16 billion). “Politicians and now the market are saying to Greece, ‘Look, you can’t keep pushing this off, and you need to come to a resolution now.’”

The S&P/TSX has risen 4.7 percent this year as manufacturing data from the U.S., Europe and China surpassed most economists’ forecasts in Bloomberg surveys, overshadowing the European debt crisis. Resources companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

Euro-area finance ministers are due to hold an emergency meeting in Brussels tomorrow as the Greek government pushes to complete talks on terms of a rescue.

U.S. gasoline supplies increased 1.63 million barrels last week, the Energy Department said today in Washington. Analysts had forecast a gain of 875,000 barrels, according to the median estimate in a Bloomberg survey. The U.S. also reported higher distillate-fuel supplies. Most surveyed analysts had forecast a decline.

Canadian Natural decreased 1.6 percent to C$37.92.

Birchcliff Energy Ltd., a western Canadian oil and gas producer, retreated 4.6 percent to C$13.05.

Encana Corp., the country’s largest natural gas producer, fell 1.8 percent to C$19.48. The company’s bonds have dropped the most among global energy companies this year as investors project further declines in prices of the fuel. Natural gas tumbled 50 percent on the New York Mercantile Exchange in the eight months ending today.

The S&P/TSX Gold Index declined for a fourth day as the metal retreated for a third time in four days on the Comex in New York.

Goldcorp slipped 1.3 percent to C$46.97. Yamana Gold Inc., Canada’s fourth-largest producer of the metal by market value, lost 1.2 percent to C$16.60. Among base-metals producers, Teck Resources Ltd., Canada’s biggest, decreased 2 percent to C$40.75.

Nevsun Resources Ltd., which mines gold in the African country of Eritrea, slumped 4.6 percent to C$4.20 after plunging 31 percent yesterday. At least three analysts cut their share- price forecasts on Nevsun today, a day after it said production may fall 50 percent this year.

The S&P/TSX Financials Index rose for a fourth day after Canada Mortgage & Housing Corp. reported that work began on 197,900 units at a seasonally adjusted annual pace. Economists had forecast 194,000 starts, according to the median of 19 responses to a Bloomberg News survey. Royal Bank of Canada, the biggest stock by weight in the S&P/Index, rose 0.7 percent to C$53.93.

Chartwell Seniors Housing Real Estate Investment Trust, which owns retirement and long-term-care residences, rose 2.1 percent to C$8.80. Canadian Western Bank, the country’s eighth- biggest lender, gained 1.8 percent to C$27.39.

Agrium rallied 1.9 percent to C$82.63 after its quarterly profit beat the average estimate in a Bloomberg survey of analysts by 16 percent, excluding certain items. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, climbed 1.1 percent to C$46.31.

ATS Automation Tooling Systems Inc., which makes factory- automation equipment, surged 7 percent to C$7.60 after reporting third-quarter earnings that surpassed the average analyst estimate in a Bloomberg survey by 13 percent, excluding certain items. The shares jumped as much as 12 percent, the most intraday since June 2009.

WestJet Airlines Ltd. gained 4.2 percent to C$13.65 after the Calgary-based carrier posted fourth-quarter profit that topped analysts’ estimates and it moved closer to starting a low-cost regional unit next year as a majority of employees backed the idea after management sought their input.

Theratechnologies Inc. fell 14 percent, the most since Aug. 8, to C$2.26. The HIV drug developer failed to provide a sales forecast with its quarterly financial results.

US

By Rita Nazareth

Feb. 8 (Bloomberg) — U.S. stocks advanced, pushing the Standard & Poor’s 500 Index to a seven-month high, as Greek Prime Minister Lucas Papademos began talks with political leaders on terms required for a bailout.

Financial and technology shares gained the most in the S&P 500 among 10 groups. Bank of America Corp. rallied 3.6 percent to the highest price since Aug. 31. Hartford Financial Services Group Inc. rose 7.6 percent as billionaire investor John Paulson said the insurer needs to take “drastic” action to reverse its decline. Cisco Systems Inc. jumped 3.2 percent at 4:09 p.m. New York time, extending its gain in regular trading, after reporting profit and sales that beat analyst estimates.

The S&P 500 added 0.2 percent to 1,349.96 at 4 p.m. New York time, after dropping as much as 0.4 percent. The Dow Jones Industrial Average increased 5.75 points, or less than 0.1 percent, to 12,883.95, the highest level since May 2008. The Nasdaq Composite Index rose 0.4 percent to 2,915.86, the highest since December 2000.

“There’s just a news vacuum,” James Paulsen, who helps oversee about $333 billion as chief investment strategist at Minneapolis-based Wells Capital Management, said in a telephone interview. “If you just get Greece to come out with anything, you can actually maybe have people move on. I do think they are going to come out with some sort of agreement. That would be a big step forward in dealing with Europe’s debt crisis.”

Global stocks entered a bull market as the MSCI All-Country World Index extended its gain from last year’s low to 20 percent. Papademos began talks with political parties supporting his government as he works to secure a second aid package.

Greece will pledge permanent spending cuts, including lower pensions and a 20 percent reduction in minimum wages, according to the draft of the financing deal.

The S&P 500 closed 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 7.3 percent this year amid better-than- expected economic data and corporate profits. Earnings beat projections at 68 percent of the 304 companies in the S&P 500 that reported quarterly results since Jan. 9, according to data compiled by Bloomberg.

“Be 100 percent in equities,” Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest money manager, said in a Bloomberg Television interview from Hong Kong today. “I don’t have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise, and there are great values in equities.”

The S&P 500 trades for about 14 times its companies’

earnings and has been stuck below its five-decade average multiple of 16.4 since May 2010, the longest stretch since a 13- year period beginning in 1973.

Companies most-tied to economic growth led the gains in the S&P 500 as measures of financial and technology shares added more than 0.6 percent. Bank of America climbed 3.6 percent, the most in the Dow, to $8.13.

Hartford jumped 7.6 percent to $20.58. Paulson, a hedge fund manager who controls the largest stake in Hartford, told Chief Executive Officer Liam McGee he needs to reverse the insurer’s stock slide. It declined 39 percent last year and trades at less than half of the company’s book value, a measure of assets minus liabilities.

“Hartford needs to do something drastic because the stock is the lowest valuation relative to book value of any major insurance company,” Paulson said today at a conference call for analysts and investors held by Hartford. The company hired advisers to evaluate splitting the life insurance and property- casualty businesses, Hartford said today.

Cisco added 3.2 percent to $21.08 after the close of regular trading. Fiscal second-quarter net income rose to $2.18 billion, or 40 cents a share, from $1.52 billion, or 27 cents, a year earlier. Excluding certain items, earnings were 47 cents.

Sales rose 11 percent to $11.5 billion in the period, which ended Jan. 28. Analysts had estimated 43 cents in profit and $11.2 billion in revenue, according to a Bloomberg survey.

Chief Executive Officer John Chambers began a turnaround plan last year, when he cut jobs, eliminated businesses and refocused on more profitable products. Cisco also boosted its dividend and got a lift from so-called enterprise customers, which use its gear in their internal networks. The shares rose 1.1 percent to $20.43 in regular trading before the earnings report.

Ralph Lauren Corp. rallied 9.2 percent to $171.49. The retailer of its namesake brand clothing said revenue in the current fiscal year may gain more than it previously expected.

Computer Sciences Corp. surged 19 percent, the most since at least 1980, to $31.39. The technology contractor for governments and companies named Mike Lawrie as its next chief executive officer as it renegotiates a contract with the U.K.’s National Health Service.

A measure of energy shares had the biggest decline among 10 industries in the S&P 500 today, falling 0.6 percent. Exxon Mobil Corp. lost 0.6 percent to $85.32.

Sprint Nextel Corp. slumped 1.6 percent to $2.41 after reporting widening losses for the first quarter it offered the Apple Inc. iPhone, signaling the best-selling device may not be helping Chief Executive Officer Dan Hesse turn around the carrier’s business.

Moody’s Corp. lost 1.7 percent to $38.31. The owner of the world’s second-largest provider of credit ratings said fourth- quarter profit fell 30 percent as Europe’s sovereign-debt crisis slowed bond sales around the world, reducing demand for its services.

Western Union Co. tumbled 10 percent, the biggest decline in the S&P 500, to $17.73. The world’s largest money-transfer business forecast earnings in 2012 will be no more than $1.75 a share, less than the average analyst estimate of $1.81.

The Nasdaq Composite Index has entered a bull market and stocks may continue to rally through the end of March, according to Louise Yamada, who said in December that equity charts were signaling further losses.

“The Nasdaq has initiated a new structural bull market,” Yamada, managing director of Louise Yamada Technical Research Advisors LLC in New York, said in a radio interview today on “Bloomberg on the Economy” with Sara Eisen. “We’ve entered the year with short-term positive signals with the possibility that we could see a rally through the first quarter.”

Yamada, who worked as a technical analyst at Salomon Smith Barney, said in a December report that investors may be better off selling “weaker stocks into strength” after a 14 percent gain in the S&P 500 since October. She said in November that evidence the market’s advance will continue hadn’t materialized and the year-end rally may falter.

Have a wonderful evening everyone.

Be magnificent!

We would be happy to do the millions of things that we are not able to do.

The will is there, but we are not able to fulfill our desire.  Thus when we feel a desire,

but we are unable to realize that desire, we undergo a reaction we call suffering.

What is the cause of desire?  I am, only me.

As a result, I myself am the cause of all of the suffering that I have known.

-Swami Vivekananda, 163-1902

As ever,

Carolann

To be surprised, to wonder, is to begin

to understand.

-José Ortega Y Gasset, 1883-1955

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7