February 1, 2012 Newsletter

Dear Friends,

Tangents:

February is Black History Month

February was the month of purification among the ancient Romans (Latin februum means purgation).

The Dutch used to call the month Spokkelmaand, “vegetation month.”

The Anglo-Saxons knew it as solmönath, meaning “mud month.”

In the French revolutionary calendar, its equivalent from January 21 to February 19^th, was Pluviôse m “rain month.”

An old proverb:

February fill dyke, be it black or be it white;

But if it be white it’s better to like.

photos of the day

February 1, 2012

A copy of Leonardo da Vinci’s Mona Lisa, painted at the same time as the original in the same studio, is displayed at the Prado Museum in Madrid. The museum says the copy is perhaps the earliest replica of the masterpiece. A museum spokeswoman said the work was done by one of da Vinci’s key students and was painted side by side with the 16th century original that hangs in the Louvre in Paris.

Paul White/AP

An airplane flies past the moon over Freudenberg, Germany.

Ina Fassbender/Reuters

Market Closes for February 1^st, 2012:

North American Markets

Market Commentary:

Canada

By Matt Walcoff

Feb. 1 (Bloomberg) — Canadian stocks rose for a second day, led by banks and energy producers, after manufacturing indexes in Europe and China surpassed most analysts’ forecasts.

Royal Bank of Canada, the country’s largest lender by assets, increased 1.6 percent as banks climbed for the first time in seven days. Cenovus Energy Inc., Canada’s fifth-biggest energy company, rallied 2.5 percent as oil and gas stocks advanced. Valeant Pharmaceuticals International Inc., Canada’s largest drugmaker, gained 4.6 percent after saying it will buy a Brazilian food supplements company.

The S&P/TSX Composite Index rose 80.86 points, or 0.7 percent, to 12,533.01 at 1:47 p.m. Toronto time.

“Canada is very much tied to global growth,” 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). “Over the last several months, there’s been a pick-up in economic numbers. In China, there’s more and more confidence they’re not going to have this hard landing some people were talking about.”

The S&P/TSX gained 4.2 percent in January, its second monthly advance in 11 months, as raw-materials producers surged

10 percent on higher metals prices. Gold had its biggest January rally since 1983 and copper increased after the U.S. Federal Reserve extended its low-interest-rate pledge to late 2014. The industry accounts for 22 percent of Canadian stocks by market value, according to Bloomberg data.

Purchasing managers’ indexes from China and the U.K. showed manufacturing expanded faster in January than most economists in Bloomberg surveys had forecast. In the euro region, manufacturing contracted less than the median economist forecast.

Greece may offer to promise a reduction in bondholders’

losses in a debt swap that would take effect if the country’s economy rebounds, people with knowledge of the confidential talks said. Owners of Greek debt have been negotiating an exchange of their bonds for newer ones that would pay a lower interest rate.

Bank shares in the S&P/TSX ended their longest streak of losses since July. Royal Bank climbed 1.6 percent to C$53.20.

Toronto-Dominion Bank, Canada’s second-largest lender by assets, rose 1 percent to C$78.28. Manulife Financial Corp., North America’s fourth-biggest insurer, gained 2.6 percent to C$12.01.

The S&P/TSX Energy Index advanced for a second day. Cenovus increased 2.5 percent to C$37.49. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, climbed 1.1 percent to C$40.16.

Petrobank Energy & Resources Ltd., the majority owner of PetroBakken Energy Ltd., jumped 7 percent to C$14.93 after agreeing to sell its May River property in Alberta to Grizzly Oil Sands Ulc for C$225 million.

TransGlobe Energy Corp., which produces oil and gas in Egypt and Yemen, rose 8.3 percent to C$10.58 to extend its three-day surge to 12 percent. The company’s daily average oil production increased 41 percent in January from the fourth quarter of 2011, Calgary-based TransGlobe said Jan. 30.

Flint Energy Services Ltd., an oilfield-services company, rallied 6.4 percent to C$15.73 after gaining 5.6 percent yesterday. Frederic Bastien, an analyst at Raymond James Financial Inc., began coverage of the company with a “strong buy” rating yesterday, citing its diverse activities and growth in the shale gas and natural gas liquids industries.

Raw-materials companies in the S&P/TSX advanced as the U.S.

Dollar Index fell to the lowest intraday level since Dec. 9 and base-metals futures rose.

Ivanhoe Mines Ltd., Rio Tinto Group’s majority-owned partner in the Oyu Tolgoi copper project in Mongolia, climbed for the first time in five days, increasing 3.6 percent to C$16.76. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 0.9 percent to C$47.42 as wheat futures gained after settling at a four-month high yesterday.

Valeant gained 4.6 percent to C$50.80 after agreeing to buy Probiotica Laboratorios Ltda., based in Embu das Artes, Sao Paulo, for 150 million reais ($86 million). Probiotica had about

80 million reais in revenue last year, Valeant said in a statement.

Westport Innovations Inc., which develops natural-gas engine technologies, dropped 6 percent to C$39.14 after Navistar International Corp. said it will sell heavy-duty trucks with engines it is developing with Clean Air Power Ltd. Westport closed at a 10-year high yesterday.

US

By Rita Nazareth

Feb. 1 (Bloomberg) — U.S. stocks advanced, snapping a four-day decline in the Standard & Poor’s 500 Index, amid signs that manufacturing across the world is strengthening.

Financial and industrial shares in the S&P 500 rose at least 1.1 percent to lead gains among 10 groups. Morgan Stanley added 4 percent as Facebook Inc. was said to pick the firm to take the lead on its planned initial public offering. Whirlpool Corp. surged 13 percent as the appliance maker projected earnings that beat forecasts. Technology companies in the benchmark index rallied to an 11 year-high. Broadcom Corp.

jumped 8.1 percent as its sales forecast may top estimates.

The S&P 500 increased 0.9 percent to 1,324.08 at 4 p.m. New York time, following the biggest January advance in 15 years for the measure. The Dow Jones Industrial Average rallied 83.55 points, or 0.7 percent, to 12,716.46. The Russell 2000 Index of small companies jumped 2.1 percent to 809.66.

“The manufacturing is looking pretty good,” Allan Flader, a senior vice president at RBC Wealth Management, said in a telephone interview from Phoenix. His firm oversees $227 billion. “It shows that there’s not a contraction going on and that we’re progressing and moving forward.”

Equities rallied after data showing manufacturing in the U.S. grew at the fastest pace in seven months. Factory indexes in China improved and a U.K. manufacturing gauge jumped to an eight-month high. In Germany, output grew for the first time since September. Manufacturing contracted less than initially estimated in the euro region. A spokesman said Greece expects to complete talks on a private sector debt swap and a second international financing deal for the country in the next days.

“The news on the economy is better,” David Sowerby, a Bloomfield Hills, Michigan-based portfolio manager at Loomis Sayles & Co., which oversees $150 billion, said in a telephone interview. “The uncertainty in Europe has diminished. While corporate profits have been less robust, they are still growing.

That’s what’s moving stock prices higher.”

The S&P 500 rose 4.4 percent for the best January since it gained 6.1 percent in 1997, according to data compiled by Bloomberg. Earnings beat projections at 67 percent of the 209 companies in the S&P 500 that reported quarterly results since Jan. 9, the data show. Profits probably grew 4.6 percent in the fourth quarter, according to a Bloomberg survey of analysts. The projection has fallen from 6.2 percent at the end of last year.

The Morgan Stanley Cyclical Index of companies most-tied to the economy rallied 1.6 percent. A gauge of homebuilders in S&P indexes jumped 3 percent. Construction spending increased 1.5 percent in December, the biggest gain since August, Commerce Department figures showed today.

The KBW Bank Index rose 1.7 percent as 23 of its 24 stocks gained. Bank of America Corp. added 3.2 percent, the most in the Dow, to $7.36. Citigroup Inc. advanced 2.9 percent to $31.60.

Morgan Stanley climbed 4 percent to $19.39. Facebook will file plans with regulators today to raise $5 billion, though the amount may increase, two people said. Morgan Stanley stands to earn a larger share of the fees collected by securities firms for arranging the IPO.

Whirlpool surged 13 percent to $61.64 after also reporting a 20 percent gain in fourth-quarter profit. Cost reductions and price increases “positively impacted” the results last quarter, the company said today in a statement.

A measure of technology shares in the S&P 500 gained 0.9 percent as some of the industry’s largest companies rallied.

Microsoft Corp., the largest software maker, advanced 1.2 percent to $29.89. Hewlett-Packard Co. increased 2.8 percent to $28.76. The Philadelphia Semiconductor Index rose 2.4 percent.

Broadcom jumped 8.1 percent to $37.13. The company is benefiting from demand for radio chips that help Apple Inc.’s smartphones and tablets connect over Wi-Fi and Bluetooth signals. Apple’s phone sales more than doubled to 37 million in the quarter.

Casino companies gained after revenue in Macau, the world’s largest gambling hub, rose 35 percent in January. MGM Resorts International climbed 5 percent to $13.70. Las Vegas Sands Corp.

increased 2.2 percent to $50.18.

AOL Inc. soared 9.6 percent to $17.76. Profit exceeded analysts’ estimates as display advertising sales gained for the fourth straight period.

Amazon.com Inc. tumbled 7.7 percent, the most in the S&P 500, to $179.46. Sales missed estimates, signaling that its investments in media services, Kindle devices and shipping promotions have been slow to pay off.

NYSE Euronext slid 0.5 percent to $26.43. European Union regulators vetoed the plan by Deutsche Boerse AG and NYSE Euronext to create the world’s biggest exchange after concluding that the merger would have led to a “near-monopoly” in European exchange-traded derivatives.

Strategists at the biggest banks are capitulating on their bearish forecasts after the best start to a year for global stocks since 1994.

Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS AG, raised his recommendations on global shares and high-yield bonds in a Jan. 23 note to customers entitled, “Wrong, but not too late.” Royal Bank of Scotland Group Plc, and Benoit Anne, the global head of emerging-markets strategy at Societe Generale SA, said their estimates for developing nations were proven wrong.

The MSCI All-Country World Index climbed 5.7 percent in January, surprising strategists at Bank of America Corp., Goldman Sachs Group Inc. and Barclays Plc who had forecast first-half losses because of Europe’s debt crisis.

“In hindsight, everybody was so beared up at the end of last year,” Mary Ann Bartels, the New York-based head of technical and market analysis at Bank of America, who predicted on Dec. 27 that the S&P 500 would probably fall about 15 percent in the first half before recovering, said in a Jan. 31 phone interview. “There was nowhere for the market to go but up.”

Have a wonderful evening everyone.

Be magnificent!

Man must understand that when he cuts himself off from all stimulating and purifying contact with infinity,

and no longer relies on it for his subsistence and his health, he risks madness;

he tears himself asunder, and divorces himself from his very substance.

-Rabindranath Tagore,1861-1901

As ever,

Carolann

Make learning your business,

speak little, do much and

receive everyone kindly.

-Shamma, 1963-

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

Senior Vice-President &

Senior Investment Advisor