January 18th, 2012 Newsletter

Dear Friends,

Tangents:

A couple of interesting things reported today in the science world:

“Scientists confirmed on Tuesday that 15 pounds of rock collected recently in Morocco fell to Earth from Mars during a meteorite shower last July. This is only the fifth time in history scientists have chemically confirmed Martian meteorites that people witnessed falling. The fireball was spotted in the sky six months ago, but the rocks weren’t discovered on the ground in North Africa until the end of December.”

“British scientists have found scores of fossils that evolutionary theorist Charles Darwin and his peers collected but that had been lost for more than 150 years. Dr. Howard Falcon-Lang, a paleontologist at Royal Holloway, University of London, said Tuesday that he stumbled upon the glass slides containing the fossils in an old wooden cabinet that had been shoved in a ‘gloomy corner’ of the massive, drafty British Geological Survey.”

photos of the day

January 18, 2012

Ballerinas from the Paris Opera Ballet of France dance during the full dress rehearsal for “Giselle” at the Esplanade Theatre in Singapore Jan. 18, 2012. The ballet will be performed from Jan. 19 – 21.

Chrystalleni Trikomiti of Cyprus competes at the International Rhythmic Gymnastics event in east London. The competition is part of the testing programme for the London 2012 Olympic Games, called ‘London Prepares’.

Eddie Keogh/Reuters

Market Closes for January 18th, 2012

Market Commentary:

Canada

By Matt Walcoff and Ksenia Galouchko

Jan. 18 (Bloomberg) — Canadian stocks rose, led by energy and financial companies, as the International Monetary Fund proposed increasing funds to contain the European debt crisis and U.S. factory production climbed.

Suncor Energy Inc., Canada’s largest oil and gas producer, gained 1.9 percent as the IMF proposed as much as $500 billion more in lending capacity to help insulate the global economy.

National Bank of Canada rallied 1.4 percent. BlackBerry maker Research In Motion Ltd. dropped 3.8 percent after Samsung Electronics Co. said it won’t buy the company. TransCanada Corp., owner of the Keystone XL pipeline, fell 1.7 percent after people familiar with the matter said the Obama administration will reject the project.

The S&P/TSX Composite Index rose 79.81 points, or 0.7 percent, to 12,312.64 at 1:22 p.m. Toronto time.

“Efforts are at least under way to stabilize the European situation — that’s encouraging,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said in a phone interview. “We are generally seeing positive economic numbers.

The manufacturing increase was very strong and suggests that the U.S. economy is recovering.”

Factories in the U.S. churned out more computers, cars and construction material in December as manufacturing remained at the center of the expansion. Output climbed 0.9 percent last month, the biggest gain since December 2010, according to Federal Reserve data issued today in Washington.

The S&P/TSX climbed 0.2 percent in the two weeks ending yesterday as gains by base-metals producers and financial companies were offset by declines in energy stocks as natural gas prices plunged to a nine-year low. The S&P/TSX trailed the S&P 500 last year for the first time since 2003 as drops in commodity prices held back the Canadian stock benchmark gauge.

Energy and raw-materials companies make up 47 percent of Canadian equities by market value, according to Bloomberg data.

Global stocks rose as the International Monetary Fund proposed to boost its lending capacity. The Washington-based lender is aiming to increase its resources after identifying a potential need for $1 trillion in financing in coming years, an IMF spokesman said in a statement.

Greece is close to a deal with private creditors that would give them cash and securities with a market value of about 32 cents per euro of government debt, said Bruce Richards, who is on the creditors’ committee and chief executive officer for Marathon Asset Management LP.

S&P/TSX banks rose, reversing three days of losses after Goldman Sachs Group Inc., the fifth-largest U.S. bank by assets, beat analysts’ average earnings forecast in a Bloomberg survey by 50 percent. Royal Bank of Canada, the country’s biggest lender by assets, gained 1.4 percent to C$52.52. Bank of Nova Scotia rose 1.1 percent to C$52.40. National Bank of Canada gained 1.4 percent to C$74.11.

Oil and natural gas stocks in the S&P/TSX rose for a third day. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, rose 1.3 percent to C$38.23.

Suncor Energy rose 1.9 percent to C$33.84 after climbing to C$33.96, the highest intraday price since Aug. 4. Petrobakken Energy Ltd. gained 4.4 percent to C$14.71. Petrobank Energy & Resources Ltd., the majority owner of PetroBakken, advanced 4.5 percent to C$12.82, after rising to C$13.25, the highest intraday price since Aug. 5.

The gauge of base metals in the S&P/TSX advanced for the third day. Teck Resources, Canada’s largest copper producer, rallied 2.7 percent to C$40.91 after rising to $41, the highest intraday price since Oct. 31. Thompson Creek Metals Co. rallied 5.7 percent to C$8.11 after touching C$8.13, the highest intraday since Sept. 8.

Uranium One Inc., a mining company controlled by Moscow- based ARMZ Uranium Holding, climbed 6.2 percent to C$2.76.

TransCanada fell 1.7 percent to C$41.63 after sliding as much as 4.8 percent, the most intraday since May 2010. The Obama administration probably will announce rejection of TransCanada’s Keystone XL pipeline later today or tomorrow, according to two people familiar with the matter. The administration will let TransCanada submit a new application for an alternate pipeline route, a person familiar with the administration’s plans said.

Finning International Inc. jumped 4.8 percent to C$25.58.

The world’s largest dealer of Caterpillar Inc. equipment agreed to buy a distribution and support business from the U.S. manufacturer for about $465 million.

RIM lost 3.8 percent to C$17.09 after Samsung denied a report from the BGR blog that the Suwon, South Korea-based company is interested in buying RIM. Shares of the Waterloo, Ontario-based smartphone maker rallied 5.3 percent yesterday.

US

By Rita Nazareth

Jan. 18 (Bloomberg) — U.S. stocks rose, giving the Standard & Poor’s 500 Index its best start to a year since 1987, after confidence among homebuilders topped forecasts, Goldman Sachs Group Inc. rallied and concern about Europe eased.

Goldman Sachs climbed 6.8 percent as earnings beat estimates amid lower compensation costs. Bank of America Corp. and JPMorgan Chase & Co. jumped at least 4.6 percent, leading the gains in the Dow Jones Industrial Average.

PulteGroup Inc. and Lennar Corp. added more than 4.3 percent, pacing an advance in homebuilders. A measure of chipmakers rose the most in the S&P 500 among 24 industries, rallying 3.9 percent.

The S&P 500 increased 1.1 percent to 1,308.04 at 4 p.m. New York time, closing above 1,300 for the first time since July.

The Dow advanced 96.88 points, or 0.8 percent, to 12,578.95. The Nasdaq Composite Index climbed 1.5 percent to 2,769.71. The Russell 2000 Index jumped 1.8 percent to 779.26.

“It’s great to see the market up,” John Carey, a Boston- based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $220 billion. “People are realizing that Europe is important, but it’s not the whole world. They are looking at the economic numbers in the U.S. and seeing that we’re not going back into a recession. The economy is still growing. We might be all right at the end of the day.”

The S&P 500 has risen 4 percent this year as measures of commodity, financial and industrial shares rallied at least 6.4 percent. The Morgan Stanley Cyclical Index of companies most- tied to the economy has surged 11 percent in 2012, with Alcoa Inc. and Caterpillar Inc. soaring at least 15 percent.

Stocks climbed today as confidence among U.S. homebuilders rose in January to the highest level since 2007. Equities extended gains as an official told reporters that Greece’s government could forge an agreement with private creditors by the end of this week after talks resumed in Athens today. The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to safeguard the economy.

“Investors need a new excuse to commit more capital,”

Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1.3 billion, said in a telephone interview. “The acute stress of Europe has moderated. Given that we already have good economic data, the most obvious new excuse is earnings. I would expect a decent earnings season.”

Companies in the benchmark index, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September- December period, analysts’ estimates compiled by Bloomberg show.

Nine out of 10 industries in the S&P 500 rallied as financial and technology gauges advanced at least 1.6 percent. A gauge of homebuilders in S&P indexes climbed 4.6 percent.

PulteGroup added 5.9 percent to $7.94. Lennar jumped 4.4 percent to $23.

Goldman Sachs rose 6.8 percent to $104.31. Chief Executive Officer Lloyd C. Blankfein cut compensation 21 percent in 2011 as he reduced costs and focused on international growth to offset a slowdown in trading, which contributes most of the firm’s revenue. Goldman Sachs’s higher-than-estimated earnings contrasted with previous reports from Citigroup Inc., which fell short of analysts’ estimates, and JPMorgan, which matched projections.

Some of the largest financial companies also climbed. Bank of America advanced 4.9 percent to $6.80. JPMorgan added 4.7 percent to $36.54.

Bank of New York Mellon Corp. fell 4.6 percent to $20.30.

The world’s biggest custody bank said fourth-quarter earnings declined 26 percent on a restructuring charge and lower revenue from businesses tied to financial markets.

The Philadelphia Semiconductor Index surged 5 percent as all of its 30 stocks advanced. Linear Technology Corp. jumped 12 percent, the most in the S&P 500, to $33.32. The maker of semiconductors for industrial equipment and cars forecast fiscal third-quarter sales that would beat analysts’ estimates.

Yahoo! Inc. gained 3.2 percent to $15.92 as Jerry Yang’s exit may remove a barrier to find a buyer or negotiate a sale of stakes in Asian assets valued at more than $10 billion. Now that the co-founder and one-time chief executive officer has cut his leadership ties to Yahoo, newly appointed CEO Scott Thompson has freer rein to unwind the company’s part-ownership of Alibaba Group Holding Ltd. and Yahoo Japan Corp.

U.S. companies that beat analysts’ earnings estimates are an exception, rather than the rule, for the fourth-quarter reporting season getting under way. Only 47.1 percent of companies in the S&P 500 that posted quarterly results between Dec. 1 and yesterday exceeded the average projection, according to data compiled by Bloomberg.

So-called positive surprises have surpassed 50 percent at a comparable point in every other quarterly reporting period for the past four years. The previous low was 51.5 percent in the third quarter of 2008, when a global financial crisis was taking hold.

“Early reporters’ results” are one of two reasons to expect the current earnings season to be disappointing, Thomas M. Doerflinger, a strategist at UBS AG, wrote yesterday in a report. The other is that many companies are likely to cut estimates for this year.

Have a wonderful evening everyone.

Be magnificent!

Man progresses, from epoch to epoch, toward the full realization of his soul,

of this soul that is greater than all the riches he can accumulate,

than all the actions he can accomplish and all the theories he can set forth,

this soul that continues onward, never ending in death or dissolution.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

Do not condemn the judgment of another

because it differs from your own. You

may both be wrong.

-Lao Tzu, 570-490 BC

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

Senior Vice-President &

Senior Investment Advisor