January 12th, 2012 Newsletter

Dear Friends,

Tangents:

On this day, January 12^th, in 1855, Chief Seattle responded to the Governor of the Stat of Washington following the decision to place the Indian tribes on reservations:

My words are like the stars that never set.  What Seattle says the Great Chief at Washington can rely upon with as much certainty as our paleface brothers can rely upon the return of the seasons.

The son of the White Chief says his father sends us greetings of friendship and good will.  This is kind of him, for we know he has little need of our friendship in return because his people are many.  They are like the grass that covers the vast prairies, while my people are few; they resemble the scattering trees of a storm-swept plain.

The Great – and I presume – Good White Chief sends us word that he wants to buy our lands but is willing to allow us to reserve enough to live on comfortably.  This indeed appears generous, for the Red Man no longer has rights that he need respect, and the offer may be wise, also, for we are no longer in need of a great country.

There was a time when our people covered the whole land as the waves of a wind-ruffled sea cover its shell-paved floor, but that time has long since passed away with the greatness of tribes now almost forgotten. I will not dwell on nor mourn over our untimely decay, nor reproach my paleface brothers with hastening it, for we, too, may have been somewhat to blame…

It matters little where we pass the remnant of our days.  They are not many.  The Indian’s night promises to be dark.  No bright star hovers above his horizon.  Sad-voiced winds moan in the distance.  Some grim Fate of our race is on the Red Man’s trail, and wherever he goes he will still hear the sure approaching footsteps of his fell destroyer and prepare to stolidly meet his doom, as does the wounded doe that hears the approaching footsteps of the hunter.

-from The Book of Days

photos of the day

January 12, 2012

A busker plays bagpipes for tourists near the Houses of Parliament in London. A row between the British government in London and the SNP has escalated sharply in recent days, after British Prime Minister David Cameron outlined a plan to bring forward the referendum, and restrict the questions asked.

Luke MacGregor/Reuters

A view of Jerusalem’s Old City with the Dome of the Rock Mosque.

Sebastian Scheiner/AP

Market Closes for January 12th, 2012

Market Commentary:

Canada

By Matt Walcoff and Ksenia Galouchko

Jan. 12 (Bloomberg) — Canadian stocks advanced, led by banks and metals producers, as borrowing costs declined in bond sales in Spain and Italy and the U.S. dollar weakened.

Toronto-Dominion Bank, Canada’s second-largest lender by assets, rose 0.9 percent as the S&P/TSX Financials Index gained for a fourth day. Enbridge Inc., the country’s biggest pipeline company, fell 2.1 percent as natural gas headed toward its biggest weekly loss since August 2009. Goldcorp Inc., the world’s second-largest gold producer by market value, increased 1.5 percent as the metal climbed for a third day.

The Standard & Poor’s/TSX Composite Index rose 13.38 points, or 0.1 percent, to 12,274.32.

“People are a bit more comfortable with the euro, so it’s a risk-on trade,” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($54 million).

“You saw gold lose its safe-haven status at the end of the year. It was a flight to safety to the U.S. currency.”

The index has rallied 6.4 percent since Dec. 19 as economic data indicating a strengthening U.S. economy outweighed the impact of the European debt crisis. The S&P/TSX fell nine of the 10 months ending in December as concern that the crisis would limit global economic growth weakened shares of commodity producers.

Spain sold 10 billion euros ($13 billion) in bonds today, twice its target. Italy sold 12 billion euros in bills at less than half the yield paid on similar-maturity securities on Dec.

12. The euro gained, and the U.S. Dollar Index fell after closing at the highest level since September 2010 yesterday.

The eight S&P/TSX banks each gained. TD advanced 0.9 percent to C$77.70. Bank of Nova Scotia, Canada’s third-biggest lender by assets, increased 1.1 percent to C$52.20. Manulife Financial Corp., North American’s fourth-largest insurer, climbed for a record 10th-straight day, rising 1.1 percent to C$11.89.

The S&P/TSX Energy Index dropped as natural gas futures declined for a fourth day. The fuel has tumbled as much of North America has had a milder winter than normal. Crude retreated after a European Union official with knowledge of the matter said an embargo on Iranian oil is likely to be delayed for six months.

Enbridge fell 2.1 percent to C$36.04. Encana Corp., the country’s largest natural gas producer, declined 2.2 percent to C$18.20, the lowest close since January 2005. Trilogy Energy Corp., which produces the fuel in Canada, slumped 7.6 percent to C$30.40 to extend its two-day plunge to 16 percent, the most since October 2008.

The S&P/TSX Materials Index gained as precious and base metals advanced. Goldcorp increased 1.5 percent to C$46.78.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, climbed 4 percent to C$23.30. Cameco Corp., the world’s biggest uranium producer, rallied 5.3 percent to C$20.67.

Guyana Goldfields Inc., which explores in South America, plunged 11 percent, the most in two years, to C$7.40 after delaying the release of a feasibility study on its Aurora project.

Quest Rare Minerals Ltd., which explores for rare earths in Canada, soared 26 percent, the most since August 2009, to C$3.27 after reporting drilling results from its Strange Lake project in Quebec.

BlackBerry maker Research In Motion Ltd. rose 5.5 percent to C$16.80. The shares gained on speculation the company hired Goldman Sachs Group Inc. to explore strategic options, Reuters reported, citing a trader it didn’t name.

Bombardier Inc., the maker of trains and airplanes, rallied 6.9 percent to C$4.52. The company is to participate in the Bahrain International Airshow next week.

US

By Rita Nazareth

Jan. 12 (Bloomberg) — U.S. stocks were little changed, after paring an early slump in the Standard & Poor’s 500 Index, as disappointing data on jobless claims overshadowed optimism about a drop in borrowing costs at debt auctions in Europe.

Chevron Corp. retreated 2.3 percent after oil-refining profit slumped. Bank of America Corp. reversed an earlier advance, dropping 1.6 percent. Sears Holdings Corp. tumbled 3.7 percent after vendor loans are said to be halted by CIT Group Inc. Fertilizer producers CF Industries Holdings Inc. and Mosaic Co. declined at least 1.4 percent after reports showed higher- than-expected U.S. corn and soybean inventories.

The S&P 500 fell less than 0.1 percent to 1,292.11 at 12:45 p.m. New York time, paring a decline of as much as 0.5 percent.

The benchmark gauge for American equities rose 1.2 percent over the previous three days. The Dow Jones Industrial Average dropped 17.67 points, or 0.1 percent, 12,431.78 today.

“There are significant cross currents,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “Lower borrowing costs will help in the refinancing that’s due in the next few months in the euroland in general. Still, they’ve got to spur growth to get things going. In the U.S., today’s economic numbers were weaker than anticipated. The market has had a nice run here. Sentiment has gotten more bullish, which makes me nervous.”

Stocks fell as jobless claims climbed by 24,000 to 399,000 in the week ended Jan. 7, compared with a median estimate of 375,000 in a Bloomberg survey. U.S. retail sales rose 0.1 percent in December, less than the 0.3 percent increase predicted in a Bloomberg survey of economists.

Earlier today, equities rose as Spain sold 10 billion euros ($13 billion) of bonds, twice the target for the sale, while Italy sold 12 billion euros of bills, easing concerns the countries would struggle to finance their debts. European Central Bank President Mario Draghi said the bank has averted a serious credit shortage and there are signs the economy is stabilizing, signaling policy makers may resist cutting interest rates further for now.

Most U.S. stocks advanced yesterday as a rally in banks helped the market recover from an early slump spurred by growing signs Europe may slip into a recession. The S&P 500 has risen 2.8 percent in 2012 through yesterday as commodity, financial and industrial companies had the biggest gains among 10 groups.

Six out of 10 industries in the S&P 500 declined as energy shares had the biggest loss. Chevron dropped 2.3 percent to $105.27. The second-largest U.S. energy company reported fourth- quarter profit was “significantly below” third-quarter results because of shrinking fuel production.

The KBW Bank Index retreated 0.3 percent, snapping a three- day gain. Bank of America sank 1.6 percent to $6.76, following an 11 percent surge over three days. JPMorgan Chase & Co. retreated 0.5 percent to $36.48.

JPMorgan, likely to keep the title of most profitable U.S. bank when it reports earnings tomorrow, has a West Coast rival closing in: Wells Fargo & Co. JPMorgan is projected to report a record $18.5 billion in 2011 earnings when adjusted for one-time items, a 6 percent increase for the New York-based company, according to a survey of analysts by Bloomberg. Profit at San Francisco-based Wells Fargo is estimated to have jumped more than four times as much, to an all-time high of $15.3 billion.

Sears Holdings slumped 3.7 percent to $31.70 after two people familiar with the situation said suppliers will no longer be able to get loans from CIT for their shipments to the retailer. CIT, the largest U.S. company that provides what’s known as factoring, told clients it would no longer approve credit for orders starting today, according to the people, who declined to be identified because the information isn’t public.

Fertilizer producers sank. CF, the biggest U.S. producer of nitrogen-based crop nutrients, declined 1.4 percent to $164.80.

Mosaic, the biggest maker of phosphate fertilizer, dropped 1.7 percent to $54.13.

Wynn Resorts Ltd. tumbled 3.8 percent to $107.64. Vice Chairman Kazuo Okada sued the casino operator for access to financial records in a dispute with the company over the use of funds.

Dow Chemical Co. rallied 2.7 percent to $32.27. The European Union removed tariffs against the U.S. on a chemical used in paints and paper coatings after U.K. producer Ineos Oxide Ltd. withdrew a complaint about price undercutting. The policy reversal ends duties as high as 13.8 percent on U.S. exporters including Dow Chemical for allegedly having sold vinyl acetate in the EU below cost, a practice known as dumping.

CA Inc. shares rose 4.1 percent, the biggest advance in the S&P 500, to $21.80. Hedge fund Taconic Capital Advisors LP said it acquired a 5.1 percent stake in the maker of software for mainframe computers and is in talks with management to boost returns.

Target Corp. added 0.5 percent to $49.28. The company will buy back as much as $5 billion of its shares as the second- largest U.S. discount retailer forecasts it will generate more cash than needed to invest in its stores.

The 12 percent rally in the S&P 500 since November has pushed optimism to a level last seen when the U.S. stock market began its biggest retreat since 2009.

The proportion of investment newsletter writers who are optimistic on equities rose to 51.1 percent this week, the highest since May, according to a report from New Rochelle, New York-based Investors Intelligence yesterday. Last year’s peak in bullishness was just before the market’s top in April.

Some analysts say sentiment serves as a contrary indicator given that optimistic investors have already purchased shares, leaving less money to help drive prices higher. The S&P 500 has climbed in four out of the past six weeks, touching a five-month intraday high of 1,296.46 on Jan. 10, as data on manufacturing and employment raised optimism the world’s largest economy will weather Europe’s sovereign debt crisis.

“Sentiment is getting more extreme,” Arthur Huprich, an analyst with Raymond James & Associates Inc., wrote in a note yesterday. “Trading will remain choppy, especially as overhanging selling pressure looms.”

Have a wonderful day everyone.

Be magnificent!

Energy is action and movement.  All action is movement and all action is energy.

All desire is energy.  All feeling is energy.  All thought is energy.

All living is energy.  All life is energy.

If that energy is allowed to flow without any contradiction,

without any friction, without any conflict, then that energy is boundless, endless.

When there is no friction there are no frontiers to energy.

It is friction which gives energy limitations.  So, having once seen this,

why is it that the human being always brings friction into energy?

Why does he create friction in this movement which we call life?

Is pure energy, energy without limitations just an idea to him?

Does it have no reality?

-Krishnamurti, 1895-1986

As ever,

Carolann

We can draw lessons from the past,

but we cannot live in it.

-Lyndon B. Johnson, 1908-1973

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,