January 30, 2012 Newsletter

Dear Friends,




Today is the Holiday of the Three Hierarchs, Greece.  The three Hierarchs are Basil the Great, Gregory the theologian and John Chrysotom.  Maybe their spirits can intervene to help positively the attempt at debt restructuring.

I was speaking with a client today who is a former teacher and she brought up the term “free-range kids,” which I hadn’t heard before.  She was emphasizing the need for children to have time, to let their imaginations flourish.   I told her about an article I read this week in a magazine on the need for kids to have free time and just play.  I dug it up.   John Yemma wrote, “Standardized testing, helicopter parenting, a society obsessed with good colleges and successful careers – there are plenty of reasons why time for make-believe and play-acting  has been shrinking….Free time and make-believe boost physical development, socialization, and – most important – the imagination.  A huge amount of what we value as a civilization comes from the what-if side of us.  While we must follow rules and recipes, train ourselves and test our skills, our artistic side needs time to wonder, improvise, and dream.  Productive writers from Shakespeare to Charles Dickens, Dr. Seuss to J.K. Rowling, have coupled imagination with discipline.  Wolfgang Amadeus Mozart talked of musical ideas emerging when he was alone, sometimes when he was sleepless or taking a walk after a good meal.  To muse and mull and eventually hear a symphony in his head, he said, ‘is perhaps the best gift I have my Divine Maker to thank for.’  Mozart might have been the most overprogrammed child of the 18th century.  Under his father’s tutelage, he was by the age of 5 adept at violin and keyboard, and composing and performing for European royalty.

By today’s standards, he would have been locked up and loaded for the Juilliard School while he was still in diapers.  It takes both imagination and discipline to produce works as original as ‘The Magic Flute.’  That twinning combination is true not just of literature, music, and painting but of science as well.  The scientific method is meant to prove or disprove a hypothesis.   But the hypothesis – the hunch, the what-if – had to come from  somewhere.  Angels must be entertained.”

photos of the day

January 30th, 2012

Members of a group of skiers using traditional ski equipment prepare for a competition in Skofja Loka, Slovenia.

Srdjan Zivulovic/Reuters

People release sky lanterns to celebrate the traditional Chinese Lantern Festival in Pingxi, Xinbei city, northern Taiwan. Believers gathered to release sky lanterns as a form of prayer for good luck and blessings. The tradition of releasing lanterns began during the Ching Dynasty when bands of outlaws frequently raided villages, forcing local residents to seek refuge in the mountains. The lanterns were signals used by the village watchmen to inform the refugees that their houses were safe again.

Pichi Chuang/Reuters


Market Closes for January 30th, 2012

North American Markets




Close Change
Dow Jones 12653.72 -6.74


S&P 500 1313.01 -3.32


NASDAQ 281194 -4.61


TSX 12436.42 -30.08



International Markets


Close Change
NIKKEI 8793.05 -48.17


HANG SENG 20160.41 -341.26


SENSEX 16863.30 -370.68


FTSE 100 5671.09 -62.36


CAC 40 3265.64 -53.12


DAX 6444.45 -67.53




Bonds %Yield Previous %Yield
CDN. 10 year bond 1.938 1.986
CDN. 30 year bond 2.548 2.599
U.S. 10-year bond 1.8439 1.8910
U.S. 30-year bond 2.9989 3.0582




BOC Close Today Previous


1.00262 1.00081


.99739 .99920


Euro  Rate

1 Euro=

Canadian $ 1.31747 0.75903


1.31402 0.76102




Gold Close Previous
London Gold Fix $1730.00 $1737.70


Oil Close Previous
WTI Crude Future $98.98 $99.63

Market Commentary:


By Matt Walcoff

Jan. 30 (Bloomberg) — Canadian stocks fell, led by producers of raw materials, after German Chancellor Angela Merkel said European leaders won’t complete a second aid program for Greece at a summit today.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, lost 5.6 percent as copper dropped the most in three weeks. Semafo Inc., which mines gold in West Africa, plunged 12 percent after saying production may decline this year. Ruggedcom Inc., which makes communications equipment used in industry, soared 25 percent after agreeing to be bought by Siemens AG.

The S&P/TSX Composite Index decreased 30.08 points, or 0.2 percent, to 12,436.42 in Toronto.

“We’ve gotten a pretty robust move out of the blocks,”

Gerry Brockelsby, a money manager at Marquest Asset Management Inc. in Toronto, said in a telephone interview. The firm oversees about C$250 million ($250 million). “It’s understandable the market may take a pause, especially in the face of continuing concern about Europe regarding the Greece settlement.”

The S&P/TSX gained each of the previous six weeks, the longest streak since April 2009, as improving U.S. manufacturing and employment data and the U.S. Federal Reserve’s plan to keep interest rates at historical lows until at least late 2014 overshadowed the European debt crisis.

Today’s summit won’t complete the Greek aid program because talks with banks over debt reduction aren’t completed, Merkel told reporters before the summit in Brussels today. Greek finance minister Evangelos Venizelos yesterday rejected the idea of European intervention in the country’s budget policy, citing “national dignity.”

U.S. personal spending was unchanged in December, the Commerce Department said today in Washington. Most economists in a Bloomberg survey had forecast an increase.

The S&P/TSX Materials Index retreated from the highest close since Dec. 1 as the U.S. Dollar Index climbed the most since Jan. 13.

First Quantum lost 5.6 percent to C$21.74. Goldcorp Inc., the world’s second-largest gold producer by market value, slipped 0.9 percent to C$48.78. Ivanhoe Mines Ltd., Rio Tinto Group’s majority-owned partner in Mongolia’s Oyu Tolgoi copper project, decreased 4.5 percent to C$16.29.

Semafo sank 12 percent to C$7.04 after forecasting 2012 production of 235,000 to 260,000 ounces. The company, based in Montreal, produced 250,100 ounces of gold last year. Josh Wolfson, an analyst at Stifel Financial Corp., cut his rating on the shares to “hold” from “buy.”

Financial companies in the S&P/TSX dropped for a fifth day, the longest streak since July. Bank of Nova Scotia, the country’s third-largest lender by assets, declined 0.7 percent to C$51.96. Bank of Montreal lost 0.6 percent to C$58.18, while Manulife Financial Corp., North America’s fourth-largest insurer, decreased 0.5 percent to C$11.81. Great-West Lifeco Inc., Canada’s second-biggest insurance company, lost 1.1 percent to C$21.72.

Ruggedcom jumped 25 percent to a record C$32.85 after Siemens agreed to buy the Concord, Ontario-based company for

C$33 a share. Belden Inc., based in St. Louis, had made an unsolicited offer of C$22 a share last month.

Mood Media Corp., the owner of Muzak Holdings LLC, rallied

21 percent, the most since September 2009, to C$2.85. The company estimated fourth-quarter earnings before interest, taxes, depreciation and amortization of $34 million, beating the average analyst forecast of $32.1 million, according to a Bloomberg survey. It was Mood Media’s first gain since Jan. 12.


By Rita Nazareth

Jan. 30 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as European leaders sparred with Greece over a second rescue program.

Equities pared declines as some of the biggest technology companies rallied. Apple Inc. and Microsoft Corp. added at least

1.2 percent. Bank of America Corp. fell 3 percent after Goldman Sachs Group Inc. cut its recommendation. Halliburton Co. and Chesapeake Energy Corp. dropped more than 1.1 percent as oil slumped. Gannett Co., the owner of 82 newspapers including USA Today, tumbled 6.9 percent as its profit plunged 33 percent.

The S&P 500 decreased 0.3 percent to 1,313.01 at 4 p.m. New York time. The benchmark index for American equities trimmed a decline of as much as 1.2 percent. The Dow Jones Industrial Average retreated 6.74 points, or 0.1 percent, to 12,653.72.

“The low hanging fruit has been picked and now it’s a more difficult slog to get substantive changes in Europe,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co, which has more than $107 billion in client assets. “There are near term doubts over the willingness of Greece and perhaps other countries to accept fiscal reforms.

Anything that could interrupt further progress in the euro area could be met with an opportunity for traders to sell.”

Today’s decline follows a four-week rally in the S&P 500, which was driven by the Federal Reserve’s plans to keep interest rates low through at least late 2014 and better-than-estimated earnings. Of the 171 S&P 500 companies that reported results since Jan. 9, 113 posted per-share earnings that beat projections, Bloomberg data show.

Greek Finance Minister Evangelos Venizelos rejected reports of plans to appoint a European Union commissioner to oversee the nation’s budget, citing “national dignity.” French President Nicolas Sarkozy said Greek debt-swap talks with private bondholders are “going in the right direction” and the issue should be settled in the next few days.

“The question isn’t whether or not Europe goes into a recession, but how deep that recession is going to be,” Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a telephone interview. “Greece as it stands currently is untenable. The market is getting comfortable with some sort of Greek default, whether it’s orderly or disorderly.”

Financial shares had the biggest decline in the S&P 500 among 10 industries, falling 1 percent as a group. Bank of America dropped 3 percent to $7.07 after Goldman Sachs cut its recommendation for the shares to “neutral” from “buy.”

A measure of energy shares in the S&P 500 retreated 0.4 percent. Halliburton slumped 1.2 percent to $36.67. Chesapeake decreased 1.6 percent to $21.69.

Nabors Industries Ltd. gained 3.5 percent, the most in the S&P 500, to $18.56. Traders in the options market are betting the world’s largest land-drilling contractor may be a takeover candidate after the departure of its 81-year-old chief executive officer. In the past two weeks, calls priced 10 percent above Nabors’ stock rose the most in 18 months versus puts on one- month contracts, signaling traders are anticipating an acquisition, said JonesTrading Institutional Services LLC.

Gannett tumbled 6.9 percent to $14.17. Revenue from the publishing division, the largest unit, declined 5.3 percent as advertising and circulation fell. The newspaper industry overall has continued to lose ad business to Internet companies such as Google Inc. and Facebook Inc.

Staples Inc. declined 4.9 percent to $15.23. The world’s largest office products company was cut to “sell” from “neutral” by Goldman Sachs, which cited a “tough” outlook for the global printing segment.

Measures of telephone and technology companies in the S&P

500 rallied. Apple added 1.3 percent to $453.01. Microsoft gained 1.3 percent to $29.61. Verizon Communications Inc. rose

1.1 percent to $37.61.

Pep Boys — Manny, Moe & Jack surged 24 percent to $14.93 after agreeing to go private in an acquisition by Gores Group LLC valued at about $791 million. The cash offer of $15 a share is 24 percent higher than Pep Boys’ closing price on Jan. 27, the companies said today in a statement.

US Airways Group Inc. rallied 4.2 percent to $8.52. Delta Air Lines Inc. is studying a bid as North American carriers assess possible combinations after the bankruptcy of American Airlines parent AMR Corp., people familiar with the matter said.

Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market.

Analysts estimate profits in the S&P 500 will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P

500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.

Battered by the 14 percent decline in the S&P 500 since 2000, the worst financial crisis since the Great Depression and the flash crash 21 months ago, investors are staying away from stocks, even after record profits, 10 quarters of U.S. economic growth and promises by the Federal Reserve to keep interest rates near zero through 2014. Of the $37 trillion erased from global equities in the credit crisis, $24 trillion has been restored.

“After two significant bear markets, the flash crash and the lost decade, many have simply said, ‘No mas,’” Howard Ward, who helps oversee $35 billion at Gamco Investors Inc. in Rye, New York, said in an e-mail on Jan. 24. “Of course, bull markets have a history of climbing a wall of worry. And it is happening again.”


Have a wonderful evening everyone.


Be magnificent!

There is an orderliness in the universe, there is an unalterable law governing everything

and every being that exists or lives.

-Mahatma Gandhi, 1869-1948

As ever,




If you can’t change your fate,

change your attitude.

-Amy Tan, 1952-


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

Senior Vice-President &

Senior Investment Advisor