February 29, 2012 Newsletter

Dear Friends,

Tangents:

On this day…

February 29^th, 1984: Trudeau resigns as Prime Minister, after a walk in the snow.  Speaking of snow, one  of my clients who dropped by today with his RSP contribution told us there was major snow on the Malahat this morning as he was driving into town.  I was speaking with other clients this afternoon who are in Arizona where they have a second residence,  and they said they haven’t had rain for two months, sunshine every day, warm – and they also said that there are still incredible real estate bargains, especially at the high end of the market.  There is also a non-stop WestJet flight now.  🙂

Leap year: why we have a need for the occasional Feb. 29

The leap year is a testament to the tough time that humans have trying to organize 365 days, 5 hours, 49 minutes, and 16 seconds into a year.

By Pete Spotts,  February 29, 2012

If you were born on Feb. 29, 1988, you can claim with a wink that you’re only 6 years old. And if you’re a single woman with your eye on a special guy, this is the day to pop the question. If he refuses, by tradition he owes you.

The leap year is a testament to the tough time that humans have trying to squeeze the 365 days, 5 hours, 49 minutes, and 16 seconds of a year – as measured by one trip around the sun – into a yearly calendar containing 365 days.

RECOMMENDED: Leap year – this day in the history of Feb. 29

Knowing when to tack an extra day onto a year isn’t as simple as “add a day to February every four years.” That would be too easy.

For those who have trouble remembering the spelling rule, “I before E, except after C,” and its caveats, try this: If the year is evenly divisible by four, add a day to February – unless you can divide the year evenly by 100, then no leap day, unless the year is evenly divisible by 400, then you add a leap day.

It could be worse. If Julius Caesar hadn’t reformed the old Roman calendar (and no one else had in the meantime), we might still be adding a month to the calendar every two or three years. The Roman calendar was based on a lunar month, which averages 29.5 days. If you were big on festivals and a slave to your calendar, your spring planting festival could end up in the dog days of summer unless you brought the calendar back in sync with solar time.

Around 46 BC, Caesar stepped in and, one can imagine, said, “Ist es ridiculum!” He moved the calendar onto a solar year.

But even Julius didn’t get it quite right.

The Julian calendar is based on a year that is 365 days, 6 hours long. So you could add one day to February every four years from now until Brutus stopped by and be happy. However, if you did that, the equinoxes, as marked on the calendar, arrived earlier every year. The spring equinox, always a favorite among festival planners, arrived on March 25, when Caesar had completed his conquest of the calendar. By the 1500s, the spring equinox was cropping up on March 10 or 11.

Keep this up long enough, and Easter Sunday as marked on a calendar eventually would take place in the dead of winter. Easter Sunday is the first Sunday after the first full moon following the vernal equinox, keeping it close to the Jewish observance of Passover.  In the late 1500s, a continued shift of Easter and other Christian holy days did not sit well with the Vatican.

The result: The Gregorian calendar, which has since become the international standard as a general-purpose calendar for scheduling business meetings, mortgage payments, and Little League Games.

Still, variations on the lunar calendar – and the periodic additions of leap months – remain in place for religious and cultural purposes, largely within cultures that trace their roots to Asia and the Middle East.

But back to marriage. Remember we mentioned marriage? According to an Irish tradition, back in the day, St. Bridget cut a deal with St. Patrick allowing women to propose marriage to men on a leap day. In some areas that adopted the tradition, men were penalized if they refused the proposal. Small consolation, perhaps, but a “no” would leave the forlorn miss in line for a new gown or several pairs of new gloves.

These days, international time is determined by the vibrations of atoms in incredibly accurate atomic clocks, rather than by Earth’s rotation. This has added another kind of leap to the time-keeping lexicon: the leap second.

Keepers of atomic clocks periodically add or subtract one or two seconds a year to keep the clocks synced with a 24-hour day as measured by Earth’s rotation – which on average is gradually slowing. The first leap seconds were added in June and December 1972. The next leap second – the 25th since 1972 – is slated for this coming June.

Earlier this year, international time gurus meeting in Geneva considered a proposal to abolish the leap second. A final decision is expected in 2015.

photos of the day

February 29, 2012

A woman performs morning exercise with fans at the Ditan park in Beijing, China.

Andy Wong/AP

Feliciano Lopez of Spain reacts after he lost a point against Roger Federer of Switzerland during the Emirates Dubai ATP Tennis Championships in Dubai, United Arab Emirates.

Hassan Ammar/AP

Market Closes for February 29, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Matt Walcoff

Feb. 29 (Bloomberg) — Canadian stocks fell, paring a second-straight monthly gain, as gold-mining companies dropped after Federal Reserve Chairman Ben S. Bernanke damped speculation of more quantitative easing.

Barrick Gold Corp., the world’s largest gold producer, declined 3.6 percent as the metal retreated after settling at a three-month high yesterday. Suncor Energy Inc., Canada’s biggest oil and gas producer, lost 1 percent after the U.S. reported an increase in crude inventories. Progressive Waste Solutions Ltd., the nation’s biggest waste-management company, slumped 5.8 percent after forecasting 2012 profit excluding certain items below analysts’ estimates.

The S&P/TSX Composite Index slipped 94.43 points, or 0.7 percent, to 12,646.04 at 1:59 p.m. Toronto time, narrowing the monthly advance to 1.5 percent. Before Bernanke’s comments today, Toronto stocks were up as much as 0.4 percent on the day.

“It looks like QE3 is off the table,” Greg Taylor, a money manager at Aurion Capital Management in Toronto, said in a telephone interview, referring to a third round of Fed asset purchases. The firm oversees about C$5.5 billion ($5.6 billion).

“There was some segment of the investor population that thought it was on. The golds are getting crushed.”

The index had gained 2.3 percent this month through yesterday as the U.S. reported improved economic data and Greek and European officials reached a deal on a second bailout for the country.

The S&P/TSX Materials Index fell the most this year after Bernanke gave no sign that the Fed is considering a new round of asset purchases in testimony to a congressional committee. Gold tumbled as much as 4.7 percent, most intraday since Dec. 14.

Barrick dropped 3.6 percent to C$47.50. Goldcorp Inc., the world’s second-largest gold producer by market value, declined 4 percent to C$47.80. Silver Wheaton Corp., Canada’s third-largest precious-metals producer, lost 5.1 percent to C$37.68 as silver sank the most intraday since September.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, retreated 1.6 percent to C$46.12 after Andrew Benson, an analyst at Citigroup Inc., said potash prices will be weaker than those of other nutrients in the first half of the year.

“There is ample supply, key producers had to cut production due to lack of demand and the buyer’s market seems more pronounced than in other fertilizers,” Benson wrote in a note to clients about Kassel, Germany-based producer K+S AG today.

The S&P/TSX Energy Index fell with crude oil after the U.S. Energy Department said supplies of the fuel increased 4.16 million barrels last week. None of the 12 analysts in a Bloomberg survey had forecast a gain that large. Suncor dropped 1 percent to C$35.93.

Canadian Natural Resources Ltd., the country’s second- biggest energy company by market value, declined 1.6 percent to C$36.89 after Paul Sankey, an analyst at Deutsche Bank AG, reduced his rating on the stock to hold from buy. Sankey cited a possible decline in world oil demand in a note to clients.

Enbridge Inc., Canada’s largest pipeline company, decreased 1.6 percent to C$38.07 after Theodore Durbin, an analyst at Goldman Sachs Group Inc., cut his rating on the shares to neutral from buy. A neutral rating means the analyst recommends neither buying nor selling the shares.

Petrominerales Ltd., which produces oil and gold in Colombia, advanced 5.4 percent to C$18.67 after tumbling a record 25 percent in the previous two days. The company reported a 14 percent drop in energy reserves Feb. 27.

Progressive Waste Solutions plunged 5.8 percent to C$20.30 after forecasting 2012 earnings of $1.13 a share to $1.17 a share, excluding certain items. Analysts had estimated profit of $1.19 a share, according to the average in a Bloomberg survey.

The shares sank as much as 11 percent, the most intraday since November 2008, earlier today.     aleant Pharmaceuticals International Inc., Canada’s biggest drug maker, rose 3.1 percent to C$52.35 to extend its three-day surge to 9 percent. The company disclosed fourth- quarter earnings that beat all 17 analyst estimates in a Bloomberg survey Feb. 27.

Calfrac Well Services Ltd. rallied 7.2 percent to C$32.57 after jumping 9.4 percent yesterday. The company reported fourth-quarter earnings yesterday that beat the average analyst estimate in a Bloomberg survey by 19 percent, excluding certain items.

Lara King, an analyst at Stifel Financial Corp., raised her 12-month share-price estimate to C$62 from C$56 today.

“We are calling for strong demand for all of Calfrac’s services from rejuvenated oil plays in 2012 and 2013,” she wrote in a note to clients.

Cogeco Cable Inc., the Montreal-based cable-television provider, gained 5.1 percent to C$49.80 after selling its Portuguese unit to Altice, a Luxembourg-based owner of communications companies, for 45 million euros ($60 million).

Cogeco Cable wrote off its investment in the unit last year after buying it for 464.9 million euros in 2006.

Cogeco Cable soared as much as 5.6 percent, the most intraday in two years, earlier today.

US

By Rita Nazareth

Feb. 29 (Bloomberg) — U.S. stocks fell, trimming the longest monthly rally in a year for the Standard & Poor’s 500 Index, as Federal Reserve Chairman Ben S. Bernanke gave no indication of further measures to stimulate the economy.

Commodity shares had the biggest decline in the S&P 500 among 10 groups as gold tumbled the most since December. Newmont Mining Corp., the largest U.S. gold producer, slumped 4.2 percent. First Solar Inc., the world’s largest maker of thin- film solar panels, retreated 11 percent after reporting an unexpected loss. Apple Inc. topped $500 billion in market capitalization for the first time, rising 1.3 percent.

The S&P 500 fell 0.5 percent to 1,365.68 at 4 p.m. New York time, retreating from an almost four-year high. It still rose 4.1 percent in February, capping a third straight month of gains. The Dow Jones Industrial Average lost 53.05 points, or 0.4 percent, to 12,952.07. The Nasdaq Composite Index topped 3,000 for the first time since 2000 before falling 0.7 percent to 2,966.89. The Russell 2000 Index slid 1.6 percent to 810.94.

“We have a bit of investor nosebleed,” said Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland.

“There are still things to worry about. With the absence of more stimulus, that would lead us to question: what’s there to move us out of some of that? In addition, we’ve had a big run-up in stocks. No trees grow to the sky.”

The S&P 500 has risen 8.6 percent this year on better-than- estimated economic data. Measures of technology and financial shares had the biggest gains among 10 groups in 2012, adding at least 13 percent. The Dow, which yesterday topped 13,000, capped its fifth straight month of gains.

Stocks fell as Bernanke also said in congressional testimony that the job market remains “far from normal” and rising oil prices may cause inflation to grow temporarily.

Earlier today, stocks gained as data showed the U.S. economy expanded more than forecast and business activity accelerated.

“It doesn’t matter if you’re a bull or a bear, you have to acknowledge that the economy is growing,” Ethan Anderson, senior portfolio manager for Rehmann Financial in Grand Rapids, Michigan, said in a telephone interview. His firm manages $1.5 billion. “Yet the market is like a roller-coaster. People want to ride it, but you got to give them a chance to get off. Once that happens, it can continue to move higher.”

Commodity shares in the S&P 500 fell 1.7 percent as a group. Newmont Mining slid 4.2 percent to $59.43. Alcoa Inc. declined 1.9 percent to $10.17.

First Solar tumbled 11 percent, the biggest decline in the S&P 500, to $32.30. The company also reduced its 2012 revenue forecast to $3.5 billion to $3.8 billion, compared with a December forecast of $3.7 billion to $4 billion.

Staples Inc. declined 8.4 percent to $14.66. The world’s largest office products company gave a 2012 forecast that was “lower quality” than analysts expected, Jefferies Group Inc.’s Daniel Binder wrote in a report.

MetroPCS Communications Inc. dropped 6.5 percent to $10.30.

The Texas-based pay-as-you-go wireless carrier was cut to “neutral” from “buy” at UBS AG.

DreamWorks Animation SKG Inc. lost 12 percent, the most since July 2005, to $17.26. The maker of the “Kung Fu Panda” films said fourth-quarter profit tumbled 72 percent as DVD sales declined.

Apple rose 1.3 percent to a record $542.44, gaining for a fifth day. Apple investors are anticipating a sales boost from the company’s latest iPad tablet computer, due on March 7.

They’re also banking on a new iPhone coming by the third quarter and the possibility of Apple offering a dividend, its first since 1995, said Howard Ward, a money manager at Gamco Investors Inc. in Rye, New York. Demand for Apple’s products has helped the company increase profit faster than its stock price, making the price-to-earnings ratio more favorable, he said.

“Impressively, its market cap has risen to the $500 billion level as its price-to-earnings multiple has actually contracted,” said Ward, who helps oversee $36 billion in assets. “At 12 times this year’s expectation of earnings, it stands in stark contrast to the experience of Cisco Systems, which sold at over 100 times earnings when it approached the $500 billion level in 2000.”

A measure of homebuilders in S&P indexes climbed 3.6 percent as a weekly survey by International Strategy & Investment Group showed an index of homebuilder activity rose to the highest level since April 2006.

Toll Brothers Inc. jumped 4.6 percent to $23.46. Chief Executive Officer Douglas Yearley Jr. told CNBC yesterday that orders for the spring season have surged 45 percent. PulteGroup Inc. added 6.3 percent to $8.82. Lennar Corp. rose 3.9 percent to $23.38.

BlackRock Inc.’s Laurence D. Fink said savers need to become more aggressive investors as returns on bank accounts and Treasuries shrink and people grow older. The traditional mix of putting 60 percent of assets in stocks and 40 percent in bonds is inadequate in a “new world” characterized by an aging population, a reduction in borrowing and risk-taking by individuals and governments, and a greater role of emerging economies.

“I’ve personally said I would be 100 percent in equities,” Fink, 59, said in prepared remarks today to the Council on Foreign Relations in New York. “Most investors need a more diversified portfolio, but virtually every investor has to find ways to achieve better returns than they’ll get in cash or government bonds for the foreseeable future.”

Have a wonderful evening everyone.

Be magnificent!

Fear is one of the greatest problems in life.  A mind that is caught in fear lives in confusion, in conflict, and therefore must be violent, distorted and aggressive.

-Krishnamurti, 1895-1986

As ever,

Carolann

The first time I see a jogger smile,

I’ll consider it.

-Joan Rivers, 1933-

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

Senior Vice-President &

Senior Investment Advisor