March 22, 2012 Newsletter

Dear Friends,

Tangents: New moon tonight.

Nature is my mirror, my mentor, every moment whispering, singing her stories and parables.  We are each a product of nature, regardless of how we think and behave.  Clanking around in our skin, feeling at times akin to it and other times alien to it, these dry bones and limbs belong to the very earth they stand on, more a part of it than not.  We differ in our DNA ever so slightly from one another, from other animals, plants, and rocks, but mostly we are kin.

Having risen from this earth just as the trees have, we too seek to grow and bear fruit, withstand the elements, and stretch our limbs to the sun.  How is it that we can see the beauty in a coastal tree bent by prevailing winds and poor soil, but see only the lack in one another when growth conditions have been less desirable?

If I use nature as my guide, she always says “yes”; “yes, give it a try,” “yes, I am here to break your fall,” “yes, now you see what is and is not possible, what harm comes from doing certain things?”  Her yeses are tough love for me.  Inside of me lives an entire world; there are regions that are fully grown and lush, but there are area barren, now growing weeds to compost down and fertilize the ground for what comes next.

-Janis Miltenberger, Artist

photos of the day

March 22, 2012

A man walks along the beach after a storm in Viladecans, near Barcelona, Spain.

Emilio Morenatti/AP

The sun rises through thick fog in Santa Ana, Calif.

Thomas Sullens/The Orange County Register/AP

Market Closures for March 22, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

March 22 (Bloomberg) — Canadian stocks fell for the third time in four days, led by materials and energy shares, after manufacturing contracted in Europe and China.

Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, declined 3.4 percent.

Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 1.8 percent. Avion Gold Corp., which explores for the metal in Mali, plunged 12 percent after army officers in the African country said they toppled the government.

The Standard & Poor’s/TSX Composite Index fell 74.68 points, or 0.6 percent, to 12,361.81 in Toronto.

“The correlation between commodities and the Canadian market is very high,” Danielle Park, a money manager at Venable Park Investment Counsel Inc. in Barrie, Ontario, said in a telephone interview. The firm manages at least C$1 million ($1

million) each for more than 200 clients. “This is not only because we’re fairly overweight in that sector, but also because of this whole perception of Chinese demand fueling commodity- based countries.”

The index fell 0.5 percent this week through yesterday as commodity shares fell on concern that slower growth and rising stockpiles in China will curb demand. Energy and raw-materials companies make up 46 percent of Canadian stocks by market value, according to Bloomberg data.

A gauge of European manufacturing fell today as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics. A preliminary measure of Chinese manufacturing slipped in March to the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics.

Canadian gold shares slipped after signs of slowing growth from China to Germany sent the U.S. dollar higher, curbing demand for the precious metal. Gold futures dropped to a nine- week low.

Guyana Goldfields Inc., which explores for gold in South America, decreased 5.6 percent to C$3.35. Jaguar Mining Inc., which produces gold in Brazil, dropped 3.9 percent to C$5.12.

Avion fell 12 percent, the most since November, to C$1.20 following a military coup in Mali, where the company operates.

The company’s Tabakoto mine and Kofi project “are running normally and for the most part unaffected,” John Begeman, chief executive officer of Toronto-based Avion, said today in a statement.

Copper futures dropped 2.1 percent, the most in two weeks.

Teck Resources, Canada’s biggest base-metal company, fell 1.8 percent to C$35.05. Lundin Mining Corp., which operates the Storliden copper and zinc mine in Sweden, declined 2.1 percent to C$4.57.

“There’s been an almost perfect correlation between the price of copper and Canadian stocks over the last couple of years,” Park said. “When you see copper down 2 percent, you say that Canadian stocks, minus some other catalyst, have more downside in the short term.”

Canadian energy companies decreased for a third straight day as oil fell to a one-week low. Canadian Natural Resources fell 3.4 percent to C$33.78. Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 1.8 percent to C$32.47.

Food distributor Colabor Group Inc. fell 24 percent, the most since it went public seven years ago, to C$8 after cutting its dividend by a third.

US

By Rita Nazareth

March 22 (Bloomberg) — U.S. stocks retreated, trimming the longest monthly rally since September 2009 for the Standard & Poor’s 500 Index, as manufacturing contracted in China and Europe and FedEx Corp. tumbled amid a disappointing forecast.

FedEx sank 3.5 percent after the world’s largest cargo airline predicted slower growth in coming quarters. The Dow Jones Transportation Average, which is considered a proxy for economic growth, slumped 2.1 percent. Commodity shares had the biggest losses in the S&P 500 among 10 groups as Alcoa Inc. and Chevron Corp. dropped at least 2.3 percent. Bank of America Corp. fell 2.2 percent to pace declines in financial shares.

The S&P 500 declined 0.7 percent to 1,392.78 at 4 p.m. New York time, slumping 1.2 percent in three days. The gauge has risen 2 percent in March, on pace for a fourth monthly rally.

The Dow Jones Industrial Average fell 78.48 points, or 0.6 percent, to 13,046.14. The Russell 2000 Index slid 1 percent to 821.44. About 6.5 billion shares changed hands on U.S.

exchanges, almost in line with the three-month average.

“We are watching China closely,” said Scott Armiger, a portfolio manager at Christiana Trust in Greenville, Delaware, which has $11 billion in client assets. “There are still a lot of questions about the pace of economic growth,” he said.

“It’s not unusual to have a pullback in the market after a strong run. We’ve made a lot of money in less than six months.”

Equities joined a global slump today as a Chinese manufacturing index indicated a worse contraction this month.

Euro-area services and manufacturing output contracted more than economists forecast. Stocks fell even after data showed that jobless claims dropped to the lowest level in four years, reinforcing signs the U.S. labor market is picking up.

Today’s decline trimmed this year’s gain in the S&P 500 to

11 percent. The benchmark gauge is up 27 percent from its October 2011 low amid economic and corporate data that exceeded projections. Financial and technology shares have soared at least 33 percent during that period.

“There’s enough of a reason there after the sharp run-up in stocks for the market to pull back or go sideways in the short term,” said Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments, in Irvington, New York.

“Most people recognize that China growth has slowed. It’s a question of: is it going to be a sharp or a mild slowdown?”

Companies most dependent on economic growth had the biggest declines among 10 groups in the S&P 500 today, as gauges of commodity, financial and industrial shares retreated at least

1.1 percent. The Morgan Stanley Cyclical Index dropped 1.9 percent. A measure of 11 homebuilders in S&P indexes slumped 1.7 percent.

FedEx tumbled 3.5 percent to $92.50. It forecast a profit range for its current fiscal quarter whose low end trailed analysts’ estimates amid slowing express-shipment demand.

The company is responding to a drop in express shipments and “below-trend” growth by parking an unspecified number of planes in the desert, reducing flight hours and reviewing domestic capacity. The range of goods delivered by FedEx and United Parcel Service Inc. makes them economic barometers.

Energy and raw material shares retreated as the S&P GSCI gauge of commodities declined 1.1 percent amid concern about slower demand. Alcoa retreated 2.5 percent, the most in the Dow, to $10.01. Chevron slumped 2.4 percent to $105.35. Among industrial companies, Caterpillar Inc. dropped 2.4 percent to $106.43.

The KBW Bank Index lost 1.6 percent as all of its 24 companies declined. Bank of America slipped 2.2 percent to $9.60. Citigroup Inc. retreated 2.4 percent to $36.90.

Discover Financial Services added 2.7 percent to $32.49.

The payments network company said fiscal first-quarter profit rose 36 percent to a record as consumers spent more on credit cards.

Dish Network Corp. rose 1.7 percent to $32.90. The second- largest U.S. satellite-TV provider has its share-price estimate increased to $41 from $35 at Deutsche Bank AG. U.S. regulators began removing barriers to the company’s proposed mobile high- speed data network, voting 3-0 yesterday to begin recasting rules that reserve the company’s recently acquired airwaves for satellite use.

Bats Global Markets Inc., founded by a high-frequency trader and nurtured by the world’s top securities firms into the third-largest U.S. stock exchange operator, will seek more than

$100 million for its owners today. It plans to sell 6.3 million shares between $16 and $18 apiece after the close of trading.

Underwriters led by Morgan Stanley, Credit Suisse Group AG and Citigroup are pricing the shares at about 16.9 times estimated 2013 earnings, according to Diego Perfumo, an analyst at hedge fund adviser Equity Research Desk.

Started in 2005 with 13 employees, Bats was steered to prominence by brokers and traders trying to hold down fees as the New York Stock Exchange and Nasdaq Stock Market bought their biggest electronic rivals. Now, with its venues accounting for

11 percent of U.S. share volume, the Lenexa, Kansas-based company is seeking a valuation that is higher than its biggest competitors, data compiled by Bloomberg show.

“Naysayers would have said these guys were just a disruptive influence and Bats was created to beat up on the traditional exchanges,” Larry Tabb, chief executive officer of research firm Tabb Group LLC in New York, said in a phone interview yesterday. “The IPO makes the case that Bats is a legitimate exchange just like NYSE and Nasdaq.”

Have a wonderful evening everyone.

Be magnificent!

Not only must we be aware of the nature and structure of the problem

and see it completely,

but meet it as it arises and resolve it immediately,

so that it does not take root in the mind.

If one allows a problem to endure for a month or a day,

or even for a few minutes, it distorts the mind.

Krishnamurti, 1895-1986

As ever,

Carolann

Leadership is a potent combination of strategy

and character.  But if you must be without one,

be without the strategy.

-Norman Schwarzkopf, 1934-

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

Senior Vice-President &

Senior Investment Advisor