March 26, 2012 Newsletter

Dear  Friends,

Tangents: Well I finally watched Mad Men for the very first time last night, the season’s premiere.  I very seldom watch television except for the BBC news every night, but I was curious because of the societal impact this show appears to be having, from cocktails to fashion.   About halfway through, Gary asked me what I thought, and I said, it’s like a daytime soap opera.  He said he agreed but he had actually liked Dynasty better, so we switched the channel to the BBC.

I read  a  short book yesterday entitled Here is New York by E.B. White (published by The Little Bookroom, NY).  It is a reissue of the one originally published in 1949, with a new introduction by his step-son, Roger Angell.

“In the summer of 1948, E.B. White sat in a New York City hotel room and, sweltering in the summer heat, wrote a remarkable, pristine essay, Here is New York.

Perceptive, funny, and nostalgic, the author’s stroll around Manhattan – with the reader arm-in-arm – remains the quintessential love letter to the city, written by one of America’s foremost literary figures.

Like most of White’s prose (his essays, his ‘Talk of the Town’ columns, The Elements of Style), this book is of modest length.  Yet, like Charlotte’s Web, it speaks more eloquently about what lasts and what really matters than other, more expansive pieces.

The New York Times has chosen Here is New York as one of the ten best books ever written about the grand metropolis.  The New Yorker calls it ‘the wittiest essay, and one of the most perceptive, ever done on the city.’

This edition of Here is New York marks the 100^th anniversary of E.B. White’s birth, and appears with a new introduction by Roger Angell.” –from the publisher.

If you love New York like me, you will love this little book.

photos of the day

March 26, 2012

People take a stroll in the garden of Schwetzingen Castle in Schwetzingen, Germany.

Ronald Wittek/dapd/AP

People walk along a tidal causeway in the town of Peel on the Isle of Man. The British Isles have seen a spell of particularly warm weather over the past few days.

Raphael Satter/AP

Market Closures for March 26, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

March 26 (Bloomberg) — Canadian stocks rose to a three- week high, led by commodity producers, as investors speculated that the European Union will increase the size of its bailout fund and Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to reduce U.S. unemployment.

San Gold Corp., the developer of a project in Manitoba, advanced 6.4 percent. Yamana Gold Inc., Canada’s third-largest producer by market value, gained 1.5 percent. Suncor Energy Inc., Canada’s largest oil and gas producer, rose 1 percent, as oil erased an earlier loss after Bernanke’s comments. Fortuna Silver Mines Inc., which operates in Peru and Mexico, plunged 9.2 percent after it reported a fourth-quarter loss.

The Standard & Poor’s/TSX Composite Index advanced 109.13 points, or 0.9 percent, to 12,574.79 in Toronto.

“Commodities have clearly been pushing the market higher,” 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 ($55 million). “You’re seeing oil prices firm up and you’re seeing a rally in gold today. The rally in gold is mainly driven by Bernanke’s comments that the job market in the U.S. isn’t recovering as quickly as he’d like it to.”

The index slipped 0.3 percent last week as manufacturing contracted in China and Europe and gold fell to a 10-week low before rebounding on March 23. Energy and raw-materials companies make up 45 percent of Canadian stocks by market value, according to Bloomberg data.

Materials stocks in the S&P/TSX gained after Bernanke said that while he’s encouraged by the unemployment rate’s drop to 8.3 percent, further improvement in the job market will require continuing the central bank’s stimulative monetary policies.

Commodities also increased after Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall.

San Gold advanced 6.4 percent to C$1.50. Yamana Gold gained 1.5 percent C$16.16. Suncor advanced 1 percent to C$33.12.

Fortuna Silver Mines dropped 9.2 percent to C$5.60 after reporting a fourth-quarter loss of $1.2 million. Excluding some items, the company broke even, missing the the 8.4 cent average of analyst estimates in a Bloomberg survey. The results were hurt by higher tax rates in Peru, Trevor Turnbull, an analyst at Bank of Nova Scotia, said in a telephone interview.

Financial stocks in the S&P/TSX rose. Royal Bank of Canada, the country’s largest lender by assets, advanced 1.2 percent to C$58.67. Industrial Alliance Insurance & Financial Services Inc. increased 2.5 percent to C$31.10.

“This market strength could last for a little while longer,” said Huen. “The Canadian markets have lagged the U.S. markets year-to-date, so you could see a bit of a catch-up.”

SNC-Lavalin Group Inc., Canada’s largest engineering and construction company, rose 5.2 percent to C$41.31, reversing an earlier loss prompted by the resignation of Pierre Duhaime as the company’s chief executive officer after a probe into project payments.

The discovery of incorrectly booked payments does not appear to have caused the loss of any contracts, company executives said in a statement today. SNC-Lavalin isn’t planning legal action against Duhaime, Chairman Gwyn Morgan said on a conference call.

US

By Rita Nazareth

March 26 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level since May 2008, after Federal Reserve Chairman Ben S. Bernanke said that accommodative monetary policy is still needed to spur jobs.

The Morgan Stanley Cyclical Index of companies most-tied to the economy rose 1.3 percent. Apple Inc. jumped 1.8 percent to a record as the world’s most-valuable technology company said it plans to increase investment in China. Amazon.com Inc. and JPMorgan Chase & Co. climbed at least 2.2 percent to pace gains among the largest companies. Pfizer Inc. added 1.6 percent as health-care shares rose the most among 10 S&P 500 groups.

The S&P 500 advanced 1.4 percent to 1,416.51 at 4 p.m. New York time, erasing last week’s loss and posting the fourth- biggest gain of 2012. The Dow Jones Industrial Average added 160.90 points, or 1.2 percent, to 13,241.63 today. The Russell 2000 Index of small companies rallied 1.9 percent to 846.13, the highest level since July. About 6.2 billion shares changed hands on U.S. exchanges, or 6 percent below the three-month average.

“Bernanke is in a difficult situation because the Federal Reserve is mostly relying on the Fed’s speech as opposed to money to move markets,” said David Kelly, who helps oversee about $394 billion as chief market strategist at JPMorgan Funds in New York. “What he’s trying to say is that they’re going to be pretty slow to remove stimulus.”

Equities rose as Bernanke said in a speech that while he’s encouraged by the unemployment rate’s decline, the economy still needs help. The number of Americans signing contracts to buy previously owned homes held in February near an almost two-year high, a sign that the real estate market may be stabilizing.

Gains in stocks were also driven by speculation the European Union will increase the size of its bailout fund.

European finance ministers meet March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel.

“Europe took care of a liquidity problem, but the solvency concern still remains,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a telephone interview. His firm manages about $107 billion. “Some action to bolster the firewall would be viewed as positive.”

All 10 groups in the S&P 500 rose today as some of the largest companies rallied. The Dow Jones Transportation Average, a proxy for the economy, gained 1.4 percent. The KBW Bank Index added 1.5 percent as 23 of its 24 stocks rose. Amazon.com increased 4 percent to $202.87. JPMorgan climbed 2.2 percent to $46.17.

Apple jumped 1.8 percent to a record $606.98. Chief Executive Officer Tim Cook visited the world’s most populous country, where store openings have trailed a forecast the company made two years ago. Cook had “great meetings” with Chinese officials, Carolyn Wu, a Beijing-based spokeswoman, said by phone, without identifying the officials.

A measure of health-care companies in the S&P 500 rose the most among 10 industries, adding 1.7 percent. Pfizer added 1.6 percent to $22.16. Tenet Healthcare Corp. had the second-biggest advance in the S&P 500, adding 5.5 percent to $5.54.

The U.S. Supreme Court opened historic arguments on President Barack Obama’s health-care overhaul by debating whether it should rule this year at all. The justices are considering whether an 1867 law bars them from ruling for now on the measure that requires almost every American to get health insurance by 2014 or pay a penalty.

Arena Pharmaceuticals Inc. soared 25 percent to $3.01, the highest level since September 2010. The weight-loss pill maker faces an advisory panel on May 10 as Food and Drug Administration staff said in a report today that obesity treatment manufacturers may need to study the heart risks of their medicines before U.S. regulators weigh approval.

Edwards Lifesciences Corp. rallied 5.9 percent, the most in the S&P 500, to $75.51. The company’s Sapien device replaces damaged aortic heart valves as well as surgery, without cracking open the chest or triggering higher rates of stroke or death after two years, a company-funded study found.

Lions Gate Entertainment Corp. added 4.5 percent to $15.18.

“The Hunger Games” collected $155 million in weekend sales in the U.S. and Canada, a record opening for the company and for the month of March.

Safeway Inc. declined 3.4 percent, the biggest loss in the S&P 500, to $20.42. The grocer was cut to neutral from outperform at Credit Suisse Group AG, meaning the firm expects the stock to perform in-line with the market over the next 12 months.

A123 Systems Inc. tumbled 12 percent to $1.49, the lowest price since it went public in September 2009. The company said it’s replacing defective battery packs and modules it supplies to customers, including Fisker Automotive Inc., and that the flaw caused a Fisker Karma to shut down in a Consumer Reports test.

The S&P 500 today erased last week’s 0.5 percent decline and extended its monthly advance to 3.7 percent. The benchmark measure is poised for a fourth straight monthly gain, the longest winning streak since September 2009. The index has risen 13 percent in 2012 amid better-than-estimated economic and corporate data. It trades for 14.6 times reported earnings, below the average since 1954 of 16.4.

Hedge funds trailing the S&P 500 for the last five months are giving up on bearish bets and buying stocks at the fastest rate in two years.

A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 48.6 last week from 42 at the end of November 2011, the biggest increase since April 2010, according to data compiled by the International Strategy & Investment Group. The Bloomberg aggregate hedge fund index gained 1.4 percent last month, lagging behind the S&P 500 by 2.65 percentage points.

Money managers struggling to catch up with the gains have contributed to the rally that pushed the S&P 500 up 27 percent since October.

Market bulls say they are a continuing source of cash that can move stocks higher. Bears say capitulating hedge funds are further evidence that equities have risen too far, too fast as economic growth remains sluggish, warning that the pool of potential buyers is being depleted.

“It’s encouraged me to gradually increase my exposure to stocks,” Barton Biggs, founder of hedge fund Traxis Partners LP in New York, said in a March 23 phone interview, referring to an improving economic outlook. “The shift has occurred gradually in the six or so months since the beginning of October. I’d be inclined to raise my net long further because the potential to the upside would be greater” should the S&P 500 fall 5 percent to 7 percent, he said.

Have a wonderful evening everyone.

Be magnificent!

Such awareness is like living with a snake in the room;

you watch its every movement, you are very, very sensitive to the slightest sound it makes.

Such a state of attention is total energy;

in such awareness the totality of yourself is revealed in an instant.

Krishnamurti, 1895-1986

As ever,

Carolann

Be thankful for what you have; you’ll end up having more.

If you concentrate on what you don’t have, you will never,

ever have enough.
– Oprah Winfrey, 1954-

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7