March 27, 2012 Newsletter

Dear Friends,

Tangents:

I was reading an interesting story in The New York Times this past Sunday morning… It was about a couple of beekeepers from upstate New York who were hired to begin producing honey on the roof of the Whitney Museum which is located on the Upper East Side.  The idea was inspired by the museum’s director after learning that the Tate museums around the world are doing the same thing as is the Louvre in Paris.  They are selling the honey in their shops in addition to the art books and other paraphernalia that helps the income stream.  What I found fascinating was the comment by one of the beekeepers that the honey is actually better than from the rural area in which they live and keep 9 hives.  The reason being that there are less pesticides used in urban areas than in rural agricultural areas.  Just amazing to me….also thinking about the future possibilities for roof tops in urban areas.  It would be fabulous if all that vacant roof-top real estate was rendered useful by replacing some of the natural world left diminished by development.

Seven Reasons You Might Fail to Become the Best in the World.
You run out of time (and quit).
You run out of money (and quit).
You get scared (and quit).
You’re not serious about it (and quit).
You lose interest or enthusiasm or settle for being mediocre (and quit).
You focus on the short term instead of the long (and quit when the short term gets too hard).
You pick the wrong thing at which to be the best in the world (because you don’t have the talent).
-Seth Godin

photos of the day

March 27, 2012

In Belfast, Northern Ireland, the six-floor Titanic Belfast building tells the story of the Titanic from the ship’s construction in Belfast to her sinking in the Atlantic on her maiden voyage one hundred years ago. The building opens to the public in April.

David Moir/Reuters

A red carpet leads the way to the UK film premiere of ‘Titanic 3D’ at the Royal Albert Hall in Kensington, west London. The re-launch of the 3D version comes 15 years after the film was a huge box office hit.

Joel Ryan/AP

Market Closures for March 27, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

March 27 (Bloomberg) — Canadian stocks fell from a three- week high as oil producers retreated after a U.S. Energy Department official said the U.S. may release crude from the Strategic Petroleum Reserve.

Nexen Inc., an energy producer with operations on five continents, fell 2.6 percent. Kinross Gold Corp., Canada’s fourth-biggest gold producer by market value, declined 2.6 percent. First Quantum Resources Ltd., the country’s second- largest publicly traded copper producer, fell 1.9 percent.

Centerra Gold Inc. plunged 15 percent after cutting its output forecast.

The Standard & Poor’s/TSX Composite Index decreased 62.75 points, or 0.5 percent, to 12,512.04 in Toronto.

“The financials have shown some improvement, but we counter that against weakness we continue to see in oil and gas,” Andrew Pyle, an associate money manager on a Bank of Nova Scotia team that oversees about C$200 million ($200 million), said in a phone interview. “For the last couple of weeks we’ve been seeing decent movements in the price of oil without really a commensurate improvement in the oil and gas sector.”

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.

Energy stocks in the S&P/TSX fell, driven by oil shares, after Charles McConnell, the acting assistant secretary for fossil energy, said a release from the reserve is “being considered.”

Nexen Inc. fell 2.6 percent to C$18.08. Pacific Rubiales Energy Corp., which explores for oil in Colombia, decreased 2.4 percent to C$28.44.

Canadian materials companies fell after two days of increases on concern that an index of property values that showed the drop in U.S. house prices is slowing may undermine the case for more Federal Reserve economic stimulus.

Kinross Gold Corp., Canada’s third-biggest gold producer by market value, declined 2.6 percent to C$9.84. Centerra Gold plummeted 15 percent to C$13.70 after cutting production forecasts at its flagship Kyrgyz mine by a third because of access delays caused by ice movement.

First Quantum fell 1.9 percent to C$18.84. Inmet Mining Corp., which produces copper, gold and zinc, dropped 2.7 percent to C$55.88.

The S&P/TSX has declined 1 percent in March after gaining

4.2 percent in January and rising 1.5 percent in February.

“This has not been an impressive month for the TSX,” said Pyle. “We’re not seeing the same improvement we saw in January and February.”

US

By Rita Nazareth

March 27 (Bloomberg) — U.S. stocks retreated as a report showing American consumer confidence near the strongest level in a year failed to encourage investors after the Standard & Poor’s

500 Index advanced to an almost four-year high.

Losses accelerated in the final 15 minutes of trading as financial companies slumped. Bank of America Corp. lost 3.3 percent as Robert W. Baird & Co. cut its rating. Apollo Group Inc. fell 8.5 percent on new enrollment concern. Homebuilder Lennar Corp. surged 4.7 percent amid better-than-estimated earnings. Pfizer Inc. added 1.5 percent as Goldman Sachs Group Inc. raised the possibility of a full breakup of the company.

The S&P 500 lost 0.3 percent to 1,412.52 at 4 p.m. New York time, after rising 1.7 percent in two days. The Dow Jones Industrial Average slid 43.90 points, or 0.3 percent, to 13,197.73. About 6.1 billion shares changed hands on U.S.

exchanged today, or 8.8 percent below the three-month average.

“There’s maybe some short-term vulnerability, but it doesn’t really dent my longer-term optimism,” said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp. Her firm has $1.81 trillion in client assets. “We had a huge day yesterday. So, it’s not a big surprise not to see an immediate follow-through.”

The S&P 500 yesterday erased last week’s loss. The index rose 3.4 percent in March, poised for a fourth straight monthly gain, the longest winning streak since 2009. It trades for 14.6 times reported earnings, the highest valuation level since July while below the average since 1954 of 16.4.

The Conference Board’s confidence index dropped to 70.2 from a revised 71.6 reading in February that was higher than initially reported. The median forecast of economists surveyed by Bloomberg News called for a decrease to 70. The S&P/Case- Shiller index of property values in 20 cities fell 3.8 percent from a year earlier, after decreasing 4.1 percent in December.

“The trend of economic data has been improving and that’s helped provide a better backdrop for investors to feel comfortable putting money into stocks,” Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Connecticut, which oversees $650 million, said in a telephone interview. “Yet we really haven’t seen much in terms of profit taking. It could be choppy.”

Seven out of 10 groups in the S&P 500 fell. Financial shares had the biggest decline among 10 industries, dropping 1 percent. Bank of America dropped 3.3 percent to $9.60 after being downgraded to neutral at Robert W. Baird. The 12-month share-price estimate is $10.

Apollo Group slumped 8.5 percent, the most in the S&P 500, to $39.54. Co-Chief Executive Officer Gregory Cappelli told investors on a conference call that new enrollments will continue to be “volatile.” Credit Suisse Group AG cut its recommendation for the shares to neutral.

A measure of homebuilders in S&P indexes gained 2.9 percent. Lennar rallied 4.7 percent to $27.63. Net income for the three months ended Feb. 29 fell to $15 million, or 8 cents a share, from $27.4 million, or 14 cents, a year earlier. Lennar was expected to earn about 5 cents a share, the average estimate of 20 analysts in a Bloomberg survey.

Pfizer climbed 1.5 percent, the most in the Dow, to $22.50.

The shares have increased 8.3 percent since July 6, the day before Pfizer Chief Executive Officer Ian Read said the New York-based company was exploring strategic alternatives for its animal health and nutrition businesses.

Read, at a recent meeting with Goldman analysts, indicated he may be willing to further split up the company after selling or spinning off those two units, Jami Rubin, a Goldman Sachs analyst, wrote in a note to investors.

American International Group Inc. advanced 2.1 percent to

$29.67 after Deutsche Bank AG said the insurer may repurchase

$20 billion of stock in the next 12 months.

Walgreen Co. added 1.3 percent to $34.80. The largest U.S.

drugstore chain reported second-quarter profit that topped analysts’ estimates after new grocery and household items boosted sales.

Opnext Inc. surged 53 percent, the most in the Russell 2000 Index, to $1.73. The maker of optical components for communications networks will be purchased by Oclaro Inc. in an all-stock deal. Holders of Fremont, California-based Opnext will get 0.42 shares of Oclaro stock, or about $1.96, for every Opnext share they own.

JDS Uniphase Corp. gained 3.3 percent to $14.79 and Finisar Corp. advanced 3.8 percent to $20.14 after Jefferies & Co. said they may gain market share while Opnext and Oclaro integrate their businesses.

The S&P 500 has climbed 12 percent since the end of last year, poised for the best first quarter since 1998, amid better- than-forecast earnings and economic data. Financial companies and computer makers rose the most among 10 groups, surging at least 21 percent so far in 2012.

Peter Lee, the New York-based chief technical analyst for UBS AG, said fund managers’ purchases of the best-performing stocks at the end of the quarter are likely to push the S&P 500 toward his 2012 target range of 1,440 to 1,450 sooner than the second half of the year, as he had anticipated.

The S&P 500 would need to rise 1.7 percent to reach 1,440 from yesterday’s closing level of 1,416.51. A failure of the benchmark index to hold gains above these levels may trigger a pullback of 5 percent to 10 percent, he said.

“When the quarter has been extremely strong, these institutional investors are pressured or motivated to dress up their portfolios to show clients that they actively participated in the marketplace during the quarter,” Lee wrote in a note yesterday. “The focus on momentum stocks and sectors leaves the overall market vulnerable for a correction.”

Have a wonderful evening everyone.

Be magnificent!

Contemplation is seeing the here and now.

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Follow your honest convictions and stay strong.

-William Thackeray, 1811-1863

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

Senior Vice-President &

Senior Investment Advisor