May 4, 2012 Newsletter

Dear Friends,

Tangents:

There is going to be a supermoon tomorrow night.  According to the G & M today, “A supermoon occurs when a full moon is also at it perigee, its closest point to Earth on its elliptical path.”  Tomorrow it will reach this perigee at 11:34 pm ET and will line up with the Earth and the sun to appear especially big and bright.  It should be pretty beautiful.

And on this day in,

1814 – Napoleon begins his exile on the island of Elba in the Mediterranean Sea

1930 – Mahatma Gandhi is arrested by the British

1942 – The United States begins food rationing

1943 – The Battle of the Coral Sea begins
1970 – Ohio National Guardsmen open fire on students at Kent State, killing 4 students and wounding 9 others
photos of the day

May 4, 2012

Mallory McCallen, from Houston, reads through a race program before the running of the first race before the 138th running of the Kentucky Oaks horse race at Churchill Downs in Louisville, Ky.

Charlie Riedel/AP

An Indian woman farmer collects beans from a vegetable field on the outskirts of Jammu, India.

Channi Anand/AP

Market Closes for May 4, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 4 (Bloomberg) — Canadian stocks fell, completing their biggest weekly decline this year, after U.S. employers added fewer jobs than forecast and energy shares declined with oil prices.

Suncor Energy Inc., Canada’s largest oil and gas producer, dropped 3.5 percent. Canadian Natural Resources Ltd., the country’s third-biggest energy company, sank 3.7 percent after its profit trailed estimates. Royal Bank of Canada, the nation’s biggest lender, decreased 1.6 percent. Goldcorp Inc., the world’s second-biggest producer of the metal, rose 1.3 percent as gold gained on speculation the Federal Reserve will add to stimulus measures to boost growth.

The Standard & Poor’s/TSX Composite Index decreased 143.67 points, or 1.2 percent, to 11,871.23 in Toronto. The index fell 3 percent over five days, its worst week since Dec. 16, and erased its gain for the year.

“The U.S. payroll numbers were a lot weaker than expected,” Anil Tahiliani, a money manager at McLean & Partners in Calgary, said in a telephone interview. The firm oversees about C$1 billion ($1 billion). “Uncertainty has come back on the table in terms of headline risk. The market has been looking for an excuse in the last day or two to take it lower.”

Canadian stocks retreated after two straight weekly gains as Spain entered a recession, a U.S. industry report showed employers added fewer jobs than forecast last month and commodity prices dropped. Energy and mining shares account for 44 percent of Canadian stocks by market value, compared with 20 percent in the U.S.

U.S. payrolls climbed 115,000 in April, the smallest gain in six months, the Labor Department reported today. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent.

Royal Bank of Canada decreased 1.6 percent to C$54.95.

Toronto-Dominion Bank, Canada’s second-largest lender, fell 0.7 percent to C$81.16. Bank of Nova Scotia, the country’s third- largest lender, dropped 1 percent to C$52.75.

Great-West Lifeco Inc., Canada’s second-biggest insurance company, fell 8.8 percent to C$22.19 after its first-quarter results fell short of analysts’ estimates and Bank of Montreal lowered its rating on the shares.

Energy stocks in the S&P/TSX declined as oil fell below $100 a barrel for the first time since February after the U.S. jobs report fanned concern that the economy of the world’s largest crude-consuming country may be losing speed.

Suncor Energy dropped 3.5 percent to C$30.17. Canadian Natural Resources sank 3.7 percent to C$31.71 after reporting first quarter adjusted profit that missed the average analyst estimate by 35 percent. Oil-sands producer Cenovus Energy Inc. declined 5.3 percent to C$32.15.

Materials companies fell as declining prices for copper and wheat outweighed an increase in gold.

Teck Resources Ltd., the country’s biggest base metals producer, dropped 1.6 percent to C$34.79. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, slipped 4.3 percent to C$18.82. Potash Corp. of Saskatchewan Inc., the biggest fertilizer company, fell 0.8 percent to C$42.32.

Gold gained for the first time this week after U.S. jobs figures increased the metal’s appeal as a hedge in the event of additional stimulus measures.

Goldcorp rose 1.3 percent to C$36.43. Barrick Gold Corp., the world’s largest producer of the metal, gained 0.4 percent to C$37.66.

US

By Rita Nazareth

May 4 (Bloomberg) — U.S. stocks declined a third day, giving the Standard & Poor’s 500 Index its worst week in 2012, after data showing employers added fewer jobs than forecast intensified concern about the pace of economic recovery.

The S&P 500 retreated 1.6 percent to 1,368.88 at 4 p.m. New York time, according to preliminary closing data, extending its weekly decline to 2.5 percent.

“The data point to sluggish job growth, declining labor market participation and for those employed, stagnant purchasing power,” Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., said in an e-mail today.

“Consumption is less dynamic at a time when headwinds from Europe and a potential fiscal cliff are still material.”

Equities slumped as payrolls climbed 115,000, the smallest gain in six months and below the estimate for a 160,000 advance.

The jobless rate unexpectedly fell to a three-year low of 8.1 percent as people left the labor force. Concern about Europe’s debt crisis also helped send stocks slower as services and manufacturing output in the euro region shrank and France, Germany and Greece prepared for elections this weekend.

Some investors said economic concern adds to speculation the Federal Reserve will consider additional steps to boost growth. The Fed may announce a third-round of asset purchases, or quantitative easing, if economic data continues to disappoint, said Keith Wirtz, at Fifth Third Asset Management.

A negative reading in a measure of forecasting accuracy shows data have been worse than economists expected. The Citigroup Economic Surprise Index was at minus 23.40 today. The gauge a year ago plunged into negative figures ahead of an economic soft patch that prompted the Fed, in an initiative dubbed “Operation Twist,” to replace $400 billion of short- term debt in its portfolio with longer-dated securities.

“The labor report may be the first beat on the drum for QE3,” said Wirtz, who oversees $15 billion as chief investment officer for Fifth Third Asset Management in Cincinnati. “As we proceed into summer, watch the releases. Negative beats will lead to Fed actions before Labor Day — ironic by accident.”

Since reaching a 12-year low in March 2009, the S&P 500 has more than doubled amid government’s stimulus measures and as corporate profits beat estimates for the 13th straight quarter.

About 71 percent of S&P 500 companies that reported results since the start of the earnings season have topped projections, according to data compiled by Bloomberg.

Have a wonderful evening everyone.

Be magnificent!

It is not a question of belief.

Stop believing in that which is;

this is what is taught in jnâna yoga.

Believe in no other,

stop believing in that which is;

this is the first stage.  Dare to be rational.

Dare to follow reason where it may take you.

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Winners never quit and quitters never win.

-Vince Lombardi, 1913-1970

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