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Welcome to the CAPCORP Comment

For the week of January 30, 2012
Blackberry shuffles their leadership, TV options drive changes in demand and we offer some details on the Greek negotiations. These and our regular market updates can be found in this week's Comment.

Market Update

Major Indexes
1-Year Returns
TSX: -7.04%
Dow: 5.59%
Nasdaq: 2.22%
S&P 500 1.29%
Dax: -9.0%
HangSeng -13.8%
Nikkei -15.6%
FTSE -3.9%

Closing prices (In $US)
$1Cdn=$0.9989
Gold: $1,738.98
Oil: $99.56

Bond Yields
10-yr Cdn 1.99%
30-yr Cdn 2.60%
10-yr U.S. 1.89%
30-yr U.S. 3.06%

RRSP Deadline Countdown
30 days to February 29

US picks up steam but slightly slower than forecast; Another European ratings cut creates few waves

Restrained spending by consumers held fourth quarter US economic growth to 2.8% annually, slower than the 3% consensus estimate of economists but still the fastest pace in more than a year. This rise followed a 1.8% gain in the prior quarter. Also in the US, the Thomson Reuters/University of Michigan index of consumer sentiment climbed to 75 from 69.9 at the end of December.

In Europe, Fitch Ratings cut the credit ratings of Italy, Spain and three other euro-area countries, saying they lack financing flexibility in the face of the regional debt crisis. Italy, the euro area's third-largest economy, was cut two levels to A- from A+, Spain was also lowered two notches, to A from AA-, ratings on Belgium, Slovenia and Cyprus were also reduced, while Ireland's rating was maintained. Market reaction was muted with the euro reaching its highest level against the US dollar since December 21 on optimism about Greek debt relief talks.

Canadian stocks rose ever so slightly on Friday, extending a sixth-straight weekly advance. The TSX was basically flat at 12466.5, gaining 0.56% for the week. US stocks rallied late on Friday to close mixed and without much change for the week. The Dow lost 0.58% on Friday to close at 12660.46. The S&P 500 was basically flat at 1316.32 and the Nasdaq was up 0.40%, to 2816.55. The Nasdaq was last week's leader, up 1.07%.

Crude oil prices hover in the $100/barrel, closing at $99.56/barrel while gold gained $18.33 to $1738.98/ounce. The Canadian dollar bounced around parity last week after the US Fed announced that super-low borrowing rates will probably continue into 2014. The dollar ended the week at $0.9989US.

Blackberry Shuffle

Mike Lazaridis and Jim Balsillie, the co-chief executives of Research In Motion (RIM), resigned last week following months of investor pressure for leadership changes at RIM. Chief operating officer Thorsten Heins was named president and CEO. Heins joined RIM from German industrial giant Siemens in December 2007 and served as senior VP for hardware engineering before becoming COO in August 2011.

Early announcements by Heins suggest he is disinclined to make major changes at RIM which may dampen some of the enthusiasm around the leadership changes. Heins said he was confident that RIM was on the right path. "We have a strong balance sheet with approximately $1.5 billion in cash at the end of the last quarter and negligible debt," he said.

Barbara Stymiest was named chairman of the board, a post previously held jointly by Balsillie and Lazaridis. Stymiest, has been on the board of RIM since 2007, has held senior positions at the Royal Bank of Canada and was chief executive of TSX Group, operator of the Toronto Stock Exchange.

Said Lazaridis, "There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership," and RIM is "entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond."

Lazaridis and Balsillie are not stepping away entirely; Lazaridis was named vice chairman of its board and chairman of a new innovation committee and Balsillie will remain a member of the board of directors.

RIM shares have lost nearly three-quarters of their value over the past year and the company has been the subject of persistent takeover speculation. Several large investors have been clamoring for a change at the top.

The TV Two Step

The era of vast cable television packages made up of scores of channels appears to be ending as nimble and cheaper Web-based competitors encroach on the domain of traditional cable providers. This is an $8.1-billion industry in Canada and industry experts suggest the future will involve much more customization than in the past.

That said, the existing providers remain powerful. Montreal-based Cogeco, Canada's fourth-largest cable provider, reported better-than-expected subscriber additions to its premium digital television service while also posting gains in basic cable. But times are undoubtedly changing. Rate increases have continued, up another 6% to an average of almost $60/month in 2010, and consumers have begun seeking refuge via regulatory complaints and opting for Web-based alternatives.

Regulators have told the big providers that they have until April 1 to reply with measures they will take to give consumers greater flexibility. The CRTC has warned that they will consider regulatory action if the big companies cannot offer viable alternatives to consumers.

Greece Tangos with Debt Crisis

Resolving the Greek sovereign-debt crisis is crucial to avoiding contagion in Europe, said Deutsche Bank AG Chief Executive Officer Josef Ackermann, as private bondholders met Greek Prime Minister Lucas Papademos last week to seek an accord to cut Greece's borrowings. "I'm confident that we can get our act together in Greece and avoid a major contagion, but that is still a very open question,"

Greece and its creditors are haggling over the terms of a deal to reduce the country's borrowings only three months after private bondholders agreed to a 50% cut in the face value of more than 200 billion euros of debt by voluntarily swapping bonds for new securities. Since then, an economic contraction that exceeded estimates has made the goal of cutting Greece's debt to 120% of gross domestic product by 2020 more difficult.

Greek Finance Minister Evangelos Venizelos told reporters in Brussels on January 24 that the government intends to wrap up the debt-swap talks with private investors by February 1.

This Week in History

• 1487 - Bell chimes invented
• 1894 - Pneumatic hammer patented by Charles King of Detroit
• 1917 - 1st jazz record recorded
• 1933 - "Lone Ranger" begins a 21-year run on ABC radio
• 1948 - 5th Winter Olympic games open in St Moritz, Switzerland
• 1956 - Elvis Presley records his version of "Blue Suede Shoes"
• 1969 - US/Canada ISIS 1 launched to study ionosphere
• 1863 - Samuel Clemens takes the pen name Mark Twain for 1st time
• 1892 - Bottle cap with cork seal patented by William Painter
• 1931 - 1st use of a rocket to deliver mail (Austria)
• 1959 - Buddy Holly's last performance
• 1990 - South Africa's President FW de Klerk promises to free Nelson Mandela
  

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Closing Comments – The Executor role - not one to be taken lightly

Death is not something most of us like to think about or even talk about. But being appointed the executor of someone's Will is certainly a reason to talk about death. Being asked to be an executor is an acknowledgement of a trust relationship, an expression of confidence in your capability and perhaps even an honour. But is can also be lot of work.

If you are asked to be an executor then you should do some reading about the role and some thinking about whether you are prepared to accept the role. If you are called upon to act as executor it is likely that your involvement will go on for several months and possibly even years. Part of an executor's duties include drawing up simple accounts providing all the details of how the deceased's estate has been divided. This information will also be needed to enable a final tax return to be completed.

The executor may also:

• Inform next of kin, close family and any potential heirs of the death that you are an executor.
• Appoint a solicitor.
• Obtain a copy of will and carry out instructions.
• If necessary, register the death and assist with funeral arrangements.
• Ensure assets are listed and if necessary made secure, for example, locating house keys and locking property.
• Gather together vital paperwork, address book of deceased, wills, death certificate and any certified copies, personal effects.
• Gather all financial paperwork such as cheque books, bank statements, paying in books, credit card details, building society books, mortgage details and any cash.
• Locate life insurance policies and paperwork such as membership forms, shares and stocks, bonds and pension information.

On this last point: As insurance advisors, we are often contacted by executors who are looking for insurance policy information. Often they have scant details: handwritten notes or an "inkling" that there might be an inforce insurance policy

Hundreds of thousands of dollars go unclaimed every year because the deceased had policies with more than one carrier and the executor had no idea where to find them. This is a good reason to rely on a single Financial Advisor, who can safeguard all the insurance information, even on policies that they did not sell originally. It's also a good reason to sit down with the person who asks you to be their executor and insist that they organize and itemize their financial assets and insurance policies. That's not something you can do after the person passes away.

This newsletter contains general information only and is intended for informational and educational purposes and has been provided to clients and potential clients of CAPCORP Financial Corporation (CAPCORP). While information contained in this newsletter is believed to be reliable and accurate at the time of printing, CAPCORP and Advisors working for CAPCORP do not guarantee, represent or warrant that the information contained in this newsletter is accurate, complete, reliable, verified or error-free. This newsletter should not be taken or relied upon as providing legal, accounting or tax advice. Obtain personal and independent professional advice, from your lawyer and/or accountant, to take into account your particular circumstances.