May 8, 2012 Newsletter

Hello All,

Tangents:

The phrase “This car practically drives itself!” has never been more apt. The Nevada Department of Motor Vehicles approved on Monday the nation’s first autonomous vehicle licence. While this might seem like an odd thing for the DMV to okay, Google has already developed its own self-driving car.

According to Google, the car navigates through video cameras, radar sensors, lasers and a database of information collected from manually driven cars. The modified Toyota Prius has already been spotted test driving officials on state highways, in Carson City neighbourhoods, and along the famous Las Vegas Strip.

You can read more about the “car of the future” here: http://life.nationalpost.com/2012/05/08/google-gets-first-self-driven-car-licence-in-nevada/

photos of the day

May 8, 2012

A man jumps into a pond from the top of a building to cool himself off on a hot afternoon in New Delhi.- Kevin Frayer/AP

A South Korean worker attaches a devotee’s name tag with their wishes on a lantern in preparation for the birthday celebration of Buddha, which falls on May 28, at Jogye temple in Seoul, South Korea. About one-third of South Korea’s 48 million people are Buddhists.- Lee Jin-man/AP

Market Closes for May 8, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 8 (Bloomberg) — Canadian stocks fell for a fifth day after material and energy producers declined as Greece’s political leaders struggled to form a government, fueling concern that austerity efforts in Europe will be derailed.

Goldcorp Inc., the world’s second-biggest producer of the metal, decreased 4.3 percent, while larger rival Barrick Gold Corp. lost 2.6 percent, as the U.S. dollar strengthened. Teck Resources Ltd., the country’s biggest base metals producer, sank 2.4 percent. Canadian Natural Resources Ltd., the country’s third-largest energy company, declined 3 percent.

The Standard & Poor’s/TSX Composite Index decreased 155.81 points, or 1.3 percent, to 11,704.85 in Toronto, its lowest closing level since Dec. 19.

“The uncertainty in Europe has reared its ugly head,” David Cockfield, a managing director at Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million ($200 million). “It will continue to upset markets until we get a clearer picture of just what the European Union plans to do.”

Canadian stocks retreated last week 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.

Materials companies fell today with metals as gold tumbled below $1,600 an ounce for the first time since January after Alexis Tsipras, the head of the Greek Syriza party, received a mandate to form a government, boosting worries over austerity. Tsipras has said he will seek to form a coalition with other parties that favor reversing a 130 billion-euro bailout.

The U.S. dollar gained, lowering demand for gold as an alternative for investors and sending the S&P/TSX Gold Index to its lowest level since May 2009.

Barrick Gold lost 2.6 percent to C$36.71. Goldcorp decreased 4.3 percent to C$34.40. Eldorado Gold Corp., a Vancouver-based mining company, declined 8.5 percent to C$11.66.

Jaguar Mining Inc., which explores for gold in Brazil, plummeted 36 percent, the most since January 2003, to C$1.42 after saying China’s Shandong Gold Group Co. won’t proceed with a takeover of the company.

Copper fell the most in almost five weeks on concern over the elections in Greece and France. Teck Resources sank 2.4 percent to C$33.53. Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi Mongolian gold and copper mine, dropped 4.4 percent to C$9.90.

Oil fell for a fifth day as Saudi Arabian Oil Minister Ali al-Naimi said prices are too high and the euro weakened against the dollar.

Canadian Natural Resources, the country’s third-biggest energy company, declined 3 percent to C$30.69. Suncor Energy Inc., Canada’s largest oil and gas producer, fell 1.5 percent to C$29.77. Nexen Inc. dropped 2.6 percent to C$16.82.

Avalon Rare Metals Inc., a company developing a rare-earth deposit in Canada’s Northwest Territory, plunged 23 percent to C$1.67, its lowest price since July 2009, after delaying the target date for its first production.

Second Wave Petroleum Inc., the Calgary-based oil and natural-gas producer that announced in February it was seeking a buyer, dropped 31 percent, its biggest drop since December 2006, to C$1.84 after ending the search without a satisfactory offer.

US

By Stephen Kirkland and Rita Nazareth

May 8 (Bloomberg) — Stocks and commodities slid, while the euro extended its longest slump since 2008, as concern that new Greek political leaders will back out of bailout agreements sent the nation’s benchmark equity index to an almost 20-year low.

The Standard & Poor’s 500 Index slipped 0.4 percent to close at 1,363.72 at 4 p.m. in New York. The index pared a loss of as much as 1.6 percent after holding for most of the day above 1,350, a technical level watched by traders. Greece’s ASE index plunged 3.6 percent to close at the lowest level since November 1992. Copper and oil lost at least 1 percent as the S&P GSCI Index of commodities wiped out most of its 2012 gain. The euro fell a seventh day, losing 0.3 percent to $1.3013. Ten-year Treasury yields fell to a three-month low.

Speculation that Greece’s new government will reject terms of its financial rescue grew as New Democracy leader Antonis Samaras said he failed to form a coalition following the weekend elections, passing the opportunity to Alexis Tsipras’s Syriza party. Tsipras said he plans to form a government of left-wing parties that would nationalize banks, repeal recent labor reforms and cancel the bailout accords.

“The situation in Europe could get worse before it gets better,” said James McDonald, chief investment strategist at Northern Trust Corp. in Chicago. His firm manages $715 billion.

“The concern is about the potential that Greece does not carry through on their agreements and they default and leave the euro. While investors have known Greece is going to be challenged to handle their debt load, it’s another thing to watch unfold.”

The S&P 500 dropped for the fourth time in five days, extending its retreat from a four-year high last month to 3.9 percent. Consumer-discretionary, financial and commodity companies led losses among eight of the 10 main industry groups today.

Hewlett-Packard Co. and Bank of America Corp. dropped more than 2 percent to lead the Dow Jones Industrial Average down 76.44 points to 12,932.09, paring losses after sliding as much as 198 points. The S&P 500 dipped below 1,350, a so-called support level being watched by traders, for only about 15 minutes this morning.

“We found support for the S&P 500 at 1,350 where you would have expected it to be,” said Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $1.6 billion. “Once that held you’ve seen a willingness to buy the dip in the U.S. market in names that people have become comfortable with.”

McDonald’s Corp. retreated 2.1 percent after April sales trailed analysts’ projections. Electronic Arts Inc., the second- largest U.S. video-game publisher, declined 4.3 percent as its forecasts fell short of estimates. Fossil Inc., owner of the namesake watch brand, plunged 38 percent after the company reduced its full-year earnings forecast amid weakness in Europe.

The 10-year U.S. Treasury note yield fell for the third straight day, losing three basis points to 1.84 percent after dipping as low as 1.81 percent, the lowest level since February 3. The government sold $32 billion of three-year notes to day, the first of three sales this week totaling $72 billion.

Investors in Treasuries reduced bets the securities will advance and raised neutral positions to the highest in a month, according to a weekly survey by JPMorgan Chase & Co.

The proportion of “net longs” was cut to zero from six percentage points last week as the level of outright longs dropped to equal the level of outright shorts, which was unchanged at 17 percent. A long position is a bet that an asset will increase in value, while a short is a wager it will decrease.

The Stoxx Europe 600 Index slid 1.7 percent, erasing yesterday’s gain, as six shares fell for each that gained. Automakers, mining and financial-services companies led the retreat. National Bank of Greece tumbled 8.4 percent. Bankia SA slid 4.8 percent in Madrid as El Confidencial said the Spanish government will nationalize the lender. Royal KPN NV rallied 17 percent as America Movil SAB offered 2.6 billion euros ($3.4 billion) to increase its stake.

The euro fell 0.4 percent versus the yen. The Dollar Index, which tracks the U.S. currency against those of six trading partners, climbed 0.3 percent, advancing for the seventh consecutive day in its longest rally since 2010. The so-called Aussie weakened against 12 of its 16 major peers after the nation reported a larger-than-estimated trade deficit.

Greece will probably leave the euro as soon as next month as the government runs out of cash and European institutions fail to lend more to the nation, according to John Taylor of hedge fund FX Concepts LLC.

“This summer I think is very likely,” Taylor, founder and chief executive officer of FX Concepts in New York, said today in an interview on Bloomberg Television’s “Inside Track” with Erik Schatzker. “The Europeans aren’t going to give them the money, the International Monetary Fund’s not going to give them an OK. They will be out of money in June.”

Tsipras told his pro-bailout counterparts they must renounce support for the European Union-led rescue if there is to be any chance of forging a coalition. Tsipras said he expected Antonis Samaras of New Democracy and Evangelos Venizelos, the former finance minister who leads the Pasok party, to send a letter to the EU revoking pledges to implement austerity measures by the time he meets with them tomorrow. Samaras said he would not do so, and would support a minority government if necessary.

Greece’s Parliament is split down the middle on the bailout deals negotiated with the EU and IMF.

“We’ve de-stabilized Greece politically and now we’re all surprised they can’t take the decisions to do what we want them to do,” Carl Weinberg, chief economist at High Frequency Economics, told Bloomberg Television. “If Greece falls out of compliance with the IMF program and goes into a hard default, that will raise questions about the capital base of the ECB, put a burden on the other governments of Europe, and that will trigger a series of events that I think won’t have a very happy ending.”

Oil in New York declined 1 percent to $97.01 a barrel in New York, falling for a fifth day in its longest slump in three months, after Saudi Arabian Oil Minister Ali al-Naimi said prices are too high. Copper sank 2.5 percent to $3.6775 a pound as 17 of 24 commodities tracked by the S&P GSCI declined, sending the gauge down 0.6 percent and trimming its 2012 advance to 0.6 percent.

The MSCI Emerging Markets Index sank 1 percent as benchmark indexes in Mexico, India and Brazil lost at least 1.4 percent. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong slid 0.5 percent as residential land sales dropped 92 percent in major Chinese cities.

Have a wonderful evening everyone.

Kindest Regards,

Ellora Howie

Assistant to Carolann Steinhoff

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7