May 10, 2012 Newsletter

Hello All,

Tangents:

As I have previously stated, we listen to a lot of National Public Radio here at Queensbury Securities. While it is mainly an American station reporting American news interspersed with smooth jazz covers of the “Mickey Mouse Song”, it is also a local Seattle station.  So aside from hearing about the American election, you also get interesting little Seattle factoids like the Space Needle turning 50.  And how does Seattle choose to celebrate this milestone? By sending a member of the general public to space!

That’s right, in what is being called the Space Race 2012 Gregory Schneider, a recent law-school grad from Tucson, Arizona, beat out over 50,000 applicants to win a trip to space.

The trip is run by the private company Space Adventures and comes with a hefty price-tag of $110,000 and offers a zero-gravity experience and stunning views of the Earth.

But don’t get it wrong, Gregory Schneider didn’t have it easy. Finalists had to first win a lottery to enter the contest, then bring in enough votes from supporters online. Finally, they had to compete against each other at tasks such as maneuvering robots and doing some climbing on the exterior of Space Needle.

The date of the voyage has yet to be determined, but you have to admit that is a pretty awesome prize!

photos of the day May 10, 2012

Cuban-American artist Jose Parla workson a creation on a building wall in Havana, Cuba, for the upcoming 11th Havana Biennial contemporary art exhibition. The project, titled ‘Wrinkles Of The City,’ involves combining French artist J.R’s pictures of Cuban elderly people in the neighborhood with Parla’s calligraphic messages, and then pasting them on walls around the city.- Desmond Boylan/Reuters

Filipino fishermen unload fish from a boat in Masinloc, Zambales, Philippines. Masinloc is the nearest land, about 128 nautical miles away, from the disputed Scarborough Shoal. China warned its citizens in Manila to stay off the streets and take precautions during planned anti-Chinese protests on Friday, a sign of mounting tensions during a standoff in the resource-rich South China Sea.- Erik De Castro/Reuters

Market Closes for May 10, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 10 (Bloomberg) — Canadian stocks rebounded from a six- day skid, led by banks and energy producers, as Greece attempted to form a new government and the U.S. reported a decline in jobless claims.

Suncor Energy Inc., Canada’s largest oil and gas producer, climbed 0.8 percent. Canadian Natural Resources Ltd., the country’s third-biggest energy company, increased 1.5 percent. Royal Bank of Canada, the nation’s biggest lender, rose 1.1 percent. Teck Resources Ltd., the country’s biggest base-metals producer, rose 0.5 percent as copper prices increased.

The Standard & Poor’s/TSX Composite Index rose 61.16 points, or 0.5 percent, to 11,736.17 in Toronto.

“You’ve had six straight days of negativity and the market was bound to bounce back,” Irwin Michael, a portfolio manager at ABC Funds in Toronto, said in a telephone interview. Michael’s firm oversees C$1 billion ($1 billion). “It’s a bit of a relief rally. Investors are taking a pause and looking ahead.”

The benchmark gauge declined 5.3 percent during the six-day slump and is heading for a second straight weekly decline. Last week it fell as a U.S. report showed employers added fewer jobs than forecast in April and commodity prices dropped. Energy and mining shares account for 43 percent of Canadian stocks by market value.

Canadian energy companies gained today as U.S. first-time claims for jobless benefits fell last week to a one-month low. Suncor Energy climbed 0.8 percent to C$29.30. Canadian Natural Resources increased 1.5 percent to C$31.15. Crescent Point Energy Corp., a western Canadian oil and gas producer, rose 3.6 percent to C$42.38.

Financial companies in the S&P/TSX increased as former Greece Finance Minister Evangelos Venizelos attempted to form a government that will ensure the nation remains in the euro area. Global stocks slumped yesterday amid the political impasse as concern grew that Greece’s debt crisis is worsening.

Royal Bank of Canada rose 1.1 percent to C$53.95. Toronto- Dominion Bank, Canada’s second-largest lender, increased 0.7 percent to C$80.19. Bank of Nova Scotia, the country’s third- largest lender, gained 0.5 percent to C$52.80.

The S&P/TSX Diversified Metals and Mining index rose as copper advanced for the first time in three days after the news from Greece eased concerns that the country will default on loans, boosting the outlook for global economic growth and commodity demand.

Teck Resources rose 0.5 percent to C$33.42. Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi Mongolian gold and copper mine, gained 1.7 percent to C$9.99.

Linamar Corp., Canada’s second-largest auto-parts maker, surged 12 percent to C$20.89 after reporting first-quarter earnings excluding some items of 59 Canadian cents, exceeding the average analyst estimate of 53 Canadian cents.

Magna International Inc. rose 2.3 percent to C$43.64. North America’s largest auto-parts supplier reported that first- quarter profit rose 6.5 percent and raised its full-year sales forecast.

US

By Rita Nazareth

May 10 (Bloomberg) — U.S. stock futures fell as investors assessed a disclosure by JPMorgan Chase & Co., the biggest U.S. bank by assets, that it had a $2 billion trading loss after positions in credit securities proved riskier than expected.

JPMorgan tumbled 6.6 percent after the close of regular trading as Chief Executive Officer Jamie Dimon said the bank made egregious mistakes and that trading losses were “self inflicted.” Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley lost at least 2.2 percent.

Standard & Poor’s 500 Index futures expiring in June slumped 0.7 percent to 1,348 at 6:26 p.m. New York time. Financial companies in the S&P 500 had the biggest gain among 10 groups in 2012, surging 15 percent, or almost double the benchmark measure’s advance. Dow Jones Industrial Average futures dropped 78 points, or 0.6 percent, to 12,756.

“JPMorgan has held to a higher standard among the banks,” Walter Todd, who oversees about $950 million as chief investment officer at Greenwood Capital in Greenwood, South Carolina, said in a telephone interview. “If this happens to them, it raises the question: if they have these issues, who else does?”

JPMorgan led a slump in financial shares after the close of regular trading. The group comprises 15 percent of the S&P 500 for the second-biggest weighting among 10 industries. The bank’s shares retreated 6.6 percent to $38.05. It gained 0.3 percent in regular trading, paring a rally of as much as 1.9 percent.

Bank of America shares lost 2.7 percent to $7.50. Citigroup retreated 3.7 percent to $29.52. Goldman Sachs sank 2.2 percent to $103.94. Morgan Stanley slumped 2.6 percent to $15.20. Wells Fargo & Co. lost 1.6 percent to $32.66.

The cost of protecting debt of JPMorgan from default rose to the highest level in a month. Credit-default swaps on the bank climbed to 118.5 basis points as of 5:42 p.m. in New York, according to prices from data provider CMA, which is owned by CME Group Inc. The contracts were at about 111 basis points before the announcement.

Dimon said JPMorgan lost about $2 billion after a failure in its chief investment office, which the bank says focuses on hedging. The office has been transformed in recent years under Dimon into a unit that makes bigger and riskier speculative bets with the bank’s money, according to five former employees, Bloomberg News reported April 13.

“We’re accountable, and what happened violates our own standards and principles about how we want to operate the company,” Dimon said in a conference call today. “This is not how we want to run a business.”

On April 13, JPMorgan reported a 3.1 percent drop in earnings, a smaller decline than analysts estimated as mortgage revenue surged and trading almost doubled from the fourth quarter. The bank benefited from gains in mortgage lending as low interest rates and federal incentive programs encouraged homeowners to refinance.

Earnings at financial companies in the S&P 500 grew 12 percent in the first quarter, for the second-biggest increase among 10 industries, according to data compiled by Bloomberg. That’s almost double the growth of profits of S&P 500 companies in the period. On average, 66 percent of financial companies in the benchmark gauge beat analysts’ estimates in the period.

Warren Buffett, whose Berkshire Hathaway Inc. has more than $20 billion invested in U.S. banks, said on May 5 the nation’s lenders have “liquidity coming out of their ears” and are in better shape than European rivals.

“I would put European banks and American banks in two very different categories,” Buffett, Berkshire’s chief executive officer, said at the firm’s annual meeting in Omaha, Nebraska.

“The American banking system is in fine shape. The European system was gasping for air a few months back” until getting assistance from the European Central Bank, he said.

Wall Street firms including JPMorgan and Bank of America, emboldened after raising capital levels ahead of stricter international guidelines, are contesting efforts by U.S. policy makers to limit trading and risk.

Banks had the biggest gain in the S&P 500 among 24 groups in regular trading today, adding 1.5 percent, as European lenders rallied. Federal Reserve Chairman Ben S. Bernanke said the U.S. banking system is stronger and more resilient while still facing challenges on credit quality and liquidity.

“Banks still have more to do to restore their health and adapt to the post-crisis regulatory and economic environment,” Bernanke said today in a speech at the Chicago Fed’s annual conference on banks.

The S&P 500 rebounded in regular trading, advancing 0.3 percent, as Greece attempted to form a new government and a decline in American jobless claims helped allay concern of a labor market setback.

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