May 18, 2012 Newsletter

Dear Friends,

Tangents:

PROVIDENCE

By Reza Mahammadi

translated by Nick Laird and Hamid Kabir

I am a rain that nobody wants.

Even the streets don’t understand me.

I am the past perfect tense

and deep down inside me are buried

the ghosts of anonymous travelers,

of infamous seadogs and all of the dead.

I am a certain word small children fear

and which the poets have forgotten.

I’m Buddha’s face in Bamiyan,

stolen, sold on from my homeland,

and I am a corpse, knocked down

in Stockwell, ignored by the binmen.

And on this day in…

1980 – Mount St. Helens Erupts 3 times in 24 hours
1974 – India becomes the sixth nation to detonate an atomic bomb
1951 – The UN moves its headquarters to New York City
1804 – Napoleon Bonaparte becomes Emperor of France

You were born an original … Don’t die a copy. – John Mason

photos of the day

May 18, 2012

In this image made available by LOCOG Britain’s David Beckham smiles during a visit to The Experimental University School of Athens a day after the ceremonial handover of the Olympic flame to the organizers of the 2012 London Olympics.

Chris Radburn//AP

Two Yorkshire Terriers pose for photographers prior to world dog show in Salzburg, Austria. More than 30,000 dogs are expected to take part at the exhibition in Salzburg.

Kerstin Joensson/AP

Market Closes for May 18, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 18 (Bloomberg) — Canadian stocks fell for the fifth time in six days, erasing an earlier gain driven by rising commodity prices, as financial shares tumbled amid increasing concerns about Europe’s debt crisis.

Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia decreased more than 0.5 percent. Industrial companies Bombardier Inc. and Canadian Pacific Railway Ltd. dropped at least 1.3 percent. Golden Star Resources Ltd., which mines for gold in Ghana, plunged 17 percent after a debenture swap raised dilution concerns.

The Standard & Poor’s/TSX Composite Index declined 50.04 points, or 0.4 percent, to 11,280.64 in Toronto, reaching its lowest level since Oct. 4. The benchmark gauge rose as much as 0.9 percent earlier in the day.

“It was holding up quite nicely until some sellers came in and flattened it out right before the market closed,” 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). “They mainly hit the banks. There’s real concern relating to any interconnections the financials may have with European problems.”

The S&P/TSX fell 3.5 percent this week for its third straight weekly decline as concerns mounted that the Greek debt crisis, European elections and a slowing Chinese economy may curb demand for commodities. Energy and raw-materials companies account for 43 percent of Canadian stocks by market value, according to data compiled by Bloomberg.

Financial companies decreased for a fifth straight day after German Finance Minister Wolfgang Schaeuble said turmoil in the financial markets caused by Europe’s debt crisis may last another two years, as Group of Eight leaders met to discuss Greece and its impact on the global economy.

Royal Bank of Canada, the nation’s biggest lender, slipped 0.5 percent to C$51.70. Toronto-Dominion Bank, Canada’s second- largest lender, decreased 0.9 percent to C$76.94. Bank of Nova Scotia, the country’s third-largest lender, sank 1.2 percent to C$51.11.

Industrial stocks in the S&P/TSX fell for a second session as Chinese home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts, adding to signs of slowing growth in the world’s second-largest economy.

Bombardier, a maker of trains and airplanes, fell 1.3 percent to C$3.71. Canadian Pacific Railway, the country’s second-largest railroad, slipped 3.1 percent to C$74.11.

Golden Star Resources plummeted 17 percent, the biggest decline in the S&P/TSX, to C$1.16, its lowest point since December 2008. The company said today it would complete a debenture swap, which raised dilution concerns and focused attention on its debt levels.

US

By Lu Wang

May 19 (Bloomberg) — U.S. stocks tumbled for a third week, pushing the Standard & Poor’s 500 Index to its longest losing streak since August, amid concern global economic growth is slowing and Greece may leave the euro area.

All 10 industries in the S&P 500 fell. Financial and raw- material companies dropped at least 6.5 percent as shareholders sued JPMorgan Chase & Co. over the company’s $2 billion trading loss and the Dollar Index’s longest rally ever reduced the prices of commodities. J.C. Penney Co. and Abercrombie & Fitch Co. each plunged 23 percent after reporting sales that missed analysts’ estimates. Facebook Inc. climbed 0.6 percent in its trading debut, erasing most of an 18 percent rally.

The S&P 500 tumbled 4.3 percent to 1,295.22, the biggest retreat since November. The index sank 7.7 percent over three weeks, trimming its 2012 gain to 3 percent. The Dow Jones Industrial Average slipped 451.22 points, or 3.5 percent, to 12,369.38, the lowest level since Jan. 6. The Nasdaq Composite Index plunged 5.3 percent, the most since September, to 2,778.79, extending its loss from a March high to 11 percent.

“We sort of hit an air pocket in terms of positive catalysts and meanwhile Europe keeps weighing on the market,”

John Kattar, chief investment officer at Eastern Investment Advisors in Boston, which manages $1.7 billion, said in a phone interview. “It was a very good earnings season, but that catalyst is behind us.”

Global equities slumped, with the MSCI BRIC Index that tracks stocks in Brazil, Russia, India and China entering a bear market, with a drop of more than 20 percent from this year’s peak. Fitch Ratings cut Greece’s credit rating on concern the country won’t be able to stay in the euro area after inconclusive elections left the country without a stable government. U.S. reports sent mixed signals, with housing starts and industrial production topping estimates while manufacturing in the Philadelphia region unexpectedly shrank.

The S&P 500’s retreat in May is almost four times worse than 2011. More than $1.14 trillion has been erased from American equity values this month, according to data compiled by Bloomberg. That compares with about $299 billion in the 14 days after April 29, 2011, when the index reached its highest level in three years.

Faltering stocks, reports showing weaker economic growth and concern about the health of countries from Spain to Italy is reminding investors of 2011, one of the most volatile years on record as the S&P 500 dropped as much as 19 percent. Investors bracing for a retreat pulled $18 billion from U.S. equity mutual funds last month, the most since at least 1984, according to the Investment Company Institute.

The Chicago Board Options Exchange Volatility Index, known as the VIX, jumped 26 percent for the week, the most since September, to 25.10. The index, which measures the cost of using options as insurance against declines in the S&P 500, has risen for six straight trading days.

“The market is struggling,” John Praveen, chief investment strategist at Prudential International Investments Advisers, a unit of Prudential Financial Inc., which manages $943 billion in assets, said in a phone interview. “Investors are extremely nervous about what’s going on in Europe.”

JPMorgan tumbled 9.4 percent, the most in the Dow, to $33.49. Chief Executive Officer Jamie Dimon agreed to testify before a Senate committee on the bank’s loss as lawmakers debate whether to tighten rules on trading by U.S. lenders. Dimon announced the loss May 10, assailing his firm’s handling of trading in synthetic credit positions as “flawed, complex, poorly reviewed, poorly executed and poorly monitored.”

Bank of America Corp. slid 7 percent to $7.02 for an eighth consecutive weekly decline, the longest run since at least 1980.

The S&P 500 Materials Index fell for nine consecutive days, the longest losing streak since September 2000, as the Dollar Index rose for a record 14 straight sessions through May 17.

U.S. Steel Corp. plunged 17 percent to $21.56 as hedge-fund manager David Einhorn said at the Ira Sohn conference that he’s not in favor of the steelmaker. Steel prices will continue to fall because of a glut of supply, Anthony Rizzuto, an analyst with Dahlman Rose & Co., wrote in a note on May 15.

Allegheny Technologies Inc., a specialty-metals producer, declined 16 percent to $33.18.

J.C. Penney slumped 23 percent, the most since October 2008 and the biggest decline in the S&P 500, to $26.29. The department-store chain led by Apple Inc.’s former retailing chief reported a first-quarter loss and sales that fell more than analysts projected.

Abercrombie & Fitch sank 23 percent to $35.89, the lowest level since September 2010. The operator of its namesake and Hollister stores reported first-quarter revenue that missed analysts’ estimates and said same-store sales will decline this fiscal year amid weakness in Europe.

Facebook rose 0.6 percent to $38.23 in its debut on the last day of the week. That compares with Carlyle Group LP’s 0.2 percent day-one increase on May 3, and pales in contrast with Google Inc.’s 18 percent jump in its 2004 initial public offering. Underwriters bought Facebook’s stock to keep it from falling below the IPO price, people with knowledge of the matter said.

Facebook raised $16 billion in the largest IPO on record for a technology company. The offering valued the company at 107 times trailing 12-month earnings, more than every S&P 500 member except Amazon.com Inc. and Equity Residential.

Wal-Mart Stores Inc. advanced 5.1 percent, the most in the Dow, to $62.43. The world’s largest retailer reported first- quarter profit that topped analysts’ estimates as its low prices increased customer traffic and boosted sales.

Have a wonderful weekend everyone.

Be magnificent!

Where does the soul go after death?  Where could the earth fall to/

Where can the soul go?  Where is it not already?

The great cornerstone of Vedantism is the recognition of Self.

Man, have faith in yourself.  The soul is the same in every one.

It is all purity and perfection and the more pure and perfect we [you] are

the more purity and perfection you will see.

Swami Vivekananda, 1863-1902

As ever,

Carolann

Life is full of obstacle illusions.

-Grant Frazier

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