May 24, 2012 Newsletter

Dear Friends,

Tangents:

May 24^th,1941 – Bob Dylan was born.

When you feel in your gut what you are and then dynamically pursue it – don’t back down and don’t give up – then you’re going to mystify a lot of folks. –Bob Dylan.

And also on this day in…

1918 – Robert Laird Borden 1854-1937 passes Canada Elections Act;
gives all Canadian women over 21, the right to vote in federal elections only.
1543 – Nicolaus Copernicus publishes proof of a sun-centered solar system. He dies just after publication.
1844 – Samuel Morse taps out the first telegraph message
1883 – Brooklyn Bridge opens

The most basic and powerful way to connect to another person is to listen. Just listen. Perhaps the most important thing we ever give each other is our attention…. A loving silence often has far more power to heal and to connect than the most well-intentioned words. – Rachel Naomi Remen

How many roads must a man walk down

Before you can call him a man?

…The answer, my friend is blowin’ in the wind,

The answer is blowin’ in the wind.

-Bob Dylan, 1962

photos of the day May 24, 2012

Buildings are lit up in pink as part of the Vivid Festival in Sydney, Australia. The festival of light, music and ideas will run until June 11.

Daniel Munoz/Reuters

Nicole Kidman with other cast members arrive on the red carpet for the screening of the film ‘The Paperboy’ in competition at the 65th Cannes Film Festival in France.

Eric Gaillard/Reuters

Market Closes for May 24, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 24 (Bloomberg) — Canadian stocks were little changed as commodity companies rallied and banks pared losses in the final 40 minutes of trading, erasing a 0.6 percent decline in the S&P/TSX Composite Index.

Equities rebounded after Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and that a majority of the region’s leaders support issuing a joint bond to fight the debt crisis. Gold producers posted their longest winning streak since July. Research In Motion Ltd. slumped 3.4 percent to the lowest level since December 2003 after Patrick Spence resigned as head of global sales. Royal Bank of Canada and Bank of Montreal fell at least 1.8 percent.

The S&P/TSX Composite Index increased 1.27 points, or less than 0.1 percent, to 11,566.07. It ranged between a loss of 0.8 percent and a gain of 0.5 percent.

“The market is taking a little bit of a breather,” Sadiq Adatia, chief investment officer at Sun Life Global Investments in Toronto, said in a telephone interview. The unit of Sun Life Financial Inc. oversees about C$4.7 billion ($4.6 billion) for clients. “The market isn’t way ahead of itself because people still aren’t very confident, but there are some cheap valuations out there.”

The market had declined earlier after three bank officials with knowledge of the matter said China’s biggest banks may fall short of loan targets for the first time in at least seven years as an economic slowdown reduces demand for credit.

China is the world’s biggest consumer of metals and energy.

According to data provided by Statistics Canada, it received 4.2 percent of Canada’s total exports in March. Canada recorded C$16.8 billion of exports to China in 2011. Commodities companies make up 43 percent of the S&P/TSX’s value, according to data compiled by Bloomberg.

China’s economy may grow in 2012 at its slowest pace in 13 years, a Bloomberg News survey showed last week, as Europe’s debt crisis curbs exports, manufacturing shrinks and demand for new homes wanes.

Materials shares in the benchmark gauge rose a third consecutive day. Gold rose the most in a week as central banks increased their holdings. Central banks, the world’s biggest holders of gold, continued to buy bullion in April as Turkey raised its reserves by 29.7 metric tons and Ukraine, Mexico and Kazakhstan boosted their holdings, International Monetary Fund data show.

Eldorado Gold Corp., a Vancouver-based mining company, climbed 2.4 percent to C$11.96. Kinross Gold Corp., Canada’s fourth-largest producer of the precious metal, gained 2 percent to C$8.65. Agnico-Eagle Mines, a gold producer that operates in Canada, Mexico and Finland, increased 1.2 percent to C$40.67.

Banks in the S&P/TSX fell for the first time in three days amid the news of a potential Chinese economic slowdown. Royal Bank of Canada, the nation’s biggest lender, slipped 2.9 percent to C$51.38. Bank of Montreal, Canada’s fourth-biggest lender by assets, declined 1.8 percent to C$55.08.

RIM slumped 3.4 percent to C$10.98, its lowest closing price since December 2003, after Spence resigned as head of global sales to take a job in a different industry following 14 years at the company. The company, which three years ago made up 3.8 percent of the S&P/TSX’s value, now represents 0.4 percent.

“RIM is becoming a forgotten story now,” Adatia said.

“When news comes out it doesn’t really impact the market because nobody’s following it much anymore. Unless it starts to have some exceptional results or you see some takeover talk, you’re not going to see it affect the market.”

US

By Rita Nazareth

May 24 (Bloomberg) — U.S. stocks erased losses as Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and a majority of the region’s leaders support issuing a joint bond, offsetting earlier concern about a Chinese slowdown.

A measure of financial shares in the Standard & Poor’s 500 Index gained, while technology and industrial companies retreated. Hewlett-Packard Co. rose 3.3 percent after the largest personal-computer maker announced plans to slice its workforce by 27,000 and reported quarterly sales and earnings that topped estimates. Tiffany & Co. tumbled 6.8 percent as the luxury jewelry retailer cut its profit and sales forecasts.

The S&P 500 rose 0.1 percent to 1,320.68 at 4 p.m. New York time, reversing a loss of 0.6 percent. The index gained for a fourth day. The Dow Jones Industrial Average added 33.60 points, or 0.3 percent, to 12,529.75. The Nasdaq Composite Index fell 0.4 percent to 2,839.38. About 6.9 billion shares changed hands on U.S. exchanges, almost in line with the three-month average.

“The market has come down not necessarily because growth has slowed so significantly, but because of a potential disorderly unwind of the euro,” said Dan Veru, who oversees $3.7 billion as chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey. “Greece won’t come out of the euro. There’s no mechanism in place to do that.”

Equities reversed losses as Monti said in an interview on Italian television station La7 today that “Europe can have euro bonds soon.” Italy can help push Germany to support the idea of collective debt and to embrace the “common good” of Europe, he said. Stocks dropped earlier as three officials said China’s biggest banks may fall short of loan targets for the first time in at least seven years amid an economic slowdown.

In the U.S., data showed companies placed fewer orders for computers, machinery and other capital equipment in April for a second month. Manufacturing in the U.S. expanded in May at the slowest pace in three months, indicating the industry that’s spurred the expansion is cooling.

Concern about a slowdown in global growth and a worsening of Europe’s debt crisis drove the S&P 500 down 5.5 percent so far this month. Financial, energy and technology shares have tumbled at least 7.7 percent in May.

Hewlett-Packard rose 3.3 percent to $21.77. The 8 percent workforce reduction, taking place through firings and early retirement offers, will generate annual savings of as much as $3.5 billion starting in 2014.

Facebook Inc. added 3.2 percent to $33.03, gaining for a second day. The social networking company is still trading below its initial public offering price of $38.

The Bloomberg U.S. Airlines Index climbed 4.9 percent after JPMorgan Chase & Co. raised industry estimates, citing lower jet-fuel prices. Southwest Airlines Co. jumped 4.6 percent, the biggest gain in the S&P 500, to $8.74. US Airways Group Inc. surged 11 percent to $12.16.

Dow Chemical Co. rallied 3.4 percent to $31.55. The chemical maker said an arbitration panel ruled that Kuwait must pay $2.16 billion in damages after it canceled a 2008 agreement to buy a stake in the company’s plastics business.

Pandora Media Inc. surged 12 percent to $11.60. The Internet radio pioneer rose the most since its first day of trading in June 2011 after first-quarter results exceeded analysts’ estimates on higher mobile advertising sales.

Technology had the biggest decline among 10 groups in the S&P 500, dropping 0.9 percent. Apple Inc., the most valuable company, lost 0.9 percent to $565.32.

NetApp Inc. plunged 12 percent, the most in the S&P 500, to $28.82. The seller of hardware and software for storing data forecast first-quarter earnings trailing analysts’ estimates amid a weak economic outlook.

Tiffany tumbled 6.8 percent to $57.59. Chief Executive Officer Michael Kowalski said sales in the Americas region “underperformed, continuing a soft trend that began in the last quarter of 2011.” Sales in the first quarter rose 3 percent to $386 million in the Americas and declined 4 percent in the New York flagship store.

MEMC Electronic Materials Inc. lost 6 percent to $1.58. The second-largest U.S. maker of polysilicon dropped after S&P cut its corporate credit rating two levels to B+ from BB.

The slump in the S&P 500 may be nearing an end after the measure dropped below its 150-day average, which may lure buyers into the market, said Oppenheimer & Co. The gauge slipped 8.7 percent between April 2 and May 18, falling below its average price from the prior 150 days on May 17 for the first time since Dec. 19, according to data compiled by Bloomberg.

Oppenheimer’s Carter Worth wrote in a May 21 report that declines to the 150-day average may prompt pessimists to stop selling and persuade investors who missed out on the market’s rally through April to buy.

The S&P 500 is “down to a level where rebound potential is high and that the right thing to do now is to put some money to work on the long side,” Worth, the New York-based chief market technician at Oppenheimer, wrote in the May 21 report. The stock index rose 1.8 percent this week through yesterday.

Worth highlighted 90 stocks to buy that are down to levels where “selling pressure is judged likely to abate.” The list included Berkshire Hathaway Inc., Intel Corp., Microsoft Corp. and Starbucks Corp.

“If and as these names stop going down (read: stabilize) and actually start to rebound, one can make inferences about the current market correction being at an end,” Worth wrote in the report.

Have a wonderful evening everyone.

Be magnificent!

This glorious soul we must believe in.  Out of that will come power.

Whatever you think, that you will be.  If you think yourselves, weak, weak you will be;

if you think yourselves strong, strong you will be; if you think yourselves impure, impure you will be;

if you think yourselves pure, pure you will be.  This teaches us not to think ourselves as weak, but as strong,

omnipotent, omniscient.  No matter that I have not expressed it yet, it is in me.

All knowledge is in me, all power, all purity, and all freedom.  Why cannot I express this knowledge?

Because I do not believe in it.  Let me believe in it, and it must and will come out.

This is what the idea of the Impersonal teaches.

-Swami Vivekananda, 1863-1902

As ever,

Carolann

I not only use all the brains that I have,

but all that I can borrow.

-Woodrow Wilson, 1856-1924

Ah, but I was so much older then,

I’m younger than that now.

-Bob Dylan, 1964

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