May 29, 2012 Newsletter

Dear Friends,

Tangents:

Déjà vu

There are many theories as to what causes déjà vu.  One holds that our ‘spirit’ can actually travel faster in time than our earthbound bodies so it charges off into the future from time to time for reasons we can’t explain.  Another claims that it’s because we are reincarnated and old memories from past lives are seeping through into our current consciousness.  And then there’s the parallel universe theory that suggests our lives are always splitting off into different directions whenever we make big decisions and that at the point of experiencing déjà vu we are connecting with these parallel worlds.

All of which rather ignores the actual sensation of déjà vu that is simply joyous and mesmerizing regardless of what it actually is.  Déjà vu experiences stay with us too, logging themselves into our memory banks where they can be withdrawn whenever those ‘déjà vu’ conversations occur, usually over a few glasses of wine late at night.  As it happens I have  a déjà vu theory of my own,  I think it’s our brains re-booting – a neurological safety mechanism designed to clear the decks of our consciousness and leave us fresh and awake.

from The Book of Idle Pleasures, Dan Kieran.

And on this day in…

1953 – Edmund Hillary and Tenzing Norgay become the first men to reach the top of Mount Everest

1974 – President Nixon agrees to turn over 1200 pages of edited Watergate transcripts
1917 – John F. Kennedy is born
1990 – Boris Yeltsin in elected President of Russia.

We need men who can dream of things that never were. –John f. Kennedy

It is said an Eastern monarch once charged his wise men to invent him a sentence to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: ‘And this, too, shall pass away.’ -Abraham Lincoln
photos of the day May 29, 2012

A lantern draped with a flower lei floats on the water during the Na Lei Aloha Lantern Floating event held by the Shinnyo-en Buddhist organization at Ala Moana beach park on Memorial Day in Honolulu, Hawaii, Monday night. The event is held in honor of those who’ve died due to war, natural disasters and health reasons.

Hugh Gentry/Reuters

Octopus Paulus, born in Germany, swims over boxes with the flags of Germany and Portugal in Sea Life Aquarium in Porto, Portugal, to predict the winner between the two teams’ Euro 2012 soccer match.

Luis Efigenio/Reuters

Market Closes for May 29, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 29 (Bloomberg) — Canadian stocks rose for the fifth time in six days as metals and oil climbed and Bank of Nova Scotia became the nation’s third lender to beat second-quarter earnings estimates.

Suncor Energy Inc. and Canadian Natural Resources Ltd. added more than 1.6 percent on increasing oil futures. Bank of Nova Scotia gained 2.2 percent after joining Toronto-Dominion Bank and Bank of Montreal in topping projections. Royal Bank of Canada increased 1.1 percent. Base metal producers Teck Resources Ltd. and First Quantum Minerals Ltd. rallied as much as 4.4 percent as copper futures rose.

The S&P/TSX Composite Index gained 84.98 points, or 0.7 percent, to 11,651.13 at 11:28 a.m. Toronto time. It added 2.6 percent last week and posted the biggest four-day rally since Feb. 22.

“This is an encouraging sign we’ve seen the last five or six days,” Barry Schwartz, a money manager at Baskin Financial Services Inc. in Toronto, said in a telephone interview. The firm oversees about C$400 million ($391 million). “People are still spending money and companies are still doing fine.”

The index completed its first weekly gain since the end of April on May 25 as materials and bank shares rallied after U.S. home sales rose and investors speculated China and Europe will stimulate economic growth.

Energy companies rose as oil climbed to a one-week high on speculation that economic growth will boost fuel demand in the U.S. as the peak consumption period for gasoline begins.

Suncor Energy, Canada’s largest oil and gas producer, gained 2.3 percent to C$29.56. Canadian Natural Resources, the country’s third-biggest energy company, increased 1.6 percent to C$32.29.

Bank of Nova Scotia, the country’s third-largest lender, gained 2.2 percent to C$51.90 after reporting a 23 percent surge in domestic banking profit in the second quarter.

Royal Bank of Canada, the nation’s biggest lender, rose 1.1 percent to C$50.97.

Materials stocks in the benchmark gauge advanced as copper increased for the third straight session on speculation that China may take more steps to boost economic growth, increasing demand for the metal.

Teck Resources, the country’s biggest base-metals producer, advanced 4.4 percent to C$32.71. First Quantum Minerals, Canada’s second-largest publicly traded copper producer, gained 1.1 percent to C$18.67.

US

By Rita Nazareth

May 29 (Bloomberg) — U.S. stocks rose, after the first weekly gain since April in the Standard & Poor’s 500 Index, as Greek opinion polls eased concern the country will leave the euro and data signaled the American housing market stabilized.

All 10 industries in the S&P 500 advanced as commodity and technology companies had the biggest gains. Builders D.R. Horton Inc. and PulteGroup Inc. increased at least 2 percent as data showed that home values in 20 U.S. cities declined at a slower pace. Caterpillar Inc., Bank of America Corp., Alcoa Inc. climbed more than 2.8 percent. Facebook Inc. tumbled 9.6 percent, extending losses from the worst-performing large initial public offering during the past decade to 24 percent.

The S&P 500 advanced 1.1 percent to 1,332.42 at 4 p.m. New York time. The gauge added 1.7 percent last week. The Dow Jones Industrial Average increased 125.86 points, or 1 percent, to 12,580.69 today. About 6.2 billion shares changed hands on U.S. exchanges, or 8.6 percent below the three-month average.

“We’re definitely seeing signs of stabilization on the housing front,” said Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp. His firm has $1.83 trillion in client assets. “The economy is looking decent. There’s also a bit of relief that we won’t have any imminent kicking out or defaulting of Greece.”

American equities joined a global rally. Greece’s New Democracy, which supports the austerity plan negotiated with international lenders, placed first in all six polls published on May 26 as campaigning continued for June’s election. The U.S. market was closed yesterday for a holiday. Home values in 20 U.S. cities fell in the 12 months ended March at the slowest pace in more than a year.

Benchmark gauges briefly pared gains as the euro weakened to the lowest level versus the dollar in almost two years on concern that Spain’s financial crisis is worsening. Egan-Jones Ratings Co. reduced its credit rating for Spain to B from Bb-.

The 17-nation currency fell against most of its major counterparts as Spanish officials debated how to fund a recapitalization of the Bankia group.

Today’s rally trimmed this month’s slump in the S&P 500 to 4.7 percent. The benchmark gauge is heading for its biggest monthly retreat since September, amid concern global economic growth is slowing and Greece may leave the euro area.

The Morgan Stanley Cyclical Index of companies most-tied to the economy increased 2 percent. A gauge of homebuilders in S&P indexes added 1.9 percent. D.R. Horton gained 2.5 percent to $17.43. PulteGroup advanced 2 percent to $9.52. Caterpillar, the biggest maker of construction equipment, added 2.9 percent to $92.52. Bank of America added 4.1 percent to $7.44. Alcoa increased 3 percent to $8.89.

Coal producers gained after Goldman Sachs Group Inc. raised its recommendation for the industry to attractive from neutral.

Peabody Energy Corp., the largest U.S. coal producer, jumped 5.6 percent to $25.22 as Goldman recommended buying the shares.

Consol Energy Inc. added 1.8 percent to $30.13.

Facebook lost 9.6 percent to $28.84. The company’s options trading began today. Facebook debuted on May 18 after underwriters sold shares at $38.

“People are disillusioned,” said Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati.

He doesn’t own shares of Facebook. “A lot of investors believed the hype,” he said. “In this type of volatile market environment, people are not going to take chances.”

Vertex Pharmaceuticals Inc. tumbled 11 percent, the most since 2008, to $57.80. The company revised results reported three weeks ago from a study of two cystic fibrosis drugs, saying the combination showed less of a benefit.

Western Digital Corp. slumped 3 percent, the most in the S&P 500, to $33.17. The maker of disk drives was downgraded at Barclays Plc. The share price estimate is $37. Seagate Technology Plc, also cut at Barclays, dropped 4.4 percent to $25.03.

Stock buybacks are falling to a three-year low just as U.S. chief executive officers boost spending on plants and equipment to a record.

Companies announced $1.1 billion of repurchases a day on average during the earnings season in April and May, the lowest level since mid-2009, according to data compiled by Bloomberg and TrimTabs Investment Research Inc. Capital spending in the U.S. has risen since 2010 and reached $63.6 billion in March.

Devon Energy Corp. eliminated buybacks and boosted exploration and production spending 18 percent. United Parcel Service Inc. cut repurchases in order to buy TNT Express NV.

After the biggest first-quarter gain for the S&P 500 since 1998, bears say the 58 percent decline in buybacks removes key support for equities amid Europe’s debt crisis and a weakening U.S. recovery.

While orders for capital equipment fell last month, bulls say the two-year gain in business investment shows CEOs are growing more optimistic, spending to raise profits instead of reducing stock to boost per-share earnings.

“Investors and corporations themselves are best served when the cash is applied to improving capital investment, as opposed to buying stock back,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees $85 billion, said in a May 22 phone interview. “That would be much more bullish.”

Have a wonderful evening everyone.

Be magnificent!

Every day a man must solve the problem

of widening the field of his life and adjusting his burdens.

These are too complex and numerous for him to carry himself,

but he knows that by being methodical he can lighten the load.

When the burdens are too complicated and difficult to manage, he must understand the reason:

he has not found a system that will put everything in place and distribute the weight he carries more evenly.

The search for this system is actually the search for the whole, for synthesis;

it is our effort to create harmony, thanks to an interior adaptation,

in the heterogeneous complex of exterior material.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

The habit of giving only enhances

the desire to give.

-Walt Whitman, 1819-1892

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