May 30, 2012 Newsletter

Dear Friends,

Tangents:

The execution of Joan of Arc, from the official contemporary account, May 30^th, 1431:

After the sentence was read, the bishop, the Inquisitor, and many of the judges went away, leaving Jeanne upon the scaffold.

Then the Bailli of Rouen, an Englishman, who was there, without any legal formality and without reading any sentence against her, ordered that she should be taken to the place where she was to be burned.

When Jeanne heard this order given, she began to weep and lament in such a way that all the people present were themselves moved to tears.

The said Bailli immediately ordered that the fire should be lighted, which was done.

And she was there burned and martyred tragically, an act of unparalleled cruelty.

And many, both noble and peasant, murmured greatly against the English.

And on this day in…

1672 – Peter the Great, Russian tsar, was born

1783 – The first US newspaper was published

1806 – General (and future U.S. President) Andrew Jackson kills Charles Dickinson in (gun) duel
1942 – The RAF launches the first 1,000 plane raid over Germany
1971- NASA launches Mariner 1, the first satellite to orbit Mars

1994 – Pope forbids the ordination of women

How wonderful it is that nobody need wait a single moment before starting to improve the world. – Anne Frank

photos of the day May 30, 2012

Queen Elizabeth II attends a dinner with The Argyll and Sutherland Highlanders, 5th Battalion The Royal Regiment of Scotland, at the Caledonian Club in London. The Queen is marking her Diamond Jubilee. Celebrations reach a peak with a four-day weekend of events, June 2-5.

Lewis Whyld/Pool/AP

Myanmar’s pro-democracy leader Aung San Suu Kyi receives flowers from migrant workers from Myanmar as she visits them in Samut Sakhon province, Thailand. Nobel Peace Prize winner Suu Kyi ventured outside Myanmar for the first time in 24 years in an unmistakable display of confidence in the liberalization taking shape in her country after five decades of military rule.

Sukree Sukplang/Reuters

Market Closes for May 30, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

May 30 (Bloomberg) — Canadian stocks declined, giving the Standard & Poor’s/TSX Composite Index its biggest decline in more than two weeks, as Research In Motion Ltd. forecast a surprise loss and concern grew that Greece will leave the euro.

RIM fell 7.1 percent after the BlackBerry maker said it will post its first quarterly operating loss since 2004 and that it hired banks to advise on strategic options. Suncor Energy Inc., Canadian Natural Resources Ltd. and Cenovus Energy Inc. slipped more than 3.1 percent as crude oil tumbled to a seven- month low. Royal Bank of Canada and Toronto-Dominion Bank fell at least 0.6 percent.

The S&P/TSX Composite Index lost 176.08 points, or 1.5 percent, to 11,433.22 in Toronto. The gauge is on pace for a 7 percent decline in May, the biggest drop since September and its third straight monthly loss.

“Nobody really knows how the game is going to play out, how ugly it’s going to get and how long it’s going to take,”

Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($1 billion). “All that uncertainty compresses valuations in equities.”

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.

RIM fell 7.1 percent to C$10.66 after saying it will post an operating loss. The average analyst estimate for operating profit was $261 million, according to data compiled by Bloomberg. The company hired JPMorgan Chase & Co. and RBC Capital Markets to help evaluate options, including forging partnerships, licensing its software and looking at “strategic business model alternatives.”

Energy companies snapped a seven-day streak of increases as crude futures declined 3.2 percent to $87.82 a barrel on speculation that U.S. crude stockpiles climbed to the highest level since 1990 and as the euro weakened on concern that the debt crisis will overwhelm Spain.

Suncor Energy, Canada’s largest oil and gas producer, declined 3.6 percent to C$28.15. Canadian Natural Resources, the country’s third-biggest energy company, sank 6.8 percent to C$29.85. Oil-sands producer Cenovus Energy decreased 3.1 percent to C$32.10.

Banks in the S&P/TSX fell after a gauge of pending U.S. home sales dropped by the most in a year and an opinion poll showed most Greeks want to see the terms of an international financial rescue revised.

Royal Bank of Canada, the nation’s biggest lender, slipped 0.7 percent to C$50.64. Toronto-Dominion Bank, Canada’s second- largest lender, declined 1.2 percent to C$77.99.

US

By Rita Nazareth

May 30 (Bloomberg) — U.S. stocks fell, putting the Standard & Poor’s 500 Index on pace for its worst month since September, as housing data disappointed and concern grew about Greece’s future in the euro and the health of Spanish banks.

A measure of homebuilders in S&P indexes sank 4.9 percent.

Sears Holdings Corp. slumped 9 percent, pacing declines in retail stocks, ahead of tomorrow’s industrywide monthly sales report. Research In Motion Ltd. dropped 7.8 percent after forecasting a surprise operating loss and hiring banks to advise on strategic options. Facebook Inc. retreated 2.3 percent, extending its decline since it went public to 26 percent.

The S&P 500 slid 1.4 percent to 1,313.32 at 4 p.m. New York time. The Dow Jones Industrial Average fell 160.83 points, or 1.3 percent, to 12,419.86. The Russell 2000 Index dropped 2 percent to 762. The Chicago Board Options Exchange Volatility Index soared 15 percent to 24.14 for the biggest rally since March 6. About 6.4 billion shares changed hands on U.S. exchanges, or 5.5 percent below the three-month average.

“It’s a high-anxiety market,” said Hayes Miller, who helps oversee about $48 billion as the Boston-based head of asset allocation in North America at Baring Asset Management Inc. “We’re not anywhere near the end of Europe’s debt crisis.

In the U.S., economists are making the point that if housing were to stabilize, consumption could grow. The question is: “What’s going to allow the housing market to stabilize?”

Global equities tumbled, U.S. Treasury 10-year yields slid to a record and the euro weakened to a two-year low. The number of Americans signing contracts to buy previously owned homes fell in April by the most in a year. An opinion poll showed most Greeks want to see the terms of a financial rescue revised.

Costs to protect Spanish government debt with default swaps climbed to a record. The European Central Bank denied it has rejected a plan floated by the Spanish government to recapitalize Bankia group, saying it hasn’t been approached. The Spanish government itself has backtracked on an idea to recapitalize Bankia by injecting sovereign debt into its parent company that, according to the Financial Times, could then be used as collateral to borrow from the ECB.

Concern about Europe’s debt crisis drove the S&P 500 down 6.1 percent so far in May. Financial, commodity and technology companies have fallen at least 7.2 percent in the period. The gauge is on pace for a second straight monthly decline, following the best first-quarter gain since 1998.

“What you’re seeing is worry about how this really plays out and whether Europe has the ability to even solve the problem at this point,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati.

Commodity, financial and industrial shares fell the most among 10 groups in the S&P 500 today. Bank of America Corp. slid

3.2 percent to $7.20. Alcoa Inc., the largest U.S. aluminum producer, dropped 3.5 percent to $8.58. Caterpillar Inc., the biggest maker of construction equipment, decreased 2.5 percent to $90.18. The Morgan Stanley Cyclical Index of companies most- tied to the economy lost 2.5 percent. Homebuilder Lennar Corp. fell 6.7 percent to $26.82.

Thirty of 32 companies in the S&P 500 Retailing Index retreated, sending the gauge down 1.6 percent. The International Council of Shopping Centers, a trade group that tracks retailers, today cut its monthly U.S. same-store sales forecast to 2 percent from 3 percent, citing weakened consumer confidence leading to a slowdown in discretionary spending.

Sears lost 9 percent to $52.34 for the biggest drop in the S&P 500. Kohl’s Corp. slumped 3.6 percent to $48.82. Macy’s Inc. fell 1.8 percent to $38.30.

RIM sank 7.8 percent to $10.35, the lowest level since 2003. An exodus of customers to Apple Inc.’s iPhone and Google Inc.’s Android devices has taken a toll on sales and profit, putting pressure on management to make changes. An operating loss would be the company’s first since 2004.

Facebook lost 2.3 percent to $28.19, after yesterday slipping below $30 for the first time. The recent slide in the stock that has cost investors $25 billion may not end until the shares drop another 20 percent, leaving the company’s valuation on par with competitors that also do business over the Internet.

The company is trading at 29.5 times its projected 2014 profit of $2.69 billion, data compiled by Bloomberg show. The stock would have to dive to $23.07 to match the average price- to-earnings ratio for the Nasdaq Internet Index based on estimated earnings in the next 12 months, according to the data.

Investors have pummeled the shares, citing concern over growth prospects for the largest social-networking service.

Shareholders filed lawsuits that said the company and its underwriters overpriced Facebook at $38 a share. The IPO gave Facebook a higher multiple than 99 percent of the S&P 500.

“It could fall quite significantly because it was priced at a significant premium,” Sameet Sinha, an analyst at B. Riley & Co., said in a telephone interview yesterday. “Such stocks, when they go out of favor, tend to fall before stabilizing.”

EBay Inc. sank 4.6 percent, the most since November, to $39.59. The largest online marketplace dropped after an analyst said second-quarter sales may miss estimates due to a slowdown in U.S. e-commerce spending growth. Sales for the quarter ending in June will be $3.33 billion, according to a projection today by Investment Technology Group Inc. That’s less than the average $3.37 billion analyst estimate compiled by Bloomberg.

Pep Boys — Manny, Moe & Jack plunged 20 percent to $8.89, the lowest level since August. The auto-parts chain slumped after ending its proposed $1 billion sale to Gores Group LLC, which questioned the deal earlier this month following lower- than-expected earnings.

Whirlpool Corp. gained 0.5 percent to $63.13. The shares surged as much as 4.2 percent earlier today as the U.S. Commerce Department proposed duties of as much as 71 percent on large, residential washing machines made in South Korea, concluding that government subsidies for the goods undercut U.S. producers.

Monsanto Co. rallied 2.2 percent to $76.41. The world’s largest seed company said third-quarter profit will exceed analysts’ estimates on rising sales in the U.S., Brazil and Eastern Europe. The company also boosted its full-year forecast.

Apple Inc., the world’s most valuable company, gained 1.2 percent to $579.17. Chief Executive Officer Tim Cook said that television is an area of “intense focus” for the company as it seeks to add products that can build on the success of Macs, iPhones and iPads.

“This is an area of intense focus for us,” Cook said of TV in an on-stage interview yesterday at the D10 conference in Rancho Palos Verdes, California. “We’re going to keep pulling this string and see where it takes us.”

Have a wonderful evening everyone.

Be magnificent!

To grow is to go beyond what you are today.

Stand up as yourself.  Do not imitate.

Do not pretend to have achieved your goal, and do not try to cut corners.

Just try to grow.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

The beginning of knowledge is the discovery

of something we do not understand.

-Frank Herbert, 1920-1986

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