June 8, 2012 Newsletter

Dear Friends,

Tangents:

It’s commencement time and longform.org gathered its 11 favorite commencement speeches from the past 25 years.  The list includes talks by Jon Stewart, David Foster Wallace, Jon Huntsman Jr., and others.  This year, screenwriter Aaron Sorkin told Syracuse University students, “I wish I could tell you that there was a trick to avoiding the screw-ups, but the screw-ups, they’re a-coming for ya.”

GROENENDAAL

-by James Harpur

He sits against a trunk and bends

His knees, a lectern for his book;

Thoughts fly and land like birds around

The glade, unless he makes them still,

When, as they say, a glow appears

Above his head and he reaches for

The spirit tree that’s upside down

Its branches fanned towards the earth

Its roots in heaven, so he climbs

Till he can see – above the woods

Of Soignes – the very ends of earth,

Snail weavings of rivers, puddle lakes,

Cities like little castles; and below

A speck of life, a man – himself

His face upturned towards his gaze,

Both paralysed between two worlds

Each one unsure of where he is

Or where he wants to be just then

And waiting for the other to return.

Extract from Angels and Harvesters by James Harpur (Anvil)

And on this day in…

1965 – President Johnson authorizes commanders in Vietnam to commit U.S. ground forces to combat.
1966 – Gemini astronaut Gene Cernan attempts to become the first man to orbit the Earth untethered to a space capsule, but is unable to when he exhausts himself fitting into his rocket pack.
1967 – Israel airplanes attack the USS Liberty, a surveillance ship, in the Mediterranean, killing 34 Navy crewmen.
1968 – James Earl Ray, the alleged assassin of Martin Luther King, Jr., is captured at the London Airport.

photos of the day June 8, 2012

A traveler man rides his horse in the River Eden prior to the Appleby Horse Fair in Appleby, Westmorland, northern England. Appleby Horse Fair has existed under the protection of a charter granted by King James II since 1685.

Scott Heppell/AP

An Indian Myna holds a grasshopper in its beak to feed chicks in a nest built inside the wall of an underpass in Greater Noida on the outskirts of New Delhi.

Parivartan Sharma/Reuters

Market Closes for June 8, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steve Chambers

June 8 (Bloomberg) — Canadian stocks fell for a second day, paring a weekly gain, after plummeting oil prices overwhelmed a rally in mining stocks tied to a recovery in gold.

Financial and energy stocks contributed most to the decline in the Standard & Poor’s/TSX Composite Index, while raw- materials companies rose. Canadian Natural Resources Ltd., the third-largest energy provider, slumped 2.4 percent. Barrick Gold Corp., the world’s largest producer, added 0.9 percent.

The S&P/TSX slid 91.49 points, or 0.8 percent, to 11,500.63. The gauge fell 1.1 percent in the last two days, trimming its weekly gain to 1.2 percent.

“We’re a commodity-oriented exchange, so what happens not only in the U.S. but China affects us a fair bit,” Ian Nakamoto, research director at MacDougall MacDougall & McTier Inc. in Toronto, said in a telephone interview. The firm manages $4 billion. “You would have thought when the Chinese lowered interest rates that would have helped, but people apparently took the glass half empty approach and figured things must be worse than we thought.”

Canadian stocks slumped yesterday even after China cut its borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates.

Canadian government reports today showed a slowing domestic economy. The country recorded its first merchandise trade deficit in six months in April as exports declined and imports rose a fifth straight time. Canada’s unemployment rate was unchanged at 7.3 percent in May as job growth slowed, with 7,700 jobs added following gains of 58,200 and 82,300 in the prior two months that were the biggest back-to-back increases in three decades.

While oil erased losses during the last 20 minutes of floor trading, earlier declines still battered energy stocks. Suncor Energy Inc., the nation’s largest energy producer, dropped 1 percent to C$29.03. Canadian Natural Resources, the third- largest energy provider, slumped 2.4 percent to C$28.09.

Gold stocks gained after the metal erased an earlier decline. Barrick Gold rose 0.9 percent to C$40.13, snapping a three-day slump. Goldcorp Inc., the second-largest gold company in Canada by market value, gained 0.4 percent to C$40.26.

Rubicon Minerals Corp., which is exploring near Goldcorp’s Red Lake mine, rose 5.3 percent to C$2.98.

Financial shares in the S&P/TSX declined 1.1 percent as a group. Royal Bank of Canada fell 1.3 percent to C$50.31, after rising in the previous three sessions. Toronto-Dominion Bank, the nation’s second-largest lender, declined 1.5 percent to C$77.92.

Research In Motion Ltd. rose 1.1 percent to C$11.16, giving it a four-day rally of 11 percent. The shares plunged 24 percent in May. At the end of the month, the BlackBerry maker forecast an operating loss for the first quarter and hiring banks to advise on strategic options.

US

By Lu Wang

June 8 (Bloomberg) — U.S. stocks rallied, driving the Standard & Poor’s 500 Index to its best weekly gain since December, amid speculation European and American central banks will join China in trying to spur economic growth.

All 10 S&P 500 industry groups rose during the week as financial companies jumped the most, adding 4.7 percent.

Chesapeake Energy Corp. soared 18 percent, leading gains in commodity producers amid plans to replace almost half its board and an agreement to sell its pipeline interests. Home Depot Inc.

climbed 9.2 percent after boosting its share repurchase program.

Facebook Inc. slipped 2.2 percent for its third straight weekly loss since it went public in May.

The S&P 500 rose 3.7 percent to 1,325.66, rebounding from a 3 percent slump last week. The Dow Jones Industrial Average climbed 435.63 points, or 3.6 percent, to 12,554.20, the biggest increase since Dec. 23, after dipping below its 2011 closing level on June 1 amid a worse-than-forecast jobs report.

“The optimism comes from the belief that there is going to be some kind of coordinated activity from central banks,” Bill Greiner, who oversees $13 billion as chief investment officer at Mariner Wealth Advisors in Kansas City, Missouri, said in a phone interview. “The question in my mind is how close to the edge do the world of investors have to move before the central banks start to move in the direction that they need to.”

Investors gravitated toward stocks during the week after the S&P 500 retreated 9.9 percent from an April high, pushing its valuation to 12.9 times earnings from the last 12 months.

That’s 21 percent below the average of 16.4 since 1954, according to data compiled by Bloomberg.

Optimism that policy makers would take steps to stimulate economic growth gave benchmark indexes their biggest gains of the year on June 6, with the S&P 500 and Dow advancing at least 2.3 percent. Equities rallied the next day as China cut interest rates for the first time since 2008 and European Central Bank President Mario Draghi said officials stand ready to act. The rally fizzled after Federal Reserve Chairman Ben S. Bernanke said the central bank will assess the economy before deciding if more stimulus is needed.

Economic reports sent out mixed signals, with a measure of service industries showing a surprise increase while factory orders unexpectedly dropped. Optimism grew that Europe was making progress on its debt crisis. Finance officials will hold discussions this weekend on a potential bailout of Spain as the nation is poised to become the fourth of the 17 euro-area countries to require emergency assistance.

“The overriding factor that’s driving the market is really Europe,” Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, which manages about $40 billion, said in a phone interview. “Equities overall are very attractively priced. But over the past several years, equities have not been trading on valuations, they have not been trading on underlying fundamentals. When we get positive news out of Europe, we get a risk-on type of environment. And when we get negative news, it’s risk off.”

Greiner of Mariner Wealth said his firm began selling stocks two months ago and he’s not ready to put the cash back to work.

“I don’t think we’re out of the woods,” he said. “We have some further volatility and potential downside movement in front of us. The probability of the U.S. slipping into some sort of economic contraction in 2013 is building. With that in mind, valuations don’t look particularly cheap, to be frank.”

The Morgan Stanley Cyclical Index of companies most-tied to the economy jumped 4.4 percent for the week, the biggest advance since Dec. 2. A gauge of homebuilders in S&P indexes rallied 4.6 percent, as PulteGroup Inc. climbed 8.7 percent to $8.98 and Lennar Corp. advanced 6.1 percent to $26.55.

The KBW Bank Index added 4 percent, the most since March 16. American International Group Inc. surged 12 percent to $30.48, leading gains among financials. Citigroup Inc. climbed 9.4 percent to $27.77, while Bank of America Corp. advanced 7.7 percent to $7.56.

Chesapeake surged 18 percent to $18.36. The energy explorer, battered by collapsing natural-gas prices and growing investor mistrust, said it will replace almost half its board under pressure from billionaire investor Carl Icahn. The company also agreed to sell its pipeline interests to Global Infrastructure Partners for more than $4 billion.

Home Depot rose 9.2 percent, the most in the Dow, to $52.35. The largest U.S. home-improvement retailer boosted its stock repurchase plan by $500 million for fiscal 2012, bringing the total to $4 billion.

Iron Mountain Inc. soared 19 percent, the most in the S&P 500, to $32.72. The document-storage company approved a plan to convert to a real estate investment trust following pressure from activist investor Elliott Management Corp.

Facebook slipped 2.2 percent to $27.10, extending its loss from its debut to 29 percent. No large U.S. company is attracting more attention from short sellers than the world’s biggest social-networking amid bets the stock will keep falling.

Short interest on Facebook reached 6.8 percent of shares outstanding, according to data compiled by Bloomberg and Data Explorers Ltd., a New York-based research firm. None of the S&P 500 companies with at least $50 billion in market capitalization has short interest higher than 3.1 percent, the data show.

Alpha Natural Resources Inc. had the biggest decline in the S&P 500, sinking 11 percent to $9.32. The second-biggest U.S. coal producer is shutting mines in Kentucky and closing some offices as cheap natural gas and clean-air rules slash demand from electricity generators.

Halliburton Co. slipped 6.7 percent to $27.96. The world’s largest provider of hydraulic-fracturing services said North American profit margins this quarter will shrink more than previously forecast because of higher material costs.

Have a wonderful weekend everyone.

Be magnificent!

The person who can wear the mantle of a Master

is one who is devoted to the cause of non-violence and non-possession

who is driven by the quest for truth and the right perspective,

who is capable of solving his own emotional and mental problems and

who can show others the way to overcome their emotional and mental problems.

Acharya Mahaprajna, 1920-2010

As ever,

Carolann

All that we see or seem is but a dream within a dream.

-Edgar Allen Poe, 1809-1849

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