June 25, 2012 Newsletter

Dear Friends,

Tangents:

One of the things I derive great enjoyment from this time of year is reading the commencement speeches for the various graduating classes.  Here are a few excerpts from speeches for the class of 2012:

Michael Lewis, Author

Princeton University

“People really don’t like to hear success explained away as luck, especially successful people.  As they age, and succeed, people feel their success was somehow inevitable.  They don’t want to acknowledge the role played by accident in their lives….Recognize that if you have had success, you have also had luck, and with luck comes obligation.  You owe a debt, and not just to your gods.  You owe a debt to the unlucky.”

Cory A. booker, Mayor of Newark

Bard College

“Go out there and swear to this world your oath, not with your words, but with what you do.  Not with your hand over your heart, but with your hand outstretched to a world that desperately needs your hand, your help, your insights, your creativity, your honor, your courage.  It needs you.”

Neil Gaiman, Author

University of the Arts

“Things go wrong, in life and in love and in business and in friendship and in health and in all the other ways that life can go wrong.  And when things get tough, this is what you should do: make good art.  I’m serious.  Husband runs off with a politician?  Make good art.  Leg crushed and then eaten by mutated boa constrictor?  Make good art.  I.R.S. on your trail?  Make good art.  Cat exploded?  Make good art.  Somebody on the Internet thinks what you do is stupid or evil, or it’s all been done before?  Make good art.”

Atul Gawande, Physician and author

Williams College

“There continue to be huge differences between hospitals in the outcomes of their care….I thought that the best places simply did a better job at controlling and minimizing risks, that they did a better job of preventing things from going wrong.  But to my surprise, they didn’t.  Their complication rates after surgery were almost the same as others.  Instead, what they proved to be really great at was rescuing people when they had a complication, preventing failures from becoming a catastrophe….They call them a ‘Failure to Rescue.’  More than anything, this is what distinguished the great from the mediocre.  They didn’t fail less.  They rescued more.  This in fact may be the real story of human and societal improvement.  Risk is necessary.”

And on this day in…

1933 – Hitler bans political parties in Germany other than the Nazis.
1938 – Joe Louis floors Max Schmeling in the first round of the heavyweight bout at Yankee Stadium.
1940 – France and Germany sign an armistice at Compiegne, on terms dictated by the Nazis.
1941 – Under the codename Barbarossa, Germany invades the Soviet Union.
1942 – A Japanese submarine shells Fort Stevens at the mouth of the Columbia River.
1944 – President Franklin Roosevelt signs the “GI Bill of Rights” to provide broad benefits for veterans of the war.

1949 – Meryl Streep was born.
1956 – The battle for Algiers begins as three buildings in Casbah are blown up.
1973 – Skylab astronauts splash down safely in the Pacific after a record 28 days in space.
1980 – The Soviet Union announces a partial withdrawal of its forces from Afghanistan.
1981 – Mark David Chapman pleads guilty to killing John Lennon.

photos of the day June 22, 201

A worker checks the lights of the installation ‘P.V.R. Neon’ (2006) of German artist Sven Druehl in the exhibition ‘Landscapes as a World View’ in the Kunstsammlungen gallery in Chemnitz, eastern Germany. The exhibition starts on June 24 and lasts until Aug. 26.

Jens Meyer/AP

A youth practices parkour as he jumps off a wall in central Sydney, Australia. Parkour is a method of movement, originally from France, whose practitioners use techniques of vaulting, rolling, running, climbing and jumping to leap over or move around obstacles.

Daniel Munoz/Reuters

The one-year-old cub of a red-handed tamarin monkey sits on his mother at the Royev Ruchey zoo in Russia’s Siberian city of Krasnoyarsk.

Ilya Naymushin/Reuters

Market Closes for June 22, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

June 22 (Bloomberg) — Canadian stocks rose as gains in banks and energy shares overshadowed falling mining companies and helped the benchmark index recover from its biggest decline since October.

Suncor Energy Inc., the nation’s largest oil provider, and Royal Bank of Canada, its biggest lender, rose at least 1.3 percent. As a group, banking and energy stocks contributed most to gains in the Standard & Poor’s/TSX Composite Index, while raw-materials shares fell the most. Centerra Gold Inc. tumbled 27 percent, its biggest slide since 2008, after disputing allegations by Kyrgyzstan that it caused environmental damage.

The S&P/TSX increased 14.07 points, or 0.1 percent, to 11,422.39 at 3:34 p.m. in Toronto, after gaining as much as 0.6 percent and falling 0.2 percent. Canadian shares lost 3 percent yesterday, the most among 24 developed nations tracked by Bloomberg.

“It’s a battle between risk-on and risk-off,” David Sherlock of Calgary-based McLean & Partners, which manages C$1 billion, said in a phone interview. “It’s a really precarious situation. You’ve got monetary policies that should be supportive of the markets and then you have the problems that caused these actions, and those aren’t solved.”

The stock index has slumped 0.9 percent this week as reports yesterday showed a slowdown in global manufacturing, while the U.S. Federal Reserve cut its forecasts for economic growth. The central bank also extended its stimulus program known as Operation Twist by $267 billion, disappointing investors anticipating a more aggressive approach.

Energy stocks rose today after two straight losses, as oil prices climbed from an eight-month low. Suncor added 1.8 percent to C$28.20. Canadian Natural Resources Ltd., the nation’s third- largest provider, jumped 1 percent to C$26.87.

Financial stocks rose as Moody’s Investors Service as 15 global bank downgrades from Moody’s Investors Service were no worse than the credit-rating firm had warned. Royal Bank of Canada gained 1.5 percent to C$52.10. Toronto-Dominion Bank advanced 0.6 percent to C$78.84.

Royal Bank, Canada’s largest lender by assets, was downgraded to Aa3 from Aa1, Moody’s second-highest level, as part of the review. It was the second downgrade for the bank in 18 months and puts Royal Bank’s credit rating from Moody’s lower than Canada’s other big banks.

“RBC remains one of the strongest and highest-rated banks in the world in terms of our credit ratings, capital base and balance sheet,” Katherine Gay, a spokeswoman for Royal Bank, said in an interview. “We expect minimal impact on our business and no impact on our clients.”

Gold futures added 0.1 percent, rebounding from a 0.4 percent decline. The price had slumped four straight days.

Barrick Gold Corp., the world’s largest provider of the metal, fell 2.3 percent to C$38.59.

Gold stocks in the S&P/TSX slumped 5.4 percent this week.

Jennifer Radman of Caldwell Investment Management Ltd., which manages C$1 billion, said in a phone interview that the decline was a reaction to this week’s meeting of Fed policy makers including Chairman Ben S. Bernanke.

“There was some expectation that Bernanke would announce further quantitative easing and it just didn’t happen,” she said. “A lot of that expectation was pushed to the market and now gold is trading off that lack of news. Nobody is buying the gold stocks at all.”

Centerra Gold plunged 29 percent to C$3.38. It said Kyrgyzstan issued a report on June 18 that “included claims of substantial environmental damage” from the company’s Kumtor mine.

“Centerra believes that the report’s findings are without merit,” the company said in a statement.

US

By Rita Nazareth

June 22 (Bloomberg) — U.S. stocks advanced, following yesterday’s global selloff, as bank downgrades from Moody’s Investors Service were no worse than the firm had warned.

The Standard & Poor’s 500 Index added 0.8 percent to 1,335.46 at 4 p.m. New York time. The benchmark measure tumbled 2.2 percent yesterday for the second-biggest loss this year.

“The bad news is out and it was not as bad as expected,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida. His firm oversees $350 billion. “They had been telegraphing the bank downgrades for a long time. Why does anybody pay any attention to those rating companies? They missed it during the financial crisis.”

The prospect of downgrades had weighed on the financial industry since Moody’s said Feb. 15 it was reviewing 17 banks with capital-markets operations because of fragile confidence and tighter regulations that pinched revenue. Pressure mounted as Europe’s debt crisis intensified.

The reductions by Moody’s are “a mea culpa from 2007 and 2008,” said James Leonard, a credit analyst at Morningstar Inc.

“The banks have gotten so much better in the last few years in terms of capital, yet their ratings keep going down. What does that tell you? That the ratings were so wrong before.”

Equities tumbled yesterday, while commodities entered a bear market, after signals of a global slowdown in manufacturing added to disappointing housing and labor market data at the world’s largest economy. The reports came out a day after the Federal Reserve lowered its growth and employment estimates while signaling it may add to its record stimulus.

Investors also watched news out of Europe. The euro strengthened against the dollar after the European Central Bank eased terms for collateral, boosting speculation the central bank will announce a third set of long-term loans. Spanish policy makers are considering forcing investors who hold equity and junior debt in banks to absorb losses in a restructuring, according to a person with knowledge of the plan.

“Time is running out,” said Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp. His firm has $1.76 trillion in client assets. “These tiny things may buy them a little time. They’re just very small measures compared to the problems that they have over there.”

Equities rose today as JPMorgan Chase & Co. paced a rally in banks following a downgrade by Moody’s Investors Service that was no worse than the credit-rating firm had warned.

Energy producers lost the most in the S&P 500 for the week, sinking 3.3 percent as economic reports added to signs of a global slowdown.

For the week, Procter & Gamble Co. slid 4.9 percent and Bed Bath & Beyond Inc. tumbled 16 percent after disappointing profit forecasts.

Facebook Inc. jumped 10 percent for its second weekly advance.

Ryder System Inc. slumped 16 percent to $35.44 for the biggest retreat in the S&P 500. The truck leasing company cut its full-year earnings forecast because of lower demand for commercial rentals.

FedEx Corp. gained 3.3 percent to $90.54. The operator of the world’s largest cargo airline climbed after pledging “significant cost reductions.” Executives said revenue and earnings growth will be impacted by “weaker economic conditions” such as the European debt crisis, and slowing growth in Asia.

Facebook climbed 10 percent to $33.05 as Nomura Holdings Inc. rated the social-network operator a buy in new coverage.

“Facebook’s industry-leading reach, engaged user base, and comprehensive user dataset will enable the company to continue to grow and take share in the display market,” Brian Nowak, a New York-based analyst with Nomura, wrote in a note.

The company has climbed 28 percent since its low on June 5, as it unveiled new products and services, and capped its first weekly gain on June 15. Concern Facebook was overvalued and that the company will struggle to increase revenue fast enough pushed the stock down as much as 32 percent from its IPO price of $38 on May 17.

Microsoft Corp. added 2.3 percent to $30.70. The world’s largest software maker unveiled its own Windows-powered tablet computer called Surface in a renewed attempt to take on Apple Inc.’s iPad.

First Solar Inc. surged 14 percent, the most in the S&P 500, to $15.88. The biggest maker of thin-film solar panels received permission to continue construction on a $1.36 billion power project in Los Angeles County.

Have a wonderful weekend everyone.

Be magnificent!

When the mind and intellect developed, man asked,

Who am I?  Who is it before me?

The search for reality began…

Moving one step towards finding the answer to the question,

Who am I, we brought consciousness from the outside to inside.

Wisdom turned the direction of the consciousness within and

we perceived our soul.

The journey of the soul in the outer world was over and the journey within had begun.

-Acharya Mahaprajna, 1920-2010

As ever,

Carolann

You can’t build a reputation on what you are going to do.

-Henry Ford, 1863-1947

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