July 5, 2012 Newsletter

Dear Friends,

Tangents:

I read a moving story in the Globe & Mail the other day in the column Lives Lived.  Mike Oke wrote about his brother, Robert, whose life ended on May 12, 2012 at the age of 69.  Robert, a graduate of the University of Western Ontario, was diagnosed with schizophrenia when he was 26 years old.  Before a new generation of drugs became available that were able to control his delusions without the debilitating side effects of previous drugs, he was “sometimes homeless and, almost always alone.”   When he was finally able to put down roots in a subsidized apartment in a downtown Toronto community for people who have been homeless, he began to attend the Toronto School of art and he started to write.   I was deeply touched by the profundity of Robert’s writing.

Mike tells us that, “He wrote about characters like himself, who suffer from mental illness and struggle to survive in a hostile world.  His novella A Tale of Bip and Bop and A Man Named Blog is the story of Blog, a painter suffering from multiple personality disorder who is approaching the end of his life but still looking for love.

Blog’s head is peopled by two quarrelsome alter egos, Bip and Bop, who are always giving him contradictory advice.  In the book, Robert writes about the gods and goddesses of ancient times:  ‘For we have lost touch with Pan and God alike, sylvan glens or bowers, a written literary convention, but in real time none now can recollect any as having existed in Greek Attica, for it has passed from the memory of man, save in the poems of the Romantics who maintain more than their imagery, for they swear the gods and goddesses, Apollo, Dionysius and Aphrodite, did walk in those golden and green forests simply because they were too beautiful not to have existed.’”

And on this day in…

1810 – P.T. Barnum , circus promoter was born.

1865 – Salvation Army founded.

1889 – Jean Cocteau was born.
1921 – Chicago White Sox accused of throwing the 1919 World Series.

1946 – First bikini swimsuit introduced.
1970 – Pilot error causes crash in Toronto.
1975 – Arthur Ashe becomes first black man to win at Wimbledon.

To explore what it would mean to live fully, sensually alive and passionately on purpose, I have to drop my preconceived ideas of who and what I am. – Dawna Markova

photos of the day July 5, 2012

Australian actor Barry Humphries, dressed as Dame Edna Everage, speaks to the media ahead of his farewell show ‘Eat Pray Laugh!’ in Sydney, Australia.

Rob Griffith/AP

A clown checks his mobile phone during an international clown festival in San Salvador, Bahamas, on Wednesday. Every year, clowns from Mexico, Colombia, and the US meet in San Salvador to exchange makeup tips and the latest tricks and jokes.

Ulises Rodriguez/Reuters

Market Closes for July 5, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva and Steve Chambers

July 5 (Bloomberg) — Canadian stocks declined for the first time in seven days after European Central Bank President Mario Draghi warned of continuing economic risks and oil and gold prices fell.

Goldcorp Inc., the world’s second-largest producer of the metal, and Suncor Energy Inc., the nation’s biggest oil producer, retreated at least 2.3 percent. TransGlobe Energy Corp. lost 6.5 percent. Energy stocks, raw-materials producers and financial firms contributed most to the decline in the Standard & Poor’s/TSX Composite Index.

The S&P/TSX fell 96.96 points, or 0.8 percent, to 11,816.91. The benchmark index had risen 5.2 percent in the past six trading sessions, including its biggest gain of the year on July 3. The gauge is down 1.2 percent for 2012.

China cut benchmark interest rates in an attempt to reverse the slowdown in the world’s second-largest economy, and the ECB lowered interest rates to a record low, saying it won’t pay anything on overnight deposits. Economic growth in the euro area remains “weak,” Draghi said at a press conference in Frankfurt.

“You need GDP growth and that’s clearly not happening in Europe or China,” Paul Gardner at Toronto-based Avenue Investment Management, which manages C$250 million ($247 million), said in a phone interview.

The People’s Bank of China cut the one-year lending rate by 31 basis points to 6 percent and the one-year deposit rate by 25 basis points to 3 percent effective tomorrow. The ECB reduced its main rate by 25 basis points to a record low of 0.75 percent as sovereign debt turmoil threatens to drive the 17-nation euro economy into recession.

Oil prices slumped after Draghi’s comments. Crude for August delivery fell 0.5 percent to settle at $87.22 a barrel on the New York Mercantile Exchange.

Suncor declined 2.3 percent to C$30.40, and Canadian Natural Resources Ltd., the nation’s third-largest energy company, fell 2.8 percent to C$27.54. TransGlobe Energy dropped to C$9.12, after rising 19 percent in the past five sessions.

Bankers Petroleum Ltd. rose 28 percent to C$2.66 after the company said oil sales increased during the first half.

Goldcorp lost 2.6 percent to C$39.30, and Centerra Gold declined 6 percent to C$8.11, as the price of the metal fell the most in a week. Barrick Gold Corp., the world’s largest producer of the metal, fell 0.8 percent to C$38.58.

Osisko Mining Corp. advanced 5.5 percent to C$7.73 after the company reported record gold production in the second quarter from its Malartic Mine in Quebec.

Manulife Financial Corp., Canada’s largest insurer, retreated 1.8 percent to C$11.24. Brookfield Asset Management Inc., a Toronto-based investment firm, slipped 2.5 percent to C$33.36 after Credit Suisse Group AG analyst Andrew Kuske lowered his rating on the stock to neutral from outperform.

Canada’s jobless rate is forecast to stay unchanged from May at 7.3 percent, according to a Bloomberg survey of economists before the government report tomorrow. The country is projected to have added 5,000 jobs in June, compared with a gain of 7,700 the month before.

US

By Rita Nazareth and Julia Leite

July 5 (Bloomberg) — U.S. stocks declined, halting a three-day advance for the Standard & Poor’s 500 Index, amid disappointment over Europe’s efforts to tame the region’s debt crisis as investors awaited tomorrow’s American jobs report.

Financial shares had the biggest loss among 10 groups in the S&P 500 as Spanish and Italian bonds plunged. JPMorgan Chase & Co. and Bank of America Corp. retreated at least 3 percent.

Retailers in the benchmark measure rose 1 percent amid June sales data. Apple Inc., the world’s most valuable company, advanced 1.8 percent to pace gains in technology companies.

The S&P 500 decreased 0.5 percent to 1,367.58 at 4 p.m. New York time. The Dow Jones Industrial Average fell 47.15 points, or 0.4 percent, to 12,896.67. Volume for exchange-listed stocks in the U.S. was 5.3 billion shares, 21 percent below the three- month average. The market was closed yesterday for a holiday.

“There’s a bit of disappointment with the ECB,” said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas. “Meantime, people are not willing to take big bets going into the jobs report tomorrow.”

Equities fell as European Central Bank President Mario Draghi said today’s cut in interest rates to a record low may have only a limited impact on the euro-area economy. China also reduced rates in a bid to spur growth. Tomorrow’s Labor Department data may show the pace of hiring in the U.S. accelerated in June while remaining at less than half the average for the first quarter of the year, economists said.

Today’s economic reports showed that fewer Americans filed jobless claims and hiring beat estimates. Service industries expanded at a slower pace, underscoring Federal Reserve concern that growth isn’t strong enough to reduce unemployment.

The last jobs report spurred a rout in stocks, erasing the 2012 gain in the Dow and putting the S&P 500 on the brink of a so-called correction, or a 10 percent decline from a recent peak. The benchmark gauge tumbled 2.5 percent on June 1 after data showed employers added the fewest workers in a year and the unemployment rate rose. Since then, the S&P 500 has risen 7 percent amid bets on global central bank action.

Eight out of 10 groups in the S&P 500 retreated today as financial and energy shares dropped at least 1.3 percent. The Morgan Stanley Cyclical Index of companies most-tied to economic growth closed almost unchanged after slumping as much as 0.9 percent and gaining 0.5 percent earlier today.

Twenty three out of 24 stocks in the KBW Bank Index declined. JPMorgan Chase & Co. slumped 4.2 percent, the most in the Dow, to $34.38. The lender was ordered by a federal judge to explain why it shouldn’t be compelled to turn over e-mails sought by U.S. regulators in a probe of potential energy-market manipulation. Bank of America slid 3 percent to $7.82.

Technology shares, which comprise 20 percent of the S&P 500, reversed an earlier decline. Apple climbed 1.8 percent to $609.94, the highest since April 25.

Consumer companies in the S&P 500 rallied. U.S. retailers’ June same-store sales about matched analysts’ estimates, with luxury chains such as Saks Inc. and discounters like TJX Cos.

topping expectations. Stores targeting middle-income consumers trailed projections.

“The high-end consumer has fared particularly well throughout this recovery,” Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics, said in an interview. “On the low end, a lot of middle-income consumers have traded down.”

TJX, which owns discount stores T.J. Maxx and Marshalls, rose 3.7 percent to $44.09. Limited Brands Inc., the parent company of Victoria’s Secret, jumped 4.5 percent to $46.12, while Saks gained 2.5 percent to $11.19. Sales at Target Corp.

rose 2.1 percent, falling short of the average projection. The shares dropped 1.1 percent to $57.15.

Chinese stocks traded in the U.S. gained as Baidu Inc., the nation’s largest online search engine, rose to a two-week high after policy makers cut interest rates for a second time in a month to bolster growth.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. rose 0.8 percent to 92.49, the highest level since June 20. Baidu advanced 2.2 percent to $117.21. Sina Corp., operator of the Twitter-like Weibo service, rallied 1.4 percent to $51.21.

“The Chinese authorities are trying to help stem the slowdown in global growth, and that’s a good thing,” said Audrey Kaplan, who helps manage $2 billion as head of international equities at Federated Global Investment Management in New York. “We see this as a great entry point for Chinese stocks.”

Netflix Inc. soared 13 percent, the most since January, to $81.72. The largest video-subscription service also had the biggest gain in the S&P 500 after an analyst said the company’s online audience exceeds cable and TV networks.

Yelp Inc. surged 5.8 percent to $26.16 amid speculation that a smaller model of Apple’s iPad could help the business- review service add users. Apple plans to debut a smaller, cheaper iPad by the end of the year, people familiar with the matter said earlier this week.

Patriot Coal Corp. climbed 23 percent to $2.26 on speculation it may be near a deal to refinance its debt. The shares have jumped 85 percent in three days, the most since it was spun off from Peabody Energy Corp. in October 2007.

Have a wonderful evening everyone.

Be magnificent!

Fearlessness is the first requirement of spirituality.

Cowards can never be moral.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

When I give a man an office, I watch him carefully

to see whether he is swelling or growing.

-Woodrow Wilson, 1856-1924

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