July 13, 2012 Newsletter

Dear Friends,

Tangents:

If you were in Victoria last night you might have noticed that we had quite the storm! A local photographer was able to snap this amazing picture of some of the lightening we were experiencing. Quite the way to start off a Friday the 13^th!

For those unfamiliar, this photo was taken at Victoria’s inner harbour at the corner of Tyee and Bay.

“Poets are always taking the weather so personally.”J. D. Salinger

Today in History July 13

photos of the day July 13, 2012

Women in traditional summer kimonos look at paper lanterns during the annual Mitama festival at the Yasukuni Shrine in Tokyo.- Issei Kato/Reuters

Alphajet planes from the Patrouille de France (France’s Patrol) fly over the Invalides in Paris on the eve of the traditional Bastille Day military parade.- Charles Platiau/Reuters

Market Closes for July 13, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

July 13 (Bloomberg) — Canadian stocks advanced, paring a weekly decline, as oil prices rose on speculation that China’s government will boost stimulus measures and gold gained for the first time in four days.

Goldcorp Inc. and China Gold International Resources Corp. added at least 2.1 percent. Suncor Energy Inc., the nation’s largest oil company, climbed 1.9 percent. Energy, raw-materials and financial shares contributed most to the advance in the Standard & Poor’s/TSX Composite Index, with nine of 10 groups advancing.

The S&P/TSX gained 89.06 points, or 0.8 percent, to 11,514.53, with almost three stocks rising for each that fell in the gauge. For the week, the Canadian equity benchmark lost 1.3 percent, the biggest decline in six weeks.

“The China GDP number was certainly weaker than a lot of people expected,” Andrew Hamlin, who manages C$80 million for Toronto-based Aston Hill Financial Inc., said in a phone interview. “What we have is bad news that maybe is not so bad news, because it could potentially open the door to new stimulus in China.”

China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, raising speculation that Premier Wen Jiabao will boost stimulus to secure a second-half economic rebound. Gross domestic product expanded 7.6 percent last quarter, the National Bureau of Statistics said today in Beijing. The number was in line with China’s 2012 target, which was lowered to 7.5 percent in early March.

Goldcorp gained 2.5 percent to C$34.53 as the metal rallied 1.5 percent on the Comex in New York. China Gold International rose 2.2 percent to C$2.81.

Oil advanced for a third day, its longest winning streak in a month. Suncor Energy climbed 1.9 percent to C$29.41. Cenovus Energy Inc. increased 2.1 percent to C$33.28. Canadian Natural Resources Ltd., the nation’s third-largest energy company, gained 1.2 percent to C$26.41.

Baja Mining Corp., which is building a copper mine in Mexico, fell 13 percent to 14 cents, the lowest since 2003. The company said it has not yet found new sources of funding and may not have enough cash to continue operations by next month.

US

By Lu Wang and Nikolaj Gammeltoft

July 13 (Bloomberg) — Global stocks rallied, ending the longest slump since November, as JPMorgan Chase & Co. surged after reporting earnings and speculation grew that China and Europe will boost stimulus efforts. The euro rebounded from a two-year low, while cotton and nickel led commodities higher.

The MSCI All-Country World Index added 1.5 percent at 4 p.m. in New York, snapping a seven-day retreat, and the Standard & Poor’s 500 Index gained 1.7 percent. The euro rose 0.3 percent to $1.2240 as Medley Global Advisors predicted the European Central Bank will ease monetary policy further. Cotton and nickel advanced more than 2.4 percent to lead a gains in 22 of 24 commodities tracked by the S&P GSCI Index. Ten-year Treasury yields increased two basis points to 1.49 percent.

JPMorgan rose 6 percent to lead the Dow Jones Industrial Average up 204 points, while the KBW Bank Index jumped the most since March, as Chief Executive Officer Jamie Dimon said the bank will still likely post record earnings for 2012 even after a $4.4 billion trading loss from its chief investment office in the second quarter. Warren Buffett said the firm’s reputation is intact as far as he’s concerned.

“The degree to which our banking system has come back, particularly compared to the European banks, is dramatic,”

Buffett, the billionaire chairman of Berkshire Hathaway Inc., said today on Bloomberg Television’s “In the Loop With Betty Liu” in Sun Valley, Idaho. “Our banking system is in terrific shape and that can’t be said for banks around the world and it couldn’t be said for our banks four years ago.”

Stocks and commodities also increased after China’s economy grew a less-than-estimated 7.6 percent last quarter, putting pressure on policy makers to increase monetary easing and investment.

“China’s growth is slowing, which will urge their policy makers to respond with a fiscal thrust,” said Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $115 billion of assets.

The S&P 500 rebounded following six days of losses, the longest slump in almost two months. U.S. equities maintained gains even as confidence among consumers unexpectedly slid in July to the lowest level this year as the labor market showed few signs of improvement. The Thomson Reuters/University of Michigan index of consumer sentiment dropped to 72 this month from 73.2 in June, trailing the median economist projection for a rise to 73.5.

Financial shares in the S&P 500 led gains among the 10 main industries in the index, rallying 2.8 percent as all 81 companies increased. Wells Fargo & Co., the most valuable U.S. bank and largest home lender, climbed 3.2 percent after earnings increased 17 percent on strength in mortgage banking and a drop in expenses.

Bank of America Corp., Microsoft Corp. and Caterpillar Inc. climbed more than 2.6 percent to helped lead gains in the Dow, with all 30 stocks in the gauge advancing except for Hewlett- Packard Co. Phillips 66 rallied 5.9 percent after Buffett said Berkshire Hathaway has invested in the refiner.

Procter & Gamble Co., the world’s largest consumer-products company, rose 2.2 percent. Board members are dissatisfied with Chief Executive Officer Robert McDonald’s performance and are discussing a possible leadership change, according to people familiar with the situation. P&G jumped 3.8 percent yesterday as the Federal Trade Commission cleared William Ackman’s hedge-fund company to buy a stake.

JPMorgan’s net income fell to $4.96 billion, or $1.21 a share, from $5.43 billion, or $1.27, in the same period a year earlier. The largest U.S. bank by assets also restated first- quarter earnings, reducing net income by $459 million, and used securities gains and an $800 million accounting benefit to help boost profit.

Dimon said he hopes the company can buy back stock in the fourth quarter of 2012 after it completes a review of trading losses in the chief investment office.

By capping the size of the potential loss and revamping management of the businesses responsible, Dimon may help restore investor confidence after the bank’s market value dropped $39.7 billion since April 5, when Bloomberg News first reported that the company had amassed an illiquid book of credit derivatives at the London chief investment office.

“They laid it all out,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co. in Elmira, New York. “The overall earnings report is showing the company is on the upswing. Earnings will continue to do fairly well as loans come back.”

Eight shares gained for each that declined in the Stoxx Europe 600 Index. Storebrand ASA rallied 8.2 percent as Norway’s second-largest publicly traded insurer said it plans to reduce costs and meet stricter European capital requirements without selling new shares. Basic-resource and telephone companies rallied more than 2.7 percent to lead gains in all 19 industry groups in the Stoxx 600.

European stock strategists are backing away from their most-pessimistic forecasts as policy makers agree on measures to tackle the region’s debt crisis. While sticking to predictions for losses of as much as 16 percent, Morgan Stanley’s Ronan Carr raised his recommendation on European equities to neutral on July 2 and Alain Bokobza of Societe Generale SA said he has started to reduce the underweight call he’s had for at least two years. Exane BNP Paribas said investors can find bargains among companies most reliant on economic growth.

The euro recovered after earlier slumping as much as 0.3 percent to $1.2163, the lowest since June 2010. The shared currency strengthened against nine of 16 major peers, rising at least 0.3 percent versus the Taiwanese dollar, Brazilian real and Swedish krona.

The ECB is prepared to further ease monetary policy, including lowering its deposit rate below zero percent and implementing more non-standard liquidity measures as early as September, if warranted, Medley Advisors wrote in a report.

The MSCI Emerging Markets Index added 1.4 percent, rebounding from a two-week low. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong increased 0.8 percent, the biggest one-day gain since July 3. South Korea’s Kospi Index, Russia’s Micex and the Bovespa in Brazil each rallied at least 1.5 percent.

Italy’s 10-year bond yield increased 15 basis points to 6.06 percent. The yield spread above benchmark German bunds was 14 basis points higher at 4.80 percentage points. Moody’s Investors Service reduced Italy’s bond rating by two levels and reiterated its negative outlook.

Crude oil rallied 1.2 percent to $87.10 a barrel in New York, climbing for a third straight day. Copper surged 2.6 percent. Corn climbed 1.1 percent and soybeans rose 1.5 percent as drought in the U.S. worsens crop conditions.

Have  a wonderful evening everyone!

“The real voyage of discovery consists not in seeking new landscapes but in having new eyes.”

Regards,

Ellora Howie

Assistant to Carolann Steinhoff

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7