July 20, 2012 Newsletter

Dear Friends,

Tangents:

Today is Moon Day, a time to celebrate the anniversary of mankind’s first landing on the moon, July 20^th, 1969.  Two US astronauts, Neil Armstrong and Edwin Aldrin, Jr., landed lunar module Eagle at 4:17 pm, EDT and remained on the lunar surface 21 hours, 36 minutes, and 16 seconds.  The landing was made from the Apollo Xl’s orbiting command and service module, code named Columbia, whose pilot, Michael Collins, remained aboard.  Armstrong was the first to set foot on the moon.  Armstrong and Aldrin were outside the spacecraft, walking on the moon’s surface, approximately 2 ¼ hours.  The astronauts returned to Earth July 24, bringing photographs and rock samples. –from Chase’s Calendar of Events.

MOONSHADOW

I’m being followed by a moon shadow

Moon shadow moon shadow

Leaping and hopping on a moon shadow

Moon shadow moon shadow…

-Cat Stevens

And on this day in…

1919 – Sir Edmund Hilary is born.  It is not the mountain we conquer, but ourselves. -Sir Edmund Hillary.

1944 – Adolf Hitler is wounded in a failed assassination attempt by German Army officers at Rastenburg.

1947 – Carlos Santana is born.
1951 – King Abdullah of Jordan is assassinated.
1969 – Neil Armstrong and Edwin “Buzz” Aldrin become the first men to walk on the moon.
1976 – The Viking spacecraft lands on Mars and begins taking soil samples.
1973 – Actor Bruce Lee dies, aged 32.
photos of the day July 20, 2012

Workers use a crane to put a large installation of the Olympic rings in place in the Olympic Park in London.

Ben Curtis/AP

Children catch fish in flood-affected Burhaburhi village, east of Gauhati, India.

Anupam Nath/AP

Market Closes for July 20, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

July 20 (Bloomberg) — Canadian stocks fell for the first time in six days as crude tumbled and commodities retreated over concern the debt crisis in Europe is worsening.

Cenovus Energy Inc. lost 1.2 percent and RMP Energy Inc. declined 6.3 percent. Bank of Nova Scotia, the third-largest lender in the country, dropped 0.9 percent. Kinross Gold Corp. rose 1.1 percent as gold advanced in New York. Energy companies and banks contributed the most among 10 industries to the decline of the Standard & Poor’s/TSX Composite Index.

The S&P/TSX fell 42.79 points, or 0.4 percent, to 11,622.91. The benchmark index rose 0.9 percent this week and has lost 2.8 percent in 2012.

“Trading is really driven by concerns in Europe today,”

Jeffrey Bradacs, who manages C$1.7 billion at Toronto-based Manulife Asset Management, said in a phone interview. “There are lagging concerns with Spain’s debt costs continuing to increase, and the oil price, as a result, has been volatile. Today is about risk-off trade.”

Oil declined 1.3 percent in New York, snapping seven days of gains to settle at $91.44 a barrel on the New York Mercantile Exchange. Spain said the recession will extend into next year as the region of Valencia prepared to seek a rescue from the central government and European finance ministers approved the bailout of Spanish banks.

The S&P GSCI gauge of commodities slipped 0.4 percent.

Suncor Energy Inc., the nation’s largest oil company, lost 0.4 percent to C$30.46. Cenovus declined 1.2 percent to C$32.54.

Imperial Oil Ltd., the nation’s second-largest energy provider, retreated 0.3 percent to C$43.69. RMP Energy, the Calgary-based oil and gas producer with sites in Alberta, declined 6.3 percent to C$1.78.

Bank of Nova Scotia dropped 0.9 percent to C$52.15. Royal Bank of Canada, the country’s largest lender, slipped 0.5 percent to C$52.41. Toronto-Dominion Bank, the second-largest lender, fell 0.6 percent to C$80.

Kinross Gold added 1.1 percent to C$8.16. Goldcorp Inc. rose 1.3 percent to C$34.04. Yamana Gold Inc. gained 1.8 percent to C$14.55.

US

By Rita Nazareth

July 20 (Bloomberg) — The Standard & Poor’s 500 Index fell, capping the biggest decline in about a month, as the euro tumbled after Spain said the recession will extend into next year and concern about its regional governments’ finances grew.

Bank of America Corp. and JPMorgan Chase & Co. dropped at least 1.6 percent, amid a plunge in European lenders, as Spain’s bond yields rose to a euro-era record. Raw material shares in the S&P 500 fell on news China won’t relax property control policies, intensifying concern an economic slowdown could reduce demand for commodities. Restaurant shares tumbled as Chipotle Mexican Grill Inc. plunged 22 percent on disappointing sales.

The S&P 500 lost 1 percent to 1,362.66 at 4 p.m. New York time. It rose 1.7 percent over the previous three days. The Dow Jones Industrial Average fell 120.79 points, or 0.9 percent, to 12,822.57. The euro weakened to the lowest versus the yen since November 2000. Volume for exchange-listed stocks in the U.S. was 6.8 billion shares, about in line with the three-month average.

“The problem is everywhere,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York. “Once the disease starts, it seems hard to stop and you wonder whether the euro will survive. There’s also concern about China’s statement because their actions have been more supportive of asset prices.”

Global equities fell in a vote of no-confidence to European authorities after the final approval of a bailout of Spanish banks. Valencia, the second-most indebted region, said it would tap an emergency-loan fund. Italy’s Prime Minister Mario Monti blamed unrest in Spain for surging borrowing costs.

“The problem hasn’t gone away and the unnerving part is that it’s deepening,” said Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private- banking unit of KeyCorp in Cleveland. “The Spanish ghost is rising again. It’s not only the banks. The regional governments also need help. Things are not better yet.”

Concern about a global slowdown also grew today as China will seek to keep a “firm grip” on the real estate market to prevent a rebound in housing prices, Xinhua News Agency reported. The Morgan Stanley Cyclical Index, which tracks companies most-dependent on economic growth, slid 1.7 percent.

Expectations for stimulus measures and better-than- estimated profits still gave the S&P 500 its second straight weekly gain. Earnings have exceeded analysts’ forecasts at 73 percent of the 118 S&P 500 companies that have reported quarterly results, according to data compiled by Bloomberg.

Financial shares dropped the most among 10 S&P 500 groups, declining 1.5 percent. Bank of America lost 2.6 percent to $7.07. JPMorgan fell 1.6 percent to $33.90.

Wall Street’s five biggest banks reported the worst start to a year since 2008. JPMorgan, Bank of America, Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley had combined first- half revenue of $161 billion, down 4.5 percent from 2011 and the lowest since $135 billion four years ago.

Raw material shares also slumped as a rally in the U.S. dollar reduced the appeal of commodities. The S&P GSCI gauge of commodities slid 0.4 percent. Freeport-McMoRan Copper & Gold Inc., the biggest publicly traded copper producer, retreated 1.9 percent to $33.77.

All 24 stocks in the S&P Supercomposite Restaurants Index retreated. Chipotle Mexican tumbled 22 percent, the most since its initial public offering in 2006, to $316.98. The best- performing restaurant stock in the S&P 500 last year reported second-quarter sales that trailed analysts’ estimates.

McDonald’s Corp., the largest restaurant chain, dropped 1.3 percent to $91.58. Yum! Brands Inc., owner of the KFC and Taco Bell brands, lost 1.4 percent to $64.95.

Xerox Corp. slumped 6.8 percent to $6.70. The provider of printers and business services cut its full-year profit forecast as the economic slump in Europe crimped demand for technology.

Advanced Micro Devices Inc. tumbled 13 percent to $4.22, the lowest price since 2009. The maker of processors for personal computers predicted a revenue decline as a sluggish economy curbs PC sales.

Freescale Semiconductor Ltd. lost 6.5 percent to $9.55. The maker of semiconductor processors forecast third-quarter revenue that missed analysts’ estimates.

Avon Products Inc. slipped 5.3 percent to $15.73 as investors reacted to an announcement that general counsel Kim Rucker plans to leave the company for another post.

Cepheid Inc. decreased 18 percent, the most since 2009, to $36.01. The maker of health-care diagnostics said 2012 profit would be lower than previously forecast.

SanDisk Corp. rallied 10 percent, the most since May 2010, to $38.70. The shares also had the biggest gain in the S&P 500.

The maker of flash memory for mobile devices reported second- quarter profit that topped analysts’ estimates.

Google Inc. advanced 3 percent to $610.82. The owner of the most popular search engine said second-quarter revenue surged 35 percent, helped by its acquisition of Motorola Mobility Holdings and as more users clicked on advertisements.

Energy shares in the S&P 500 rose even as oil dropped for the first time in eight days. Natural gas futures closed above $3 for the first time in six months.

Baker Hughes Inc. jumped 9.2 percent to $45.59 after the third-largest oilfield-services company reported second-quarter profit that beat analysts’ estimates.

Schlumberger Ltd. added 1 percent to $69.33. The world’s largest oilfield-services provider said second-quarter profit rose as customers increased their quest for crude outside the U.S. and Canada onshore market.

General Electric Co. rose 0.4 percent to $19.87. Earnings climbed 7 percent in the second quarter after profit growth at the finance and energy units overcame a drop in wind-turbine orders. Revenue rose 2 percent to $36.5 billion, trailing analysts’ estimates of $36.8 billion.

A measure of homebuilders in S&P indexes jumped 2.6 percent. PulteGroup Inc. rallied 3.7 percent to $10.86. D.R. Horton Inc. added 2.2 percent to $18.88.

Palo Alto Networks Inc. and Kayak Software Corp. jumped in their trading debuts after raising more than planned in initial public offerings, bolstering the revival in technology IPOs.

Palo Alto, a provider of Internet-firewall technology, climbed 27 percent to $53.13, while Kayak, the travel-site operator, rose 28 percent to $33.18.

Onyx Pharmaceuticals Inc. increased 12 percent to $76.38 as a treatment for a deadly blood cancer won U.S. approval, giving the company its first wholly owned drug to sell.

The cost of protecting against U.S. equity losses is dropping at the fastest rate in more than three years, pushed lower by speculation the Federal Reserve will stimulate the economy as concern about Europe recedes.

Puts with an exercise level 10 percent below the S&P 500 cost 8.73 points more than calls 10 percent above on July 18, the lowest since May 2011, according to data on three-month contracts compiled by Bloomberg. The price relationship known as skew shrunk 32 percent since its June 15 high, the biggest decline since March 2009 over comparable periods.

U.S. shares jumped in the past month as optimism grew that European leaders would be able to contain the region’s crisis and investors speculated the Fed will increase stimulus measures. Fed Chairman Ben S. Bernanke this week told senators the central bank is prepared to act to boost growth if the labor market doesn’t improve.

“The acute concern about Europe’s debt crisis has faded somewhat, and markets have become a bit more complacent,” Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has more than $120 billion in client assets, said yesterday in a phone interview. “The market has moved very quickly to now speculate about the next round of monetary easing, anticipating some kind of policy response.”

Have a wonderful weekend everyone.

Be magnificent!

What is the world?  It is the earth below and the sky above and the air in space that connects them.

What is light?  It is fire below and the sun above – and the lightning that connects them.

What is education?  It is the teacher above and the disciple below – and the wisdom that connects them.

Taittiriya Upanishad

As ever,

Carolann

All generalizations are dangerous, even this one.

-Alexander Dumas, 1802-1870

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