March 15, 2013 Newsletter

Dear Friends,

Tangents:

On this day in 44 BC, roman “dictator for life,” Julius Caesar was assassinated by a group of conspirators during a trip to the Senate in what became known as the Ides of March.

A member of Roman historical society ‘Gruppo Storico Romano’ prepares to take part in a re-enactment of the ‘Ides of March,’ known also as the date on which Julius Caesar was assassinated in 44 BC, in downtown Rome. Tony Gentile/Reuters

Market Closes for March 15^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

March 15 (Bloomberg) — Canadian stocks increased for a second day as rising oil and gas prices sent energy producers higher.

Canadian Natural Resources Ltd. and Suncor Energy Inc. advanced at least 0.5 percent, as the price of crude rose to a three-week high. Encana Corp., the nation’s largest natural gas producer, and Crew Energy Inc., an oil and gas company, rose more than 1.4 percent as natural gas rallied to a 16-week high.

Pacific Rubiales Energy Corp. dropped 2.4 percent as a Salman Partners Inc. analyst lowered his rating for the stock.

The Standard & Poor’s/TSX Composite Index rose 30.12 points, or 0.2 percent, to 12,830.03 at 4 p.m. in Toronto. The benchmark Canadian equity index fell less than 0.1 percent this week, snapping a string of three weekly gains. The S&P/TSX has added 3.2 percent this year.

“The market today is reflecting higher commodity prices,” said Michael O’Brien, director and fund manager with TD Asset Management Inc. in Toronto. He manages about C$3 billion ($3 billion). “It’s been helping the gassy and oily names react positively.”

West Texas Intermediate crude climbed 0.5 percent to $93.45 a barrel, as the dollar weakened and inventories fell at a major storage hub. The U.S. benchmark settled at its highest since Feb. 20. Natural gas rose 1.6 percent to $3.872 per million British thermal units on speculation that a late cold blast in the East will boost heating demand. Gas capped four straight weekly gains and settled at the highest since Nov. 23.

Energy shares rose the most in the S&P/TSX, advancing 1 percent as a group. Half of the 10 groups in the benchmark index increased. Trading volume was 55 percent higher than the 30-day average.

Canadian Natural Resources increased 0.9 percent C$33.55.

Suncor Energy added 0.5 percent to C$31.67.

Encana rose 1.5 percent to C$20.73. Crew Energy increased 7.5 percent to C$7.

Colossus Minerals jumped 8.6 percent to C$3.15, and Torex Gold climbed 5.6 percent to C$1.88. Gold rose 0.1 percent to settle at $1,592.60 an ounce in New York. The metal has added 1 percent this week amid rising demand for a hedge against inflation.

Pacific Rubiales lost 2.4 percent to C$22.84 after Justin Anderson, analyst with Salman Partners, lowered the stocks rating to hold from buy and decreased his price target to C$25 from C$32.

Latin America’s largest non-state oil producer by market capitalization yesterday reported adjusted earnings of 13 cents a share, lower than the 60 cents expected from seven analysts surveyed by Bloomberg.

US

By Sarah Pringle

March 15 (Bloomberg) — U.S. stocks fell, sending the Dow Jones Industrial Average lower for the first time in 11 days, as a report showed consumer confidence unexpectedly fell in March.

JPMorgan Chase & Co. lost 1.9 percent after a Senate panel said it hid losses and dodged regulators. Financial stocks reversed earlier losses in the wake of Federal Reserve stress tests, as Bank of America Corp. and Morgan Stanley added at least 3.5 percent. Carnival Corp. fell 2.2 percent after trimming its earnings forecast. DirectTV rose 4.5 percent after pulling out of a bidding war for Vivendi SA’s GVT division.

The Standard & Poor’s 500 Index fell 0.2 percent to 1,560.70 at 4 p.m. in New York, trimming its weekly gain to 0.6 percent. The Dow Jones Industrial Average slid 25.03 points, or 0.2 percent, to 14,514.11. The 30-stock gauge rose 0.8 percent this week. About 8.5 billion shares traded hands on U.S. exchanges today, 34 percent above the three-month average, ahead of the expiration of futures and options contracts in a process known as quadruple witching. Today also marked the biggest day for volume so far this year, Bloomberg data show.

“This is a market that is digesting, it’s a market that is in watchful wait mode, and waiting either to continue this pullback or getting ready for the next leg,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion of assets, said in a phone interview. “It’s healthy to have these gaps between run-ups.”

The S&P 500 climbed yesterday to within two points of its record closing level of 1,565.15 set in October 2007. The gauge has more than doubled from its bottom in 2009, fueled by corporate earnings that topped estimates and monetary stimulus from the Federal Reserve. The Dow set an all-time high for the eighth day in a row yesterday.

Equities declined today as the Thomson Reuters/University of Michigan preliminary sentiment index for March fell to 71.8 from 77.6 in February. The gauge was projected to increase to 78, according to the median estimate of 67 economists surveyed by Bloomberg.

Industrial production rose 0.7 percent in February, exceeding the median projection in a Bloomberg survey, figures from the Federal Reserve showed today in Washington. Separate data showed manufacturing in the New York region expanded for a second month in March and industry managers grew more optimistic about the future.

A Bloomberg gauge of U.S. airlines slid 1.2 percent, as all 10 of its members retreated. Delta Air Lines Inc. dropped 1.7 percent to $16 and U.S. Airways Group Inc. fell 1.7 percent to $15.98. The airlines’ ratings were cut to market perform from outperform by Savanthi Syth, an equity analyst at Raymond James.

Banks advanced the most out of 24 S&P groups, erasing earlier losses. Wells Fargo & Co. rose 3.3 percent to $38.20, its highest level since September 2008, and Fifth Third Bancorp added 1.5 percent to $16.61.

Bank of America gained 3.8 percent to $12.57, for the largest increase in the Dow. The second-largest U.S. lender won the Fed’s approval to buy back as much as $5 billion in stock, the firm’s first repurchase since the financial crisis. The bank said it can also redeem $5.5 billion in preferred shares.

Morgan Stanley added 3.5 percent to $23.59. The owner of the world’s biggest brokerage got permission to buy the remaining 35 percent of its wealth-management venture with Citigroup Inc. after passing the Fed’s annual stress tests.

Discover Financial Services rose 3 percent to $44.14, an all-time high. The credit-card issuer approved a $2.4 billion stock buyback and boosted its quarterly dividend to 20 cents from 14 cents.

JPMorgan fell 1.9 percent, the most in the Dow, to $50.02.

Goldman Sachs Group Inc. rose 0.5 percent to $154.84, reversing an earlier loss. The world’s biggest trading firms must submit new capital plans to regulators to address weaknesses the Fed found in their planning processes.

Separately, a Senate investigation found that JPMorgan Chief Executive Officer Jamie Dimon misled investors and dodged regulators as losses escalated on a “monstrous” derivatives bet last year.

Phone companies and consumer-staples shares retreated the most in the S&P 500 among 10 groups, losing at least 0.5 percent. Verizon Communications Inc. fell 1 percent to $48.02 and AT&T Inc. slid 1.2 percent to $36.43.

Carnival slumped 2.2 percent to $34.95. The cruise operator beset by mishaps at sea this year cut its annual earnings forecast, reflecting costs from an engine fire that crippled the Carnival Triumph last month.

Boeing Co. gained 2.1 percent to $86.43, its highest level in almost five years. The company said safety upgrades to the 787 Dreamliner’s battery systems may allow commercial flights to restart within weeks, ending a two-month grounding of the composite-plastic fleet.

Freeport-McMoRan Copper & Gold Inc. climbed 1.9 percent to $33.80. Goldman Sachs raised its rating on the the world’s second-largest copper miner to buy from neutral.

DirectTV surged 4.5 percent to a record $54.99. The largest U.S. satellite-TV provider pulled out of bidding for Vivendi’s Brazilian phone and Internet unit, GVT, forgoing an option to add more services in South America.

U.S. economic growth will have to accelerate to “ridiculously strong levels” to justify any advance for the S&P 500 above 1,600, said Jim O’Neill, chairman of Goldman Sachs Asset Management.

O’Neill, who coined the term BRIC in describing the rise of Brazil, Russia, India and China, has an estimate of 1,575 for the U.S. equity benchmark this year. The world’s biggest economy is forecast to grow 1.9 percent in 2013 and 2.7 percent next year.

“In order to justify the S&P above 1,600, we’d have to see growth expectations go to something like 4 percent and beyond,” O’Neill said in a Bloomberg Television interview in Singapore.

“I don’t see persistent upside from those kind of levels without some more evidence that the economy would be growing by ridiculously strong levels.”

Have a wonderful weekend everyone.

Be magnificent!

A civilization must be judged and assessed, not by the level of power it has reached,

but by how it develops and expresses a love of humanity

through  its laws and institutions.

The first and last criterion one must submit to is:

Is it recognizable, and to what level, that man is more a spirit than a machine?

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Character is power.

-Booker T. Washington, 1856-1915

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