March 21, 2013 Newsletter

Dear Friends,

Tangents:

An interesting item when I read it this morning:

Be better, with science

“Want to be a better person?  Spend more time thinking about science,” says Pacific Standard magazine.  “That’s the implication of newly published research, which finds people who study science – or even are momentarily exposed to the idea of scientific research – are more likely to condemn unethical behavior, and more inclined to help others.  ‘Thinking about science leads individuals to endorse more stringent moral norms,’ report psychologist Christine Ma-Kellams of Harvard University and Jim Blascovich of the University of California, Santa Barbara.  Their research is published in the online journal PLoS One.”  -The Globe & Mail, Thursday, March 21^st, 2013.

Photos of the Day – March 21st, 2013

A Pakistani woman, carrying bowls filled with water on her head, walks back to her home through a field on the eve of World Water Day, on the outskirts of Islamabad, Pakistan. Muhammed Muheisen/AP

An indigenous man wearing face paint and a headdress stands inside the abandoned old Indian museum in Rio de Janeiro, Brazil. Brazilian Federal Court ruled that indigenous people who have been occupying the building since 2006 have to leave the area because it is next to the Maracana stadium, 2014 World Cup soccer tournament and 2016 Olympic games. Felipe Dana/AP

Market Closes for March 21st, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Nikolaj Gammeltoft and Sarah Pringle

March 21 (Bloomberg) — Canadian stocks fell for the third time in four days as concern about Europe’s debt crisis overshadowed a rise in Canadian retail sales and better-than- estimated U.S. economic data.

Bankers Petroleum Ltd. and Canadian Natural Resources Ltd. dropped at least 2.5 percent as oil fell 1.1 percent. Financial shares slumped as Royal Bank of Canada and Canadian Imperial Bank of Commerce lost more than 1 percent. Corus Entertainment Inc. slid 3.4 percent after an RBC Capital Markets analyst downgraded the media company. OceanaGold Corp. soared 10 percent after Edison Investment Research predicted a “transformational year” for the mining company.

The Standard & Poor’s/TSX Composite Index fell 78.68 points, or 0.6 percent, to 12,747.87 at 4 p.m. in Toronto. The S&P/TSX has risen 2.5 percent this year. Trading volume was 5.1 percent below the 30-day average. Nine of 10 groups in the benchmark index retreated.

“Putting the European debt crisis back on the front burner created a bit of hesitation,” Bob Decker, who helps oversee C$6 billion ($6 billion) at Aurion Capital Management Inc. in Toronto, said in a phone interview. “It’s created a bit of a light volume sell-off.”

Canadian equities slumped as German manufacturing unexpectedly contracted and Cyprus worked to obtain a European bailout. The European Central Bank said it may cut Cypriot banks off from emergency funds after March 25 while the island nation’s president, Nicos Anastasiades, tried to forge agreement on a plan to stave off financial collapse.

A purchasing managers’ index for Germany’s manufacturing indicated contraction in the sector, adding to signs the euro- area economy is struggling to emerge from a recession. Oil retreated to a two-week low, with crude for May delivery sliding $1.05 to settle at $92.45 a barrel.

Bankers Petroleum dropped 2.7 percent to C$2.84. The oil and gas producer appointed David Lawrence French as its president and chief executive officer following the retirement of Abdel Badwi. Canadian Natural Resources fell 2.5 percent to C$32.79, and Encana Corp. retreated 2.1 percent to C$19.51.

Retail sales in Canada gained 1 percent in January to recoup some of the previous month’s 2.3 percent plunge on advances at auto dealerships and department stores, a sign the economy may be recovering.

In the U.S., fewer Americans than forecast filed jobless claims last week. Other reports showed sales of previously owned U.S. homes rose to the highest level in more than three years in February, and a gauge of leading economic indicators topped estimates for last month.

Banks, industrial shares and telephone companies retreated the most out of 10 groups in the benchmark Canadian equities index, sliding at least 0.8 percent. Royal Bank of Canada fell 1 percent to C$60.74 and Canadian Imperial Bank of Commerce lost 1.4 percent to C$81.09.

Canadian Pacific Railway Ltd. dropped 2.1 percent to C$129.24, while Canadian National Railway Co. lost 2.5 percent to C$98.84. Intermodal rail traffic in North America climbed at the slowest rate this year in the week ended March 16 compared with a year ago, Association of American Railroads data show.

Corus Entertainment slumped 3.4 percent to C$25.22. RBC Capital Markets equity analyst Haran Posner reduced his rating on the Toronto-based company to sector perform from outperform.

OceanaGold surged 10 percent to C$2.92, for its biggest gain since October 2011. Edison Investment Research said “promising exploration results” at the company suggest a new source of low-cost gold production and higher earnings.

US

By Sarah Pringle and Lu Wang

March 21 (Bloomberg) — U.S. stocks fell, after the Standard & Poor’s 500 Index approached a record high yesterday, as concern about Europe’s debt crisis overshadowed better-than- estimated American economic data.

Oracle Corp. plunged 9.7 percent after sales and earnings missed estimates. Cisco Systems Inc. and Juniper Networks Inc. slipped at least 2.2 percent amid an analyst downgrade. Guess? Inc. fell 7.2 percent after its revenue forecast trailed projections. Yahoo! Inc. added 3.5 percent as Oppenheimer & Co. upgraded the shares.

The S&P 500 fell 0.8 percent to 1,545.8 at 4 p.m. in New York, headed toward its second weekly decline of the year. The Dow Jones Industrial Average lost 90.24 points, or 0.6 percent, to 14,421.49. About 5.9 billion shares traded hands on U.S. exchanges today, 6.7 percent below the three-month average.

“There’s going to be on-again, off-again, troublesome news out of Europe and occasionally it’s going to cause the market some disruption,” Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $85 billion, said in a telephone interview. “The U.S. economy can do somewhat better, but it will probably be in a slow growth mode for most of 2013. That’s how it’s been over the last four years and the market has done quite well in that environment.”

Equities slid today as a purchasing managers’ index for Germany’s manufacturing industry unexpectedly fell this month while a measure of euro-area services and manufacturing output contracted more than forecast.

The European Central Bank said it may cut Cypriot banks off from emergency funds after March 25 as the island nation’s president, Nicos Anastasiades, struggled to forge agreement on a plan to stave off financial collapse.

“We don’t feel anything has been solved in Europe in terms of the debt situation there,” Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. “Europe and the surrounding economies having trouble could well be the reason that the market decides to pause here for a while.”

In the U.S., sales of previously owned homes rose in February to the highest level in more than three years.

Purchases increased 0.8 percent to a 4.98 million annualized rate, the most since November 2009, figures from the National Association of Realtors showed today in Washington.

Other data showed applications for jobless benefits increased by 2,000 to 336,000 in the week ended March 16, while the Conference Board’s gauge of the outlook for the next three to six months climbed 0.5 percent for the second straight month.

The S&P 500 climbed yesterday to within seven points of its record reached in 2007 while the Dow hit an intraday all-time high as the Federal Reserve indicated it will keep up bond buying to stimulate the economy.

The bull market in U.S. equities entered its fifth year this month as the central bank embarked on three rounds of bond purchases to keep interest rates low and corporate profits beat analysts’ estimates.

Nine out of the 10 S&P 500 groups fell today as raw- materials and technology companies dropped the most, sinking at least 1.3 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, climbed 10 percent to 13.99.

The gauge, known as the VIX, is down 22 percent this year and reached its lowest level since February 2007 last week.

Oracle led the slump in technology shares, tumbling 9.7 percent to $32.30. The largest database-software supplier reported sales and profit that missed analysts’ estimates as Chief Executive Officer Larry Ellison is being stymied by customers switching to Internet-based cloud systems, curbing their reliance on Oracle’s servers, databases and related programs.

Cisco declined 3.8 percent to $20.84 while Juniper Networks lost 2.2 percent to $18.89. The makers of networking equipment were cut to underperform, an equivalent of sell, from market perform at FBR Capital Markets. Increased competition means there will be a slow but “meaningful” reduction in the number of routers and switches deployed into networks, analyst Scott Thompson said in a note.

Jabil Circuit Inc. retreated 4.5 percent to $18.60. The contract electronics manufacturer forecast earnings excluding some items of 58 cents a share at most for the fiscal third quarter. That trailed the average analyst estimate of 61 cents in a Bloomberg survey.

Airgas Inc. dropped 5.2 percent to $97.96. The largest U.S. distributor of packaged gases said it may not meet its fiscal fourth-quarter earnings guidance after sales didn’t increase through February.

Guess slid 7.2 percent to $25.01. The maker of designer jeans forecast annual revenue of $2.6 billion to $2.64 billion, less than analysts’ estimates of $2.74 billion.

Yahoo, the largest U.S. web portal, rose 3.5 percent to $22.86. The shares were upgraded to outperform, meaning investors should buy the shares, from market perform at Oppenheimer, which cited the value of Yahoo Japan shares and a possible initial public offering of Alibaba.com Ltd. in the next 12 months.

KB Home, the best-performing U.S. homebuilder stock this year, rallied 2.5 percent to $22.10, its highest level since September 2008. The Los Angeles-based company reported a narrower loss for its fiscal first quarter as sales and prices climbed amid a nationwide rebound in housing construction.

The S&P 500 is approaching a record almost 5 1/2 years after peaking and two years after most stocks in the gauge fully recovered from the worst bear market since the 1930s.

The index has climbed 130 percent since March 2009, adding $10 trillion to the value of American equity as it erased losses from the credit crisis. The majority of companies surpassed their previous highs by April 2011, according to data compiled by Bloomberg. The S&P 500 Equal Weighted Index, which counts each company in the index equally instead of by their market value, increased 192 percent from the bottom.

Unlike past bull markets, where a single industry dominated, all groups have improved in this rally as the U.S. economy recovers. The breadth of the rebound can be seen in the S&P 500’s weightings, where none of the 10 industry measures represents more than 18 percent of the index. In 2000, technology companies made up 35 percent of the gauge, and in 2006, financial stocks accounted for 22 percent.

“The breadth of this rally is rather remarkable,” Stephen Wood, who helps manage about $152 billion as the New York-based chief market strategist for North America at Russell Investments, said by telephone. “It speaks to the fact that four years ago the markets were pricing in the end of the world, but the end of the world was not nigh. So we’ve seen this significant but drawn-out recovery across the board in equities– small, medium, large, defensive, dynamic, value, growth.”

Have a wonderful evening everyone.

Be magnificent!

Your reactions are shared by all humanity.

Your brain is not yours, it has evolved through centuries of time.

So we are questioning deeply whether there is an

individual at all.  We are the whole of humanity,

we are the rest of mankind.

Krishnamurti, 1895-1986

As ever,

Carolann

If you would understand your own age, read

the works of fiction produced in it.  People in

disguise speak freely.

-Arthur Helps, 1813-1875

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