April 12, 2013 Newsletter

Dear Friends,

Tangents:

There is a wonderful special exhibition on at the de Young museum in Golden Gate Park in San Francisco.  The fabulous Mauritshuis  museum in the Hague has selected several paintings to go on tour while the museum is under renovation.   The highlight of the exhibition is Vermeer’s The Girl with The Pearl Earring, although the whole collection which includes Rembrandts as well as many other Dutch masters, is well worth the effort to make the trip before this special exhibit ends on June 2^nd, 2013.  We went on the long Easter weekend and the non-stop flight from Victoria had us on the ground in under two hours.  If you are interested, it is best to buy the tickets on-line before you go.  You can do so at https://tickets.famsf.org/public/.  If you go, spring for the audio tour as there is meaningful commentary by one of the curators at the Mauritshuis.  Check out A 16 restaurant in Pacific Heights.  They feature a local area farmer’s product every Sunday.  The Sunday we were there, a duck farmer from Sonoma was being featured and the special menu of the day offered many different duck dishes, including the best duck confit I’ve ever tasted.  Pacific Heights is a really interesting neighborhood to meander around – the architecture is stunning!

Photos of the day – April  12th, 2013

Staff uniforms are displayed for auction at the Hotel de Crillon in Paris. The Hotel de Crillon, one of the oldest luxury hotels in Paris, hushed after the departure of its last guests in March, has been transformed into a buyer’s wonderland as it closes its doors for a two-year renovation. Charles Platiau/Reuters

Kaitlyn Weaver and Andrew Poje (not pictured) of Canada perform during the ice dance free dance at the ISU World Team Trophy in Figure Skating in Tokyo. Yuya Shino/Reuters.

Market Closes for April 12th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

April 12 (Bloomberg) — Canadian stocks tumbled, giving the benchmark index its second-biggest decline of the year, after energy and raw-material shares dropped as commodity prices plunged amid an unexpected slump in U.S. retail sales.

The Standard & Poor’s/GSCI Index of commodities tumbled 1.3 percent to the lowest level since July. Barrick Gold Corp. and Yamana Gold Inc. slumped at least 6.8 percent as the price of gold dipped below $1,500 an ounce, entering a bear market. First Majestic Silver Corp. and Silver Standard Resources Inc. lost as much as 4.1 percent as silver plunged. Canadian Natural Resources Ltd. fell 3.7 percent after crude declined to its lowest in a month.

The S&P/TSX Composite Index fell 143.78 points, or 1.2 percent, to 12,337.59 at 4 p.m. in Toronto. The gauge’s biggest decline this year was on April 3, when it tumbled 2.1 percent amid another commodities slump. The benchmark Canadian equity index is down 0.8 percent for 2013, erasing earlier gains.

Trading volume was 3.5 percent higher than the 30-day average.

“It’s pretty ugly here and the commodities are again the main culprit,” said John Kinsey, fund manager with Caldwell Securities Ltd. in Toronto. His firm manages about C$1 billion ($987 million). “Gold is taking a thrashing and energy stocks are a problem as well. Financials are also reacting to the U.S. numbers. It’s not quite as bad as it used to be, when the U.S. sneezed and we’d catch a cold, but the U.S. is our largest trading partner.”

U.S. retail sales fell 0.4 percent in March, the most in nine months, Commerce Department figures showed. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March. Department stores and electronics dealers were among the weakest showings.

Raw-materials stocks declined the most in the S&P/TSX, losing 4.2 percent as a group to the lowest level since June 2009.

Barrick, the world’s largest producer of gold, plunged 8.2 percent to C$22.94, its lowest close since October 2008. Yamana Gold lost 6.8 percent to C$13.27, for the biggest decline since September 2011.

Gold for June delivery tumbled 4.1 percent to settle at $1,501.40 an ounce in New York, entering what many consider a bear market after slumping more than 20 percent from an August 2011 record. The price was down 5.3 percent to $1,482.70 in electronic trading as of 5 p.m. in Toronto.

The S&P/TSX Gold index sank 6.2 percent to its lowest level since November 2008. All 30 members declined.

First Majestic Silver fell 4.1 percent to C$14.22 and Silver Standard Resources lost 6 percent to C$8.69 as silver futures for May delivery dropped 4.9 percent to $26.331 an ounce, the biggest loss since June.

Canadian Natural Resources retreated 3.7 percent to C$31.28 and Suncor Energy Inc. decreased 1.5 percent to C$28.82. Crude for May delivery declined 2.4 percent to settle at $91.29, the lowest in a month. Cyprus was said to seek an increase in the 10 billion euros ($13 billion) pledged by the euro area, raising concern the European debt crisis will worsen.

Dollarama Inc. surged 5.6 percent to C$68.23, its highest level since an initial public offering in October 2009. The discount retailer reported fourth-quarter adjusted earnings of C$1.06 a share, compared with analysts’ estimates of C$1.02. The company also raised its quarterly dividend 27 percent to 14 Canadian cents a share from 11 cents.

US

By Lu Wang and Lindsey Rupp

April 12 (Bloomberg) — U.S. stocks fell, dragging the Standard & Poor’s 500 Index down from a record, as government data showed retail sales unexpectedly fell in March, commodities plunged and a gauge of consumer sentiment slipped.

Raw-material and energy shares lost the most among 24 groups in the S&P 500. Newmont Mining Corp. slumped 5.9 percent as gold dropped to its lowest since July 2011. DuPont Co. and Alcoa Inc. slid at least 0.9 percent. Banks retreated 1.1 percent as Wells Fargo & Co. reported a drop in revenue and M&T Bank Corp. delayed its planned purchase of Hudson City Bancorp.

The S&P 500 fell 0.3 percent to 1,588.85 at 4 p.m. in New York, paring an earlier decline of as much as 0.8 percent. The Dow Jones Industrial Average dropped less than 1 point to 14,865.06, erasing a drop of 0.5 percent earlier in the day. The benchmark indexes closed at all-time highs yesterday. About 5.9 billion shares changed hands on U.S. exchanges, 5.3 percent lower than the three-month average.

“We’ve seen this market go up quite a bit,” Terry L.

Morris, who helps oversee about $2.6 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said by phone. “A lot of investors are cautious at this point and are quick to sell on any kind of signs of a slowdown.”

The 0.4 percent decrease in U.S. retail sales, the biggest since June, followed a 1 percent gain in February, Commerce Department figures showed today in Washington. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March. Department stores and electronics dealers were among the weakest showings.

The Thomson Reuters/University of Michigan preliminary sentiment index for April fell to 72.3 from 78.6 in March. No change was projected for this month’s reading compared with March, according to the median estimate of 69 economists surveyed by Bloomberg.

Companies in the U.S. added to inventories in February at the slowest pace in eight months, a separate Commerce Department report showed, putting them in a better position to deal with a subsequent slowdown in demand.

Euro-area finance ministers agreed in principle at a meeting in Dublin today to extend the maturities on rescue loans to Ireland and Portugal by seven years. Cyprus President Nicos Anastasiades will seek an increase to the nation’s 10 billion- euro ($13 billion) bailout from the European Union, according to a government official, who asked not to be identified.

The bull market in U.S. equities entered its fifth year last month. The S&P 500 has surged 135 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy. The benchmark gauge added 2.3 percent this week amid optimism over central-bank stimulus and corporate earnings.

Investors will be watching closely as the number of earnings reports increases in the weeks ahead, helping to gauge the health of the economy. Profits at S&P 500 companies dropped 1.4 percent in the first three months of the year, according to analyst estimates compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.

Seventy percent of the 30 companies that have reported results so far beat estimates. Bank of America Corp., Coca-Cola Co., Google Inc. and General Electric Co. are among companies that will release earnings next week.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, fell 1.5 percent to 12.06 today. The gauge, known as the VIX, is down 33 percent this year and reached its lowest level since February 2007 last week.

Fourteen out of the 24 industries in the S&P 500 declined today. A gauge of stocks closely tied to economic growth retreated, as the Morgan Stanley Cyclical Index fell 0.5 percent to snap a four-day rally. DuPont slipped 0.9 percent to $49.82 and Alcoa lost 1.2 percent to $8.22.

The KBW Bank Index slumped 1.1 percent, even as Wells Fargo and JPMorgan Chase & Co. posted results that topped analyst estimates.

Wells Fargo dropped 0.8 percent to $37.21. The largest U.S. home lender posted a 22 percent rise in first-quarter profit that beat forecasts as the bank curbed expense growth. Revenue, mortgage banking income and lending margins fell.

JPMorgan slipped 0.6 percent to $49.01. First-quarter profit rose 33 percent as improving consumer credit quality allowed the bank to cut loan-loss reserves by $1.2 billion.

While mortgage volume jumped 37 percent, mortgage-banking net income dropped 31 percent. The largest U.S. bank by assets said 2013 net interest income will be 1 percent lower than the year- earlier period.

“They beat, but it’s kind of a low-quality beat,” David Chalupnik, head of equities at Nuveen Asset Management in Minneapolis, said in a phone interview. His firm manages $120 billion. “What these companies need to see is better economic growth and with that an increase in longer term interest rates. We’re not seeing that yet.”

M&T Bank fell 4.5 percent to $100.24, the lowest close of the year. The lender said a Federal Reserve review of its compliance with money-laundering rules has delayed its planned purchase of Hudson City. Shares of Hudson City dropped 5.5 percent to $8.29.

Energy and raw-materials companies in the S&P 500 tumbled more than 1.3 percent as the S&P/GSCI index of commodities fell to the lowest level since July.

Gold for June delivery tumbled 4.1 percent to settle at $1,501.40 an ounce in New York, entering what many consider a bear market after slumping more than 20 percent from an August 2011 record. The price declined 5.3 percent to $1,481.70 in electronic trading at 4:55 p.m. Crude oil lost 2.4 percent to settle at $91.29 a barrel, the lowest in a month.

Newfield Exploration Co. fell 4.1 percent to $21.70.

Newmont Mining dropped 5.9 percent to $36.37, its lowest close in four years. Cliffs Natural Resources Inc., the largest U.S. iron-ore miner, declined 3.6 percent to $19.20.

Home Depot Inc., the largest home-improvement retailer, jumped 2.4 percent to $73.62 for the biggest gain in the Dow. An analyst with Jefferies LLC increased his recommendation on the stock to buy from hold.

Biogen Idec Inc. advanced 3.4 percent to $207.01. The biotechnology company was boosted to buy from neutral at Bank of America Corp.

Ashland Inc. climbed 9.9 percent to $86.66, an all-time high. Activist investor Jana Partners LLC acquired a 7.4 percent stake in the biggest producer of specialty papermaking chemicals and has spoken to management.

Have a wonderful weekend everyone.

Be  magnificent!

Within, everything is connected.

This is because an action in one part produces a similar reaction elsewhere

and thus a response.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

A well-written life is almost as rare

as a well spent one.

-Thomas Carlyle, 1795-1881

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