April 17, 2013 Newsletter

Dear Friends,

Tangents:

On this day in,

1397

616 years ago

Geoffrey Chaucer, one of England’s (it’s poetry month still) greatest poets, recites The Canterbury Tales for the first time, before the court of Richard ll.

Lots of talk these days about King Richard, specifically Richard lll.  The world marveled as a team of British archaeologists recently located and dug up the remains of the supposedly villainous king’s 500-year old bones buried under a parking lot it Leicester, England.   On Sunday, April 21^st at 9 PM on the Smithsonian Channel, there will be a program to see entitled The King’s Skeleton: Richard lll Revealed.

The world said good-bye to Lady Thatcher today.  Conrad Black paid tribute to her in a column in The National Post this past week.  He wrote, “The matriarchy hated Thatcher with a passion, exceeding even the general loathing of the left.

The reason was simple.  Thatcher did it without them.

Actually, she did it in spite of them.  She did what others pay lip service to: selected what was hard and right over what was easy and wrong.  When she said dreadfully earnest things like ‘disciplining yourself to do what you know is right and important, although difficult, is the high road to pride, self-esteem, and personal satisfaction,’ she meant them.  Thatcher appears to have been one of those rare people who call it as they see it and see it as it really is – not invariably, perhaps, but often enough.  Thatcher, often described as ideological, was perhaps the most pragmatic politician of our times.  She preferred what worked to what merely sounded good and ought to have worked if, in fact, it didn’t.”

Photos of the day – April  17th, 2013

Guests read from the order of service during the ceremonial funeral of former British Prime Minister Margaret Thatcher at St Paul’s Cathedral in London. World leaders and dignitaries from 170 countries attended. Stefan Wermuth/AP

Actress Tilda Swinton sleeps in a box for her performance piece called “The Maybe.”, at the Museum of Modern Art in New York. Keith Bedford/Reuters

Market Closes for April 17th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

April 17 (Bloomberg) — Canadian stocks fell, sending the Standard & Poor’s/TSX Composite Index to a five-month low, after the central bank cut its growth outlook and said that economic slack will persist for more than two years.

Lundin Mining Corp. sank 9.9 percent after the Democratic Republic of Congo banned exports of copper and cobalt concentrates. Barrick Gold Corp. plunged to a 20-year low after Moody’s Investors Service said it was reviewing its debt for possible downgrade. Teck Resources Ltd., Canada’s largest diversified miner, and First Quantum Minerals Ltd. slid at least 5 percent as copper had the biggest decline in more than a year.

Suncor Energy Inc. and Canadian Natural Resources Ltd. lost more than 1.5 percent as oil fell for the fourth time in five days.

The S&P/TSX fell 172.63 points, or 1.4 percent, to 11,947.29 at 4 p.m. in Toronto, the lowest since Nov. 16. The benchmark equity gauge has fallen 3.9 percent this year.

“When you look at what drives commodity prices, a very important factor is global GDP growth and estimates have come down,” said Anish Chopra, fund manager with TD Asset Management Ltd. in Toronto. The firm manages C$204 billion ($200 billion).

“You’re seeing this reaction in copper and oil as demand for these products goes down in an environment of slower economic growth.”

The Bank of Canada cut its growth forecast for 2013 to 1.5 percent from 2 percent as “a material degree of slack has re- emerged in the Canadian economy,” policy makers with the bank said today. The bank also held the benchmark interest rate at 1 percent for the 21st consecutive meeting, as expected by all 23 economists surveyed by Bloomberg.

Raw-materials, energy producers and banks contributed most to losses in the S&P/TSX as eight of 10 industries retreated.

Trading volume was 35 percent higher than the 30-day average.

Barrick, the world’s largest gold producer, slumped 5.8 percent to C$18.12, the lowest level since 1993. About $7.45 billion of debt was placed under review for downgrade, Moody’s said in a statement today.

Barrick faces challenges in its Pascua Lama project after the Chilean government filed an injunction halting construction due to environmental concerns, Moody’s said.

Suncor, Canada’s largest oil producer, dropped 1.5 percent to C$27.98 and Canadian Natural Resources lost 1.7 percent to C$29.53. Crude for May delivery declined 2.3 percent to settle at $86.68 a barrel in New York. Energy shares closed at the lowest level since November. Gold stocks tumbled to the lowest since October 2008.

Bank of Nova Scotia, the nation’s third-largest lender, dropped 1.5 percent to C$56.83 while Manulife Financial Corp., Canada’s largest insurance company, lost 2.1 percent to C$13.87 as 40 of 44 stocks in the S&P/TSX Financials Index fell.

The central bank said consumer debt will likely stabilize around the current record 165 percent of disposable income, which has been elevated in part due to a surge in home purchases since the 2008 financial crisis.

There are signs of “overbuilding” of multiple-unit housing such as condos in some cities, the Bank of Canada said.

The federal government has acted four times to make mortgage lending rules more restrictive.

Lundin Mining tumbled 9.9 percent to C$3.73 after the Democratic Republic of Congo banned exports of coper and cobalt concentrates to force mining companies to add value to the minerals before shipping them. Lundin owns a 24 percent stake in the Tenke mining project, the largest in the country, which produced 11,669 metric tons of cobalt last year.

First Quantum Minerals plunged 9.4 percent to C$15.43 and Teck Resources tumbled 5 percent to C$25.42. Copper for July delivery slid 3.6 percent to settle at $3.2025 a pound in New York, the biggest decline in 16 months.

The S&P/TSX Materials Index slumped 3.9 percent to the lowest level since March 2009.

The International Monetary Fund said yesterday the global economy will expand 3.3 percent this year, less than January’s 3.5 percent forecast, while also cutting its projection for expansion in China, the world’s biggest copper consumer.

US

By Inyoung Hwang and Whitney Kisling

April 17 (Bloomberg) — U.S. stocks fell, erasing the biggest rally in three months for the Standard & Poor’s 500 Index, amid disappointing results by companies from Bank of America Corp. to Textron Inc.

All 10 groups in the S&P 500 declined as technology, energy and financial shares dropped the most. Apple Inc. tumbled 5.5 percent, briefly falling below $400 for the first time since 2011 as one of its suppliers reported an inventory glut. Bank of America sank 4.7 percent after profit missed analysts’ projections. Textron slumped 13 percent after lowering its forecast for business-jet sales. Caterpillar Inc. slid 1.4 percent amid an analyst downgrade.

The S&P 500 declined 1.4 percent to 1,552.01 today, paring its 2013 gain to 8.8 percent. The Dow Jones Industrial Average lost 138.19 points, or 0.9 percent, to 14,618.59. About 7.9 billion shares traded on U.S. exchanges, 23 percent above the three-month average.

“We’re at a point where it’s been exceedingly positive and it’s now swinging back the other way, and that’s a treacherous time for markets,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private- banking unit of KeyCorp in Cleveland, said in a phone interview.

“People are nervous.”

Today’s decline in the S&P 500 erased yesterday’s rally of 1.4 percent, which was sparked by better-than-expected housing data and earnings from Coca-Cola Co. to Johnson & Johnson. The index has fallen 2.6 percent since reaching an all-time high of 1,593.37 on April 11, as China’s economic growth unexpectedly slowed, commodities tumbled and data on American employment and retail sales missed economists’ estimates.

U.S. stocks are poised for a “spring break” that will bring losses to investors as economic growth slows and corporate earnings weaken, according to Jonathan Golub at UBS AG.

The S&P 500 declined 7.1 percent on average from May to August in the last three years, according to data compiled by UBS. The benchmark gauge for American equities rallied 8.8 percent between January and April and climbed 8.2 percent during the final four months from 2010 to 2012, the data show.

“The market’s advance has been out of sync with weak earnings and economic trends,” Golub, chief U.S. equity strategist at UBS, wrote in a note dated yesterday. “Another spring break is likely to materialize and that now is a good time to begin dialing back on risk.”

The Federal Reserve said today in its Beige Book business survey that the U.S. economic expansion remained “moderate” amid gains in manufacturing, housing and autos that offset weakness in defense-related industries in some regions. The survey is based on reports from the Fed’s 12 regional banks from late February to early April.

Companies from American Express Co. to EBay Inc. are among those in the S&P 500 posting earnings today. Of the 57 that have reported so far this season, 39 of them have beaten profit estimates and 29 have exceeded forecasts for sales, according to data compiled by Bloomberg. Earnings 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.

Companies whose earnings are most tied to economic swings led today’s retreat. The Morgan Stanley Cyclical Index dropped 1.9 percent. The Chicago Board Options Exchange Volatility Index, or VIX, surged 18 percent to 16.51 today. The VIX, which moves in the opposite direction to the S&P 500 about 80 percent of the time, rallied 43 percent on April 15, the most since August 2011. The gauge is down 8.4 percent this year.

Technology companies retreated 2.3 percent, the most among 10 groups in the S&P 500.

Apple, the world’s most valuable company, plunged 5.5 percent to $402.80, briefly falling below $400 for the first time since December 2011. Apple’s audio-chip supplier, Cirrus Logic Inc., reported an inventory glut that suggests iPhone sales may fall short of analysts’ estimates. Cirrus Logic plunged 16 percent to $18.05.

The KBW Bank Index slipped 2 percent as all but one of its 24 members declined.

Bank of America tumbled 4.7 percent, the most since November, to $11.70 after shortfalls in mortgage banking and trading marred first-quarter results and slowed the company’s turnaround.

Energy stocks fell 1.9 percent as a group as oil fell to a four-month low. Chevron Corp. slumped 1.9 percent to $114.81 while Schlumberger Ltd. erased 3.2 percent to $70.97.

Freeport-McMoRan Copper & Gold Inc. plunged 4.3 percent to $28. The largest publicly traded copper producer has dropped for the past six days, losing 18 percent. Copper futures plunged the most in 16 months.

Textron slid 13 percent to $25.41 after saying business jet deliveries will probably fall this year. The Providence, Rhode Island-based manufacturer previously forecast a “modest” increase. First-quarter profit was 40 cents a share, missing the average analyst estimate by 5 cents.

Caterpillar erased 1.4 percent to $81.47. Sameer Rathod, an analyst with Macquarie Group Ltd., cut the rating on the world’s largest maker of construction equipment to neutral from outperform, citing “tepid” growth in China that will continue longer than anticipated.

Mattel Inc. gained 1.9 percent, the third-biggest rally in the S&P 500, to $43.78. The world’s biggest toymaker posted first-quarter earnings of 11 cents a share, topping the 8-cent profit estimated by analysts on average.

Abbott Laboratories climbed 2.4 percent to $37.28. The medical device and nutritional products maker that split off its drug unit on Jan. 1 said first-quarter profit rose 55 percent on higher sales of its baby formula and lower taxes.

Have  a wonderful evening everyone.

Be magnificent!

But if you are not connected with all living beings on earth,

you risk losing your relationship with humanity, with human beings.

We never truly look at a tree’s qualities; we never touch it to feel how solid it is, how rough its bark is,

to listen to the sound it makes.  Not the sound of the wind in the leaves,

nor the morning breeze that makes them rustle, but its own sound, the sound of the trunk,

the silent sound of the roots.  You have to be extremely sensitive to hear this sound.

It is not the noise people make, the chattering of thoughts, nor that of human quarrels and wars,

but the very sound of the universe.

Krishnamurti, 1895-1986

As ever,

Carolann

The symbol of all relationships among such men, the moral symbol of

respect for human beings, is the trader.

-Ayn Rand, 1905-1982

Atlas Shrugged, 1957

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