April 26, 2013 Newsletter

Dear Friends,

Tangents: Full moon weekend!

Many composers, such as Beethoven and Tchaikovsky, required a long daily walk to keep their ideas flowing, writes Mason Currey, author of Daily Rituals: How Artists Work.  “The most extreme example is the French composer Erik Satie, who each morning would walk from his home in a Paris suburb to the city’s Montmartre district, a distance of about 10 kilometres.  There he would visit friends, work on his compositions in cafés, eat dinner and go out drinking –often missing the last train home, in which case he would walk back again, slipping into bed just before sunrise (and then getting up and walking back a few hours later).”  -Michael Kesterton, Globe & Mail, April 26^th, 2013.

If you can’t annoy somebody, there is little point in writing. –Kingsley Amis

Photos of the day – April  26th, 2013

People watch the full moon as it rises over the skyline of New York City near 42nd Street (r.), as seen across the Hudson River in Weehawken, New Jersey April 25th. Gary Hershorn/Reuters

A giant panda plays at a “panda kindergarten”, a refuge for baby pandas, inside Bifengxia giant panda base in Ya’an, Sichuan province, China, after an earthquake hit Lushan. According to local reports, more than half of the pandas in Bifengxia were resettled from Wolong panda base after an 7.9 earthquake in 2008. Reuters

Market Closes for April 26th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

April 26 (Bloomberg) — Canadian stocks fell for the first time in seven days, paring a weekly gain, after data showed the U.S. economy grew at a slower pace than forecast.

TransCanada Corp. dropped 1.3 percent after the pipeline builder said delays in getting a U.S. presidential permit for the Keystone XL oil conduit will push back its start until the second half of 2015. Suncor Energy Inc., Canada’s largest energy producer, lost 1.1 percent as crude retreated for the first time in seven days.

The Standard & Poor’s/TSX Composite Index fell 109.31 points, or 0.9 percent, to 12,220.20 at 4 p.m. in Toronto. The benchmark equity gauge gained 1.3 percent this week, trimming its loss for the year to 1.7 percent.

“The U.S. numbers are definitely weaker than expected,” Andrew Pyle, a fund manager with ScotiaMcLeod Inc., said on the phone from Peterborough, Ontario. He manages C$210 million ($206 million). “That number has had an impact on oil. It was not a disastrous number, but when people are looking for a 3 percent handle on GDP, 2.5 percent takes some of the wind out of oil.”

U.S. gross domestic product rose at a 2.5 percent annual rate, lower than forecast, after a 0.4 percent fourth-quarter advance, Commerce Department figures showed today in Washington.

The median estimate of 86 economists surveyed by Bloomberg called for a 3 percent gain. Consumer spending, the biggest part of the economy, climbed by the most since the fourth quarter of 2010.

Raw-materials and energy stocks contributed most to losses in the S&P/TSX as eight of 10 industries retreated. Trading volume was 13 percent lower than the 30-day average at this time of the day.

TransCanada, Canada’s second-largest pipeline company, decreased 1.3 percent to C$49.14. The company said its $5.3 billion cost estimate for the Keystone project will increase depending on the timeline of the permit.

TransCanada has spent $1.8 billion on the project as of the end of last month, which was originally targeted for a startup in late 2014 or early 2015.

The Calgary-based company also reported first-quarter earnings of 52 Canadian cents a share, short of the average estimate of 54 cents according to a Bloomberg survey of 13 analysts.

Suncor lost 1.1 percent to C$29.28 and Canadian Natural Resources Ltd. dropped 2.1 percent to C$29.58. Crude for June delivery declined 0.7 percent to settle at $93 a barrel in New York to trim the biggest weekly advance since June. Prices rose 5.7 percent this week.

Lundin Mining Corp. dropped 5.8 percent to C$3.93 and First Quantum Minerals Ltd. fell 7.4 percent to C$16.67 as copper fell for the first time in three days. Stockpiles of the metal are expanding ahead of a holiday that will close markets in China, the world’s biggest consumer.

Royal Bank of Canada, the nation’s largest lender, lost 0.8 percent to C$60.02 and Toronto-Dominion Bank decreased 0.3 percent to C$81.10 as financial stocks fell for the first time in four days.

Gabriel Resources Ltd. surged 29 percent to C$1.72, the biggest gain since October 2008. Mediafax, a Romanian media company, said the government plans to create a company called Minvest Rosia Montana to take over the 19.3 percent stake held by the state in Gabriel’s mine project, according to an unpublished official document.

Gabriel’s Rosia Montana project has reported resources of 17.1 million ounces of gold and 81.1 million ounces of silver, according to the company’s website.

US

By Lu Wang

April 26 (Bloomberg) — U.S. stocks rose for the week, with the Standard & Poor’s 500 Index rebounding from the biggest drop since November, as companies beat earnings estimates amid speculation central bank stimulus will continue.

The S&P 500 fell on the final day as data showed the U.S. economy grew less than forecast in the first quarter. United Parcel Service Inc. and Boeing Co. climbed more than 3.2 percent for the week after posting results. Apple Inc. rose 6.8 percent after boosting its dividend and share-buyback plan. DuPont Co. and Halliburton Co. jumped at least 7.5 percent, driving commodity shares to the biggest gain among 10 S&P 500 groups.

The S&P 500 rose 1.7 percent to 1,582.24 over the five days, after tumbling 2.1 percent in the previous week. The Dow Jones Industrial Average increased 165.04 points, or 1.1 percent, to 14,712.55. The S&P 500 is up 0.8 percent in April, poised for a sixth straight monthly gain, the longest stretch since September 2009.

“We see a big pivot in markets to go from safe to cyclical,” John Augustine, who helps manage $27 billion as chief market strategist at Cincinnati-based Fifth Third Bancorp, said by phone. “Earnings were OK. Now market attention is focusing on stimulus, which they believe is coming in Europe.”

Global stocks rallied during the week as speculation mounted that the European Central Bank will cut rates when it meets on May 2. U.S. gross domestic product rose at a 2.5 percent rate in the first quarter, below economists’ estimates for a 3 percent gain. The economy’s inability to sustain faster growth means Federal Reserve policy makers will probably affirm a pledge to keep buying bonds after their May 1 meeting.

Other economic reports in the week showed demand for durable goods slumped by the most in seven months while applications for unemployment benefits fell to a six-week low.

The bull market in U.S. equities has entered its fifth year as the S&P 500 surged 134 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of monetary stimulus from the Fed.

Analysts are turning more bullish on corporate earnings.

Profit at S&P 500 companies gained 1.1 percent in the first three months of the year, according to analysts’ projections compiled by Bloomberg. That compares with a week earlier projection for a decline of 1.1 percent.

Of the 270 companies in the benchmark index that have reported so far in this earnings season, 74 percent have exceeded analysts’ predictions on profits while 54 percent trailed on sales, data compiled by Bloomberg show.

“It’s the trend we’ve seen for a while, which is, companies seem to beat on earnings, but struggle on the top line,” Rob Edel, chief investment officer with Nicola Wealth Management, in a phone interview from Vancouver. His firm manages about C$2 billion ($1.97 billion). “It’s a question of how much it is cost-saving driven versus real growth.”

The markets experienced two disruptions in separate incidents during the week. The S&P 500 erased almost all of a 1 percent rally on April 23 following a post on an Associated Press Twitter account that said there were explosions at the White House. Stocks recovered as the AP said it had been hacked and there were no explosions.

A software malfunction shut the Chicago Board Options Exchange for three-and-a-half hours on April 25, preventing traders from trading on options based on the S&P 500 and the so- called VIX gauge of equity volatility.

The Chicago Board Options Exchange Volatility Index dropped 9.1 percent to 13.61 for the week. The gauge has lost 24 percent for the year.

Companies whose earnings are most tied to economic swings led gains for the week. Commodity, technology and financial companies rose the most among 10 S&P 500 groups, rallying at least 2.6 percent. The S&P GSCI gauge of 24 commodities jumped 2.4 percent as gold rallied the most in 15 months and crude capped its biggest increase since June.

The Dow Jones Transportation Average climbed 1.4 percent.

UPS advanced 3.3 percent to $85.71. First-quarter earnings beat estimates as the world’s largest package-delivery company carried more purchases to online shoppers.

Boeing jumped 5.6 percent to $92.85, the highest level in more than five years. The company increased deliveries for 777- and 737-model jets, making up for the halt in buyers picking up Dreamliners while that plane was grounded and helping quarterly profit exceed forecasts.

Apple rallied 6.8 percent, the most since November, to $417.21. The company, which this year ceded the title of the world’s largest company by market value to Exxon Mobil Corp., said it will return an additional $55 billion in cash to shareholders to compensate for a stock that’s been hammered by signs of slowing growth.

The iPhone maker reported its first profit drop in a decade and forecast sales this quarter that may miss analysts’ projections.

DuPont advanced 7.5 percent to $52.90. The largest U.S. chemical company by market value posted first-quarter earnings that exceeded analysts’ estimates as profit from crop seeds and pesticides hit a record and pigment demand began to recover.

Cost reductions helped quarterly results at Halliburton and Cliffs Natural Resources Inc. Halliburton, the world’s largest provider of hydraulic-fracturing services, rose 9 percent to $40.57. Cliffs Natural, the largest U.S. iron-ore producer, gained 14 percent to $20.17.

An index of homebuilders jumped 14 percent. The Commerce Department reported April 23 that sales of new U.S. homes advanced in March as near record-low mortgage rates helped the industry complete the strongest quarter since 2008.

Profits at D.R. Horton Inc. and PulteGroup Inc. surged amid the accelerating housing recovery. D.R. Horton, the largest U.S. homebuilder by volume, rallied 21 percent to $26.66. PulteGroup, the biggest by revenue, climbed 19 percent to $21.35.

Netflix Inc. soared 32 percent, the most in the S&P 500, to $215.55. The online video service signed up more than 2 million new U.S. customers and 1 million internationally in the first quarter, defying skepticism about its growth prospects.

Microsoft Corp., the world’s largest software maker, jumped 6.8 percent to $31.79 after activist investor ValueAct Holdings LP amassed about a $1.9 billion stake.

Procter & Gamble Co. declined 5.3 percent to $77.10 for the biggest retreat since 2009. The maker of Gillette razors and Tide detergent projected fiscal fourth-quarter earnings that trailed analysts’ estimates because of currency fluctuations and marketing costs.

AT&T Inc. slipped 3.2 percent to $37.04. The largest U.S. phone company reported lower first-quarter revenue than analysts forecast, dragged down by sluggish landline sales and competition with Verizon Wireless.

Edwards Lifesciences Corp. fell the most in the S&P 500, plunging 23 percent to $64.17. The biggest maker of aortic heart valves implanted with a catheter cut its 2013 forecast on slower-than-anticipated sales.

Have a wonderful weekend everyone.

Be magnificent!

One drop of the sea cannot claim to come from one river, and another drop of the sea from another river;

the sea is a single consistent whole.  In the same way all beings are one; there is no being

that does not come from the soul, and is not part of the soul.

Chandogya Upanishad

As ever,

Carolann

Never apologize for showing feeling.  When you

do so, you apologize for the truth.

-Bejamin Disraeli, 1804-1881

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