May 7, 2013 Newsletter

Dear Friends,

Tangents:

I recently finished reading  Jess Walter’s Beautiful Ruins, (Harper Collins, 2012).  It is a very enjoyable novel, so if you’re looking for something new to read, I recommend it. The story  begins in 1962 when a beautiful American actress arrives at a tiny fishing village on the Italian coastline.  She had been filming in Rome with Richard Burton and Elizabeth Taylor on the set of Cleopatra. The novel oscillates between that time and the present – what happens in the life of the beautiful actress.

[Dick] Cavett’s four great interviews with Richard Burton were done in 1980….Burton, fifty-four at the time, and already a beautiful ruin, was mesmerizing. –“Talk Story” by Louis Menard, The New Yorker, November 22, 2012.

Photos of the day – May 7th, 2013

A visitor to the Missouri State Capitol in Jefferson City treads over the reflection of artist Herman Schladermundt’s stained glass ‘Great Window,’ distorted by the third floor Rotunda’s marble flooring, as she makes her way to the grand staircase following a celebration marking the Capitol’s 100th groundbreaking anniversary on Monday. Kris Wilson/News-Tribune/AP

A couple walk past ‘Filament Lamp,’ an art work installation, at a commercial center near a construction site in Beijing’s Sanlitun area. Jason Lee/Reuters

Market Closes for May 7th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

May 7 (Bloomberg) — Canadian stocks rose, sending the benchmark index higher for a fourth day, as gains among banks and energy shares offset declines in precious-metals producers.

Royal Bank of Canada advanced 0.6 percent. Suncor Energy Inc. and Cenovus Energy Inc. gained at least 1.2 percent.

Barrick Gold Corp. and New Gold Inc. tumbled more than 3.2 percent as the metal’s price slumped 1.3 percent. Westjet Airlines Ltd. dropped 7.5 percent after reporting weaker April traffic figures.

The Standard & Poor’s/TSX Composite Index rose 10.19 points, or 0.1 percent, to 12,464.11 at 4 p.m. in Toronto. The benchmark equity gauge gained 1.2 percent over the past four days. Trading volume was in line with the 30-day average.

“The banks are performing well and people are picking away at energy names with the unrest in the Middle East,” said Arthur Salzer, chief executive officer with Northland Wealth Management in Toronto. His firm manages C$225 million ($224 million).

Bank, consumer discretionary and energy stocks contributed most to gains in the S&P/TSX. Royal Bank of Canada advanced 0.6 percent to C$61.71, its highest close in a month.

Suncor, Canada’s largest oil producer, rallied 2.1 percent to C$31.45 while Cenovus advanced 1.2 percent to C$30.55.

Israel launched air strikes against targets in Syria on May 5. Israeli Prime Minister Benjamin Netanyahu affirmed his country’s right to self-defense and Syria threatened retaliation against Israel. Crude slid 0.6 percent to $95.62 a barrel, falling for the first time in four days.

Raw-materials producers paced losses, falling 1.3 percent as a group. Gold producers slumped 2.7 percent to a two-week low, with 26 of 30 stocks falling.

Barrick Gold declined 3.2 percent to C$19.80 and New Gold lost 5.5 percent to C$7.21 as gold futures for June delivery tumbled 1.3 percent to $1,448.80 an ounce in New York.

Gold fell after Dutch Finance Minister Jeroen Dijsselbloem discussed details for the European banking union project, adding to signs that the regions’s leaders will act to contain its fiscal crisis and eroding demand for haven assets.

Westjet, the discount airliner based in Calgary, dropped 7.5 percent to C$22.87. Westjet reported an April load factor of 82.7 percent, down 3.5 percentage points compared with a year earlier. Load factor is a measure of available seats sold.

The company also announced plans to upgrade its fleet with 10 new jetliners from Boeing Co. with a catalog value of $891 million while unloading 10 older jets. Westjet will likely incur a non-cash loss of C$60 million to C$70 million once it gets rid of the older aircraft.

Westjet reported a profit of 68 cents a share in the first quarter, ahead of consensus expectations of 64 cents according to a Bloomberg analyst survey.

US

By Inyoung Hwang

May 7 (Bloomberg) — U.S. stocks rose, sending the Dow Jones Industrial Average to its first close above 15,000, on optimism over global central bank stimulus and better-than- estimated corporate earnings.

Nine out of 10 groups in the Standard & Poor’s 500 Index rose. DirecTV gained 6.9 percent to an all-time high after adding more subscribers than analysts projected. Fossil Inc. advanced 9 percent after profit beat estimates and the company lifted its forecast for the year. EOG Resources Inc. jumped 7.7 percent after seeing higher growth rates for crude oil. First Solar Inc. plunged 8.9 percent after earnings fell short of estimates.

The S&P 500 rose 0.5 percent to 1,625.96 at 4 p.m. in New York, its fourth straight record close. The Dow added 87.31 points, or 0.6 percent, to 15,056.20. The gauge briefly surpassed 15,000 for the first time in intraday trading on May 3. More than 5.8 billion shares traded hands on U.S. exchanges today, or 6.7 percent below the three-month average.

“This is a QE-fueled market,” Steven Bulko, the New York- based chief investment officer of Lombard Odier Investment Management’s $1 billion long/short 1798 Fundamental Strategies Fund, said by telephone. “You’re just not seeing sales based on allocation into any other asset class because of the relative unattractiveness of everything other than equities. That’s putting in place a firm bid to the equities market.”

The S&P 500 advanced 0.2 percent yesterday, after the benchmark gauge for U.S. equities topped 1,600 for the first time on May 3. U.S. stocks are in the fifth year of a bull market amid better-than-estimated corporate earnings and three rounds of bond purchases by the Federal Reserve.

Fed Chairman Ben S. Bernanke has injected more than $2.3 trillion into the financial system since 2008. The Fed is currently buying $85 billion of debt each month under a policy of so-called quantitative easing. Bank of Japan Governor Haruhiko Kuroda last month began a campaign to end falling prices in a bid to reach 2 percent inflation in two years. The European Central Bank cut its main refinancing rate last week.

Global equities rose today as the Reserve Bank of Australia cut its benchmark interest rate to a record low of 2.75 percent.

The Bank of England will probably leave its stimulus program on hold this week amid signs the economy has found a firmer footing. A Bloomberg News survey of economists shows policy makers will refrain from expanding quantitative easing beyond 375 billion pounds ($582 billion) on May 9.

About 84 percent of S&P 500 stocks traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg. That’s the highest level since March 14, while below the two-year high of 93 percent in January.

American Express Co., Walt Disney Co. Disney and Home Depot Inc. have led the Dow’s rally since its 2009 low, climbing more than 311 percent as the world’s largest economy recovered from the worst recession in seven decades. Hewlett-Packard Co., the largest personal computer maker, is the only stock still in the measure to fall since March 9, 2009. The shares are down 20 percent as consumers favor tablets and mobile phones over PCs.

“It becomes harder and harder for central banks to be the odd man out,” Steven Soranno, a Bethesda, Maryland-based senior equities analyst for Calvert Investments Inc., which oversees about $12 billion, said by telephone. “The old adage used to be ‘Don’t fight the Fed.’ Now it’s ‘Don’t fight the Feds’, plural. Australia came in with the rate cut and that just adds to the coordinated central bank easing.”

About 72 percent of the 425 S&P 500 companies that have released results since the start of the earnings season have exceeded profit projections, while 53 percent have missed sales estimates, data compiled by Bloomberg show.

Phone, industrial and utility companies rallied the most out of 10 S&P 500 groups, gaining at least 0.9 percent.

Caterpillar Inc. added 2.5 percent to $89.79 for the biggest gain in the Dow. Investors bought shares of stocks most tied to economic growth, sending 24 out of 30 members of the Morgan Stanley Cyclical Index higher. The gauge has rallied 4.7 percent in the last four days.

DirecTV jumped 6.9 percent to a record $61.95. The largest U.S. satellite-television provider added 21,000 U.S. subscribers and 583,000 Latin American customers in the first quarter, compared with the 10,000 and 505,000, respectively, predicted by analysts. The gains may help reassure investors, who have been concerned that growth is sputtering.

Fossil surged 9 percent to $107.88 for the biggest advance in the S&P 500. The maker of the namesake watch brand reported first-quarter earnings were $1.21 a share, exceeding the 97-cent profit estimated by analysts on average. The Richardson, Texas- based company also boosted its earnings forecast for 2013 to as much as $6.26 a share after earlier predicting no more than $6.15.

EOG Resources jumped 7.7 percent to $135.69. The natural- gas and crude-oil producer reported first-quarter profit that beat analysts’ estimates by 52 percent and said it sees “sustained” high growth in rates for oil production through 2017. The Houston-based company also said its sees a moderate increase in North American natural gas next year.

Electronic Arts Inc. added 0.7 percent to $18.41. The second-largest video-game publisher reached a multiyear agreement with Disney to create games based on “Star Wars” characters. Disney said it will retain certain rights to develop new titles within the mobile, social, tablet and online game categories.

After the close of regular trading, EA posted fiscal fourth-quarter profit that missed analysts’ estimates. The company forecast fiscal-year profit of $1.20 a share, ahead of the $1.10 a share analysts estimated. The shares jumped 9.2 percent to $20.10 as of 4:56 p.m. in New York.

Disney said fiscal second-quarter profit rose 32 percent, beating analysts’ estimates on gains at its theme parks and film division. Its shares were little changed in late trading after adding 1.6 percent to $66.07 during the regular session.

Yahoo! Inc. climbed 3.6 percent to $26.07, its highest since June 2008. Alibaba Group Holding Ltd., China’s largest e- commerce company, had revenue that rose 80 percent and profit that doubled in the three months ended in December. Sunnyvale, California-based Yahoo owns a 24 percent in Alibaba.

Separately, the largest U.S. Web portal also recorded $273 million in gains resulting from steps taken to guard against swings in the Japanese yen, according to a regulatory filing.

Urban Outfitters Inc. climbed 4.8 percent to a record $43.66, after Wells Fargo & Co. lifted its rating on the retailer to outperform from market perform. Tiffany & Co. slumped 0.1 percent to $75.45. Wells Fargo lowered its rating on the world’s second-largest luxury jewelry retailer to market perform from outperform.

First Solar tumbled 8.9 percent to $43.43 for the biggest decline in the S&P 500. The largest U.S. solar manufacturer by shipments posted earnings, excluding one-time expenses related to restructuring, of 69 cents a share, or 6 cents less than the average of 17 analysts’ estimates compiled by Bloomberg.

Technology stocks fell 0.2 percent for the only decline among S&P 500 groups. Microsoft Corp., the world’s largest software maker, sank 1.3 percent to $33.31. Cisco Systems Inc. retreated 2.1 percent to $20.38 for the biggest drop in the Dow.

Baxter International Inc. erased 2.5 percent to $68.58. The company’s Gammagard failed to help patients with Alzheimer’s disease in a late-stage study, adding to a string of failures to develop a treatment for the most common form of dementia. Baxter will halt all studies of the therapy for mild to moderate forms of the disease and reconsider its Alzheimer’s program, the Deerfield, Illinois-based company said in a statement today.

Have a wonderful evening everyone.

Be magnificent!

This universe is like an ocean in perfect equilibrium.

A wave cannot rise in one place, without creating a hollow elsewhere.

The sum total of the energy of the universe remains identical from one end to the other.

If you take from one place, you must give elsewhere.

Swami Vivekananda, 1863-1902

As ever,

Carolann

It is better to know some of the questions

than all of the answers.

-James Thurber, 1894-1961

ab hoc et ab hac et ab illa

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