May 23, 2013 Newsletter

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be sending the newsletter on her behalf.

I was recently reading the Globe and Mail and came across this article “Images from A Map of the World: The World According to Illustrators & Storytellers”.  The maps show how many ways there are to understand the world and each person’s place in it.  I wanted to share one of my favorite maps with you and have also include the link should you wish to view the others: http://www.theglobeandmail.com/life/home-and-garden/decor/6-maps-to-change-how-you-look-at-the-world/article11948270/

Joâo Lauro Fonte’s typographic map of London, created for Converse, is a brilliant example of the creative ways to view geography. The red streak of the Thames adds a striking pop of colour to what might otherwise be slightly monotonous.

On this day in…

1879 – The first U.S. veterinary school was established by Iowa State University.

1895 – The New York Public Library was created with an agreement that combined the city’s existing Astor and Lenox libraries.

1900 – Civil War hero Sgt. William H. Carney became the first African American to receive the Medal of Honor, 37 years after the Battle of Fort Wagner.

1922 – The play “Abie’s Irish Rose” opened in New York City.

1922 – “Daylight Saving Time” was debated in the first debate ever to be heard on radio in Washington, DC.

1938 – “LIFE” magazine’s cover pictured Errol Flynn as a glamour boy.

“Our lives begin to end the day we become silent about things that matter.” – Martin Luther King, Jr.

Photos of the day – May 23^rd, 2013

A house built on a rock on the river Drina is seen near the western Serbian town of Bajina Basta. The house was built in 1968 by a group of young men who decided that the rock on the river was an ideal place for a tiny shelter, according to the house’s co-owner. Marko Djurica/Reuters

Solar Impulse, piloted by André Borschberg, takes flight during the second leg of the 2013 Across America mission, at dawn from Sky Harbor International Airport in Phoenix. The plane’s creators, Bertrand Piccard and Borschberg, said the trip is the first attempt by a solar airplane capable of flying day and night without fuel to fly across America. Matt York/AP

Market Closes for May 23^rd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary

Canada

By Eric Lam

May 23 (Bloomberg) — Canadian stocks fell for the first time in five days amid a global equity selloff as China’s manufacturing industry unexpectedly contracted.

Teck Resources Ltd., Canada’s largest diversified miner, and First Quantum Minerals Ltd. fell at least 2.8 percent as base metal prices declined. Suncor Energy Inc. lost 0.6 percent as crude retreated for a third day. Toronto-Dominion Bank, Canada’s second-largest bank, dropped 0.5 percent after reporting adjusted earnings that missed estimates. Kirkland Lake Gold Inc. and Kinross Gold Corp. rallied more than 1.9 percent as gold snapped two days of losses.

The Standard & Poor’s/TSX Composite Index fell 94.41 points, or 0.7 percent, to 12,658.09 at 4 p.m. in Toronto. The benchmark equity gauge has gained 1.8 percent this year. Trading was 15 percent below the 30-day average.

“Manufacturing data tells you a lot about where markets are going, and they’ve been weak for some time,” said John Stephenson, a fund manager with First Asset Investment Management Inc. in Toronto. Stephenson helps manage C$2.7 billion ($2.6 billion) at the firm. “Seeing the slowdown in the China data confirms that. It’s a negative for stocks.”

China manufacturing is contracting in May for the first time in seven months. The preliminary reading of 49.6 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final 50.4 for April and the 50.4 median estimate in a Bloomberg News survey. A reading above 50 indicates expansion.

The MSCI All-Country World Index slumped 1.3 percent for the biggest decline since April. Japan’s Topix Index plunged 6.9 percent, the most since March 2011. The S&P 500 lost 0.3 percent.

“It’s a combination of the China data and the reaction that’s happening in the rest of the world,” Anish Chopra, a fund manager with TD Asset Management Ltd., said from Toronto.

He helps manage C$204 billion with the firm. “Japan has fallen quite a bit and it’s rippled through the rest of the markets worldwide. The Japanese equity market has been up substantially year-to-date, so a pullback seems reasonable.”

All 10 groups in the S&P/TSX fell, with industrial and health-care stocks dropping at least 1.2 percent.

Teck Resources dropped 4.3 percent to C$28.20 and First Quantum slid 2.8 percent to C$18.69 as raw-materials producers declined 0.9 percent as a group. Copper, used in building construction, fell 2.3 percent to settle at $3.304 a pound in New York, the biggest decline since May 1. Aluminum, nickel, lead, tin and zinc prices were also lower in London.

Suncor, Canada’s largest oil producer by market value, lost 0.6 percent to C$32.32. Athabasca Oil Corp. dropped 2.7 percent to C$6.42 and Penn West Petroleum Ltd. fell 2.1 percent to C$10.14. The price of crude retreated 3 cents to settle at $94.25 a barrel in New York, paring earlier losses of as much as 2.2 percent.

TD Bank dropped 0.5 percent to C$83.65 after reporting adjusted second-quarter earnings of C$1.90 a share, missing the C$1.91 average estimate of 13 analysts compiled by Bloomberg.

Kirkland Lake Gold rallied 5.7 percent to C$4.46 and Kinross Gold Corp. climbed 1.9 percent to C$6.02. The precious metal’s price advanced 1.8 percent to settle at $1,391.80 an ounce in New York, the biggest gain since April 25.

US

By Stephen Kirkland and Lu Wang

May 23 (Bloomberg) — The Standard & Poor’s 500 Index recovered most of a 1.2 percent morning slide as Hewlett-Packard Co. led gains in technology shares. Global equities slid, with Japanese shares plunging the most since the aftermath of the Fukushima disaster. Copper sank and the yen rallied.

The S&P 500 fell less than 0.3 percent at 4 p.m. in New York after decreasing 0.8 percent yesterday. The MSCI All- Country World Index declined 1.3 percent and Japan’s Topix Index slumped 6.9 percent, the most since March 2011. The yen rose against its 16 major peers, gaining 1.3 percent to 101.84 per dollar. Ten-year Treasury yields lost 2.5 basis points to 2.01 percent after topping 2 percent yesterday for the first time since March. Copper sank more than 2 percent in London, leading commodities lower.

Hewlett-Packard jumped 17 percent, the most since 2001, as cost cuts helped its earnings and forecast top estimates. The drop in global stocks came as factory output in China shrank for the first time in seven months and overseas investors reacted to growing concern the U.S. Federal Reserve will scale back its monetary stimulus program. Fed Bank of St. Louis President James Bullard said today he wants to continue the current pace of bond purchases as long as falling inflation is a concern.

The swing in stocks “really shows the nervousness in the marketplace that at any given time a piece of exogenous news can quickly change the psychology,” Rick Bensignor, head of trading strategy at Wells Fargo Securities LLC in New York, said in a phone interview. “But you’re going to have your confirmed bulls that will use any pullbacks at all to buy. There is enough of the Street that thinks that the S&P 500 has a few more hundred points to go.”

While Fed Chairman Ben S. Bernanke said in prepared remarks to Congress yesterday that a premature withdrawal of stimulus would put the economic recovery at risk, he later told lawmakers that the central bank will reduce the flow of purchases as the outlook for the labor market improves.

The S&P 500 lost about 1.1 percent in two days, its biggest retreat in more than a month. Utilities in the index tumbled 2.4 percent in the past two sessions as yesterday’s jump in bond yields reduced demand for their dividends. Utilities pay 3.8 percent of their price in dividends for the second highest yield among 10 groups, according to data compiled by Bloomberg.

NYSE Euronext let stand trades that sent American Electric Power Co. and NextEra Energy Inc. down at least 54 percent, while labeling them as “aberrant” and excluding them from records showing the stocks’ lows of the day.

American Electric Power fell as much as 54 percent to $22.28 a share, according to data compiled by Bloomberg. The shares rebounded, trimming the loss to 0.6 percent and closing at $48.28. NextEra Energy, another electricity supplier, sank as much as 62 percent to $30.37 before bouncing back to pare the day’s drop to 1.2 percent and closing at $78.22.

Yesterday’s 0.8 percent drop in the S&P 500 may signal a “garden variety correction” that will result in a 6 percent to 9 percent retreat in the index, according to Oppenheimer & Co. technical analyst Carter Worth. The drop met the requirements of being a “key reversal day,” as well as an “outside day” because both the session’s high and low points exceeded those of the previous day. Outside days and key reversal days signal changes in direction more often than not, he wrote.

U.S. stocks pared losses today as government data showed sales of new homes climbed 2.3 percent to a three-month high of 454,000 homes at an annualized pace from a 444,000 rate in March that was faster than first estimated. The median estimate of 76 economists surveyed by Bloomberg called for a gain to 425,000.

The median selling price rose to a record on sales of more expensive properties. A gauge of 11 homebuilders in S&P indexes jumped 1 percent.

Jobless claims decreased more than forecast, falling by 23,000 to 340,000 in the week ended May 18, Labor Department figures showed. The median forecast of 50 economists surveyed by Bloomberg called for a drop to 345,000.

The Stoxx Europe 600 Index retreated from the highest level in almost five years, sliding 2.1 percent for the biggest drop since July. Trading volume was 24 percent more than the 30-day average as all 19 industry groups retreated. HSBC Holdings Plc, Europe’s biggest bank, sank 3.4 percent. Daimler AG, the world’s third-largest maker of luxury vehicles, lost 3.3 percent.

The drop in Japanese shares erased $314 billion in market value amid record volume, shaking bulls who pushed the Topix Index to five-year highs and highlighting their vulnerability to shocks at home and abroad.

This year’s best performing major equity gauge plunged after government bond yields rose to the highest levels in a year and Chinese manufacturing missed estimates. The slide triggered a halt in Osaka-traded index futures and cut the measure’s 2013 advance to 38 percent from 48 percent. Gains for the Topix remain more than twice as big as the S&P 500’s this year.

JPMorgan Asset Management and Pinebridge Investments LLC said the selloff was overdue after $1.2 trillion was added to equities on speculation Prime Minister Shinzo Abe and the Bank of Japan would end two decades of deflation. The Topix traded at as much as 24.8 times earnings this week, higher than 86 percent of days since 2004, data compiled by Bloomberg show. Mark Matthews, who helps oversee $282 billion as head of Asia research at Bank Julius Baer & Co., said the rally will resume.

For the first time since April 2005 every company in the Nikkei 225 Stock Average fell, dragging the gauge down 7.3 percent. Nikkei 225 futures traded in Osaka were up 0.1 percent in the May 24 session.

The MSCI Emerging Markets Index sank the most in 10 months, losing 2 percent. Russia’s Micex Index slid 3.6 percent, the biggest drop in a year, while Brazil’s Ibovespa closed little changed.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 2.8 percent, the most in six weeks.

The preliminary reading of 49.6 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final 50.4 for April. The number was also below the 50.4 median estimate in a Bloomberg News survey of 13 analysts. A reading above 50 indicates expansion.

West Texas Intermediate oil closed little changed in New York, slipping 3 cents to $94.25 a barrel, while copper dropped 2.3 percent in London. China is the biggest buyer of industrial metals and energy. The S&P GSCI gauge of commodities declined 0.2 percent, the third consecutive drop. Gold futures climbed 1.8 percent to $1,391.80 an ounce.

The yen climbed as much as 2.3 percent against the dollar, the most since Feb. 25. It reached a 4 1/2 year low of 103.74 per dollar yesterday. Japan’s currency gained 0.7 percent to 131.73 per euro.

The Swiss franc pared gains after climbing as much as 1.3 percent against the euro, the most since Sept. 5, 2011, the day before the Swiss National Bank imposed its currency floor.

Spain’s 10-year bond yield climbed 11 basis points to 4.29 percent. Borrowing costs increased as the government sold 4.08 billion euros ($5.26 billion) of debt maturing in 2016, 2018 and 2026.

Have a great evening everyone!

Be magnificent!

“Take up one idea. Make that one idea your life – think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success.” – Swami Vivekananda

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5838