June 4, 2013 Newsletter

Dear Friends,

Tangents:

I am enjoying reading little entries every day from Rosemary Verey’s garden notes.  Here is one from the month of June:

“June ~ That wonderful garden raconteur, Canon Ellacombe, always full of sound advice and country common sense, must have been enjoying a good lunch with a bowl of scented roses on his dining-table on the day in June 1871 when he wrote: ‘Is there any other month in the year that can show such a delightful triplet as we have now – roses, strawberries and green peas?’  We all have our own June speciality without which we would feel something was missing.  My broad beans have been in advance of the peas this year and thanks to the Mediterranean weather the early potatoes and strawberries were a treat before May was out.  As for roses, the first sweetly-scented blooms have been Souvenir de la Malmaison and Zéphirine Droubin.  This is the season when it is most difficult to go away even for a night – there is so much to be done at home.  But when we do manage to get away there are always rewards.  Driving from home through to the eastern counties in late May it seemed as though England was a land of white lilacs and pink and whiter May trees; every front garden and hedgerow were heavy with blossom.  The fields of oil-seed rape glowed like brightest sunshine.  At home I wake to the cuckoo, the milking machine, or a particularly noisy aeroplane which sounds as though it is coming right into the house most mornings at 4 a.m.  When we were staying in Dorset I thought I was dreaming when peacocks calling to each other disturbed my sleep.  I remembered Ruskin’s thought ‘that the most beautiful things in the world are the most useless; peacocks and lilies for instance.’  I don’t necessarily agree with the sentiment but so far have managed to stand out against the introduction of peacocks to our garden – they may be beautiful but are also destructive.  Lilies are a different matter.” –Rosemary Verey, from A Countrywoman’s Notes.

If the only prayer you said in your whole life was, ‘Thank You’, that would suffice. – Meister Eckhart, 1260-c1327

On this day in 1984, Bruce Springsteen released Born in the USA, his 7^th studio album. –Steven Russolillo, WSJ, 06/04/13.

Sooner or later we must realize there is no station, no one place to arrive at once and for all. The true joy of life is the trip. – Robert J. Hastings, 1924-97.

Photos of the Day –June 4^th, 2013

Tens of thousands of people participate in a candlelight vigil at Hong Kong’s Victoria Park to mark the 24th anniversary of the military crackdown of the pro-democracy movement at Beijing’s Tiananmen Square in 1989. Tyrone Siu/Reuters

The Manhattan skyline is seen behind a tree on Roosevelt Island in New York. World Environment Day is celebrated annually on June 5 to raise global awareness about environmental issues and stimulate political action, according to the United Nations Environment Program. Zoran Milich/Reuters

Market Closes for June 4^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

June 4 (Bloomberg) — Canadian stocks fell for a third day, to the lowest close in more than two weeks, as consumer staples and gold producers declined and investors considered mixed trade data and prospects for Federal Reserve stimulus.

Alimentation Couche-Tard Inc. lost 1.5 percent after Seven & I Holdings Co., operator of 7-Eleven convenience stores, said it may more than double its North American outlets. Canadian Pacific Railway Ltd. fell 2.8 percent as Pershing Square Capital Management LP said it will sell part of its stake. Barrick Gold Corp. retreated 1.7 percent after saying production at its Pascua-Lama project will be delayed.

The Standard & Poor’s/TSX Composite Index fell 15.83 points, or 0.1 percent to 12,593.97 at 4 p.m. in Toronto, the lowest since May 16. The index has added 1.3 percent this year.

“Investors want more clarity on when the Fed will taper its bond purchasing program, and a lot of it is dependent on economic data, which has been mixed signals,” Anish Chopra, a fund manager with TD Asset Management Ltd., said from Toronto. He helps manage about C$204 billion ($197 billion). “When you look at gold stocks, the actual commodity has fallen quite a bit. Investors are trying to figure out where the new range is.”

Esther George, Fed Bank of Kansas City President, urged the Fed to reduce its $85 billion in monthly bond buying as the U.S. economy improves. Data today from the Commerce Department showed the trade deficit in the U.S. widened in April from a more than three year low, reflecting a rebound in imports of consumer goods and business equipment that eases concern about the degree of slowing in economic growth.

Canada’s merchandise trade deficit widened in April to C$567 million ($550 million) from a revised C$3 million shortfall in March. Canada has recorded 16 straight trade deficits, the longest run in at least a quarter century.

Consumer staples stocks fell 1.2 percent as a group, as eight of 10 industries in the S&P/TSX retreated. Trading volume was 8.8 percent higher than the 30-day average.

Alimentation Couche-Tard, which operates convenience stores and gas bars across North America and in Norway, lost 1.5 percent to C$57.70. Competitor 7-Eleven may increase its North American store count to as high as 30,000, Seven & I Holdings Chairman Toshifumi Suzuki said in an interview with Bloomberg on May 30 in Tokyo.

Barrick, the world’s largest gold producer, retreated 1.7 percent to C$21.57 after announcing production at its Pascua- Lama project on the border of Chile and Argentina won’t start in the second half of 2014 as planned, due to demands from Chile’s environmental agency. The delay will lead to higher capital costs, the company said in a filing.

Barrick has already raised the cost estimate for the project twice in the past year, to as much as $8.5 billion.

AuRico Gold Inc. slipped 2.5 percent to C$5.41 and Kinross Gold Corp. lost 1.6 percent to C$6.66 as the price of gold declined 1 percent to settle at $1,397.20 an ounce in New York.

CP Rail lost 2.8 percent to C$131.76 after William Ackman’s Pershing Square said in a statement yesterday it will cut its stake in the railway by about 29 percent by selling as many as 7 million shares over six to 12 months.

Ackman took control of the company last year, hiring Hunter Harrison as the new chief executive officer to improve operations. The stock has tripled since his 2011 investment and jumped 81 percent in the past year.

Lululemon Athletica Inc. advanced 2.1 percent to C$83.30. The company is restocking its Luon black yoga pants in stores and online this month after they were pulled in March for being too sheer, the company said yesterday in a note on their website.

US

By Whitney Kisling and Nikolaj Gammeltoft

June 4 (Bloomberg) — U.S. stocks fell, snapping a streak of 20 straight Tuesday gains for the Dow Jones Industrial Average, as economists predicted the Federal Reserve may reduce stimulus as soon as September.

Exxon Mobil Corp. and Chevron Corp. dropped 0.9 percent as energy producers slumped. Salesforce.com Inc. declined 7.9 percent after saying it will buy ExactTarget Inc. Dollar General Corp. fell 9.2 percent after reducing the top end of its full- year earnings forecast. General Motors Co. added 1.6 percent as S&P said the automaker will replace H.J. Heinz Co. in the benchmark equity gauge.

The Standard & Poor’s 500 fell 0.6 percent to 1,631.38 at 4 p.m. in New York, erasing an earlier gain of as much as 0.4 percent. The Dow slid 76.49 points, or 0.5 percent, to 15,177.54. More than 6.8 billion shares traded hands on U.S. exchanges today, 7.6 percent higher than the three-month average.

“We definitely think that equities are going to be more volatile with all the talk of Fed tapering,” David Lafferty, a Boston-based investment strategist at Natixis Global Asset Management, which manages about $785 billion, said in a phone interview. “You can see that volatility in the market jitteriness in the past days.”

The S&P 500 has alternated between gains and losses for the past seven sessions as Fed policy makers continue to debate when to begin reducing monetary stimulus.

Fed Bank of Kansas City President Esther George, who has dissented against record stimulus at every policy meeting this year, urged the central bank in a speech today to slow bond buying. San Francisco Fed President John Williams said yesterday a “modest adjustment downward” in the purchases is possible as “early as this summer.” Atlanta Fed President Dennis Lockhart said “very mixed” economic data makes him “more cautious” about a near-term reduction.

Economists at Goldman Sachs Group Inc. and Deutsche Bank AG predicted the central bank could start winding down its bond- buying program this summer. The Fed could cut $25 billion in purchases in September, even if this week’s employment data falls short of forecasts, Joseph A. LaVorgna, chief economist at Deutsche Bank Securities in New York, wrote in a note.

While Goldman Sachs’s forecast remains for Fed officials to wait until December before slowing their $85 billion of monthly asset purchases, the firm’s chief economist, Jan Hatzius, said that so-called tapering could occur sooner.

“A September tapering is certainly possible, I think that is going to depend on the data,” Hatzius said in a Bloomberg Television interview at Goldman Sachs’s Global Macro Conference in London.

Investors will get more insight into the economy’s strength this week as two reports are forecast to show growth in payrolls in May. U.S. companies added 165,000 employees last month, ADP Research Institute will say tomorrow, according to a Bloomberg News survey of economists, and government data on June 7 is predicted to show similar growth.

The Fed stimulus, and better-than-expected corporate earnings, have propelled the bull market in U.S. equities into a fifth year and driven the S&P 500 up 141 percent from a 12-year low in 2009. The gauge has fallen 2.2 percent since May 17.

The Dow’s decline today snapped a streak of gains on 20 straight Tuesdays, the longest run since at least 1900, according to data by Schaeffer’s Investment Research. The winning streak is the second-longest for any day of the week, following the Dow’s gain for 24 straight Wednesdays in 1968, the firm’s data show.

The Chicago Board Options Exchange Volatility Index, or VIX, fell 0.6 percent to 16.27. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, has lost 9.7 percent this year.

Eight of 10 groups in the S&P 500 declined today, with banks and energy producers falling at least 0.8 percent to pace losses. Chevron slid 0.9 percent to $122.96 and Exxon Mobil dropped 0.9 percent to $90.68. Bank of America Corp. slipped 1.4 percent to $13.36 for a third straight day of drops.

Salesforce.com dropped 7.9 percent to $37.80. The largest maker of online customer-management tools said it signed an agreement to buy e-mail marketer ExactTarget in a deal valued at $2.5 billion. ExactTarget jumped 53 percent to $33.69.

Dollar General slid 9.2 percent to $48.64 for the biggest drop in the S&P 500. The retailer cited “moderating” sales growth for lowering its adjusted-earnings target to as much as $3.22 per share from a previous maximum of $3.30. Analysts projected $3.28, the average of estimates compiled by Bloomberg.

Phone companies rallied 0.9 percent to pace gains among S&P 500 groups. AT&T Inc. jumped 1.7 percent to $35.67.

Monster Beverage Corp., the largest U.S. energy drink maker by sales volume, gained the most in the S&P 500, adding 10 percent to $59.60. The Corona, California-based company said yesterday gross sales the last two months increased 9 percent, an acceleration that is “encouraging,” Stifel Nicolaus & Co. said in a note today.

GM rose 1.6 percent to $34.96. The automaker will rejoin the S&P 500 after it was dropped following the company’s bankruptcy in June 2009. Heinz is being taken private by Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital in a $23 billion buyout. The change may prompt money managers to shift holdings to match the index.

An index that tracks chipmakers surged 0.5 percent for the second-biggest gain among 24 groups in the S&P 500. Intel Corp. advanced 0.5 percent to $25.36, the highest since August.

Have a wonderful evening everyone.

Be magnificent!

At our first meeting with beauty, we see it in its gaudy faded finery, jarring us with its garish tones,

its frills and flounces, even its deformed shapes.  But when we get to know it better,

the apparent discord reveals itself to us as rhythmic modulations,

At first, we isolate beauty from all that is around it; we detach it from the rest;

but in the end, we understand its harmony with the whole.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

No duty is more urgent than that of

returning thanks.

-James Allen, 1864-1912

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