June 26, 2013 Newsletter

Dear Friends,

Tangents:

The air of June is velvet with her scent,

The realm of June is splendid with her state.

Asia and Europe to our island lent

These parents of our rose,

Yet Albion took her name from her white rose

Not from her cliffs, some say.  So let it be.

We know the dog-rose, flinging free

Whip-lashes in the hedgerow, starred with pale

Shell blossom as a Canterbury Tale,

The candid English genius, fresh and pink

As Chaucer made us think,

Singing of adolescent meads in May.

That’s not the rose in her true character;

She’s a voluptuary; think of her

Wine-dark and heavy-scented of the South,

Stuck in a  cap or dangled from a mouth

As soft as her own petals.  That’s the rose!

-V. Sackville-West,

from The Garden, Summer

This is the 50^th anniversary of JFK’s ‘Ich bin ein Berliner’ speech.  The G & M today ran a piece by Andrew Cohen and also one by John Allemang which analyze parts of the speech, musing on its relevance and stature.  I found it interesting; in some aspects, the speech was quite prescient considering the current status of China and Russia, and of course the fall of the Berlin wall.  In his speech, Kennedy said, “There are some who say that communism is the wave of the future.  Let them come to Berlin.  And there are some who say in Europe and elsewhere we can work with the Communists.  Let them come to Berlin.  And there are even a few who say that it is true that communism is an evil system, but it permits us to make economic progress.  Lass’ sie nach Berlin kommen.  Let them come to Berlin.”

Photos of the Day –June 26th, 2013

Indian Sadhus, or Hindu holy men, release a sky lantern to signify world peace at the end of the annual Ambubasi festival in Gauhati, India. Anupam Nath/AP

People at Union Station in downtown Chicago interact with a 3D art installation, created by Kurt Wenner, depicting the depleted Colorado River. Scott Boehm/AP

Market Closes for June 26^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

June 26 (Bloomberg) — Canadian stocks fell, following the biggest gain in two months, as gold prices slumped to a 34-month low and phone companies plunged on concern Verizon Communications Inc. is poised to enter the market.

Rogers Communications Inc. and Telus Corp. dropped more than 8 percent after a report that Verizon made an offer for Canada’s Wind Mobile. Barrick Gold Corp., the world’s largest producer of gold, slumped 8.2 percent to a 21-year low.

Endeavour Silver Corp. retreated 8.6 percent as silver touched the lowest level since August 2010.

The Standard & Poor’s/TSX Composite Index fell 53.52 points, or 0.5 percent, to 11,951.90 at 4 p.m. in Toronto.

Trading volume was 7.1 percent higher than the 30-day average.

The benchmark gauge climbed 1.4 percent yesterday, the most since April 24, after China’s central bank said it will ensure stable money markets and better-than-forecast U.S. data bolstered optimism about the world’s largest economy. The index is down 5.5 percent this month, erasing its gain for 2013 and on track for the first quarterly loss in a year.

“If the government rules on the ability for someone like Verizon to come into the market and create competition in the wireless space, that’s a landmark change to the way these companies do business in Canada,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. He helps manage C$220 million ($210 million).

Telephone stocks plunged 6 percent as a group, the biggest decline since November 2008. Verizon has made a C$700 million offer for Wind Mobile, the Globe and Mail reported today, citing two people familiar with the situation.

Rogers Communications, Canada’s largest wireless carrier, plunged 9.2 percent to C$41.67, the most since October 2008.

Telus tumbled 8 percent to C$30.70 and BCE Inc. declined 4.1 percent to C$41.57.

Raw-materials producers sank 2.9 percent as a group to the lowest since December 2008, as 48 of 55 stocks in the gauge retreated. The index has retreated 35 percent this year.

Barrick Gold dropped 8.2 percent to C$15.50, the lowest close since 1992. OceanaGold Corp. retreated 9.2 percent to C$1.09 and Alacer Gold Corp. fell 16 percent to C$1.96 as the price of gold slipped 3.6 percent to settle at $1,229.80 an ounce in New York, the lowest settlement since August 2010.

Endeavour Silver lost 8.6 percent to C$3.08 and Fortuna Silver Mines Inc. tumbled 7.1 percent to C$2.86. Silver dropped 4.8 percent to $18.613 an ounce and earlier fell to the lowest since Aug. 24, 2010.

Bombardier Inc. fell 2.1 percent to C$4.57 after delaying the first flight of its CSeries jet to the end of July instead of June. The company said in a statement it needed additional time to install software upgrades to the aircraft.

BlackPearl Resources Inc. declined 7.6 percent to C$1.47.

The oil and gas explorer announced yesterday it was deferring construction of its Onion Lake thermal project after deciding not to proceed with a proposed $350 million term loan due to volatility in debt markets.

US

By Nikolaj Gammeltoft and Katie Brennan

June 26 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as China’s cash crunch eased and slower-than-forecast economic growth fueled speculation the Federal Reserve will maintain stimulus.

Citigroup Inc. and Bank of America Corp. rose at least 0.7 percent as financial stocks rallied. Boeing Co. and Microsoft Corp. jumped more than 2 percent to pace gains in the the Dow Jones Industrial Average. Barrick Gold Corp. and Newmont Mining Corp. fell more than 5.9 percent, leading a selloff in precious- metal producers as gold and silver slumped to 34-month lows.

The S&P 500 increased 1 percent to 1,603.26 at 4 p.m. in New York. The index has rallied 1.9 percent over two days, after slumping to a nine-week low on June 24. The Dow climbed 149.83 points, or 1 percent, to 14,910.14 today. Almost 6.6 billion shares changed hands today on U.S. exchanges, about in line with the three-month average.

“We’ve had a relatively sharp selloff over a couple of days and we’re getting a bounce here,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.6 billion in assets, said in a phone interview. “Weaker economic numbers may be met with favor by the market because it can suggest that the Fed can slow the tapering process or not taper if the economy looks weaker than expected.”

Gross domestic product expanded at a revised 1.8 percent annualized rate from January through March, down from a prior estimate of 2.4 percent, figures from the Commerce Department showed today in Washington. Household purchases, which account for about 70 percent of the economy, were revised to a 2.6 percent advance compared with the 3.4 percent gain estimated last month.

The S&P 500 climbed 1 percent yesterday after reports on durable-goods orders, new house sales and consumer confidence bolstered confidence in the economy. The gauge has still retreated 4 percent from a record high reached May 21 as Federal Reserve Chairman Ben S. Bernanke said the central bank may start paring quantitative-easing measures this year if the recovery continues to improve in line with forecasts.

Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 147 percent from its March 2009 low.

Fed Bank of Richmond President Jeffrey Lacker said he expects the U.S. expansion to remain “sluggish” for “a couple more years,” and today’s downward revision to first-quarter growth is in line with his outlook. Lacker, who doesn’t vote on the Federal Open Market Committee this year, said he sees growth of about 2.25 percent in 2014.

“The economy is telling us this is about all we’re capable of right now,” Lacker said today in a Bloomberg Television interview with Peter Cook. “We’re going to continue to get growth at a fairly disappointing rate going forward.”

Stocks advanced in Asia and Europe today as the cost of locking in China’s interest rates slid for a fourth day and money-market rates fell. The People’s Bank of China said in a statement yesterday that it has provided financing to some financial institutions to stabilize interbank lending rates. The central bank added that it will use short-term liquidity operations and existing loan-facility tools to ensure steady markets.

“The PBOC reiterated overnight that it is comfortable with its current stance on liquidity and stands ready to avoid a collapse, but it is not keen to give in to demand from banks,” said Ioan Smith, a strategist at Knight Capital Europe Ltd. in London. “This may have helped markets to some degree, but there will be a lot of posturing over the next few days as investors have the month end in their sights.”

The S&P 500 has lost 1.7 percent in June, paring its advance in the second quarter to 2.2 percent. It is on course to end a streak of seven monthly advances, the longest run since September 2009. The Chicago Board Options Exchange Volatility Index, or VIX, retreated 6.8 percent to 17.21. The benchmark gauge for U.S. stock options surged to the highest level since Dec. 28 last week amid concern the Fed may begin tightening monetary policy.

All 10 industries in the S&P 500 increased today, with health-care companies climbing the most. UnitedHealth Group Inc. jumped 1.7 percent to $64.78 while Johnson & Johnson rallied 1.9 percent to $86.99. Microsoft increased 2 percent to $34.35 and Boeing added 2.1 percent to $100.75.

Financial shares advanced 1 percent. Citigroup gained 1.3 percent to $47.61, and Bank of America added 0.7 percent to $12.76.

Pandora Media Inc. gained 8 percent to $17.73. Cowen & Co. analyst John Blackledge boosted his rating of the biggest online radio service to outperform, the equivalent of buy, from market perform, following news that the number of U.S. listeners in cars topped 2.5 million.

Hartford Financial Services Group Inc. added 2.8 percent to $29.99. The insurer boosted its plan for buybacks and lifted its dividend by 50 percent after Chief Executive Officer Liam McGee sold assets to simplify the company.

Teradata Corp. surged 3.9 percent to $50.40. Morgan Stanley said shares of the database management company represent a buying opportunity after a recent slump, citing improving demand for data warehouses. The stock has fallen 19 percent this year, compared to a 12 percent increase in the S&P 500.

Barrick Gold, the world’s largest gold miner, dropped 8.3 percent to $14.78, the lowest in a decade. Newmont slid 5.9 percent to $27.22. Materials producers had the weakest performance among 10 S&P 500 groups as gold and silver tumbled after yesterday’s U.S. economic data bolstered the case for the Fed to reduce stimulus.

Apollo Group Inc. sank 10 percent to $17.39 for the biggest drop in the S&P 500. The largest U.S. for-profit college said earnings in the fiscal third quarter fell 40 percent as new enrollment tumbled.

Apple Inc. slid 1.1 percent to $398.07, the lowest level since April. The maker of iPhones and iPads has fallen 14 percent from a May 8 peak, and is down 43 percent from a record high reached in September.

Customers of American equity mutual funds withdrew money for the fifth straight week, the longest stretch since Jan. 2, as stocks tumbled amid signs the Fed may scale back its unprecedented stimulus.

Mutual funds that invest in U.S. shares had $463 million in outflows in the five days that ended with the Fed’s policy statement on June 19, according to data from Washington-based Investment Company Institute released today. Redemptions since May 16 total $7.3 billion.

Have a wonderful evening everyone.

Be magnificent!

Like the silkworm you have built a cocoon around yourself.  Who will save you?

Burst your own cocoon and come out as the beautiful butterfly, as the free soul.

Swami Vivekananda, 1863-1902

As ever,

Carolann

People may hear your words, but they feel

your attitude.

-John C. Maxwell, 1947-

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