August 12, 2013 Newsletter

Dear Friends,

Tangents:

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

I have always loved photography, but never been quite good at it so over the past couple weeks I have been speaking with some friends to get some tips on how to take a good photo.  One friend told me “ It’s about the photographer, not the camera”.  When I asked him what that meant, he told me that a picture is directed by the photographer, meaning they pick the composition, decide on the exposure and also decide on the moment the picture is captured.  I thought about what he had told me, which made sense and decided to do some research on my own. I came across the Kodak website, which gave beginner photographers some tips on how to take a good picture:

1) Look your subject in the eye

2) Use a plain background

3) Use flash outdoors

4) Move in close

5) Move it from the middle

6) Lock the focus

7) Know your flash’s range

8 ) Watch the light

9) Take some vertical pictures

10) Be a picture director

“A good photographer will make art with a cheap camera; the same cannot be said for a bad photographer with expensive gear.” Unknown

Photos of the Day –August 12^th, 2013

In this long exposure photo, a streak appears in the sky during the annual Perseid meteor shower above a roadside silhouette of a Spanish fighting bull, conceived decades ago in Spain as highway billboards, in Villarejo de Salvanes, central Spain in the early hours. Paul White/AP

France’s Renaud Lavillenie competes in the men’s pole vault final at the World Athletics Championships in the Luzhniki stadium in Moscow, Russia. David J. Phillip/AP

“Try to learn something about everything and everything about something.” – Thomas Henry Huxley

Market Closes for August 12^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 12 (Bloomberg) — Canadian stocks rose after three weeks of losses as China boosted purchases of precious metals and BlackBerry Ltd.’s board said it is considering selling the company.

BlackBerry jumped 10 percent, the most since March, as it announced it will form a special board committee to consider options for the company including joint ventures and partnerships. Barrick Gold Corp. and Eldorado Gold Corp. surged at least 4.1 percent as the metal capped the longest rally in four weeks. Silvercorp Metals Inc. and Silver Wheaton Corp. advanced more than 5.2 percent as silver prices gained. Alliance Grain Traders Inc., a seller of specialty crops such as lentils, gained 5.1 percent after reporting better-than-estimated earnings.

The Standard & Poor’s/TSX Composite Index rose 52.14 points, or 0.4 percent, to 12,594.27 at 4 p.m. in Toronto.

Trading volume was 8.3 percent higher than the 30-day average at this time of the day.

“You’re starting to see a bit of outperformance in the TSX on the back of strength in China,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. His firm manages C$220 million ($214 million). “The Chinese are aggressively buying precious metals, so gold import numbers were quite healthy and that’s leading to a rally in materials.”

China’s domestic purchases of gold jumped 54 percent to 706.4 metric tons in the first half of 2013, compared with a year earlier, the China Gold Association said in a report today.

Buying of gold-bar purchases surged 87 percent and jewelry demand increased 44 percent.

Barrick Gold advanced 4.1 percent to C$18.74 and Eldorado Gold surged 7.6 percent to C$8.76 as all 24 companies in the S&P/TSX Gold Index advanced. The gauge jumped 5.8 percent to 1,649.24, its highest close since July 23. Gold prices rose 1.7 percent to settle at $1,334.20 an ounce in New York. Gold climbed for a fourth straight day, the longest rally since July 11.

Silvercorp Metals jumped 10 percent to C$3.52 and Silver Wheaton added 5.2 percent to C$25.26. Silver for September delivery soared to a seven-week high.

Torex Gold Resources Inc. surged 12 percent to C$1.57.

Killian Charles, an analyst at Industrial Alliance Securities Inc., began coverage of the stock today with a buy rating and a price target of C$1.80.

The company’s Morelos gold mine in Mexico is expected to begin production in 2015 and “will work in any gold price environment,” Charles said in a note to clients.

BlackBerry, based in Waterloo, Ontario, rose 10 percent to C$11.10, the biggest gain since March 13. The announcement today builds on a move last year when BlackBerry hired JPMorgan Chase & Co. and RBC Capital Markets to advise the company on strategic alternatives. At the time, Chief Executive Officer Thorsten Heins said a sale wasn’t the “main direction” he was considering. Prospects have worsened since then, with the new BlackBerry 10 — the linchpin of a turnaround strategy — meeting scant demand.

Aimia Inc. climbed 4.1 percent to C$15.93, the highest close in three months. The loyalty program manager said today Toronto-Dominion Bank will become the primary credit-card issuer for its Aeroplan loyalty cards.

The deal ends a 22-year allegiance between Aimia and Canadian Imperial Bank of Commerce. CIBC didn’t match TD Bank’s June conditional agreement with Aimia by an Aug. 9 deadline and is now negotiating a sale of half its Aerogold credit-card portfolio to the other bank.

CIBC gained 2 percent to C$78.47 while TD Bank slipped 0.3 percent to C$86.41.

Alliance Grain Traders increased 5.1 percent to C$16.48, the most in three months. The Regina, Saskatchewan-based company, which buys, processes and sells food ingredients including pasta and rice, reported second-quarter adjusted earnings of 24 Canadian cents a share, ahead of analysts’ estimates for 16 cents. The company said it is “optimistic” as it heads into the North American harvest period.

US

By Lu Wang and Nick Taborek

Aug. 12 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index to its fifth drop in six sessions, as data showed a slowdown in Japan’s economic growth and investors awaited tomorrow’s report on America’s retail sales.

Tesla Motors Inc. declined 3.7 percent as Lazard Capital Markets LLC downgraded the carmaker’s shares. Sysco Corp. fell 5.8 percent after results missed analysts’ estimates. Apple Inc. advanced 2.8 percent after winning a patent-infringement battle against Samsung Electronics Co. BlackBerry Ltd. rallied 10 percent as the company’s board said it is exploring alternatives, including a possible sale.

The S&P 500 fell 0.1 percent to 1,689.47 at 4 p.m. in New York, extending its loss from a record high to 1.2 percent. The Dow Jones Industrial Average declined 5.83 points, or less than 0.1 percent, to 15,419.68. About 5 billion shares changed hands on U.S. exchanges, 20 percent below the three-month average.

“We have growth frustratingly low offset by discount rates that are unnaturally low,” Joe Costigan, director of equity research at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. His firm oversees $6.7 billion. “As long as that’s the case, the market will stay locked at least into September and you’ll see days like this with low volume and really not a lot of conviction.”

The S&P 500 declined 1.1 percent last week, its biggest drop in seven weeks, and the Dow dropped 1.5 percent in the period, snapping a string of six weekly advances, amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens.

The S&P 500 has rallied 18 percent so far in 2013 and closed at a record 1,709.67 on Aug. 2. The index is trading at 15.3 times projected earnings, up from 13.1 times on the first trading day of this year. That compares with a five-year average of 13.9 times, data compiled by Bloomberg show.

Better-than-estimated corporate earnings and central bank stimulus, including record-low borrowing rates, have helped equities rally, with the S&P 500 surging more than 150 percent from its bear-market low in 2009.

Of the 450 companies in the S&P 500 that have reported quarterly results this period, 72 percent have exceeded analysts’ profit estimates, with earnings rising 2.8 percent, data compiled by Bloomberg show.

“We’ve seen a rally with a multiple expansion and not necessarily earnings growth,” Jeff Schwarte, a money manager who helps oversee about $290 billion in Des Moines, Iowa, at Principal Global Investors, said by phone. “We need to see earnings, we need to see some resolution on tapering.”

Investors have been scrutinizing economic data to determine whether growth is strong enough for the Fed to curtail its monthly bond buying. A Commerce Department report tomorrow will show that retail sales rose for a fourth consecutive month in July, economists surveyed by Bloomberg predicted. A Fed release on Aug. 15 may show factories, mines and utilities increased their output in July. On Aug. 16, reports will probably show that housing starts and building permits rebounded last month.

In Asia, government reports showed Japan’s gross domestic product growth slowed from the first quarter to a pace below economists’ forecasts while Chinese factor production increased a higher-than-expected 9.7 percent in July.

Stock swings have narrowed. The S&P 500’s average intraday price changes averaged about 0.7 percent over the past 30 days, the smallest fluctuation since a comparable period ended Feb. 21, data compiled by Bloomberg.

The Chicago Board Options Exchange Volatility Index, or VIX, retreated 4.5 percent to 12.81. The equity volatility gauge reached its 2013 peak in June and has since dropped 37 percent.

Seven of 10 main groups in the S&P 500 fell today, with utility and energy stocks sinking at least 0.5 percent to lead the retreat.

JPMorgan Chase & Co. lost 0.8 percent to $54.09, the stock’s seventh straight decline. Prosecutors are weighing penalties for the bank, including a fine and a reprimand, related to allegations staff tried to conceal losses last year, the New York Times reported. The U.S. may announce charges as early as this week against former London-based employees, a person familiar with the matter said.

Tesla slumped 3.7 percent to $147.38. Investors are pricing in the company’s development into a successful premium manufacturer similar to Porsche Automobil Holding SE over the next decade, and any “execution issues” with its electric car models could send the shares down to $100, Aditya Satghare, an analyst with Lazard, wrote in a note to clients.

Sysco fell 5.8 percent, the most in the S&P 500, to $32.99.

The food distributor said it will not meet its fiscal 2015 earnings forecast as weak restaurant traffic hurt profit.

Apple advanced 2.8 percent to $467.36, snapping a four-day losing streak. The U.S. International Trade Commission on Aug. 9 said Samsung Electronics infringed two Apple patents and issued an order banning imports of products using the iPhone maker’s multitouch features and headphone jack detection.

F5 Networks Inc. gained 3.1 percent to $92.70. Barclays Plc analyst Ben Reitzes upgraded the Internet software provider to overweight from equalweight, citing improved prospects in the company’s networking business and “significant” opportunities to provide security solutions.

BlackBerry jumped 10 percent, the most since March 11, to $10.78. The mobile device maker said it has formed a special committee to explore options including a sale of the company or a joint venture. Its shares slumped 18 percent this year through the end of last week.

Newmont Mining Corp., the world’s second-biggest gold producer, gained 4.7 percent to $30.90 for the largest increase in the S&P 500, as the precious metal rose a fourth day, the longest rally in almost a month. Barrick Gold Corp, Newmont Mining’s bigger rival, added 4.5 percent to $18.21.

J.C. Penney Co. gained 2.3 percent to $13.17. The stock erased an earlier decline people familiar with the situation said shareholders Soros Fund Management LLC and Glenview Capital Management LLC support the current management team in a dispute between Bill Ackman and Chairman Tom Engibous over the company’s leadership.

Ackman, whose Pershing Square Capital Management LP owns about 18 percent of the retailer’s shares, asked his fellow J.C. Penney directors last week to expedite the search for a new chief executive officer and to replace Engibous. The stock tumbled 5.8 percent Aug. 9 and has lost 33 percent this year.

Have  a wonderful evening everyone.

Be magnificent!

As ever,

“I find that the harder I work, the more luck I seem to have.”

– Thomas Jefferson

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.