August 19, 2013 Newsletter

Dear Friends,

Tangents:

Seattle Opera did not disappoint with its latest Ring Cycle, beginning with Das Rheingold last Monday night, followed by Die Walküre, Siegfried and the final opera we attended on Saturday evening, Götterdämmerung.  The first Ring cycle was performed in Seattle in 1975 and has been performed every four years since.  Der Ring des Nibelungen was first performed as a cycle in August 1876 at the Festspielhaus in Bayreuth, Germany.  It’s a lot of opera for a week, but it is amazing theatre.  Conductor Asher Fisch is a true genius.  He stated in his “Welcome” to the audience in the program, “It is my goal to give you an incredible sonic experience to illuminate each dramatic moment of these operas with music full of meaning and beauty.  I want you to have an experience you can’t possibly get in any digital form.  And if you are new to Wagner, it is my wish that you experience something akin to what I did 20 years ago when I first discovered Wagner.  Growing up as I did in Israel, I hadn’t heard much Wagner until I moved to Berlin to work for Daniel Barenboim at the Staatsoper.  At that point, Wagner swept me away like a tidal wave…”   Well, Asher Fisch, you swept us away like a tidal wave.

Anniversary:  On August 19^th, 2004, Sergey Brin and Larry Page, took their search engine company, Google, public.  The shares closed that day at $100.34 that day.  They closed at $865.65 today.

Photos of the Day –August 19^th, 2013

Enzo the dog rests after Steven Tillack and Karen Sundstrom won their division with a 1960 Alfa Romeo Superflow IV Pinin Farina Coupe during the Concours d’Elegance on the 18th fairway of the Pebble Beach Golf Links in Pebble Beach, California. The Concours tops a week-long celebration of automobiles and car culture on the Monterey Peninsula. Michael Fiala/Reuters

Members of an international religious movement called the White Brotherhood perform a ritual dance near Babreka lake, in Rila Mountain, 62 miles south of Sofia, as part of celebration of their New Year. The teaching of the movement, whose founder is Bulgarian Peter Danov, is a synthesis of Christianity and Hinduism with a heavy emphasis on brotherly love, a healthy diet and living in harmony with nature. Stoyan Nenov/Reuters

Market Closes for August 19^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 19 (Bloomberg) — Canadian stocks fell, for the biggest drop since June, as a decline in gold and silver spurred losses in metal producers and energy companies slumped the most in eight weeks.

B2Gold Corp. plunged 13 percent to pace declines among gold mining companies after announcing a $225 million note offering.

Endeavour Silver Corp. and Silvercorp Metals Inc. slipped at least 2.9 percent as the price of the metal snapped the longest winning streak since January. Penn West Petroleum Ltd. and Bonterra Energy Corp. retreated more than 1.2 percent as crude fell.

The Standard & Poor’s/TSX Composite Index fell 148.90 points, or 1.2 percent, to 12,588.02 at 4 p.m. in Toronto. The index has gained 1.2 percent this year, the third-worst performance among developed markets ahead of Singapore and Hong Kong.

“Nothing goes up forever, the gold commodity had a good run as well as the stocks last week and they’re taking a bit of a pause today,” said John Kinsey, a fund manager with Caldwell Securities Ltd. in Toronto. The firm manages about $1 billion.

“The financials are down today, with the usual headwinds of mortgages and housing still present. It’s been a case of going up one day and then back down the next, and that’s going to continue to the end of the month when the banks report earnings.”

Financial stocks declined 0.9 percent as all 10 industries in the S&P/TSX retreated. Trading volume was 17 percent lower than the 30-day average at this time of the day.

Bank of Montreal lost 0.7 percent to C$63.96 and Bank of Nova Scotia slipped 0.2 percent to C$58.12. The two banks will report their third-quarter earnings on Aug. 27, the first of Canada’s major banks to do so for this period.

BMO is expected to report adjusted earnings of C$1.53 a share and Scotiabank C$1.31 a share, according to analysts surveyed by Bloomberg.

Penn West Petroleum sank 4.5 percent to C$11.78 and Canadian Natural Resources Ltd. fell 2.6 percent to C$30.67 as 55 of 58 members of the S&P/TSX Energy Index fell. The energy index lost 1.7 percent, the biggest decline since June 20.

Crude fell for the first time in seven days as the threat of a storm in the Gulf of Mexico dissipated, removing a risk to oil and gas production. Crude for September delivery fell 0.3 percent to $107.10 a barrel in New York.

B2Gold sank 13 percent to C$2.95, the biggest loss in almost five years. The gold producer, with mines in Nicaragua, Colombia and Uruguay, said it was raising the debt for “general corporate purposes.”

Silvercorp Metals lost 5.1 percent to C$3.75 and Endeavour Silver fell 2.9 percent to C$5.28 as silver for December delivery retreated 0.7 percent to $23.22. The price of silver advanced for seven straight days before today.

Bombardier Inc. dropped 1.8 percent to C$4.79. Cameron Doerksen, analyst with National Bank Financial, said in a note to clients that the entry into service of the company’s CSeries jet may be pushed into early 2015.

Utilities stocks plunged 2.8 percent for a three-year low, as 10 of 11 companies in the group declined amid a rise in bond yields. Algonquin Power & Utilities Corp. fell 4.3 percent to C$6.64 and TransAlta Corp. retreated 2.1 percent to C$13.84.

The S&P/TSX Utilities Index yielded 5 percent in dividends in the second quarter, compared with 3.2 percent for the S&P/TSX, data compiled by Bloomberg show.

U.S. Treasury yields jumped to the highest level since 2011 today amid speculation the Federal Reserve will trim its bond purchasing program next month.

US

By Alex Barinka and Nikolaj Gammeltoft

Aug. 19 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its first four-day decline of the year, after energy shares dropped and Treasury yields jumped to a two-year high as investors awaited signals this week on the Federal Reserve’s stimulus plans.

Apache Corp. tumbled 4.6 percent, leading energy stocks to the biggest decline among 10 groups in the S&P 500 as crude prices fell. Exxon Mobil Corp. dropped for the 18th time in 19 days. Intel Corp. gained 1.7 percent after Piper Jaffray Cos. raised its rating on the shares. Edwards Group Ltd. surged 18 percent after Atlas Copco AB agreed to buy the company for $1.2 billion.

The S&P 500 dropped 0.6 percent to 1,646.06 at 4 p.m. in New York, the lowest level since July 8. The Dow Jones Industrial Average slipped 70.73 points, or 0.5 percent, to 15,010.74. About 5.3 billion shares exchanged hands on U.S. exchanges today, 16 percent below the three-month average. The benchmark 10-year yield jumped to 2.88 percent.

“We are still in that dead zone where there is a void of catalysts — no Fed, no earnings, summer holidays, etc.,” Jeff Saut, the St. Petersburg, Florida-based chief investment strategist at Raymond James & Associates, wrote in a note to investors today. He helps oversee about $400 billion “I think rallies are for selling on a trading basis, but remain quite bullish on the longer-term.”

The S&P 500 declined 2.1 percent last week and the Dow average lost 2.2 percent, the largest weekly drop in 14 months, amid speculation the Fed will pare its bond-purchase program as the economy recovers.

The Federal Open Market Committee will release minutes of its July 30-31 meeting on Aug. 21. Investors and analysts will be looking for clues on when central bankers plan to reduce their $85 billion in monthly asset purchases. Officials will begin to trim buying at their Sept. 17-18 meeting, according to 65 percent of economists surveyed by Bloomberg on Aug. 9-13.

Central bankers and policy makers meet in Jackson Hole, Wyoming, from Aug. 22 to Aug. 24 to discuss the global economy and monetary policy.

Fed stimulus helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. Benchmark indexes reached record highs on Aug. 2. The S&P 500 has dropped 3.7 percent since then, and is trading below its average price over the past 50 days.

Some 41 S&P 500 stocks had their 14-day relative-strength index below 30 at the end of last week, the most since Nov. 16, Bloomberg data show. RSI measures the degree to which gains and losses outpace each other and some analysts who watch charts to predict market moves consider a reading lower than 30 as indicating the stock has fallen too far too fast.

Of the 464 companies in the S&P 500 that have reported earnings so far, 72 percent have topped analysts’ estimates, according to data compiled by Bloomberg. About 55 percent have exceeded revenue projections. About 23 S&P 500 companies are scheduled to release quarterly results this week.

“This is the difficult period of a rest area for the market, which is the time right after earnings and just before some major policy debates,” Chris Hyzy, who helps oversee about $325 billion as chief investment officer of U.S. Trust, said in a phone interview.

The Chicago Board Options Exchange Volatility Index, or VIX, climbed 5.1 percent today to 15.10. While the gauge has advanced 28 percent since a low on Aug. 5, it remains 16 percent lower for the year.

Energy shares had the largest decline today, dropping 1.5 percent. West Texas Intermediate crude dropped for the first time in seven days as the threat of a storm in the Gulf of Mexico dissipated, removing a risk to oil and gas production in the area. Oil also slid because demand from U.S. refineries is declining as the peak gasoline-use period comes to an end. WTI capped the longest rising streak since April on Aug. 16 amid unrest in Egypt.

Apache fell 4.6 percent to $75.37, leading declines in energy stocks. The company extended a five-day tumble as Stifel Nicolaus & Co. cut its rating on the shares to a hold from buy.

Exxon Mobil lost 1.1 percent to $86.92. The biggest energy company by market value has tumbled 8.7 percent since July 23, when it reached a record high.

Marathon Oil Corp. slumped 4.3 percent to $32.61, the lowest since May. Valero Energy Corp. declined 2.7 percent to $34.47.

Cobalt International Energy Inc. fell 15 percent to $24.90 after the oil exploration company said it found no commercial hydrocarbons in its Ardennes well in the Gulf of Mexico.

Financial shares tumbled 1.3 percent. Genworth Financial Inc. fell 4.5 percent to $12.02. Invesco Ltd. lost 1.9 percent to $31.20.

JPMorgan Chase & Co. slid 2.7 percent to $51.83. The U.S. Securities and Exchange Commission’s anti-bribery unit is investigating whether the bank hired the children of Chinese officials to help its business, The New York Times reported.

Zillow Inc. lost 7.1 percent to $84.74. The operator of the largest real-estate information website agreed to acquire StreetEasy for $50 million in cash to expand its coverage of the New York housing market.

Intel gained 1.7 percent to $22.28. Piper Jaffray changed its rating on the shares to neutral from underweight and raised its price target to $22 from $20.

Apple Inc. rose 1.1 percent to $507.74. The shares have gained 12 percent in the last six trading days. Billionaire Carl Icahn said Aug. 13 that he had acquired a large position in the company. The maker of iPads and iPhone has pared its decline from an all-time high in September to 28 percent.

Health-care companies rose 0.2 percent for the only advance among 10 S&P 500 groups as a group. Intuitive Surgical Inc. gained 1.8 percent to $384.95. Gilead Sciences Inc. increased 0.8 percent to $57.34.

Edwards Group soared 18 percent to $10 after Atlas Copco, the world’s largest maker of air compressors, agreed to pay $1.2 billion for the British vacuum-pump maker. Shareholders of the Crawley, England-based company will receive as much as $10.50 a share depending on financial results for this year, Atlas Copco said in a statement today.

Dollar General Corp. gained 3.1 percent to $54.09 as JPMorgan changed its rating on the shares to the equivalent of a buy from hold. The firm increased its target price to $64 from $51.

Have a wonderful evening everyone.

Be magnificent!

The question of whether or not there is a God or truth or reality, or whatever you like to call it,

can never be answered by books, by priests, philosophers or saviors.

Nobody and nothing can answer the question but you yourself and that is why you must know yourself.

Immaturity lies only in total ignorance of self.

To understand yourself is the beginning of wisdom.

Krishnamurti, 1895-1986

As ever,

Carolann

The best revenge is massive success.

-Frank Sinatra, 1915-1998

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