July 10, 2014 Newsletter

Dear Friends,

Tangents:

Marcel Proust was born on this day in 1871.  Happy 143^rd birthday. He died in 1922.

In 1971, The town of Illiers, where Proust spent some of his childhood and ate madeleines, changes its name, adding Proust’s fictional version of it, Combray. It remains Illiers-Combray to this day.

Also in 1971, celebrating Proust’s centenary, a ball is held in Paris with attendees, including a bejeweled Elizabeth Taylor, wearing gowns designed by Yves St. Laurent, Valentino and Christian Dior all inspired by Proust and his work.

In 1972, an unnamed editor of a New York publishing house jokes that Proust’s novel, Remembrance of Things Past, is “the story of a man who fell in love with a cookie.”

In 1982, writer Cameron Crowe originally conceived of “Fast Times at Ridgemont High” as Marcel Proust as a Ridgemont senior.

1983: In a review of a new collection of Proust’s letters: “Like Dante or Machiavelli, Proust’s reputation rests on a single work. Students and admirers read his letters and early writings … to search for precursors of the vivid characterizations and penetrating analyses, the profound themes and translucent style that make ‘Remembrance of Things Past’ a monument of literature.”

1988: The copyright of “Remembrance of Things Past” expires in France and becomes public domain, sparking a “Proust boom.” “Proust Belongs to You,” one French literary magazine declares. The novel is reissued in a luxury edition by his publisher Gaillimard, and four other publishers put out new versions, one including 312 pages of biographical notes. Videos about his life run in the Paris Metro. The novel is “one of the most celebrated works of the 20th century,” The Los Angeles Times writes, “a luxuriant unfolding of memory by a narrator of exquisite sensitivity.”

Happiness is beneficial for the body, but it is grief that develops the powers of the mind.  -Marcel Proust.

Photos of the Day

Visitors admire the Victory of Samothrace scultpture at the Louvre museum in Paris. The 2,200-year-old, 29-ton statue is back after almost a year of restoration. The statue is one of the five most popular works at the Louvre. Remy de la Mauviniere/AP

People look at a creation by French artist Elsa Tomkowiak in the Graslin Theater during the ‘A journey to Nantes’ art festival in Nantes, western France. Stephane Mahe/Reuters

Market Closes for July 10^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam

July 10 (Bloomberg) — Canadian stocks retreated from a record and joined a global selloff as signs of financial stress in Portugal increased concern that instability will return to Europe.

Crew Energy Inc. and TransGlobe Energy Corp. dropped at least 2 percent to pace declines among energy stocks. Banro Corp. plunged 29 percent after production was significantly hampered at one of its projects as the processing plant has problems handling the ore. Fortuna Silver Mines Inc. slumped 9.9 percent after analysts at Canaccord Genuity Corp. cut their rating for the stock.

The Standard & Poor’s/TSX Composite Index fell 100.71 points, or 0.7 percent, to 15,114.48 at 4 p.m. in Toronto, the most in two weeks after reaching a record close yesterday. The benchmark Canadian equity gauge has gained 11 percent this year.

A selloff in Europe spread to North America amid concern about the missed debt payments by the parent of Banco Espirito Santo SA. The MSCI All-Country World Index, which tracks both developed and emerging markets, sank as much as 1 percent.

Crew Energy fell 2 percent to C$11.37 and TransGlobe Energy lost 2.9 percent to C$7.38. The S&P/TSX Energy Index sank 0.9 percent, reaching a one-month low as 65 of 69 members retreated.

Crude for August delivery rallied 0.6 percent to snap a nine-day decline, the longest stretch since 2009, New York Mercantile Exchange data show. Prices have fallen about 2.4 percent this month.

Manulife Financial Corp. retreated 0.9 percent to C$21.47 as financial stocks decreased 0.2 percent as a group.

Royal Bank of Canada, the nation’s second-largest lender by assets, lost 0.2 percent to C$78.34 to snap a nine-day winning streak and retreat from a record.

Fortuna Silver Mines sank 9.9 percent to C$5.83 as the S&P/TSX Materials Index slumped 1.6 percent, the most in the benchmark Canadian equity gauge. Trading volume for S&P/TSX stocks was 26 percent higher compared with the 30-day average.

John Kratochwil, analyst at Canaccord Genuity, reduced Fortuna’s rating to a hold from a buy. The company said cash costs at its Caylloma mine in Peru were higher than earlier guidance in the second quarter.

Gold for August delivery rose 1.1 percent to settle at $1,339.20 an ounce on the Comex in New York, the highest since March. Gold is seen as an safe haven alternative investment in times of increasing volatility.

US
By Joseph Ciolli

July 10 (Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index resuming a selloff started earlier this week, as signs of financial stress in Portugal fueled demand for haven assets.

Home Depot Inc. and Lowe’s Cos. fell at least 1.4 percent after a Deutsche Bank AG analyst lowered his estimates for their profits based on weak results at rivals. Shares in high-dividend yielding companies such as Verizon Communications Inc. advanced as U.S. Treasuries gained.

The S&P 500 fell 0.4 percent to 1,964.68 at 4 p.m. in New York, trimming an earlier decline of 1 percent that was the most since May 15. The Dow Jones Industrial Average lost 70.54 points, or 0.4 percent, to 16,915.07. The Russell 2000 Index fell 1 percent, paring a drop of 1.9 percent.

“People will shoot first and ask questions later when news like this hits,” said Lawrence Creatura, a fund manager at Federated Investors Inc. in Rochester, New York. His firm manages about $363.8 billion. “The concern of an event like this is always determining whether it’s occurring in isolation or whether it’s the first domino. It’s a classic flight to safety across the equity, commodities and bond markets.”

European stocks and Portuguese bonds tumbled with investor concern deepening over missed debt payments by a company linked to the Iberian nation’s second-largest lender. Portugal’s central bank said Banco Espirito Santo SA is protected after its parent missed the payments. U.S. Treasuries and gold rallied.

Today’s decline came after speculation that U.S. stocks have risen too far, too fast fueled losses earlier in the week as Raymond James & Associates Inc. said equities are vulnerable and Citigroup Inc.’s chief U.S. equity strategist cited concerns for a “severe” pullback. The S&P 500 ended last week at an all-time high and the Dow Jones Industrial Average topped 17,000 for the first time.

The Chicago Board Options Exchange Volatility Index rose 8.5 percent today to 12.64. The gauge known as the VIX finished last week at a seven-year low before rallying 16 percent during the first two days of the week, the biggest surge since April.

The S&P 500 has not had a drop of 10 percent in more than two years, and has not fallen by more than 1 percent on a closing basis since April. The gauge trades at a valuation of 18 times reported earnings, the highest since 2011 when it was in the middle of a 19 percent slide, its biggest during the current five-year bull market.

Equities trimmed steeper losses amid speculation the day’s initial selloff was overdone.

“Everyone expected the worst, and the contagion fears were brought back to fruition, but as the day has gone on those fears have abated a bit,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “Right now the market is saying that their concerns are not going to be as widespread as they were when they walked in this morning.”

U.S. equities yesterday halted a two-day selloff as optimism about corporate earnings and jobs growth outweighed concern that Federal Reserve concern that investors may be growing complacent about risk.

A report today showed fewer Americans than forecast filed applications for unemployment benefits last week, adding to signs the job market continues to strengthen. The latest government payrolls report showed job growth blew past expectations in June and the unemployment rate fell to the lowest level since before the financial crisis peaked six years ago.

More than 140 companies in the S&P 500, including Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Johnson & Johnson, will report quarterly results between now and July 23, according to data compiled by Bloomberg.

Profit at S&P 500 companies probably rose 5 percent in the three months through June, while sales gained 3 percent, estimates show. The forecasts have decreased from the start of April, when analysts predicted a 7.3 percent jump in earnings and 3.7 percent sales increase.

Earnings for banks are forecast to fall 3.3 percent in the second quarter, according to data compiled by Bloomberg. It’s the only sector expected to see declining profits, the data show.

Goldman Sachs dropped 0.8 percent and JPMorgan Chase lost 0.8 percent as banks had the fourth-worst performance among 24 S&P 500 groups.

Eight of the 10 main groups in the S&P 500 retreated today. Shares in energy producers and makers of consumer-discretionary products tumbled at least 0.9 percent to pace losses as investors shifted out of stocks whose performance is linked to economic growth.

Exxon Mobil Corp. retreated 1 percent to $102.57 as crude prices climbed after a nine-day losing streak. Chevron Corp. fell 0.9 percent to $130.25.

Home Depot sank 1.7 percent to $79.40 for the biggest decline in the Dow, while Lowe’s lost 1.4 percent to $47.20. Deutsche Bank’s Michael Baker lowered his earnings estimates for the two biggest U.S. home-improvement retailers by 1 cent a share each after Lumber Liquidators Holdings Inc. reported weaker-than-estimated results. Lumber Liquidators sank 22 percent to $55.25 for its biggest drop in three years.

Tractor Supply Co. lost 2.4 percent to $59.92. The farm- supplies retailer forecast second-quarter earnings below analysts estimates.

L Brands Inc. decreased 2.7 percent to $60.21. The owners of the Victoria’s Secret and Bath & Body Works chains reported that June sales rose 2 percent, falling short of the consensus analyst forecast of 2.7 percent.

Utility and phone shares rose at least 0.6 percent to lead advances today, as investors shifted into sectors with high dividend-yielding stocks often favored in a risk-averse environment.

Verizon added 1.5 percent to $49.64 for the biggest rise in the Dow. The stock extended gains after Chief Executive Officer Lowell McAdam said on CNBC that Verizon was not interested in buying a satellite company.

Utilities yield 3.7 percent and phone stocks pay at 4.9 percent, the highest the S&P 500. The yield on benchmark 10-year Treasury notes fell one basis point, or 0.01 percentage point, to 2.54 percent today.

Have a wonderful evening everyone.

Be magnificent!

Our contribution

to the progress of the world must, therefore,

consist in setting our own house in order.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

College is something you complete.  Life is something you experience.  So don’t worry about

your grade, or the results or success.  Success is defined in myriad ways, and you will find it,

and people will no longer be grading you, but it will come from your own

internal sense of decency.

-Jon Stewart, 1962-

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM, FCSI

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7