April 2, 2013 Newsletter

Dear Friends,

Tangents:

April, the poet told us, is the cruelest month.  Yesterday, Joseph Epstein, writing in the Wall Street Journal, noted that April is also National Poetry Month.  He wrote, “Like so many of my rapidly diminishing generation, I walk around with lines and entire passages from the poetry of W.B. Yeats, T.S. Eliot, Robert Frost, Wallace Stevens, e.e. cummings, and others rattling around pleasantly in my head.  But nearly all the poetry written since the years those poets wrote doesn’t register, resonate, ring, do any of the elevating things that poetry is supposed to, and once indeed did, do….Years ago I wrote an essay on this subject called ‘Who Killed Poetry?,’ which stirred up beehives of poets in protest.  I suggested that the academicization of poetry did a lot to help kill it; I also concluded that too much poetry was in production, with Gresham’s Law relentlessly at work, in this instance the crappy driving out the second-rate.  I also concluded that so many people who drifted into the writing of poetry didn’t have very interesting minds: a family member dies, they saw a tree of unusual shape, a little-known Matisse painting excited them, so they take to their computers and trivialize the subject or experience by encasing it in a more or less complex contraption of verbal self-absorption currently called a poem.

I now wonder if quite as considerable a reason for the death of poetry is that the international attention span has been much reduced by so many fresh distractions, leaving fewer and fewer people who have the patience or intellectual curiosity to work out the rich complexity of a well-wrought poem – that is, if anyone is around who could actually produce one.  My main point is that if any of your children or grandchildren comes to you and declares a wish to become a poet, send that child directly off to bed without any dinner, and return to your place on the couch before the television set.”

Mr. Epstein is the author, with Frederic Raphael, of “Distant Intimacy: A Friendship in the Age of the Interne,” published this week by Yale University Press.  This op-ed is based in part on the book.

On this day in:

1513, Spanish explorer Juan Ponce de León landed in Florida during his quest for the legendary Fountain of Youth.

On April 2^nd, 1917, President Woodrow Wilson asked Congress to declare war on Germany.

1917, Suffragist Jeanette Rankin is the first woman ever to be elected to Congress.

Success is most often achieved by those who don’t know that failure is inevitable. –Coco Chanel, Believing in Ourselves – The Wisdom of Women.

Photos of the Day –April 2^nd, 2013

Iranian women jump for a picture as they celebrate the ancient festival of Sizdeh Bedar, or public picnic day, in a park in western Tehran, Iran. Sizdah is the Persian word for thirteen, and spending the day outdoors with family on the thirteenth day of Farvardin, the first month of the Iranian calendar, has been a tradition since ancient times in Iran. Ebrahim Noroozi/AP

A Great Blue Heron prepares to swallow a fish at a wetland preserve near Delray Beach, Fla. For the past three months, birders have enjoyed nesting and baby season at Wakodahatchee Wetlands, a bird-watcher’s paradise. J Pat Carter/AP

Market Closes for April 2^nd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang

April 2 (Bloomberg) — Canadian stocks fell as the biggest decline in gold prices in almost six weeks dragged raw-materials stocks lower, offsetting better-than-estimated data on U.S. factory orders.

Barrick Gold Corp. and Goldcorp Inc. declined at least 2.6 percent as the metal’s price slid 1.6 percent. Silvercorp Metals Inc. slumped 11 percent amid a report that the U.S. Securities and Exchange Commission is probing the company over its battle with short sellers. Canadian Pacific Railway Ltd. fell for a second day, losing 2.1 percent. Secure Energy Services Inc. climbed 4.9 percent as Raymond James Financial Inc. boosted the stock’s rating.

The Standard & Poor’s/TSX Composite Index fell 13.04 points, or 0.1 percent, to 12,682.10 at 4 p.m. in Toronto. The benchmark gauge is up 2 percent this year. Trading volume was 11 percent above the 30-day average at this time of day.

“You’re walking this fine line,” Bill Harris, portfolio manager with Avenue Investment Management in Toronto, said in a phone interview. His firm manages about C$300 million ($296 million). “We’re not falling off the cliff, but we don’t have to raise interest rates, so the market cycle is still on.”

Gross domestic product and inflation numbers below analysts’ forecasts prompted Bank of Canada Governor Mark Carney to say on Jan. 23 that interest-rate increases were “less imminent” and to add on March 6 that the current rate would be “appropriate for a period of time.”

The S&P/TSX gained as much as 0.2 percent earlier in the day, as orders placed with U.S. factories increased 3 percent in February. Demand was boosted by a pickup in orders for motor vehicles and commercial aircraft, a Commerce Department report showed today. The gain in bookings was the biggest in five months and exceeded the median forecast for a 2.9 percent rise in a Bloomberg survey of economists.

Raw-materials producers declined 3 percent for the worst performance among 10 groups in the benchmark gauge. The Standard & Poor’s/TSX Materials Index of 60 stocks plunged 11 percent in the first quarter.

Producers of raw materials from copper to coal and gold have slid amid concerns China is settling into a slower growth path, mining companies face escalating costs and gold’s status as a safe haven is diminishing as the U.S. economy gains momentum.

Barrick Gold, the largest producer of the metal, declined 2.6 percent to C$28.71, its lowest level since November 2008.

Goldcorp dropped 3.4 percent to C$32.82. In New York, gold futures for June delivery fell 1.6 percent, the biggest decline since Feb. 20, to settle at $1,575.90.

Silvercorp tumbled 11 percent to C$3.54. The SEC issued a subpoena to the Chinese mining company on March 15 requesting documents relating to the allegations that the firm has overstated its production and the amount of precious minerals that its mines contained in China, The Globe and Mail reported.

Canadian Pacific slid 2.1 percent to C$126.34, contributing most to declines among industrial stocks and extending yesterday’s 2.7 percent drop.

Secure Energy advanced 4.9 percent to C$12.79. Andrew Bradford, an analyst with Raymond James, boosted his rating to outperform, an equivalent of buy, from market perform, citing the energy services company’s acquisition of Frontline Integrated Services Ltd.

Catamaran Corp., a drug-benefits manager, climbed 1.7 percent to C$55.09. The lack of an announcement from Cigna Corp. on a strategy for its pharmacy-benefits unit may be “good news,” Brian Tanquilut, an analyst with Jefferies & Co., wrote in a note.

Catamaran’s contract with Cigna’s HealthSpring PBM expires at the end of 2013. Cigna Chief Executive Officer David Cordani said in November the company expected to decide on the future of the unit by the first half of 2013.

US

By Lindsey Rupp and Nikolaj Gammeltoft

April 2 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index to a record close, as concern over Europe’s debt crisis eased and factory orders topped forecasts.

Humana Inc. jumped 5.5 percent as health-care providers rallied the most among 10 groups in the S&P 500, after medical insurers won an increase in a key Medicare payment rate. Hertz Global Holdings Inc. added 6.9 percent as it forecast earnings above analysts’ estimates. Nasdaq OMX Group Inc. plunged 13 percent, the most in the S&P 500, after agreeing to buy BGC Partners Inc.’s bond platform. Hewlett-Packard Co. fell 5.2 percent as Goldman Sachs Group Inc. advised selling the shares.

The S&P 500 rose 0.5 percent to 1,570.25 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 89.16 points, or 0.6 percent, to 14,662.01, also reaching a record high. About 5.9 billion shares changed hands on U.S. exchanges, 6.6 percent below the three-month average.

“It’s an agonizingly slow economic recovery but it is a recovery,” Tom Mangan, who helps oversee about $4 billion as a money manager at James Investment Research Inc. in Xenia, Ohio, said in a phone interview. “The risk has so far not been that you are in the stock market, the risk is that you’re not in the stock market and that you don’t own enough stocks.”

U.S. equities fell yesterday as a report showed American manufacturing expanded less than forecast, after the S&P 500 climbed above its highest closing level reached in October 2007.

The index has yet to reach the all-time intraday high of 1,576.09. The S&P 500 rallied 10 percent in the first quarter, extending a recovery that has added more than $10 trillion of value to the world’s largest stock market. The Dow first passed its 2007 record on March 5.

U.S. factory orders rose in February, boosted by a pickup in demand for motor vehicles and commercial aircraft. The 3 percent gain in bookings, the biggest in five months, followed a revised 1 percent decline in January, a Commerce Department report showed. The median forecast of 64 economists in a Bloomberg survey called for a 2.9 percent rise.

In Europe, the Cypriot government completed talks on the terms for aid with the so-called troika of officials representing the International Monetary Fund, the European Central Bank and the European Union. Cyprus was granted two extra years, to 2018, to implement measures linked to its bailout, government spokesman Christos Stylianides told reporters. The accord will be discussed at a euro working group meeting of finance officials on April 4.

“We get these little dust-ups whether it’s Cyprus or negative economic data, but then the market comes back to the thinking that the best game in town is U.S. equities and that’s what is driving stocks,” Dan Veru, chief investment officer at Palisade Capital Management LLC, said over the phone. The Fort Lee, New Jersey-based firm manages about $4 billion. “The U.S economy is growing, and relative to the rest of the world we’re far more stable.”

The bull market in equities entered its fifth year last month, with the S&P 500 more than doubling from its bottom in 2009, as corporate earnings topped estimates and the Federal Reserve carried out an unprecedented three rounds of bond purchases to spur the economy.

Companies begin releasing their first-quarter earnings next week, with Alcoa Inc. scheduled to announce results on April 8.

Earnings among S&P 500 companies are forecast to decline 1.9 percent for the period, for the first retreat since 2009, according to estimates compiled by Bloomberg. In January, analysts forecast earnings growth of 1.2 percent. Profit expanded by 8 percent in the fourth quarter of 2012.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against claims, fell 5.9 percent to 12.78 today. The gauge, known as the VIX, is down 29 percent for the year.

Health-care stocks advanced 1.4 percent as a group. Humana, the second-largest private Medicare insurer, climbed 5.5 percent to $79.11 after the government announced a decision to do away with a planned rate reduction. Instead, insurers will receive a 3.3 percent increase in the rate that determines the payments they get for running the government’s Medicare Advantage plans.

UnitedHealth Group Inc. advanced 4.7 percent to $61.74 and Aetna Inc. gained 3.7 percent to $54.30 on the decision.

Hertz, the Park Ridge, New Jersey-based car rental company, climbed 6.9 percent to $23.41 after giving a 2015 earnings outlook above analyst estimates. The company predicts earnings between $3.10 and $3.30 a share for 2015, compared with the average analyst estimate of $2.39.

Urban Outfitters Inc. added 3.8 percent to $39.87. The retailer said comparative retail net sales have climbed at a high single-digit pace so far during the first quarter.

Ford Motor Co. gained 0.9 percent to $13.01 after the Dearborn, Michigan-based automaker announced its best monthly sales in its home market since 2007. Ford delivered 5.7 percent more light vehicles in March than a year earlier, beating estimates.

General Motors Co. added 0.5 percent to $27.93, as March sales expanded 6.4 percent. Analysts had estimated a 12 percent climb. Sales of GM’s Cadillac jumped almost 50 percent in the month while Chevrolet sales rose 0.5 percent.

Nasdaq OMX plunged 13 percent, the most since November 2008, to $27.91. The company will buy eSpeed, an electronic trading system for U.S. Treasuries, from BGC Partners for about $750 million in cash. Moody’s Investors Service and Standard & Poor’s warned that Nasdaq’s debt rating may be lowered.

The deal gives the second-largest U.S. equity market a foothold in fixed income. Nasdaq will also issue about 15 million common shares over 15 years as part of the acquisition, pushing the potential value of the transaction to $1.23 billion, according to statements by the two companies. BGC Partners jumped 49 percent, its biggest gain since 1999, to $5.72.

Hewlett-Packard slipped 5.2 percent to $22.10. Goldman Sachs lowered its recommendation on the shares to sell from neutral. The brokerage said it remained cautious on the market for printers and servers.

The Bloomberg U.S. Airlines Index lost 5.7 percent, the biggest drop since June, as Delta Air Lines Inc. declined 8.1 percent to $14.94. The carrier’s March passenger revenue per available seat mile missed its estimate, the company said in a filing. Delta expects system capacity to be down by 2 to 3 percent in the latest quarter.

Have a wonderful evening everyone.

Be magnificent!

The fact that there are so many men still alive in the world

shows that it is based not on the force of arms but on the force of truth or love.

Therefore, the greatest and most impeachable evidence of the success of this force

is to be found in the fact that, in spite of all the wars of the world,

it still lives on.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

In spite of everything, I still believe people are good

at heart.

-Ann Frank, 1929-1945

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