April 24, 2013 Newsletter

Dear Friends,

Tangents:

Birthdays:

1934 – Shirley MacLaine

1942 – Barbra Streisand

Last weekend, The Wall Street Journal cited the study from the University of British Columbia showing that acetaminophen eases not just physical pain, but relieves “existential anxieties” as well.  Participants wrote about their own deaths and watched clips from a David Lynch movie.  Acetaminophen appeared to ease feelings of dread.  Quite amazing.

Tyranny is always better organized than freedom. –Charles Péguy

Photos of the day – April  24th, 2013

Tulips are seen on Capitol Hill in Washington. Carolyn Kaster/AP

A worker is seen through an art piece ‘Poetic Cosmos of the Breath’ by Argentina-born artist Tomas Saraceno as part of an exhibition ‘Inflation!’ at the site of an upcoming park in the West Kowloon cultural district in Hong Kong. Bobby Yip/Reuters

Market Closes for April 24th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

April 24 (Bloomberg) — Canadian stocks rose, giving the benchmark index its largest gain since August, as commodities rallied and Barrick Gold Corp.’s results surpassed estimates.

Barrick, the world’s largest gold producer by sales, jumped the most since 2009 as better-than-estimated mining costs and gold output boosted first-quarter earnings. Alacer Gold Corp. and New Gold Inc. surged at least 9.8 percent as the price of the metal rallied. Teck Resources Ltd. added 4.7 percent after copper rebounded from a bear market. Suncor Energy Inc., Canada’s largest oil producer, gained 2.6 percent as crude increased.

The Standard & Poor’s/TSX Composite Index rose 179.49 points, or 1.5 percent, to 12,270.43 at 4 p.m. in Toronto. The benchmark equity gauge has increased 2.7 percent in the past five sessions, the longest streak of gains since January.

Trading volume was in line with the 30-day average.

“It’s very heavily weighted towards the commodity space today, they’re all bouncing back,” Michael O’Brien, a fund manager with TD Asset Management, said on the phone from Toronto. He manages about C$3 billion ($3 billion). “The entire commodity complex has been sold down so viciously over the past couple weeks that people had to stop and pause for breath.”

Commodity stocks contributed most to gains in the benchmark index, as raw-material producers rose 5 percent for the biggest advance since November 2011. The S&P/TSX Materials Index has fallen 24 percent this year.

Gold advanced 1.1 percent to settle at $1,423.70 an ounce in New York, the fourth increase in five sessions, as signs of more physical purchases tempered shrinking assets in exchange- traded products. The metal has rallied 7.7 percent since touching a low of $1,321.50 on April 16.

Alacer Gold jumped 17 percent to C$2.95 and New Gold soared 9.8 percent to C$7.88. The S&P/TSX Gold Index added 6.6 percent, the most since June, as 29 of 30 members advanced.

Barrick rallied 7.6 percent to C$19.38, the biggest gain since September 2009. The miner posted adjusted first-quarter earnings of 92 cents a share, compared with the 86-cent average of 21 estimates compiled by Bloomberg.

The company’s total cash cost to produce an ounce of gold was $561, compared with $540 a year earlier and the $654 average of six estimates. The Toronto-based company is also considering suspending the $8.5 billion Pascua-Lama project on the border of Chile and Argentina.

Jamie Sokalsky, chief executive officer, said at a shareholder meeting in Toronto today Barrick is still looking for more ways to cut costs and will need to manage without the promise of higher gold prices. Barrick has plunged 44 percent this year.

Turquoise Hill Resources Ltd., which is developing the $6.6 billion Oyu Tolgoi gold project in Mongolia with parent Rio Tinto Group, soared 16 percent to C$7.

Nick Cousyn, chief operating officer with BDSec, a brokerage in Mongolia, said the Mongolian government, which has been locked in negotiations with the company over costs and environmental concerns, is now looking to do “everything possible” to ensure production starts in June.

“This is a significant about-face,” Cousyn said in a note yesterday, advising investors to “move up their time frames and buy now.”

Teck Resources, Canada’s largest diversified miner, gained 4.7 percent to C$26.80 as copper for July delivery rose 2 percent to settle at $3.165 a pound in New York. The metal fell into a bear market last week on concern slowing economies in the U.S. and China would reduce demand. Copper prices have dropped 12 percent this year.

Suncor climbed 2.6 percent to C$29.60 and Canadian Natural Resources Ltd. rallied 2.3 percent to C$29.45. Crude for June delivery jumped the most this year, adding 2.5 percent to settle at $91.43.

US

By Lu Wang and Whitney Kisling

April 24 (Bloomberg) — Most U.S. stocks advanced, extending gains in the Standard & Poor’s 500 Index to a fourth day, as investors weighed quarterly earnings at companies from Boeing Co. to Apple Inc.

Boeing and Yum! Brands Inc. advanced at least 3 percent after reporting first-quarter earnings that topped estimates.

Apple fell 0.2 percent after planning to return an additional $55 billion in cash to shareholders amid its first profit decline in a decade. Procter & Gamble Co. dropped 5.9 percent as its earnings forecast missed analyst projections. AT&T Inc. fell 5 percent after sales trailed estimates.

The S&P 500 added less than 0.1 percent to 1,578.79 at 4 p.m. in New York. The index has rallied 2.4 percent over four days. The Dow Jones Industrial Average dropped 43.16 points, or 0.3 percent, to 14,676.30 today. More than three stocks rose for every two that fell on U.S. exchanges as 6.3 billion shares traded hands, in line with the three-month average.

“First-quarter earnings have generally exceeded expectations and looked good, but second-quarter guidance seems to be ratcheting lower,” Eric Teal, chief investment officer at First Citizens BancShares Inc., which manages $4.5 billion in Raleigh, North Carolina, said in a phone interview. “So it’s a bit of a mixed bag and the market has been volatile.”

Forty-seven S&P 500 companies post earnings today. Of the 180 companies that have published results so far in this reporting season, 73 percent have exceeded analysts’ predictions for earnings, data compiled by Bloomberg show. Profit at S&P 500 companies dropped 1.1 percent in the first three months of the year, according to forecasts compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.

Analysts have trimmed their projections for the second quarter, forecasting earnings to expand 5.5 percent, data compiled by Bloomberg show. They had expected an increase of 6.2 percent at the beginning of April.

The S&P 500 has surged 133 percent from a 12-year low in 2009 as corporate earnings beat estimates and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy. Benchmark indexes reached record highs on April 11.

U.S. stocks suffered declines during the second quarter in each of the past three years, with losses in the S&P 500 averaging 5.2 percent, data compiled by Bloomberg show.

“The earnings season has been enough to hold stocks where they are in light of some less-than-hoped-for macro data,” Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $380 billion, said by phone. “Time will tell if it will remain enough as we move through what’s a seasonally more difficult time.”

Data today showed orders for U.S. durable goods fell in March by the most in seven months as demand slumped for commercial aircraft and business investment cooled.

The Chicago Board Options Exchange Volatility Index, or VIX, rose 1 percent to 13.61. The gauge, which moves in the opposite direction to the S&P 500 about 80 percent of the time, is down 24 percent for the year.

Seven out of the 10 S&P 500 industries gained as commodity and energy companies advanced the most, rising at least 1.2 percent. Phone stocks had the biggest loss, down 2.9 percent as a group.

Boeing gained 3 percent to $90.83. The aircraft maker said earnings were $1.73 a share in the first quarter, topping the average analyst estimate of $1.49 per share, as increased deliveries for 777- and 737-model jets made up for the halt in buyers picking up Dreamliners while that plane was grounded.

Yum Brands increased 7 percent to $68.65. The owner of the KFC and Pizza Hut dining chains said profit excluding certain items was 70 cents a share as new menu items helped Taco Bell’s domestic sales. Analysts estimated 60 cents, the average of 25 projections compiled by Bloomberg.

Newfield Exploration Co. climbed 7.4 percent to $21.31, leading energy stocks to a 1.2 percent gain. The oil producer reported quarterly profit that beat analysts’ estimates by the most in a year, data compiled by Bloomberg show. Newfield said it expects to meet a 2013 output target.

WellPoint Inc. gained 5.8 percent to $73.33. The second- biggest U.S. health insurer reported profit that outpaced analysts’ estimates and raised its forecast, fueled by the acquisition of Amerigroup Corp. and lower-than-anticipated medical costs.

General Dynamics Corp. advanced 6.9 percent to $71.73. The maker of Abrams tanks and Gulfstream business jets beat analysts’ estimates for first-quarter profit as the company is focusing on cost-cutting and increasing margins.

Buckeye Technologies Inc. surged 27 percent to a record $37.86. The manufacturer of specialty-cellulose products agreed to be bought by Georgia-Pacific LLC for $37.50 a share in cash.

The transaction is valued at about $1.5 billion, including debt.

Apple slipped 0.2 percent to $405.46. The maker of iPhones forecast sales that missed analysts’ predictions and reported an 18 percent decline in earnings, its first profit drop since 2003. Apple also said it will return an additional $55 billion in cash to shareholders to compensate for a stock that’s been hammered by signs of slowing growth. Apple shares have slumped 24 percent this year amid signs of slowing growth.

The company boosted its quarterly dividend and allotted more cash to buybacks, announcing plans to borrow funds for what it called the largest share-repurchase program in history.

P&G slipped 5.9 percent, the most in about four years, to $77.12 after predicting full-year core earnings will be in the range of $3.96 to $4.04 a share. Analysts surveyed by Bloomberg had estimated earnings at $4.06 per share for 2013.

Results in the current quarter will be affected by increased marketing expenses for new product introductions, Chief Financial Officer Jon Moeller said. Foreign currency exchange is also expected to reduce net sales by 2 percent in the period, P&G said.

Amgen Inc. declined 6.9 percent, the most in four years, to $104.93. Revenue increased 5 percent to $4.24 billion, less than the $4.37 billion estimated by analysts. This is the first time in 11 quarters that the company has missed expectations, according to Bloomberg Industries.

AT&T lost 5 percent to $37.04 for the biggest retreat since February 2009. The largest U.S. phone company said sales dropped 1.5 percent to $31.4 billion in the first quarter, dragged down by a sluggish landline business and competition with Verizon Wireless. Analysts on average had forecast $31.7 billion.

Edwards Lifesciences Corp. tumbled 22 percent, the largest drop since 2000, to $64.60. The biggest maker of aortic heart valves implanted with a catheter cut its 2013 forecast as first- quarter sales were slower than anticipated.

Motorola Solutions Inc. declined 9.3 percent to $56.02. The maker of industrial gear such as two-way radios and bar-code scanners reported quarterly profit and sales that trailed analysts’ estimates. Corporate customers are still working to rebound from the economic slump, causing them to put off orders, Chief Executive Officer Greg Brown said.

Have a wonderful evening everyone.

Be magnificent!

The soul is the home of all living beings;

and from the soul all living beings derive their strength.

There is nothing in the universe that does not come from the soul.

The soul dwells within all that exists;

it is the truth of all that exists;

You, my son, are the soul.

Chandogya Upanishad

As ever,

Carolann

Art is the only way to run away without leaving home.

-Twyla Tharp, 1941-

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