August 1, 2013 Newsletter

Dear Friends,

Tangents:

On this day in…

1819, Herman Melville was born.

1831, King William IV and Queen Adelaide officiate at the River Thames to debut the London Bridge.

1936, Yves St. Laurent was born.

1936, The Berlin Olympics opening ceremony took place.

1944, Anne Frank writes the last entry in her diary before her hidden family is discovered.

1960, Aretha Franklin records her first studio demos which lands her a contract with Columbia Records.

1990, The World Wide Web was established.

Computers make very fast, very accurate mistakes.

Retirement?

Alfred Feld started working for Goldman Sachs in 1933 as an office boy, when the U.S. unemployment rate was 25%, the Wall Street Journal reports.

He still works there.

Feld is now 98, and spent most of that time working as a financial advisor. While he no longer works directly with clients, he serves as a mentor and ambassador for the wealth-management arm of GS.

When the New York Times profiled him in 2008 for his 75th anniversary, he said he had no plans to retire.

What’s money?  A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do. –Bob Dylan.

Photos of the Day –August 1st, 2013

More than 400 hot-air balloons take off in Chambley-Bussieres, eastern France, Wednesday in an attempt to set a world record for collective take-offs during an international hot-air balloon meeting. Alexandre Marchi/L’est Republicain/AP

Japanese actor Takeshi Tsuruno clowns around with a replica of the Velociraptor during the opening ceremony of the dinosaurs exhibition in Tokyo. Koji Sasahara/AP

Market Closes for August 1^st, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katie Brennan

Aug. 1 (Bloomberg) — Canadian stocks rose, capping the biggest gain in three weeks, after companies reported higher- than-estimated earnings and manufacturing in the U.S. and China strengthened.

Suncor Energy Inc., Canada’s largest energy company by market value, advanced 3.9 percent after second-quarter profit more than doubled. Catamaran Corp., a manager of prescription drug benefits, surged 9.1 percent after boosting its profit forecast for the year and announcing an acquisition. Athabasca Oil Corp. and BlackPearl Resources Inc. added at least 10 percent as oil climbed the most since since July 10.

The Standard & Poor’s/TSX Composite Index gained 107.32 points, or 0.9 percent, to 12,593.96 at 4 p.m. in Toronto. The gauge advanced 3 percent last month, the largest increase since September 2012. Trading volume was 3.6 percent below the 30-day average.

“We saw strong manufacturing data out of China and the U.S., and another key driver we’ve had lately is earnings,” said Jeffrey Bradacs, a fund manager with Manulife Asset Management Ltd., in a phone interview from Toronto. He helps oversee about C$1.50 billion ($1.47 billion) with his team.

“Today we had a number of companies in Canada report with strong earnings and that is helping our market.”

China’s manufacturing unexpectedly expanded in July, suggesting a slowdown in the world’s second-largest economy may be stabilizing as the government rolls out targeted measures to support growth. The Institute for Supply Management’s U.S. manufacturing index grew at the fastest pace in more than two years as orders and production jumped. China and the U.S. are Canada’s largest trading partners.

Seven of 10 industries in the Canadian equity benchmark rose. Health-care and energy companies paced gains, adding at least 1.9 percent.

About 57 percent of the companies in the S&P/TSX that have reported earnings have exceeded analysts’ profit forecasts, data compiled by Bloomberg show. More than 90 companies in the gauge are scheduled to report earnings between tomorrow and the end of next week.

Catamaran surged 9.1 percent to a record C$59.03 after beating second-quarter earnings estimates and increasing its full-year profit forecast. The company also announced it will buy pharmacy benefit manager Restat for $409.5 million in cash.

Athabasca Oil climbed 10 percent to C$7.95 and BlackPearl Resources added 13 percent to C$1.81 as oil rose 2.7 percent.

Suncor Energy gained 3.9 percent to C$33.74. The company’s second-quarter profit more than doubled after earnings a year ago were crimped by a one-time charge on its Syrian operations.

Chief Executive Officer Steve Williams has been cutting costs by halting or delaying projects.

Potash Corp of Saskatchewan Inc. added 2.6 percent to C$30.56. The fertilizer producer fell 22 percent in two days after OAO Uralkali, the world’s largest potash producer, predicted prices for the crop nutrient will fall about 25 percent after it exits an export cartel.

Barrick Gold Corp. added 2.7 percent to C$17.46. The company reported sales and earnings excluding one-time items that surpassed analysts’ estimates.

Cameco Corp. fell 1.6 percent to C$20.53. The world’s third-largest uranium producer said it will sell less of the nuclear fuel via its German trading unit than previously planned prices have fallen 27 percent in the past year.

US

By Lu Wang and Nick Taborek

Aug. 1 (Bloomberg) — U.S. stocks rallied, sending the Standard & Poor’s 500 Index above 1,700 for the first time, after central banks vowed to maintain stimulus and data on global manufacturing beat forecasts.

All 10 S&P 500 main industries advanced. MetLife Inc. and Procter & Gamble Co. rose more than 1.7 percent as earnings topped estimates. DreamWorks Animation SKG Inc. jumped 8.8 percent as net income surged on the hit movie “The Croods.”

Exxon Mobil Corp. slid 1.1 percent as profit trailed estimates by the most in more than a decade.

The S&P 500 rose 1.3 percent to 1,706.87 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 128.48 points, or 0.8 percent, to a record 15,628.02. About 6.8 billion shares changed hands, or 7 percent above the three-month average.

“Central banks throughout the world remain accommodative and you do not want to fight the central banks,” Phil Orlando, New York-based chief equity strategist at Federated Investors, which manages about $380 billion in assets, said by phone. “All of the data from an economic standpoint is telling that the economy is continuing to get better, the labor market is improving, and corporate earnings are coming in better than expected. So this market should continue to work higher.”

The Fed said yesterday that persistently low inflation could hamper the economy and pledged to keep buying $85 billion in bonds every month. The statement came as data showed the U.S. economy grew more than projected in the second quarter. European Central Bank President Mario Draghi said today that recent economic indicators signal that the euro region is through the worst and reiterated that officials plan to keep interest rates low for the foreseeable future.

Three rounds of bond purchases by the Fed, coupled with improving earnings and economic growth, has helped propel the S&P 500 up 152 percent from its bear-market low in 2009.

Speculation about the Fed’s monthly bond purchases has whipsawed stocks since May, when Chairman Ben S. Bernanke first indicated policy makers could begin reducing the stimulus this year if the job market continues to improve.

Investors poured $38.1 billion into exchange-traded funds listed in the U.S. last month, the most since December 2008 and the fourth-highest inflow ever, according to data compiled by Bloomberg since 2000. Almost $30 billion of the deposits went to funds that buy and sell American equities.

“When you see milestones, that gets people interested,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by phone. “Maybe there’s still a lot of money sitting on the sidelines that might be tempted to come into the market. I think it’s a bullish thing.”

The benchmark index gained 5 percent in July, its biggest monthly advance since January. The gauge is trading at 15.5 times estimated earnings, compared with an average valuation of 13.9 times profit over the past five years, according to data compiled by Bloomberg.

Manufacturing in the U.S. expanded at the fastest pace in more than two years as orders and production jumped, according to the Institute for Supply Management’s factory index. Separate reports overseas showed manufacturing grew more than forecast in China and Europe.

In the U.S., applications for unemployment insurance payments declined by 19,000 to 326,000 in the week ended July 27, the fewest since January 2008, the Labor Department reported today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 345,000.

Labor Department data tomorrow may show U.S. employers added 185,000 people to payrolls in July, as the jobless rate fell to 7.5 percent from 7.6 percent, according to Bloomberg surveys of more than 80 economists.

Some 40 companies in the S&P 500 were scheduled to report results today. Of the 373 companies in the gauge to have already reported quarterly results, 73 percent have exceeded analysts’ profit estimates and 56 percent have beaten sales projections, data compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, or VIX, slipped 3.8 percent to 12.94 today. The equity volatility gauge reached its highest level this year in June and has since fallen 37 percent.

Companies whose growth is most tied to economic swings led the rally. The Morgan Stanley Cyclical Index rose 1.8 percent.

The Dow Jones Transportation Average surged 3.2 percent to a record, while the Russell 1000 Index, the S&P Midcap 400 Index and the Russell 2000 Index for smaller companies hit all-time highs, climbing at least 1.3 percent. The Nasdaq Composite Index added 1.4 percent to the highest level since September 2000.

The KBW Bank Index rallied 1.9 percent as all its 24 members gained. American Express Co. advanced 2.5 percent to $75.63 for the biggest gain in the Dow, and Bank of America Corp. climbed 2.4 percent to $14.95.

MetLife jumped 6.3 percent to $51.47. The largest U.S. life insurer said earnings, which exclude some investment results, were $1.44 a share. That beat the $1.33 average estimate of 20 analysts surveyed by Bloomberg.

Procter & Gamble rose 1.7 percent to $81.64. Earnings beat analyst forecasts, giving Chief Executive Officer A.G. Lafley some breathing room as he works to turn around the company he rejoined two months ago.

DreamWorks climbed 8.8 percent to $26.95. The independent film studio run by Jeffrey Katzenberg reported a 75 percent surge in profit. “The Croods” was released on March 22 in the U.S. and later in countries including China and France, generating $71.8 million in revenue in the quarter.

Automakers advanced 2.2 percent as a group in the S&P 500, as vehicle sales extended a resurgence that’s putting the industry on course for its best year since 2007. Ford Motor Co. gained 1.8 percent to $17.19 as light-vehicle sales increased 11 percent in July. General Motors Co. rose 1.7 percent to $36.47 after its deliveries jumped 16 percent last month.

Industrial companies rose 1.7 percent as a group for the best performance among 10 S&P 500 groups. Quanta Services Inc. jumped 5 to $28.14. The biggest U.S. power line contractor exceeded analysts’ estimates for a ninth straight quarter, according to data compiled by Bloomberg. The company boosted its full-year forecast.

Yelp Inc. soared 23 percent to $51.50. The company, whose website compiles consumer-business reviews, said second-quarter sales climbed 69 percent to $55 million, topping the $53.3 million average analyst prediction compiled by Bloomberg.

CBS Corp. gained 3.9 percent to $54.88. The owner of the most-watched U.S. TV network said second-quarter profit rose 11 percent, spurred by higher rates from pay-TV systems and new Internet streaming agreements.

Pioneer Natural Resources Co. jumped 13 percent to $174.15.

At least three analysts raised their share-price forecasts for the oil and gas producer, according to data compiled by Bloomberg. Results from Pioneer’s Wolfcamp drilling site appear to show the company has “established a giant resource play,” Jonathan Wolff, an analyst with International Strategy & Investment Group LLC, wrote in a note.

Sprouts Farmers Market LLC more than doubled to $40.11 on the first day of trading. The organic grocery chain and existing owners sold 18.5 million shares, or a 13 percent stake, for $18 apiece, pricing its initial public offering above the marketed range as increasing consumer confidence ignites interest in companies from restaurants to cruise lines.

Exxon Mobil dropped 1.1 percent to $92.73. The world’s biggest energy company by market value reported profit of $1.55 a share as returns from its fuel-making business plunged. That missed the average analyst estimate by 18 percent, the biggest gap since at least the fourth quarter of 2002.

Have a wonderful evening everyone.

Be magnificent!

Everyone is but a manifestation of the Impersonal, the basis of all being,

and misery consists in thinking of ourselves as different from this Infinite, Impersonal Being,

and liberation consists in knowing our unity with this wonderful Impersonality.

Swami Vivekananda, 1863-1902

As ever,

A smile is happiness you’ll find

right under your nose.

-Tom Wilson

Carolann

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