August 23, 2013 Newsletter

Dear Friends,

Tangents:

On this day 50 years ago – August 23^rd, 1963, The Beatles released She Loves You sung by Paul McCartney.  It became their best selling single in Great Britain.

Speaking of love, the story about Antoinette Tuff this week is truly inspirational and underscores the power of love.  She is the person who reached out to the gunman in the Atlanta-area elementary school who was intent on wreaking the kind of devastation that befell so many families in Newton, Connecticut last December.  She reached out to the young man with love and convinced him to lay down his weapons.  Incredibly, no one was hurt.  This is proof of the power of good over evil.  Good cannot be silenced.  It would be transformative for this planet of ours if we all approached our lives with the  same courage to do what Tuff did.  Tuff believed in the power of good over evil and her courage in reaching out to the young man with love saved not only the children in the school but probably that young man’s life as well, as she soothingly convinced him that he could be better.  I was listening to the radio in my car on the way home from the office when the recording of her interaction with him came on and I was mesmerized by it.  I thought about how the world would benefit and be so different if we all greeted every situation, from the mildly annoying to the utterly terrifying, with the same attitude as Antoinette Tuff’s.

There are in fact two things, science and opinion: the former begets knowledge, the latter ignorance. –Hippocrates.

Photos of the Day –August 23rd, 2013

In July 2013, the National Park Service began work on the Martin Luther King Jr. Memorial in Washington to remove a controversial inscription from the sculpture. It reads: ‘I was a drum major for justice, peace and righteousness.’ The truncated line was paraphrased from a sermon King delivered in 1968: ‘Yes, if you want to say that I was a drum major, say that I was a drum major for justice. Say that I was a drum major for peace. I was a drum major for righteousness. And all the other shallow things will not matter.’ J. Scott Applewhite/AP

The Rev. Bobby Turner of Columbus, Ohio, places his hand on the Martin Luther King Jr. Memorial, Aug. 22, 2013, in Washington. Carolyn Kaster/AP

Market Closes for August 23^rd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 23 (Bloomberg) — Canadian stocks rose, closing at the highest level in five months, as gold producers surged after a plunge in U.S. new-home sales boosted speculation the Federal Reserve will maintain stimulus.

Alacer Gold Corp. and Iamgold Corp. rallied at least 5.9 percent as the metal traded at its highest in 11 weeks. Maple Leaf Foods Inc. jumped 7.8 percent as it agreed to sell a unit for C$645 million ($614 million). Penn West Petroleum Ltd. added 1.7 percent after cutting 25 percent of its workforce to reduce costs.

The Standard & Poor’s/TSX Composite Index rose 87.95 points, or 0.7 percent, to 12,762.30 at 4 p.m. in Toronto, the highest level since March 20. The index erased losses from earlier in the week to finish the five-day period 0.2 higher.

Sales of newly built homes in the U.S. plunged the most in more than three years last month. The July minutes of the Federal Open Market Committee showed policy makers are “supportive” of Chairman Ben S. Bernanke’s plan to begin scaling back the bank’s $85 billion a month bond purchases later this year. Central-bank stimulus has helped propel global equities higher.

“The data may have markets reassessing U.S. growth and when, or by how much, the Fed will taper quantitative easing,” said Andrew Grantham, an economist with CIBC World Markets in a note today.

The price of gold rallied on the housing data, briefly topping $1,400 an ounce to its highest level since June 7. The price of gold settled up 1.5 percent at $1,396.30.

The S&P/TSX Gold Index surged 2.7 percent to a four-month high. While the index has rallied 42 percent since June 26, it remains down 27 percent this year. Alacer Gold soared 7.2 percent to C$3.27 and Iamgold rallied 5.9 percent to C$7.06.

Raw-materials producers climbed 1.6 percent as a group for the biggest gain in the S&P/TSX, with all 10 industry groups advancing. Trading volume was 18 percent lower than the 30-day average.

Royal Bank of Canada, the nation’s largest lender, gained 1 percent to C$65.12 as Canada’s banks rose 0.8 percent to close at the highest this month. Bank of Montreal, scheduled to report earnings on Aug. 27, added 0.7 percent to C$65.20 for a fourth day of gains.

Maple Leaf, the Canadian food processor, jumped 7.8 percent, the most in almost five years, to C$14.44, after agreeing to sell its Rothsay animal-rendering business to Darling International.

Suncor Energy Inc. added 1.9 percent to C$36.06 as crude erased earlier losses to advance 1.3 percent in New York on signs of accelerating economic growth in Europe and unrest in the Middle East.

Penn West Petroleum, based in Calgary, rose 1.7 percent to C$12.12. The company has cut 550 jobs from the beginning of the year and expects to record an expense of about C$25 million in the third quarter related to the move.

US

By Nikolaj Gammeltoft and Alex Barinka

Aug. 23 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index posting its first two-day rally in three weeks, as investors watched Federal Reserve officials for signals on stimulus cuts after data showed home sales plunged.

Microsoft Inc. rallied 7.3 percent after Chief Executive Officer Steve Ballmer said he would retire within 12 months.

Nasdaq OMX Group Inc. added 1.2 percent after the shares slid the most in more than four months following a trading disruption yesterday. D.R. Horton Inc. sank 2.9 percent to pace declines in an index of homebuilder stocks. Pandora Media Inc. slumped 13 percent as its sales forecast missed estimates.

The S&P 500 climbed 0.4 percent to 1,663.47 at 4 p.m. in New York. The gauge added 1.3 percent in the past two sessions in the first back-to-back advance since Aug. 2. The Dow Jones Industrial Average rose 46.62 points, or 0.3 percent, to 15,010.36. About 4.9 billion shares changed hands on U.S. exchanges today, 21 percent below the three-month average.

“The macro picture is very important,” Jim Russell, the senior equity strategist for U.S. Bank Wealth Management, said in an interview from Cincinnati. His firm oversees $110 billion.

“Investors are trying to figure out how markets will respond to rising rates and what it will mean for the consumers and the business climate. This weekend’s meeting in Jackson Hole is a focus although we don’t expect big announcements.”

The S&P 500 gained 0.5 percent this week, snapping a run of two losing weeks, as investors weighed whether the economy is strong enough to prompt the Fed to curb its monthly bond purchases. Minutes from the central bank’s July meeting released Aug. 21 showed almost all policy makers agreed with plans to slow the pace if the economy continues to improve in line with forecasts.

Three Fed regional bank presidents, who spoke today from a monetary policy conference in Jackson Hole, Wyoming, differed over the timing for reducing the bond buying, with one backing a tapering next month if the economy remains strong and two others saying policy makers should take time to assess economic data.

“We can take our time” on slowing purchases, St. Louis Fed President James Bullard said. San Francisco’s John Williams told CNBC he wants to “taper our purchases later this year” if the economy doesn’t flag, while Atlanta’s Dennis Lockhart said he “would be supportive” of slowing purchases next month if the expansion holds up.

Data today from the Commerce Department showed purchases of new U.S. homes plunged in July by the most in more than three years and previous months were revised down, a sign that growth in the industry may be taking a pause as mortgage rates rise.

Yields on 10-year Treasury notes have risen toward a two-year high.

“Home sales are a big part of this recovery story in the U.S.,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $180 billion, said in an interview. “The fact that there are rising interest rates looks like it may be starting to bite into new home sales. That’s probably going to cause the economy be a little softer in the second half.”

The monetary support helped push the S&P 500 up as much as 153 percent from its March 2009 low. Speculation about the stimulus has whipsawed stocks since May, when Chairman Ben S.

Bernanke, who is not at the conference, first indicated cuts could start this year.

The S&P 500 tumbled 5.8 percent from a record high on May 21 through June 24. It then rebounded as much as 8.7 percent to close at its latest record of 1,709.67 on Aug. 2. The index closed today 2.7 percent below the all-time high.

The Chicago Board Options Exchange Volatility Index, or VIX, dropped 5.3 percent to 13.98. The equity volatility gauge fell 2.7 percent in the past five days to halt two consecutive weeks of advances.

Nasdaq halted trading of its listed stocks for three hours yesterday because a computer problem left some investors without quotes and the company did not want to have “information asymmetry,” Chief Executive Officer Robert Greifeld said in interviews today.

Nasdaq shares rose 1.2 percent to $30.83 after retreating 3.4 percent yesterday. The exchange operator will probably not have to spend large sums on damages, Wells Fargo & Co. analysts led by Christopher Harris wrote in a note. Nasdaq suspended trading in the stocks, so investors probably didn’t lose money as a result of mismanaged orders.

Greifeld told CNBC that Nasdaq has “no liability” from the outage and said yesterday’s share decline was a buying opportunity.

Microsoft rallied 7.3 percent to $34.75 for the biggest gain in the Dow. Ballmer, who has struggled to adapt to an era of declining personal-computer sales, will retire after more than a decade leading the world’s largest software maker.

Autodesk Inc. jumped 7.7 percent, the most since October 2011, to $38.91. The software maker was upgraded to buy from neutral by B Riley & Co. after its sales and profit topped estimates in the second quarter.

The S&P Supercomposite Homebuilding Index sank 3.1 percent, with all 11 members declining. PulteGroup Inc. retreated 1.6 percent to $16.06 and D.R. Horton slid 2.9 percent to $18.73.

Pandora Media slumped 13 percent to $18.91, its steepest slide this year. The biggest online radio service forecast third-quarter profit that will miss analysts’ estimates as the company invests to expand its sales staff.

Have a wonderful weekend everyone.

Be magnificent!

I am imperfect and want to be perfect – this alone is the starting point of my nonviolence.

The imperfect will turn perfect when it ceases to be and what is not comes into being.

Acharya Mahaprajna, 1920-2010

As ever,

Carolann

A friend is one who knows you and loves you just the same.

–Elbert Hubbard, 1856-1915

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