August 29, 2013 Newsletter

Dear Friends,

Tangents:

Interesting article this week by Peter Geoghegan:

EDINBURGH, SCOTLAND – August in Edinburgh is synonymous

with the arts. This August more

than 25,000 performers have descended on

the Scottish capital, offering everything from

stand-up comedy and one-act plays to jazz,

opera, and poetry readings as part of several

separate festivals that are collectively known

as the Edinburgh Festival.

But while the cobbled streets of Edinburgh’s

Old Town will be littered with fliers and street

performers until the end of this month, the

program for next year’s festival is already

causing a stir. The 2014 Edinburgh Festival

– which bills itself as the largest arts festival

in the world – is scheduled to end just weeks

before Scotland goes to the polls in a historic

referendum on independence.

But the Scots’ historic constitutional

choice won’t be on the

agenda at the oldest of the festivals,

the Edinburgh International

Festival (EIF), according to its

director, Jonathan Mills.

Mr. Mills told a Scottish newspaper

earlier this month that he

was “not anticipating anything

in the [program] at all” next year

about the independence debate.

The program will concentrate on

the Commonwealth Games – due

to take place in Glasgow next

summer – and the centenary of

the start of World War I.

“We would not wish our festival

to be anything other than it

has always been, which is a politically neutral

space for artists. It is important that it remains

that,” Mills said in an interview with The

Scotsman.

Founded in 1947, the EIF has a budget of

£10 million ($15 million), about half of which

comes from public funds.

The reaction to the director’s comments

about next year’s program was quick, with

many in Scotland’s arts community questioning

the idea that the arts are politically neutral.

“I don’t think the EIF is going to be able to keep

this issue out. We’ve got a year to make use of

this opportunity to start a proper discussion,”

novelist Denise Mina told the Sunday Herald,

a popular Scottish newspaper. “The discussion

has become really narrow, and people are stating

their positions. Nobody is really listening

to each other and the festival would have been

a great opportunity to listen.”

“The arts are one of the places where we

can discuss the more abstract notions. It’s a

real missed opportunity by Jonathan Mills,”

Ms. Mina added.

By far the largest slice of the Edinburgh

Festival pie belongs to the Fringe. It was inaugurated

in 1947 when eight theater companies

that were not invited to the EIF decided to perform

regardless, and has grown into one of the

most recognizable arts festivals in the world,

with a reputation for being more spontaneous

and edgy than its more formal sibling. Despite

this, Scottish independence remained a rather

marginal theme in this year’s Fringe, says Ben

Judge, editor of Fest magazine.

Even so, playwright and novelist Alan

Bissett believes that the arts have a particularly

important role to play in the lead-up to

next September’s vote.

“Because [independence] is so complex, the

arts is the ideal place to have that discussion,”

he says. “Artists aren’t beholden to ‘the truth.’

We are much more about exploring the emotional

complexities. People who experience a

play, or a poem, or a novel about nationalism

recognize more of it because it’s not black and

white.”

Photos of the Day –August 29^th, 2013

Members of Britain’s Royal Air Force perform a parachute jump into The Ageas Bowl cricket ground before England play Australia in Southampton, England. Kirsty Wigglesworth/AP

People carry lanterns around Pleasure Bay during an event to commemorate the 50th anniversary of Martin Luther King Jr.’s ‘I Have a Dream’ speech in Boston, Massachusetts August 28th. Brian Snyder/Reuters

Market Closes for August 29^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Alex Barinka

Aug. 29 (Bloomberg) — Canadian stocks rose for a second day, as bank shares advanced on better-than-estimated earnings and phone companies rallied on dimmed prospects of competition from U.S.-based Verizon Communications Inc.

Royal Bank of Canada and Toronto-Dominion Bank gained at least 1.2 percent after raising their dividends and posting third-quarter earnings that beat analysts’ estimates. Rogers Communications Inc. surged 3 percent to lead phone stocks higher. Dundee Precious Metals Inc. jumped 10 percent after suggesting it may expand a gold and silver mine in Armenia.

The Standard & Poor’s/TSX Composite Index rose 97.51 points, or 0.8 percent, to 12,704.73 at 4 p.m. in Toronto. The gauge added 0.1 percent yesterday and has gained 1.8 percent this month.

“Given that so many people own Canadian banks, it’s good news and that will set the tone on the macro for Canadian equity markets,” Irwin Michael, portfolio manager with ABC Funds in Toronto, said in a phone interview. His firm manages C$800 million ($774 million). “With the higher U.S. GDP, it gives us more comfort that the economy is slowly but surely improving.”

Investors are weighing data that showed the U.S. economy grew by more than expected in the second quarter and that claims for unemployment benefits declined last week. The U.S. is Canada’s biggest trading partner.

Eight of 10 industries in the S&P/TSX rose, with phone, bank and health-care stocks rising at least 1.2 percent. Trading volume in the benchmark gauge was 4.6 percent below the 30-day average.

The S&P/TSX Commercial Bank Index jumped 1.6 percent to a record high, as all eight members increased. Royal Bank, TD Bank and Canadian Imperial Bank each reported today third-quarter earnings that beat analysts’ estimates.

Royal Bank, Canada’s largest lender by assets, gained 1.2 percent to C$65.24, the highest in a month. Toronto-Dominion, the second-biggest bank, climbed 2.7 percent to a record C$89.93. Canadian Imperial Bank of Commerce rose 2.8 percent to C$82.66.

The three Toronto-based banks posted record profit in Canadian personal and commercial banking and wealth management even as near record-low interest rates and tight net interest margins proved challenging for lenders.

Phone stocks rallied 2.4 percent on speculation that a Verizon bid for Vodafone Group Plc’s stake in Verizon Wireless will reduce the U.S. carrier’s appetite for Canadian expansion.

Vodafone confirmed it’s in talks to sell its stake, in a deal that may be worth $130 billion, according to people familiar with the matter.

“If negotiations between Verizon and Vodafone are really heating up, we believe that the prospects of a Verizon entry into Canadian wireless could decline significantly,” Dvai Ghose, head of research at Canaccord Genuity said in a note to clients dated yesterday.

Rogers Communications, Canada’s largest wireless carrier, climbed 3 percent to C$42.01. Telus Corp. rose 2.5 percent to C$33.10.

Health-care companies jumped 1.6 percent, led by a surge in Catamaran Corp. of 1.7 percent to C$58.19.

Shares in producers of raw materials erased earlier losses of as much as 1.3 percent even as metals prices slumped. The S&P/TSX Materials Index advanced 0.5 percent, halting two days of declines.

Dundee Precious Metals surged 10 percent to C$6.80 after saying an internal study of its Kapan mine in Armenia most likely will result in expanding operations there.

Energy stocks were little changed as a group. Shares in commodities producers have been roiled in recent days, amid growing speculation the U.S. and its allies will take military action against Syria.

The prospect of imminent strikes receded today as U.K. Prime Minister David Cameron, the U.S.’s top ally, struggled to win parliamentary backing for military action.

US

By Nick Taborek and Corinne Gretler

Aug. 29 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as data showed the economy expanded at a faster pace in the second quarter and concerns over Syria eased.

Verizon Communications Inc. added 2.7 percent as Vodafone Group Plc said the companies are in talks over their Verizon Wireless venture. Guess? Inc. rallied 13 percent after the apparel maker reported second-quarter profit that exceeded analysts’ estimates. Exxon Mobil Corp. lost 1.8 percent as oil futures fell from a two-year high.

The S&P 500 rose 0.2 percent to 1,638.17 at 4 p.m. in New York, paring an earlier advance of as much as 0.7 percent. The Dow Jones Industrial Average gained 16.44 points, or 0.1 percent, to 14,840.95.

“That’s just one confirmation that the data is continuing to move in the right direction,” Anastasia Amoroso, global market strategist at J.P. Morgan Funds, which oversees about $400 billion, said in a phone interview. “That gives more evidence why the Fed should ultimately taper. But over the last couple of months the markets have been a lot more comfortable with that notion.”

Gross domestic product rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg projected a 2.2 percent gain.

Jobless claims in the week ended Aug. 24 dropped 6,000 to 331,000 from a revised 337,000 the week before that was higher than initially reported, the Labor Department said today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for a drop to 332,000.

The equity benchmark has fallen 2.8 percent in August amid speculation the Fed will pare stimulus measures and concern the U.S. will take military action against Syria.

Minutes of the Fed’s July meeting released on Aug. 21 showed policy makers supported cuts to the central bank’s bond- buying program this year if the economy improves in line with its forecasts. Fed stimulus helped push the S&P 500 up as much as 153 percent from its March 2009 low, data compiled by Bloomberg show.

The prospect of imminent military strikes on Syria receded as the U.K. and France said they favor waiting for the results of a United Nations investigation into alleged use of chemical weapons. The U.S., which says it has evidence that Syria’s government was responsible, won’t act without allies, Defense Secretary Chuck Hagel said today.

“We’re back to focusing on economic data, specifically out of the U.S. and Europe, and the Fed tapering, as the market is coming around to believe the Syrian conflict poses only a short- term risk,” said Manish Singh, who helps oversee $2 billion as head of investment at Crossbridge Capital in London. “I am of the opinion that tapering will happen in September, regardless of data.”

About 4.8 billion shares changed hands on U.S. exchanges.

Trading is poised for the second-slowest month in at least five years, according to data compiled by Bloomberg. An average of about 5.5 billion shares changed hands each day this month.

That’s about 50 million shares more than last August.

The Chicago Board Options Exchange Volatility Index, or VIX, increased 1.9 percent to 16.81. The equity volatility gauge has surged 42 percent since a five-month low on Aug. 5.

Eight out of 10 main groups in the S&P 500 rose, with phone companies advancing 1.2 percent to lead gains.

Verizon Communications rose 2.7 percent to $47.82. The company is in advanced talks to acquire Vodafone’s 45 percent stake in their Verizon Wireless venture for about $130 billion, people with knowledge of the matter said.

In a statement, Newbury, England-based Vodafone said there’s “no certainty that an agreement will be reached” as it holds discussions with New York-based Verizon. Bob Varettoni, a spokesman for Verizon, declined to comment.

Microsoft Corp. rose 1.6 percent to $33.55. Microsoft is in talks with Foursquare Labs Inc. about a potential investment in the social-media company, according to people with knowledge of the discussions.

An S&P index of homebuilders climbed 2.5 percent, after dropping 3.7 percent over the previous two days. PulteGroup Inc. rose 3.1 percent to $15.86 and Lennar Corp. advanced 3.2 percent to $32.62.

The Bloomberg U.S. Airlines Index rose 2 percent as US Airways Group Inc. advanced 4 percent to $15.96. Delta Air Lines Inc. jumped 2.7 percent to $19.64.

Guess soared 13 percent to $30.82. Second-quarter adjusted earnings per share amounted to 52 cents, exceeding the average estimate of 35 cents in a survey of analysts. The company raised its full-year earnings guidance to $1.78 to $1.92 a share, from a previous prediction of $1.70 to $1.90. Analysts had forecast $1.79.

Exxon Mobil declined 1.8 percent to $87.27, while Chevron Corp. lost 1.2 percent to $120.37. Oil futures retreated 1.2 percent after climbing to the highest level since May 2011 yesterday.

Campbell Soup Co. fell 3.1 percent to $43.33 after the company reported fourth-quarter sales lower than analysts’ estimates.

Have a wonderful evening everyone.

Be magnificent!

The idea of a duty to understand violence engenders for me

a great vitality and passion for knowledge.

But to transcend this violence, I need not repress it, nor deny it, nor say to myself:

It has become a part of me, I can do nothing about it; or, I wish to reject it.

I must observe it, study it, enter into it intimately,

and for that purpose I need neither condemn it nor justify it.

And yet, it is this that we do.

I would ask you then, to suspend for an instant your judgments on the subject.

-Krishnamuti, 1895-1986

Carolann

If two wrongs don’t make a right, try three.

-Lawrence J. Peter, 1919-1990

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