February 19, 2013 Newsletter

Dear Friends,

Tangents:

If you have no plans for the weekend yet, consider heading down to Seattle for the 25^th anniversary of the Northwest Flower & Garden Show.  It is the biggest show of its kind in North America – after Philadelphia’s garden show, of course.  Six acres of gardening and flora design at the Washington State Convention Center in Seattle!  This 25^th anniversary year should be especially wonderful with the theme being Hollywood movies.  Apparently, there’s even a Vespa parked in one of the gardens, its creation inspired by the 1953 movie Roman Holiday with Audrey Hepburn and Gregory Peck.

I don’t know why I saved this when I first read it,  but I did; maybe you will like it too…

English Gardens

England’s romantic gardens, with their billowing masses of roses and rustic cottages, are emblematic of the country itself.  Many visitors come with the express purpose of seeing the country’s famous garden sights.

Early in the 1700’s, English gardens resembled the formal classical gardens of Italy and France.  Then began a movement, spurred on first by romantically inclined writers and poets, for more “natural” gardens.  Alexander Pope, a poet and essayist, lobbied for a return to the “amicable simplicity of unadorned nature” in an essay on gardening in the 1713 Guardian.  In his Epistle to Burlington, he proclaimed:  “In all, let nature never be forgot….Consult genius of the place.”  The English landscape style went on to be finessed by three designers;  William Kent, Lancelot(Capability) Brown, and Humphrey Repton.  You’ll see their work at many of England’s historic homes.

Not all gardens are residential.  You’ll find some enchanting ones in the cloisters of cathedrals.  Monks and nuns carefully tended these peaceful green spaces, growing the food they needed, as well as medicinal herbs.

For comprehensive information on English public gardens, the National Trust is the best place to start.  The agency also suggests itineraries at www.nationaltrutst.org.uk.

This list of gardens is cited by www.gardenvisit.com as being outstanding examples of garden design.   They provide the perfect skeleton for a garden lover’s trip to England:

Biddulph Grange, Blenheim Palace, Castle Howard, Chatsworth, Great Dixter, Hampton Court Garden, Harewood House, Wisley, Rousham Landscape Garden, Royal Botanic Garden, Edinburgh, Sissinghurst Castle Garden, Stowe Landscape Gardens, Studley Royal, Hidcote Garden, Royal Botanic Garden, Kew, Leonardslee Gardens, and Levens Hall Garden.

THE MOSS ROSE: It’s hard to imagine a greater honor for a horticulturist than having a plant named after you.  Such is the case for the noted horticulturist Nancy Moss, whose family has carefully perfected the Moss rose.  Portulaca grandiflora is a hardy, drought-resistant flowering plant that comes in an array of bright colors.  –from Lande’s Snapshots.

Photo of the Day – February 19^th, 2013

Cuba’s best-known dissident, blogger Yoani Sanchez, addresses a news conference at the auditorium of the Chamber Executives of shopkeepers in Feira de Santana, Brazil. Sanchez is on an 80-day tour, after she was granted a passport under Cuba’s sweeping immigration reform that went into effect this year. Ueslei Marcelino/Reuters

Market Closes for February 19th, 2013:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada:

By Eric Lam

Feb. 19 (Bloomberg) — Canadian stocks rose the most in three months, led by gains among banks, after a measure showing an increase in German investor confidence added to signs of a European economic recovery.

Royal Bank of Canada, the nation’s largest lender, surged 1.8 percent. Bank of Nova Scotia and Toronto-Dominion Bank rose at least 1.1 percent. Suncor Energy Inc., Canada’s largest energy producer, gained 1.2 percent as the price of crude rallied. Great-West Lifeco Inc. added 2.4 percent after agreeing to acquire Irish Life Group Ltd. Atlantic Power Corp. slid 3.6 percent after an analyst with RBC Capital Markets said the company may lower its dividend.

The Standard & Poor’s/TSX Composite Index rose 123.58 points, or 1 percent, to 12,810.21 in Toronto for the biggest gain since Nov. 19. The S&P/TSX has risen 3 percent for 2013.

Canadian markets were closed yesterday for the Family Day holiday.

“Financials are rebounding with the positive news worldwide with the German investor confidence number and a Canadian company willing to make an acquisition in Ireland,” Anish Chopra, managing director and fund manager with TD Asset Management Ltd., said on the phone from Toronto. His firm manages about C$204 billion ($201.5 billion). “It all bodes well for banking institutions in Canada.”

Investor confidence in Germany, Europe’s largest economy, jumped in February to 48.2 from 31.5 in January, the ZEW Center for European Economic Research in Mannheim said. That’s more than economists forecast and the highest level since April 2010.

Great-West added 65 Canadian cents to C$27.43. Canada’s second-largest insurer agreed to acquire Irish Life from Ireland’s government for C$1.75 billion as it seeks to expand European operations.

Banks and energy stocks contributed most to gains in the S&P/TSX as nine of 10 industries advanced. Trading volume was in line with the 30-day average.

The S&P/TSX Financials Index rose 1.3 percent to 1,844.15 points, its highest level since December 2007. Royal Bank gained 1.8 percent to C$64.43, an all-time high. TD Bank advanced 1.3 percent to C$83.84. Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce added at least 0.9 percent.

“We’re also getting a rally in the safety sectors of the pipelines, utilities and telecoms. Investors seem to be gravitating to high-quality, dividend-paying equities,” Chopra said.

Enbridge Inc. gained 1 percent to C$44.81 and TransCanada Corp. added 1.3 percent to C$47.39. Rogers Communications Inc., Canada’s largest wireless carrier, jumped 2.5 percent to C$48.49. Telus Corp. rose 2.2 percent to C$69.32.

Canadian National Railway Co. increased 0.7 percent to C$101.50. The Montreal-based railway named Jim Vena, 54, its new chief operating officer after Keith Creel left earlier this month to be president and COO of rival Canadian Pacific Railway Ltd.

Suncor climbed 38 Canadian cents to C$32.13, its biggest gain in more than two weeks. Cenovus Energy Inc. advanced 1.8 percent to C$32.76. Crude for March delivery, which expires tomorrow, added 0.8 percent to settle at $96.66 a barrel in New York.

Atlantic Power, based in Boston, lost 42 Canadian cents to C$11.17 after Nelson Ng, analyst with RBC Capital Markets, said the company may lower its dividend by at least 30 percent after it reports its fourth-quarter earnings results on Feb. 28.

US:

By Nikolaj Gammeltoft and Sarah Pringle

Feb. 19 (Bloomberg) — U.S. stocks advanced, sending benchmark indexes to their highest levels in five years, on increasing optimism over dealmaking and a report showing rising investor confidence in Germany.

Office Depot Inc. soared 9.4 percent and OfficeMax Inc. surged 21 percent as a person familiar with the matter said the companies have discussed a merger and may announce a deal as early as this week. Bank of America Corp. and Citigroup Inc. rose more than 1.3 percent as financial shares rallied. Google Inc. jumped 1.8 percent, surpassing $800 for the first time.

The Standard & Poor’s 500 Index increased 0.7 percent to 1,530.94 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 53.91 points, or 0.4 percent, to 14,035.67. Both indexes closed at their highest levels since October 2007. About 6.5 billion shares exchanged hands on U.S. exchanges, 6.5 percent above the three-month average. U.S. equity markets were closed yesterday for the Presidents Day holiday.

“More deals out there do create a good sentiment,” Kevin Divney, chief investment officer at Beaconcrest Capital Management in Boston, said in an phone interview. “CEOs now are looking further out, and that’s been the issue the past four years. If we can extend horizons it makes for better strategic decisions.”

The S&P 500 completed its seventh consecutive weekly advance on Feb. 15, climbing 0.1 percent for the five days amid optimism over corporate merger activity and better-than- estimated economic data. The benchmark gauge is 2.2 percent below its 2007 all-time high of 1,565.15, while the Dow is 0.9 percent from its record high of 14,164.53.

Almost $40 billion in deals were announced in the U.S. on Feb. 14, bringing the total this month to more than $140 billion, according to data compiled by Bloomberg. That already surpassed the total of $99.6 billion during the first two months of 2012.

The S&P 500 has climbed 7.3 percent in 2013 as U.S. lawmakers agreed on a compromise federal budget and earnings topped analyst estimates. About 71 percent of the 402 companies in the S&P 500 that have released results in the earnings season have exceeded profit projections, and 66 percent have beaten sales estimates, data compiled by Bloomberg show.

German investor confidence jumped more than economists forecast in February to the highest in almost three years, data showed today, adding to signs that Europe’s largest economy is rebounding from its slump.

The Chicago Board Options Exchange Volatility Index reached its lowest level since April 2007, slipping 1.2 percent to 12.31. Declines in the VIX, as the gauge of S&P 500 Index volatility is known, came before gains in the S&P 500 in 2009 and at the end of 2011.

Nine out of 10 groups in the S&P 500 advanced, with consumer-staples and energy shares climbing at least 1 percent.

The KBW Bank Index added 0.6 percent, as Bank of America gained 1.3 percent to $12.19. Citigroup jumped 1.5 percent to $44.50, its highest level since May 2011, while JPMorgan Chase & Co. reached a more than four-year high after adding 1.2 percent to $49.45.

Office Depot, the second-largest office-supplies retailer, added 43 cents to $5.02 and OfficeMax rallied $2.25 to $13. The companies have discussed a stock swap that would create a single office-supply retailer to compete with Staples Inc., said the person familiar with the matter, who asked not to be identified because the talks remain private. Office Depot has explored options since September, when activist fund Starboard Value LP became its largest shareholder.

Staples climbed 13 percent to $14.65 for the biggest gain in the S&P 500.

Google advanced $13.96 to $806.85, the highest since the company went public in August 2004. Google is benefiting as more advertisers place promotions on its website, buoyed by the growing number of users who access the service on smartphones and tablets.

Best Buy Co. gained 2.7 percent to $17.33 after Alan Rifkin, an analyst at Barclays Plc, raised the retailer of electronic goods to overweight, the equivalent of buy, from equal weight.

“We believe Best Buy is taking the necessary steps to improve operations by cutting costs out and driving efficiencies,” Rifkin wrote in a report today. “We are confident that management will work to defend share.”

General Mills Inc. added 1.9 percent to $45.43. The maker of Cheerios cereal said profit would rise at a high single-digit percentage rate in fiscal 2014 and reiterated its earnings forecast for this year. Analysts project an increase of 8 percent to $2.90 per share, according to the average of estimates compiled by Bloomberg.

Sealed Air Corp. jumped 9 percent to $21.15. The packaging manufacturer, based in Elmwood Park, New Jersey, posted fourth- quarter revenue of $1.98 billion, topping the $1.94 billion average estimate in a Bloomberg survey of analysts.

An index of homebuilders dropped 1.2 percent, with nine of its 11 members declining. The National Association of Home Builders/Wells Fargo builder confidence index fell to 46 from January’s 47, a report from the Washington-based group showed today. The median forecast in a Bloomberg survey of 50 economists called for a rise to 48.

PulteGroup Inc. tumbled 1.8 percent to $19.95 and D.R. Horton Inc. lost 1.6 percent to $23.29.

Humana Inc. tumbled 6.4 percent to $73.01 for the biggest drop in the S&P 500. The second-biggest private Medicare insurer said the U.S. government’s preliminary Medicare Advantage payment rates were less than the company anticipated. The proposed rates also sent other insurers’ shares down.

United Health Group Inc., the largest U.S. health insurance provider, fell 1.2 percent to $56.66. Cigna Corp. lost 1.1 percent to $60.43.

Casino companies retreated as HSBC Global Research said Macau’s gambling revenue lagged behind its projection for the first 17 days of February. VIP, or high-stakes, gamblers may have stayed away to avoid crowds during the New Year holiday, HSBC said.

Wynn Resorts Ltd. dropped 2.1 percent to $120.39 after CLSA Ltd. downgraded Wynn Macau, the Hong Kong-listed unit of billionaire Steve Wynn’s Las Vegas-based company, to outperform from buy. Las Vegas Sands Corp., which operates casinos and convention centers in the U.S., Macau and Singapore, tumbled 3.1 percent to $51.25.

Price swings in U.S. stocks are narrowing the most since the Great Depression, a signal of reviving investor confidence that has fueled a four-year-old bull market.

Average daily price moves for the S&P 500 have fallen to 0.43 percent in 2013 from an average 1.08 percent in the past five years, the steepest decline for any corresponding period since the 1930s, according to data compiled by Bloomberg. The last time the annual average was this low was 1995, when the S&P 500 surged 34 percent and doubled in the following four years.

Stocks gain an average of 17 percent during years when the gyrations are so small, the data going back to 1928 show.

The combination of declining volatility and the best start to a year since 1997 is prompting bears to warn that investors are growing complacent as the rally ages. Bulls cite smaller fluctuations as another reason to buy, on top of rising earnings forecasts, below-average valuations and the biggest deposits in equity mutual funds in nine years.

“Switching from net outflows to net inflows has been a big part of volatility being dampened,” Michael Shaoul, the chairman and chief executive officer at Marketfield Asset Management, said in a Feb. 14 phone interview.

Have a wonderful evening everyone.

Be magnificent!

It is quite proper to resist and attack a system but,

to resist and attack its author is tantamount to resisting and attacking oneself.

For we are all tarred with the same brush.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

About the time we can make the ends meet

somebody moves the ends.

-Herbert Hoover, 1874-1964

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