July 10, 2012 Newsletter

Dear Friends,

Tangents:

Raymond Asquith wrote this to his wife Katharine on July 10^th, 1916:

We are in the front line now and have two more days there….One gets terribly tired of one’s clothes after sixteen days without a change.   One dozes off in the daytime with a pleasant humming in one’s ears which makes one dream of woods and hayfields in England and when one wakes one finds that it is a covey of bluebottles quarreling over a bit of  bully beef that some blasé private has flung in the trenches.  Yesterday I saw a very handsome fly with a bottle-green bodice and magenta skirt.  This is the nearest I can get to a pretty woman. –from The Book of Days.

And also on this day in…

1509 – John Calvin, founder of Presbyterianism is born.

1871 – Marcel Proust is born.

1925 – John Scopes (Inherit the Wind) “Monkey Trial” begins.
1940 – Battle of Britain begins.
1962 – U.S. Patent issued for the Three Point Seatbelt.
1943 – Allies begin amphibious landing of Sicily – In Operation Husky, Canadian 1st Infantry and 1st Tank Brigade Invade Sicily with British, French and U.S. troops – Sicily is taken Aug. 17 victory, with 2434 Canadian casualties.
1962 – The Telstar satellite is launched from Cape Canaveral, beaming live television from Europe and U.S.
1985 – Rainbow Warrior sunk, Greenpeace.

CHEFS IN YOUR KITCHEN

FYI: Now you can bring your laptop or tablet right into your kitchen and enroll in classes with different chefs at TestKitchenSchool.com. Instructor-led classes are $39.95/month; the self-guided option is $19.95/month.  There are photos, video and interactive tools.

The way you get to know yourself is by the expression on other people’s faces. -Gil Scot Heron

photos of the day July 10, 2012

Visitors to the National Gallery of Art in Washington pass between the East and West Buildings via Multiverse, the largest and most complex light sculpture ever, created by American artist Leo Villareal.

Kevin Lamarque/Reuters

Children climb up a massive bonfire in the Shankill Estate in West Belfast, Northern Ireland. Thousands of bonfires have been built in Protestant areas across Northern Ireland for the annual July 11 bonfire night in which Protestants celebrate the 1690 Battle of the Boyne.

Peter Morrison/AP

Market Closes for July 10, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steve Chambers

July 10 (Bloomberg) — Canadian stocks slumped for a fourth straight session as declines in commodities outweighed news that housing starts unexpectedly rose and European officials took steps to protect Spanish banks.

Mining and energy stocks contributed the most among 10 industries to the decrease in the Standard & Poor’s/TSX Composite Index. Barrick Gold Corp. and Kinross Gold Corp. dropped at least 1.4 percent as the metal fell 0.3 percent on the Comex. Research In Motion Ltd. retreated 4.7 percent after Chief Executive Officer Thorsten Heins struggled to reassure shareholders who gathered at the company’s annual meeting.

The S&P/TSX Index retreated 29.44 points, or 0.3 percent, to 11,605.23 at 12:44 p.m. in Toronto. The benchmark index had slumped 2.3 percent over the last three sessions and is down 2.9 percent in 2012.

“We’re in one of those information vacuums,” Jamie Robertson, chief investment officer at Calgary-based McLean & Partners Wealth Management, said in a phone interview. The firm manages C$900 million. “We’re heading into earnings season, expectations are damped for company reporting, and Europe is always going to be background noise. It just shows how nervous the markets are and the lack of conviction they’re trading with at this point.”

Canadian housing starts rose unexpectedly by 2.4 percent in June, beating estimates by all 21 economists surveyed by Bloomberg. European governments will jump-start as much as 100 billion euros ($123 billion) in emergency loans to shore up Spain’s banks and may move the costs off the Spanish government’s balance sheet to shield the euro region’s fourth- largest economy from the debt crisis.

BlackBerry maker Research in Motion fell 4.7 percent to C$7.43 as company officials told shareholders at the company’s annual meeting that it expects the next couple of quarters to be very challenging.

Barrick Gold, the world’s largest producer of the metal, lost 1.4 percent to C$36.82. Kinross Gold declined 2.5 percent to C$8.24. Jaguar Mining Inc., a gold miner with deposits in Brazil, tumbled 18 percent to 82 cents, the most since May.

Oil fell as much as 1.6 percent after Norway ended a strike that threatened to halt output by western Europe’s largest crude exporter and as China reduced purchases of the raw material.

Cenovus Energy Inc., a provider of natural gas, fell 0.5 percent to C$32.74. Imperial Oil Ltd., the second-largest energy provider, declined 0.6 percent to C$42.54.

US

By Rita Nazareth and Allison Bennett

July 10 (Bloomberg) — U.S. stocks fell for a fourth day as pessimism about the earnings season grew while commodity producers slid amid lower oil and metal prices. The euro reached a two-year low versus the dollar, while European shares rallied.

The Standard & Poor’s 500 Index dropped 0.9 percent to 1,339.68 at 2:36 p.m. in New York to extend its longest slump since May. The 10-year Treasury yield was little changed at 1.51 percent. The euro weakened as much as 0.6 percent to $1.2235 and touched a record low of 1.199 Australian dollars. Oil sank 2.5 percent to $83.84 a barrel in New York as a strike in Norway was averted and China reduced purchases. Natural gas tumbled 4.8 percent, while nickel and silver lost more than 2 percent.

Lower-than-estimated sales projections at Advanced Micro Devices Inc. and Cummins Inc. spurred concern about the groups forecast to post the strongest profit growth among 10 industries in the S&P 500. Technology and industrial company earnings increased more than 7 percent in the second quarter, according to analyst estimates compiled by Bloomberg, while profits for the entire S&P 500 are projected to have fallen 1.8 percent in the first decrease since 2009.

“I don’t expect the rest of the earnings season to surprise to the upside,” John Augustine, who helps oversee $25 billion as chief market strategist at Cincinnati-based Fifth Third Asset Management, said in a phone interview. “Earnings will be the driver of the market coming up.

Technology shares in the S&P 500 slid 1.3 percent as a group and were the biggest drag on the index among the 10 main industries. Industrial companies lost 1.8 percent for the largest decline.

AMD, the second-biggest maker of processors for personal computers, tumbled 11 percent after reporting an unexpected drop in second-quarter sales, citing weakness in China and Europe.

Micron Technology Inc. and SanDisk Corp. lost at least 4.2 percent. Cummins, a maker of truck engines, tumbled 9.5 percent after saying order trends have weakened and the company expects 2012 revenue ‘‘to be in line’’ with the 2011 level after projecting a 10 percent increase in February. Second-quarter preliminary revenue was about $4.45 billion, the company said, compared with the average analyst estimate for $5.08 billion.

Alcoa Inc. tumbled 4.6 percent after the company reported a quarterly loss of $2 million and a drop in sales to $5.96 billion from $6.59 billion. Profit excluding charges related to a proposed settlement of Aluminium Bahrain BSC’s bribery lawsuit and other items was 6 cents a share, compared with the 5-cent average of 19 estimates compiled by Bloomberg.

The euro weakened against all 16 major peers five days after the European Central Bank reduced its key interest rate to a record 0.75 percent. The shared currency depreciated even as Europe planned to jump-start as much as 100 billion euros ($123 billion) in loans to shore up Spain’s banks, Luxembourg Prime Minister Jean-Claude Juncker said after chairing a meeting of euro-area finance ministers.

‘‘The euro is now the main funding currency, and everyone wants to be short euro,” said Sebastian Galy, a senior foreign- exchange strategist at Societe Generale SA in New York. “The dollar is no longer the main funding currency.” A short position is a bet currency will decline in value.

The currencies of Mexico, Sweden and South Africa led gains against the euro, rising at least 0.8 percent. The euro extended losses as Italian Prime Minister Mario Monti said he won’t serve in another government when his term ends next year. Monti said he is confident Italy would not need a full rescue from European allies, while not ruling out a request for the permanent bailout funds to buy the nation’s bonds.

Five shares rose for every one that declined in the Stoxx 600. ASML Holding NV jumped 8.6 percent as Intel Corp., the world’s largest semiconductor maker, agreed to invest as much as $4.1 billion in Dutch chip-equipment maker. Ipsen SA sank 11 percent after U.S. regulators put clinical trials of a hemophilia drug it’s developing on hold because of potential safety concerns.

European stocks also advanced as U.K. manufacturing rose 1.2 percent from April and industrial output grew 0.8 percent in Italy, defying the median economist estimates for declines.

Spanish equities and bonds gained after finance chiefs agreed to make available 30 billion euros by the end of this month. The goal is to eventually use the euro-area bailout fund to recapitalize banks directly instead of saddling the government with the debts.

“It’s positive progress showing that the European Union is moving towards a banking union,” Norman Chan, head of investment at Calibre Asset Management Ltd., a unit of National Australia Bank Ltd., said in an interview with Bloomberg Television. “It shows the EU is being pragmatic.”

The MSCI Emerging Markets Index rose less than 0.1 percent, snapping a four-day drop. Benchmark gauges in India and Thailand climbed more than 1 percent. Russia’s Micex Index gained 0.5 percent. The Hang Seng China Enterprises Index of mainland shares slid 0.6 percent. China’s imports rose less than anticipated in June while growth in outbound shipments slowed, customs bureau data showed.

The extra yield investors demand to own Spanish 10-year debt over benchmark German bunds narrowed 25 basis points to 5.49 percent. The yield on 10-year Italian bonds fell 15 basis points to 5.95 percentage points. Germany’s 10-year yield was little changed at 1.32 percent.

The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments dropped 4 basis points. The Markit iTraxx Crossover Index of contracts tied to the debt of 50 mostly junk-rated European companies declined for a second day, falling 15 basis points.

Brent crude fell 1.4 percent to $98.95 a barrel, tumbling below $100 after the Norwegian government ordered compulsory arbitration, preventing a lockout of platform workers that had been scheduled to start yesterday at midnight.

Have a wonderful evening everyone.

Be magnificent!

The purity of life is the highest and most authentic art to follow.

Mahatma Gandhi, 1869-1948

As ever,

Carolann J

Anyone can hold the helm

when the sea is calm.

-Publilius Syrus, 85-43 BC

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