July 24, 2012 Newsletter

Dear Friends,

Tangents:

In three words I can sum up everything I’ve learned about life: it goes on. – Robert Frost

Hemingway’s publisher, Scribner, is releasing an edition of his 1929 classic with all 47 of his draft endings.  That’s right, he wrote 47 alternate endings to the novel and all of them will be appended in the upcoming edition.  Obviously, great writers take endings seriously.  Here’s the ending from the first edition:  “After a while I went out and left the hospital and walked back to the house in the rain.”

A few other great literary endings:

“…but my life now, my whole life, independently of anything that can happen to me, every minute of it is no longer meaningless as it was before, but has a positive meaning of goodness with which I have the power to invest it.”  -Anna Karenina, by Leo Tolstoy.

I lingered round them, under that benign sky; watched the moths fluttering among the heath and hare-bells; listened to the soft wind breathing through the grass; and wondered how anyone could ever imagine unquiet slumbers for the sleepers in that quiet earth.  –Wuthering Heights, by Emily Bronte.

Gazing up into the darkness I saw myself as a creature driven and derided by vanity; and my eyes burned with anguish and anger.  –Araby, from Dubliners, by James Joyce.

And on this day in…

1898 – Amelia Earhart is born.

1900 – Zelda Fitzgerald is born.

1911 – Machu Picchu discovered.
1969 – President Kennedy’s goal accomplished – Apollo 11 safely returns from its successful moon landing mission.
1974 – U.S. Supreme Court rules that President Nixon must surrender the Watergate tapes.
1567 – Mary, Queen of Scots, is imprisoned and forced to abdicate her throne to her 1-year-old son James VI.

photos of the day July 24, 2012

Visitors ride a large carousel next to the London Eye (l.) on the south bank of the river Thames in London.

Ben Curtis/AP

A rower practices before the 2012 Summer Olympics in Eton Dorney, near Windsor, Britain.

Natacha Pisarenko/AP

Market Closes for July 24, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

July 24 (Bloomberg) — Canadian stocks fell for a third day on growing speculation that Greece will miss debt-reduction targets and require more restructuring.

Energy shares and banks contributed the most to the decline in the Standard & Poor’s/TSX Composite Index among 10 industries, while telecommunications companies rose the most.

Encana Corp. and Canadian Natural Resources Ltd. fell at least2.7 percent. Rogers Communications Inc., the nation’s largest wireless carrier, gained 5.2 percent after reporting second- quarter earnings that beat analysts’ estimates.

The S&P/TSX declined 66.94 points, or 0.6 percent, to 11,478.60 at 1:23 p.m. in Toronto. The benchmark index advanced as much as 0.3 percent earlier.

A report from Reuters citing European Union officials said Greece was seen missing targets for reducing debt. On July 22, German Vice Chancellor Philipp Roesler said it was unlikely Greece could meet its obligations under a euro-area bailout program and that he was “very skeptical” European leaders would be able to rescue the country.

Greece’s international creditors returned to Athens today to assess how far from bailout terms the country has strayed as Prime Minister Antonis Samaras pieces together additional budget cuts that may determine the country’s membership in the euro area.

Energy provider Encana lost 2.7 percent to C$20.94.

Canadian Natural Resources declined 3.1 percent to C$27.89.

Suncor Energy Inc., the nation’s largest oil company, fell 1.2 percent to C$29.94.

Toronto-Dominion Bank, the nation’s second-largest lender, sank 1.1 percent to C$78.22. Bank of Nova Scotia, the third- largest lender, dropped 1 percent to C$50.86.

Rogers rose 5.2 percent to C$39.16 as job cuts lifted profitability at the company’s main mobile phone unit. Profit excluding some items rose 6 cents to 91 Canadian cents a share, beating the average estimate of 86 cents from 16 analysts compiled by Bloomberg.

US

By Rita Nazareth

July 24 (Bloomberg) — U.S. stocks slumped, sending the Standard & Poor’s 500 Index down for a third straight day, amid concern Europe’s debt crisis is worsening and after United Parcel Service Inc. lowered its earnings forecast.

Equities pared losses amid speculation the Federal Reserve may act to boost growth. UPS, the largest package-delivery company and considered an economic bellwether, tumbled 4.6 percent. AT&T Inc., the biggest U.S. phone company, lost 2.1 percent amid sluggish sales after signing up fewer wireless customers. Apple Inc., the most valuable company, sank 5 percent at 4:51 p.m. New York time on disappointing results.

More than three stocks fell for each rising on U.S. exchanges at 4 p.m. New York time. The S&P 500 slipped 0.9 percent to 1,338.31, paring a loss of 1.6 percent. The benchmark measure decreased 2.8 percent in three days. The Dow Jones Industrial Average lost 104.14 points, or 0.8 percent, to 12,617.32. Volume for exchange-listed stocks in the U.S. was 6.8 billion shares, or about in line with the three-month average.

“It’s far from over,” said Paul Zemsky, the New York- based head of asset allocation for ING Investment Management.

His firm oversees $160 billion. “There’s renewed euro crisis concern. As for earnings, it’s not much what the numbers are printing. There’s fear of what to expect going forward.”

Equities slumped as Moody’s Investors Service cut the outlooks of Germany, the Netherlands and Luxembourg. A Reuters report citing European Union officials said Greece was seen missing targets for reducing debt. German Vice Chancellor Philipp Roesler said over the weekend that Greece was unlikely to be able to meet its obligations under a bailout program.

Stocks pared losses after the Wall Street Journal reported that the Fed is moving closer to taking new steps to spur economic growth. Fed Chairman Ben S. Bernanke last week said policy makers are studying options for further easing that could be deployed in case economic growth remains too feeble to produce a lasting decline in unemployment.

“You’re at that point where the economy looks weak enough to make QE3 a real possibility,” said Dan Veru, chief investment officer at Palisade Capital Management LLC, which oversees $3.5 billion. He referred to a third round of asset purchases to stimulate the economy. “The downside to this market is more limited than what many people think it is.”

Investors also monitored second-quarter earnings. Data compiled by Bloomberg show better-than-estimated sales at only 39 percent of the 147 companies which have reported results so far. About 73 percent have beaten on profit, the data shows.

All 10 groups in the S&P 500 retreated. The Morgan Stanley Cyclical Index of companies most-tied to the economy lost 1.7 percent. The Dow Jones Transportation Average retreated 1.2 percent. The Chicago Board Options Exchange Volatility Index rose 9.9 percent to 20.47, the highest level since June 15. It surged 32 percent in three days.

UPS slumped 4.6 percent, the most since August, to $74.34.

The company predicted the U.S. economy will grow 1 percent in the rest of 2012 as slowing volume growth prompted it to conclude average forecasts are too high. Economists surveyed by Bloomberg project a 2.2 percent growth rate. Rival FedEx Corp. lost 1.8 percent to $87.67.

Telephone shares in the S&P 500 fell 1.8 percent, the most among 10 groups. AT&T dropped 2.1 percent to $34.63. It added 320,000 monthly contract customers, a smaller number than a year earlier. While the decline hurt sales growth, it meant the company doled out fewer dollars in subsidies.

Apple lost 5 percent to $570.67 after the close of regular trading. Profit and sales missed projections for only the second time since 2003 as customers held off on iPhone purchases while waiting for a new model to be introduced later in the year.

Net income climbed 21 percent to $8.82 billion, or $9.32 a share, in the period that ended June 30, Cupertino, California- based Apple said today in a statement. Sales rose 23 percent to $35 billion. Analysts had predicted profit of $10.37 a share on revenue of $37.2 billion, the average of estimates compiled by Bloomberg.

“Every quarter that Apple isn’t launching a new iPhone it’s a transition quarter,” said Brian Marshall, an analyst at ISI Group. “That’s the key product that matters.”

Whirlpool Corp. retreated 7.5 percent to $62.25. The world’s largest appliance maker reported second-quarter profit that trailed analysts’ estimates.

Lexmark International Inc. slumped 13 percent to $16.77.

The maker of laser and inkjet printers forecast third-quarter profit that missed analysts’ estimate as the economic weakness in Europe erodes sales.

Peabody Energy Corp. dropped 11 percent to $20.55. The largest U.S. coal producer forecast third-quarter earnings that trailed analysts’ estimates after metallurgical-coal prices fell and Australia introduced a carbon tax.

Texas Instruments Inc. slid 0.9 percent to $26.57. The largest maker of analog chips forecast third-quarter sales and profit that may miss some analysts’ estimates as an economic slowdown in Europe crimps demand for electronics.

DuPont Co. decreased 2 percent to $47.74. The chemical maker said 2012 profit will be at the lower end of a previously forecast range because of uncertainties created by weaker global economies and foreign currencies.

The Bloomberg U.S. For-Profit Education Index of 13 shares sank 7.8 percent. DeVry Inc. plunged 25 percent to $20.80. The for-profit education company said it plans to cut 570 jobs, or 5.5 percent of its total headcount, amid declining enrollment.

Cisco Systems Inc. sank 5.9 percent, the most in the Dow, to $15.12. VMware Inc. is buying Nicira Inc. for $1.26 billion and the products could help VMware lessen the need for types of networking equipment sold by Cisco, said ISI Group.

Clearwire Corp. lost 9.8 percent to 92 cents. The unprofitable company attempting to build a wireless network across the U.S. fell below $1 amid concern that it’s running out of money. Analysts are projecting a loss of more than $200 million when it releases its second-quarter results on July 26.

Pfizer Inc. fell 1 percent to $23.38. The company, Johnson & Johnson and Elan Corp.’s experimental Alzheimer’s treatment failed to improve symptoms of dementia in the first of four pivotal studies testing the drug.

The Bloomberg U.S. Airlines Index dropped 3.1 percent.

United Continental Holdings Inc. slumped 5.4 percent to $20.38 after a JPMorgan Chase & Co. analyst reduced his second-quarter profit forecast based on an accounting adjustment at the world’s largest airline.

Regions Financial Corp. gained 4.1 percent to $6.65. The 10th-largest U.S. bank by deposits reported second-quarter profit that rose more than analysts estimated as provisions for loan-loss reserves declined.

Ryder System Inc. added 5.9 percent to $36.72 as the largest publicly traded truck lessor boosted its full-year and third-quarter profit forecasts.

Under Armour Inc. surged 9.1 percent to $52.79. The maker of athletic apparel and shoes raised its annual sales and profit forecasts amid increased demand.

Domino’s Pizza Inc. jumped 3 percent to $32.96 after second-quarter earnings topped analysts’ estimates on increasing international sales.

The two-day selloff in equities through yesterday pushed bets that the Chicago Board Options Exchange Volatility Index will keep rising to the most in a year.

The ratio of outstanding calls to buy the VIX jumped to 2-to-1 on July 20, according to data compiled by Bloomberg. The gauge climbed 21 percent from July 20 to 18.62 yesterday, the biggest two-day increase since April, as the Standard & Poor’s 500 Index slipped 1.9 percent.

Have a wonderful evening everyone.

Be magnificent!

You can live with few clothes or with one meal a day, but that is not simplicity.

So be simple, don’t live in a complicated way, contradictory and so on, just be simple inwardly.

Krishnamurti, 1895-1986

As Ever,

Carolann

For death is no more than a turning of us over from time to eternity.

-William Penn, 1644-1718

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