July 25, 2012 Newsletter

Dear Friends,

Tangents:

POEM

The Change

As after journeys, candlelit, through books,

We long for morning ploughland and the rooks;

As summer that delays in listless air

Makes welcome ragged autumn and the spare,

Blue smoke of woods; as we can know delight

In many musks and clamours of a night

Whose crowds are padding by a gleaming dome,

And yet soon miss the empty street of home,

With its far tap footsteps on the kerb

That can no sleeping house or soul disturb;

As after steaming plains, the mountain’s chill

Renews us: so do we, who have been ill

With love, awake at last unfevered, sane

As limpid air that has been washed by rain.

-by Sheila Wingfield from Poetry by Women in Ireland:

A Critical Anthology 1871-1970, ed. Lucy Collins, Liverpool University Press

And on this day in…

1978 – The first test-tube baby is born in Oldham, England.
1943 – Italian dictator Mussolini is overthrown in a coup.
1909 – French aviator Louis Bleriot becomes the first man to fly across the English Channel in an airplane.
1759 – British forces defeat a French army at Fort Niagara, Canada.
2000 – Concorde jet crashes.

photos of the day July 25, 2012

Gannets gather on their nesting grounds on Bonaventure Island in Perce, Quebec, Canada.

Jacques Boissinot/The Canadian Press/AP

An indigenous child swims in the Sao Miguel River during the ‘Meeting of Traditional Cultures of Chapada dos Veadeiros’ in a multiethnic village in Goias, Brazil.

Ueslei Marcelino/Reuters

Market Closes for July 25, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steve Chambers and Eric Lam

July 25 (Bloomberg) — Canadian stocks rose, snapping three days of losses, as Suncor Energy Inc. reported profit that beat analysts’ estimates and mining and energy shares climbed amid advancing gold and oil prices.

Barrick Gold Corp., the world’s largest producer of the metal, rallied 2.2 percent as gold futures advanced the most in more than three weeks. Suncor, the nation’s largest oil company, rose 3.7 percent after its oil-sands production costs fell.

The Standard & Poor’s/TSX Composite Index rose 25.56 points, or 0.2 percent, to 11,492.51. The benchmark index lost 1.7 percent over the previous three sessions and is down 3.9 percent in 2012.

“The Canadian market is on the cyclical side and it’s turning a bit, not everywhere, but certainly on the metals side,” Terry Shaunessy, president of Shaunessy Investment Counsel Inc. in Calgary, which manages about C$200 million, said in a phone interview. “The Nexen bid from Cnooc shows the kind of value that is in these companies. Somebody who actually wants the oil sees that the market is so cheap relative to the value of the assets. This is basically true for a lot of the metals and resources companies, and that is sinking in a bit.”

Cnooc agreed earlier this week to pay $15.1 billion in cash to acquire Nexen in the biggest overseas takeover by a Chinese company. Canada has become a fertile area for Chinese oil producers seeking to add oil and gas reserves to meet demand in the world’s largest energy-consuming country.

Gold futures advanced on speculation that European leaders may take further steps to tame the worsening debt crisis.

European Central Bank council member Ewald Nowotny said today there were arguments in favor of giving the region’s rescue fund a banking license. The move would give the permanent bailout fund, the European Stability Mechanism, access to ECB lending, increasing cash available for aid.

Barrick rose 2.2 percent to C$34.49. Goldcorp Inc., the world’s second-largest producer, gained 3.5 percent to C$34.84.

Kinross Gold Corp. jumped 3.9 percent to C$8.21.

Suncor climbed 3.7 percent to C$30.87. Enbridge Inc., the nation’s third-largest energy provider, advanced 0.4 percent to C$41.55.

Cenovus Energy Inc. lost 3 percent to C$31.15 after the company said second-quarter profit declined 40 percent as crude prices fell.

Teck Resources Ltd. tumbled 7.3 percent to C$27.27.

Canada’s largest diversified miner reported second-quarter profit that trailed analysts’ estimates as prices for metallurgical coal, copper and zinc fell. Net income dropped 65 percent to C$268 million, or 46 cents a share, from C$756 million, or C$1.28 a share, a year earlier, the company said.

US

By Rita Nazareth

July 25 (Bloomberg) — The Standard & Poor’s 500 Index erased gains in the final hour of trading as a rally in bank and industrial shares wasn’t enough to overcome disappointing results at Apple Inc. and an unexpected drop in new home sales.

A gauge of homebuilders in S&P indexes slumped 3.2 percent.

Apple tumbled 4.3 percent as iPhone sales missed forecasts.

Netflix Inc., the largest video-subscription service, plunged 25 percent after raising doubts on user growth. JPMorgan Chase & Co. and Citigroup Inc. rose at least 1.2 percent. Boeing Co. and Caterpillar Inc. added more than 1.4 percent, pacing gains in industrial shares, after raising their earnings forecasts.

About five stocks rose for every four falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 slid less than 0.1 percent to 1,337.89, after gaining 0.4 percent earlier. The benchmark gauge has lost 2.8 percent in four days. The Dow Jones Industrial Average rose 58.73 points, or 0.5 percent, to 12,676.05. Volume for exchange-listed stocks in the U.S. was 6.6 billion shares, or about in line with the three-month average.

“There’s a huge amount of uncertainty out there,” Rob McIver, co-portfolio manager at Jensen Investment Management in Lake Oswego, Oregon said in a phone interview. His firm manages $5.5 billion. “It’s a somewhat anemic U.S. recovery. And you see that starting to be reflected in corporate results. It’s certainly a difficult environment for investors.”

The S&P 500 fell as a report showed demand for new U.S. homes unexpectedly dropped in June from a two-year high. Sales at only 40 percent of the 201 S&P 500 companies which reported second-quarter results have beaten analysts’ estimates, according to data compiled by Bloomberg. Earnings at 71 percent of companies topped forecasts, the data showed.

“The earnings news is mixed,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “Still, companies have managed expectations and, for the most part, the numbers came in ahead of forecasts. We’re also seeing a discussion on the Fed potentially acting amid an economic slowdown.”

Worse-than-expected economic data intensified bets that the Federal Reserve 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. The Federal Open Market Committee meets next week.

Technology shares, which comprise 20 percent of the S&P 500, dropped 0.8 percent.

Apple sank 4.3 percent, the most since October, to $574.97.

Customers delayed purchases of existing iPhone versions while awaiting the next model. Samsung Electronics Co. releases several designs a year to defend its lead in the $219.1 billion smartphone market. That raises the stakes for Apple Chief Executive Officer Tim Cook, who relies on a once-a-year upgrade of the device that makes up half of the company’s sales.

“Pressure is mounting,” said Michael Obuchowski, a portfolio manager at North Shore Asset Management LLC, an owner of Apple shares. “Because everybody else has a much faster design cycle, Apple has to come up with a new phone that’s competitive not just when it comes out, but will stay competitive for a long period of time.”

Netflix plunged 25 percent to $60.28, the lowest since January 2010. The summer Olympics are likely to hamper efforts to sign up new customers, Chief Executive Officer Reed Hastings said. The full year-goal of adding 7 million new U.S. users will be “challenging” if this quarter’s most optimistic targets aren’t met, he said.

International Game Technology dropped 20 percent to $11.76.

The world’s biggest maker of slot machines reported profit and sales that trailed analysts’ forecasts.

TripAdvisor Inc. sank 17 percent to $36.18. The online travel-recommendation service spun off from Expedia Inc. reported second-quarter revenue that missed analysts’ estimates.

RadioShack Corp. tumbled 29 percent to $2.60. The electronics chain suspended its dividend and posted an unexpected second-quarter loss as costs soared.

WellPoint Inc. lost 12 percent to $54.01. The second- biggest U.S. health plan cut its forecast after quarterly profit missed analyst estimates because of higher medical costs.

ConocoPhillips lost 2.6 percent to $53.24. The company said second-quarter profit fell 33 percent for the newly independent oil and natural-gas producer after losing income from its refining segment, which was spun off April 30.

Corning Inc. retreated 7.7 percent to $11.14. The world’s largest maker of glass for flat-panel televisions reported a 39 percent drop in second-quarter earnings amid price declines for its LCD screens.

A measure of financial shares in the S&P 500 gained 0.3 percent. JPMorgan added 1.3 percent to $35.17. Citigroup rose 2.2 percent to $25.79.

Nasdaq OMX Group Inc. jumped 4.8 percent, the most since November, to $22.87. The second-largest U.S. equity exchange operator reported earnings that beat analyst estimates. The company lowered its 2012 expense forecast.

Boeing gained 2.8 percent to $74.03. Total jet deliveries should rise to a range of 585 to 600 this year, it said. That may help the U.S. planemaker reclaim the top spot in commercial production it lost to European rival Airbus SAS in 2003.

Caterpillar rallied 1.4 percent to $82.60. The largest maker of construction and mining equipment raised its full-year earnings forecast as increasing demand from North American builders and overseas miners bucks an economic slowdown.

Symantec Corp. soared 14 percent to $14.96. The world’s largest maker of computer-security software ousted Chief Executive Officer Enrique Salem and passed the reins to Chairman Steve Bennett, saying the company wasn’t performing well enough.

Altera Corp. surged 12 percent to $34.41. The maker of programmable chips forecast sales that may beat analysts’ estimates this quarter on stronger demand for wireless- communications gear.

Juniper Networks Inc. climbed 11 percent to $16.50. The No.2 maker of networking gear reported second-quarter revenue and profit that beat analysts’ estimates, citing demand for new products and improved sales to U.S. telecommunications carriers.

Broadcom Corp. added 7.2 percent to $32.98. The maker of chips that help mobile devices connect to the Internet, forecast third-quarter sales that may exceed some analysts’ estimates, helped by strong demand from its smartphone customers.

Baxter International Inc. surged 3.4 percent to $56.83. The maker of blood products and intravenous drugs raised its dividend and said it authorized a new share buyback program.

U.S. initial public offerings are set for their busiest week since March as purveyors of steak, burritos and antivirus software strive to go to market before investor optimism wears off.

Del Frisco’s Restaurant Group Inc., Chuy’s Holdings Inc., Avast Software NV and five other companies are attempting to raise as much as $923 million, data compiled by Bloomberg show.

That would be the most since the week of March 26, when nine companies went public, including foodmaker Annie’s Inc. and industrial-components maker Rexnord Corp.

The IPOs come on the heels of sales last week by Palo Alto Networks Inc., Kayak Software Corp. and teen retailer Five Below Inc., which surged on their first trading days. Tex-Mex restaurant chain Chuy’s raised $75.8 million on July 23 and jumped 16 percent in its debut, giving further impetus to this week’s sellers even as concerns persist over Europe’s debt crisis and the economic recovery in the U.S., said James Investment Research Inc.’s Tom Mangan.

“There’s nothing like someone else’s success to encourage you to take that leap as well,” said Mangan, who helps oversee $3.4 billion at the Xenia, Ohio-based firm. “There’s some urgency on the part of people who want to proceed with an IPO because they’re afraid of what might happen later in the year.”

Have a wonderful weekend everyone.

Be magnificent!

If a  man does not of his own free will put himself last among his creatures,

there is no salvation for him.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Tact is the ability to describe others

as they see themselves.

-Abraham Lincoln, 1809-65

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