July 26, 2013 Newsletter

Dear Friends,

Tangents:

George:  The patron saint of England since his “adoption” by Edward III.  The popularity of St. George in England stems from the time of the early Crusades, for he was said to have come to the assistance of the crusaders at Antioch in 1098.  Many of the Normans under Robert Curthose, son of William The Conqueror, took him as their patron.

Edward Gibbon and others argued that George of Cappadocia (d. 361), the Arian bishop of Alexandria, became the English patron saint, but it is more generally accepted that he was a Roman officer martyred (c. 300) near Lydda during the Diocletian persecution.  He is also the patron saint of Aragon and Portugal.

The legend of St. George and the Dragon is simply an allegorical expression of the triumph of the Christian hero over evil, which St. John the Evangelist envisioned through the image of a dragon.  The legend forms the subject of the ballad “St. George for England” in Percy’s Reliques (1765), and a gently humorous version of the tale, entitled “The Reluctant Dragon” was included by Kenneth Grahame in Dream Days (1898), by evocation of orphan childhood.  –adapted from Brewar’s, 16^th ed.

Photos of the Day –July 25th, 2013

A male (r.) and female American Kestrel, formerly known as the Sparrow Hawk, have a family spat near Newberry, Fla., while teaching their newly fledged young how to make their way in the wild. The American Kestrel is the smallest falcon in North American. The Kestrel feeds on dragon flies, grasshoppers, small rodents, and birds. Phil Sandlin/AP

Customers enjoy a drink in Ice Pub Prague in central Prague, Czech Republic. The interior of the bar is made of ice, and customers are served with drinks in glasses made of ice. Temperatures in the Czech Republic are expected to rise up to 40 degrees Celsius (104 degrees Fahrenheit) on Sunday, Czech Hydrometeorological Institute reported. David W Cerny/Reuters

Market Closes for July 25^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

July 25 (Bloomberg) — Canadian stocks fell for a third day as investors weighed earnings from commodity producers including Teck Resources Ltd. and Goldcorp Inc.

Goldcorp, the biggest gold producer by market value, dropped 1.2 percent after taking a $1.96 billion writedown due to falling gold prices. Potash Corp. of Saskatchewan Inc. slumped 2.1 percent as it lowered its 2013 profit forecast. Teck Resources rose 3 percent as its profit beat estimates. Encana Corp. gained 1.7 percent after an analyst with TD Securities Inc. raised his rating for the stock.

The Standard & Poor’s/TSX Composite Index fell 3.16 points, or less than 0.1 percent, to 12,669.14 at 4 p.m. in Toronto.

Trading volume was in line with the 30-day average.

“The Canadian numbers have been less than inspiring,” said Michael O’Brien, a fund manager with TD Asset Management Inc. in Toronto. The firm manages C$216 billion ($210 billion).

“Expectations for these companies were pretty low coming into the quarter. Everybody knew it was going to be a horrendous quarter so people wanted to see just how bad it is and then pick at the pieces.”

Five of 10 industries in the benchmark index fell, led by a 0.8 percent decline in shares of utilities. Atco Ltd. lost 2 percent to C$44.11 as the electric power distributor fell for the fourth time in five days.

Industrial stocks rose the most, adding 0.4 percent as a group, as Canadian Pacific Railway Ltd. advanced 3 percent to C$131.26 to snap four days of losses.

Fifteen companies in the S&P/TSX report earnings today and tomorrow, including TransCanada Corp. and Canadian Utilities Ltd.

Potash Corp., the world’s largest fertilizer producer, sank 2.1 percent to C$38.35, the lowest close since November. The Saskatoon, Saskatchewan-based company said it expects profit of $2.45 to $2.70 a share this year, compared with an April forecast of $2.75 to $3.25 and the $2.84 average of 30 estimates compiled by Bloomberg.

Potash Corp. reported second-quarter profit of 73 cents a share, short of the 80 cent analysts’ average. Prices for potash are down because of plentiful producer inventories and historically low import volumes in India.

Goldcorp fell 1.2 percent to C$28.88 after writing down the value of its assets and announcing it will slow down some project spending due to lower gold prices. The Vancouver-based company reported adjusted earnings of 14 cents a share, trailing the 23-cent average of 19 estimates compiled by Bloomberg.

Gold-mining companies have announced at least $13 billion of writedowns in the past two months after the precious metal’s steepest quarterly drop in London trading in more than nine decades.

Teck Resources, Canada’s largest diversified miner, climbed 3 percent to C$24.41 after reporting adjusted earnings of 34 cents a share, topping analysts’ average forecast of 32 cents.

Teck said output at its Quintette coal mine in British Columbia won’t begin until a recovery in the market for metallurgical coal, and development of its Quebrada Blanca Phase 2 copper project has also been slowed.

Encana added 1.7 percent to C$18.09 after Menno Hulshof, analyst with TD Securities, raised his rating for the company to buy from hold on a positive operations outlook as well as cost- cutting plans. The stock has four buys, 16 holds and 6 sells, according to data compiled by Bloomberg.

Encana yesterday reported second-quarter adjusted earnings of 34 cents a share, topping estimates for 17 cents.

US

By Lu Wang and Katie Brennan

July 25 (Bloomberg) — U.S. stocks rose, halting two days of losses for the Standard & Poor’s 500 Index, as investors weighed corporate earnings and economic reports for clues on when the Federal Reserve may reduce stimulus measures.

Facebook Inc. rallied 30 percent after the world’s most popular social-networking service posted second-quarter revenue and profit that beat analysts’ estimates. Visa Inc. advanced 4.2 percent to a record as profit topped forecasts. Homebuilders sank 4.8 percent as a group after PulteGroup Inc. and D.R. Horton Inc. reported lower-than-expected orders.

The S&P 500 rose 0.3 percent to 1,690.25 at 4 p.m. in New York, after earlier falling as much as 0.4 percent. The Dow Jones Industrial Average added 13.37 points, or 0.1 percent, to 15,555.61. More than 6.4 billion shares traded hands on U.S. exchanges today, in line with the three-month average.

“It seems like market participants on a day-to-day basis want to trade more on the prospect of what that means for the Fed’s tapering plan,” Jeff Layman, chief investment officer of BKD Wealth Advisors in Springfield, Missouri, said in a phone interview. His firm has $2.3 billion under management. “I’d much rather see the market supported by positive underlying economic trend and real activity, rather than supported by the hope that the Fed will continue to artificially suppress the rate.”

The S&P 500 completed its first two-day drop in a month yesterday, after climbing to within 3 points of 1,700 for a third straight day, as housing and manufacturing data fueled speculation the Fed may reduce its asset-buying this year.

Support from central banks and better-than-estimated corporate earnings have driven the S&P 500 up as much as 151 percent from its March 2009 low.

The benchmark gauge rose to session highs today after a Wall Street Journal article suggested the Fed will reassure investors it won’t be quick to raise interest rates at its next policy-making meeting on July 30-31. Fed Chairman Ben S.

Bernanke said last week it is “way too early to make any judgment” as to whether policy makers will start tapering purchases in September.

The central bank has said economic data will determine the timing and pace of any reduction in its $85 billion in monthly bond-buying, known as quantitative easing. The Fed will start trimming purchases in September, according to a Bloomberg survey of economists.

Separate reports showed today that orders for durable goods rose more than forecast in June while more Americans filed for unemployment benefits last week as annual auto-plant shutdowns continued to affect data.

“We are kind of stuck in that middle ground where data is not bad enough to be encouraging about more quantitative easing, but it’s not good enough to convince people that there is enough there fundamentally to justify sharply higher prices,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in an interview.

Equity valuations have climbed 16 percent this year, with the S&P 500 trading at 16.3 times reported earnings, close to the highest level since May 2010, according to data compiled by Bloomberg. The index closed at record on July 22.

Of the 237 S&P 500 companies that have posted quarterly results, 74 percent have exceeded analysts’ profit estimates and 57 percent have beaten sales projections, data compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, or VIX, dropped 1.6 percent today to 12.97, halting two days of gains. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, is down 28 percent this year.

Nine of the 10 S&P 500 main groups advanced, as utilities and commodity producers rose at least 0.5 percent.

Facebook surged 30 percent to $34.36, the highest level in 14 months. Revenue rose 53 percent to $1.81 billion in the latest quarter, beating the average analyst estimate of $1.62 billion. Profit excluding certain items of 19 cents a share also exceeded the 14-cent average projection of analysts.

Visa advanced 4.2 percent to a record $194.61 as the biggest bank-card network reported a fiscal third-quarter profit that beat analysts’ estimates.

TripAdvisor Inc. jumped 16 percent to $71.10 after posting second-quarter earnings per share of 52 cents. That exceeded the average analyst projection of 48 cents.

Boston Scientific Corp. rallied 13 percent to $10.83. The second-biggest maker of heart-rhythm devices reported profit that beat analysts’ estimates and raised its forecast amid signs that demand for defibrillators is starting to stabilize.

Better-than-expected results from International Paper Co. and Dow Chemical Co. boosted raw-materials producers to the best performance in the S&P 500. International Paper, the world’s largest maker of office paper, jumped 6.3 percent to $50.19. Dow Chemical rose 1.8 percent to $34.99 as stronger transportation and packaging demand helped its plastics unit.

Qualcomm Inc. added 3.3 percent to $63.42. The largest seller of semiconductors for mobile phones forecast fiscal fourth-quarter sales that may exceed analysts’ estimates, buoyed by smartphone demand in emerging markets.

Oneok Inc. surged 26 percent to a record $53.77 for the biggest gain in the S&P 500. The company plans to spin off its distribution business, forming one of the largest natural gas utilities in the U.S. with 2 million customers in at least three states.

E*Trade Financial Corp. climbed 7.9 percent to $14.69. The online brokerage with six chief executive officers since 2007 said it plans to sell a market-making unit that handles orders for its customers and announced earnings that beat estimates.

The S&P Supercomposite Homebuilding Index slumped 4.8 percent to the lowest level since December as all its 11 members declined for a second day.

PulteGroup fell 10 percent to $16.55 for the biggest retreat in the S&P 500. The largest U.S. housebuilder by market value said second-quarter earnings included 17 cents a share in charges that left the total below analyst estimates.

D.R. Horton slid 8.6 percent to $19.38, the lowest this year. The largest U.S. homebuilder by volume said orders increased 12 percent. That’s below analysts’ forecast of 28 percent growth, according to Adam Rudiger, an analyst at Wells Fargo & Co.

Home Depot Inc. the biggest U.S. home-improvement retailer, slipped 1.6 percent to $78.99.

Caterpillar Inc. declined 1.6 percent to $82.14. The largest manufacturer of mining and construction machinery was cut to market perform, an equivalent of neutral, from outperform at BMO Capital Markets by equity analyst Joel Tiss. The company yesterday issued a forecast that missed analyst estimates.

Western Digital Corp. dropped 5.9 percent to $63.53. The maker of hard drives forecast first-quarter adjusted earnings per share of $1.95 to $2.05, less than the average analyst estimate of $2.06. Competitor Seagate Technology LLC slipped 4.7 percent to $42.12.

Have a wonderful evening everyone.

Be magnificent!

You must learn how to be lucid in all your actions;

that is, you must not only be aware of the time, the place, and the circumstances,

in which the action takes place, but also of yourself, the player, of your body

and what is happening at any moment.

It is not only a question of seeing things as they are, but of seeing yourself at the same time,

and the reactions that take place within you.

In other words, you absorb the whole thing within you and you become complete.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

There are no shortcuts in evolution.

-Louis D. Brandeis, 1856-1941

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