July 3, 2012 Newsletter

Dear Friends,

Tangents:

We watched  the Canada Day celebrations on Sunday from a balcony at the Empress – what a spectacular event this year.  The fireworks were especially fantastic!  Gary spoke with a man in the lobby who is an American and he told him that he visits every year from Portland at this time just to watch the concert and the fireworks.  Our birthday – 145 years young this year.

The Dog Days begin today: hottest days of the year July 3 – August 11^th:  the Romans called the hottest weeks of the summer caniculares dies.  Their theory was that the Dog Star (Sirius, the brightest star in the firmament in the constellation of the Big Dog, Alpha Canis Majoris), rising with the sun, added to its heat and that the Dog Days bore the combined heat of both.

And on this day in…

1776 – Congress votes for U.S. Independence.

1881 – President Garfield is shot.

1883 – Franz Kafka is born.

1900 – Zeppelin demonstrates airship.

1937 – Amelia Earhardt disappears.

1962 – Tom Cruise is born.
1964 – President Johnson signs the Civil Rights Act

photos of the day July 3, 2012

Stuntman Nick Macomber carries the Olympic Flame through the air using a jet pack at the National Space Center on the Torch Relay leg through Leicester, England.

Yui Mok/LOCOG/AP

A boy jumps into the Arabian Sea during high tide after monsoon rains in Mumbai, India.

Rajanish Kakade/AP

Market Closes for July 3, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

July 3 (Bloomberg) — Canadian stocks rose, with the Standard & Poor’s/TSX Composite Index heading for the biggest gain in seven months, as higher commodity prices boosted raw- material producers and optimism grew that central banks will add to stimulus measures.

Suncor Energy Inc., the largest oil company in Canada, advanced 4.2 percent as crude climbed 4.3 percent in New York.

Potash Corp. of Saskatchewan Inc. rose 2.7 percent and Barrick Gold Corp. gained 2.2 percent after a measure of raw-material prices rose to a five-week high.

The S&P/TSX added 251.10 points, or 2.2 percent, to 11,847.66 at 1:20 p.m. in Toronto, poised for the biggest gain since November. In the gauge, 213 members climbed and 31 fell.

“Stocks just want to go up right now because there’s not a lot of other places to go,” Royden Richardson, vice chairman of GMP Investment Management, which manages $400 million, said in a phone interview from Toronto. “If people are going bullish, they’re looking at increasing demand for oil. I don’t see the demand for oil declining, if anything I think it’s going to go higher from this point.”

The European Central Bank is forecast by economists to cut interest rates this week to help curb the debt crisis, while a state-owned newspaper in China said the time is ripe for a reduction in the reserve requirement ratio for major banks.

Declining employment figures this week may prompt the Federal Reserve to initiate fresh stimulus, BNP Paribas SA said.

Suncor Energy gained for the fifth day, adding 4.2 percent to C$30.68. Cenovus Energy Inc. rose 5.4 percent to C$34.13, the highest price since May. Potash Corp. advanced 2.7 percent to C$45.72. Winstar Resources Ltd., a Calgary-based oil and gas company, jumped 19 percent to C$2.67.

The S&P GSCI Spot Index rallied 3.4 percent, with 23 of 24 commodities advancing. The speculation about further stimulus to spur growth boosted demand for gold as an inflation hedge.

Bullion futures for August delivery rose to a two-week high in New York.

Barrick Gold, the world’s largest producer of the metal, gained 2.2 percent to C$39.19. Goldcorp Inc. added 3.4 percent to C$39.65. Teck Resources Ltd., the nation’s largest base- metals producer, gained 4.8 percent to C$33.03.

US

By Rita Nazareth and Julia Leite

July 3 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index to a two-month high, after data showed factory orders topped estimates and as speculation grew that global central banks will act to spur economic growth.

Commodity, industrial and technology shares had the biggest gains among 10 groups in the S&P 500. Alcoa Inc., Caterpillar Inc. and Apple Inc. advanced at least 1.1 percent. Ford Motor Co. rallied 2.2 percent as deliveries of cars and light trucks beat analysts’ estimates. Facebook Inc. climbed 1.4 percent as General Motors Co. is said to be talking with the largest social-networking company about resuming advertising.

The S&P 500 rose 0.6 percent to 1,374.02 at 1 p.m. New York time. The Dow Jones Industrial Average added 72.43 points, or 0.6 percent, to 12,943.82. The Russell 2000 Index rallied 1.3 percent to 818.48. The market closed at 1 p.m. today, and will be shut tomorrow for a holiday. Trading in S&P 500 companies was almost in line with the 30-day average at this time of day.

“The factory orders report was a good surprise,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview.

“Investors are also finding comfort in central bank action. The Fed has anticipated that they will do whatever it takes to not let the economy slip, China is doing the same and that the Europeans seem to be doing that too.”

Equities climbed as factory orders rose in May for the first time in three months. Yet declining jobs data in the U.S.

this week may prompt the Federal Reserve to initiate fresh stimulus, BNP Paribas SA said. The European Central Bank is forecast to cut interest rates this week to help curb the debt crisis, while a state-owned newspaper in China said the time is ripe for a reduction in banks’ reserve-requirement ratios.

The U.S. economy will grow by 2 percent this year and about 2.25 percent in 2013 amid a “tepid” recovery and the European debt crisis, the International Monetary Fund said, lowering its previous projections. In an April report, the IMF forecast U.S. growth of 2.1 percent this year and 2.4 percent in 2013.

“Further easing” by the Federal Reserve might be needed “if the situation was to deteriorate,” IMF Managing Director Christine Lagarde said at a press conference in Washington today. She said she welcomed previous actions by the Fed to help the U.S. economy.

Concern about a global economic slowdown put the S&P 500 last month on the brink of a so-called correction, or a 10 percent decline from a recent peak. The index slumped 3.3 percent in the second-quarter, the biggest retreat since the period ending in September.

The Morgan Stanley Cyclical Index of companies most-tied to the economy rose 1.3 percent. Alcoa, the largest U.S. aluminum producer, added 3.2 percent to $8.90. Caterpillar, the biggest maker of construction equipment, advanced 3.3 percent to $86.46. Apple, the biggest company by market value, gained 1.2 percent to $599.41.

Car companies in the S&P 500 added 2.1 percent for the second-biggest gain among 24 groups. General Motors, Ford and Chrysler Group LLC said U.S. auto sales exceeded estimates in June. Ford rallied 2.2 percent to $9.60. GM added 5.6 percent to $20.67.

Facebook climbed 1.4 percent to $31.20. The talks were reported by two people familiar with the matter. GM said it would stop advertising on Facebook on the eve of the company’s initial public offering in May.

MModal Inc. surged 8.4 percent to $14.02. The largest provider of medical transcription services said it agreed to be bought by a JPMorgan Chase & Co. unit for about $1.1 billion.

Navistar International Corp. rose 7.2 percent to $29.04 after the truckmaker scheduled an operations update for investors this week that may include plans to drop one type of pollution-control technology.

The nation’s largest home-improvement retailers declined after Cleveland Research cited “softer” second-quarter sales.

Lowe’s Cos. retreated 3.5 percent to $27.62. Home Depot Inc. dropped 2.6 percent to $51.65.

Duke Energy Corp. lost 1.7 percent to $68.69 after unexpectedly announcing the resignation of Bill Johnson, previously named to be the chief executive officer after its takeover of Progress Energy Inc. James Rogers, the head of Duke, is CEO of the merged companies effective immediately.

Johnson, 58, is resigning “by mutual agreement,” the company said. The takeover, announced in January 2011, received its final regulatory approval yesterday. Tom Williams, a spokesman for Duke, declined to comment on the reason for the change. Johnson has been the chairman and CEO of Raleigh, North Carolina-based Progress since 2007.

Bearish sentiment in an individual investors’ survey has surpassed the historical average for the longest stretch since October, when stocks began a rally that lifted the S&P 500 24 percent.

A poll by the American Association of Individual Investors showed 44.4 percent of respondents say U.S. stocks will fall over the next six months. That’s the eighth week that pessimism stayed above the 25-year average of 30 percent.

Concern Europe’s debt crisis will deepen and the recovery weaken have erased as much as $1.8 trillion from U.S. equities since March. The last time the proportion of bears topped the average for this long was in the 14 weeks through Oct. 20, 2011, just after the S&P 500 bottomed at 1,099.23. The benchmark measure for U.S. stocks went on to surge as much as 29 percent, reaching a four-year high of 1,419.04 on April 2.

“Individual investors tend to get in when the markets are red hot and they tend to get out when the markets are at the bottom,” said Robert Carey, who helps oversee $53 billion as chief investment officer of Wheaton, Illinois-based First Trust Portfolios.

Gains that drove the S&P 500 to its biggest June advance since 1999 may falter because too few stocks are rising with enough speed, StockCharts.com Inc. said.

The gauge surged 2.5 percent on June 29, finishing the month up 4 percent, amid optimism that Europe will prevent bank losses from multiplying. While the rally drove 64 percent of shares above their average price during the past 50 days, that’s short of the 85 percent threshold that usually accompany longer rallies, said Arthur Hill, a technical analyst at the firm.

While 85 percent is where momentum becomes self-sustaining, equity declines are likely to speed up when the number of stocks above the 50-day mean slips below 15 percent, Hill said.

“A surge above 85 percent shows strong-enough buying pressure to suggest that an uptrend is emerging,” Hill wrote in a note yesterday. “It is like a rocket lifting off the launch pad. A strong up-thrust is needed to insure a sustainable advance.”

Have a wonderful evening everyone.

Be magnificent!

You have to stand against the whole world although you may have to stand alone.

You have to stare the world in the face although the world may look at you with a bloodshot eye.

Do not fear.

Trust that little thing in you which resides in the heart and says:

forsake friends, wife, all, but testify to that for which you have lived and for which you have to die.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

What convinces is conviction.  Believe in the argument

you’re advancing.  If you don’t, you’re as good as dead.

The other person will sense that something isn’t there,

and no chain of reasoning, no matter how logical or

elegant or brilliant, will win your case for you.

-Lyndon B. Johnson, 1908-1973

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