July 3, 2013 Newsletter

Dear Friends,

Tangents:

The “Dog Days of Summer” begin today and end on August 11^th.  These are the hottest days of the year in the northern hemisphere.  They are so named because originally they were the days when Sirius, the Dog Star, rose just before or at about the same time as sunrise, which is no longer true due to the precession of the equinoxes.  The Ancients sacrificed a brown dog at the beginning of the Dog Days to appease the rage of Sirius, believing that the star was the cause of the hot sultry weather.

Happy Thought

-Robert Louis Stevenson

The world is so full of a number of things,

I’m sure we should all be as happy as kings.

Photos of the Day –July 3rd, 2013

The Statue of Liberty, which has been closed to visitors since Superstorm Sandy, is scheduled to reopen for tours July Fourth, when Statue Cruises resumes departures for Liberty Island from Lower Manhattan. Mark Lennihan/AP/File

A Bald Eagle juvenile on its nest at Heritage Park, Kirkland, Washington, June 21, 2013. The floating launch pad for July Fourth fireworks display in suburban Seattle was moved from its usual site to avoid frightening a pair of baby bald eagles nesting in a tree on the shore of Lake Washington Mick Thompson/Reuters

Market Closes for July 3^rd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

July 3 (Bloomberg) — Canadian stocks fell for the first time in four days, as unrest in Egypt and a political crisis in Portugal roiled global markets.

BlackBerry extended its loss to 33 percent in the three sessions since reporting disappointing sales for its Z10 smartphone on June 28. Sandvine Corp., a broadband network tools provider, slumped 7.6 percent as second-quarter sales missed estimates. Alamos Gold Inc. rose 4 percent as the price of the precious metal advanced.

The Standard & Poor’s/TSX Composite Index fell 32.70 points, or 0.3 percent, to 12,145.68 at 4 p.m. in Toronto, trimming an earlier decline of as much as 1 percent. The gauge has fallen 2.3 percent this year. Trading volume was 32 percent below the 30-day average.

“We don’t know if the situation in Egypt will get out of hand and whether it will spread into other countries,” said Irwin Michael, fund manager with ABC Funds in Toronto. He helps manage about C$800 million ($759 million). “In Portugal, two members resigned and they’re worried about that spreading to Spain as well. The sovereign debt issue appears to be flaring up in Europe. There’s a lot of uncertainty right now, in the context of a long weekend in the U.S., so we expect the market between now and when you come in on Monday to be very volatile.”

The MSCI All-Country World Index dropped 0.5 percent as Egypt’s military ousted President Mohamed Mursi from power, suspended the constitution and announced an early presidential election in a bid to resolve the political crisis that has polarized the nation. Oil spiked to a 14-month high amid concern the turmoil will disrupt shipments in the Suez Canal. Portugal’s main equity gauge slumped 5.3 percent after two ministers resigned as the country struggles to implement budget cuts.

Nine of 10 industries in the S&P/TSX retreated today, with materials producers the only group to advance. U.S. markets closed at 1 p.m. in New York, erasing early losses to advance 0.1 percent. The American exchanges remain closed July 4 for the Independence Day holiday.

BlackBerry slid 1.4 percent to C$10.08. The company formerly known as Research In Motion Ltd. last week missed analysts’ estimates for phone shipments and profit. The Waterloo, Ontario-based smartphone maker has slipped 15 percent this year.

Sandvine sank the most since September, losing 7.6 percent to C$1.95. The company reported second-quarter sales of $23.5 million, short of analyst estimates of $24.9 million. It also posted adjusted earnings of 1 cent, in line with expectations.

Utilities stocks tumbled 1.7 percent to pace losses in the S&P/TSX. Canadian Utilities Ltd. lost 3.4 percent to C$35.50 and Atlantic Power Corp. declined 3.8 percent to C$4.08.

Energy shares slumped 0.2 percent, paring an earlier decline of as much as 0.8 percent. Crude for August delivery rallied 1.6 percent to the highest since May 3, 2012. Encana Corp. retreated 0.5 percent to C$17.85 and Enbridge Inc. slid 0.8 percent to C$44.53.

Raw-materials producers added 1.1 percent as gold and silver prices advanced in New York. Alamos Gold rose 4 percent to C$13.09 and Centerra Gold Inc. climbed 6 percent to C$3.54.

First Majestic Silver Corp. rallied 6.7 percent to C$11.61 to lead gains among silver stocks.

US

By Lu Wang and Katie Brennan

July 3 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index to the highest level in two weeks, on better-than-estimated labor data as investors watched political developments in Egypt and Portugal.

Chipotle Mexican Grill Inc. advanced 3.5 percent amid an analyst upgrade. Time Warner Cable Inc. paced gains among telecommunication service providers as Macquarie Group Inc. predicted a “wave” of takeovers. Bank of America Corp. and Citigroup Inc. declined as Standard and Poor’s downgraded three European lenders. Alcoa Inc. fell 1.2 percent as JPMorgan Chase & Co. cut the stock’s rating.

The S&P 500 rose 0.1 percent to 1,615.41, the highest since June 19. The Dow Jones Industrial Average added 56.14 points, or 0.4 percent, to 14,988.55. About 3.6 billion shares traded hands, as U.S. exchanges closed at 1 p.m. New York time today.

Equities markets are shut tomorrow for the Independence Day holiday.

“Europe can’t hurt us, higher oil prices can’t hurt us,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an interview. His firm oversees $8 billion.

“Bernanke has the market finally saying that good news is good news and less QE is not a bad thing. If we can get some revenue growth, that would be the icing on the cake.”

The S&P 500 slumped as much as 5.8 percent since May 21, the day before Federal Reserve Chairman Ben S. Bernanke said the central bank may taper bond purchases, or quantitative easing, if the U.S. economy improves in line with forecasts. The index has since climbed 2.7 percent from the June low.

Jobless claims decreased to 343,000 in the week ended June 29 from a revised 348,000 in the prior period that was higher than initially reported, the Labor Department said today in Washington. Separate reports showed companies boosted employment by 188,000 workers in June while service industries unexpectedly expanded at the slowest pace in more than three years.

The data come before the government’s monthly labor report on July 5. That report will probably show employers created 165,000 jobs in June, from 175,000 a month earlier, according to the median forecast of economists in a Bloomberg survey. The unemployment rate probably fell to 7.5 percent, matching April’s four-year low.

Oil futures surged to as high as $102.18 a barrel, the most since May 2012, as political unrest in Egypt sparked concern of Middle East supply disruptions and a report showed U.S. stockpiles shrank in the week ended June 28.

After the close of U.S. markets, Egypt’s military ousted President Mohamed Mursi from power, suspended the constitution and announced an early presidential election in a bid to resolve the political crisis that has polarized the nation. The army said July 1 it would impose its own plan if Mursi didn’t end the turmoil and meet the people’s demands within 48 hours.

In Portugal, Prime Minister Pedro Passos Coelho told voters in a televised speech from Lisbon yesterday that he’s trying to hold his government together after Foreign Affairs Minister Paulo Portas, leader of junior coalition party CDS, quit.

The Chicago Board Options Exchange Volatility Index, or VIX, fell 1.5 percent today to 16.20, reversing an earlier rise of 5.4 percent. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, reached a six-year low in March and has since surged 43 percent.

Half of 10 main industries in the S&P 500 advanced as technology and consumer-discretionary stocks rose more than 0.5 percent. International Business Machines Corp. added 0.9 percent to $193.25 and Cisco Systems Inc. gained 1.1 percent to $24.59.

Chipotle climbed 3.5 percent to $384.47 for the biggest increase in the S&P 500. The fast-casual dining chain was raised to buy from hold by Argus Research Corp.

Time Warner advanced 2.7 percent to $112.45. Leap Wireless International Inc. jumped 5.7 percent to $7.07. The pay-as-you- go wireless carrier may be a takeover target for T-Mobile US Inc. or Dish Network Corp., Macquarie analysts said in a note, upgrading Leap to neutral from underperform.

Financial companies slid 0.3 percent, the most among 10 S&P 500 groups. Bank of America, the second-biggest U.S. lender by assets, retreated 0.5 percent to $12.83. Citigroup declined 1 percent to $47.67. In Europe, banks tumbled after S&P downgraded the credit ratings of Barclays Plc, Deutsche Bank AG and Credit Suisse Group AG, saying new rules and “uncertain market conditions” threaten their business.

Alcoa dropped 1.2 percent to $7.71 as JPMorgan lowered its recommendation on the shares to neutral from overweight, citing lower aluminum-price forecasts. The biggest U.S. aluminum producer will report results after the market closes on July 8, unofficially starting the second-quarter earnings season.

Profits for S&P 500 stocks probably climbed 2.4 percent, with financial and telephone companies the only two industries to have growth of more than 10 percent, according to analyst estimates compiled by Bloomberg. The estimate for the entire index is down from a projected increase of 6.2 percent at the beginning of the quarter.

“Money managers are waiting now for earnings to get a better idea of where to place funds,” John Augustine, who helps manage $27 billion as chief market strategist at Cincinnati- based Fifth Third Bancorp, said by phone. “It’s relatively unusual to have earnings growth that narrow and focused on the financial and telecom sectors. A lot of the sectors, the bar has been lowered and it may actually help them outperform estimates.”

Robert Half International Inc. lost 5.2 percent to $31.56 as Deutsche Bank AG said the Obama administration’s decision to delay a mandate requiring businesses to provide workers health insurance is negative for staffing service providers. Businesses won’t be penalized next year if they fail to provide workers health insurance. The so-called employer mandate, a key requirement under its signature 2010 health-care law, will be postponed until 2015, the Obama administration said.

Mead Johnson Nutrition Co. slumped 8.1 percent to $68.85.

John Baumgartner, an analyst with Wells Fargo & Co., cut the rating for the world’s largest baby-formula maker to market perform, an equivalent of neutral, from outperform, citing a pricing probe in China and weakening economic growth in developing countries.

Have a wonderful evening everyone.

Be magnificent!

Man falls from the pursuit of the ideal of plain living and high thinking

the moment he wants to multiply his daily wants.  Man’s happiness really lies in contentment.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

A man who is a master of patience is a master

of everything else.

-George Savile, 1633-1695

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