July 9, 2012 Newsletter

Dear Friends,

Tangents:

Alba by Samuel Beckett

before morning you shall be here

and Dante and the Logos and all strata and mysteries

and the branded moon

beyond the white plane of music

that you shall establish here before morning

grave suave singing silk

stoop to the black firmament of areca

rain on the bamboos flower of smoke alley of willows

who though you stoop with fingers of compassion

to endorse the dust

shall not add to your bounty

whose beauty shall be a sheet before me

a statement of itself drawn across the tempest of emblems

so that there is no sun and no unveiling

and no host

only I and then the sheet

and bulk dead.

From “The Collected Poems of Samuel Beckett”, edited by Seán Lawlor and John Pilling, published by Faber, 2012.

Success means doing the best we can with what we have. Success is the doing, not the getting; in the trying, not the triumph. Success is a personal standard, reaching for the highest that is in us, becoming all that we can be.  – Zig Ziglar, 1926-

And on this day in…

1846 – U.S. Takes San Francisco.
1850 – President Zachary Taylor dies unexpectedly of Cholera.

1856 – Inventor Nikola Tesla is born.

1879 – Composer Otto Respighi is born.
1941 – Enigma code key is broken.
1942 – Anne Frank and her family go into hiding in the attic above her father’s office in Amsterdam.

1948 – Satchel Page makes debut with the Cleveland Indians.

1956 – Actor Tom Hanks is born.
1971 – U.S. turns over responsibility for Korea’s DMZ.

photos of the day July 9, 2012

A bee collects nectar from a sunflower in a field near Leibstadt, northern Switzerland.

Arnd Wiegmann/Reuters

‘Locks of love’ are displayed on top of Mt. Nam or Namsan in central Seoul, South Korea. Young couples come to the top of the mountain to hang their locks of love and throw the keys away in the hope for eternal love.

Kim Hong-Ji/Reuters

Market Closes for July 9, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

July 9 (Bloomberg) — Canadian stocks fell for a third day after rising yields on Spanish bonds increased investor concerns that the European sovereign debt crisis may slow the global economy.

Suncor Energy Inc., the nation’s largest oil provider, and Canadian Natural Resources Ltd. lost at least 0.6 percent as energy stocks and raw-material producers were the biggest drag on the Standard & Poor’s/TSX Composite Index. South American Silver Corp. lost 29 percent, the most in five years, after Bolivian President Evo Morales said he may revoke the company’s exploration license.

The S&P/TSX Index fell 25.29 points, or 0.2 percent, to 11,634.67. The index slumped 2.1 percent over the two final sessions of last week following six days of gains. The Canadian equity benchmark has retreated 2.7 percent in 2012.

Spain’s 10-year debt yield rose above 7 percent, signaling last month’s summit wasn’t enough to stem the region’s debt crisis, according to Pacific Investment Management Co.’s Mohamed El-Erian. China’s inflation eased to a 29-month low as Premier Wen Jiabao said the government would intensify its response to the economic slowdown. Analyst estimates compiled by Bloomberg show S&P 500 companies may report the first year-over-year profit decline since 2009.

“It’s general cautiousness today,” said Bruce Campbell, president of Oakville, Ontario-based Campbell & Lee Investment Management Inc. “It’s investor worry about Europe, it’s worry about China because the inflation number was the equivalent of deflation in a sense, and it’s worry about second-quarter earnings.”

Suncor Energy, the nation’s largest oil company, declined 0.7 percent to C$29.16 and Canadian Natural Resources, the nation’s third-largest energy provider, slumped 1 percent to C$26.32. Natural-gas producer Cenovus Energy Inc. lost 0.2 percent to C$32.91. Crude advanced 1.5 percent to $85.99 a barrel in New York, snapping two days of losses.

Barrick Gold Corp., the world’s largest producer of the metal, declined 0.5 percent to C$37.36. Goldcorp Inc., the second-largest producer, dropped 0.3 percent to C$38.42. Gold futures gained 0.6 percent to $1,589.10 an ounce on the Comex in New York, paring two days of losses.

South American Silver plunged 29 percent to 72 cents, the most since the stock started trading in February 2007. The Malku Khota silver project in southwestern Bolivia’s Potosi province has divided the community with protesters taking people hostage in confrontations that led to two deaths, according to the state agency known as ABI.

Analyst estimates compiled by Bloomberg project a 1.8 percent decline in profit for S&P 500 companies in the second quarter, which would be the first year-over-year decrease since 2009.

US

By Stephen Kirkland and Rita Nazareth

July 9 (Bloomberg) — U.S. stocks fell for a third day as Spain’s 10-year debt yield topped 7 percent, fueling concern the debt crisis is worsening, and investors awaited the start of the earnings season. Corn and soybeans surged on forecasts for more dry U.S. weather. Treasuries rose.

The Standard & Poor’s 500 Index slipped 0.2 percent at 4 p.m. in New York and the Stoxx Europe 600 Index fell 0.4 percent. Ten-year Spanish yields jumped 11 basis points to 7.06 percent after rising as high as 7.108 percent. The euro climbed 0.2 percent to $1.2319, rebounding from a two-year low of $1.2251. Corn rose as much as 5.8 percent and soybeans jumped to a four-year high. Oil added 1.8 percent to $85.99 a barrel and natural gas rallied as a strike threatened supplies from Norway.

European finance ministers were gathering to work out crisis measures after leaders agreed last month to ease banks’ access to bailout funds. France and Germany sold six-month debt at negative yields amid demand for assets considered safe. Alcoa Inc. began the second-quarter U.S. earnings season after markets closed in New York, with analyst estimates compiled by Bloomberg predicting the first year-over-year profit decline for S&P 500 companies since 2009.

“It’s very concerning,” Jeff Savage, regional chief investment officer for Wells Fargo Private Bank in Portland, Oregon, said in a telephone interview. His firm manages $169 billion. “Seven percent is not a sustainable level of interest rates for Spain. That’s scary stuff. We can’t have one of our best trading partners going through terrible economic times and not having an effect on U.S. corporate earnings.”

The S&P 500 dropped for a third day, the longest streak in more than a month, and closed at its lowest level since June 28.

Alcoa, the biggest U.S. aluminum producer, rose 0.4 percent in the regular session and climbed another 0.3 percent in extended trading after the largest aluminum producer reported earnings and revenue that beat estimates following an increase in orders from the auto and aerospace industries.

Analyst estimates compiled by Bloomberg project a 1.8 percent decline in profit for S&P 500 companies in the second quarter, which would be the first year-over-year decrease since 2009. Revenue is projected to have increased 2.5 percent.

Earnings pessimism is reaching levels last seen during the global financial crisis of 2008 and 2009, based on company forecasts. Forty-four corporations issued profit projections that trailed analyst estimates during the 20 days through July 6, or 3.1 times the number of those that exceeded them. The ratio has been greater than 3 for five straight days and 17 of the last 20, the most in three years. It was at least that high the majority of the time between October 2008 and April 2009, climbing to 11.5 in December 2008, the data show.

DuPont Co., Exxon Mobil Corp., Caterpillar Inc. and Bank of America Corp. fell at least 1.3 percent to lead losses in the Dow Jones Industrial Average. Commodity and consumer- discretionary companies fell at least 0.5 percent to lead declines in eight of the 10 main industry groups in the S&P 500.

Navistar International Corp., the maker of International brand trucks, fell 3.1 percent after Bloomberg Industries said truckmakers will need to reduce production in the second half of the year.

Visa Inc. and MasterCard Inc. fell at least 1.3 percent after being downgraded at UBS AG. Apple Inc., the biggest company by market value, rose 1.3 percent amid optimism about its smaller iPad tablet’s sales. Amerigroup Corp. surged 38 percent after WellPoint Inc., the second-biggest U.S. health plan, agreed to buy the company for $92 a share.

Ten-year U.S. Treasury yields slipped four basis points to 1.51 percent. Thirty-year rates lost four basis points to 2.62 percent.

More than two shares fell for each that advanced in the Stoxx 600, which retreated for a fourth day. Metro AG, Germany’s biggest retailer, sank 6.3 percent to a three-year low as Chief Executive Officer Olaf Koch said restrained spending will have a “significant impact” on business. Michael Page International Plc lost 3.8 percent after the U.K. recruitment company reported a decline in gross profit. Hays Plc, the recruiter that finds workers for Siemens AG, sank 2.7 percent.

The euro recovered from its lows of the day after the European Commission said any future direct recapitalizations of banks by the European Stability Mechanism would not require guarantees by governments in countries that receive the aid.

The world’s most-accurate foreign-exchange strategists say the worst is over for the euro this year, putting them at odds with traders who see more pain.

Led by Wells Fargo & Co. and Westpac Banking Corp. — which correctly called the euro’s weakness last quarter — the five best firms as measured by Bloomberg expect Europe’s 17-nation common currency to end the year at about $1.26. That’s above the $1.24 median estimate in a survey of 55 strategists by Bloomberg News.

A draft document to be discussed by finance ministers today showed that Spain will get an extra year to bring its budget deficit to 3 percent of gross domestic product, according to a Europa Press report. The deficit target for 2012 will be eased to 6.3 percent, Europa Press reported, with a target of 4.5 percent for 2013 and 2.8 percent in 2014.

Germany dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spain’s banks as the euro-area debt crisis simmers. Finance Minister Wolfgang Schaeuble dismissed “false expectations” raised by euro leaders last month that the economically troubled euro zone would act quickly to unify the oversight of its banking system.

“It will take time, it’s complicated, it isn’t easy to do,” Schaeuble told reporters before the finance ministers meeting.

“All eyes will be on the meeting of European finance ministers today to put a halt to the one-step-forward, two-step- backward discussions on the European sovereign debt crisis,”

Jeroen van den Broek, a credit strategist at ING Bank NV in Amsterdam, wrote today in a report. “To distract investors a bit, Alcoa will kick off the second-quarter earnings season today. It is doubtful that earnings will give positive impetus.”

The difference in yield investors demand to own Spanish 10- year bonds over benchmark German bunds climbed 11 basis points to 574 basis points, within 15 basis points of the June 18th record. Spanish 30-year bond yields increased three basis points to 7.29 percent, after rising to a euro-era record 7.327 percent.

German two-year note yields were at minus 0.003 percent from minus 0.010 percent on July 6. The government sold 3.29 billion euros ($4.04 billion) of six-month bills at a record-low yield of minus 0.0344 percent, according to a statement from the Bundesbank today.

France’s two-year rate increased five basis points to 0.25 percent. France sold 1.99 billion euros of six-month bills at a yield of minus 0.006 percent, the first time the nation agreed to a negative yield on the securities since Bloomberg began collecting the data in 1999.

The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed for a fourth day, rising 1.4 basis points to 285.

Corn surged as much as the 40-cent limit on the Chicago Board of Trade, advancing 5.8 percent to $7.33 a bushel, the highest since September. Soybean futures for November delivery increased 2.8 percent to $15.4775 a bushel and reached $15.7125, the highest since July 2008, amid the worst U.S. drought since Ronald Reagan was president.

The U.S. drought is withering the world’s largest corn crop, and the speed of the damage may spur the government to make a record cut in its July estimate for domestic inventories.

Tumbling yields will combine with the greatest-ever global demand to leave U.S. stockpiles on Sept. 1, 2013, at 1.216 billion bushels (30.89 million metric tons), according to the average of 31 analyst estimates compiled by Bloomberg. That’s 35 percent below the U.S. Department of Agriculture’s June 12 forecast, implying the biggest reduction since at least 1973.

In Asia, Chinese Prime Minister Wen Jiabao said the nation’s economy faces “relatively large” downward pressure.

China’s inflation eased to a 29-month low, with the consumer price index rising 2.2 percent in June from a year earlier.

Japan’s May machinery orders fell the most since 2001, while Hong Kong and Vietnam signaled growth may fall short of official forecasts.

The MSCI Emerging Markets Index lost 1.1 percent, declining for a fourth day. The Shanghai Composite Index slipped 2.4 percent. Benchmark gauges in South Korea, the Philippines, Thailand, Indonesia and Brazil dropped more than 1 percent.

Egypt’s EGX 30 Index slumped 4.2 percent as President Mohamed Mursi reinstated parliament, reversing the military’s decision last month after a court ruling.

Have  a wonderful evening everyone.

Be magnificent!

True morality consists not in following

the well-beaten track,

but in finding out the true path for ourselves

and in fearlessly following it.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Success is how high you bounce

when you hit bottom.

-George S. Patton, 1885-1945

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