June 1, 2012 Newsletter

Dear Friends,

Tangents:

Today begins the celebrations for the Queen’s Diamond Jubilee.  I am such a huge fan of hers….would love to be there; I tried to book flights months ago with my accumulated BA award points, but no luck.  Understandable I guess – BA probably had no difficulty selling the seats.  We’re lucky to have television.

And also on this day in…

193 – The Roman Emperor, Marcus Didius, is murdered in his palace
1533 – Anne Boleyn, Henry VIII’s new queen, is crowned
1958 – Charles de Gaulle becomes Premier of France
1939 – The Douglas DC-4 makes its first passenger flight from Chicago to New York
1978 – The U.S. reports finding wiretaps in the American embassy in Moscow
1926 – Marilyn Monroe (Norma Jean Peterson, later Norma Jean Baker) is born
1980 – CNN debuted

1967 – Sgr. Pepper’s Lonely Hearts Club Band released

Will you still need me?  Will you still feed me?

When I’m 64… -the Beatles

The Queen’s Diamond Jubilee

June 1, 2012

The Household Cavalry Mounted Regiment, HCMR, form up in the early hours of the morning, June 1, 2012 at the Palace of Westminster, London during the Queens Diamond Jubilee Procession rehearsal.

AP

Bruno Peek, Pageantmaster of the Queen’s Diamond Jubilee Beacons, poses with the Jubilee Crystal Diamond at the Tower of London May 1. Britain’s Queen Elizabeth will use the diamond to light the National Beacon on June 4, during her Diamond Jubilee celebrations.

Stefan Wermuth/Reuters

Empress Michiko of Japan kneels to place a flower, given to her by her husband Emperor Akihito, into the ornamental pond, as they tour the Kyoto Japanese Garden, in Holland Park West London, Thursday May 17, 2012. The royal couple are in Britain to take part in celebrations around the Diamond Jubilee of Britain’s Queen Elizabeth II.

John Stillwell/AP

Britain’s Queen Elizabeth, the then Princess Elizabeth (2nd r.), is seen with her sister Margaret (r.), her mother Queen Elizabeth (l.) and father King George VI, in this still image taken from archive film footage. The film entitled Royal Road, was shot during a car trip around the grounds of Windsor Castle in 1941.

Reuters/File

A woman walks past silkscreen prints of Britain’s Queen Elizabeth by Andy Warhol during a press view at the National Portrait Gallery in London, 2012.

Stefan Wermuth/Reuters

Market Closes for June 1, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steven Chambers

June 1 (Bloomberg) — Canadian stocks fell, building on the biggest monthly decline for the Standard & Poor’s/TSX Composite Index since September, as shares were battered worldwide by weaker-than-estimated U.S. jobs data and evidence Chinese manufacturing is slowing.

Sun Life Financial Inc., Canadian Oil Sands Ltd. and Magna International Inc. dropped at least 3.9 percent. Financial shares in the S&P/TSX retreated 2.5 percent as a group, the most since October. Energy companies sank 2.9 percent as oil futures slid to an eight-month low. Gold companies in the index surged 7.5 percent, the most since 2009, as futures on the metal rallied amid concern about the global economy.

The S&P/TSX Composite Index fell 138.59 points, or 1.21 percent, to 11,374.62 at 3:22 p.m. Toronto time. The measure headed for its fourth weekly decline in five weeks. The gauge slumped 6.3 percent in May, posting a third straight monthly loss as investors grew more concerned Greece will exit the euro.

“The market is a whirl,” Irwin Michael, a portfolio manager at ABC Funds in Toronto, said in a telephone interview.

Michael’s firm oversees C$1 billion ($1 billion). “People are confused. They are worried. They are fearful. As a contrarian this is the time to be looking at securities.”

The S&P/TSX trades for 13.19 times reported earnings, near the three-year low of 13.16 set on May 18, according to data compiled by Bloomberg.

U.S. payrolls climbed by 69,000 last month, less than the most-pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, the Labor Department said today. The median estimate called for a 150,000 increase in May. The jobless rate rose to 8.2 percent. Another report showed Chinese manufacturing grew less than estimated.

The euro region’s jobless rate reached a record high of 11 percent, the European Union’s statistics office in Luxembourg also reported.

Canada’s economic growth rate stagnated in the first quarter as consumer spending increased at the slowest pace in three years, according to a report today by Ottawa-based Statistics Canada.

Royal Bank of Canada, the nation’s biggest lender, fell 3.1 percent to C$49.95. Toronto-Dominion Bank, the second-largest lender, dropped 2.8 percent to C$76.85.

Sun Life Financial, Canada’s third-biggest insurance company, fell 5.3 percent to C$20.19 as yields on Canadian 30- year bonds sank to a record low of 2.199 percent. Falling interest rates reduce investment income while increasing costs from obligations to clients who bought products with guaranteed returns.

Energy companies in the S&P/TSX fell after crude slumped to its lowest level in almost eight months as worsening employment rates in the U.S. and Europe signaled fuel demand may tumble.

Canadian Natural Resources Ltd., the country’s third- largest energy company by market value, dropped 3.2 percent to C$28.70. Suncor Energy Inc., Canada’s largest oil and gas producer, declined 1.8 percent to C$27.52. Canadian Oil Sands, the largest owner of the Syncrude project, slipped 3.9 percent to C$19.31.

Rising gold futures helped producers of the metal avoid losses seen elsewhere in the stock market and gave the S&P/TSX Materials Index a 3.6 percent advance, the only rally among 10 industries. The S&P/TSX Gold Index has risen 5.2 percent this week, posting the first two-week advance since the end of March.

Barrick Gold Corp., the world’s largest producer of the metal, rose 7.4 percent to C$43.60. Goldcorp Inc., the second- largest producer of the metal, rose 9.1 percent to C$41.12

Auto manufacturer Magna International declined 5.2 percent, its biggest drop since November, to C$39.60.

US

By Rita Nazareth

June 1 (Bloomberg) — The Dow Jones Industrial Average wiped out its 2012 advance as American employers added the fewest workers in a year, the unemployment rate rose while manufacturing in the U.S., Europe and China disappointed.

The Standard & Poor’s 500 Index retreated 2.5 percent to 1,277.79 at 4 p.m. New York time, the most since November and below the average price of the past 200 days. The Dow fell 277.61 points, or 2.2 percent, to 12,115.84.

“The weak jobs report confirms that the U.S. is vulnerable to a European situation that is going from bad to worse,” said Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., the world’s largest manager of bond funds. “The report’s details speak to an unemployment crisis that is getting more stubbornly embedded in the structure of the economy. Looking forward, the employment situation will be further challenged by an ongoing synchronized global slowing.”

Equities tumbled as U.S. payrolls climbed by 69,000 last month, less than the most-pessimistic forecast. The jobless rate rose to 8.2 percent. The Institute for Supply Management’s factory index fell after reaching a 10-month high. Manufacturing output shrank in Europe and slowed in China.

Concern about Europe’s debt crisis also drove stocks lower.

The 17-nation euro area is in real danger of disintegrating unless policy makers revamp the bloc’s fiscal and economic ties, Economic and Monetary Commissioner Olli Rehn said.

Today’s decline trimmed this year’s gain in the S&P 500 to 1.6 percent. A two-month retreat in equities has cut the gauge’s valuation to 13 times earnings in the last 12 months. That’s about 21 percent below its five-decade average of 16.4, according to data compiled by Bloomberg. Earnings in the S&P 500 are forecast to reach a record $104.74 a share in 2012.

“People are going to find value,” said John Lynch, the Charlotte-based regional chief investment officer for Wells Fargo Private Bank. His firm manages $169 billion. “Given what we know now, I don’t see anything worse than a 10 percent correction nor do I see a recession being priced in. Profits are at a record. That’s an opportunity for the longer-term investor.”

Yet technical analysts say that the decline of the S&P 500 below its 200-day moving average could be a harbinger of further losses. It’s a “shot to the bulls,” according to Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati. He says the next level of support for the benchmark gauge is 1,257.

Have a wonderful weekend everyone.

Be magnificent!

I do not want  my house to be walled in on all sides and my windows to be stuffed.

I want the cultures of all lands to blow about my house as freely as possible.

But I refuse to be blown off my feet by any.

-Mahatma Gandhi, 1869-1948

As ever,

Carolann

There is no end.  There is no beginning.

There is only the passion of life.

-Federico Fellini, 1920-1993

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