June 12, 2012 Newsletter

Dear Friends,

Tangents:

A big night yesterday in Los Angeles, California for the LA Kings as they defeated the New Jersey Devils in a 6-1 victory, to take the 2012 Stanley Cup.  After scoring 3 power play goals in the first period, LA was on fire and ready to claim the cup. The fans started chanting “We want Cup!” early, and kept it up until the clock ran down in a delirious celebration at the Staples Centre. This is the first Stanley Cup for the LA Kings, so you can imagine the excitement from not only the fans, but from the team, coaches and everyone who supported the team through the long haul. “They’ve been waiting longer than I have, this city,” captain Dustin Brown said. “You dream of winning the Cup, and you know what, I’m glad I was the first King to ever lift it.” After being in 11^th place in the Western Conference, this victory caps one of the most remarkable postseason runs in League history. Congratulations to the LA Kings and we will see you in Vancouver next season!

photos of the day June 12, 2012

A rocket fired by a South Korean Multiple Launch Rocket System vehicle, unseen, flies over US Multiple Launch Rocket System vehicles in a live fire drill during joint military exercises by the US and South Korea in Cheorwon, South Korea.

A Pacific white-sided dolphin calf swims along with its mother Piquet, at Chicago’s Shedd Aquarium. The baby male dolphin, which does not have a name, was born on Memorial Day.

Market Closes for June 12, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steve Chambers

June 12 (Bloomberg) — Canadian stocks rose, snapping a three-day losing streak by the Standard & Poor’s/TSX Composite Index, as equities gained worldwide on speculation policy makers will do more to stimulate the economy and an early slump in oil and gold reversed itself.

Bombardier Inc. surged 6 percent after Warren Buffett’s Berkshire Hathaway Inc. placed a record $9.6 billion order for business aircraft with the company and Textron Inc. Raw- materials stocks in the S&P/TSX jumped 1.8 percent as a group as Avion Gold Corp., Nevsun Resources Ltd. and Aurizon Mines Ltd. rallied more than 5.6 percent.

The S&P/TSX rose 95.52 points, or 0.8 percent, to 11,497.30. The benchmark index fell 0.1 percent earlier after Fitch Ratings downgraded 18 Spanish banks, then rebounded. The index, which had fallen 2 percent the previous three days, pared its June loss to 0.1 percent. It fell 6.3 percent in May.

“There was definitely a risk-on trade if you looked at the top performers with gold, energy, commodities and more cyclical names like Bombardier,” Jennifer Radman, a portfolio manager at Caldwell Investment Management in Toronto, said in a phone interview. The firm manages C$1 billion ($974 million). “Our view is the market is going to trade like that with a lot of volatility until we get the fiscal issues addressed” in Europe, she said.

Stocks climbed after Federal Reserve Bank of Chicago President Charles Evans said he would support a variety of measures to generate faster job growth, underscoring his preference for more stimulus. The policy-setting Federal Open Market Committee meets next week. Equities also rallied after the European Central Bank backed a European Commission proposal to guarantee deposits.

Oil rose from an eight-month low after Evans’ comments and expectations that U.S. inventories are dropping. Gold rose for the third straight day on speculation that policy makers will announce additional stimulus measures to boost growth, increasing demand for the metal as a hedge against inflation.

Bombardier, the world’s largest private-jet maker, soared 6 percent to C$3.87. The transaction from Berkshire’s NetJets division covers as many as 275 Bombardier Challenger aircraft, including 100 firm orders. That represents about four years of Challenger production, said Walter Spracklin, an analyst with RBC Capital Markets in Toronto, who has an outperform rating on the planemaker’s stock.

Barrick Gold Corp., the world’s largest producer of the metal, rose less than 0.1 percent to C$39.61. Goldcorp Inc., the second-largest gold producer in the index, advanced 1.4 percent to C$40.46.

Suncor Energy Corp., Canada’s largest energy provider, rose 2.3 percent to 28.97, snapping a two-day losing streak.

Clothing maker Gildan Activewear Inc. rose 8.7 percent to C$27.88 after equity analyst David Glick at Buckingham Research raised his recommendation on the stock to buy from neutral.

US

By Michael P. Regan and Rita Nazareth

June 12 (Bloomberg) — Stocks rebounded from yesterday’s slump amid speculation policy makers will do more to stimulate the economy and protect European banks. Spain’s 10-year bond yield touched a euro-era record high as Fitch Ratings downgraded some Spanish lenders.

The Standard & Poor’s 500 Index added 1.2 percent to 1,324.18 at 4 p.m. in New York after tumbling 1.3 percent yesterday. The Stoxx Europe 600 Index rose 0.6 percent. The 10- year Spanish yield increased as much as 33 basis points to 6.83 percent, before trimming gains and trading at 6.71 percent. The S&P GSCI Index of commodities lost 0.2 percent as wheat and corn tumbled more than 2 percent. Ten-year Treasury yields rose eight basis points to 1.66 percent.

Gains in stocks followed remarks by Federal Reserve Bank of Chicago President Charles Evans that he would support more stimulus. The European Central Bank backed European Commission proposals for a banking union based on three pillars:

Strengthening euro-area supervision of lenders, establishing a deposit guarantee program and “minimizing the risks for taxpayers” through contributions from the financial industry.

“It has been a bit schizophrenic,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “What’s taking place in the Spanish bond market is troubling. Yet pessimism is so high that the prospect of any relief would be enough to jump-start a rally in equities.”

Commodity, financial and industrial shares rose at least 1.6 percent to lead gains in all 10 of the main industries in the S&P 500. Boeing Co. jumped 3.5 percent as Sanford C. Bernstein & Co. raised its rating and the company was poised to win the first order by a lessor for its 737 MAX jets. Textron Inc. rallied 4 in New York and Bombardier Inc. surged 6 percent in Toronto as Warren Buffett’s Berkshire Hathaway Inc. agreed to buy planes from the companies.

Boeing led gains in the Dow Jones Industrial Average, followed by advances of at least 2.5 percent in JPMorgan Chase & Co., Bank of America Corp. and DuPont Co. The Dow surged 162.57 points to 12,573.80. JPMorgan advanced before Chief Executive Officer Jamie Dimon is scheduled to testify before Congress tomorrow about his firm’s $2 billion trading loss.

The S&P 500 erased an early rally yesterday and ended the session with its biggest decline in more than a week as early investor optimism over Spain’s request for bailout funds to help its banks was met with skepticism that the rescue will tame the crisis.

Fitch said today that euro-area countries face lower ratings because policy makers are failing to demonstrate they can bring the debt crisis under control and predicted Spain will miss budget-deficit targets. Bond ratings in the euro currency bloc are under “strong downward pressure,” Fitch Managing Director Ed Parker said in Oslo today. The Fed is scheduled to meet next week and announce its rate decision on June 20.

“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu airing today. “Extending the Twist would be useful,” he said, referring to a plan expiring this month that lengthens the average duration of bonds in the Fed’s portfolio.

All but seven of 24 commodities tracked by the S&P GSCI Index declined. Corn fell the most in two weeks, dropping 1.4 percent, as the U.S. Department of Agriculture forecast global inventories will rise to the highest level in 11 years. Wheat slid 2.3 percent after the USDA said stockpiles will be larger than analysts expected. Oil rose 0.8 percent to $83.32 a barrel, rebounding from an eight-month low.

The dollar weakened against 12 of 16 major peers, with the currencies of Australia and New Zealand appreciating about 1 percent to lead gains. The euro climbed 0.2 percent to $1.2505, reversing a 0.3 percent slump in the morning.

Optimism among global asset allocators “collapsed” this month as Europe’s debt crisis prompted money managers to sell equities and hoard cash to the highest level since 2008, a Bank of America Corp. survey showed.

Respondents, who together manage $522 billion, reduced their holdings in stocks to underweight for the first time in seven months, meaning they now own less than are represented in indexes. Cash balances surged to 5.3 percent in June, the third- highest level on record, while an index of risk and liquidity sank to 30, the lowest level since September 2011.

The Stoxx 600 climbed even as three shares retreated for every two that rose in the regional benchmark.

TomTom NV rallied 16 percent after Apple Inc. agreed to use its digital maps. Lafarge SA rose more than 2 percent after announcing plans to increase earnings by 54 percent by 2015.

Lagardere SCA retreated 2.4 percent after the company lowered its advertising-revenue target.

Spain’s 10-year bond yield and the cost of insuring against a default by the nation each rose for a third day, with credit- default swaps increasing 12 basis points to 607. The price was at a record 613.5 basis points on June 1.

Italy’s 10-year yield increased 14 basis points to 6.17 percent after reaching 6.30 percent, the highest since January.

Germany’s 10-year bund yield climbed 12 basis points to 1.42 percent, with France’s yield rising 17 basis points to 2.73 percent.

“We’re going to just keep playing this game until there’s some final outcome of what’s going to happen with the euro,”

Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., based in Elmira, New York, said in phone interview. “Europe is a total disaster.”

The European Financial Stability Facility plans to raise at least 1 billion euros through a sale of bonds due April 2037 as banks in Norway and Germany sell relatively safe covered bonds after yesterday’s surge in non-financial deals.

Italy plans to auction at least 9.5 billion euros ($11.9 billion) of debt this week as yields climb for Europe’s most- indebted countries following Spain’s request for a bailout.

Greece holds elections June 17 that may determine the country’s future in the euro.

The MSCI Emerging Markets Index slipped 0.2 percent, after closing yesterday at the highest level since May 29. The Shanghai Composite Index, South Korea’s Kospi and Taiwan’s Taiex Index slid at least 0.7 percent. The ISE National 100 Index advanced 1.2 percent as Tupras Turkiye Petrol Rafinerileri AS jumped 2.7 percent after the U.S. said Turkey was among nations that would be exempt from sanctions for buying Iranian oil.

Poland’s WIG20 Index and India’s Sensex Index climbed more than 1 percent.

Have a wonderful evening everyone.

“Don’t aim for success if you want it; just do what you love and believe in it, and it will come naturally.”
David Frost

Regards,

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.