June 12, 2013 Newsletter

Dear Friends,

Tangents:

Sweet June, Is she of Summer or of Spring,

Of adolescence or of middle-age?

A girl first marveling at a touch of lovers

Or else a woman growing ripely sage?

Between the two she delicately hovers,

Neither too rakish nor, as yet, mature.

She’s not a matron yet, nor fully sure;

Neither too sober nor elaborate;

Not come to her fat state.

She has the leap of youth, she has the wild

Surprising outburst of an earnest child.

Sweet June, der month, while yet delay

Wistful reminders of a dearer May;

June, poised between, and not satiate…

-V. Sackville-West

from The Garden, 1946

Photos of the Day –June 12^th, 2013

Visitors walk past the sculpture ‘Le Corbusier (Bust)’ by French artist Xavier Veilhan part of the exhibition ‘Architectones’ at the MaMo art center in Marseille, France. The MaMo contemporary art center is installed on the restored rooftop terrace of Le Corbusier’s 1947 Cite Radieuse (Radiant City) and created by French designer Ora-Ito. Jean-Paul Pelissier/Reuters

People take part in a yoga class across the Hudson River from New York’s Lower Manhattan and One World Trade Center in a park in Hoboken, New Jersey. Gary Hershorn/Reuters

Market Closes for June 12^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

June 12 (Bloomberg) — Canadian stocks fell, sending the benchmark index to the lowest since April 23, as energy and phone companies slumped and investors weighed prospects for economic growth and the pace of U.S. stimulus efforts.

Dollarama Inc., the dollar-store retailer, fell 3.4 percent after earnings missed analyst estimates. Bonavista Energy Corp. dropped 5.5 percent to lead a decline in energy shares. BCE Inc. and Telus Corp. retreated at least 1.3 percent after Canada’s top broadcast regulator said he will look more closely at ownership transactions for competition concerns. Pretium Resources Inc. and Gabriel Resources Ltd. climbed at least 3 percent as gold producers rallied.

The Standard & Poor’s/TSX Composite Index fell 113.68 points, or 0.9 percent, to 12,109.89 at 4 p.m. in Toronto. The index has tumbled 2.6 percent this year, the third-worst performance among developed markets. Trading volume was 9.5 percent lower than the 30-day average at this time of the day.

“We’ve finished earnings season and now we’re just waiting for economic data,” said Jeffrey Bradacs, a fund manager with Manulife Asset Management Ltd. He helps oversee about C$1.50 billion ($1.47 billion) with his team. “The key for the market these days is to see how strong the economy is and to see whether the Fed tapers stimulus.”

U.S. Federal Reserve Chairman Ben S. Bernanke said May 22 that the Fed could scale back stimulus efforts if the employment outlook shows “sustainable improvement.”

Telecommunications stocks slumped 1.9 percent as a group as nine of 10 industries retreated in the S&P/TSX.

BCE, which is attempting to acquire Astral Media Inc. for C$3.7 billion after having an earlier agreement scuttled by regulators, dropped 1.3 percent to C$43.95, the lowest since January. Telus, which had its own deal for Mobilicity blocked by the government, retreated 1.7 percent to C$33.67.

Jean-Pierre Blais, chairman of the Canadian Radio- television and Telecommunications Commission, said in a speech today in Banff, Alberta, that he will be applying a tougher public interest test on ownership transactions.

“That was clear from our response to the initial application made by BCE to acquire control of almost all of Astral’s holdings,” Blais said. “Our decision last fall sent a clear signal that the public interest is paramount.”

Dollarama, based in Montreal, sank 3.4 percent to C$70.13, the biggest decline since August 2011. The company reported adjusted first-quarter earnings of 62 Canadian cents a share, short of the median analysts’ estimate of 67 cents according to a Bloomberg survey.

The company had topped analysts’ estimates on a per-share basis for 14 straight quarters since Dollarama went public in October 2009.

Bonavista Energy lost 5.5 percent to C$14.50 as the S&P/TSX Energy Index fell to the lowest level since April, with 48 of 58 members declining.

Penn West Petroleum Ltd. jumped 3.9 percent to C$11.33, the highest close since March 25. The stock has jumped 8.8 percent over three days, after the company last week named a new chief executive officer and board leadership and said it will explore options to increase returns.

Pretium Resources jumped 6.6 percent to C$8.45 and Gabriel Resources added 3 percent to C$1.38 as the price of gold rallied 1.1 percent to settle at $1,392 an ounce in New York. The U.S. dollar declined a third day, increasing demand for the precious metal as an alternative investment.

US

By Lu Wang

June 12 (Bloomberg) — U.S. stocks fell, with the Dow Jones Industrial Average posting its first three-day losing streak this year, as investors weighed prospects for economic growth and the pace of Federal Reserve stimulus measures.

All 10 main industries in the S&P 500 retreated. Utility stocks fell 1.1 percent, extending a six-week decline to 11 percent. Biogen Idec Inc. slipped 7.4 percent as Citigroup Inc. cut its recommendation on the stock. Cooper Tire & Rubber Co. soared 41 percent after agreeing to be acquired by Apollo Tyres Ltd. for about $2.57 billion.

The Standard & Poor’s 500 Index fell 0.8 percent to 1,612.52 at 4 p.m. in New York. The gauge erased a 0.7 percent rally earlier today and recorded its biggest three-day decline since April 17. The Dow lost 126.79 points, or 0.8 percent, to 14,995.23. The index has slipped 1.7 percent in the past three days, its longest retreat since Dec. 28.

“Markets are having a difficult time holding onto gains of any kind,” Peter Kenny, chief market strategist at Knight Capital Group Inc. in Jersey City, New Jersey, said in an interview. “Buying is suddenly becoming less automatic given the backdrop of the Fed narrative. It appears as though whenever the market pops its head up and trades in the green, institutions lighten up, hedge risk and provide supply. It appears as though the easy lifting is behind us.”

Stimulus from the Federal Reserve and better-than-forecast earnings have propelled the bull market in U.S. stocks into a fifth year and driven the S&P 500 up 138 percent from a 12-year low in 2009. The gauge has fallen 3.4 percent from its record high on May 21, the day before Fed Chairman Ben S. Bernanke suggested the central bank could curtail its bond purchases, known as quantitative easing, if the economy improved in a “real and sustainable way.”

Investors get their next look at the health of the U.S. economy tomorrow, when reports may show initial jobless claims were unchanged last week and sales at retailers rose in May. The S&P 500 rallied June 7 after jobs growth in May beat forecasts.

At the same time, bigger job and wage gains are needed to move the central bank closer to scaling back stimulus. Fed policy makers next meet June 18-19.

Concerns over economic growth and the pace of central-bank bond buying have led to widening swings in U.S. shares. That has prompted options traders to make unprecedented bets on equity volatility, pushing bullish and bearish contracts to records.

Options outstanding on the iPath S&P 500 VIX Short-Term Futures ETN, tracking a gauge of VIX futures, climbed to an all-time high of 3.46 million on June 6, based on data compiled by Bloomberg.

“Markets are wrestling with high volatility and changes, which in my opinion, are disconcerting to a lot of investors,” David Kotok, Sarasota, Florida-based chief investment officer at Cumberland Advisors Inc., said in a phone interview. His firm oversees $2.2 billion. “We went from QE, relied upon and predictable, to mixed messages in most of the capital markets of the world,” he said. There will be “more volatility, lots of more, both directions in nearly all markets. Great opportunity if you’re on the right side of it.”

The Chicago Board Options Exchange Volatility Index, a gauge of derivative prices for the S&P 500 known as the VIX, has gained 65 percent from a six-year low in March. The index rose 8.9 percent to 18.59 today, erasing its loss for the year.

Consumer-discretionary and utility stocks dropped at least 1.1 percent, leading losses among 10 S&P 500 groups.

Utilities in the index have fallen 11 percent as a group after reaching a five-year high April 30, as rising bond yields reduce demand for their dividends. Stocks in power providers pay 4.1 percent of their price in dividends for the second highest yield among 10 groups, according to data compiled by Bloomberg.

Yields on 10-year Treasury notes have added 56 basis points, or 0.56 percentage point, to 2.23 percent since the end of April.

American Express Co. slid 2.4 percent to $74.72, the biggest retreat in the Dow, as financial stocks dropped 1 percent as a group. Legg Mason Inc. slipped 2.7 percent to $32.44, after the money manager was cut to sell from neutral by Goldman Sachs Group Inc.

Biogen Idec, maker of multiple sclerosis pill Tecfidera, fell 7.4 percent to $206.55. The shares were cut to neutral from buy at Citigroup, after they rallied 52 percent this year through yesterday. The S&P 500 Health Care Index rose 21 percent in the period.

First Solar Inc., the largest U.S. solar manufacturer by shipments, slid 11 percent to $46.66, the biggest decline in the S&P 500. The company said it is offering 8.5 million shares to finance “general corporate purposes.” The offer amounts to almost 10 percent of current stock.

Cooper Tire soared 41 percent to $34.66, the highest in 20 years, after Apollo Tyres, India’s second-biggest tiremaker by market value, agreed to acquire the company. Apollo’s subsidiary will pay $35 a share to stockholders of Findlay, Ohio-based Cooper Tire, 43 percent higher than yesterday’s closing share price of $24.56.

Goodyear Tire & Rubber Co., the largest U.S. tiremaker, added 2 percent to $14.89.

Spectra Energy Corp. climbed 11 percent to a record $33.68.

The pipeline operator said it plans to sell some transmission and storage asset to Spectra Energy Partners LP by the end of the year. The completion of the plan will enable the company to boost its dividend by 12 cents a year, up from the current target of 8 cents a share. Spectra Energy Partners advanced 6.2 percent to $39.48.

Hewlett-Packard Co. gained 2.8 percent, the most in the Dow, to $24.91. Chief Executive Officer Meg Whitman told CNBC that the personal-computer maker is ahead of its target in the turnaround as the company is halfway done with planned job cuts.

Whitman is eliminating 29,000 jobs through the end of fiscal 2014 to save as much as $3.5 billion a year and shore up profitability as PC demand ebbs.

Have a wonderful evening everyone.

Be magnificent!

There is an orderliness in the universe, there is an unalterable law governing everything

and every being that exists or lives.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Study nature, love nature, stay close to nature.

It will never fail you.

-Frank Lloyd Wright, 1867-1959

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