June 13, 2013 Newsletter

Dear Friends,

Tangents:

On this day in 1966, the landmark Miranda rights were established, ruling that suspects must be informed of their rights before being questioned by police:  “You have the right to remain silent.  Anything you say can and will be used against you in a court of law.  You have the right to speak to an attorney and to have an attorney present during questioning.  If you cannot afford a lawyer, one will be provided for you at government expense”

Also on this day, in 1865, one of the world’s most beloved poets, William Butler Yeats was born:

I will arise and go now, for always night and day

I hear lake water lapping with low sounds by the shore;

While I stand on the roadway, or on the pavements grey,

I hear it in the deep heart’s core.

~William Butler Yeats

Apoem is never finished, only abandoned. –Paul Valery

Photos of the Day –June 13^th, 2013

A staff member of the Japanese toy and home appliances maker CCP Co. operates a ‘Nano-Falcon,’ the world’s smallest infrared remote-controlled helicopter, at the Tokyo Toy Show in Tokyo. The toy helicopter measures 8 centimeter (3.1 inches) in length while weighing 11 grams (0.39 ounces). It’s now on sale at 4,704 yen ($50) on the domestic market. Koji Sasahara/AP

A laborer walks in water after setting up a scaled replica of the rubber duck, by Dutch conceptual artist Florentijn Hofman, on an artificial lake in Luoyang, Henan province , China. Reuters

Market Closes for June 13^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

June 13 (Bloomberg) — Canadian stocks rose the most in seven weeks as technology and consumer shares gained after better-than-expected U.S. data offset a World Bank forecast for slower growth in China.

Empire Co. soared 11 percent after a unit agreed to buy Safeway Inc.’s Canadian assets in a $5.7 billion deal.

BlackBerry added 5.8 percent after Societe Generale SA advised clients to buy the stock. Lundin Mining Corp. jumped 8.8 percent after agreeing to buy a nickel mine from Rio Tinto Group.

Kirkland Lake Gold Inc. lost 1.9 percent as the precious metal’s price dropped.

The Standard & Poor’s/TSX Composite Index rose 167.24 points, or 1.4 percent, to 12,277.13 at 4 p.m, the biggest advance since April 24. The gauge snapped a two-day losing streak that had erased 2.2 percent. Trading volume was 11 percent lower than the 30-day average.

“When you look at the World Bank reducing GDP estimates, that was more related to the emerging markets and Europe,” said Anish Chopra, a fund manager with TD Asset Management Ltd. in Toronto. He helps manage C$204 billion ($201 billion). “The data in North America, whether in Canada or the U.S. with retail sales above forecast and jobless claims decreasing, that’s all positive. And when you put the two together that’s positive for North America, which is why you’re getting the reaction you’re seeing.”

Data today showed retail sales in the U.S. rose 0.6 percent last month, surpassing the median forecast of 0.4 percent in a Bloomberg survey. A separate report indicated fewer Americans than forecast filed applications for unemployment benefits last week. U.S equities rallied, with the S&P 500 gaining 1.5 percent.

Data from Statistics Canada showed industrial companies’ use of production capacity rose in the first quarter, as oil and gas companies boosted output.

Global equities slumped after the World Bank said in a report released yesterday that the world economy will expand 2.2 percent this year, less than a January forecast for 2.4 percent growth.

The growth forecast for China, Canada’s second-largest trading partner, was cut to 7.7 percent from 8.4 percent, the bank said. China is the world’s biggest consumer of industrial metals and energy.

All 10 industries in the S&P/TSX rose, with technology stocks adding 3 percent and producers of consumer staples gaining 2.3 percent.

BlackBerry, formerly Research In Motion Ltd., climbed 5.8 percent to C$14.68. Andy Perkins, an analyst with Societe Generale, raised his rating for the stock to buy from sell.

Sales of BlackBerry’s latest smartphones are doing well, with the touchscreen Z10 estimated to sell 4 million units and the Q10, which boasts a physical keyboard, to sell just under 1 million units.

Empire soared 11 percent to a record C$74.77. Its Sobeys Inc. will have 213 grocery stores in Western Canada and 199 in- store pharmacies in a bid to compete with Loblaw Cos., the largest grocery retailer in Canada. Loblaw added 3.9 percent to C$48.29.

Lundin Mining jumped 8.8 percent to C$4.33 after agreeing to buy Rio Tinto’s Eagle nickel and copper project in northern Michigan for about $325 million. Construction at the mine is just over 50 percent complete and output is scheduled to start in the fourth quarter of 2014, Lundin said in a statement.

Alacer Gold Corp. soared 12 percent to C$2.60 after Chief Executive Officer David Quinlivan said in an interview with Bloomberg the company plans to sell its two mines in Australia within eight months due to high labor costs.

Dorel Industries Inc. slumped 8.7 percent to C$35.40, the biggest drop in 13 months. The Montreal-based maker of bicycles and car seats said bad weather and widespread discounting hurt its second-quarter expectations for earnings in its cycling unit. Full-year earnings from that business will not exceed 2012 levels, and Dorel is cutting 50 jobs as a result.

Barrick Gold Corp., the world’s largest gold producer, slipped 0.8 percent to C$20.02 and Kirkland Lake Gold retreated 1.9 percent to C$5.05. Gold futures for August delivery declined 1 percent to settle at $1,377.80 an ounce in New York.

US

By Lu Wang

June 13 (Bloomberg) — U.S. stocks rallied, giving the Standard & Poor’s 500 Index its biggest gain since January, on better-than-forecast economic data and speculation the Federal Reserve will signal plans to maintain record low interest rates.

Gannett Co., the publisher of USA Today, jumped 34 percent after agreeing to buy Belo Corp. for about $1.5 billion. Belo surged 28 percent. Safeway Inc. soared 7.4 percent as the second-largest U.S. grocery chain agreed to sell its Canadian stores. DuPont Co. slid 0.7 percent after cutting its forecast.

The S&P 500 rose 1.5 percent to 1,636.36 at 4 p.m. in New York. The index had tumbled 1.9 percent over the previous three days. The Dow Jones Industrial Average added 180.85 points, or 1.2 percent, to 15,176.08. About 6.3 billion shares traded hands today, in line with the three-month average.

“It’s undeniable that the series of data are getting better,” Chris Bertelsen, chief investment officer at Global Financial Private Capital, a Sarasota-based private wealth firm with about $2 billion in assets under management, said in a phone interview. “The only issue for the market is we’re in a vacuum month. In other words, there are no earnings, there is nothing to latch onto other than an occasional number here and there and people are worried about the Fed tapering.”

Retail sales in the U.S. rose 0.6 percent last month, the biggest increase in three months, Commerce Department figures showed today. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4 percent advance. Data from a separate report indicated fewer Americans than forecast filed applications for unemployment benefits last week.

Investors have been scrutinizing economic data to determine whether growth is strong enough to prompt the Federal Reserve to scale back stimulus measures. The S&P 500 has slipped 2 percent since May 21 as Fed Chairman Ben S. Bernanke said the central bank may scale back bond buying if the U.S. labor market “improves in a real and sustainable way.” Three years of earnings growth and stimulus from the Fed has helped push the gauge up 142 percent from its bear-market low in 2009.

U.S. equities extended gains today after the Wall Street Journal reported that the Fed may “push back” on market expectations of higher interest rates. Bernanke has repeatedly said a reduction in the Fed’s $85 billion in monthly bond purchases wouldn’t mean an end to record easing.

Equities fell earlier as the World Bank said in a report the global economy will expand 2.2 percent this year, less than a January forecast for 2.4 percent growth and slower than last year’s 2.3 percent. It lowered its projection for developing economies and said the euro area’s gross domestic product will fall 0.6 percent.

Stocks in Asia plunged, erasing the MSCI Asia Pacific Index’s 2013 advance and dragging Japan’s Nikkei 225 Stock Average into a bear market. The Hang Seng China Enterprises Index of Hong Kong-listed mainland firms slid 2.7 percent, and the Nikkei 225 tumbled 6.4 percent.

“The economy around the globe is slowing down so U.S. investors are certainly watching the data and hopefully see signs that the U.S. is not joining their friends in Europe and emerging markets,” Wayne Wilbanks, chief investment officer at Wilbanks, Smith & Thomas Asset Management LLC in Norfolk, Virginia, which oversees $2.5 billion, said by phone. “As markets get higher and higher, they can’t decide, ‘is the game over?’ Everybody wants to take their profits in this market, but they don’t want to miss the last 100 points.”

The Chicago Board Options Exchange Volatility Index, or VIX, slipped 12 percent today to 16.41. 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 45 percent.

Stock gains accelerated after the S&P 500 recovered from a brief dip below its average price in the past 50 days, a measure that’s watched by some analysts to gauge the market’s trend. The S&P 500 has closed above the threshold on all trading days so far this year, except for April 18.

All 10 industries in the S&P 500 gained. Financial and consumer-discretionary companies climbed the most, rising at least 1.8 percent. Investors bought shares of companies most tied to economic growth, sending the Morgan Stanley Cyclical Index up 3.1 percent, its biggest one-day gain since September.

An S&P gauge of homebuilders also rose, surging 4.9 percent.

Gannett rallied 34 percent to $26.60 and Belo soared 28 percent to $13.77. Both stocks hit five-year highs. Gannett will pay $13.75 per Belo share in cash, plus the assumption of $715 million in debt, according to a statement. The acquisition will make Gannett the fourth largest owner of major network affiliates, the company said. It will almost double Gannett’s broadcast portfolio to 43 stations from 23.

Safeway jumped 7.4 percent to $25.82 after agreeing to sell its Canadian stores to Empire Co.’s Sobeys Inc. unit for about C$5.8 billion ($5.7 billion) in cash. Proceeds from the sale will be used to pay down $2 billion in debt and buy back stock, Safeway said.

PVH Corp. climbed 10 percent to $122.60. The owner of the Tommy Hilfiger and Calvin Klein brands said that excluding some items it earned $1.91 a share in the first quarter. That beat the average analyst estimate of $1.37 in a Bloomberg survey.

DuPont slipped 0.7 percent to $53.88. The largest U.S. chemical company by market value cut its first-half earnings forecast after cool, wet weather in North America and Europe affected revenue and costs at its agriculture and nutrition and health units.

Williams Cos. fell 1 percent to $33.70, after an explosion and fire at a chemical plant in Geismar, Louisiana. At least one person died and scores were injured, Governor Bobby Jindal said.

The cause of the explosion isn’t known, Williams said.

Coty Inc. declined 0.8 percent to $17.36 on the first day of trading. The maker of perfumes endorsed by Beyonce and Heidi Klum raised about $1 billion on behalf of existing holders in an initial public offering yesterday.

Have a wonderful evening everyone.

Be magnificent!

Order is the very essence of the universe –

the order of birth and death and so on.  It is only man that seems to live in disorder, confusion.

He has lived that way since the world began.

Krishnamurti, 1895-1986

As ever,

Carolann

God gave us the gift of life; it is up to us to give

ourselves the gift of living well.

-Voltaire, 1694-1778

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