June 14, 2013 Newsletter

Dear Friends,

Tangents:

That month of sounds, that month of scents,

That sensuous month when every sense

Ripens, and yet is young;

Th’  external world, by which we judge

And sterner rules of reason grudge;

That dear misleading framework of our faith,

Truth in untruth, that picture slung

From such precarious nail, that nectarous breath

Of music, when the senses grow confused

And each might be the other; when, bemused,

We stray through thickets of the honeyed air.

But, Wanderer, then beware

Of beanfields amorous to strolling lovers,

Too dangerous (they say) to dally there

Along the hedgerow by the serried coverts

Where murmuring cushats hint that love is fair,

No sweeter load was ever laid at eve

Across the shoulders of the country’s sweep

Mantled in June that, drowsing, seem asleep

But stir to greet the dream that all believe.

-V. Sackville-West,  from The Garden

Photos of the Day –June 14^th, 2013

A double rainbow is seen during a heavy rainfall over Djurgarden and Nacka in Stockholm, Sweden. Johan Nilsson/Scanpix Sweden/AP

A dog passes by an ice-cream van by an empty beach at Brighton in southern England. Luke MacGregor/Reuters

Market Closes for June 14^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katie Brennan

June 14 (Bloomberg) — Canadian stocks fell, capping a third straight weekly loss for the Standard & Poor’s/TSX Composite Index, as the International Monetary Fund cut its 2014 U.S. growth forecast and manufacturing data trailed estimates.

Nine out of 10 groups in the S&P/TSX retreated today, with health-care and raw-material stocks leading losses. Valeant Pharmaceuticals International Inc., Canada’s largest drugmaker, dropped 1.7 percent. Niko Resources Ltd. slid 5.2 percent, pacing declines among energy stocks. Utility companies were the only industry to rise, increasing 0.6 percent.

The S&P/TSX fell 89.77 points, or 0.7 percent, to 12,187.36 in Toronto. The benchmark gauge for Canadian equities lost 1.5 percent in the past five days as declines of at least 0.9 percent on June 11 and 12 overshadowed a 1.4 percent rebound on June 13.

“It’s a pause after a fairly volatile week with a big down day on Wednesday, followed by a big up day on Thursday,” Bob Decker, fund manager with Aurion Capital Management, said by telephone from Toronto. His firm manages C$6 billion ($5.9 billion). “People are scratching their heads as to what the true direction of the market is.”

Investors continue to weigh data from around the world to determine the strength of economic growth. The International Monetary Fund lowered its forecast for U.S. gross domestic product in 2014, while leaving unchanged its prediction for this year.

A report today showed U.S. consumer confidence in June eased from a six-year high. Separate data showed industrial production was unchanged and wholesale prices rose in May for the first time in three months.

A Canadian economic report indicated factory sales fell at the fastest pace in more than three years in April. The Bank of Canada predicts the economic expansion will rotate to exports and investment from consumer and government spending even amid what it calls the slowest export recovery since World War II.

Canada’s benchmark equities gauge rallied 1.4 percent yesterday even as government reports from China showed industrial production and exports trailed economists’ estimates in May, fueling concerns the world’s second-largest economy is slowing. The World Bank cut it growth forecast for China, the biggest consumer of commodities and a key destination for Canadian exports.

The S&P/TSX dropped in nine of the past 11 sessions, erasing 4.4 percent since May 30. The gauge is down 2 percent this year.

Health-care companies fell 1.8 percent as a group today, while raw-materials stocks declined 1.6 percent. Valeant Pharmaceuticals dropped 1.7 percent to C$85.69.

Niko, an oil and gas explorer, dropped 5.2 percent to C$7.89. Energy companies fell 0.4 percent, even as the price of crude oil rose 1.2 percent to a four-month high of $97.85 a barrel.

Sears Canada Inc. rallied 14 percent to C$10.76. The department-store operator raised C$191 million from the sale of two Toronto-area stores to mall landlords.

US

By Lu Wang

June 14 (Bloomberg) — U.S. stocks fell, after yesterday’s rally in the Standard & Poor’s 500 Index, as the International Monetary Fund cut its 2014 outlook for America and urged the central bank to carefully manage its exit from stimulus plans.

DuPont Co. and American Express Co. slipped at least 2.2 percent after analysts cut their recommendations. Edwards Lifesciences Corp. slid 2.7 percent after losing a patent- infringement case against Medtronic Inc. GameStop Corp. and Groupon Inc. jumped more than 3.9 percent amid analyst upgrades.

The S&P 500 fell 0.6 percent to 1,626.73 at 4 p.m. in New York, ending the week down 1 percent. The Dow Jones Industrial Average slipped 105.90 points, or 0.7 percent, to 15,070.18 today. About 5.5 billion shares changed hands on U.S. exchanges, 13 percent below the three-month average.

“We’re hitting a period of higher volatility,” Bryan Novak, who helps oversee about $650 million at Chicago-based Astor Asset Management LLC, said in a telephone interview.

“Interest rates need to rise, but while you have an economic picture, where growth is around 2 percent, you don’t have a lot margin of error to work with in terms of interest rates. That has a meaningful impact on the futility of the economy at this point. The market is going to focus heavily on every word that the Fed says.”

The Washington-based IMF lowered its U.S. growth forecast for 2014 to 2.7 percent, from 3 percent predicted in April. It left its predication for this year unchanged at 1.9 percent. The IMF sees the Federal Reserve maintaining large monthly bond purchases until at least the end of this year and urged the central bank to carefully manage its exit plan to avoid disrupting financial markets.

The S&P 500 rallied 1.5 percent yesterday on better-than- estimated economic reports and speculation the Federal Open Market Committee will maintain record low interest rates. The Fed will hold its two-day policy meeting next week, with Fed Chairman Ben S. Bernanke scheduled to speak after the central bank’s decision on June 19.

Investors have been scrutinizing economic data to determine whether growth is strong enough to prompt the Fed to scale back stimulus measures.

The Thomson Reuters/University of Michigan June preliminary index of consumer sentiment fell to 82.7 from a final reading of 84.5 the prior month, a report showed today. The median forecast in a Bloomberg survey was unchanged at 84.5. Other reports showed U.S. industrial production was unchanged in May and wholesale prices climbed for the first time in three months, reflecting an increase in fuel and food prices that failed to filter through to other goods.

The S&P 500 has slid 2.5 percent since May 21 as 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 140 percent from its bear-market low in 2009.

“All eyes are on the Fed in terms of what policy might be like three to six months from now,” Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. “The Fed is unlikely to step in with any kind of potential damper. The fundamentals are improving, but the markets have improved so much quickly that we may need to see some consolidation, some sideways movement in the market before the next major uptrend.”

The Chicago Board Options Exchange Volatility Index, or VIX, rose 4.5 percent today to 17.15. 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 52 percent.

Nine of 10 main industries in the S&P 500 declined today.

Financial and energy companies dropped the most, sinking at least 1 percent. Utilities had the only gain among the groups, adding 0.1 percent.

The Russell 1000 Index of large companies retreated 0.5 percent while the Russell 2000 Index, a gauge of stocks with smaller market value, slipped 0.8 percent.

Russell Investments, whose global stock indexes are used by investors with $4.1 trillion in assets, was set to announce its preliminary list of changes for indexes after the close of U.S. trading today.

DuPont dropped 2.2 percent to $52.68. Bank of America Corp. lowered its rating on the largest U.S. chemical company by market value to neutral from buy.

American Express declined 3 percent to $72.97. The biggest credit-card issuer by purchases was reduced to equal weight, an equivalent of neutral, from overweight at Barclays Plc on valuation.

Edwards Lifesciences slid 2.7 percent to $70. The biggest- maker of aortic heart valves implanted with a catheter lost a patent-infringement case against Medtronic in a German court.

Medtronic rose 0.3 percent to $52.92.

Coal stocks tumbled amid concern over Walter Energy Corp.’s finances. After the close of regular trading, the producer of steelmaking coal said it canceled a proposed loan refinancing.

The company added it has no material debt principal payments due until 2015.

Walter Energy plunged 17 percent to $12.13 before trading was halted. Peabody Energy Corp. declined 3.4 percent to $16.78 while Consol Energy Inc. fell 1.5 percent to $31.95.

Myriad Genetics Inc. tumbled 14 percent to $27.59.

Companies like Ambry Genetics and the University of Washington are moving to offer cheaper and broader genetic testing for breast cancer risk to a growing group of women, following a U.S. Supreme Court ruling that ended Myriad’s monopoly over DNA that vastly raises odds for the disease.

GameStop gained 3.9 percent to $39.01. The world’s largest video-game retailer was raised to outperform from market perform at Oppenheimer & Co. GameStop will benefit from new consoles being released by Microsoft Corp. and Sony Corp. before the year-end holidays, according to analyst Brian Nagel.

Groupon rallied 12 percent to $7.65. Deutsche Bank AG upgraded the daily-deal website to buy from hold, citing optimism that mobile applications would expand use of the service.

Smith & Wesson Holding Corp. added 5.2 percent to $9.78.

The gunmaker posted preliminary earnings of 44 cents a share in the fourth quarter, beating estimates that called for 40 cents.

Cable stocks rallied after CNBC reported Time Warner Cable Inc. has discussed with billionaire John Malone’s Liberty Media Corp. about an industry consolidation, including a potential merger between Time Warner Cable and Charter Communications Inc., in which Liberty Media bought a 27 percent stake.

Time Warner Cable has no interest in being acquired by Charter, CNBC said.

Time Warner Cable advanced 8.1 percent to $103.93. Charter climbed 5.2 percent to a record $116.61. Cablevision Systems Corp., which is selling its Optimum West unit to Charter, increased 3.6 percent to $14.68.

Have  a wonderful weekend everyone.

Be magnificent!

Man must understand that when he cuts himself off from all stimulating and purifying contact with infinity,

and no longer relies on it for his subsistence and his health, he risks madness;

he tears himself asunder, and divorces himself from his very substance.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

I never learn anything talking.  I only learn things

when I ask questions.

-Lou Holtz, 1937-

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