June 19, 2012 Newsletter

Dear Friends,

Tangents:

Emily Carr is one of the best know Canadian painters and an icon of the Canadian art world. Eight of her canvases were among the top 100 painting ever sold at auction in Canada with her 1939 work Wind in the Treetops ranking number 9 after raking in a winning bid of $2.2 million.

While a household name in Canada, Carr has never quite been able to nab the same distinction at the international level. However this may soon change. An exhibition of seven of her most illustrious paintings, from the Vancouver Art Gallery’s permanent collection, are on display at dOCUMENTA, the prestigious and influential international art showcase held every five years in Kassel, Germany. Carr is the first Canadian to be honoured with this posthumous invitation.

Big Raven

Emily Carr, 1931, oil on canvas. Carr’s painting was deeply influenced by the art of the Northwest Coast First Nations

Today in History

June 19

photos of the day June 19, 2012

People hold a 550-foot-long sacred cloth to offer at the tomb of Emperor Shah Jahan on the 357th anniversary of his death at the historic Taj Mahal, in the northern Indian city of Agra. The Taj Mahal was built by the Emperor in memory of his wife and is one of the world’s most famous monuments.

-Brijesh Singh/Reuters

In this image made off the monitor screen at the Beijing Aerospace Flight Control Center, Chinese astronaut Liu Wang (l.) tries to help his female colleague, Liu Yang, move forward as their commander Jing Haipeng waves in the orbiting Tiangong-1 lab module.

-Beijing Aerospace Control Center via Xinhua/AP

Market Closes for June 19, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steve Chambers and Katia Dmitrieva

June 19 (Bloomberg) — Canadian stocks rose, sending the Standard & Poor’s/TSX Composite Index up for a third day, as optimism that Europe’s debt crisis is easing and speculation that the Federal Reserve will act to stimulate the economy fueled gains in oil prices and equities worldwide.

Energy and bank stocks contributed the most to the advance in the Standard & Poor’s/TSX Composite Index. Canadian Natural Resources Ltd., the nation’s third-largest energy provider, rose 1.7 percent, while Royal Bank of Canada, the country’s largest lender, added 3.5 percent, its biggest gain since December on a closing basis.

The S&P/TSX Composite Index gained 159.40 points, or 1.4 percent, to 11,760.53 at 2:39 p.m. Toronto time. The index added to its first back-to-back weekly gains in two months, and pared its 2012 loss to 1.6 percent.

“There’s an absence of bad news; there’s nothing to push the market down,” Thomas Caldwell, founder of Caldwell Securities Ltd. in Toronto, said in a phone interview. The firm manages C$1 billion ($982 million). “No bad news on any front leaves room for the market to go considerably higher.”

Global stocks rallied for a fourth day as the U.S. Fed began a two-day meeting amid rising expectations that it will do something to spur growth following government data on joblessness indicating a slowdown.

Statistics Canada said wholesale sales rose 1.5 percent in April to C$49.3 billion, the fastest since May 2011 and more than the 0.2 percent median estimate in a Bloomberg survey of economists.

The S&P/GSCI Spot Index increased 0.8 percent after falling 0.2 percent the day before. Ivanhoe Mines added 3.9 percent to C$10.68. Potash Corp. of Saskatchewan, the world’s second- largest agricultural chemicals supplier, rose 4.2 percent to C$41.57. Fertilizer producer Agrium Inc. climbed 2.6 percent to C$88.22.

Energy stocks gained 1.9 percent after oil rallied 0.9 percent, reversing yesterday’s 0.9 percent decline. Suncor Energy Inc., Canada’s largest energy provider, jumped 3 percent to C$30.14. Cenovus Energy Inc., a provider of oil and natural gas, increased 3.6 percent to C$33.42. Canadian Natural Resources added 1.7 percent to C$28.80.

Royal Bank of Canada rose 3.5 percent to C$52.66, after falling 0.7 percent yesterday. Toronto-Dominion Bank, the nation’s second-largest lender, advanced 1.5 percent to C$79.78, after dropping 0.5 percent the previous day.

US

By Rita Nazareth

June 19 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level in more than a month, as investors speculated the Federal Reserve will announce more measures to stimulate the world’s largest economy.

Bank of America Corp. climbed 4.5 percent as the Federal Housing Finance Agency said it plans to help banks avoid being forced to buy back mortgages amid concern lenders are tightening standards even for the most creditworthy buyers. FedEx Corp., operator of the largest cargo airline, jumped 2.8 percent after pledging “significant cost reductions.” Microsoft Corp. increased 2.9 percent after unveiling a tablet computer.

The S&P 500 rose 1 percent to 1,357.98 at 4 p.m. New York time, gaining for a fourth day. The Dow Jones Industrial Average added 95.51 points, or 0.8 percent, to 12,837.33. Trading volume for exchange-listed stocks in the U.S. was about 6.8 billion shares, or almost in line with the three-month average.

“It’s possible that the Federal Reserve will do something else,” said David Kelly, who helps oversee about $394 billion as chief market strategist at JPMorgan Funds in New York. “It’s possible that they will do some further extension of Operation Twist. They seem overly sensitive to the possibility that the market will react badly to them not taking action.”

Signs of slowing growth amid Europe’s turmoil could mean the Fed, which began a two-day meeting today, could extend its so-called Operation Twist, according to JPMorgan Chase & Co. and Jefferies & Co. The program involves selling short-term debt and buying longer-term bonds. A more aggressive response could be warranted if the Fed see high costs in a slowdown of growth.

The central bank may expand its balance sheet, extend Operation Twist and/or lengthen its short-term interest rate guidance beyond late 2014, Goldman Sachs Group Inc. chief economist Jan Hatzius wrote today.

“A decision not to ease is tantamount to a tightening,” he wrote in an e-mailed report to clients today. “At this point we’d be quite surprised if we saw no easing.”

Expectations for further policy action gave stocks their first back-to-back weekly gain since April on June 15. The S&P 500 earlier this month was on the brink of a so-called correction, or a 10 percent drop from a recent peak, on concern about a global slowdown and a worsening of Europe’s crisis.

Equities briefly pared gains as a German official said the Group of 20 leaders didn’t discuss any specific plans for Europe’s rescue funds to buy the bonds of euro-area governments.

Haggling among Greek political leaders is set to continue for a third day over a coalition that will seek relief from austerity measures tied to emergency loans, with Pasok leader Evangelos Venizelos saying a new government could be ready by midday tomorrow. Spanish bond yields fell after yesterday’s surge.

The S&P 500 traded near its average price of the last 100 days of about 1,359. A rally above that level could be considered a harbinger of more gains, according to analysts who study charts to make forecasts. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, rose 0.3 percent to 18.38, after slumping 25 percent in three days.

Seven out of 10 groups in the S&P 500 rose today as commodity, financial and industrial shares had the biggest gains. The Morgan Stanley Cyclical Index of companies most-tied to the economy increased 2 percent. The KBW Bank Index rallied 2 percent as all of its 24 stocks advanced.

Bank of America surged 4.5 percent to $8.11. The FHFA will detail flaws that would trigger a putback request, Stefanie Johnson, a spokeswoman for the FHFA, said in a statement.

Julius Baer Group Ltd. is in talks with Bank of America about acquiring its Merrill Lynch wealth management business outside the U.S. The Bank of America wealth unit may fetch about $2 billion, said a person familiar with the matter.

JPMorgan added 2.2 percent to $35.38. Chief Executive Officer Jamie Dimon told U.S. House members that he complied with disclosure rules in warning investors about changes that contributed to the bank’s trading loss of at least $2 billion.

It was his second appearance on Capitol Hill in less than a week to explain how the firm lost control of its derivatives trades.

FedEx, which is considered an economic bellwether, gained 2.8 percent to $91.01. The company’s express unit, which accounts for the bulk of sales, is developing a detailed strategy to improve efficiency in its operating expenses, Chief Financial Officer Alan Graf said on an earnings call.

Microsoft added 2.9 percent to $30.70. The Windows-powered tablet computer called Surface alters the company’s strategy of focusing on software and relying on partners to make the machines, in a renewed attempt to take on Apple Inc.’s iPad.

Nvidia Corp. rallied 6.7 percent to $13.24. Microsoft said the tablet computer will be powered by its Tegra processor.

Oracle Corp. advanced 3.1 percent to $27.96. The world’s largest maker of database software reported that fiscal fourth- quarter profit topped analysts’ estimates, buoyed by sales of new software licenses.

Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. rose as a global rubber deficit is projected to turn into a surplus in the second half, driving down the price tiremakers pay for the raw material. Goodyear increased 5.6 percent to $11.53. Cooper Tire added 3.2 percent to $17.23.

MetLife Inc. jumped 5 percent to $30.88. The largest U.S. life insurer got more time to submit a fresh capital plan to the Fed as the firm seeks to raise its dividend and resume buybacks after being twice blocked by the regulator.

J.C. Penney Co. tumbled 8.6 percent to $22.25, the lowest since 2010. The company’s merchandising and marketing chief is leaving, and Chief Executive Officer Ron Johnson will take over his duties, following a marketing strategy that has flopped with shoppers. The departure comes as Johnson struggles to remake the retailer’s image and overhaul its pricing strategy.

“They weren’t happy with the marketing direction, and it wasn’t resonating with consumers,” said Lizabeth Dunn, an analyst with Macquarie Group in New York. “They really want to emphasize price and product more obviously in marketing.”

Walgreen Co. dropped 5.9 percent to $30.09. The largest U.S. drugstore chain agreed to pay $6.7 billion for a 45 percent stake in the U.K.’s Alliance Boots, with an option to gain full control in about three years.

Barnes & Noble Inc. slumped 4 percent to $14.63. The largest U.S. bookstore chain posted fourth-quarter revenue that trailed analysts’ estimates.

The peak in stock trading during the market’s decline after April was less than half the volume triggered during the slumps in 2011 and 2010, a sign bears could come back in force, according to Bank of America.

About 4.67 billion shares changed hands on the New York Stock Exchange on June 1, the busiest trading since the S&P 500 started its retreat from this year’s high in April, according to data compiled by Bank of America and Bloomberg. That compared with peak volume of more than 9.5 billion in the previous two years, the data show.

The S&P 500 tumbled 9.9 percent from April 2 through June 1 and has since risen 6.3 percent. The relatively slow trading during the retreat suggests a lack of “volume shakeout” and means bears may still have the power to drive the market lower, according to Mary Ann Bartels, a New York-based technical analyst at Bank of America.

“While the short-term technicals support the case for a rally, the risk is that sellers are not yet completely exhausted and an adverse macro news event could trigger a future shakeout,” Bartels wrote in a note dated yesterday.

Have a wonderful evening everyone!

”They key is to keep company with people who uplift you, whose presence calls forth your best.” – Epictetus

Ellora Howie

Assistant to Carolann Steinhoff

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7