June 25, 2013 Newsletter

Dear Friends,

Tangents:

OK, as I have been describing to everyone today, The Rolling Stones concert was fantastic – and an amazing feat of aerobics on stage for Mick Jagger.  The band  performed without a break for three hours straight.  Mick never stopped moving throughout the entire performance and the quality of the music is as good as it ever was.  I don’t think anyone in the audience sat down once during the entire concert.  They keep adding dates and places on this tour so if you get a chance to see them – do!

The highlight of the trip was seeing the Barnes Foundation exhibit in Philadelphia.  It is really worth the effort to get there – more than once.  You can reserve times and tickets on line which is what I did before we went;  I booked two visits in advance because I thought it would suffice.   I’d recommend at least three reservations – there are so many incredible masterpieces you just want to gaze upon.  You can check it out at www.barnesfoundation.org/collections.  An easy way to get there is to book the Amtrak from Penn Station in NY – the fast train gets to Philadelphia in just over an hour.

Photos of the Day –June 21^st, 2013

A woman carries her bike at sunset across Lock One of the Rideau Canal where it joins with the Ottawa River, in Ottawa, Canada. Chris Wattie/Reuters

Visitors enjoy an art installation by Argentinan artist Leandro Erlich in London. The detailed facade of a Victorian terraced house lies horizontally on the ground with mirrors positioned overhead. The reflections of visitors give the impression they are standing on, suspended from, or scaling the building. Frank Augstein/AP

Market Closes for June 25^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katie Brennan

June 25 (Bloomberg) — Canadian stocks rose the most since April, after China’s central bank said it will ensure stable money markets and better-than-forecast U.S. data bolstered optimism about the world’s largest economy.

BlackBerry rose 3.2 percent after a Morgan Stanley analyst raised his rating on the stock. CML Healthcare Inc. surged 47 percent after LifeLabs Medical Laboratory Service agreed to buy the diagnostic services provider for about C$1.22 billion ($1.2 billion). Enbridge Inc. gained 3.2 percent after restarting part of its oil-sands pipeline system in Alberta.

The Standard & Poor’s/TSX Composite Index climbed 168.56 points, or 1.4 percent, to 12,005.42 at 4 p.m. in Toronto, the biggest gain since April 24. Trading was 19 percent higher than the 30-day average.

“It’s like a tug of war between the bullish and the bearish factors out there,” Irwin Michael, portfolio manager with ABC Funds, said from Toronto. The firm manages about C$800 million. “People are worrying a lot about China. The economic data indicating that the U.S. economy is getting better is not linear.”

The benchmark gauge for Canadian equities dropped 1.3 percent yesterday to the lowest level since November as commodities producers slumped amid concern China’s cash crunch would hurt growth in the world’s biggest consumer of materials and energy.

China’s central bank said today it has provided liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing lending-facility tools to ensure steady markets. China is Canada’s second-biggest trading partner behind the U.S.

U.S. economic data today showed orders for durable goods rose more than forecast in May and sales of new homes climbed more than estimated to the highest level in almost five years. A separate report showed confidence among U.S. consumers rose in June to the highest in more than five years.

The S&P/TSX has fallen 5.1 percent this month to erase a gain for the year and is on track for the first quarterly loss since the same period last year.

All ten industries in the index advanced, with technology health-care and industrial stocks adding more than 2.3 percent.

CML Healthcare surged 47 percent to C$10.60, the highest in 13 months. Closely held LifeLabs agreed to buy the company in an acquisition that combines two of Canada’s largest medical diagnostic laboratory operators. CML’s gain helped health-care stocks rise 2.3 percent as a group.

BlackBerry, formerly known as Research in Motion Ltd., rose 3.2 percent to C$15.32, the highest since May 14. Morgan Stanley analyst Ehud Gelblum said he expects sales of the company’s new BB10 smartphone to meet or beat his firm’s first-quarter estimates, citing strong global sales.

Enbridge rose 3.2 percent to C$43.99 after the largest transporter of Canadian crude to the U.S. restored operations on a segment of an Alberta pipeline network and said it will restart other lines over the next “several days,” according to a statement yesterday.

The Calgary-based company shut the Athabasca and Waupisoo systems, which have total capacity to move as much as 1.17 million barrels a day, after finding a 750-barrel spill caused by severe flooding.

Industrial stocks contributed the most to the benchmark index’s gain, rising 2.3 percent as a group. Canadian Pacific Railway Ltd. jumped 3.5 percent to C$126.51 after saying it re- opened its line west of Calgary and planned to open segments of its main line through downtown after floods interrupted service.

Tim Hortons Inc. gained 3.2 percent to C$56.29. Scout Capital Management LLC demanded in an open letter that the company increase debt for share repurchases and curtail the use of cash flow to fund a U.S. expansion. The New York-based investment firm has a 5.5 percent stake in the Canadian coffee and doughnut chain.

Royal Bank of Canada, the country’s biggest bank, is leading a group of investors and brokers creating a new Canadian stock exchange to compete with TMX Group Ltd.’s Toronto Stock Exchange.

The bourse, to be run by a venture called Aequitas Innovations Inc., is also backed by Barclays Plc, CI Financial Corp., IGM Financial Inc., ITG Canada Corp. and PSP Public Markets Inc., according to a statement today. The group will file an application to regulators by the end of the year.

US

By Inyoung Hwang

June 25 (Bloomberg) — U.S. stocks rose, as the Standard & Poor’s 500 Index rebounded from a nine-week low, after data showed durable-good orders and home sales increased more than forecast and consumer confidence climbed.

PulteGroup Inc. rallied 3.9 percent as an index of homebuilders jumped 1.1 percent. JPMorgan Chase & Co. and Bank of America Corp. gained at least 2.3 percent as financial companies advanced. Walgreen Co. sank 5.9 percent after posting quarterly profit that missed estimates. Netflix Inc. slid 1.3 percent after Sanford C. Bernstein & Co. cut its rating on the company to underperform.

The S&P 500 climbed 1 percent to 1,588.03 in New York. The Dow Jones Industrial Average rose 100.75 points, or 0.7 percent, to 14,760.31 today.

“People are still digesting the news from the Fed, making mental adjustments for different levels of interest rates and what those might imply for securities’ prices over the next several quarters,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by telephone. His firm oversees about $208 billion. “I’m encouraged the market has stabilized a little here.”

U.S. equities climbed today as the Conference Board’s index of U.S. consumer confidence increased to 81.4 in June from 74.3 a month earlier. Another report showed bookings for U.S. goods meant to last at least three years climbed 3.6 percent for a second month, topping economist forecasts.

Separate data showed sales of new U.S. homes climbed more than forecast in May to the highest level in almost five years, while home prices increased more than forecast in the 12 months through April.

The S&P 500 snapped a winning streak yesterday, tumbling 5.8 percent from a record on May 21, the day before Federal Reserve Chairman Ben S. Bernanke said the central bank may start paring stimulus efforts as soon as September if the economy improves in line with its forecasts. The gauge spent 149 days through June 21 without incurring a drop of 5 percent or more from a peak, the longest since a 173-day stretch ended Feb. 20, 2007, about eight months before the financial crisis sent the market plunging 57 percent.

Quantitative-easing measures have helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 147 percent from its March 2009 low. While the S&P 500 is up 1.2 percent for the quarter, it is down 2.6 percent in June, on course to end a streak of seven monthly advances, the longest run since September 2009.

“QE lifted all boats,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Pension A/S in Copenhagen, wrote in an e-mail. “Equally, its removal will shake all markets. The recent comments from central-bank officials show that they are a bit scared about the consequences of their own words and do not want to see a cold-turkey reaction in markets in the context of a still-fragile world economy.”

The S&P 500 followed global stocks lower yesterday as Chinese equities entered a bear market amid concern a cash crunch will hurt growth.

China’s central bank will keep money-market rates at a reasonable level and seasonal forces that have driven them up will fade, Ling Tao, deputy director of the PBOC’s Shanghai branch, said at a briefing in Shanghai today. The overnight repurchase rate dropped 47 basis points to 6 percent, according to a daily fixing compiled by the National Interbank Funding Center. It reached a record 12.85 percent on June 20.

More than 6.7 billion shares traded hands on U.S. exchanges today, or 4.3 percent higher than the three-month average. About 28.8 billion shares changed hands on U.S. exchanges in the previous three trading days, the most since August 2011, according to data compiled by Bloomberg.

The Chicago Board Options Exchange Volatility Index, the measure of options on the S&P 500 known as the VIX, fell 8.2 percent to 18.47. The gauge surged 6.4 percent to 20.11 yesterday, and has climbed 63 percent since hitting a six-year low in March.

PulteGroup rallied 3.9 percent to $19.02. Nine out of 11 members of the S&P Supercomposite Homebuilding Index advanced.

The homebuilder index recovered after falling 19.6 percent from a May 14 peak through yesterday, close to the 20 percent threshold considered to be a bear market.

All 10 groups in the S&P 500 rose today, with financial stocks rising 1.9 percent for the second-largest gain. JPMorgan, the largest U.S. bank by assets, added 2.3 percent to $52.08.

Bank of America, the second-biggest, gained 3 percent to $12.67 for the best performance in the Dow.

Investors bought shares of stocks most tied to economic growth, sending the Morgan Stanley Cyclical Index up 1.4 percent. The Dow Jones Transportation Average rose 1.9 percent, as all of the 20 railroads, shipping companies and airlines in the gauge advanced.

Carnival Corp. rallied 5 percent to $34.89. The cruise operator that had a series of mishaps at sea this year reported fiscal second-quarter profit that topped analysts’ estimates.

The company also said Micky Arison will step down as chief executive officer after 34 years as it splits the CEO and chairman roles.

Valero Energy Corp. rose 3.6 percent to $34.98 after Goldman Sachs Group Inc. boosted the world’s biggest independent refiner to neutral from sell.

Walgreen sank 5.9 percent, the most since September 2011, to $45.22. The largest U.S. drugstore chain reported third- quarter adjusted earnings of 85 cents a share, missing the average analyst estimate by 6 cents. Revenue during the period also fell short of analysts’ projections.

Netflix slid 1.3 percent to $212.90. The biggest online subscription video service was cut to underperform from market perform by Sanford C. Bernstein analyst Carlos Kirjner.

Barnes & Noble Inc. tumbled 17 percent, the largest decline since August 2011, to $15.61. The U.S. bookstore chain that’s considering breaking itself up posted a loss that was twice as wide as analysts estimated and said it would stop making tablets as the digital unit’s sales plummet.

While investors in U.S. stocks have suffered losses amid signs the Fed will pare stimulus measures, the declines look small when compared with the rout elsewhere in the world. U.S. shares have dropped at a slower pace than those in Asia and Europe since May 22, when Bernanke signaled that the central bank could taper quantitative easing as the economy improves.

The S&P 500’s 4.6 percent drop from its May high through the end of last week compares with 9.7 percent for the Stoxx Europe 600 Index and 12 percent for the MSCI Asia Pacific Index.

“The U.S. is regarded as a safe haven and as an economy that’s just beginning to get up and running, which has produced this relative outperformance in stocks in the short term,” said Nick Skiming, who helps manage about $2 billion at Ashburton Ltd. in Jersey, the Channel Islands.

Have a wonderful evening everyone.

Be magnificent!

The freedom of the seed resides in its fulfillment of its dharma, of its nature and its destiny,

which is to become a tree; the failure to achieve this

becomes for the seed a prison.

The sacrifice through which one thing reaches its fulfillment is not a sacrifice that leads to death;

it is the casting off of chains and the attainment of freedom.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Our attitude towards others determines their attitude

towards us.

-Earl Nightingale, 1921-1989

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