June 27, 2012 Newsletter

Dear Friends,

Tangents:

This is the last week for legal foie gras in California.  A law to shut down the making, cooking and selling of super-fatty goose or duck liver takes effect July 1….The law’s purpose is to end gavage, the ancient practice of forcing grain down the throat of a goose or duck until its liver is grossly enlarged.  The law’s critics say gavage is hardly more stress-inducing than the many other things humans do to the animals they eat.  The corporate operations that grow and slaughter pigs, poultry and cattle represent animal cruelty on an immense scale, they say, about which the foie gras ban does nothing….It is not known how energetically the state will enforce the ban and if any restaurant chefs will be willing to risk a $1,000 fine.  Chicago enacted a foie gras ban in 2006.  It was widely mocked and flouted and, after a couple of years, repealed.   Chefs in California are already pushing for a repeal bill.

Meanwhile, “faux gras” recipes are proliferating on the Web.  One chef suggests soaking chicken livers overnight in milk with garlic, thyme, salt and pepper, searing them briefly and then puréeing them in a food processor with half their weight in soft butter.  It’s your basic chicken-liver mousse, not foie gras but goo.  “You could mix almost anything with half its weight in butter and have a very nice spread,” said Mark Bittman, one of The Times’s experts on such things.  –Lawrence Downes, NY Times.

Not to mention the torture we subject potatoes and carrots to, pulling them from their dark little homes in the earth or…

And on this day in…

1859 – “Happy Birthday to You” song was composed.
1871 – The yen becomes the new form of currency in Japan.

1880 – Helen Keller was born.
1918 – Two German pilots are saved by parachutes for the first time.
1929 – Scientists at Bell Laboratories in New York reveal a system for transmitting television pictures.
1944 – Allied forces capture the port city of Cherbourg, France.
1950 – Truman order U.S. Forces to Korea

Self-pity is our worst enemy and if we yield to it, we can never do anything good in the world. – Helen Keller, 1880-1968

photos of the day June 27, 2012

A sculpture called ‘Woman walking to the sky’ by US artist Jonathan Borofsky is seen in Strasbourg, France.

Vincent Kessler/Reuter

Alan Ellinson abseils with the Olympic Flame down the side of the Royal Dock Tower in Grimsby, England, at the beginning of Day 40 of the London 2012 Olympic Torch Relay.

Joe Giddens/LOCOG/AP

Market Closes for June 27, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

June 27 (Bloomberg) — Canadian stocks rose as energy producers advanced along with oil and natural gas amid mounting speculation that China will introduce additional economic stimulus and better-than-forecast U.S. economic data.

Energy stocks rallied as oil traded above $80 dollars a barrel. Suncor Energy Inc. gained 1.8 percent while Encana Corp., Canada’s biggest natural-gas producer, climbed 3.8 percent. Enbridge Inc., the nation’s largest pipeline company, rose 0.5 percent after falling as much as 1.6 percent yesterday.

The Standard & Poor’s/TSX Composite Index advanced 76.52 points, or 0.7 percent, to 11,410.94 in Toronto. Eight out of 10 industries in the index advanced, with phone and health-care companies trailing. The index is down 0.9 percent in June, headed for a fourth straight month of declines.

“Any positive news out of China is going to have a positive effect on the whole commodity sector,” said David Cockfield of Toronto-based Northland Wealth Management, which manages C$200 million ($195 million), in a phone interview.

“China has to move people in the country, into the cities, build infrastructure, and that takes a lot of the resources they import — and energy.”

Canadian equities followed a rally in global stocks today as the China Securities Journal said the country may introduce “more proactive” policies to ensure stable growth in the world’s second-largest economy and data on U.S. home sales and durable-goods orders topped forecasts. European leaders prepared for a two-day summit starting tomorrow.

Encana, which is expanding into Michigan’s shale- exploration region, paced gains in energy, advancing 3.8 percent to C$19.75. Natural gas futures jumped to a five-month high on forecasts for hotter-than-normal weather that would boost fuel demand from power plants.

Suncor, the nation’s largest oil provider, rose 1.8 percent to C$28.24. Enbridge gained 0.5 percent to C$39.96. Spartan Oil Corp., a Calgary-based oil and gas exploration company with mines in Alberta and Saskatchewan, jumped 6.1 percent to C$3.32.

Pacific Rubiales Energy Corp., a heavy crude producer with deposits in Colombia, rose 6.4 percent, the most since April 11, to C$22.44 as the company expects to receive an environmental permit that will increase its oil output. The license will allow greater water injection into wells at the onshore Rubiales field in eastern Colombia, increasing possible production to 200,000 barrels a day.

Potash Corp of Saskatchewan, the largest fertilizer producer in the world, moved up 1.7 percent to C$44.28, the highest level since April.

MacDonald Dettwiler & Associates Ltd., which made the robotic arm for NASA’s defunct space shuttle, soared 28 percent, the biggest jump ever, to C$57.25. The company bought Loral Space & Communications Inc.’s commercial satellite unit to tap growing demand for mobile entertainment and smartphones.

US

By Rita Nazareth

June 27 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, amid better-than-estimated housing and durable goods orders data while speculation grew that China will add to economic stimulus.

Energy and financial shares rose the most in the S&P 500 among 10 groups. A gauge of homebuilders in S&P indexes climbed 3 percent to the highest since 2008. Monsanto Co., the world’s biggest seed company, added 3.9 percent as earnings beat estimates. Facebook Inc. fell 2.6 percent as analysts including those at lead underwriter Morgan Stanley said the social-network operator is worth no more than its debut price of $38.

The S&P 500 rose 0.9 percent to 1,331.85 at 4 p.m. New York time. It has risen 1.6 percent so far in June. The Dow Jones Industrial Average added 92.34 points, or 0.7 percent, to 12,627.01. Volume for exchange-listed stocks in the U.S. was 5.8 billion shares, or 14 percent below the three-month average.

“The economic data was encouraging,” said Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital in Greenwood, South Carolina. “It’s important to see that because most recently we’ve had weaker data here and in China while Europe came back to the forefront. Any policy moves out of China would certainly be welcomed.”

Equities rallied as orders for durable goods and the number of Americans signing contracts to buy an existing home rebounded in May, easing concern the world’s largest economy is faltering.

The China Securities Journal said the country may introduce “more proactive” policies to ensure stable growth in the world’s second-largest economy. European leaders prepared for a two-day summit starting tomorrow.

Concern about a worsening of Europe’s debt crisis and a global slowdown has taken the S&P 500 down 5.4 percent this quarter. Energy and financial shares have had the biggest losses in the period, tumbling at least 9.5 percent.

Both groups jumped more than 1.2 percent for the largest increases in the S&P 500 today, with energy companies accounting for eight of the gauge’s nine biggest gains. Exxon Mobil Corp. added 1 percent to $83.20. JPMorgan Chase & Co. climbed 3 percent, the most in the Dow, to $36.78, while Bank of America Corp. had the second-biggest increase, rising 2 percent to $7.77.

Monsanto, the largest seed company, added 3.9 percent to $80.89. Sales of corn seed and genetic licenses rose 35 percent as U.S. farmers planted the biggest crop in 75 years. Soybean sales gained 15 percent, driven by demand for the newest seed engineered to tolerate Monsanto’s Roundup herbicide. Chairman and Chief Executive Officer Hugh Grant also is expanding in Latin America and Eastern Europe.

Bristol-Myers Squibb Co. gained 1.7 percent to $35.09 after the drugmaker doubled the size of its share buyback program, authorizing $3 billion in additional repurchases to be made over the “next couple years.”

Lennar Corp. rose 4.8 percent to $28.70. The homebuilder gained after a tax benefit and improving demand fueled a surge in its fiscal second-quarter profit.

Facebook slid 2.6 percent to $32.23. At least 17 securities firms began coverage of the company today, bringing the average analyst share-price estimate to $37.95, data compiled by Bloomberg show. Morgan Stanley gave Facebook the equivalent of a buy rating, as did JPMorgan Chase & Co., Goldman Sachs Group Inc. and five other firms. There were eight holds and one sell, the data show.

Facebook, its bankers and listing exchange Nasdaq OMX Group Inc. faced criticism after the shares fell below the initial public offering price of $38 on the second day of trading and extended losses to 32 percent on June 5. Underwriters sold stock at a higher valuation than every S&P 500 company except two.

“Investors probably have a right to be a little bit upset,” John Kattar, chief investment officer at Eastern Bank Wealth Management in Boston, which manages $1.7 billion, said in a telephone interview. His firm doesn’t own Facebook stock.

“The underwriters got a lot of pressure from the company to price it as high as possible. They were getting a lot of pressure from Facebook to try to extract the maximum pricing.”

DreamWorks Animation SKG Inc. surged 5 percent to $18.29.

The computer-animation studio rose after an analyst said the company’s latest film, “Madagascar 3: Europe’s Most Wanted,” was exceeding expectations.

O’Reilly Automotive Inc. tumbled 14 percent to $82.61. The retailer of auto parts, tools and accessories sank the most in more than a decade after saying sales growth was slower than expected and second-quarter profit will be on the lower end of the company’s forecast range.

Rival AutoZone Inc. sank 4.7 percent to $359.

Economic reports are due to take a turn for the better that will lift U.S. stocks, according to Binky Chadha, chief global strategist at Deutsche Bank AG.

Investors are suffering from “data disappointment” that has become extreme by historical standards, Chadha wrote in a report two days ago. “The typical pattern from here would be for fewer negative surprises and then positive ones.”

Changes in jobless claims explain 88 percent of the S&P 500’s performance during the period, according to statistical analysis cited in the report. The figure is near a 100 percent limit when two values move in lockstep.

As the relationship suggests, economic data “have been the key driver of equities,” Chadha wrote. They largely explain why stocks have retreated in the past few weeks, the New York-based strategist added. The S&P 500 has fallen as much as 9.9 percent from this year’s high, set on April 2.

Europe’s sovereign-debt crisis and slowing growth in emerging markets have contributed to the decline, the report said. Any stock-market rebound triggered by policy changes on these issues won’t last unless the economic data turn around, he wrote.

Have a wonderful evening everyone.

Be magnificent!

With the clouds hanging in the air above the trees,

and the birds falling silent before the storm,

this morning brings forth serious reflection,

bringing into question the entirety of existence,

the gods themselves, and all human activity.

Krishnamurti, 1895-1986

As ever,

Carolann

Life is half spent before we know what it is.

-George Hebert, 1593-1633

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