June 28, 2012 Newsletter

Dear Friends,

Tangents:

The assassination of the Austrian Archduke Franz Ferdinand in Bosnia in 1914, the immediate cause of the First World War, described by Borijove Jevtic, one of the Serbian nationalist conspirators on June 28^th, 1914:

Two hours before Franz Ferdinand arrived I Sarajevo all the twenty-tow conspirators were in their allotted positions, armed and ready.  They were distributed five hundred yards apart over the whole route along which the Archduke must travel from the railroad station to the town hall….After the reception in the Town Hall General Potiorek, the  Austrian commander, pleaded with Franz Ferdinand to leave the city, as it was seething with rebellion.  The Archduke was persuaded to drive the shortest way out of the city and to go quickly.  The road to the manoeuvres was shaped like the letter V, making a sharp turn at the bridge over the River Nilgacka.  Franz Ferdinand’s car could go fast enough until it reached this spot but here it was forced to slow down for the turn.  Here Princip had taken his stand.

As the car came abreast he stepped forward from the curb, drew his automatic pistol from his coat and fired two shots.  The first struck the wife of the Archduke, the Archduchess Sofia, in the abdomen.  She was an expectant mother.  She died instantly.

The second bullet struck the Archduke close to the heart.  He uttered only one word – Sofia – a call to his stricken wife.  Then his head fell back and he collapsed.  He died almost instantly.  –from The Folio Book of Days

And that’s what it took to give the world The Lost Generation…

And also on this day in…

1577 – Painter Peter Paul Rubens was born.

1712 – Jean-Jacques Rousseau, philosopher, was born.

1919 – Keynes predicts economic chaos.

1919 – Treaty of Versailles is signed, formally ending the First World War.

1928 – Louis Armstrong records “West End Blues”
1953 – Workers assemble first Corvette in Flint, Michigan.
1969 – Stonewall Riot: start of the Gay Liberation movement.
1972 – President Nixon announces no new draftees will go to Vietnam.
1981 – Terry Fox died at age 22, of lung cancer.

I feel that art has something to do with the achievement of stillness in the midst of chaos. A stillness which characterizes prayer, too, and the eye of the storm. I think that art has something to do with an arrest of attention in the midst of distraction. –Saul Bellow, 1915-2005

photo of the day June 28, 2012

Supertrees light up against the dusk skyline in Singapore. These Supertrees serve as vertical gardens in the Gardens By The Bay, part of Singapore’s efforts to nurture greenery within the city. It opens its doors to the public for the first time Friday.

Wong Maye-E/AP

Market Closes for June 28, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katia Dmitrieva

June 28 (Bloomberg) — Canadian stocks pared losses in the final hour of trading, sending the benchmark index higher for a third day, amid speculation European leaders were nearing an agreement on plans to halt contagion in the debt crisis.

Energy stocks rallied, outweighing a decline in raw- material companies as oil and gold fell. Progress Energy Resources Corp. surged 74 percent after agreeing to be bought by Petroliam Nasional Bhd, Malaysia’s state-owned oil and natural- gas company, for C$4.8 billion ($4.67 billion) in cash. Bank of Montreal and Toronto-Dominion Bank gained, pacing a recovery among financial shares.

The S&P/TSX gained 13.76 points, or 0.1 percent, to 11,424.70, reversing an earlier drop of as much as 1.2 percent.

The benchmark index is down 7.8 percent for the quarter.

Stocks trimmed declines today as German Chancellor Angela Merkel canceled a press briefing at a summit in Brussels as talks on a growth accord continued, her spokesman Steffen Seibert said. After the market closed, EU President Herman Van Rompuy said leaders had agreed on a 120 billion euros ($149 billion) plan to stoke the economy and create jobs.

Energy stocks rallied following Progress Energy’s deal. The Calgary-based oil and natural gas producer jumped 74 percent to C$20.05. Petronas Chief Executive Officer Shamsul Azhar Abbas said March 30 he wants to expand his company’s presence in Canada and Australia. The company bought a stake in three of Progress Energy’s gas fields last year and agreed to explore development of a liquefied natural gas terminal to export the fuel.

Advantage Oil & Gas Ltd. advanced 5.3 percent to $2.96.

Celtic Exploration Ltd. rose 7.2 percent to C$13.72, the highest level since May. Encana Corp., Canada’s biggest natural-gas producer, gained 6.7 percent to C$21.08.

Financial shares dropped 0.2 percent as a group, paring  an earlier loss of as much as 1.4 percent. Bank of Montreal, Canada’s fourth-largest lender, rose 0.4 percent to C$55.52.

Toronto-Dominion, the nation’s second-largest lender, advanced0.1 percent to C$79.17.

Gold declined to the lowest in almost four weeks amid signs of slowing U.S. growth. The number of applications for U.S. unemployment benefits hovered last week near the highest level of the year, the Labor Department said.

Barrick Gold Corp., the world’s largest producer of the metal, dropped 0.4 percent to C$37.43. Goldcorp Inc. declined 2.8 percent to C$37.31, the lowest since May 29.

Tahoe Resources Inc. plunged 23 percent to C$12.50. The developer of the Escobal silver mine in Guatemala tumbled after Mineweb reported that the government proposed taking stakes in mining companies operating in the country, citing newspaper Prensa Libre.

“High-level officials in Guatemala’s Ministry of Energy and Mines indicate the government has no intention of acquiring an interest in the Escobal project or other mining projects in the country,” the Reno, Nevada-based company said in a statement today.

Centerra Gold Inc. plunged 32 percent to C$6.72. The owner of the Kumtor mine in Kyrgyzstan said it believes a parliamentary resolution calling for changes to the agreements governing the project isn’t legally binding. The company dropped 26 percent on June 22 after the company said the parliamentary report alleged Centerra’s operations had caused environmental damage.

US

By Rita Nazareth and Julia Leite

June 28 (Bloomberg) — U.S. stocks pared losses in the final hour of trading amid speculation European leaders were nearing an agreement to halt contagion from the debt crisis.

After the market close, European Union President Herman Van Rompuy said leaders agreed to spend 120 billion euros ($149 billion) to stimulate growth. JPMorgan Chase & Co. tumbled 2.5 percent after the New York Times said trading losses from credit derivatives may total as much as $9 billion, exceeding the firm’s initial estimate. Health-care stocks in the Standard & Poor’s 500 Index fell 0.3 percent as the Supreme Court upheld the core of President Barack Obama’s industry overhaul.

The S&P 500 dropped 0.2 percent to 1,329.04 at 4 p.m. New York time, paring a loss of as much as 1.4 percent. The Dow Jones Industrial Average slid 24.75 points, or 0.2 percent, to 12,602.26. Volume for exchange-listed stocks in the U.S. was 6.8 billion shares, about in line with the three-month average.

European leaders began a two-day summit in Brussels today intended to chart a path out of their financial crisis. Stocks pared losses as German Chancellor Angela Merkel canceled a press briefing and her spokesman said talks on a growth accord were ongoing.

“Europe has been the driver of this market,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “The postponement of a conference call was a signal for traders to put on more risk.

Another ‘kick the can’ would be viewed as favorable.”

Equities tumbled earlier today as the number of applications for unemployment benefits hovered last week near the highest of the year, showing little improvement in the labor market. The U.S. economy grew 1.9 percent in the first quarter, reflecting a gain in consumer spending that now shows signs of cooling as the labor market weakens.

Concern about a worsening of Europe’s debt crisis and a global slowdown has taken the S&P 500 down 5.6 percent this quarter. Technology and financial shares have had the biggest losses in the period, tumbling at least 9.6 percent.

Financial shares in the S&P 500 dropped 0.2 percent, paring a loss of as much as 1.9 percent. Barclays Plc’s record $451 million fines for interest rate manipulation sent bank shares plunging as U.S. and U.K. authorities pursue sanctions in a global investigation of more than a dozen lenders.

JPMorgan slumped 2.5 percent to $35.88. The New York Times reported that the lender’s losses have increased in recent weeks as it sought to exit its holdings, citing unidentified former traders and executives at the bank.

JPMorgan won’t have a “major loss” in 2012 following the lender’s disclosure of losses from credit derivatives that could amount to more than $2 billion this quarter, Richard Bove said.

“We’re not expecting JPM to run a major loss,” Bove, an analyst with Rochdale Securities LLC, said today in a Bloomberg Television interview with Tom Keene. “I don’t believe that there’s any likelihood that the liquidity of the company is going to be affected by this.”

Citigroup Inc. dropped 2.6 percent to $26.39, trimming a decline of as much as 5.4 percent. The bank is not one of the lenders being investigated by the U.K.’s Financial Services Authority for attempting to manipulate the London interbank offered rate, the company said in an emailed statement today.

Tenet Healthcare Corp. led hospitals and Medicaid insurers higher while commercial health plans led by WellPoint Inc. fell after the U.S. Supreme Court upheld most of President Barack Obama’s health-care overhaul.

Tenet, the third-biggest hospital chain, rose 5.4 percent to $5.25, while Medicaid plan Molina Healthcare Inc. climbed 8.6 percent to $23.16. Indianapolis-based WellPoint, the second- largest U.S. health insurer, declined 5.2 percent to $65.90.

Cisco Systems Inc., the largest maker of computer- networking gear, slipped 1.5 percent to $16.48 after Lazard Ltd. said in a note today that the company may be seeing weaker-than- expected demand trends.

Family Dollar Stores Inc. slumped 2.8 percent to $67.20.

The owner of more than 7,200 discount shops in the U.S. narrowed its fiscal 2012 profit forecast. Rival Dollar Tree Inc. retreated 2.4 percent to $52.18, while Dollar General Corp. declined 0.5 percent to $53.73.

News Corp. dropped 1.4 percent to $21.99, after climbing 11 percent over the previous two days. It announced plans to split into two publicly traded entities focused on publishing and entertainment after shareholder pressure prompted the biggest reorganization since Rupert Murdoch built the media empire.

Genworth Financial Inc. rallied 11 percent to $5.43. The life insurer and mortgage guarantor surged as hedge fund Highfields Capital Management LP said it is in talks with management about increasing the value of its stake.

U.S. executives are tapping into their record pile of cash for the first time in four years as they drive spending on plants and equipment to an all-time high.

Cash held by S&P 500 companies, excluding financial institutions and utilities, fell 1.4 percent to $1.01 trillion in the first quarter, according to data compiled by Howard Silverblatt, a New York-based senior index analyst at S&P.

Capital spending, based on 12-month trailing data compiled by Bloomberg for the entire index, rose 3.3 percent during the same period and reached a record $66.6 billion last month.

While record-low interest rates may have prompted companies to build more factories, concern over the European debt crisis and expiration of Bush-era tax cuts will make executives reluctant to keep increasing spending, said David Sowerby, a money manager at Boston-based Loomis Sayles & Co.

“It will only persist to the extent that companies remain reasonably confident in the business outlook,” Sowerby, whose firm oversees about $170 billion, said in a telephone interview.

“With the great concern in Europe as well as the pending expiration of the tax cuts, you could see a return to rebuilding cash and less capital expenditure.”

Companies amassed $1.03 trillion in cash at the end of last year after beating analysts’ earnings estimates for 12 straight quarters, data compiled by S&P and Bloomberg show. Combined profits by S&P 500 stocks rose 9.9 percent to a record $92.09 a share in 2011, Bloomberg data show.

Executives are seeking ways to give back money to shareholders. While share buybacks fell by 6.2 percent to $84.3 billion in the first quarter from a year earlier, dividends increased by 14 percent to $64.1 billion, S&P data show.

Have a wonderful evening everyone.

Be magnificent!

Very few people in this world can reason normally.

There is a terrible tendency to accept all that is said, all that is read, and to accept it without question.

Only he who is ready to question, to think for himself, will find the truth!

To understand the currents of a river,

he who wishes to know the truth must enter the water.

Nisargadatta, 1897-1981

As ever,

Carolann

A government which robs Peter to pay Paul

can always depend on the support of Paul.

-George Bernard Shaw, 1856-1950

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