June 28, 2013 Newsletter

Dear Friends,

Tangents:

Interesting item in the Wall Street Journal today:

• Scientists unlock mystery in evolution of pitchers. Scientists say that the “classic overhand throw used by baseball players” is an evolutionary adaptation preceded by anatomical changes that first appeared 1.8 million years ago. The secret is not muscle strength—otherwise Major League Baseball would be recruiting chimpanzees—but the ability of the shoulder, arm and the rest of the body, including the waist, to store elastic energy. “It works just like a slingshot would. You’re actually stretching the ligaments,” the author of a recent report tells the New York Times’s James Gorman. It would be over a million and half years after the appearance of the open shoulder and twistable waist that “homo sapiens, the species that would eventually form both the American and National Leagues,” would appear on the scene, Gorman notes. And even then, humans “did not evolve the intellectual power and wisdom to invent the rules of baseball until the 19th century.” Evolution took a small step back in 1973 with the adoption of the designated-hitter rule.

Science > Art:

“Score another one for Wolfgang Amadeus,” says Pacific Standard magazine.  “Researchers report the soothing sounds of a Mozart minuet boost the ability of children and seniors to focus on a task and ignore extraneous information.  Dissonant music has the opposite effect, according to Nobuo Masataka of Japan’s Kyoto University and Leonard Perlovsky of Harvard University.  Their findings help make the case that music, sometimes thought of as a pleasant byproduct of evolution, has in fact played an active role in human development.”

Photos of the Day –June 28th, 2013

Dories built at Lowell’s Boat Shop (in background) bob on the Merrimack River in Amesbury, Mass. Lowell’s is the oldest continuously operating boat shop in the country and has been cited as the birthplace of the fishing dory. Melanie Stetson Freeman/Staff

Brushes hang in front of a paint-splattered wall in the paint shop. Melanie Stetson Freeman/Staff

Market Closes for June 28^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

June 28 (Bloomberg) — Canadian stocks rose for a second day, snapping a streak of four losing weeks, as phone companies rallied after a BCE Inc. deal got regulatory approval and materials producers surged on higher metals prices.

BCE, Canada’s largest telephone company, rose 2.8 percent after regulators accepted its bid to acquire Astral Media Inc. for C$3 billion. Astral, a Quebec broadcaster, gained 3.6 percent. Yamana Gold Inc. added 9.3 percent as the precious metal rebounded from a 34-month low. BlackBerry plunged 27 percent after reporting a first-quarter loss and weaker-than estimated sales of its BB10 smartphones.

The Standard & Poor’s/TSX Composite Index rose 123.33 points, or 1 percent, to 12,129.11 at 4 p.m. in Toronto. The gauge gained 1.1 percent for the week and pared its monthly loss to 4.1 percent. The S&P/TSX fell 4.9 percent in the second quarter, the first drop in a year. Trading volume was 26 percent higher than the 30-day average at this time of the day.

“There’s a bounce in the gold sector today which has been decimated, and some stabilization in the telcos, which were knocked hard by the Verizon chatter,” said Bob Decker, fund manager with Aurion Capital Management in Toronto. He helps manage C$6 billion ($5.7 billion) at the firm. “The debate on the timing of quantitative easing tapering is driving things and gold has found a round number it likes. There’s a bit of short covering and bottom fishing today.”

U.S. Federal Reserve officials assured investors yesterday that stimulus efforts would remain in place until economic growth hit the central bank’s targets.

Canada’s economy grew for a fourth straight month in April, rising 0.1 percent, data today showed. The gain marks the longest string of monthly expansions since September 2011, signaling a further revival from a slump in the second half of last year that was led by investment and exports.

Eight of 10 groups in the S&P/TSX advanced today. Phone stocks rallied 2.5 percent, paring the industry’s worst weekly loss in four years. A report that Verizon Communications Inc. had placed a bid for Wind Mobile to enter the Canadian market sent the group tumbling 6 percent on June 26.

BCE gained 2.8 percent to C$43.12 and Astral advanced 3.6 percent to C$49.96. The Canadian Radio-television and Telecommunications Commission approved a union between the two media companies yesterday, as long as BCE agrees to conditions including investing C$247 million in programming and not withholding content from competitors.

Telus jumped 3 percent to C$30.71 after dropping 11 percent in the previous two sessions. Rogers Communications Inc., Canada’s largest wireless carrier, rose 2.1 percent to C$41.20.

Shaw Communications Inc. climbed 5.6 percent to C$25.24 after reporting third-quarter sales that topped analysts’ estimates. The company also raised its year-end forecast for cash flow.

Materials producers rallied 4.7 percent, the biggest gain since April. The S&P/TSX Gold Index surged 8.9 percent, the most since 2009, as all 25 stocks advanced. The gold gauge rose 0.3 percent this week, snapping three weeks of losses.

China Gold International Resources Corp. jumped 12 percent to C$2.80 and Yamana Gold surged 9.3 percent to C$10.03. The price of gold rebounded from a 34-month low.

First Quantum Minerals Ltd. added 2.3 percent to C$15.60 as the price of copper rose as much as 1 percent before closing 0.1 percent lower in New York. Fortuna Silver Mines Inc. jumped 19 percent as silver prices jumped.

BlackBerry, formerly known as Research In Motion Ltd., sank 27 percent to C$11.03, the biggest loss since December. The company shipped 6.8 million smartphones last quarter, including about 2.7 million BlackBerry 10 models. Analysts had estimated total shipments of 7.5 million, with 3.6 million BlackBerry 10 units.

Technology stocks, which include BlackBerry, slumped 7.8 percent, the most in 21 months.

US

By Nikolaj Gammeltoft

June 28 (Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index snapping a streak of seven monthly gains, as comments from Federal Reserve Governor Jeremy Stein spurred concern the central bank may begin to reduce stimulus in September.

Accenture Plc, the world’s second-largest technology- consulting company, slumped 10 percent after its quarterly sales forecast missed analysts’ estimates. International Business Machines Corp. lost 2.3 percent for the biggest retreat in the Dow Jones Industrial Average. BlackBerry, the Canadian smartphone maker, fell the most in 12 years after reporting a surprise quarterly loss.

The S&P 500 fell 0.4 percent to 1,606.28 at 4 p.m. in New York. The index extended today’s decline into the close of trading as investors adjusted positions at end of the quarter.

The Dow lost 114.89 points, or 0.8 percent, to 14,909.60 today.

About 10.1 billion shares changed hands on U.S. exchanges, 53 percent above the three-month average.

“People are hearing all these various Fed governors speak and the message they’re trying to send isn’t necessarily any clearer than what was talked about by Bernanke last week,” Robert Pavlik, chief market strategist at Banyan Partners LLC, said by phone. His firm manages about $1.4 billion. “I didn’t really seen a reason to step up to be a buyer on the pullback we had and I didn’t see a lot of follow through at least on the institutional level.”

The S&P 500 yesterday capped the biggest three-day rally since early January on better-than-estimated economic data and assurances on stimulus efforts from Fed officials. Stein said today the central bank is providing more clarity about how it will wind down its $85 billion in monthly bond buying as unemployment falls toward 7 percent.

If the Fed makes a decision to begin reducing purchases in September, Stein said in New York, “it will give primary weight to the large stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting.”

Fed Reserve Bank of Richmond President Jeffrey Lacker, who dissented against additional stimulus at every Fed meeting last year, said financial markets will remain volatile as policy makers debate how and when to curtail the central bank’s asset purchases program.

The Chicago Board Options Exchange Volatility Index, the measure of options on the S&P 500 known as the VIX, has climbed 49 percent since hitting a six-year low in March. The gauge was unchanged at 16.86 today.

The S&P 500 has rallied 13 percent so far this year, the best performance since a 17 percent gain in the first six months of 1998. It has dropped 3.8 percent since May 21 as Fed Chairman Ben S. Bernanke signaled the central bank could taper quantitative easing as the economy improves. The gauge slid 1.5 percent in June, its first monthly decline since October.

Business activity in the U.S. cooled more than projected in June, a regional report showed. The MNI Chicago Report’s business barometer dropped to 51.6 from 58.7 in May, which was the highest in more than a year. A reading of 50 is the dividing line between expansion and contraction. The median forecast of 55 economists surveyed by Bloomberg was 55.

Consumer sentiment fell less than forecast in June from an almost six-year high a month earlier. The Thomson Reuters/University of Michigan said its final index of confidence eased to 84.1 this month from 84.5 at the end of May, which was the highest since July 2007. The median forecast in a Bloomberg survey of economists called for 83 in the gauge after a preliminary reading of 82.7.

“I’m not surprised to see some pullback from three days of strength,” Michael James, a managing director of equity trading at Wedbush Securities Inc. in Los Angeles, said in an interview.

“But bulls are still not willing to let things come in too much with the end of quarter today. Only thing we can count on for the rest of today and next week is continued trader-driven volatility, in both directions.”

U.S. stock trading accelerated into the close, with about 3.8 billion shares, or 38 percent of today’s total, changing hands after 3:59 p.m. Trading volume averaged about 7.1 billion shares this month, the busiest since November 2011, according to data compiled by Bloomberg.

The volume figure got a boost today as Russell Investments concluded the annual revisions to its equity benchmark gauges.

Russell’s annual revisions usually spur one of the busiest sessions of the year. Today’s total was the second highest in 2013 after 10.8 billion shares changed hands June 21, an options expiration day. Last year’s reconstitution on June 22 helped fuel a jump in volume to 9.73 billion shares, the highest total of the year.

Russell’s global stock indexes, including the Russell 1000 Index and the Russell 2000 Index, are used as benchmarks for $4.1 trillion in assets, according to the company’s website. In three of the previous four years, the reconstitution day ranked in the top 20 busiest trading sessions, data compiled by Bloomberg show.

Health-care shares and phone companies fell the most today, losing more than 0.7 percent, as eight of 10 industries retreated. Energy stocks and companies that rely on consumer discretionary spending gained, adding at least 0.4 percent.

Accenture tumbled 10 percent to $71.96 after saying fiscal fourth-quarter revenue will be $6.7 billion to $7 billion. That fell short of the $7.36 billion average estimate of analysts, according to data compiled by Bloomberg. IBM, the world’s largest seller of computer services, fell 2.3 percent to $191.11.

BlackBerry fell 28 percent to $10.46, the biggest decline since April 2000. The company reported a quarterly loss and lower-than-projected sales, hurt by sluggish demand and currency restrictions in Venezuela. The loss in the three months through June 1 was 13 cents a share, excluding some items. Analysts had estimated a profit of 8 cents on average, according to data compiled by Bloomberg.

Molycorp Inc., a producer of rare-earth minerals, jumped 11 percent to $6.20. The company said the U.S. Securities and Exchange Commission recommended no enforcement action be taken after completing an investigation into Molycorp’s public disclosures.

Have a wonderful weekend everyone.

Be magnificent!

We would be happy to do the millions of things that we are not able to do.

The will is there, but we are not able to fulfill our desire.  Thus when we feel a desire,

but we are unable to realize that desire, we undergo a reaction we call suffering.

What is the cause of desire?  I am, only me.

As a result, I myself am the cause of all of the suffering that I have known.

Swami Vivekananda, 1863-1902

As ever,

Carolann

Attitude determines the altitude of life.

-Edwin Louis Cole, 1922-2002

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