June 7, 2012 Newsletter

Dear Friends,

Tangents:

Sir David Tang, entrepreneur and founder of ICorrect, offers advice on questions about property, interiors – and modern manners for globetrotters.  This was a question and answer in the Financial Times this past weekend to which we can all relate:

A friend of mine was visiting when her mobile rang in the middle of our conversation.  She answered it and I could hear some of the words from the caller while I was trying to pretend it didn’t matter.  When the call ended, instead of giving me an indication of the importance of the call, she passed on to another subject and soon made for the exit.  What do you think?

It is indeed a sad state of affairs when the telephone/Blackberry/iPhone have now invaded our daily lives so unforgivingly.  There is no airport nor aircraft, no train station nor train, no ferry terminal nor ferry, no park nor street nor alleyway at which zombie-like characters are not listening to, or speaking on, or reading their cyber devices.  Even when I am sitting at a beautiful Parisian café on a beautiful spring morning.   I will see, mon dieu, Parisians doing the same!  The most interesting consequence from this rather depressing observation is that I can now pick out the left-handers without difficulty.  It’s the kind of empiricism that would have pleased even Locke.  I can also imagine Descartes arguing for “Emailo Ergo Sum”!

It is indeed irritating when someone with whom we are having a conversation suddenly switches to an incoming call.  They might say sorry because it’s their sick mother or lie about sympathetic stories.  But they are seldom contrite.  Otherwise, they would not have taken the call in the first place.  Even worse is when you are having lunch or dinner with those who surreptitiously divert their gaze on to their lap, or blatantly carry on reading their messages.

To deal with this new antisocial behavior, I simply walk away without explanation.  This usually rattles them as they half try to continue their conversation, and half try to apologise with some frantic gesticulation.  That’s what you should have done to your friend – in mid-flow of her call, you turn your back on her in silence and disappear into the sunset.

By far the worst behavior is when the phone rings in the middle of an artistic performance.  I saw a marvelous clip on YouTube when, at precisely the critical pause in a concerto, that familiar sugary tune of a mobile rang out in the audience.  The solo violinist was visibly flabbergasted.  But without a moment’s hesitation, he suddenly played on his violin an echo of the appalling tune.  This was a masterstroke of sheer contempt.

And on this day in…

1914 – The first vessel passes through the Panama Canal.
1863 – Mexico City is captured by French troops.
1654 – Louis XIV is crowned king of France.
1942 – Battle of Midway ends

1848 – Paul Gauguin was born

1958 – Prince R. Nelson was born

I never meant 2 cause U any sorrow

I never meant 2  cause U any pain…

I only wanted 2 see U laughing in the purple rain… – Prince

We all live with the objective of being happy; our lives are all different and yet the same. -Ann Frank

photos of the day June 7, 2012

A rainbow appears over the New York City skyline as storms roll through Hoboken, N.J.

CX Matiash/AP

A horse enters the track at sunrise for training at Belmont Park, in Elmont, N.Y. Belmont Park hosts the Belmont Stakes on Saturday.

Mark Lennihan/AP

Market Closes for June 7, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Steve Chambers

June 7 (Bloomberg) — Canadian stocks fell as gold and oil prices dragged down commodity shares after Federal Reserve Chairman Ben S. Bernanke left unspecified the steps the U.S. central bank could take to bolster the economy.

Raw-materials and energy companies fell the most in the Standard & Poor’s/TSX Composite Index, while financial stocks advanced as China said it would cut interest rates to boost the economy. Barrick Gold Corp. lost 4.1 percent, as gold futures plunged the most in two months, and energy provider Canadian Natural Resources Ltd. dropped 2.2 percent with oil prices falling for the first time in four days.

The S&P/TSX declined 41.28 points, or 0.4 percent, to 11,592.12, reversing an earlier gain of as much as 0.8 percent.

The benchmark index rose 2.6 percent over the previous two days.

“The rest of the market can’t seem to get the job done when precious metals are in the tank,” David Baskin, founder and chief executive officer of Baskin Financial Services in Toronto, said in a telephone interview. The firm manages C$450 million ($439.5 million), and does not own metals stocks.

Bernanke’s comments before a congressional committee initially weighed on gold stocks and then oil reversed its gain.

He warned lawmakers the U.S. economy is at risk from Europe’s debt crisis and fiscal tightening, while not detailing steps the bank might take to stoke growth. Equities rose earlier as China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates.

Canadian Natural Resources, the nation’s third-largest energy provider, fell 2.2 percent to C$28.77. Natural gas provider Encana Corp. fell 2.1 percent to C$20.93 after two days of gains. Suncor Energy Inc., Canada’s largest energy provider, rose 0.1 percent to C$29.32.

Barrick Gold fell 4.1 percent to C$39.79, giving it a two- day decline of 9 percent. Yesterday, the company announced it was replacing Chief Executive Officer Aaron Regent and expressed disappointment with its share price, which has fallen 5.4 percent since he got the job on Jan. 16, 2009, as gold prices soared.

Kinross Gold Corp. fell 6.1 percent to C$8.30. Goldcorp Inc., the second-largest gold company in Canada by market value, dropped 2.9 percent to C$40.12.

Financial stocks in the index rose 0.5 percent. Royal Bank of Canada, the nation’s largest lender, gained 0.7 percent to C$50.99. Toronto-Dominion Bank, the second-largest lender, rose 1 percent to C$79.08.

US

By Rita Nazareth

June 7 (Bloomberg) — Most U.S. stocks declined as a late- day slump in financial and technology shares erased an advance driven by China’s first interest-rate cut since 2008.

The Standard & Poor’s 500 Index began paring a rally in the morning as Federal Reserve Chairman Ben S. Bernanke said the central bank will assess the economy before deciding if more stimulus is needed. The measure erased gains in the final hour of trading after a report that Greece’s upcoming election could be derailed. Bank of America Corp. and Hewlett-Packard Co. dropped at least 1.3 percent. Newmont Mining Corp. slumped 2 percent as gold tumbled amid reduced bets on Fed action.

About seven stocks retreated for every five rising on U.S. exchanges at 4 p.m. New York time. More than 7.2 billion shares changed hands, or 6.3 percent above the three-month average. The S&P 500 declined less than 0.1 percent to 1,314.99, after rallying as much as 1.1 percent earlier today. The Dow Jones Industrial Average advanced 46.17 points, or 0.4 percent, at 12,460.96, after gaining as much as 140.47 points.

“It’s disappointing that the markets were not able to sustain the momentum established by the Chinese action,” said Peter Jankovskis, who helps manage about $2.8 billion at Oakbrook Investments in Lisle, Illinois. “Bernanke’s comments weren’t indicative of a Fed that will take aggressive action in the near future. There’s also concern about the upcoming Greek election. We’ll have to wait and see how all that plays out.”

Earlier gains in equities were driven by optimism that the Chinese rate cut could prompt global policy action. Stocks pared gains as Bernanke said further rounds of stimulus could boost the economy, yet may have “diminishing returns.”

“Sometimes investors look for their Christmas gifts in June,” said Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “China’s action helps to calm some of the fears. Yet Bernanke is throwing some cold water on expectations for QE3,” or a third round of asset purchases to stimulate growth. “We’d need to see a lot more deterioration in the economy before that happens.”

The S&P 500 reversed gains as the Associated Press reported that a municipal strike threatens to derail a June 17 Greek election that could determine the nation’s future in the euro.

Concern about a worsening of Europe’s debt crisis and a global slowdown took the S&P 500 down as much as 9.9 percent from this year’s peak in April. The index started the week trading at 12.9 times reported earnings, according to data compiled by Bloomberg, the cheapest valuation in six months. A three day rally through yesterday erased the loss driven by a disappointing jobs report on June 1.

Technology and financial shares, the biggest groups in the S&P 500, retreated. Bank of America slumped 2.9 percent, the most in the Dow, to $7.42. Hewlett-Packard, the largest personal-computer maker, dropped 1.3 percent to $22.06. Newmont Mining lost 2 percent to $50.69.

Best Buy Co. fell 1 percent to $19.70. Founder and Chairman Richard Schulze resigned from the board sooner than planned and will explore options for his 20.1 percent ownership stake in the electronics retailer.

Facebook Inc. dropped 1.9 percent to $26.31, after rallying 3.6 percent yesterday. Earlier this week, the largest social- networking company fell to the lowest price since its initial public offering last month.

Nasdaq OMX Group Inc.’s backlog of IPO’s hasn’t suffered as a result of its mishandling of Facebook’s debut, Chief Executive Officer Robert Greifeld said. Nasdaq OMX’s computer systems used to establish the opening price for Facebook were overwhelmed on May 18 by order cancellations and updates for the IPO.

“Our IPO backlog is stable,” he said today during a Bloomberg Television interview. “Since May 18, nothing has changed. We’ve actually added a few companies.”

Pall Corp. retreated 4.3 percent to $52.29. The maker of filtration and separation products posted third-quarter earnings that lagged behind analysts’ estimates.

Lululemon Athletica Inc. dropped 8.8 percent to $63.84. The Vancouver-based yoga-wear retailer projected full-year earnings and sales that trailed analysts’ estimates.

Navistar International Corp. tumbled 14 percent to $24.11.

The company reported a surprise loss, lowered its forecast for a second time this year and reassigned top managers as it works to develop an engine that meets 2010 emission standards.

Industrial shares in the S&P 500 gained. United Technologies Corp., a jet engine maker, advanced 2.4 percent to $75.40. Boeing Co., the world’s largest aerospace company, rallied 1.4 percent to $69.95.

Baidu Inc., which handles about 80 percent of China’s Internet search queries, jumped 2.8 percent to $122.46. Apple Inc. plans to add the company’s search engine on iPhones in China, part of a push to broaden its services and user base in the most-populous nation, according to two people with knowledge of the matter.

Regions Financial Corp. climbed 2.4 percent to $6.09. The Birmingham, Alabama-based bank was raised to outperform at Macquarie Group Ltd. The 12-month share-price estimate is $7.

CACI International Inc. surged 10 percent to $49.50 after the government technology contractor forecast 2013 profit that was higher than analysts’ estimates.

A five-month low reached last week by the S&P 500 produced a pattern similar to one at last year’s low, indicating equities may be poised to rebound. While the benchmark measure sank June 1 to the lowest level since January, its 14-day relative strength index, which measures the degree to which gains and losses outpace each other, reached 28.5, staying above a low of 23.2 reached on May 18, according to data compiled by Bloomberg.

Last year, the S&P 500 dipped on Oct. 3 to a level not seen since September 2010, with the RSI holding above its August low.

The index then surged by 29 percent over the next six months.

“This divergence highlights that sellers are losing momentum and control,” Joshua Dollinger, chief quantitative and technical strategist at BTIG LLC in New York, wrote in an e- mail. The “signals certainly make a compelling case to be long” over the next six weeks, he said.

Have a wonderful evening everyone.

Be magnificent!

Your way is very good for you, but not for me.

My way is good for me, but not for you.

-Swami Vivekananda, 1863-1902

As ever,

Carolann

Ninety per cent of all human wisdom is the ability

to mind your own business.

-Robert Heinlein, 1907-1988

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