March 13, 2013 Newsletter

Dear Friends,

Tangents:

Nothing great is created suddenly, any more than a bunch of grapes or a fig.  If you tell me that you desire a fig, I answer that there must be time.  Let it first blossom, then bear fruit, then ripen. –Epictetus, 55-135 AD

A bee collects pollen from a sunflower in a field at the southern Indian state of Tamil Nadu, India. Babu/Reuters

A woman cycles as she carries baskets to sell in a market near Lapdaung mountain in Sarlingyi township, Myanmar. Soe Zeya Tun/Reuters

Market Closes for March 13^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lindsey Rupp

March 13 (Bloomberg) — Canadian stocks fell the most since November, snapping a three-day advance in the benchmark index, as energy and raw-materials shares dropped after oil and gold prices slumped.

Encana Corp. and Savanna Energy Services Corp. lost more than 1.2 percent after the International Energy Association cut its 2013 global demand estimate for oil and U.S. inventories unexpectedly rose. New Gold Inc. and Iamgold Corp. slid at least 5.5 percent as gold fell for the first time in five days.

BlackBerry gained 11 percent after receiving the biggest order in its history.

The Standard & Poor’s/TSX Composite Index declined 134.49 points, or 1 percent, to 12,744.11 at 4 p.m. in Toronto. The gauge has gained 2.5 percent this year and closed yesterday at its highest level since July 2011. Trading volume was 5.1 percent lower than the 30-day average.

“Certainly we had a larger-than-expected build in crude- oil inventories, so that’s a negative,” Peter Buchanan, Toronto-based senior economist at CIBC World Markets, said in a telephone interview today.

Raw-materials stocks fell the most in the S&P/TSX, losing 2.1 percent as a group. Energy producers slid 1.2 percent, as eight of the gauge’s 10 groups retreated.

Iamgold fell 8.9 percent to C$6.86 and New Gold dropped 5.5 percent to C$9.48. Gold declined 0.2 percent to settle at $1,588.40 an ounce in New York.

Bullion ended its longest rally since August after a deputy Chinese central bank governor said the country may limit its gold holdings to 2 percent of total foreign exchange reserves. A better-than-estimated U.S. retail sales report increased optimism about the world’s largest economy and the dollar rose.

Savanna, a provider of oil-well and drilling services, slid 3.3 percent to C$6.75, its lowest since December. Encana dropped 1.2 percent to C$19.50. TransCanada Corp. fell 1.7 percent to C$48.20 after Canadian heavy oil weakened on the spot market after strengthening more than $10 a barrel in the previous six days.

Oil erased gains after the Energy Information Administration said U.S. inventories climbed an eighth straight week. Earlier, Paris-based IEA trimmed its 2013 global demand forecast by 60,000 barrels a day to 90.6 million. Crude fell 2 cents to settle at $92.52 a barrel on the New York Mercantile Exchange, after reversing an advance of as much as 0.9 percent.

BlackBerry, formerly known as Research In Motion Ltd., surged 11 percent to C$16.45, the highest in a month. The company said one of its “established partners” placed an order for 1 million of its new BlackBerry 10 smartphones.

US

By Sarah Pringle

March 13 (Bloomberg) — U.S. stocks rose, sending the Dow Jones Industrial Average to its longest rally since 1996, as data showing retail sales increased in February by the most in five months bolstered optimism in the world’s largest economy.

Best Buy Co. and Abercrombie & Fitch Co. climbed at least 2.7 percent as retailers advanced. Netflix Inc. jumped 5.6 percent after announcing new social features integrated with Facebook Inc. International Business Machines Corp. gained 0.7 percent to a record. BlackBerry surged 8.2 percent after announcing its largest purchase order ever.

The Standard & Poor’s 500 Index rose 0.1 percent to 1,554.52 at 4 p.m. in New York. The Dow added 5.22 points, or less than 0.1 percent, to 14,455.28. The 30-stock gauge reached another record high and capped its ninth straight gain, the longest winning streak since November 1996. About 5.5 billion shares traded hands on U.S. exchanges today, 13 percent below the three-month average.

“All the economic data is incrementally positive,” Dan Veru, chief investment officer at Palisade Capital Management LLC, said over the phone. The Fort Lee, New Jersey-based firm manages about $3.6 billion. “Even if we do have a pause in the market or a correction, how deep can that correction be? Because I think there’s a lot of people, a lot of investors, waiting to get into the market.”

The S&P 500 is about 11 points from its record of 1,565.15 set in October 2007. The benchmark index fell yesterday, ending a seven-day winning streak. The gauge has more than doubled from its bottom in 2009 as the rally was fueled by corporate earnings that topped estimates and monetary stimulus from the Federal Reserve. The Dow has set record closing highs for seven straight days.

While the S&P 500 remains less than one percent below its record, the Russell 2000 Index of smaller companies advanced 0.4 percent to an all-time high of 943.90 and the Dow Jones Transportation Average climbed 1.6 percent to a record 6,232.59 today. The Morgan Stanley Cyclical Index also topped its previous high, adding 0.5 percent to 1,171.95.

The S&P 500 is valued at 15.4 times reported earnings, a 22-month high, according to data compiled by Bloomberg. That’s still 7.2 percent below an average of 16.6 over the last decade.

The Dow is trading at a price-to-earnings ratio of 14.1, the highest level in almost two years and 11 percent below its 10- year average of 15.8.

U.S. equities rose today as Commerce Department figures showed a 1.1 percent advance in retail sales in February, more than forecast and followed a revised 0.2 percent gain in January. The median projection in a Bloomberg survey called for a 0.5 percent advance. Sales excluding the volatile categories of automobiles and gasoline climbed 0.4 percent.

Progress in the job market is shoring up sentiment and spurring demand at merchants including Costco Wholesale Corp., easing the burden of a two percentage-point increase in the levy that funds Social Security. The boost to household wealth from home values and stock prices has also helped consumers maintain spending in the face of higher fuel prices.

“The retail number was nice and that’s helping lessen concern that high gas prices and taxes would combine to slow down consumer spending,” Erick Maronak, chief investment officer at Victory Capital Management Inc., said in a phone interview. The New York-based firm oversees about $3 billion. “On balance things look pretty good.”

Best Buy rallied 3.3 percent to $20.96, pacing gains among retailers amid today’s sales data. Abercrombie & Fitch added 2.7 percent to $49.77 and Nike Inc. rose 2.5 percent to $54.85.

Netflix jumped 5.6 percent to $192.36. The online video service began offering U.S. subscribers the ability to peer into each others’ digital movie libraries in a long-awaited partnership with Facebook. The features will become available starting today, the Los Gatos, California-based company said in a statement.

IBM gained 0.7 percent to $212.06, the most in the Dow, to a record $212.06. The largest technology services provider has risen 11 percent this year as the company boosted earnings per share, divested underperforming units and moved into higher margin software businesses such as data analysis.

BlackBerry surged 8.2 percent to $15.65. The Canadian smartphone maker, formerly known as Research In Motion Ltd., said one of its “established partners” has placed an order for 1 million BlackBerry 10 phones. The new phones are the linchpin of its comeback strategy.

Walgreen Co. rallied 4.2 percent to $42.78, its highest level since July 2011, as UBS raised its rating on the drugstore chain to buy from neutral.

Phone companies and commodity producers retreated the most out of 10 S&P 500 groups. Valero Energy Corp. fell 4.7 percent to $43.42. Cliffs Natural Resources Inc. sank 4.9 percent to $22.73 for the biggest decline in the benchmark index. U.S. Steel Corp. slid 3.1 percent to $20.04.

Spectrum Pharmaceuticals Inc., a maker of cancer medicines, plunged 37 percent to $7.79 as the Henderson, Nevada-based drugmaker said 2013 revenue will be $160 million to $180 million. Analysts had anticipated total sales of $297 million, according to the average of five estimates compiled by Bloomberg.

Express Inc. dropped 3.2 percent to $18.25. The clothing retailer forecast first-quarter earnings of 38 cents a share at most, less than the average analyst estimate of 46 cents. Its full-year earnings forecast also fell short of analyst expectations.

The rally that pushed the S&P 500 toward a record is poised to pause after faltering yesterday, judging by trading patterns, according to DZ Bank AG.

The five-day relative-strength index for the benchmark, representing the number of trading days in a week, was 74.6 yesterday after reaching 84.8 the day before. The index measures the velocity of price changes to identify overbought or oversold conditions and turning points. Readings above 70 indicate prices will probably fall.

“The RSI is just starting to turn down,” said Andy Cossor, a Hong Kong-based strategist at Germany’s fourth-largest lender. “The S&P 500 has had a good run this year, and it looks as if it needs to take a breath.”

Have a wonderful evening everyone.

Be magnificent!

Humanity is not divided into airtight compartments

that inhibit going from one to the other.

And when one counts them in the thousands,

they will not be less linked one to the other.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Your attitude, not your aptitude,

will determine your altitude.

-Zig Ziglar, 1926-2012

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