March 26, 2013 Newsletter

Dear Friends,

Tangents:

A word of caution in today’s Globe & Mail:

It’s not the years, it’s the noise

“Noise, not age, is the leading cause of hearing loss,” writes Jane Brody of The New York Times.  “Unless you take steps now to protect your ears, sooner or later many of you – and your children – will have difficulty understanding even ordinary speech.  Tens of millions of Americans, including 12 to 15 per cent  of school-age children, already have permanent hearing loss caused by the everyday noise that we take for granted as a fact of life.”  -Michael Kesterton, Globe & Mail, 03/26/13.

On March 26^th:

1874 – Poet Robert Frost was born.

1905 – Psychiatrist Victor Frankl was born.

1911 – Playwright Tennessee Williams was born.

1921 – the Bluenose was launched and still graces the Canadian dime.

1942 – Writer Erica Jong was born.

1944 – Singer Diana Ross was born,

1953 – Jonas Salk announced he had succeeded in developing a polio vaccine.

1979 – Israeli Prime Minister Menachem Begin and Egyptian President Anwar El-Sadat, signed a peace treaty at Camp David, ending 30 years of war.

1985 – Actor Keira Knightly was born.

True Strength is delicate.  – Louise Nevelson.

Photos of the Day – March 26th, 2013

Icicles hang from a statue in Trafalgar Square, central London, as the cold weather continues. The cold weather is predicted to continue for the upcoming days with freezing temperatures and high winds hitting many regions of Britain. Andrew Matthews/PA/AP

A street vendor waits for customers as she sells traditional Easter eggs at Prague’s Wenceslas Square, Czech Republic. Petr Josek/Reuters

Market Closes for March 26^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lindsey Rupp and Eric Lam

March 26 (Bloomberg) — Canadian stocks erased losses as better-than-estimated U.S. data boosted energy shares and telecommunication providers rallied, offsetting a drop in gold producers.

Rogers Communications Inc. rose 1.7 percent after saying it will expand its LTE wireless Internet network. Canadian Natural Resources Ltd. and ARC Resources Ltd. added at least 0.5 percent as oil jumped to a five-week high. AuRico Gold Inc. fell the most in six months after the company wrote down the value of a mine. Barrick Gold Corp. slid 1.1 percent as gold slumped for a third day.

The Standard & Poor’s/TSX Composite Index rose 25.67 points, or 0.2 percent, to 12,706.38 at 4 p.m. in Toronto after falling as much as 0.2 percent. The S&P/TSX is up 2.2 percent this year. Trading volume was 26 percent lower than the 30-day average.

“To the extent we can see continued improvement in the U.S. economy, eventually the Canadian market will come along,” Laura Wallace, Toronto-based vice president and portfolio manager for Scotia Asset Management, said in a phone interview today. She helps manage about C$11 billion ($11 billion). “We need to see sustained recovery in the U.S., which will firm up commodity prices.”

U.S. economic data released today bolstered optimism about the world’s largest economy. Orders for durable goods climbed more than forecast in February and residential real estate prices increased in January by the most since 2006.

Telecommunication firms rose the most in the S&P/TSX, adding 1.3 percent as a group. Rogers Communications, Canada’s largest wireless carrier, rose 1.7 percent to C$51.43. The company said it would expand its high-speed cellular Internet system into 44 new markets this spring. BCE Inc., the nation’s biggest phone company, climbed 1.7 percent to C$47.31.

Energy shares advanced, as oil jumped 1.6 percent to $96.34, the highest settlement since Feb. 19. Canadian Natural Resources added 0.5 percent to C$33.08 and ARC Resources climbed 1 percent to C$26.63.

Just Energy Group Inc. rallied 9.9 percent to C$6.79 after its executive chairman said the natural gas and power supplier does not plan additional dividend cuts. The stock slid 14 percent over the previous four days.

“We recognize there are rumors in the market regarding a further dividend reduction,” Rebecca MacDonald said in a statement yesterday. “At this point we do not expect any further changes to our dividend payout.”

The Toronto-based company cut its quarterly dividend to 7 Canadian cents a share from 10 cents a share on Feb. 7.

Financial shares increased after Canada’s government said the country’s six largest banks are “systemically important” and need to set aside more capital. The Office of the Superintendent of Financial Institutions, the country’s banking regulator, said the banks will be subject to a surcharge equal to 1 percent of risk weighted capital by Jan. 1, 2016.

Each bank will also have to hold debt that can be converted to capital if it fails, reducing the need for a taxpayer-funded bailout. Canadian banks have been ranked the world’s soundest for the past five years by the World Economic Forum.

“Investors are giving banks the benefit of the doubt and reasonably so,” said John O’Connell, chief executive officer with Davis Rea Ltd., which manages about C$600 million, in Toronto. “It wasn’t a surprise. They’re clearly in great shape, so nobody’s really worried about these banks.”

Royal Bank of Canada, the nation’s largest lender, added 0.5 percent to C$61.48 and Toronto-Dominion Bank rose 0.6 percent to C$84.68.

Bank of Montreal, Canada’s fourth-largest bank, gained 0.8 percent to C$64.19 after the company raised its five-year mortgage rate to 3.09 percent. A reduction earlier this month drew criticism from Finance Minister Jim Flaherty. The bank’s 2.99 percent rate was a “limited time offer,” and expires March 28, the bank said in a statement today.

Raw-materials stocks fell 0.7 percent as a group, the only one of 10 industries in the S&P/TSX to retreat. Gold futures for June delivery declined 0.6 percent to settle at $1,597.30 an ounce. The metal has lost 4.7 percent this year.

AuRico Gold slid 7.8 percent to C$6.23 for its biggest slide since September after the company wrote down the value of its El Chanate mine in Mexico by $127 million. Fourth-quarter revenue of $63.1 million was lower than the $71.3 million average of three analysts’ estimates compiled by Bloomberg.

Barrick Gold, the world’s largest gold producer, lost 1.1 percent to C$29.32. Founder and Co-Chairman Peter Munk said yesterday he and his directors have been considering “new leadership” for the board.

US

By Sarah Pringle

March 26 (Bloomberg) — The Standard & Poor’s 500 Index rebounded to within two points of its record after orders for U.S. durable goods climbed more than forecast in February and home prices increased the most since June 2006.

Monsanto Co. jumped 4.4 percent as the company and DuPont Co. agreed to dismiss their respective antitrust and soybean patent lawsuits. Netflix climbed 5.4 percent after Pacific Crest Securities LLC raised its price target on the company. Boeing Co. added 2.1 percent after an appeals court upheld the dismissal of a lawsuit. Apparel retailers retreated, as Gap Inc. and Macy’s Inc. lost more than 0.9 percent.

The S&P 500 added 0.8 percent to 1,563.77 at 4 p.m. in New York, after the equity benchmark fell 0.3 percent yesterday. The Dow Jones Industrial Average rose 111.90 points, or 0.8 percent, to 14,559.65, reaching another record. About 5.2 billion shares changed hands on U.S. exchanges today, 18 percent below the three-month average.

“The data continues to be pretty good out of the U.S., even though we had some bad news out of Europe over the past few days,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $170 billion, said by phone. “Housing is a huge part of the economic recovery story and if housing prices rise, people feel better about their homes and generally more confident.”

The S&P 500 yesterday came within one point of its record of 1,565.15 reached in October 2007, before retreating as the bailout of Cyprus spurred concern bank deposits in other euro- area nations may be subject to levies to pay for rescues in the future. The benchmark gauge has surpassed the 1,560 level six times since March 14, only to fall short of the record each time. The Dow first surpassing its 2007 all-time high on March 5.

The bull market in equities entered its fifth year this month as the S&P 500 more than doubled from its bottom in 2009, driven by an unprecedented three rounds of bond purchases by the Federal Reserve.

Equities rose today as residential real estate prices increased in January by the most since June 2006, according to the S&P/Case-Shiller index released today. Orders for U.S. durable goods climbed more than forecast in February, propelled by automobiles and a rebound in commercial aircraft, a Commerce Department report showed.

Consumer confidence slumped more than forecast this month as Washington’s budget battle soured Americans’ views of the economic outlook. The consumer confidence index dropped to 59.7 from a revised three-month high of 68 in February, data from the New York-based Conference Board showed today. New-home sales declined 4.6 percent, worse than the 3.9 percent median estimate, another report showed.

“We like to see what consumers do rather than what they say,” Brad Sorensen, director of market and sector analysis at Charles Schwab Corp., said in a phone interview. The San Francisco-based firm has $2.04 trillion in client assets. “They may say they’re less confident, but does that translate into their spending? So far we haven’t seen that. Retail sales have held up pretty well.”

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines, fell 7.1 percent to 12.77. The gauge has tumbled 29 percent for the year.

Health-care companies, energy and utility shares advanced the most, adding at least 1 percent. Intel Corp. rose 2.9 percent to $21.77 and Hewlett-Packard Co. jumped 2.3 percent to $23.64, for the biggest gains in the Dow. American Express Co. climbed 1.6 percent to a record $67.17, while Pfizer Inc. added 1.6 percent to $28.60, the highest level since 2005.

Monsanto rallied 4.4 percent to $103.79. The company will dismiss its claim that DuPont infringed patents for Roundup Ready soybeans, setting aside a $1 billion jury award, and DuPont will dismiss its claim that Monsanto uses monopoly power to stifle innovation, the companies said in a joint statement.

The world’s largest seed companies also agreed to enter into licensing agreements for making genetically modified crops.

DuPont fell 0.3 percent to $48.97.

Netflix surged 5.4 percent, the most in the S&P 500, to $190.61. Pacific Crest raised its price target on the company to $225 from its previous estimate of $160, writing in a note that “Netflix is the future of non-live video.”

Boeing jumped 2.1 percent to $86.62. The Chicago-based company won a U.S. appeals court ruling affirming the dismissal of an investor lawsuit accusing company officials of making misleading public statements about the readiness of its 787 “Dreamliner” aircraft.

Consumer durables and apparel retailers had the smallest gain as a group among 24 S&P 500 industries. The International Council of Shopping Centers cut its top-end forecast for March same-store sales. “An abnormally cold bout of weather in eastern two-thirds of the country brought a chill to consumers and their interest in spring goods—especially apparel,” Michael Niemira, ICSC vice president of research and chief economist, wrote.

Gap lost 2.7 percent to $35.03 and Macy’s slumped 0.9 percent to $41.99. Abercrombie & Fitch Co. slid 1.5 percent to $45.69.

Have a wonderful evening everyone.

Be magnificent!

The key to cosmic awareness, to a consciousness of God,

is in the understanding of the soul.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

Success is getting what you want.  Happiness is

wanting what you get.

-Dale Carnegie, 1888-1955

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