March 28, 2013 Newsletter

Dear Friends,

Tangents:

HAPPY LONG WEEKEND!

“In the future, we might see the world through Google-colored glasses.  The search-engine giant revealed last year that it’s been playing with Internet-connected eyewear.  The gadget acts essentially like a smart phone for your face.  A tiny screen hags in the far corner of your vision, layering information on top of everything you see.  Google’s pitch video showed directions, text messages, and video calls seemingly projected into the real world…..The device marks another step toward the Internet weaving its way into daily life…You won’t need to disconnect from a conversation in order to check your e-mail or text messages, Google says.  Important information will appear right in front of you.  Early versions are selling for $1500.” –by Chris Gaylord.

Confidence that one is of value and significance as a unique individual is one of the most precious possessions which anyone can have. –Anthony Storr, 1920-2001

Photos of the Day – March 28th, 2013

A gaucho looks on at others riding wild horses during the annual celebration of Criolla Week in Montevideo, March 27. Throughout Easter Week, ‘gauchos,’ the Latin American equivalent of the North American cowboy, from all over Uruguay and neighboring Argentina and Brazil will visit Montevideo to participate in the Criolla Week to win the best rider award. Andres Stapff/Reuters

Women wearing the traditional suit La Mantilla (the mantle) when penitents of the ‘Virgen de la Esperanza’ brotherhood take part in a Holy Week procession in Zamora, northern Spain. Hundreds of processions take place throughout Spain during the Easter Holy Week. Daniel Ochoa de Olza/AP

Market Closes for March 28^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lindsey Rupp

March 28 (Bloomberg) — Canadian stocks rose, clinching a third straight quarterly gain, as financial and industrial shares climbed amid a report showing the economy grew faster than forecast.

Niko Resources Ltd., an oil and natural gas explorer, jumped 9.8 percent amid plans to sell assets. Canadian National Railway Co. rose 2.1 percent, pacing gains in industrial companies, as rail traffic climbed in the week ended March 23.

Lenders advanced as Royal Bank of Canada and Bank of Nova Scotia paced gains in the biggest banks.

The Standard & Poor’s/TSX Composite Index rose 50.25 points, or 0.4 percent, to 12,749.90. The gauge fell as much as 0.4 percent earlier in the day, as gold producers dropped after the metal’s price slumped. The S&P/TSX advanced 2.5 percent in the first three months of the year for a third straight quarterly gain. Trading volume was 11 percent below the 30-day average.

“The key thing is we have to be watching the economy,” Irwin Michael, fund manager with ABC Funds in Toronto, said in a phone interview today. His firm oversees about C$800 million ($787 million). “You get the housing market doing a little better, people are feeling a little better. Keep in mind today is the last day of the month and the last day of the quarter, so there’s probably some significant window dressing going on,” he said, referring to fund managers buying some of the best- performing stocks at the end of the quarter.

Canadian stock exchanges will be closed tomorrow for the Good Friday holiday.

Canada’s economic output increased 0.2 percent, following a 0.2 percent decline in December, Statistics Canada said today.

The data suggest the economy may be picking up some speed after ending last year with the slowest growth since the recession.

Reports this week showing a 5.7 percent jump in durable goods orders and the biggest increase since 2006 for the S&P/Case-Shiller index of home prices in 20 cities were among the latest data points to fuel optimism in the U.S. economy.

American gross domestic output rose at a 0.4 annual rate in the last three months of 2012, up from a 0.1 percent prior estimate, a report today showed.

Niko Resources jumped 9.8 percent to C$6.39, adding to a 10 percent gain yesterday after the oil and gas exploration company said it planned to sell some assets. Oil increased 0.7 percent to $97.23 a barrel in New York, the highest settlement since Feb. 14.

Financial shares contributed most to the S&P/TSX’s gain, rising 0.6 percent as a group to pare their loss for the month to 0.6 percent. Eight of 10 industries in the broader index advanced.

Royal Bank rose 0.8 percent to C$61.20, capping a 2.2 percent quarterly advance for the nation’s largest lender.

Toronto-Dominion gained 0.8 percent to C$84.58.

Canadian National Railway added 2.1 percent to C$102.10.

Total originated rail traffic rose 0.7 percent last week from a year ago, data from the Association of American Railroads showed.

Raw-materials producers declined 0.5 percent as a group.

Silver Wheaton Corp. slid 1.3 percent to C$31.80. Novagold Resources Inc. fell 4.9 percent to C$3.73 and Alacer Gold Corp. slipped 1.4 percent to C$4.10. Gold declined 0.7 percent to settle at $1,595.70 an ounce, capping a second-straight quarterly drop.

BlackBerry, formerly known as Research In Motion Ltd., fell 0.4 percent to C$14.74, after rallying 6.8 percent earlier in the day. The Waterloo, Ontario-based company reported a surprise profit in the fourth quarter after embarking on a cost-cutting program last year, even as sales continued to trail projections.

US

By Sarah Pringle

March 28 (Bloomberg) — The Standard & Poor’s 500 Index rose to a record, wiping out losses from the financial crisis, as economic growth slowed less than previously estimated and concern about Europe’s debt crisis eased.

Hewlett-Packard Co. and International Business Machines Corp. each jumped 1.1 percent to pace advances among the biggest companies. GameStop Corp. rallied 5.8 percent after profit topped estimates. Deckers Outdoor Corp. increased 6 percent after Jefferies Group Inc. raised its price target. BlackBerry fell 0.8 percent after reporting fourth-quarter results.

The S&P 500 increased 0.4 percent to 1,569.19 at 4 p.m. in New York, above its closing high of 1,565.15 from Oct. 9, 2007.

The Dow Jones Industrial Average climbed 52.38 points, or 0.4 percent, to 14,578.54, reaching another record. About 5.7 billion shares changed hands on U.S. exchanges, 9.4 percent below the three-month average. U.S. markets will be closed tomorrow for a holiday.

“It’s about time,” said Robert Lutts, the president and chief investment officer at Cabot Money Management Inc., which oversees $500 million in Salem, Massachusetts. “We’ve gone through two bear markets in the last decade and equity investors have been really challenged in their conviction to hold through that period of time, but I think that we’re at the beginning of a very strong phase for equities, not at the end.”

The S&P 500’s advance above its record close marks a recovery from a bear market that wiped out more than $10 trillion of value from the world’s largest stock market. The gauge rose 10 percent for the quarter, its best performance in a year. It remains below an all-time intraday high of 1,576.09.

The Dow first surpassed its 2007 high on March 5.

Shares of American companies are rallying as their profits expand for a third straight year and the Federal Reserve commits to continuing its unprecedented monetary stimulus. Reports this week showing a 5.7 percent jump in durable goods orders and the biggest increase since 2006 for the S&P/Case-Shiller index of home prices in 20 cities were among the latest data points to fuel optimism in the economy.

Gains today came as gross domestic product rose at a 0.4 percent annual rate in the last three months of 2012, up from a 0.1 percent prior estimate and following a 3.1 percent pace in the third quarter, revised Commerce Department figures showed today. The reopening of banks in Cyprus after being closed since March 16 eased concern about Europe’s debt crisis. German retail sales, adjusted for inflation and seasonal swings, gained 0.4 percent last month from January.

The four-year bull market has sent the S&P 500 up more than 131 percent since it reached a 12-year low of 676.53. The rally is extending beyond the average length of bull markets, according to Birinyi Associates Inc. data that show cycles since 1962 have an average duration of four years. Of nine advances, four have lasted longer than the mean and the market rose for about six years during those periods.

“This has been a very broad-based rally in equities, it’s been global,” Stephen Wood, who helps manage about $163 billion as the New York-based chief market strategist for North America at Russell Investments, said by telephone. “Many fundamentals haven’t changed all that much in recent weeks and months, but it’s becoming apparent that momentum and sentiment are changing.”

Shares of retailers, restaurant chains and other companies that depend on discretionary consumer spending jumped more than 233 percent as a group since the bottom of the bear market to lead gains among the 10 main groups in the S&P 500. Gauges of financial and industrial companies have almost tripled, while technology, commodity and health-care stocks are up more than 100 percent.

Wyndham Worldwide Corp., CBS Corp., Fifth Third Bancorp and Gannett Co. are among six companies in the index that have surged more than 1,000 percent since March 9, 2009.

The rebound in stocks came as the Fed pumped more than $2.3 trillion into the economy through monetary easing since 2008, sending Treasury yields to record lows last year. The S&P 500’s dividend yield, currently at about 2.1 percent, has been above the rate on 10-year Treasuries for almost a year.

Corporate profits have jumped to a record during the rebound, with earnings-per-share for S&P 500 companies projected to reach $110.51 this year from less than $62 in 2009, according to analyst forecasts compiled by Bloomberg. Alcoa Inc. will unofficially kick off the next reporting season when it posts first-quarter results on April 8.

The average year-end prediction of 17 Wall Street strategists surveyed by Bloomberg is for the S&P 500 to keep rising to 1,583. The gauge’s advance during the rally exceeds the average bull-market return of 120 percent, Birinyi data show. Two of the last nine cycles have rallied more than today’s advance — the 302 percent gain in the 1990s and 229 percent in the 1980s, the data show.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against claims, fell 3.4 percent to 12.70 today. The gauge, known as the VIX, dropped to its lowest level since February 2007 on March 11 and has retreated 30 percent this year.

Hewlett-Packard gained 1.1 percent to $23.84 and IBM added 1.1 percent to $213.30 to pace advances among the largest companies.

EBay Inc. rallied 4.1 percent to $54.22. The operator of the world’s largest online marketplace said it expects to have merchandise volume of $110 billion by 2015 as its active user base expands to 200 million, aided by emerging markets.

GameStop rallied 5.8 percent to $27.97. The world’s largest video-game retailer reported fourth-quarter profit that beat analysts’ estimates, led by digital and mobile products.

Deckers surged 6 percent to $55.69. Jefferies analyst Randal Konik raised his price target on the Ugg brand owner to $100 from a previous estimate of $65, noting the likelihood of sheepskin prices falling this year.

BlackBerry, formerly known as Research In Motion Ltd., fell 0.8 percent to $14.45, reversing an earlier rally of 6.8 percent. The company, which is attempting a comeback with a new lineup of smartphones, reported a surprise profit in the fourth quarter after embarking on a cost-cutting program last year, even as sales continued to trail projections.

An S&P index of homebuilders retreated 0.7 percent, as 10 of 11 members fell. Toll Brothers Inc. slid 1.4 percent to $34.24, while Lennar Corp. lost 0.7 percent to $41.48.

PVH Corp. dropped 5.3 percent to $106.81. The owner of the Tommy Hilfiger brand said earnings will be $7 a share for the year, less than the average analyst estimate of $7.41 a share.

Have a wonderful weekend everyone!

Be magnificent!

It is quite evident that our world is useful and that it provides for our needs,

but our connection to it does not end there.

We are united to it by a connection much larger and more truthful than that of necessity.

Our soul is drawn to it; our love of life is in reality a desire in us to seek our connection with this universe.

And this connection is love.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Nothing is so firmly believed as that

which we least know.

-Michel de Montaigne, 1533-1592

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