March 5, 2013 Newsletter

Dear Friends,

Tangents:

A man should hear a little music, read a little poetry, and see a fine picture every day of his life, in order that worldly cares may not obliterate the sense of the beautiful which God has implanted in the human soul. – J.W. Goethe.

Judge your success by what you had to give up in order to get it. –Dalai Lama XIV

Photos of the Day –March 5th, 2013

Seagulls fight over bread thrown into the Serpentine lake in London’s Hyde Park. Temperatures in the capital rose to 13 degrees Celsius (55 Fahrenheit) making Tuesday the warmest day of the year so far. Alastair Grant/AP

A woman walks alongside the East Side Gallery, a part of former Berlin Wall. Protests have stalled the removal of a small part of the East Side Gallery for the construction of a luxury apartment building. Markus Schreiber/AP

Market Closes for March 5th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Sarah Pringle and Jeremy Herron

March 5 (Bloomberg) — Canadian stocks rose, as financial companies and energy producers rallied, after investors speculated central banks will continue stimulus measures and oil ended a three-day losing streak.

Bank of Nova Scotia rose 0.7 percent after Canada’s third- largest bank posted better-than-estimated earnings and boosted its dividend. Encana Corp. and Cenovus Energy Inc. added at least 1 percent. WestJet Airlines Ltd. climbed 4.3 percent to a record after saying February traffic and capacity increased.

The Standard & Poor’s/TSX Composite Index rose 28.63 points, or 0.2 percent, to 12,736.04 at 4 p.m. in Toronto. The benchmark index has gained 2.4 percent this year. Trading was in line with the 30-day average.

Efforts to bolster economic growth are “providing a positive backdrop, in that while the Fed and other central banks might not provide additional stimulus, they’re certainly not going to take their foot off the gas pedal,” Philip Petursson, managing director of the portfolio advisory group with Manulife Asset Management Ltd., said from Toronto. His firm manages about $238 billion.

Federal Reserve Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program. U.S. stocks jumped today, sending the Dow Jones Industrial Average to a record close of 14,253.77.

Canadian financial companies rallied 0.4 percent as a group, contributing the most to the S&P/TSX index’s gains, as Bank of Nova Scotia climbed 42 Canadian cents to C$61.32. The stock rose to a record earlier in the day, adding as much as 1.5 percent after the lender’s first-quarter per-share earnings of C$1.27 beat the C$1.25 average estimate of 16 analysts surveyed by Bloomberg.

Scotiabank joined Royal Bank of Canada and Toronto-Dominion Bank in posting higher quarterly profit, even as Canada’s economic growth began to stagnate on record levels of household debt. Royal Bank added 0.2 percent to C$63.76 and Toronto- Dominion rose 0.5 percent to C$85.43. Both banks reported their results last week.

Energy producers advanced 0.3 percent after oil climbed from its lowest level in 2013 and China vowed to maintain its growth target. Encana increased 21 Canadian cents to C$18.23 and Cenovus rose 31 Canadian cents to C$32.13.

China retained an expansion goal of 7.5 percent for this year and plans a 10 percent increase in fiscal spending to support economic growth, the government said. “It gives confidence to the market that there’s a growth commitment on that side of the world, and that’s being felt over here,” Petursson said. Oil climbed 0.8 percent to settle at $90.82 a barrel in New York.

Raw-material producers advanced 0.1 percent as a group after rallying as much as 1.7 percent earlier. Teck Resources added 0.9 percent to C$30.53. Potash Corp. of Saskatchewan Inc. gained 0.5 percent to C$40.43.

WestJet surged 98 Canadian cents to a record C$24.05. The Calgary-based discount carrier said February traffic climbed 7.3 percent and capacity rose 3.1 percent.

TMX Group Ltd., the owner of the Toronto Stock Exchange, is considering more acquisitions to expand its business, Chief Executive Officer Thomas Kloet said. “We are not standing still,” he said. “We will acquire, when appropriate and strategic, key assets — both small and large — that advance our business.”

TMX has expanded through acquisitions since Kloet joined the company as CEO in 2008, most recently agreeing to buy Equity Financial Holdings Inc.’s transfer agent and corporate trust services business. TMX rose 1.1 percent to C$55.86 today.

US

By Inyoung Hwang and Sarah Pringle

March 5 (Bloomberg) — The Dow Jones Industrial Average climbed to a record, erasing losses from the financial crisis, as China vowed to maintain its growth target and investors bet central banks will continue stimulus measures.

All 10 groups in the Standard & Poor’s 500 Index and 27 out of 30 stocks in the Dow rose. Apple Inc. rallied 2.6 percent for its first gain in five days. Qualcomm Inc. jumped 2 percent as it increased its dividend by 40 percent and set up a $5 billion share buyback plan. J.C. Penney Co. sank 11 percent after its second-biggest shareholder sold part of its stake.

The Dow rose 125.95 points, or 0.9 percent, to 14,253.77 at 4 p.m. in New York, surpassing its previous closing high of 14,164.53 as well as its intraday peak of 14,198.1 from Oct. 11, 2007. The S&P 500 added 1 percent to 1,539.79 today. The benchmark gauge is less than 2 percent below its record high.

About 6.5 billion shares exchanged hands, 2.8 percent above the three-month average.

“People are now starting to realize that it is a bull market,” Laszlo Birinyi, president of Birinyi Associates Inc. in Westport, Connecticut, said in an interview on Bloomberg Radio’s “Surveillance” with Tom Keene and Michael McKee.

“It’s not going to come back, you’ve missed the train, and the train still has a long way to go. But you better get on it.”

The bull market in U.S. equities enters its fifth year this month. The S&P 500 has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.

U.S. stock indexes advanced this week amid optimism the Fed will maintain stimulus measures to support the economic recovery. Fed Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.

Global equities also rose today as China pledged to support economic expansion. The nation will keep its growth target at 7.5 percent for this year and plans a 10 percent jump in fiscal spending, the government said during the start of the National People’s Congress today.

The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which covers about 90 percent of the economy, rose to 56 in February from the prior month’s 55.2, the Tempe, Arizona-based group said today. Readings above 50 signal expansion. The ISM services survey covers industries ranging from utilities and retailing to housing, health care and finance.

“This is clearly a day where investors are looking to put risk on,” Andrew Milligan, head of global strategy at Standard Life Investments Ltd., who helps manage over $263.9 billion, said in a phone interview. The Edinburgh, U.K.-based firm manages over $263.9 billion. “Services are a much, much larger part of all economies now than the manufacturing sector.”

Birinyi, who was one of the first money managers to tell clients to buy before the bull market began in March 2009, said technology, materials and energy stocks are the best choices today. Salesforce.com Inc., the largest maker of online customer-management software, is an example of a well-performing cyclical stock, he said.

Cisco Systems Inc., United Technologies Corp., Boeing Co. and Hewlett-Packard Co. had the biggest gains in the Dow, rising at least 2 percent. Technology, industrial and consumer- discretionary stocks added the most among 10 groups in the S&P 500, advancing at least 1 percent.

Investors bought shares of companies most tied to economic growth, sending the 30-member Morgan Stanley Cyclical Index up 1.4 percent. The Dow Jones Transportation Average, a gauge of 20 shipping companies, climbed to a record, adding 1.5 percent.

The Chicago Board Options Exchange Volatility Index, known as the VIX, fell for the third day, losing 3.8 percent. The gauge has lost 25 percent this year.

Apple rallied $11.09 to $431.14. The company is planning on releasing its iPhone 5S in August, iMore reported, citing unnamed people familiar with the matter. An updated iPad is getting “serious consideration” and may be introduced around April, the technology news website said. Apple shares have tumbled 19 percent in 2013.

Sears Holdings Corp. increased 5.6 percent to $46.63. Chief Executive Officer Eddie Lampert bought 1.24 million shares of the retailer yesterday, while his hedge fund ESL Investments Inc. sold the same amount for the same price, according to a filing yesterday.

Qualcomm jumped $1.34 to $67.97. The largest seller of semiconductors for mobile phones will increase its quarterly cash dividend to 35 cents from 25 cents, rewarding investors after rising demand for smartphones that run on its technology spurred sales growth. The new share repurchase plan replaces an older $4 billion plan that had $2.5 billion remaining.

Genworth Financial Inc. surged 3.3 percent to $9.39. The seller of life insurance and mortgage guaranties has climbed 10 percent in two days and is up 25 percent this year. Barclays Plc analyst Mark C. DeVries raised his rating on mortgage insurers MGIC Investment Corp. and Radian Group Inc. to overweight from underweight in a note today.

Apollo Group Inc. jumped 3.1 percent to $16.70 after six days of losses. The for-profit educator was raised to hold from sell by Deutsche Bank AG analyst Paul Ginocchio, who cited the stock’s valuation in a note dated today.

American Apparel Inc. surged 19 percent to $1.53 as the retailer projected sales of $654 million to $660 million in 2013. That beat the $650.2 million average of two analyst estimates in a Bloomberg survey.

BMC Software Inc. climbed 3.7 percent to $42.32. The maker of programs to manage corporate computer networks has attracted renewed buyout interest from private-equity funds, people with knowledge of the situation said.

KKR & Co. and TPG Capital have separately expressed interest, said the people, who declined to be identified because the talks are private. BMC held similar talks last year amid pressure from activist investor Elliott Associates LP before deciding to buy back $1 billion in shares.

J.C. Penney declined $1.78 to $14.96, its lowest level since March 2009, after people familiar with the matter said Vornado Realty Trust sold 10 million shares in the department- store company at $16.40 apiece through Deutsche Bank AG.

“There are more tailwinds than headwinds,” Joseph Tanious, a New York-based global market strategist for JPMorgan Funds, which oversees $400 billion, said by phone. On the ISM number, he said, “This is all coming on the back of better- than-expected economic data partly from around the world but also from Europe. There’s some very dovish sentiment from central bankers and policy makers around the world as well.”

Have a wonderful evening everyone.

Be magnificent!

Water, you are the one that brings us life.  You are the source of nourishment that gives us strength.

We rejoice at your existence.

We drink you with joy, as babies drink their mothers’ milk

And when we swallow you, we receive love.

Water, carry away all my sins and my failures, all that has been bad in my life.

I seek you today; I shall plunge into your wetness.

Drown me in splendor.

The Vedas

As ever,

Carolann

Feel the fear and do it anyway.

-Susan Jeffers

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