May 1, 2013 Newsletter

Dear Friends,

Tangents: May Day today.  Polydore Virgil says that the Roman youths used to go into the fields and spend the calends of May in dancing and singing in honour of Flora, goddess of fruits and flowers.  The English celebrated May Day with games and sports, particularly archery and Morris dances and the setting up of the Maypole.  In due time, Robin Hood and Maid Marian came to preside as Lord and Lady of the May, and by the 16^th century May Day was Robin Hood’s day and Robin Hood plays an integral part of the festivities.  May Day was also formerly the day of the London chimney-sweepers’ festival.

The Anglo-Saxons called this month thrimilce, because then cows can be milked three times a day.  The present name is the Latin Maius, probably from Maia, the goddess of growth and increase, connected with major.  It was the fifth month in the Julian and Gregorian calendars.  The old Dutch name was Bloumaand – blossoming month.  The corresponding month in the French Revolutionary calendar was Floréal – floral – with a period from modern April 21^st to May 20^th. –from Brewar’s Phrase & Fable.

Photos of the day – May 1st, 2013

Mt. Fuji is seen from Shizuoka prefecture, central Japan. The Agency for Cultural Affairs issued a notice saying it had received notification that Mt. Fuji was recommended for World Heritage status by the International Council on Monuments and Sites, a body affiliated with UNESCO. Kyodo News/AP

People cover a wooden statue of Saint Domenico with snakes during a procession in Cocullo, central Italy. Every year in May, snakes are placed onto the statue of St. Domenico and the statue is then carried in a procession around the town. Alessandro Bianchi/Reuters

Market Closes for May 1^st, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

May 1 (Bloomberg) — Canadian stocks fell, snapping a two- day rally, as commodity prices slid after data showed China’s manufacturing grew at a weaker pace last month and U.S. companies added fewer workers than forecast.

Cott Corp. plunged 14 percent after reporting disappointing earnings. Yamana Gold Inc. dropped 6.5 percent after first- quarter profit missed estimates. Premier Gold Mines Ltd. and New Gold Inc. slumped more than 4.1 percent as gold fell the most in two weeks. Loblaw Cos. climbed 4.7 percent after raising its dividend and saying earnings topped estimates.

The Standard & Poor’s/TSX Composite Index fell 135.21 points, or 1.1 percent, to 12,321.29 in Toronto. The benchmark equity gauge rose 1.9 percent the first two days of the week to pare its loss in April.

“The commodities board is reacting negatively to the weak data from China, putting the correction in prices back on course,” Bob Decker, fund manager with Aurion Capital Management, said on the phone from Toronto. His firm manages C$6 billion ($5.9 billion).

The Standard & Poor’s GSCI gauge of 24 commodities fell 2.1 percent. Oil slipped 2.6 percent and gold dropped 1.8 percent.

China’s manufacturing expanded at a weaker pace in April in a sign that the slowdown in the world’s No. 2 economy is extending into the second quarter. China is Canada’s second- biggest trading partner.

In the U.S., the Institute for Supply Management’s factory index showed manufacturing growth slowed to 50.7 in April from the prior month’s 51.3 The world’s largest economy added 119,000 workers in April, the smallest since September, following a revised 131,000 gain in March, figures from the Roseland, New Jersey-based ADP Research Institute showed today.

Canadian equities maintained losses after the U.S. Federal Reserve said it will keep its bond buying at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve. None of the 47 economists in an April 25-29 Bloomberg survey forecast the central bank to alter the pace of purchases.

Cott, the Mississauga, Ontario-based drinks maker, sank 14 percent to C$9.49. Cott posted first-quarter earnings of zero cents a share, short of the average estimates of 9 cents according to a survey of eight analysts by Bloomberg.

Yamana Gold slumped 6.5 percent to C$11.66. Canada’s fourth-largest producer of the metal said first-quarter earnings missed estimates as costs jumped 31 percent from a year earlier.

Raw-materials stocks fell 2.2 percent, as eight of 10 S&P/TSX groups retreated today. Energy stocks lost 1.8 percent.

Premier Gold Mines plunged 5.7 percent to C$1.99 and New Gold lost 4.1 percent to C$7.75.

Copper miners fell after the metal slid the most in a year.

Teck Resources Ltd., Canada’s largest diversified miner, lost 0.7 percent to C$26.61 while First Quantum Minerals Ltd. declined 2.5 percent to C$17.15.

Loblaw jumped 4.7 percent to C$44.75, the highest since October 2007. The grocery store chain and operator of the Joe Fresh fashion label raised its dividend to 24 cents a share from 22 cents after reporting revenue and adjusted earnings that topped analysts’ estimates.

Loblaw also said it expects to file a preliminary prospectus to create a real estate investment trust in late May, and complete an initial public offering of the REIT in July.

Loblaw first disclosed plans to create the real-estate unit in December.

US

By Lu Wang and Whitney Kisling

May 1 (Bloomberg) — U.S. stocks fell, dragging the Standard & Poor’s 500 Index from a record high, on slower growth in American payrolls and manufacturing as the Federal Reserve said it will maintain its bond buying to support the economy.

Commodity companies dropped the most among 10 S&P 500 industries as oil and copper tumbled. Merck & Co. slid 2.8 percent after cutting its full-year forecast. Allergan Inc. slumped 13 percent after delaying further study of an experimental drug for age-related macular degeneration. Comcast Corp. and Viacom Inc. gained more than 1.3 percent after the media companies reported quarterly profits.

The S&P 500 fell 0.9 percent to 1,582.70 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 138.85 points, or 0.9 percent, to 14,700.95. More than 6.6 billion shares changed hands on U.S. exchanges, or 4.4 percent above the three-month average.

“It’s more of the same,” Kevin Holt, who oversees the $9.7 billion Invesco Comstock Fund in Houston, said in a phone interview. “The existing policy guideline kind of continues. We didn’t expect anything different out of the Fed at this point of time. We had a good run. For the market to go higher, we need to see stronger economic growth, we need to see more sustainable employment growth.”

The Fed will maintain its bond buying at a pace of $85 billion a month, the Federal Open Market Committee said at the conclusion of a two-day meeting in Washington. It left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.

Stocks dropped earlier as a report showed companies added fewer workers than forecast in April. The 119,000 increase in payrolls, the smallest since September, followed a revised 131,000 gain in March that was less than initially estimated, according to data from ADP Research Institute. The median forecast of 37 economists surveyed by Bloomberg projected a 150,000 advance.

“The ADP report is somewhat disappointing because it’s just further evidence of slowdown,” Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a telephone interview.

The Labor Department publishes its jobs and unemployment report on May 3. Combined payrolls for companies and government agencies increased by 148,000 workers in April after rising 88,000 in March, according to a survey of economists by Bloomberg.

The S&P 500 climbed to a record yesterday as consumer confidence jumped and investors bet central banks around the world will continue their efforts to stimulate the economy. The bull market in U.S. equities has entered its fifth year, surging 134 percent from a 12-year low in 2009 on better-than-estimated corporate earnings and three rounds of bond purchases by the Fed.

Among other economic reports today, the Institute for Supply Management’s factory index fell to 50.7 in April from the prior month’s 51.3. Chinese and Australian reports also signaled a slowdown in manufacturing. Construction spending in the U.S. decreased 1.7 percent to an $856.7 billion annual rate, the least since August, the Commerce Department reported.

Investors also watched corporate earnings today. Of the 342 companies in the S&P 500 that have reported so far, 73 percent exceeded analysts’ predictions while 55 percent missed on sales, data compiled by Bloomberg show. Profit at S&P 500 companies rose 1.1 percent in the first three months of the year, according to analysts’ projections compiled by Bloomberg.

“During earnings season, you’re going to get some resets of expectations and the reality of what the underlying fundamentals look like,” Edward Painvin, chief investment officer of the Chase Investment Counsel Corp., which oversees $600 million, said by phone from Charlottesville, Virginia.

“Expectations were a little bit ahead of themselves. This is a reset of expectations.”

The Chicago Board Options Exchange Volatility Index, or VIX, climbed 7.2 percent to 14.49 today as investors stepped up hedging against losses in the S&P 500. The gauge for options hit a six-year low in March and is down 20 percent this year.

Companies whose earnings are most tied to economic growth led the retreat. The Morgan Stanley Cyclical Index declined 1.4 percent and the Dow Jones Transportation Average tumbled 2.3 percent. The Russell 2000 Index of small companies sank 2.5 percent.

All 10 S&P 500 groups fell, with energy and raw-materials stocks sinking at least 1.6 percent.

Cliffs Natural Resources Inc., the largest U.S. iron-ore producer, dropped 4.7 percent to $20.33 as the S&P GSCI gauge of 24 commodities fell 2.1 percent. Marathon Petroleum Corp. erased 6.2 percent to $73.47.

QEP Resources Inc. lost 6.1 percent to $26.95 after earnings trailed analysts’ estimates.

Merck fell 2.8 percent to $45.69. The company cut its full- year projections, citing estimates for lower sales, and said it plans to buy back $15 billion in shares. Merck has been eliminating thousands of jobs and trying to boost demand of existing products to overcome the revenue drop from its once- leading drug Singulair, an asthma medication that began facing competition from cheaper copies in August.

MasterCard Inc. fell 2.4 percent to $539.82. The second- biggest U.S. payments network reported first-quarter revenue that missed analysts’ estimates.

Allergan, the maker of the Botox wrinkle treatment, plunged 13 percent to $98.67 for the biggest drop since 1999. Chief Executive Officer David Pyott said on a conference call that current data don’t support taking the DARPin medicine into the final stages of trials needed for regulatory approval.

Regeneron Pharmaceuticals Inc., which makes potential rival eye medicine Eylea, surged 10 percent to a record $237.29.

Regeneron replaced MetroPCS Communications Inc. in the S&P 500 after the close of trading yesterday.

T-Mobile US Inc., the fourth-biggest U.S. wireless company, jumped 6 percent to $16.52 in its first day trading on the New York Stock Exchange after a merger with MetroPCS Communications, a smaller rival.

Comcast gained 1.4 percent to $41.86. The largest U.S. cable company and the owner of NBC Universal said first-quarter profit rose 17 percent as U.S. residential video subscriber revenue increased at the highest rate in four years.

Viacom added 3 percent to $65.90. The owner of cable networks Nickelodeon and MTV as well as the Paramount film studio reported fiscal second-quarter profit that exceeded analysts’ estimates on improved advertising sales.

Humana Inc. climbed 4.7 percent to $77.56 after the second- biggest private provider of Medicare coverage boosted its full- year earnings forecast to a range of $8.40 to $8.60 a share.

That topped the average analyst estimate of $7.95 in a Bloomberg survey.

DreamWorks Animation SKG Inc. rose 7.3 percent to $20.69.

The studio run by Jeffrey Katzenberg posted a surprise profit, helped by its box-office hit “The Croods” and television revenue from “Madagascar 3: Europe’s Most Wanted.”

Have a wonderful evening everyone.

Be magnificent!

In nature, action and reaction are continuous.  Everything is connected to everything else.

No one part, nothing, is isolated.  Everything is linked, and interdependent.

Everywhere everything is connected to everything else.  Each question receives the correct answer.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Manners require time, and nothing is

more vulgar than haste.

-Ralph Waldo Emerson, 1803-1882

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