May 10, 2013 Newsletter

Dear Friends,

Tangents:

On this day, May 10^th, in 1908, Mother’s Day was first observed in church services in West Virginia and Philadelphia.

Happy Mother’s Day to all the mothers out there!

What are heavy? sea-land and sorrow:

What are brief?  today and tomorrow:

What are frail?  spring blossoms and youth:

What are deep?  the ocean and truth.

–Christina Rossetti

You can learn many things from children.  How much patience you have, for instance. –Franklin P. Jones.

Photo of the day – May 10^th, 2013

People shelter by the rain under umbrellas with several slogans written on them against austerity measures and the new Spanish Education Law, reading, ‘Stop LOMCE Law,’ in Pamplona northern Spain. The Spanish Conservative Government will be approve a new Education Law on Friday, May 10^th, 2013. Alvaro Barrientos/AP

Market Closes for May 10th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Nikolaj Gammeltoft and Eric Lam

May 10 (Bloomberg) — Canadian stocks rose, with the benchmark equity index gaining for a third week, as a rally in energy shares offset a slump in raw-materials producers.

BlackPearl Resources Inc. and Enerplus Corp. climbed at least 5.8 percent to lead energy shares higher. Magna International Inc., North America’s largest auto-parts maker, added 3.6 percent as earnings beat projections. TMX Group Ltd., owner of the Toronto Stock Exchange, fell 3.1 percent after saying first-quarter trading volume dropped and fewer companies sought financings.

The Standard & Poor’s/TSX Composite Index advanced 45.19 points, or 0.4 percent, to 12,589.09 at 4 p.m. in Toronto after falling as much as 0.3 percent earlier in the day. The benchmark equity gauge rose 1.2 percent this week. Trading volume was in line with the 30-day average.

Canadian employment rose by 12,500 in April as manufacturers added the most jobs in 11 months, contributing to evidence of a modest expansion. The jobless rate was unchanged at 7.2 percent, a report from Statistics Canada said today.

Economists surveyed by Bloomberg News projected a gain of 15,000 jobs and 7.2 percent unemployment.

“Given the lack of real clarity in the jobs numbers in Canada, the markets are very mixed,” said Kevin Headland, fund manager with Manulife Asset Management Ltd. in Toronto. He helps manage about C$250 billion ($247 billion) at the firm. “It’s the opposite of the U.S. where we’re getting much better revisions on the jobs front, better economic growth. There’s a lot of mixed messages out of Canada and uncertainty, and people are unsure where to go.”

Energy shares contributed the most to gains in the S&P/TSX, rising 0.6 percent even as oil prices fell for a second day.

Crude futures slid 0.4 percent to settle at $96.04 a barrel as the dollar climbed. Prices fell as much as 3.1 percent during the session.

BlackPearl surged 9.2 percent, the most since July, to $2.37 and Encana Corp. rose 2.8 percent to C$19.32.

Enerplus rallied 5.8 percent to C$15.19 as its first- quarter loss narrowed and the oil and gas exploration company affirmed its 2013 production forecast.

Health-care, technology and consumer-discretionary shares rallied at least 1 percent as eight of 10 industries in the index advanced. BlackBerry, the smartphone maker, added 1.4 percent to C$15.71.

Magna International gained 3.6 percent to a record C$65.46.

The company raised its 2013 sales forecast and reported first- quarter earnings and sales that topped analysts’ estimates.

Raw-materials producers slid 0.3 percent as a group. Gold fell 2.2 percent, the biggest drop in more than three weeks, to settle at $1,436.60. Silver prices also retreated.

Semafo Inc. lost 2.4 percent to C$2.03, paring an earlier decline of as much as 7.7 percent. Iamgold Corp. dropped 2.6 percent to C$5.74.

TMX Group declined 3.1 percent to C$51.30. Trading on TMX’s equity markets, including the Toronto Stock Exchange, fell 22 percent to about 38.5 billion shares in the quarter from a year earlier. The company’s first-quarter profit matched analyst estimates.

Chorus Aviation Inc. plunged the most in the benchmark index, losing 21 percent to C$2.89. The regional airline cut its quarterly dividend in half, to 7.5 Canadian cents a share from 15 cents.

US

By Lu Wang

May 11 (Bloomberg) — U.S. stocks climbed for a third week, pushing benchmark indexes to record levels, as companies from Walt Disney Co. to DirecTV beat earnings estimates and central banks worldwide stepped up monetary stimulus to boost growth.

Disney and DirecTV rallied at least 3.7 percent, pacing gains among consumer stocks. Whole Foods Market Inc. and Electronic Arts Inc. jumped more than 10 percent on better-than- expected profit forecasts. Bank of America Corp. advanced 6.4 percent after settling a five-year legal battle with MBIA Inc. over soured mortgage debt. McDonald’s Corp. slipped 2.6 percent as sales dropped in April amid slowing demand in Asia.

The Standard & Poor’s 500 Index rose 1.2 percent to 1,633.70 over the five days, extending its 2013 gain to 15 percent. The Dow Jones Industrial Average advanced 144.53 points, or 1 percent, to 15,118.49. Both indexes reached record highs on the final day of the week, after the Dow closed above 15,000 for the first time on May 7.

“Yes, we are at record highs, but if you take into consideration where earnings are, we are pretty fairly valued,” Greg Peterson, director of investment research at Ballentine Partners LLC in Waltham, Massachusetts, which manages about $4 billion in assets, said by phone. “Interest rates are incredibly low around the world. If anything that would give us a pause, how will that unwind?”

Global equities advanced for the week as central banks from Australia and South Korea lowered their benchmark interest rates, joining a wave of monetary easing spanning from the U.S. to Europe. The S&P 500 posted its only loss of the week on May 9 after Federal Reserve Bank of Philadelphia President Charles Plosser said he favors scaling back the central bank’s pace of stimulus.

The Fed is currently buying $85 billion of debt each month and central bank officials have been debating whether to expand or curb the program. Fed Chairman Ben S. Bernanke has pledged to hold the 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.

Three rounds of monetary stimulus from the Fed and better- than-expected corporate earnings have propelled the bull market in U.S. equities to a fifth year and driven the S&P 500 up 141 percent from a 12-year low in 2009.

Equities also gained during the week as earnings topped forecasts. About 72 percent of the 452 S&P 500 companies that have released results since the start of the earnings season have exceeded profit projections, data compiled by Bloomberg show. Analysts forecast earnings will grow 6.8 percent this year to a record $108.80 a share.

The S&P 500 is valued at 16 times reported profits, approaching the most expensive levels in almost three years, according to data compiled by Bloomberg. The multiple was 17.5 at the previous market peak in October 2007.

“We still see reasonable equity valuations,” Brian Peery, who helps oversee about $3.5 billion for Novato, California- based Hennessy Funds, said by phone. “There is probably a pretty good amount being left in the market. People are waiting for a potential dip to increase their equity exposure.”

Eight out of 10 S&P 500 groups gained for the week as industrial, consumer-discretionary and financial shares climbed the most, rising at least 1.9 percent. The Chicago Board Options Exchange Volatility Index, or VIX, fell 2 percent to 12.59, extending the equity volatility gauge’s loss for the year to 30 percent.

Disney climbed 3.7 percent to an all-time high of $67.20.

The world’s largest entertainment company said fiscal second- quarter profit rose 32 percent as guests splurged at theme parks in California and Florida.

DirecTV surged 10 percent to a record $63.80. The largest U.S. satellite-television provider reported profit that topped estimates, bolstered by Latin American subscriber growth.

Whole Foods jumped 10 percent to $100.89. The largest natural-goods grocer in the U.S. boosted its forecast for earnings this year after sales at established locations increased and second-quarter profit climbed 20 percent. Whole Foods, which plans to triple its U.S. store count to about 1,000, has lured Americans who are becoming more concerned with eating organic and healthy foods.

Electronic Arts rallied 25 percent, the most in the S&P 500, to $22.48. The No. 2 U.S. video-game maker forecast annual profit that exceeded analysts’ estimates as the company is cutting jobs and reducing expenses to cushion against a potentially rocky transition to new consoles. Electronic Arts also reached a multiyear agreement with Disney to create games based on “Star Wars” characters after Disney said it would stop making them itself.

Bank of America gained 6.4 percent to $13.02 while MBIA soared 57 percent to $15.42. The companies agreed to a deal in which the lender will pay MBIA the equivalent of $1.7 billion and give Bank of America a 5 percent stake in the bond insurer.

S&P raised MBIA’s debt rating to investment grade for the first time in four years following the agreement.

McDonald’s declined 2.6 percent to $100.20 for the worst retreat in the Dow. The world’s biggest restaurant chain said sales at stores open at least 13 months fell 0.6 percent in April as growth slowed in its Asia-Pacific region. Analysts estimated a 0.5 percent drop, the average of estimates from Consensus Metrix.

Restaurant chains have been facing increasing consumer scrutiny in China following an outbreak of bird flu and also after a former poultry supplier to Yum! Brands Inc. was investigated for selling chicken with excessive levels of antibiotics.

Utility shares fell the most among 10 groups in the S&P 500, erasing 2.7 percent. AES Corp. dropped 3.7 percent to $13.31 after reporting first-quarter earnings that missed analysts’ estimates. AES sees earnings little changed or declining through 2015 in Europe, the Middle East and Africa, where it has about 8,200 megawatts of generation, according to an investor presentation.

Have a wonderful weekend everyone.

Be magnificent!

What is the soul?  The soul is consciousness.

It shines as the light within the heart.

Brihadaranyaka Upanishad

As ever,

Carolann

An invincible determination can

accomplish almost anything, and in

this lies the great distinction between

great men and little men.

-Thomas Fuller, 1823-1898

O cives, cives, quaerenda pecunia primum est; virtus post nummos.

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