May 15, 2013 Newsletter

Dear Friends,

Tangents:

An interesting piece of good news in today’s paper; maybe it will catch on everywhere:

“Barclay’s Wealth customers will no longer need to answer security questions and remember PIN codes to use telephone banking,” The Daily Telegraph says.  “Advanced voice recognition will detect whether customers are who they say they are after just 30 seconds of normal conversation, the bank claims.  The system, which is powered by the voice specialists Nuance, who are also widely known to be behind Apple’s Siri technology, could end the frustration of customers who struggle to remember passwords.”  – Michael Kesterton, Globe & Mail, 05/15/13.

On this day in…

1843 – Author Henry James was born.

1856 – Author L. Frank Baum of The Wizard of Oz fame, was born.

1963 – Tony Bennett won Record of the Year at the 5^th annual Grammy Awards for I Left My Heart In San Francisco.

2001 – Steve Jobs gave a media tour of the first Apple retail store located in a suburb of Washington, D.C.

Live all you can – it’s a mistake not to.  It doesn’t so much matter what you do in particular, so long as you have your life.

If you haven’t had that, what have you had? –Henry James.

We’re off to see the Wizard,

The Wonderful Wizard of Oz.

You’ll find he is a whiz of a Wiz!

If ever a Wiz! there was… -L. Frank Baum.

Photos of the day – May 15^th, 2013

Kentucky Derby winner Orb attempts to snack on decorative flowers, against the wishes of training rider Jennifer Patterson, after a training session in preparation for the upcoming 138th running of the Preakness Stakes at Pimlico Race Course in Baltimore. The Preakness Stakesi is the second leg of US thoroughbred racing’s Triple Crown. Jonathan Ernst/Reuters

In this picture taken with a long time exposure a man walks besides a piano, part of the installation ‘Klinger – Landscapes of Melancholy’ of of German artist rosalie during the press preview of the exhibition ‘World Creators: Richard Wagner, Max Klinger, Karl May’ on the occasion of the 200th birthday of Richard Wagner in the Museum of Fine Arts in Leipzig, central Germany. Jens Meyer/AP

Market Closes for May 15th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

May 15 (Bloomberg) — Canadian stocks fell as banks and raw-material shares slumped after the price of gold dropped below $1,400 on disappointing U.S. manufacturing data.

Detour Gold Corp. and Dundee Precious Metals Inc. slumped at least 8.5 percent as gold extended the longest losing streak in almost three months. First Majestic Silver Corp. and Endeavour Silver Corp. dropped more than 7.4 percent as the price of silver fell. Aurizon Mines Ltd. retreated 2.3 percent after reporting an unexpected loss and decreasing production.

The Standard & Poor’s/TSX Composite Index fell 103.40 points, or 0.8 percent, to 12,473.65 at 4 p.m. in Toronto. The benchmark equity gauge trimmed its gain for the year to 0.3 percent. Trading volume was 13 percent lower than the 30-day average.

“It’s another day where the bears are having their way,” John Kinsey, a fund manager with Caldwell Securities Ltd., said from Toronto. He helps manage about C$1 billion at the firm.

“There are a lot of numbers this week and it’s a bit of a roller coaster ride. Earlier in the year the economy seemed to have been gaining traction but lately numbers have been soft. That’s discouraging.”

U.S. industrial production declined in April by the most in eight months, reflecting broad-based cutbacks in U.S. manufacturing that show factories will provide little support for the economy. New York area manufacturing unexpectedly contracted in May, according to a separate report.

The S&P GSCI Index, which tracks prices for a basket of commodities including metals, crude and grain, fell 0.1 percent for a fourth day of losses, the longest losing streak in a month. Iron ore slumped, pushing the price down 20 percent since Feb. 20, meeting the common definition of a bear market.

Raw-materials producers fell 2.7 percent as a group as all 10 industries retreated. The S&P/TSX Gold Index retreated 5 percent as all 30 members in the group declined.

Detour Gold Corp. slumped 8.5 percent to C$9.85 and Dundee Precious Metals Inc. tumbled 15 percent to C$4.36 as gold for June delivery plunged 2 percent to settle at $1,396.20 for a three-week low. The price of gold has retreated for five days, the longest since Feb. 20.

Aurizon Mines dropped 2.3 percent to C$3.89 after reporting a first-quarter loss of 2 Canadian cents a share. Analysts had expected a profit of 1 cent a share. First-quarter production at the company’s Casa Berardi mine in Quebec fell to 24,444 ounces from 33,488 ounces a year ago due to major shutdowns to incorporate a deeper mine shaft, the company said in a statement.

First Majestic Silver plunged 9 percent to C$10.42 and Endeavour Silver retreated 7.4 percent to C$4.13. Silver for July delivery tumbled 3.1 percent to settle at $22.658 an ounce in New York, its biggest decline since May 1.

Manulife Financial Corp. dropped 1.5 percent to C$15.75 and Royal Bank of Canada lost 1 percent to C$60.94 to pace declines among financial stocks. The S&P/TSX Financials Index retreated 0.7 percent, the lowest in two weeks.

BlackBerry, formerly known as Research In Motion Ltd., lost 1.7 percent to C$15.26. Pierre Ferragu, equity analyst with Sanford Bernstein, lowered his rating for the stock to market perform, the equivalent of a hold, from outperform, the equivalent of a buy.

US

By Nikolaj Gammeltoft

May 15 (Bloomberg) — U.S. stocks rose, pushing benchmark indexes to fresh records, as data showing weakness in manufacturing fueled bets the Federal Reserve will be in no hurry to scale back stimulus.

JPMorgan & Chase Co. jumped 1.7 percent to its highest level since June 2007 as financial shares rallied. Procter & Gamble Co. added 1.5 percent as the index tracking consumer- staples stocks hit a record. Macy’s Inc. increased 2.5 percent after reporting profit that beat estimates. Netflix Inc.rose 4 percent, extending gains for a sixth day. Deere & Co. lost 4.1 percent as the world’s biggest agricultural-equipment maker cut its equipment-sales forecast.

The Standard & Poor’s 500 Index rose 0.5 percent to 1,658.78 at 4 p.m. in New York. The benchmark equity gauge has set a record in nine of the past 10 sessions. The Dow Jones Industrial Average added 60.44 points, or 0.4 percent, to a record 15,275.69 today. More than 6.5 billion shares traded hands on U.S. exchanges today, or 3.5 percent above the three- month average.

“The global economic outlook gives some support to the idea that more easing is on its way, especially with soft inflation,” Oliver Pursche, co-manager of the GMG Defensive Beta Fund and president of Suffern, New York-based Gary Goldberg Financial Services, said via phone. The firm manages about $650 million. “It would be surprising if there was a meaningful and prolonged pullback at this point.”

The U.S. bull market has entered its fifth year. The S&P 500 has surged 145 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve.

The central bank’s policy makers debated at their April 30- May 1 meeting whether to expand or curb the pace of stimulus.

They said they’re  prepared to increase the $85 billion monthly rate of bond buying in response to changes in the labor market or inflation. Fed Chairman Ben Bernanke has said he would continue unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent.

Data from the Labor Department showed wholesale prices dropped in April by the most in three years, reflecting a decrease in fuel costs that is helping underpin profits.

U.S. industrial production declined in April by the most in eight months, reflecting broad-based cutbacks in factory output and indicating American manufacturers will provide little support for an economy beset by weaker global markets and federal budget cuts. Manufacturing in the New York region unexpectedly shrank in May as factories received fewer orders and sales stagnated, a separate report showed.

The euro-area economy shrank 0.2 percent in the first quarter after a 0.6 percent decline in the previous three months, the European Union’s statistics office in Luxembourg said today. Bank of England Governor Mervyn King declared that a U.K. recovery is “in sight.”

The Chicago Board Options Exchange Volatility Index, or VIX, rose less than 0.1 percent to 12.81. The benchmark gauge for options, which moves in the opposite direction to the S&P 500 about 80 percent of the time, climbed with the equity gauge for the second straight day.

“The VIX being up in conjunction with new all-time highs in many indices is a function of risk protection given the strong move we’ve seen so far in equities,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an interview.

About 91 percent of S&P 500 stocks traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg, approaching the two-year high of 93 percent reached January.

Nine of 10 groups in the benchmark equity index advanced.

Shares in companies that make food, beverages and household products surged 1 percent, pushing the S&P 500 Consumer Staples Index to an all-time high. Procter & Gamble added 1.5 percent to $80.68. Indexes tracking consumer-discretionary and health-care stocks also rose to record closes. Wal-Mart Stores Inc. climbed 1.4 percent to $79.86, a new high.

Bank shares jumped 1 percent as a group, sending the S&P 500 Financials Index to its highest close since Oct.1, 2008.

JPMorgan Chase climbed 1.7 percent to $50.89. American Express Co. added the most in the Dow, rising 1.8 percent to a record $72.78.

Macy’s jumped 2.5 percent to a record $48.57. The second- largest U.S. department-store chain reported fiscal first- quarter profit that beat analysts’ estimates and increased its share-buyback program by $1.5 billion.

Netflix extended gains for a sixth day, increasing 4 percent to $2413.40, the highest since August 2011. The world’s largest subscription video service’s streaming of the revived show “Arrested Development” is likely to have a larger impact on second-quarter gross additions than new series like “House of Cards” did in the previous three months, BTIG analyst Richard Greenfield said in note.

Google Inc. rose 3.3 percent to a record $915.89, extending its rally to 20 percent since reporting earnings after the market closed on April 18. The company introduced a subscription music-streaming service today, one of several product updates to be unveiled at a developer meeting this week.

Apple Inc. retreated 3.4 percent to $428.85. Appaloosa Management LP, the hedge fund run by billionaire David Tepper, cut its stake in the iPhone maker by 41 percent last quarter, according to a regulatory filing today. Birinyi Associates Inc. also trimmed its holdings in the company, a separate filing said.

Energy shares fell 0.4 percent as oil was little changed after declining as much as 2.2 percent. Chevron Corp. dropped 1.6 percent to $123.01.

Deere declined 4.1 percent to $89.64 as the company cut its full-year equipment-sales forecast, citing global financial “pressures” and cold, wet weather that has delayed crop planting in the U.S.

ExOne Co. sank 15 percent to $41.15. The maker of 3-D printers reported a first-quarter loss per share of 20 cents, wider than the estimate for a loss of 8 cents a share. The shares have still more than doubled since the company sold stock at $18 in an initial public offering in February.

Computer Sciences Corp. dropped 9.6 percent to $44.71 for the biggest loss in the S&P 500. The technology consultant for governments and companies reported fourth-quarter revenue that fell short of analyst estimates.

Have a wonderful evening everyone.

Be magnificent!

Man progresses, from epoch to epoch, toward the full realization of his soul,

of this soul that is greater than all the riches he can accumulate,

than all the actions he can accomplish and all the theories he can set forth,

this soul that continues onward, never ending in death or dissolution.

Rabindranath Tagore, 1861-1901

As ever,

Failure is not fatal, but failure to change

might be.

-John Wooden, 1910-2010

Hic victor caestus artemque repono. – Virgil

Carolann

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