May 22, 2013 Newsletter

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be sending the newsletter on her behalf.

On May 31^st, 2013 David Foster will be honored on the Hollywood Walk of Fame.  His star will be the 2,499^th on the Hollywood Walk of Fame.  A famous record producer, composer, singer, songwriter, and arranger, David Foster also is creator of the David Foster Foundation which is a non-profit charitable organization dedicated to providing financial support for non-medical expenses to Canadian families with children in need of life-saving organ transplants.  This well deserved individual will be revealing his star in front of the Capitol Record Building.  In 1971, Capitol was the record label that launched his career when it signed his band Skylark, which had a 1972 Top-10 hit in Wildflower.  The ceremony will be live-streamed on walkoffame.com at 11:30 am on May 31^st, 2013.  Tune in!

On this day in…

1849 – Abraham Lincoln received a patent for the floating dry dock.

1859 – The creator of “Sherlock Holmes,” Sir Arthur Conan Doyle was born.

1882 – The U.S. formally recognized Korea.

1891 – The first public motion picture was given in Thomas Edison’s lab.

1892 – Dr. Sheffield, a British dentist, invented the toothpaste tube.

1900 – The Associated Press was incorporated as a non-profit news cooperative in New York.

1906 – The Wright brothers received a patent their flying machine.

1967 – “Mister Rogers’ Neighborhood” premiered on PBS. 

“Since love grows within you, so beauty grows. For love is the beauty of the soul.” – Saint Augustine

Photos of the day – May 22^nd, 2013

Pots of flowers hang from a wall on the Interflora display at the Chelsea Flower Show in London. Luke MacGregor/Reuters

Divers are silhouetted as they enter a giant aquarium at the Marine Life Park at Resorts World, one of the city-state’s newest tourist attractions opened late 2012, in Singapore. Wong Maye-E/AP

The pack pedals through mountain landscape during the 16th stage of the Giro d’Italia, Tour of Italy cycling race, from Valloire, France, to Ivrea, Italy. Benat Intxausti of Spain won the 16th stage of the Giro d’Italia, and favorite Vincenzo Nibali retained the overall lead as the race entered the final week.Fabio Ferrari/AP

Market Closes for May 22^nd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

May 22 (Bloomberg) — Canadian stocks rose for a fourth day, with a rally in metals miners offsetting losses among banks and oil producers, as investors weighed the pacing of U.S. central-bank stimulus measures.

First Quantum Minerals Ltd. and Teck Resources Ltd. gained at least 1.7 percent as the price of copper advanced to a five- week high amid supply concerns. Copper Mountain Mining Corp. jumped 9.3 percent after repairing a transformer at its mine sooner than it estimated. Barrick Gold Corp. and Goldcorp Inc. increased more than 1.7 percent even as the metal’s price declined. Royal Bank of Canada, the nation’s largest lender, dropped 0.6 percent and Suncor Energy Inc. lost 1 percent.

The Standard & Poor’s/TSX Composite Index rose 10.07 points, or 0.1 percent, to 12,752.50 at 4 p.m. in Toronto, after gaining as much as 1.2 percent earlier in the session. The benchmark equity gauge has added 2.2 percent over four trading days. Trading volume was 17 percent higher than the 30-day average.

“We started off fairly positively this morning with the Bernanke comments,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd. in Vancouver.

Richardson GMP manages about C$15 billion ($14.4 billion).

“With the FOMC minutes, we saw them talk of more stabilization, of a more positive outlook to the economy, and markets are taking that as less stimulus. In the medium to long term it’s positive, but any comments on less stimulus are a short-term negative.”

A number of Federal Reserve officials said they were willing to taper bond buying as early as the next policy-maker meeting in June if economic reports show “evidence of sufficiently strong and sustained growth,” according to minutes from the April 30-May 1 gathering released today.

Fed Chairman Ben S. Bernanke said earlier in testimony prepared for a Congressional hearing today that a premature withdrawal of stimulus would put the U.S. economic recovery at risk. The banker later told lawmakers that as the outlook for the labor market “improves in a real and sustainable way, the committee will reduce the flow of purchases.”

Gold rallied more than 2.5 percent following the prepared statements, but turned lower as Bernanke answered questions from lawmakers about the possible timing of reducing the rate of bond purchases. The metal settled down 0.7 percent to $1,367.40 in New York and maintained losses after the Fed minutes were released at 2 p.m.

“The news today is very clearly that, you taper off bond buying there’s less liquidity and it’s not good for gold,” said Jeffrey Burchell, a fund manager with Aston Hill Financial Inc. in Toronto. His firm manages about C$7 billion. The rise in miner stocks is “a bounce off the bottom for gold producers, they’ve been so beaten up,” he said.

The S&P/TSX Materials Index rallied 1.7 percent, extending yesterday’s 1.6 percent advance. The gauge has fallen 23 percent this year as the price of gold retreated into a bear market.

Barrick Gold added 1.7 percent to C$20.21 and Goldcorp rose 3.1 percent to C$28.19.

Kirkland Lake Gold Inc. jumped 13 percent to C$4.22 for the biggest gain in the benchmark equity index. The company said yesterday it met its 2012 target for replacing proven and probable reserves mined by the company at its complex in Kirkland Lake, Ontario. Barrick is down 42 percent this year and Goldcorp has fallen 23 percent.

First Quantum Minerals gained 1.7 percent to C$19.22 and Teck Resources rallied 3.4 percent to C$29.46. Copper futures rose 0.7 percent at 4:40 p.m. in New York. The industrial metal earlier touched a five-week high of $3.418 a pound on mounting concern that a deadly accident at the world’s second-biggest mine may crimp supplies as a recovering housing market boosts demand in the U.S.

Sales of existing U.S. homes in April were the highest since November 2009, a report from the National Association of Realtors showed today.

Copper Mountain Mining soared 9.3 percent to C$1.77 after the company said it replaced a damaged transformer at its mine in southern British Columbia and had resumed operations earlier than previously estimated. The stock fell 9.5 percent May 17; the company disclosed the transformer problem May 16 after the end of regular trading.

Royal Bank dropped 0.6 percent to C$63.46 and the Bank of Nova Scotia declined 0.4 percent to C$59.49 as financial stocks retreated 0.3 percent, the first decline in four days.

Suncor lost 1 percent to C$32.50 and Pembina Pipeline Corp. fell 2.7 percent to C$34.66. Crude for July delivery fell the most in three weeks as a government report showed U.S. gasoline supplies unexpectedly gained and crude stockpiles declined less than expected. The dollar strengthened on Bernanke’s comments, accelerating oil’s drop.

Catamaran Corp., a drug-benefits manager, slumped 2.5 percent to C$50.42, its lowest close since January. UBS analyst Steven Valiquette said the company is at risk of losing its contract with Cigna Corp.’s HealthSpring PBM when the deal expires at the end of this year.

US

By Inyoung Hwang and Lu Wang

May 22 (Bloomberg) — U.S. stocks fell, with benchmark indexes retreating from record highs, as concern grew that the Federal Reserve will scale back its stimulus efforts if the labor market continues to improve.

All 10 industries in the Standard & Poor’s 500 Index declined. Utility, commodity and phone stocks sank the most, losing at least 1.2 percent. Target Corp. slid 4 percent after profit fell 29 percent as higher taxes and cooler temperatures hampered sales. Saks Inc. soared 15 percent as the retailer was said to have hired Goldman Sachs Group Inc. to explore options including a sale. Hewlett-Packard Co. jumped 13 percent after the market closed as it forecast earnings that topped estimates.

The S&P 500 fell 0.8 percent to 1,655.35 at 4 p.m. in New York, after rallying as much as 1.1 percent earlier. The Dow Jones Industrial Average lost 80.41 points, or 0.5 percent, to 15,307.17. About 8.3 billion shares changed hands today, 32 percent above the three-month average.

“The key takeaway is whether the Fed does more or does less all depends on the data,” John Canally, investment strategist at Boston-based LPL Financial Corp., which has $373 billion in advisory and brokerage assets, said in a phone interview. “Stocks have been up so much year to date. Largely, people are looking for an excuse to sell.”

U.S. stocks rallied early in the day after Fed Chairman Ben S. Bernanke said in prepared remarks to Congress that a premature withdrawal of quantitative easing would put the economic recovery at risk. Equities pared gains after he said the central bank could “step down” the pace of asset purchases in the next few meetings if the labor market continues to improve and “we have confidence that that is going to be sustained.”

The chairman has said he would continue stimulus efforts until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent.

Many Fed officials said more progress in the labor market is needed before deciding to slow the pace of asset purchases, according to minutes of their last meeting. A number said they were willing to taper bond buying as early as the next meeting on June 17-18 if economic reports show “evidence of sufficiently strong and sustained growth,” according to the record of the April 30-May 1 gathering released today in Washington.

“Most observed that the outlook for the labor market had shown progress” since the-bond buying program began in September, according to the minutes. “But many of these participants indicated that continued progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases would become appropriate.”

Fed Bank of New York President William C. Dudley said in an interview with Michael McKee on Bloomberg Television that policy makers will know in three to four months whether the economy is healthy enough to allow the central bank to begin reducing its stimulus program.

“If they were to taper, it might be a good sign that the economy is capable of standing on its own feet,” Terry L.

Morris, a senior equity manager who helps oversee about $2.6 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said by phone. “But we’re programmed to believe that the market is going to go down when this happens.

It’s probably what’s going to happen initially, but the market will likely start to work its way higher.”

The S&P 500 has surged 145 percent from its 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed. The index trades at 16.2 times reported operating profit, 16 percent below the average since 1998, data compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, or VIX, jumped 3.4 percent to 13.82. The equity volatility gauge, which moves in the opposite direction to the S&P 500 about 80 percent of the time, has slipped 23 percent this year.

A slide in Treasury prices after Bernanke’s remarks sent the 10-year note’s yield above the S&P 500’s 2.04 percent dividend yield for the first time in more than a year, according to data compiled by Bloomberg.

“The 2 percent is the magic thing on the 10-year yield,” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a telephone interview.

His firm oversees $1.6 billion. “It’s the threshold so going toward that, people are getting a little worried,” he said.

Utility and phone stocks, which offer the highest dividend yield among 10 industry groups, dropped 1.6 percent and 1.2 percent, respectively. Duke Energy Corp., the largest U.S. utility owner, slipped 1.7 percent to $70.19. AT&T Inc., the country’s biggest phone company, lost 0.9 percent to $36.62.

Target, the second-largest U.S. discount retailer, dropped 4 percent to $68.40. U.S. retailers have been struggling as an increase in Social Security taxes takes a larger bite out of shoppers’ paychecks while colder-than-normal temperatures hurt sales of spring merchandise.

Pfizer Inc. rose 1.8 percent to $29.30 for the largest advance in the Dow. The world’s largest drugmaker will offer its 80.2 percent stake in Zoetis Inc., the animal health company it spun off almost four months ago, in a stock exchange. Zoetis gained 1.5 percent to $33.55.

Bristol-Myers Squibb Co. jumped 5.3 percent to $46.40 after Citigroup Inc. boosted the drugmaker to buy from neutral.

Saks jumped 13 percent to $15.50. The company has hired Goldman Sachs to explore its strategic options, according to two people with knowledge of the matter. KKR & Co. is weighing whether to make an investment in Saks and may push the luxury retaile to pursue a combination with rival Neiman Marcus Group, said people with knowledge of the matter.

Hewlett-Packard Co. surged 13 percent to $23.94 at 4:48 p.m. After the close of regular trading, the largest personal- computer maker forecast fiscal third-quarter profit that topped analysts’ estimates and raised its quarterly dividend as it cut costs to counter slumping demand for desktops and laptops.

Toll Brothers Inc. climbed 2.9 percent to $37.07 in regular trading after beating analysts’ earnings estimates. Demand for new homes has begun to recover as buyers take advantage of low mortgage rates and the supply of existing homes remains tight.

Sales of previously owned U.S. homes rose in April to the highest level in more than three years as housing continued to gain momentum, National Association of Realtors reported today.

Lowe’s Cos. added 1.2 percent to $42.97 after Chief Executive Officer Robert Niblock said the strengthening housing market is helping sales recover from a cold spring that sapped demand for outdoor merchandise. The second-largest U.S. home- improvement retailer today reported first-quarter profit that trailed analysts’ estimates while maintaining its forecast for earnings this year.

Home Depot Inc. rose 1.3 percent to $79.69. The retailer yesterday posted profit and sales that topped estimates.

NetApp Inc. gained 1.8 percent to $37.28 after the data- storage company said it will cut jobs and return cash through stock buybacks and dividends.

Zale Corp. surged 22 percent to $6.60. The operator of the Zales and Piercing Pagoda jewelry chains reported third-quarter revenue of $442.7 million, exceeding the $440 million in sales analysts estimated on average.

Have a great evening everyone!

Be magnificent!

“This is my simple religion. There is no need for temples; no need for complicated philosophy. Our own brain, our own heart is our temple; the philosophy is kindness.” – Dalai Lama

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5838