The Newsletter for July 10, 2013

Dear Friends,

Tangents:

Tired of people talking loudly on cellphones or jangly, obnoxious ring tones?  So were the staff at the website The Art of Manliness, so they asked artist Ted Slampyak to create 1940-s era propaganda posters urging phone users to be more polite.  Check them out at http://bit.ly/politephones.  I was pleased to find that when we recently took an Amtrak train from Penn Station to Philadelphia, passengers had the choice of a “quiet” train (no cell phones or loud talking) or a regular train.

Music: The Waterboys have created an entire album from the poems of W.B. Yeats.  An Appointment with Mr. Yeats finds the Celtic rock band returning to the 1980s sound they dubbed “the big music.”  Critics say it is The Waterboys’ best record since “Fisherman’s Blues.”

Poem:

BEGINNING

In the beginning,

in the list of begats,

one begat

got forgot:

work begets work

(one poem

bears

the next).

In other words,

once there was air,

a bird

could be got.

Not taken.

Not kept.

But conjured up.

-Lia Purpura

Film: Gary and I went to see the movie Before Midnight last night.  Great film.  Great acting. Highly recommended.

Photos of the Day –July 10th, 2013

Omega Pharma-Quick Step team rider Sylvain Chavanel of France cycles past Mont Saint-Michel during the 32 km individual time trial eleventh stage of the centenary Tour de France. Eric Gaillard/Reuters

A postman delivers letters to a house in Henton, southern England. The British government plans to privatize the state postal operator. Eddie Keogh/Reuters

Market Closes for July 10^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

July 10 (Bloomberg) — Canadian stocks rose a third day, erasing earlier losses as oil rallied and investors analyzed U.S. Federal Reserve minutes for signs on when the central bank might slow the pace of stimulus.

BlackPearl Resources Inc. surged 15 percent as crude jumped to a 15-month high. Alimentation Couche-Tard Inc. climbed 6.3 percent to lead gains among producers of consumer staples, rebounding from its biggest decline in year after reporting earnings yesterday. BlackBerry Ltd. dropped to an eight-month low after announcing late yesterday its vice president of U.S. sales had left.

The Standard & Poor’s/TSX Composite Index rose 9.84 points, or 0.1 percent, to 12,306.93 at 4 p.m. in Toronto, erasing an earlier decline of as much as 0.4 percent. The index has lost 1 percent this year.

“The market got carried away and misinterpreted what Bernanke said at his press conference, and the losses were a little overdone,” said David Baskin, president of Baskin Financial Services in Toronto. The firm manages C$500 million ($476 million). “Basically people today are saying ’No big deal’ to this.”

Canadian equities plunged 4.3 percent between June 19 and June 24, tracking a similar drop among U.S. stocks, as Fed Chairman Ben S. Bernanke said after the June 18-19 meeting that the central bank may reduce the pace of monthly bond purchases as soon as in September.

Fed stimulus has helped fuel gains in global stocks and the prospect for less support roiled markets in recent weeks as investors guessed the timing of any reduction. The minutes, released at 2 p.m. today in Washington, showed that while several members judged that a reduction in asset purchases “would likely soon be warranted,” many officials want to see more signs employment is picking up before they’ll taper stimulus.

The meeting occurred before data last week showed U.S. hiring last month exceeded expectations while the unemployment rate remained unchanged at 7.6 percent. With today’s gain, the S&P/TSX has recovered much of its loss after the meeting, closing 0.5 percent below its June 18 level.

Separate data showed China’s imports and exports declined in June, raising concerns that Canada’s second-largest trading partner faces slowing economic growth. Overseas shipments slid 3.1 percent from a year earlier, compared with the median estimate of a 3.7 percent gain.

“It’s the latest in a long line of softening economic data from China,” said John Wilson, co-chief investment officer with Sprott Asset Management LP in Toronto. He manages about C$250 million across three funds. “That exports were negative was a bit of a surprise. It’s consistent with the idea that growth in China is slowing.”

Shares in raw-materials producers retreated 0.2 percent, even as commodities extended a rally to a seventh day. Consumer staples stocks gained the most in the benchmark gauge, rising 1.4 percent as a group as four of 10 industries in the S&P/TSX advanced. Trading volume was 18 percent lower than the 30-day average.

Couche-Tard, the largest public convenience-store operator in North America, rallied 6.3 percent to C$62. The stock recovered losses from yesterday when the company reported fourth-quarter earnings that fell short of analysts’ estimates.

Energy shares jumped 0.4 percent as crude in New York surged to its highest since March 2012, with gains accelerating after the Fed minutes were released. BlackPearl Resources soared 15 percent to C$1.75, the biggest advance since August 2011.

Gold producers gained, as the price of the precious metal climbed to a one-week high. Alacer Gold Corp. rallied 3.4 percent to C$2.43 and Torex Gold Resources Inc. jumped 8.2 percent to C$1.32.

Fortis Inc., which invests in electricity distribution, slipped 1.1 percent to C$32.05, dragging utilities stocks to the worst performance in the benchmark gauge. The S&P/TSX Utilities Index retreated 0.9 percent, with nine of 11 members lower.

Technology shares dropped 0.1 percent for the eighth decline in the past nine sessions, led lower by BlackBerry. The smartphone maker, formerly Research In Motion Ltd., sank 3.9 percent to C$9.80, the lowest since November. The Waterloo, Ontario-based company said in an e-mail yesterday that Richard Piasentin, vice-president of U.S. sales, has left the company.

The stock has plunged 35 percent since June 27, the day before BlackBerry posted worse-than-expected earnings in its most recent quarter. The company said at its shareholder meeting yesterday that it’s looking for partners to help get its software on more devices as sales of its phones struggle.

US

By Inyoung Hwang and Alex Barinka

July 10 (Bloomberg) — U.S. stocks were little changed as investors analyzed minutes from the Federal Reserve’s last meeting for signs on when the central bank might slow the pace of stimulus efforts.

Financial companies fell the most out of 10 S&P 500 groups as Bank of America Corp. and Wells Fargo & Co. slumped more than 1.2 percent. Nabors Industries Ltd. fell 6.3 percent after forecasting operating income below analysts’ estimates. Family Dollar Stores Inc. added 7.1 percent as the retailer’s earnings topped analyst estimates. Hewlett-Packard Co. rose 1.8 percent after Citigroup Inc. advised investors to buy the stock.

The Standard & Poor’s 500 Index added less than 0.1 percent to 1,652.62 at 4 p.m. in New York, after rising and falling as much as 0.3 percent during the day. The Dow Jones Industrial Average dropped 8.68 points, or 0.1 percent, to 15,291.66. About 5.7 billion shares traded hands on U.S. exchanges, or 13 percent below the three-month average.

“The minutes largely reiterated what the chairman said in June,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said by e- mail. His firm oversees $290 billion. “Tapering, whether it will be this year or next, is inevitable. The market was initially encouraged that the Fed is waiting on additional data, but possibly taken aback by the fact that about half the participants indicated that asset purchases should end later this year.”

Minutes from the central bank’s June 18-19 meeting, released today in Washington, showed that while several members judged that a reduction in asset purchases “would likely soon be warranted,” many officials want to see more signs employment is picking up before they’ll begin slowing the pace of $85 billion in monthly bond purchases.

Fed officials met before last week’s Labor Department jobs report for the month of June exceeded expectations, with the economy adding 195,000 jobs and the unemployment rate unchanged at 7.6 percent.

The S&P 500 rallied 2.4 percent over the past four days as the June employment data eased concern over a scaling back of Fed stimulus. The index has recovered from a 4.8 percent drop between June 19 and 24, triggered when Fed Chairman Ben S.

Bernanke said the central bank may reduce its bond-buying this year and end the program in 2014 as economic risks subside. The benchmark gauge is up 16 percent for the year, and within 1 percent of a record high set on May 21.

Data today showed inventories at U.S. wholesalers unexpectedly declined in May by the most since September 2011 as sales surged, pointing to a pickup in orders and production.

In China, a report from the General Administration of Customs in Beijing showed that exports fell 3.1 percent in June from a year earlier. The median estimate in a Bloomberg survey had called for a 3.7 percent gain. Imports dropped 0.7 percent last month, compared with the median projection of a 6 percent increase. China’s trade surplus with the U.S. slipped to $17.49 billion in June from $19.35 billion in May.

Investors have also been watching corporate earnings. Alcoa Inc. unofficially started the U.S. earnings season on July 8 with results that beat analysts’ estimates. JPMorgan Chase & Co. and Wells Fargo are among companies releasing results later this week.

The Chicago Board Options Exchange Volatility Index, or VIX, slid 1 percent to 14.21. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, reached a six-month high on June 20 and has fallen 31 percent since.

Financial companies lost 0.6 percent. U.S. regulators proposed a plan yesterday that said the eight largest firms would need to retain capital equal to at least 5 percent of assets, while their banking units would have to hold a minimum of 6 percent. Bank of America dropped 1.2 percent to $13.37.

Wells Fargo sank 1.5 percent to $42.07. Nabors Industries fell 6.3 percent to $14.99 after the company said it expects second-quarter operating income of $88 million to $91 million, below estimates of $110.1 million. The owner and operator of land drilling rigs cited adverse weather and intense competition, particularly for pressure pumping in the U.S. and Canada.

Best Buy Co. plunged 4.2 percent to $28.47. Cleveland Research Co. wrote in a report that a seasonal slowdown during the May to June period appears more pronounced this year for the world’s largest consumer-electronics retailer.

Fastenal Co. slid 2.8 percent to $45.77 after the seller of industrial and construction supplies reported second-quarter sales of $847.6 million, lower than analyst estimates for $857.4 million. Hewlett-Packard

Health-care, utility and technology shares rose the most among 10 S&P 500 groups, climbing at least 0.5 percent.

Hewlett-Packard increased 1.8 percent, the most in the Dow, to $25.93. Citigroup upgraded its recommendation for the computer maker to buy from sell and doubled its price estimate for the shares to $32. A survey among chief information officers signaled a “positive inflection” for HP’s services, Citigroup analysts said.

Cisco Systems Inc. gained 1 percent to $25.41, the highest level since May 2010, after surging 2.2 percent yesterday.

Microsoft Corp. advanced 1 percent to $34.70.

Family Dollar Stores jumped 7.1 percent to $68.50. The second-biggest U.S. dollar-store retailer reported fiscal third- quarter earnings of $1.05 a share, beating analyst estimates of $1.03 a share. Same-store sales climbed 2.9 percent as average transaction value and customer traffic increased for the quarter ended June 1.

Dollar General Corp. increased 5.8 percent to $54.78.

Dollar Tree Inc. added 2.8 percent to $54.29.

Have a wonderful evening everyone.

Be magnificent!

We are always comparing what we are with what we should be.

This measuring ourselves all the time against something or someone

is one of the primary causes of conflict.  Now why is there any comparison at all?

If you do not compare yourself with another

you will be what you really are.

Krishnamurti, 1895-1986

As ever,

Carolann

Endurance is patience concentrated.

-Thomas Carlyle, 1795-1881

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

Tel: 778.430.5808

(C): 250.881.0801

Toll Free: 1.877.430.5895

Fax: 778.430.5828

www.carolannsteinhoff.com