The Newsletter for July 11, 2013

Dear Friends,

Tangents:

The Poem:

Green

The dawn was apple-green,

The sky was green wine held up in the sun,

The moon was a golden petal between.

She opened her eyes, and green

They shone, clear like flowers undone

For the first time, now for the first time seen.

-D.H. Lawrence

On July 11^th, 1914, Babe Ruth  made his major league baseball debut.

On July 11^th, 1960, Harper Lee published To Kill a Mockingbird.  Over fifty million copies have sold to date.

On this date in 1977, Martin Luther King Jr. is posthumously awarded the Presidential Medal of freedom for his leadership during the Civil Rights Movement.

Never believe that a few caring people can’t change the world.  For, indeed, that’s all who ever have.  –Margaret Mead.

Photos of the Day –July 11th, 2013

Milla, a female snow leopard, and her baby are nose to nose in the Zoo de Servion, in Servion, Switzerland. Jean-Christophe Bott/Keystone/AP

Zumreta Ahmetasevic prays amidst gravestones during a funeral ceremony at the memorial center in Potocari, near Srebrenica, Bosnia. People are commemorating the 18th anniversary of a 1995 massacre and reburying recently identified victims exhumed from mass graves. Amel Emric/AP

Market Closes for July 11^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Katie Brennan

July 11 (Bloomberg) — Canadian stocks rose the most in 11 months as commodity producers rallied amid speculation central banks will keep acting to stoke economic growth in China and the U.S., the country’s two biggest trading partners.

OceanaGold Corp. and Dundee Precious Metals Inc. surged at least 14 percent as metals prices jumped. Canadian Natural Resources Ltd. added 1.9 percent as energy shares rallied.

BlackBerry Ltd. lost 1.1 percent as two executives left the smartphone maker. Corus Entertainment Inc. slumped 6.9 percent after reporting fiscal third-quarter revenue that fell short of estimates.

The Standard & Poor’s/TSX Composite Index gained 186.33 points, or 1.5 percent, to 12,493.26 at 4 p.m. in Toronto. The gain, the most since August 2012, extended a four-day rally to 3 percent and erased a loss for the year. Trading was in line with the 30-day average at this time of the day.

“The central banks have made it clear that they are going to support the economy,” Barry Schwartz, fund manager with Baskin Financial Services Inc., said from Toronto. He helps manage more than C$500 million ($482 million) with the firm.

“Indirectly, they want to make everybody richer and one way you do it is make the stock market go higher.”

The rally, the S&P/TSX’s longest since May 22, has helped erase a 4.3 percent plunge between June 19 and June 24. That rout started when Federal Reserve Chairman Ben S. Bernanke said after a June 18-19 meeting that the central bank may reduce its $85 billion of monthly bond purchases this year.

Bernanke said after the markets closed yesterday that “highly accommodative monetary policy for the foreseeable future is what’s needed,” and minutes of the Fed’s June meeting showed officials would want to see more signs of job growth before reducing support.

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. Benchmark U.S indexes closed at records today.

Global equities rallied, with China’s benchmark gauge adding 3.2 percent. The government will soften its stance on monetary policy, Nomura International (HK) Ltd. said, after Premier Li Keqiang said growth must stay above a certain floor.

The nation’s economy slowed for eight of the last nine quarters.

Data in Canada today showed an index of new home prices rose in May. Other reports this week also indicated housing- market strength, as building permits rose a fifth month in May and housing starts fell less than economists predicted in June.

All 10 industries in the S&P/TSX advanced at least 0.3 percent. Raw-materials producers paced the gains, adding 4.6 percent to the highest level since June 19.

Gold producers rallied for a third day, adding 6.9 percent.

The price of the metal for August delivery rose to a two-week high. Dundee Precious Metals led the group with a 16 percent advance, the most since September 2009, to C$4.96. OceanaGold jumped 14 percent to C$1.47.

Fortuna Silver Mines Inc. climbed 7 percent to C$3.54 as silver rallied to the highest level since June 19.

Utility companies added 1.8 percent as a group, led by a 4.1 percent gain in Atlantic Power Corp. The company, which holds indirect interests in power plants in the U.S., closed at C$4.56.

Canadian Natural Resources added 1.9 percent to $33.29 and Niko Resources Ltd. gained 2 percent to C$8.36, driving the S&P/TSX Energy Index to a 1.4 percent increase, its fourth straight gain.

BlackBerry retreated 1.1 percent to C$9.7, the lowest level in eight months, after it said two executives who were closely involved with its new smartphone operating system left the company. The stock dropped 4.9 percent yesterday as the vice president of U.S. sales departed.

Corus Entertainment Inc. slumped 4.9 percent, the most in the index, to C$23.55. The Toronto-based media company reported fiscal third-quarter revenue that fell short of estimates.

US

By Inyoung Hwang and Alex Barinka

July 11 (Bloomberg) — U.S. stocks jumped, sending the Standard & Poor’s 500 Index to a record closing level, as Federal Reserve Chairman Ben S. Bernanke backed sustained monetary stimulus.

All 10 groups in the S&P 500 rallied, with technology and raw-materials shares posting the biggest gains. Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. led gold producers higher as the precious metal’s price soared. Advanced Micro Devices Inc. rose 12 percent as analysts recommended that investors buy the shares. An S&P gauge of homebuilders added 7.1 percent as all 11 members advanced.

The S&P 500 gained 1.4 percent to 1,675.02 at 4 p.m. in New York. The index topped the closing record of 1,669.16 reached May 21, erasing losses since Bernanke first suggested the Fed might curb stimulus this year. The Dow Jones Industrial Average jumped 169.26 points, or 1.1 percent, to 15,460.92 today, also a record. About 6.5 billion shares traded hands on U.S. exchanges today, in line with the three-month average.

“The story in stocks for this year is about confidence replacing uncertainty and anxiety,” Hank Smith, who oversees $7 billion as chief investment officer at Radnor, Pennsylvania- based Haverford Trust Co., said by telephone. “It’s really more about an improvement in sentiment. That’s being a big driver for equity returns and we are still a long ways away from worrying about there being too much optimism or exuberance.”

Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging 148 percent from its March 2009 low. The S&P 500 has advanced for six straight days, the longest winning streak since March 11, and is heading toward its biggest weekly gain since Jan. 4.

Bernanke said yesterday that “highly accommodative monetary policy for the foreseeable future” was needed in the world’s largest economy. The Fed chairman spoke just three hours after the central bank released minutes of the June 18-19 gathering showing that about half of the 19 participants in the Federal Open Market Committee wanted to halt $85 billion in monthly bond purchases by year end.

At the same time, the minutes showed many Fed officials wanted to see more signs employment is improving before backing a trim to bond purchases known as quantitative easing.

“Everybody’s hanging on the Fed’s every word,” Malcolm Polley, who manages $1.1 billion as chief investment officer at Stewart Capital Advisors LLC in Indiana, Pennsylvania, said by telephone. “Even though Bernanke’s comments after the last FOMC meeting really weren’t hawkish, the market has wanted more clarity in terms of what he meant. Bernanke was as clear as one can be, saying ‘We’re not going to step on the brakes. We’re just going to let up on the accelerator.’ The more dovish comments he made yesterday clarifies that position.”

The S&P 500 sank as much as 5.8 percent after reaching a record on May 21, the day before Bernanke said the central bank may start paring stimulus efforts as soon as September if the economy improves in line with its forecasts. The equity gauge has rebounded 6.5 percent from a June 24 bottom as economic data from hiring to housing tempered concern over the possible scaling back of Fed stimulus.

Data today showed the number of Americans filing for unemployment benefits unexpectedly increased to a two-month high. Swings in jobless applications are typical in July as auto plants close for annual retooling. The Labor Department last week released its jobs report for the month of June, showing the economy added 195,000 jobs, exceeding estimates, while the unemployment rate was unchanged at 7.6 percent.

“Fed policy has been helpful no question, but the driver of equity returns off of the March 2009 bottom has been fundamentals, not Fed policy,” Haverford’s Smith said. “You’ve had over the past four years tremendous earnings growth confirmed by dividend growth. That has been the primary driver of the market but yet Fed policy has been helpful.”

Investors are watching earnings results this week. Profit at companies listed on the S&P 500 rose 1.8 percent last quarter, down from a projection of 8.7 percent six months ago, according to analyst estimates compiled by Bloomberg. Lower expectations helped about 73 percent of the companies in the benchmark measure exceed forecasts by an average of 5.1 percent for the first three months of the year, Bloomberg data show.

The Chicago Board Options Exchange Volatility Index, or VIX, slid 1.4 percent to 14.01, the lowest level since May 24.

The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, has declined six straight days, the longest streak of losses since January. The index reached a six-month high on June 20 and has fallen 32 percent since.

Technology, raw-material and utility companies rallied more than 1.6 percent for the biggest gains out of 10 S&P 500 groups.

Investors bought shares of stocks most tied to economic growth, sending the Morgan Stanley Cyclical Index up 1.8 percent to a record close.

The Nasdaq Composite Index rose 1.6 percent to 3,578.30, the highest since September 2000, as technology shares soared 1.7 percent as a group. Intel Corp. climbed 3.2 percent to $23.99 and Microsoft Corp. rallied 2.8 percent to $35.69, the highest since 2007. The two stocks had the best performance in the Dow today.

Hewlett-Packard Co. increased 1.7 percent to $26.38 after a report showed its sales of personal computers in the U.S. fell less than 1 percent in the second quarter. Sales for all PC makers gained 8.5 percent from the previous quarter and posted their smallest year-on-year drop of the last seven quarters, according to market researcher Gartner Inc.

AMD added 12 percent to $4.45 for the largest advance in the S&P 500. Bank of America’s Merrill Lynch unit and Canaccord Genuity Ltd. raised their ratings on the maker of processors for personal computers to buy from underperform, and to buy from hold, respectively. Canaccord said increased production of games consoles may boost demand for its hardware in the third quarter.

Freeport advanced 4.6 percent to $28.53. Gold futures rallied 2.6 percent for a fourth day of gains. Newmont Mining added 5.7 percent to $28.12 after reaffirming its forecast for gold and copper production this year in a statement late yesterday.

The S&P Supercomposite Homebuilding Index rallied 7.1 percent for the biggest gain since October 2011. D.R. Horton Inc. surged 9.2 percent to $22.98 and Lennar Corp. jumped 8.3 percent to $37.44.

Celgene Corp. rose 7.9 percent to a record $134.92 after its Revlimid cancer drug met the goal of a study aimed at showing the medicine could be an initial treatment for patients with multiple myeloma.

Bank shares were the only group to fall among 24 S&P 500 industries, losing 0.6 percent as regional banks tumbled.

Regions Financial Corp. slid 2.5 percent to $9.88 and KeyCorp tumbled 1.9 percent to $11.57. The KBW Regional Banking Index erased 1.5 percent as 48 out of 50 members declined.

JPMorgan Chase & Co. increased 0.6 percent to $55.14 while Wells Fargo & Co. slipped 0.4 percent to $41.89. The two lenders report second-quarter results tomorrow, the first of the six largest U.S. banks.

Bernanke’s plan for paring central bank bond purchases are estimated to squeeze profit and erode capital through 2014 at the six largest U.S. lenders, overshadowing second-quarter earnings that are projected to rise by an average of 20 percent.

Market gyrations that began mid-quarter damped earnings at firms including Goldman Sachs Group Inc. and Bank of America Corp., analysts’ estimates show. Trading and home-lending that started strong slumped after Bernanke indicated May 22 that the Fed could slow monthly bond purchases.

Have a wonderful evening everyone.

Be magnificent!

Free yourself from anger and desire, which are the causes of sin and conflict,

and thereby make yourself whole.  This is the essence of yoga;

this is the means by which you come to know the soul, and thereby attain the highest spiritual state.

Learn to meditate.  Close your eyes; calm your breathing; and focus your attention

on the center of consciousness.  Thus you will master the senses, the emotions, and the intellect –

and thereby free yourself from desire and anger.

The Bhagavad Gita

As ever,

Carolann

Humility is attentive patience.

-Simone Weil, 1909-1943

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