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Market Summaries
S&P/TSX Composite down 4.10% to 11521 (down 1.90% year-to-date)
S&P/TSX Venture Composite down 8.79% to 1453 (up 0.95% ytd)
Dow Jones Industrial Avg down 4.00% to 10193 (down 2.30% ytd)
Nasdaq Composite down 5.00% to 2229 (up 1.80% ytd)
Oil (West Texas Intermediate) down $3.57 to $68.04 (down $11.32 ytd)
Gold (Spot USD/oz) down $56.08 to $1177.10 (up $80.15 ytd)

Managing Your Emotions Through a Correction
We simply are not ready for another big down leg on the equity markets. With most still jittery from the last sell-off which ended early last March, this latest round of fear and anxiety comes all too soon.

After watching the TSX drop about 50%, from a high of 15,154 in mid 2008 to a frightening low of 7479, the majority of investors were drained and had a hard time believing the markets were actually capable of rallying again in a meaningful way. Throughout the melee, newspaper headlines were littered with fear and loathing and the financial news channels pushed the optimistic personalities aside in favour of “doom and gloomer’s” who forecasted the end of the financial world playing out in many different scenarios. Clearly, the downside fears were overdone, sanity prevailed, and the markets moved higher over the next year and change. And as the markets pulled themselves out of their year-long funk, did you notice the rosier personalities or “bulls” begin to pop-up in your favourite news columns and re-appear on BNN and CNBC? Once the media decided it was time to go bullish again, the “dark knights” were rotated out and the world was a sunny place to be again.

Fast forward to today. The talking heads updating us on the progress of our fledgling economy or the bullish analyst looking to up his targets on a given sector are again hard to find. It was only weeks ago they were still dominating the stage only to give way to fears across to the Euro zone. And with those fears came a parade of “bears” to let us know how bad things are and how bad they are going to get. We are once-again seeing and hearing from Eric Sprott, David Rosenberg and a slew of others on a daily basis, each with their own dark version of how this latest round of turmoil is going to play out.

Let’s face it; the pain of a sell-off is much more intense than the jubilation of a rising market. We take the defeats in life much harder than we celebrate our wins. Do yourself a favour and manage your exposure to news programs and financial publications that drive hysteria, both good and bad. The media loves to pounce on momentum and go for the good read, in many cases leaving the relevant and useful stories aside. If you drink the Kool-Aid long enough you may begin to become a believer and lose your ability to step back and look at things objectively.   

Soundbites

• Four of BC’s most prominent businessmen have been honoured with a place in the BC Hall of Fame. Rags-to-riches story Jack Diamond, development tycoon and Prospero Group head Robert H Lee, VANOC chair Jack Poole, and Thrifty Store founder Alex A Campbell. The annual affair, which was held last Wednesday at Hotel Vancouver, honours business leaders who make outstanding contributions to their community. Jack Diamond arrived from Poland at the age of 17 and turned a tiny little butcher shop into the largest meat packing operation in BC – the Pacific Meat Co. His long list of philanthropic ventures included founding the Variety Club of Vancouver, co-founding the BC Heart Foundation, and saving the 1954 Empire Games with a last-minute fund raising effort. Mr Lee has served on several foundations and received the Order of BC in 1990, while his good friend Jack Poole has been instrumental in a number of very meaningful events in BC, including the Olympics and the Molson Indy (he was also inducted into both the Order of BC and Order of Canada). Beyond Campbell’s outstanding business accomplishments, he’s extremely proud of work with the Greater Victoria Hospital Foundation and the BC Cancer Foundation.
• The BC real estate market seems to finally be cooling off, with the number of first quarter sales (-26.65%) and the value of sales (-25.83%) way off of 2009’s fourth quarter. Landcor Data Corp reported the data last week and added that while the quarter-over-quarter numbers are down substantially, the year-over-year stats still see a substantial increase with total value of sales almost double that of 2009’s Q1. The implementation of the highly controversial HST, rising interest rates and historically high real estate prices will be further obstacles for the sector to overcome as we move further into 2010.
• In direct response to the oil rig disaster in the Gulf of Mexico, the agency that regulates oil drilling off the coast of Newfoundland has put a hold on Chevron Canada’s deepsea project until the company can satisfy a series of criteria demonstrating it has taken the appropriate precautions. The project is set to be the deepest drilling program in Canadian history, at 2600 metres and has environmentalists and various industry observers asking questions in the wake of the Deepwater Horizon fire and subsequent sinking of the structure in the Gulf. Chevron will now be required to provide daily reports on their activities as well as face-to-face meetings with an oversight team every two weeks. In addition, it will be required to provide field reports regarding the rig’s blowout preventer and all associated backup equipment and provide a comprehensive summary of “lessons learned” from the Gulf of Mexico tragedy.

Marketwatch – A Look at the Week’s Newsmakers

Tim Hortons Inc (TIH) – is looking to flex its muscle outside of its Canadian comfort zone. With a build-out already underway through parts of the United States, the company is now making in-roads in Europe with 290 self-serve kiosks inside Spar convenience stores in Ireland and England. And the chain has been supporting both the Canadian and US troops setting up operations in Afghanistan, Iraq, and Fort Knox. With 3029 shops in Canada and only 567 in the US to date, Timmy Ho’s footprint is still firmly in Canada. The Canadian institution is facing increased competition from McDonald’s, which implemented an aggressive free coffee promotion to market its new premium brand, which falls right into Tim Horton’s price point. The company has not elaborated on what new countries are being targeted and is still in the due diligence phase.
Quadra FNX (QUX) – CEO’s Paul Blythe and Terry McGibbon announced the successful merger of Quadra Mining (QUA) and FNX Mining (FNX), which will lead to a new intermediate copper/nickel producer, with a deep portfolio of properties, no debt and over $600 million in cash. Quadra’s Paul Blyth will become President and CEO of the combined entity which is set to trade under the symbol QUX later this week. The firm’s diversified portfolio of producing and developmental-stage properties spans North and South America, with locations in the Sudbury Basin in Ontario and the Atacama region in northern Chile.
First Quantum Minerals Ltd (FM) – shares plunged after a corporate update stated the Supreme Court of the Democratic Republic of Congo has ruled in a manner that could see two of First Quantum’s mines lost to nationalization. The Lonshi and Frontier copper mines have been seized by local authorities and for the time being, titles have been revoked. Shares fell as much as 17.50% in Monday’s session after the news release and dealt a severe blow to the company which has seen its stock trade as high as $100.32 this year. Shares are now in the low $50 level, closing in on the $45.25 year low established last July.

“Quote of the Day”
“My mother buried three husbands, and two of them were just napping.” – Rita Rudner

JAMIE SWITZER | Raymond James Ltd.
Senior Vice President, Financial Advisor
North Vancouver IAS
PH: 604.981.3355 | FAX: 604.981.3376
jamie.switzer@raymondjames.ca

MARC LATTA | Raymond James Ltd.
Senior Vice President, Financial Advisor
PH:604-981-3366 | FAX: 604.981.3376
marc.latta@raymondjames.ca

Suite 480, 171 West Esplanade
North Vancouver, British Columbia

This newsletter expresses the opinions of the writers, Marc Latta and Jamie Switzer, and not necessarily those of Raymond James Ltd. (RJL)  Statistics and factual data and other information are from sources believed to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities.  It is not meant to provide legal, taxation, or account advice; as each situation is different, please seek advice based on your specific circumstance. RJL and its officers, directors, employees and their families may from time to time invest in the securities discussed in this newsletter. It is intended for distribution only in those jurisdictions where RJL is registered as a dealer in securities. Any distribution or dissemination of this newsletter in any other jurisdiction is strictly prohibited. This newsletter is not intended for nor should it be distributed to any person residing in the USA. Within the last 12 months, Raymond James Ltd. has undertaken an underwriting liability or has provided advice for a fee with respect to the securities of the Royal Bank of Canada. Raymond James Ltd is a member of the Canadian Investor Protection Fund.

“My most recent TIMER DIGEST ‘Sell’ signal from May 6 is looking pretty good and the way the market is acting in overnight trading will look even better this morning. It is also ‘Turnaround Tuesday’, so there could be some shennanigans suggesting enough of a break might be a trading exit opportunity for our inverse ETF positions. Stay tuned.” – For a trial Subscription of VR Platinum Newsletter covering Stocks, Bonds, Gold, US Dollar, Oil CLICK HERE

More Mark Leibovit and Larry Edelson via Dan Dorfman below”

“A fella who has made some excellent up and down calls on the direction of gold prices — in fact, he accurately predicted the recent weakness — is Mark Leibovit, editor of the VR Gold Letter in Sedona, Ariz.

He drew my attention to several recent negative technical signs that suggest gold could continue its recent drop to around $1,060 an ounce, which would be equivalent to an overall retreat of say 15%. which Leibovit contends would represent a buying opportunity. One of those signs was what he calls a reversal pattern, which occurred when gold rose to higher highs during one recent trading session and then reversed to lower lows the following day. Another red flag was the failure of a couple of gold indexes — the Gold Bugs Index and the Philadelphia Gold Index — to accompany and confirm the metal’s recent rise to record highs.

Leibovit cited the possibility of a strengthening Euro, which could hurt gold, maybe even lead to a retesting of the $1,000 price tag, but he thought a more likely course was the fear that the European debt crisis might expand, leading instead to a higher gold price. In any event, he thinks the wind is at gold’s back and views $2,000 or $3,000 as only a matter of time.”

Hey, This Bullet-Proof Vest Doesn’t Work by Dan Dorfman

Hey, what’s up with gold, supposedly the bullet-proof investment when things look like they’re going to hell (like now)? Somehow, the script got screwed up. Instead of roaring, gold is crawling, and not only that, it’s going backwards to boot.

After tripling since 2001 and steadily ballooning in recent years to an all-time high a couple of weeks ago of $1,250.40 an ounce — about a 50% jump from its 2007 close of $833 and nearly a 15% gain from last year’s wrapup of $1,098.60 — the yellow metal is starting to tarnish. Last week alone, it dropped $54.40 or 4.4%.

Granted, nothing goes up forever, but the sudden retreat by the investment darling of the flight-to- safety crowd into the $1,100s — coupled with growing predictions of more erosion ahead — seems totally out of line, given a slew of gold-buying catalysts. These include:

–Europe’s worsening sovereign debt crisis.

–A growing number of forecasts that Greece will default.

–Swelling currency concerns, led by the collapsing Euro.

–French President Sarkozy’s threat to pull France out of the Euro.

–Burgeoning money printing world-wide, a sure harbinger of future inflation.

–Fears that the European debt crisis will lead to a faltering global recovery, maybe even a recession.

–Our exploding debt and deficit.

–A warning by former Treasury Secretary Paul O’Neill that the U.S. could go the way of Greece, that “if we don’t change course, we could become a basket case ourself.”

–Increasing worries about bonds, including long-term U.S. Treasuries.

–An increasingly erratic U.S. stock market, characterized by growing daily triple-digit losses in the Dow Industrials and the recent nasty one-day decline in the Dow of nearly 1,000 points.

Actually, given world-wide financial turmoil and no indication of any let-up in sight, some gold traders think the metal should already be commanding a price tag of around $2,000. But even some bulls see additional weakness, with the metal, currently around $1,192, seen falling over the near term to $1,120 and perhaps even retesting $1,000.

One concern, as a number of gold experts see it, is a worrisome contrary indicator, namely there are way too many bulls. “It’s a crowded trade on the upside,” says Larry Edelson, who monitors precious metals trends for Weiss Research in Jupiter, Fla. and notes that sentiment readings show 98% of investors are bullish on gold. “Near term, it’s putting in a little top, says Edelson, who thinks the metal could drop to the $1,130-$1,150 range.

One reason, he believes, that gold is being negatively impacted short term is stepped-up overseas demand for the U.S. dollar for safety purposes, although Edelson views such buying as tantamount “to jumping from the frying pan into the fire.”

Although concerned about the near term outlook for gold, the analyst takes a far more positive view beyond that, arguing that it’s surely headed higher. Pointing in particular to the collapsing Euro and growing financial distress in the U.S., Edelson sees gold subsequently rising to $1,500 this year and on to $2,300 in 2011. As another positive for the metal, he notes that gold, before its recent spell of weakness, has been climbing even in the face of a rising greenback. “That’s proof positive of a crisis in the fiat currency system,” says Edelson.

Taking a longer term view, he thinks gold should be part of every investor’s portfolio. His favorite is the physical gold itself, which can be purchased from such well known outfits as Monex; Manfra, Tordello and Brookes, a New York bullion dealer, and Kitco.com., an online dealer. As for individual stocks, he goes for the biggies, notably Barrick Gold., Goldcorp., and Newmont Mining.