August 14, 2012 Newsletter

Dear Friends,

Tangents:

Today is the day Italians celebrate La Torta dei Fieschi:

When Count Fieschi of Lavagna in Genoa, Italy, was married in 1240, he invited his guests—and everyone else in town—to share a cake that was more than 30 feet high. The citizens of Lavagna haven’t forgotten his generosity, and each year they celebrate the event on August 14. Dressed in costumes, they parade to the town square, where they pin to their clothes a piece of paper (blue for men, white for women) on which a word is written. When they find someone wearing the same word, the couple is given a piece of “Fieschi’s cake.” –from The Free Dictionary by FarLex.

And also on this day in…

1935 – FDR signs Social Security Act.

1945 – Japan’s unconditional surrender becomes public.

1959 – Earvin “Magic” Johnson was born.

1968 – Halle Berry was born.
1973 – The U.S. ends the “secret” bombing of Cambodia.

2003 – Blackout hits Northeast U.S. and Canada.

photos of the day August 14, 2012

Children play in a mud bank while watching a festival inaugurating the Amazon River as one of the seven natural wonders of the world at the mouth of Itaya River in Iquitos, Peru. The Amazon River made it to the list of winners in a global contest conducted by the New Seven Wonders Foundation.

Enrique Castro-Mendivil/Reuters

Gardeners work on a giant carpet made of flowers to form a floral decoration at Brussels’ Grand Place. The design requires about 700,000 flowers to create, according to event organizers.

Francois Lenoir/Reuters

Market Closes for August 14, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Julia Leite

Aug. 14 (Bloomberg) — Canadian stocks advanced as U.S. retail sales beat estimates and oil rose amid speculation that inventories declined to the lowest level in four months.

Suncor Energy Inc., the nation’s largest oil producer, gained 0.9 percent. Agrium Inc., the largest U.S. farm retailer, climbed 0.6 percent after saying it won’t spin off its retail operations. Gold producer Alacer Gold Corp. slumped 2 percent as it cut its production forecast for the year.

The Standard & Poor’s/TSX Composite Index rallied 56.06 points, or 0.5 percent, to 11,894.39 at 11:43 a.m. in Toronto.

It slipped 0.4 percent yesterday. Energy and financial stocks contributed the most to the advance today among 10 industries in the gauge, while raw-materials shares declined.

“The European economic data wasn’t worse than what people expected, so that was a positive,” Irwin Michael, a portfolio manager at ABC Funds in Toronto, said in a telephone interview.

His firm oversees about C$850 million. “U.S. retail sales were considerably better than expected. I guess people gain a little confidence, which takes gold down and oil up.”

Retail sales in the U.S. rose more than forecast in July, the first gain in four months, as consumer spending rebounded at department stores, auto dealers and electronics outlets. The 0.8 percent increase reported by the U.S. Commerce Department exceeded economists’ projections for a 0.3 percent rise, based on the median forecast in a Bloomberg survey.

Stocks worldwide advanced earlier after Germany said gross domestic product rose 0.3 percent from the first quarter.

Economists predicted a 0.2 percent increase, according to a Bloomberg News survey. French GDP was unchanged in the quarter, better than the 0.1 percent decline economists had predicted.

Oil snapped two days of losses before a U.S. Energy Department report that analysts estimate will show a decline in crude stockpiles last week. Stockpiles probably fell by 1.75 million barrels in the seven days ended Aug. 10 as refiners operated near the highest rates in five years, according to the median response in a Bloomberg survey.

Oil for September delivery advanced 0.8 percent to $93.43 a barrel. Suncor rose 0.9 percent to C$31.80. Canadian Natural Resources Ltd., the nation’s third-largest oil company, advanced 2 percent to C$30.66.

Royal Bank of Canada, the nation’s largest lender, gained 2 percent to C$51.93, snapping four days of declines. Bank of Nova Scotia, Canada’s third-largest bank, rose 0.8 percent to C$52.27 after agreeing to buy 51 percent of Colfondos AFP, Colombia’s fourth-largest pension-fund company.

Agrium advanced 0.6 percent to C$96.12 after announcing it would hold onto its retail business following a report that shareholder Jana Partners LLC wants to separate the unit from the more profitable wholesale operations.

Osisko Mining Corp. declined 1.6 percent to C$9.17 as gold fell for a second day, shedding 0.5 percent to $1604.50 an ounce. Alacer Gold fell 2 percent to C$5.93.

US

By Inyoung Hwang

Aug. 14 (Bloomberg) — U.S. stocks erased gains, sending the Standard & Poor’s 500 Index lower for a second day, as a slump in technology and financial shares reversed an earlier rally amid better-than-estimated retail sales.

Hewlett-Packard Co. and Cisco Systems Inc. posted the biggest declines in the Dow Jones Industrial Average. The S&P 500 Financials Index slipped 0.1 percent after earlier rising as much as 0.7 percent. Alcoa Inc. retreated 1.6 percent, pacing losses among commodity stocks. Home Depot Inc. increased 3.6 percent after quarterly earnings topped analysts’ estimates.

The S&P 500 dropped less than 0.1 percent to 1,403.93 at 4 p.m. in New York, after earlier rising as much as 0.4 percent.

The Dow added 2.71 points, or less than 0.1 percent, to 13,172.14. Volume for exchange-listed stocks in the U.S. was about 5.2 billion shares today, 20 percent below the three-month average, according to data compiled by Bloomberg.

“The light volume demonstrates there’s just little conviction right now,” Peter Tuz, who helps manage about $800 million as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said in a telephone interview. “It is a symptomatic of the fact that people are just not that interested in the equity market.”

Stocks rose early in the day after U.S. retail sales climbed more than forecast in July as consumer spending rebounded at department stores, auto dealers and electronics outlets. The 0.8 percent advance, the first gain in four months, followed a 0.7 percent drop in June, Commerce Department figures showed. Economists projected a 0.3 percent rise, according to the median forecast in a Bloomberg survey.

A separate report showed wholesale prices increased more than forecast in July, reflecting higher costs for automobiles, cigarettes and pharmaceuticals.

Stocks worldwide advanced earlier after the Federal Statistics Office in Germany said gross domestic product rose 0.3 percent from the first quarter. Economists predicted a 0.2 percent increase, according to the median of 40 estimates in a Bloomberg News survey. French GDP was unchanged in the quarter, better than the 0.1 percent decline economists had predicted.

“The market was up earlier on light volume,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4.5 billion in Raleigh, North Carolina, said in a telephone interview. “The economic news has been generally on the uptrend in the last few weeks despite ongoing European concerns. With some of the summer seasonal factors affecting the market, volume’s going to be soft.”

The Chicago Board Options Exchange Volatility Index rebounded after four days of losses, climbing 8.4 percent to 14.85. The gauge known as the VIX lost 7.1 percent to 13.70 yesterday, the lowest level since June 2007.

U.S. equity volume yesterday reached the lowest level since at least 2008 excluding holidays. About 4.5 billion shares changed hands on all venues, the lowest level in data compiled by Bloomberg going back four years that excludes the days surrounding New Year’s, Christmas, Thanksgiving and Independence Day.

Hewlett-Packard, the world’s largest maker of personal computers, slid 1.3 percent to $19.36. Cisco, the largest maker of computer-networking gear, lost 1 percent to $17.17. Intel Corp., the world’s largest chipmaker, retreated 0.8 percent to $26.48. Juniper Networks Inc. erased 4.5 percent to $18.07 for the biggest decline in the S&P 500.

Groupon Inc. plunged 27 percent to $5.51, the lowest level since the company’s initial public offering in November. The largest daily-deal website reported second-quarter revenue that missed estimates as economic weakness in Europe curbed online coupon sales. Revenue rose 45 percent to $568.3 million, the Chicago-based company said yesterday. That fell short of the average analyst estimate of $575.3 million, according to data compiled by Bloomberg.

Commodity companies lost 0.5 percent for the biggest drop out of 10 groups in the S&P 500. Alcoa, the largest U.S. aluminum producer, retreated 1.6 percent to $8.69. The S&P 500 Financials Index slipped 0.1 percent after earlier rising as much as 0.7 percent.

Retailers had the biggest gain out of 24 groups in the S&P 500, climbing 0.9 percent.

Home Depot, the largest U.S. home-improvement retailer, rose 3.6 percent to $54.71 for the biggest rally in the Dow.

Sales by stores open at least a year advanced 2.1 percent, the fifth straight quarterly increase, as consumers visited more often and spent more per trip.

Estee Lauder Cos., the maker of Mac and Clinique skin care, added 9.3 percent to $60.13. Profit in the fourth quarter was 17 cents a share, exceeding the average analyst estimate by 1 cent. Revenue during the period was $2.25 billion, beating the average projection of $2.21 billion.

Monster Beverage Corp. climbed 10 percent, the most in the S&P 500, to $58.59. The board of directors at the largest U.S. energy drink maker authorized an additional $250 million in buybacks, according to a statement from the company yesterday.

Have a wonderful evening everyone.

Be magnificent!

Man cannot be broken down into emotions, intellect, or action.

Man is a whole.

When these three elements of intellect, feelings, and action are in harmony, they make up man.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Nothing, of course, begins at the time

you think it did.

-Lillian Hellman, 1905-1984

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