August 21, 2012 Newsletter

Dear Friends,

Tangents:

Aubrey Vincent Beardsley was born on this day in 1872 and lived until his death in 1898.  He was an English artist, born at Brighton, and he took up art as a profession in 1891 until his death.  His work (all in black and white) came continually before the public, arousing a storm of criticism and much hostile feeling.  They felt  that Beardsley had an unswerving tendency towards the fantastic are of the gloomier and “unwholesome’ sort.  To learn more, see www.victorianweb.org.

And also on this day in…

1883 – The trial of Frank James begins in Missouri.
1897 – Olds Motor Works (Oldsmobile) founded.

1904 – Count Basie was born.

1936 – Wilt Chamberlain was born.

1959 – Hawaii becomes the 50th state – President Eisenhower issues orders for the 50-star flag.

1991 – The Hardline Coup against Soviet President Mikhail Gorbachev ends. The uprising was led by Russian Federation President Boris Yeltsin.
1993 – NASA loses contact with the Mars Observer spacecraft – its fate remains unknown – the project cost $980-million.

photos of the day August 21, 2012

Ecuador’s Tungurahua volcano spews ash to the nearby town of Banos in Tungurahua. The authorities are encouraging residents living near the volcano to evacuate due to increased activity of the volcano, according to local media.

Gary Granja/Reuters

The sun is obscured over the Chips fire near Greenville, California. The fire has forced evacuations and burned over 47,000 acres in Northern California.

Max Whittaker/Reuters

Market Closes for August 21, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 21 (Bloomberg) — Canadian stocks rose, sending the benchmark index to the highest level since May, on increasing optimism that European leaders will make progress in addressing the region’s debt crisis and as commodities rallied into a bull market.

Enerplus Corp. jumped 4 percent after selling its stake in a private oil sands company for C$141 million yesterday. CGI Group Inc. climbed 3.8 percent to its highest level in more than 12 years. Eldorado Gold Corp. gained 5.7 percent. Gold and crude prices rallied to three-month highs.

The Standard & Poor’s/TSX Composite Index advanced 40.89 points, or 0.3 percent, to 12,116.92 in Toronto. The index jumped as much as 1 percent earlier in the day. It has gained 1.4 percent in 2012.

“A move is afoot to generate another round of economic stimulation from policy makers once they stabilize the solvency issues in Italy and Spain,” Bob Decker, portfolio manager with Aurion Capital Management, said in a phone interview from Toronto. The firm manages about C$6 billion ($6 billion). “And there has been a natural recovery from the slowdown of the second quarter in terms of sentiment around commodities. Some of the speculators are returning to the market.”

Oil jumped 0.7 percent. The Standard & Poor’s GSCI gauge of 24 raw materials rose 0.9 percent to 675.55, the highest level since May. The gauge has climbed 21 percent from this year’s lowest close of 559 on June 21. A gain of more than 20 percent is the common definition of a bull market.

There is mounting speculation European leaders will make progress on Greece’s debt crisis this week. Luxembourg Prime Minister Jean-Claude Juncker, head of the group of euro-area finance ministers, visits Athens tomorrow to listen to a request by Greek Prime Minister Antonis Samaras for a two-year extension to the country’s fiscal-adjustment program. French President Francois Hollande and German Chancellor Angela Merkel meet in Berlin on Aug. 23.

Norbert Barthle, a senior lawmaker with Merkel’s ruling party, said concessions are possible for Greece, including interest and maturity adjustments on loans, as long as the country shows willingness to meet the main targets set out in its bailout program.

Eldorado Gold advanced 5.7 percent to C$12.43. Kirkland Lake Gold Inc. surged 7.1 percent to C$13.40. Gold futures for December delivery increased 1.2 percent to settle at $1,642.90 an ounce in New York.

Barrick Gold Corp. increased 1.3 percent to C$36.48. Goldcorp Inc. rose 2.5 percent to C$38.88.

Silvercorp Metals Inc. jumped 5.9 percent to C$5.76, its biggest percentage gain since May. Silver gained 2.9 percent to $29.51 in New York.

CGI Group, a Montreal-based supplier of technology services to retailers, utilities and banks, added 3.8 percent to C$25.10, the highest price since March 2000. The company recently closed its C$2.7 billion acquisition of Britain’s Logica Plc.

Enerplus surged 4 percent to C$16 after agreeing to sell its stake in Laricina Energy Ltd. Enerplus plans to use the cash to pay down debt. Kristopher Zack, an analyst with Raymond James, upgraded Enerplus to outperform from market perform, with a one-year target price of C$18.

Cenovus Energy Inc. climbed 1.3 percent to C$33.31 after crude futures jumped 0.7 percent to $96.68 a barrel in New York.

Baja Mining Corp. slid 13 percent to 6.5 Canadian cents, its biggest decline in two weeks after the company said it hadn’t received financing committed by its Korean partners by yesterday’s deadline. The miner has struggled to contain expenses to build a copper mine in Mexico and has plunged 92 percent this year.

US

By Inyoung Hwang

Aug. 21 (Bloomberg) — U.S. stocks fell, after the Standard & Poor’s 500 Index failed to remain above a four-year high, as a slump in technology shares overshadowed optimism euro-area leaders will make progress in resolving the region’s crisis.

The S&P 500 lost 0.3 percent to 1,413.26 at 4 p.m. in New York. The index earlier traded above a four-year high of 1,419.04 reached on April 2. Equities erased gains as Apple Inc. tumbled 1.4 percent after setting a record for U.S. market value yesterday, dragging down technology companies as a group.

“Tech’s seeing weakness across the board,” Peter Sorrentino, a money manager at Huntington Asset Advisors in Cincinnati who helps oversee $14.7 billion of assets, said today by telephone. “With Apple, you’ve got a case where we have the back-to-school season and what does that look like for their product release.” He said, “Year-to-date, tech’s also up the most, so if you’re going to see profit-taking anywhere, you’d likely see it there.”

The S&P 500 has climbed 12 percent this year, with technology and financial stocks posting the biggest gains.

Investor optimism that global central banks will take actions to stimulate growth has pushed the gauge up since June 1. At the same time, trading volume and volatility have dropped this month as vacationing traders await policy clues from the Federal Reserve’s annual summit in Jackson Hole, Wyoming, beginning Aug.30 and a European Central Bank meeting in September.

Economic reports that exceeded economists’ estimates and second-quarter earnings have also boosted stocks. The Citigroup Economic Surprise Index for the U.S., which tracks how much data is beating or missing estimates, rebounded to minus 15.3 after hitting a low of minus 65.3 in July. While earnings growth for S&P 500 companies in the second quarter was the weakest since 2009, about 72 percent posted profits that beat analysts’ projections, the 14th straight quarter earnings topped estimates.

Stocks worldwide rose earlier today on mounting speculation leaders will make progress on Greece’s debt crisis this week.

Luxembourg Prime Minister Jean-Claude Juncker, head of the group of euro-area finance ministers, visits Athens tomorrow to listen to a request by Greek Prime Minister Antonis Samaras for a two- year extension to the country’s fiscal-adjustment program.

French President Francois Hollande and German Chancellor Angela Merkel meet in Berlin on Aug. 23.

Concessions are possible for Greece so long as Samaras shows a willingness to meet the main targets set out in his country’s bailout program, a senior lawmaker with Chancellor Angela Merkel’s party said.

Tomorrow, the Fed will publish minutes of its two-day meeting that ended on Aug. 1. The central bank, which has pledged to keep its benchmark rate near zero through 2014, refrained from adding to the $2.3 trillion in asset purchases it has already made to support the economy. The next Federal Open Market Committee gathering is on Sept. 12-13.

Fed Bank of Atlanta President Dennis Lockhart said U.S. policy makers face a risk of easing too much while trying to spur a “disappointing” three-year-old economic recovery.

“There is a risk to monetary policy being employed too aggressively and without effect to address economic problems that can be resolved only by fiscal reform,” Lockhart said today in a speech in Atlanta.

Have a wonderful evening everyone.

Be magnificent!

The like and dislike is the result of my culture, my training, my associations,

my inclinations, my acquired and inherited characteristics.

It is from that center that I observe and make my judgments,

and the observer is separate from the thing he observes.

Krishnamurti, 1895-1986

As ever,

Carolann

The symbol of all relationships among such men,

the moral symbol of respect for human beings,

is the trader.

-Ayn Rand, 1905-1982

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