August 28, 2012 Newsletter

Dear  Friends,

Tangents:

August 28, 1963 – March on Washington culminates in Martin Luther King’s “I have a dream” speech.

In the end , we will remember not the words of our enemies, but the silence of our friends. –Martin Luther King Jr.

And also on this day in…

1749 – Johann W. von Goethe was born.

1944 – German forces in Toulon and Marseilles, France, surrender to the Allies.
1945 – Chinese communist leader Mao Tse-Tung arrives in Chunking to confer with Nationalist leader Chiang Kai-Shek in a futile effort to avert civil war.
1963 – One of the largest demonstrations in the history of the United States, the March on Washington for Jobs and Freedom, takes place and reaches its climax at the base of the Lincoln Memorial when Dr. Martin Luther King delivers his “I have a dream” speech.
1965 – The Viet Cong are routed in the Mekong Delta by U.S. forces, with more than 50 killed.

1965 – Shania Twain was born.
1996 – Charles and Diana divorce.

Act with kindness, but do not expect gratitude. –  Confucius

photos of the day August 28, 2012

Couples dance during the Salon style Tango World Championship final round in Buenos Aires.

Marcos Brindicci/Reuters

A vendor blows soap bubbles at Lalbagh Kella in old Dhaka, Bangladesh. Lalbagh Kella is a fortress, established by Mughals in 1678, which is now open to tourists.

Andrew Biraj/Reuters

Market Closes for August 28, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam and Inyoung Hwang

Aug. 28 (Bloomberg) — Canadian stocks fell for a second day as data showed the biggest decline in U.S. consumer confidence in 10 months and investors awaited Federal Reserve Chairman Ben S. Bernanke’s speech in three days.

Potash Corp. of Saskatchewan Inc. slid 0.9 percent as seven out of 10 groups in the Standard & Poor’s/TSX Composite Index declined. Eco Oro Minerals Corp., a gold explorer in which hedge fund Paulson & Co. owns 10 percent, plunged 55 percent after Colombia granted an extension on less than half the company’s title rights. Bank of Montreal paced gains among financial companies after it boosted its dividend.

The S&P/TSX Composite Index dropped 19.02 points, or 0.2 percent, to 12,029.80 at 3:25 p.m. in Toronto. About two stocks fell for each that rose in the Canadian equity benchmark.

“People are waiting to see what Bernanke has to say,”

David Baskin, president of Baskin Financial Services Inc. in Toronto, which manages about C$450 million ($445 million) in assets, said in a phone interview. “There was mixed economic news from the U.S. today. While housing prices were better, consumer confidence was weaker-than-expected.”

Bernanke probably won’t provide specific plans for further monetary action at the Fed Bank of Kansas City’s annual Jackson Hole, Wyoming symposium this week, Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said today on Bloomberg Television. The Canadian equity benchmark has climbed 6.7 percent since May 18 amid speculation that global central banks will take action to stimulate growth.

The Conference Board’s index of U.S. sentiment decreased to 60.6 from a revised 65.4 in July, figures from the New York- based private research group showed today. The 4.8-point decrease was the biggest since October. Economists projected a reading of 66, according to the median estimate in a Bloomberg survey.

A separate U.S. report also showed that home prices in 20 U.S. cities climbed in June from a year earlier, the first gain in almost two years.

Potash, the world’s largest fertilizer producer, slid 0.9 percent to C$40.34, while Enbridge Inc., the largest transporter of Canadian crude to the U.S., lost 0.9 percent to C$38.88.

Eco Oro fell 55 percent to 88 cents, the most intraday since 1992. Colombia’s national mining agency said in a resolution dated Aug. 8 that it would only extend the title on 46 percent of Eco Oro’s Angostura gold and silver concession because the rest of the land was located on a paramo, which is a high-altitude watershed area. The portion of the concession that wasn’t extended contains about 70 percent of the Angostura deposit.

Nexen Inc. lost 1 percent to C$25.13. Canadian Industry Minister Christian Paradis said Cnooc Ltd. will soon file an application to the federal government for approval of the Chinese company’s takeover bid for the oil and gas producer.

Cnooc last month offered to acquire Calgary-based Nexen for $15.1 billion in what would be the biggest overseas takeover by a Chinese company.

Bank of Montreal added 1.2 percent to C$58.40. The nation’s fourth-biggest bank raised its dividend for the first time in five years after profit rose 37 percent to C$970 million, or C$1.42 a share. It increased its dividend 2.9 percent to 72 cents a share.

“It’s all about the banks with a couple of days of reports,” Anil Tahiliani, a fund manager at McLean & Partners Wealth Management, said in a phone interview from Calgary. The firm manages about C$1 billion ($1.01 billion). “It’s positive that they continue to show, even in a weak or slow-growth economy in Canada, that banks can make good profits and return capital to shareholders.”

Royal Bank of Canada, the nation’s largest lender, Toronto- Dominion Bank and Canadian Imperial Bank of Commerce are scheduled to release third-quarter earnings on Aug. 30. About half of the companies in the S&P/TSX that have reported quarterly results exceeded analysts’ estimates, according to data compiled by Bloomberg.

Royal Bank of Canada added 0.9 percent to C$54.39. Toronto- Dominion climbed 0.6 percent to C$81.33.

US

By Rita Nazareth

Aug. 28 (Bloomberg) — U.S. stocks fell, following yesterday’s drop in the Standard & Poor’s 500 Index, as investors watched economic reports ahead of Federal Reserve Chairman Ben S. Bernanke’s speech on the economy in three days.

KLA-Tencor Corp., a maker of machinery used in the production of semiconductors, slumped 2.5 percent after Deutsche Bank AG cut its rating. Lexmark International Inc. surged 14 percent after the printer maker said it plans to cut 1,700 jobs and shut a factory in the Philippines as it explores a sale of its inkjet technology. H.J. Heinz Co. advanced 1.7 percent after reporting preliminary profit that topped analysts’ estimates.

The S&P 500 fell 0.1 percent to 1,409.30 at 4 p.m. New York time. The Dow Jones Industrial Average dropped 21.68 points, or 0.2 percent, to 13,102.99. Volume for exchange-listed stocks in the U.S. was 4.6 billion shares, or 26 percent below the three- month average, according to data compiled by Bloomberg.

“It will be interesting to see what Bernanke says about the economy,” said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp., which has $1.82 trillion in client assets. “I wouldn’t expect to hear much about easing other than: we’re going to keep the door open. The U.S. may not be shining in an absolute sense but relative to the rest of the world the trajectory is far more positive.”

Data today showed that confidence among U.S. consumers fell in August by the most in 10 months as households grew more pessimistic about the economic outlook. Home prices in 20 U.S. cities climbed in June from a year earlier, the first gain in almost two years, indicating the market that triggered the recession is beginning to rebound.

Bernanke probably won’t provide specific plans for further monetary action at the Fed Bank of Kansas City’s annual Jackson Hole symposium this week, according to Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian. The Fed signaled last week it’s ready to take further steps to spur the economy. Many policy makers said additional stimulus probably will be needed soon unless the economy shows signs of a durable pickup, according to minutes released Aug. 22 of the central bank’s most recent meeting, on July 31-Aug. 1.

“The minutes were consequential and we don’t expect Bernanke to take it further than what the minutes said,” El- Erian, also the co-chief investment officer of the world’s largest manager of bond funds, said on Bloomberg Television’s “In the Loop” with Betty Liu. “It’s highly probably that he will outline the options that the Fed has available and the commitment to do more if needed.”

Seven out of 10 groups in the S&P 500 retreated as phone, industrial and raw material shares had the biggest losses.

Energy shares rose the most among 10 groups.

KLA-Tencor dropped 2.5 percent to $51.66. Deutsche Bank cut the company’s recommendation to sell from hold. Spending by foundries, companies that manufacture chips on a contract basis for other electronics makers, may fall in 2013 from a year earlier, according to a note to investors by Deutsche Bank analyst Vishal Shah in New York.

Lexmark rallied 14 percent, the most in the S&P 500, to $21.62. The inkjet manufacturing facilities in Cebu will be closed by the end of 2015, Lexington, Kentucky-based Lexmark said in a statement today. The company will cut 1,100 manufacturing positions and also reduce positions in research and development, supply chain and support functions. The reorganization will generate annual savings of $95 million.

H.J. Heinz added 1.7 percent to $57.41. The company’s full results, which will be released tomorrow, will show “dynamic growth in emerging markets as well as improved productivity, higher margins and a favorable tax rate,” Chief Executive Officer William R. Johnson said in a statement.

Nike Inc. rose 2.5 percent to $98.87. The world’s largest maker of sporting goods advanced after a Stifel Financial Corp. analyst said it gained market share during back-to-school shopping.

Molycorp Inc. added 13 percent to $10.75. The owner of the largest rare-earth deposit outside of China climbed after ore separation began at its Mountain Pass mine in California.

Movado Group Inc. jumped 17 percent to $35.36 after raising its profit forecast for this fiscal year as sales of its branded watches gained.

Consumer stocks are worth buying because they lessen the risks associated with lower earnings estimates and any revival in market volatility, according to Gina Martin Adams, a Wells Fargo & Co. strategist. The ratios of two S&P 500 gauges of consumer-related shares to the index have retreated from this year’s highs. Retailers, media companies and others in S&P’s consumer-discretionary category peaked in May. Makers of food, beverages and other consumer staples followed suit in July.

“U.S. consumers have managed to hold their own,” Martin Adams wrote in a report. “Consumer stocks have followed along the path of the consumer, offering stability amid the noise of the broader markets.”

Both industry groups ought to carry more weight with investors than they do within the S&P 500, according to the New York-based strategist. Each was about 11 percent of the index’s value as of yesterday, according to data compiled by Bloomberg.

Earnings for consumer companies are poised to rise at a relatively fast pace, the report said. She estimated that next year’s profit for the staples category will climb 6.1 percent, the biggest increase among the S&P 500’s 10 broadest industry groups. Consumer-discretionary earnings may rise 4 percent, surpassing a 3.3 percent growth estimate for the 500-stock index, she wrote.

Consumer industries may be a haven from bigger U.S. stock swings, Martin Adams wrote. In the past year, the staples index moved 0.56 percent on average for each 1 percent change in the S&P 500, the report said. The consumer-discretionary gauge matched the S&P 500’s moves, which resulted in a so-called beta of 1. The Chicago Board Options Exchange Volatility Index, or the VIX, advanced 22 percent through yesterday from a five-year low on Aug. 17.

Have a wonderful evening everyone.

Be magnificent!

How can we be free to look and learn when our minds from the moment we are born

to the moment we die are shaped by a particular culture

in the narrow pattern of “me?”

For centuries we have been conditioned by nationality, caste, class, tradition,

religion, language, education, literature, art, custom, convention,

propaganda of all kinds, economic pressure, the food we eat, the climate we live in,

our family, our friends, our experience – every influence you can think of –

and therefore our responses to every problem are conditioned,

Are you aware that you are conditioned?

Krishnamurti, 1895-1986

As ever,

Carolann

It is better to be hated for what your are than to be loved

for what you are not.

-Andre Gide, 1869-1951

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