September 18, 2012 Newsletter

Dear Friends,

Tangents:

My greenhouse is never so pleasant as when we are just upon the point of being turned out of it.  the gentleness of the autumnal suns, and the calmness of this latter season, make it a much more agreeable retreat than we ever find it in summer; when, the winds being generally brisk, we cannot cool it by admitting a sufficient quantity of air, without being at the same time incommoded by it.  But now I sit with all the windows and the door wide open, and am regaled with the scent of every flower in a garden as full of flowers as I have known how to make it.  We keep no bees, but if I lived in a hive I should hardly hear more of their music.  All the bees in the neighbourhood resort to a bed of mignonette, opposite to the window, and pay me for the honey they get out of it by a hum, which, though rather monotonous, is as agreeable to my ear as the whistling of my linnets.

-Letter from William Cowper  to the Revd John Newton, September 18, 1784.

The Book of Days

And also on this day in…

1707 – Samuel Johnson was born.

1851 – New York Times first published.

1905 – Greta Garbo was born.

1929 – Charles Lindbergh takes off on a 10,000 mile air tour of South America.
1934 – The League of Nations admits the Soviet Union.
1939 – A German U-boat sinks the British aircraft carrier Courageous, killing 500 people.

1947 – US Air force established.
1960 – Two thousand cheer Castro’s arrival in New York for the United Nations session.
1964 – U.S. destroyers fire on hostile targets in Vietnam.

1971 – Lance Armstrong was born.
1980 – Cosmonaut Arnoldo Tamayo, a Cuban, becomes the first black to be sent on a mission in space.

Of all the liars in the world, sometimes the worst are your own fears. –Rudyard Kipling

photos of the day September 18, 2012

Dutch Queen Beatrix formally opens the new parliamentary year with a speech outlining the government’s plans for its 2013 budget, in The Hague, Netherlands.

Vincent Jannink/AP

A Syrian woman, who fled her home due to fighting between rebels and government forces, carries her infant as she waits to be registered at the UNHCR, in Baalbek, east of Lebanon.

Bilal Hussein/AP

Market Closes for September 18^th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam and Rita Nazareth

Sept. 18 (Bloomberg) — Canadian stocks fell, sending the Standard & Poor’s/TSX Composite Index down a second day, on concern European leaders will struggle to tame the debt crisis.

Utility, energy and health-care shares in the S&P/TSX declined while technology companies advanced. Penn West Petroleum Ltd. dropped 3.1 percent after being cut at Macquarie Group Ltd. Pacific Rubiales Energy Corp. rallied 3.2 percent as it expects to receive a license next month to explore and produce at its CPE-6 block in Colombia.

The S&P/TSX lost 31.56 points, or 0.3 percent, to 12,415.30 at 12:10 p.m. in Toronto. The benchmark measure has risen 10 percent from its low for the year on May 18, and is up 4.1 percent for 2012.

“I don’t expect a strong direction in the market,”

Michael Sprung, president of Toronto-based Sprung Investment Management Inc., said in a phone interview. “The market has run up for a while. People are sitting and waiting for when the next shoe is going to drop.”

Concern about Europe’s crisis weighed on the market as Spain’s two-year notes stayed lower after a bill auction. Rising yields may force Spain to seek assistance and submit to European Central Bank conditions for aid, ECB Governing Council member Luc Coene said yesterday. The country will consider a rescue to cut borrowing costs if the conditions are acceptable, Spanish Deputy Prime Minister Soraya Saenz de Santamaria said.

Penn West Petroleum slipped 3.1 percent to C$15.46. The shares were downgraded to “underperform” from “neutral” at Macquarie Research by equity analyst Cristina Lopez. The 12- month target price is C$14 per share.

Pacific Rubiales rallied 3.2 percent to C$25.19. The regulator will receive additional company data allowing the process for a license in Colombia to move ahead, Chief Executive Officer Ronald Pantin said in a phone interview yesterday in Bogota.

Goldcorp Inc., the world’s second-largest producer of the metal, said mining acquisition targets are looking more attractive as tougher financing conditions have depressed share prices. The 74 companies in a Bloomberg Industries index of gold explorers now trade at an average 1.54 times book value, versus a three-year average of 2.58.

“The development-company valuations have come down to where, at least on paper, it looks like there’s some opportunities,” Chief Executive Officer Chuck Jeannes said in an interview last week. “There’s a lot of looking going on.”

Exploration and development companies, or so-called juniors, underperformed the large gold miners last year after they struggled to raise funds and investors shunned risky assets. The juniors are on average lagging the seniors again this year, even after rising 25 percent since hitting a two-year low on June 28.

US

By Nikolaj Gammeltoft and Amanda Gould

Sept. 18 (Bloomberg) — Most U.S. stocks fell, after the Standard & Poor’s 500 Index climbed to the highest level since 2007, as FedEx Corp. slumped and concern grew that European leaders will struggle to resolve the region’s debt crisis.

FedEx dropped 3.1 percent as it reduced its profit outlook after quarterly earnings fell. United Continental Holdings Inc. fell 2.3 percent amid a U.S. investigation of tarmac delays.

Advanced Micro Devices Inc. dropped 9.7 percent after announcing its chief financial officer will resign. Apple Inc. closed above $700 for the first time.

The S&P 500 slid 0.1 percent to 1,459.32 at 4 p.m. in New York. The Dow Jones Industrial Average rose 11.54 points, or 0.1 percent, to 13,564.64. About five stocks fell for every four advancing on U.S. exchanges today, as 6 billion shares traded hands, in line with the three-month average.

“We’re looking for the market to flatten out and hold where it is until the U.S. election,” Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $13 billion, said in a telephone interview.

“Europe is an overhang that’s still there on the U.S. market.

Their debt crisis is not being handled, it’s Band-Aids here and there. It’s slowing us down.”

The S&P 500 is trading at 14.1 times the estimated earnings of its constituent members, close to its highest price multiple since the end of 2010, data compiled by Bloomberg show. The equity benchmark rose to its highest level since December 2007 on Sept. 14 after the Federal Reserve said it will buy mortgage securities to support economic growth. Bearish options contracts on the S&P 500 have dropped to the cheapest level in more than three years.

The S&P 500 fell 0.3 percent yesterday after a meeting of European Union finance ministers in Cyprus on Sept. 14 and 15 failed to agree on a timetable for a more unified banking industry, the terms of bailout requests and the role played by the European Central Bank.

ECB Governing Council member Luc Coene said Spain may have to ask the European Commission for aid and submit to conditions imposed by its creditors if bond yields continue to increase.

Coene spoke at a panel discussion in London yesterday.

The Spanish government sold 4.6 billion euros of bills at an auction today, more than its maximum target. Spain’s bond yields climbed to more than 6 percent yesterday for the first time since Sept. 7, the day after policy makers approved ECB President Mario Draghi’s plan to buy government debt to ensure the transmission of interest rates.

“We don’t think Europe is going to have a giant, broad- based, perfect solution, but we’ve come a long way over the last 12 months,” Kate Moore, the New York-based senior global equity strategist at Bank of America Corp., said on Bloomberg Television’s “In The Loop with Betty Liu” today. “We are very much worried about a slowdown in business spending and this uncertainty shock that could hit the economy over the next few quarters.”

Energy, financial stocks and companies that rely on consumer discretionary spending fell the most in the S&P 500, retreating at least 0.4 percent. Consumer staples, phone companies and health-care stocks rose the most.

FedEx slumped 3.1 percent to $86.55. The operator of the world’s largest cargo airline cut its annual profit outlook as a weakening economy spurs shippers in the U.S. and overseas to switch to cheaper delivery options.

The company, an economic bellwether because it ships goods from financial documents to electronics, pared its forecast for U.S. expansion next year to 1.9 percent from a June prediction of 2.4 percent. FedEx trimmed its forecast for global growth this year and next to 2.3 percent and 2.7 percent, down from 2.4 percent and 3 percent, respectively.

“Fundamentally what’s happening is that exports around the world have contracted and the policy choices in Europe, the U.S. and China are having an effect on global trade,” Chief Executive Officer Fred Smith said on a conference call. “Over the last few months, exports and trade have gone down at a faster rate than GDP has.”

The Dow Jones Transportation Average declined for the second day, losing 1.1 percent. The Bloomberg U.S. Airlines Index slumped 2.1 percent. United Continental fell 2.3 percent to $19.27. The world’s largest airline is under U.S. investigation for stranding 16 flights on tarmacs for more than three hours during thunderstorms.

AMD declined 9.7 percent to $3.62, the most in the S&P 500, after the second-biggest maker of processors said CFO Thomas Seifert will leave to seek other opportunities. The resignation is the latest disruption at the semiconductor maker, which is struggling to prevent larger rival Intel Corp. from taking market share and is facing slowing demand in the PC market.

OCZ Technology Group Inc. dropped 7.4 percent to $4.13.

Chief Executive Officer Ryan Petersen resigned from the maker of solid-state disk drives. He will be replaced on an interim basis by Chief Marketing Officer Alex Mei, the San Jose, California- based company said in a statement yesterday.

Clearwire Corp. declined 10 percent to $1.38 after Time Warner Cable Inc. said it plans to sell its 46.4 million shares in the money-losing venture to build a high-speed wireless Internet network across the U.S. Time Warner Cable has alerted other Clearwire investors, including Sprint Nextel Corp. and Intel Corp., of its intention to sell the holdings, according to a filing last week.

Apple rose 0.3 percent to a record $701.91, for a market capitalization of about $658 billion. The world’s most-valuable company said yesterday that it sold 2 million units of its new iPhone 5 in the first day of orders, more than double the record set by the previous model. The stock has advanced 73 percent this year.

F5 Networks Inc. rose 4 percent to $108.62 for the biggest advance in the S&P 500. The computer-networking company is an attractive investment as it benefits from mobile data traffic growth and spending on data centers, Piper Jaffray & Co. wrote in a note yesterday.

Oxigene Inc. jumped 30 percent to 72 cents after the pharmaceuticals company reached an agreement with the Food and Drug Administration for a Phase 3 trial of a thyroid cancer drug.

American Science & Engineering Inc. rose 7.7 percent to $66.71 after winning a U.S. government contract to provide body scanners used for security at airports. The Transportation and Security Administration yesterday announced the award valued as high as $245 million over five years.

Energizer Holdings Inc. soared 11 percent to $75.22 for the biggest gain in more than three years. The maker of its namesake batteries, Schick razors and Wet Ones wipes said it will reduce costs and change how it determines executive bonuses.

Have a wonderful evening everyone.

Be magnificent!

The word duty indicates compulsion,

The word responsibility indicates freedom.

Duties lead one to demand rightfully.

Responsibilities lead one to command respectfully.

Sense of duty is out of attachment.

Sense of responsibility is out of love.

Duties can be thrust upon others.

Responsibilities are taken up by oneself.

There can be willingness in performing one’s duty.

Responsibility is always taken up willingly

-Maa Purnananda

As ever,

Carolann

Beware of no man more than yourself; we carry

our worst enemies within us.

-G.K. Chesterton, 1874-1936

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