September 21, 2012 Newsletter

Dear Friends,

Tangents:

September 21^st: It’s Leonard Cohen’s birthday today.  Cohen is spending his 78^th birthday in Romania, preparing for a concert Saturday night in Bucharest.

A poem ~

PRAYER FOR SUNSET

by Leonard Cohen

The sun is tangled

in black branches,

raving like Absolom

between sky and water,

struggling through the dark terebinth

to commit its daily suicide.

Now, slowly, the sea consumes it,

leaving a glistening wound

on the water, a red scar on the horizon;

In darkness

I set out for home,

terrified by the clash of wind on grass,

and the victory cry of weeds and water,

Is there no Joab for tomorrow night,

with three darts

and a great heap of stones?

And also on this day…

photos of the day September 21, 2012

The pack cycles pass a windmill during the junior women road race of the World Championship Cycling near Valkenburg, southern Netherlands.

Peter Dejong/Reuters

McLaren Formula One driver Lewis Hamilton of Britain drives during the first practice session of the Singapore F1 Grand Prix at the Marina Bay Street Circuit, as the Singapore Flyer is seen in the background.

Tim Chong/Reuters

Market Closes for September 21^st, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 21 (Bloomberg) — Canadian stocks erased gains in the last hour of trading as a plunge in Research In Motion Ltd. overshadowed gains in energy and mining shares.

RIM plunged 7.4 percent after BlackBerry service was disrupted for some users outside of North America. Sun Life Financial Inc. and Manulife Financial Corp. fell at least 0.8 percent. Niko Resources Ltd., which explores for oil and gas, surged 17 percent. San Gold Corp. added 3.9 percent.

The Standard & Poor’s/TSX Composite Index lost 25.65 points, or 0.2 percent, to 12,383.60 in Toronto. The benchmark equity gauge slumped 0.9 percent for the week.

“People don’t want to hold risk into the weekend,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. His firm manages about C$55 million ($56.4 million). “Spain is potentially asking for aid, but until that actually happens it’s speculation. You won’t put both feet in the water unless you know that’s what’s going to happen.”

Seven of 10 industries in the S&P/TSX declined. Trading volume was 124 percent greater than the 30-day average, according to data compiled by Bloomberg. Mining and energy stocks climbed on higher gold and crude prices.

The Financial Times reported that European policy makers will unveil a financial bailout program for Spain as early as next week. Spanish Deputy Prime Minister Soraya Saenz de Santamaria said this week that Spain will consider seeking a bailout if the conditions imposed are acceptable.

Sun Life tumbled 1.9 percent to C$23.14. Manulife slipped 0.8 percent to C$11.77. Royal Bank of Canada dipped 1.3 percent to C$55.99. Financial stocks are up 6.9 percent this year.

RIM tumbled 7.4 percent to C$6.25, its lowest level in more than nine years, as users in Europe, the Middle East and Africa lost access to e-mail and the Internet. The malfunctions have since been resolved, the Waterloo, Ontario-based company said in e-mails. Apple Inc. also launched the iPhone 5 smartphone today, seen as the biggest threat to RIM’s shrinking market share, with sales expected to top 10 million over the weekend.

San Gold jumped 3.9 percent to C$1.08. Gold rose for a fifth week, the longest rally since February.

Niko Resources, the worst-performing stock in the S&P/TSX this year, soared 17 percent to C$11.79. Canadian Natural Resources Ltd. gained 0.5 percent to C$32.24 and Crescent Point Energy Corp. added 4.4 percent to C$45.70. Crude for November delivery advanced 0.5 percent to settle at $92.89 a barrel in New York for its first gain in five days.

Superior Plus Corp. fell 3.4 percent to C$9.11, paring earlier losses, after the propane distributor said the Canada Revenue Agency may reassess its tax obligations related to its 2008 conversion to a company from an income trust.

US

By Amanda Gould and Nikolaj Gammeltoft

Sept. 21 (Bloomberg) — The Standard & Poor’s 500 Index erased gains, sending the benchmark index lower for the fourth time in five days, as a rally in Apple Inc. faded and banks retreated.

Apple, which is forecast to sell 10 million iPhone 5s this weekend in the device’s debut, rose 0.2 percent after climbing as much as 0.9 percent. Materials producers, consumer staples, and bank stocks led losses in the S&P 500. Alcoa Inc., Coca-Cola Co. and Bank of America Corp. slipped at least 0.8 percent.

Research In Motion Ltd. declined 6.5 percent as its BlackBerry service suffered disruptions in Europe.

“The market is trying to catch its breath,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion, said in a telephone interview. “We’ve had a pretty good run and, in the absence of incremental news, investors are resetting their portfolios.”

The S&P 500 fell less than 0.1 percent to 1,460.15 at 4 p.m. in New York. The Dow Jones Industrial Average lost 17.46 points, or 0.1 percent, to 13,579.47. Today’s trading came amid the expiration of equity futures and options contracts, a process known as quadruple witching, as well as S&P’s quarterly index rebalancing. About 8.4 billion shares changed hands, 37 percent more than the three-month daily average.

The benchmark index for U.S. equities fell 0.4 percent this week as reports signaled global economies are slowing. The benchmark index has rallied 16 percent this year and last week closed at the highest level since 2007 after the Federal Reserve and the European Central Bank announced monetary stimulus measures. The index trades for about 14.9 times its companies’ reported earnings, compared with an average price-to-earnings multiple of about 16.3 since 1954.

“I think the market this week has clearly been digesting the gains of the previous several weeks,” Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm oversees $6.5 billion in assets.

Equities rose earlier today following a Financial Times report that Spain’s Economy Minister Luis de Guindos has held talks with the commission about a series of structural reforms that will be unveiled on Sept. 27. The newspaper cited unidentified officials involved in the discussions. The European Union needs Spain to meet specific conditions before it can authorize a full bailout.

“There may be some relief around Spain in particular, but there’s still the overhang of a deeper recession in many parts of Europe,” Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4.5 billion in Raleigh, North Carolina, said in a phone interview. Apple’s iPhone 5 success “is a sign that the consumer is capable of continuing to spend and it provides a positive boost toward the technology sector.”

Apple added 0.2 percent to $700.10. The company may not be able to keep up with demand as customers lined up in Sydney, Tokyo, Paris and New York to pick up the latest model of its best-selling product. Deutsche Bank increased its price forecast for the shares of the world’s biggest company to $850 from $775.

Mobile-service carriers offering the iPhone gained. Sprint Nextel Corp. jumped 3.9 percent to $5.65, while AT&T Inc. increased 0.4 percent to $38.08 and Verizon Communications Inc. added 0.3 percent to $45.64.

Phone stocks had the biggest gain among 10 groups in the S&P 500, climbing 0.5 percent. MetroPCS Communications Inc. surged 3.9 percent to $11.63.

Research In Motion slipped 6.5 percent to $6.46. Some BlackBerry users in Europe, the Middle East and Africa lost e- mail and Internet access, wireless carrier Vodafone Group Plc said. The disruptions, disclosed earlier today, have since been resolved, Waterloo, Ontario-based RIM said in an e-mailed statement.

The Dow Jones Transportation Average decreased 1 percent today, completing its biggest weekly decline since November. The gauge of 20 shipping companies from FedEx Corp. to United Continental Holdings Inc. began slipping into a bear market three months before broader benchmark indexes in 2007 and peaked before the rest of the market when the technology bubble popped in 2000.

Bank of America fell 0.9 percent to $9.11. Beverage producer Coca-Cola retreated 1.6 percent to $38.03, while Alcoa Inc., the largest U.S. aluminum producer, slipped 1.3 percent to $9.13.

Genworth Financial Inc. lost 2.9 percent to $5.66. Acting Chief Executive Officer Martin Klein said the cost of defending its investment-grade status at Moody’s Investors Service may be more detrimental than a cut to junk, according to BTIG LLC.

Michael Kors Holdings Ltd. climbed 9.3 percent to $57.35 after increasing its forecasts for sales and profit this year as demand increases in North America and Europe.

Expedia Inc. rallied 4 percent to $59.37 for the second- biggest gain in the S&P 500. The online travel company was rated buy in new coverage from Cantor Fitzgerald & Co.

An index of homebuilder stocks rose for third straight day, gaining 1.7 percent. KB Home, the Los Angeles-based homebuilder that targets first-time buyers, rose 16 percent to $15.26 after reporting a profit for its fiscal third quarter. KB Home benefited from tax and insurance-related gains, as well as higher sales amid a U.S. housing market recovery.

Confidence among homebuilders climbed to the highest level in more than six years, the National Association of Home Builders/Wells Fargo sentiment index showed this week. Single- family housing starts rose in August to the fastest annual rate since April 2010, the Commerce Department said Sept. 19.

The U.S. is the most attractive stock market because of the strength of corporate balance sheets, low interest rates and valuations, said billionaire investor Michael Price, who made his reputation as a value investor in the 1980s by buying shares of beaten-down lenders and running some of the best-performing U.S. mutual funds.

“As the economy improves and as uncertainty from our election and China and all the European issues go away, American consumers have enormous pent-up demand,” Price said in a “Bloomberg Surveillance” interview with Tom Keene and Sara Eisen. “It’s very early for European stocks.”

Price, president of MFP Investors LLC, said he’s bullish on J.C. Penney Co. because the U.S. retailer is “doing all the right things” and will benefit from rising demand among U.S. shoppers.

J.C. Penney shares, which tumbled 11 percent yesterday, will rally amid a rebound in consumer spending when concerns about the global economy subside, said Price. He said the retailer is trading for about half of its “intrinsic value.”

He also likes Citigroup Inc. shares because they’re the cheapest among large U.S. banks, he said.

J.C. Penney increased 0.2 percent to $25.89. Citigroup fell 0.4 percent to $33.67.

Have a wonderful weekend everyone.

Be magnificent!

Only the intelligence of love and compassion can solve all problems of life.

Krishnamurti,  1895-1986

As ever,

Carolann

Originality is unexplored territory.  You get there by

carrying a canoe.  You can’t take a taxi.

-Alan Alda, 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