October 4, 2012 Newsletter

Dear Friends,

Tangents:

A dying star is throwing a cosmic tantrum in this combined image from NASA’s Spitzer Space Telescope and the Galaxy Evolution Explorer, provided by NASA Wednesday Oct. 3, 2012. In death, the star’s dusty outer layers are unraveling into space, glowing from the intense ultraviolet radiation being pumped out by the hot stellar core. This object called the Helix nebula, lies 650 light-years away in the constellation of Aquarius.

And also on this day in…

1957 – The Soviet Union launched Sputnik I into orbit around the Earth. Sputnik was the first manmade satellite to enter space. Sputnik I fell out of orbit on January 4, 1958.

1958 – British Overseas Airways Corporation became the first jetliner to offer trans-Atlantic service to passengers with flights between London, England and New York.
1965 – Pope Paul VI addressed the U.N. General Assembly and became the first reigning pontiff to visit the Western Hemisphere.
1976 – Barbara Walters joined Harry Reasoner at the anchor desk of the “ABC Evening News” for the first time.
1981 – Bruce Jenner and Harry Belafonte debuted in their first dramatic roles in NBC-TV’s “Grambling’s White Tiger”.
1987 – NFL owners used replacement personnel to play games despite the player’s strike.
1990 – The German parliament had its first meeting since reunification.
1992 – The 16-year civil war in Mozambique ended. 

“The best thing about the future is that it comes one day at a time.” – Abraham Lincoln

photos of the day October 4^th, 2012

The church spires of the Familienkirche are silhouetted against the sky during sunrise in Vienna.

People gather at a steel mill ‘Interpipe Steel’, with an installation created by artist Olafur Eliasson seen inside, in Dnipropetrovsk, Ukraine.

Market Closes for October 4th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Oct. 4 (Bloomberg) — Canadian stocks rose to their highest level in almost three weeks after European Central Bank President Mario Draghi said the bank is ready to buy government bonds as soon as the necessary conditions are fulfilled.

Enbridge Inc. rose 1.8 percent after analysts at BMO Capital Markets and UBS AG raised their rating on the stock on an improved company outlook. Dundee Industrial Real Estate Investment Trust jumped 9 percent in its first day of trading on the Toronto Stock Exchange.

The Standard & Poor’s/TSX Composite Index gained 88.21 points, or 0.7 percent, to 12,447.68 in Toronto. The benchmark index has risen 4.1 percent this year. Mining and telephone stocks led the advance today as eight of 10 industries rose.

“Draghi’s comments definitely help,” said Bruce Campbell, president of Campbell & Lee Investment Management Inc., in an interview from Oakville, Ontario. “It’s fairly obvious Spain needs some bailout help. We can argue what the number is, but because of what he’s said he’ll do and what he’s already done, it’s become self-fulfilling.”

The ECB is ready to start buying government bonds as soon as the necessary conditions are fulfilled by any countries needing assistance, Draghi said today at a press conference in Ljubljana, Slovenia. The central bank is ready to undertake purchases “once all the prerequisites are in place,” Draghi said, after policy makers left the benchmark rate at a historic low of 0.75 percent.

Bank of Canada Senior Deputy Governor Tiff Macklem said today that business investment has been “solid” and that executives need to become more competitive and win sales in faster-growing emerging markets such as Asia. Macklem also reiterated the amount of slack in the labor market has shrunk and policy makers may raise the policy interest rate to meet a 2 percent inflation target.

Canadian equities joined a rally in North American markets after U.S. jobless claims data rose less than estimated.

Applications for jobless benefits increased 4,000 to 367,000 in the week ended Sept. 29, U.S. Labor Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey.

The Canadian economy probably added 10,000 jobs in September, with the unemployment rate unchanged at 7.3 percent, according to the median estimate of economists surveyed by Bloomberg news ahead of a Statistics Canada announcement tomorrow.

Enbridge, Canada’s largest pipeline company by market value, rose 1.8 percent to C$40.08 after Carl Kirst, an analyst with BMO Capital Markets, raised the stock to outperform and Chad Friess of UBS raised his rating to buy after the company’s investor meeting in Toronto yesterday.

Dundee Industrial REIT climbed 9 percent to C$10.90 in its first day of trading on the Toronto Stock Exchange after its C$155 million ($158 million) initial public offering last month at C$10 a unit.

Whitecap Resources Inc. jumped 6.7 percent to C$7.84 after the oil and gas explorer reported record September production of 16,900 barrels of oil equivalent per day yesterday after the market close.

Bankers Petroleum Ltd., which operates in the Patos-Marinza oil field in Albania, surged 4.8 percent to C$3.25 after the Albanian project reported a 10 percent increase in production in the third quarter.

Sulliden Gold Corp., run by Forbes & Manhattan Inc.

Chairman Stan Bharti, soared 14 percent to C$1.06 after the mineral exploration company canceled a bonus plan for the board on shareholders’ input. The stock fell 15 percent yesterday.

Suncor Energy Inc., Canada’s largest energy company, advanced 1.3 percent to C$33.15 and Canadian Natural Resources Ltd. rose 1.4 percent to C$30.70 as crude rebounded from a two- month low. Oil for November delivery gained 4.1 percent to settle at $91.71 a barrel in New York as tensions between Syria and Turkey fanned concern Middle East production may be disrupted.

US

By Nikolaj Gammeltoft, Daniel Kruger and Lu Wang

Oct. 4 (Bloomberg) — U.S. stocks and commodities rallied, while the dollar and Treasuries fell, as American jobless claims climbed less than forecast and the European Central Bank said it’s ready to buy bonds once necessary conditions are met.

The Standard & Poor’s 500 Index added 0.7 percent to close at 1,461.40 at 4 p.m. in New York. Oil jumped the most in two months, recouping most of yesterday’s 4.1 percent plunge, as tension between Syria and Turkey escalated. Gasoline climbed 5.1 percent and gold touched the highest price in 11 months. The dollar weakened against 15 of 16 major peers, while 10-year Treasury yields added six basis points to 1.67 percent.

Treasuries fell as stocks advanced and investors dissected last night’s U.S. presidential debate. Government data showed 367,000 people filed initial jobless claims last week, below the median forecast of 370,000. A report tomorrow is projected to show the U.S. added 115,000 jobs last month and the unemployment rate increased to 8.2 percent. The ECB left its benchmark rate at 0.75 percent and President Mario Draghi put the onus on Spain to decide whether it wants a bailout.

“The jobless claims report was OK and Draghi is signaling he will do whatever it takes, so I’m not expecting him to take his foot off the accelerator,” Philip Orlando, the New York- based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a phone interview. “Every data point in the U.S. will be viewed through a market prism and a political prism now.”

The S&P 500 has rallied 16 percent this year as policy makers around the world attempted to safeguard the economic recovery. The benchmark index reached the highest level since 2007 on Sept. 14 after Federal Reserve Chairman Ben S. Bernanke said the central bank will buy $40 billion of mortgage securities a month, a third round of quantitative easing nicknamed QE3 by investors.

Fed officials said they could change the size of the purchases to reduce the risks associated with the program, such as disrupting financial markets and spurring inflation, according to minutes from their last meeting released today.

Mitt Romney aggressively challenged President Barack Obama in their first debate last night and polls conducted in the immediate aftermath by CNN and CBS News both indicated voters thought Romney had won the encounter at the University of Denver. Obama’s odds of re-election fell to 66.9 percent from 74 percent before the debate and a peak of 78.9 percent on Sept.29, according to Intrade.com.

Romney has said that he wouldn’t appoint Bernanke to a third term, while his running mate, House Budget Committee Chairman Paul Ryan of Wisconsin, has said he doesn’t want the Fed to provide additional stimulus.

“The market’s got to start pricing in the possibility of a Romney victory, and if that’s the case then things are going to change a lot,” said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York, one of the 21 primary dealers that trade with the Fed. “Romney’s going to go after Bernanke. He’s not a fan of the QE, printing money.”

The S&P 500 rose for a fourth day as financial, commodity and consumer companies led gains among the index’s 10 main groups.

Bank of America Corp. and Citigroup Inc. rose at least 2.6 percent to pace an advance in diversified financial shares, which led gains among 24 industries. Romney said last night that the Dodd-Frank overhaul of the financial industry has made banks reluctant to lend and the industry needs clearer regulations.

Consol Energy Inc. and Peabody Energy Corp. jumped more than 4 percent as analysts forecast an end to four straight quarters of declines in the price of coal and Romney said in the debate last night that he likes coal.

TJX Cos. and Target Corp. gained after the retailers reported monthly same-store sales that topped estimates. Ryder System Inc. jumped 6 percent after SunTrust Robinson Humphrey advised buying the shares. Sprint Nextel Corp. slid 2.1 percent after the stock was downgraded by Robert W. Baird & Co. Avery Dennison Corp. fell 4.4 percent after 3M Co. scrapped an agreement to buy its office products business.

Some traders pointed to a bullish bet on the S&P 500 in the options market as helping to fuel today’s rally. One investor bought 11,000 calls expiring tomorrow giving the right to buy the index at 1,465, 1 percent above yesterday’s closing level, Chris Rich, head options strategist at JonesTrading Institutional Services LLC in Chicago, said in an interview.

The bullish options surged 196 percent to $3.70 and were the most-traded contract on the benchmark gauge today.

“People are blaming the move higher in the S&P 500 on the options trade,” Rich said in an interview. “Everyone was talking about it.”

Another report today showed orders placed with U.S. factories fell in August by the most in more than three years, signaling that slowdowns in business investment and exports restrained the economic expansion. The 5.2 percent decrease in bookings was less than the median forecast of economists in a Bloomberg News survey predicting a decline of 5.9 percent.

Tomorrow’s jobs data will be the second-to-last of the Labor Department’s monthly reports before U.S. voters vote for their next president on Nov. 6.

“The most important message will be from the employment data from the U.S. on Friday,” said Herbert Perus, who helps oversee about $36 billion as head of equities at Raiffeisen in Vienna. “This will be crucial.”

The yen fell against 13 of its 16 major peers as the Bank of Japan started a two-day meeting after expanding stimulus last month. Price swings in major currencies have waned, with the JPMorgan G7 Volatility Index sliding as low as 7.69 today, the lowest level since October 2007.

Among European stocks, Halfords Group Plc jumped a record 14 percent after the U.K. retailer of bicycles and car parts said earnings will be in the upper half of its previous forecast. Nobel Biocare Holding AG slid 4.3 percent in Zurich as the world’s second-biggest maker of dental implants said full- year profit will be hurt by a deteriorating Japanese market.

Spanish government bonds stayed lower after the nation sold 3.99 billion euros ($5 billion) of securities. It auctioned 3.75 percent notes maturing in 2015 at an average yield of 3.956 percent, up from 3.845 percent at the last sale on Sept. 20. It also sold notes maturing in 2014 at 3.282 percent and 2017 securities at 4.766 percent.

The nation’s three-year note yields rose six basis points to 3.98 percent, while the rate on the two-year security was five basis points higher at 3.28 percent.

Indian stocks rallied to the highest level in more than a year the cabinet considered further measures to open up Asia’s third-largest economy. The cabinet approved a proposal to allow overseas companies to own as much as 49 percent in local insurers versus the current limit of 26 percent, Ajay Maken, minister of sports, said in New Delhi. The BSE India Sensitive Index, or Sensex, jumped 1 percent.

The S&P GSCI gauge of 24 commodities rose 2.5 percent, the biggest gain in two months. West Texas Intermediate oil advanced 4.1 percent to $91.71 a barrel in New York. Crude rebounded as Turkey’s parliament authorized the government to order military action in Syria. A mortar bomb fired across the border yesterday killed five Turks. Oil slid yesterday after the Energy Department said output rose to 6.52 million barrels a day last week, the most since December 1996.

Gold futures advanced 0.9 percent to $1,796.50 an ounce and climbed to as high as $1,797.70, the highest for a most-active contract since Nov. 9.

“Peace begins with a smile.” – Mother Teresa

Have a great evening everyone!

“Never allow a person to tell you no who doesn’t have the power to say yes.” – Eleanor Roosevelt

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.