October 25, 2012 Newsletter

Dear Friends,

Tangents:

Prime Number:  100 MILLION

Number of years ago, roughly that tree resin “froze” in amber a spider in the act of seizing a wasp, the first known fossil evidence of a spider attack, found in a Burmese mine.

MUSIC – A new license to thrill

-by Stephen Humphries

When it comes to “James Bond” theme songs, nobody does it better than the Brits.  (Apologies to Carly Simon, whose ballad for “The Spy Who Loved Me” is an honorable exception.)  Case in point: Adele’s “Skyfall,” the first “Bond” song by a British artist in more than 25 years, has been widely hailed as one of the best in the series.

“[Sony pictures] was interested in an artist who not only would be right for the specific film, but who could harken back to the classic ‘Bond ‘ themes of the ‘60s,”  says Jon Burlingame, author of “The Music of James Bond.”  Because Adele is one of the hottest artists in the world – and a Brit – it was almost a no-brainer.”

….Adele’s “Skyfall” earns its license to thrill by emulating the classic “Bond” sound.  In keeping with the tenor of Daniel Craig’s Bond, it’s soulful and somber, sophisticated and seductive.  One can imagine a tuxedoed 007 listening to “Skyfall” while driving his Aston Martin – or sky-diving with Her Majesty.

“It’s one of the most listenable and accessible ‘Bond’ tunes in a long time,” concludes Burlingame.

On this day in 1986, Red Sox first baseman Bill Buckner let a routine ground ball go through his legs and get past him. You know the rest. -Steven Russolillo, WSJ, 10/25/2012.

And also on this day in…

1881 – Pablo Picasso was born.

1944 – The Japanese are defeated in the Battle of Leyte Gulf, the world’s largest sea engagement. From this point on, the depleted Japanese Navy increasingly resorts to the suicidal attacks of Kamikaze fighters.

1950 – Chinese Communist Forces launch their first-phase offensive across the Yalu River into North Korea.

1951 – In a general election, England’s Labour Party loses to Conservatives. Winston Churchill becomes prime minister, and Anthony Eden becomes foreign secretary.

1954 – President Eisenhower conducts the first televised Cabinet meeting.

1960 – Martin Luther King, Jr., is sentenced to four months in prison for a sit-in.

1983 – 1,800 U.S. troops and 300 Caribbean troops land on Grenada. U.S. forces soon turn up evidence of a strong Cuban and Soviet presence–large stores of arms and documents suggesting close links to Cuba.

Write in on your heart that every day is the best day in the year. –Ralph Waldo Emerson

photos of the day

October 25, 2012

Guests are silhouetted at the launch event of Microsoft’s Windows 8 operating system in New York.

Lucas Jackson/Reuters

Robert Cuccioli, portraying the Green Goblin, and Reeve Carney, portraying Spider-Man, with an actor dressed as villain Kraven the Hunter from the Broadway musical ‘Spider-Man: Turn Off the Dark’ speak at a news conference in New York held to offer tips on keeping kids safe this Halloween. The actors reminded parents to examine all Halloween candy, never let kids eat unwrapped treats, ensure children wear flame-retardant costumes and avoid strangers.

Mark Kennedy/AP

Market Closes for October 25^th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang

Oct. 25 (Bloomberg) — Canadian stocks rose for the first time in five days as Goldcorp Inc. earnings beat estimates and amid speculation the Bank of Japan will add stimulus.

Raw-materials producers rose the most among the 10 industry groups in the Standard & Poor’s/TSX Composite Index, surging 2.2 percent, as Goldcorp jumped 8.2 percent. Suncor Energy Inc. advanced 1.3 percent as oil gained for the first time in six days.

The S&P/TSX advanced 105.21 points, or 0.9 percent, to 12,300.23 in Toronto. The benchmark index lost 2.2 percent over the previous four days. It rallied as much as 11 percent from its 2012 low on May 18 as the U.S. Federal Reserve and the European Central Bank took actions to stimulate the economy.

“Keep in mind that we are coming off a fairly sharp pullback,” Andrew Pyle, an associate portfolio manager at ScotiaMcLeod Inc. in Toronto, said in a phone interview. His team oversees about C$200 million ($200 million). “All you really need is a couple indications of positive or constructive sentiment and you start to see buying come back.”

“You got speculation that we are going to see further stimulus from a major central bank,” Pyle said. “Given the weight of resources in Canada, anything that improves the outlook for commodities obviously has a greater impact on the TSX.”

Japan’s central bank will consider increasing its asset- purchase program by 10 trillion yen ($125 billion) to 90 trillion yen at its Oct. 30 policy meeting, the Nikkei newspaper reported today.

Goldcorp climbed 8.2 percent to C$43.60, the biggest jump since June 1. The second-biggest gold miner by market value reported third-quarter earnings that beat analysts’ estimates after production was higher than projected. Profit excluding one-time items was 54 cents a share, exceeding the 45-cent average of 21 estimates compiled by Bloomberg.

Agnico-Eagle Mines Ltd. surged 8.9 percent to C$55.97. The gold producer boosted its 2012 gold production forecast as its third-quarter sales exceeded analysts’ estimates.

Energy stocks gained 0.8 percent as a group. Suncor increased 1.3 percent to C$33.14. Encana Corp., Canada’s largest natural gas producer, advanced 2.1 percent to C$22.31 after being boosted to outperform, an equivalent of buy, from market perform at BMO Capital Markets.

Lundin Mining Corp. slumped 5.7 percent, the most in the S&P/TSX, to C$5.15. Third-quarter revenue missed analysts’ estimates. The company, which produces base metals in Europe, reduced its 2012 capital spending by $30 million to $380 million.

US

By Rita Nazareth

Oct. 25 (Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index up from the lowest level in seven weeks, amid better-than-estimated corporate earnings.

Procter & Gamble Co., the largest consumer-products maker, rallied 2.9 percent after reporting profit that topped analysts’ projections. A measure of homebuilders in S&P indexes declined 1.7 percent as Americans signed fewer contracts than forecast to buy previously owned homes. Apple Inc. fell 1.3 percent at 4:56 p.m. New York after profit missed analysts’ predictions.

The S&P 500 increased 0.3 percent to 1,412.97 at 4 p.m. New York time, snapping a two-day decline. The Dow Jones Industrial Average advanced 26.34 points, or 0.2 percent, to 13,103.68.

Volume for exchange-listed stocks in the U.S. was 6.3 billion shares, or 5.2 percent above the three-month average.

“The market is zigzagging each day on earnings,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $170 billion. He spoke in a telephone interview. “Earnings did come out better than estimated yet revenue surprises are negative.”

Fifty-four companies in the S&P 500 were scheduled to release results today. Third-quarter earnings at about 71 percent of the index’s companies beat analysts’ estimates, according to data compiled by Bloomberg. Sales missed forecasts at 60 percent of companies, the data showed.

Orders for U.S. business equipment stalled in September, capping a quarterly slump that signals investment will cool in the second half of the year. Fewer Americans filed first-time applications for unemployment benefits last week as the seasonal volatility at the start of the quarter wound down.

The S&P 500 fell 1.8 percent over the previous two days amid concern about a worsening earnings picture. The index is still up 12 percent this year on speculation central bankers will keep economies expanding.

“The market is trying to digest a lot of reports,” said Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital in Greenwood.

Procter & Gamble added 2.9 percent to $70.07. Chief Executive Officer Bob McDonald is working to introduce new products to regain market share and reduce costs amid pressure from activist investor Bill Ackman. P&G said it held or gained market share in categories representing more than 45 percent of sales in the quarter, up from 30 percent in the fourth quarter.

Symantec Corp. rose 6.7 percent to $18.54. The security- software maker forecast sales that topped projections. Symantec is doing a better job now at signing up customers at a time of sluggish spending by corporations and weak personal-computer sales, said Daniel Ives, an analyst at FBR Capital Markets & Co.

Casino companies rallied as Wynn Resorts Ltd. added 7.3 percent to $120.43. The owner of casinos in Nevada and Macau reported profit that beat forecasts and doubled its dividend.

MGM Resorts International advanced 2.3 percent to $10.88, while Las Vegas Sands Corp. increased 4.4 percent to $46.25.

Akamai Technologies Inc. surged 6.7 percent to $38.54. The company, which helps businesses deliver data more quickly over the Internet, reported sales and earnings beat estimates. Akamai was also raised to outperform from market perform at Oppenheimer & Co. by equity analyst Timothy Horan. The 18-month target price is $50 per share.

ConocoPhillips gained 2.2 percent to $57.16. The Houston- based oil-and-gas producer said profit excluding one-time costs and gains was $1.44 a share, 25 cents more than the average of 18 analysts’ estimates compiled by Bloomberg.

Angie’s List advanced 27 percent to $11.56. The consumer- review website jumped after reporting sales that beat estimates as more members paid to use the service.

McKesson Corp. increased 4.1 percent to $93.16. The largest U.S. drug distributor agreed to purchase PSS World Medical Inc. for about $2.1 billion to expand in providing medical supplies and services. PSS World surged 32 percent to $28.57.

Apple and Amazon.com Inc. were among the companies reporting results after the market close today.

Apple slid 1.3 percent to $601.91 after the close of regular trading. Profit rose to $8.22 billion, or $8.67 a share, in the fiscal fourth quarter, Cupertino, California-based Apple said today in a statement. That compares with $8.3 billion, or $8.75 a share, the average of analysts’ estimates compiled by Bloomberg. The company’s sales and profit forecasts for the current quarter also fell short of predictions.

Apple sold 14 million iPads, fewer than the 15.3 million predicted by analysts in a Bloomberg survey, as customers delayed buying old versions before the release of the iPad mini in the current quarter.

Amazon.com fell 0.7 percent to $221.28 after the close of regular trading. The world’s largest online retailer reported revenue that missed estimates and posted its first quarterly net loss since 2003, dragged down by weakness at LivingSocial.com, which it partly owns.

Nine out of 11 stocks in a measure of homebuilders in S&P indexes retreated. PulteGroup Inc., the largest U.S. homebuilder by revenue, dropped 2.5 percent to $17.01. Toll Brothers Inc. retreated 3 percent to $34.21.

Cliffs Natural Resources Inc. plunged 11 percent to $38.20 as the largest U.S. iron-ore producer reported third-quarter results that missed analysts’ estimates.

Best Buy Co. dropped 10 percent to $15.17. The retailer resisting a takeover attempt by its founder said fiscal third- quarter profit will be “significantly” below last year’s results as sales at established stores continue to decline.

Shares of Internet-radio leader Pandora Media Inc. plunged 12 percent to $8.20. Apple and major music labels have intensified negotiations to start an advertising-supported Internet radio service by early next year, according to people with knowledge of the talks.

United Continental Holdings Inc. slid 5 percent to $19.26.

The world’s largest carrier posted third-quarter profit that trailed analysts’ estimates as fuel costs increased while traffic and unit revenue declined.

The New York Times Co. plunged 22 percent, the most since at least 1980, to $8.31. The newspaper publisher led by Chairman Arthur Sulzberger Jr. tumbled after reporting a surprise third- quarter loss as total advertising sales fell.

Mead Johnson Nutrition Co. dropped 8.6 percent to $63.53.

The world’s largest standalone baby formula maker reduced its earnings forecast for the year.

Investors are flocking to the options market at an unprecedented rate to place bets on Standard & Poor’s 500 Index volatility, a sign they see risks increasing after the calmest election year in two decades.

Outstanding contracts tied to the Chicago Board Options Exchange Volatility Index reached 9.01 million on Oct. 16, the highest level ever, according to data on open interest compiled by Bloomberg. Calls that pay should the VIX increase have almost tripled this year to 4.38 million, while puts climbed 52 percent to 2.14 million, the data show.

Traders are snapping up VIX options after the gauge, which moves in the opposite direction of the S&P 500 about 80 percent of the time, lost 22 percent in 2012 through yesterday. That’s the largest annual drop for any election year since it was created in 1990, according to data compiled by Bloomberg. The VIX has climbed 22 percent since Oct. 18 as the equity gauge retreated 3.3 percent.

“The market is uncertain of the outcome of the election,” Andrew Greeley, a senior managing director at Stamford, Connecticut-based Acorn Derivatives Management Corp., which manages more than $500 million in volatility assets, said yesterday. “It will be range-bound until it is decided. Soon after the election, we could experience a stronger move.”

Have a wonderful evening everyone.

Be magnificent!

The golden rule of conduct therefore, is mutual toleration,

seeing that we will never think alike and we shall see the Truth

in fragments and from different angles of vision.

Conscience is not the same thing for all.

While, therefore, it is a good guide for individual conduct,

imposition of that conduct upon all will be an insufferable interference

with everybody’s freedom of conscience.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

I was brought up to believe that how I saw myself

was more important than how others saw me.

-Anwar Sadat, 1918-1981

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