August 23, 2012 Newsletter

Dear Friends,

Tangents:

Would Google hire you?  How do you test a job applicant’s creativity, problem-solving prowess, and ability to think outside the box?  You might pose some mind-twisting puzzles for him or her to solve.  Here are a few of the ones most easily described and answered, from “Are You Smart Enough to Work at Google?” by William Poundstone.

1. THREE WOMEN  are wearing swimsuits.  Two are sad and one is happy.               The happy woman is crying.  The sad women are smiling.  Explain.

1. A MAN PUSHES his car to a hotel and loses his fortune.  What happened?
2. HOW DO YOU PUT  a giraffe in a refrigerator?
3. YOU HAVE 10,000 Apache Web servers and one day to make $1 million.  What would you do?
4. WHAT’S THE MOST BEAUTIFUL equation you’ve ever seen?

Scroll down for the ANSWERS.

And on this day in…

1541 – Jacques Cartier lands near Quebec on his third voyage to North America.

1785 – Naval hero Oliver H. Perry is born.

1912 – Gene Kelly is born.
1914 – The Emperor of Japan declares war on Germany.
1926 – American film star Rudolph Valentino dies, causing world-wide hysteria and a number of suicides.

1927 – Sacco & Vanzetti are executed.
1939 – Joseph Stalin and German Foreign Minister Joachim von Ribbentrop sign a non-aggression pact between the Soviet Union and Germany, freeing Hitler to invade Poland and Stalin to invade Finland.
1942 – German forces begin an assault on the major Soviet industrial city of Stalingrad.
1944 – German SS engineers begin placing explosive charges around the Eiffel Tower in Paris.
1950 – Up to 77,000 members of the U.S. Army Organized Reserve Corps are called involuntarily to active duty to fight the Korean War.

ANSWERS:

1. They’re at a beauty contest.
2. He’s playing the board game Monopoly.
3. You open the refrigerator door and put him in.
4. Sell the servers for $100 apiece – they’re worth at least that much.
5. E=m(c squared) is simple, beautiful – and lame.  How about: G=8(pi)T, which states Einstein’s general theory of relativity? -from Owen Thomas

photos of the day August 23, 2012

Emanuelle Angeletti (from l. to r.) as Paul McCartney, Stephen Hill as George Harrison, Reuven Gershon as John Lennon, and Gordon Elsmore as Ringo Starr play live in London at the launch of the new West End musical ‘Let it Be’ which celebrates the 50th anniversary of The Beatles. The musical will open to the public on Sept. 24.

Kirsty Wigglesworth/AP

A macaque monkey sits on a handrail of a staircase at Batu Caves on the outskirts of Kuala Lumpur, Malaysia. The caves are one of the most popular Hindu shrines outside India.

Vincent Thian/AP

Market Closes for August 23, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 23 (Bloomberg) — Canadian stocks fell as crude declined after comments from European leaders failed to hint at progress on solving the region’s debt crisis, and U.S. jobless claims unexpectedly rose.

Potash Corp. of Saskatchewan Inc. dropped 2.6 percent. Suncor Energy Inc. fell 1.5 percent. Talison Lithium Ltd. surged 53 percent after it agreed to be acquired by a U.S. company in a C$734 million ($740 million) cash deal.

The Standard & Poor’s/TSX Composite Index fell 56.48 points, or 0.5 percent, to 12,062.51 in Toronto. The benchmark gauge has gained 3.4 percent this month.

“Yesterday people got a bit excited about the potential for QE3,” Marc-Andre Robitaille, a portfolio manager with AGF Investments Inc., said in a phone interview from Montreal, referring to a third round of quantitative easing through asset purchases by the U.S. Federal Reserve. “Today is a bit of back to reality.” Robitaille manages about C$900 million in assets.

The number of Americans filing applications for unemployment benefits climbed last week to a one-month high, a fresh sign of weakness in the U.S. economy that may encourage the U.S. Federal Reserve to introduce another round of monetary stimulus.

Jobless claims rose by 4,000 for a second week to reach 372,000 in the period ended Aug. 18, Labor Department figures showed today in Washington. The median forecast of 41 economists surveyed by Bloomberg called for 365,000.

German Chancellor Angela Merkel said she and French President Francois Hollande will together keep pressure on Greece, at the center of the European sovereign debt crisis, to overhaul its economy.

Merkel, speaking to reporters in Berlin before hosting a working dinner with the French president, said they will discuss “how to receive our colleague,” Greek Prime Minister Antonis Samaras, who visits the German capital tomorrow and Paris on Aug. 25.

“It’s important to me that we all stand by our obligations and wait for the troika report and see what the result is,”

Merkel said in a prepared statement, referring to a forthcoming report on Greece’s progress in meeting its bailout terms. “We, and I, will encourage Greece to pursue the path of reform that demands a lot from the people.”

Potash Corp. retreated 2.6 percent to C$41.15, its lowest since June 21. BHP Billiton Ltd. said yesterday it is continuing preparatory work at its Jansen potash project in Saskatchewan. BHP does not yet produce potash, a key fertilizer.

Suncor fell 1.5 percent to C$31.25 and Cenovus Energy Inc. declined 2.4 percent to C$32.37. Crude fell from a three-month high, settling down 99 cents at $96.27 a barrel in New York.

Energy stocks led declines on the S&P/TSX among 10 industries.

Centerra Gold Inc. surged 11 percent to C$8.45 and Barrick Gold Corp. gained 1.5 percent to C$37.87 as gold advanced to its highest level in more than four months. Silver Standard Resources Inc. jumped 7.2 percent to C$14.87 after the metal reached its highest point since May.

Talison Lithium soared 53 percent to C$6.50, its biggest gain ever, after the Australian lithium producer agreed to be acquired by Rockwood Holdings Inc., the world’s largest producer of lithium products. The deal is worth $6.50 a share.

Advantage Oil & Gas jumped 13 percent to C$3.69, its biggest percentage gain since July 2009. The company plans to sell all non-core assets and review its strategic options at year-end, it said in a press release after the market close yesterday. Advantage shares have slumped 13 percent this year.

US

By Inyoung Hwang

Aug. 23 (Bloomberg) — U.S. stocks fell, as the Standard & Poor’s 500 Index posted its biggest decline in a month, amid investor concern that European leaders aren’t making progress in solving the region’s debt crisis.

Hewlett-Packard Co. dropped 8.2 percent after forecasting full-year earnings that missed analysts’ estimates as demand slumped. Big Lots Inc. tumbled 21 percent after lowering its annual earnings projection. Boeing Co. retreated 3.4 percent after losing 35 orders for 787-9 planes, the biggest Dreamliner cancellation. Alcoa Inc. erased 2.7 percent, pacing declines among raw-material stocks.

The S&P 500 slumped 0.8 percent to 1,402.08 at 4 p.m. in New York. The benchmark index for American equities is heading for its first weekly decline in almost two months, with a four- day drop of 1.1 percent. The Dow Jones Industrial Average lost 115.3 points, or 0.9 percent, to 13,057.46 today. Volume for exchange-listed stocks in the U.S. was 5.3 billion shares, 16 percent below the three-month average.

“We’re tipping over into a corrective phase in stocks,” Barry James, who helps oversee $3.3 billion as president of James Investment Research in Xenia, Ohio, said in a telephone interview. “Europe is the key driver in the world right now. European leaders aren’t really addressing the root problems.”

German Chancellor Angela Merkel said Europe is in one of its deepest crises, and while the path to a solution is “arduous,” the euro region will emerge stronger. She hosted French President Francois Hollande today as the leaders of Europe’s two biggest economies seek common ground on Greece and the wider debt crisis. Greece’s prime minister, Antonis Samaras, will follow Hollande to Berlin tomorrow and travel on to Paris on Aug. 25.

Stocks extended declines after the European Union said it is focused on its aid program for Spain’s banks and hasn’t received a request for a full bailout from the euro-area nation.

Earlier, German Finance Minister Wolfgang Schaeuble said that allowing Greece more time to meet its debt obligations would not solve the country’s problems and would increase costs for creditors.

“People aren’t willing to invest,” Stephen Hammers, the chief investment officer at Brentwood, Tennessee-based Compass EMP Funds, which manages about $1 billion in assets, said in a telephone interview. “If Europe gets worse, U.S. investors will see that as a warning sign.” Investors also watched for signs of future monetary policy.

The S&P 500 has rallied 9.7 percent since June 1 on speculation global central banks will take action to stimulate growth. U.S. stocks erased losses yesterday as minutes from the Federal Open Market Committee’s last meeting showed many members judged that more stimulus “would likely be warranted fairly soon.”

James Bullard, the Fed Bank of St. Louis President, said today on CNBC the minutes of this month’s meeting were no longer as relevant because the U.S. economy has picked up in the past month. Earlier, Fed Bank of Chicago President Charles Evans said in Beijing that easing policies would support economic growth around the world, including in China, broadening his call for more stimulus in the U.S.

Purchases of new U.S. homes rose more than projected in July. Sales climbed 3.6 percent to a 372,000 annual pace, compared with the median estimate of 365,000. A separate report showed the number of applications for unemployment benefits climbed last week to a one-month high, showing little progress in the labor market. Jobless claims rose for a second week to reach 372,000. The median forecast called for 365,000.

A Chinese report today indicated that manufacturing will contract at a faster pace in August, signaling the country’s economy needs more stimulus to secure a rebound in growth. The preliminary reading for a purchasing managers’ index for China was 47.8. If confirmed, it would be the weakest level since November and the 10th month that the reading has stayed below 50, the longest run in the index’s eight-year history.

Hewlett-Packard, the biggest maker of personal computers, dropped 8.2 percent to $17.64 for the biggest decline in a year. Profit excluding some costs will be $4.05 to $4.07 a share in the year that ends in October, Palo Alto, California-based Hewlett-Packard said yesterday in a statement. That’s at the low end of a forecast for $4.05 to $4.10 issued in May and below the average $4.08 analyst estimate compiled by Bloomberg.

The company suffered another quarter of slumping demand for personal computers and services aimed at businesses, underscoring the turnaround challenge facing Chief Executive Officer Meg Whitman.

Other technology stocks also declined. Intel Corp., the world’s largest chipmaker, slid 2.7 percent to $25.04, while Microsoft Corp., the biggest software maker, slumped 0.9 percent to $30.26.

Big Lots, the Columbus, Ohio-based discount retailer, plunged 21 percent to $30.76 for the biggest drop in the S&P 500. Profit excluding some items will decline to $2.80 to $2.95 a share this year, reduced from a previous projection of $3.25 to $3.40 a share. Analysts anticipated $3.30, the average of 16 estimates compiled by Bloomberg.

Boeing slumped 3.4 percent to $70.36, after losing 35 orders for 787-9 planes, the biggest Dreamliner cancellation, as Qantas Airways Ltd. scrapped a contract after delivery delays and losses on international routes. Qantas’s pullback on jets worth about $8.5 billion at current list prices reduced Chicago- based Boeing’s backlog for the 787-9 by about 10 percent.

Raw-material stocks fell 1.7 percent for the biggest drop out of 10 groups in the S&P 500. Alcoa, the largest aluminum producer in the U.S., erased 2.7 percent to $8.63, while DuPont Co., the most valuable U.S. chemicals producer, lost 1.1 percent to $50.24.

Patterson Cos. tumbled 4.9 percent to $34.15. The St. Paul, Minnesota-based maker of medical devices for dental and veterinary clinics reported first-quarter earnings of 45 cents a share, missing the average analyst estimate by 4 cents.

Guess? Inc., an apparel maker that operates 511 stores in the U.S. and Canada, sank 23 percent to $25.95 after cutting its annual profit and revenue forecasts amid a drop in North American store sales. Comparable-store sales, a measure of a retailer’s growth that excludes new stores, fell 8.5 percent in the quarter ended July 28.

Have a wonderful evening everyone.

Be magnificent!

The state of mind is a vicious circle.  It creates problems for itself, and then tries to resolve them.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

When a thing is funny, search it carefully for a hidden truth.

-George Bernard Shaw, 1856-1950

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