August 31, 2012 Newsletter

Dear Friends,

Tangents:

Syrup theft – seems like a sticky situation!

The folks at a St-Louis-de-Blandford warehouse are in shock today, as bandits in Quebec have taken off with over $30 million dollars worth of maple syrup.  The maple syrup was being temporarily stored in the warehouse, while renovations were being done at a new location.  It wasn’t until a routine inventory check when the maple syrup was discovered missing.  “The Federation always acts with caution to protect producers’ harvests. The St-Louis-de-Blandford warehouse had been secured by a fence and locks, and visited regularly,” Serge Beaulieu, president of the Federation of Quebec Maple Syrup Producers, said in a statement. “The sales agency`s maple syrup inventory is spread across several storage locations which were not subject to theft.” Quebec is responsible for 70 to 80% of the world’s maple syrup, according to the Quebec Maple Syrup Producers federation. The federation noted that several U.S. states had “a very low, indeed catastrophic, harvest during the 2012 season” while “the Quebec harvest . . . remained normal.” “The Federation wishes to underscore that all maple syrup inventories in its charge are fully insured. The marketing of the stolen maple syrup will affect the entire maple industry. It is crucial to identify those responsible for this crime.”

Maple trees are readied at the Morgan Arboretum as they prepare for the upcoming Maple syrup harvest, in Montreal.

“Don’t judge each day by the harvest you reap but by the seeds that you plant.” – Robert Louis Stevenson

And also on this day in…

• 1881 – 1st US men’s single tennis championships (Newport, RI)
• 1886 – 1st major earthquake recorded in eastern US, at Charleston SC
• 1897 – Thomas Edison patented his movie camera (Kinetograph)
• 1914 – 24.8 cm rainfall at Bloomingdale, Michigan (state record)
• 1954 – Hurricane Carol (1st major named storm) hits New England
• 1961 – Amsterdam National Ballet forms
• 1986 – Russian cargo ship crashes into cruise ship Admiral Nakhimov

photos of the day August 31, 2012

Tributes for Princess Diana are displayed on the gate of Kensington Palace in London on the 15th anniversary of her death. Princess Diana was killed in a car accident in Paris August 31, 1997.

A performer from the Fuerzabruta company of Argentina is pictured as she acts in a show entitled ‘Mylar’ on a translucent overhead water stage during the Night Festival in Singapore.

The full moon rises as riders take a spin on the Tilt-a-Whirl during the Oregon State Fair, in Salem, Ore., on Thursday, Aug. 30, 2012.

Market Closes for August 31, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 31 (Bloomberg) — Canadian stocks rose for the first time this week as data showed faster-than-estimated economic growth and U.S. Federal Reserve Chairman Ben S. Bernanke said he would not rule out further bond purchases.

Athabasca Oil Corp. soared 6.8 percent after the crude producer said it signed a letter of intent to pursue a joint venture. Canadian Natural Resources Ltd. and Petrominerales Ltd. gained at least 0.9 percent as crude prices advanced for the first time in three days. Thompson Creek Metals Co. surged 9.8 percent after an analyst at Dahlman Rose & Co. recommended buying the molybdenum mining company.

The Standard & Poor’s/TSX Composite Index added 93.08 points, or 0.8 percent, to 11,979.73 at 2:37 p.m. in Toronto.

Two stocks rose for each that fell in the index. The equity benchmark has dropped 0.8 percent this week.

“Bernanke is so far keeping to a cautious mode and not signaling anything dramatic,” said Michael Smedley, executive vice president with Morgan Meighen & Associates Ltd. in Toronto.

His firm manages about C$1 billion ($1.01 billion). “It’s some comfort for the market the speech-making is moderate in its presentation. Probably more comforting than having to analyze something dramatic. The seasonal change is so vital here, you will see an acceleration in activity after the long weekend.” North American markets will be closed Monday for the Labor Day holiday.

Bernanke’s 24-page speech at the Kansas City Fed’s symposium reviewed the Fed’s policy actions through the financial crisis and use of nontraditional policy tools such as communication and outright bond purchases, concluding that they have been effective in boosting growth and improving financial conditions. He said that declines in the unemployment rate would continue only if growth picks up above its longer term trend.

The speech comes two weeks before he leads a meeting of the Federal Open Market Committee to decide whether an expansion of the Fed’s record stimulus is needed to spur growth. The Fed will likely not take any concrete action in an effort to avoid upstaging the U.S. presidential election in November, Smedley said.

Canadian gross domestic product grew at a 1.8 percent annualized pace in the second quarter, matching the revised January-March figure. The median forecast of 25 economists surveyed by Bloomberg News was for the rate to fall to 1.6 percent from an originally reported 1.9 percent first-quarter pace.

Canadian Natural Resources added 0.9 percent to C$30.13 and Petrominerales jumped 1.7 percent to C$9.41. Oil for October delivery increased 2.2 percent to $96.70 a barrel on the New York Mercantile Exchange.

Athabasca Oil jumped 6.8 percent to C$13.36 after the company said it signed a letter of intent to pursue a joint venture for its Hangingstone and Birch properties. Athabasca did not comment on the size of the potential transaction or its partner in a statement today. Its shares were halted earlier in the day after a report in the Globe and Mail that Kuwait Petroleum Corp. may invest as much as C$4 billion for a joint venture to develop Athabasca Oil’s assets in Alberta.

OceanaGold Corp. advanced 9.1 percent to C$2.64, heading for its biggest gain since December. China Gold International Resources Corp. soared 9.9 percent to C$3.44 and Dundee Precious Metals Inc. climbed 6 percent to C$8.51 as gold prices gained the most in a week. Gold futures for December delivery jumped 2 percent to $1,690.10 an ounce in New York.

Barrick Gold Corp. added 3.5 percent to C$38.10 and Goldcorp Inc. rallied 3.9 percent to C$40.68.

Thompson Creek Metals surged 9.8 percent to C$2.71 after Anthony Young, an analyst with Dahlman Rose, upgraded the company to a buy from hold. Thompson Creek shares have plunged 62 percent this year.

Royal Bank of Canada rose 1.3 percent to C$55.69 after Gabriel Dechaine, an analyst with Credit Suisse Group AG, raised the bank to an outperform. Royal Bank, Canada’s largest lender, raised its dividend yesterday after posting a 73 percent increase in profit for its third quarter.

Research In Motion Ltd. sank 1.5 percent to C$6.57, on pace for its lowest share value in almost nine years. RIM stock has plunged 56 percent this year.

US

By Rita Nazareth and Inyoung Hwang

Aug. 31 (Bloomberg) — U.S. stocks rallied with commodities and Treasuries as Federal Reserve Chairman Ben S. Bernanke said he wouldn’t rule out more stimulus to lower a jobless rate he described as a “grave concern.” The dollar weakened.

The Standard & Poor’s 500 Index added 0.5 percent to close at 1,406.58 and the Dow Jones Industrial Average climbed 90.13 points to 13,090.84 as both finished a third straight monthly gain. Oil extended its biggest monthly advance since October and gold capped its best since January. Ten-year Treasury yields slid seven basis points to 1.55 percent, an three-week low, and the Dollar Index lost 0.5 percent to 81.25, its lowest on a closing basis since May.

Bernanke’s 24-page speech at the Kansas City Fed’s symposium made the case for further monetary easing and concluded that the central bank’s non-traditional policy tools such as bond purchases have been effective in boosting growth and improving financial conditions. He said that declines in the unemployment rate would continue only if growth picks up above its longer term trend.

“It’s the strongest language on unemployment I remember Bernanke using,” said Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private- banking unit of KeyCorp in Cleveland. “That makes the next jobs report even more critical. If it deviates significantly from muddling along, they may well be forced to act.”

The Labor Department’s employment report for August is scheduled to be released on Sept. 7. Payrolls probably climbed by 125,000 in the month and the unemployment rate remained at 8.3 percent, according to the median economist prediction in a Bloomberg survey.

Commodity, technology, financial and industrial companies helped lead gains in the 10 main industry groups in the S&P 500 today. Intel Corp., American Express Co. and Microsoft Corp.

rose more than 1.6 percent to lead the Dow’s gain.

The dollar weakened against 15 of 16 major peers, losing about 1 percent against the Swedish krona, Mexican peso and South African rand. The euro strengthened 0.6 percent to $1.2575 and rose to as much as $1.2638, the strongest level in almost two months.

Two-year Treasury yields decreased three basis points to 0.22 percent and 30-year rates tumbled seven basis points to 2.67 percent.

Bernanke left the door for a third round of quantitative easing “wide open” and the chairman’s remarks about unemployment signal the Fed is likely to act if the jobless rate increases even slightly, Alan Ruskin, Deutsche Bank AG’s global head of Group-of-10 currency strategy, said in a note to clients.

“We have seen no net improvement in the unemployment rate since January,” Bernanke told central bankers and economists in the audience, according to a text of his remarks released in Washington. “Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time.”

Speaking two weeks before the next meeting of the Federal Open Market Committee, Bernanke said long periods of high unemployment produce “enormous suffering and waste of human talent” and also risk causing structural damage to the economy that could last for many years.

“He set the backdrop for them acting, saying things like ‘the labor market is a grave concern,’” said John Canally, an economist and investment strategist at LPL Financial Corp. in Boston. The firm oversees about $350 billion. “He didn’t say that the economy is seeing any sustainable or substantial improvement, so when you mix it all together, it’s still a matter of how and when they’re going to do it rather than if.”

Benchmark U.S. equity indexes marked a third straight monthly advance in August. The S&P 500 has advanced 12 percent this year as European leaders worked to tame the region’s debt crisis and the Fed pledged to act to safeguard the economic recovery if needed.

The S&P 500 last week climbed to its highest level on an intraday basis in more than four years, then failed to close at that milestone. The index has fluctuated near the 1,400 level for three weeks.

Trading has slowed toward the end of the U.S. summer as investors awaited the Fed’s gathering in Wyoming. Bernanke’s address in Jackson Hole in 2010 preceded a second round of quantitative easing, nicknamed QE2 on Wall Street.

Volume for exchange-listed stocks in the U.S. was below 4.5 billion shares for three days this week, the lowest levels excluding days surrounding holidays in Bloomberg data going back to 2008. About 5.4 billion shares changed hands today, 12 percent below the three-month average.

The Stoxx Europe 600 Index added 0.5 percent today. It declined 0.7 percent this week, trimming its third straight monthly advance to less than 1.9 percent. Hermes International SCA gained 2.3 percent today after the maker of Birkin and Kelly bags raised this year’s sales-growth target as first-half earnings beat estimates. Bankia SA climbed 6.3 percent. After markets closed in Europe, Spain’s rescue fund said it would inject capital into the lender immediately.

Spanish bonds tumbled, sending 10-year yields up 26 basis points to a two-week high of 6.86 percent, as the government bolstered the powers of the bank rescue fund to restructure troubled lenders and S&P lowered the Catalonia region’s credit rating to junk. Spain yesterday delayed making a decision on seeking European bailout funds until conditions of the aid are clear.

Oil advanced 2 percent to $96.47 a barrel in New York to cap a 9.6 percent rally for the month. Gold increased 1.8 percent to $1,687.60 an ounce as Bernanke’s remarks spurred demand for an inflation hedge. The precious metal increased 4.5 percent in August. The S&P GSCI Index of commodities jumped 1.2 percent as 18 of its 24 materials increased.

The MSCI Emerging Markets Index rose 0.4 percent, snapping a five-day slump and trimming this month’s drop to 0.4 percent. Benchmark gauges in Turkey, Poland, the Czech Republic and Thailand gained more than 1 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slipped 0.7 percent.

“Nothing is impossible, the word itself says ‘I’m possible’!” – Audrey Hepburn

Have a fabulous long weekend everyone!

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.