August 8, 2012 Newsletter

Dear Friends,

Tangents:

Lots of buzz about Julia Child these days, including two new biographies that have been  receiving terrific reviews.  August 15^th would have been her 100^th birthday.  PBS honors her legacy with a multi-platform initiative on-air, online, and through social media at pbs.org/food.  Julia-lovers – and I admit I am one – can cook their own versions of her classic dishes and share photographs and blogs on PBS Food and tweet their creations using the hashtag #CookforJulia.  The celebration runs August 5^th to 15^th.

And on this day in…

1937 – Dustin Hoffman was born.
1940 – The German Luftwaffe attacks Great Britain for the first time, beginning the Battle of Britain.

1942 – U.S. Marines capture Guadalcanal airstrip.

1963 – Land Rovers used in famous ‘Great Train Robbery’.
1974 – Richard Nixon resigns.

1981 – Roger Federer was born.

photos of the day August 8, 2012

A man paddles on a stand up paddle board (SUP) during a hot summer day on Lake Geneva in Vevey, Switzerland.

Denis Balibouse/Reuters

School children dressed as Hindu Lord Krishna take part in a function held ahead of ‘Janamashtmi’ celebrations in the southern Indian city of Chennai. Janamashtmi is the birth anniversary of Lord Krishna which will be celebrated on August 10.

Babu/Reuters

Market Closes for August 8, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Aug. 8 (Bloomberg) — Canadian stocks declined as a slump in energy and financial shares offset gains in mining and phone companies amid concern about the global economy and central banks’ efforts to add stimulus measures.

Bank of Nova Scotia and Royal Bank of Canada dropped at least 0.8 percent to pace losses among banks. Barrick Gold advanced 0.2 percent as the price of the metal rose 0.3 percent, reversing earlier losses. BCE Inc. gained 3 percent as Canada’s second-largest wireless carrier topped second-quarter profit estimates and increased its annual forecast. Research In Motion Ltd., maker of the BlackBerry smartphone, soared 5.9 percent.

The Standard & Poor’s/TSX Composite Index declined 28.95 points, or 0.2 percent, to 11,834.55 at 1:27 p.m. in Toronto.

Equities were weighed down as the U.S. Federal Reserve Bank of Dallas president, Richard Fisher, said global central banks may not have the capacity to undertake additional measures.

German industrial production declined in June, led by a drop in construction output, data from the Economy Ministry in Berlin showed today.

Bank of Nova Scotia tumbled 1.1 percent to C$52.05. Royal Bank of Canada slid 0.8 percent to C$51.41.

Silver Wheaton Corp., which resells silver bought from mining companies, jumped 4.9 percent to C$30.09 after it agreed to pay HudBay Minerals Inc. $750 million for access to future gold and silver production at two HudBay mining sites. HudBay dropped 1.4 percent to C$8.89. Barrick Gold gained 0.2 percent to C$34.01.

RIM jumped 5.9 percent to C$7.75 amid speculation by a Jefferies & Co analyst that Samsung Electronics Co. may license the struggling BlackBerry maker’s new software or consider buying the company.

US

By Rita Nazareth

Aug. 8 (Bloomberg) — The Dow Jones Industrial Average rose a fourth day, the longest gain since June, as a jump in Hewlett- Packard Co. helped the measure recover from earlier losses.

Hewlett-Packard increased 2.4 percent after raising its profit forecast and appointing a new head for its enterprise services unit as it restructures the business. Dean Foods Co. surged 41 percent as its WhiteWave unit filed to raise $300 million in a U.S. initial public offering. McDonald’s Corp. slid 1.7 percent amid unchanged July global sales. Priceline.com Inc., the biggest U.S. online travel agency by market value, tumbled 17 percent on a disappointing earnings projection.

Seven stocks fell for every six rising on U.S. exchanges at 4 p.m. New York time. The Standard & Poor’s 500 Index gained 0.1 percent to 1,402.22. The Dow average added 7.04 points, or 0.1 percent, to 13,175.64, rallying 2.3 percent in four days. Volume for exchange-listed stocks in the U.S. was 5.8 billion shares, or about 13 percent below the three-month average.

“People have been particularly surprised with earnings,” said David Goerz, the San Francisco-based chief investment officer at Highmark Capital Management Inc., which oversees about $17.5 billion of assets. “Profit margins are still very high and will not fall off a cliff. There’s a tendency for people to be more inclined to be a buyer than a seller.”

A four-day rally has taken the S&P 500 up almost 10 percent from a five-month low on June 1. The index is trading above the average year-end forecast among Wall Street strategists of 1,389. About 73 percent of S&P 500 companies which reported second-quarter results so far have beaten analysts’ earnings estimates, according to data compiled by Bloomberg.

Earlier today, benchmark gauges fell after Federal Reserve Bank of Dallas President Richard Fisher said adequate economic stimulus already is in place and that global central banks may not have the capacity to undertake additional measures to boost growth. Stocks rose yesterday as Fed Bank of Boston President Eric Rosengren said the central bank should pursue an “open- ended” easing program of “substantial magnitude.”

“Stimulus can’t hurt, but the problem is that it has less and less effect,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati.

“Any argument by policymakers is going to pull the market in various directions, depending on what they are saying.”

Seven out of 10 groups in the S&P 500 rose as consumer staples, health-care and commodity shares had the biggest gains.

Hewlett-Packard rallied 2.4 percent, the most in the Dow, to $19.41. Profit excluding some items in the current period will be $1, up from a prior projection of 94 cents to 97 cents, the Palo Alto, California-based company said today.

Dean Foods surged 41 percent, the biggest gain since it began trading 16 years ago, to $17.46. The proceeds will be used to pay down debt at Dallas-based Dean, according to the filing.

Dean said yesterday that it will own at least 80 percent of WhiteWave’s common stock following the IPO and distribute those shares to its investors at least 180 days after the offering.

Macy’s Inc. rose 2.7 percent to $38.01. The owner of its namesake and Bloomingdale’s department stores reported second- quarter profit that beat estimates, helped by its credit cards.

Walt Disney Co. gained 1.4 percent to $50.49. The world’s largest entertainment company, posted better than expected third-quarter profit buoyed by the film hit “Marvel’s The Avengers.” Revenue fell short of analysts’ estimates.

Computer Sciences Corp. gained 16 percent to $29.53. The technology contractor for government and corporate customers reported profit and revenue that topped estimates as its new chief executive officer works on turning the company around.

Express Scripts Holding Co. added 8.4 percent to $60.73.

The largest U.S. processor of drug prescriptions raised its annual profit forecast as gross margins improved following its April acquisition of Medco Health Solutions Inc.

XL Group Plc climbed 6.6 percent to $22.78 after the insurer’s second-quarter profit beat analysts’ estimates as premium revenue increased.

MEMC Electronic Materials Inc. soared 11 percent to $2.28.

The second-largest U.S. polysilicon maker jumped after second- quarter sales of solar projects boosted its cash flow.

New York Times Co. added 6.1 percent to $8.57 after the newspaper publisher entered talks to sell About.com, aiming to salvage a portion of its ill-fated bet on the website.

Bloomin’ Brands Inc. soared 13 percent to $12.41. The owner of the Outback Steakhouse restaurant chain rallied after raising $176 million in its U.S. IPO, pricing a reduced number of shares below the proposed range.

Knight Capital Group Inc. climbed 3.3 percent to $3.16, after tumbling 24 percent over the previous two days. Chief Executive Officer Thomas Joyce estimated last week’s trading loss will be $270 million after taxes and told clients the firm is “in good standing” with clearinghouses.

The post-tax loss compares with a previously disclosed pretax loss of $440 million. The letter comes a week after Knight, one of the biggest market-making firms in the U.S., was driven to the brink of bankruptcy after a technology malfunction spewed orders into the market by mistake.

Cincinnati Bell Inc. jumped 5.4 percent to $3.94 after proposing an IPO for its CyrusOne unit, a data-center operator it acquired in 2010.

A123 Systems Inc. advanced 6.4 percent to 50 cents. The maker of lithium batteries signed a $450 million non-binding financing agreement with China’s Wanxiang Group Corp.

McDonald’s slumped 1.7 percent to $87.53. Analysts projected an increase of 2.3 percent, the average of estimates compiled by Consensus Metrix. Sales at domestic locations fell 0.1 percent. Analysts estimated a gain of 2.2 percent.

Priceline tumbled 17 percent to $562.32. Consumers in Europe — one of the main engines of growth for Priceline — put off travel amid an economic crisis there. The company had been boosting sales in the region after the 2005 acquisition of Amsterdam-based Booking.com. Results were also dragged down as the strength of the U.S. dollar eroded the value of overseas receipts, said Chief Executive Officer Jeffery Boyd.

Rival Expedia Inc. declined 4.6 percent to $56.14, while Orbitz Worldwide Inc. decreased 26 percent to $3.47. TripAdvisor Inc. retreated 4.9 percent to $36.77.

Alpha Natural Resources Inc. declined 8.7 percent to $6.30.

The second-largest U.S. coal producer lowered its metallurgical coal sales forecast for 2012 as steel output declined in Europe and slowed in China.

Ralph Lauren Corp. lost 1.1 percent to $151.35. The retailer of its namesake brand clothing projected second-quarter sales that trailed analysts’ estimates.

VeriFone Systems Inc. plunged 12 percent to $34.18 after Starbucks Corp., the largest coffee-shop chain, said it will use Square Inc.’s rival payment-system technology in 7,000 stores.

Warner Chilcott Plc fell 6.9 percent to $16.54. The drugmaker specializing in women’s health and dermatology said it has ended efforts to find a buyer for the company.

The S&P 500 is in a “make-or-break situation” that will probably lead to either large gains or losses for the benchmark U.S. stocks gauge, according to technical analysts at UBS AG.

After climbing through the 1,390 level, the S&P 500 may test the highs reached in March and May, Michael Riesner and Marc Mueller wrote in a note dated yesterday. A drop below 1,325 would indicate a retreat to the early-June low of 1,266.

Investors should watch the flow of money into defensive stocks, whose earnings are less dependent on economic growth, and cyclicals, which are more tied to the economy, for signs of future moves in the S&P 500, the analysts said.

Have  a wonderful evening everyone.

Be magnificent!

To conquer the subtle passions

seems to me to be far harder than the

physical conquest of the world by the force of arms.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

And remember, we all stumble, every one

of us.  That’s why it’s a comfort to go

hand in hand.

-Emily Kimbrough, 1899-1989

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