November 5, 2012 Newsletter

Dear Friends,

Tangents:

Today is Guy Fawkes Day in England.

Participants in costume hold burning torches as they take part in one of a series of processions during Bonfire night celebrations in Lewes, southern England. The processions and bonfire mark the uncovering of Guy Fawkes’s ‘Gunpowder Plot’ to blow up the Houses of Parliament in 1605 and commemorates the memory of its seventeen Protestant martyrs.

Luke MacGregor/Reuters

Birthday: November 5^th,1857, Ida Tarbell, Journalist and Author

Journalist and author Ida Minerva Tarbell was one of the most well known women of her day.  An imposing, six feet tall, she revealed the fraud of the Standard Oil monopoly in a series of articles that appeared in McClure’s Magazine in 1902.  A celebrated muckraker, she devoted much of her life to uncovering waste and corruption in both the public and private sector.

Born in a log farmhouse in Pennsylvania, Tarbell moved with her family at 13 into a Philadelphia mansion when her father’s business prospered.  Ironically, given his daughter’s future exposé, he made his fortune building giant wooden containers for oil.  By 14, Tarbell was praying for deliverance from marriage in favor of the freedom she already knew she needed.  Tarbell was the only woman in her undergraduate class at Allegheny College and later earned a Master’s degree.  After two years of teaching, she retired and began writing for The Chautauquan, which championed the reformist causes of the day.  In 1891, she moved to Paris, studied at the Sorbonne, wrote articles to meet her expenses, and interviewed Emile Zola, Alexandre Dumas, and Louis Pasteur.  In her later years, she wrote books, including a biography of Abraham Lincoln and her autobiography.  She died on January 6, 1944 at the age of 86.

Imagination is the only key to the future.  Without is none exists – with it all things are possible.  –Ida Tarbell.

On this day in 1872, Susan B. Anthony was fined $100 for trying to vote in a presidential election. -Steven Russolillo, 11/05/2012, WSJ.

Also, on this day in…

1885 – Will Durant, historian, is born.

1935 – Parker Brothers company launches “Monopoly,” a game of real estate and capitalism.

1940 – President Franklin D. Roosevelt is re-elected for third term.

1941 – Art Garfunkel, singer, is born.

1968 – Richard Nixon is elected 37th president of the United States.

1968 – Shirley Chisholm of Brooklyn, New York, becomes the first elected African American woman to serve in the House of Representatives.

 
Civilization exists by geological consent, subject to change without notice. –Will Durant.

photos of the day

November 5, 2012

A woman checks her camera among ginkgo leaves outside Diaoyutai State Guest House on a late autumn day in central Beijing.

Jason Lee/Reuters

A woman uses her mobile phone in central London.

Olivia Harris/Reuters

Market Closes for November 5th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 5 (Bloomberg) — Canadian stocks swung between gains and losses ahead of U.S. elections, as gold rallied the most in a week while building permits fell more than expected in non- residential projects.

Turquoise Hill Resources Ltd. jumped 11 percent after announcing its Oyu Tolgoi copper-gold mine in Mongolia has signed a contract with a state-owned firm to supply power to the site. Silver Wheaton Corp., which pays miners upfront for a discount on future production, retreated 1.7 percent after missing earnings estimates and cutting its dividend.

The Standard & Poor’s/TSX Composite Index fell 13.55 points, or 0.1 percent, to 12,366.86 at 11:51 a.m. in Toronto.

The benchmark Canadian equity gauge is up 3.4 percent this year. “It’s the election — we’ll see relatively light volumes today and tomorrow,” said David Baskin, president of Baskin Financial Services in Toronto. His firm manages about C$450 million ($451.4 million). “I don’t know whether people will take money off the table and see what happens but that’s probably the story and I don’t expect markets to be much changed by the end of the day.”

Gold mining companies contributed most to gains on the Toronto Stock Exchange as four of 10 industries advanced.

U.S. voters head for the polls tomorrow, with a choice between incumbent Democratic President Barack Obama and the Republican challenger Mitt Romney.

The value of municipal permits fell 13.2 percent to C$6.48 billion ($6.50 billion) from a record high the prior month, Statistics Canada said today in Ottawa. Economists forecast a 3 percent decline according to the median of six responses to a Bloomberg survey.

Bank of Canada Governor Mark Carney has kept the overnight interest rate at 1 percent since September 2010 to encourage borrowing and spending, and has said business investment and consumption will help lead an economic expansion through next year.

Turquoise Hill, which is majority-owned by Rio Tinto Plc, soared 11 percent to C$9.03, on pace for its biggest percentage gain since April. The Oyu Tolgoi mine in Mongolia, of which Turquoise Hill owns 66 percent, has signed a power purchase agreement with the Inner Mongolia Power Corp. for electrical power.

Gabriel Resources Ltd. advanced 4 percent to C$2.60 and Agnico-Eagle Mines Ltd. gained 2.6 percent to C$54 as gold for December delivery rose 0.4 percent to $1,682.50 an ounce in New York.

Petrominerales Ltd., the second-worst performing stock on the S&P/TSX Energy Index this year, rose 10 percent to C$8.42 after reporting third-quarter adjusted earnings of 41 cents a share, compared with median analysts’ estimates of 39 cents a share, according to data compiled by Bloomberg.

SNC-Lavalin Group Inc., Canada’s largest engineering and construction company, increased 3.3 percent to C$43.57.

Trevor Johnson, analyst with National Bank Financial, raised the stock to an outperform from sector perform rating, citing an “encouraging” third quarter and a new, energetic chief executive officer in Robert Card, who has “started off on the right foot.”

Silver Wheaton fell 1.7 percent to C$38.77 after posting adjusted earnings of 34 cents a share, short of analysts’ expectations of 40 cents, according to data compiled by Bloomberg. The stock has risen 32 percent this year, compared with a 2.2 percent loss in the S&P/TSX Materials Index. The company also cut its quarterly dividend to 7 cents a share, compared with 10 cents previously.

US

By Rita Nazareth and Tom Stoukas

Nov. 5 (Bloomberg) — U.S. stocks advanced, rebounding from an earlier decline in the Standard & Poor’s 500 Index, as Americans prepared to vote in the presidential election.

Apple Inc. rose 1.4 percent as it sold 3 million units of its iPad mini and fourth-generation iPad during the debut weekend, saying demand for the smaller version of its tablet outstripped supply. KBW Inc. added 7.2 percent as Stifel Financial Corp. agreed to buy the boutique investment bank in a cash-and-stock transaction valued at $575 million. Time Warner Cable Inc. declined 6.4 percent amid disappointing earnings.

The S&P 500 added 0.2 percent to 1,417.26 at 4 p.m. New York time. It fell 0.4 percent earlier today. The Dow Jones Industrial Average rose 19.28 points, or 0.2 percent, to 13,112.44. Volume for exchange-listed stocks in the U.S. was 5.1 billion shares, or 13 percent below the three-month average.

“People are more like holding their breath and turning blue,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati. She spoke in a phone interview. “There’s the election in the U.S. That keeps investors on the sidelines.”

U.S. voters decide tomorrow between giving President Barack Obama another four years in office or changing course with Republican challenger Mitt Romney. Earlier losses were driven by concern about a worsening of Europe’s debt crisis. Greek Prime Minister Antonis Samaras will this week battle to win political support for measures to obtain aid.

The Institute for Supply Management’s non-manufacturing index declined to 54.2 last month from 55.1 in September, the Tempe, Arizona-based group said today. Economists projected 54.5, according to the median estimate in a Bloomberg survey.

Readings above 50 signal expansion in the gauge of industries that account for almost 90 percent of the economy.

The S&P 500 rose 0.2 percent last week as the market reopened after Hurricane Sandy caused the longest weather- related shutdown since 1888. The benchmark gauge for American equities has surged 13 percent this year as central banks around the world stepped up stimulus to boost the economy. About 70 percent of companies that released quarterly results have beaten analysts’ estimates, according to data compiled by Bloomberg.

“Markets are expected to remain mostly range bound today, with some more downside possible as investors tend to take money off the table, preferring to take a wait-and-see attitude until the picture is clearer,” Markus Huber, head of German sales trading at ETX Capital in London, wrote in an e-mail.

Apple rose 1.4 percent to $584.62, after slumping 4.5 percent last week. The company began selling the 7.9-inch tablet in the U.S. and more than 30 other countries on Nov. 2, ramping up an effort to fend off competition in the market for tablets, which NPD DisplaySearch predicts will more than double by 2017.

“Demand for iPad mini exceeded the initial supply and while many of the pre-orders have been shipped to customers, some are scheduled to be shipped later this month,” Cupertino, California-based Apple said today in a statement.

KBW jumped 7.2 percent to $17.47. Shareholders will receive $17.50 per share, comprised of $10 in cash and $7.50 in Stifel common stock, the companies said today in a statement. The deal values KBW 7.4 percent higher than its closing price on Nov. 2.

FuelCell Energy Inc. surged 13 percent to $1.03. The U.S. manufacturer of fuel-cell power plants announced its biggest order to date. Posco, South Korea’s largest steelmaker, agreed to pay about $181 million for 121.8 megawatts of power plants and services beginning in May, Danbury, Connecticut-based FuelCell said today in a statement.

Transocean Ltd. climbed 5.6 percent to $48.64. The world’s largest offshore rig contractor posted adjusted third-quarter earnings that exceeded estimates on improved cost control.

Time Warner Cable slumped 6.4 percent to $91.93. It lost 140,000 video subscribers, more than the 128,000 that analysts had estimated. Time Warner Cable has become “top-heavy” after shares gained more than 54 percent this year, Todd Mitchell, an analyst at Brean Capital LLC in New York, said in an interview before the results were released. Its operations also aren’t as strong as those of Comcast Corp., the largest U.S. cable company, he said.

McGraw-Hill Cos. slumped 4 percent to $52.24. The owner of the largest credit ratings company S&P fell after an Australian judge ruled it misled investors by giving its highest credit grade to securities whose value plunged during the global financial crisis.

Radian Group Inc. tumbled 10 percent to $4.83 after Barron’s said the mortgage insurer may eventually incur costs for claims that it denied.

Swings in U.S. stocks have shrunk to the lowest level in six years, an indicator that has most often coincided with incumbent parties keeping the presidency in data going back to 1900.

The Dow has gained or lost 0.54 percent a day on average this year, the smallest fluctuations for an election year since George W. Bush defeated John Kerry in 2004, according to data compiled by Bloomberg. Daily changes have trailed the 112-year average of 0.75 percent in 13 of 17 instances when incumbents won, compared with six of 11 times the parties lost.

While volatility doesn’t predict winners, its decline shows less concern that prices will be whipsawed by economic news, a potential benefit for Obama. At the same time, the Dow’s 65 percent rally since he took office never pushed it above the record 14,164.53 reached in October 2007. No Democrat since World War II has held on to the White House with the Dow this far from its peak.

“The incumbent tends to get re-elected when the market is doing well,” James McDonald, chief investment strategist at Northern Trust Corp. in Chicago, said in a telephone interview.

His firm manages $750 billion. “If the market has done well, that means the economy is doing well, that means the incumbent has a better chance.”

Have a wonderful evening everyone.

Be magnificent!

In your veins, and in mine, there is only one blood,

The same life that animates us all!

Since one unique mother begat us all,

Where did we learn to divide ourselves?

Kabir, 1440-1518

As ever,

Carolann

He that wrestles with us strengthens our nerves and sharpens

our skill.  Our antagonist is our helper.

-Edmund Burke, 1729-1797

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