November 8, 2012 Newsletter

Dear Friends,

Tangents:

I didn’t get to see Barbra Streisand when she was in Vancouver recently, but everyone I know who saw the show, said it was over the top.  There is a new treasure-trove CD out.  It is entitled Release Me and is a collection of previously unreleased recordings that have been hibernating in the vaults for decades.  Three of the best are the oldest – Willow Weep for Me (1967), Jimmy Webb’s heartbreaking Didn’t We (1970), and a version of Randy Newman’s masterpiece I Think It’s Going to Rain Today (1971).

And on this day in…

1519 – Cortes conquers Mexico.

1656 – Edmund Halley, astronomer, was born.

1793 – The Louvre opens in Paris.

1887 – Doc Holliday, who fought on the side of the Earp brothers during the Gunfight at the O.K. Corral 6 years earlier, dies of tuberculosis in Glenwood Springs, Colorado.

1900 – Margaret Mitchell, writer, was born.

1923 – Adolf Hitler attempts a coup in Munich, the “Beer Hall Putsch,” and proclaims himself chancellor and Ludendorff dictator.

1932 – Franklin D. Roosevelt is elected 32nd president of the United States.

1942 – The United States and Great Britain invade Axis-occupied North Africa.

1949 – Bonnie Raitt, singer, was born.

I love receiving your emails, even though I do not reply to every one, I DO read every one of them.  Today, I received the best e-mail that an advisor could ever hope to receive from clients.  These wonderful people have been my clients for over 2 decades…

The husband wrote,

Dear Carolann,

…just opened the mail and told me how well we are doing thanks to your wonderful handling of our accounts.

Thanks to you we have never been so well off financially.

Bless you! XO

I love you all, so I must tell you now dear friends, that with the US election over, I expect that the media will turn its attention to alarming us about the future – the fiscal cliff, the geopolitical situation etc.etc.  Take my advice – tune it out.

Success is not final, failure is not fatal:  It is the courage to continue that counts.  –Winston Churchill.

photos of the day

November 8, 2012

People enjoy an installation of the Argentinian artist and architect Tomas Saraceno, in Milan, Italy. ‘On Space Time Foam’ is a multilayered aerial installation featuring surfaces of clear film in the air for visitors to walk, crawl, and lie in.

Luca Bruno/AP

It is the function of art to renew our perception. –Anais Nin.

Swiss Interior Minister Alain Berset watches the launch of a model rocket with the children of employees of the University of Bern in the Center for Space and Habitability in Switzerland on National Kids Future Day.

Ruben Sprich/Reuters

Market Closes for November 8th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang

Nov. 8 (Bloomberg) — Canadian stocks fell for a second day, sending the benchmark index to the lowest level since September, as energy shares slumped amid worse-than-expected earnings from Canadian Natural Resources Ltd.

Energy producers fell the most among 10 industry groups in the Standard & Poor’s/TSX Composite Index, sinking 0.9 percent.

Canadian Natural tumbled 3.6 percent after reporting a decline in third-quarter profit due to lower gas and oil prices.

Manulife Financial Corp. slipped 1.5 percent as the country’s largest insurer delayed its objective of reaching C$4 billion ($4 billion) in annual profit. Sun Life Financial Inc. gained 3.8 percent after earnings beat analysts’ estimates.

The S&P/TSX dropped 39.54 points, or 0.3 percent, to 12,191.05 at 4 p.m. in Toronto. The benchmark Canadian equity gauge is up 2 percent this year.

“The stock market is waking up now to how low the Canadian oil price is and drilling has almost stopped in some areas,” Bill Harris, portfolio manager with Avenue Investment Management in Toronto. His firm manages about C$275 million and recently sold out its holdings in Canadian Natural.

Energy is the second-biggest industry after financials, making up about a quarter of the S&P/TSX. Canadian Natural is among producers that have cut spending and shut gas wells after prices in New York dropped to a 10-year low in April.

Shares of Canadian Natural slumped 3.6 percent to C$28.02.

The nation’s third-largest oil and natural-gas producer posted quarterly profit excluding one-time items of 32 cents a share, missing the 50-cent average of 18 analyst estimates compiled by Bloomberg.

Suncor Energy Inc., Canada’s largest energy company by market value, declined 1.1 percent to C$33.31.

Among other commodity stocks, Aurizon Mines Ltd. slumped 11 percent, the most since December 2008, to C$4.08. The gold miner reported third-quarter profit that trailed analysts’ estimates and reduced its full-year production forecast.

Western Forest Products Inc. tumbled 6.1 percent to C$1.23.

The company said it broke even in the third quarter. Analysts expected a profit of 2 cents a share, according to a Bloomberg survey.

Kinross Gold Corp. advanced 8.8 percent, the most in the S&P/TSX, to C$10.16. Canada’s third-largest producer reported profit that beat analysts’ estimates and Canaccord Financial Inc. raised its rating on the stock.

Manulife slipped 1.5 percent to C$11.82. The owner of Boston-based John Hancock Financial expects to have C$4 billion in so-called core earnings by 2016 after previously stating a goal of 2015. The Toronto-based insurer said in August that the worsening economy would make it hard to reach the 2015 target.

CML Healthcare Inc. plunged 16 percent to C$7.16, the lowest level since December 2003. The provider of medical imaging services reported third-quarter sales of C$85.5 million, missing the average analyst estimate of C$92.1 million.

Sun Life jumped 3.8 percent to C$25.29, the highest since October 2011. Canada’s third-largest insurer reported third- quarter profit of 64 cents a share. Analysts, on average, estimated 43 cents, according to a Bloomberg survey.

Air Canada climbed 2.1 percent to C$1.91. The country’s largest airline reported higher third-quarter profit than analysts estimated as passenger traffic and revenue climbed while operating expenses declined. Excluding foreign-exchange gains, earnings were 82 cents a share, topping the 73-cent average of 11 estimates from analysts surveyed by Bloomberg.

Canaccord Financial rallied 5.7 percent, the most since August, to C$4.98. Canada’s largest non-bank brokerage by assets posted quarterly results that beat analysts’ estimates.

US

By Rita Nazareth and Sarah Jones

Nov. 8 (Bloomberg) — U.S. stocks declined, extending losses after the re-election of President Barack Obama and sending the Dow Jones Industrial Average to the lowest level since July, amid concern about Greece’s financial aid payment.

Apple Inc., the world’s most valuable company, retreated 3.6 percent, extending its plunge since its September high to 23 percent. McDonald’s Corp., the world’s largest restaurant chain, dropped 2 percent after its monthly store sales declined for the first time in nine years. Prudential Financial Inc., the second- largest U.S. life insurer, decreased 4.8 percent after lowering its assumptions for equity and bond returns.

The Standard & Poor’s 500 Index declined 1.2 percent to 1,377.51 at 4 p.m. New York time, dropping 3.6 percent in two days, the biggest slump in a year. The benchmark gauge for U.S. equities fell below its average price of the last 200 days of 1,380.71. The Dow sank 121.41 points, or 0.9 percent, to 12,811.32. Volume for exchange-listed stocks in the U.S. was 6.9 billion shares, or 15 percent above the three-month average.

“It’s hard bargaining for Greece,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “The risk of a recession is still out there. Apple might be a victim of its own success because it’s risen so much. With its huge market cap, as Apple goes, so goes the broader market.”

Equities extended yesterday’s tumble as investors turned to the budget debate and Europe’s crisis following President Obama’s re-election. Energy, financial and technology shares had the biggest losses in the S&P 500 in two days, falling at least 4.2 percent. The Dow dropped 3.3 percent in the period.

Obama’s presidential victories have preceded the two biggest post-Election Day selloffs on record, according to data compiled by Bloomberg starting in 1896. The Dow’s 9.7 percent plunge in the two days after he won his first term in 2008 came at the height of the credit crisis that erased $11 trillion from American equity values. This year’s two-day drop ranks second.

The Dow lost 32 percent from Election Day in 2008 to its 12-year low of 6,547.05 on March 9, 2009. From there it rallied 96 percent, handing Obama the biggest gain for any first term president since Bill Clinton, data compiled by Bloomberg show.

Stocks have tumbled since the re-election of Obama and a split Congress on concern they’ll be unable to compromise and avoid a series of changes that have become known as the fiscal cliff. The Congressional Budget Office released a report today reaffirming its previous projections that allowing the scheduled tax increases and automatic spending cuts to take effect would lead to a recession in the first half of 2013. Congress returns to Washington next week for a post-election session that will focus on the fiscal cliff.

Euro-area finance ministers may not make a decision on unlocking funds for Greece until late November as they await a full report on the country’s compliance with the terms of its bailout, a European Union official said.

Greek Prime Minister Antonis Samaras mustered support in Parliament to approve austerity measures needed to unlock bailout funds, in a tense vote that weakened his majority after the expulsion of seven dissenting lawmakers. The European Central Bank kept interest rates on hold today as the economic outlook worsens and Spain resists asking for a bailout that would open the door to ECB bond purchases.

“We’re not out of the woods yet,” German Finance Minister Wolfgang Schaeuble said in Hamburg today. “At the moment, I don’t see how we can take the decision already next week.”

Apple, the most valuable company, slumped 3.6 percent to $537.75. It dropped to the lowest level since May 18 and trimmed this year’s surge to 33 percent. The company hasn’t been able to keep up with demand for the latest version of the iPhone, which accounts for about two-thirds of the company’s profit.

McDonald’s dropped 2 percent to $85.13. Sales at stores open at least 13 months fell 1.8 percent in October as U.S. customer traffic decreased. Analysts projected a drop of 1.1 percent, the average of estimates compiled by Consensus Metrix. after narrowing its full-year profit forecast.

Prudential slumped 4.8 percent, the most since May, to $52.76. The Newark, New Jersey-based company cut its projection of annual stock market returns, including dividends, to 8 percent from 9.25 percent. The projection for bond returns was lowered by about 100 basis points, the company said on a conference call today. The new estimate is for 4.6 percent total returns.

Kohl’s Corp. slipped 5.1 percent to $51.55. The third- largest U.S. department-store chain fell after narrowing its full-year profit forecast.

Monster Beverage Corp. slid 1.3 percent to $44.40 after posting third-quarter profit that trailed analysts’ estimates as sales growth slowed.

Autodesk Inc. lost 2.7 percent to $30.73. The software maker was downgraded to hold from buy at Jefferies Group Inc. by equity analyst Ross Macmillan. The 12-month share-price estimate is $34.

Bank of America Corp. climbed 1.7 percent to $9.39. The stock could almost double in three years as capital improves, operating costs decline and mortgage risks ease, according to Ed Najarian, banking analyst at ISI Group.

Najarian changed his rating to buy from hold, saying in a note to investors yesterday that Bank of America may be able to buy back common shares sooner and in greater amounts than he expected. The dividend, now 4 cents a share annually, could jump to an annual 20 cents next year and 40 cents by 2015, ISI wrote.

Qualcomm Inc. jumped 4.4 percent to $60.67. The largest seller of mobile-phone semiconductors forecast sales and profit that exceeded analysts’ estimates, helped by robust consumer demand for smartphones.

The company briefly gained a bigger market value than Intel Corp. for the first time. Under Chief Executive Officer Paul Jacobs, the company is gaining as consumers in developed nations snap up pricey new phones while those in emerging markets upgrade to devices that provide Web access. Intel, a laggard in the market for mobile-phone chips, is being hurt by slack personal-computer sales.

“Qualcomm has absolutely been one of the prime beneficiaries in smartphones and tablets,” said Mike Burton, an analyst at Brean Capital LLC. “This is a very strong report.”

CBS Corp. rose 1.1 percent to $34.36. The owner of the most-watched TV network said third-quarter profit increased 16 percent, beating analysts’ estimates on rising income from affiliate fees and sales of reruns.

Shares of smaller U.S. companies are performing well enough this quarter to signal a year-end rally in stocks, according to Ari Wald, an analyst at PrinceRidge Group LLC. The Standard & Poor’s MidCap 400 Index has risen relative to the S&P 500 since the quarter started. The S&P SmallCap 600 Index has followed suit more recently.

The increases in the index ratios are noteworthy because they happened “during a period of market consolidation, when investors tend to gravitate toward safer, bigger-cap names,” Wald, based in New York, wrote in a note yesterday.

Companies in the S&P 500 had a median market capitalization of $12.4 billion as of yesterday, according to data compiled by Bloomberg. The medians for the MidCap 400 and SmallCap 600 were $2.7 billion and $730 million, respectively. The S&P 500 posted a 3.2 percent decline for the quarter through yesterday.

Have a wonderful evening everyone.

Be magnificent!

At one pole of my existence,

I am one with the stones and the tree branches.

Thus, I must submit to the yoke of the universal law.

It is this, in the end, that is the very basis of my life.

And that force comes from that which is closely bound up in the unity of the world,

which is in full communication with all things.

But at the other pole, I am distinct from all of the rest.

Here, I have broken the barriers of equality

and I find myself alone, as an individual.

I am absolutely unique, I am me, I am incomparable.

The whole of the mass of the universe can not crush this individuality that is mine.

I maintain it, despite the formidable gravitation of all that exists.

It is small in appearance, but great in reality.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

What a child doesn’t receive he can

seldom later give.

-P.D. James, 1920-

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