October 1, 2012 Newsletter

Dear Friends,

Tangents:

Kinesiology professor, Dr. Jamie Burr has recently conducted a study on the health effects of inactivity and is a proponent of “walk-and-talk” meetings. Dr. Burr maintains that moving around makes your brain work better. According to the Center for Disease Control and Prevention, based in Bethesda, Md., adults who do aerobic exercise show greater task-related activity in the region of the brain associated with attention, while aerobically trained rats learn mazes two to 12 times faster than those which are not. A meta-analysis of several studies examining the link between exercise and cognition in adults, meanwhile, found that physical activity has the greatest impact on “executive control,” which includes tasks such as scheduling, planning and multitasking, as well as working memory. So next time you are planning a staff meeting, or need to meet with a client, think about taking the meeting outside of the office: a coffee shop, lunch date or like Dr. Burr, meet at an indoor/outdoor track and walk laps while enjoying the fresh air.

And also on this day in…

1908 – The Ford Model T, the first car for millions of Americans, hits the market. Over 15 million Model Ts are eventually sold, all of them black.

1942 – The German Army grinds to a complete halt within the city of Stalingrad.
1943 – British troops in Italy enter Naples and occupy Foggia airfield.
1944 – The U.S. First Army begins the siege Aachen, Germany.
1946 – Eleven Nazi war criminals are sentenced to be hanged at Nuremberg trials—Hermann Goring, Alfred Jodl, Hans Frank, Wilhelm Frick, Ernst Kaltenbrunner, Wilhelm Keitel, Joachin von Ribbentrop, Fritz Saukel, Arthur Seyss-Inquart, Julius Streicher, and Alfred Rosenberg.
1974 – Five Nixon aides–Kenneth Parkinson, Robert Mardian, Nixon’s Chief of Staff H.R. Haldeman, John Ehrlichman, and U.S. Attorney General John

“Never be afraid to laugh at yourself, after all, you could be missing out on the joke of the century.” — Dame Edna Everage

photos of the day October 1^st, 2012

A worker sprays water on a statue of the late Mahatma Gandhi on the eve of his birth anniversary at Gandhi Park in Bhubaneswar, eastern India. Gandhi, known as the ‘Father of the Nation,’ was instrumental in the movement that lead to India’s independence from Britain in 1947.

A dog catches a wave during the Surf City Surf Dog contest in Huntington Beach, Calif.

In this handout photo provided by the Mount Washington Observatory, a snowman is seen at the top of the highest peak in the Northeast.

Market Closes for October 1^st, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Oct. 1 (Bloomberg) — Canadian stocks rose to a one-week high after reports showed an unexpected jump in U.S. manufacturing and smaller-than-forecast contraction in European factory data.

Magna International Inc., North America’s biggest auto- parts supplier, added 2.3 percent after agreeing to buy German automotive pumps producer Ixetic Verwaltungs GmbH. Canam Group Inc., a maker of construction products, surged 12 percent as Guy Gottfried, founder of Rational Investment Group, recommended buying the stock at an investing conference.

The Standard & Poor’s/TSX Composite Index rose 68.8 points, or 0.6 percent, to 12,386.26 at 2:35 p.m. in Toronto. The measure is on pace for the highest close since Sept. 20 and has climbed 3.6 percent this year. Energy stocks led gains as nine of 10 industries in the Canadian equity benchmark advanced.

“We’re taking our direction from the much stronger-than- expected ISM numbers,” said Barry Schwartz, a fund manager with Baskin Financial Services Inc. in Toronto. The firm manages about C$450 million ($458.4 million). “Canada is in a pretty good spot right now. Our neighbors in the U.S. are doing just fine, thank you very much, and we do enough trade with them that we can ride on their coattails.”

The Institute for Supply Management’s index of U.S. manufacturing rose to 51.5 in September from 49.6 a month earlier, snapping three months of contraction. Economists in a Bloomberg survey projected a reading of 49.7 for September, according to the median of 76 forecasts. A reading above 50 indicates expansion.

A gauge of manufacturing in the 17-nation euro region based on a survey of purchasing managers was at 46.1, above an initial estimate of 46 on Sept. 20, Markit Economics in London said today.

Magna gained 2.3 percent to C$43.47. The purchase of Ixetic will add manufacturing sites in Germany, China and Bulgaria, the company said.

Canam surged 12 percent to C$5.66, on pace for its biggest gain since October 2008 on trading volume more than double the three-month average. Gottfried said the stock was undervalued at the Value Investing Congress in New York.

Centerra Gold Inc. jumped 4.2 percent to C$12.83, poised for the highest close since June. Gold futures for December delivery rose 0.3 percent to $1,779.40 in New York after earlier touching $1,794.40, highest since Nov. 14.

Bankers Petroleum Ltd. climbed 3.4 percent to C$3.05 and Crew Energy Inc. rose 5.3 percent to C$7.62. Crude for November delivery rose 0.2 percent to $92.41 a barrel in New York.

Suncor Energy Inc., Canada’s largest energy company, added 1.9 percent to C$32.94 and Canadian Natural Resources Ltd. jumped 2.4 percent to C$31.04.

US

By Rob Verdonck and Rita Nazareth

Oct. 1 (Bloomberg) — Stocks climbed, rebounding from the worst weekly drop in four months, as U.S. manufacturing unexpectedly expanded. Spanish bonds gained with the euro as stress-test results bolstered confidence in Spain’s banking system. Gold touched the highest price since November.

The Standard & Poor’s 500 Index rose 0.3 percent at 4 p.m. in New York, trimming earlier gains as Apple Inc. slumped. Spanish 10-year yields declined for a third day, slipping six basis points to 5.88 percent. The euro advanced against all 16 major peers. The S&P GSCI gauge of commodities added 0.2 percent as natural gas and sugar led gains. Gold futures pared gains after rising as much as 1.2 percent to $1,794.40. Treasury yields traded near three-week lows.

The Institute for Supply Management’s U.S. factory index rose to 51.5 in September from 49.6 a month earlier, surpassing the median economist estimate and the level of 50 that signals growth. Banks helped lead gains in Europe after Spanish stress tests revealed a capital deficit of 59.3 billion euros ($76 billion), less than the 100 billion-euro bailout the country was awarded to shore up its banks.

“The fact that manufacturing is beginning to recover will significantly reduce fears of a potential U.S. recession,” said James Paulsen, the chief investment strategist at Minneapolis- based Wells Capital Management. His firm oversees about $325 billion. “Fears regarding the euro zone have been diminishing in recent months and today represents another positive move in that direction.”

Reports today showed euro-area manufacturing contracted less than initially estimated in September, Markit Economics said today. Chinese factory output weakened for a second month and big Japanese manufacturers became more pessimistic in the last quarter, according to the findings of official surveys. Unemployment in the euro area reached the highest on record.

The S&P 500 rebounded after last week sliding 1.3 percent, its worst retreat since the week ended June 1. Consumer-staples, health-care, energy and financial shares led gains in the benchmark index for U.S. equities today as six of its 10 main groups advanced.

Goldman Sachs Group Inc. advanced 2.8 percent after Barron’s predicted that the stock will rise as much as 25 percent within a year as capital markets improve. Ceradyne Inc. jumped 43 percent after 3M Co. agreed to buy the company for $860 million to expand its energy unit. Monster Worldwide Inc., the Internet recruiting service that is exploring a sale, increased 4.1 percent after DealReporter said the company is in talks with a private equity bidder.

Apple, the biggest company by market value, lost 1.2 percent to extend last week’s 4.7 percent drop, its first weekly decline since July. As it retreated, the S&P 500 trimmed an earlier gain of as much as 1.1 percent.

“Apple is a real market mover,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion, said in a telephone interview. “Its fundamentals are in place, but after such a big run, we’re a seeing a breather. In the U.S., manufacturing data has limited the downside risk. Yet the market is still saying ‘show me’ and waiting for other data points.”

The S&P 500 may climb to a record 1,585 next year as economic growth improves amid stimulus efforts by global central banks, said John Stoltzfus, Oppenheimer & Co.’s chief investment strategist. The strategist’s forecast implies a 10 percent rally in the S&P 500 from the Sept. 28 close of 1,440.67.

Wall Street strategists so far are unanimous in predicting the S&P 500 will reach a record next year, according to the four firms that have made predictions out of 14 tracked by Bloomberg.

Stoltzfus’ estimate is higher than the 1,575 level called for by Bank of Montreal’s Brian Belski while lower than predictions of 1,600 by Bank of America Corp.’s Savita Subramanian and 1,615 by Tobias Levkovich at Citigroup Inc.

Emerging markets led global stocks to the fourth monthly gain in September, the longest streak since 2007, handing equity investors better returns than bonds, commodities and the dollar and pushing them ahead for the year.

The MSCI All-Country World Index of equities increased 3.2 percent last month including dividends, bringing its 2012 gain to 13 percent. The S&P GSCI Total Return Index of commodities slid 1.4 percent, trimming its yearly advance to 3.5 percent, while the U.S. Dollar Index lost 1.6 percent. Bonds of all types returned 0.31 percent, on average, according to Bank of America Merrill Lynch’s Global Broad Market Index.

Unprecedented steps by central bankers to fix the slowest global growth since 2009 have sent investors to equities. The U.S. Federal Reserve pledged on Sept. 13 a third round of asset purchases to revive the economy after unemployment stayed above 8 percent for 44 months. The European Central Bank announced an unlimited bond-buying program last month, the Bank of Japan unexpectedly expanded its asset-purchase fund and India’s central bank lowered the cash reserve ratio for lenders.

Fed Chairman Ben S. Bernanke today renewed a pledge to sustain record stimulus even after the U.S. expansion gains strength, while saying policy makers don’t expect the economy to remain weak through 2015.

“We expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens,” Bernanke said today in the text of a speech in Indianapolis. Policy makers’ forecast to hold the main interest rate near zero until at least mid-2015 “doesn’t mean that we expect the economy to be weak through” that year.

The S&P GSCI added 0.2 percent as 16 of 24 commodities advanced. Oil increased 0.3 percent to $92.48 a barrel in New York. Sugar, natural gas and coffee rose more than 2.5 percent while wheat, cocoa and soybeans led declines.

All but one of 19 industry groups in the Stoxx 600 advanced as the gauge rebounded from last week’s 2.7 percent plunge, the biggest decline since June 1. Xstrata Plc rose 2.4 percent in London trading after its board recommended shareholders accept a $33 billion takeover offer by Glencore International Plc.

Air France-KLM Group gained almost 3 percent as the International Air Transport Association raised its 2012 global airline profit forecast by 37 percent. International Consolidated Airlines Group climbed 3.6 percent. Credit Agricole SA advanced 7.4 percent after entering exclusive talks to sell Emporiki Bank, its unprofitable Greek unit, to Alpha Bank SA.

Banks in the Stoxx 600 climbed 2.2 percent as a group and contributed the most to the index’s advance.

“The stress tests are another hurdle overcome in easing the sovereign-debt crisis,” said Henk Potts, an equity strategist at Barclays Plc in London. “It’s absolutely right to rally on the back of the tsunami of stimulus we have seen.”

Unemployment in the economy of the 17 nations using the euro was 11.4 percent in August, the same as in June and July after those months’ figures were revised higher. An Oct. 5 report is forecast to show the U.S. jobless rate rose to 8.2 percent last month from 8.1 percent in August, economists surveyed by Bloomberg estimated.

Spain’s securities pared last week’s declines after Moody’s Investors Service said the recapitalization of the nation’s banks was positive for its credit rating.

Italy’s 10-year bond yield fell two basis points to 5.08 percent, while the rate on similar-maturity German bunds climbed one basis point to 1.45 percent. The yield on 10-year U.S.

Treasuries lost two basis points to 1.61 percent.

The euro rose 0.2 percent to $1.2886 and 0.3 percent to 100.51 yen. The shared currency earlier weakened 0.4 percent against both.

A gauge of manufacturing in the 17-nation euro area based on a survey of purchasing managers was 46.1, a six-month high and above an initial estimate of 46 on Sept. 20, according to Markit. The index, which stood at 44 in July, has held for 14 months below 50, indicating contraction.

The MSCI Asia Pacific Index slipped 0.4 percent as almost two stocks fell for each that rose. Toyota Motor Corp., the world’s biggest carmaker by market value, lost 1.7 percent in Tokyo. Financial markets in China, Hong Kong and South Korea were closed for holidays.

China’s Purchasing Managers’ Index was 49.8 in September after a 49.2 reading in August, according to a report today by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. In Japan, the Tankan index for large manufacturers fell in the July-September quarter to minus 3 from minus 1, the fourth negative reading, the Bank of Japan said today.

“The real voyage of discovery consists not in seeking new lands but seeing with new eyes.” —Marcel Proust

Have a great evening everyone!

Watch your thoughts; they become words.

Watch your words; they become actions.

Watch your actions; they become habits.

Watch your habits; they become character.

Watch your character; it becomes your destiny.

—Lao-Tze

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.