October 11, 2012 Newsletter

Dear Friends,

Tangents:

I recently finished reading A Tree Grows in Brooklyn by Betty Smith.  This book was first published in 1943 but has since been rereleased HarperPerennial Modern Classics with a forward by Anna Quindlen.  I picked it up after I read a review that noted that it was selected as one of the Books of the Century by The New York Public Library.  I highly recommend it.  Why?  Well to quote Anna Quindlen, “If, afterwards, someone asked, ‘What is the book about?’ ….A Tree Grows in Brooklyn is not the sort of book that  can be reduced to its plot line.  The best anyone can say is that it is a story about what it means to be human….this is that rare and enduring thing, a book in which, no matter what our backgrounds, we recognize ourselves.”

This is a poignant excerpt I took from this book:

“There was a worn clipping in the purse, a poem she had torn out of an Oklahoma newspaper.  It had been written by a poet who had lived in Brooklyn, gone to the Brooklyn public schools and, as a young man, had edited The Brooklyn Eagle.  She reread it for the twentieth time handling each word in her mind.

I am of old and young, of the foolish as much as the wise

Regardless of others, ever regardful of others.

Maternal as well as paternal, a child as well as a man,

Stuff’d with the stuff that is coarse, and stuff’d

with the stuff that is fine.

The tattered poem went into the envelope….On the outside she wrote:

Frances Nolan, age 15 years and 4 months.  April 6, 1917.

She thought:  ‘If I open this envelope fifty years from now, I will be again as I am now and there will be no being old for me.

There’s a long, long time yet before fifty years . . . millions of hours of time.  But one hour has gone already since I sat here . . . one hour less to live . . . one hour gone away from all the hours of my life.’ ”

On this day in 1975, “Saturday Night Live” made its debut on NBC.

And also on this day in…

1884 – Eleanor Roosevelt was born

1945 – Negotiations between Nationalist leader Chiang Kai-shek and Communist leader Mao Tse-tung break down. Nationalist and Communist troops are soon engaged in a civil war.
1950 – The FCC authorizes the Columbia Broadcasting System (CBS) to begin commercial color TV broadcasts.
1968 – Apollo 7, with three men aboard, is successfully launched from Cape Kennedy.

1976 – The so-called “Gang of Four,” Chairman Mao Tse-tung’s widow and three associates, are arrested in Peking, setting in motion an extended period of turmoil in the Chinese

Communist Party.
1991 – Confirmation hearings for Supreme Court Justice Clarence Thomas begin.

Leadership should be born out of the understanding of the needs of those who would be affected by it. –Marian Anderson

photos of the day October 11, 2012A pigeon leaves a trail of claw prints on snow-covered ground in Russia’s Siberian city of Krasnoyarsk.

Ilya Naymushin/Reuters

Schoolchildren form a sparrow during a program to create awareness to save the bird in the southern Indian city of Chennai.

Babu/Reuters

Market Closes for October 11th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam and Rita Nazareth

Oct. 11 (Bloomberg) — Canadian stocks rose, snapping a three-day slump in the Standard & Poor’s/TSX Composite Index, as U.S. jobless claims fell to a four-year low and the European Union was said to consider delaying tougher bank-capital rules.

Teck Resources Ltd., Canada’s largest diversified mining company, and Valeant Pharmaceuticals International Inc. advanced at least 1 percent to pace gains among the biggest corporations.

Research In Motion Ltd., the maker of BlackBerry smartphones, climbed 1.6 percent. Keegan Resources Inc. increased 3.6 percent after being raised at Clarus Securities.

The S&P/TSX rose 21.53 points, or 0.2 percent, to 12,233.95 at 4 p.m. in Toronto. It has rallied 8.5 percent from its low for the year on May 18, and is up 2.3 percent in 2012.

“The market had been down for three straight days and we were due for a bounce,” said John Kinsey, a fund manager with Caldwell Securities Ltd. in Toronto. The firm manages about C$1 billion. “Going forward, it’s going to depend on a couple of things — the European mess being one.”

Equities gained as data showed that applications for U.S. jobless benefits dropped to 339,000 in the week ended Oct. 6. Economists forecast 370,000 claims. The EU may push back the deadline for applying the Basel Committee on Banking Supervision’s tougher bank-capital rules for as long as a year, according to people familiar with the talks. The committee, the global standard-setting body that prepared the new rules, admitted this week that not all nations will meet the 2013 start date.

Canada’s new-home price index rose for a 17th consecutive month in August. A new Canadian leading economic indicator suggests the country won’t fall back into a recession. The MLI Leading Economic Indicator, released for the first time today by the Macdonald-Laurier Institute, showed a 0.1 percent increase in August after gains of 0.2 percent the previous four months.

“There have been constant concerns and reports Canada’s economy would relapse into recession,” Philip Cross, a researcher with the institute, an Ottawa-based non-partisan policy research group, said in a statement. “The leading indicator showed a trend to slower growth, but no recession, something borne out by the data on output and employment.”

Six out of the 10 groups in the S&P/TSX rose today as health-care and commodity shares had the biggest gains. Teck Resources added 1.6 percent to C$30.39. Valeant Pharmaceuticals International climbed 1.1 percent to C$54.81. Research In Motion jumped 1.6 percent to C$7.73.

Keegan Resources rallied 3.6 percent to C$3.71. The company was raised to buy from hold at Clarus Securities by equity analyst Nana Sangmuah. The 12-month share-price estimate is C$7.50.

Nexen Inc. rose 0.2 percent to C$25.21. Canada said it extended its review of Cnooc Ltd.’s $15.1 billion takeover of Nexen for 30 days to undertake a “thorough and careful” assessment.

Prime Minister Stephen Harper’s government is reviewing the bid, China’s largest ever foreign acquisition, under Canada’s foreign takeover law, which specifies transactions must have a “net benefit” for the country in order to win approval.

“Extensions to the review period are not unusual,” Industry Minister Christian Paradis said in an e-mailed statement today.

US

By Inyoung Hwang

Oct. 11 (Bloomberg) — U.S. stocks erased gains as optimism about a drop in jobless claims faded and a slump in Apple Inc. dragged down technology shares.

The Standard & Poor’s 500 Index pared an advance of 0.8 percent as Apple extended its retreat from a September record to more than 10 percent. Bank of America Corp. and Morgan Stanley advanced at least 1.4 percent as energy and financial stocks posted the biggest rallies out of 10 groups in the S&P 500.

Sprint Nextel Corp. jumped 14 percent as it said it’s in talks with Japan’s Softbank Corp. about a potential transaction.

The S&P 500 increased less than 0.1 percent to 1,432.84 at 4 p.m. in New York. The benchmark gauge fell to the lowest level in a month yesterday on concern that the global economy is slowing down. The Dow Jones Industrial Average lost 18.58 points, or 0.1 percent, to 13,326.39. More than 6 billion shares traded hands on U.S. exchanges today, in line with the three- month average.

“Weakness in Apple continues to be watched and traders are eyeing the S&P 50-day moving average as we slowly slip back towards that level,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an e-mail. His firm oversees $250 billion in assets.

The S&P 500 has slipped 2.3 percent since reaching an almost five-year high of 1,465.77 on Sept. 14. The benchmark index is less than 1 percent higher than its 50-day moving average of 1,427.11. Apple, the world’s most valuable company, sank 2 percent to $628.10, erasing an earlier rally of as much as 1 percent and helping to reverse gains for technology companies as a group in the S&P 500. The iPhone maker is down 11 percent since reaching its all-time high of $702.10 on Sept. 19.

Stocks rallied earlier today after Labor Department figures showed fewer Americans than forecast filed first-time claims for unemployment benefits last week. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey.

One state accounted for most of the plunge in claims, a Labor Department spokesman said. The breakdown by state will show up in next week’s report. A separate report showed the U.S. trade deficit widened by 4.1 percent to $44.2 billion from $42.5 billion in July as slower global growth reduced demand for American exports, Commerce Department figures showed.

The claims report “is consistent with the improving jobs numbers and consumer confidence we’ve been seeing,” Brian Gendreau, a market strategist at El Segundo, California-based Cetera Financial Group Inc., said in a telephone interview. The firm has about $20 billion in assets under management. “It just adds to the picture of a U.S. economy that’s recovering. Not as fast as anyone would like, but still improving.”

European equities climbed earlier as Italy sold 3.75 billion euros ($4.8 billion) of its benchmark three-year bonds at 2.86 percent. Investors bid for 1.67 times the amount offered, up from 1.49 times last month. S&P yesterday cut Spain’s debt rating to one level above junk, citing economic and political risks as the government considers a second bailout.

Bank of America, the second-largest U.S. bank by assets, gained 1.4 percent to $9.34. Morgan Stanley rose 2.6 percent to $17.86. The European Union may push back the deadline for applying tougher bank-capital rules for as long as a year, after warnings from lenders that pressing ahead with the original timetable may drive up their costs, according to three people familiar with the talks.

Othmar Karas, the lawmaker leading work on the draft rules in the European Parliament, denied that any discussion took place in meetings today on a change of dates for when the rules set by the Basel Committee on Banking Supervision might enter into force.

JPMorgan Chase & Co. and Wells Fargo & Co. are scheduled to report quarterly earnings tomorrow. Analysts forecast Wells Fargo, the largest U.S. home lender, will post record profit.

The San Francisco-based company slid 0.1 percent to $35.18. JPMorgan gained 0.8 percent to $42.10.

Energy and financial companies jumped at least 0.5 percent among 10 groups in the S&P 500, while phone and consumer shares fell the most. Investors bought shares of companies most tied to economic growth as the Morgan Stanley Cyclical Index gained 0.5 percent, halting three days of losses.

Sprint Nextel Corp. jumped 14 percent, the biggest gain in the S&P 500, to $5.76. The company said it’s in talks with Softbank for a “substantial” investment from the Japanese carrier, potentially shifting the balance of power in the U.S. telecommunications industry. Softbank, Japan’s third-largest mobile-phone company, is seeking control of Overland Park, Kansas-based Sprint, according to two people familiar with the matter, who asked not to be identified because the discussions are private.

Clearwire Corp., which has a joint venture with Sprint, rallied after a person familiar with the matter said Softbank may also buy the company. Shares surged 71 percent to $2.22.

MetroPCS Communications Inc., which Sprint has considered buying, slumped 3.3 percent to $11.64. The shares briefly erased losses earlier after Japan’s Nikkei newspaper reported Softbank plans to acquire MetroPCS.

Fastenal Co. jumped 8.4 percent to $45.89. The largest U.S. retailer of nuts, bolts and other fasteners reported sales in the third quarter were $802.6 million, exceeding the average analyst estimate of $801.4 million. Daily sales growth in September was 13 percent, up from 12 percent in the prior month.

Oshkosh Corp. soared 11 percent to $29.90 after billionaire activist investor Carl C. Icahn offered to buy the U.S. military’s biggest supplier of blast-resistant trucks for $32.50 a share. Icahn is the largest shareholder of the Wisconsin-based company, according to Bloomberg data. Navistar International Corp., another truckmaker in which Icahn is the third-largest holder, also rose, increasing 2.8 percent to $22.61.

Realogy Holdings Corp. climbed 27 percent to $34.20 in its trading debut. The real-estate brokerage company controlled by Apollo Global Management LLC raised $1.08 billion in its initial public offering, pricing the shares at the top of the planned range. Shares had been offered for $23 to $27 each.

Dollar Tree Inc. lost 7.7 percent to $43.28, for the biggest decline in the S&P 500. Executives of the discount-store operator said in a presentation at its capital markets conference that sales in the third quarter will be at the low end of its forecast amid long-term unemployment, high gas prices and uncertainty from U.S. elections. The Chesapeake, Virginia- based company had predicted in August that revenue in the period will be between $1.71 billion and $1.75 billion.

Safeway Inc. declined 3.6 percent to $15.71. The second- largest U.S. grocery store chain posted third-quarter sales that trailed analysts’ estimates as bargain-hunting shoppers made it harder to boost prices.

Have a wonderful evening everyone.

Be magnificent!

For you, now, meditation involves establishing within yourself

the reality of these two unavoidable rules – difference and change.

Try as hard as possible to convince yourself

that these two rules can neither be changed nor avoided.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Where do consequences lead?  Depends on

the escort.

-Stanislaw Lem, 1921-2006

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