October 17, 2012 Newsletter

Dear Friends,

Tangents:

October

-by Robert Frost

O hushed October morning mild,

Thy leaves have ripened to the fall;

Tomorrow’s wind, if it be wild,

Should waste them all.

The crows above the forest call;

Tomorrow they may form and go.

O hushed October morning mild,

Begin the hours of this day slow.

Make the day seem to us less brief.

Hearts not averse to being beguiled,

Beguile us in the way you know.

Release one leaf at break of day;

At noon release another leaf;

One from our trees, one far away.

Retard the sun with gentle mist;

Enchant the land with amethyst.

Slow, slow!

For the grapes’ sake, if they were all,

Whose leaves already are burnt with frost,

Whose clustered fruit must else be lost-

For the grapes’ sake along the wall.

October 17^th, 1989:

The worst earthquake in 82 years strikes San Francisco bay area minutes before the start of a World Series game there. The earthquake registers 6.9 on the Richter scale–67 are killed and damage is estimated at $10 billion

O hushed October morning mild,

Thy leaves have ripened to the fall;

Tomorrow’s wind, if it be wild,

Should waste them all.

The crows above the forest call;

Tomorrow they may form and go.

O hushed October morning mild,

Begin the hours of this day slow.

Make the day seem to us less brief.

Hearts not averse to being beguiled,

Beguile us in the way you know.

Release one leaf at break of day;

At noon release another leaf;

One from our trees, one far away.

Retard the sun with gentle mist;

Enchant the land with amethyst.

Slow, slow!

For the grapes’ sake, if they were all,

Whose leaves already are burnt with frost,

Whose clustered fruit must else be lost—

For the grapes’ sake along the wall

And also on this day in…

1913 – Zeppelin LII explodes over London, killing 28.

1915 – Arthur Miller, writer, is born.

1918 – Rita Hayworth, actor, is born.

1931 – Al Capone isconvicted of income tax evasion; sentenced to 11 years in jail – Alcatraz.
1933 – Due to rising anti-Semitism and anti-intellectualism in Hitler’s Germany, Albert Einstein immigrates to the United States. He makes his new home in Princeton, N.J.
1941 – The U.S. destroyer Kearney is damaged by a German U-boat torpedo off Iceland; 11 Americans are killed.
1956 – The nuclear power station Calder Hall is opened in Britain. Calder Hall is the first nuclear station to feed an appreciable amount of power into a civilian network.
1972 – Peace talks between Pathet Lao and Royal Lao government begin in Vietnam.
1989 – The worst earthquake in 82 years strikes San Francisco bay area minutes before the start of a World Series game there. The earthquake registers 6.9 on the Richter scale–67 are killed and damage is estimated at $10 billion.
Treasure your relationships, not your possessions. –Anthony J. D’Angelo

photos of the day October 17, 2012

A flock of starlings flies over the vineyards in Tartegnin near Geneva, Switzerland.

Denis Balibouse/Reuters

Three year-old Annie Wood rides her scooter in front of changing autumn leaves in Sheffield Park Gardens near Haywards Heath in southern England.

Luke MacGregor/Reuters

Market Closes for October 17th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Oct. 17 (Bloomberg) — Canadian stocks rose to their highest level in a month as energy shares rallied after Exxon Mobil Corp. agreed to acquire oil and gas producer Celtic Exploration Ltd. and U.S. housing starts jumped to a four-year high.

Celtic Exploration jumped 45 percent after agreeing to a C$2.86 billion ($2.91 billion) sale to Exxon Mobil. Encana Corp. increased 2.4 percent. Ivanplats Ltd. rose 6.3 percent in its first day of preliminary trading after raising C$300.8 million in an initial public offering yesterday.

The Standard & Poor’s/TSX Composite Index added 53.54 points, or 0.4 percent, to 12,461.24 in Toronto, its highest close since Sept. 14. Energy companies contributed the most to gains in the benchmark equity gauge as six of 10 industries advanced on trading 16 percent higher than the 30-day average.

“There’s a positive tone in oils because of the surprise takeover of Celtic Exploration,” said Bob Decker, a money manager at Aurion Capital in Toronto. His firm manages about C$5.5 billion.

“It’s put a bid on most of the E&P companies with similar assets and put a general positive tone on the sector,” Decker said, referring to energy exploration and production companies that also have interests in the Montney and Duvernay shale fields in which Celtic operates.

Celtic surged 45 percent to C$26.29. Shareholders will receive C$24.50 a share and half a share of a new company that will hold assets not included in the agreement, Calgary-based Celtic said in a statement. The deal will give Exxon Mobil, the world’s largest energy company, significant new production in the Alberta shale fields, where oil and gas are extracted by horizontal drilling and hydraulic fracturing.

Among Montney and Duvernay shale companies, Cequence Energy Ltd. added 12 percent to C$1.98, NuVista Energy Ltd. gained 13 percent to C$5.14, Advantage Oil & Gas Ltd. rose 1.6 percent to C$3.88 and Trilogy Energy Corp. advanced 6.1 percent to C$27.69.

New-home construction in the U.S. surged to the highest level in four years, raising hopes that the economy of the world’s biggest oil-consuming country is improving. Crude for November delivery rose three cents to settle at $92.12 a barrel in New York, reversing earlier losses of as much as 0.6 percent after the U.S. Energy Department said inventories rose more than analysts expected last week.

Encana added 2.4 percent to C$22.78 and Suncor Energy Inc. increased 1.3 percent to C$33.60.

Harry Winston Diamond Corp. rose 3.7 percent to C$13.83, paring earlier gains of as much as 10 percent. The mining company, which owns 40 percent of the Diavik diamond mine in the Northwest Territories, is in talks with major European luxury goods companies such as PPR SA and LVMH Moet Hennessy Louis Vuitton SA to sell its jewelry and watches business, according to Challenges, a weekly French business magazine.

Ivanplats, a mining company founded by billionaire Robert Friedland, rose 6.3 percent to C$5.05, trading on an “if and when issued basis” ahead of its official listing on the TSX. The company yesterday sold 63.3 million shares at C$4.75.

Kirkland Lake Gold Inc. slumped 4.9 percent to C$9.99 after announcing it will sell C$60 million in convertible notes. The company plans to use the cash to pay for production expansions at its mine in Kirkland Lake, Ontario.

US

By Nikolaj Gammeltoft

Oct. 17 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third straight day, as a jump in housing starts overshadowed disappointing results from International Business Machines Corp. and Intel Corp.

PulteGroup Inc. and D.R. Horton Inc. jumped more than 4.2 percent as homebuilders rallied. Dean Foods Co. soared 13 percent after its WhiteWave Foods Co. filed to go public. Intel fell 2.5 percent after forecasting a fourth-quarter gross margin that missed estimates. IBM slid 4.9 percent after reporting third-quarter revenue that trailed analysts’ projections.

The S&P 500 rose 0.4 percent to 1,460.91 at 4 p.m. in New York. The index has gained 2.3 percent this week. The Dow Jones Industrial Average added 5.22 points, or less than 0.1 percent, to 13,557 today. IBM, which accounts for more than 11 percent of the share-price-weighted Dow, took 80 points off the gauge today. About 6.3 billion shares traded hands on U.S. exchanges, 5.1 percent above the three-month average.

“The housing number was amazing,” Randall Warren, who oversees $75 million as chief investment officer of Warren Financial Service in Exton, Pennsylvania, said in a phone interview. “Corporate earnings have been strong in a slow growth environment, so if housing can help improve the economy then we could see a move up in stocks.”

U.S. equities rose as Commerce Department figures showed new-house construction jumped 15 percent to an 872,000 annual rate last month, the most since July 2008 and exceeding all forecasts in a Bloomberg survey of economists. The median estimate of 81 economists surveyed by Bloomberg called for 770,000.

An S&P gauge of 11 homebuilder stocks rose 3.2 percent.

PulteGroup, the largest U.S. homebuilder by revenue, jumped 5.3 percent to $17.44. D.R. Horton gained 4.2 percent to $21.54, while Lennar Corp. climbed 2.2 percent to $38.13.

The S&P 500 has rallied 16 percent this year and is about 7 percent below its all-time high of 1,565.15 reached in October 2007. More than 80 companies in the S&P 500 release results this week, according to data compiled by Bloomberg. Of the 71 companies in the equity benchmark that have reported since Oct. 9, 53 have posted earnings that exceeded analyst estimates, data compiled by Bloomberg show.

Moody’s Investors Service maintained its investment-grade credit rating on Spain late yesterday. The company cited a reduced risk of losing market access because of the European Central Bank’s willingness to buy the nation’s debt. Spain avoided joining Cyprus, Portugal, Ireland and Greece which are all rated below investment grade.

Technology shares had the largest decline among 10 groups in the S&P 500, tumbling 0.8 percent.

Intel, the world’s largest semiconductor maker, dropped 2.5 percent to $21.79. Profit is being crimped by expenses to slow factory output and combat rising inventories. Corporate customers are showing “caution” in placing orders and consumers in developed markets are curtailing PC purchases, Chief Financial Officer Stacy Smith said in a statement.

The Santa Clara, California-based company projected gross margin, the only profit measure it forecasts, of about 57 percent. That’s less than the 61.4 percent average estimate, according to data compiled by Bloomberg.

IBM dropped 4.9 percent to $200.63 after the world’s biggest computer-services provider reported revenue that dropped 5.4 percent to $24.7 billion. That missed the $25.4 billion median analyst estimate, according to data compiled by Bloomberg. IBM customers, hurt by anemic demand in home markets, put off software purchases and computer-maintenance contracts.

Dean Foods rose 13 percent to $16.96. Its WhiteWave Foods Co., the maker of Silk almond milk, filed to raise as much as $320 million in a U.S. initial public offering.

Cymer Inc. jumped 49 percent to $71.45 after ASML Holding NV agreed to buy the maker of lasers used to manufacture computer chips for $2.6 billion. Cymer investors will receive $20 in cash and 1.1502 of ASML’s ordinary shares for every Cymer share they hold, ASML said in a statement today. The price is 72 percent more than San Diego-based Cymer’s close in New York yesterday.

Apollo Group Inc. tumbled 22 percent to $21.40. The largest U.S. for-profit college chain forecast revenue for fiscal 2013 that missed analysts’ estimates and said it would close campuses and cut jobs.

CSX Corp. declined 2 percent to $21.19 after predicting two of its biggest markets, coal and agriculture shipments, would be depressed this quarter by the U.S. drought and competition from cheap natural gas.

The biggest eastern U.S. railroad expects unfavorable conditions for a third of its businesses, driving a “neutral outlook” for the three months through December, Chief Commercial Officer Clarence Gooden said. The carrier also predicted headwinds in food and consumer and emerging markets cargoes.

President Barack Obama and Republican challenger Mitt Romney met in a nationally televised debate last night. The showdown had gained added significance after a majority of voters said Obama lost to Romney in their first debate on Oct.3. Romney has since gained in national and state polls.

A USA Today/Gallup poll released this week gave Romney a 50 percent to 46 percent edge among likely voters in the 12 states that strategists in both parties say will decide who wins the White House on Nov. 6.

“The presidential race remains extremely close, according to polls following the latest debate,” Barclays Plc’s Laurent Fransolet and Paul Robinson wrote in a note to clients today.

“The induced uncertainty remains an issue for markets, though not as important as the eurozone developments, so far at least.”

Have a wonderful evening everyone.

Be magnificent!

If you do not think he is different, he is unique, he exists in his own right,

there cannot be any relationship.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Knowledge of what is possible is the beginning

of happiness.

-George Santayana, 1863-1952

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