October 2, 2012 Newsletter

Dear Friends,

Tangents:

A British political power couple has sparked a debate over whether the modern convention of the “date night” is all it’s cracked up to be. What are your thoughts on this topic? Some say with the busyness of everyday life, they no longer have time to take a night out for a “date”. With soccer games, sleepovers and other extra circular activities, where do you find the time to squeeze in that ever so important night out with your significant other? Well, if you are having problems coordinating a date night, look no further. For $12.50 an hour, Brenndon Knox “secretary of romance”, plans fun outings for couples, such as a taco-making class or an “impromptu” dance down an aisle at a flea market.  Some may criticize this style of dating as an inauthentic expression of love, but Lida Elias, owner of the Toronto date-planning service Save My Date, doesn’t think there’s anything wrong with getting a little help. “People are just busy with their jobs,” she says. With that being said, ensure once, or even every other month, you set aside a night where you and your significant other go out for dinner, a movie or anything, just as long as it is the two of you!

And also on this day in…

1959 – “The Twilight Zone” debuted on CBS-TV. The show ran for 5 years for a total of 154 episodes.
1962 – U.S. ports were closed to nations that allowed their ships to carry arms to Cuba, ships that had docked in a socialist country were prohibited from docking in the United States during that voyage, and the transport of U.S. goods was banned on ships owned by companies that traded with Cuba.
1967 – Thurgood Marshall was sworn in. He was the first African-American member of the U.S. Supreme Court.
1988 – Pakistan’s Supreme Court ordered free elections.
1989 – In Leipzig, East Germany a protest took place demanding the legalization of opposition groups and the adoption of democratic reforms.
1990 – The Allies ceded their rights to areas they occupied in Germany.
1993 – Opponents of Russian President Boris Yeltsin fought police and set up burning barricades. 

“Lots of people want to ride with you in the limo, but what you want is someone who will take the bus with you when the limo breaks down.” – Oprah Winfrey

photos of the day October 2^nd, 2012

A student holds a rose during a program organized to mark the International Day of Non-Violence in Kathmandu, Nepal.

A boat sails on Lake Leman during a warm afternoon in Chexbres, Switzerland.

Children react as a giant bubble is formed around them during an event to attempt a new Ukrainian record for the most people in a bubble, in Kiev. Ten children are taking part in the attempt by Ukrainian bubble artist Anton Kushpil.

Market Closes for October 2^nd, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Oct. 2 (Bloomberg) — Canadian stocks rose in the last hour of trading as a rally in energy shares overshadowed disappointment after Spanish Prime Minister Mariano Rajoy said he has no plans to request a bailout in the near term.

Niko Resources Ltd. and Birchcliff Energy Ltd. jumped at least 10 percent as energy stocks contributed the most to gains in the Standard & Poor’s/TSX Composite Index. Kinross Gold Corp. climbed 1.5 percent after analysts with RBC Capital Markets raised their rating on the miner. Research In Motion Ltd. jumped 5.8 percent to lead technology shares higher.

The S&P/TSX rose 21.04 points, or 0.2 percent, to 12,391.23 in Toronto, reversing an earlier loss of as much as 0.2 percent. The benchmark equity gauge has risen 3.7 percent this year.

Rajoy said he has no plans to request rescue funds for Spain in the near term, defying speculation that the nation was preparing to ask for a bailout.

“The markets have been going up on anticipation of real action, but we’re still waiting,” said Stephen Gauthier, a money manager with Fin-XO Securities Inc. in Montreal. The firm manages about C$600 million ($610 million). “In Europe, every day it’s been like this for the past two months. It’s a lot of talking, and it looks good, but there’s not a lot that’s really being done to address the problems.”

Central banks continued to inject liquidity into the market to sustain the global economy, with the Reserve Bank of Australia unexpectedly cutting its interest rate to 3.25 percent. This is good for equities but at some point governments need to take action to cut deficits, Gauthier said.

Kinross rose 1.5 percent to C$10.34 after Stephen Walker, analyst with RBC Capital Markets, raised his rating for the gold miner to outperform from sector perform and increased his one- year price target to $14 from $11. The company is poised to take advantage of higher long-term prices for the metal, Walker said.

Goldcorp Inc. slipped 1.1 percent to C$44.93 after Jorge Beristain, head of Americas metals and mining research with Deutsche Bank Securities, cut his rating to hold from buy.

“We now rate those companies buy that have the most ability to rein in capital spending and have shown the most willingness to return cash to shareholders,” he said. “To put it bluntly, managing for aggressive growth is passe.”

Niko Resources surged 14 percent to C$15.84 and Birchcliff Energy soared 10 percent to C$7.70.

Research In Motion rallied 5.8 percent to C$8.15. The stock has jumped 32 percent over the past six days.

Torex Gold Resources Inc. tumbled 8.5 percent to C$1.94 after announcing a C$350 million financing, selling shares and warrants to a group of underwriters led by Bank of Montreal Capital Markets to help fund the development of the company’s Morelo gold project in Mexico.

US

By Michael P. Regan and Lu Wang

Oct. 2 (Bloomberg) — U.S. stocks erased losses in the final hour of trading as Apple Inc. rebounded from a six-week low, helping the market recover from a drop triggered by concern about Spain’s finances. Treasuries rose and the dollar fell.

The Standard & Poor’s 500 Index added less than 0.1 percent to close at 1,445.75 after retreating 0.4 percent in early trading. Ten-year Treasury yields decreased one basis point to 1.62 percent, declining for the 11th time in 12 days. The Dollar Index slipped for a second day, with the euro up 0.3 percent at $1.2920. Australia’s currency weakened at least 0.7 percent against all 16 major peers after the central bank cut its benchmark interest rate to the lowest since 2009.

Apple, the world’s largest company by market value, reversed its loss in the final hour of the session after briefly dipping below a technical level watched by traders as a potential buying opportunity. Stocks turned lower earlier after Spanish Prime Minister Rajoy said he has no plans to request rescue funds in the near term, defying market speculation that the nation would ask for a bailout which would pave the way for the European Central Bank to buy its debt.

“Spain took down the market, but people looked past it and found some good entry points in technology stocks,” Frank Ingarra, who helps manage $1.4 billion at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a telephone interview. “Apple is such a big part of the market and it’s been on a downtrend for a couple of days, so it makes sense for the stock to get some relief and rebound which would translate into the indexes.”

Apple rose $1.92, or 0.3 percent, to $661.31. The stock rebounded after 3 p.m. after dropping as much as 1.3 percent to $650.65, below its average price from the past 50 days. The shares, which slumped 4.7 percent last week after sales of the iPhone 5 started, contributed the most to the S&P 500’s rebound in the final hour, according to data compiled by Bloomberg.

Technology companies in the S&P 500 reversed a 0.7 percent retreat to end the session up 0.1 percent.

Health-care, utility and financial shares led gains among 10 groups, while commodity producers and consumer-discretionary stocks fell the most.

Chipotle Mexican Grill Inc. slid 4.2 percent after hedge fund manager David Einhorn recommended betting against the restaurant chain. Mosaic Co. dropped 3.9 percent after reporting earnings that missed estimates. Citigroup Inc. increased 1.6 percent as its rating was raised by KBW. MetroPCS Communications Inc. rallied 18 percent as Deutsche Telekom AG was said to be nearing a deal with the wireless carrier.

MSCI Inc. fell the most on record after being dropped as benchmark provider for 22 index funds by Vanguard Group Inc., the largest U.S. mutual-fund company. MSCI declined 27 percent, the most since it went public in November of 2007, after Vanguard said funds with about $537 billion in assets will replace New York-based MSCI to cut costs for fund shareholders.

Investors are proving skeptical that the Federal Reserve’s announcement of additional quantitative easing will get Americans to spend more.

The Consumer Discretionary Select Sector SPDR Fund — which includes Amazon.com Inc. and Macy’s Inc. — has lagged behind the Consumer Staples Select Sector SPDR Fund by 2.8 percent since Sept. 14, the day after the Fed unveiled plans to buy mortgage-backed securities at a pace of $40 billion a month until the labor market improves. During the preceding six weeks, the discretionary exchange-traded fund outpaced its defensive counterpart, which includes Procter & Gamble Co. and Coca-Cola Co., by 9.2 percent.

Rajoy’s remarks followed the close of European markets, where Spanish bonds and stocks rallied in anticipation of a bailout request that would pave the way for the European Central Bank to buy the nation’s debt.

The Stoxx Europe 600 Index slipped 0.3 percent. PostNL NV, the Dutch mail service with operations in the U.K., Germany and Italy, jumped 4.4 percent after saying it will raise postage stamp rates in 2013.

Banks in the index declined 0.6 percent as a group. Spain’s banks face a capital shortfall that could climb to 105 billion euros ($135 billion), almost double the estimate the government provided last week, according to Moody’s Investors Service.

Spanish registered unemployment rose for a second month in September amid a worsening recession. The number of people registering for jobless benefits increased 79,645 from August to 4.7 million, according to data released today by the Labor Ministry in Madrid. That compares with an increase of 95,817 in the same month last year.

Asked at a press conference in Madrid today if a bailout request was imminent, Rajoy said: “No.” Rajoy is weighing the terms of a Sept. 6 proposal by the ECB president to buy bonds of cash-strapped nations including Spain if they make for a formal aid request from the euro region’s government-run rescue funds.

Reuters news agency yesterday reported that Spain is ready to seek a bailout as soon as this weekend.

“This continues to show the fact markets remain much headline driven,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an interview. His firm oversees $250 billion in assets. “Rajoy’s comments today really shouldn’t come as any surprise to the market. It seems very consistent with what he reiterated over the last several weeks,” he said. Early declines were “probably a little bit of over-reaction from the market.”

Alstom SA plunged 4.9 percent after Europe’s second-largest power-equipment maker sold 350 million euros ($452 million) of stock to help finance an acquisition it announced in 2009. Erste Group Bank AG slipped 2.8 percent after the Austrian bank’s largest shareholder sold a 235 million-euro stake.

The yield on German 10-year bunds climbed one basis point to 1.46 percent, while Spain’s 10-year rate lost 13 basis points to 5.75 percent and Italy’s decreased five points to 5.03 percent.

The S&P GSCI gauge of 24 commodities declined 0.4 percent as wheat, nickel, gasoline and soybeans declined at least 1.5 percent, while coffee and lean hogs and sugar gained more than 2 percent.

The MSCI Emerging Markets Index added 0.1 percent for a fourth day of gains. Turkey’s benchmark index climbed 1.1 percent while Russia’s Micex Index slipped 0.4 percent for the first decline in four days.

The dollar weakened against nine of 16 major peers, while strengthening 0.9 percent to $1.0266 per Australian dollar.

The RBA’s interest-rate cut was predicted by nine of 28 economists surveyed by Bloomberg News. The ECB will probably keep its benchmark rate at a record low of 0.75 percent when council members meet on Oct. 4, according to a Bloomberg survey.

“Central bankers have revealed their hands,” said Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc in London. “Open-ended monetary policy will to some extent backstop risk, and thus limit the downside. We can expect a protracted period of sideways churn in the market.”

“The future belongs to those who believe in the beauty of their dreams.” – Eleanor Roosevelt

Have a great evening everyone!

“Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.” – Norman Vincent Peale

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.