October 3rd Newsletter

Dear Friends,

Tangents:

Critics of Toronto Mayor Rob Ford pooh-poohed his vision for a giant Ferris wheel and megamall on the city’s waterfront. But that hasn’t deterred developers from announcing plans for the world’s tallest Ferris wheel in New York. To open in 2015 on Staten Island, the New York Wheel will be taller than Singapore’s Flyer and the planned High Roller in Las Vegas. It will be anchored by a 100-store fashion mall and it will operate through the winter months, something many Torontonians thought impossible.

An artist’s rendering of a proposed 625-foot Ferris wheel planned as part of a retail and hotel complex along the Staten Island waterfront in New York. (/AP)

And also on this day in…

1962 – The Sigma VII blasted off from Cape Canaveral for a nine-hour flight.
1962 – The play, “Stop the World, I Want to Get Off!” opened on Broadway.
1974 – Frank Robinson took over the management position of the Cleveland Indians baseball team. He was the first black manager in major league baseball.
1981 – Irish Nationalist in Maze Prison in Belfast, Northern Ireland called off their hunger strike. The strike had lasted 7 months and ten people had died.
1988 – The space shuttle Discovery landed safely after its four-day mission. It was the first American shuttle mission since the Challenger disaster.
1989 – East Germany suspended unrestricted travel to Czechoslovakia in an effort to slow the flow of refugees to the West.
1990 – The Berlin Wall was dismantled eleven months after the borders between East and West Germany were dissolved. The unification of Germany ended 45 years of division. 

“Faith is taking the first step even when you don’t see the whole staircase.” – Martin Luther King, Jr.

photos of the day October 3^rd, 2012

People stroll on the Bund, a famous waterfront as the symbol of town, in Shanghai, China. China celebrated its national day on Oct. 1 and people enjoy a week-long holiday.

Fog rolls through downtown Atlanta, Georgia.

A man poses with a thumbs up sign in front of a painting at the Berlin Wall in Berlin. Wednesday marks the 22nd anniversary of German reunification, after decades of division into Soviet-controlled communist German Democratic Republic (GDR) in the east and the Federal Republic of Germany in the west.

Market Closes for October 3^rd, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Oct. 3 (Bloomberg) — Canadian stocks fell as a slump in Chinese non-manufacturing industrial growth offset better-than- estimated reports on U.S. employment and services industries.

Potash Corp. of Saskatchewan Inc. retreated 2.1 percent after Scotia Capital Markets cut its rating on the company amid a weaker potash outlook. Canadian Natural Resources Ltd. and Cenovus Energy Inc. slipped at least 2 percent. Crude fell below $90 as a report showed U.S. crude output climbed to the highest level in more than 15 years and fuel consumption decreased.

The Standard & Poor’s/TSX Composite Index fell 31.76 points, or 0.3 percent, to 12,359.47 in Toronto. The benchmark equity gauge has advanced 0.3 percent this week.

“People have been hoping for and expecting a soft landing in China, but the most recent set of data suggests we may be looking at a harder landing,” said Laura Wallace, vice president and fund manager for Scotia Private Client Group, said on the phone from Toronto. The group manages about C$10 billion ($10 billion). “We’re in a no-man’s land where the data isn’t totally weak but isn’t totally strong either, except for Europe which looks like they will be in recession.”

Stocks retreated across Europe and Asia as China’s non- manufacturing industries expanded at the weakest pace since at least March 2011. The purchasing managers’ index fell to 53.7 in September from 56.3 in August. Readings above 50 indicate expansion.

ADP Employer Services said U.S. companies added 162,000 jobs last month, topping the median forecast of 38 economists surveyed by Bloomberg for a 140,000 advance. The Institute for Supply Management’s non-manufacturing index climbed to a six- month high of 55.1, exceeding the most optimistic projection in a Bloomberg survey, from 53.7 in August, figures from the Tempe, Arizona-based group showed today.

Canadian Natural Resources fell 2.9 percent to C$30.28 and Cenovus Energy slipped 2 percent to C$34.53. Crude for November delivery tumbled 4.1 percent to $88.14 a barrel, the lowest settlement since Aug. 2, after the U.S. Energy Department said crude output rose 11,000 barrels a day to 6.52 million last week, the most since December 1996. Total fuel demand fell 0.3 percent to 18.3 million barrels a day in the four weeks ended Sept. 28, the lowest level since April.

Potash Corp., the world’s largest fertilizer producer, slumped 2.1 percent to C$41.07 after Ben Isaacson, analyst with Scotia Capital Markets, downgraded the stock to sector perform from sector outperform.

“The Street needs to bring numbers down substantially,”

Isaacson said in a note today arguing that earnings expectations for the industry are too high.

Quebecor Inc. lost 1.3 percent to C$33 after agreeing to pay C$1.5 billion to the Caisse de Depot et Placement du Quebec, the country’s second-biggest pension fund manager, to increase its controlling stake in a newspaper and cable television unit.

Quebecor will hold a 75.4 percent stake in Quebecor Media Inc. after the transaction.

Pierre Karl Peladeau, chief executive officer of Quebecor, said in a statement the company is “taking advantage” of a favorable debt market.

US

By Nikolaj Gammeltoft and Lu Wang

Oct. 3 (Bloomberg) — U.S. stocks rose and Treasuries erased early gains as data showed better-than-forecast growth in payrolls and service industries, offsetting concern over China’s economy. Commodities fell as the dollar strengthened.

The Standard & Poor’s 500 Index climbed 0.4 percent to 1,450.97 at 4 p.m. in New York, paring a rally of as much as 0.6 percent as declines in energy producers and Hewlett-Packard Co. weighed on the market. Ten-year Treasury yields were little changed at 1.61 percent after falling two basis points earlier.

The S&P GSCI gauge of 24 raw materials dropped 2.3 percent, the most since July, as oil and natural gas tumbled at least 3.9 percent. The dollar appreciated against 14 of 16 major peers.

S&P 500 futures turned higher before the open of exchanges in New York after ADP Employer Services said companies added 162,000 jobs last month, topping the median forecast of economists surveyed by Bloomberg for a 140,000 advance. Service industries in the U.S. expanded more than forecast in September.

Futures and European stocks slipped earlier as a report showed Chinese services industries expanded at the weakest pace since at least March 2011.

“There has been an ongoing tug of war as to whether or not the liquidity coming into the markets can counteract perhaps weaker earnings,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial, which oversees $943 billion, said by phone. While today’s data “are positive underpinnings for the market,” she said, the range-bound trading “will continue until investors feel comfortable enough to go in with longer positions in the equity market. Market participants are still worried about the economy.”

The ADP data comes two days before a government jobs report that economists forecast will show the nation added 115,000 jobs last month and the unemployment rate increased to 8.2 percent from 8.1 percent.

The S&P 500 is down 1.1 percent from an almost five-year high set on Sept. 14, trimming a drop of as much as 2.2 percent. Gauges of telephone, consumer-discretionary and financial shares led gains in eight of the 10 main industry groups in the S&P 500 today.

Best Buy Co. jumped on a Reuters report the retailer’s founder and buyout firms are scrutinizing the company’s finances. Monsanto Co. fell as the world’s largest seed company forecast 2013 earnings below analyst estimates. Hewlett-Packard Co. tumbled as Chief Executive Officer Meg Whitman projected a profit decline for fiscal 2013 as a turnaround effort at the struggling computer maker takes longer than expected.

The Stoxx Europe 600 Index fell 0.1 percent after slumping 0.5 percent earlier. The volume of shares changing hands in the index’s companies was 17 percent less than the 30-day average, before a meeting of European Central Bank policy makers tomorrow, according to data compiled by Bloomberg.

FirstGroup Plc plunged 21 percent, the most on record, after the U.K. rail operator was stripped of the right to operate West Coast trains from London to Scotland. EasyJet Plc climbed 3.5 percent as Europe’s second-biggest discount airline said full-year earnings beat its forecasts.

Oil declined 4.1 percent to $88.14 a barrel after a government report showed that U.S. crude output climbed to the highest level in more than 15 years and fuel consumption decreased. Natural gas lost 3.9 percent, the most in seven weeks, on forecast of moderating temperatures. Gasoline dropped 2.4 percent as 18 of 24 commodities tracked by the S&P GSCI retreated.

The MSCI Emerging Markets Index fell 0.4 percent, declining for the first time in five days. The Hang Seng China Enterprises Index slid as much as 0.4 percent, the most in a week, before paring its loss to less than 0.1 percent. Financial markets in China and South Korea were closed.

China’s purchasing managers’ index fell to 53.7 in September from 56.3 in August, according to the National Bureau of Statistics and China Federation of Logistics and Purchasing.

Australia’s dollar declined for a fourth straight day as the nation recorded its widest trade deficit since 2008 in August. It dropped to as low as $1.0196, the weakest level since Sept. 6.

South Africa’s rand depreciated 0.8 percent against the dollar on rising expectations the central bank will cut interest rates to stimulate growth. The dollar strengthened against 14 of 16 major currencies, up 0.1 percent at $1.2903 per euro and 0.5 percent higher at 78.52 yen.

Yields on 10-year Italian government bonds increased one basis point to 5.04 percent, after earlier slipping below 5 percent. The rate on similar-maturity Spanish securities added six basis points to 5.81 percent.

Spanish Prime Minister Mariano Rajoy said yesterday 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 ECB to buy its debt.

There’s “ongoing uncertainty about the timing of Spain’s formal request for an official program and concerns about global growth,” Barclays Plc’s head of European currency strategy, Guillermo Felices, wrote in a report to investors. “We remain constructive on risky assets, but think better news is needed on both fronts for the rally to regain momentum.”

The cost of insuring European corporate and sovereign debt using credit-default swaps fell for a third day, to the lowest levels in more than a week. The Markit iTraxx Crossover Index of swaps on 50 mostly junk-rated companies declined eight basis points to 549.

Portuguese debt agency IGCP bought 3.76 billion euros ($4.9 billion) of bonds due next year in exchange for securities due in 2015 as the nation takes steps to return to international credit markets.

“Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” – Mark Twain

Have a great evening everyone!

“Always be yourself, express yourself, have faith in yourself, do not go out and look for a successful personality and duplicate it.” – Bruce Lee

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.