September 11, 2012 Newsletter

Dear Friends,

Tangents:

September 10^th, 1981:

Pablo Picasso’s painting Guernica is returned to Spain and installed in Madrid’s Prado Museum. Picasso stated in his will that the painting was not to return to Spain until the Fascists lost power and democracy was restored.

Where and When

Painted and initially exhibited in Paris, but refers to events in Guernica, Spain, 1937.

And also on this day in…

1897 – First drunk driving arrest.

1929 – Arnold Palmer is born.

1941 – Stephen J. Gould is born.

1977 – The Guillotine is used for the last time in France – At Baumetes Prison in Marseille, France, Hamida Djandoubi, a Tunisian immigrant convicted of murder, becomes the last person executed by guillotine.
1991 – Nirvana’s “Smells Like Teen Spirit” released as a single.

It does no harm just once in a while to acknowledge that he whole country isn’t in flames, that there are people in the country besides politicians, entertainers, and criminals.  –Charles Kuralt, 1934-1997.

photos of the day September 10, 2012

Visitors lay roses over the names of the first responders at the South Pool of the 9/11 Memorial, ahead of the 11-year anniversary of the September 11, 2001 attacks on the World Trade Center at ‘ground zero’ in New York.

Adrees Latif/Reuters

Members of the public release olive ridley turtle hatchlings during an event by the Kuta Beach Sea Turtle Conservation at Kuta Beach, Bali. According to the conservation, more than 20,000 eggs were safely relocated to the hatchery since 2002, 80% of which have been successfully hatched and released to the ocean.

Desmond Ang/Reuters

Market Closes for September 10, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 10 (Bloomberg) — Canadian stocks fell, sending the benchmark index lower for the first time in four days, as Greece’s struggle to qualify for aid undermined confidence that Europe’s debt crisis is being contained.

Talisman Energy Inc. gained 1.6 percent after the company replaced its chief executive with a member of the board. Nordion Inc. plunged 37 percent after the company said it was unsuccessful in its claim for damages related to the canceled construction of the Maple nuclear facilities. Gold prices fell.

Five stocks fell for every three that rose as the Standard & Poor’s/TSX Composite Index dropped 52.58 points, or 0.4 percent, to 12,215.43 after rising as much as 0.3 percent. old stocks led the decline as eight of 10 major industries ended the day lower. The benchmark equity gauge has advanced 2.2 percent this year.

“What the ECB announced last week took out the tail risk of the euro area disintegrating,” said Ian Nakamoto, director of research with MacDougall MacDougall & MacTier Inc. in Toronto. The firm manages about $4 billion. “I think it’s still probable Greece will exit one way or another, it’s just a matter of the manner of exit. But it’s a different story if we get headlines on Italy or Spain.”

Global stocks soared last week after the European Central Bank approved a bond-buying plan and investors bet U.S. Federal Reserve Chairman Ben S. Bernanke will continue to support economic growth. The Fed starts a two-day policy meeting on Sept. 12.

Greek Prime Minister Antonis Samaras was to meet officials from the nation’s creditors today after failing to secure agreement from coalition partners on spending cuts required for bailout funds. Greece’s Democratic Left leader Fotis Kouvelis, one of Samaras’s governing partners, said that poorer Greeks must be protected from more austerity.

Copper reached a four-month high in New York after weaker Chinese industrial production increased speculation that further steps would be taken to bolster growth in the world’s biggest consumer of the metal. Copper futures for December delivery added 1.2 percent to settle at $3.69 a pound in New York after touching $3.70, the highest since May 10.

Talisman, a Canadian oil and gas producer that has underperformed its peers for the past five years, rose 1.6 percent to C$14.09. The company said it has replaced Chief Executive Officer John Manzoni with board member Hal Kvisle, a former CEO of TransCanada Corp. Manzoni, who took over the Calgary-based company in 2007, will step down immediately.

Talisman has slumped 23 percent during Manzoni’s tenure.

“The board may have been forced to be proactive,” Phil Skolnick, analyst with Canaccord Genuity Corp., wrote in a note.

“Mr. Kvisle was viewed as a very competent CEO and thus the market appeared to like him when he was at TransCanada.”

North American Palladium Ltd. climbed 5.2 percent to C$2.04 as the price of the metal rose. The miner’s stock has slumped 22 percent this year.

Sherritt International Corp., a diversified commodities producer, added 5.4 percent to C$4.68. Sherritt has declined 14 percent this year, compared with a 5.4 percent slump for the S&P/TSX materials index.

Franco-Nevada Corp., a mining royalties company that has soared 31 percent this year, fell 4.4 percent to C$50.90 after Brian MacArthur, an analyst with UBS Investment Research, downgraded the stock to a neutral rating from a buy.

Nordion slipped 37 percent to C$6.64, its biggest decline since 1988, after the medical imaging equipment manufacturer said it lost its case seeking damages from Atomic Energy of Canada Ltd. and suspended its quarterly dividend. The Ottawa- based company had been seeking damages after AECL canceled construction of the Maple nuclear facilities, which Nordion was planning to use as its long-term medical isotope supply.

Alacer Gold Corp. fell 4.7 percent to C$6.35 and Eldorado Gold Corp. retreated 3.8 percent to C$13.83 as gold tumbled for the first time in three sessions. Gold futures for December delivery dropped 0.5 percent to settle at $1,731.80 an ounce in New York.

US

By Inyoung Hwang

Sept. 10 (Bloomberg) — U.S. stocks fell, after the Standard & Poor’s 500 Index rose to the highest level since 2008, as concern over Greece’s debt crisis overshadowed speculation central banks will take action to spur the economy.

Intel Corp. lost 3.8 percent after Morgan Stanley cut its earnings forecasts and Nomura Holdings Inc. said estimates for the largest chipmaker’s profit next year may fall further. Apple Inc. dropped 2.6 percent as technology shares tumbled 1.3 percent, the most among 10 S&P 500 groups. International Paper Co. slid 4.2 percent after Deutsche Bank AG cut its rating.

The S&P 500 fell 0.6 percent to 1,429.08 at 4 p.m. in New York. The Dow Jones Industrial Average slid 52.35 points, or 0.4 percent, to 13,254.29. The Nasdaq Composite Index lost 1 percent to 3,104.02. About 5.6 billion shares traded hands on U.S.

exchanges, 7.3 percent below the three-month average, while the Chicago Board Options Exchange Volatility Index, known as the VIX, rose 13 percent, the biggest jump in seven weeks, to 16.28.

“Europe will continue kicking the can down the road and there’s no quick solution,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “Macro numbers have been very unimpressive, but there’s this aspect of expansionary monetary policy decisions that have been driving prices higher.” He said, “The market will turn on what the Federal Reserve does this week.”

The S&P 500 climbed last week to a four-year high after the European Central Bank approved a bond-buying plan and investors bet Fed Chairman Ben S. Bernanke will continue to support economic growth. The equities index is 20 percent above its level on Sept. 15, 2008, the first trading day after Lehman Brothers Holdings Inc. filed the world’s biggest bankruptcy and prompted a 46 percent drop through March 9, 2009. The gauge is less than 10 percent from its record closing high after rising 14 percent this year.

Bets on further stimulus measures have increased as data last week showed payrolls rose less than projected and the unemployment rate was unexpectedly driven down by Americans leaving the labor force. On Aug. 31, Bernanke cited his concern about the jobless rate and said the central bank will provide additional stimulus as needed to promote a stronger recovery.

The Fed’s Open Market Committee meets this week and will release a statement on Sept. 13.

Stocks declined earlier today as Greek Prime Minister Antonis Samaras was meeting officials from the nation’s creditors after failing to secure agreement from coalition partners on spending cuts. Greece’s Democratic Left leader Fotis Kouvelis, whose party is one of the three in the coalition government, said that no decision had been made on the cuts required to obtain further aid for the country’s bailout, and that poorer citizens must be protected from austerity measures.

Germany’s Federal Constitutional Court is due to rule on the country’s participation in the European Stability Mechanism, a permanent 500 billion-euro fund that offers loans to member states and may buy their bonds to lower borrowing costs.

“The euro zone is a problem that is so difficult to solve, we’re going to continue to live with it for many months or even longer,” Stanley Nabi, who helps oversee more than $11 billion as vice chairman of New York-based Silvercrest Asset Management Group, said in a telephone interview. “Who is going to step in and finance Greece here? We can’t continue to throw good money after bad. This is not a temporary situation.”

In Asia, a report showed imports into China slid 2.6 percent in August from a year earlier, the nation’s customs bureau said. Economists in a Bloomberg survey had forecast growth of 3.5 percent. Exports rose 2.7 percent, slower than estimated. Industrial production increased 8.9 percent, the National Bureau of Statistics said yesterday.

“We could be much closer to the tipping point for more policy action as the slowdown in the external sector — if it were to persist — may bring more pressure on employment,”

Morgan Stanley wrote in a report today.

Technology, financial and industrial companies posted the biggest losses today out of 10 groups in the S&P 500, erasing at least 0.7 percent. Bank of America Corp. sank 2.5 percent to $8.58. Boeing Co. dropped 2.5 percent to $71.08. Apple tumbled 2.6 percent to $662.74.

Intel lost 3.8 percent to $23.26 for the biggest drop in the Dow. Morgan Stanley reduced its third-quarter revenue and earnings projections, saying the company faces margin erosion ahead. Estimates for the Santa Clara, California-based company have further downside risk due to headwinds facing notebook shipments and decelerating demand in China, according to Nomura’s Romit Shah. Intel slashed its third-quarter sales forecast last week.

International Paper dropped 4.2 percent to $34.79. Deutsche Bank’s Mark Wilde cut his recommendation on the world’s largest paper and pulp producer and other containerboard makers, saying price increases are “not a done deal.” He cited the Institute for Supply Management’s manufacturing report for August that was below 50, which is the dividing line between expansion and contraction.

American International Group Inc. retreated 2 percent to $33.30. The U.S. Treasury is offering to sell $18 billion of shares in a transaction that may cut taxpayers’ stake in the firm to below 50 percent for the first time since its 2008 bailout. The insurer plans to buy back as much as $5 billion of the shares and Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the sale, the Treasury said yesterday in a statement.

Titan Machinery Inc. plunged 23 percent to $19.41. The owner of agricultural and equipment stores reduced its forecast for 2012 earnings. It estimates profit to be no more than $2.30 a share, compared with an earlier prediction of at least $2.55 a share. The company also reported second-quarter earnings of 25 cents a share, missing the average analyst estimate of 43 cents.

Plains Exploration & Production Co. sank 11 percent to $36.09. The oil company said it agreed to buy BP Plc’s interests in certain deepwater Gulf of Mexico oil and natural-gas assets for $5.55 billion. The assets have production equivalent to 59,500 barrels of oil a day.

Michael Kors Holdings Ltd. declined 4.5 percent to $53.50.

The high-fashion retailer said last week after markets closed that some of its investors will sell 20 million shares in a so- called secondary sale.

Telephone stocks posted the only gain among 10 S&P 500 group. Verizon Communications Inc. added 0.8 percent to $44.06.

Sprint Nextel Corp., the third-largest U.S. wireless carrier, rose 2.4 percent to $5.15. Mike McCormack, a Nomura analyst in New York, raised his recommendation on Sprint to buy from neutral in a report today, citing cost savings from the company’s network-improvement plan. He now expects Sprint’s shares to reach $7 over the next 12 months, up from a previous target of $2.50.

Hewlett-Packard Co. jumped 0.8 percent to $17.43. The world’s largest personal-computer maker expanded the total job cuts under its reorganization plan announced in May to 29,000, more than it had originally disclosed.

The S&P 500 will surge through the end of 2013 to a record 1,615 as an improvement in capital investment and industrial production boost earnings, Citigroup Inc. strategists led by Tobias Levkovich wrote in a report dated Sept. 7. Gamco Investors Inc.’s Howard Ward also said U.S. stocks may rally to record highs in the next four months as consumers increase spending and help drive up corporate earnings.

“The key message to investors is get in stocks,” Ward, a fund manager who helps oversee $35.6 billion at Gamco in Rye, New York, said in a television interview on “Bloomberg Surveillance” with Tom Keene and Sara Eisen. “It’s not too late. If we can avoid a fiscal cliff-driven, recession-type of hit, we’re going to have a new high in stocks in the next three to four months.”

A deal by U.S. lawmakers to head off automatic tax increases and spending cuts at the start of next year may be “messy” and could hurt stocks, Goldman Sachs Group Inc.’s chief U.S. equity strategist David Kostin said. The automatic spending cuts totaling about $1.2 trillion would be carried out beginning Jan. 2 unless lawmakers reach a deal to cancel or modify them.

The so-called fiscal cliff “is unlikely to be resolved in a smooth fashion, and probably will be resolved in a messy way,” Kostin said today at a conference in San Diego sponsored by the Insured Retirement Institute.

Have a wonderful evening everyone.

Be magnificent!

Self is not something as opposed to something else,

it is sunya: we are also all things;

the self represented in all forms, good or bad,

not exclusively or exhaustively in any.

-Ramchandra Gandhi, 1937-2007

As ever,

Carolann

The first human who hurled an insult instead of a stone

was the founder of civilization.

-Sigmund Freud, 1856-1939

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