September 12, 2012 Newsletter

Dear Friends,

Tangents:

September 12^th, 1940 – The Lascaux Caves in France, with their prehistoric wall paintings, are discovered.

1940 – The Lascaux Caves in France, with their prehistoric wall paintings, are discovered.
And also on this day in…

1880 – H.L. Mencken, critic,  was born.

1888 – Maurice Chevalier was born.

1944 – American troops fight their way into Germany.
1945 – French troops land in Indochina.
1969 – President Richard Nixon orders a resumption in bombing North Vietnam.

An idealist is one who, on noticing  that a rose smells better than a cabbage, concludes that it will also make better soup. –H. L. Mencken

What small act of kindness were you once shown that you will never forget?

photos of the day September 12, 2012

Local residents visit the Shanghai International Lantern Festival in Luxun Park at Hongkou district in Shanghai. According to Chinese tradition, people try to solve puzzles on lanterns, eat Yuanxiao (glutinous rice ball) and enjoy family reunions during the festival.

Carlos Barria/Reuters

Market Closes for September 12^th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 12 (Bloomberg) — Canadian stocks rose for a second day as the U.S. Federal Reserve began a two-day meeting amid speculation of another round of economic stimulus and a German court cleared the way for Europe’s bailout fund.

SouthGobi Resources Ltd. gained 0.9 percent after ousting its chief executive officer. North American Palladium gained 5 percent as prices for the metal advanced for an eighth day. Niko Resources Ltd. dropped 33 percent after plugging and abandoning a well in Indonesia. Petrominerales Ltd. lost 14 percent after reporting a decline in production.

The Standard & Poor’s/TSX Composite Index advanced 12.17 points, or 0.1 percent, to 12,232.62 in Toronto, after falling 0.2 percent earlier. The benchmark equity gauge has climbed 2.3 percent this year.

“Everyone’s waiting for the Fed,” said Anil Tahiliani, portfolio manager with McLean & Partners Wealth Management in Calgary. The firm manages about C$1 billion ($1.02 billion).

“If they disappoint the market and don’t actually announce QE3, it could pull back 3 to 5 percent. But I don’t think it will be a major drop off as U.S. economic data remains weak,” he said, referring to a third round of quantitative easing, or government bond purchases.

U.S. Fed Chairman Ben S. Bernanke and the Federal Open Market Committee began two days of meetings today, with almost two-thirds of economists in a Bloomberg survey expecting an announcement tomorrow of another round of bond purchases to stimulate the economy.

In Europe, Germany’s Federal Constitutional Court dismissed motions that sought to block the European Stability Mechanism, while ruling the nation’s 190 billion euro ($245 billion) contribution can’t be increased without legislative approval.

Much of the effort to resolve the crisis hinges on the permanent ESM, which will succeed the temporary European Financial Stability Facility.

Niko Resources, the worst-performing stock on the S&P/TSX this year, tumbled 33 percent to C$9 after the oil and gas exploration company said yesterday its Lebah-1 well in Indonesia has been plugged and abandoned after gas was discovered in only one of a “number of” geological formations.

Petrominerales, a Calgary-based company focused on oil and gas exploration in Colombia and Peru, sank 14 percent to C$8.21 after saying production declined in August. Nathan Piper, equity analyst with RBC Capital Markets, also downgraded the company to sector perform from outperform.

SouthGobi, a coal miner with operations in Mongolia which has lost 63 percent of its value this year, added 0.9 percent to C$2.20 after firing Chief Executive Officer Alexander Molyneux, effective immediately. The move comes eight days after Aluminum Corp. of China Ltd. dropped its C$925 million ($949 million) takeover bid. Molyneux will be replaced by Ross Tromans, who formerly managed coal marketing with Rio Tinto Group.

North American Palladium added 5 percent to C$2.09 as the metal rose.

Agrium Inc. rose 2.1 percent to C$101 after P.J. Juvekar, an analyst with Citi Research, raised the stock to buy from neutral with a new target price of $118 from $104.

“It has more room to run,” Juvekar said, citing increased demand for seeds, nitrogen, crop protection chemicals and services.

US

By Inyoung Hwang

Sept. 12 (Bloomberg) — U.S. stocks rose, with benchmark indexes trading near four-year highs, as a German court cleared the way for Europe’s bailout fund and investors weighed prospects for stimulus measures from the Federal Reserve.

Apple Inc. rallied 1.4 percent, reversing an earlier decline, after introducing the iPhone 5. General Electric Co.

and JPMorgan Chase & Co. added at least 0.8 percent, pacing gains among the biggest companies. PulteGroup Inc. advanced 6 percent as homebuilders rallied. Facebook Inc. climbed 7.7 percent after Chief Executive Officer Mark Zuckerberg said he’s addressing missteps that made it hard to reap the benefits of mobile advertising.

The Standard & Poor’s 500 Index added 0.2 percent to 1,436.56 at 4 p.m. in New York, near a four-year high set last week. The Dow Jones Industrial Average rose 9.99 points, or 0.1 percent, to 13,333.35 today. About 6.2 billion changed hands on U.S. exchanges today, 2.5 percent above the three-month average.

“All eyes are expecting some sort of quantitative easing,” Joseph Tanious, a New York-based strategist at JPMorgan Funds, which oversees $394 billion, said in a telephone interview. “Central bank accommodation has been what’s helped propel this market higher.” He said, “The tail risk is being eliminated in Europe. Getting the ruling from the German Constitutional Court reinforces that we’re stepping in the right direction.”

The Fed began a two-day meeting today amid speculation policy makers will provide more stimulus. The central bank will probably announce a third round of bond purchases tomorrow, according to almost two-thirds of economists in a Bloomberg survey. The central bank will also likely commit to hold interest rates close to zero into 2015, the survey showed.

Chairman Ben S. Bernanke and his colleagues on the Federal Open Market Committee will opt for further quantitative easing to support an economy that grew at less than 2 percent in the second quarter, according to economists. The unemployment rate has remained above 8 percent for 43 consecutive months. Since Aug. 1, the S&P 500 has climbed more than 4 percent amid expectations of further easing by the central bank.

“Bernanke has adopted a very important guideline, and that is if he’s going to be wrong in the next two or three years, it’s because he kept rates too low for too long,” John Manley, who helps oversee about $204 billion as chief equity strategist for Wells Fargo Advantage Funds in New York, said in a telephone interview. “You want to err on the side of the angels, and I think he feels the angels are saying pay low rates in interest at this time.”

Stocks rose earlier as Germany’s Federal Constitutional Court dismissed motions that sought to stop the government from contributing to the rescue facility known as the European Stability Mechanism. The legal challenge delayed efforts by Chancellor Angela Merkel and other euro-area policy makers to stem the region’s debt crisis. The judges ruled that parliament must approve any increase of the country’s 190 billion euros ($245 billion) of liabilities.

The S&P 500 briefly extended gains after Bloomberg News reported France is pressing Spain to snub German concerns and request help from the European Union to contain the euro-area financial crisis, according to three people familiar with negotiations.

Telephone, industrial and financial stocks led gains among 10 groups in the S&P 500 today. General Electric added 1.4 percent to $21.89, the highest since October 2008. JPMorgan, the largest U.S. bank by assets, advanced 0.8 percent to $39.92, while property and casualty insurer Travelers Cos. climbed 0.9 percent to a record $67.54.

Apple rose 1.4 percent to $669.79 after falling as much as 0.7 percent. The world’s most valuable company introduced a new version of the iPhone that boasts a bigger screen, faster chip and access to speedier wireless networks, an overhaul aimed at widening its lead over Samsung Electronics Co. and Google Inc.

Coming almost a year after the death of Apple co-founder Steve Jobs, the next iPhone is the first hardware redesign of the product since 2010. Technology stocks rose 0.4 percent as a group.

PulteGroup rallied 6 percent to $15.55 for the second- biggest gain in the S&P 500. Ten of 11 companies in the S&P Supercomposite Homebuilding Index rallied as Credit Suisse Group AG’s August survey of real estate agents showed momentum in prices is continuing and Goldman Sachs Group Inc.’s Hui Shan wrote in a note that housing starts are showing signs of improvement after staying at depressed levels since 2009.

Weyerhaeuser Co.’s Chief Financial Officer Patricia Bedient said at a UBS AG conference that she sees a slow, steady housing recovery.

Facebook, the world’s largest social-networking website, rose 7.7 percent to $20.93 after Zuckerberg said yesterday at the TechCrunch Disrupt conference in San Francisco that the company should generate more revenue from mobile devices than from desktop computers. Shares extended gains after Apple said the iPhone 5 has a built-in application for the social network that enables photo sharing and voice-activated posts.

The remarks helped allay concerns over Facebook’s ability to generate sales from users who increasingly socialize over handheld devices. The stock had plunged 49 percent since the May 17 IPO amid signs of slowing growth and executives’ silence over plans to turn the tide. Zynga Inc. jumped 10 percent to $3.07 after Zuckerberg also said business with the largest maker of social games is strong.

Kohl’s Corp. jumped 3.4 percent to $53.77. Deutsche Bank AG’s Charles P. Grom lifted his rating on the third-largest U.S. department store to buy from hold, citing valuations and improving same-store sales.

The S&P 500 will climb another 2 percent before the benchmark U.S. equities gauge reaches a resistance level near 1,450 to 1,460, according to Bill McNamara, a technical analyst at Charles Stanley & Co. in Joenkoeping, Sweden.

Gains are set to continue as the measure is trading above key short-term moving averages, including the 21-day mean, and has held on to last week’s advance, which pushed it to the highest since 2008, McNamara said.

Have a wonderful evening everyone.

Be magnificent!

We cross the infinite with every step, and encounter the eternal with every second.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

I don’t want to live – I want to love first,

and live incidentally.

-Zelda Fitzgerald, 1900-1948

Letter to F. Scott Fitzgerald, 1919

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