September 13, 2012 Newsletter

Dear Friends,

Tangents:

In honor of New York Fashion Week:

Pattern and Snarl

Life likes a little mess. All patterns need a snarl.

The best patterns know how best to heed a snarl.

Every high style, every strict form was once nonce.

The best way to save a snagged pattern? Repeat the snarl.

Eden used to snow in fractals, rain in syncopated runs.

Adam never imagined he would hear its seedlings snarl.

Tug the wrong thread, and your wool sweater vanishes at once.

Death pulls at a wisp of us – and just like that, it’s freed the snarl.

What is it about order that we love? This sense,

Maybe, that a secret informs the pattern?

Is it a toddler’s joy in doing things again?

Is it the entropy in us that warms to pattern?

I never intended this line to rhyme on again again.

Then again, sometimes it’s the snarl that adorns the pattern.

-AMI MAJMUDAR

And on this day in…

1759 – The British are victorious against the French on the Plains of Abraham, in Québec
1814 – Francis Scott Key pens a poem which is later set to music and in 1931 becomes America’s National Anthem, “The Star Spangled Banner.”  It was inspired by the attack on Fort McHenry.

1903 – Claudette Colbert is born.

1944 – Jacqueline Bissett is born.
1976 – The U.S. announces it will veto Vietnam’s bid to join the UN
1961 – An unmanned Mercury capsule is orbited and recovered by NASA in a test
1951 – In Korea, U.S. Army troops begin their assault on Heartbreak Ridge. The month-long struggle will cost 3,700 lives

photos of the day September 13, 2012

A kiwi chick hatches at Auckland Zoo in Auckland, during its spring breeding season. The chick, a flightless bird that will grow to about the size of a domestic fowl, is the fifth born this season and has been named Nick 1.

Greg Bowker/New Zealand Herald/AP

A new species of monkey found in the Democratic Republic of the Congo and identified as Lesula (Cercopithecus lomamiensis) is seen in this undated photograph from an article published September 12, 2012 in the science journal PLOS One.

Hart JA, Detwiler KM, Gilbert CC/PA/Reuters

Market Closes for September 13^th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang and Eric Lam

Sept. 13 (Bloomberg) — Canadian stocks rallied, pushing the index toward its highest close since April, after the U.S.

Federal Reserve said it will buy mortgage-backed securities and keep interest rates “exceptionally low” to spur the economy.

Raw-materials producers jumped 2.9 percent, the most among 10 groups in the Standard & Poor’s/TSX Composite Index, as Barrick Gold Corp. climbed 3.3 percent. Vero Energy Inc. rallied 15 percent after agreeing to be bought by TORC Oil & Gas Ltd.

The S&P/TSX increased 125.47 points, or 1 percent, to 12,358.09 at 2:23 p.m. in Toronto. Trading was 26 percent higher than the 30-day average at this time of day.

“The Federal Reserve is committed to generating some real growth,” Laura Wallace, vice president and portfolio manager for Scotia Private Client Group in Toronto, said in a phone interview. “Canada is an export-driven economy and very dependent on global economic growth. Anything that improves the outlook for the U.S. economy is very positive for Canada.”

The U.S. Fed said today in a statement that it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a bid to boost growth and reduce unemployment. The Federal Open Market Committee also said it would likely hold the federal funds rate near zero “at least through mid-2015.”

The S&P/TSX has climbed 3.3 percent this year, trailing all of the world’s 24 developed markets, except for Spain and Portugal, amid concern slowing global growth will hurt demand for oil and metals. Commodity companies account for about half the S&P/TSX.

Barrick, the world’s largest gold producer, climbed 3.3 percent to C$40.01. Gold futures topped $1,770 an ounce for the first time since February after the Fed announcement stoked concern inflation will rise, boosting demand for the precious metal as an inflation hedge. NovaGold Resources Inc. advanced 5.9 percent to C$5.36.

Vero Energy surged 15 percent to C$2.60. The oil and natural-gas explorer agreed to be bought by TORC for about C$3 a share.

Precision Drilling Corp. gained 2.6 percent to C$8.69. The oil and natural-gas drilling services company was boosted to outperform from market perform at Wells Fargo & Co.

MacDonald Dettwiler & Associates Ltd., which made the robotic arm for NASA’s defunct space shuttle, plunged 5.8 percent to C$50.72. Steven Arthur, analyst with RBC Capital Markets, cut the stock to sector perform from outperform.

Kirkland Lake Gold Inc. retreated 4.4 percent to C$11.91.

The company posted first-quarter adjusted earnings of 1 Canadian cent a share, compared with analysts’ estimates of 14 Canadian cents, according to a Bloomberg survey.

US

By Inyoung Hwang and Amanda Gould

Sept. 13 (Bloomberg) — U.S. stocks surged, sending the Standard & Poor’s 500 Index to its highest level since 2007, as the Federal Reserve said it will buy mortgage-backed securities to bolster the economy.

All 10 groups in the S&P 500 gained. Bank of America Corp. and JPMorgan Chase & Co. jumped more than 3.7 percent to pace gains among financial shares. Alcoa Inc. and Cliffs Natural Resources Inc. rallied at least 3 percent as commodity companies advanced. Pall Corp. rose 8 percent as it reported quarterly earnings that topped analysts’ estimates. Apple Inc. added 2 percent after unveiling a new version of the iPhone yesterday.

The S&P 500 rallied 1.6 percent to 1,459.99 at 4 p.m. in New York, rising for a third straight day and closing at the highest level since Dec. 31, 2007. The Dow Jones Industrial Average rose 206.51 points, or 1.6 percent, to 13,539.86. More than 8.1 billion shares traded hands in the U.S. today, the most since June and 35 percent above the three-month average.

“It was a very powerful statement,” Kevin Caron, a market strategist at Stifel Nicolaus & Co. in Florham Park, New Jersey, said in a telephone interview. The firm oversees about $127 billion. “The Fed is going all in here, especially with their commitment to continue asset purchases until they see the desired result in the form of a lower unemployment rate. This statement removes a lot of uncertainty about the Fed’s commitment to maintaining price stability.”

The Fed said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month. The central bank will continue its purchases of mortgage-backed securities and undertake other asset purchases if the outlook for the labor market doesn’t improve substantially, the Federal Open Market Committee said today in a statement at the end of its two-day meeting in Washington.

The FOMC also said it would probably hold the federal funds rate near zero “at least through mid-2015.” Since January, the Fed had said the rate was likely to stay low at least through late 2014. Fed officials said economic growth will improve faster than they had earlier projected, as they upgraded their 2013 and 2014 estimates for gross domestic product.

“What the market didn’t expect was having this labor market kicker,” John Canally, an economist and investment strategist at LPL Financial Corp. in Boston, said by phone. The firm oversees about $350 billion. “The Fed said if the labor market doesn’t improve, the committee will continue.” He said, “That was a little bit of a bolder step than the market would have thought and what is adding to the risk-on trade here.”

Data today showed the number of Americans filing applications for unemployment benefits rose more than projected last week, indicating scant improvement on the outlook for jobs.

Wholesale prices in the U.S. increased in August by the most in more than three years, reflecting a surge in energy costs.

Two rounds of large-scale asset purchases totaling $2.3 trillion have failed to reduce the jobless rate below 8 percent more than three years into the recovery. In a speech to central bankers and economists on Aug. 31, Fed Chairman Ben S. Bernanke said “the stagnation of the labor market in particular is a grave concern.”

The S&P 500 is about 7 percent away from reaching its record closing high from 2007 after rallying 16 percent this year. The equities index has climbed in the past three months amid expectations central banks will take steps to stimulate the economy. The European Central Bank last week announced a bond- buying program.

All 30 stocks in the Dow rallied and all 10 groups in the S&P 500 rose at least 1 percent, led by financial and commodity shares.

Bank of America, the second-largest U.S. bank by assets, increased 4.8 percent to $9.40. JPMorgan added 3.7 percent to $41.40. Shares of the New York-based lender have erased their decline since Chief Executive Officer Jamie Dimon disclosed a $2 billion trading loss in May. Class A shares of Berkshire Hathaway Inc. jumped 2.1 percent to $132,851, the highest since October 2008.

Alcoa, the largest U.S. aluminum producer, gained 3 percent to $9.63, and Cliffs Natural Resources, the biggest iron-ore producer in the country, jumped 6.3 percent to $43.18. The Morgan Stanley Cyclical Index, a gauge of 30 U.S. stocks tied to economic growth, rose for the third-straight day, climbing 1.7 percent. The KBW Bank Index, a measure of 24 U.S. lenders, jumped 2.8 percent to 51.02, the highest since May 2011.

Pall rallied 8 percent to $62.80 after the supplier of water-filtration systems reported fiscal fourth-quarter profit that beat analysts’ estimates as pharmaceutical and aerospace sales increased.

Apple gained 2 percent to a record $682.98, after advancing 1.4 percent yesterday. The company is betting the new iPhone, which has a bigger screen, a faster chip and access to speedier wireless networks, is loaded with enough functionality to set it apart in a market swiftly crowding with phones by Nokia Oyj, Microsoft Corp. and Samsung Electronics Co.

The device may be poised to become the fastest-selling technology gadget in history. Carl Howe, an analyst at Boston- based Yankee Group, predicted Apple will sell more than 10 million by month’s end, surpassing the record set last year by the predecessor device, the iPhone 4S.

Northrop Grumman Corp. fell 1.4 percent to $67.01. Revenue and margins at the maker of Global Hawk surveillance drones may decline more than other large defense companies as the U.S. makes budget cuts, according to UBS AG analyst David Strauss.

Nike Inc. slid 1.6 percent to $99.20. Kate McShane, an analyst at Citigroup Inc., cut her recommendation on the stock from buy to neutral, citing valuation and the potential for deceleration of future orders.

Have a wonderful evening everyone.

Be magnificent!

Sensibility is the capacity to feel, recognize, and distinguish

the most tiny and subtle changes.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

I have never let my schooling interfere with my education.

-Mark Twain, 1835-1910

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