September 26, 2012 Newsletter

Dear Friends,

Tangents:

“Amasia – named for the crash and subsequent connection of the Americas and Asia – will fuse in 100 million years,” says National Geographic magazine.  “It won’t be a first.  The Earth’s land masses are constantly shifting, all together – a supercontinent – then apart again, no faster than a fingernail grows.  The most recent convergence, Pangaea, formed 300 million years ago; Rodinia, 1.1 billion; Nuna, 1.8 billion.  Most theories of Amasia’s creation show the Atlantic seafloor stretching or being swallowed, but geologies Ross Mitchell’s model, using paleomagnetic data from ancient rocks, predicts the Arctic Ocean will close up instead, the supercontinent sliding north into its place.  Where the rebroken land goes from there is unknown.”  G & M, September 25, 2012.

And on this day in…

1888 – T.S. Eliot, poet, was born.

1898 – George Gershwin, composer, was born.

1949 – Writer John Smiley was born.

1960 – Vice President Nixon and Senator John F. Kennedy participate in the first nationally televised debate between presidential candidates.
1961 – Nineteen-year-old Bob Dylan makes his New York singing debut at Gerde’s Folk City.
1967 – Hanoi rejects a U.S. peace proposal.
1969 – The Beatles last album, Abbey Road, is released.
1972 – Richard M. Nixon meets with Emperor Hirohito in Anchorage, Alaska, the first-ever meeting of a U.S. President and a Japanese Monarch.
1977 – Israel announces a cease-fire on Lebanese border.
Trust yourself. Create the kind of self that you will be happy to live with all your life. Make the most of yourself by fanning the tiny, inner sparks of possibility into flames of achievement. –Golda Meir

photos of the day September 26, 2012

A woman walks out of the Sule Pagoda in Yangon, Myanmar.

Soe Zeya Tun/Reuters

A woman runs along the Ayalon expressway, during the holiday of Yom Kippur in Tel Aviv. Israelis are marking the holiday of Yom Kippur, or ‘Day of Atonement,’ which is the holiest of Jewish holidays when observant Jews atone for the sins of the past year and the Israeli nation comes to almost a complete standstill.

Oded Balilty/AP

People sleep on boats anchored in the Ganges River in Varanasi, India. Varanasi is among the world’s oldest cities, and millions of Hindu pilgrims gather annually here for ritual bathing and prayers in the Ganges River considered holiest by Hindus.

Rajesh Kumar Singh/AP

Market Closes for September 26th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 26 (Bloomberg) — Canadian stocks fell a fifth day for the longest losing streak since May, after investment firm AGF Management Ltd. missed estimates and commodities tumbled amid concern that the euro-area debt crisis is worsening.

Penn West Petroleum Ltd. and Bankers Petroleum Ltd. retreated at least 2.3 percent as crude fell to a seven-week low. AGF plunged 9.1 percent after third-quarter earnings missed estimates.

The Standard & Poor’s/TSX Composite Index slumped 24.32 points, or 0.2 percent, to 12,232.86 in Toronto, paring an earlier loss of as much as 0.7 percent. The benchmark equity gauge has fallen for five days, its worst losing streak since May 9.

“People are concerned Spain’s upcoming budget will not be as stringent as expected,” said Anil Tahiliani, portfolio manager with McLean & Partners Wealth Management Ltd. in Calgary. The firm manages about C$1 billion ($1.01 billion).

“There are whispers Spain is getting ready to ask for help, but the fact that they haven’t, the market is getting impatient. It seems like they can’t get their act together and Europe will take longer to resolve itself.”

Spanish bond yields surged the most this month as a second night of violent protests loomed amid sparring over the police response to clashes in Madrid. Spain’s 10-year benchmark yield rose above 6 percent, approaching the levels seen before European Central Bank President Mario Draghi offered to buy struggling nations’ debt.

Prime Minister Mariano Rajoy has pushed for budget cuts and tax increases since taking power in December, in the midst of an economic recession and unemployment at 25 percent.

The S&P/TSX joined declines in global markets on trading volumes 8.4 percent higher than the 30-day average.

Energy shares dropped 0.7 percent as six of 10 industries on the Toronto Stock Exchange retreated. Commodity prices are slumping ahead of a seven-day “Golden Week” national holiday in China that will send the country’s industries to a virtual standstill and see a lack of potential stimulus announcements, Tahiliani said.

Alacer Gold Corp. decreased 2.5 percent to C$6.72 as gold futures for December delivery retreated 0.7 percent to settle at $1,753.60 an ounce in New York.

Bankers Petroleum dropped 2.3 percent to C$2.94 and Penn West Petroleum declined 2.5 percent to C$14.01. Crude fell below $90 a barrel for the first time since early August as the U.S.

Energy Department reported total fuel use decreased 1.1 percent in the four weeks ended Sept. 21 and inventories remained above the seasonal average after declining 0.7 percent. Futures for November delivery fell 1.5 percent to settle at $89.98 a barrel in New York, the lowest since Aug. 2.

AGF Management slumped 9.1 percent to C$11.30, its biggest percentage loss in more than three years, after reporting third- quarter earnings of 11 Canadian cents a share, compared with analysts’ estimates of 18.5 cents.

Canadian Imperial Bank of Commerce fell 0.4 percent to C$76.60 and the Bank of Nova Scotia declined 0.3 percent to C$54.08.

Cameco Corp., the world’s third-largest uranium producer, fell 4 percent to C$19.34 after Greg Barnes, analyst with TD Securities, cut his rating to hold from buy. Barnes also cut his price target to C$24 from C$30.

“The next 12 months are likely to be a continuation of the moribund market that has dogged uranium for the past 18 months,” he said in a note today.

Research In Motion Ltd. jumped 5.9 percent to C$6.88 as the company’s BlackBerry Jam conference in San Francisco continued with presentations from executives. Chief Executive Officer Thorsten Heins told press yesterday RIM still has a “clear shot” at becoming the world’s third major operating system behind Apple Inc.’s iOS and Google Inc.’s Android.

US

By Lu Wang and Inyoung Hwang

Sept. 26 (Bloomberg) — U.S. stocks fell for a fifth day, sending the Standard & Poor’s 500 Index to its longest retreat since July, as concern grew Europe’s debt crisis is worsening.

PulteGroup Inc. dropped 4.7 percent, helping to give homebuilders their biggest decline since June, after new homes sales missed estimates. Energy and technology companies dropped the most among the benchmark gauge’s 10 industry groups as oil fell to a seven-week low and Jabil Circuit Inc. tumbled 9.9 percent amid a disappointing forecast.

The S&P 500 slid 0.6 percent to 1,433.32 in New York. The benchmark index is down 1.9 percent over five days. The Dow Jones Industrial Average lost 44.04 points, or 0.3 percent, to 13,413.51 today. Almost 6.4 billion shares traded hands on U.S. exchanges, 6.3 percent higher than the three-month average.

“We’re at a point where stimulus continues to be added and yet we’re seeing no meaningful improvements in the global economy,” Sean Lynch, the Omaha, Nebraska-based global investment strategist for Wells Fargo Private Bank, which oversees $169 billion, said in a telephone interview. “When you figure in some of the political risks along with Spain and Greece leading headlines once again, it makes equity investors want to pause right now.”

Stocks worldwide fell as Germany, the Netherlands and Finland said late yesterday that Spain should bear the cost of problems in their banks, with the European Stability Mechanism assuming only a limited burden in recapitalizations. The Bank of Spain said the economy kept falling at a “significant pace” in the third quarter.

U.S. equity indexes fell yesterday from their highest levels in almost five years as Federal Reserve Bank of Philadelphia President Charles Plosser said new bond buying announced by the Fed this month probably won’t boost growth or hiring. The S&P 500 has erased all its gains since the Federal Open Market Committee said Sept. 13 that it will undertake a third round of quantitative easing by purchasing mortgage-backed securities at a pace of $40 billion per month until labor markets “improve substantially.”

Optimism that central banks around the world will take steps to boost economic growth has sent the S&P 500 up 14 percent this year. The European Central Bank this month approved unlimited bond-buying programs while the Bank of Japan unexpectedly increased its asset-purchase target.

“The Fed cheerleading and stimulus has lulled investors into a sense of complacency that the Fed can keep the economy afloat and growing,” Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. “We’re afraid when reality sets in that this economic recovery may take longer than expected, the market could pull back quickly and meaningfully.”

The S&P 500 has rallied 5.2 percent so far in the third quarter and pension funds may need to sell stocks this week to rebalance their asset allocations, according to UBS AG strategist Boris Rjavinski. U.S. pensions, which UBS estimates hold about 55 percent of their $5 trillion in stocks, may pull as much as $36 billion from equities and put as much as $19 billion into fixed income, Rjavinski wrote in a note to clients dated Sept. 24. The largest outflows will be from stocks of large U.S. companies, with as much as $21 billion being sold, the strategist said.

The decline in stocks prompted investors to seek protection against losses, driving up the cost of options for a third day.

The Chicago Board Options Exchange Volatility Index, known as the VIX, climbed 8.9 percent to 16.81.

The S&P Supercomposite Homebuilding Index tumbled 4.2 percent, the most since June, as all of its 11 members fell.

Purchases of new U.S. homes declined 0.3 percent to a 373,000 annual pace following a revised 374,000 rate in July that was higher than previously estimated, figures from the Commerce Department showed. The median estimate of 71 economists surveyed by Bloomberg called for a rise to 380,000.

PulteGroup dropped 4.7 percent to $15.30, while D.R. Horton Inc. slid 3.9 percent to $20.90. Lennar Corp. decreased 4.5 percent to $34.64.

Energy shares in the S&P 500 slipped 0.9 percent. Crude futures erased 1.5 percent as the U.S. government reported lower oil demand. Noble Corp. retreated 2.9 percent to $35.17 while Denbury Resources Inc. fell 2.9 percent to $16.04.

Technology shares in the S&P 500 dropped 0.8 percent. Apple Inc. fell for a third day, losing 1.2 percent to $665.18, after earlier this week reporting debut weekend sales for the iPhone 5 that fell short of some analysts’ estimates because of supply constraints. The shares are down 5 percent so far this week, for the biggest three-day decline since May.

Jabil Circuit slid 9.9 percent, the most in the S&P 500, to $18.90. The electronics supplier forecast first-quarter earnings will be no more than 62 cents a share, missing the average analyst estimate of 67 cents, as demand across most of its business segments weakened.

NetApp Inc., which Jabil counts among its biggest customers, declined 4.2 percent to $32.98.

SanDisk Corp. fell 2.8 percent to $42.66. Alex Gauna, an analyst with JMP Securities LLC, downgraded the biggest maker of flash-memory cards to market perform from market outperform, citing weakness in electronics demand and supply constraints.

Blyth Inc. tumbled 21 percent to $25.68. ViSalus, a health- products business bought by the maker of candles and decorations in 2008, withdrew its filing for an initial public offering, citing “uncertain market conditions.”

Dean Foods Co. climbed 5.5 percent, the most in the S&P 500, to $16.23. The largest U.S. dairy processor said it’s considering a sale of its Morningstar unit that sells milk products to retailers and restaurants.

American Greetings Corp. rallied 17 percent to $16.82. The biggest publicly traded greeting-card company said Chief Executive Officer Zev Weiss and Chief Operating Officer Jeffrey Weiss offered to take the company private for $17.18 a share.

Have a wonderful evening everyone.

Be magnificent!

The intellectual aspect is, that love sees and understands.

The emotional aspect is to feel as one with the other person.

Love is unity.  There is no “me” in love, only “you.”

The behavioral aspect is, that love inspires us to give.

There is no expectation; we do not expect to receive.

Such love is wisdom and liberation in itself.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Life is a lot like jazz…it’s best when

you improvise.

-George Gershwin, 1898-1937

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