September 28, 2012 Newsletter

Dear Friends,

Tangents: Full Moon weekend!

On this day in 1968, the Beatles hit song “Hey Jude” became a number-one single on the U.S. Billboard charts. It held the title for nine weeks, the longest of any Beatles song.

40 years ago today Henderson scored the famous goal!

And also on this day in…

48 BC – On landing in Egypt, Pompey is murdered on the orders of Ptolemy.
1066 – William, Duke of Normandy, soon to be known as William the Conqueror invades England.

1542 – Cabrillo Day; discovery of California.
1607 – Samuel de Champlain and his colonists return to France from Port Royal Nova Scotia.
1904 – A woman is placed under arrest for smoking a cigarette on New York’s Fifth Avenue.
1924 – Three U.S. Army aircraft arrive in Seattle, Washington after completing a 22 day round-the-world flight.

1934 – Brigitte Bardot was born.
1959 – Explorer VI, the U.S. satellite, takes the first video pictures of earth.

1973 – Actress Gwyneth Paltrow ws born.

I’ll play it first and tell you what it is later. –Miles Davis

Question to ponder: If today were the last day of your life, who would you call and what would you tell them?

photos of the day September 28, 2012

A man plays the accordion as French centenarian Robert Marchand, born on November 26, 1911, attempts to establish a record for the fastest 100-year-old to cover 100km, at the outdoor Velodrome track of Lyon, central France.

Laurent Cipriani/AP

Children dressed as ancient Chinese scholars gather to have their picture taken after a traditional ritual to celebrate Confucius’ birthday on Teachers’ Day, at the Confucius Temple in Taipei, Taiwan. The philosopher Confucius, who lived between 555-479 B.C., is revered among the Chinese as the teacher of teachers.

Yi-ting Chung/Reuters

Hindu devotees hold plates with earthen lamps during a prayer ritual 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 28th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 28 (Bloomberg) — Canadian stocks fell for the sixth time in seven days as data showed U.S. business activity unexpectedly contracted for the first time in three years.

Bank of Nova Scotia fell 1.5 percent. Canadian Natural Resources Inc. lost 1.7 percent. Energy companies and lenders contributed most to declines. Research In Motion Ltd. soared 8.1 percent after reporting better-than-expected results.

The Standard & Poor’s/TSX Composite Index fell 21.39 points, or 0.2 percent, to 12,317.46 in Toronto, paring earlier losses of as much as 0.7 percent after Spain released the results of stress tests on its banking system. The benchmark Canadian gauge advanced 3.1 percent this month, its biggest gain since January.

“U.S. economic numbers are mildy positive, then mildly negative,” said Paul Harris, portfolio manager with Avenue Investment Management in Toronto. The firm manages about C$275 million ($279 million). “They keep telling us they’re not going to be growing quickly and that weighs on the marketplace. With Europe, it’s one step forward and two steps back. The issues are not being solved, so people are constantly worried.”

The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 49.7 this month from 53 in August. A reading of 50 is the dividing line between expansion and contraction. Consumer spending in the U.S. barely rose in August after adjusting for inflation, showing the economic expansion is struggling to gain momentum.

Spain’s banks have a combined capital shortfall of 59.3 billion euros ($76.3 billion), less than previously estimated, according to a stress test designed to remove doubts about a financial industry pummeled by real estate losses. Spain commissioned the independent stress test, conducted by management consultants Oliver Wyman, as part of the conditions agreed in July for a European bailout of as much as 100 billion euros for its banking system.

The S&P/TSX Energy Index retreated 0.4 percent as six of 10 industries on the Toronto Stock Exchange declined.

Scotiabank fell 1.5 percent to C$53.92 and Royal Bank of Canada, the nation’s largest lender, slipped 0.3 percent to C$56.54.

Canadian Natural Resources fell 1.7 percent to C$30.33 and Legacy Oil + Gas Inc. lost 3.3 percent to C$6.72. Oil fell for a second week on concerns that slower U.S. economic growth will reduce demand. Crude for November delivery rose 0.4 percent to settle at $92.19 a barrel in New York. Prices dropped 0.8 percent this week and 4.4 percent for the month.

Finning International Inc., which sells, finances and services Caterpillar equipment, fell 2.9 percent to C$23.84 after analysts with Bank of America Merrill Lynch reinstated coverage of the company with an underperform rating and a C$24 price target.

RIM soared 8.1 percent to C$7.52 on the Toronto Stock Exchange after the BlackBerry smartphone maker beat analyst estimates with its second-quarter results. The Waterloo, Ontario-based company sold 7.4 million smartphones, about 500,000 more than analysts had estimated.

Richard Tse, analyst with Cormark Securities Inc., upgraded the stock to a buy from market perform, with a $12 price target.

“The risk right now is not owning it ahead of a potential turnaround,” he said in a note today.

Osisko Mining Corp., which holds interests in the Malartic gold deposit in Quebec, added 3.5 percent to C$9.74 after Dan Rollins, analyst with RBC Capital Markets, raised his rating to outperform from sector perform, and increased his one-year price target to C$13 from C$10.

US

By Rita Nazareth

Sept. 28 (Bloomberg) — U.S. stocks fell, capping the biggest weekly slump since June for the Standard & Poor’s 500 Index, amid disappointing data at the world’s largest economy.

Equities pared losses as Spain’s stress tests showed that its banks have a capital deficit of 59.3 billion euros ($76.3 billion), less than previously estimated. McDonald’s Corp., the world’s biggest restaurant chain, slid 1.6 percent after Janney Montgomery Scott LLC cut its recommendation on the shares. Nike Inc., the largest sporting-goods company, dropped 1.1 percent after reporting future orders that trailed estimates.

The S&P 500 retreated 0.5 percent to 1,440.67 at 4 p.m. New York time, paring a loss of as much as 0.8 percent. The index dropped 1.3 percent this week. The Dow Jones Industrial Average decreased 48.84 points, or 0.4 percent, to 13,437.13 today.

Volume for exchange-listed stocks in the U.S. was 6.4 billion shares, or 6 percent above the three-month average.

“We’re seeing data that are consistent with stall speed growth,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York. “It’s disappointing. We wanted to see acceleration. As for Europe, there’s always going to be anxiety. We’ve seen this movie before.”

Equities fell as data showed business activity unexpectedly contracted in September and consumer spending stalled in August after the surge in gasoline prices squeezed paychecks. Yet confidence among consumers climbed this month, indicating Americans became less pessimistic about the outlook for the world’s largest economy.

Benchmark gauges pared losses after Spain released the results of a test designed to lift doubts about a financial industry hit by real estate losses. Spain commissioned the independent stress test as part of the conditions agreed in July for a European bailout of as much as 100 billion euros for its banking system, which has been saddled with more than 180 billion euros of losses linked to souring real estate assets.

“The focus is back on Europe,” said Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital in Greenwood, South Carolina. “It’s this ebb and flow of crisis-response-complacency. You get everything fine for a while and then increase in stress.”

Today’s decline trimmed this month’s gain in the S&P 500 to 2.4 percent and the benchmark’s quarterly advance to 5.8 percent. The index capped its fourth straight monthly rally. If history is any guide, October may be another month of gains for stocks. Over the last 20 years, the Dow has risen an average 1.8 percent in October, with positive returns 70 percent of the time, according to data compiled by Bespoke Investment Group.

Nine out of 10 groups in the S&P 500 retreated today as phone, technology and commodity companies had the biggest losses. The Dow Jones Transportation Average, which is considered a proxy for economic growth, dropped 1 percent. Intel Corp., the largest semiconductor maker, declined 1.9 percent to $22.66. Bank of America Corp. slid 1.6 percent to $8.83.

McDonald’s dropped 1.6 percent to $91.75. Janney Montgomery Scott said September may be the slowest month for fast-food hamburger restaurants’ same-store sales this year. The firm downgraded the stock to neutral from buy. Yum! Brands Inc., owner of the KFC and Taco Bell restaurant brands, dropped 1.9 percent to $66.34.

Nike slid 1.1 percent to $94.91. Chief Executive Officer Mark Parker has been discounting merchandise in China to clear inventory that wasn’t selling well, hurting demand for new products. Future orders from China, excluding currency fluctuations, declined 6 percent, trailing analysts’ average estimate for a 1.2 percent gain.

Apple Inc. slumped 2.1 percent to $667.11. Chief Executive Officer Tim Cook apologized for the iPhone mapping software released last week that has been criticized for flaws such as misrouted directions and inaccurately located landmarks.

“We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better,” Cook said in a letter to customers posted today on the Cupertino, California-based company’s website.

Research In Motion Ltd. rallied 5 percent to $7.50. The company reported a narrower loss than analysts had projected, helped by the growth of BlackBerry subscribers in overseas markets such as India, South Africa and Indonesia.

U.S. shares of Accenture Plc jumped 7.1 percent to $70.03. The world’s second-largest technology consulting company said earnings for the fiscal year ending in August will be $4.22 to $4.30 a share. Analysts estimated $4.13, on average.

International Business Machines Corp., the biggest technology services provider, rose 0.8 percent to $207.45.

Facebook Inc. advanced 6.6 percent to $21.66 after researcher GlobalWebIndex said the social-networking site has seen an eightfold increase in users in China since that nation restricted access to the service in 2009.

Hartford Financial Services Group Inc. advanced 0.7 percent to $19.44 as the firm agreed to sell a life unit to Prudential Financial Inc. The insurer will get a statutory capital benefit of about $1.5 billion in the deal, more than the $1.1 billion expected by Randy Binner, an analyst at FBR Capital Markets.

Tesla Motors Inc., the electric-car maker led by Elon Musk, gained 2.8 percent to $29.28 after expanding a stock offering.

The company said in a regulatory filing today that it expects to sell 6.93 million additional shares at $28.25 each, an increase of 2.58 million from what it reported in a Sept. 25 filing. The earlier filing didn’t list a price.

Dendreon Corp. increased 3.9 percent to $4.81. The maker of the prostate cancer drug Provenge gained after insurer Aetna Inc. said it will cover more patients to receive the therapy.

Have a wonderful weekend everyone.

Be magnificent!

Whenever there is a touch of color,

a note of a song, grace in a form,

this is a call to our love.

Rabindranath Tagore

As ever,

Carolann

All art is autobiographical.  The pearl is the oyster’s

autobiography.

-Frederico Fellini, 1920-1993

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