September 4, 2013 Newsletter

Dear Friends,

Tangents:

Rosh Hashanah, the Jewish New Year, begins at sundown tonight and ends at sundown on Friday, September 6^th.  Tradition is to eat apples dipped in honey for a sweet new year.

On this day, September 4^th, 1888, George Eastman registered his trademark Kodak and received a patent for his roll-film camera.

If you like old photos, you can find a wonderful photo album of time gone by at the Shorpy blog site (named after Shorpy Higginbotham, a 20^th-century teenage coal miner).  Check out www.shorpy.com

September tries its best to have us forget summer. –Bern Williams

Photos of the Day –September 4th, 2013

A woman stops to photograph the skyline of New York across from the Empire State Building as she walks in a park along the Hudson River in Hoboken, New Jersey, yesterday evening. Gary Hershorn/Reuters

The sun rises behind the sheer rock faces at the mouth of Eldorado Canyon State Park, a place for technical rock climbers and also a popular retreat for local tourists, just outside Boulder, Colo. Brennan Linsley/AP

Market Closes for September 4^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 4 (Bloomberg) — Canadian stocks advanced as BlackBerry Ltd. rallied along with utilities and industrial companies, offsetting losses in commodity producers amid concern about a U.S. military strike on Syria.

BlackBerry jumped 4.9 percent after a report the mobile phone maker aims to find a buyer by November. Air Canada, the nation’s largest airline, climbed 2.5 percent for a fourth day of gains. Niko Resources Ltd. lost 9.5 percent as crude slipped for the third time in four days. Torex Gold Resources Inc. slid 5.6 percent and Silvercorp Metals Inc. sank 4.2 percent as the prices of both metals fell.

The Standard & Poor’s/TSX Composite Index rose 17.31 points, or 0.1 percent, to 12,757.81 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has risen 2.6 percent this year.

Trading volume was 2.1 percent lower than the 30-day average at this time of the day.

“The oil price and gold price are reflecting geopolitical risk,” said Jeffrey Burchell, a fund manager with Aston Hill Financial Inc., in a telephone interview from Toronto. His firm manages about C$8 billion ($7.6 billion). “People are getting settled in and trying to figure out what to do next.”

Gold and silver futures fell the most in eight weeks. Torex Gold sank 5.6 percent to C$1.53. Silvercorp Metals fell 4.2 percent to C$3.85.

The S&P/TSX Materials Index lost 0.1 percent as 35 of 55 members retreated. The group has plunged 24 percent this year, the worst performer among 10 industries in the S&P/TSX.

The international community’s credibility is on the line after Syria used chemical weapons against civilians, U.S. President Barack Obama said at a news conference today in Stockholm, repeating a claim the Syrian government has denied.

The U.S. Senate Foreign Relations Committee voted to authorize a limited U.S. military operation in Syria, the first step toward congressional endorsement of the effort.

Torex Gold Resources Inc. slid 6.1 percent Silvercorp Metals Inc. sank 4.2 percent as the prices of both metals fell.

Canada’s trade deficit widened to C$931 million in July from C$460 million in June, Statistics Canada said. The gap exceeded the most pessimistic forecast in a Bloomberg survey of economists. Exports fell 0.6 percent to C$39.2 billion on a 7.3 percent drop in shipments of metal and non-mineral products.

“The hearty gain in energy exports that the street was expecting didn’t quite materialize,” Emanuella Enenajor, an economist with CIBC World Markets Inc., said in a note to clients today. “Overall a disappointing figure.”

The Bank of Canada today kept its main interest rate unchanged at 1 percent for the 24th meeting. Policy makers reiterated that current monetary policy remains appropriate as an expected rotation of demand to exports and investment is being delayed.

BlackBerry advanced 4.9 percent to C$11.28. The mobile device maker has held talks with bidders and plans to begin an auction process soon, Dow Jones said, citing people familiar with the situation.

Niko Resources declined 9.5 percent to C$4.29 and Bankers Petroleum Ltd. slipped 0.3 percent to C$3.60. Crude for October delivery lost 1.2 percent to $107.23 a barrel in New York.

Air Canada, the nation’s largest airline, rose 2.5 percent to C$2.89. The stock has jumped 8.7 percent in the past four sessions, the longest winning streak since June.

US

By Lu Wang and Alex Barinka

Sept. 4 (Bloomberg) — U.S. stocks rose, led by automakers and technology companies, as a Senate panel voted to authorize military action in Syria and the Federal Reserve said the economy maintained a “modest to moderate” pace of growth.

Ford Motor Co. and General Motors Co. rallied at least 3.5 percent after sales beat forecasts. Micron Technology Inc. and SanDisk Corp jumped more than 3.3 percent after a fire forced rival SK Hynix Inc. to suspend operations at a factory in China.

Apple Inc. gained 2.1 percent as Cantor Fitzgerald LP initiated coverage of the shares with a buy rating and amid speculation that the company may team up with China Mobile Ltd.

The Standard & Poor’s 500 Index rose 0.8 percent to 1,653.08 at 4 p.m. in New York. The Dow Jones Industrial Average added 96.91 points, or 0.7 percent, to 14,930.87. About 6.1 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“Managers actually are fairly bullish on the environment,” Arvin Soh, a New York-based portfolio manager with GAM, said by phone. His firm has more than $120 billion under management. “The view has been, ‘yes we have some serious issues with Syria, but at the end of the day, growth is improving.’”

The S&P 500 briefly pared its gain after the Senate Foreign Relations Committee voted to authorize President Barack Obama to conduct a limited U.S. military operation in Syria, the first step toward congressional endorsement of the effort. Republican House Speaker John Boehner yesterday said he supports Obama’s call for military action. The full Senate is expected to consider the resolution on Sept. 9.

The Fed said today the economy continued to grow from early July through late August, even as borrowing costs increased. The central bank’s Beige Book survey of economic conditions in 12 Fed districts showed consumers spent more on travel and tourism, while manufacturing expanded “modestly.”

Fed officials have been scrutinizing data to determine the timing and pace of any reduction in its $85 billion in monthly bond buying. The central bank, which has said it may pare stimulus if the U.S. economy improves in line with its forecasts, will hold its next policy meeting on Sept. 17-18.

Figures from the Labor Department on Sept. 6 may show payrolls increased in August and the jobless rate held at 7.4 percent. A report from Automatic Data Processing Inc. tomorrow is expected to indicate that companies hired fewer workers than in July. A manufacturing gauge published yesterday reached a two-year high.

“The employment number is going to help drive the Fed,” Jim Landreth, a portfolio manager with 300 North Capital LLC in Pasadena, California, said by phone. His firm oversees $640 million. “The Fed is going to be careful. They don’t want rates to spike up again because housing has been one of the fundamental underpinnings of this recovery.”

The S&P 500 has lost 3.3 percent from a record on Aug. 2 amid speculation the Fed will scale back its bond buying.  The stimulus has helped push the benchmark equity gauge up 144 percent from its March 2009 low. There have been signs that the housing recovery has begun to slow, including a drop in sales of previously owned homes in July, as yields on 10-year Treasury notes rose to a two-year high last month.

Citigroup Inc. downgraded U.S. equities to underweight today, saying valuations are “not as attractive as other parts of the world.” The firm upgraded the U.K. and emerging markets.

These areas “appear the cheapest major regions across the world,” strategists including Robert Buckland and Tobias Levkovich wrote in a note.

Emerging markets have a trailing price-to-earnings ratio of 11.8 and the U.K. has a multiple of 13.3, the firm said. The benchmark gauge for U.S. equities trades at 15.9 times profit, according to data compiled by Bloomberg.

The Chicago Board Options Exchange Volatility Index, or VIX, slipped 4.4 percent to 15.88 today. The equity volatility gauge is down 12 percent this year.

All but two of 24 S&P 500 industry groups advanced.

Automakers surged 3 percent for the best performance, as U.S. car and light-truck sales rose 17 percent to 1.5 million units, the most since May 2007, according to researcher Autodata Corp.

That exceeded the average 14 percent gain estimated by 10 analysts in a survey by Bloomberg News.

Ford climbed 3.5 percent to $16.91 after posting a 12 percent increase. GM gained 5 percent to $35.85 as sales grew 15 percent.

Micron jumped 5.3 percent to $14.75 while SanDisk advanced 3.3 percent to $57.14. SK Hynix, the world’s second-largest maker of computer-memory chips, is ascertaining if there are any casualties and investigating the cause of the fire, which occurred at a plant in Wuxi, China.

Apple advanced 2.1 percent to $498.69. Cantor’s 12-month share-price estimate was $777, 59 percent higher than yesterday’s close of $488.58. The world’s biggest technology company announced a Sept. 10 event at which it will unveil new models of the iPhone. The next day, it will host an event in Beijing, spurring speculation that Apple may announce an agreement with China Mobile, according to Reuters.

Apple may sell more than 5 million iPhones to China Mobile in the December quarter, with the potential subscriber base at the Chinese wireless carrier reaching 38.7 million next year, Brian Marshall, an analyst with International Strategy & Investment Group, estimated in a note yesterday.

Networking-equipment makers rallied after Ciena Corp. posted profit and sales that beat analysts’ estimates. Ciena, which provides fiber-optic networking gear for carriers such as AT&T Inc., jumped 14 percent to $23.54. Phone stocks rallied 1.3 percent as a group, the most among 10 main S&P 500 industries.

Juniper Networks Inc. climbed 6.5 percent to $20.72 while JDS Uniphase Corp. increased 5.9 percent to $13.70.

J.C. Penney & Co. gained 6.1 percent to $13.50 after Glenview Capital Management LLC raised its stake in the department-store chain to 9.1 percent. Glenview joined J. Kyle Bass in boosting its Penney holdings, becoming the biggest shareholder in a bet the retailer will recover after Bill Ackman ended a revamp effort last month. Bass’s Hayman Capital Management LP holds 11.4 million shares.

Dollar General Corp. added 4.7 percent to a record $56.39.

The discount retailer reported second-quarter adjusted profit of 77 cents per share, beating the 74 cents estimated by analysts in a Bloomberg survey. Competitor Dollar Tree Inc. rose 3.1 percent to $54.17.

E*Trade Financial Corp. rallied 8.1 percent to $15.71, the biggest gain in the S&P 500. The online brokerage said a subsidiary will pay a $100 million dividend to the parent company and plans to make similar payments every quarter.

Microsoft Corp. lost 2.2 percent, the most in the Dow, to $31.20. Morgan Stanley downgraded the world’s biggest software maker to equal weight, a rating comparable to neutral, from overweight, which is similar to buy. The company’s 5.44 billion- euro ($7.2-billion) deal to with Nokia Oyj’s devices unit brings execution risks and increased expenditure, the brokerage wrote in a note.

LinkedIn Corp. fell 2.9 percent to $238.93. The owner of the world’s biggest professional-networking website said in a filing it plans to sell 4.17 million shares of its Class A stock. LinkedIn estimated it will raise $1 billion from the sale, based on a closing price of $240.04 on Aug. 30.

SAIC Inc. tumbled 4.9 percent to $14.41. The company, which provides scientific services for government agencies related to national security, posted second-quarter revenue that missed analysts’ estimates and cut its annual sales forecast.

Have a wonderful evening everyone.

Be magnificent!

Not only must we be aware of the nature and structure of the problem

and see it completely,

but meet it as it arises and resolve it immediately,

so that it does not take root in the mind.

If one allows a problem to endure for a month or a day,

or even for a few minutes, it distorts the mind.

Krishnamurti, 1895-1986

As ever,

Carolann

The attempt and not the deed confound us.

-William Shakespeare, 1564-1616

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