September 5, 2012 Newsletter

Dear Friends,

Tangents:

For you, a poem,

Coach & Horses.  Interior

-by Roger McGough

(After a photograph by Andrew Thorpe)

What we see in the photograph

taken in the afternoon

is the corner of an empty bar

and his favourite table

On it stand two pint glasses

and an ashtray in which a cigarette

still burns,  The beer is unfinished

as if the drinkers had left in a hurry

What we do not see are the regulars

silent on the pavement in funeral best

Sholto, Don, John, and Terry and the rest.

Waving goodbye to Andrew.  To each other.

–from “As Far As I Know.”

And on this day in…

1870 – Author Victor Hugo returns to Paris from the Isle of Guernsey, after 20 years of exile.
1877 – Crazy Horse killed.

1905 – Arthur Koestler is born.

1929 – Bob Newhart is born.
1944 – Germany launches first V2 rocket at Paris, France.
1972 – Massacre at the Munich Olympics.
1975 – Gerald Ford evades first assasination attempt in Sacramento, California.
It is best to act with confidence, no matter how little right you have to it. – Lillian Hellman

photos of the day September 5, 2012

Visitors adhere circular stickers in a room installation at the exhibition ‘Dot.Systems – from Pointillism to Pixel’ by Japanese artist Yayoi Kusama at the Wilhelm-Hack Museum in Ludwigshafen, Germany.

Torsten Silz/dapd/AP

A statue of Guanyin, also known as the Goddess of Mercy, is seen inside a 100-year-old pavilion, that was a former pumping station, on the grounds of the Beijing Tap Water Museum.

David Gray/Reuters

Market Closes for September 5, 2012:

North American Markets

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Sept. 5 (Bloomberg) — Canadian stocks rose as details emerged on the European Central Bank’s proposed bond-buying plan aimed at stemming the region’s debt crisis.

Detour Gold Corp. added 4.4 percent as the mining company’s rating was raised at Royal Bank of Canada. First Quantum Minerals Ltd. climbed 0.3 percent as copper prices increased.

Financial and commodity shares contributed most to gains in the Standard & Poor’s/TSX Composite Index. AuRico Gold Inc. plunged20 percent after the mining company cut its production forecast.

The S&P/TSX gained 48.44 points, or 0.4 percent, to 11,990.14. The benchmark equity gauge has increased 0.3 percent this year.

“What’s driving the markets this morning is the news coming from Europe,” said Stephen Gauthier, a fund manager with Fin-XO Securities Inc. in Montreal. His firm manages about C$500 million ($504 million). “Equity markets around the world, especially the markets in Europe and North America, are highly correlated these days.”

ECB President Mario Draghi’s proposal involves unlimited purchases of government debt, two central bank officials briefed on the plan said. Under the blueprint, the ECB would refrain from setting a public cap on yields, according to the people, and a third official, who spoke on condition of anonymity. The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.

The Bank of Canada kept its main interest rate unchanged and reiterated that an increase may be needed as domestic spending props up an economic recovery restrained by weak global demand for exports.

Detour Gold added 4.4 percent to C$26.38 after Dan Rollins, equity analyst with RBC Capital Markets, raised the company’s rating to outperform from sector perform.

First Quantum gained 0.3 percent to C$19.18 as copper rose to a six-week high.

Royal Bank of Canada gained 1.4 percent to C$55.63 and Bank of Nova Scotia rose 0.4 percent to C$52.46. Senior executives of both Royal Bank and Scotiabank said the two lenders, Canada’s largest and third-largest lenders respectively, are exploring takeover activities.

“While acquisitions will continue to be an important part of the strategy, we will always remain opportunistic,” Richard Waugh, the chief executive officer at Scotiabank, said today at the Scotiabank Financials Summit in Toronto.

AuRico Gold plunged 20 percent to C$5.49 after the mining company cut its production forecast and raised cost forecasts at its Ocampo gold project in Mexico for 2012 and 2013.

US

By Inyoung Hwang

Sept. 5 (Bloomberg) — Most U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a second day, amid a slump in FedEx Corp. and disappointing global economic data as investors awaited the European Central Bank’s plan to buy bonds.

FedEx, a barometer for the economy because it delivers goods from mobile phones to pharmaceuticals, slid 2 percent after projecting its first decline in quarterly earnings in almost three years. Facebook Inc. jumped 4.8 percent after Chief Executive Officer Mark Zuckerberg said he won’t start selling his holdings for at least a year. The Bloomberg U.S. Airlines Index soared 3.4 percent amid carriers’ improved performances.

The S&P 500 lost 0.1 percent to 1,403.44 at 4 p.m. New York time, after rising as much as 0.3 percent earlier. The Dow Jones Industrial Average added 11.54 points, or 0.1 percent, to 13,047.48. About five shares fell for every four that advanced on U.S. exchanges, with volume at 5.7 billion shares, or 6.4 percent below the three-month average.

“We’ve had this wait-and-see going on for three weeks now,” Bruce Bittles, chief investment strategist at Milwaukee- based Robert W. Baird & Co., which oversees $85 billion, said in a telephone interview. “The sellers are being held off from the anticipation of more quantitative easing. You don’t want to short or sell in front of that. On the other hand, the economy doesn’t seem to be able to make it — either domestically or globally. It’s really a stand-off.”

The S&P 500 in August climbed to its highest level on an intraday basis in more than four years, then failed to close at that milestone. The index has fluctuated near the 1,400 level for three weeks as European leaders worked to tame the region’s debt crisis and Federal Reserve Chairman Ben S. Bernanke said in Jackson Hole, Wyoming, last week he wouldn’t rule out more stimulus.

ECB President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said. To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, ensuring the program has a neutral impact on the money supply.

Draghi told the European Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in the fragmented euro-area economy and ensure the survival of the common currency. Policy makers deliberated on the plan today and Draghi will announce whether it has been agreed to at a press conference tomorrow.

Stocks slumped as London-based Markit Economics said euro- area services and manufacturing contracted more than initially estimated in August. Separate data showed service industries in China expanded at a weaker pace last month as new orders slowed and Australia’s economy slowed more in the second quarter than economists expected.

Investors also awaited the U.S. government’s monthly employment report in two days. U.S. payrolls probably grew at a weaker pace in August and unemployment exceeded 8 percent for a 43rd month, economists said before the Labor Department report on Sept. 7.

“Investors are still holding that the ECB will surprise us pleasantly tomorrow,” Jack Ablin, who helps oversee about $60 billion of assets as chief investment officer of BMO Harris Private Bank in Chicago, said in a telephone interview. He said FedEx “really has tentacles in just about everything in the global economy, and to hear a disappointing report from them is disappointing to me.”

FedEx lost 2 percent to $85.80 for the biggest drop since July 20. The operator of the world’s largest cargo airline said profit for the quarter that ended Aug. 31 will range from $1.37 to $1.43 a share. That was less than its June 19 forecast of $1.45 to $1.60 a share and year-earlier earnings of $1.46. It would mark the first drop in adjusted earnings per share since the quarter that ended November 2009.

Rival United Parcel Service Inc. also fell, losing 2.4 percent to $71.94. The Dow Jones Transportation Average, a gauge of 20 shipping companies, declined 1.1 percent. The index has dropped in five of the past seven trading sessions.

Utility and industrial shares posted the biggest declines out of 10 groups in the S&P 500, falling at least 0.4 percent. Commodity, telephone and consumer discretionary companies posted the largest increases. Walt Disney Co. jumped 2.3 percent to $50.79 for the biggest gain in the Dow.

Advanced Micro Devices Inc. sank 3.6 percent for the second-biggest decline in the S&P 500, to $3.51. The second- biggest maker of processors for personal computers was reduced to neutral from buy by UBS AG.

Facebook rallied 4.8 percent to $18.58, climbing from its lowest price since going public in May. Zuckerberg, faced with a plummeting stock price and deluge of shares hitting the market, has yet to adopt a share sale plan, the Menlo Park, California- based company said yesterday in a filing with the U.S.

Securities and Exchange Commission. Typically, insiders use plans to pare their stakes over time to avoid flooding the market.

Safeway Inc. rallied 4.3 percent to $16.50. The second- largest grocery chain in the U.S. is planning an initial public offering of a minority stake in its Blackhawk Network Holdings Inc. business. Blackhawk provides prepaid products, such as restaurant gift cards, to retail and grocery stores in the U.S., Canada, Europe, Mexico and Australia.

All 10 stocks in the Bloomberg U.S. Airlines Index rose. Delta Air Lines Inc. climbed 3.7 percent to $8.88, while U.S. Airways Group Inc. advanced 7.4 percent to $11.22. Passenger revenue for each seat flown a mile, a measure of airline performance, rose 4 percent at Atlanta-based Delta in August and 1 percent at Tempe, Arizona-based US Airways. Miles traveled by paying passengers increased at both carriers, according to statements.

Sealed Air Corp. jumped 6 percent to $14.96. The Elmwood, New Jersey-based company is poised to turn into a takeover target after its biggest acquisition in more than a decade wiped out a third of its market value and left the maker of Bubble Wrap trading at a 64 percent discount to sales.

The company lost $1.4 billion in market capitalization since it said last June that it would buy Diversey Holdings Inc. for $2.9 billion to expand into cleaning and food-safety products. With the stock slumping after the Diversey deal and Sealed Air saying last month that it’s weighing options, the company could become vulnerable to a takeover, according to Stewart Capital.

Have a wonderful evening everyone.

Be magnificent!

One must become poor inwardly

for then there is no seeking, no asking,

no desire – nothing!

It is inward poverty

that can see the truth of a life in which

there is no conflict at all.

-Krishnamurti, 1895-1986

As ever,

Carolann

People of mediocre ability sometimes achieve outstanding success because they don’t know when to quit.  Most men succeed because they are determined to.

-George Allen, 1918-1990

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