TreasurePicks: October 2008

Thursday, October 30, 2008

WOW What A Day To Play Talisman

Exxon Mobil profit hits record $14.83-billion

JOHN PORRETTO
The Associated Press
October 30, 2008 at 8:25 AM EDT
HOUSTON — Exxon Mobil posts biggest US quarterly profit ever Exxon Mobil Corp., the world's largest publicly traded oil company, says it shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83-billion (U.S.) in the third quarter.
Bolstered by this summer's record crude prices, the Irving, Texas-based company said Thursday that net income jumped nearly 58 per cent, or $2.86 a share in the July-September. That compares with $9.41 billion, or $1.70 a share, a year ago.
The previous record for U.S. corporate profit was set earlier this year, when Exxon Mobil earned $11.68-billion in the second quarter.
Revenue rose 35 per cent to $137.7-billion.

Exxon Mobil profit hit a new record in the third quarter
Exxon Mobil

On average, analysts expected the company to earn $2.39 per share in the latest quarter on revenue of $131.4-billion

Source

Obama's Television Informercial

http://blogs.abcnews.com/george/2008/10/obama-infomerci.html

Wednesday, October 29, 2008

BNN Are More Market Crashes Ahead?

2:45 PM
Campbell HarveyProfessor of FinanceDuke UniversityFocus: Why bailouts are a bad idea. BNN interviews Campbell Harvey, Professor of Financie, Duke University.

http://watch.bnn.ca/

Oil prices bounce off 17-month low

Oil prices bounce off 17-month low

ALEX KENNEDY
Wednesday, October 29, 2008
SINGAPORE — Oil prices bounced off a 17-month low Wednesday in Asia as a rally in global stock markets boosted investor confidence that the worst of a global economic slowdown and its impact on crude demand has been priced in.

Oil investors have been closely tracking equity indexes for signs of market sentiment about how deep and widespread the global downturn will be. They took heart from a rally in stocks that began Tuesday in Asia, followed through to Europe and the U.S. and continued Wednesday in Asia.

“Everybody is looking to Wall Street for guidance,” said Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney. “The positive momentum in stock markets has had an impact on commodities.”

Light, sweet crude for December delivery was up $1.95 to $64.68 (U.S.) a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract overnight fell 49 cents to settle at $62.73, the lowest closing price since May 15, 2007.
Oil prices have fallen by about 57 per cent since peaking at nearly $150 a barrel in mid-July.
Japan's benchmark Nikkei index jumped 7.7 per cent on Wednesday while Australia's key stock index rose 1.3 per cent. The Dow Jones industrial average soared nearly 900 points, or nearly 11 per cent, its second-largest point gain ever.

The U.S. Federal Reserve is expected to cut its target fed funds rate by half a point to one per cent on Wednesday and investors are speculating the Bank of Japan may trim interest rates when it meets Friday.

Investors are also watching for signs of slowing U.S. demand in the weekly oil inventories report to be released Wednesday from the U.S. Energy Department's Energy Information Administration. The petroleum supply report has shown larger than expected increases in oil, gasoline and distillate stocks during the last few weeks, suggesting U.S. motorists reduced driving after oil surged to a record high in July.

OPEC members warned Tuesday that lower oil prices threaten to make unprofitable key oil infrastructure investment, which could undermine future production.
At an annual oil and money conference in London, United Arab Emirates Energy Minister Mohammed Bin Dhaen al-Hamli said the current crude prices were “very dangerous for the world's economy.”

“OPEC would like to protect the $80 price level,” Mr. Wendt said. “Many OPEC members haven't made the proper investments in their aging infrastructure.”
In other Nymex trading, gasoline futures rose 3.7 cents to $1.49 a gallon, while heating oil gained 3.8 cents to $1.95 a gallon. Natural gas for November delivery increased 12.4 cents to $6.31 per 1,000 cubic feet.

In London, December Brent crude rose $1.96 to $62.25 a barrel on the ICE Futures exchange.
© Copyright The Globe and Mail

Tuesday, October 28, 2008

Oil predictions: Drop From $200 to $50

Oil predictions: From $200 to $50

Tuesday, October 28, 2008
Say goodbye to predictions for crude oil hitting $200 (U.S.) a barrel. Say hello to $50 oil.
Okay, Merrill Lynch was never the most bullish on oil, but the commodities strategist there nonetheless ratcheted down his expectations for oil prices this year, and noted that his prediction for 2009 could take a beating.

Francisco Blanch, commodity strategist at Merrill Lynch, lowered his forecast in the fourth quarter to $78 a barrel from $107 previously – a sign that observers are beginning to throw in the towel for[amp]nbsp;expectations of an imminent energy rebound.

“Demand for physical commodities is tanking in many parts of the world, with U.S. oil consumption contracting at the sharpest rate since 1980,” he said in a note written last Friday but only released to the media on Tuesday. “More importantly, we are starting to see signs of oil demand slowing in emerging markets.”

For 2009, he believes oil will rise to $90 a barrel. But he acknowledges that there are downside risks to this prediction: “If we do indeed embark on a global recession next year, oil prices will likely drop to $50 a barrel,” Mr. Blanch said.

On Tuesday, oil traded at $63.21 a barrel, relatively unchanged after an earlier rally.

© Copyright The Globe and Mail

Housing market ‘alarms' Merrill

LORI McLEOD
Tuesday, October 28, 2008

Merrill Lynch & Co. economists are becoming more “alarmed” about the Canadian housing market every day as their data suggest it is tracking the United States with a two-year lag.
Falling prices, overbuilding and too much unsold inventory in Canada are creating a trend similar to that in the United States a couple of years ago, Merrill economists David Wolf and Carolyn Kwan said in a research note Tuesday.

“Though the consensus does seem to be gravitating towards our view of a sustained downturn in the Canadian housing market, we still do not sense any particular alarm in either the policy-making or forecasting community. We ourselves are getting more alarmed by the day,” Mr. Wolf and Ms. Kwan said in their report.

Many other economists believe Canada is in for a moderate downturn next year, but is differentiated from the U.S. experience by more prudent lending practices for both home buyers and developers.

There are a number of reasons the risk of lower house prices is not as magnified in Canada as in the United States, said Derek Holt, economist at Scotia Capital Inc.

“I still agree that Canadian housing markets have been in correction mode all year long, and that further downsides lie ahead. But the macroeconomic implications are not as stark in Canada given a lower degree of leverage on household balance sheets, on bank balance sheets through a much healthier banking system, and through the avoidance of heavily leveraged off-balance-sheet instruments that caused much of the troubles in the U.S.,” Mr. Holt said.

Merrill has a more bearish view, and made headlines recently with a report suggesting Canada's high household deficit level could make it vulnerable to a U.S.-style housing collapse.

“In our ‘tipping point' piece a month ago, we presented a chart showing the ominously high correlation between the price action in the Canadian housing market and that of the U.S. market two years earlier ... Evidence from the supply side further reinforces that Canada's housing market seems to be tracking the U.S.' with a two-year lag,” Tuesday's report said.

The earlier report raised hackles in the real estate community, and questions during the election campaign even prompted Prime Minister Stephen Harper to say Canada's housing and construction markets remain stronger than those in the U.S.

The same two-year lag idea was raised this summer by Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., who called the apparent trend “unnerving” in a report in July.
At the time, Mr. Porter said there were many reasons why the two markets were different, but said even a pale version of what had happened in the United States would be bad news for Canada.

House prices posted a record 16.6 per cent year-over-year decline in the United States in August, according to the benchmark S&P/Case-Shiller Home Price Index report, also released Tuesday. The index has now shown year-over-year declines for 20 months.

Taking into account the two-year lag, Merrill's data suggests the ramp-up in construction of housing units in Canada may be even larger than it was in the United States.

The number of units under construction currently is just off the peak hit in May, which was the highest recorded in 36 years of available data and 97 per cent above the long-term average, the report said.

By contrast at its peak in 2006, U.S. housing construction was 54 per cent above the long-term average, it added.

As of August, there were more condos under construction in both Toronto and Vancouver separately than there were in all Canadian cities combined a decade ago, Mr. Wolf and Ms. Kwan said.

“And as in the U.S. two years ago, we are now seeing completed units pile up unsold in Canada, a clear sign of overbuilding and an ominous sign given the voluminous supply still in the pipeline,” they said.

Inventories of unsold new single-family homes in Canada rose by 56 per cent year over year as of last month, close to the maximum increase in July 1990, which marked the last housing market downturn, the report said.

At the peak in April 2006, inventories of unsold new single-family homes in the United States were up 26.5 per cent over a year earlier, the report said.

The two-year lag could be the result of Canada having more room to run up because its recovery started later than that of the United States. Strong commodity prices and looser lending standards initiated in 2006 may also have contributed to the lag, the report said.

© Copyright The Globe and Mail

QEC Flows at 1600+ Barrels Per Day Target=6000+per day

QEC should hit a TARGET of $63.00/sh based on USA Shale Gas land valued at $35,000 per acre (Joseph Schachter) . (BNN-TV [ROB-TV) .

http://watch.bnn.ca/the-close/september-2008/the-close-september-12-2008/#clip92209

Questerre Energy Corporation is engaged in the exploration for, and the development, production and acquisition of scalable natural gas projects. Its major properties include St. Lawrence Lowlands, Quebec; Greater Sierra and Beaver River Field, British Columbia; Antler, Saskatchewan, and Vulcan and Westlock, Southern & Central Alberta.

The St. Lawrence Lowlands area is prospective for natural gas in multiple horizons with targets in the Ordovician Trenton Black-River and the Lorraine and Utica. Its landholdings of over one million gross acres consist of three separate blocks.

The largest block of 711,000 acres is subject to a farm-in and participation agreement with Talisman Energy. The primary zone of interest in the Greater Sierra region is the Devonian Jean Marie.

The region is also prospective for shallower zones, including the Mississippian Debolt and Slave Point formations. In November 2007, it acquired Magnus Energy Inc. In April 2008, the Company acquired Terrenex Ltd.

Share Capitalization
Issued & Outstanding:
Common Shares:
179,127,088 (as at May 14, 2008)
Stock Options:
16,769,170 (avg exercise price $0.61)
Insider Position:
17,126,231 (9.57%)

House 111 has accumulated huge in October

This Shows 1 Month Of Buy And Sells By Brokerages

This is the most current Corporate Presentation

Questerre Energy Corporation ("Questerre" or the "Company") (OSE,TSX:QEC) is pleased to announce that Talisman Energy Canada (“Talisman”) has elected to drill the remaining three option wells under its farm-in agreement with Questerre and its minority partner in the St. Lawrence Lowlands, Quebec.

The three wells will complete the work program allowing Talisman to earn about a 75% interest in the original 719,000 acre farm-out block. Questerre also retains about a 4¼% gross overriding royalty on production from Talisman.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, “We were one of the first companies to recognize the potential of the Quebec Lowlands for unconventional gas and have worked for almost ten years to get to this point. We are thrilled that Talisman, which also saw the potential early on, has decided to accelerate the exploration and appraisal program. Our joint land lies right in the heart of the Lowlands between the Yamaska growth fault and Logan’s Line and runs from Quebec City to south of Lac Saint Pierre. We continue to believe this land position proximate to the market has significant natural gas potential.”

The three-well program is expected to commence in the latter half of 2008. The wells will test multiple horizons including the Trenton Black-River and the Utica and Lorraine shale sequences.

Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.

This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company’s plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein.

For further information, please contact:

Questerre Energy Corporation - Jason D’Silva, VP Finance
Tel: (403) 777-1185
Fax: (403) 777-1578
Email: info@questerre.com
Web: www.questerre.com

"It feels a little like we've all woken up in the Twilight Zone," said Jason Goff, head of treasury sales at Emirates NBD

"People are scared. Nobody in a million years predicted this would happen here," he added.

A kick in the shins for Gulf states

SONIA VERMA
Tuesday, October 28, 2008
DUBAI — For British soccer fans, it seemed too good to be true: Zabeel Investments, a Dubai-based sovereign wealth fund, was looking to buy Charlton Athletic, a struggling soccer club mired in more than $30-million (U.S.) of debt.
But late last week, Zabeel suddenly pulled out, blaming the toxic economic climate in the West. The company had decided to focus on "domestic opportunities" instead.
If soccer fans in Britain were shattered, the mood in Dubai was shock. The deal's collapse was one of the most striking signs the party in this oil-rich region was over: State-owned investment vehicles had sobered up, suddenly shunning trophy assets like Charlton.
In the past few weeks, Persian Gulf states have been jolted by the realization that they are not immune to the financial turmoil gripping the globe. Oil-fuelled wealth proved to be only thin insulation against the effects of the credit crunch.
More than $50-billion of foreign deposits has fled the region's banks in recent weeks as investors pulled back.
The price of oil - this region's main export and source of income - plunged, and local stock markets sank to new lows.
Gulf states have had to retrench, with Kuwait moving to prop up its central bank and Saudi Arabia extending special credit to its neediest citizens over the weekend.
The United Arab Emirates has already acted to guarantee bank deposits, and injected billions of dollars into its domestic money markets to encourage interbank lending. Qatar and Kuwait have used their sovereign wealth to buy up stakes in ailing banks and slumping stock.
"It feels a little like we've all woken up in the Twilight Zone," said Jason Goff, head of treasury sales at Emirates NBD.
"People are scared. Nobody in a million years predicted this would happen here," he added.
Economists are scaling back growth forecasts, and the Gulf's once-giddy property market is showing signs of shakiness, with developers now openly talking about construction delays and cancellations as fear spreads, paralyzing buyers.
Property developers have scaled back recruitment, with some companies imposing unprecedented hiring freezes until the economy stabilizes. Credit Suisse said market turmoil and negative sentiment would likely dent property demand in Dubai and Abu Dhabi, while Morgan Stanley predicts a market downturn of at least 10 per cent by 2010.
"These economies are no longer islands unto themselves," said Dr. Henry Azzam, chief executive officer of Deutsche Bank, Middle East and North Africa, and a former economics professor at Beirut University.
"Economic integration with the West brings with it a level of exposure. It forces a certain degree of reflection on how to move forward."
For the region's rulers, the need to take drastic steps to stabilize markets is unprecedented. Gulf leaders tend to view themselves as mavericks, building skyscrapers in the middle of the desert and man-made islands in the middle of the ocean, all in an effort to attract foreign investment and diversify their economies away from oil wealth.
The strategy has so far worked in countries like the United Arab Emirates, which has boasted double-digit growth in the past five years. Only in the past month have the hidden costs of that progress been revealed.
As Gulf states refocus their resources domestically, there is dwindling interest in acquiring assets in the West, even at fire sale prices.
"Anything in the West is seen as toxic," Dr. Azzam said. "They are not going to be the ones to bail out the banks any more. It's just not worth it," he said.
Foreign assets of Gulf Co-operation Council states were estimated to top $1-trillion last year. Some funds have seen their existing investments suffer massive losses.
The Kuwait Investment Authority's investment in Citigroup last January shows a $270-million loss.
To be sure, Gulf states are in a far better position to survive financial turbulence than the West.
Even though oil prices have dropped, countries including Saudi Arabia, Abu Dhabi and gas-rich Qatar have deep reserves of savings to cushion their countries from any real devastation.
Dubai is still viewed as a refuge for worried professionals, whose jobs are quickly evaporating in Western financial capitals. Some recruitment companies have reported a tenfold jump in applications in the past two months with bankers and estate agents leading the charge.
Gulf leaders and central bankers remain self-assured, arguing that their economies are fundamentally sound and able to withstand the current turmoil.
Echoing the optimistic outlook of other leaders, Sultan Nasser al-Suweidi, the UAE's central bank governor, said yesterday that the liquidity crunch in the region's banking system was easing and soon the region's economies would return to normal. "Things are getting better and stabilizing," he said.
But confidence alone won't calm markets, analysts say, and some suggest a co-ordinated action plan among Gulf states is needed to address the region's problems.
For now, leaders appear to be waiting to see if things get worse.
"If there is a need, we will do more," Mr. al-Suweidi said.
Special to The Globe and Mail
*****
Gimme shelter
As the financial crisis creeps into the Middle East, here's what others countries did yesterday to shore up battered markets.
The U.S. Treasury Department started moving $125-billion (U.S.) to nine major banks by buying ownership stakes, the first big transfer since the $700-billion bailout was passed this month.
Australia's central bank took the rare step of buying Australian dollars twice in the past few days to limit their plunge.
Crisis-hit Iceland said it needs another $4-billion in loans on top of the $2-billion it wants from the IMF .
Japan's Prime Minister Taro Aso told senior officials to draw up steps to calm volatile markets and to fend off further fallout.
News services
© Copyright The Globe and Mail

Monday, October 27, 2008

TSX Crashes 756.38 Points

QEC Houses

Global stock market indexes fell on Monday, continuing the sharp selloff

It continuesRTGAM

Global stock market indexes fell on Monday, continuing the sharp selloff that alarmed investors around the world on Friday, when fears of a long recession sent major indexes to new lows.U.S. stock index futures were sharply lower with about an hour before markets open, suggesting stocks will fall at the start of trading. Futures for the Dow Jones industrial average fell 195 points, to 8066. Futures for the broader S&P 500 fell 25 points, to 841.

In Europe, the U.K.'s FTSE 100 fell 3.2 per cent and Germany's DAX index fell 3.6 per cent in afternoon trading. In Asia, Japan's Nikkei 225 fell 6.4 per cent in overnight trading.There wasn't a lot of negative news to send the markets lower. Indeed, Verizon Communications reported quarterly earnings that matched analysts' expectations.Crude oil continued its decline, falling to $61.87 (U.S.) a barrel, down $2.28. With oil down more than 50 per cent since the summer,

The Wall Street Journal reported that even oil-rich Persian Gulf states are beginning to suffer from the financial crisis that has claimed victims around the world. On Sunday, Kuwait guaranteed bank deposits and bailed out one of its largest banks.At the same time, Saudi Arabia announced plans to help low-income borrowers with $2.3-billion in loans.

And Dubai, which is attempting to transform itself into the cultural and financial hub of the region, real estate brokers are apparently seeing softer real estate prices and a lack of financing.Copyright 2001 The Globe and Mail

Sunday, October 26, 2008

Retirement Planning

Retirement Planning

If you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00. With Enron, you would have had $16.50 left of the original $1000.00. With WorldCom, you would have had less than $5.00 left. If you had purchased $1000 of Delta Air Lines stock you would have $49.00 left. But, if you had purchased $1,000.00 worth of wine one year ago, drank all the wine, then turned in the bottles for the recycling REFUND, you would have had $214.00. Based on the above, the best current investment advice is to Drink heavily and recycle.

Let people you care about know...
and tell them to Start Now!!!

Wednesday, October 22, 2008

Buy American. I Am- W. Buffet

Buy American. I Am.
By WARREN E. BUFFETT
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

Tuesday, October 21, 2008

Houses and Short Interest in QEC

Short History
Symbol
Report Date
Volume
Change

QEC - T
2008-10-15
300,205
91,871

QEC - T
2008-09-30
208,334
62,034

QEC - T
2008-09-15
146,300
93,200

QEC - T
2008-08-31
53,100
7,700

QEC - T
2008-08-15
45,400
-131,700

QEC - T
2008-07-31
177,100
-176,200

Monday, October 20, 2008

Bust to boom? Not so fast!

Bust to boom? Not so fast!
Monday, October 20, 2008

Gordon Pape

TORONTO (GlobeinvestorGOLD) --There was certainly nothing in the news to send stock prices higher last week. But investors, who just a few days earlier had been selling at the slightest excuse, suddenly decided to ignore the drumbeat of dismal reports and went on a buying spree.

As a result, the TSX/S&P composite index recorded its first weekly gain since the middle of September and it was a pretty impressive one – almost 500 points (5.5 per cent). Anything on the upside is a welcome change these days but this was better than we might have expected thanks to Friday's surge.

There was no obvious reason for Friday's 292-point jump, other than a modest recovery in the price of oil.

If anything, we might have expected another sharp sell-off after the latest consumer confidence numbers showed that both Americans and Canadians are scared to death about what's going on and what it all means for the economy and to their lives.

The Conference Board of Canada said on Friday that its confidence index has dropped to the lowest level in 26 years. That would take us back to 1982, a time when the economy was in recession while interest rates were near record highs.
Things are even worse in the United States, where the University of Michigan reported its consumer sentiment index recorded its biggest monthly drop in history, falling to 57.5 per cent from 70.3 per cent in September.
If that wasn't enough to discourage investors, we learned that the U.S. housing slump isn't going to end any time soon with a report from the Commerce Department that showed a 6.3-per-cent decline in new home construction in September.

Home building is now at its lowest level since the recession of 1991.
Okay, that's all bad but your pension is safe, right? Not so fast! Another report on Friday revealed that the value of major Canadian pension plans fell 8.6 per cent in the third quarter.

That brought the total decline for the year to more than 10 per cent. And pension fund managers are supposed to be the most cautious and conservative money experts around. If they're getting hammered, it's no wonder people are worried about their registered retirement savings plans.

About the only motivator for investors was Warren Buffett's article in The New York Times in which he wrote that the time has come to buy stocks. In a column titled "Buy America. I Am." the Oracle of Omaha said that selling shares in sound, well-run companies makes no sense.

"These businesses will indeed suffer earnings hiccups, as they always have," he wrote. "But most major companies will be setting new profit records five, 10 and 20 years from now." For his part, he has been selling bonds and buying stocks.

Ironically, U.S. investors seemed to ignore Mr. Buffett as the Dow dropped 127 points on the day, although it produced an overall gain for the week. But Canadians went to their phones and starting placing buy orders. Suddenly, we went from bust to boom. Or did we?

Actually, we've seen this story before – just a few days ago, in fact. On Tuesday, the TSX leaped more than 900 points as Canadians caught up with the global rally they had missed while they were enjoying their Thanksgiving holiday. Then on Wednesday, buyer's regret set in to the tune of a 631- point drop. So before we get too excited, let's see what Monday brings.

While it's nice to go into the weekend on a high note, I'm not convinced we've seen the market bottom yet. There are early signs that the international banking bailout is having an impact and that the credit freeze is easing. That's good news but we are still faced with the reality that we're about to move into a recession, if in fact we aren't already there.

The next several months will bring a litany of gloomy economic numbers and weak earnings reports. Investors will react accordingly and there will be more days of triple-digit declines.
So we're not out of the woods yet, not by a long shot. As I've said in the past, market rallies offer an opportunity to review your portfolio and, if appropriate, to reduce risk by selling some equity positions. If you need to sell, do it at a time when prices are moving higher, not in a market plunge.
If you decide you want to buy at these levels, pay attention to Mr. Buffett's sage words. Focus on industry leaders that generate strong cash flow and have good balance sheets. Those are the stocks that will pay off big-time in a year or two.
Gordon Pape is one of Canada's best respected financial authors and the nation's leading expert on mutual funds.

Copyright ©

Canadian Arrow Mines Ltd. - Exploration Update

Canadian Arrow Mines Ltd. - Exploration Update
08:30 EDT Monday, October 20, 2008

SUDBURY, ON, Oct. 20 /CNW/ - Canadian Arrow Mines, Ltd. (CRO: TSX-V) (the "Company") is pleased to provide an update on exploration activities conducted on the Company's Turtlepond Lake properties Atikokan properties and Denmark Lake properties. Claim staking, line cutting, geological mapping, prospecting, ground geophysics, mechanical trenching, and diamond drilling have been ongoing throughout the summer exploration season. Exploration programs are focused on identifying and evaluating nickel-copper sulphide and platinum group element (PGE), exploration targets.
Turtlepond Lake - Mechanical trenching and ground geophysical surveys on the Glatz showing have delineated two parallel zones of mineralization which extend for 900m and 700m in length. Widespread disseminated and blebby nickel-copper-iron sulphide mineralization has been exposed and channel sampled along both trends. Both anomalies are coincident with airborne geophysical anomalies and have not yet been drill tested. The geology and geophysical surveys at Emmons Lake showing indicates a well defined northern plunge to the surface mineralization, which is defined along a 250m trend.
Three newly discovered targets; North Glatz, Night Danger, and Double E, have coincident ground and airborne geophysical anomalies situated within favorable host rock assemblages.
Atikokan Properties - Sixteen holes (2,354 metres) have been completed on the Eva/Kawene project to evaluate a number of surface PGE showings, untested airborne anomalies and newly exposed areas of sulphide mineralization. The drill program has been completed and samples are currently in the lab for analysis.
Denmark Lake Area - The Company staked 73 claims covering 14,368 hectares to cover the majority of the Denmark Lake Intrusion. Staking was initiated following the Caribou Lodge discovery intersection of 4.58% Ni, 0.44% Cu, and 0.15% Co over a core length of 0.75 metres during the winter 2008 drill program. Mineralization consists of massive, blebby and disseminated nickel-copper-iron sulphides positioned near the base of a large ultramafic intrusion, an environment typical of magmatic nickel deposits.
The exploration program is being carried out under the direction of The Company's Vice President of Exploration, Todd Keast P. Geo., a qualified person as defined by National Instrument 43-101. The information in this release was prepared under the direction of Kim Tyler, P. Geo., President of the Company, a qualified person as defined by National Instrument 43-101.
About Canadian Arrow Mines, Ltd:
Canadian Arrow Mines, Ltd. is an established Canadian exploration and development Company committed to developing and advancing base metal deposits close to existing infrastructure through exploration, development and acquisition. Shares of Canadian Arrow Mines trade on the TSX Venture Exchange under the symbol "CRO".
Investors are invited to visit Canadian Arrow's IR hub at http://www.agoracom/IR/CanadianArrow where they can post questions and receive answers within the same day, or simply review questions and answers posted by other investors. Alternately, investors are able to e-mail all questions and correspondence to CRO@agoracom.com where they can also request addition to the investor e-mail list to receive future press releases and updates in real time.
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If you would like to receive press releases via email please contact:
Mirna@chfir.com
THIS PRESS RELEASE WAS PREPARED BY MANAGEMENT WHO TAKES FULL
RESPONSIBILITY FOR ITS CONTENTS.
THE TSX VENTURE EXCHANGE NEITHER APPROVES NOR DISAPPROVES OF THIS
PRESS RELEASE.
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%SEDAR: 00008534E
For further information: visit the website at www.canadianarrowmines.ca, call toll free at 1-877-262-6354, or contact: Canadian Arrow Mines, Ltd., R. Kim Tyler, P. Geo, President, Tel: (705) 673-8259, E-mail: kim@canadianarrowmines.ca; CHF Investor Relations, Barry Leung, Director Business Development, Tel: (416) 868-1079 ext. 222, E-mail: barry@chfir.com or Alison Tullis, Senior Account Manager, Tel: (416) 868-1079 ext. 233, E-mail: alison@chfir.com;

QEC Is A Stock You Should Own At These Prices

Sunday, October 19, 2008

QEC Flows at 1600+ Barrels Per Day Target=6000+per day

“We were one of the first companies to recognize the potential of the Quebec Lowlands for unconventional gas and have worked for almost ten years to get to this point. We are thrilled that Talisman, which also saw the potential early on, has decided to accelerate the exploration and appraisal program. Our joint land lies right in the heart of the Lowlands between the Yamaska growth fault and Logan’s Line and runs from Quebec City to south of Lac Saint Pierre. We continue to believe this land position proximate to the market has significant natural gas potential.”

The three-well program is expected to commence in the latter half of 2008. The wells will test multiple horizons including the Trenton Black-River and the Utica and Lorraine shale sequences. Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada. This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect.

These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company’s plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein. For further information, please contact: Questerre Energy Corporation - Jason D’Silva, VP FinanceTel: (403) 777-1185Fax: (403) 777-1578Email:

info@questerre.comWeb: http://www.questerre.com/

Questerre Energy Corporation is engaged in the exploration for, and the development, production and acquisition of scalable natural gas projects. Its major properties include St. Lawrence Lowlands, Quebec; Greater Sierra and Beaver River Field, British Columbia; Antler, Saskatchewan, and Vulcan and Westlock, Southern & Central Alberta.

The St. Lawrence Lowlands area is prospective for natural gas in multiple horizons with targets in the Ordovician Trenton Black-River and the Lorraine and Utica. Its landholdings of over one million gross acres consist of three separate blocks.

The largest block of 711,000 acres is subject to a farm-in and participation agreement with Talisman Energy. The primary zone of interest in the Greater Sierra region is the Devonian Jean Marie.

The region is also prospective for shallower zones, including the Mississippian Debolt and Slave Point formations. In November 2007, it acquired Magnus Energy Inc. In April 2008, the Company acquired Terrenex Ltd.

Share Capitalization
Issued & Outstanding:

Common Shares:179,127,088 (as at May 14, 2008)

Stock Options:16,769,170 (avg exercise price $0.61)

Insider Position:17,126,231 (9.57%)

http://www.questerre.com/080917_QEC_Presentation.pdf

This is the most current Corporate Presentation

Saturday, October 18, 2008

QEC 8-12 Wells To Be Reported By Year End

Jean Francois Tardiff on Market Call at the 5.55 min second clip.

1) QEC has best land package

2)Over next 3-4 months = results from 8-12 wells drilled

3)QEC Lowest risk of Jr's in the area

http://watch.bnn.ca/market-call/october-2008/market-call-october-17-2008/#clip103614

Business - Good time to buy stocks, Buffett says

Good time to buy stocks, Buffett says TheStar.com -

October 17, 2008 The Associated Press
NEW YORK–Warren Buffett has been moving his personal investments from safe Treasuries into U.S. stocks, he wrote in an opinion piece in Friday's New York Times.
"If prices keep looking attractive, my non-Berkshire net worth will soon be 100 per cent in United States equities," he wrote.

The piece, titled "Buy American. I am," reiterated one of the legendary investor's favourite maxims: Be fearful when others are greedy; be greedy when others are fearful.
"To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions," he wrote. "But fears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.''

Since stocks began to tumble in September, Buffett, and his investment company, Berkshire Hathaway Inc., have made large bets on U.S. companies, exacting rich dividend payments in the process. Berkshire Hathaway agreed on Oct. 1 to invest $3 billion in General Electric Co.'s preferred shares, which carry a hefty 10 per cent dividend. In late September, Berkshire Hathaway also bought $5 billion in preferred shares of Goldman Sachs Group Inc., which also pay a 10 per cent dividend. He also bought warrants to purchase another $5 billion common shares at about $115 each.

"Let me be clear on one point: I can't predict the short-term movements of the stock market," he wrote. "I haven't the faintest idea as to whether stocks will be higher or lower a month – or a year – from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.''

Friday, October 17, 2008

QEC Houses Friday

Financial FAQs Worth Reading

As the global financial crisis deepens, Report on Business writers examine and explain the turmoil in credit and stock markets. Here, we answer your questions daily, with the most recent at the top.

CENTRAL BANKS

What is a liquidity injection?

Central banks can use their financial clout to try to get money flowing to the banks and their customers. In a liquidity injection, they make money available for banks to borrow, although the financial institutions have to post securities as collateral to get it. Last week the Bank of Canada said it would make $20-billion available to Canadian banks, and on Monday it said it would let banks pledge their troubled asset-backed commercial paper assets as collateral. This will give some banks more flexibility. One problem, said TD Bank chief economist Don Drummond, is that the central bank's injection is just for the short term - Bank of Canada loans usually have to be repaid within 90 days. But the demand from customers is trending towards longer-term loans - especially from corporations who can't get money any other way - so the central bank money won't help much on that score.

Where do central banks get the money for a liquidity injection?

The Bank of Canada has billions of dollars in assets - about $56-billion at last count - mostly held in very safe securities such as bonds and treasury bills. In essence, when it makes money available to commercial banks, it is temporarily swapping its safe securities for the riskier ones the banks are putting up as collateral.

Do interest rate cuts actually help boost the stock market?

In theory, they should. If an investor is trying to make a decision between putting money into a bond or a stock, he or she will look at the difference between the yield on the bond and the possible return on the stock. Bond yields should fall when interest rates go down, making stocks more attractive. Essentially, for a stock to compete for an investor's money, it doesn't need to offer as high a rate of return. However, bond yields do not always follow central bank interest rate cuts, and they haven't this time. Some very high-quality corporate bonds, for example, are offering huge yields compared with the stock market. While lower interest rates should also make corporate borrowing easier and thus lower costs and finance growth, that hasn't been happening either in the current credit crunch. On top of all this, worries over a recession or panic over falling stocks can trump any minor tweaking of interest rates.

What will the co-ordinated rate cuts achieve?

Central banks around the world moved Wednesday morning to cut their benchmark interest rates by half a percentage point, marking the first co-ordinated action since the terrorist attacks of September, 2001. It was an extraordinary move to bolster markets and help ease clogged credit markets. Among the central banks were the Federal Reserve, the Bank of Canada, the European Central Bank and the central banks of Britain, Switzerland and Sweden. The Bank of Canada's key overnight rate falls to 2.5 per cent, while the Federal funds rate moves to 1.5 per cent.Economists cited the action as a positive and necessary step, but said there's still more to do. London-based Capital Economics, for example, said the move would provide "at least a temporary boost to confidence." Derek Holt, vice-president of economics at Scotia Capital Inc., cited the risk of 50 basis points not being enough and possibly not passing through to consumers and businesses. So far in Canada, major banks have cut their prime rates by just one-quarter of a percentage point. The Bank of Canada itself said the move does not preclude another rate cut at its next scheduled policy meeting on Oct. 21. Indeed, Toronto-Dominion Bank deputy chief economist Craig Alexander said the bank expects both the Federal Reserve and the Bank of Canada to cut another half-point at their next meetings, and the ECB and Bank of England to cut even deeper in the months ahead.

Don't interest rate cuts tend to fuel inflation?

In normal circumstances this is true, and that is one of the reasons the Fed has held rates steady for several months. But with oil prices dropping sharply, and commodity prices falling as well, the threat of inflation is taking a back seat to worries about credit and the functioning of the economy.

What was behind the Federal Reserve's Oct. 7 plan to buy up commercial paper?

The central bank is stepping in as a buyer of last resort in the $100-billion market for commercial paper. This is a form of short-term debt that thousands of companies use to finance their daily operations, including paying employees and buying supplies. The Fed hopes to kickstart this market and free up funds for corporations. The central bank said it was taking the action because money market mutual funds and other investors were loathe to buy commercial paper. Ian Stannard, a currency strategist at BNP Paribas in London, described the move as "probably the first piece of news we've had that starts to address the underlying problem in the financial system. This is a very proactive step and will be a huge help to getting things moving again.

What are the specifics of the plan?

Using Depression-era powers, the Fed will create a new temporary lending vehicle that eligible companies can tap for short-term cash (IOUs of less than three months). In return, the Fed will collect fees and interest, assuming the role of private investors, such as pension and money market funds, that have become too nervous to buy the paper.

How effective will the Fed's new measure be?

The historic move should unclog the market for these business IOUs, helping to insulate the real economy from the credit crunch. The hope is that, over time, private investors will feel confident enough to return to the market, allowing the Fed to withdraw. The catch is that the commercial paper market is just one piece of a massive and interconnected credit system that is no longer functioning, and the Fed can't possibly nationalize it all. Credit markets saw some slight easing Tuesday after the announcement, described by some observers as the most effective measure to date. Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said the central bank is putting itself even more into the "credit creation process" and taking on more risk as a result. Will it work? "This welcome step should alleviate some of the pressure on companies which were finding even day-to-day operations difficult to manage ... Still the problems besetting the credit markets are so multi-dimensional that no move will be a single fix," Mr. Porter said, noting the Fed wants to use every measure possible before cutting its benchmark Federal funds rate.

CREDIT MARKETS AND CRISIS

What is the "money market," and why does it matter if it freezes?

The money market is made up short-term loans (generally of less than one year), such as certificates of deposit, commercial paper, banker's acceptances, and 30-day treasury bills. If the money market freezes up - in other words, no one wants to make short-term loans because they are worried about borrowers defaulting - companies cannot get the cash they need to pay staff, buy supplies or pay rent. Often companies need to borrow this money because they are waiting for revenue that may not arrive for a few days or weeks. But if they can't get short-term cash from the money markets, it can make day-to-day operations very difficult.

What is a credit default swap?

These were originally set up as a kind of insurance against bad debts. A holder would pay a series of "premiums," and in return would get a payout if a specified organization failed. It's the same idea as paying a life insurance premium, where the beneficiary gets a payout only if the specified person dies. Like life insurance, everything is in balance unless there is an epidemic and people start dying left and right. With more companies going under, or threatening to do so, firms that issued swaps are themselves in trouble. That's what happened to insurer AIG, which sold credit default swaps that protected investors against bond defaults. When bonds started defaulting, AIG itself was left vulnerable.

What is counterparty risk?

When you lend $20 to a friend, the counterparty risk is the chance that he or she won't pay you back. And it works the same way with corporations or financial institutions, although their measurement of risk is a little more sophisticated. If the counterparty risk is high, traders and banks won't lend money unless they get some solid collateral or loan guarantees, or they might just say "forget it."

Commercial paper is normally issued only by the most credit-worthy companies, providing them with short-term cash to run their day-to-day operations. Issuers almost always need to have a credit rating on their commercial paper, because the buyers want assurance that their money is very safe, and will be paid back quickly. But getting a credit rating is an expensive and time-consuming process that is conducted by bond-rating agencies. As a result, most commercial paper is issued only by large, stable companies, or entities such as utilities.

What other measures could the U.S. take if the bailout package and interest rate cuts don't stabilize markets and the economy?

The U.S. government and Federal Reserve have used two of the key tools in its toolkit to try to stem panic and stabilize the financial system: The $700-billion bailout of the problem assets at the big banks, and an interest rate cut. But there are other tools as well that have not come into play yet. They could try to stimulate the weak economy by cutting taxes to individuals, they could beef up spending on federal infrastructure to create jobs, or they could give specific tax incentives, for home purchases for example. And while the U.S. government has already boosted insurance on bank deposits to $250,000 from $100,000, it could follow the lead of some European countries and move to unlimited insurance. And if things get even worse at any of the major financial institutions, the government could take direct equity stakes. That seems an unlikely move, but the current situation is unprecedented.

Where will the $700-billion (U.S.) in the Wall Street bailout package go and how will prices be determined?

The money will be paid to Wall Street firms, banks, pension funds and other companies that hold bad mortgages and other toxic assets. The values aren't known at this point, and the amount paid will be decided in a reverse auction, in which the sellers of the assets compete with each other and decide how cheaply they will sell the toxic debts. The government, through the newly appointed Office of Financial Stability, then pays the lowest price offered.

Will the money ever be recovered?

The U.S. Treasury Department has said there is a good chance it will recover some if not all of the money, although observers are not so certain. Previous rescue efforts have actually turned a profit, although others have cost billions.

Who wins and who loses?

While it's theoretical at this point, financial institutions could win out by having their toxic assets bought by the government at what is effectively a premium. While banks can dispose of some of these assets now, they would be doing so at firesale prices if buyers are found. In an ideal world, the U.S. government would hold on to the troubled assets until maturity, when hopefully the real estate market will have recovered, and then dispose of them at at least breakeven. But it is a long-term process, and thus it is too early to tell how the taxpayer makes out.

ECONOMY

Everybody keeps talking about a recession, but when will we know if we're really in one?

The classic definition of a recession is a period when the economy shrinks for two consecutive quarters. But that is considered very rough and imprecise by most economists.

By that measure we won't know whether Canada or the United States is in recession now until well into next year. The third-quarter gross domestic product (GDP) numbers are due at the end of November, and the fourth-quarter stats will be out at the end of February. In the second quarter, both economies grew.

One of the problems with the simple definition of recession is that it doesn't take into account swings in the economy. If GDP shrinks in one quarter by 2 per cent, rises in the next by 0.5 per cent, then shrinks in the third by another 2 per cent, then the country is not in recession under the definition, although it very likely is, in reality.

On the other hand, two consecutive 0.2-per-cent drops would mean we're in recession, even if there was strong growth in earlier quarters. That's not very realistic either.

GDP numbers can also be skewed by population growth, which can disguise a possible recession. And they are often revised months after the fact, so that what initially looked like a recession might not actually have been one.

"We've had situations in history where a recession has been revised away, two years later," says Dale Orr, chief economist at Global Insight Canada.

Is there a better way to define recession?

Many economists prefer to do a much more complex analysis to determine whether a country is in a recession. What needs to be added into the equation, says Mr. Orr, is data on industrial production, consumer spending and labour markets.

In the United States, the National Bureau of Economic Research (NBER) takes these and other numbers into account to officially declare whether a recession has happened.

The NBER (or more specifically, the NBER's "business cycle dating committee") says that a recession is the period that begins just after the economy reaches a peak of activity, and ends as the economy reaches its trough. Sometimes NBER data show there is a recession, even if GDP hasn't declined for two quarters. That was the case in 2001, when the U.S. was deemed to be in recession even though there were no successive quarterly GDP declines. (Later revisions showed there were GDP declines in the first three quarters of 2001.)

So is Canada in recession? Is the U.S. in recession?

Mr. Orr says Global Insight's view is that Canada is not in a recession. While the economy is pretty much stalled, with little or no GDP growth expected this year, "the labour market is moving along at a pretty good pace."

At the same time, consumer spending appears to be holding up, although some analysts are projecting a very weak fourth quarter.

The Conference Board of Canada weighed in yesterday, saying it thinks Canada will likely avoid a recession.

In the United States, however, all the signs suggest a recession is already under way. Estimates indicate the U.S. economy shrank in the third quarter, and will fall again sharply in the fourth, and again in the first quarter of 2009. Employment also has been falling since the start of the year and there is a definite decline in consumer spending. "There is a wide range of people who are feeling a lot of pain; a lot more than in Canada," Mr. Orr said.

If I lose my job, that puts me personally in a recession, doesn't it?

There is an old joke (recently retold in the Economist) that says that when your neighbour loses her job, it is called an economic slowdown. When you lose your job, it is a recession. But when an economist loses his job, it becomes a depression.

What is a depression, anyway?

There doesn't seem to be any formal definition of a depression. But economists say it would involve a sharp drop in economic activity, as measured by GDP, over a prolonged period of more than two years. That shrinkage would also be accompanied by a rapidly rising unemployment rate and a severe drop in personal consumption. During the most bleak stretch of the Great Depression between August, 1929, and March, 1933, the U.S. economy shrank by 27 per cent, about 10 times as much as during the worst postwar recession.

EUROPE

Why are European banks having more trouble than those in Canada?

European banks are in trouble because their leverage - their assets to equity ratio - is typically much higher than those of their Canadian and U.S. counterparts. In North America, the average leverage ratio is about 20. In Europe, it's close to 40. At the end of June, the top dozen European banks had a leverage range from, at the low end, 18.8 (Royal Bank of Scotland) to, at the high end, 61.3 (Barclays). The European banks' sheer size makes them vulnerable too, in the sense that they may be too big to save. For example, the total assets of Deutsche Bank, Germany's biggest lender, are almost €2-trillion. That's more than 85 per cent of the country's GDP. Political squabbling also has the potential to hurt the European banks. If a big bank with operations scattered across the continent, like Italy's UniCredit or ING of the Netherlands, needs a bailout, who pays? The home country or all the countries where the bank has major subisidiaries?

What did the British government do to bolster the banking sector?

The British government partially nationalized its financial institutions by offering to buy up to £50-billion in preference shares from at least eight of the country's biggest banks and building societies. These include HBOS PLC, Barclays and Royal Bank of Scotland. The move by the Treasury would give taxpayers a stake in Britain's major banks. Treasury chief Alistair Darling stressed Britain was not trying to take control of the banks or attempt to run them. But the government also warned it would not be hands off, saying it would look at the dividend policies and executive compensation schemes of the banks and also wanted a firm commitment to support lending to small business and home buyers.The government also promised to guarantee £250-billion of bank loans. British bank stocks surged on the announcement.

Why is Britain taking a leading role?

As the world's foremost banking centre, Britain has more than most at stake in repairing a system that has so rapidly disintegrated.

"We regard ourselves as leaders in global finance and I think government has really sought to protect that, to protect the city as a global leader in finance," said Charles Davis, economist at the Centre for Economics and Business Research Ltd.

Much of the motivation stems from the role of the country's financial services sector, which represents a higher-than-average chunk of the country's economic activity. Britain was the first country in the world to put together a policy package that addressed the different dimensions of the banking crisis, says economist Margaret Bray at the London School of Economics. Other countries have tackled those problems on a piecemeal basis, but Britain was the first to tackle the issues comprehensively, she said.

Will recent measures fix things?

British policy responses, in conjunction with global efforts to repair the financial crisis, are giving investors reason for optimism.

"It's premature to argue that this is the end of the credit crunch but certainly the pervasive lack of confidence and fraught atmosphere is starting to dissipate somewhat," said Mr. Davis of the Centre for Economics and Business Research.

Government assurances Monday were "exactly what was needed because clearly the markets weren't going to come up with a solution to the systemic problems that the credit crunch created," he added.

The spectacular bounce in stock markets Monday was "encouraging," though it will take more time to see whether interbank lending recovers. Recapitalizing banks and guaranteeing debt will go a long way toward restoring confidence.

Economic challenges remain, though. "We may be getting past the worst of the financial crisis but you still have the economic crisis to deal with next year in terms of the effects on the real economy," Mr. Davis said.

What is Mr. Brown proposing now?

British Prime Minister Gordon Brown wants reforms to the international financial system. His London speech Monday outlined five principles that should govern any overhaul.

First, transparency and the adoption of internationally agreed-upon accounting standards. Second, integrity and closer focus on conflicts of interest. "This includes a system of remuneration founded on long-term success, not short-term irresponsibility," he said.

Third, responsibility and ensuring boards are effectively managing risks. Fourth, closer regulations and supervision of banks. This should also help to "prevent speculative bubbles when markets are rising and to cushion the impact of shocks when they are falling."

Fifth, a new Bretton Woods agreement (established in 1944 and which set up the International Monetary Fund and the World Bank) that would build a new global financial framework for the years ahead. "Sometimes it takes a crisis for people to agree that what is obvious and should have been done years ago can no longer be postponed."

Iceland's president said his country could face "national bankruptcy" because of the credit crisis. Can a country actually go bankrupt?

Countries can't go bankrupt in the same way that companies do - closing their doors, sending everyone home, and having their remaining assets seized. But they can become insolvent if they default on their loans and don't repay the interest or principal.This has happened many times over the years, particularly among small developing nations. But in those cases the creditors were not able to seize assets - that would have meant an invasion and takeover of the country. In most cases, world bodies such as the International Monetary Fund work to reschedule or restructure debt so that creditors get some of their money back eventually. At the depths of Latin American debt crisis in 1990, more than four dozen countries were close to bankruptcy because they were unable to pay what they owed. Some were brought back from the brink by the creation of "Brady bonds" - a repackaging of defaulted loans that were backed by U.S. collateral.

FINANCIAL SYSTEM

Are bank deposits safe?

Bank deposits in this country - GICs or other deposits that mature in five years or less - are insured by the Canada Deposit Insurance Corp., a government agency. But the limit is $100,000 per person per institution. and not all financial institutions are members. Depending on the type of account in question, more than one account may be covered to $100,000 at a given bank. In Europe, some countries have recently removed any limits, to make sure that there is no rush of worried customers taking their money out and stuffing it under their mattresses. In Canada there has been no move to change the limit. The CDIC points out on its web site that banks in Canada don't fail often, but "it has happened and it could happen again." In fact, 43 CDIC members - mostly small ones - have collapsed since it was formed in 1967.

What is interbank lending?

Banks normally lend each other cash and short-term securities to help balance out their everyday activities. But lately, banks around the world have been extraordinarily cautious about this lending - partly because they are worried about getting repaid - and this is driving up the interest they have to pay when they want to borrow. This also makes the banks much more cautious about lending out the money they receive in deposits, thus making it harder - and more expensive - for homeowners, small businesses or corporations to borrow. The standard interest rate for interbank loans is Libor, an acronym for the London Interbank Offered Rate. Libor is an average of interbank rates offered by more than a dozen banks, and is calculated every day. The difference between Libor and government bond yields has been growing recently, and that's important because corporate loans, mortgages and student loans are all based on Libor.

Don't banks usually get the money they loan from deposits?

That is usually the case, but the balance is never perfect, and that's why banks lend money to each other. Currently, there is a lot of demand for loans from corporations, which until recently haven't needed much money because they've been so profitable. With little cash available, rates have increased.

Where is the U.S. government getting the money to buy shares in the country's financial firms?

The $250-billion will be part of the $700-billion set aside to help bail out the financial sector. That bigger pot of money, authorized by the U.S. Congress, is likely to be borrowed from the public, corporations and perhaps other national governments, by issuing bonds and Treasury bills.

Of the $250-billion, about half will be used to buy preferred shares and common stock warrants from several of the country's largest banks. Those banks have also agreed to place some limits on executive pay, including a ban on "golden parachutes" during the period that the government holds its stake. The other half will go to thousands of small and mid-sized banks.

The U.S. government will earn an annual dividend of 5 per cent for the first five years and 9 per cent after that. But Washington's holdings will be non-voting.

The banks will be able to buy back the shares from the government when volatility has cooled down and they can raise capital from private investors.

President George Bush also said the government will insure all deposits in non-interest bearing bank accounts, to help businesses worried because their payroll and checking accounts exceed the limits backed by the Federal Deposit Insurance Corp. The government will also back most new bank debt, a change designed to spur more lending between banks.

Why is the U.S. government investing in healthy banks as well as struggling ones?

The government said it didn't want there to be a stigma in accepting the government cash, so it is giving it to both strong banks and weak ones. President Bush said the new capital will help healthy banks continue to make loans to consumers and businesses, while it will help struggling ones "fill the hole created by losses during the financial crisis, so they can resume lending and help spur job creation and economic growth."

Is this the first time the U.S. government has taken equity stakes in private companies?

By no means. Despite the free-enterprise culture of the United States, Washington has often intervened to take ownership of private business. During the First World War the U.S. government took over the railways to make sure that arms and troops were efficiently transported. The trains were returned to private ownership in the 1920s.

The railways were nationalized again during World War II, along with coal mines. The government has also taken direct ownership of banks before. In 1984, when Continental Illinois National Bank and Trust was on the verge of failure after a run on its deposits, a huge rescue package was put in place that resulted in Washington owning an 80-per-cent stake for a decade. In 1994 Continental was finally sold to Bank of America.

Has the Canadian government ever owned shares in our commercial banks?

The Canadian government has avoided any direct investments in Canadian banks, and has tried not to get directly involved in rescuing troubled financial institutions, says Duncan McDowall, a historian at Ottawa's Carleton University.

"The pattern in Canada has consistently been that when commercial banks got in trouble, the federal government allowed them to collapse, or more likely, to fall into the arms of another bank that took its assets and its employees," Prof. McDowall said.

An example: In 1906, the Ontario Bank collapsed, but the federal and provincial governments and other commercial banks arranged to have Bank of Montreal take over its assets and operations.

The only active federal government involvement in banking, Prof. McDowall said, was Canada Post's ownership of the mainly rural Post Office Savings Bank, which had almost 1,500 branches but was shut down in the late 1960s after 100 years in existence.

Aside from that, "there's always been a complete arm's length relationship" between the federal government and the banks, he said. It also helps that the Bank Act is updated every decade or so, "which allows it to be attuned to changes in the market."

Interestingly, the federal government didn't even own the Bank of Canada when it was first established in 1935. For the first few years it was held by private investors, including the commercial banks. But in 1938 the central bank was nationalized and has been in Ottawa's hands since then.

What should be done differently in a new Bretton Woods?

Bretton Woods was formulated more than half a century ago when the world was a different place. Mr. Brown's proposal calls for more co-ordination among national regulators and a focus on global money flows. A new agreement would need to be much more inclusive, said Peter Chowla, London-based policy officer at the Bretton Woods Project, which monitors the World Bank and International Monetary Fund. "We need to involve more people in the discussion. We shouldn't presume one country from a region is going to represent the whole region."

What is Tier 1 capital and what does it tell you about a bank's health?

Tier 1 capital includes a bank's common equity - the value of the shares it has sold to the public - plus the value of its non-cumulative preferred shares, and its retained earnings. These are instruments that can't easily be redeemed by holders, so they are considered permanent.

Tier 1 capital, as a proportion of a bank's overall assets, is a key measure of its financial strength. There are international standards, set by the Swiss-based Bank for International Settlements, for this Tier 1 capital ratio. In Canada, the Office of the Superintendent for Financial Institutions sets the minimums.

Most Canadian banks have Tier 1 capital ratios of around 10 per cent (meaning that Tier 1 capital represents about one-10th of overall assets), well above the OSFI minimum of 7 per cent. The banks also measure second level, or Tier 2, capital which includes not-quite-so-permanent items such as reserves, loan loss provisions, and subordinated debt.

What is the TED spread?

The TED spread is a measure of how much premium banks have to pay when they borrow from each other, and it is a reflection of worries over possible defaults.

Originally, the TED spread was the difference in interest rates between three-month U.S. treasury bill contracts (the "T") and three-month Eurodollar contracts (the "ED").

Now, it usually represents the spread between risk-free three month T-bills and not-so-risk-free three-month LIBOR (the London inter-bank offered rate that banks use for interbank borrowing).

When the TED spread goes up, that suggests bank lenders are worried their counterparties on interbank loans might default. In today's paranoid environment, the TED spread has increased to more than 400 basis points (a basis point is one-hundredth of a percentage point) from "normal" levels of around 30 basis points.

How exactly is the American taxpayer going to pay, directly or indirectly, for the $700-billion bailout package?

The U.S. government's treasury will likely borrow the $700-billion from the public, corporations and perhaps other national governments, by issuing bonds and treasury bills. They will then use this money to buy, at a discount, the distressed assets from the financial institutions that are in trouble. The hope is that when these assets are eventually sold, they could bring in a substantial return to the government, and possibly even make a profit. If it works out as planned, the process should not cost the taxpayer anywhere near $700-billion. Because the process of selling the assets will take time, there should be no impact on the U.S. budget deficit in the short term. If the government eventually takes a loss on the assets it is buying, then it will deepen the deficit down the road.

MORTGAGES AND MORTGAGE INSTITUTIONS

This whole downward spiral seemed to start with U.S. subprime mortgages. What exactly are they?

Subprime mortgages are home loans made to people who would not, under normal circumstances, be ideal candidates to get a mortgage - thus they are "subprime." These are individuals who have a higher risk of defaulting on their loan, such as those who have been delinquent in making payments in the past, or people with a bankruptcy on their credit record, or those who simply don't have a credit history.

Starting around 2005, U.S. lenders loosened their rules and began granting mortgages to borrowers who provided very little evidence of their income and ability to repay. Many of these mortgages had very low initial interest rates, for the first six months to three years, but when that period ended the payments jumped sharply. Borrowers were led to believe that they would be able to refinance their homes at this point because the value of the property would have increased. But the slump in the housing market meant that didn't happen. As a result many people - especially those who had not been completely frank about their income levels - defaulted on their mortgages and lost their homes.

What are Fannie Mae and Freddie Mac? Why the cute names?

Fannie Mae is the nickname of the Federal National Mortgage Association, while Freddie Mac is the Federal Home Loan Mortgage Corp. Fannie Mae is the older of the two. It was created as a government agency in 1938 under U.S. president Franklin Roosevelt's New Deal. The idea was to give local banks federal money to finance home mortgages, since private lenders were leery of lending money. The government wanted to help more people buy homes, and encourage the building of affordable housing. In 1968 it became a private company. Freddie Mac was set up in 1970 to expand the secondary mortgage market, and ensure there was competition with Fannie Mae's monopoly. Both companies buy loans from banks or mortgage firms, and re-sell these as mortgage-backed securities. Together they own or guarantee about half of U.S. mortgages. The two were put under "conservatorship" by the U.S. Federal Housing Finance Agency on Sept. 7 - essentially a takeover by the government.

Who owns Canada Mortgage and Housing Corp. and can it go under?

CMHC was set up by the federal government just after the Second World War to help deal with a housing shortage exacerbated by the huge number of soldiers returning home. It helped finance home construction and provided funds for low-income housing. In the 1950s, when banks got into mortgage lending, CMHC started insuring "high-ratio" mortgages where home buyers initially made only a small down payment. This summer CMHC stopped insuring mortgages with zero down payment or 40 year amortizations.

CMHC also subsidizes aboriginal housing, provides loans and grants for certain kinds of renovations, and gathers statistics on the housing market. It also buys mortgages from financial institutions, and repackages them as mortgage-backed securities, which it sells to investors.

Because CMHC is a Crown corporation - unlike Fannie Mae and Freddie Mac which were private companies - it is backed by Ottawa and could not really "go under."

PERSONAL FINANCE

Do the interest rate cuts mean my mortgage rate or credit card interest rate will go down?

On Wednesday several banks lowered their prime rates by just a quarter of a percentage point, instead of matching the half-point cut in the Bank of Canada's benchmark overnight rate. One bank said it couldn't afford a steeper cut because it is paying so much these days to fund its own borrowing through global credit markets. You will see that quarter-point cut in interest rates if you have a variable-rate mortgage that is tied directly to prime. Other short-term loan rates - certain car loans, for example - that are measured off prime will also go down. But other rates - for five year mortgages, for example - are set based on bond yields, which have been rising sharply, so don't expect any relief. Credit card rates are a function of credit risk, and won't likely see any decline because of the drop in the prime rate.

Why are Saudi Arabia and other OPEC countries allowing the price of crude oil to fall so dramatically? Can they not control the price of oil by adjusting production?

OPEC (the Organization of Petroleum Exporting Countries) does have significant control over production, but it is not an instantaneous process and changes don't always have an immediate effect. In early September the cartel said it would cut production by about 520,000 barrels a day, and OPEC is set to meet Oct. 24 to talk about possible further action. (On Thursday it shifted the meeting forward from Nov. 18.)

Still, as University of Alberta business professor Joseph Doucet points out, OPEC has no direct control over prices, but can merely control the quantity of its production, which has an indirect influence on prices. Other factors - such as the level of crude and gasoline supplies in the United States - can have a greater impact. In addition, Prof. Doucet says, oil prices have been shifting quickly in the past few weeks and production changes take some time to put into place.

The internal politics of OPEC account for yet another complicating factor. "Saudi Arabia has the largest reserves of any OPEC country and is the 'patient' one - the country with the longest view," Prof. Doucet said. "They have an interest in a moderate oil price [because] they want to be able to sell oil for a long time. Countries with shorter views, say Nigeria, have more pressing needs for cash flow ... and thus worry less about long term oil substitution."

And even when OPEC sets quotas, not every country in the organization always respects them.
© Copyright The Globe and Mail

How the market's crash has hit the wealthiest like Ivanhoe And Lundin And Connacher CEOs

JANET MCFARLAND

From Friday's Globe and Mail

October 16, 2008 at 8:11 PM EDT

The ranks of Canada's billionaires appear to be thinning in the painful bear market gripping global investors.

Since the market's peak on June 6, some of Canada's most famous business people have seen their stakes in public company holdings fall precipitously.

Robert Friedland, for example, who is best known for selling his Voisey's Bay nickel discovery to Inco Ltd. in 1996, has seen the value of his stakes in Ivanhoe Mines Ltd. and Ivanhoe Energy Inc. drop 66 per cent since the market peak in June.

Although his private holdings are not known, the value of Mr. Friedland's two major public investments have fallen far below the $1-billion level, totalling just $440-million as of Tuesday's close.

Two other hard-hit Canadian billionaires are Atco Ltd. owner Ronald Southern and Paramount Resources Ltd. chairman Clayton Riddell, who have both seen their public company holdings fall below the $1-billion mark since June.

In dollar terms, however, some of those hit hardest have been Canada's wealthiest billionaires because of the size of their company stakes.

The Thomson family, for example, has seen its stake in Thomson Reuters Corp. lose $3.2-billion in value since June, even though their majority ownership position is still worth $13-billion.

Grant Rasmussen of UBS Canada said ultra-high-net-worth individuals often have major investments beyond their public company shares, so it is difficult to estimate their true worth simply by looking at their companies' share prices.

“It would capture a large portion, because that is a big chunk of their wealth,” he says. “But the type of money they are rounding off, in terms of hundreds of millions of dollars, would still be a significant amount to most people.”

Older billionaires typically have the most diversified holdings: “With age comes wisdom,” Mr. Rasmussen says.

But even younger ones are often counselled to shape their portfolios to look like “barbells” to offset their risky holdings of one company's shares with large holdings in cash or equivalents, he said.

“So they would try to somewhat even out the risk profile of their two situations,” he said.

Some, he added, pledge some of their shares to borrow money, which they invest to hedge against the risk of so much exposure to one stock.

Most of Canada's wealthiest individuals are still rich by any standard, even if they have taken major hits since June.

Even Vancouver's Lundin family, which has been especially hurt by the market turmoil, still has $162-million of value in Lundin Mining Corp. and several other mining-related public companies. The estate of Adolf Lundin, who died in 2006, has seen its stake in Lundin Mining Corp. lose 70 per cent of its value since June and 97 per cent over the past year.

Lukas Lundin, chairman of Lundin Mining, said last week that he has never seen anything like the current commodities downturn.

“I'm very surprised. This is the worst correction we have had in the last 50 years,” he said in an earlier interview.

Some executives are feeling a pinch. Richard Gusella, chief executive officer of Calgary-based Connacher Oil and Gas Ltd., was required to sell almost half his shares in the company because of a margin call at his brokerage firm.

“Never in my wildest dreams did I expect, with the progress we've made as a company, that we'd have a market meltdown as we've seen,” he said earlier this week.

Amid the gloom, there are a small number of wealthy Canadians who have seen their wealth climb since June.

Prem Watsa, chairman and CEO of Fairfax Financial Holdings Ltd., has seen his stake in Fairfax climb in value by $128-million to $605-million as his company's share price grew by 27 per cent in the period. Similarly, Galen Weston, chairman of the George Weston Ltd. empire, has also seen his stake grow slightly to a total of $4.3-billion as investors move into safe staples such as grocery-store stocks.

Carrigan:three stages of a typical bear market

"Last week, I explained the three stages of a typical bear market. First, we go through the non-belief stage when investors buy declines on dips and ignore outside noise such as falling housing prices and the subtle money shift from small caps to large caps. This is the early stage of a flight to safety.

The second stage is worry as surprising disappointments in the financial sector cause investors to shift money from equities into Treasury bonds, marking the latter stage of a flight to safely.

The third stage is the recognition of a crisis. Normal sector rotation ends and global fundamentals are meaningless as a bearish stampede blows away assets at any price. Fears of another depression mount and eventually a global rescue plan unfolds.

Finally the crisis passes, and the dawn of a new bull market shines light on the debris left behind by the passing bear. The clean-up gets underway and the healing or basing process begins."

Stock mayhem takes cue from Pulp Fiction

October 17, 2008 Bill Carrigan

Last week, while visiting a branch of Union Securities at the height of the stock market selling spree, I was confronted by the branch manager who asked: "Are you scared yet?"
I paused and searched for an answer. I then recalled a line from the restaurant scene in the film Pulp Fiction when Jules (Samuel L. Jackson) was confronted by Pumpkin, a robber who points a gun at his face.

Without blinking, Jules replies: "Hate to shatter your ego, but this ain't the first time I've had a gun pointed at me."

Without blinking, I replied, "I am concerned, but this ain't the first time I've been mauled by a bear market."

Last week, I explained the three stages of a typical bear market. First, we go through the non-belief stage when investors buy declines on dips and ignore outside noise such as falling housing prices and the subtle money shift from small caps to large caps. This is the early stage of a flight to safety.

The second stage is worry as surprising disappointments in the financial sector cause investors to shift money from equities into Treasury bonds, marking the latter stage of a flight to safely.
The third stage is the recognition of a crisis. Normal sector rotation ends and global fundamentals are meaningless as a bearish stampede blows away assets at any price. Fears of another depression mount and eventually a global rescue plan unfolds.

Finally the crisis passes, and the dawn of a new bull market shines light on the debris left behind by the passing bear.

The clean-up gets underway and the healing or basing process begins.
This clean-up or basing period can last for several months – the 9/11 crisis took about nine months to repair. The bottom is first built by the market leaders – financial, technology and telecom, which bottomed in mid 2002. The market laggards – materials and energy – built bases through mid-2003.

We are now probably in that basing period. The broad indexes look to be forming a bottom, though commodity-related stocks could continue to deflate as commodities continue to weaken.
Two important tests loom.

The first test is for the major stock indexes and sub-indexes not to violate the panic lows posted last Friday.

The second test would be the return to natural market rotation – like the lows of 2002-2003 – a condition caused by investors moving in and out of various stock groups.

If over the next few weeks the lows of October 10 hold then a return to sector rotation is likely as investors focus on the economy.

You can see examples of sector rotation by looking at weekly or monthly charts of the various TSX sectors such as the financial, consumer, technology or materials sectors. In the normal course of the business cycle the financial and consumer sectors will lead the broader market indexes and the materials and commodity sensitive stocks will lag the broader market indexes.
Investors should incorporate sector rotation studies into their investment decision process by doing a quick scan of the TSX sub-groups or stock sectors.

One example is to compare the monthly closes of the TSX information technology index to the monthly closes of the TSX energy index in order to spot a lead and lag relationship.
Our two plots extend back to 2002 and clearly illustrate that the technology sector leads the energy sector to the upside and to the downside. Note the price peaks of the tech index in 2004 and again in 2007, well ahead of the energy price peaks of 2005 and 2008.

Note also the tech index is down to long-term support at the 2002-2003 base, giving us a compelling reason to own the TSX technology index and to avoid the TSX energy index.
Bill Carrigan is an independent stock-market analyst. His Getting Technical column appears Friday.

Thursday, October 16, 2008

Gurus speak, investors buy late in the day

The close: Gurus speak, investors buyRTGAMA global recession has not been averted and the financial system is not humming again. But after yet another deep stock market rout early on Thursday, investors couldn't sit on the sidelines any longer: They stepped back into the market, sending U.S. stocks up and erasing most of the losses in Canada.It only helped that prominent voices from the professional investment community - some of them notoriously bearish until recently - are suggesting that the low markets are a gift to long-term investors.Jeremy Grantham, chairman of GMO, told Reuters: "The early purchases will be painful.

But if you could slice in and do some buying before and after the low, seven years from now you will not regret it."Chris Orndorff, managing principal at Payden & Rygel Investment Management, told Reuters: "Things have just gotten a bit silly. We are very, very close to a bottom in equities."John Hussman, Hussman Funds, in a note to investors: "On nearly every measure - sentiment, valuation, volatility, oversold conditions, and others, we are observing extremes associated with strong expected return/risk profiles, on average. My impression is that investors underestimate the potential for a very rapid 20 to 25 per cent market advance as risk aversion collapses."Somebody listened.

The Dow Jones industrial average closed at 8979.26, up 401.35 points or 4.7 per cent. From its low point earlier in the day, the index rallied 780 points. Of the 30 stocks in the index, 27 rose. The broader S&P 500 closed at 946.43, up 38.59 points or 4.3 per cent.Exxon Mobil Corp. rose 11.4 per cent, Wal-Mart Stores Inc. rose 9.1 per cent, Microsoft Corp. rose 6.8 per cent and General Electric Co. rose 3.3 per cent. Citigroup Inc. missed out on the rally, falling 2 per cent.In Canada, the S&P/TSX composite closed at 9269.97, down 53.88 points or 0.6 per cent.

But this is a case where down looks up: The index rallied more than 500 points from its low. The winners included Royal Bank of Canada, up 1.5 per cent, and Research In Motion Ltd., up 4 per cent.Even though the price of crude oil fell below $70 (U.S.) a barrel, closing in New York at $69.85, a number of energy producers performed well. Canadian Oil Sands Trust rose 10.6 per cent and EnCana Corp. rose 5 per cent. Gold producers, however, were hit hard by a low reading of U.S. inflation in September, which sent the price of gold down to $804.50 an ounce. Barrick Gold Corp. fell 12.5 per cent and Goldcorp Inc. fell 10.9 per cent.Copyright 2001 The Globe and Mail

TSX Drops 310 Points

he TSX Venture Exchange was off 43.23 points to 947.98.
The Dow Jones industrial average, down well over 300 points late in the morning, but was off just 36.8 points to 8,541.11 at mid-afternoon Thursday after tumbling 733 points the previous day in its worst one-day plunge since 1987.
The Nasdaq composite index was ahead 6.12 points to 1,634.45 following a 151-point loss Wednesday while the S&P 500 index declined 8.3 points to 899.54 after losing 90 points in the prior session.
"There is some good news and a lot of bad news and I think if there is any type of bad news in anything that comes out, that's really what people are focusing on – which is indicative of a bear market really," said Jennifer Radman, associate portfolio manager at Caldwell Securities.
"You still have a lot of deleveraging going on, which means there are people out there that just have to sell regardless of what the value of their stock is worth."
The latest dive in the price of oil helped send the Canadian dollar down 0.15 of a cent to 84.03 cents U.S., while the latest snapshot on manufacturing showed a sharp deterioration in sales.
Statistics Canada reported that manufacturing sales declined 3.7 per cent to $52 billion in August. The slide was led by the petroleum and coal sectors, but declines were widespread as the transportation equipment industry fell 4.3 per cent.
The Philadelphia Federal Reserve said Wednesday that regional manufacturing conditions weakened in October. The bank's regional index came in at a negative 37.5 compared with a positive 3.8 for September.

In other U.S. economic news, industrial production plunged 2.8 per cent last month, on top of a one per cent drop in August.

The Federal Reserve estimated that disruptions related to the hurricanes accounted for about 2.25 percentage points of the total drop in industrial production in September.
Also, consumer prices were flat last month rather than increasing as forecast. And claims for unemployment benefits fell by 16,000 last week to a seasonally adjusted level of 475,000 – a greater decline than anticipated.

While the credit markets are performing better than they were last week given unprecedented support by governments, they are hardly operating normally.

The ultra-safe three-month U.S. Treasury bill was yielding 0.44 per cent, higher than the 0.20 per cent reading on Wednesday.

The Toronto stock market's energy sector was down just over three per cent after plunging 12 per cent Wednesday. The November crude contract on the New York Mercantile Exchange was down $4.21 at US$70.33 – after earlier slipping below US$70 for the first time since August 2007 – as new data showed much higher oil inventories in the U.S. last week.
EnCana Corp. (TSX: ECA) eased five cents to $44.25 as RCMP are investigate a second explosion targeting a gas pipeline near Dawson Creek, on the B.C.-Alberta border, belonging to the energy giant.
Suncor Energy (TSX: SU) lost $1.78 to $23.21.

Oil has lost more than half its value in three months from its July peak of US$147.27.
Other commodities were lower with the December copper contract on the Nymex down 12.5 cents to US$2.0855 a pound after Rio Tinto PLC, one of the world's biggest mining giants, warned of slowing demand from China, the world's biggest growth engine over the last few years.

"The Chinese economy is pausing for breath after spectacular GDP growth," the company's chief executive Tom Albanese said.

Teck Cominco Ltd. (TSX: TCK.B) retreated 86 cents to $14.60.

Gold declined $34.50 to US$804.50 an ounce, sending the sector down more than 10 per cent.
Goldcorp Inc. (TSX: G) fell back $3.97 to $23.81.

NovaGold Resources Inc. (TSX: NG) faded 74 cents to $3.99 after it reported a record third-quarter profit of $16.7 million on a $33.5-million pre-tax gain from the sale of its NovaGrernPower unit.
Other materials stocks dragging the TSX lower included Potash Corp., (TSX: POT) down $11.42 to $81.15.
The TSX financial sector was down 2.5 per cent, with Scotiabank (TSX: BNS) $1.26 lower to $42.24.

Losses for Canadian insurers were much steeper with Manulife Financial (TSX: MFC) down $1.95 or 6.5 per cent to $27.10.

In the U.S., Citigroup Inc. posted its fourth straight quarterly loss due to credit-related troubles and cut another 11,000 jobs during the third quarter. The company lost US$2.8 billion in the quarter compared with a year-ago profit of US$2.2 billion. The loss was narrower than analysts had expected but its shares fell 82 cents to US$15.41.

Merrill Lynch & Co., which has agreed to be acquired by Bank of America Corp., posted a quarterly net loss of US$5.1 billion and its shares gave back 86 cents to $17.38.

The FTSE 100 index was down 218.2 points or 5.35 per cent to 3,861.39 in London
despite more action by the Bank of England to free up lending. Germany's DAX was down 4.9 per cent while the French CAC-40 lost 5.9 per cent.

In Asia, Tokyo's Nikkei slid 1,089.02 points to 8,458.45, its biggest drop since the 1987 stock market crash.
South Korea's main index dropped 9.25 per cent and Hong Kong's key index closed down 4.8 per cent.

QEC Flows at 1600+ Barrels Per Day Target=6000+per day

At the 9:00 video mark BNN discusses the successful well drilled in BC.
BUYQuesterre Energy QEC-T2.340A fabulous story. Shale gas has just recently been able to be accessed because of new technology. Have great partners including Talisman (TLM-T) and Forest Oil (FST-N).

BUYQuesterre Energy QEC-T2.450Company is waiting to see the next phase of drilling. 2 going on right now by the partners, one by Talisman (TLM-T) and one by Forest Oil (FST-N). As they start getting comfort that they can crack the 3 shales and that they are productive after fracking, it then becomes a manufacturing operation

BUYQuesterre Energy QEC-T3.200Key for them is the million gross acres in Quebec. Has about 30% and partners are Talisman (TLM-T), which knows shale plays and Forest Oil (FST-N). Forest is drilling right now and starting in the fall Talisman will drill their other 3 plays.

http://watch.bnn.ca/the-business-news/october-2008/the-business-news-october-14-2008/#clip102634

Questerre Energy Corporation ("Questerre" or the "Company") (OSE,TSX:QEC) is pleased to announce that Talisman Energy Canada (“Talisman”) has elected to drill the remaining three option wells under its farm-in agreement with Questerre and its minority partner in the St. Lawrence Lowlands, Quebec. The three wells will complete the work program allowing Talisman to earn about a 75% interest in the original 719,000 acre farm-out block. Questerre also retains about a 4¼% gross overriding royalty on production from Talisman. Michael Binnion, President and Chief Executive Officer of Questerre, commented, “We were one of the first companies to recognize the potential of the Quebec Lowlands for unconventional gas and have worked for almost ten years to get to this point. We are thrilled that Talisman, which also saw the potential early on, has decided to accelerate the exploration and appraisal program. Our joint land lies right in the heart of the Lowlands between the Yamaska growth fault and Logan’s Line and runs from Quebec City to south of Lac Saint Pierre. We continue to believe this land position proximate to the market has significant natural gas potential.” The three-well program is expected to commence in the latter half of 2008. The wells will test multiple horizons including the Trenton Black-River and the Utica and Lorraine shale sequences. Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada. This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company’s plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein. For further information, please contact: Questerre Energy Corporation - Jason D’Silva, VP FinanceTel: (403) 777-1185Fax: (403) 777-1578Email: info@questerre.comWeb: http://www.questerre.com/

The largest block of 711,000 acres is subject to a farm-in and participation agreement with Talisman Energy. The primary zone of interest in the Greater Sierra region is the Devonian Jean Marie.

Share Capitalization
Issued & Outstanding:
Common Shares:179,127,088 (as at May 14, 2008)Stock Options:16,769,170 (avg exercise price $0.61)Insider Position:17,126,231 (9.57%)

Shows 1 Month Of Buy And Sells By Brokerages

This'>http://www.questerre.com/080917_QEC_Presentation.pdf">This is the most current Corporate Presentation

Mutual Fund investors rush for the exits

September withdrawals hit a record $4.5 billion
Oct 16, 2008 04:30 AM

Brett Popplewell Business Reporter

Desperate to escape the vicious bear market, Canadian investors pulled a record $4.5 billion out of mutual funds last month and apparently threw much of that money straight into their bank accounts.

And judging by yet another rout in the markets yesterday, investors are unlikely to put much cash back into funds anytime soon.

The massive outpouring of funds more than doubled the previous record for the highest monthly net outflow since the Investment Funds Institute of Canada (IFIC) began collecting data in 1990.
"There is no doubt that September has been a difficult month for investors of all stripes," said Pat Dunwoody, IFIC's vice-president, member services and communications.

"We welcome recent actions taken by governments to support the global financial system and we expect that these actions will help restore some order to markets going forward," he said.

Confidence was lacking yesterday, however, as the TSX gave back most of Tuesday's surge.
As oil prices sank below $75 (U.S.) a barrel, tumbling energy stocks led a drop of 631 points, or about 6.4 per cent, for the S&P/TSX composite index.

Last month's liquidation of mutual funds came as investor confidence plunged.
Canadians saw their savings and retirement funds dwindle as the S&P/TSX composite index dropped 15 per cent in September.
September was the first month since August 2007 that mutual funds have seen a net outflow. Prior to last month, the highest monthly net outflow from mutual funds was April 2003, when investors pulled $1.7 billion.

In addition to the large scale cashing out of equity mutual funds, money-market funds – commonly regarded as a safe haven – saw $2.5 billion in redemptions last month, down from $944.1 million in net sales in August and $328 million in the year-earlier period.

Once seen as ultra-safe, money-market funds have also been affected by the credit crisis. Last year, some Canadian money market funds were caught with asset-backed commercial paper that had fallen in value and forced some financial institutions to backstop the funds. U.S. money-market funds this year have been similarly hit.

In the past month, meanwhile, chequing and savings accounts rose by 12 per cent.
Usually such accounts increase between 2 per cent to 3 per cent.

"This is the highest rate since the beginning of the decade," said Benjamin Tal, senior economist with CIBC World Markets.

"It's pure risk aversion. During these crisis, people often take their money out of mutual funds and the market and keep it close to home.

Wednesday, October 15, 2008

Stocks plummet again

Stocks plummet again

STEVE LADURANTAYE
Wednesday, October 15, 2008

Investors abandoned any hopes of a quick recovery to the credit crisis Wednesday, driving North American markets lower on economic data that suggested massive government intervention may not be enough to prevent a recession.

The Dow Jones industrial average closed the day 7.9 per cent lower, or 733.08 points, to 8,577.91, while the broader S&P 500 was down 9 per cent, or 90.23 points, to 907.78. The S&P/TSX closed 6.4 per cent lower, or 631.83 points, to 9,312.83, after gaining 9.8 per cent Tuesday.

“Any euphoria over the notion that government actions are finally attacking the root problems of the crisis is rapidly dissipating as economic data turns south,” UBS wrote in a note to clients. “Systemic problems require systemic solutions which do not lend themselves to rapid resolution.”

September retail sales in the United States posted their biggest monthly drop in more than three years, down 1.2 per cent, compared to the 0.7 per cent decline economists had predicted. Consumer spending accounts for two-thirds of economic activity in the United States.

“The details of this report were simply disturbing,” said Millan Mulraine, an economics strategist at TD Securities. “On the whole, the strains on U.S. consumers are beginning to show, and this report is yet another indication that consumers are beginning to retrench their spending as they navigate against the headwinds coming from a weak domestic economy, tight credit conditions (despite the dramatic easing in monetary policy) and a deteriorating job market.”

Toronto was under pressure to hold onto some of Tuesday's gains, with oil falling $4.09 (U.S.) to $74.54 on expectations of weaker demand as the economy slows. Oil is trading at its lowest level since September, 2007. The energy sector fell 12.3 per cent, while the mining sector fell 9.9 per cent. Only the consumer staples sector posted a gain, up 1.6 per cent as Saputo Inc. gained 5 per cent and George Weston Ltd. gained 5.05 per cent.

© Copyright The Globe and Mail

Pescod Says...Oil and Gas Mergers?

With the drop in oil and gas prices and the near collapse
in stock prices of many oil and gas companies
these days, one wonders if we aren’t near an era of mergers
and acquisitions according to Canaccord’s Terry Peters.
Peters points out that the big guys in the oil and gas
patch; Internationally—Exxon, Shell, BP, Total and
Chevon have approximately $65 billion in cash

This is the full report

QEC Houses

Frantic trading takes toll on gridlocked online brokers

B CARRICK
Globe and Mail Update

October 15, 2008 at 6:00 AM EDT

Investor Alan Harries has been getting consistent service from his online broker during the past weeks of stock market swings, which is to say it's all bad service.
Whether the market is soaring, like it did yesterday, or plunging, as it did last week, Mr. Harries has found his broker to be slow and unreliable.

“When the market is busy, I haven't been able to execute trades,” Mr. Harries, an investor from Peterborough, Ont., with decades of experience in the markets, said yesterday. “I'm extremely frustrated. On a day like last Friday, when you're trying to sell, all you can see is money being lost because you can't make a trade. And then today, you lose the opportunity to make money because your trades won't go through.”

Online brokers say they're handling trading volumes these days that are double the normal level or more. Some websites are bogging down or timing out on clients, and the wait to talk to a trader on the telephone can be close to an hour at worst at some firms.

“This morning, it's been completely insane,” Doug Coulter, president of RBC Direct Investing, said around 10:30 a.m. yesterday as the S&P/TSX composite index soared more than 1,000 points. “I heard that our telephone volumes were up more than 300 per cent.”

It was much the same story over at the online broker TD Waterhouse. “We're unbelievably busy,” said John See, the firm's president. “Last week alone, we had had two of our top three all-time trading days.”

Online brokers are supposed to be a way for do-it-yourselfers who need no advice to get quick, cheap access to the stock market (they also sell bonds and mutual funds, of course).
But the latest round of service glitches highlights the limitation of online brokers: When the markets are crazy, they sometimes can't deliver.

This is a problem that investors haven't had to deal with since 2000, when frenzied trading of technology stocks routinely caused websites to malfunction and phone queues to stretch endlessly. Most online brokers spent big bucks to add new staff and strengthen their technical capabilities and, until recently, investors had reaped the benefit through largely trouble-free trading.

Mr. Harries' experience shows how the recent surge in trading has again swamped online brokers. “Today was an exercise in frustration,” he said after tussling with his broker's online stock-trading service. At one point, he actually submitted a sell order indicating he'd accept less than what other investors were offering to pay for a stock simply to expedite the trade.
The transaction never went through and he ended up using a market order, something savvy investors usually prefer to avoid, to get the trade executed. Market orders mean you'll accept the going market rate for a stock and you can never be sure of what kind of a price you'll end up with.

For individual investors, problems with their online brokers have been compounded by issues related to the Toronto Stock Exchange.

Brokers say there have been sporadic delays in getting trades confirmed and, yesterday, trading in 100 TSX-listed stocks, closed-end funds and exchange-traded funds was halted for two hours. TSX spokesman Jean-Charles Robillard said such halts are prompted by factors such as unusual price moves in a security. All the affected stocks were trading again by 11:30 a.m.
Roughly nine in 10 trades handled by online brokers are submitted over the Internet these days, which reflects the fact that the commissions are much lower than they are for trades placed over the phone with a trader.

Investors have complained lately about problems logging in at their broker's websites and also about having the screen freeze on them as they're submitting trades.

But people who want to talk to a real person have it worse these days. Christopher Wicks, vice-president of investor services at TD Waterhouse, said clients had to wait as long as 49 minutes to speak to someone at the market open yesterday, and then as long as 36 minutes by the later morning.

A heavy volume of calls is part of the issue at TD, but so is the amount of time that clients are spending on the phone. “We're having longer conversations,” Mr. Wicks said. “People are asking questions, expressing their uncertainty and concerns.”

There are a couple of things investors can do to minimize trading problems with an online broker on the kind of busy days we've seen lately. One is, where possible, to avoid trading at the peak periods of the day – market open and market close. If you do want to place a trade around the 9:30 a.m. market open, log in at your broker's website well in advance.

“Right around market open, the number of simultaneous sign-ons is unbelievable,” TD's Mr. See said.

While he admits to some “slowness” at TD Waterhouse these days, Mr. See says today's problems in the online brokerage business are not as bad as they were back in 2000. “What I've told clients is that in some cases, we've bent, but we certainly haven't broken. We haven't had systems go down.”

Who's the best broker?

The Globe and Mail's 10th annual ranking of online brokers will be published on Oct. 25. Check it out to see how 13 firms compare in such areas as fees, resources and customer satisfaction.

Conservative Minority Wins The Election

CAMPBELL CLARK
Globe and Mail Update
October 15, 2008 at 2:30 AM EDT
OTTAWA — Stephen Harper's Conservatives have won a stronger minority government on the strength of gains in Ontario and British Columbia.

But the Tories paid dearly for campaign missteps in Quebec, as their failure to make gains there was a big reason they fell short of outright control of the Commons.
In two and half years of minority government, Mr. Harper had sought to woo Quebeckers, seeing them as the path to a majority government.

With almost all of the results in, the Tories lost one of their 11 seats there. The Bloc Québécois again defied early-campaign predictions of collapse, winning almost two-thirds of the province's seats.

Mr. Harper had called the election on Sept. 7, appealing for a stronger mandate to manage the economy in uncertain times. He won more seats, but not clear control, although as he took the stage in Calgary for his victory speech, he appeared elated, not disappointed, with his larger minority — and struck perhaps the most non-partisan, co-operative tone of his political career.
Mr. Harper pledged to fulfill his party's election platform, but also to govern for Canadians who had voted for other parties, too — and at a time when a faltering economy poses challenges for any government, offered co-operation with opposition MPs.

"This is a time for us all to put aside political differences and partisan considerations and to work cooperatively for the benefit of Canada. We have shown that minority government can work, and at this time of global economic instability we owe it to Canadians to demonstrate this once again," he said.

"We stretch out a hand to all members of all parties, asking them to join together to protect the economy and weather this world financial crisis."

The Conservative gains came largely in Ontario, where near-complete results show them winning 51 of the province's 106 seats — a gain of 10 from when the election was called.
And in B.C., the Tories were on track to pick up four or five seats.

Stéphane Dion's Liberals were poised to drop almost 20 of the seats they held when the election was called — a defeat, but not as bad as some Liberals had feared in mid-campaign.
The Liberals were on track to be knocked down to only six or seven seats west of Ontario. A rare bright spot was a small gain in Quebec, where Justin Trudeau, son of late prime minister Pierre Trudeau, won in Papineau riding.

Jack Layton's NDP was making gains of seven or eight seats — the second-highest tally in the party's history. But it was still not the major breakthrough they had hoped for, and their share of the vote was essentially unchanged from the last election.
But the New Democrats made substantial gains in Northern Ontario, gained a toehold in Newfoundland with Jack Harris's win in St. John's East, and held on to deputy leader Thomas Mulcair's lone Quebec seat in Outremont.

The election results turned not as much on more votes for Mr. Harper's Conservatives, but the softening of Liberal support.

The Conservatives have won about 37 per cent of the popular vote, up one percentage point from 2006.

But Mr. Dion's Liberals garnered the lowest share of popular vote the party had ever tallied — lower than the 28 per cent the John Turner-led Liberals garnered in 1984.
The Grits lost about four percentage points from 2006, leaking a little to the Tories, but also to the Greens.

The results will likely lead some to question whether Mr. Dion's deal with Green Party Leader Elizabeth May, in which he agreed not to run a candidate against her in Central Nova and lobbied for her inclusion in the leaders' debates, was a losing strategy.

Mr. Dion conceded defeat with grace, but appeared to indicate that he expects to lead the Liberals in opposition in coming months, saying he told Mr. Harper in a phone call that he would work with him in the new Parliament to confront the global economic crisis.
"My priority, the priority of the official opposition, will be the economy, will be the economic storm that we see around the world, will be to protect Canadians, our savings, our homes, our jobs, our pensions," he said.

But Mr. Dion's control of his own party has never been solid, and he will almost certainly face pressure to step down.

Two possible front runners, Toronto MPs Bob Rae and Michael Ignatieff, were both re-elected, and the fourth-place finisher from the party's 2006 leadership race, Gerard Kennedy, was elected in Toronto's Parkdale-High Park riding.

For Mr. Harper, it was a mixed bag — a larger caucus, but no majority. He was shut out in Newfoundland, did poorly in Quebec, but won handily from Ontario westward to B.C.
Only one of his cabinet ministers, Michael Fortier, who resigned from the Senate to run for a Commons seat, lost; he was beaten easily by Bloc Québécois incumbent Meilli Faille in Vaudreuil-Soulanges.

Former foreign affairs minister Maxime Bernier, forced out of cabinet for leaving classified documents at the home of former girlfriend Julie Couillard, was handily re-elected in his riding of the Beauce, southeast of Quebec City.

In Saskatchewan, another cabinet minister who gaffed, Gerry Ritz — who made tasteless jokes about the victims of the tainted-meat crisis — was also re-elected.
In Atlantic Canada, the Conservatives gained a few seats but were swept out of Newfoundland by the backlash over the Atlantic Accord.

Green Party Leader Elizabeth May, the first leader of her party ever to take part in national leaders' debates, lost her bid to unseat Tory Defence Minister Peter MacKay in Nova Scotia's Central Nova riding — finishing second, but not close.

But when Mr. Harper forms another Conservative government after tonight, he will do so without a minister or MP in Newfoundland. Premier Danny Williams' Anything But Conservative movement appeared to strike a chord with Newfoundlanders who felt betrayed by Mr. Harper's change in stance on offshore resource revenues.

Mr. Harper lost all three of his Tory seats in Newfoundland, including both St. John's seats, where Loyola Hearn and Norm Doyle did not run again, and Avalon, where MP Fabian Manning was defeated by his Liberal challenger, Scott Andrews.

And in Nova Scotia, MP Bill Casey — who was kicked out of the Conservative caucus for voting against the budget because he believed Mr. Harper broke his promise to leave offshore resource revenues untouched under the Atlantic Accord — won by a huge margin to keep his seat as an Independent.

Still, the Conservatives ticked up elsewhere in Atlantic Canada, eking out small gains by picking up seats from the Liberals in New Brunswick and Nova Scotia and PEI.
In his speech to supporters late in the evening, Bloc Québécois Leader Gilles Duceppe said Quebeckers had rejected the Conservatives' cuts to arts and culture and his hard-line approach to youth justice.

He pointed out that the Bloc won five times as many Quebec seats as Mr. Harper's, and two-thirds of Quebec's ridings.

"That's strong," Mr. Duceppe said. "Without the Bloc Québécois, Stephen Harper would be forming a majority government."

Canadians headed to the polls on a day when the stock market climbed sharply higher. Plummeting markets appeared to shake voters' confidence last week, but while voters trooped out today, the S&P/TSX Composite Index was climbing, closing the day up 9.8 per cent.
In fact, early numbers put voter turnout at about 60 per cent, which would be the lowest in Canadian history

When the election was called Sept. 7, the Conservatives had 127 seats, the Liberals 95, the Bloc Québécois had 45, and the NDP 30. There were 4 independents, including former Liberal Party MP Blair Wilson who briefly sat as a Green Party MP, and 4 vacant seats.

Tuesday, October 14, 2008

Cramer Says Stop Trading + Pescod Says...Leverage Whacks CLL CEO + More

Source

Most people that are in the markets are quite aware of
the benefits and also the absolute disasters that buying
stocks on margin can cause. In a good and booming
market like we had several months ago, to buy on margin
gave you that extra little leverage and a chance to make
more on your money than before and then paying a small
interest cost.

But in the market crash of the last while, we’ve been
reminded how badly this can work against you. In a market
that falls as much as all of the markets have lately
and included every phase from finance to oil and gas to
mining to you-name-it, leverage works going up and for
the worst, going down. Two items of note here

click here for the whole .pdf report

Crisis hopping

Crisis hopping

Out with the credit crisis, in with the economic crisis. That seemed to be the operating mantra of investors on Tuesday after early gains in major stock market indexes gave way to worries about corporate profits in the months ahead.The Dow Jones industrial average closed at 9310.99, down 76.62 points or 0.8 per cent.

The broader S&P 500 closed at 998.01, down 5.34 points or 0.5 per cent.Many financial firms rose spectacularly for the second day in a row as investors grew more confident that the latest attempts to stabilize the financial system will work. The U.S. government announced earlier in the day that it will help capitalize a number of firms by buying preferred shares.

The firms include Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. Citigroup Inc. rose 18.2 per cent and Bank of America Corp. rose 16.4 per cent, but JPMorgan fell 3.1 per cent.Some stocks that appear to be exposed to the economy, however, fell. Most notably, PepsiCo Inc. fell 11.9 per cent after its third-quarter results missed analyst expectations and it announced severe job cuts. It dragged down Coca-Cola Co., which fell 7.5 per cent.

Yes, both stocks are considered to be economically defensive. But the fear is that if Pepsi is suffering, who knows what's happening to more economically sensitive companies.Meanwhile, concerns about Intel Corp.'s third-quarter results sent the shares down 6.2 per cent. However, the chip-maker edged past analysts' predictions when it released its results after markets closed. Intel reported earnings of $2-billion (U.S.), or 35 cents a share, a 12 per cent increase over last year.

The shares rose 4.3 per cent in after-hours trading.In Canada, the S&P/TSX composite index closed at 9955.66, up 890.5 points or 9.8 per cent. The Toronto market was closed on Monday for the Thanksgiving Day holiday. But if you take both Monday and Tuesday into account, the Dow has risen 10.2 per cent in total, which is roughly in line with the one-day return for the Canadian benchmark index.Among energy producers, Talisman Energy Inc. rose 23.4 per cent and Suncor Energy Inc. rose 11.1 per cent. Among financials, Royal Bank of Canada rose 14.6 per cent and Bank of Montreal rose 12.5 per cent. Manulife Financial Corp. rose 14.5 per cent after the company reassured investors that its capital resources were more than adequate.

Meanwhile, Research In Motion Ltd. rose 9.4 per cent. BCE Inc. rose 2.6 per cent - although the stock is still more than 20 per cent below the agreed-upon takeover price for the telecommunications giant, suggesting that investors are still not convinced that the money needed to complete the deal in December will be available.

Copyright 2001 The Globe and Mail

QEC:Energy Corporation : Liard Basin Shale Well Flows at 10 mmcf/d

Questerre Energy Corporation : Liard Basin Shale Well Flows at 10 mmcf/d
00:15 EDT Tuesday, October 14, 2008

CALGARY, ALBERTA--(Marketwire - Oct. 14, 2008) -
NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC) (OSLO:QEC) and Transeuro Energy Corp. ("Transeuro") announced results from their Liard shale gas program at the Beaver River Field in British Columbia.
The program consisted of a series of mini-fracs and high pressure acid stimulations on the A-5 well. The main objective of the program was to evaluate rock properties of the Liard shales and identify prospective intervals for a possible future fracture stimulation program.
After a minor stimulation, the A-5 well flowed sweet dry natural gas at a stabilized rate of 10 mmcf/d (1,667 boe/d) over a three day test with a wellhead pressure of 3000 psi. The well is being tied-in to the local gathering system to commence a long-term production test. Production is expected to begin before the end of October pending regulatory approval.
Michael Binnion, President and Chief Executive Officer of Questerre, commented, "While too early to evaluate the full contribution from the Liard shales, these initial results are well above our expectations. With over 30 square miles of prospective acreage, existing infrastructure and takeaway capacity, this remains an exciting opportunity."
Questerre intends to place the well on production at restricted rates. The high flowing pressure associated with this well will likely reduce production from the lower pressure A-2 and A-7 wells limiting overall production gains at the field.
The tested interval in A-5 is brittle and highly dolomitic at the top of a thick sequence of organic rich shale. The appraisal strategy is to target the more brittle rock intervals that have higher carbonate and silica content expected to respond favourably to stimulation. The brittle rocks contain free gas and may serve as a pathway for the shale gas to enter the well. The long-term production test is intended to establish how much, if any, contribution will come from the shales.
A-5 is the third well to be put on production from the shale/siltstone intervals at Beaver River. These intervals are collectively more than 2000m thick and, for classification purposes, have been separated into three major intervals. Discovered resource is estimated at over 1 Tcf per square mile based on independent analysis by Netherland, Sewell & Associates, Inc. The two other producing wells, A-7 and A-2, produce from the upper and middle intervals respectively.
Questerre is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.
This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company's plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein.
Barrel of oil equivalent ("boe") amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel and is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead.
This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.
FOR FURTHER INFORMATION PLEASE CONTACT:Questerre Energy Corporation
Anela Dido
Investor Relations
(403) 777-1185
(403) 777-1578 (FAX)
Email: info@questerre.com
Website: www.questerre.com

Bush announces new steps for banking industry

Bush announces new steps for banking industry

MARTIN CRUTSINGER
Tuesday, October 14, 2008
WASHINGTON — U.S. President George W. Bush on Tuesday announced a $250-billion (U.S.) plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were “not intended to take over the free market but to preserve it.”

Mr. Bush, in the latest of a series of statements on the troubled economy, said in a brief Rose Garden statement that the move echoed similar bold moves made overseas in an effort to prevent a global recession.

“These efforts are designed to directly benefit the American people by stabilizing the financial system and helping the economy recover,” he said.

The president made his statement after an early morning meeting with his economic advisers, announcing these steps:

—The federal government will use part of the $700-billion bailout law to inject money into banks “by purchasing equity shares.” Mr. Bush said this will help banks continue to make loans to businesses and individuals.

—The Federal Deposit Insurance Corporation will “temporarily guarantee” most new debt issued by insured banks.

—The FDIC also will expand government insurance to cover all non-interest bearing accounts, aiding small businesses in covering their day to day operations.

—The Federal Reserve will “soon finalize work” on a new program to serve as a buyer of last resort for commercial paper.

More to come

© Copyright The Globe and Mail

Monday, October 13, 2008

NBC and Nobel Prize Winner Economics

The Dow is up about 938 points at the 9,389 level

Dow leaps more than 900 pointsRTGAMWall Street stormed back from last week's devastating losses, sending the Dow Jones industrials soaring a nearly inconceivable 938 points after many governments' plans to support the global banking system reassured distraught investors.

The Dow by far outstripped its previous record for a one-day point gain, 499, reached during the waning days of the dot-com boom in 2000.The market was likely to have a rebound after eight days of precipitous losses that took the Dow down nearly 2,400 points, but no one expected this kind of advance.

Still, back-and-forth trading is likely to continue as Wall Street still contends with a crippled financial system and a struggling economy. So some of Monday's big gains may disappear when trading resumes Tuesday.The Dow is up about 938 points at the 9,389 level. All the major indexes are up more than 11 per cent.

The Standard & Poor's 500 Index jumped 104.06 points, or 11.57 per cent, to finish unofficially at 1,003.31. The Nasdaq Composite Index surged 194.74 points, or 11.81 per cent, to close unofficially at 1,844.25.Copyright 2001 The Globe and Mail

Global Markets Rally

Dow leaps 500 points

Dow leaps
Monday, October 13, 2008

Stocks surged as investors rushed into stocks after eight sessions of devastating losses, hoping that the stock market is finding some footing following pledges by governments to further aid the banking sector, including plans by the Treasury to buy U.S. bank stocks.
In the first half-hour of trading, the Dow Jones industrial average rose 358.10, or 4.24 per cent, to 8,809.29 after rising 500 points in the early going.

Broader stock indicators also jumped. The Standard [amp]amp; Poor's 500 index advanced 41.81, or 4.65 per cent, to 941.03, and the Nasdaq composite index rose 75.52, or 4.58 per cent, to 1,725.03.

© Copyright The Globe and Mail

Wall Street headed for a huge rebound Monday

Wall St. heads for higher openRTGAM

Wall Street headed for a huge rebound Monday as investors, hoping that the stock market is finding some footing after eight sessions of devastating losses, sent stock futures sharply higher.

The market appeared relieved by pledges of further co-ordinated actions by European and U.S. authorities to aid the crippled banking system, including plans by the Treasury to buy U.S. bank stocks.Dow Jones industrial average futures rose 348, or 4.2 per cent, to 8,718. Standard & Poor's 500 index futures rose 42.90, or 4.81 per cent, to 933.90. Nasdaq 100 index futures rose 56.50, or 4.41 per cent, to 1,339.00.

Investors in Asia and later Europe were already buying, grabbing stocks after last week's rout and action by major governments over the weekend to bolster investor confidence.Overseas, Hong Kong's Hang Seng index surged 10.2 per cent.

Markets in Japan were closed for a holiday. In afternoon trading, Britain's FTSE 100 jumped 3.83 per cent, Germany's DAX index rose 6.84 per cent, and France's CAC-40 jumped 4.37 per cent.Copyright 2001 The Globe and Mail

Friday, October 10, 2008

Stocks gone wild

Market News: After the Bell

The close:
Stocks gone wild!

RTGAM

At any given moment on Friday afternoon, investors were either cheering the return of the Dow Jones industrial average or cowering under their desks out of concern that yet another level of support for the index was being crushed.In the end, though, the index closed out the week on a relatively quiet note.

The Dow ended at 8451.19, down 128 points, or 1.5 per cent - its eighth straight decline, but the shallowest setback since the start of the month. The broader S&P 500 closed at 899.23, down 10.69 points, or 1.2 per cent.Some financial firms actually saw some gains, which may come as a relief for those investors who have been seeing visions of the global financial system melting. Citigroup Inc. rose 9.1 per cent and JPMorgan Chase & Co. rose 13.5 per cent.

Morgan Stanley, however, was a notable exception: It tumbled 22.3 per cent on concerns about its health.Still, the carnage during the week was nothing short of amazing. The Dow and the S&P 500 each fell 18.2 per cent. According to Bloomberg News, that's the worst one-week setback since 1933. In Europe, the U.K.'s FTSE 100 fell 21.1 per cent during the week and Japan's Nikkei 225 fell 24.3 per cent.Meanwhile, the Chicago Board Options Exchange volatility index, or VIX, shot above 70 - another record high in what has been a series of record-breaking days and a sure sign that the level of fear among investors is at extreme levels.

In Canada, the S&P/TSX composite index closed at 9065.2, down 534.98, or 5.6 per cent - a sharper decline than that seen in the United States thanks to its heavier exposure to commodities, which plunged as the U.S. dollar rallied.Suncor Energy Inc. fell 6 per cent and EnCana Corp. fell 12.8 per cent after the bottom fell out of crude oil; it traded at $77.70 (U.S.) a barrel, down $8.89. Barrick Gold Corp. fell 12.8 per cent after the price of gold slid to $859 an ounce, down $27.50.Copyright 2001 The Globe and Mail

QEC Houses

Tories show video to play up Dion's language difficulties

Tories show video to play up Dion's language difficulties TheStar.com - Federal Election -

TOM HANSON/THE CANADIAN PRESS
Reporters covering the Conservative Party campaign view a television interview by Liberal leader Stephane Dion that the Tories provided outside the press room in Winnipeg, Oct. 9, 2008.
October 09, 2008 Tonda MacCharlesOttawa Bureau
WINNIPEG–Conservative leader Stephen Harper emerged shortly after a broadcast interview aired showing Liberal leader Stéphane Dion struggling in English to grasp a simple economic question, suggesting his answers showed he was unfit to lead the country.

Harper moved quickly to exploit what the Conservatives said is a damning, embarrassing piece of tape, in which Dion asked for three takes to answer what he would have done about the economy if he were prime minister now.

Harper told reporters that: "When you're managing a trillion-and-a-half-dollar economy, you don't get a chance to do do-overs, over and over again."
Harper said it shows that Dion and the Liberal party "really don't know what they would do about the economy."

"I don't think this is a question of language at all. The question was very clear, it was asked repeatedly. But what's important in the end after all the times the question was put, the answer was, from Mr. Dion, that he does not have a plan, that if he is elected he would spend 30 days trying to create one."

French reporters pointed out that Harper himself had used the incorrect word in French for trillion.
The party arranged for a television set to be brought to the hotel lobby so that party officials and the travelling media could view the scene.

Then, in a first ever for a campaign in which Harper has only made himself available once a day, early on, the campaign delayed its flight, and the Prime Minister met with reporters to say the fact Dion could not grasp a simple economic question betrays his inability to manage the economy.

The interview was aired by ATV, CTV's Atlantic affiliate, and later on by the national political show Mike Duffy Live.

In it, host Steve Murphy asks Dion: "If you were prime minister now, what would you have done about the economy and this crisis that Mr. Harper has not done?"

Dion struggles to understand the question's conditional subjunctive tense.
"If I would have been prime minister two and a half years ago?"
"If you were the prime minister right now?" responds the anchor.

"If I'm elected next Tuesday, this Tuesday is what you're suggesting?" asks Dion.
"No, I'm saying if you hypothetically were prime minister today," Murphy asks.
Dion attempts to answer, stumbling as he describes his 30-day, five point plan for post-election consultations as a "30-50 plan, in fact the plan for the first 80 days once we would have a Liberal government. Can we stop it now," asks Dion. "Because I think I was a bit slow to understand your question. And I don't think it would be good TV."

The anchor agrees to repose the question, and the it descends into a somewhat farcical and embarrassing encounter as Dion and the host try to make themselves understood.
On take two, Dion says: "Again I don't understand the question, because you ask me to be prime minister at which moment? Today? Or since a week or 60 weeks?"

Dion asks for a third take, and tries to understand as an aide explains off-camera what the question is. "Yes but if I would have been prime minister two years ago, I would have had an agenda," he says to his aide. "Let's start again."

On the third "Thank you for coming" by the host Steve Murphy, both Dion and Murphy chuckle and start over a fourth time.

"Give me a first day where I am prime minister that I can figure out what is your question is about," says Dion.

The television station said the Liberal party had asked ATV not to air the tape, but the CTV affiliate, and the national political show Mike Duffy Live played the whole thing.
Once Murphy asks the question again, Dion says: "I will assume that I have been elected today prime minister. The first thing I would do is to consult with the Privy Council office, minister of finance to know exactly in which situation we are according their data."

From that point on, Dion slips more comfortably back into his usual platform speech.
A senior Conservative official said it sounded like something "worthy of an SNL (Saturday Night Live) skit."

Earlier in the day, Harper had hardened his political message to move critical voter support in the final stretch of the campaign.

The Conservative leader conjured up what he believes Canadians will see as a scary prospect: "Prime Minister Dion."

World Markets Crash

"The right time to move out of stocks was a year or so ago, before various stock indexes the world over fell by one-third or more.If you missed that opportunity, you’re hardly alone."

Switching to Cash May Feel Safe, but Risks Remain

The New York Times

09 Oct 2008 11:36 AM ET

It’s a question we’ve all asked in our darker moments of late: Why not just put all of our investments in cash, 100 percent, just for a little while, until things calm down?

Some people already seem to be acting on that instinct. In the first six days of October (through Monday), investors pulled $19 billion out of mutual funds that invest in United States stocks, matching the outflows for the entire month of September, according to TrimTabs Investment Research.

“What clients are looking for is safety,” said John Bunch, president of retail distribution at TD Ameritrade. “They are seeking solutions that are backed by the federal government. Specifically, F.D.I.C-insured money funds and certificates of deposit. All of it is under the umbrella of, ‘Am I safe and insured?’ ”

By fleeing for the comfort of safe and insured, however, investors with a time horizon beyond a few years may be doing real damage to their long-term finances. If you’re tempted to make a big move to cash right now, you’re doing something called market timing. It’s an implied statement that you’ve figured out the right moment to get out of stocks — and will also know the right time to get back in.

So let’s dispense with the first part straightaway.

The right time to move out of stocks was a year or so ago, before various stock indexes the world over fell by one-third or more.
If you missed that opportunity, you’re hardly alone.

But if you sell now, you’ll be locking in your losses. And once you’re in cash, there isn’t much upside. In fact, with interest rates low, you’re likely to lose money in cash, because inflation will probably eat up the after-tax returns you earn from a savings or money-market account.
A guarantee of a small loss may sound good right now. But if you’re not bailing out of stocks once and for all, how will you know when it’s time to get back in? The fact is, any peace of mind you gain by being on the sidelines now will turn into a migraine once you see how much you can harm your portfolio over time by missing just a bit of any rebound.

H. Nejat Seyhun, a professor of finance at the Ross School of Business at the University of Michigan, put together a study in 2005 for Towneley Capital Management, where he tested the long-term damage that investors could do to their portfolios if they missed out on the small percentage of days when the stock market experienced big gains.

From 1963 to 2004, the index of American stocks he tested gained 10.84 percent annually in a geometric average, which avoided overstating the true performance. For people who missed the 90 biggest-gaining days in that period, however, the annual return fell to just 3.2 percent. Less than 1 percent of the trading days accounted for 96 percent of the market gains.

This fall, Javier Estrada, a professor of finance at IESE Business School in Barcelona, published a similar study in The Journal of Investing that looked at equity markets in 15 nations, including the United States. A portfolio belonging to an investor who missed the 10 best days over several decades across all of those markets would end up, on average, with about half the balance of someone who sat tight throughout.

So moving to cash right now is just fine as long as you know precisely when to get back into stocks (even though you didn’t know when to get out of them).
At some point, stocks will indeed fall enough that investors will remove the money from their mattresses and put it to work, causing prices to rise significantly.

But, as Bonnie A. Hughes, a certified financial planner with the Enrichment Group in Miami, put it to me, there won’t be an e-mail message or news release that goes out when this is about to happen. It will be evident only afterward, on the few days when the market surges.
And it gets worse for those who think they won’t have any trouble investing in stocks again later. Medium- or long-term investors who are considering a big move into cash right now are probably making an emotional decision, at least in part.

For those who follow through, the same instincts will probably hurt when trying to figure out when to reinvest in stocks.
“The emotional forces that drove them out of the market aren’t likely to let them back in ‘until things are better,’ ” Dan Danford of the Family Investment Center in St. Joseph, Mo., said in an e-mail message. “And for most people, things won’t feel better again until the market has already moved back up.”

In fact, he added, plenty of people may not allow themselves to get back in until the market has already risen significantly.
That situation is worth considering if you think your mood, or returns, can’t get any worse. “People feel worse missing out on the bounce-back that will inevitably come than they do hanging in there through the down period,” said Elaine D. Scoggins, a certified financial planner with Merriman Berkman Next in Seattle.

The truly downbeat do not see the bounce as inevitable. This outlook is essentially a bet that our current predicament is so different that the equity markets won’t bounce back at all, even though they survived 1929, the Great Depression, 1987 and a major terrorist attack. I do not believe that the markets are in some kind of permanent decline, and I haven’t found an expert who does.
That said, some retirees, or those close to leaving the work force, may be well-off enough to leave stocks behind for now. If the tumult in the economy and the decline in the markets have altered your risk tolerance, then it may make sense to move to a portfolio of Treasury bills, certificates of deposit and money market funds.

Michael G. Coli, 56, of Crystal Lake, Ill., decided to take his 401(k) money out of the market in February. As an investor in his sons’ pizza restaurants, he noticed that an increasing number of customers were relying on credit cards. And as the owner of a winter home in Naples, Fla., he witnessed the housing market dive. Taken together, he decided to pull his retirement money, which he would need in five years, from the Vanguard Balanced Index Fund and move it all into certificates of deposit.

“I had the feeling the economy was not on real firm ground,” Mr. Coli said. “I decided to get out and put it all in C.D.’s, and that is where I’ve been ever since.”

If you can’t afford to live off the proceeds of cash investments (or dividends from your investment in your kids’ pizza joints), you may have no choice but to hold on to whatever stocks you have left. Then, you can hope for a rebound that will allow you to live out your later years more comfortably. Selling now and moving to cash could mean guaranteeing a lower standard of living for the rest of your life, because you’d be locking in your losses.

But if you’re a bit younger, try to think of your investment portfolio in the same way you consider the value of your home, if you own one. After all, if you’re not moving anytime soon, your home is a long-term investment, too.

“Today’s price is not your price. Your price is 10 or 20 years from now,” said Thomas A. Orecchio, of Greenbaum & Orecchio, a wealth management firm in Old Tappan, N.J. “Unfortunately, stock market investors don’t always see things that way.”
Tara Siegel-Bernard contributed reporting.

Copyright © 2008 The New York Times

Canada rated world's soundest bank system: survey

Thu Oct 9, 2008 2:41pm EDT
By Rob Taylor

CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.
But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.

The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.
The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.
The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).
Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).
UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).

The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.
The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.
Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.
At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).

RANKINGS
1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta 11. Hong Kong
12. Finland
13. Singapore
14. Norway
15. South Africa
16. Switzerland
17. Namibia
18. Chile
19. France
20. Spain
--------------------------------------------
124. Kazakhstan
125. Cambodia
126. Burundi
127. Chad
128. Ethiopia
129. Argentina
130. East Timor
131. Kyrgyz Republic
132. Lesotho
133. Libya
134. Algeria
SOURCE: World Economic Forum Global Competitiveness Report 2008-2009.

Thursday, October 9, 2008

Pescod Says...

Cro Insiders Loading Up On Shares

The 5 Year Chart Shows
The Last Time The Stock Was This Low It Was June 2005
Cro Has A Small Float And Will Rocket Up On Any Positive Developments

The Insiders Bought Shares From The Public Markets

200,000 x .14 cents Larche

QEC Houses Today Anonumous #1 Buyer

Petrolifera Confirms Its Financial Integrity as Capital Markets Deteriorate

Petrolifera Confirms Its Financial Integrity as Capital Markets DeterioratecnwCALGARY, Oct. 9 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX) wishes to comment on recent share price movements, capital and credit markets and current activity being conducted by the company.ARGENTINA AND FINANCIAL MATTERS

The company wishes to confirm that during the months of July and August in the third quarter 2008 its production has been relatively stable at approximately 8,000 boe/d, similar to levels reported for the second quarter 2008. 47.00 per barrel coverted becomes $49.87 per barrel when translations of the US dollar

There were some minor crude oil production declines in September 2008 due to adjustments being made in the Puesto Morales Norte Field with respect to pumping systems designed to handle the changing fluid mix with the water injection that is occurring at the present time as part of the waterflood program. These changes to extraction rates are expected to restore production rates in the fourth quarter in line with expectations of the impact of the waterflood as contained in our recent Fall 2008 Corporate Presentation, which is posted on our website at www.petrolifera.ca. We would note that the expected waterflood impact is occurring, offsetting normal declines that arise from the production process. We are awaiting final September natural gas sales levels and we will be reporting to our shareholders our Third Quarter 2008 operating and financial results on November 11, 2008 when our Board of Directors will convene to review these results and the company's 2009 operating and financial plan and budget.Prices have been stable in Argentina for crude oil, albeit at much below world prices, especially as has been the case since last December 2007, when the imposition of increased export taxes reduced the effective wellhead price to US$42 per barrel. This price was subsequently negotiated up to $47 per barrel without any concessions from the governing authorities.

It should also be noted that as the Canadian dollar has weakened recently, our realized price in August 2008, for example, was $49.87 per barrel when translations of the US dollar, the Argentinean peso and the Canadian dollar were incorporated into Canadian dollar reporting, which is used in Petrolifera's financial statements. All of Petrolifera's production occurs in Argentina.Operationally, we are conducting drilling operations in Argentina using one drilling rig and one service rig at the present time.

Presently, we are testing an exploratory well on Vaca Mahuida which encountered live 29 degree API oil during drilling and initial swab tests. A number of hydraulic fracs will be conducted over several intervals to determine well productivity from identified shallow Centenario sandstone reservoirs at around 800 meters subsurface. The Centenario was the primary objective of this well, labeled VM 2007. Should this well prove commercial, management anticipates early production with good follow-up potential.

Petrolifera also has another well, VM 2001, standing cased awaiting testing on the Vaca Mahuida block. The company has an effective 75 percent working interest in this project.The lone drilling rig under contract presently is drilling an exploratory well to evaluate a Centenario/Basement play on the Rinconada Norte block northeast of Puesto Morales. This is also a shallow test and the well is likely to be cased for further evaluation based on live oil shows while drilling.

The rig is scheduled to return to Puesto Morales to drill two low-risk infill wells within the Puesto Morales Field for additional near-term deliverability. These are the type of Argentinean programs and drilling Petrolifera anticipates pursuing during the next several months until further price increases or increased investment incentives emerge in that economy and more particularly until credit and capital markets stabilize or improve.Petrolifera is currently generating a healthy net operating income from its production base in Argentina. On a preliminary basis, before review by Petrolifera's auditors and the company's Audit Committee and Board of Directors, cash flow from operations before changes in working capital ("cash flow") has been exceeding monthly average cash flow reported for the second quarter of 2008. First half of 2008 cash flow and other financial results were previously reported to capital markets in August 2008.

The company is striving to reduce cash outlays to be more aligned with internally generated funds to maintain its excellent balance sheet and financial flexibility as it prepares for increased activity in Colombia and Peru.

As at August 31, 2008, Petrolifera only had $4 million of net debt, including other long term investments and assuming the asset backed commercial paper ("ABCP") resolution is completed shortly, the notes arising from the resolution are issued and the company is able to finalize a negotiated long-term credit facility, secured by the notes to be issued to replace ABCP owned by the company.

This was offered to Petrolifera by a Canadian chartered bank for approximately the equivalent of the carrying value of the ABCP on our balance sheet and would further enhance corporate liquidity. There can be no assurance that this proposed resolution and term credit facility will be finalized.In the meantime, at August 31, 2008 the company had approximately a $25 million surplus of available long-term reserve backed credit available to supplement its internally generated cash flow and with the ABCP resolution, would have access to another approximately $10 million which could become available on a long term basis, which would further improve reported working capital as all debt related to ABCP would be classified as long term. Working capital at August 31, 2008 was $11.8 million, including $16.6 million of cash and after provision for $16 million of short term borrowings which, as indicated above, would become long term debt under the ABCP resolution and finalization of the amended bank credit facility.COLOMBIAIn Colombia, Petrolifera has prepared the surface location and access road for the La Pinta well scheduled to commence drilling this year on the Sierra Nevada license in the Lower Magdalena Basin. A suitable helicopter transportable drilling rig was located in Ecuador and mobilized to Colombia where it is currently be being refurbished prior to its relocation to the La Pinta drill site.

This will occur as quickly as possible to meet the license's requirements. Thereafter a La Pinta follow-up well if warranted by success or drilling of the Brillante prospect on the same license is anticipated in 2009.A 120 square kilometer 3D seismic program on the Turpial license in the Middle Magdalena Basin is scheduled to commence shortly.PERUThe company continues to evaluate and interpret the results of its extensive 2D seismic program over Ucayali Block 107 in Peru.

We remain optimistic about the hydrocarbon potential of this block.The establishment of a seismic base camp and the line surveying program on Maranon Block 106 in northern Peru is underway following receipt of approval of the Environmental Impact Assessment conducted over the past year.Petrolifera's award of Block 133 offsetting Block 107 is awaiting Presidential decree later this year.GENERALWe remain mindful of the difficult credit and capital market conditions throughout the world, including in certain countries in South America. Over the near term, we intend to conduct a prudent program focusing on risk reduction to maintain financial strength and integrity.

This will be reflected in our proposed 2009 operating and financial plan and capital budget which will be tabled with our Board of Directors in mid-November 2008. We will endeavor in the appropriate circumstances to introduce joint venture partnerships to facilitate risk mitigation. We will also manage the timing of significant outlays while meeting obligations to ensure to the extent possible the significant participation by our shareholders in the upside potential of the oil and gas properties and assets we have secured over the past several years. We will also continue to examine new opportunities to expand and diversify the company's exposure in Latin America under the direction of our strengthened technical staff with an emphasis on lower risk opportunities which can be managed in conjunction with our risk averse approach.We are of the opinion that our shares are undervalued in relation to the net asset value of the company and that capital market forces, including the impact of the share price falling under marginable levels as set by banks and other lending institutions, have adversely and unduly influenced the price of our common shares in the stock market.

This share price deterioration has also occurred for most junior Canadian oil companies engaged in international activity, regardless of financial or operating results, apparently due to the desire of many investors to sell in a search for cash or immediate liquidity in a flight to perceived quality. We also understand concerns about the risk of declining commodity prices arising from the credit crisis and the potential impact on economic activity throughout the world has led to high levels of redemptions among mutual funds holding the shares of energy companies.

These forces have overridden fundamentals and adversely affected our share price as well.We would also remind investors and shareholders that as we do not presently receive world prices for our production in Argentina, due to that country's export tax policy, we are accordingly not exposed to declining oil prices impacting on our cash flow from operations until WTI reaches a level of approximately $61 per barrel.

Buy QEC In Time For Drilling October Results

QEC should hit a TARGET of $63.00/sh based on USA Shale Gas land valued at $35,000 per acre (Joseph Schachter) . (BNN-TV [ROB-TV) .

http://watch.bnn.ca/the-close/september-2008/the-close-september-12-2008/#clip92209

Share Capitalization
Issued & Outstanding:
Common Shares:
179,127,088 (as at May 14, 2008)
Stock Options:
16,769,170 (avg exercise price $0.61)
Insider Position:
17,126,231 (9.57%)

House 111 has accumulated huge in October

This Shows 1 Month Of Buy And Sells By Brokerages

Short selling ban expires...now what happens?

Investors will also be watching to see what kind of an effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling – an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 – did more harm than good at a time of historic market volatility.

Wall Street set for higher open TheStar.com - Business - Wall Street set for higher open
October 09, 2008
JOE BEL BRUNO
The Associated Press

NEW YORK–Wall Street appeared headed for a strong open Thursday after IBM Corp. reaffirmed its profit outlook and investors hoped that the panic selling that cascaded through global markets a day earlier was overdone.

Stock markets around the world moved mostly higher one day after the Federal Reserve and other leading central banks cut interest rates to help fight the credit crisis and stimulate the global economy.

Asian and European markets moved higher on Thursday, and the Dow Jones industrial average futures was up 136 points ahead of the opening bell in New York.

There was hope by investors that perhaps Wall Street is getting closer to finding a bottom after the worst five-day rout since 1987. On Wednesday, the Dow gave up 189 points to close at – and is now down about 35 per cent from its high of 14,164.53 reached exactly one year ago.

While rate cuts can take up to a year to work its way through the economy, there was some positive signs Thursday that corporate earnings might come in better than expected. IBM, a Dow component, posted third-quarter results that beat forecasts and reaffirmed its full-year earnings guidance.

There might also be a bit more hope in the market on a report that the Bush administration is mulling a plan to stabilize hobbled U.S. banks. The government is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.

That certainly could help motivate investors on Thursday, though early signs that the market will move higher has often been erased with trading extremely volatile during the past few weeks. Ahead of the bell, Dow futures rose 136, or 1.46 per cent, to 9,327. Standard & Poor's 500 composite futures added 17.70, or 1.80 percent, to 998.40, and Nasdaq-100 futures added 33.75, or 2.56 per cent, to 1,353.75.

Investors will also be watching to see what kind of an effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling – an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 – did more harm than good at a time of historic market volatility.

Ivanhoe signs new oil deal with Ecuador Capped at $37.00.barrel

Ivanhoe signs new oil deal with Ecuador

Wednesday, October 08, 2008
QUITO — — Ecuador on Wednesday signed a service deal with Canada's Ivanhoe Energy Inc. to exploit an oil field, marking a victory for the leftist government in its drive to boost control over the crucial sector.

Ivanhoe plans to invest up to $5-billion (U.S.) over 30 years to extract oil from the Pungarayacu field in Ecuador's Amazon jungle. Ecuadorean oil officials have said the company could produce up to 120,000 barrels a day within five years.

Payments to Ivanhoe: To recover its investments, costs and expenses, and to provide for a profit, Ivanhoe Energy Ecuador will receive from Petroproduccion a payment of US$37.00 per barrel of oil produced and delivered to Petroproduccion. The payment will be indexed (adjusted) quarterly for inflation, starting from the contract date, using the weighted average of a basket of three US Government-published producer price indices relating to steel products, refinery products and upstream oil and gas equipment. Type: The contract is a Specific Services Contract under which Ivanhoe Energy Ecuador will use its unique and patented HTL technology, as well as provide advanced oil-field technology, expertise and capital to develop, produce and upgrade heavy crude oil from Block 20, which contains the Pungarayacu field. In addition, Ivanhoe Energy Ecuador has the right to conduct exploration for light oil in the contract area and to use any light oil that it discovers to blend with the heavy oil for delivery to Petroproduccion.

Term: The 30-year term may be extended by mutual agreement for two additional five-year periods. The contract has three phases. The first two phases are for evaluation of the field's production capability and the crude-oil characteristics, as well as for the construction of the first HTL plant. The third phase is for full field development and will include drilling additional exploration and development wells. Additional HTL capacity will be added as necessary for expected production. HTL is a field-located upgrading process that converts heavy oil to a transportable, upgraded liquid product. The upgrading process generates by-products that can be used on site to create steam for injection into the reservoir, thereby improving recovery, or alternatively, to generate electricity. The processed oil can be transported by pipeline without the need to add diluent and the upgraded product has a significantly higher market value than raw heavy crude.

The HTL process can be used in technically and economically scalable plants - down to as low as 10,000-30,000 barrels per day - in modular form near producing wells. For the Pungarayacu oil field and the balance of Block 20, all of these advantages are expected to come into play.

HTL's environmental advantages ------------------------------
Numerous significant environmental benefits result from using the integrated HTL process for heavy-oil production, compared with the use of conventional production methods. These include a) minimizing surface disturbance by the relatively small scale of the HTL plants; and b) significantly reducing greenhouse gases, on a full life-cycle basis, through the generation of onsite energy from the by-products of HTL processing. : Italics Ours.

President Rafael Correa, a leftist former economy minister, has pushed foreign oil companies already producing to switch to new service deals that would allow the state to keep all the oil they extract in exchange for a fee.

"Today, we have signed a contract that marks the change of times in our country," said Mr. Correa after signing the deal and replacing the country's oil chief to speed up negotiations with other companies.

"We want private companies to have a fair return, but they also have to respect the winnings of the country."

The service deal with Ivanhoe is a win for Mr. Correa's drive to increase the OPEC nation's sway over the sector, but also highlights the U.S.-trained economist's willingness to continue working with foreign oil companies to boost production.

Mr. Correa has so far refrained from oil nationalizations, but threatened to expel foreign oil companies that fail to raise production levels. Most companies have halved investment since new contract negotiations started last year.

Mr. Correa's allies in Venezuela and Bolivia have nationalized key swaths of their economies including oil and gas.

Local oil experts have charged the new deal with Ivanhoe lacks transparency and questioned the company's capacity to meet production targets with experimental technology to upgrade the quality of heavy crude on site.

Ivanhoe has operations in Canada and China, and its working on a technological innovation that potentially makes developing heavy oil fields more economical for smaller producers.
© Copyright The Globe and Mail

Zinc And Base Metal Slump worst in 50 years: Lundin

Slump worst in 50 years: Lundin
ANDY HOFFMAN
Wednesday, October 08, 2008
As the scion of the Lundin family resources empire, Lukas Lundin has both prospered and suffered through plenty of commodity sector booms and busts. Yet in all his years as a mining executive and financier he has never seen anything like this.
"I'm very surprised. This is the worst correction we have had in the last 50 years," Mr. Lundin said in an interview this week.

Just two weeks ago, the chairman of Lundin Mining Corp. and the head of the Lundin Group of Companies, still believed that the commodities boom cycle was intact. Despite a looming recession in the United States he had faith in the theory of "de-coupling," believing that the U.S. was no longer the key to commodities demand and that Europe and Asia would be able to escape the downturn.

That has all changed now as the deepening global financial crisis has led to a savage selloff of mining stocks and nose-diving commodity prices. The S&P TSX Metals and Mining Index has lost a stunning 23 per cent of its value in a week and more than 38 per cent over the past month.
Mr. Lundin is suddenly among the legions of resource investors who have resigned themselves to the notion that America's toxic debt contagion will crimp global economic growth and cut demand for commodities.

"I thought there was a decoupling in the world between us and the U.S., but I think now we've all been dragged in to the same crap," he said.

Born in Sweden and now residing in Vancouver, Mr. Lundin grew up in the commodities business. His late father, Adolf Lundin, compiled a fortune by following his own personal motto, "No guts, no glory," and taking a chance on oil and mining concessions in troubled places such as Sudan, Iran and The Democratic Republic of Congo.

Lukas put his stamp on the family empire recently by pulling off a series of aggressive acquisitions during the height of the commodity boom. But now some of the mining assets that Lundin Mining acquired are proving less profitable than hoped because of operational troubles and falling metal prices.

Lundin Mining shares have lost nearly a third of their value in a week and almost 50 per cent in a month.

Meanwhile, the price of copper plunged as much as 7 per cent Wednesday on the London Metals Exchange, hitting a 20-month low of $5,227 (U.S.) a tonne, or about $2.37 a pound. The metal later recovered slightly to close at $5,240, down from $5,625 on Tuesday. As recently as July, copper was changing hands at an all-time high of more than $4 a pound.
The price of zinc, one of Lundin Mining's key production metals, has skidded to three-year lows of about 65 cents a pound and the company is now considering cutting production from high-cost operations such as its Galmoy mine in Ireland.

"We are okay at this price, but if they go much lower we are going to have to start doing some cuts," he said, adding that the company is reviewing costs at all of its mines.
"We're cutting costs and we are making sure that operations are at least cash flow positive. If not, we will shut them down," he said.

The company is also considering revamping its troubled Aljustrel zinc mine in Portugal as a copper-focused operation. A decision could come within two weeks.
As for the Lundin Group's stable of junior exploration firms, access to outside sources of capital has all but dried up. A Lundin family trust recently had to lend one of the companies, Africa Oil Corp., $6-million to help fund day to day operations.

"The smaller companies, they are finished right now," Mr. Lundin said, adding that "the exploration game is going to be the last one to come back. That's a very tough business."
Bay Street analysts have also begun slashing commodity price assumptions and stock price targets to reflect the mining sector's new reality.

On Monday, UBS Securities analysts Brian MacArthur and Onno Rutten cut 2009 metal price assumptions by an average of 30 per cent. The target price for Lundin's shares was reduced by 59 per cent to $3.50 (Canadian).

Scotia Capital followed suit Wednesday, sharply cutting 2009 metal price assumptions and stock targets.
The new forecasts "reflect our view that the global credit crisis is likely to result in a more severe cyclical downturn than we were already forecasting," analysts Lawrence Smith and Alex Terentiew said in a report.

Scotia cut 2009 copper price assumptions by 31 per cent to $2.25 (U.S.) a pound from $3.25.
The Lundin share target price was cut to $2.75 from $6 (Canadian), a reduction of 54 per cent.
When commodities do come back, they will "come back strong," Mr. Lundin said. But he was hard pressed to predict when the recovery will take hold.

"I don't know if it's six months, two years or 21/2 years, but we are definitely not out of the woods," he said.

© Copyright The Globe and Mail

Gold Is Gold And Going Higher

Debt unwinding propels gold higher

Wednesday, October 08, 2008
Here's Allan Robinson's At The Bell which you'll find in Thursday's newspaper:Deflation is in the air, yet gold rose yesterday to more than $900 (U.S.) an ounce.The S[amp]amp;P/TSX global gold index, which has been lagging bullion, soared 19 per cent yesterday to 267.35 points.Gold bullion, like the world's currencies and bond markets, is caught up in the massive unwinding of debt by speculative hedge funds, said Bill Belovay, a portfolio manager for BMO Precious Metals Fund, which has about $60-million (Canadian) under management.

“The gold price has risen due to the increase in the lease rates by the central banks,” said Mr. Belovay, who is both a geologist and a mineral economist.WHAT ARE LEASE RATES?Speculative hedge funds were borrowing gold at rates of interest below 1 per cent and the five-year average rate was 0.12 per cent, he said.

The funds would turn around and sell the gold and reinvest the proceeds in higher yielding securities such as European bonds. It was a part of what was known as the carry trade.However, the one-month gold lease rate has increased to 2.65 per cent as banks worry about the creditworthiness of the borrowers.

“Now comes the time that [the funds] have to repay the gold,” Mr. Belovay said. Gold is rising as funds have to buy the gold they need to return to the banks.Carry trades are no longer lucrative for hedge funds and the banks are clearly saying the gold lending window is closed. “It's a slow painful way of giving a message to the system.”But from the perspective of a long-term investing strategy, the changes under way are positive for bullion, Mr. Belovay said. The withdrawal of banks from the gold lending business to funds should result in less gold coming on the market, he said. “In looking further out, the credit crunch should eventually cause the gold price to rise because there is no capital available to start new mines, so the supply should diminish.

”The BMO Precious Metals Fund has good exposure to senior gold mining companies and potential merger and acquisition candidates sitting on gold deposits once the credit crunch eases, Mr. Belovay said. “But in the short term everything is high risk,” he said.

“The game is changing every hour, basically.”A PERFECT MARKETBut right now it looks like a perfect market for bullion. The fear over the financial crisis is enhancing it as a safe haven, the demand for gold coins by the general public is so strong it is outstripping the ability of various mints to produce them and there are even indications that central banks may be reconsidering their gold-selling strategies with an eye on increasing their exposure to gold, according to Dundee Wealth Management Inc.Strategists are also looking for the possible decoupling of gold from the U.S. dollar.

Traditionally, U.S.-dollar strength tends to correlate with weaker bullion prices.“Indeed, one day the gold market will be less slavishly tied to the dollar/euro rate, but I don't know when that day will come,” said Martin Murenbeeld, chief economist at Dundee Wealth.

“Both Europe and the U.S. are moving rapidly toward significant fiscal and monetary reflation, meaning gold should rise against both currencies, regardless of whether the dollar is up or down against the euro.”And there are signs that may be happening. “On Monday, the euro dropped against the dollar and gold rose $30 (U.S.),” he said. “We are starting to see some signs of the break. That is the key.”
© Copyright The Globe and Mail

'Armageddon' in the oil patch

'Armageddon' in the oil patch

NORVAL SCOTT
Wednesday, October 08, 2008
CALGARY — Jeffery Tonken has lost a fortune over the past six weeks.
“It's Armageddon out there,” Mr. Tonken, the chief executive officer of junior oil and gas company Birchcliff Energy Ltd., said Wednesday.
“I've lost millions. Everyone has.”

The value of Canada's energy companies has been devastated since oil plunged from record levels in the summer. Among the 58 companies in the S&P/TSX capped energy index, about $110-billion in market value has been wiped out in the past six weeks, calculations show.
Despite being one of the success stories of 2008 – Birchcliff has capitalized on the B.C. gas rush – the company's shares have plunged from almost $16 in July to just over $6 today.

Mr. Tonken is far from alone. While the price of oil has fallen from $147 (U.S.) a barrel in July to below $90, the value of Canada's energy firms has been hit disproportionately as hedge funds and other investors liquidate their positions in sectors in which they had bought heavily, such as energy.

“There's some chaos and panic selling, and people have lost sense of the fundamentals,” said Harvest Energy Trust CEO John Zahary.

Harvest's unit price has fallen from $26 in June to below $11, also a hit for Mr. Zahary, who said he owns about 100,000 units.

“Clearly I've participated in the downturn – there's a reduction in my net worth, and that of other employees and shareholders,” he said.

“It's a substantial sum of money that is no longer there,” Mr. Zahary said.
Given the financial climate, Harvest is now unlikely to proceed with a $2-billion project to expand its refinery in Newfoundland unless it finds a partner, because that would consume too much of the company's capital, he added.

Since Labour Day, the value of the S&P/TSX capped energy index has been cut almost in half, in comparison with the 25-per-cent loss made on the S&P/TSX composite index in the same period.

The precipitous drop isn't just affecting trusts and juniors; oil sands giant Suncor Inc., for example, has seen its market capitalization fall from just under $70-billion in May to just over $27-billion.

“Hedge funds are selling anything off their shelves that they can,” said Bill Andrew, CEO of Penn West Energy Trust. The valuation of the trust – one of Canada's largest – has been halved since June, and is now just over double its annual cash flow.

But fundamentally, and despite the panic, oil and gas prices are still strong enough for companies to make profits, Mr. Andrew said. “It changes nothing at our operations.”
One concern for investors – especially in the junior side – is that banks will reduce or even refuse to renew revolving lines of credit, stymieing the ability of companies to expand, Birchcliff's Mr. Tonken said.

While Birchcliff doesn't have any debt to pay back in the short term, the company, like other juniors, will likely just spend its cash flow or even less in 2009, he added. Juniors often spend up to five times their cash flow as they chase rapid growth.

Calgary's analysts, many of whom maintained that companies were comparatively undervalued when oil was at $140 a barrel, say there is little by rational explanation for the collapse, which means Canadian oil patch assets now appear to be hugely underpriced.
“Buy some ammunition, go to the hills and hide,” said William Lacey, an analyst at FirstEnergy Capital Corp.

“We've gone beyond doomsday scenarios. There's no logic any more and this is an outright capitulation. Investors are simply throwing up their hands and saying ‘I'm out,'” he said.
According to Mr. Lacey, the drop means that companies will be re-evaluating their future strategies, and will now increasingly buy back their own shares because “those are the cheapest barrels out there right now.”

Nexen Inc., which historically hasn't bought many of its own shares, has snapped up stock worth $300-million since the beginning of August.

Analysts are also watching plans by EnCana Corp., Canada's largest energy company, to split itself into two separate entities, one focused on gas, the other on oil sands.
Floating an oil company in the current climate means EnCana's oil sands assets, rated among the highest quality in Alberta, could be quickly poached by a larger oil company at a very low price, Mr. Lacey said.

EnCana spokesman Alan Boras said that while the company is watching the situation, it's still moving towards completing its split early next year.
© Copyright The Globe and Mail

Wednesday, October 8, 2008

Canada's benchmark index posted gains on Wednesday for the first time this month, ending a horrendous five-day losing streak

The close: Canada sails alone

RTGAMAre we close to the turn in the stock market that everyone has been waiting for? The fact that Canada's benchmark index posted gains on Wednesday for the first time this month, ending a horrendous five-day losing streak, is certainly encouraging.The gains were slight, especially compared to steep losses in previous sessions, but who's going to complain? Then again,

U.S. indexes slipped into the red near the end of the day, after being above water throughout most of the afternoon, suggesting that U.S. stocks are still groping for stability.The Dow Jones industrial average closed at 9258.1, down 189.01 points, or 2 per cent. The broader S&P 500 closed at 984.86, down 11.37 points, or 1.1 per cent.Both indexes were volatile throughout the day as investors weighed the probability that the co-ordinated interest rate cuts by six of the world's central banks would halt the economic slide. In the end, the market's collective answer appeared to be:

Probably not - despite an upbeat assessment from Treasury Secretary Henry Paulson.In a statement, Mr. Paulson said: "Today's announcement of a co-ordinated rate cut, including Europe, China and other large economies, is a welcome sign that central banks around the world are prepared to take the necessary steps to support the global economy during this difficult time."Alcoa Inc. fell 12 per cent, General Motors Corp. fell 9 per cent and Bank of America Corp. fell 7 per cent.

But there were some winners. General Electric Co. rose 1.7 per cent and Intel Corp. rose 1.4 per cent.In Canada, the S&P/TSX composite index closed at 10,055.39, up 225.84 points, or 2.3 per cent. Commodity producers were by far the biggest winners. Among gold miners, Goldcorp Inc. and Barrick Gold Corp. surged 20 per cent and 19 per cent, respectively, following the upward trajectory of gold to $906.50 (U.S.) an ounce. Potash Corp. of Saskatchewan Inc. rose 14 per cent.

Among energy stocks, Suncor Energy Inc. rose 1 per cent and Canadian Natural Resources Ltd. rose 3.1 per cent, taking a different path than crude oil. Oil slipped to $88.95 a barrel, down $1.11.Meanwhile, financials posted slim gains. Royal Bank of Canada rose 0.8 per cent and
Toronto-Dominion Bank rose 0.1 per cent.Copyright 2001 The Globe and Mail

Markets Turn Yet again- Look At QEC

Time cover a "buy" signal?

Wednesday, October 08, 2008

If you put faith in magazine covers as contrary indicators, you'll love the latest issue of Time magazine. (Hat tip: The Big Picture.) The headline? "The New Hard Times." The picture? A vintage shot of a lineup at a soup kitchen. Could the market bottom be close?

As indicators of important turns in the market, the[amp]nbsp;track record of magazine covers is impressive. BusinessWeek put “Death of Equities” on its cover in 1979, an excellent time to buy stocks, in turned out.

More recently, The Economist, plastered a barrel of oil on its May 29 issue, with the headline “Recoil.” Then, the price of crude oil was closing in on $130 (U.S.) a barrel but the bull market in energy was a mere six weeks away from its peak. In other words, this was ideal time to dump energy stocks.

The indicator even has academics weighing in. The New York Times ran a story in 2007 that discussed the research of Thomas Arnold, John Earl and David North, all finance professors at the University of Richmond. They asked, “Are cover stories effective contrarian indictors?” and concluded that, yes, they are.

“As one might expect, positive feature stories headlined on business magazine covers follow extremely positive company performance and negative headlines follow extremely negative performance. In both cases, however, the appearance on a cover of Business Week, Fortune, or Forbes tends to signal the end of the extreme performance,” the professors wrote.

Conversely, “if an investor is short the stock of a company that is the subject of a negative cover story, the publication of the story indicates it is time to cover the short position because the stock has hit bottom.”

[amp]nbsp;
© Copyright The Globe and Mail

So, where do they get the money?

HEATHER SCOFFIELD
Tuesday, October 07, 2008

OTTAWA — Central banks around the world have pumped hundreds of billions of dollars into gummed-up credit markets over the past two weeks. On Tuesday alone, the U.S. Federal Reserve Board said it would find the financing to actually buy up commercial paper, a move that could cost up to $1-trillion (U.S.) more.

What the central banks are doing is a modern version of the old-fashioned role of monetary authorities, one that dates back to the 18th century, says David Laidler, a retired economics professor at the University of Western Ontario who has advised the Bank of Canada. They're printing money.

“When the banking system gets nervous, they tend to hold their cash. The classic response of central banks is to provide more,” Mr. Laidler said in an interview from London, Ont. “Simply put, they print it.”

An extreme example is the famous image of Germans pushing around wheelbarrows full of banknotes in the 1920s, trying to deal with hyperinflation. That's not the case this time around, economists say.

This credit crunch, in fact, is mainly deflationary. When companies and households can't borrow as they wish, and spend accordingly, economic activity contracts and prices can fall. So the central banks' money machines are trying to counteract that deflationary force.
If the global economy were running smoothly, and money were easy to get, the liquidity operations of central banks would indeed be inflationary, economists say.
But now, the supply of readily available money is insufficient to meet demand. So central banks are not indulging in oversupplying markets with money. Rather, they're trying to increase the supply merely to a point where it can meet demand.

“Concern about inflation can be put aside for the moment,” said Edwin Truman, a senior fellow at the Peterson Institute for International Economics in Washington, and long-time senior Fed official for international affairs.

Plus, the central banks are not dishing money out for free. In most cases, they are lending the money out, and taking collateral in return. Their balance sheets are holding up.
“I think the central banks, as I understand it in general, are being reasonably careful,” said Mr. Truman. “The risk of a substantial loss at a central bank is minimal.”

When central banks issue extra cash for money markets, they keep their balance sheets in good shape by taking collateral from borrowers in return. The collateral is marked down by a prescribed “haircut” decided upon by the central bank.

The central bank does not normally just hang on to the collateral. It holds it for only a short time – long enough to help the markets fund their daily operations.

It is possible, but unlikely, that the central bank could actually lose money if the value of the collateral collapses while the central bank is holding it, Mr. Truman said.

Not everyone agrees. Some fear that the financial crisis is so out of control that the Fed and other central banks don't have a hope of counteracting it with their own funds alone.
“The Federal Reserve balance sheet is about $1.2-trillion,” David Shulman, senior economist at the UCLA Anderson Forecast, told the Washington Post this week. “But we have an $11-trillion mortgage market, a $5-trillion credit-default-swaps market. The central banks are nowhere near large enough to handle this problem right now.”

Concerns about fiscal health weigh heavily, as well.
It's hard to know how much of the $700-billion rescue plan passed last week by the U.S. Congress will have to be funded by U.S. taxpayers. But pressure is growing in the United States and in Europe for governments to pledge their own money to back up banks and their troubled customers.

On Tuesday, the International Monetary Fund urged governments to inject capital, buttress troubled assets, and use their funds to prevent a “fire sale” of problem banks and their holdings.
At their meeting last weekend in Paris, the leaders of France, Germany, Italy and Britain agreed that European rules limiting government deficits and state aid should be applied flexibly given the exceptional circumstances.

And in Canada, former tough talk about deficits from political leaders has softened in the past couple of days.

But most economists say that even if Ottawa needs to come to the economy's rescue just as its revenues are diminishing because of falling commodity prices, the country can afford to run a small deficit.

“There is ample room to run deficits … and Canada has lots of room for lender-of-last-resort liquidity operations,” Mr. Laidler said.

The U.S. fiscal situation is another question, however. Already carrying a large debt, more stimulus packages and bailouts will take a toll, he said.
“The U.S. is extraordinarily vulnerable.”

Retail Panics and Yell Sell Sell Sell!

Nervous investors bombard advisers

STEVE LADURANTAYE
Wednesday, October 08, 2008

Investment advisers are being bombarded with questions from panicked clients, as each passing day makes it more difficult for the average investor to understand what's happening to their money.

“You have all these retail investors who just want to get out of the market,” said Andrew Pyle, a Peterborough, Ont.-based wealth adviser for Scotia McLeod. “They look at what's happening, and they see bailouts that aren't working, nothing seems to help. They don't see evidence of recovery in the markets, and they are just literally asking to get out.”

The credit crisis, which had been simmering for more than a year but exploded in September with the U.S. government's takeover of mortgage lenders Freddie Mac and Fannie Mae, was initially perceived as a U.S story that wasn't likely to spread into the wider global economy.

But since then, the U.S. government was forced to rescue insurer American International Group for $85-billion (U.S.), Lehman Brothers Holding Inc. declared bankruptcy and national governments around the world are bailing out their banks.

Now, less than a week after the U.S. government passed a $700-billion bailout package for the country's ailing financial sector, central banks around the world cut interest rates in a co-ordinated effort intended to get banks lending to one another again.

Yet, the Dow Jones industrial average and S&P/TSX have fallen more than 20 per cent each since the beginning of September, despite the heavy government intervention. Canadian investors, rattled by the rapid decline of their key index, pulled a record $4.6-billion from mutual funds last month.

“You're seeing all of this volatility, and retail investors need to deal with that,” said Mr. Pyle. “And they don't want to deal with it. They're willing to sell, because they aren't worried about missing out on a big rally. They think that's a small price to pay for the sanity of sleeping well at night.”

David Baskin, president of Toronto-based Baskin Financial Services Inc., which manages client assets of about $400-million (Canadian), has heard a lot questions over the course of his career, but never had a client ask him whether markets could go to zero. That is, until last week.
“It's a pretty incredible indication of how negative the market psychology is,” he said. “We're heading to a recession. But a recession doesn't mean barefoot hobos hopping trains and selling apples in the street, it means slower growth.”

He said retail investors have largely gone on what he termed a “buyer's strike,” refusing to get involved in day-to-day trading until three or four days of solid gains on major markets. Before they are interested in putting up money, he said, they want to see large institutions step up and snap up big stakes in beleaguered companies.

“Nobody wants to take a chance on stock just to watch it erode out from under them,” he said. “I have a sense that might be starting to change a little bit, but I have no great evidence and may be whistling in the dark. But clearly, they want to see some buying action out of institutions before jumping back.”

More to come
© Copyright The Globe and Mail

QEC Depth And More

Rate cuts everywhere

Rate cuts everywhere!RTGAMGet a bunch of central bankers together to discuss a co-ordinated cut to their respective key interest rates and good things can happen.On Wednesday morning, the central banks of the United States, Europe,

Canada, the U.K., Switzerland and Sweden each slashed their rate by half of a percentage point. The Fed, which had been torn between a slowing economy and rising inflation, was unanimous in voting for the measure, issuing a statement saying that "incoming economic data suggest that the pace of economic activity has slowed markedly in recent months.

"The cuts take the U.S. key rate down to 1.5 per cent. In Canada, the key rate fell to 2.5 per cent.U.S. stock index futures, which had been down sharply, reversed course after the rate decision was announced, suggesting that stocks will rise at the start of trading. With about an hour before markets open, futures for the Dow Jones industrial average were up 42 points, to 9580. Futures for the broader S&P 500 were up 14 points, to 1019.

Things weren't quite a rosy overseas, though, despite some impressive rebounds. In Europe, the U.K.'s FTSE 100 was down 0.2 per cent and Germany's DAX index was down 1.4 per cent in afternoon trading.In Asia, Japan's Nikkei 225 plunged 9.4 per cent in overnight trading.

The Bank of Japan did not cut its key rate but said it supported the action of the other banks.Copyright 2001 The Globe and Mail

Tuesday, October 7, 2008

House 111 Absorbing All QEC Shares RBC is Selling

Fed to buy up commercial paper: Radical Plan

Fed to buy up commercial paper JEANNINE AVERSATuesday, October 07, 2008WASHINGTON — The Federal Reserve announced Tuesday a radical plan to buy massive amounts of short-term debt in a dramatic effort to break through a credit clog that is imperilling the economy.

The Federal Reserve, invoking Depression-era power under “unusual and exigent circumstances,” will buy “commercial paper,” a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls.

The $99.4-billion (U.S.) daily market for this crucial financing, which relies on investors rather than banks, has virtually dried up. Most investors have become too jittery to buy paper for longer than overnight or a couple days.

That has made it increasingly difficult and expensive for companies to raise money to fund their operations. Commercial paper is a way of borrowing money for short periods, typically ranging from overnight to less than a week.

The unstable situation has left many companies vulnerable.
The notion under the plan is for the government to provide a “backstop” that would give companies a new place to get cash, the Fed said. The action makes the Fed a source of credit for non-financial businesses, in addition to commercial banks and investment firms.

The Fed's action helped lift investors' spirits. The Dow Jones industrials rose 145 points in early trading, a day after a huge selloff put the Dow below 10,000 for the first time in four years.
The Fed said it is creating a new entity to buy three-month unsecured and asset-backed commercial paper directly from eligible companies.

“The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors” have become increasingly reluctant to buy commercial paper, especially longer-dated maturities. As the market for commercial paper shrank, the Fed said rates on the longer-term debt “increased significantly,” making it more expensive for companies to borrow.

The Treasury Department, which worked with the Fed on the program, said the action is “necessary to prevent substantial disruptions to the financial markets and the economy.”
The Treasury will provide money to the Federal Reserve Bank of New York to support the new program, the Fed said. It did not say how much.

If a company's commercial paper is not backed by assets or other forms of security acceptable to the Fed, the company could pay an upfront fee, the central bank said.
The Fed said it hoped its effort would jolt the commercial paper market back to life.
“This facility should encourage investors to once again engage in term lending in the commercial paper market,” the Fed said. That should eventually spur financial companies to lend to each other and to their customers, including consumers, the Fed said.

The Fed said it planned to stop buying commercial paper on April 30, 2009, unless the Federal Reserve board agrees to extend the program.

There was $1.61-trillion in outstanding commercial paper, seasonally adjusted, on the market as of last Wednesday, according to the most recent data from the Fed. That was down from $1.70-trillion in the previous week. Since the summer of 2007, the market has shrunk from more than $2.2-trillion.

Pressure also is growing on the Fed to reverse course and order a deep reduction in its key interest rate, now at 2 per cent. Such a move would be aimed at reviving the moribund economy by encouraging consumers and businesses to boost their spending. Many predict the Fed will act on or before its next meeting on Oct. 28-29. And, some believe it could be part of a broader co-ordinated move with central banks in other countries.

Fed Chairman Ben Bernanke may offer clues on the Fed's next move when he speaks Tuesday afternoon on the economic outlook and developments in financial markets.
President George W. Bush also was set to talk about the government's $700-billion bailout effort, which lets the government buy rotten mortgages and other bad debts from banks and other financial institutions. By getting these bad debts off bank's balance sheets, they might be in a better position to raise capital and more willing to lend to each other and to customers.
The Fed pledged Monday to take “additional measures as necessary” to battle the worst credit crisis in decades.

Treasury Secretary Henry Paulson has tapped a former Goldman Sachs executive to be director of the government's bailout program. Neel Kashkari, who has worked with Mr. Paulson at the department since July 2006, was chosen Monday as the interim head of the government's unprecedented effort to unclog the credit markets.

Mr. Kashkari, who was a vice president in Goldman's San Francisco office before joining the department, is one of four former executives from the firm now working feverishly to resolve the financial crisis.

The lending lockup is a key reason why the U.S. economy is faltering. Unable to borrow money freely or forced to pay a high cost to borrow, employers are cutting jobs and reducing capital investments.

© Copyright The Globe and Mail

QEC Fraser M. still buying Retail RBC still Selling

Credit crisis losses total $1.4-trillion -- IMF

Tuesday, October 07, 2008
WASHINGTON — The International Monetary Fund Tuesday increased its estimate of global losses from the financial meltdown to $1.4-trillion (U.S.) and warned that the world's economic downturn was deepening.

“Declared losses on U.S. loans and securitized assets are likely to increase further to about $1.4-trillion,” the IMF said, increasing the loss estimate from $945-billion in April and slightly up from $1.3-trillion it cited last month.

In its quarterly assessment of global capital markets, the IMF said global economic activity is slowing down as growth in advanced economies decelerates and emerging economies start to lose momentum.

“Despite better-than-expected performance early this year, rising financial turmoil has led to a downgrade in the IMF's baseline forecast for global economic growth in 2008-09,” it said.
The IMF called for a well co-ordinated response to restore confidence and to avert a more protracted economic slowdown, but warned that central banks would need to continue injecting cash to calm the unprecedented turmoil.

“The risk of a more severe adverse feedback loop between the financial system and the broader economy represents a critical threat,” the IMF said.

“The combination of mounting losses, falling asset prices, and a deepening economic downturn has caused serious doubts about the viability of a widening swath of the financial system,” it added.

Separately, a senior International Monetary Fund official said Tuesday that globally co-ordinated policy actions are needed to address the current financial crisis, but not all measures need to be exactly the same.

“Co-ordinated action can help alleviate what is now a difficult situation in financial markets,” Jaime Caruana, director of the IMF's monetary and capital markets department, told a news conference.

© Copyright The Globe and Mail

Questerre On Verge Of Testing Utica Commerciality: Dundee
Dow Jones Newswires

TORONTO (Dow Jones)--Questerre Energy Corp. (QEC.T) is on the verge of testing commerciality of the Utica shale play in the St. Lawrence Lowlands of Quebec, leading Dundee Securities to initiate coverage of the company at buy with a stock-price target of C$8.25.

Recent improvements in horizontal drilling and completion methods have opened up many tight reservoirs and shale plays that have previously been uneconomic, including those in the St. Lawrence Lowlands, Dundee analyst Victor Rodberg said.

He added that, based on his model of the well economics of the Utica shale combined with well test data to date, he believes Questerre has the makings of a commercial project. He noted several near-term catalysts for Questerre's share price, which is at C$2.84 in Toronto Friday, up nearly 22%.

The largest near-term catalyst by far, he said, is horizontal initial production rates from Forest in the deep Utica. Drilling is underway with Forest and Rodberg expects to hear news on initial production rates in October. Additionally, Talisman Energy Inc. (TLM) has recompleted a previous well with Questerre that provided an 18-day well test of the Utica but should also give us a future glimpse at the prospectivity of the Lorraine shale.

Questerre is also drilling a well with Gastem Inc. (GMR.V) to test the shallow acreage of the Utica shale. Dundee doesn't have an investment-banking relationship with Questerre, nor does Rodberg have a stake in the Calgary company. Company Web site: http://www.questerre.com -

Tara Zachariah, Dow Jones NewsWires;

Monday, October 6, 2008

TSx Dives 1000 Points + QEC Houses

QEC Agoracom Board Worth Looking At Click Here For QEC Info

Capitulation nation

Monday, October 06, 2008

As an investor, Bob Hoye is as sickened by Monday's stock market selloff as anyone. But as a professional market watcher who often delves into the historical nitty gritty, the editor and chief investment strategist at Institutional Advisors, can see an upside to the market plunge.

He noted that sharp downturns in the stock market can last 55 trading days, from start to finish.
The most recent leg of the downturn, for the Dow Jones industrial average and the S[amp]amp;P 500, began in late August. That[amp]nbsp;means that this one may near its conclusion toward the end of October.

History also suggests that if you suffer through a stock market disaster in the autumn, the volatility will usually conclude – again – before the end of the October.
Third, his firm has an in-house model, using six parameters, which gives them a signal of capitulation for the Dow and the S[amp]amp;P 500. If the model sends another downward signal this week, it will show a capitulation level seen only eight times since 1900.

“It looks like this week is going to be down,” said Mr. Hoye, a long-time bear. “When we conclude this signal, the rebound can be within a week or a maybe another week after that. But the rebound is inevitable.”

[amp]nbsp;
© Copyright The Globe and Mail

Stocks in freefall as financial crisis spreads

STEVE LADURANTAYE
Monday, October 06, 2008
Stocks in Toronto plunged Monday, joining a global selloff sparked by concerns about a $700-billion (U.S.) bailout package for the U.S. financial sector and the spreading bank crisis in Europe and Asia.

The S&P/TSX - down 11 per cent earlier in the session - lost 5.95 per cent, or 642.32 points, to 10,161.03 by 11:45 a.m. (ET). The index last closed below 10,000 July 4, 2005.
The Dow Jones industrial average traded 4.38 per cent lower, down 452 points to 9,873.38 – the first time it has traded below 10,000 since April 2005. The S&P 500 fell 4.70 per cent, or 51.68 points, to 1,047.55.

“Breaking below 10,000 is a psychologically significant thing for investors,” said Kenneth Norquay, a partner at CastleMoore Inc., a portfolio-management company in Oakville, Ont. “Those big round numbers – like $1,000 gold, 10,000 on the indexes – can become very important as benchmarks. Just how important, I guess we're about to find out.”
The energy sector – which is weighted second behind financials on the S&P/TSX, fell 9.5 per cent in morning trade as oil slipped below $90 a barrel for the first time since April. It touched $88.99 a barrel early in the session, but recouped some losses to trade at $90.82 – still a loss of $3.06.

“The Canadian market is going to keep getting lower because of the effect of commodities,” said Brandon Osten, president of Venator Capital Management Inc. in Toronto. “Get the hell out of commodities - it's not too late for you. Oil can go back to $65 a barrel. Any out there who thinks $90 oil is low by historical levels needs to take another look.”

No sector was untouched – utilities and health care were each off about 7 per cent, industrials fell 5.6 per cent and consumer staples 6.8 per cent. Technology was faring the best, down 1.12 per cent.

The American bailout plan was created to get banks lending to each other again, after the subprime-mortgage crisis wreaked havoc on American financial markets.
The U.S. government was forced to take over mortgage lenders Freddie Mac and Fannie Mae in September to protect $5-trillion in mortgages, and also rescued insurer AIG Corp. with an $85-billion investment.

Meanwhile, Lehman Brothers Holdings Inc. declared bankruptcy, Merrill Lynch & Co. Inc. was taken over, and Goldman Sachs and Morgan Stanley restructured into depository institutions.
The ripple effects extended deeper into Europe over the weekend, with Germany bailing out Hypo Real Estate AG, and France's BNP Paribas throwing a lifeline to financial group Fortis. The European Central Bank flooded markets with $50-billion Monday, while the Bank of England contributed another $10-billion.

Losses on major indexes around the world Monday included 4.5 per cent drops in China and Japan, a 5 per cent drop in London, and a 5.1 per cent drop in Germany. Norway's commodity-heavy index was off 9.95 per cent.

“There are worries rushing round the banking sector as markets try to account for the potential disparity that could be seen in savers' trust in deposit accounts and the knock on effect this will potentially have on the viability of institutions,” said London-based CMC Markets dealer Jimmy Yates. “All told it's not looking pretty and it does seem as if we may now have to resign ourselves to seeing further casualties along the way.”

Global markets shaken by new bank woes

TheStar.com - Business - Global markets shaken by new bank woes

KAI PFAFFENBACH/REUTERS
Share trader Dirk Mueller reacts as he stands in front of the German share prize index DAX board on the trading floor of the Frankfurt stock exchange, October 6, 2008.

WALL ST POISED TO DROP
U.S. stock index futures slid Monday as concerns about the widening fallout from the credit crisis fueled a global equities sell-off and bank rescues in Europe heightened fears about the stability of major financial institutions.

S&P 500 futures dropped 27.70 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slid 219 points and Nasdaq 100 futures shed 33.25 points.
Financial firms, oil, drag down global bourses

October 06, 2008 EMILY FLYNN VENCATAssociated Press

LONDON–Asian and European stock markets plunged Monday as government bank bailouts in the U.S. and Europe failed to alleviate fears that the global financial crisis would depress world economic growth.

Investors took scant comfort from Washington's passage of a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry on Friday because of the uncertainty still hanging over the details of the deal and the degree to which it will help.
Britain's benchmark stock index, the FTSE 100, lost 220.11 to 4,760.14 – a 4.42 per cent fall. The declines were led by the banking industry, with the mining and oil industries also suffering drops. HBOS PLC's share price dropped 15.7 per cent, while the Royal Bank of Scotland Group PLC fell 13.6 per cent.

Germany's DAX index fell 4.22 per cent to 5,552.27. France's CAC-40 index dropped 4.85 per cent to 3,882.81. In Russia, the RTS stock index tumbled more than 7 per cent in first 20 minutes of trading.

Over the weekend, many European governments moved to save troubled banks, and made more promises to protect depositors from the credit crisis.

Germany on Sunday agreed a $68 billion package to bail out Hypo Real Estate, the country's second-biggest commercial property lender, after a rescue plan by private lenders fell apart.
France's BNP Paribas SA committed to taking a 75 per cent stake in troubled European bank Fortis, and Sweden and Denmark followed Ireland and Britain in raising the amount of savers' deposits guaranteed by the government.

Britain's treasury chief Alistair Darling said he was "ready to do whatever it takes" to get the country through the credit crunch, and was looking at a "range of proposals."

But analysts said that, like the U.S. plan, the lack of detail in many of Europe's moves failed to restore investors' confidence, resulting in the stock market tumbles. "What the markets need are some more details about exactly when and how these plans are going to come in," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers, "And they need some proof that some of these measures are taking hold."

Across Asia, all markets were also in the red. Tokyo's Nikkei 225 index fell to its lowest level in 4.5 years, sinking 4.25 per cent to 10,473.09.

Hong Kong's Hang Seng index slid 5 per cent to 16,803.76. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plummeted 10 per cent, it's biggest one-day drop ever.

"Everyone is losing confidence," said Mark Tan, who helps manage about $20 billion of equities and bonds at UOB Asset Management in Singapore. "The problem now is that the lack of foreign confidence could affect the Asian consumer, which would lead to a bigger slowdown in Asia than expected."

"This credit crunch looks like it's not going away any time soon," said Alex Tang, head of research at brokerage Core Pacific-Yamaichi in Hong Kong. "Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy."
Investors appeared spooked by a series of developments out of Europe over the weekend.
Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75 per cent stake in troubled European bank Fortis NV. British treasury chief Alistair Darling also said he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.

The outlook for the U.S. economy darkened after figures released Friday showed that 159,000 jobs in the U.S. were lost last month, the fastest pace in more than five years.

Such concerns overshadowed any investor optimism over the U.S. House of Representatives' approval Friday of a massive bailout plan that will allow the U.S. government to buy distressed mortgages and securities backed by mortgages from banks and other financial institutions.
Investors questioned how long it would take for the package to unfreeze credit markets, restore bank lending and generally shore up the U.S. economy.

"The market had already figured in the package's passage," said Yukio Takahashi at Shinko Securities Co. in Tokyo. "There are strong doubts about its implementation."
Japanese financial companies and industries dependent on exports, such as steel, were especially hard hit Monday. Nippon Steel Corp. stock tumbled 9.8 per cent, while Mizuho Financial Group was down 8.3 per cent in morning trading.

Trading in mainland China resumed after a weeklong holiday break with the benchmark Shanghai Composite Index sinking 5.2 per cent to 2,173.
Banks and other financial shares saw heavy declines. Shanghai Pudong Development Bank fell 7 per ent and Bank of China slipped 3.6.

Shares of Ping An Insurance Co. rose even after it said Monday it will record a $2.3 billion loss on its stake in European bank Fortis in the biggest blow yet to a Chinese institution from the global credit crisis. Ping An's shares were up 1.6 per cent.

U.S. stock index futures were nearly 2 per cent lower, suggesting Wall Street would open lower Monday. The Dow Jones industrial average fell 157.47, or 1.5 per cent, to 10,325.38 on Friday.
In currencies, the euro slid to $1.3570 from $1.3774 late Friday. But the U.S. dollar was weaker against the yen, falling to 103.66 from 105.30 yen late Friday.

Oil prices tumbled on speculation that slower global growth will cut crude demand. Light, sweet crude for November delivery was down $3.23 to $90.65 a barrel in Asian electronic trading on the New York Mercantile Exchange.

Sunday, October 5, 2008

Bank heist accused is investment firm VP

GTA - Bank heist accused is investment firm VP

PHOTO SUPPLIED
Wanted man is believed 28 to 35 years old, solidly built and wears prescription glasses.
'Shocked' company launches probe of client accounts October 05, 2008 Nick AvelingStaff Reporter

A man who policed the day-to-day operations of a financial institution has been accused of being one of the country's most prolific bank robbers, known as the Exchange Bandit.

Kevin John Pinto, the 37-year-old vice-president of compliance at a Toronto investment firm, turned himself in Friday after the Canadian Bankers Association posted a $10,000 reward for his capture. He has been charged with 10 counts of robbery.

Pinto was one of two compliance staff at Paradigm Capital, an investment firm with offices in Toronto and Calgary. He was responsible for providing oversight and ensuring the firm's trading activities complied with regulatory requirements. Although compliance officers sometimes have legal backgrounds, Pinto does not, said company CEO David Roland.

Pinto had previously worked for National Bank.
"We're obviously extremely shocked," said Roland. "This is just an extremely unfortunate thing."

Paradigm Capital released a statement on its website Friday afternoon announcing that Pinto had been suspended and his case had been passed on to "relevant regulatory authorities."

Roland said Paradigm has also launched its own investigation. "We have no reason whatsoever to believe that any of our records, securities or client funds have in any way been compromised," said Roland. "We'll focus the investigation to make sure there's absolutely no chance that has happened."

A suspect had been wanted for at least 21 robberies – in Toronto, Peel, Kitchener, St. Catharines and Niagara Falls – dating to 2003.

The "Exchange Bandit's" most recent heist took place Sept. 12 at a Scotiabank on King St. W., just minutes from Paradigm's offices.

The suspect was given the nickname for his habit of exchanging words with a teller before producing a holdup note and warning that he was armed.

Pinto appeared briefly in court at Old City Hall yesterday morning. His bail hearing was moved to tomorrow. Police expect more charges from other regions.

Saturday, October 4, 2008

Qec- 1st Target 8.25 the future Try $40,$50 or$60.00

QEC should hit a TARGET of $63.00/sh based on USA Shale Gas land valued at $35,000 per acre (Joseph Schachter) . (BNN-TV [ROB-TV) .

http://watch.bnn.ca/the-close/september-2008/the-close-september-12-2008/#clip92209

Share Capitalization

Issued & Outstanding:

Common Shares:
179,127,088 (as at May 14, 2008)
Stock Options:
16,769,170 (avg exercise price $0.61)
Insider Position:
17,126,231 (9.57%)

House 111 Is Accumulating Huge Over The Last 2 Days

This is Today

This Shows 1 Month Of Buy And Sells By Brokerages

Markets Drop In Spite Of Bail-out

Friday, October 3, 2008

Bailout bill passes Senate and Congress

Bailout bill passes

JULIE HIRSCHFELD DAVIS and DAVID ESPO
Friday, October 03, 2008

WASHINGTON — With the U.S. economy on the brink and elections looming, Congress approved an unprecedented $700-billion (U.S.) government bailout of the battered financial industry on Friday and sent it to President George W. Bush for his certain signature.

The final vote was 263-171 in the House of Representatives, a comfortable margin that was 58 more votes than the measure garnered in Monday's stunning defeat.

The vote capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act.

At the White House, Mr. Bush declared, “We have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country.”

Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.
“We all know that we are in the midst of a financial crisis,” House Republican Leader John Boehner of Ohio, said shortly before casting his vote for government intervention in private capital markets that was unthinkable only a month ago.

“And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen.”

Speaker Nancy Pelosi, D-Calif., said the bill was needed to “Begin to shape the financial stability of our country and the economic security of our people.”

Stocks were up Friday on Wall Street, where there was a lot of anticipation of the vote but where investors also were buffeted by a bad report on the job market. The Labour Department said employers slashed 159,000 jobs in September, the largest cut in five years and further evidence of a sinking economy.

Federal Reserve Chairman Ben Bernanke, who had joined the administration in urging quick action, said, “The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses.” He said the Fed would work closely with the Treasury Department to put the bill's provisions into effect.
Even before the measure cleared Congress, the White House sought to dampen optimism of its immediate impact on the economy. “This legislation is to fix a problem in our financial markets,” said spokesman Tony Fratto. “It's not sold as giving a boost to the economy, but rather preventing a crisis in our economy... If it works as we hope it will, credit will be able to begin flowing again.”
The House vote marked a sharp change from Monday, when an earlier measure was sent down to defeat, largely at the hands of angry conservative Republicans.
Senate leaders quickly took custody of the measure, adding on $110-billion in tax and spending provisions designed to attract additional support, then grafting on legislation mandating broader mental health coverage in the insurance industry. The revised measure won Senate approval Wednesday night, 74-25, setting up a furious round of lobbying in the House as the administration, congressional leaders, the major party presidential candidates and outside groups joined forces behind the measure.
It worked — augmented by a sudden switch in public opinion that occurred after the U.S. stock market took its largest-ever one-day dive on Monday.
“No matter what we do or what we pass, there are still tough times out there. People are mad — I'm mad,” said Republican Rep. J. Gresham Barrett of South Carolina, who opposed the measure the first time it came to a vote. Now, he said, “We have to act. We have to act now.”
Rep. John Lewis, D-Ga., another convert, said, “I have decided that the cost of doing nothing is greater than the cost of doing something.”
Critics were unrelenting.
“How can we have capitalism on the way up and socialism on the way down,” said Rep. Jeb Hensarling of Texas, a leader among conservative Republicans who oppose the central thrust of the legislation — an unprecedented federal intervention into the private capital markets.
It was little more than two weeks ago that Mr. Paulson and Mr. Bernanke concluded that the economy was in such danger that a massive government intervention in the private markets was essential.
The core of the plan remains little changed from its inception — the Treasury Department would have $700-billion at its disposal to purchase bad mortgage-related securities that are weighing down the balance sheets of institutions that hold them. The flow of credit has slowed, in some cases drying up, threatening the ability of businesses to conduct routine operations or expand.
At the same time, lawmakers have dramatically changed the measure, insisting on greater congressional supervision over the money, taking measures to protect taxpayers, and insisting on steps to crack down on so-called golden parachutes that go to corporate executives whose companies fail.
Earlier in the week, the legislation was altered to expand the federal insurance program for individual bank deposits, and the Securities and Exchange Commission took steps to ease the impact of the questionable mortgage-backed securities on financial institutions.
In the moments before the vote, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, pledged “serious surgery” next year to address the underlying causes of the crisis.
If anything, the economic news added to the sense of urgency.
The Labour Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. The news of the payroll cuts came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 per cent.
Typifying arguments the problem no longer is just a Wall Street issue but also one for Main Street, lawmakers from California and Florida said their state governments were beginning to experience trouble borrowing funds for their own operations.
Ms. Pelosi said, “We must win it for Mr. and Mrs. Jones on Main Street.”
One month before election day, the drama unfolded in an intensely political atmosphere.
Democratic presidential candidate Barack Obama, a supporter of the bill, made calls to members of the Congressional Black Caucus, who publicly credited him with changing their minds.
Rep. Elijah Cummings and Donna Edwards, both Maryland Democrats, were among them. They said Mr. Obama had pledged if he wins the White House that he would help homeowners facing foreclosure on their mortgages. He also pledged to support changes in the bankruptcy law to make it less burdensome on consumers.
“It's not too often you get the future president telling you that his priority matches your priority,” said Mr. Cummings.
Mr. Obama's rival, Sen. John McCain, who announced a brief suspension in his campaign more than a week ago to try and help solve the financial crisis, made calls to Republicans.
Republican Rep. Sue Myrick of North Carolina, who switched her vote to favour the measure, looked ahead to the election and said, “I may lose this race over this vote, but that's okay with me. This is the right vote for the country.”
The vote on Monday staggered the congressional leadership and contributed to the largest one-day stock market point drop in U.S. history, 778 points as measured by the Dow Jones industrial average.
Across the Capitol, Senate leaders reacted quickly, deciding to sweeten the bill with a series of popular tax breaks as well as spending on rural schools and disaster aid. They also grafted on a bill to expand mental health coverage under private insurance plans.
At the same time, the change in federal deposit insurance and the action by the SEC on an obscure accounting rule helped produce a steady trickle of converts.
© Copyright The Globe and Mail

Bank of Canada pumps billions into system

Bank of Canada pumps billions into system

HEATHER SCOFFIELD
Friday, October 03, 2008

OTTAWA — The Bank of Canada is substantially bulking up its liquidity injections, increasing their frequency and making it easier for financial institutions to partake - measures that aim to manage near-frozen conditions in money markets.

The central bank said it is increasing its plans to inject extra cash into term lending markets from $8-billion, announced recently, to $20-billion.
The extra securities will be made available more frequently, on a weekly basis, until at least the end of the year, the bank said in a statement on its website. Plus, the bank will announce well in advance the minimum amounts that will be made available.

“In light of persistent pressures in these markets, the Bank announces additional steps to provide term liquidity,” the bank explained.
The Bank of Canada also added an additional $830-million to the overnight money market Friday morning.

The central bank also said it is expanding its list of eligible collateral, again. “In recognition of market conditions,” it will now take bank-sponsored asset backed commercial paper, in addition to other securities recently added to its list of acceptable collateral, the bank said.
“The Bank will continue to provide term liquidity as long as conditions in financial markets warrant,” the statement concluded.

The announcement marked a dramatic escalation of the central bank's liquidity measures, with the Bank of Canada moving in tandem with central banks around the world to bolster money markets that have become paralyzed by fear.

The Canadian central bank has not been as active as others in the overnight money market, with intervention only needed sporadically -- albeit it intervened both Thursday with $610-million and Friday with $830-million so far.

But the “term” money market - involving one-month and three-month securities, among others - has required more and more support in Canada.

Already on Monday of this week, the central bank doubled its 28-day injection from $2-billion to $4-billion, pushing its total extraordinary measures to $10-billion from $8-billion.
Now, the bank's amounts have soared across the curve, in the hopes of bringing down spreads and diminishing risk aversion.

Money markets around the world were at a standstill on Friday, with banks refusing to lend to each other as they kept on an eye on the U.S. House of Representatives to see if it would pass the $700-billion (U.S.) bailout bill.

So-called “term” funding of one month and beyond remains mostly expensive and scarce because banks prefer to hoard cash to bolster battered balance sheets than lend to counterparties they fear may be in severe financial distress.

Canada has been no exception, with spreads rising substantially over the past few days, and signs that investors and financial institutions would prefer to hold government-backed treasuries over everything else. The spread between Canadian interbank lending rates and government-backed securities is now above 100 basis points, up from a normal range of 10.
Some analysts had hoped that money market spreads would relax somewhat after Sept. 30, since that's quarter end for many financial institutions and typically a time of high demand for short-term securities. But the end of the month has come and gone, and spreads are still breaking through record highs.

The passing of the U.S. financial rescue plan could come later on Friday and would help shore up confidence across financial markets. But many measures of deteriorating credit conditions, such as interbank premia over expected policy rates and swaps spreads, remained at extreme levels.
“Lower (interbank term) rates would be helpful overall for the economy, and it's disappointing that central banks can't engineer lower rates,” Ciaran O'Hagan, senior strategist at Societe Generale in Paris told Reuters.

“There's a big focus on spreads, but that's not as relevant for the economy as the level of rates. The more serious thing is the rationing of credit ... especially to the non-financial sector,” he said.
Massive central bank cash injections have helped keep trading going on an overnight basis since confidence collapsed with the demise of Lehman Brothers and subsequent rescue of several European banks.

The Bank of Japan injected $7.6 billion in an over-the-weekend operation on Friday to provide funds to foreign banks struggling to secure cash from Japanese lenders.
Australia's central bank added $1.2 billion in repurchase agreements, way above an estimated daily need of $1.195 billion.
The Bank of England auctioned $10-billion overnight money and $30-billion of one-week cash, while the European Central Bank auctioned $50-billion of three-day funds and threw open the doors for thousands of banks to access its so-called 'fine-tuning' operations for overnight auctions.
The ECB left its benchmark interest rate on hold at 4.25 per cent Thursday but highlighted the risk to the European economy from the credit crunch, suggesting the first euro zone rate cut in five years was on the cards.
Financial markets now expect a rate cut at the ECB's next meeting and a further two cuts to 3.50 per cent by February.
In the United States, there was no relief for the commercial paper market. Outstanding paper slumped by $94.9-billion to $1.607-trillion, Federal Reserve data showed, bringing the cumulative shrinkage to $208-billion in the past three weeks.
Fed data also showed banks borrowed a record $367.8-billion from the central bank in the latest week.
© Copyright The Globe and Mail

Investing myths laid bare by this bear market

Investing myths laid bare by this bear market
TheStar.com - Business -

Foremost is belief that balance sheets reflect true value of assets

October 03, 2008 Bill CarriganSpecial to the Star

The 2007-08 bear market in global stock markets has exposed several investing myths. Let's start with the idea that corporate balance sheets are a fair reflection of the value of a company's assets and liabilities.

Balance-sheet myth

Last Monday's panic liquidation began with shares of Wachovia Corp. plunging to penny-stock status in reaction to the massive devaluation of Washington Mutual's loans.

The problem was WaMu's numbers were much lower than those at which Wachovia was valuing its own portfolio.

Citigroup quickly agreed to buy Wachovia's banking operations for $2.1 billion (U.S.) in a deal arranged by federal regulators.

Mad Money's host Jim Cramer was enraged, claiming Citigroup bought Wachovia "for a pittance."

It was only two weeks ago that Wachovia chief executive Bob Steel told CNBC's Mad Money viewers that out of $500 billion in loans on the bank's books, only $10 billion were bad.
Cramer did not call Steel a liar, but rather believes that Steel believed what he said. Cramer was mad at himself for letting his viewers down. He trusted Steel, who has been known as a solid financier for 25 years, and he urged viewers to do the same.

Cramer went on to say Wachovia's financials "just didn't reflect reality," and "the SEC and multiple bank examiners all signed off on Wachovia's books. Even Steel, a former number two at Treasury, couldn't see how bad his own balance sheet was.

"He just didn't know what was there."

Cramer would end up the session by adding the CEO to the Mad Money Wall of Shame.
The demise of Wall St. shows that balance sheets could not be trusted because large amounts of their assets were based on murky financial engineering.

Complex financial derivatives such as credit-default swaps and collateralized debt obligations were not valued properly because they were not subject to the same visibility as publicly traded securities.

Commodity myth
Remember all that talk about the commodity supercycle and how China's growth would keep commodities prices in the stratosphere forever? Doesn't seem to be working out that way.

The investors who bought into the long-term commodity story have over the past several weeks learned a brutal lesson. Commodities are cyclical. They don't pay dividends and they are not growth companies.

Prices gyrate as leveraged hedge funds push prices every which way with billions of dollars of hot money stampeding in and out of the latest hot commodity.

Global diversification myth

We also learned that global diversification in recent years has been little help to investors. There was a time when markets around the world went in different directions, while economies in different countries did their own thing. But for years now it's been a global economy and markets increasingly move up and down in unison. When it comes to the world bourses, it is monkey see, monkey do.

What you do get by investing abroad, however, is foreign-currency exposure, and that does add diversification.

Currency hedging myth
While investing abroad adds currency diversification, in recent years many investors have curiously moved to hedge out that exposure. The recent weakening of the Canadian dollar has illustrated that currency hedging is an expensive scam. If foreign currency exposure gives you some diversification, why then would you hedge the advantage away? For example, the currency-hedged iShares CDN S&P 500 Index Fund (XSP) is down about 21 per cent year-to-date. An unhedged version would be down about 15 per cent in terms of Canadian dollars. Investment industry pushes helped make hedging popular two years ago.

If you have the time, one strategy that you can employ in sloppy markets is to engage in stock picking. During these volatile markets, the price behaviour of a stock will tell you much more than the current fundamentals because the price leads the fundamentals by weeks and months.
For example, collapsing markets create an opportunity to study the price behaviour of stocks in your portfolio and of the stocks you are thinking of acquiring.

The strategy here is to seek out stocks that performed better or worse than the broader stock indices during a period of fear and panic. That is very bullish

I ran a stock filter and uncovered 48 issuers that displayed the same bullish price action subsequent to the Monday massacre. The selections are relatively liquid and stocks trading under $2.25 (Canadian) were rejected from the scan.

You can view these names on my blog at www.gettingtechnical.com.

Bill Carrigan is an independent stock-market analyst.

Thursday, October 2, 2008

Markets Trashed But Cash Bought The Bottom

QEC Stochastics

QEC Is A Stock You Should Own At These Prices

http://watch.bnn.ca/the-close/september-2008/the-close-september-12-2008/#clip92209

Share Capitalization

Issued & Outstanding:

Common Shares:
179,127,088 (as at May 14, 2008)
Stock Options:
16,769,170 (avg exercise price $0.61)
Insider Position:
17,126,231 (9.57%)

House 111 Is Accumulating Huge Over The Last 2 Days

This is Today

This Shows 1 Month Of Buy And Sells By Brokerages

Wednesday, October 1, 2008

September, 2008: 30 days that rocked the world

September, 2008: 30 days that rocked the world

DAVID PARKINSON
Tuesday, September 30, 2008
Perhaps one day, they'll print it on T-shirts: I Went Through the September Wringer of 2008.
With a dizzying, dismal September finally behind the world's financial markets, investors are left surveying the carnage of the most volatile month for stocks in a generation. After a history-making month of failing banks, rescue plans and dashed hopes, investors find themselves looking at a Canadian market worth almost 15 per cent less than it was a month ago – and facing some difficult questions about what comes next.

Veteran market watchers note the markets have seen deeper turmoil over shorter time spans – most recently, the selloffs of October, 1987, and August, 1998, both of which saw 20-per-cent-plus declines.

But what is more worrisome this time is the underlying economic and credit landscape, which offers little support for stocks.

Unlike the plunges that were triggered by financial market woes but came in times of a generally solid underlying economy, this selloff has come amid a severe credit crunch and a global economy lurching toward recession.

“This is a more complicated situation. It has a lot more layerings,” said UBS Securities Canada chief economist George Vasic, a market veteran of nearly three decades.
Even after rebounding more than 450 points Tuesday, the S&P/TSX composite index finished the month down 14.7 per cent – its fourth-worst month since 1980, and its worst September since 1931. The month featured wild mood swings in which one-third of the trading sessions (seven of 21) featured moves of more than 3 per cent.

The end of September also caps a dismal quarter of credit woes and sinking commodity prices that fuelled a 19-per-cent slide in the S&P/TSX composite, its worst quarter in a decade. The index is down 22 per cent from its peak in June.

The month wasn't much kinder to U.S. markets. The S&P 500 fell 9.2 per cent, its third-worst September, and eighth-worst month, since 1950.

Sharp downward corrections in stock markets aren't as rare as many investors imagine. In the past decade alone, the Canadian market has had eight months with losses of more than 7 per cent.

“These things happen more often than people remember,” Mr. Vasic said. “The pain of the past doesn't sting quite as much right now, because you eventually recovered from that pain, but at this moment you're not sure if or when you're going to recover from the current situation.”

And, indeed, stocks have historically rebounded smartly from violent short-term slides. Merrill Lynch analyst Mary Ann Bartels noted that in six of the eight occasions the S&P 500 suffered losses equal to or greater than Monday's 9-per-cent plunge, stocks bounced back the next day and were still above those selloff lows a month later.

But with the global economy still slowing, complicated by the confusion surrounding credit and financial sector woes, this pullback may not follow the typical model.

“Even allowing for the U.S. recession, we do have the fact that U.S. consumers do need to de-lever themselves. So, that would appear to cement the prospects for a weak recovery,” Mr. Vasic said.
And the credit-fuelled turmoil in the global financial sector “is a feature that really hasn't been there in any of the postwar recessions,” he said.

Academics said Tuesday that although we're still in early days, September's events and their accompanying market turmoil could one day make up key chapters in economic and financial text books. The transformation in some of the world's biggest and most powerful financial institutions, government and central bank manoeuvrings and the gut-wrenching reconstruction of the world's credit system could provide valuable lessons for the global economy and financial system.

“This is not the end game, but it's the beginning of the end,” said economist Mahmoud El-Gamal of Rice University. “How the end game plays out really depends on whether there is an international level of co-operation on reconfiguring the international financial system, as well as specific sectors including the investment banks and the hedge funds.

“We don't really know how it's going to go.”
© Copyright The Globe and Mail

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