November 14, 2012 Newsletter

Dear Friends,

Tangents:

Britain’s media are in a meltdown and its government is gaffe-prone, so Oxford Dictionaries has chosen an apt Word of the Year: “omnishambles.” Oxford University Press on Tuesday crowned the word – defined as “a situation that has been comprehensively mismanaged, characterized by a string of blunders and miscalculations” – its top term of 2012. Each year Oxford University Press tracks how the English language is  changing and chooses a word that best reflects the mood of the year. The publisher typically chooses separate British and American winners. This year’s American champion is “gif,” short for graphics interchange format, a common format for images on the Internet.                                                                    -CSM, 11/14/12

On this day in 1972, the Dow Jones Industrial Average closed above 1,000 for the first time ever. It finished that day at 1,003.16. -Steven Russolillo, WSJ, 11/14/12

And also on this day in…

1666 – First blood transfusion.

1792 – Capt George Vancouver is 1st Englishman to enter SF Bay.

1832 – 1st streetcar (horse-drawn) (John Mason) debuts in NYC; fare 12 cents rode on 4th Avenue between Prince and 14th Sts.

1833 – Charles Darwin departs by horse to Montevideo.

1834 – William Thomson enters Glasgow University at 10 yrs 4 months.

1840 – Claude Monet was born.

1851 – “Moby Dick,” by Herman Melville, published.

1948 – Prince Charles, Prince of Wales, was born.

photos of the day

November 14, 2012

A total solar eclipse observed in Green Island, Queensland state, Australia. Starting just after dawn, the eclipse cast its 150-kilometer (95-mile) shadow in Australia’s Northern Territory, crossed the northeast tip of the country and was swooping east across the South Pacific, where no islands are in its direct path.

AP

A four-day old newborn silverback gorilla holds to his mother gorilla in the Ramat Gan safari, near Tel Aviv, Israel.

Ariel Schalit/AP

Market Closes for November 14th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 14 (Bloomberg) — Canadian stocks slid, erasing the 2012 gain for the Standard & Poor’s/TSX Composite Index, after an Israeli air strike killed a Hamas leader and concern grew about the so-called U.S. fiscal cliff.

Iamgold Corp. plunged 19 percent, its biggest loss ever, after lowering its 2013 output forecast. Barrick Gold Corp., the world’s largest producer of the metal, retreated 3.8 percent and Goldcorp Inc. slipped 3.8 percent. Bombardier Inc. fell 3.3 percent as the company’s credit rating was cut by S&P, which cited lower-than-expected cash generation this year.

The S&P/TSX fell 204.87 points, or 1.7 percent, to 11,929.79 in Toronto, the biggest decline since June 21. The benchmark Canadian equity gauge is down 0.2 percent in 2012, closing at a loss for the first time since September.

“The fiscal cliff is getting closer to reality; there has to be some signal of a getting together of minds and we’re not seeing that,” said Ian Nakamoto, director of research with MacDougall MacDougall and MacTier Inc. in Toronto. His firm manages about $4 billion. “The bombing in the Middle East is very bad because the last thing the economy needs now is higher oil prices. It’s already relatively weak and we can’t afford a spike in any raw material.”

The United States, Canada’s largest trading partner, faces $607 billion in automatic tax increases and spending cuts beginning in 2013 that will likely send the world’s largest economy into a recession unless policy makers on Capitol Hill come to a compromise before year-end.

Israeli jets struck the Gaza Strip today, killing Ahmed al- Jabari, leader of Hamas’s military wing, as the army pledged the use of ground troops if required to end attacks on its citizens.

Crude for December delivery rose 1.1 percent to settle at $86.32 a barrel in New York on concerns unrest in the Middle East will intensify and disrupt supplies.

While Canadian stocks generally move higher with rising commodity prices, “if there’s enough fear people will sell,” Nakamoto said.

Raw materials companies contributed the most to losses in the S&P/TSX as nine of 10 industries retreated. Trading volume was 27 percent higher than the 30-day average.

“Iamgold is also dragging down quite a few gold companies,” said John Tsagarelis, managing director and fund manager with Manulife Asset Management, which oversees about $218 billion from Toronto. “Gold prices have not appreciated that much this year, but costs continue to go up.”

Iamgold plunged 19 percent to C$11.98, the most since it began trading in 1996, after the gold producer reported adjusted earnings of 16 cents a share, short of analysts’ average estimate for 24 cents.

Production will be lower than expected next year because of “poor” performance at the Sadiola mine in Mali, which Iamgold owns with AngloGold Ashanti Ltd., and a slower ramp-up in production at the company’s Westwood project in Quebec, which is expected to begin output in the first quarter, Iamgold said.

The company was downgraded to sell from buy by Pawel Rajszel, an analyst with Veritas Investment Research, and to neutral from outperform by Tony Lesiak of Macquarie Research.

Barrick fell 3.8 percent to C$33.99 and Goldcorp slipped 3.8 percent to C$41.28.

Investors also sold silver producers, as First Majestic Silver Corp. slumped 7.9 percent to C$21.70, Fortuna Silver Mines Inc. fell 7.2 percent to C$4.90 and Silver Wheaton Corp. lost 6.4 percent to C$36.69.

Just Energy Group Inc., which sells natural gas and electricity, slumped 9.3 percent to C$8.88. The stock was downgraded to underperform from sector perform by equity analyst Trevor Johnson at National Bank Financial.

Chorus Aviation Inc. jumped 12 percent to C$3.39 after reporting third-quarter adjusted earnings of 30 Canadian cents a share, ahead of analysts’ estimates of 15 cents.

Loblaw Cos. Ltd. rose 0.9 percent to C$33.64 after the grocer raised its dividend for the first time since February 2005, to 22 Canadian cents a share from 21 cents. Loblaw also reported third-quarter revenue of C$9.83 billion, above estimates of C$9.81 billion.

Rona Inc. gained 4.9 percent to C$11.52. Invesco Canada Ltd., the company’s second-largest investor, said it wants to replace the board at the home-improvement retailer. Invesco said it plans to request a meeting of shareholders to elect new directors.

US

By Nikolaj Gammeltoft

Nov. 14 (Bloomberg) — U.S. stocks fell, sending the Dow Jones Industrial Average to the lowest level since June, as concern about the budget debate in Washington and an Israeli air strike erased an early rally led by technology shares.

Federal Express Corp. and Boeing Co. slumped at least 2.8 percent to pace declines among the largest companies. Bank of America Corp. and JPMorgan Chase & Co. dropped more than 1.8 percent as financial shares sank. Cisco Systems Inc., the world’s biggest maker of computer-networking equipment, jumped 4.8 percent after earnings topped estimates. Facebook Inc. soared 13 percent as investors were undeterred by a surge in the number of tradeable shares after a lockup period expired.

The Standard & Poor’s 500 Index fell 1.4 percent to 1,355.49 at 4 p.m. in New York. The Dow lost 185.23 points, or 1.5 percent, to 12,570.95, the lowest level since June 26. The Nasdaq Composite Index slid 1.3 percent to 2,846.81, dropping more than 10 percent from its almost 12-year closing high in September, in what is known as a correction.

“The recent wall of worry continues to mount,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an interview. His firm oversees $250 billion. “Middle East geo-political tensions, continued sovereign concerns about Greece and Spain, indecision ahead of the fast-approaching fiscal cliff and the fact that the major U.S. indices continue to trade under key technical levels are all weighing on sentiment.”

The S&P 500 has fallen 5.1 percent since President Barack Obama’s re-election set up a budget showdown with the Republican-controlled House of Representatives. The benchmark gauge is trading below its average price for the past 200 days, and is down 7.5 percent from an almost five-year high on Sept. 14. Volume for exchange-listed stocks in the U.S. was 7.51 billion shares today, 24 percent above the three-month daily average.

Obama is negotiating to reach a deficit-reduction deal with Congress to avert $607 billion in automatic tax increases and spending cuts, or the so-called fiscal cliff. He said in a White House news conference that voters sent a “very clear message” on Nov. 6 that they want both parties to stop bickering over politics and take the necessary steps to cut the budget deficit through a combination of tax increases for the wealthy and cuts in spending.

The president’s remarks spurred concern lawmakers were not making progress in reaching an agreement to avert the fiscal cliff. Obama will sit down with Democratic and Republican congressional leaders Nov. 16 for an opening round of negotiations.

Stocks extended losses after Israel carried out a series of air strikes in the Gaza Strip today, killing the leader of Hamas’s militant wing, and said it was ready to use ground troops if needed to end attacks on its citizens. In Europe, industrial production dropped the most in more than three years in September, led by double-digit declines in Portugal and Ireland.

Retail sales in the U.S. fell in October for the first time in four months, influenced by the effects of superstorm Sandy, which hurt receipts for some and helped for others. Wholesale prices unexpectedly declined for the first time in five months as energy and vehicle costs dropped.

A number of Federal Reserve officials said the central bank may need to expand its monthly purchases of bonds next year after the expiration of Operation Twist, according to minutes of their last meeting released today.

Under Operation Twist, scheduled to end in December, the Fed is swapping short-term Treasuries on its balance sheet for longer-term debt. The Fed in addition is buying $40 billion in mortgage-backed securities in a third round of so-called quantitative easing.

All 10 groups in the S&P 500 slid today, with raw-material, financial and industrial shares dropping at least 1.7 percent.

FedEx tumbled 3.7 percent to $87.12. Boeing erased 2.8 percent to $71.29. Bank of America slumped 3.6 percent to $8.99, for the biggest drop in the Dow, while JPMorgan declined 1.9 percent to $39.29.

Home Depot Inc. fell 3 percent to $61.47. The largest U.S. home-improvement retailer retreated after reaching the highest level since 2000 yesterday as profits beat estimates. The stock was downgraded to the equivalent of hold by analysts at Gabelli & Co. and Raymond James & Associates Inc.

Advanced Micro Devices Inc. fell 7.7 percent to $1.93, after a 5 percent rally yesterday. The second-largest maker of personal-computer processors said it isn’t actively pursuing a sale of the company or a significant sale of assets. The statement came after Reuters reported yesterday that AMD hired JPMorgan to explore options, including a potential sale of the company or its patent portfolio.

Mosaic Co. fell 3.3 percent to $49.10. The largest U.S. fertilizer producer may further reduce its output of potash amid lower-than-expected global demand for the crop nutrient, Chief Financial Officer Larry Stranghoener said today. The company yesterday cut its fiscal second-quarter forecast for potash and phosphate shipments as international buyers delay purchases.

Monster Worldwide Inc. retreated 5 percent to $5.93. The online jobs site seeking a buyer may fail to cement a deal after suitors such as TPG Capital and Apollo Global Management LLC passed, said two people familiar with the matter.

Cisco surged 4.8 percent to $17.66. The maker of computer- networking equipment reported profit that topped analysts’ estimates as price reductions helped spur sales and cost cuts kept margins intact.

Juniper Networks Inc. the second-largest maker of networking gear, added 1.2 percent to $17.55. F5 Networks Inc., a maker of equipment for managing data traffic, gained 1.1 percent to $87.50.

Abercrombie & Fitch Co. jumped 34 percent to $41.92. The teen retailer with more than 1,000 stores raised its forecast for the year after exceeding its estimates in the third quarter.

Sales in the period ended Oct. 27 rose 9 percent, while international sales jumped 37 percent.

Facebook soared 13 percent to $22.36. Restrictions lift today on 804 million shares held by former employees and those who sold at the IPO, almost doubling the total available for trading, according to a regulatory filing.

The operator of the world’s most popular social-networking service has lost about half its value since going public as the number of shares rose and investors fretted about the company’s ability to boost mobile-advertising sales. With its most recent quarterly earnings report, Facebook convinced investors that it has potential to boost ad revenue, helping to drive up the price of shares released for trading today, said Brian Wieser, an analyst at Pivotal Research Group.

Zynga Inc. rose 1.4 percent to $2.14. The largest maker of games played on social networks said Chief Financial Officer David Wehner is departing to take a senior finance job at Facebook. He’ll be succeeded by Mark Vranesh.

Have a wonderful evening everyone.

Be magnificent!

How does seeing the difference permit unity?

Quite simply, because physically speaking there cannot be unity, since the physical plane consists of shapes,

and all shapes are different.

Unity only exists in the heart.  It is a feeling:  love.

And in love the notion of self disappears;  only the other remains.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

The gods cannot help those who don’t seize

opportunities.

-Confucius, 551-479 BCE

Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7