December 13, 2012 Newsletter

Dear Friends,

Tangents:

Of to our holiday season office party tonight.  In that spirit, let me share with you a new piece of music for the season.

There is a specially commission new Christmas carol by Luke Styles, Glyndebourne’s Young Composer in Residence.  It is called When Icicles Hang From The Wall and it is  based on words from Shakespeare’s Love’s Labour’s Lost.  Love’s Labour’s Lost is one of William Shakespeare’s early comedies, believed to have been written in the mid-1590s, and first published in 1598.  You can see the video of the recording at www.ft.com/ftcarol.

The fabulous Sir David Tang is at the ivories!

And on this day in…

1929 – Christopher Plummer was born.

1981 – The Polish government imposed martial law in an attempt to crush the Solidarity movement.

1990 –  GST goes through after a 6-month filibuster.

2000 – Al Gore concedes presidential election.

2003 – American forces captured Saddam Hussein who was hiding in a hole near his hometown of Tikrit.

 
Let us love winter, for it is the spring of genius. –Pietro Aretino.

photos of the day

December 13, 2012

A giant Christmas tree stands in the middle of the Galeries Lafayette department store in Paris.

Charles Platiau/Reuters

An ultra-Orthodox Jewish man lights a Hanukkah menorah in Jerusalem’s Mea Shearim neighborhood. The Jewish festival of light is an eight-day commemoration of the Jewish uprising in the second century B.C. against the Greek-Syrian kingdom, which had tried to put statues of Greek gods in the Jewish Temple in Jerusalem.

Ariel Schalit/AP

Market Closes for December 13th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Dec. 13 (Bloomberg) — Canadian stocks fell for the first time in five days as gold and crude retreated, sending commodity stocks lower amid an impasse in U.S. budget talks.

Kirkland Lake Gold Inc. plunged 15 percent after cutting its production guidance. Barrick Gold Corp. and Goldcorp Inc., the two largest producers of the metal, dropped at least 2 percent as gold prices fell the most in a week. Oncolytics Biotech Inc. soared 28 percent after the Calgary-based drug company received positive results from a study on a cancer drug it is developing. Sears Canada Inc. rose 5.8 percent after the retailer declared a special dividend.

The Standard & Poor’s/TSX Composite Index fell 63.92 points, or 0.5 percent, to 12,289.17 in Toronto. The equity gauge has gained 2.8 percent this year.

“We had a bit of a rally the past few weeks for commodity prices, but the companies in those sectors aren’t getting full value for the prices so investors may sell when there’s a bit of profit on the table,” said Kevin Headland, director of the portfolio advisory group with Manulife Asset Management in Toronto. The firm manages about $218 billion. “From a fiscal cliff perspective, a lot of it is rhetoric right now. We expect something will be announced at the last minute.”

Negotiations for a U.S. budget compromise have stalled with House Speaker John Boehner saying President Barack Obama is “unserious about cutting spending.” Obama said the negotiations are “still a work in progress.” Democrats and Republicans remain hundreds of billions of dollars apart as a year-end deadline to avoid more than $600 billion in automatic tax increases and spending cuts approaches.

U.S. Federal Reserve Chairman Ben S. Bernanke warned yesterday fiscal stimulus measures will not be able to offset the impact of those automatic tax increases if government officials are unable to reach a deal. The Fed also lowered its forecast for growth next year, now expecting the economy to expand 2.3 percent to 3 percent, compared with 2.5 percent to 3 percent in September.

Gold mining companies and energy stocks contributed most to losses on the S&P/TSX as seven of 10 industries retreated.

Trading volume was 25 percent higher than the 30-day average.

Kirkland Lake plunged 15 percent to C$6.61 after saying gold sales for the year ending in April will be about 90,000 to 110,000 ounces. The company had previously forecast 180,000 to 200,000 ounces.

Barrick fell 2 percent to C$33.86 and Goldcorp dropped 3.2 percent to C$36.41. Gold for February delivery retreated 1.2 percent to settle at $1,696.80 an ounce in New York, the biggest loss since Dec. 4.

Suncor Energy Inc., the nation’s largest oil producer, lost 1.6 percent to C$31.68 and Cenovus Energy Inc. slipped 1.8 percent to C$32.75 as crude fell for the first time in three days. Crude oil for January delivery lost 1 percent to settle at $85.89 a barrel in New York.

Encana Corp., Canada’s largest natural gas producer, rose 2 percent to C$20.85 after PetroChina Co. said it will form a joint venture with the company by paying C$1.18 billion for a 49.9 percent stake in Alberta’s Duvernay formation. PetroChina will pay an additional C$1 billion over the next four years to fund development, Encana said in a statement today.

The deal is the first between Canada and a state-owned company since Canadian Prime Minister Stephen Harper unveiled new foreign investment rules on Dec. 7 that prohibit state-owned enterprises from taking control of Canadian oil-sands businesses unless there are “exceptional circumstances.”

Oncolytics surged 28 percent to C$3 after the company said initial data from a test of its product Reolysin in combination with carboplatin and paclitaxel, a type of chemotherapy, found 86 percent of those in the test arm of the study showed either tumor stabilization or shrinkage. This compares with 67 percent of patients in the control arm.

Sears Canada, the largest department-store chain in the country, added 5.8 percent to C$11.88. The company will pay a special cash dividend of C$1 a share following a partial spinoff of the company from its parent last month. Sears will pay out a total of about C$102 million on Dec. 31 to shareholders of record as of Dec. 24, the retailer said yesterday.

Research In Motion Ltd. climbed 3.7 percent to C$13.63. The company said U.S. Immigration and Customs Enforcement will test its new BlackBerry 10 devices early next year, becoming one of the first government agencies to try the new operating system.

US

By Rita Nazareth and Sofia Horta e Costa

Dec. 13 (Bloomberg) — U.S. stocks retreated, snapping a six-day advance in the Standard & Poor’s 500 Index, as the standoff in federal budget negotiations overshadowed a decline in jobless claims and a rebound in retail sales.

Newmont Mining Corp. and Mosaic Co. dropped at least 1.4 percent to pace losses in commodity shares. Phillips 66, the crude refiner that was spun off from ConocoPhillips in May, declined 1.6 percent on plans to raise as much as $400 million in an initial public offering for a minority interest in some of its pipeline and logistics assets. CVS Caremark Corp. climbed 2 percent after forecasting profit that beat estimates. Best Buy Co. jumped 16 percent on a report that founder Richard Schulze will offer to take the company private by Dec. 15.

The S&P 500 fell 0.6 percent to 1,419.45 at 4 p.m. New York time. The Dow Jones Industrial Average dropped 74.73 points, or 0.6 percent, to 13,170.72. About 6.1 billion shares changed hands on U.S. exchanges, or in line with the three-month average, according to data compiled by Bloomberg.

“It’s going to be a bumpy ride until we see some type of deal on the fiscal cliff,” said Matt McCormick, who helps oversee $7.3 billion as a money manager at Cincinnati-based Bahl & Gaynor Inc. “Speeches and speculation are the drivers of the market right now. I’m hopeful that we’ll see a resolution, but the politicians seem to be going a different tune.”

U.S. House Speaker John Boehner repeated his insistence that President Barack Obama’s budget proposal is “anything but” balanced and accused the president of being “not serious” about cutting spending. Obama said the negotiations are “still a work in progress.” The deadlock in talks to avoid more than $600 billion in tax increases and spending cuts will start taking effect in January unless Congress averts them.

Obama and Boehner were scheduled to meet today at the White House at 5 p.m. Washington time for further budget talks, according to a spokesman for the speaker.

Applications for jobless benefits fell by 29,000 to 343,000 in the week ended Dec. 8. Economists forecast 369,000 claims.

Retail sales in the U.S. rose in November as demand for automobiles rebounded and holiday shoppers snapped up electronics and clothes. Wholesale prices in the U.S. fell more than forecast in November, reflecting the biggest drop in the cost of energy since March 2009.

The Federal Reserve said yesterday it would buy $45 billion of Treasuries per month starting in January in an effort to boost growth. Interest rates will stay low “at least as long” as unemployment remains above 6.5 percent and if inflation is projected to be no more than 2.5 percent, it said.

European governments geared up to provide extra aid or debt relief for Greece after releasing the country’s first loan payment in six months, signaling renewed battles over how to stabilize the euro economy. Euro-area finance ministers approved the payout of 49.1 billion euros ($64 billion) of loans through March and committed to “additional measures” in case Greece’s debt reduction veers off track.

All 10 groups in the S&P 500 retreated today as health- care, energy and technology companies had the biggest losses.

Newmont Mining dropped 2.9 percent to $44.17. Mosaic, the largest U.S. fertilizer producer, slid 1.4 percent to $55.63.

Phillips 66 slid 1.6 percent to $52.21. The company plans to hold the IPO in the second half of 2013 for units in a master-limited partnership, or MLP, and use the proceeds to pay for expansion of its oil and natural gas transportation operations, the Houston-based company said today in a statement.

CVS Caremark climbed 2 percent to $48.50. Chief Executive Officer Larry Merlo has increased marketing and promotions to retain customers that it won when Walgreen Co. ended an agreement to provide Express Scripts Holding Co. shoppers with prescriptions.

Best Buy jumped 16 percent to $14.12. Schulze will submit an offer to the board before the Dec. 16 deadline, the Minneapolis Star-Tribune reported, citing a person it didn’t name. The bid will be about $5 billion to $6 billion, the newspaper said.

Clearwire Corp. surged 15 percent to $3.16 as Sprint Nextel Corp. offered to take it over in a $2.1 billion deal. Sprint, which already owns more than 50 percent of Clearwire, is seeking to acquire the remaining shares at $2.90 each, according to a regulatory filing today. That’s 5.5 percent more than the stock’s closing price in New York yesterday.

Research In Motion Ltd. added 4.1 percent to $13.86 after saying U.S. Immigration and Customs Enforcement will test its new BlackBerry 10 devices early next year, becoming one of the first government agencies to try the new operating system.

PBF Energy Inc. advanced 1 percent to $26.25, paring an earlier rally of as much as 8.4 percent. The oil refiner backed by First Reserve Management LP and Blackstone Group LP climbed after raising $533 million in an initial public offering that valued the company at $2.52 billion.

Warren Buffett’s Berkshire Hathaway Inc. placed a higher floor under its stock by raising the price limit for share repurchases, according to Whitney Tilson, a co-founder and managing director of T2 Partners LLC. Berkshire’s Class A stock has closed higher than the original ceiling since September of last year, when the insurance and investment company began the buyback program.

Berkshire said yesterday that it’s now willing to pay as much as 120 percent of book value for its two classes of common shares, rather than 110 percent. Yesterday’s closing prices for both classes came close to the higher percentage, tied to the value of assets after subtracting liabilities.

Tilson added to his firm’s stake in Berkshire after the increase was announced, the New York-based money manager wrote yesterday in an e-mail. T2 owns Class B stock, according to a regulatory filing. Each share is equivalent to 1/1,500th of a Class A share in the company, based in Omaha, Nebraska.

“Needless to say, I’m even happier having this as my largest position,” he wrote. Berkshire was second to American International Group Inc. among T2’s biggest holdings at the end of September, the filing showed.

Have a wonderful evening everyone.

Be magnificent!

We know that toleration is not sufficient toward another religion; we must accept it.

Thus it is not a question of subtraction, it is a question of addition.

The truth is the result of all these different sides added together.

Each religion represents one side, the fullness being the addition of all these.

Swami Vivekananda, 1863-1902

As ever,

Carolann

We all have the ability.  The difference is

how we use it.

-Stevie Wonder, 1950-

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