January 24, 2013 Newsletter

Dear Friends,

Tangents:

I turn the radio on to King FM every morning when I awaken.  It is a Seattle station (95.5 on our radio at home) that is devoted to classical music.  This month, the entire month is dedicated to the music of Mozart, since January is his birthday month.   He was born on January 27^th, 1756 in Salzburg, Austria.  You can visit his childhood home if you go there; it is open to the public.  His baptismal name was Johannes Chrysostomus Wolfgangus Theophilus Mozart.  Anyhow, just thought I’d mention it in case you are a Mozart fan like me.

We are off to see Oprah tonight!  Should be fun;  I’ll let you know tomorrow.

photo of the day

01/24th/2013

A double rainbow appears after a heavy summer rain storm in the Andean Argentine province of Mendoza January 22, 2013. Enrique Marcarian/Reuters

Market Closes for January 24th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Leslie Picker

Jan. 24 (Bloomberg) — Canadian stocks rose, briefly rising to the highest level since 2011, as Research In Motion Ltd. drove a rally in technology shares after Lenovo Group Ltd. said it’s considering a deal with the BlackBerry maker.

RIM jumped 2.9 percent as Lenovo assessed potential acquisition targets and strategic alliances. Encana Corp. and Canadian Natural Resources Ltd. rose at least 1.5 percent, pacing gains in energy shares, as oil rallied from a one-week low. Agrium Inc., operator of the largest U.S. network of agricultural retail outlets, added 2.8 percent after reporting fourth-quarter profit that exceeded estimates.

The Standard & Poor’s/TSX Composite Index added 29.57 points, or 0.2 percent, to 12,823.62 at 4 p.m. in Toronto.

Trading volume was 7.6 percent above the 30-day average. The S&P 500 briefly topped 1,500 for the first time since 2007. The Canadian dollar declined to an almost 10-week low.

“There’s a lot of green so far,” said John Kinsey, who helps manage about C$1 billion of assets at Caldwell Securities Ltd. in Toronto. “People are feeling that 2013 might be a little better year than 2012, and the markets are creeping up a little bit every day.”

The S&P/TSX has risen 3.1 percent so far this year amid optimism the global economy is recovering. Technology and health-care companies have led the rally, increasing more than 10 percent. Raw-material stocks have fallen 0.7 percent for the biggest decline among 10 groups in the measure.

American economic data also helped lift the market today.

Claims for jobless benefits in the world’s largest economy unexpectedly dropped to a five-year low. The index of American leading indicators rose in December by the most in three months.

“The U.S. coughs, we get pneumonia,” said Chyanne Fickes, a fund manager at Toronto-based Stone Asset Management Ltd., which manages C$700 million. “Given the jobless claims being better, that backs up better growth down the road for the United States, which bodes well for Canada.”

Technology and health-care shares had the biggest gains in the S&P/TSX today among 10 groups, advancing at least 1.7 percent. Raw-material and utility companies fell.

RIM rallied 2.9 percent to C$17.80, the highest since December 2011. The shares have risen 51 percent so far this year. RIM began a review of its strategic options last year after losing market share to smartphones such as Apple Inc.’s iPhone and Samsung Electronics Co.’s Galaxy, raising speculation that it could be a takeover target.

Earlier today, RIM dropped as much as 5.4 percent after Apple posted its slowest profit growth in a decade.

Energy shares rose as oil climbed amid a narrowing spread between West Texas Intermediate crude in the U.S. and London’s Brent. Encana added 1.5 percent to C$19.63. Canadian Natural Resources rose 1.6 percent to C$30.67.

Methanex Corp. rallied 8.2 percent to C$34.88. The company announced a 10-year natural gas supply agreement with Chesapeake Energy Corp. Separately, the shares were raised to outperform from market perform at Raymond James Financial Inc. by equity analyst Steven Hansen.

Agrium advanced 2.8 percent to C$113.90. Fourth-quarter profit excluding one-time items was “slightly above” $2 a share, buoyed by demand for crop nutrients, Calgary-based Agrium said today in a statement. Agrium was expected to earn $1.71 a share, the average of 22 analysts’ estimates compiled by Bloomberg. In November the company, which also produces potash and nitrogen-based fertilizer, forecast $1.50 to $1.90 a share.

The company plans to release its full fourth-quarter results on Feb. 22, according to the statement.

Major Drilling Group International Inc. tumbled 15 percent, the most since December 2008, to C$10.17. The provider of mineral-drilling services said fiscal fourth-quarter revenue will be lower than previously expected.

US

By Inyoung Hwang and Sarah Pringle

Jan. 24 (Bloomberg) — Most U.S. stocks rose, with the Standard & Poor’s 500 Index briefly topping 1,500, as an unexpected drop in jobless claims and better-than-forecast earnings offset the worst slump for Apple Inc. in four years.

Apple, the world’s most valuable company, slid 12 percent after reporting the slowest profit growth since 2003 and weakest sales increase in 14 quarters. Microsoft Corp. dropped 1.8 percent after the close of regular trading as it posted results.

Netflix Inc. surged 42 percent as the largest online-video service beat its forecast for fourth-quarter subscriber growth and posted an unexpected profit.

More than four stocks rose for every three that fell on U.S. exchanges as of 4 p.m. in New York. The S&P 500 was unchanged at 1,494.82, after rallying as much as 0.5 percent earlier. The Dow Jones Industrial Average gained 46 points, or 0.3 percent, to 13,825.33. The Nasdaq 100 Index slid 1.4 percent to 2,723.53. More than 6.8 billion shares traded hands on U.S. exchanges today, or 10 percent above the three-month average.

“We’ve been talking for a while that the market was going to get to 1,500,” Michael Vogelzang, chief investment officer at Boston Advisors LLC, which manages $2.4 billion, said by telephone. “The question now is, ‘To where from here?’” He said Apple’s drop is “a very interesting case in terms of understanding where the price should be and clearly the market doesn’t quite know.”

U.S. stocks rose yesterday as lawmakers voted to temporarily suspend the federal debt limit and Google Inc. and International Business Machines Corp. reported better-than- forecast earnings. The S&P 500 has rallied 4.8 percent this year and is 4.5 percent below its all-time high of 1,565.15. The Dow is 2.5 percent from its record of 14,164.53 reached in October 2007.

Some 75 percent of the 134 companies in the S&P 500 that have released results so far exceeded profit projections, according to data compiled by Bloomberg. Analysts on average forecast growth of 3.8 percent in fourth-quarter profit, the data show.

Equities rose earlier today as a report showed claims for jobless benefits in the U.S. unexpectedly dropped last week.

Applications for unemployment payments decreased to 330,000 in the week ended Jan. 19, compared with the median forecast of 355,000 claims. A separate release showed the index of leading economic indicators, a gauge of the outlook for the next three to six months, climbed 0.5 percent last month.

In China, manufacturing expanded at the fastest rate in two years, according to a survey of companies.

“People are just trying to digest all the earnings reports from all the various companies,” Giri Cherukuri, portfolio manager who helps manage $3 billion at Oakbrook Investments LLC in Lisle, Illinois, said in a telephone interview. “As long as the economy seems to get better, the stock market will do well.”

Apple fell 12 percent to $450.50. The results reinforce concern that the company’s growth is being hurt by higher production costs and step up pressure on Chief Executive Officer Tim Cook to demonstrate that Apple has more blockbuster products in the pipeline to reignite sales. The shares have fallen 36 percent since they set a record in September, and have lost 15 percent this year for the worst performance in the S&P 500.

For the fiscal second quarter, which is now under way, Apple forecast sales of $41 billion to $43 billion, compared with predictions by analysts for revenue of $45.5 billion.

The company’s share price decline means the company may lose its status as the world’s most valuable company to Exxon Mobil Corp. Apple’s market value was $423 billion as of today’s close, compared with Exxon’s $416.5 billion.

Microsoft slumped 1.8 percent to $27.13 at 5:08 p.m. in New York as the world’s biggest software maker posted a decline in net income for the fiscal second quarter.

Technology stocks lost 2 percent as a group during regular trading, for the biggest decline among 10 industries in the S&P 500.

Altera Corp. erased 4.6 percent to $33.56. Fourth-quarter earnings at the maker of programmable chips used in phone systems were 37 cents a share, missing the average analyst estimate by 2 cents.

Netflix soared 42 percent, its biggest gain ever, to $146.86. The company signed 2.05 million new U.S. Internet subscribers in the fourth quarter, bringing total domestic online customers to 27.2 million, it said yesterday on its website. The gain led to a quarterly profit of 13 cents a share, compared with analysts’ predictions of a loss.

Amazon.com Inc., the Seattle, Washington-based online retailer, jumped 2.1 percent to $273.62. The company announced today that it was acquiring IVONA Software, a text-to-speech technology company. EBay Inc., operator of the world’s largest online marketplace, advanced 3.4 percent to $55.19, its highest level since 2005.

Consumer discretionary stocks rose 0.7 percent as Netflix led gains. Bed Bath & Beyond Inc. increased 4.4 percent to $58.99. The operator of more than 1,400 home-furnishing stores was raised to outperform from market perform by Oppenheimer & Co.’s Brian Nagel, who said shares have likely reached a bottom and that the stock will rebound significantly in the next few quarters.

The Dow Jones Transportation Average extended gains into an eighth day, advancing 1.7 percent to a record. United Continental Holdings Inc. rose 2.2 percent to $25.54, while Southwest Airlines Co. added 0.8 percent to $11.45, as the airlines beat analysts’ estimates for fourth-quarter results amid steadying costs for fuel, their biggest expense.

F5 Networks Inc. rallied 4.5 percent to $103.22. The provider of Internet traffic management solutions forecast second-quarter adjusted earnings of at least $1.21 a share, exceeding the average analyst projection of $1.20.

Xerox Corp. jumped 2.2 percent to $7.75. The provider of document and business services reported earnings that beat analyst expectations as the company shifts away from its traditional printing business. Earnings excluding some items were 30 cents a share, above the average analyst estimate of 29 cents.

Have a wonderful evening everyone.

Be magnificent!

Facts are not frightening.

But if you try to avoid them, turn your back and run, then that is frightening.

Krishnamurti,1895-1986

As ever,

Carolann

The question isn’t who is going to let me;

it’s who is going to stop me.

-Ayn Rand, 1905-1982

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