February 6, 2013 Newsletter

Dear Friends,

Tangents:

On this day in 1952, King George VI died; he was succeeded by his daughter, Elizabeth II.

Elizabeth Renzetti writes in today’s Globe & Mail:  She had left London a week earlier, a princess embarking on a five-month tour of the Commonwealth, waving goodbye to her father at the airport.  And she returned a queen.  Princess Elizabeth, 25, burst into tears when her husband, Philip, broke the news that her father, George VI, had died unexpectedly in his sleep on the royal estate of Sandringham on Feb. 6, 1952.  The young couple was staying at a hunting lodge in Kenya on the first leg of their tour, but immediately boarded a plane for the 19-hour flight back to London.  “It was a tragic homecoming,” reported the BBC.  “There stepped down from the plane a figure in mourning, Elizabeth II, the queen of this realm and all her other realms and territories, head of the Commonwealth, defender of the faith.”

And also on this day in…

1895 – Babe Ruth was born.

1900 – The Holland Senate ratified the 1899 peace conference decree that created in international arbitration court at The Hague.

1919 – Zsa Zsa Gabor was born.

1932 – Francois Truffaut was born.

1937 – K. Elizabeth Ohi became the first Japanese woman lawyer when she received her degree from John Marshall Law School in Chicago, IL.

1945 – Bob Marley was born.

1987 – President Ronald Reagan turned 76 years old this day and became the oldest U.S. President in history.

2001 – Ariel Sharon was elected Israeli prime minister.

All you need in this life is ignorance and confidence; then success is sure. ― Mark Twain

Market Closes for February 6th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Sarah Pringle

Feb. 6 (Bloomberg) — Canadian stocks advanced as earnings from companies including TMX Group Ltd. and Genworth MI Financial Inc. offset a slump in Suncor Energy Inc. after it posted disappointing results.

TMX, the owner of the Toronto Stock Exchange, and Genworth rose at least 2.3 percent after beating analysts’ earnings estimates. Raw-material shares rallied as Silver Wheaton Corp. climbed 1.4 percent after agreeing to buy gold from Vale SA mines in Brazil and Canada. Suncor Energy, Canada’s largest energy company by market value, dropped 5.4 percent for the worst performance in the benchmark index, after reporting the biggest loss in at least two decades.

The Standard & Poor’s/TSX Composite Index added 15.94 points, or 0.1 percent, to 12,761.59 at 4 p.m. in Toronto. Seven of 10 industries advanced. About 738 million shares traded hands on Canadian exchanges today, or 3 percent below the three-month average. The benchmark gauge has gained 2.6 percent this year.

“Earnings season in Canada is just starting to ramp up,” Jeffrey Bradacs, who helps oversee about C$1.5 billion ($1.5 billion) as a fund manager with Toronto-based Manulife Asset Management Ltd., said in a phone interview. “That will be the key catalyst now going forward.”

Financial shares contributed most to gains in the benchmark index, as Royal Bank of Canada rose 1 percent to C$62.67, reaching a record high.

TMX Group rallied 2.3 percent to C$56.73. The company benefited from an increase in revenue from its trading, clearing and depository business, after adding contributions from the Canadian Depository for Securities Ltd. clearinghouse and Alpha Group. The businesses were acquired as part of TMX’s C$3.73 billion takeover in September by a group of banks and pension funds.

Genworth, a residential mortgage insurance provider, advanced 4 percent to C$24.63, the most in four months. The company, based in Oakville, Ontario, reported a surge in new business and a drop in its loan loss ratio that led to better- than-expected earnings.

Silver Wheaton, which resells precious metals bought from mining companies, rose 44 Canadian cents to C$36.57. The Vancouver-based company agreed to acquire gold mined by Vale in Brazil and Canada for $1.9 billion in cash and 10 million share warrants. Silver Wheaton typically offers upfront payments to help mining companies fund their projects in exchange for a discount on the silver and gold output that it buys.

Energy producers had the worst performance among S&P/TSX groups, slipping 0.5 percent.

Suncor, the oil-sands producer, slumped C$1.85 to C$32.53, the biggest decline since June. The Calgary-based company reported its first quarterly loss in 3 1/2 years. Suncor’s results were hurt by a charge of C$1.49 billion related to its Voyageur oil project in the province of Alberta, which may face cancellation. The company also said late yesterday in a statement it faces a possible C$1.2 billion tax bill.

Husky Energy Inc., the Canadian oil company controlled by Asia’s richest man, Li Ka-shing, fell 1 percent to C$31.06. The Calgary-based company reported fourth-quarter profit and sales that missed analysts’ estimates on lower-than-expected refining margins.

US

By Inyoung Hwang and Leslie Picker

Feb. 6 (Bloomberg) — U.S. stocks rose, erasing earlier declines, as better-than-estimated earnings overshadowed concern over Europe’s debt crisis before a gathering of euro-area leaders tomorrow.

Time Warner Inc. surged 4.1 percent after affiliate fees from cable-TV providers boosted profit. Walt Disney Co. gained 0.4 percent after sales topped estimates and its interactive unit posted its first profit since 2009. GameStop Corp. plunged 6 percent after a report said Microsoft Corp.’s next Xbox console will require an Internet connection. DreamWorks Animation SKG Inc. dropped 3.9 percent after the company pulled one movie from its schedule and delayed the release of another.

The Standard & Poor’s 500 Index rose 0.1 percent to 1,512.12. The Dow Jones Industrial Average gained 7.22 points, or 0.1 percent, to 13,986.52. More than 6.5 billion shares changed hands on U.S. exchanges today, or 5.1 percent above the three-month average.

“Most of the bad news is well-known and the better news is still playing,” David Sowerby, fund manager at Boston-based Loomis Sayles & Co., said in a telephone interview. His firm oversees about $180 billion. “In a tug-of-war with Europe, the good news, which is earnings, respectable valuations, and continued low interest rates, is winning the war.”

U.S. equities slumped earlier in the day amid concerns Europe’s debt crisis may worsen. European Central Bank President Mario Draghi will head a meeting of policy makers tomorrow in Frankfurt as euro-area leaders gather for a summit in Brussels.

The euro has retreated from a 14-month high against the dollar reached on Feb. 1 as Spain’s premier faced opposition calls to resign.

The S&P 500 has rallied 6 percent in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than- estimated earnings. The benchmark equity gauge is 3.4 percent below its record high reached in October 2007. It has more than doubled since bottoming in March 2009 as the Federal Reserve conducted three rounds of bond-buying to lower interest rates and boost economic growth.

Visa Inc., News Corp. and Prudential Financial Inc. are among 24 companies in the S&P 500 reporting earnings today.

About 74 percent of the 303 index members that have released results so far in the earnings season exceeded profit projections, and 67 percent beat sales estimates, data compiled by Bloomberg show.

Time Warner, owner of the HBO cable network and the Warner Bros. film studio, rose $2.05 to $52.01. Chief Executive Officer Jeffrey Bewkes has concentrated the company’s growth strategy on its TV business. He fostered the development of costly shows, such as HBO’s “Game of Thrones,” and signed rights deals for major sports programming, including the NCAA basketball tournament, to command higher fees from pay-TV providers such as Comcast Corp. and DirecTV.

The New York-based company also announced a new buyback program and boosted its dividend 11 percent to almost 29 cents a share, up from 26 cents.

Disney, the world’s largest entertainment company, advanced 23 cents to $54.52. The owner of the “Star Wars” and “Avengers” franchises said first-quarter profit adjusted for some items was 79 cents a share, topping the 77-cent average of 26 analysts’ estimates compiled by Bloomberg. Sales rose 5.2 percent to $11.3 billion.

Ralph Lauren Corp. surged 5.9 percent to $174.63. The retailer of its namesake brand clothing reported fiscal third- quarter profit that topped analysts’ estimates, helped by lower- than-expected expenses and cheaper cotton.

3M Co. jumped 1.2 percent to $102.69, for the biggest advance in the Dow. The maker of products ranging from Scotch tape to dental braces authorized a stock buyback program of as much as $7.5 billion and increased the quarterly dividend by 7.6 percent.

Aflac Inc. fell 4.3 percent to $51.18 after the largest seller of supplemental health insurance forecast profit that fell short of analysts’s estimates. A weaker yen is pressuring results at Aflac, which gets most of its revenue in Japan.

GameStop tumbled $1.61 for the second-biggest decline in the S&P 500 to $25.20. The world’s largest video-game retailer surged 16 percent over the previous three days. Microsoft’s next console will include technology that registers video games over the Internet and renders resold titles useless, the gaming website Edge.com said today, without saying where it got the information.

DreamWorks, the independent studio behind the “Madagascar” films, dropped 68 cents to $16.75. “Me and My Shadow” was pulled from the schedule and put back in development, DreamWorks Animation said. “Mr. Peabody & Sherman,” planned for theaters in November 2013, will now be released in March 2014. The change reduces the company’s 2013 release slate to two movies from three.

C.H. Robinson Worldwide Inc. led declines in the S&P 500, falling 9.7 percent to $60.50. The freight broker reported fourth-quarter earnings that missed analysts’ estimates.

Wynn Resorts Ltd., which depends on its Macau unit for most of its revenue, dropped 2 percent to $123.30. China’s government will start taking action this month to clamp down on junket operators that bring gamblers from the mainland to Macau, the London-based Times reported on its website, citing unidentified people in law enforcement.

Apple Inc. fell 0.1 percent to $457.35, erasing an earlier rally of as much as 1.9 percent. A report showed that Legg Mason Inc. fund manager Bill Miller said the stock may be worth 50 percent more than its current price. Miller told the Financial Times the shares could be worth more if the company were to keep all its cash on its balance sheet and put future free cash flow into a dividend.

Have a wonderful evening everyone.

Be magnificent!

I do not know of any religion apart from human activity.

It provides a moral basis to all other activities which they would otherwise lack,

reducing life to a maze of ‘sound and fury signifying nothing.’

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Success is a lousy teacher.  It seduces smart people

into thinking they can’t lose.

-Bill Gates, 1955-

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