December 10, 2013 Newsletter

Dear Friends,

Tangents:

Emily Dickinson’s birthday: born December 10^th, 1830.

We turn not older with years, but newer every day. –Emily Dickinson.

Will there really be a “Morning”?

– by Emily Dickinson

Will there really be a “Morning”?

Is there such a thing as “Day”?

Could I see it from the mountains

If I were as tall as they?

Has it feet like Water lilies?

Has it feathers like a Bird?

Is it brought from famous countries

Of which I have never heard?

Oh some Scholar!  Oh some Sailor!

Oh some Wise Man from the skies!

Please to tell a little Pilgrim

Where the place called “Morning” lies!

Photos of the day

A large flock of starlings fly illuminated by the setting sun near Bacau, north eastern Romania. Large numbers of starlings populate the vast cereal growing agricultural lands in eastern Romania, feeding on the seeds already laid in the ground. Vadim Ghirda/AP

The crescent moon rises behind two statues on the Milan’s gothic cathedral known as the Duomo, in Milan, Italy. Antonio Calanni/AP

Market Closes for December 10^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Callie Bost and Eric Lam

Dec. 10 (Bloomberg) — Canadian stocks rose for a third day as gold producers posted the biggest rally in six weeks after a drop in the dollar boosted the price of the precious metal.

Dundee Precious Metals Inc. and Endeavour Silver Corp. jumped more than 5 percent, as gold and silver miners accounted for nine of the 10 biggest gains in the Standard & Poor’s/TSX Composite Index. Chorus Aviation Inc., the regional air carrier, soared 7 percent after boosting its quarterly dividend. Sunshine Oilsands Ltd. sank 6.3 percent after its chief executive and chief financial officers resigned.

The S&P/TSX rose 11.23 points, or 0.1 percent, to 13,324.01 at 4 p.m. in Toronto. The benchmark equity gauge has risen 7.2 percent this year, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.

“There’s a bear market rally in bullion, which is leading to a strength in Canadian stocks,” Bob Decker, fund manager with Aurion Capital Management Inc. in Toronto, who helps manage about C$6 billion ($5.7 billion), said in a telephone interview.

“This is narrowly focused on a bounce in gold prices due to weakness in the U.S. dollar.”

Gold futures advanced 2.2 percent, the biggest gain since mid-October, and the Bloomberg U.S. Dollar Index dropped 0.3 percent for a fourth straight loss, the longest slump in two months, amid speculation that the Federal Reserve will signal short-term U.S. interest rates will remain low.

Improving economic data has spurred bets that the Fed will reduce its monthly bond buying sooner than forecast while maintaining low interest rates to spark growth. The central-bank support has helped boost global equities. Fed officials next meet on Dec. 17-18.

Producers of raw materials rallied 1.8 percent as a group as six of the 10 main industries in the S&P/TSX advanced on trading volume 25 percent higher than the 30-day average. The S&P/TSX Gold Index jumped 4.2 percent, the most since October, as all but one of the 24 components rose.

Dundee Precious Metals surged 8.1 percent to C$2.81. Detour Gold Corp. increased 9.3 percent to C$4.22 and B2Gold Corp. rose 7 percent to C$2.29.

Endeavour Silver rallied 5.5 percent to C$3.82 to lead silver miners higher as the price of the metal reached the highest in almost three weeks.

Chorus Aviation added 7 percent to C$3.99, the highest price since April. The airline operator increased its quarterly dividend to 11.25 Canadian cents from 7.5 cents, payable to shareholders on or after Jan. 17 next year.

First Quantum Minerals Ltd. tumbled 3.4 percent to C$16.96, the lowest close since Aug. 29, after employees with The Mineworkers Union of Zambia rejected a deal it signed. The workers declined the agreement that included a 10 percent pay increase next year, negotiated by the union at First Quantum’s Kansanshi copper mine.

Sunshine Oilsands fell 6.3 percent to 23 Canadian cents after the oil explorer announced CEO John Zahary and CFO Robert Pearce resigned in a statement released to the Hong King stock exchange. The company appointed David Owen Sealock as interim president and CEO.

US

By Nick Taborek and Callie Bost

Dec. 10 (Bloomberg) — U.S. stocks fell, after the Standard & Poor’s 500 Index reached a record, as investors weighed federal budget negotiations and better-than-estimated economic data to gauge the timing of any Federal Reserve stimulus cuts.

General Motors Co. slipped 1.2 percent as the government sold its stake and the automaker named its next leader. Ares Capital Corp. dropped 3 percent after saying it will sell shares to help reduce debt. Twitter Inc. rallied for the fifth time in six sessions, adding 5.8 percent to extend a record. Goldman Sachs Group Inc. added 1.2 percent as federal agencies approved the Volcker rule to limit proprietary trading.

The S&P 500 dropped 0.3 percent to 1,802.62 at 4 p.m. in New York. The gauge closed at a record 1,808.37 yesterday. The Dow Jones Industrial Average fell 52.40 points, or 0.3 percent, to 15,973.13. About 5.8 billion shares changed hands on U.S. exchanges, 5 percent below the three-month average.

“In front of the prospect of a budget deal and the Fed’s meeting next week, there’s a little bit of nervousness,” Dan Greenhaus, chief global strategist with BTIG LLC in New York, said in a phone interview. “You’re inclined to trade sideways and I think that’s what’s happening. We had a very strong day on Friday, so some digestion of a more than 1 percent move up is not out of the question.”

The benchmark equity gauge advanced 0.2 percent yesterday to a record, extending a 1.1 percent gain on Dec. 6 after better-than-forecast jobs growth boosted confidence in the world’s largest economy. Improving data had spurred concern that the Fed will reduce its stimulus sooner than expected.

Data today showed job openings in the U.S. climbed to a five-year high in October, indicating employers were confident about demand even as Washington’s budget impasse shuttered parts of the federal government. Another report showed wholesale trade sales and inventories increased more than economists forecast.

Some 12 out of 35 economists surveyed by Bloomberg on Dec. 6 predicted that Fed policy makers will begin to slow the asset- buying program at their Dec. 17-18 meeting. Nine said the central bank will buy fewer bonds from its January meeting and the remaining 14 forecast that tapering will start in March.

Fed officials will be watching the outcome of U.S. budget talks, as Congressional negotiators have until Dec. 13 to reach a deal to trim automatic spending cuts and break a three-year stretch of failed fiscal talks in Washington.

Representative Steny Hoyer, the No. 2 House Democrat, said in an interview on CNBC today that he doesn’t like what he’s heard about the budget deal. Senate Budget Committee Chairwoman Patty Murray, Democrat from Washington, said negotiators are “getting close,” and that the remaining issues will be resolved.

“There was a little more hope yesterday on that front, that we could have something positive out of D.C.,” Richard Sichel, chief investment officer at Philadelphia Trust Co., said in a telephone interview. He helps oversee $1.9 billion. “Any doubt that surfaces on that could discourage investors.”

The 29-member budget conference panel was set up by the legislation that ended the 16-day government shutdown in October.

The S&P 500 has rallied 26 percent in 2013, challenging 2003 for the best annual gain in 15 years. The gauge trades at 16.3 times the projected earnings of its constituents, up from a price-earnings ratio of 13.7 at the start of the year. The index has risen every December since 2007, according to data compiled by Bloomberg.

Barclays Plc told investors to reduce holdings of U.S. stocks in 2014 as less attractive valuations may end their leadership in equities. Earnings growth in the U.S. will lag behind other regions next year, the bank said.

“You have to be a bit selective as the market gets more narrow and stocks get more expensive,” Patrick Spencer, London- based head of U.S. equity sales at Robert W. Baird & Co., said in an interview. “Sentiment overall is still bullish. December historically has always been a good month for markets.”

In China, a report from the National Bureau of Statistics showed that industrial production in the world’s second-largest economy rose 10 percent in November from a year earlier. That fell short of the median economist projection for growth of 10.1 percent. Output increased 10.3 percent in October.

Five U.S. agencies today approved the Volcker rule, which aims to reduce the chances that banks will put federally insured depositors’ money at risk by largely banning proprietary trading.

New York-based banks JPMorgan Chase & Co., Goldman Sachs and their industry allies have contested the proposed rule for more than three years.

Wall Street’s lobbying efforts paid off in easing some provisions of the rule. Regulators granted a broader exemption for banks’ market-making desks, on the condition that traders aren’t paid in a way that rewards proprietary trading.

Regulators said the final version imposed stricter restrictions on hedging, providing banks less leeway for classifying bets as broad hedges for other risks.

Goldman Sachs added 1.2 percent to $169.73 for the biggest gain in the Dow. JPMorgan added 0.3 percent to $56.70.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, rose 3.1 percent to 13.91.

Eight of 10 main S&P 500 industries retreated today.

Utility, consumer staple and telephone shares had the biggest declines. They were also three of the five worst performing groups of the year.

“This is typical December action,” Bruce Bittles, chief investment strategist at RW Baird & Co., said by phone from Sarasota, Florida. His firm oversees $100 billion. “It’s caused by tax-related moves by investors. You get a lot of people selling areas of the market that underperformed for tax losses, and they match those with a little bit of selling in some of the winners.”

General Motors slid 1.2 percent to $40.40. The company named Mary Barra, an engineer whose career began on the factory floor, to succeed Dan Akerson as chief executive officer, making her the first female CEO in the global automotive industry.

The U.S. government yesterday sold its final shares of GM, freeing the automaker from taxpayer ownership almost five years after receiving government aid.

Analogic Corp. slumped 6.8 percent to $86.33. The medical and airport-security device maker reported sales of $110.1 million for the three months ended Oct. 31, less than the $131.5 million average of two estimates compiled by Bloomberg. The shares didn’t trade in Europe today.

Ares Capital dropped 3 percent to $17.75. The investment- management company, which currently has 281.2 million shares outstanding, said it will sell 14.3 million shares and use the proceeds to reduce debt.

Starbucks Corp. fell 3 percent to $77.38. The world’s largest coffee-shop operator may see slowing growth in same- store sales in its fiscal first quarter, ITG Investment Research Inc. analyst Steve West said in a note.

Pep Boys-Manny, Moe & Jack fell 7.6 percent to $12.39. The auto-parts retailer reported third-quarter profit below analysts’ estimates as same-store sales fell 2.8 percent.

AutoZone Inc. rose 3.2 percent to a record $471.86. The company reported first-quarter earnings of $6.29 per share, beating analysts’ average estimate of $6.27 per share, and a 0.9 percent increase in sales at stores open at least 13 months.

CVS Caremark Corp. rose 1.9 percent to $67.99 and Cardinal Health Inc. climbed 3 percent to $66.22. The two companies are forming a joint venture to negotiate contracts for generic drugs.

Twitter gained 5.8 percent to $51.99, almost double its debut price of $26 on Nov. 6. The short messaging service has rallied 25 percent this month.

Broadcom Corp. advanced 2.3 percent to $28.51. The maker of communications chips used in Apple Inc.’s iPhone and iPad said revenue in the current period will be higher than it had originally anticipated on improving networking revenue.

Rambus Inc. jumped 12 percent to $9.58 after settling a patent dispute. Micron Technology Inc. agreed to pay $280 million in the next seven years for the right to use any of Rambus’s patents for the manufacture of integrated-circuit products, according to a joint statement issued after the close of trading yesterday.

Newmont Mining Corp. rose 2.5 percent to $24.18. Gold gained the most since mid-October as the dollar weakened.  Newmont is the largest-U.S. producer of the precious metal.

Have a wonderful evening everyone.

Be magnificent!

Nature’s law dictates that, in order to survive, bees must work together.

As a result, they instinctively possess a sense of social responsibility.

They have no constitution, no law, no police, no religion or moral training but,

because of their nature, the whole colony survives.

We human beings have  a constitution, laws and a police force.

We have religion, remarkable intelligence, and hearts with a great capacity to love.

We have many extraordinary qualities but, in actual practice,

I think we are behind those small insects.

In some ways, I feel that we are poorer than the bees.

His Holiness the XIVth Dalai Lama

As ever,

Carolann

The highest proof of virtue is to possess

boundless power without abusing it.

-Thomas Babington Macaulay, 1800-1859.

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