December 12, 2013 Newsletter

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.

Feeling tired and stressed over the holidays?  Here are 10 ways to keep the holiday stress minimal:

1. Set clear intentions by asking yourself, “What do I most need and desire over the holidays?”

2. Reduce the pressure of creating a “perfect Christmas.” Instead, Trudeau suggests, ask yourself what a “good enough” holiday would look like. For example, you can ask guests to contribute snacks to your New Year’s Eve party and still be a great host.

3. Combat “Christmas amnesia” – the kind that makes you forget how overwhelmed you were last year – by keeping track of all the holiday tasks and activities you do. Document which activities gave the most joy or caused the most stress. Keep your list for next year and ditch any commitments that bring few rewards.

4. Consider alternating holiday traditions, such as making a gingerbread house one year and Christmas pudding the next, instead of trying to do all of them each year.

5. Reduce your Christmas gift list by reaching out to friends and family who have everything they need. Ask if they’d like to exchange simple cards or shared experienced (such as an outing) instead of normal gifts.

6. Book downtime for your family before filling your precious vacation days with everything else. While you may be bombarded with invitations, “it’s really okay to say no,”.

7. Schedule activities in nature, such as snowshoeing or tobogganing, to give your family a break from the holiday hubbub.

8. Make sure to exercise, even if it’s a short skate with your family instead of a vigorous workout.

9. Try to get enough sleep. For example, don’t leave gift wrapping till the last minute if you know your kids will wake up early on Christmas morning.

10. Balance holiday indulgence with healthy habits. Managing your food and alcohol intake helps regulate moods.

“Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.”
Norman Vincent Peale

Photos of the Day:

Palestinian children look at a rainbow shining over buildings after heavy rain poured in Gaza City. The weather in Gaza dropped to 6 degrees Celsius (43 degrees Fahrenheit) with heavy rain showers and cloudy skies. Hatem Moussa/AP

Yuan Ye photographs the sunrise over Washington, looking toward the Lincoln Memorial, Washington Monument and the Capitol, on a chilly winter day in the nation’s capital. J.David Ake/AP

Market Closes for December 12^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Dec. 12 (Bloomberg) — Canadian stocks fell to a two-month low, led by gold mining companies amid speculation the Federal Reserve will reduce stimulus.

Iamgold Corp. sank 11 percent after suspending its dividend due to declines in the price of the metal. Fortis Inc. dropped 3.7 percent after agreeing to buy UNS Energy Corp. for $2.5 billion. Mercator Minerals Ltd. more than doubled after Russian billionaire Mikhail Prokhorov’s Intergeo MMC Ltd. agreed to acquire the company. Canadian National Railway Co. and Canadian Pacific Railway Ltd. paced gains among industrial stocks.

The Standard & Poor’s/TSX Composite Index fell 19.03 points, or 0.1 percent, to 13,114.39 at 4 p.m. in Toronto, the lowest since Oct. 17. The benchmark equity gauge pared an earlier loss of 0.6 percent. The index is up 5.5 percent this year, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.

“Over time, the long-term trend will be upwards,” said Barry Schwartz, a fund manager with Baskin Financial Services Inc. in Toronto. He helps manage C$585 million ($549.5 million) with the firm. “It’s an extremely long walk and sometimes you have to stop and catch your breath, which is what’s happening the last few days after an unbelievable run.”

Investors are weighing economic data ahead of the next meeting of the Federal Open Market Committee on Dec. 17-18, which may result in the Fed reducing its $85 billion a month in bond purchases.

U.S. retail sales rose 0.7 percent in November, more than forecast and the most since June, as Americans bought more cars and took advantage of discounts going into the holiday-shopping season, Commerce Department figures showed today in Washington.

Fortis slid 3.8 percent to C$30.01. Utilities slumped 1.7 percent to lead declines among six of 10 industries in the S&P/TSX.

Fortis, Canada’s largest investor-owned natural gas and electric utility, will pay $2.5 billion in cash to buy UNS Energy to expand into markets with more growth prospects, the company said in a statement yesterday.

Iamgold dropped 11 percent to C$3.63, a five-year low, after suspending its dividend to conserve cash. Steve Letwin, chief executive officer at the gold producing company, said in a statement that Iamgold is on target to reduce costs by $100 million this year.

Dundee Precious Metals fell 1.1 percent to C$2.68 and Eldorado Gold retreated 1.2 percent to C$5.95 as the price of gold dropped the most since Oct. 1. Gold futures for February delivery declined 2.6 percent to $1,224.90 an ounce in New York.

Canadian National Railway advanced 1.3 percent to C$58.40 and Canadian Pacific Railway rose 0.9 percent to C$160.28 to snap three days of declines. Industrial shares rose 0.7 percent, the most in the S&P/TSX.

Mercator Minerals soared 111 percent to 9.5 Canadian cents, the biggest increase in 11 years. The Vancouver-based copper producer will be renamed Intergeo Mining Ltd., giving Prokhorov’s Onexim Group a listing in Canada. Terms of the deal were not disclosed.

Redknee Solutions Inc., which works on infrastructure software for mobile networks, sank 20 percent to C$5.73 for the biggest decline since 2009. The Mississauga, Ontario-based company yesterday reported a fourth-quarter loss yesterday on acquisition costs. Gross margin shrank to 54 percent from 69 percent a year ago, Redknee said.

US

By Nikolaj Gammeltoft and Callie Bost

Dec. 12 (Bloomberg) — U.S. stocks fell a third day, sending the Standard & Poor’s 500 Index to a one-month low, as improving economic data spurred speculation the Federal Reserve will cut stimulus as early as next week.

Oracle Corp. dropped 2.8 percent after RBC Capital Markets LLC lowered its rating on the stock. Lululemon Athletica Inc. plunged 12 percent after projecting fourth-quarter profit that trailed analysts’ estimates. Facebook Inc. rose 5 percent as S&P Dow Jones Indices said it will join the S&P 500 next week.

The S&P 500 fell 0.4 percent to 1,775.50 at 4 p.m. in New York, extending a three-day decline to 1.8 percent after closing at a record on Dec. 9. The Dow Jones Industrial Average dropped 104.10 points, or 0.7 percent, to 15,739.43, also a one-month low. About 6.3 billion shares changed hands on U.S. exchanges, 3.3 percent above the three-month average.

“We’ve had a lot of pretty good economic news lately and in the face of that data we’re seeing the market starting to digest the exuberance it has had in 2013,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by phone. “A lot of it might be in anticipation of the FOMC announcement next week and whether this good economic news is enough for the Fed to start its tapering process.”

The S&P 500 fell 1.1 percent yesterday after a federal budget accord fueled concern that the Fed may begin tapering bond buying earlier than forecast. Central-bank policy makers have been watching fiscal events in Washington and scrutinizing economic data to determine whether growth is robust enough to withdraw some stimulus.

Data today showed retail sales rose more than forecast in November as Americans bought cars and took advantage of discounts going into the holiday-shopping season. A separate report indicated applications for unemployment benefits jumped last week from an almost three-month low. The Bloomberg Consumer Comfort Index advanced for a third straight week as Americans grew more optimistic about the economy.

Data last week showed the jobless rate fell to a five-year low and the economy expanded in the third quarter at a rate faster than initially estimated.

“The economic news has been generally pretty good and the Fed has supposedly has been waiting for better economic news,” John Carey, a fund manager at Pioneer Investment Management who oversees about $200 billion, said in a telephone interview.

“There was an expectation a few weeks ago that the Fed might wait until February or March. But now with good economic news, it’s starting to seep into the market that the Fed could start tapering earlier than that.”

The Fed will probably start reducing its $85 billion of monthly bond purchases at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent in a Nov. 8 poll.

The S&P 500 has surged 24 percent this year, poised for the best annual gain since 2003, as the Fed refrained from reducing its monthly bond purchases. Three rounds of monetary stimulus from the central bank have helped drive the equity index up more than 160 percent from a 12-year low in 2009.

The gauge has fallen 1.7 percent this month, leaving it on track for the first December decline since 2007. The final month of the year has been the second-best for U.S. equity returns, according to data compiled by Bloomberg that starts in 1928. The average gain for the month is 1.5 percent, more than twice the overall monthly mean of 0.6 percent.

“There will always be year-end adjustments,” Bateman said. “We’ve had a strong year and a lot of the professional investors want to capture the returns they’ve experienced and to protect the strong moves as opposed to think the market will continue with the same buoyancy as we saw in 2013.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, rose 0.8 percent to 15.54, after yesterday climbing the most since Oct. 15. The gauge has fallen 14 percent this year.

Seven of 10 main S&P 500 groups fell today. Producers of consumer staples paced declines, losing 1.4 percent. Procter & Gamble Co. slid 2.1 percent, the most since September, to $82.30.

Oracle dropped 2.8 percent to $33.60. RBC Capital’s Matthew Hedberg cut his rating on the stock to the equivalent of hold from buy and issued a 12-month price target of $35.

Cisco Systems Inc. fell 1.8 percent to $20.51 for a fourth day of losses that left the stock at its lowest since May. Chief Executive Officer John Chambers reiterated in a presentation to analysts that a slowdown in emerging-markets growth was a major reason why the computer-networking equipment maker missed first- quarter revenue expectations.

Ciena Corp. dropped 6.9 percent to $21.31. The provider of fiber-optic networking gear for carriers such as AT&T Inc. reported fourth-quarter adjusted earnings per share of 16 cents, missing estimates of 24 cents.

Lululemon lost 12 percent to $60.39, the lowest since August 2012. The yogawear retailer that named a new chief executive officer this week, said profit in the fourth quarter will be 78 cents to 80 cents per share. Analysts projected 84 cents, the average of 30 estimates compiled by Bloomberg. Delays in new merchandise hurt sales, the company said.

Facebook added 5 percent to $51.83. The social-networking company will replace Teradyne Inc. in the S&P 500 at the close of trading on Dec. 20. The addition to the benchmark index is a vote of confidence in the company, which met S&P’s requirements after achieving a year of profitability.

Hilton Worldwide Holdings Inc. rose to $21.50, 7.5 percent above its initial public offering price. The world’s biggest hotel operator raised $2.35 billion in a record IPO for a lodging company after selling about 117.6 million shares for $20 each, according to a statement yesterday.

Energy stocks rose 0.5 percent for the biggest gain in the S&P 500. Mexico will end 75 years of government control of its vast oil reserves after the nation’s lawmakers  approved the most significant economic reform since the North American Free Trade Agreement.

The bill will change Mexico’s charter to allow companies such as Exxon Mobil Corp. and Chevron Corp. to develop the largest unexplored crude area after the Arctic Circle. Exxon, the biggest oil company by market value, increased 1.2 percent to $95.36 for the largest increase in the Dow.

Southwest Airlines Co. jumped 4.6 percent to $18.79, while Delta Air Lines Inc. added 2 percent to $28.21. U.S. airlines won a repeal of $380 million in fees they pay for aviation security each year as part of a congressional budget agreement this week that raised related charges on their passengers.

JPMorgan Chase & Co. gained 0.4 percent to $56.31. The bank, which is the target of multiple U.S. Justice Department investigations, tentatively agreed to pay about $2 billion to resolve probes into whether it ignored warning signs about Bernard Madoff’s crimes, according to a person briefed on the matter.

American International Group Inc. advanced 1.5 percent to $49.42. The company, which has been unable to complete the sale of its jet-leasing business to a group of Chinese bidders, is now in talks to sell that unit to AerCap Holdings NV, people with knowledge of the matter said.

Global economic growth will accelerate at least 3.4 percent in 2014 from less than 3 percent this year as the euro area recovers from recession and China and other emerging markets stabilize, according to economists at Goldman Sachs Group Inc., Deutsche Bank AG and Morgan Stanley.

The upturn should prove bullish for equities and bearish for bonds. If it boosts corporate confidence in the durability of growth, it could further fuel demand, raising the odds that 2014 will break the pattern of recent years and come in better, rather than worse, than projected.

“So far it’s been a very bumpy, below-par and brittle expansion,” said Joachim Fels, co-chief global economist at Morgan Stanley in London. “Next year could bring a very important transition: a transition to a sounder, safer and more sustainable recovery.”

Have a wonderful evening everyone.

Be magnificent!

“I suppose leadership at one time meant muscles; but today it means getting along with people.”
Mahatma Gandhi

As ever,

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7