December 18, 2013 Newsletter

Dear Friends,

Tangents:

Full moon to enjoy again tonight!

Recipe of The Month –from Maria Hines Restaurant Group, Seattle (sounds perfect for winter):

Smoked Heirloom Bean Cassoulet

1 cup cannellini beans,1 cup  cranberry beans,1 cup adzuki beans, 3 ea yellow onion peeled and halved, 3 ea carrots peeled, 6 ea celery stalks, leaves removed, 3 ea bouquet garni, 6 ea roma tomatoes,1 bu chives sliced thin,1 bu parsley chopped, 2 ea shallots, peeled and minced,4 ea garlic cloves, minced, salt and pepper to taste,1 lb butter, 2 oz black truffle carpaccio,4 oz truffle oil,1 lb wild mushrooms, cleaned and cut.

Soak the beans separately overnight. There should be three times the amount of water to beans. Drain the beans and place in hotel pans. Divide the onion, carrot, celery and bouquet garni between the three pans. Cover with cold water, enough to cover the beans by 3 inches. Bring to a simmer, cover with foil and cook in a 300 degree oven. Stir every 20 minutes. Cook until tender. When the beans are finished, season with salt and pepper. Let cool. Drain the liquid and smoke the beans using apple wood chips.

For the tomatoes: Core the tomatoes and cut an “x” in the bottom using a sharp knife. Blanch the tomatoes in boiling water and shock in an ice bath. Remove the skin and insides of the tomatoes. Mix the tomatoes with the herbs, shallot, garlic, olive oil and salt and pepper. Spread the tomatoes on a cooling rack and dry in the oven at 200 degrees until tomatoes are dry and the flavor is intensified, up to 4 hours. Julienne the tomatoes.

For the butter: In a food processor, combine the tempered butter, black truffle, and truffle oil, mix until well combined.

To assemble: Sauté the mushrooms in canola oil in a hot pan, season with salt and pepper. Cook until golden brown. Add the dried tomatoes and beans. Add enough water just to cover the bottom of the bean mixture and bring to a simmer, lower the heat and stir in the truffle butter, 2 tbs at a time, to taste. Adjust seasoning with fresh lemon juice, salt and pepper. Garnish with bread crumbs.

Courage is resistance to fear, mastery of fear, not absence of fear. –Mark Twain.

Photos of the day

Horses walk in the snow at the base of Mount Hermon in the Golan Heights near the Israel-Syria border December 17th. Nir Elias/Reuters

Bolivian squirrel monkeys gets a special treat from their keepers of sultanas and wax worms that were set out on a Christmas tree at London Zoo in London. London Zoo is the world’s oldest scientific zoo. It was opened in London on 27 April 1828. Alastair Grant/AP

Market Closes for December 18^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Callie Bost

Dec. 18 (Bloomberg) — Canadian stocks rose the most in two months after the Federal Reserve said it would reduce its monthly asset purchases by $10 billion and raised its assessment of the job market.

Dundee Precious Metals Inc. rallied 4.9 percent after gold futures increased as much as 1.1 percent. Athabasca Oil Corp. fell 2.7 percent after Macquarie Group Ltd. reduced its rating to neutral from outperform.

The Standard & Poor’s/TSX Composite Index increased 154.57 points, or 1.2 percent, to 13,334.73 at 4 p.m. in Toronto, the biggest jump since Oct. 10. The benchmark equity gauge has risen 1.6 percent this week, poised for its first week of gains since November.

“The uncertainty over tapering was more damaging than the actual event,” Bob Decker, a fund manager with Aurion Capital Management Inc. in Toronto, who helps manage about C$6 billion ($5.7 billion), said in a phone interview. “The Fed validated the view of the economy that most people have and this gives some encouragement that the risks are diminishing.”

The Fed announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus that Chairman Ben S.

Bernanke put in place to help the economy recover from the worst recession since the 1930s. Fed officials predicted the unemployment rate will fall as low as 6.3 percent by the end of next year, compared with a September projection of 6.4 percent to 6.8 percent.

Producers of raw materials in the S&P/TSX advanced 0.3 percent. Dundee Precious Metals Inc. jumped 4.9 percent to C$2.80. The S&P/TSX Gold Index slipped 0.5 percent. Gold futures for February delivery gained 0.4 percent to settle at $1,235 in New York.

Valeant Pharmaceuticals International Inc. rose 3.5 percent to a record C$120.03. The drugmaker has advanced 6.2 percent since Dec. 13 after this week announcing it will buy Solta Medical Inc., a medical-device manufacturer, for about $250 million.

WestJet Airlines Ltd. slipped 1 percent to C$27.60. The company is “exploring” a possible bid, Chief Executive Officer Gregg Saretsky said in an interview. American Airlines Group Inc. was required to give up 104 takeoff and landing slots at Reagan to settle an antitrust lawsuit filed by the U.S. government and complete its merger with US Airways Group Inc.

USA

By Callie Bost and Whitney Kisling

Dec. 18 (Bloomberg) — U.S. stocks surged, sending benchmark indexes to record highs, while Treasuries fell as the Federal Reserve expressed enough confidence in the labor market to taper asset purchases while still promising to hold interest rates close to zero. Commodities and the dollar advanced.

The Standard & Poor’s 500 Index rose 1.7 percent to 1,810.65, its biggest gain in two months, and the Dow Jones Industrial Average soared 292.71 points to 16,167.97 by 4:30 p.m. in New York. The benchmark gauge of U.S. equity volatility dropped the most since October. Ten-year Treasury yields added four basis points to 2.88 percent. The greenback jumped to a five-year high versus the yen and climbed versus most major peers. Gasoline and coffee drove gains in commodities.

The Fed announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place by outgoing Chairman Ben S. Bernanke to help the economy recover from the worst recession since the 1930s. Fed officials predicted the unemployment rate will fall to as low as 6.3 percent by the end of next year, compared with a September projection of 6.4 percent to 6.8 percent.

“The market likes the news,” Jeffrey Kleintop, chief market strategist at LPL in Boston, which manages about $400 billion, said in a phone interview. “This was very small, more of a test than a taper at just $10 billion. This really suggests the Fed is going to be cautious moving forward. Going from $85 billion to $75 billion is not a big deal, so that’s encouraging.”

About 34 percent of economists surveyed by Bloomberg Dec. 6 had predicted that the Fed would start paring bond buying this month, up from 17 percent in a Nov. 8 poll.

The central bank today left unchanged its statement that it will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent.

The panel added that it “likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation continues to run below” the Fed’s 2 percent goal.

Fed stimulus has helped propel gains of more than 165 percent in the S&P 500 from a 12-year low reached in March 2009 and put the gauge on track for its best annual performance since 1997.

Speculation over a reduction in bond buying has whipsawed equities since May, when Bernanke first indicated cuts to the program could start this year. The S&P 500 tumbled 5.8 percent from a record May 21 through June 24. After the Fed unexpectedly refrained from tapering following its Sept. 17-18 meeting, the gauge extended its rally to set record highs.

The index had retreated 1.5 percent through yesterday from its latest record reached Dec. 9, as improving economic data fueled speculation the Fed would deem growth sufficient enough to withdraw some support. The S&P 500 is up 27 percent this year, the most since surging 31 percent in 1997.

Health-care, financial, consumer staple and energy shares rose more than 1.6 percent for the biggest gains among the 10 main S&P 500 industry groups today. Exxon Mobil Corp., 3M Co. and JPMorgan Chase & Co. rallied at least 2.7 percent to lead the Dow’s advance.

Lennar Corp. climbed 6.3 percent after the homebuilder reported earnings that topped estimates. An S&P gauge of builders jumped 4.2 percent as all 11 companies in the index advanced.

A Commerce Department report today showed U.S. housing starts jumped 22.7 percent to a 1.09 million annualized rate, exceeding all forecasts of economists surveyed by Bloomberg and the most since February 2008. Permits for future projects held near a five-year high, indicating the pickup will be sustained into 2014.

The Chicago Board Options Exchange Volatility Index, the benchmark gauge of options prices know as the VIX, sank 15 percent to 13.80 for its biggest decline since Oct. 16. The VIX, which moves in opposite direction of the S&P 500 about 80 percent of the time, had risen for 14 of the past 16 trading days, the first time that has ever occurred.

Futures on Japan’s Nikkei 225 Stock Average jumped 4.2 percent to 15,895 on the Chicago Mercantile Exchange, after closing at 15,590 yesterday in Japan. Contracts on Australia’s S&P/ASX 200 Index climbed 1.1 percent, while futures on the Kospi Index in South Korea rose 0.9 percent in their most recent trading session. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York jumped 1.7 percent.

Coffee, gasoline, heating oil and gas oil all rallied  more than 0.9 percent to lead gains in 10 of the 24 commodities in the S&P GSCI Index of raw materials prices, while soybeans, wheat and gold dropped at least 0.9 percent for the biggest declines.

West Texas Intermediate oil climbed 0.6 percent to $97.80 a barrel. The U.S. Energy Information Administration said crude stockpiles decreased 2.94 million barrels to 372.3 million last week. Inventories were forecast to slip 3.5 million barrels, according to the median of nine analyst estimates in a survey before the report.

Treasury yields increased earlier in the U.S. session as the government sold $35 billion in five-year notes at a yield of 1.6 percent, compared with a forecast of 1.57 percent in a poll of seven of the Fed’s 21 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount offered, was 2.42, the least since August.

The benchmark 10-year Treasury yield, which influences rates on everything from mortgages to corporate debt, has more than doubled since reaching a record-low 1.379 percent in July 2012. It’s still less than the average over the past decade of 3.50 percent.

Markets in Europe closed before the Fed’s announcement.

The Stoxx Europe 600 Index climbed 0.9 percent, erasing yesterday’s drop and reaching a one-week high. Electrolux AB, a maker of ovens and dishwashers, jumped 3.5 percent after a report showed U.S. shipments of appliances surged last month.

Elektrobit Corp. advanced 6.7 percent after the Finnish maker of software products for cars increased its earnings forecast.

Technip SA lost 6.3 percent after the French oilfield- services company said it expects a weaker profit margin at its subsea division next year.

The pound climbed 0.8 percent to $1.6401, after declining 1.1 percent over the previous five days.

The U.K. jobless rate in the three months through October measured by International Labour Organization methods declined to 7.4 percent from 7.6 percent in the quarter through September, the Office for National Statistics said in London today. The median forecast of 32 economists was for the rate to stay unchanged at 7.6 percent.

Germany’s 10-year bund yield rose two basis points to 1.85 percent. The Ifo institute German business climate index, based on a survey of 7,000 executives, increased to 109.5 in December from 109.3 in November. That matched the median prediction of 39 estimates in a survey.

The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, rallied 0.5 percent, the biggest one-day gain since Nov. 8.

The yen weakened as much as 1.5 percent to 104.21 per dollar, the lowest intraday level since October 2008. Japan’s currency, viewed as a haven by some investors, slid at least 0.3 percent against all 16 major counterparts. The Asian nation’s merchandise trade deficit for November was 1.35 trillion yen on a seasonally-adjusted basis, compared with the 1.2 trillion yen median estimate in a Bloomberg News survey.

The yen has tumbled 15 percent this year, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The euro has risen 8.4 percent and the dollar advanced 4 percent.

The Bank of Japan, which starts a two-day meeting Dec. 19, sees significant scope to boost government bond purchases if needed to achieve its inflation target, according to people familiar with the discussions. The BOJ buys more than 7 trillion yen of the nation’s bonds every month to battle deflation.

Turkish stocks erased earlier losses, sending the benchmark up 0.7 percent after dropping as much as 3.9 percent today and closing 5.2 percent lower yesterday. The sons of two cabinet ministers and the chief executive officer of the country’s largest listed state-owned bank were arrested as part of a corruption probe.

India’s S&P BSE Sensex Index advanced 1.2 percent to a one- week high after the nation’s central bank unexpectedly left its policy interest rate unchanged.

The Indonesian rupiah depreciated 0.4 percent to its weakest level in five years on concern a planned ban on ore exports will worsen the country’s current-account deficit.

Thailand’s baht weakened as much as 0.7 percent against the dollar as investors weighed the outcome of the Fed’s monetary policy meeting.

Have a wonderful evening everyone.

Be magnificent!

Ever tell yourself, I am He.

These are words that will burn up the dross that is in the mind, words that will bring out the tremendous energy

which is within you already, the infinite power which is sleeping in your heart.

Swami Vivekananda, 1863-1902

As ever,

Carolann

It is neither wealth nor splendor, but tranquility

and occupation, that gives happiness.

-Thomas Jefferson, 1743-1826.

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