December 11, 2012 Newsletter

Dear Friends,

Tangents:

To Do: DECORATING CANDLES

Gather candles of all shapes, sizes, and colors.  Next buy special decorating wax sheets made by Stockmar.  Create shapes from the wax to press into the sides of the candles.  There is no end to the star designs you can make, even the youngest child can take part.  They make great hostess gifts!

I love candles, especially scented Diptyque candles from Paris.  I keep one on my desk and light it sometimes in the early mornings when I am working away here by myself.  The light, the shimmering flame inspires.  This is the time of year for light as we do each night with the Menorah, as we see all the wonderful holiday lights on homes and on trees, in gardens…

And on this day in…

1936 – Edward VIII abdicates to marry Wallis Simpson.

1943 – John F. Kerry was born.

1941 – The United States declares war on Italy and Germany.

1945 – A Boeing B-29 Superfortress shatters all records by crossing the United States in five hours and 27 minutes.

1946 –UNICEF founded.

1951 – Joe DiMaggio announces his retirement from baseball.

1964 – Frank Sinatra, Jr., is returned home to his parents after being kidnapped for the ransom amount of $240,000.

1967 – The Concorde, a joint British-French venture and the world’s first supersonic airliner, is unveiled in Toulouse, France.

1972 – Challenger, the lunar lander for Apollo 17, touches down on the moon’s surface, the last time that men visit the moon.

1978 – Massive demonstrations take place in Tehran against the shah.

 
Failure is an event, not a person. Yesterday ended last night. – Zig Ziglar.

photos of the day

December 11, 2012

Dolphins jump near a man dressed as Santa Claus at the Marineland aquatic park in Antibes, France.

Eric Gaillard/Reuters

Visitors walk across the Capilano Suspension Bridge decorated in Christmas lights in North Vancouver, British Columbia, Canada. Originally built in 1889, the bridge stretches 135 metres across and 70 metres above the Capilano River.

Andy Clark/Reuters

A gallery employee poses next to the artwork ‘Tom Na H-iu’ by Japanese video and performance artist Mariko Mori at the Royal Academy of Arts in London.

Stefan Wermuth/Reuters

Market Closes for December 11th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Dec. 11 (Bloomberg) — Canadian stocks rose for a third day after a measure of German investor confidence jumped and speculation grew that progress was being made in budget negotiations in the U.S.

Precision Drilling Corp. rose 4.4 percent after the company cut its capital spending next year and announced a dividend. MEG Energy Corp. fell 3.5 percent as analysts with FirstEnergy Capital Corp. cut the stock’s rating after the oil and gas producer announced its 2013 budget. Petrobank Energy & Resources Ltd. and Canadian Natural Resources Ltd. gained at least 0.9 percent.

The Standard & Poor’s/TSX Composite Index advanced 51.89 points, or 0.4 percent, to 12,282.36 in Toronto. The equity gauge has gained 2.7 percent this year.

“There’s rising hope for the fiscal cliff talks and rising hope in Europe after yesterday everyone was worried about Italy,” said Keith Richards, a fund manager with ValueTrend Wealth Management, referring to Italian Prime Minister Mario Monti announcing on Dec. 9 his plan to resign. The firm, based in Barrie, Ontario, manages about C$100 million. “Everything is leveraged through the U.S., so if it’s good for Europe it’s really good for the States and somewhat good for Canada.”

Lawmakers returned to Washington today amid a potential thaw in the U.S. fiscal policy dispute. U.S. House Speaker John Boehner said on the House floor today in Washington he is “hopeful” policymakers will reach a budget agreement before the end of the year, while calling for U.S. President Barack Obama to offer proposed spending cuts as part of a compromise.

German investor confidence jumped more than economists forecast to a seven-month high in December on speculation Europe’s largest economy will gather momentum next year. The ZEW Center for European Economic Research’s index of German investor confidence jumped to 6.9 from minus 15.7 in November.

Bank of Nova Scotia rose 1 percent to C$56.50 and Royal Bank of Canada, the nation’s largest lender, added 0.6 percent to C$58.87 as bank stocks contributed most to gains in the S&P/TSX. Trading volume was 21 percent higher than the 30-day average.

Precision Drilling climbed 4.4 percent to C$8.05 after it said yesterday it will begin paying a quarterly dividend of 5 Canadian cents in the fourth quarter of 2012, payable Dec. 28.

The Calgary-based driller has also cut its capital spending in 2013 to C$485 million from about C$920 million in 2012.

Petrobank rose 1.9 percent to C$11.82 and Canadian Natural Resources gained 0.9 percent to C$28.32 as crude advanced for the first time in six days. Crude for January delivery climbed 0.3 percent to settle at $85.79 a barrel in New York.

Research In Motion Ltd., which is preparing to unveil its BlackBerry 10 smartphone next February, rose 5.8 percent to C$12.42. The Waterloo, Ontario-based company released the “gold” build of its BlackBerry 10 developer tool kit, which includes the final tools and components necessary for developers to design applications for the smartphones.

Ivanhoe Energy Inc., a heavy-oil development and production company, soared 12 percent to 85 Canadian cents for a fourth day of gains. The Vancouver-based company presented its strategy and current activities at an investment conference in Toronto today.

MEG Energy slipped 3.5 percent to C$32.47 after the company announced its 2013 budget yesterday and a plan to sell C$800 million in shares.

Michael Dunn, analyst with FirstEnergy, said the company’s production guidance of 32,000 to 35,000 barrels a day was in line with his expectations, but capital spending of C$1.9 billion was “materially higher” than he estimated. He has lowered his rating for MEG to market perform from outperform, while also cutting his price target to C$41 from C$47.

US

By Whitney Kisling and Rita Nazareth

Dec. 11 (Bloomberg) — U.S. stocks rose, erasing losses since Election Day for the Dow Jones Industrial Average, after German investor confidence climbed and traders awaited progress on federal budget negotiations in Washington.

American International Group Inc. added 5.7 percent as the government sells its remaining stake. Apple Inc. rose 2.2 percent as Morgan Stanley reiterated its overweight rating for the world’s most valuable company. Delta Air Lines Inc. gained 5.1 percent after agreeing to buy a 49 percent stake in Virgin Atlantic Airways Ltd. from Singapore Airlines Ltd.

The Standard & Poor’s 500 Index advanced 0.7 percent to 1,427.84 at 4 p.m. in New York, after rallying as much as 1.1 percent earlier. The Dow increased 78.56 points, or 0.6 percent, to 13,248.44, its highest level since Oct. 22. About 6.4 billion shares changed hands on U.S. exchanges, 3.2 percent above the three-month average.

“There’s speculation of progress on a deal, given that the two sides are still meeting and talking” about how to resolve the so-called fiscal cliff, Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a phone interview. “Right now, people want to see a deal, period. There will be quite a relief rally if one’s announced.”

The S&P 500 is less than 0.1 percent from erasing its loss since the Nov. 6 election as President Barack Obama seeks a deal with Republican lawmakers to avoid more than $600 billion of automatic tax increases and spending cuts starting next year.

House Speaker John Boehner said today he is still “hopeful” the parties can reach a budget agreement before the end of the year.

Equities trimmed gains today as Senate Majority Leader Harry Reid said Republicans have offered no specifics on what they want in negotiations. “It’s going to be extremely difficult to get it done before Christmas, but it could be done,” Reid, a Democrat from Nevada, told reporters.

The S&P 500 has advanced 0.8 percent so far this month to give the benchmark index a 14 percent rally for 2012. Its average gain for December is 1.5 percent, the highest of any month except July, according to data dating back to 1928 compiled by Bloomberg. The stock market may also get a year-end boost from a so-called Santa Claus rally — an upswing in the last five days of the year and the first two in January, according to the Stock Trader’s Almanac.

Stocks rose today as German investor confidence jumped in December on speculation Europe’s largest economy will gather momentum next year. The trade deficit in the U.S. widened in October as the biggest slump in exports in almost four years outweighed a drop in imports.

Federal Reserve policy makers began a two-day meeting today that will culminate in updated projections on economic growth, unemployment and inflation. Fed officials are considering whether to supplement $40 billion a month of mortgage-bond purchases with Treasury purchases when their Operation Twist program expires at the end of the month.

BlackRock Inc.’s Laurence D. Fink, who heads the world’s largest asset manager, said today he doesn’t expect many U.S. companies to default, so investors shouldn’t be afraid to take risks in bonds. He said long-term investors must be in equities.

“Corporations are in fabulous shape,” Fink said in an interview with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s Market Makers. “I would say if you’re not in equities now, you need to start layering in and starting to buy, but I would not do it all at once.”

AIG added 5.7 percent to $35.26. The U.S. Treasury Department is selling 234.2 million shares at $32.50 each in the sixth offering since the 2008 rescue. The proceeds boost the profit on the rescue that began in 2008 to $22.7 billion, the Treasury said in a statement.

Technology shares advanced the most among 10 industries today, adding 1.4 percent. Apple gained 2.2 percent to $541.39.

Morgan Stanley reiterated its recommendation on the shares as its Smart TV survey suggests significant potential from the possible introduction of televisions, with consumers willing to pay a 20 percent premium.

Salesforce.com Inc. rose 4.2 percent to $165. Susquehanna Financial Group raised its price estimate for the largest maker of online customer-management software to $185 from $175, citing growth prospects as corporate customers do more computing tasks over the Internet.

Delta Air Lines increased 5.1 percent to $10.66. The Atlanta-based carrier agreed to buy the 49 percent stake in Richard Branson’s Virgin Atlantic for $360 million to boost its share of the lucrative trans-Atlantic travel market. Virgin, the biggest long-haul rival to British Airways at London’s Heathrow airport, will also join forces with Delta for the operation of flights between Europe and North America, the companies said today in a statement.

Genworth Financial Inc. advanced 2.7 percent to $6.90 after the insurer named Thomas J. McInerney as chief executive officer to stanch losses from insuring mortgages in the U.S. McInerney, previously CEO of ING Americas, replaces Michael Fraizer, who stepped down May 1, the Richmond, Virginia-based company said today. Genworth shares had plunged more than 80 percent since the end of 2006.

TripAdvisor Inc. surged the most in the S&P 500, advancing 6.6 percent to $40.91. Liberty Interactive Corp. bought about $300 million of TripAdvisor shares, gaining voting control of the online travel-review company from billionaire Barry Diller, who stepped down as its chairman.

Facebook Inc. will join the Nasdaq-100 Index tomorrow, replacing Infosys Ltd. The operator of the social network with more than 1 billion users will represent 1.02 percent of the index, and require exchange-traded funds that track the gauge to own $356.2 million worth of Facebook shares, according to Markit, a London-based research firm. Facebook added 0.5 percent to $27.98.

Stillwater Mining Co., a platinum producer in Montana, increased 7.2 percent to $12.30. The company will replace JDA Software Group Inc. in the S&P SmallCap 600 Index after the close of trading on Dec. 13.

WebMD Health Corp., the online provider of medical information, advanced 12 percent to $15.45 after saying it will eliminate 250 jobs, or 14 percent of the workforce, in a cost- cutting measure designed to deal with a decline in drug-company advertising. The New York-based company said it plans to take a pretax restructuring charge of $6 million to $8 million for the fourth quarter.

Discount stores fell the most among the 500 stocks in the benchmark U.S. equity index after Dollar General Corp., the largest U.S. dollar-store chain, said it will respond to rivals’ price cuts in the fourth quarter. The Goodlettsville, Tennessee- based company forecast annual sales growth would be at the lower end of its estimate, rising 8 percent to 8.5 percent from the earlier projection of 8 percent to 9 percent.

Dollar General fell 7.8 percent to $42.94, while Family Dollar Stores Inc. declined 8.4 percent to $64.68 and Dollar Tree Inc. slipped 3.7 percent to $37.98.

Hertz Global Holdings Inc. dropped 1.9 percent to $15.90.

The second-largest U.S. rental-car company declined after three investors sold 50 million of its shares.

The cost of hedging against losses in U.S. energy companies has fallen to an 18-month low after the shares trailed the broader market and data signaled global economic growth may be picking up. Puts protecting against a 10 percent decline in the Energy Select Sector SPDR Fund cost 5.57 points more than calls betting on a 10 percent rally, the smallest gap since May 2011, according to three-month data compiled by Bloomberg.

The U.S. exchange-traded fund tracking companies such as Exxon Mobil Corp. and Schlumberger Ltd. has climbed 3.4 percent this year, versus a 13 percent rally for the S&P 500. Energy shares have had the second-worst return among 10 industries in the S&P 500 this year.

“Our forecast is that the U.S. will avoid a recession and experience lumbering but measurably positive growth, while China is going to contribute to global growth which will help energy stocks,” Stephen Wood, the New York-based chief market strategist for North America for Russell Investments, which oversees $159.1 billion, said in a phone interview.

Have  a wonderful evening everyone.

Be magnificent!

Selfishness in man is a beginning.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Common sense is not so common.

-Voltaire, 1694-1778

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