December 23, 2013 Newsletter

Dear Friends,

Tangents:

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

People looking for the spirit of Christmas past, need only take a self-guided tour of a fully decorated Craigdarroch Castle this holiday season. Visitors will find late-Victorian period decorations in every room of the historic house, which also contains furniture, paintings, glassware, dishes and other domestic material that dates to the time the Dunsmuir family lived in the castle, between 1890 and 1908. Over the Christmas holidays, items in the museum’s collection are augmented by loans of toys, decorations and silverware from private and institutional collections. Staff and volunteers begin to unpack decorations in the middle of October to get the museum ready for the Christmas season. The halls are indeed decked with boughs of holly. The intense colours of the berries and peacock feathers, which Victorians loved, glow even more during sunlit hours by the light filtering through the 33 original stained-glass windows. Depending on the time of day, visitors can take part in a puppet workshop or craft time for children in the morning, enjoy musical interludes by local musicians in the afternoon and take in a play in the evening.

The drawing room was used for formal occasions and is decorated for Christmas with toys and decorations dating back to the late 1800s and early 1900s.

“It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership.”
Nelson Mandela

Photos of the Day:

Petal portrait: The phalaenopsis is one of the most popular types of orchid because it is so hardy. Melanie Stetson Freeman/Staff

Market Closes for December 23^rd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Dec. 23 (Bloomberg) — Canadian stocks rose to the highest closing level in four weeks, as data showed the nation’s economy grew a fourth straight month, led by gains in manufacturing and wholesale trade.

Reitmans Canada Ltd. rallied 9 percent after Fairfax Financial Holdings Ltd. acquired shares of the clothing retailer. Toronto-Dominion Bank, the nation’s largest lender, gained 0.8 percent. Niko Resources Ltd. surged 24 percent after raising cash through a private placement and receiving loans from some investors. Detour Gold Corp. fell 4.5 percent to pace losses among gold miners.

The Standard & Poor’s/TSX Composite Index rose 48.10 points, or 0.4 percent, to 13,447.70 at 4 p.m. in Toronto, for the highest close since Nov. 25. The benchmark equity gauge has risen 8.2 percent this year.

“Seasonally, it’s pretty positive going into the end of the year,” said Bruce Campbell, fund manager at StoneCastle Investment Management Inc. from Kelowna, British Columbia. The firm manages about C$100 million ($94.5 million). “We continue to see things move in the right direction. Over the last three or four months, we’ve seen a bit of a synchronization across all the global economies, a little better numbers across the board. Canada bottomed out at the beginning of this year and now we’re inching toward economic growth.”

Canada’s gross domestic product rose 0.3 percent in October. Analysts surveyed by Bloomberg had forecast a 0.2 percent expansion, based on the median of 15 estimates.

BlackBerry Ltd. advanced 3.1 percent to C$7.98 to pace gains among technology stocks. The group climbed 0.6 percent, as eight of 10 industries in the S&P/TSX rose. Trading volume was 34 percent lower compared with the 30-day average.

The Waterloo, Ontario-based company has surged 23 percent in the past three days, the biggest gain for that time span since February, as the company announced a five-year plan on Dec. 20 to outsource smartphone production to Foxconn Group.

Reitmans Canada surged 9 percent to C$6.92, the biggest gain since 2009. Fairfax Financial acquired 2 million Reitmans Class A shares at C$6.35 a share for C$12.7 million total. The acquisition raises Fairfax’s holdings in the company to 13.8 percent of Class A shares outstanding, it said in a release.

Financial stocks added 0.4 percent as a group. TD Bank added 0.8 percent to C$98.93, a record close. The stock has rallied 4.3 percent in the past seven days, the longest winning streak since November. Royal Bank rose 0.8 percent to C$70.80.

Niko Resources jumped 24 percent to C$3.18. The company said it will receive $340 million in loans from some institutional investors and its fourth-quarter production will increase.

The oil and gas explorer said Dec. 19 it had raised about C$33 million through a private placement of subscription receipts. The company said it will use the cash to pay a portion of its debt. The stock has soared 64 percent in the past two days.

Kinross Gold slipped 2.8 percent to C$4.56 and Detour Gold dropped 4.5 percent to C$3.61. Gold futures fell in New York on speculation less stimulus from the Federal Reserve and an improving U.S. economy will cut demand for bullion as a protection of wealth.

US

By Nick Taborek and Lu Wang

Dec. 23 (Bloomberg) — U.S. stocks rose, with benchmark indexes extending all-time highs, as Apple Inc. rallied and the International Monetary Fund indicated it would raise its outlook for the economy.

Apple jumped 3.8 percent after the company struck a deal to sell its iPhones through China Mobile Ltd., the world’s largest phone company. T-Mobile US Inc. added 2.8 percent after people familiar with the situation said SoftBank Corp. Chief Executive Officer Masayoshi Son is exploring a deal for Sprint Corp. to buy the majority of the wireless-phone provider next year.

Micron Technology Inc. slid 3.1 percent after Bank of America Corp. downgraded its rating on the stock.

The Standard & Poor’s 500 Index added 0.5 percent to 1,827.99 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 73.47 points, or 0.5 percent, to 16,294.61. The Nasdaq Composite Index jumped 1.1 percent to 4,148.90. About 5.5 billion shares changed hands on U.S. exchanges, 9.8 percent below the three-month average.

“It’s a cauldron of bullish factors,” Donald Selkin, who helps manage about $3 billion as the New York-based chief market strategist at National Securities Corp., said by phone.

“There’s the seasonal factor, the IMF raising its forecast and the Fed saying they’re going to keep the federal funds rate low.”

The Dow jumped 3 percent last week and the S&P 500 climbed 2.4 percent as the Federal Reserve said it will reduce the pace of bond buying amid faster-than-estimated economic growth. The S&P 500 has advanced 28 percent in 2013, putting it on course for its biggest annual rally since 1997. Three rounds of monetary stimulus have sent the equities benchmark up 170 percent from a 12-year low in 2009.

The IMF is raising its outlook for the U.S. economy, as a budget deal in Washington and the Fed’s plan to taper its bond buying ease doubts about the future, IMF Managing Director Christine Lagarde said yesterday in an interview broadcast today on NBC’s “Meet the Press.” The IMF predicted in October that the world’s largest economy would expand 2.6 percent next year.

Lagarde didn’t set out any new projections.

A report last week indicated the U.S. economy expanded at a 4.1 percent annualized rate in the third quarter, as consumers stepped up spending on services and companies invested more in software. The reading was the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent, according to the report.

Data today showed that consumer spending rose in November by the most in five months as Americans took advantage of store discounts during the year-end shopping season, giving the world’s largest economy a lift.

A separate report showed the the Thomson Reuters/University of Michigan final index of consumer sentiment in December climbed to 82.5 from 75.1 a month earlier. The median forecast of 61 economists in a Bloomberg survey called for 83 after a preliminary reading of 82.5.

The S&P 500 has gained 1.2 percent so far this month.

December has been the second-best month 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. The last December retreat for the S&P 500 was in 2007.

“This is a very good seasonal period of time for the markets,” Eric Green, director of research and fund manager at Penn Capital Management, said by phone. The Philadelphia-based firm oversees about $7 billion. “Most of the economic data points suggest stronger growth going forward.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, fell 5.5 percent to 13.04.

Eight of 10 main S&P 500 groups advanced today, with technology stocks rallying 1.5 percent to pace the gains.

Facebook Inc. surged 4.8 percent to a record $57.77 as the company began trading as a member of the S&P 500 today.

Today’s surge in technology shares helped the Nasdaq surpass 4,120, a level that represents a recovery of 76.4 percent of the index’s decline during the bursting of the Internet bubble. The threshold is seen by Fibonacci analysts as the last obstacle for a full recovery. The benchmark gauge, which plunged 78 percent from its peak of 5,048.62, set on March 10, 2000, would need to climb about 22 percent to reclaim its record.

Apple rose 3.8 percent to $570.09, the highest close since Dec. 4, 2012. The company, ending six years of negotiations, struck a deal that will give both the U.S. phone maker and China Mobile a means to fight declining share in the market of 1.2 billion wireless subscribers.

China Mobile will sell the iPhone 5s and 5c models in its stores from Jan. 17, the companies said in a statement that provided no financial terms. Apple’s stores in the country will also offer the phones for China Mobile’s network.

T-Mobile advanced 2.8 percent to $31.86. SoftBank’s Son has discussed financing a bid with banks such as Credit Suisse Group AG, Mizuho Bank Ltd. and Goldman Sachs Group Inc., people familiar with the matter said.

Son, who is looking for about $20 billion to finance a bid, has also met with Deutsche Bank AG and JPMorgan Chase & Co., while receiving advice from the Raine Group LLC, said the people, who asked not to be identified because the discussions are private. Those six banks helped finance and advise on SoftBank’s purchase of Sprint.

An S&P index of homebuilders rallied 4 percent to the highest level in five months as all 11 members advanced. KB Home gained 7.6 percent to $18.19 after Citigroup Inc. upgraded the shares to neutral from sell, citing strengthening demand.

PulteGroup Inc. added 5.9 percent to $19.71.

Darden Restaurants Inc. rallied 6.4 percent to $54.35 for the biggest gain in the S&P 500. The owner of Olive Garden and LongHorn Steakhouse slid 3.5 percent last week after announcing it will separate the Red Lobster seafood chain.

The plan falls short of activist investor Barington Capital Group LP’s proposals for a bigger shakeup, including ways to profit from its real estate. Starboard Value LP, which disclosed a stake in the company today, also said Darden’s proposal is inadequate.

Jos. A. Bank Clothiers Inc. slid 1.3 percent to $56.29. The retailer rejected a $1.54 billion takeover offer from Men’s Wearhouse Inc. as too low and said it would continue to seek its own acquisitions. Men’s Wearhouse dropped 0.9 percent to $51.55.

Micron Technology slid 3.1 percent to $21.49. An analyst at Bank of America Corp. downgraded the memory chipmaker to underperform from neutral, citing increasing competition.

Have a wonderful evening everyone.

Be magnificent!

“When the power of love overcomes the love of power the world will know peace.”
Jimi Hendrix

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