December 9, 2013 Newsletter

Dear Friends,

Tangents:

Margie Warrell, Forbes.com:

“Everyone of us are called to greater courage in some unique way.  No one is immune to fear.  No one is forever free of self doubt.  Connecting to  a purpose much bigger than ourselves is what enables us to step through our fears of not being enough, to think bigger, to play bolder, and to act with the bravery needed to make the important contribution only we can make…

Courage.  Resilience.  Forgiveness.  Dedication to a cause far bigger than ourselves. These are the timeless messages of the great Madiba’s life.  I can think of no more meaningful way to honor his passing than to reflect on the legacy we are creating each day in how we choose to live our own lives.  Does your life tell a story of courage, resilience, forgiveness and commitment to a cause greater than yourself?  Something to reflect.”

-Quotes from Mandela:

Do not judge me by my successes, judge me by how many times I fell down and got back up again.

Difficulties break some men but make others.  No axe is sharp enough to cut the soul of a sinner who keeps on trying, one armed with the hope that he will rise even in the end.

Resentment is like drinking poison and then hoping it will kill your enemies.

I learned that courage was not the absence of fear, but the triumph over it.  The brave man is not he who does not feel afraid, but he who conquers that fear.

Lead from the back – and let others believe they are in front.

Photos of the day

An egret prepares to fly near the Galle Face beach in Colombo, Sri Lanka. Dinuka Liyanawatte/Reuters

A rainbow shines over buildings after heavy rain poured in Gaza City. Hatem Moussa/AP

Motorists negotiate snow covered roads along West Western Avenue in Muskegon, Mich. Ken Stevens//The Muskegon Chronicle/AP

Market Closes for December 9^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Dec. 9 (Bloomberg) — Canadian stocks rose a second day for the biggest two-day gain in more than a month after commodity producers advanced on rising gold and copper prices.

Detour Gold Corp. and Semafo Inc. rallied at least 4.8 percent as gold snapped two days of losses. Royal Bank of Canada and Bank of Nova Scotia paced gains among financial stocks. Air Canada, the nation’s largest airline, dropped 2.8 percent after analysts with National Bank Financial lowered their rating on the stock. Africa Oil Corp. tumbled 9 percent after the company said that it has plugged and abandoned a well in Kenya.

The Standard & Poor’s/TSX Composite Index rose 32.06 points, or 0.2 percent, to 13,312.78 at 4 p.m. in Toronto. The measure has advanced 0.9 percent in the past two days, the most since Oct. 25. The benchmark equity gauge has risen 7.1 percent this year, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.

“The unemployment numbers were good on Friday and we’re seeing some follow-through here,” said John Kinsey, a fund manager with Caldwell Securities Ltd. in Toronto. He helps manage about C$1 billion ($937.9 million) with the firm. “It’s primarily the financials and gold doing well today. The market had a nice run in the fall and was perhaps overextended. Now we have a bit of a base and maybe we’ll head up again.”

Housing starts in Canada fell to a seasonally adjusted annual rate of about 192,000 units in November, a 3 percent decline from about 198,000 in October, as construction of multiple-unit projects such as condominiums fell.

The weekly Bloomberg Nanos Canadian Confidence Index, a measure of consumer sentiment, increased to 59.3 in the period ended Dec. 6 and is nearing a one-year high of 59.8. The share of respondents who think real-estate prices will increase over the next six months rose to 40.3 from 40.0 the previous week, the highest level since March 2012.

Five of 10 industries in the S&P/TSX advanced on trading volume 5.1 percent higher than the 30-day average.

Royal Bank, the nation’s largest lender, climbed 1 percent to C$69.75 and the Bank of Nova Scotia added 0.5 percent to C$64.30 as financial stocks rose 0.3 percent as a group.

Canada’s largest banks slipped 2 percent after reporting quarterly earnings last week.

Semafo jumped 4.8 percent to C$2.60 and Detour Gold climbed 7.8 percent to C$3.86, as all but two of the 24 members of the S&P/TSX Gold Index increased. Detour Gold is the worst- performing stock in the S&P/TSX this year, slumping 84 percent.

Gold rose from a five-month low as investors weighed the outlook for reduced U.S. stimulus as early as next week against speculation physical demand may increase at lower prices. Gold for February delivery advanced 0.4 percent in New York.

Barrick Gold Corp. rallied 3.9 percent to C$17.01 and Canadian Natural Resources Ltd. added 1.1 percent to C$34.58 after a cover story in Barron’s included the two stocks among 10 that may be winners in 2014.

First Quantum Minerals Ltd. gained 2 percent to C$17.55 and Teck Resources Ltd. increased 0.9 percent to C$25.21. Copper rose 0.2 percent to a four-week high in New York.

Africa Oil sank 9 percent to C$8.99, falling the most in a year, after the company said its Bahasi well in Kenya has been stopped after finding sand and shale with only “minor shows” of gas.

Air Canada, the best-performing stock in the S&P/TSX this year, fell 2.8 percent to C$7.71, the biggest decline in three weeks. Cameron Doerksen, an analyst with National Bank Financial, lowered his rating for the stock to sector perform, the equivalent of a hold, from outperform, or buy. The primary reason for the downgrade was the stock is approaching Doerksen’s target price of C$8, according to a research report from the bank. Air Canada has soared 341 percent this year.

USA

By Nick Taborek

Dec. 9 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index to a fresh record, as investors weighed the timing of any cuts to Federal Reserve monetary support amid budget negotiations in Washington.

Sysco Corp. jumped 9.7 percent after the food distributor agreed to buy closely held US Foods in a deal valued at about $3.5 billion. Gilead Sciences Inc. advanced 1.6 percent after getting approval for a hepatitis C pill that may generate more than $6 billion in annual sales. McDonald’s Corp. dropped 1.1 percent after November sales missed analysts’ estimates.

The S&P 500 climbed 0.2 percent to 1,808.37 at 4 p.m. in New York, surpassing its previous record of 1,807.23 set on Nov. 27. The Dow Jones Industrial Average rose 5.33 points, or less than 0.1 percent, to 16,025.53. About 5.6 billion shares changed hands on U.S. exchanges, 8.9 percent below the three-month average.

“People are getting more comfortable with the idea of tapering and the concept that the reason for the taper is that the economy is getting stronger,” Walter Todd, who oversees about $950 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said by phone. “At the end of the day that’s a good thing not a bad thing. For the next week it’s just going to be speculation around the timing.”

The S&P 500 gained 1.1 percent on Dec. 6, halting a five- day slump that erased 1.2 percent from the gauge, as jobs growth in November beat estimates and the unemployment rate fell to a five-year low.

The index fell less than 0.1 percent last week, snapping an eight-week rally that was the longest in almost a decade, as improving economic data spurred concern that the Fed will reduce its stimulus sooner than expected.

Fed policy makers will probably begin reducing $85 billion in monthly bond buying at a Dec. 17-18 meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a November survey. In November, 53 percent predicted a tapering in March, compared with 40 percent in the poll of 35 economists.

Fed Bank of St. Louis President James Bullard, who votes on policy this year, said in a speech today the odds of tapering bond purchases have risen along with gains in the labor market, and any reduction should be modest to account for low inflation.

“A small taper might recognize labor-market improvement while still providing the committee the opportunity to carefully monitor inflation during the first half of 2014,” Bullard, a supporter of record stimulus, said in St. Louis.

His Dallas counterpart, Richard Fisher, said in a Chicago speech that the Fed needs to begin tapering “at the earliest opportunity,” as the current pace of stimulus “comes at a cost that far exceeds its purported benefits.”

The central bank will also be watching the outcome of U.S. budget talks. Fed officials cited the drag from fiscal policy in their Oct. 30 statement and Jeffrey Lacker, president of the Richmond Fed, said in a speech today that U.S. budget uncertainty is also weighing on business hiring and investment decisions.

Congressional negotiators are nearing a deal to trim automatic spending cuts and break a three-year stretch of failed fiscal talks in Washington. Aides to Republican Representative Paul Ryan and Democratic Senator Patty Murray, chief negotiators on a special panel, say they are optimistic for a compromise by a Dec. 13 deadline.

The 29-member budget conference panel was set up by the legislation that ended the 16-day government shutdown in October, with the goal of getting both chambers of Congress back to regular order in devising a budget plan for Congress.

“Our fundamental view is that any tapering-related pullback will be a temporary selloff,” said Dan Morris, who helps oversee about $520 billion as global investment strategist at TIAA-CREF Asset Management in New York. “Valuations and earnings are good. We don’t see a bubble in U.S. stocks.”

The S&P 500 has gained 27 percent in 2013 as the Fed refrained from trimming its $85 billion a month of bond purchases. The gauge is trading at 16.2 times the projected earnings of its constituents, compared with a 10-year average of almost 14.9.

Household wealth in the U.S. increased from July through September as improvement in the home and equity markets boosted American balance sheets. Net worth for households and non-profit groups rose by $1.92 trillion in the third quarter, or 2.6 percent from the previous three months, to $77.3 trillion, the Federal Reserve said today from Washington.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, fell 2.2 percent to 13.49.

Eight of 10 main S&P 500 industries advanced today, with materials companies climbing 0.5 percent to pace the gains.

Financial firms rose 0.4 percent as a group, a day before five U.S. agencies will finish the Volcker rule, which aims to reduce the chances that banks will put federally insured depositors’ money at risk by largely banning proprietary trading.

JPMorgan Chase & Co. climbed 0.8 percent to $56.51 and Goldman Sachs Group Inc. added 0.3 percent to $167.67.

Sysco gained 9.7 percent to $37.62. The company will pay $3 billion in common stock and $500 million in cash. Sysco, which will also assume about $4.7 billion US Foods’ debt, said it has secured fully committed bridge financing for the transaction.

Gilead climbed 1.6 percent to $75.19. The Food and Drug Administration said it gave approval for sofosbuvir, which Gilead will call Sovaldi, for use with other drugs depending on the type of illness.

Given Imaging Ltd. surged 27 percent to $30.06, the highest since October 2007. Covidien Plc plans to acquire the medical technology company’s outstanding stock for $30 a share, or about $860 million.

Ruby Tuesday Inc. rallied 5.3 percent to $7.18. The restaurant chain hired Goldman Sachs to explore a sale, Debtwire reported on Dec. 6.

McDonald’s fell 1.1 percent to $95.72 for the biggest drop in the Dow. The world’s largest restaurant chain said sales at stores open at least 13 months rose 0.5 percent last month, trailing analysts’ estimates as rivals lured diners amid a choppy U.S. economic recovery. Analysts projected a 0.6 percent increase, the average of 14 estimates from Consensus Metrix.

Abercrombie & Fitch Co. lost 2.2 percent to $34.10, bringing its decline this year to 29 percent. Chief Executive Officer Mike Jeffries got a new contract with the teen-apparel retailer amid weakening earnings and a call by shareholder Engaged Capital LLC for him to be replaced.

Dean Foods Co. lost 1.9 percent to $18.08. Morgan Stanley reduced its rating on the food-and-beverage producer to equal weight, similar to hold, from overweight, or buy. The shares had posted a year-to-date gain of 20 percent through Dec. 6, even after falling as much as 19 percent from a four-year high in August.

Edwards Lifesciences Corp. slid 5.4 percent to $62.73. The maker of artificial heart valves said 2014 earnings per share will be in a “wide range” around $3, citing “uncertain timing” of new competition in the U.S. and Europe. Analysts were predicting profit next year of $3.49 a share.

Have a wonderful evening everyone.

Be magnificent!

The person who can wear the mantle of a Master

is one who is devoted to the cause of non-violence and non-possession

who is driven by the quest for truth and the right perspective,

who is capable of solving his own emotional mental problems and

who can show others the  way to overcome their emotional and mental problems.

Acharya Mahaprajna, 1920-2010

As ever,

Carolann

Minds are like parachutes.  They only function

when they are open.

-Sir James Dewar, 1842-1923.

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