February 1, 2013 Newsletter

Dear Friends,

Tangents:

February: the month of purification among the ancient Romans – Latin februum, meaning purgation.  The 2^nd of February is Candlemas Day, the feast of the Purification of the Blessed Virgin Mary.  The Dutch used to call the month Spokkelmaand, meaning vegetation month.  The Anglo-Saxons knew it as solmonath, mud month.  In the French Revolutionary Calendar its equivalent from 21^st January to 19^th February was Pluviôse, meaning rain month.

Happy February everyone!

On this day in 1982, David Letterman’s late-night show premiered on NBC. –Steven Russolillo, WSJ, 02/01/13.

And also on this day in…

1920 – Canada’s Royal North West Mounted Police changed their name to the Royal Canadian Mounted Police. The organization was commissioned in 1873.

1930 – The Times published its first crossword puzzle.

1951 – The first X-ray moving picture process was demonstrated.

1957 – P.H. Young became the first black pilot on a scheduled passenger airline.

1976 – “Sonny and Cher” resumed on TV despite a real life divorce.

1987 – Terry Williams won the largest slot machine payoff, at the time, when won $4.9 million after getting four lucky 7s on a machine in Reno, NV.

1996 – Visa and Mastercard announced security measures that would make it safe to shop on the Internet. 

Photos of the day February 1^st, 2013

A man holds an umbrella on a jetty at Lake Starnberg in Niederpoecking near Munich, southern Germany. Victoria Bonn-Meuser/AP

People photograph the Roman numerals for NFL Super Bowl XLVII as they are silhouetted against the morning sky Feb. 1, 2013, in New Orleans.Charlie Riedel/AP

Market Closes for February 1^st, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Feb. 1 (Bloomberg) — Canadian stocks rose, paring a weekly decline, after hiring in the U.S. increased in January and jumped more than previously estimated at the end of 2012.

BlackBerry, the company formerly known as Research In Motion Ltd., added 0.7 percent for the first gain in six days amid its introduction of a new line of smartphones. Barrick Gold Corp. and Goldcorp Inc. each increased 1.1 percent as gold prices rose. Domtar Corp., a maker of paper and pulp products, slumped 6 percent after earnings missed estimates.

The Standard & Poor’s/TSX Composite Index rose 83.59 points, or 0.7 percent, to 12,768.83 in Toronto. The benchmark gauge trimmed its decline for the week to 0.4 percent. The S&P/TSX has underperformed every developed market in the world except Spain over the past 12 months, according to data compiled by Bloomberg.

“Looks like a good start to the month, the U.S. payroll numbers were encouraging,” Michael O’Brien, fund manager with TD Asset Management, said on the phone from Toronto. He oversees about $3 billion.

U.S. payrolls rose 157,000 following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed today in Washington. The revisions added a total of 127,000 jobs to the employment count in November and December. The jobless rate increased to 7.9 percent from 7.8 percent.

Energy and raw-materials producers contributed most to gains in the S&P/TSX as nine of 10 industries advanced. Trading volume was 5.4 percent lower than the 30-day average.

Imperial Oil Ltd., the second-largest Canadian oil producer, added 0.3 percent to C$43.91 after reporting fourth- quarter profit that beat analysts’ estimates. Record refining earnings of C$549 million, boosted by the difference between low-cost Western Canadian crude and the price of gasoline, offset lower gross oil output. Imperial is the largest refiner in Canada.

Suncor Energy Inc., Canada’s largest oil producer, climbed 1.5 percent to C$34.42.

Barrick, the world’s largest gold producer, added 1.1 percent to C$32.10 and Goldcorp rose 1.1 percent to C$35.52.

Gold futures for April delivery climbed 0.5 percent to settle at $1,670.60 an ounce in New York, the third gain in four days.

BlackBerry, based in Waterloo, Ontario, rose 0.7 percent to C$13.01. The stock fell 26 percent this week, for the biggest weekly loss since 2008. The company’s new BlackBerry 10 line of smartphones, unveiled in New York on Jan. 30, does not go on sale in the U.S. until March, raising concern that the company will fall even further behind Apple Inc.’s iPhone and Google Inc.’s Android in its biggest market.

BlackBerry will begin trading under the ticker symbol BB in Toronto and BBRY in New York on Feb. 4.

Norbord Inc., a maker of wood-based panels used in home construction, jumped 5.3 percent to C$30.79, its biggest gain since Nov. 1. Stephen Atkinson, an analyst with BMO Capital Markets, raised his rating for the stock to outperform, or the equivalent of a buy, from market perform.

The company reported adjusted earnings for the fourth quarter yesterday of 76 cents a share, compared with a consensus estimate of 73 cents, Bloomberg data show.

Domtar dropped 6 percent to C$78.04, its biggest loss since April 26, after reporting fourth-quarter adjusted earnings of $1.31 a share, compared with estimates of $1.36 a share. Revenue of $1.33 billion fell short of forecasts of $1.35 billion.

US

By Rita Nazareth and Michael P. Regan

Feb. 1 (Bloomberg) — U.S. stocks surged as growth in American payrolls was enough to ease concern about the economy without stoking speculation the Federal Reserve will hasten the end of stimulus. Industrial metals led gains in commodities and the yen weakened, while Treasuries reversed early gains.

The Dow Jones Industrial Average rose 149.21 points to 14,009.79, climbing above 14,000 for the first time since 2007, while the S&P 500 Index jumped 1 percent to return to a five- year high following a two-day retreat. The 10-year Treasury yield rose four basis points to 2.02 percent. Spain’s IBEX 35 Index slid to a one-month low as regulators lifted a ban on short selling, while China’s Shanghai Composite Index capped the best week since October 2011 as manufacturing expanded. The yen sank against all 16 major peers.

U.S. employers added 157,000 jobs in January and employment growth accelerated more than previously estimated at the end 2012, Labor Department figures showed, while other reports on consumer confidence, manufacturing and construction spending topped forecasts. The data eased concern about the world’s largest economy following a report earlier this week that showed gross domestic product shrank last quarter for the first time since the recession.

“The most positive part of the headline was the revisions,” said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp., which has $1.95 trillion in client assets. “That’s particularly good because of the negative 0.1 percent GDP report. The market is telling you that the economy is not as bad as many people believe. The fact the January was up very nicely typically bodes well for the rest of the year.”

The Labor Department revised earlier data to show a 196,000 increase in employment for December and a 247,000 surge in November, adding a total of 127,000 to the count for those two months. Labor also issued its annual benchmark update, which aligns data spanning from April 2011 to March 2012 with corporate tax records. The revision showed payrolls grew by an additional 424,000 workers, on an unadjusted basis, in that period. The jobless rate increased to 7.9 percent from 7.8 percent.

“The unemployment rate has increased primarily due to individuals streaming back into the workforce, which is a sign of growth in confidence in the economic expansion, and perhaps the exhaustion of savings and employment benefits,” said Joseph Brusuelas, senior economist at Bloomberg LP, parent of Bloomberg News. “While there are encouraging signs, caution is the proper way for investors to proceed.”

Bank of America Corp., United Technologies Corp. and Verizon Communications Inc. jumped more than 2 percent to lead the Dow’s gain today.

All 10 industry groups in the S&P 500 advanced, with financial, telephone and commodity companies climbing at least 1.2 percent to lead the rally. Tyson Foods Inc. gained 3.1 percent after profits topped forecasts. Zoetis Inc., the animal- health company owned by Pfizer Inc., surged 19 percent in its trading debut following an initial public offering. Merck & Co. slipped 3.3 percent after forecasting a drop in profit this year.

Exxon Mobil Corp. closed little changed after reporting fourth-quarter earnings that topped estimates. Earnings per share beat the average analyst estimate at some 73 percent of 254 companies in the index that have released results so far in the reporting season, data compiled by Bloomberg show.

The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment for January rose to 73.8 from 72.9 at the end of the previous month. Economists projected 71.5 for the gauge after a preliminary January reading of 71.3, according to the median estimate in a Bloomberg survey. The index averaged 64.2 during the last recession and 89 in the five years before the 18-month economic slump that ended in June 2009.

The Institute for Supply Management’s manufacturing index climbed to 53.1 last month from December’s 50.2, exceeding the highest estimate in a survey of 86 economists with a median forecast of  50.7.

About $2.6 trillion was added to the value of equities worldwide last month as earnings from companies including Goldman Sachs Group Inc. beat estimates and U.S. lawmakers forged a deal to avert the so-called fiscal cliff of automatic spending cuts and tax increases. Including dividends, the S&P 500 rallied 5.2 percent last month for its best January return since 1997.

Two-year Treasury yields erased an earlier drop to end little changed at 0.26 percent, while 30-year rates rose six basis points to 3.23 percent.

Bonds reversed gains after Federal Reserve Bank of St. Louis President James Bullard, an advocate for slowing stimulus, said U.S. job growth in the past three months has been “an encouraging sign.” Bullard said he may urge cutting the pace of central bank asset purchases by the middle of the year if growth picks up as he expects.

“We should think about tapering or adjusting the program,” Bullard said today in an interview in Washington.

“If you get some good data for a couple of months,” then policy makers might say, “OK, we go to $75 billion or something like that,” he said, referring to monthly asset purchases that currently run at $85 billion a month.

Seventeen of the 24 commodities tracked by the S&P GSCI Index increased, sending the gauge up 0.5 percent to the highest level since September. Nickel, aluminum, copper and zinc added more than 1.4 percent each. Oil rose 28 cents to settle at $97.77 a barrel in New York to cap an eighth straight weekly gain, the longest streak since 2004.

The Stoxx Europe 600 Index advanced 0.3 percent, trimming this week’s drop to 0.5 percent. The gauge climbed in January, capping an eighth month of gains and the longest winning streak since 1997. BT Group Plc rallied 6.5 percent as the U.K’s largest Internet service provider reported profit that exceeded analysts’ estimates. The regional benchmark pared gains earlier while German two-year notes rose after the European Central Bank said banks will repay 3.5 billion euros ($4.8 billion) of its emergency loans next week.

Spain’s IBEX 35 slipped 1.6 percent as the market regulator, known as CNMV, allowed a ban on short-selling stocks to expire yesterday. Banco Santander SA, Spain’s largest bank, fell 2.3 percent and Fomento de Construcciones & Contratas SA slid 9.1 percent.

The yen weakened for a third straight day against the dollar, headed for a 12th consecutive weekly decline. It depreciated as much as 1.2 percent to 92.80 per dollar, the lowest level since June 2010. Japan’s jobless rate rose and household spending declined, data showed today, underscoring the case for further easing.

The euro strengthened against 12 of its 16 major peers, climbing 0.6 percent to $1.3666. In addition to a report showing manufacturing shrank less than forecast in the currency region, other data showed the unemployment rate was 11.7 percent in December, less than forecast.

The MSCI Emerging Markets Index gained 0.4 percent. The Shanghai Composite Index added 1.4 percent, climbing 5.6 percent in the week, and Brazil’s Bovespa increased 1 percent to pare a second straight weekly loss.

Have a wonderful weekend everyone!!

Be magnificent!

It is man’s social nature which distinguishes him from the brute creation.

If it is his privilege to be independent, it is equally his duty to be inter-dependent.

Only an arrogant man will claim to be independent of everybody else and be self-contained.

-Mahatma Gandhi, 1869-1948

As ever,

Carolann

Action is the foundational key to all success.

-Pablo Picasso, 1881-1973

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