February 25, 2013 Newsletter

Dear Friends,

Tangents:

I am sorry I was not able to send out the newsletter on Friday as all of the servers were down.  Hope everyone had a great weekend!!

Today In History:

1793 – The department heads of the U.S. government met with U.S. President Washington for the first Cabinet meeting on U.S. record.

1901 – The United States Steel Corp. was incorporated by J.P. Morgan.

1913 – The 16th Amendment to the U.S. Constitution was ratified. It authorized a graduated income tax.

1930 – The bank check photographing device was patented.

1933 – The first aircraft carrier, Ranger, was launched.

1940 – The New York Rangers and the Montreal Canadiens played in the first hockey game to be televised in the U.S. The game was aired on W2WBS in New York with one camera in a fixed position. The Rangers beat the Canadiens 6-2.

1948 – Communists seized power in Czechoslovakia.

1950 – “Your Show of Shows” debuted on NBC.

1956 – Soviet leader Nikita Khrushchev criticized the late Josef Stalin in a speech before a Communist Party congress in Moscow.

“Be yourself; everyone else is already taken” ― Oscar Wilde

Photos of the Day – February 25^th, 2013

A student has her face painted as part of her nature-inspired costume before participating in a parade for the Caracol festival in Makati city, metro Manila. Romeo Ranoco/Reuters

Sled dogs run at the 23. International Sled Dog Race in Oberhof, central Germany. Jens Meyer/AP

Market Closes for February 25th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Sarah Pringle and Eric Lam

Feb. 25 (Bloomberg) — Canadian stocks fell, reversing earlier gains in the final hour of trading, as partial voting results spurred concern about prospects for a stable government in Italy and a worsening of Europe’s debt crisis.

Royal Bank of Canada, the nation’s largest lender, slumped 1 percent and Manulife Financial Corp., the largest insurer, tumbled 2.1 percent. Suncor Energy Inc. lost 1.8 percent as crude slipped. Inmet Mining Corp. slid 2.8 percent after reaching an agreement with Petaquilla Minerals Ltd. over their Panamanian mines. Eldorado Gold Corp. added 6.3 percent and Goldcorp Inc. climbed 1.3 percent. Cineplex Inc. rose 1 percent after analysts predicted it would hit record highs.

The Standard & Poor’s/TSX Composite Index fell 50.76 points, or 0.4 percent, to 12,650.87 in Toronto, erasing earlier gains of as much as 1 percent. The benchmark gauge is up 1.8 percent in 2013. Trading on Canadian exchanges was 3.5 percent higher than the 30-day average today.

“No matter what people say they’re looking over their shoulders at the Dow and I was surprised the Canadian market hung in as long as it did before people lost their nerve,” David Cockfield, managing director and fund manager with Northland Wealth Management, said from Toronto. His firm manages about C$200 million ($195 million). “We haven’t worried about Europe for a while, so it’s about time. The fact Berlusconi is making a big comeback just discourages everybody.”

Italy may require another vote after the four-way race that ended today was poised to result in a divided parliament.

Forecasts by IPR Marketing and state broadcaster RAI showed Pier Luigi Bersani winning the lower chamber and Silvio Berlusconi, former prime minister of Italy, with a blocking minority in the Senate. Bersani, who led in opinion polls throughout the two- month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti.

Banks fell 0.6 percent as a group in the S&P/TSX, erasing earlier gains of as much as 1.2 percent. Royal Bank dropped 67 Canadian cents to C$63.59 and National Bank of Canada declined 1 percent to C$77.30. Manulife dropped 31 Canadian cents to C$14.84, its lowest close since Feb. 8.

Financial companies are scheduled to begin reporting earnings tomorrow, including results from Bank of Montreal, followed by Royal Bank of Canada, Toronto-Dominion and National Bank of Canada on Feb. 27.

Suncor, Canada’s largest energy company by market value, lost 58 Canadian cents to C$31.37 and Cenovus Energy Inc. slipped 1.2 percent to C$32.40. Crude for April delivery slumped 1 percent to $92.18 a barrel in electronic trading at 5:18 p.m. in New York, the lowest level since Dec. 28.

Inmet fell C$1.89 to C$65.52. The developer of the $6.2 billion Cobre Panama copper project said it agreed with Petaquilla to settle certain claims relating to their adjacent Panamanian projects. Inmet will purchase from Petaquilla as much as $100 million a year of aggregates over three years for use at Cobre Panama, the companies said in a statement.

Petaquilla gained 2 percent to 51 Canadian cents.

Eldorado jumped 62 Canadian cents to C$10.42 and Goldcorp added 42 Canadian cents to C$33.64.

The S&P/TSX Gold index climbed 2.4 percent, its biggest gain since Jan. 10, as 29 of 31 members advanced. Gold futures for April delivery rose 0.9 percent, the most in three weeks, to settle at $1,586.60 an ounce in New York as Russia and Kazakhstan’s central banks increased bullion reserves last month.

Cineplex rose 34 Canadian cents to C$33.44. The operator of 70 percent of Canadian movie theaters is forecast by analysts to advance beyond a record as acquisitions and the addition of in- seat liquor service increases revenue.

US

By Rita Nazareth and Sarah Pringle

Feb. 25 (Bloomberg) — U.S. stocks fell, giving benchmark indexes their biggest losses since November, as partial election results spurred concern about prospects for a stable government in Italy and a worsening of Europe’s debt crisis.

Chesapeake Energy Corp. slumped 6.8 percent after agreeing to sell a stake in an Oklahoma oilfield to China Petrochemical Corp. for less than one-third of its estimated value. ITT Educational Services Inc. tumbled 17 percent after disclosing that U.S. regulators subpoenaed documents related to private loan programs for its students. Hertz Global Holdings Inc., the largest publicly traded U.S. auto-rental chain, gained 1.7 percent after projecting profit and sales that beat estimates.

The Standard & Poor’s 500 Index retreated 1.8 percent to 1,487.85 at 4 p.m. New York time. The benchmark measure advanced as much as 0.7 percent earlier today. The Dow Jones Industrial Average decreased 216.40 points, or 1.6 percent, to 13,784.17.

About 7.4 billion shares changed hands on U.S. exchanges today, or 18 percent above the three-month average.

“We don’t want to see more chaos out of Europe,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. His firm oversees more than $20 billion. “Any question about whether or not Italy would be committed to austerity measures after the elections gets investors concerned.”

Stocks erased gains on concern Italy may be left with a hung parliament as partial election results suggested Silvio Berlusconi may have built a blocking minority in the Senate to deny victory to Pier Luigi Bersani. Bersani, who led in opinion polls throughout the two-month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti. Bets Japan’s Prime Minister Shinzo Abe will nominate a central bank chief who favors stimulus pushed stocks higher earlier today.

This week’s March 1 deadline to avoid automatic U.S. spending cuts may get investors’ attention. It marks another fiscal showdown between President Barack Obama and congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.

The S&P 500 has gained 4.3 percent this year as U.S. lawmakers agreed on a compromise on taxes in January and amid better-than-estimated corporate earnings. About 75 percent of the S&P 500 companies that have released quarterly results beat profit estimates, according to data compiled by Bloomberg. The index trades at 14.7 times reported earnings, below the average since 1954 of 16.4.

“Continued earnings momentum and rising corporate confidence suggest improved capital spending this year,” said James Paulsen, the chief investment strategist at Minneapolis- based Wells Capital Management, which oversees about $325 billion.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, surged 34 percent to 18.99. The gauge had the biggest jump since August 2011 after sliding to the lowest level since April 2007 on Feb. 19.

All 10 groups in the S&P 500 fell today as financial and commodity shares had the biggest losses. The Morgan Stanley Cyclical Index, which includes shares of companies most tied to economic growth, slid 2.5 percent, the most since June 25. A measure of 11 homebuilders in S&P indexes dropped 3.9 percent.

Chesapeake Energy declined $1.39 to $19.11. Sinopec, as China’s second-largest energy producer is known, will pay $1.02 billion in cash for a 50 percent interest in 850,000 acres Chesapeake controls in the Mississippi Lime formation, the companies announced in separate statements. The price equates to $2,400 an acre, less than the $7,000 to $8,000 at which Oklahoma City-based Chesapeake valued the asset in a July presentation.

ITT Educational tumbled $3.10 to $15.53. The Securities and Exchange Commission demanded documents relating to “actions and accounting” for the private loan programs, which helped students pay for education costs that weren’t covered by state, federal and other funding sources, Carmel, Indiana-based ITT said Feb. 22 in a filing.

Dynavax Technologies Corp. dropped 32 percent to $2.01. The drugmaker seeking to bring its first product to market fell after U.S. regulators rejected the company’s hepatitis B vaccine.

Affymax Inc. sank 85 percent to $2.42 after the drugmaker and partner Takeda Pharmaceutical Co. voluntarily recalled an anemia treatment for kidney dialysis patients after reports of three fatal reactions.

Hertz gained 31 cents to $19.04. Adjusted earnings per share for 2013 will rise to $1.82 to $1.92, on sales of as much as $10.95 billion, the Park Ridge, New Jersey based company said today in a statement. Analysts projected $1.73 a share on revenue of $10.6 billion, the average of estimates compiled by Bloomberg.

BlackBerry, formerly known as Research In Motion Ltd., added 0.5 percent to $13.25. Sales of BlackBerry 10 devices are above the company’s “ambitious” expectations and production has been increased, chief executive officer Thorsten Heins told Frankfurt Allgemeine.

Barnes & Noble Inc. added 11 percent to $15.06 after Chairman Leonard Riggio said he will offer to buy the stores and website of the chain he founded more than 40 years ago as it struggles to navigate the rising popularity of digital books.

Zynga Inc. rose 7.5 percent to $3.43. The biggest maker of online social games surged on optimism that other U.S. states may follow Nevada in legalizing real-money gambling over the Internet.

CME Group Inc., the world’s largest futures exchange, has approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation.

A combination of Chicago-based CME and Deutsche Boerse would unite the biggest futures exchanges in the U.S. and European markets. CME shares have rallied 15 percent this year, giving it a market capitalization of $19.4 billion. Deutsche Boerse climbed 1 percent through Feb. 22, bringing its value to 9 billion euros ($11.9 billion).

The companies met again last month to debate whether to begin formal takeover talks and haven’t yet made a decision, the people said. No offer has been made, nor have terms been discussed, they said.

Have a wonderful evening everyone.

Be magnificent!

Bees suck nectar from many different flowers, and then make honey.

One drip of honey cannot claim to come from one flower, and another drop of honey from another flower,

the honey is a single consistent whole.

In the same way, all beings are one even though they are not aware of this.

The tiger and the lion, the wolf and the boar, the worm and the moth, the gnat and the mosquito,

all come from the soul, and are part of the soul.

Chandogya Upanishad

As ever,

Carolann

If you don’t drive your business,

you will be driven out of business.

-B. C. Forbes, 1880-1954

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