February 5, 2013 Newsletter

Dear Friends,

Tangents:

Today when I found the first picture below, I smiled because we saw the first spring blossoms of the year just last Sunday!  Gary and I were walking downtown and I looked over to The Empress and a few of the trees were already in blossom; the rest are just about to blossom.

I finished reading a wonderful book last weekend that I want to share with you.  It is entitled The Secret Scripture; it is written by Sebastian Barry.  I agree with Thomas Cahill who writes that [this book contains] “some of the most beautifully formed prose passages I have ever read.”

Here is a sample, one of the passages I marked in the book:

“The room had a little bit of sideways spring sunlight, that seemed to have crept in through the window-glass with an almost apologetic delicacy.  A little square beam of it sat across Roseanne’s face.  Yes, she is very old.  Sunlight as always the most brutal measurer of age, but also, the most faithful painter.  I thought of the line from T.S. Eliot that we learned at school in England,

My life is like a feather on the back of my hand,

Waiting for the death wind.

It is spoken by Simeon, the man who wished to live long enough to see the newborn Messiah.  I do not think Roseanne is waiting for that.  I thought also of those self-portraits of Rembrandt van Rijn, so faithfully faithless to the idea of our own looks that we carry as an antidote against remorse….today was the day I opted myself for her silence, her privacy.  Because it strikes me there is something greater than judgement.  I think it is called mercy.”

Photos of the day February 5th, 2013

A cat sits on top of a tree in Kathmandu, Nepal. Navesh Chitrakar/Reuters

Workers check on electricity pylon situated amid farmlands in Chuzhou, Anhui province, China. A leading think tank of China predicted that China’s GDP will grow in 2013 at a rate of 8.4 percent, up by 0.6 percentage points from that of 2012, China Daily/Reuters

I’m a success today because I had a friend who believed in me and I didn’t have the heart to let him down. ― Abraham Lincoln.

Market Closes for February 5th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Sarah Pringle

Feb. 5 (Bloomberg) — Canadian stocks rose, rebounding from yesterday’s retreat, as BlackBerry surged on signs of strong demand for its new phone and energy shares rallied amid a recovery in oil prices.

BlackBerry, formerly known as Research in Motion, jumped 6.3 percent after wireless carrier BCE Inc. said the Z10 smartphone has attracted record orders. Energy producers rallied as oil rebounded 0.5 percent. Condor Petroleum Inc. surged 55 percent after announcing an oil discovery in Kazakhstan. WestJet Airlines Ltd. rose 3 percent as traffic and capacity levels increased in January.

The Standard & Poor’s/TSX Composite Index climbed 28.03 points, or 0.2 percent, to 12,745.65 at 4 p.m. in Toronto. The benchmark gouge dropped 0.4 percent yesterday and has gained 2.5 percent this year. Nine of 10 industries advanced today. About 791 million shares traded hands on Canadian exchanges today, or 4.2 percent above the three-month average.

“Canada is really trading on news that’s happening globally,” Anish Chopra, managing director and portfolio manager at TD Asset Management Inc., said in a phone interview.

The Toronto-based firm manages about C$204 billion ($205 billion). “There’s sort of a risk-on tone in Europe that has translated into a risk-on tone here in North America as well. People are just more optimistic.”

Global equities rebounded today after a slump yesterday sparked by renewed concern that Europe’s debt crisis will intensify. Italian, Spanish and Portuguese bonds recovered following losses yesterday. Data today showed service industries shrank less than initially estimated in Europe while growing more than economists forecast in the U.S. Energy producers contributed the most to gains in the S&P/TSX. Encana Corp., Canada’s largest natural gas producer, climbed 1.7 percent to C$19.37, and Suncor Energy Inc., the Calgary-based oil-sands producer, rose 0.6 percent to C$34.38.

Condor Petroleum surged 23 Canadian cents, the biggest gain since the company went public in April 2011, to 65 Canadian cents. Don Streu, Condor’s chief executive officer, said the company has about three weeks of drilling to go before it can evaluate the size of the discovery at the Kiyaktysai well in the Zharkamys West 1 territory in Kazakhstan.

Tethys Petroleum Ltd., which also has assets in Kazakhstan, jumped 20 percent to 73 Canadian cents, its highest level since September.

West Texas Intermediate crude oil for March delivery rose 47 cents to settle at $96.64 a barrel on the New York Mercantile Exchange.

BlackBerry jumped 95 Canadian cents to C$15.94, extending a two-day rally to 23 percent. BCE, Canada’s No. 2 carrier, said early orders for the Z10 have topped any previous BlackBerry model, while one Carphone Warehouse Group Plc outlet in the U.K., where the phone has been on sale since Jan. 31, sold out of the model in under half an hour, local staff said.

WestJet Airlines rose 66 Canadian cents to C$22.55. The low-fare airline reported a 6.4 percent increase in capacity for January. Its load factor, or percentage of seats filled with paying passengers, climbed to 80.9 percent for a seventh straight monthly record.

Raw material producers had the only decline among 10 S&P/TSX groups. Torex Gold Resources Inc. dropped 3.6 percent to C$1.90, and Silver Standard Resources Inc. slipped 1.7 percent to C$11.79. Gold futures for April delivery fell 0.2 percent to $1,673.50 an ounce on the Comex in New York.

CGX Energy Inc. tumbled 13 percent to 14 Canadian cents.

Repsol SA, Spain’s largest oil producer, and Toronto-based CGX plan to re-drill the Jaguar-1 well prospect off the coast of Guyana after abandoning the initial probe in July because of excessive well pressure.

US

By Inyoung Hwang and Leslie Picker

Feb. 5 (Bloomberg) — U.S. stocks advanced, rebounding from the biggest loss of the year for benchmark indexes, as earnings topped forecasts and Dell Inc. agreed to be taken private in the largest leveraged buyout since the financial crisis.

All 10 groups in the Standard & Poor’s 500 Index climbed at least 0.1 percent. Dell added 1.1 percent after Chief Executive Officer Michael Dell and Silver Lake Management LLC agreed to buy the personal-computer maker. Computer Sciences Corp. jumped 9.2 percent after raising its earnings forecast for 2013.

McGraw-Hill Cos. plunged the most in the benchmark index after the company and its S&P unit were sued by the U.S. over mortgage-bond ratings.

The S&P 500 rose 1 percent to 1,511.29 at 4 p.m. in New York. The index sank 1.2 percent yesterday amid concern that the European debt crisis may intensify. The Dow Jones Industrial Average added 99.22 points, or 0.7 percent, to 13,979.30 today.

More than 6.7 billion shares traded hands on U.S. exchanges today, or 8.3 percent above the three-month average.

“There’s an underlying tidal wave,” Rob Morgan, who oversees $1 billion as chief investment strategist at McLean, Virginia-based Fulcrum Securities LLC, said by telephone. “When you do get a pullback, that’s an excellent time to put some money to work in the stock market,” he said. “If insiders are buying their stock, that’s a positive sign. Here’s the ultimate insider of Dell, basically buying a controlling stake.”

The S&P 500 has rallied 6 percent in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than- estimated earnings. The gauge is 3.4 percent below the record 1,565.15 it reached in October 2007. The Dow is 1.3 percent from its all-time high.

The benchmark gauge tumbled the most since Nov. 14 yesterday as Spanish Premier Mariano Rajoy faced opposition calls to resign and Deutsche Bank AG said this year’s rally in Italian and Spanish bonds may falter.

About 74 percent of the 291 companies from the gauge that have released results so far in the reporting season have exceeded profit projections, and 66 percent have beaten sales estimates, according to data compiled by Bloomberg. Walt Disney Co. and Expedia Inc. are among 27 companies in the S&P 500 that reported today.

The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which covers about 90 percent of the economy, fell to 55.2 in January from the prior month’s 55.7, the Tempe, Arizona-based group said today. The median forecast of 76 economists surveyed by Bloomberg projected 55. Readings above 50 signal expansion.

“It’s as if the water’s fine, so come on in,” Rex Macey, who oversees $20 billion as chief investment officer at Wilmington Trust Advisors in Atlanta, said by telephone. “We’re getting into a ‘buy on dips’ mentality as people try to increase their positioning.” He said on Dell, “These are indications that there’s long-term confidence in the economy and the markets.”

Consumer, financial, health-care and technology companies rose the most out of 10 S&P 500 groups, rallying at least 1 percent. Twenty-eight out of 30 stocks in the Dow increased. The KBW Bank Index of 24 U.S.-listed lenders added 1.6 percent to 54.90, a two-year high. Bank of America Corp. jumped 3.5 percent to $11.88. JPMorgan Chase & Co. gained 2.3 percent to $48.79.

Apple Inc. rallied 3.5 percent to $457.84 and Hewlett-Packard Co. surged 2.7 percent to $16.61.

Dell added 15 cents to $13.42. The world’s third-biggest maker of personal computers agreed to be purchased for $13.65 a share in a deal valued at $24.4 billion. That’s 25 percent more than the closing price of $10.88 on Jan. 11, the last trading day before Bloomberg News reported the discussions. Michael Dell is taking back majority control of the company he started almost three decades ago.

Computer Sciences gained the most in the S&P 500, adding $3.84 to $45.75. The technology contractor for governments and companies forecast earnings from continuing operations this year will be as much as $2.70 a share after previously projecting no more than $2.50.

Archer-Daniels-Midland Co. advanced 3.3 percent to $29.38.

The world’s largest corn processor reported earnings excluding inventory gains and other items exceeded analysts’ estimates by 2 cents a share, as its U.S. soybean-crushing operations ran at record capacity. Sales were $24.9 billion, exceeding the $22.7 billion average projection.

Estee Lauder Cos. jumped 6 percent to $64.71. The maker of Mac cosmetics and Clinique skin care lifted its profit forecast for the year to as much as $2.59 a share. The New York-based company previously estimated earnings would be no more than $2.56.

Zynga Inc. jumped 7 percent to $2.74. Bank of America raised its rating on the biggest maker of social games to buy from underperform.

BlackBerry surged 6.9 percent to $16.02. Thorsten Heins, chief executive officer of the company formerly known as Research In Motion Ltd., said early sales of the Z10 smartphone are “encouraging” and that users are switching from other platforms. The Z10 smartphone has attracted record orders at Canadian wireless carrier BCE Inc. and analysts say sales are off to a strong start in the U.K.

McGraw-Hill plunged 11 percent to $44.92, adding to a 14 percent drop yesterday when the company said it expected the lawsuit. The U.S. is seeking as much as $5 billion in penalties from McGraw-Hill and S&P as punishment for inflated credit ratings that Attorney General Eric Holder said were central to the worst financial crisis since the Great Depression.

“Claims that we deliberately kept ratings high when we knew they should be lower are simply not true,” said Catherine Mathis, a company spokeswoman, in an e-mailed statement.

Moody’s Corp., owner of the second-largest ratings provider, dropped 8.8 percent for the second-biggest decline in the S&P 500 to $45.09. The shares lost 11 percent yesterday.

Yum! Brands Inc. slid 2.9 percent to $62.08. The owner of the KFC and Pizza Hut dining chains said profit will be less than it previously expected as a probe into its chicken suppliers hurt sales in China. Earnings excluding certain items will drop this year, compared with a previous estimate for growth of 10 percent, the company said late yesterday in a statement.

Diamond Offshore Drilling Inc., the largest offshore rig contractor in the U.S., fell 3.8 percent to $73.58, after forecasting more downtime for its vessels in 2013 than analysts expected.

U.S. stocks will extend gains from a five-year high as corporate earnings increase and central banks maintain policies to stimulate economic growth, said Robert Doll, Nuveen Asset Management LLC’s chief equity strategist.

Interest rates near zero will lead investors to keep adding to equity funds, said Doll, who works at the Chicago-based firm that oversees $117 billion. He said he’s bullish on shares from the U.S. and emerging markets and concerned about European and Japanese equities.

“The fundamentals, meaning corporate earnings, macroeconomics, delay of problems in Washington, zero-percent return on cash, and monetary accommodation virtually everywhere in the world,” Doll said in a television interview on “Bloomberg Surveillance” with Tom Keene. “They’re the ingredients to me for stocks to go higher.”

Have a wonderful evening everyone.

Be magnificent!

Do you live and work in the world?

Always act according to the highest moral standards, both in private and in public.

Always be honest in word and deed, both in private and in public.

Master your emotions and control your senses, both in private and in public.

Be calm and patient, both in private and in public.

Take every opportunity to serve others, both in private and in public.

Be kind and gentle to your children, both in private and in public.

Taittiriya Upanishad

As ever,

Carolann

Failure is success if we learn from it.

-Malcolm Forbes, 1919-1990

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