January 29, 2013 Newsletter

Dear Friends,

Tangents:

On Jan. 29, 1963, poet Robert Frost died in Boston.  One of my favorites:

THE ROAD NOT TAKEN

-by Robert Frost

Two roads diverged in a yellow wood,

And sorry I could not travel both

And be one traveler, long I stood

And looked down one as far as I could

To where it bent in the undergrowth;

Then took the other, as just as fair,

And having perhaps the better claim,

Because it was grassy and wanted wear;

Though as for that passing there

Had worn them really about the same,

And both that morning equally lay

In leaves no step had trodden black,

Oh, I kept the first for another day!

Yet knowing how way leads on to way,

I doubted if I should ever come back.

I shall be telling this with a sigh

Somewhere ages and ages hence:

Two roads diverged in a wood, and I –

I took the one less traveled by,

And that has made all the difference.

And also on this day in…

1820 – Britain’s King George III died insane at Windsor Castle.

1845 – Edgar Allan Poe’s “The Raven” was published for the first time in the “New York Evening Mirror.”

1856 – Britain’s highest military decoration, the Victoria Cross, was founded by Queen Victoria.

1886 – The first successful petrol-driven motorcar, built by Karl Benz, was patented.

1958 – Paul Newman and Joanne Woodward were married.

The worst part of success is trying to find someone who is happy for you. ― Bette Midler

photos of the day

01/29th/2013

Visitors wear protective coverings on their shoes as they walk through a light installation called ‘Chromosaturation’ from 1965-2012 by Carlos Cruz-Diez at an exhibition entitled ‘Light Show’ at the Hayward Gallery in London. Suzanne Plunkett/Reuters

A man rides a bicycle near the beach at sunset in Andernos, Southwestern France. Regis Duvignau/Reuters

Market Closes for January 29th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Jan. 29 (Bloomberg) — Canadian stocks rose for the first time in three days as industrial and raw-material shares advanced amid a rally in commodities while Research In Motion Ltd. sank after UBS AG said its new smartphone is too expensive.

Canadian Pacific Railway Ltd. increased 3.1 percent after reporting fourth-quarter earnings in line with analysts’ estimates. Goldcorp Inc. and Kinross Gold Corp. advanced at least 1.3 percent as the price of the metal rallied the most in two weeks. Premier Gold Mines Ltd. added 1.7 percent after agreeing to sell one of its assets. RIM sank 3.4 percent a day before it unveils its BlackBerry 10 line of smartphones in a bid to recapture market share.

The Standard & Poor’s/TSX Composite Index rose 14.65 points, or 0.1 percent, to 12,830.56 in Toronto. The benchmark gauge has gained 3.2 percent this year.

“We might be taking a bit of a pause here, we’ve been up a lot,” Ian Nakamoto, director of research with MacDougall MacDougall & MacTier Inc., said from Toronto. His firm manages about $4 billion. “We’re a very narrow market in Canada, very commodities-focused. If people get very hot on the outlook for the global economy, the Canadian market will do well.”

Canada’s MLI Leading Economic Indicator rose 0.2 percent in December for a fifth straight gain, as Canadians benefited from rising stock prices and a U.S. rebound. The index is published by the Ottawa-based Macdonald-Laurier Institute.

Industrials and raw-material producers contributed most to gains in the S&P/TSX as six of 10 industries advanced. Trading volume was 3.6 percent higher than the 30-day average.

Canadian Pacific climbed 3.1 percent to a record C$116.22 after posting fourth-quarter adjusted earnings of C$1.28 a share that were in line with analysts’ estimates. Chief Executive Officer Hunter Harrison, installed by investor William Ackman last June after winning a proxy battle, is targeting inefficiencies at the railroad.

Goldcorp gained 1.7 percent to C$36.11 and Kinross advanced 1.3 percent to C$8.47. Gold for April delivery climbed 0.5 percent to settle at $1,662.70 an ounce in New York.

U.S. Federal Reserve Chairman Ben S. Bernanke and the Federal Open Market Committee began two days of meetings today, with the central bank expected to continue its commitment to asset buying until the first quarter of 2014.

Silvercorp Metals Inc. gained 3.5 percent to C$4.45 and Fortuna Silver Mines Inc. added 5.8 percent to C$4.21 as silver for March delivery rose 1.3 percent to $31.184 an ounce in New York.

The U.S. Mint resumed sales of American Eagle silver coins yesterday for the first time in more than a week after selling out of the collectibles earlier.

Premier Gold increased 1.7 percent to C$3.58 after agreeing to sell its position in Premier Royalty Inc., a subsidiary with royalties from gold mines in Canada, the U.S., South Africa and Argentina, to Sandstorm Gold Ltd. for C$70.7 million. Sandstorm rose 2.1 percent to C$11.81.

RIM, based in Waterloo, Ontario, slumped 3.4 percent to C$15.71, paring earlier losses of as much as 9.3 percent.

Phillip Huang, an analyst with UBS Securities, said pricing for the new mobile phones will be too high for emerging markets, and RIM will have difficulty drawing customers away from Google Inc.’s Android and Apple Inc.’s iPhone platforms.

“RIM is attempting a comeback, but it appears late, at least in its current form,” he said in a note to clients today. “We remain skeptical of a dramatic turnaround.”

US

By Lu Wang and Sarah Pringle

Jan. 29 (Bloomberg) — U.S. stocks advanced, sending the Dow Jones Industrial Average to a five-year high, as companies including Pfizer Inc. and Valero Energy Corp. reported earnings that beat estimates.

Pfizer rose 3.2 as the drugmaker also forecast higher-than- expected full-year profit. J.C. Penney Co. jumped 9.3 percent amid new store promotions. Energy shares climbed as Valero reported a 20-fold gain in profit and Paul Singer’s Elliott Management Corp. urged Hess Corp. to consider a spinoff of its U.S. shale assets. EMC Corp. and Seagate Technology Plc led technology shares lower amid disappointing outlooks. Amazon.com Inc. rose 9.4 percent in late trading after posting its results.

The Standard & Poor’s 500 Index rose 0.5 percent to 1,507.84 at 4 p.m. in New York. The Dow added 72.49 points, or 0.5 percent, to 13,954.42, the highest level since October 2007.

About 6.9 billion shares traded hands on U.S. exchanges today, or 12 percent above the three-month average.

“Continued earnings beats that we’ve seen so far this quarter is helping drive the market,” Jay Wong, a Los Angeles- based fund manager with Payden & Rygel, which oversees $80 billion, said in a phone interview. “There is a lot of momentum in the market right now.”

Equities rose even as the Conference Board’s index of consumer confidence decreased to 58.6, the weakest since November 2011. The January reading was lower than the most pessimistic forecast in a Bloomberg survey, which had a median estimate of 64.

The S&P 500 has risen 5.7 percent this month, off to the best start of a year since 1989, as lawmakers agreed on a budget compromise and companies reported better-than-estimated earnings. The index has more than doubled from a 12-year low in 2009 as the Federal Reserve has increased its bond purchases to keep interest rates low to spur growth. The S&P 500 is less than 4 percent below its record of 1,565.15 set in October 2007, while the Dow is less than 2 percent from its all-time high.

Twenty-five companies in the S&P 500 were scheduled to report quarterly earnings today. About 75 percent of the 179 companies in the S&P 500 that have released results so far in the quarter exceeded profit projections.

About 67 percent have surpassed sales estimates, according to data compiled by Bloomberg. That’s the highest percentage since the second quarter of 2011, according to data compiled by Bloomberg. Fewer than half the companies had surprise sales gains in the second and third quarters.

Investors will watch an announcement from the Fed tomorrow to gauge the central bank’s future policy. Chairman Ben S.

Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the program in the first quarter of 2014, according to median estimates in a Bloomberg survey of economists.

The Federal Open Market Committee will renew its commitment to asset buying during a two-day meeting starting today after determining the benefits from the program exceed any risk of inflation or financial instability, according to economists surveyed Jan. 24-25.

“Economic growth is so modest at the moment that it’s still highly unlikely they’ll consider tightening,” Michelle Clayman, chief investment officer at New Amsterdam Partners in New York, which manages $2.5 billion, said in a phone interview. “It’d be pretty surprising to see any changes there.”

Eight out of the 10 industry groups advanced today as phone, energy and health-care companies rose the most, gaining at least 1.1 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, declined 1.9 percent to 13.31.

J.C. Penney soared 9.3 percent to $21.01, the most in a year. The department-store company said it will resume holiday- related promotions in another adjustment to Chief Executive Officer Ron Johnson’s pricing strategy. The stock lost 2.5 percent this month through yesterday and slid 44 percent last year.

Amazon rallied 9.4 percent to $284.92 as of 4:54 p.m. in New York. The world’s largest Internet retailer reported fourth- quarter sales that rose 22 percent as more shoppers turned to its broad product selection and speedy shipping for holiday gifts.

Pfizer climbed 3.2 percent to $27.70. The world’s biggest drugmaker forecast 2013 profit of as much as $2.30 a share, higher than analyst estimates, after introducing two products with the potential to each generate more than $1 billion a year.

Eli Lilly & Co. gained 3.2 percent to $54.32. Fourth- quarter earnings beat analyst estimates as sales of its top- selling drug, the Cymbalta depression treatment, increased 20 percent, helped by higher prices in the U.S.

Boston Scientific Corp. added 3.5 percent to $7.10. The second-biggest maker of heart devices said it plans to cut as many as 1,000 jobs in an expansion of its restructuring program that will save an additional $100 million to $115 million annually. The company issued a sales forecast of $7.05 billion to $7.35 billion for 2013, compared with the $7.25 billion generated last year.

Valero Energy gained 13 percent to $43.77. The world’s largest independent refiner by processing capacity said fourth- quarter profit rose 20-fold as the company boosted its use of discounted U.S. crude.

Hess jumped 9 percent to $68.11. The energy company should conduct a full strategic review, Elliott Management said. The activist investor urged shareholders of the energy company to vote for five new board members it’s proposing in a letter.

Elliott Management owns 4 percent of Hess’s common stock, the largest initial investment in its 35-year history.

An S&P index of homebuilders climbed 3 percent to the highest level since July 2007 as the S&P/Case-Shiller index of property values increased 5.5 percent in November, the biggest year-over-year gain since August 2006.

D.R. Horton Inc. surged 12 percent to $23.82. The largest U.S. homebuilder by volume said fiscal first-quarter profit more than doubled as demand for new houses climbed in a recovering real estate market.

EMC lost 4.1 percent to $24.18. The provider of enterprise- storage systems and software forecast annual adjusted earnings per share of $1.85, lower than the estimate of $1.90.

VMware Inc., the software maker mostly owned by EMC, tumbled 22 percent to $77.14 after saying first-quarter revenue will be $1.19 billion at most. Analysts on average had projected $1.25 billion, according to data compiled by Bloomberg.

Seagate slid 9.4 percent to $33.91. The maker of hard drives said third-quarter revenue will be between $3.25 billion and $3.45 billion, missing the average projection of $3.47 billion in a Bloomberg survey of analysts. Rival Western Digital Corp. dropped 5.2 percent to $46.11.

Yahoo! Inc. fell 3 percent to $19.70. The largest U.S. Web portal gave first-quarter and full-year sales forecasts that fell short of some analysts’ projections, underscoring the challenge Chief Executive Officer Marissa Mayer faces in display advertising, an area where Yahoo lags behind Google Inc. and Facebook Inc. Facebook, the operator of the world’s most-popular social network that’s scheduled to report results tomorrow, fell 5.2 percent to $30.79.

BMC Software Inc. slumped 6.2 percent to $41.71. The maker of programs that help companies update servers and personal computers forecast fiscal 2013 profit that missed analysts’ estimates, a sign it’s struggling to clinch big contracts.

JetBlue Airways Corp. fell 2.7 percent to $6.07. The carrier’s fourth-quarter profit tumbled 96 percent, more than analysts projected, after superstorm Sandy forced flight cancellations and reduced travel demand. More than half of the airline’s departures are from New York’s John F. Kennedy International and the carrier was forced to cancel 1,700 flights there and at other airports over five days in October when Sandy hit the northeastern U.S.

Ford Motor Co. slid 4.6 percent to $13.14 as the second- largest U.S. automaker said it expects to lose about $2 billion in Europe this year as a likely recession in the region continues to sap demand for cars.

Have a wonderful evening everyone.

Be magnificent!

I am asking whether it is possible for a human being living psychologically in any society

to clear violence from himself inwardly.

If it is, the very process will produce a different way of living in this world.

Krishnamurti, 1895-1986

As ever,

Carolann

Defeat is not the worst of failures.  Not to have tried

is the true failure.

-George Edward Woodberry, 1855-1930

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