November 16, 2012 Newsletter

Dear Friends,

Tangents:

Life is amazing…I was speaking with one of my clients a few moments ago and our conversation led to Chinese mythology  – symbolism – and he told me that the snake (he is a snake, as is his wife) is the keeper of the treasure in Chinese mythology – recall Indiana Jones movies – (he mentioned that he will be appearing in Nixon In China next month in Vancouver – this is a hobby, he is a university professor by day).  Well, after our conversation, I  began to look at photos from today to send to you and I came across the photo below of the Taiwanese artist, Cheng Forng-Chean looking at his creation of a snake chasing an elephant….coincidence?  I wonder…

And also on this day in…

1885 – Louis Riel, leader of the North West Rebellion , is hanged in Manitoba.

1920 – Metered mail is born in Stamford, Connecticut with the first Pitney Bowes postage meter.

1945 – Eighty-eight German scientists, holding Nazi secrets, arrive in the United States.

1979 – American Airlines is fined $500,000 for improper DC-10 maintenance.

1982 – The space shuttle Columbia completes its first operational flight.

I respect faith, but doubt is what gets you an education. –Wilson Mizner, 1876-1933.

photos of the day

November 16, 2012

Taiwanese artist Chen Forng-shean looks through a magnifier at his creation, a miniature resin figurine of a snake chasing an elephant, on top of a pencil in Taipei, Taiwan. The snake is about 0.55 cm (0.22 inches) long and 0.3 cm (0.12 inches) high while the elephant is about 0.1 cm (0.04 inches) long and 0.1 cm (0.04 inches) high.

Pichi Chuang/Reuters

A rose is placed on a monument inside the Athens Polytechnic school, a day before the anniversary of a 1973 student uprising against the military ruling junta in Athens, Greece. A mass march to the US embassy is planned to take place on November 17 marking the anniversary of a student revolt that helped topple the 1967-1974 military junta.

Yorgos Karahalis/Reuters

Market Closes for November 16th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang and Eric Lam

Nov. 16 (Bloomberg) — Canadian stocks rose for the first time in five days, paring the biggest weekly decline since May, amid signs that U.S. policy makers are taking steps to reach a budget compromise.

Astral Media Inc. gained 5.1 percent for its biggest advance in eight months after saying it’s in renewed talks with BCE Inc. after their first proposed union was rejected by regulators. Valeant Pharmaceuticals International Inc., Canada’s largest publicly traded drugmaker, added 3.1 percent after it received clearance from the U.S. Federal Trade Commission for its acquisition of Medicis Pharmaceutical Corp. Niko Resources Ltd. slumped 9.3 percent after announcing sales of stock and convertible notes.

The Standard & Poor’s/TSX Composite Index rose 66.34 points, or 0.6 percent, to 11,877.72. The Canadian equity benchmark is down 2.6 percent this week and has lost 0.7 percent for the year.

“We’re very optimistic,” Paul Vaillancourt, chief investment officer at Canadian Wealth Management, which oversees more than C$600 million ($598 million) in Calgary, said in a phone interview. “The U.S. fiscal cliff, there is a solution there. They just need the political will and leadership to get it done.” Vaillancourt said he’s interested in buying energy shares.

U.S. House Speaker John Boehner said he outlined the framework of a deficit-cutting deal with President Barack Obama and would accept government revenue increases coupled with spending cuts. Boehner’s remarks spurred optimism that lawmakers would reach an agreement to avoid a $607 billion deficit-cutting package known as the fiscal cliff.

A deal on averting the fiscal cliff may be reached within weeks after talks today between Obama and Congressional leaders, said U.S. Treasury Secretary Timothy F. Geithner in an interview today in Washington on Bloomberg Television’s “Political Capital With Al Hunt” airing this weekend.

Astral rose 5.1 percent to C$44.40, the most since March, after the Montreal-based multimedia company said it is in discussions with BCE, Canada’s largest telecommunications company, to continue pursuing regulatory approvals.

The Canadian Radio-television and Telecommunications Commission, the nation’s broadcast regulator, rejected BCE’s C$3 billion bid to buy Astral on Oct. 18, saying the deal would curb television and radio competition. BCE added 1.5 percent to C$41.99.

Valeant climbed 3.1 percent to C$55.07, helping to give health-care stocks the best performance among 10 industries in the S&P/TSX today.

Progress Energy Resources Corp. climbed 2.3 percent to C$20.43. Petroliam Nasional Bhd. has responded to queries from the Canadian government after submitting a modified bid for the company, a person with knowledge of the matter said.

Niko Resources, the worst-performing stock on the S&P/TSX this year, tumbled 9.3 percent to C$8.44. The oil and gas company said it’s offering to sell C$252 million of shares and notes. The stock is down 83 percent this year.

Banro Corp. dropped 4.7 percent to C$3.48 and Argonaut Gold Inc. retreated 2.7 percent to C$9.81. Gold mining companies in the S&P/TSX Global Gold Sector Index fell 7.8 percent this week, the biggest drop since December 2011.

US

By Rita Nazareth and Sarah Jones

Nov. 16 (Bloomberg) — U.S. stocks rose, erasing earlier losses, as House Speaker John Boehner said he had constructive talks with President Barack Obama on the budget and would accept government revenue increases coupled with spending cuts.

Home Depot Inc. and Alcoa Inc. added at least 1.4 percent to pace gains in the biggest companies. Facebook Inc. climbed 6.3 percent as it expanded the roster of retailers that let users buy and send items to their friends on its website. Dell Inc. sank 7.3 percent as its revenue forecast missed estimates.

Sears Holdings Corp. plunged 19 percent as the retailer posted a wider loss and its 23rd straight quarterly sales decline.

The Standard & Poor’s 500 Index rose 0.5 percent to 1,359.88 at 4 p.m. New York time. The Dow Jones Industrial Average gained 45.93 points, or 0.4 percent, to 12,588.31, trimming its weekly drop to 1.8 percent. It capped a fourth week of losses, the longest losing streak since August 2011. Volume for exchange-listed stocks in the U.S. was 7.4 billion shares today, 22 percent above the three-month daily average.

“Any tidbit of hope on the fiscal cliff front would lead to a positive response,” said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “Because of the oversold condition of the market, any good news is going to cause a pop. Conversely, anything that’s viewed as negative in the negotiations is going to cause a downward move.”

President Obama began his first face-to-face talks with top Republicans and Democrats in Congress on reducing the deficit since his failed attempt to strike a grand bargain last year, saying voters are demanding a deal.

“What folks are looking for, I think all of us agree on this, is action,” Obama said at the start of the meeting today with House Speaker Boehner and other congressional leaders in the Roosevelt Room at the White House.

Concern about the so-called fiscal cliff drove the S&P 500 down 1.5 percent since Nov. 9. The index capped a second week of losses and trimmed its 2012 rally to 8.1 percent.

“The markets are very shaky,” former Federal Reserve Chairman Alan Greenspan told Bloomberg Television’s “In the Loop” program with Betty Liu. “The markets will crater if we run into any evidence that we can’t solve this problem,” he said. “If we get out of this with a moderate recession, I would say the price is very cheap. The presumption that we’re going to solve this problem without pain, I think, is grossly inappropriate.”

Oil rose on concern that the clash between Israel and Hamas will escalate into a wider conflict that would endanger Middle East crude shipments. Palestinian missiles landed in areas around Jerusalem and Tel Aviv and air-raid warnings sounded in both cities as Israel extended its bombing of the Gaza Strip and planned to increase its military call-up.

Investors also watched economic data today. Industrial production in the U.S. unexpectedly declined in October as superstorm Sandy knocked out power in the Northeast.

Twenty two out of 30 companies in the Dow gained today.

Home Depot advanced 1.4 percent to $62.12. Alcoa increased 1.6 percent to $8.18.

Facebook added 6.3 percent to $23.56. Partners added include Brookstone Inc., Dean & Deluca Inc. and Fab.com Inc., Facebook said at a press conference yesterday in New York.

“Tens of millions” of users in the U.S. can now access products via the gifting service, which was introduced in September with retailers such as Starbucks Corp. and 1-800- Flowers.com Inc.

Cablevision Systems Corp. jumped 2.9 percent to $14.02. It hired JPMorgan Chase & Co. and Citigroup Inc. to seek buyers for its Bresnan Broadband Holdings LLC unit acquired in 2010, said two people familiar with the situation.

Gap Inc. gained 1 percent to $33.59. The largest U.S. specialty-apparel retailer raised its full-year earnings forecast as sales in North America advanced.

OfficeMax Inc. jumped 12 percent to $9.22. A company in which it owns a stake announced an initial public offering that could bring the office-supply retailer more than $300 million.

Nike Inc. gained 1.9 percent to $92.59. The largest athletic-shoe maker agreed to sell its Cole Haan fashion brand to private-equity firm Apax Partners for $570 million as it focuses on faster-growing businesses. The company yesterday announced a 2-for-1 stock split and boosted its dividend by 17 percent.

Dell retreated 7.3 percent to $8.86. The No. 3 PC maker is struggling amid a deep slump in demand as companies wait to upgrade machines and consumers turn to smartphones and tablets like Apple Inc.’s iPad and iPhone to manage their work and personal lives.

Sears sank 19 percent to $47.49. The third-quarter net loss widened to $498 million, or $4.70 a share, from a loss of $421 million, or $3.95, a year earlier, Sears said yesterday in a statement. Sales dropped 5.8 percent to $8.86 billion, continuing a streak of declines that began in 2007.

Dynavax Technologies Corp. tumbled 47 percent to $2.44 after its hepatitis B vaccine Heplisav failed to win the backing of U.S. regulatory advisers as the drugmaker seeks to bring its first product to market.

Options traders are paying the most in 15 months to protect against swings in the largest U.S. companies relative to the S&P 500 as earnings growth declines.

The CBOE OEX Volatility Index, which tracks the cost of S&P 100 Index options, has jumped 56 percent through yesterday since its low on Sept. 21 to 19.28. That’s the highest level since August 2011 relative to the CBOE Volatility Index of S&P 500 contracts, data compiled by Bloomberg show. The S&P 100 slipped 8.4 percent since its Oct. 4 high, compared with a 7.4 percent decline for the U.S. equity benchmark.

Profits for the biggest U.S. companies are forecast to slow more than smaller ones amid Europe’s debt crisis and China’s weakest economic expansion in 14 quarters. Data yesterday showed that the euro-area economy entered a recession for the second time in four years as governments imposed tougher budget cuts.

“There’s been a deafening silence among optimists regarding revenue growth for blue-chip companies,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $138 billion, said by phone, referring to the largest U.S. companies. “The global macro situation is disconcerting, which is forcing market speculators into hedging their portfolios.”

International purchases of U.S. financial assets plunged in September as confidence grew that Europe was beginning to solve its debt crisis. Net buying of long-term equities, notes and bonds totaled $3.3 billion during the month, down from net purchases of $90.3 billion in August, the Treasury Department said today in Washington. Economists surveyed by Bloomberg projected net buying of $50 billion of long-term assets, according to the median estimate.

“The slowdown in the pace of the capital inflows was due in part to the improvement in global sentiment toward the European financial crisis following the European Central Bank’s quantitative easing announcement,” Millan Mulraine, senior U.S. strategist for TD Securities Inc. in New York, said before the report was released.

Have a wonderful weekend everyone.

Be magnificent!

The infinite oneness of the Soul is the eternal sanction of all morality.

You and I are not only brothers – every literature voicing man’s struggle towards freedom

has preached that – but you and I are really one.

This is the dictate of Indian philosophy.

This oneness is the rationale of all ethics and all spirituality.

Swami Vivekananda, 1863-1902

As ever,

Carolann

If you would thoroughly know anything,

teach it to others.

-Tryon Edwards, 1809-1894

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