November 28, 2012 Newsletter

Dear Friends,

Tangents:

“In a new study, researchers found that when people wrote down their unwanted negative thoughts on a piece of paper and then threw the paper away, they mentally discarded the thoughts as well,” reports Psych Central.  “The new study also found that people were more likely to use their thoughts when making judgments if they first wrote them down on a piece of paper and put the paper in a pocket to protect it.  ‘However you tag your thoughts – as trash or as worthy of protection – seems to make a difference in how you use those thoughts,’ said Richard Petty, PhD, co-author of the study and professor of psychology at Ohio State University.  ‘At some level, it can sound silly.  But we found that it really works:  By physically throwing away or protecting your thoughts, you influence how you end up using those thoughts.  Merely imagining engaging in those actions has no effect.’ “  -Michael Kesterton, Globe & mail, 11/28/12.

I just finished reading a book last night  by Gretchen Rubin entitled The Happiness Project – Or, Why I Spent a Year Trying to Sing in the Morning, Clean My Closets, Fight Right, Read Aristotle, and Generally Have More Fun (Harper Colllins, 2011 ed.). It’s worth the read. You can also visit her popular daily blog at www.happiness-project.com.

On this day in…

1757 – the poet, William  Blake was born.

1941 – The aircraft carrier USS Enterprise departs from Pearl Harbor to deliver F4F Wildcat fighters to Wake Island. This mission saves the carrier from destruction when the Japanese attack.

1943 – Sir Winston Churchill, Joseph Stalin and Franklin D. Roosevelt meet at Tehran, Iran, to hammer out war aims.

1948 – Dr. Edwin Land’s first Polaroid cameras go on sale in Boston.

1950 – In Korea, 200,000 Communist troops launch attack on UN forces.

1962 – Comedian Jon Stewart was born.

photos of the day

November 28, 2012

Trees decorated with Christmas lights are reflected in a puddle as people walk along the Unter den Linden promenade in Berlin.

Thomas Peter/Reuters

Waves crash over lava as it flows into the ocean near Volcanoes National Park in Kalapana, Hawaii, Tuesday. The volcano is creating a rare and spectacular fusion of steam and waves.

Hugh Gentry/Reuters

Market Closes for November 28th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 28 (Bloomberg) — Canadian stocks gained, erasing earlier losses in the final hour of trading, as base metals producers rallied after Inmet Mining Corp. rejected a takeover offer from First Quantum Minerals Ltd.

Inmet, a Canadian copper and zinc producer, soared 18 percent as it declined the C$4.86 billion ($4.9 billion) unsolicited offer from First Quantum. Poseidon Concepts Corp. sank 22 percent after a proposed class action was filed alleging officers and directors made false statements about the company’s financial position. SNC-Lavalin Group Inc. dropped 2.3 percent after former Chief Executive Officer Pierre Duhaime was arrested today by Quebec investigators.

The Standard & Poor’s/TSX Composite Index rose 28.70 points, or 0.2 percent, to 12,140.33 in Toronto, erasing an earlier loss of as much as 0.9 percent. The equity gauge has declined 0.6 percent this week amid concern over progress in U.S. budget talks to avert the so-called fiscal cliff.

“Investors have fiscal cliff on the brain, and it’s overhanging the marketplace,” said Irwin Michael, fund manager with ABC Funds in Toronto. His firm manages about C$1 billion.

Raw materials and energy companies contributed most to gains on the S&P/TSX as five of 10 industries advanced. Trading volume was 2.9 percent higher than the 30-day average.

The U.S. Congress is seeking a budget deal to prevent $607 billion of automatic tax increases and spending cuts from kicking in next year. If a compromise is not reached, the country is expected to fall into recession in the first half of the year, according to the Congressional Budget Office.

President Barack Obama reached out to chief executives and middle-income taxpayers today, imploring them to press Congress to avoid the fiscal cliff as he said he wants to get a deal “done before Christmas.” U.S. Speaker of the House John Boehner said he is optimistic lawmakers can “avert this crisis sooner rather than later.”

Inmet jumped 18 percent to C$62. The company said it turned down a C$70-a-share offer in cash and stock from First Quantum made Nov. 25. First Quantum had first offered $62.50 a share on Oct. 28, an offer Inmet also rejected, the company said. Inmet is developing the $6.2 billion Cobre Panama copper-mining project in the Latin American nation.

First Quantum dropped 1.6 percent to C$20.80.

Silver Standard Resources Inc. decreased 4.3 percent to C$13.06 as silver futures for March delivery slumped 0.9 percent to $33.77 an ounce in New York, the biggest decline since Nov. 16.

Poseidon, which sells containment tanks for waste fluids produced from the oil and gas industry, tumbled 22 percent to C$4.06. Siskinds LLP said in a statement it has filed a proposed class action in Ontario Superior Court seeking C$200 million in damages. The proposed class includes anyone who bought securities in the company on or before Nov. 14.

On Nov. 15, Poseidon plunged 62 percent, the most in its history, after reporting results that fell short of analysts’ estimates. Analysts at at least six firms lowered their recommendations on the stock as a result.

Suncor Energy Inc., Canada’s largest energy producer, sank 0.5 percent to C$32.73. Crude for January delivery retreated 0.8 percent to $86.49 a barrel in New York, paring earlier losses of as much as 2.1 percent after the U.S. Energy Department said supplies unexpectedly decreased last week.

SNC, Canada’s largest construction and engineering company, fell 2.3 percent to $39.99 after Duhaime, who retired earlier this year amid a corruption scandal at the company, was arrested by Quebec’s anti-corruption unit. Charges include fraud, fraud conspiracy and forgery, Anne-Frederick Laurence, a spokeswoman for the police unit, said in a phone interview.

CGI Group Inc., which provides information technology services, lost 3.9 percent to C$23.12 after reporting fourth- quarter adjusted earnings of 37 Canadian cents a share, short of analysts’ estimates of 42 cents.

US

By Inyoung Hwang

Nov. 28 (Bloomberg) — U.S. stocks rose, erasing an earlier loss for the Standard & Poor’s 500 Index, after comments by Speaker of the House John Boehner and President Barack Obama fueled optimism an agreement can be reached in budget talks.

Costco Wholesale Corp. advanced 6.3 percent after saying it plans to pay a special dividend. J.C. Penney Co. rallied 4.6 percent as consumer staples and discretionary stocks posted gains among 10 groups in the S&P 500. Knight Capital Group Inc. jumped 15 percent after receiving takeover offers from Getco LLC and Virtu Financial LLC. Cliffs Natural Resources Inc. dropped 1.3 percent as commodities declined.

The S&P 500 climbed 0.8 percent to 1,409.93 in New York, after erasing a decline of as much as 1 percent. The Dow Jones Industrial Average added 106.98 points, or 0.8 percent, to 12,985.11 today. About 6.1 billion shares traded hands on U.S. exchanges today, in line with the three-month average, according to data compiled by Bloomberg.

Obama “was confident of something being done by the end of the year,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said in an e-mail. His firm oversees about $80 billion. “This is something that the market is worried about not getting done by year-end, so if they can get it done, it would provide some relief. The market doesn’t like uncertainty.”

Equities reversed declines as Boehner, an Ohio Republican, said he is optimistic lawmakers engaged in budget talks can “avert this crisis sooner rather than later.” He made his remarks to reporters, while saying he continues to oppose the expiration of tax cuts for top earners and Democrats need to get “serious” on budget cuts. Obama said separately at the White House, “My hope is to get this done before Christmas.”

Stocks fell earlier after Erskine Bowles, co-chairman of Obama’s 2010 fiscal commission, said it’s unlikely the president and Congress will reach a deal by the end of this year. The president met with business leaders today, including Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein.

The S&P 500 has declined 1.3 percent since Obama was re- elected on Nov. 6 as he seeks a budget agreement with the Republican-controlled House. The deal is aimed at avoiding $607 billion of automatic tax increases and spending cuts that come into effect next year.

Sales of new U.S. homes dropped 0.3 percent to a 368,000 annual pace following a revised 369,000 rate in September that was weaker than initially reported, figures from the Commerce Department showed today in Washington. The median estimate of 74 economists surveyed by Bloomberg called for a 390,000 sales pace.

The U.S. economy expanded at a “measured pace” in recent weeks as gains in consumer demand and housing were tempered by a slowdown in manufacturing and the impact of superstorm Sandy, the Federal Reserve said today in its Beige Book business survey, which is based on reports from the Fed’s 12 district banks.

The report indicates that Fed policy makers are unlikely to curtail monthly purchases of $40 billion in housing debt to boost the three-year economic expansion. It also bolsters Fed Chairman Ben S. Bernanke’s view that an agreement on reducing long-term federal budget deficits without abrupt tax increases and spending cuts would remove a barrier to growth.

“The market is at the mercy of the fiscal cliff until we get some sort of resolution,” Liz Ann Sonders, the New York- based chief investment strategist at Charles Schwab Corp., which has $1.9 trillion in client assets, said by phone. “The worst scenario in general, particularly for psychology, would be just a total can kick — something like, ‘We can’t come up with a solution. We’re just going to kick this thing six months down the road, without giving the market a path between now and then.’”

Costco advanced 6.3 percent for the biggest gain in the S&P 500 to $102.58. The largest U.S. warehouse-club chain said it plans to pay shareholders a special dividend totaling about $3 billion. Costco is among more than 16 companies in the Russell 1000 Index that have set a special dividend this quarter, according to data compiled by Bloomberg. Dillard’s Inc., Las Vegas Sands Corp. and Carnival Corp. are among the others.

“We would expect this trend to continue through year- end,” Dane Mott, a San Francisco-based accounting analyst at JPMorgan Chase & Co., wrote yesterday in a report. Mott, based in San Francisco, wrote that companies are seeking to “take advantage of the favorable tax treatment for dividends in 2012 relative to the potential environment in 2013.”

Payouts made this year are subject to a 15 percent federal tax. Next year’s rate may rise to as high as 43.4 percent as part of the fiscal cliff.

J.C. Penney rallied 4.6 percent to $18.32 as consumer stocks rallied. Coach Inc. also gained, rising 4.4 percent to $60.15, as discretionary companies jumped 1.3 percent. Wal-Mart Stores Inc. added 1.5 percent to $70.56, as staples companies rose 0.9 percent.

Advanced Micro Devices Inc. rose 4.3 percent to $1.96.

Reuters reported that the second-largest maker of personal- computer processors is selling its Austin, Texas, campus to raise cash. The Sunnyvale, California-based company expects to raise as much as $200 million in the sale, Reuters reported, citing an unnamed spokesman.

Knight Capital climbed 15 percent to $3.42. Getco, the Chicago-based high-frequency trader, offered cash and stock that values Knight at $3.50 a share, an 18 percent premium from yesterday’s close, according to a filing today.

Virtu submitted a bid to buy Knight for about $3 a share, a person with direct knowledge of the matter said. Knight was bailed out by six financial companies in August after losing more than $450 million in a trading malfunction.

Green Mountain Coffee Roasters Inc. surged 27 percent to $36.86 after reporting fourth-quarter earnings that beat projections. Chief Executive Officer Lawrence Blanford has sought to boost sales with a new Keurig machine that makes milk- based drinks. Blanford also developed an espresso maker with Luigi Lavazza SpA that went on sale in time for the holidays.

Cliffs dropped 1.3 percent to $29.61. The S&P GSCI Index that tracks 24 commodities slid 0.5 percent, falling for the third straight day.

Principal Financial Group Inc. declined 1.9 percent to $26.80. The U.S. insurer that agreed to buy a Chilean pension provider for $1.5 billion last month gave a 2013 outlook that fell short of some estimates.

Have a wonderful evening everyone.

Be magnificent!

Society cannot be changed unless man changes.

Man, you and others, have created these societies

for generations upon generations.

Krishnamurti, 1895-1986

As ever,

Carolann

A short saying oft contains much wisdom.

-Sophocles, 496-406 BC

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