November 29, 2012 Newsletter

Dear Friends,

Tangents:

A lovely thought to share:

A friend of mine, Nelson, who lives up in North Carolina, told me a story about something that happened to him some time ago. Nelson is loved by everyone who knows him. He lives next door to a seasoned gardener.  One day she asked him to watch over her flowers while she was on vacation, in particular, her geraniums. She stressed the importance of deadheading – pinching off the flowers that have died to make room for more blossoms and growth of new flowers.  Nelson took this assignment seriously. For the first few days, he scanned the flowers for dead blossoms, dutifully pinching them off and throwing them away.  He told me that then, four days after he had begun deadheading, as he gazed at the pots he noticed how brilliant the geraniums were. He suddenly realized that he’d spent the first part of the week focusing on the dead flowers and had overlooked the beauty of the garden and each individual plant by looking for death instead of life. He became incredibly grateful for life and being.

Thinking about our conversation, I realized how often I have concentrated on the “dead flowers” in my experience and missed some of the beauty of the good that is going on. How often discouragement, failure, missed opportunities, and fear have kept me from being grateful for life, from seeing the beautiful, the good, and the true picture. At times I had overlooked life’s most wonderful treasures, failing to be truly grateful for all the good in my life.  I can now see the power in being grateful for the good that surrounds us, for every loving and joyful thought, for family, for friendship, for being alive and able to share God’s love – grateful for seeing life instead of death and its faded blooms. – Pat Collins, adapted from the author’s blog

On this date in 2001, George Harrison, lead guitarist of the Beatles, passed away. He died at 58 years old after suffering from lung cancer. –Steven Russolillo, WSJ, 11/29/12

And also on this date in…

1832 – Louisa May Alcott was born.

1878 – C.S. Lewis was born.

1949 – The United States announces it will conduct atomic tests at Eniwetok Atoll in the Pacific.

1961 – NASA launches a chimpanzee named Enos into Earth orbit.

1962 – Algeria bans the Communist Party.

1963 – President Lyndon B. Johnson appoints Chief Justice Earl Warren head of a commission to investigate the assassination of John F. Kennedy.

1989 – Czechoslovakia ends communist rule.

Be content to act, and leave the talking to others. –Baltasa

photos of the day

November 28, 2012

Two elephants reach out to each other at the Sonepur cattle fair in Saran district in the eastern Indian state of Bihar. The fair, which is held annually, was originally a cattle and animal market where traders bought and sold livestock on the holy river Ganges.

Aftab Alam Siddiqui/AP

Joggers run past trees on a foggy morning in Rheda-Wiedenbrueck, western Germany.

Sascha Schuermann/dapd/AP

Market Closes for November 29th, 2012:

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang and Eric Lam

Nov. 29 (Bloomberg) — Canadian stocks gained for a second day amid optimism that a U.S. budget agreement will be reached and as Research In Motion Ltd. and Inmet Mining Corp. rallied.

RIM jumped 4.4 percent after Goldman Sachs Group Inc. upgraded the stock to buy. Inmet, a Canadian copper and zinc producer, added 5.7 percent after announcing yesterday that it rejected a takeover offer from First Quantum Minerals Ltd. Royal Bank of Canada, the first Canadian lender to report fourth- quarter results, climbed 0.5 percent as profit rose 22 percent on higher trading and investment-banking fees.

The Standard & Poor’s/TSX Composite Index rose 62.52 points, or 0.5 percent, to 12,202.85 in Toronto. The equity gauge is up 2.1 percent this year.

“There will be some headline risk the next month or so, but the general consensus is everyone wants to work toward a deal and the market is reflecting that,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP, on the phone from Vancouver. Richardson GMP manages about C$14.5 billion ($14.6 billion). “We can also point to some decent U.S. economic data today.”

U.S. congressional leaders are working toward an agreement to avert more than $600 billion in spending cuts and tax increases scheduled to begin next year. Republican Speaker of the House John Boehner told reporters “no substantive progress” has been made in budget talks. Senate Majority Leader Harry Reid said Democrats were all on the same page and Senator Chuck Schumer said there has been progress.

U.S. data showed today that Americans signed more contracts in October to purchase previously owned homes and the economy grew at a faster pace than earlier estimated during the third quarter.

Energy companies and banks contributed the most to gains on the S&P/TSX as all 10 industries advanced. Trading volume was 4.6 percent higher than the 30-day average.

Canadian Natural Resources Ltd. added 1.1 percent to C$28.54 as oil rose for the first time in four days. Crude for January delivery climbed 1.8 percent to settle at $88.07 a barrel in New York.

RIM advanced 4.4 percent to $11.48. Goldman’s upgrade is the latest in a wave of higher analyst ratings amid fresh optimism for the new BlackBerry 10 phones, which are set to go on sale in February. While RIM’s current BlackBerry lineup continues to lose market share to Apple Inc.’s iOS and devices that run Google Inc.’s Android software, the new phones may change that, said Simona Jankowski, a Goldman analyst.

Inmet, which is developing the $6.2 billion Cobre Panama copper mine, gained 5.7 percent to C$65.50. It rallied 17 percent yesterday after saying it declined the C$4.86 billion unsolicited offer from First Quantum. Shares of First Quantum slipped 2.1 percent to C$20.37 today, bringing its weekly decline to 6.7 percent.

Royal Bank added 0.5 percent to C$58.61. Canada’s largest lender by assets benefited in the quarter from a surge in fixed- income trading and gains in its RBC Capital Markets investment bank. Analysts and investors expect Canadian banks to offset slower growth in consumer lending and mortgages with fees for arranging stock sales, trading and advising on takeovers.

Gildan Activewear Inc. rose 2.7 percent to C$33.98. The underwear maker estimated adjusted earnings of $2.60 to $2.70 a share for fiscal 2013, ahead of analysts’ estimates of $2.49.

Gildan also raised its dividend to 9 cents a share from 7.5 cents a share.

US

By Inyoung Hwang

Nov. 29 (Bloomberg) — U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, amid investor optimism that lawmakers will reach a resolution in federal budget negotiations.

All 10 groups in the S&P 500 rose as commodity producers rallied. Apple Inc. and Advanced Micro Devices Inc. led an advance in technology stocks. Kroger Co. jumped 4.8 percent after boosting its profit projection for the year. Walt Disney Co., the world’s largest entertainment company, added 1.1 percent after raising its dividend. Tiffany & Co. tumbled 6.2 percent after cutting its profit forecast. Kohl’s Corp. plunged 12 percent after reporting disappointing sales for November.

The S&P 500 increased 0.4 percent to 1,415.95, the highest level since Nov. 6, at 4 p.m. in New York. The Dow Jones Industrial Average rose 36.71 points, or 0.3 percent, to 13,021.82. About 6.2 billion shares traded hands on U.S. exchanges today, in line with the three-month average, according to data compiled by Bloomberg.

“There’s going to be increasingly divisive negotiations that might shake the market’s confidence a bit,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in a telephone interview. “We might see a lot of volatility.”

Equities briefly erased gains after Speaker of the House John Boehner said to reporters in Washington today that “no substantive progress” has been made in budget talks. Senate Majority Leader Harry Reid said Democrats were all on the same page on budget talks and Senator Chuck Schumer said there has been progress, helping the market recover after Boehner’s comments.

U.S. stocks have been whipsawed amid lawmakers’ comments on whether an agreement can be reached to avert more than $600 billion in spending cuts and tax increases scheduled to begin on Jan. 1. The S&P 500 rose yesterday after comments by Boehner and President Barack Obama fueled optimism a deal would be made before the end of the year. The benchmark gauge of U.S. stocks has declined 0.9 percent since the president won re-election on Nov. 6.

Obama reached out to chief executives and middle-income taxpayers yesterday, imploring them to press Congress to avoid the fiscal cliff as he said he wants to get a deal “done before Christmas.” Treasury Secretary Timothy F. Geithner arrived at the Capitol today to face demands from Republican leaders to spell out spending cuts. He began his round of meetings with each of the top four leaders in Congress in Reid’s office.

“Equity markets will be very beholden to the incremental statements regarding the fiscal cliff, either progress or lack of progress,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $113 billion, said in a telephone interview.

Goldman Sachs Group Inc.’s David Kostin wrote in a report that stocks will outperform Treasuries next year as S&P 500 sales and profit growth boost the price-earnings multiple. “The turbulent political environment that curtailed corporate risk- taking in 2012 will end,” Kostin, chief U.S. equity strategist at the New York-based firm, said.

Stocks gained earlier as a report showed Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained. The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8, figures from the National Association of Realtors showed today in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain.

Gross domestic product grew at a 2.7 percent annual rate, up from a 2 percent prior estimate, revised figures from the Commerce Department showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 2.8 percent gain. Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed.

Raw-material producers rose 0.6 percent as a group today.

The S&P GSCI Index, which tracks 24 commodities, halted three straight days of losses, climbing 1.1 percent.

Technology companies also advanced, increasing 0.4 percent.

Apple, the world’s most valuable company, rallied 1.1 percent to $589.36. AMD added 4.1 percent to $2.04. The second-largest maker of personal-computer processors has jumped 8.5 percent in two days amid optimism that the sale of its campus in Austin, Texas, may help shore up cash reserves.

Kroger rose 4.8 percent to $26.25. The supermarket operator boosted its profit projection for the fiscal year to at least $2.44 a share. That’s up from the previous guidance of no more than $2.42 and higher than the average analyst estimate.

Walt Disney gained 1.1 percent to $49.72 after raising its annual dividend by 25 percent, joining other companies boosting their payouts ahead of an expected tax-rate increase next year.

The payment of 75 cents per share will be made on Dec. 28 to shareholders as of Dec. 10. The previous 60-cent annual dividend was paid to investors in January.

Research In Motion Ltd. added 4 percent to $11.54 as Goldman Sachs upgraded the BlackBerry maker to buy from neutral, saying the new BlackBerry 10 phones could help it return to profitability in fiscal 2014.

Pandora Media Inc. increased 7.5 percent to $8.79.

Cannacord Genuity Ltd.’s Michael Graham, who rates the biggest online radio service with a buy, said Apple’s recent management changes may slow the development of the iPhone maker’s competing Internet radio.

Tiffany tumbled 6.2 percent to $59.80. The world’s second- largest jewelry retailer cut its annual profit forecast for the third time this year after higher diamond costs ate into margins and customers curbed spending in weak economies. The New York- based company’s gross margin, a key measure of profitability, shrank more than analysts anticipated last quarter as precious- metals costs also increased.

Kohl’s plunged 12 percent to $45.02. The department-store chain operator said same-store sales in November will be down 5.6 percent, missing the average analyst estimate, which called for an increase of 2.1 percent.

Supervalu Inc. sank 19 percent, the most since July, to $2.28. Cerberus Capital Management LP’s pursuit of the grocery- chain operator has stalled because the private-equity firm has had trouble obtaining the funds for a leveraged buyout, said people familiar with the matter. Potential lenders are balking because they’re concerned over how the Eden Prairie, Minnesota- based chain will manage the increased debt load as revenue shrinks, said the people.

Aeropostale Inc. dropped 5 percent to $13.42 after the teen-apparel retailer projected fourth-quarter earnings per share of 36 cents to 41 cents, compared with the average analyst estimate that called for 55 cents. Chief Executive Officer Thomas Johnson said Black Friday weekend sales were “encouraging,” while he remains “cautious” for the rest of the quarter.

A Bloomberg Global Poll published today showed that three out of four global investors expect Obama and congressional leaders to reach a short-term agreement. Only 6 percent of investors anticipate a political impasse that would send the U.S. economy over the fiscal cliff and into a recession, according to the poll conducted on Nov. 27.

The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. looks likely to avoid the fiscal cliff, according to the poll. Two-thirds of the 862 surveyed described the global economy either as stable or as improving. That’s up from just over half who said that in September and is the most since May 2011.

The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year.

Have a wonderful evening everyone.

Be magnificent!

“If I change, will the world have any value?”

That is a wrong question, if one may point out.  It is wrong because you are the rest of humanity.

Krishnamurti, 1895-1986

As ever,

Carolann

If they give you ruled paper, write the other way.

-Juan Ramon Jimenez,  1881-1958

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