CANADIANINVESTORS.COM JAN.

. 2ND, 2013 NYSE (NYX:US) going to be purchased for less than Linkedin, Monster Beverage and the same price as the Tribune buyout? Semi bookings in Nov. lower than Nov. 1994. Foreign currency denominated net Swiss assets at a record of 64.7 billion as at September 30th, 2012 up from 34.1 billion as at December 2011 in the US. US liabilities to the Caymans fall to 1.3 trillion from 1.48 trillion at the end of 2009 and 1.42 trillion at the end of 2011 as unwinding continues. Liabilities to the Bahamas, Europe and the UK also drop in 2012. US a net seller of foreign bonds for the fourth straight year in 2012.

NYSE (NYX:US) MERGER The NYSE has 9 times the revenue of Linkedin but a market cap of 8 billion vs the 12 billion of Linkedin and the Tribune company which was taken private for just over 8 billion and has been in bankruptcy for the past 4 years. Monster (MNST:US) trades at 10 times book value. The buyer ICE has 35% of the combined revenue of the NYSE (1.4 billion plus 2.5 billion = 3.9 billion). ICE is levered 45 times tangible capital 37 billion in assets vs 822 million in tangible capital. NYSE has 13 billion in assets and admittedly negative tangible equity with deferred revenue writedowns mentioned in the presentation (and goodwill than needs writing down). My concern is that with the ICE clearing default swaps you are bringing new risk to the NYSE. Multiple member firms may fail on the NYSE as a result of OTC derivative practices/counterparties, but that does not mean the NYSE fails. Clearing default swaps can cause the clearing exchange to fail IMHO. Subject to financing and due diligence I will offer $35.00 per share for the NYSE. My offer is less than one days expenditure by the US government and approximately 3 days of purchases by the Federal Reserve. One billion in annual cash flow certainly can be modeled to finance 10 billion at 5% interest rates even under mutual fund liquidation scenarios. I would most certainly advise turning down this merger offer as currently contemplated.

ICE and NYSE Emails seeking comment on the expected number of job losses was returned by Kelly Loeffler confirming that the number of job losses at this time has not been quantified. http://ir.theice.com/releasedetail.cfm?ReleaseID=728039

NYSE Euronext shareholders will own approximately 36% of ICE shares post-transaction. Under the terms of the agreement, which was unanimously approved by the Boards of both companies, the transaction is currently valued at $33.12 per NYSE Euronext share, or a total of approximately $8.2 billion, based on the closing price of ICE's stock on December 19, 2012. NYSE Euronext shareholders will have the option to elect to receive consideration per NYSE Euronext share of (i) $33.12 in cash, (ii) 0.2581 IntercontinentalExchange common shares or (iii) a mix of $11.27 in cash plus 0.1703 ICE common shares, subject to a maximum cash consideration of approximately $2.7 billion and a maximum aggregate number of ICE common shares of approximately 42.5 million. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=ice&uf =0&type=2&size=2&sid=2153628&style=320&freq=1&entitlementtoken=0c33378313484ba9b 46b8e24ded87dd6&time=8&rand=841510813&compidx=aaaaa%3a0&ma=1&maval=200&lf=1 &lf2=0&lf3=0&height=335&width=579&mocktick=1

DECEMBER TREASURY BULLETIN Items of note. http://fms.treas.gov/bulletin/b2012_4.pdf U.S. liabilities to foreigners reported by U.S. banks were recorded at $4.6 trillion in September 2012, a decrease of $306 billion from yearend 2011. U.S. banking liabilities include foreign holdings of U.S. short term securities but exclude foreign holdings of U.S. longterm securities. U.S. banking liabilities decreased about $427 billion in 2009, but increased about $131 billion in 2010 and $314 billion in 2011. U.S. banking liabilities are concentrated in international financial centers. The data on this page show that about 55 percent of U.S. banking liabilities is currently recorded against the United Kingdom and banking centers in the Caribbean. Overall, banking liabilities rebounded in 2010 and 2011 from earlier declines, with the exception of Caribbean banking centers. In the first three quarters of 2012, liabilities to Caribbean banking centers continued to fall and liabilities to other international financial centers and Japan turned down. Page 68. In June 2012, U.S. claims on foreigners reported by U.S. banks amounted to $3.8 trillion, a decrease of $502 billion from that recorded at yearend 2011. U.S. banking claims include holdings of foreign short-term securities but exclude holdings of foreign long-term securities. U.S. banking claims increased $257 billion in 2009 and $554 billion in 2010. However, they decreased $276 billion in 2011. As with U.S. banking liabilities, U.S. banking claims on foreigners are concentrated in international financial centers. Nearly 60 percent of these claims are reported opposite the United Kingdom and banking centers in the Caribbean. In the post crisis years, there has been a steady fall in claims on all other Europe, and claims on the U.K. turned down in the first half of 2012

US a net seller of foreign bonds for the fourth straight year in 2012. Page 82 and 91. (US dollar repatriation). Last time this occurred was in 2008. A sign of the US turning inward.

Foreigners buying less of US. The data on this page represent foreign investors purchases and sales of long-term U.S. securities (that is, U.S. Treasury and Government agency bonds and notes, and U.S. corporate bonds and stocks) as reported in the Treasury International Capital (TIC) reporting system. After including stock swaps and accounting for ABS repayment flows, net foreign purchases totaled $436 billion in 2009. The pace of acquisition picked up in 2010, when foreign net purchases were recorded at $685 billion. The pace of acquisitions slowed considerably in both 2011 and again in 2012, with net foreign purchases recorded at $331 billion in 2011, and only $227 billion in the first three quarters of 2012 Page 90. Swiss Franc Forwards 792 billion in Swiss franc spot, futures and forwards as at September 2012 down from 1.0 trillion in spot, futures and forwards in January 2012. Foreign currency denominated net Swiss assets at a record of 64.7 billion as at September 30th, 2012 up from 34.1 billion as at December 2011. US Dollar Forwards US dollar forwards remain a concern at 20 trillion, especially currency arbitrage given the interconnectedness in any version of orderly/disorderly see Japan in the last 2 months, ie volatility. 1.998 trillion in calls bought on the US dollar. 2.3 trillion in calls written against the US dollar. 2.120 trillion in puts bought on the US dollar. 2.464 trillion in puts written against the US dollar.

UNECONOMIC TRADING. Some have made this argument in the gold market, so it bears watching for precedent purposes even if the fines rendered are small. I believe a case can be made that it more akin to loss leaders in the grocery store, but I will watch and listen to the facts as presented. http://www.risk.net/energy-risk/news/2232636/uneconomic-trading-at-issue-in-barclays-powerdispute

The theory in question is uneconomic trading, which involves traders deliberately losing money in one market in order to profit from another position in a related market. Ferc believes that such behaviour should automatically be considered unlawful manipulation. Ferc is breaking new ground here, and any or all of these cases could very well impact everybody else "Traders should not lose in one market to gain in another, because that is prima facie manipulation, in my opinion," said Ferc chairman Jon Wellinghoff, in an exclusive interview with Energy Risk during November. In the Barclays case, Ferc is accusing the former Barclays traders of executing loss-making trades in next-day fixed-price physical power at four hubs in and around California, with the goal of moving price indexes managed by Atlanta-based exchange operator Ice. As a result, Barclays profited from opposing positions they held in cash-settled derivatives linked to the Ice indexes, Ferc says. Barclays denies the allegations, however. "We believe that our trading was legitimate and in compliance with applicable law," says a New York-based spokesman for the bank. "If the Ferc proceeds, we intend to vigorously defend this matter in federal court." In its December 14 filing, which it submitted along with similar filings from the four ex-traders, Barclays offered a more detailed rebuttal of Fercs allegations. The bank said the agency had cherry-picked an unrepresentative selection of trading data to support its allegations and insisted its traders had not intentionally lost money on their trades. Likewise, the agency alleged that Constellation Energy routinely took losses on physical and virtual trades in eastern US power markets to benefit from positions in swaps and financial transmission rights instruments that are similar to CRRs. In March, Constellation agreed to pay $245 million to settle those allegations, but did not admit to any wrongdoing. A Baltimore-based spokesman for the firm declined to comment for this article.

EUROPEAN BANKS SHORT INTEREST. Note the large increases in short interest at Deutsche Bank (DE:DBK) and Credit Suisse (CH:CSGN) in the fourth quarter. http://www.euromoney.com/images/1/Markit/stoxx-19-dec.jpg Short covering in the second half of 2012. http://www.dataexplorers.com/news-and-analysis/shorts-cover-h2

Early June saw average short interest in both the S&P 500 and Stoxx 600 reach annual highs of 3% and 2.9% of the total shares respectively. Since the summer, the European large cap index has seen a sustained period short covering with demand to borrow having fallen sharply to 2.3% of the total shares which is close to the annual low of 2.2% seen at the end of March. Shorts also covered their aggregate positions in the S&P 500 since the summer high, but the rate of decline has been more muted, with 2.6% of the shares currently on loan.

SEMIS Bookings were lower than November 1994 when the semi revolution began gathering steam. Long time readers know that Taiwan leads the Semis, leads the Nasdaq leads the NYSE. This suggests stock prices are going back to November 1994 levels. Negative side effect of the Tablet/smart phone proliferation.
http://www.semi.org/en/node/44281 http://prod.semi.org/en/sites/semi.org/files/docs/p033815.pdf

North America-based manufacturers of semiconductor equipment posted $720.4 million in orders worldwide in November 2012 (three-month average basis) and a book-to-bill ratio of 0.79, according to the November Book-to-Bill Report published today by SEMI. A book-to-bill of 0.79 means that $79 worth of orders were received for every $100 of product billed for the month. The three-month average of worldwide bookings in November 2012 was $720.4 million. The bookings figure is 3.0 percent lower than the revised October 2012 level of $742.8 million, and is 26.3 percent lower than the November 2011 order level of $977.2 million.

WORLD FEDERATION OF EXCHANGES 3.7 trillion in share turnover worldwide in November 2012 vs 4.6 trillion in November 2011. 376 billion raised in bond issuance worldwide in November 2012 compared to 596 billion in November 2011 as bond trading also saw a noticeable year over year decline. http://www.world-exchanges.org/statistics/monthly-reports 2013 forecast government debt is 52 trillion according to the Economist debt clock while the world domestic equity market capitalization is 52.7 trillion as at November 30th, 2012 with little

change in December 2012. I continue to expect government debt outstanding to rise at a faster than equity market capitalization. JAPAN http://www.reuters.com/article/2012/12/24/japan-banks-fsa-idUSL4N09Y1GJ20121224 The FSA's new requirement, likely to be phased in from 2016, is expected to cover major trust banks, such as Sumitomo Mitsui Trust Bank and Norinchukin Bank. These institutions will probably have to maintain capital ratios about 0.5 percentage point higher than other banks, the Nikkei report said.

INTEL (INTC:US) Weekly chart is weak here under the 200 day moving average. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=i ntc&uf=0&type=2&size=2&sid=2564&style=320&freq=2&entitlementtoken=0c333783134 84ba9b46b8e24ded87dd6&time=12&rand=1254943986&compidx=aaaaa%3a0&ma=1&m aval=200&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

EMC (EMC:US) 10 times book value. Under the 200 day moving average. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=e mc&uf=0&type=2&size=2&sid=1698&style=320&freq=1&entitlementtoken=0c3337831348 4ba9b46b8e24ded87dd6&time=8&rand=852145991&compidx=aaaaa%3a0&ma=1&maval =200&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

NETAPP (NTAP:US) Also looks weak here. Under the 200 day with a gap to cover to the 20s. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=n tap&uf=0&type=2&size=2&sid=3145850&style=320&freq=1&entitlementtoken=0c333783 13484ba9b46b8e24ded87dd6&time=8&rand=1855872919&compidx=aaaaa%3a0&ma=1& maval=200&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

DEFAULTS http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=1245345 540939 This action raises the 2012 global corporate default tally to 80 issuers so far in 2012. By region, 46 of the 80 defaulters were based in the U.S., 22 in the emerging markets, nine in Europe, and three in the other developed region (Australia, Canada, Japan, and New Zealand). In comparison, the 2011 total (through Dec. 12, 2011) was 52, with 39 issuers based in the U.S., four in Europe, three in the emerging markets, and six in the other developed region.

CP and CN Rail vs Wheat show a profitable disconnect. Essentially, Canadian railways that carry wheat are overvalued, whereas the wheat itself is undervalued relative to these two names. 750 on wheat should provide solid support. CP vs Wheat http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=c a%3acp&uf=0&type=2&size=2&sid=820878&style=320&freq=1&entitlementtoken=0c333 78313484ba9b46b8e24ded87dd6&time=9&rand=918893837&compidx=aaaaa%3a0&comp =wheat&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

HOUSEHOLD AND BUSINESS CREDIT IN CANADA Up 133 billion in the first 10 months of the year to 3.038 trillion at the end of October. http://www.bankofcanada.ca/wp-content/uploads/2012/12/wfs281212.pdf

HOTELS CONTINUE TO BE A CONCERN Short Candidate Marriott (MAR:US) negative tangible equity and under the 200 day moving average. Hotel foreclosures continue. With the SPY yielding close to 3% and the DIA yielding over 4% in a market that I see has very little economic growth, I would expect the market to be looking to short names with yields below 3% and buy names with yields above 3%. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb= mar&uf=0&type=2&size=2&sid=102556&style=320&freq=1&entitlementtoken=0c3337831

3484ba9b46b8e24ded87dd6&time=8&rand=2111403962&compidx=aaaaa%3a0&ma=1& maval=200&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

POSCO (PKX:US) South Korean autos continue to trade better than North America autos. As such I prefer South Korea steel to North American steel as a method of playing Asian currency appreciation. Underperformed Korean indices by 20 points I would expect this to be a value play relatively speaking. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=p kx&uf=0&type=2&size=2&sid=1100007&style=320&freq=1&entitlementtoken=0c3337831 3484ba9b46b8e24ded87dd6&time=8&rand=1870689403&compidx=aaaaa%3a0&ma=1& maval=200&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

A number of concerns as presented and the repercussions therein. Technology change, pensions and the implications of countries inflating their currencies and the impact on forwards, counterparties etc.

DISCLOSURE Long Iamgold (IMG:T), Eldorado (ELD:T), Kinross (K:T), Aurico (AUQ:T), Nevsun (NSU:T), Golden Star (GSC:T), Gabriel (GBU:T), Agnico (AEM:T), Brigus (BGD:T), Yamana (YRI:T), Silver Standard (SSO:T), China Gold (CGG:T), Compton (CMT:T), Nova Gold (NG:T), Central Fund (CEF.a:T), Goldcorp (G:T), Ensign (ESI:T), Akita Drilling (AKT.a:T), Noble Metals (NMG:X), Aurizon (ARZ:T), Northern Dynasty (NDM:T), First Majestic (FR:T), Wesdome (WDO:T), Virgina (VGQ:T), Barrick (ABX:T), physical CDN, physical RMB, Royal Bank (RY:T) T-Bill Fund, Microsoft January (MSFT:US) puts, Schlumberger January (SLB:US) puts, Royal Bank Precious Metals Fund, physical gold, physical silver at the time of writing.