CANADIANINVESTORS.

COM JANUARY 3RD, 2013 Market pricing in interest rate increases as 433 new highs on the NYSE and 233 new highs on the Nasdaq start the year 2013? Fourth annual increase in Brent Crude. Options daily volume down 6% in 2012. Gilts back up noticeably raise concern over interest rate swaps and options.

UK GILT YIELDS The focus on the Federal Reserve and the ECBs balance sheets will quickly move to the Bank of England given the backup in Gilts. 3.4 trillion in interest rate swaps at UK resident banks according to the Bank of England. http://www.bankofengland.co.uk/publications/Pages/bankreturn/2012/default.aspx
http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=BX%3aTMBM KGB10Y&uf=0&type=2&size=2&sid=10239529&style=320&freq=1&entitlementtoken=0c33378313484ba9b4 6b8e24ded87dd6&time=8&rand=1196858934&compidx=aaaaa%3a0&ma=1&maval=200&lf=1&lf2=0&lf 3=0&height=335&width=579&mocktick=1

CBOE Options volume down for the year up in December year over year. CBOE Holdings, Inc. (NASDAQ: CBOE) reported today that 2012 consolidated trading volume for options contracts on Chicago Board Options Exchange (CBOE) and C2 Options ExchangeSM (C2SM) and futures contracts on CBOE Futures ExchangeSM (CFE) totaled 1.13 billion contracts. Average daily volume (ADV) in 2012 was 4.54 million contracts, down six percent from 4.83 million contracts traded in 2011. I will double check but I believe that is the first full year annual decline in volume this century.
http://ir.cboe.com/releasedetail.cfm?ReleaseID=731125

IBKR 395 thousand Daily Average Revenue Trades (DARTs), 6% higher than prior year and 10% lower than prior month.
http://investors.interactivebrokers.com/en/?f=%2Fen%2Fgeneral%2Fabout%2FmediaRelations%2F0102-13.php%3Fib_entity%3Dir

ENERGY BRENT
The North Sea grade advanced 3.5 percent in 2012, a fourth annual gain.
http://www.bloomberg.com/news/2013-01-02/lead-is-top-gainer-as-natural-gas-slumps-commoditiesat-close.html

Natural gas futures in New York tumbled the most in more than three years on forecasts of moderating temperatures that may reduce demand for the power-plant fuel. Natural gas for February delivery fell 12.5 cents, or 3.7 percent, to $3.226 per million British thermal units on the New York Mercantile Exchange. The intraday percentage decline was the most since Sept. 11, 2009. The futures have risen 8 percent from a year ago. Trading volume was up 48 percent from the 100- day average.

MEXICO AXTEL
http://www.reuters.com/article/2013/01/02/idUSWNB269520130102

The ratings downgrade follows Axtel's proposed exchange offering. According to Fitch's methodology, the proposed offering imposes a material reduction in terms vis-a-vis the original terms of the 2017 and 2019 notes, resulting in a distressdebt exchange. The completion of the exchange will result in the IDRs being downgraded to Restricted Default 'RD'. Shortly after the distressed debt exchange is completed, the IDRs will be re-rated and raised to a performing level, which usually is still in the low speculative grade. The offering proposes to voluntarily exchange US$765 million in senior notes due 2017 and 2019 for new US$356.5 million 7% senior secured notes due 2020, US$26.3 million in new 7% convertible senior notes due 2020 for 10% of Axtel's equity and a US$114.8 million cash payment if early tendered before Jan. 11, 2013.
http://www.reuters.com/article/2012/12/28/idUSWNB266820121228

Metrofinanciera is a Mexico-based mortgage and construction lender that has been in the market for 16 years

However, the company continues to present a financial position that we consider as insufficient, and is reflected in its counterparty rating of selective default ('sd'), because it has not completed the bonus exchange derived of the restructure of its private issuance Metrofi 10.

ENERGY FUTURE HOLDINGS http://www.reuters.com/article/2012/12/26/markets-ratings-efh-idUSWNB264220121226 On Dec. 26, 2012, Standard & Poor's Ratings Services lowered its corporate credit ratings on EFIH, TCEH, and EFCH to 'CC' from 'CCC' and kept the negative rating outlook with the announcement of various exchanges--completed and announced--that we view as distressed. We kept unchanged EFH's 'SD' rating, reflecting another completed exchange on Dec. 21, 2012 of senior unsecured cash pay and PIK toggle notes into new debt at EFIH, and another offer to exchange the remaining balances of cash pay and PIK toggle notes into more new debt at EFIH. Liquidity We view consolidated liquidity as "less than adequate" given TCEH's large $3.8 billion term loan coming due in 2014. While we believe EFH should have sufficient liquidity to operate through 2013, it will face a sharp liquidity decline in 2014.

AT&T (T:US). 17 billion in funding. Negative for the equity price. http://www.reuters.com/article/2012/12/21/us-corp-bonds-credit-att-idUSL1E8NL5WP20121221 Market players estimate the plan will require at least US$17bn from debt capital markets to fund the spending increase and debt maturities. GERMAN RESIDENTIAL ASSET NOTE DISTRIBUTOR. Wow.
http://www.reuters.com/article/2012/12/21/idUSWNB252720121221

The affirmation reflects the ratification of the English Scheme of Arrangement that allows the loans to be extended to 2018 from 2013 and the notes' legal final maturity to 2021 from 2016. The new and amended transaction documents were signed on 21 December 2012; equity injection by the sponsor as well as the conversion into subordinated loans of certain notes held by its affiliates will occur on the January 2013 interest payment date The equity injection of EUR504m is a positive signal for the sponsorship of the assets. Nevertheless, the Negative Outlooks continue to reflect uncertainty about the sponsor's ability to meet its annual amortisation targets. In order to meet its business plan, the sponsor will have to

successfully split the largest portfolio, McKinley, over this period. SAUDI http://www.bloomberg.com/news/2012-12-29/saudi-arabia-boosts-2013-spending-in-recordbudget-state-tv.html Saudi Arabia raised its 2013 expenditure target by almost a fifth to a record 820 billion riyals ($219 billion) as the worlds biggest oil exporter pushes ahead with expansion plans to diversify away from oil. The government expects 2013 revenue of 829 billion riyals, giving it a surplus of 9 billion riyals, the Finance Ministry said in a statement on its website today.

JAPAN Signs of capitulation are bullish. Given that its been 23 years, capitulation is understandable.
http://www.yomiuri.co.jp/dy/business/T121225001625.htm

According to the Japan Securities Dealers Association, a total of 13 securities companies closed down as of Dec. 24 in fiscal 2012, including Akakiya Securities Co., a pace surpassing that of fiscal 2009, when 14 companies closed down in the entire fiscal year--a record for recent years. "Small and midsize securities companies that cannot shift from old business models will face difficulties," association Chairman Tetsuo Mae said. The rise of Internet securities companies with inexpensive commissions on securities transactions has been cited as a major reason behind the fact that small and midsize securities firms face an uphill battle. When Japan Exchange Group Inc., a holding company that is set be established by the merger of the TSE and OSE, becomes listed in January, every securities company that existed in 2001, when the TSE became a joint stock company, will become holders of shares of Japan Exchange Group. Each of those companies was allotted 20,000 unlisted TSE shares. After the January listing, those shares can be traded on the market.

"That would be a good time [to go out of business]," an owner of one of the small and midsize securities companies said. "By selling the shares for a profit, we'll be able to pay off debts and pay for the retirement of our employees."

An observer said: "Theoretically, securities companies would get 1.5 billion yen by selling their 20,000 shares. More than 50 securities companies will probably terminate their businesses."

CANADA http://www.bloomberg.com/news/2013-01-02/rbc-takes-top-spot-for-stock-sales-from-torontodominion.html Companies raised $29.3 billion in Canada from IPOs, secondary sales and convertible debentures in 2012, down 7.3 percent from the $31.6 billion raised in 2011, Bloomberg data show. Last year was the slowest since 2008, when companies raised $19 billion. The Standard & Poors/TSX Composite Index, Canadas benchmark stock gauge, rose 4 percent last year, trailing every developed stock market except Portugal and Spain.

Canadian bond fund. XBB http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=ca%3ax bb&uf=0&type=2&size=2&sid=8660885&style=320&freq=1&entitlementtoken=0c3337831348 4ba9b46b8e24ded87dd6&time=8&rand=1077123249&compidx=aaaaa%3a0&ma=1&maval=20 0&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

EUROPEAN AUTO SALES IN DECEMBER. http://uk.reuters.com/article/2013/01/02/uk-autos-europe-idUKBRE9010L720130102 Ford (F.N) led December's declines among mass-market brands with sales down 40 percent in France, 31 percent in Spain and 33 percent in Italy. Opel - the European unit of General Motors (GM.N) - posted declines of 16 percent, 17 percent and 47 percent, respectively. Volkswagen (VOWG_p.DE), Europe's biggest automaker, saw sales at its core brand slump 25 percent in France, 15 percent in Spain and 36 percent in Italy.

EXUBERANCE FOR JUNK? http://research.stlouisfed.org/fred2/data/BAMLHYH0A3CMTRIV_Max_630_378.png

STOCK MARKET IS CERTAINLY FORECASTING A STRONGER CONSUMER. So far that has not happened. This is Seattle, Tacoma, but relevant as many jurisdictions have similar type charts. Given that the consumer is a larger part of the economy than the stock market, I tend to stay with the consumer, despite the money printing. http://research.stlouisfed.org/fred2/data/CCDIOA42660Q156N_Max_630_378.png

AAPL RALLIES TO 50 DAY MOVING AVERAGE. (As does the HUI). http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=aapl&u f=0&type=2&size=2&sid=609&style=320&freq=1&entitlementtoken=0c33378313484ba9b46b8 e24ded87dd6&time=8&rand=433703166&compidx=aaaaa%3a0&ma=1&maval=50&lf=1&lf2= 0&lf3=0&height=335&width=579&mocktick=1

TARGET (TGT:US) Down in an up market. On big up days I tend to focus on where natural selling occurred. Bear rallies in the overall market such as todays tend to invite selling. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=tgt&uf= 0&type=2&size=2&sid=166617&style=320&freq=1&entitlementtoken=0c33378313484ba9b46 b8e24ded87dd6&time=8&rand=708569880&compidx=aaaaa%3a0&ma=1&maval=200&lf=1&l f2=0&lf3=0&height=335&width=579&mocktick=1

SHORT CANDIDATE EMC (EMC:US) 10 times book value. Under the 200 day moving average. Down in an upmarket. http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=emc&u f=0&type=2&size=2&sid=1698&style=320&freq=1&entitlementtoken=0c33378313484ba9b46b 8e24ded87dd6&time=8&rand=649302337&compidx=aaaaa%3a0&ma=1&maval=200&lf=1&lf 2=0&lf3=0&height=335&width=579&mocktick=1

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.