Month: October 2013

Dear Friends,

Tangents:

On this  day in 1993, 20 years ago, Nelson Mandela won the Nobel Peace Prize for his role in ending apartheid in South Africa.

Last night I finished reading a book entitled Summertime written by another Nobel laureate, J.M. Coetzee.  Coetzee is from South Africa and he won the Nobel prize for literature in 2003.  I’ve read a few of his books, Disgrace, Elizabeth Costello, are two that come to mind easily; I quite like his writing.  Apartheid is often an underlying theme in his work.  What makes Summertime remarkable is it is about the life of the writer Coetzee written by Coetzee but told through the fictional biographer he creates in this novel.  The chapters are interviews with people who knew him when he was alive, growing up in South Africa and afterwards, when he was an English Professor in South Africa.  This book was written in 2009 – a good read.  Now I can begin Jhumpa Lahiri’s  recently published novel Lowland.  I love her writing.

Photos of the day

Torch bearers Nataliya Golovina (l.) and Olga Puchkova hold Olympic torches during a relay in Ryazan, Russia. The relay for the Sochi Winter Games will pass through many cities that showcase the historical, cultural, and ethnic richness of Russia. Olympictorch2014.com/AP

A girl and a boy walk on the first day of the Eid al-Adha feast near the Saudi city of Tabuk. Mohamed Al Hwaity/Reuters

Market Closes for October 15^th, 2013

Market  Index	Close	Change
Dow  Jones	15168.01	-133.25    -0.87%
S&P 500	1698.06	-12.08    -0.71%
NASDAQ	3794.010	-21.264    -0.56%
TSX	12931.46	+39.35
		+0.31%

International Markets

Market  Index	Close	Change
NIKKEI	14441.54	+36.80
		+0.26%
HANG  SENG	23336.52	+118.20
		+0.51%
SENSEX	20547.62	-59.92
		-0.29%
FTSE 100	6549.11	+41.46
		+0.64%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.649	2.591
CND.   30 Year Bond	3.181	3.146
U.S.   10 Year Bond	2.7276	2.6871
U.S.   30 Year Bond	3.7891	3.7428

Currencies

BOC Close	Today	Previous
Canadian $	0.96380	0.96579
US   $	1.03756	1.03543
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40341	0.71255
US  $	1.35260	0.73932

Commodities

Gold	Close	Previous
London Gold   Fix	1282.03	1271.40
Oil	Close	Previous
WTI Crude Future	101.21	102.02
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 15 (Bloomberg) — Canadian stocks rose, after posting the biggest weekly gain in a month, as metal producers rallied with the price of gold to help erase earlier declines amid political brinkmanship in the U.S. over avoiding a debt default.

Miners accounted for the 10 biggest advances in the benchmark equity index, with AuRico Gold Inc. soaring 12 percent to pace gains among gold producers. BlackBerry Ltd. gained 1.6 percent after a report that private-equity firm Cerberus Capital Management LP is considering an offer for the company. Canadian National Railway Co. dropped 0.4 percent after the Teamsters Canada union threatened to strike over contract talks.

The Standard & Poor’s/TSX Composite Index rose 39.35 points, or 0.3 percent, to 12,931.46 at 4 p.m. in Toronto, erasing an earlier loss of as much as 0.4 percent. Canadian markets were closed yesterday for the Thanksgiving holiday. The gauge advanced 1.1 percent last week, most since Sept. 6.

“There continues to be pockets of attractiveness, and we continue to be favorable on stocks,” said Barry Schwartz, fund manager with Baskin Financial Services in Toronto. He helps manage about C$535 million ($516 million). “I don’t think anyone should be distracted by what’s going on. Don’t let it scare you.”

The fiscal showdown in Washington entered its final stages as the House and Senate prepared competing plans that would end the 15-day-old government shutdown and prevent the U.S. from missing promised payments.

The House and Senate plans would both fund the government through Jan. 15, 2014, and suspend the U.S. debt limit until Feb. 7. As the differences narrow between the parties, a House vote as soon as tonight would test whether Republicans are willing to raise borrowing authority and end the shutdown without major changes to the 2010 health-care law.

“The only thing you can’t model is crazy politicians,” Schwartz said. “You cannot put that into your formulas to come up with a value when you have nut cases running the asylum. I’m not concerned about global growth, or the economy.”

Five of 10 main industries in the S&P/TSX rose, with materials and technology stocks increasing the most. Trading volume was 16 percent lower compared with the 30-day average at this time of the day.

Materials producers rallied 2.1 percent as gold, silver and copper prices reversed earlier declines. The S&P/TSX Gold Index gained 2.9 percent, the most in almost a month.

AuRico Gold surged 12 percent to C$4.04, the most since Sept. 18, after the company reported third-quarter production of about 48,900 ounces of gold and reiterated its production forecast for the year.

Torex Gold Resources Inc. climbed 6.8 percent to C$1.26 and Silvercorp Metals Inc. added 3.9 percent to C$3.24 as gold and silver prices pared earlier losses in New York.

Teck Resources Ltd. rallied 2.7 percent to C$27.89 as copper rose for a fourth day.

BlackBerry gained 1.6 percent to C$8.48 as technology stocks climbed 1.3 percent as a group.

Cerberus Capital, the private-equity firm that focuses on distressed assets, has signed a nondisclosure agreement with BlackBerry and is in the early stages of considering an offer to acquire all of the company, a person with knowledge of the situation said.

Wi-Lan Inc., the patent licensing company, climbed 3.2 percent to C$4.25, the highest since July, after the company settled a patent case with Novatel Wireless Inc. Wi-Lan has jumped 10 percent in the past four sessions.

Canadian National Railway lost 0.4 percent to C$109.07 as industrial stocks slipped 0.2 percent as a group.

Teamsters Canada Rail Conference, which represents about 3,300 railway workers including conductors, said Canadian National Railway has rejected the union’s proposal for further mediation and warned there may be a strike or lockout on Oct. 28.

Talisman Energy Inc. dropped 1.5 percent to C$12.52 as the price of crude slipped to a three-month low amid talks with Iran over its nuclear program. Two days of negotiations with the U.S., U.K., France, Germany, Russia and China began today in Geneva.

US

By Nick Taborek

Oct. 15 (Bloomberg) — U.S. stocks dropped, following a four-day rally in the Standard & Poor’s 500 Index, as lawmakers failed to reach an agreement to extend the government’s borrowing limit less than two days before the deadline.

Citigroup Inc. dropped 1.5 percent as its profit fell short of analysts’ estimates. Teradata Corp. declined 18 percent after the computer-data storage company’s earnings missed projections.

Flir Systems Inc. dropped 14 percent after preliminary earnings fell short of analyst estimates. FedEx Corp. jumped 4.1 percent after the world’s largest cargo airline operator announced a share repurchase program.

The S&P 500 fell 0.7 percent to 1,698.06 at 4 p.m. in New York. The Dow Jones Industrial Average declined 133.25 points, or 0.9 percent, to 15,168.01. About 6.2 billion shares changed hands on U.S. exchanges today, 6.3 percent above the three-month average.

“Everyone is somewhat over-caffeinated and a bit jittery in part because of politicians not doing their job,” Chad Morganlander, a Florham Park, New Jersey-based portfolio manager at Stifel Nicolaus & Co., which oversees about $130 billion of assets, said by phone. “The markets are trading on every news clip and the uncertainty is increasing, which is having an unstabilizing effect in the markets.”

The benchmark index dropped as much as 0.8 percent after Senate Majority Leader Harry Reid rejected a House plan to halt the fiscal impasse and Senate leaders stopped talks on a bill that would fund the government through Jan. 15, 2014, and suspend the U.S. debt limit until Feb. 7. The Senate talks haven’t broken down, spokesmen for the chamber’s top leaders said.

The House later revised its plan, which would extend government funding through Dec. 15, rather than Jan. 15, 2014, in the Senate plan, said Representative Devin Nunes of California, who had been meeting with leaders. A vote could come as soon as tonight.

The new House proposal would bar government subsidies of health insurance for congressional staff members, along with lawmakers and high-ranking administration officials, Nunes said. A two-year delay in the medical-device tax was dropped, he said.

The Congressional impasse has left the government partially shut down since Oct. 1 and could lead to the U.S. reaching on Oct. 17 the limit on federal borrowing.

The S&P 500 closed at the highest since Sept. 19 yesterday after a four-day rally gave it the biggest advance since January, as optimism grew that lawmakers would reach a deal to prevent a government default. The rally pushed the gauge to within 16 points of its Sept. 18 record of 1,725.52.

“If we can get through this political mess, then we can really start to focus on more fundamental things like earnings,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said in a phone interview. His firm manages more than $90 billion. “The numbers that we are going to start to get for the last month, you might see a little bit of a slowdown from the government shutdown.”

A report today showed manufacturing in the New York region grew at a slower pace than projected in October as sales and hiring cooled. The government shutdown has delayed the publication of some closely watched economic data, including the Labor Department’s monthly jobs gauge.

Profits for companies in the S&P 500 probably increased 1.4 percent during the three months while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg. Intel Corp., Johnson & Johnson, Yahoo! Inc. and Coca-Cola Co. were are among nine companies in the S&P 500 that released third-quarter results today.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 16 percent to 18.66. the biggest gain since June 20.

All 10 main industries in the S&P 500 fell at least 0.4 today, as utility stocks dropped 1.4 percent to lead losses.

Industrial companies and producers of consumer-discretionary products sank more than 0.5 percent.

Home Depot Inc. retreated 1.5 percent to $75.18 and Procter & Gamble Co. sank 1.5 percent to $77.60 for the biggest slides in the Dow.

An S&P index of homebuilders fell 2.6 percent for a second day of losses. KB Home slid 3.2 percent to $16.09 and Lennar Corp. fell 2.8 percent to $33.34.

Teradata sank 18 percent to $42.91. The company said adjusted earnings per share amounted to 69 cents to 70 cents in the third quarter, compared with the average analyst estimate that called for 81 cents. Teradata cut its earnings forecast for the year to $2.70 to $2.80, down from a previous prediction of $3.05 to $3.20.

Flir Systems Inc. lost 14 percent to $28.59. The maker of surveillance and broadcast systems reported preliminary third- quarter profit below analyst estimates as exposure to the U.S. federal government hurt results.

Citigroup dropped 1.5 percent to $48.86. The third-biggest U.S. bank reported a $3.23 billion profit that missed estimates as bond trading slumped 26 percent and U.S. mortgage revenue declined.

Charles Schwab Corp. gained 4.6 percent to $23.03. The brokerage reported third-quarter profit that beat analyst estimates as average revenue per trade increased.

Coca-Cola increased 0.7 percent to $37.66. The world’s largest beverage company said third-quarter profit rose as sales volumes advanced in North America.

FedEx rallied 4.1 percent to $120.08, the highest since February 2007. The package delivery company said it would buy back 32 million shares, or about 10 percent of its outstanding stock as of Sept. 30. The repurchase program comes in addition to an existing plan to buy back 7.4 million shares.

Even with a deadline looming for the U.S. to avoid a debt default, it’s been a comparatively calm October for financial markets. Daily swings in the S&P 500 have averaged 0.78 percent so far this month through yesterday, down from 0.9 percent for Octobers over the last eight decades and less than a quarter the moves in 1929, 1987 and 2008, data compiled by Bloomberg show.

U.S. equities aren’t overpriced even though they have historically elevated valuations, Robert J. Shiller, a co-winner of this year’s Nobel Prize in economics, said today in a Bloomberg Television interview with Tom Keene and Sara Eisen.

Companies are “relatively high-priced” according to Shiller’s cyclically adjusted price-earnings ratio, or CAPE, which compares the S&P 500 with companies’ average profits during the past 10 years, he said.

“The U.S. market is still not that overpriced, not like it was in 2000,” even though “we’re pretty high” using the CAPE gauge, he said. “Looking at the alternatives, it should be a part of your portfolio.”

 

Have a wonderful evening everyone.

 

Be magnificent!

 

The very essence of the Hindu Philosophy

is that man is a spirit, and has a body,

and not that man is a body and

may have a spirit also.

Swami Vivekananda, 1863-1902

As ever,

 

Carolann

 

Do what you can, with what you have,

where you are.

-Theodore Roosevelt, 1858-1919

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

 

 

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.

Thanksgiving Day (Jour de l’Action de grâce for French Canadians) is a national holiday celebrated primarily in the United States and Canada as a day of giving thanks for the blessing of the harvest and of the preceding year. Several other places around the world observe similar celebrations. It is celebrated on the fourth Thursday of November in theUnited States and on the second Monday of October in Canada. Thanksgiving has its historical roots in religious and cultural traditions, but has long been celebrated in a more secular manner as well.

As Thanksgiving approaches this weekend, take a moment out and think about what you are thankful for.  With busy schedules, work, children, etc, we often forget the small things that mean so much to us. This weekend take a minute and ask yourself the question, “what am I grateful for”?

Happy Thanksgiving Everyone!!!!!

Also on this Day:

1811 – The Juliana, the first steam-powered ferryboat, was put into operation by the inventor John Stevens. The ferry went between New York City, NY, and Hoboken, NJ.

1869 – Thomas Edison filed for a patent on his first invention. The electric machine was used for counting votes for the U.S. Congress, however the Congress did not buy it.

1881 – David Henderson Houston patented the first roll film for cameras.

1929 – JCPenney opened a store in Milford, DE, making it a nationwide company with stores in all 48 states.

1932 – In New York, the first telecast of a political campaign was aired.

1939 – U.S. President Roosevelt was presented with a letter from Albert Einstein that urged him to develop the U.S. atomic program rapidly.

1983 – The last hand-cranked telephones in the U.S. went out of service. The 440 telephone customers of Bryant Pond, ME, were switched to direct-dial service.

1984 – American Kathryn D. Sullivan became the first female astronaut to space walk. She was aboard the space shuttle Challenger. 

“The future belongs to those who believe in the beauty of their dreams.” – Eleanor Roosevelt

Photos of the Day:

A devotee of ‘Chao Pho Kuan U Shrine’ runs on burning charcoal as he performs a fire-walking ceremony during celebrations for the vegetarian festival in Phang Nga. Athit Perawongmetha/Reuters

Visitors are reflected in mirrors inside an installation at the contemporary design festival Designblok 2013 in Prague, Czech Republic. David W Cerny/Reuters

Market Closes for October 11^th, 2013

Market  Index	Close	Change
Dow  Jones	15237.11	+111.04    +0.73%
S&P 500	1703.20	+10.64    +0.63%
NASDAQ	3791.873	+31.126    +0.83%
TSX	12892.11	-2.30
		-0.02%

International Markets

Market  Index	Close	Change
NIKKEI	14404.74	+210.03
		+1.48%
HANG  SENG	23218.32	+267.02
		+1.16%
SENSEX	20528.59	+255.68
		+1.26%
FTSE 100	6487.19	+56.70
		+0.88%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.591	2.593
CND.   30 Year Bond	3.146	3.152
U.S.   10 Year Bond	2.6871	2.6814
U.S.   30 Year Bond	3.7428	3.7339

Currencies

BOC Close	Today	Previous
Canadian $	0.96579	0.96092
US   $	1.03543	1.04067
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40238	0.71307
US  $	1.35440	0.73833

Commodities

Gold	Close	Previous
London Gold   Fix	1271.40	1288.50
Oil	Close	Previous
WTI Crude Future	102.02	103.01
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 11 (Bloomberg) — Canadian stocks fell, after climbing the most since July yesterday, as the jobless rate unexpectedly slipped to a five-year low while gold producers sank amid speculation the U.S. will avoid a default.

Goldcorp Inc. and Barrick Gold Corp. slumped at least 3.1 percent as the price of the metal sank to the lowest since July.

Potash Corp. of Saskatchewan Inc. lost 1.6 percent after cutting its profit forecast after buyer estimates of lower prices delayed sales. Peregrine Diamonds Ltd. plunged 35 percent after De Beers told the company it wouldn’t exercise its right to acquire control of Peregrine’s Chidliak project in the Arctic.

Tricon Capital Group Inc. jumped 8 percent after being named a “top pick” by an analyst at RBC Capital Markets.

The Standard & Poor’s/TSX Composite Index fell 2.30 points, or less than 0.1 percent, to 12,892.11 at 4 p.m. in Toronto, for a weekly gain of 1.1 percent. The index is up 3.7 percent this year. Trading volume was 23 percent lower compared with the 30- day average.

“Now that the chances of a deal getting done have risen, the demand for actual gold is weakening,” said Anish Chopra, fund manager with TD Asset Management Inc. in Toronto. He helps manage C$216 billion ($208 billion). “They’re talking now, but we don’t know the details. If over a shorter time frame there are no announcements of anything concrete, the market will take that as a negative. There needs to be follow-through.”

Unemployment in Canada declined to 6.9 percent in September from 7.1 percent a month earlier, the lowest since December 2008, as young people dropped out of the labor market, Statistics Canada said. Job creation slowed to 11,900 from 59,200 in August. Economists surveyed by Bloomberg had projected a 10,000 job increase and an unchanged jobless rate.

U.S. President Barack Obama met with Senate Republicans today as the two sides move closer to a deal to raise the debt limit ahead of a potential default on Oct. 17. Senator Orrin Hatch of Utah said Obama is open to changing a tax on medical devices in the future. Both sides are weighing a potential short-term increase in the debt limit that would postpone a default to Nov. 22.

Barrick Gold dropped 3.9 percent to C$17.81 and Goldcorp lost 3.1 percent to C$24.48 as raw-materials producers sank 1.8 percent as a group, most in the S&P/TSX.

The S&P/TSX Gold Index retreated 3.4 percent to a three- month low as all 24 stocks in the measure declined. Gold for December delivery fell 2.2 percent to $1,268.20 an ounce in New York, the lowest since July 10. Gold, seen as a safe haven for investors in volatile markets, has plunged 24 percent this year and fell for a second straight week.

Potash Corp., North America’s largest producer of the fertilizer, slid 1.6 percent to C$32.46. The company said yesterday that third-quarter earnings would be about 41 cents a share, down from the 45 to 60 cents estimated in July. The company is expected to officially release its earnings on Oct. 24.

TMX Group Ltd., owner of the Toronto Stock Exchange, tumbled 6.2 percent to C$43.15, the most since at least September 2012. Jeff Fenwick, analyst with Cormark Securities Inc., lowered his rating for the stock to reduce, the equivalent of sell, on continued weak trading volumes and financing in the third quarter.

“We have yet to see evidence of any cyclical improvement in TMX’s various operating segments,” Fenwick said in a report.

Peregrine Diamonds sank 35 percent to 43 Canadian cents, its biggest loss ever, after being notified by De Beers of its decision not to form a joint venture at Chidliak, the company said. De Beers would have helped fund a feasibility study of the diamond project in Nunavut.

Tricon Capital, a residential real estate asset manager, soared 8 percent to C$7.27, its highest ever close, after Royal Bank analyst Geoffrey Kwan rated the stock a top pick with a price target of C$9.50. Tricon has four buys, according to data compiled by Bloomberg.

Air Canada, the nation’s largest airline, climbed 1.6 percent to C$4.97 for a third day of gains and extended a five- year high. Air Canada is the best-performing stock in the S&P/TSX this year, soaring 184 percent after cutting costs and reporting better-than-forecast earnings.

US

By Stephen Kirkland and Lu Wang

Oct. 11 (Bloomberg) — U.S. shares rallied for a second day following the biggest jump since January and gold plunged to a three-month low as lawmakers discussed a potential agreement to extend the nation’s borrowing authority. Treasuries erased early gains while the yen weakened and oil slid.

The Standard & Poor’s 500 Index added 0.6 percent to 1,703.20 at 4 p.m. in New York after jumping 2.2 percent yesterday. The Stoxx 600 Europe Index gained 0.4 percent and the benchmark index for emerging markets extended its two-day advance to 1.9 percent. U.S. 10-year Treasury yields climbed one basis point at 2.69 percent, reversing a four basis-point drop, while the dollar and yen weakened against major peers. Corn slid to a three-year low on concern demand may shrink if the government scales back the biofuel mandate. Gold futures fell 2.2 percent to $1,268.20 an ounce, while oil lost 1 percent on forecasts for rising North American production.

The S&P 500 erased losses since the partial government shutdown began on Oct. 1 and added 0.8 percent for the week.

Democrats and Republicans were moving toward an agreement to extend the nation’s borrowing authority before an Oct. 17 deadline even as they remained at odds over terms for reopening the government. JPMorgan Chase & Co. and Wells Fargo & Co.  began the earnings season for banks. Confidence among U.S. consumers fell to a nine-month low amid the budget impasse.

“We continue to look at the overall situation in Washington and see how that’s evolving,” Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors, said in a phone interview from Wilmington. His firm oversees about $20 billion. “I suspect we may still be at least several days away from getting any sort of final resolution and it may create some market volatility as we go forward.”

The Chicago Board Options Exchange Volatility Index, the benchmark gauge of options prices known as the VIX, slipped 4.6 percent to 15.72 today, extending its three-day retreat to 23 percent for its biggest decline over similar time frames since April.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index of decreased to 75.2 this month from 77.5 in September. Economists in a Bloomberg survey projected a drop to 75.3, according to the median estimate.

Gauges of energy, technology and consumer stocks rose at least 0.8 percent today to lead an advance in all 10 of the main industry groups in the S&P 500.

Johnson & Johnson advanced 1.9 percent as Goldman Sachs Group Inc. boosted the stock’s rating. An index of homebuilders climbed 2 percent amid analyst upgrades. Cognizant Technology Solutions Corp. climbed 5.5 percent after Infosys Ltd. raised its sales forecast. Gap Inc. dropped 6.7 percent, its worst loss of the year, after September sales missed analyst estimates.

JPMorgan closed down 1 cent after reporting its first quarterly loss under Chief Executive Jamie Dimon amid a $7.2 billion charge to cover the cost of litigation and regulatory probes. Earnings adjusted for one-time items were $1.42 a share, compared a $1.30 average of 20 analysts surveyed by Bloomberg.

Wells Fargo & Co. also closed little changed after its earnings results showed weakness in new mortgage lending.

With few government economic reports available during the shutdown, investors are watching third-quarter corporate earnings. Profits for companies in the S&P 500 probably increased 1.4 percent during the three months while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg.

House Republicans offered a plan to raise the U.S. debt limit and end a partial government shutdown that would require the president to accept policy conditions attached to a spending measure, said two congressional aides.

Republicans sent a list of policy options to the White House following a meeting yesterday, said the aides, who spoke on condition of anonymity. President Barack Obama has insisted that he won’t accept conditions for ending the shutdown, which is in its 11th day.

“The debt-ceiling debate will be resolved without major accidents,” Nicola Mai, senior vice president and sovereign credit analyst at Pacific Investment Management Co., the world’s biggest manager of bond mutual funds, said in an interview with Francine Lacqua on Bloomberg Television’s “The Pulse.”

“Politicians realize there are significant consequences to this and that’s why last night we saw some opening on the part of Republicans and Democrats in debt negotiations.”

The Stoxx 600 extended its two-day rally to 2.1 percent, its biggest gain since July. The index rose 0.6 percent this week.

Royal Mail Group Ltd., the U.K.’s 360-year-old postal service, jumped 38 percent on the first day of trading after its initial public offering. Swedish Match AB sank 4.2 percent as the maker of Longhorn snuff said full-year earnings at its U.S. cigars and chewing tobacco unit will decline.

The MSCI Emerging Markets Index gained 1 percent, extending this week’s advance to 1.6 percent. India’s S&P BSE Sensex jumped 1.3 percent after Infosys Ltd. raised its annual sales forecast. The Shanghai Composite Index added 1.7 percent as the Shanghai Securities News reported the city may reform state- owned enterprises. Benchmark gauges in Turkey, South Korea and the Philippines advanced at least 0.7 percent.

The yen declined 0.6 percent per euro and slipped 0.4 percent to 98.50 per dollar as it depreciated against all 16 major peers. Europe’s 17-nation common currency advanced 0.2 percent to $1.3550 as the U.S. dollar weakened against 12 of 16 major peers.

The rate on $93 billion in Treasury bills due Oct. 24 was at 0.26 percent, according to Bloomberg Bond Trader data, after climbing as high as 0.52 percent yesterday. It was zero as recently as Sept. 19. The rate on bills due Nov. 29 was at 0.17 percent, the highest since the security was issued.

“The fact that it’s far from a done deal and it seems that we’re only talking about a six-week delay means certainly for the bond markets it doesn’t amount to a great deal of relief,” said John Wraith, a fixed-income strategist at Bank of America Corp. in London. “You’ve seen a small decline in the distress in late October Treasury bills but it has just spilled over into those maturing in November and December.”

Credit-default swaps on U.S. Treasuries retreated for a second day after reaching a seven-month high. The contracts declined 0.8 basis points to 34.2 basis points, according to data compiled by Bloomberg. That compares with 21 basis points last month and 65 basis points in 2011, the last time Congress played brinkmanship over the nation’s debt limit.

Swaps on Treasuries were the ninth most traded of 1,000 entities tracked by the Depository Trust & Clearing Corp. in the week through Oct. 4, up from 147th two weeks before, with 87 trades covering a gross $2.3 billion of debt.

There are now 953 contracts covering a net $3.6 billion of Treasuries outstanding, the most in a year and up from a more than two-year low of $3.1 billion on Sept. 20.

Italy’s two-year note slipped six basis points to 1.59 percent as the nation sold 6 billion euros ($8.1 billion) of securities due between 2016 and 2028 today, its maximum target.

Spain’s 10-year yield dropped five basis points to 4.29 percent.

German bunds of similar maturity were little changed, leaving the yield at 1.86 percent.

Corn fell to the lowest level since August 2010, losing 1.1 percent to $4.3325 a bushel, as the U.S. Environmental Protection Agency is considering scaling back requirements on the use of ethanol next year. Corn is used to make ethanol in the U.S. Corn has already dropped 38 percent this year on a record U.S. harvest, heading for the biggest annual decline since at least 1960.

West Texas Intermediate crude oil retreated 1 percent to $102.02 a barrel, capping a fourth loss in five weeks. The International Energy Agency said that oil producers outside OPEC, led by the U.S., Canada and Kazakhstan, will probably bolster supplies next year by the most since the 1970s.

Gold capped a second straight weekly retreat.

Gold analysts have turned the most bearish in a month on increased confidence that U.S. lawmakers will avoid a sovereign default and evidence that Asian demand for physical bullion is weakening. Fifteen analysts surveyed by Bloomberg News expect prices to decline next week, eight are bullish and four neutral, the highest proportion of bears since Sept. 13.

 

Have a wonderful weekend everyone!!!

 

Be magnificent!

 

“I am determined to be cheerful and happy in whatever situation I may find myself. For I have learned that the greater part of our misery or unhappiness is determined not by our circumstance but by our disposition.” – Martha Washington

As ever,

 

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

 

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5838

 

 

Dear Friends,

Tangents:

Canadian short-story writer Alice Munro has been awarded the Nobel Prize in literature!  The Swedish Academy, which announced the prize in Stockholm today, called the 82-year-old author the “master of the contemporary short story.”

I get a kick out of  reading David Tang’s column in the weekend Financial Times.  David Tang, entrepreneur and founder of ICorrect, offers advice on questions about property, interiors – and modern manners for globetrotters.  This past weekend, one of his readers inquired, “I am always interested to read your musical suggestions for certain situations – from accompaniment in morgues to how to irritate nuisance neighbours.  What are your favorite pieces of music to listen to while burning calories on the gym bicycle?”

A shortened version of Sir Tang’s reply,   “My exercise regime is rather erratic and mostly consists of running for cover, jumping to conclusions, and stretching my imagination….But when I’m indoors on, say a cross-trainer, I would do my daily cryptic crossword by taping it on to a board in front.  In the background, I would put on a bit of avant-garde music – quietly playing – to jar the grey cells into action.  Which explains why I don’t go to ‘professional’ gyms that pump through loud and monotonous music.  If I were ever to have control over their music, I would choose compound time signatures, such as 5/4s (as in Tchaikovsky’s extraordinary waltz in his last sympathy) or 7/8s (as in the last movement of Prokofiev’s 7^th sonata).  Or, for the less esoteric, Dave Brubeck’s rendition of ‘Take Five’, in 5/4s.  It will be interesting to see who, in their leotards, have rhythm and who have not!”

Photos of the day

The front facade of L’Eden cinema, the world’s first and oldest cinema, is illuminated during an inauguration of its reopening in La Ciotat, southeastern France, October 9. The theater, which screened in 1899 the first film in history made by the French Lumiere brothers, was closed in 1995 for security reasons and reopened today after its renovation. Jean-Paul Pelissier/Reuters

A model displays an outfit by Ukrainian designer Zalevskiy during a Fashion Week in Kiev, Ukraine. Sergei Chuzavkov/AP

Market Closes for October 10^th, 2013

Market  Index	Close	Change
Dow  Jones	15126.07	+323.09    +2.18%
S&P 500	1692.56	+36.16    +2.18%
NASDAQ	3760.747	+82.971    +2.26%
TSX	12894.41	+164.08
		+1.29%

International Markets

Market  Index	Close	Change
NIKKEI	14194.71	+156.87
		+1.12%
HANG  SENG	22951.30	-82.67
		-0.36%
SENSEX	20272.91	+23.65
		+0.12%
FTSE 100	6430.49	+92.58
		+1.46%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.593	2.578
CND.   30 Year Bond	3.152	3.127
U.S.   10 Year Bond	2.6814	2.6631
U.S.   30 Year Bond	3.7339	3.7374

Currencies

BOC Close	Today	Previous
Canadian $	0.96092	0.96212
US   $	1.04067	1.03937
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40768	0.71039
US  $	1.35267	0.73928

Commodities

Gold	Close	Previous
London Gold   Fix	1288.50	1.03937
Oil	Close	Previous
WTI Crude Future	103.01	101.61
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 10 (Bloomberg) — Canadian stocks rose the most in three months as energy companies rallied amid signs that U.S. lawmakers may reach an agreement to increase the debt ceiling and avoid a default.

Canadian Natural Resources Ltd. jumped 4.5 percent as energy stocks surged. BlackBerry Ltd. rose 0.6 percent after company co-founders Michael Lazaridis and Douglas Fregin said they are considering all options including an acquisition of the company. Twin Butte Energy Ltd. jumped 9.1 percent after agreeing to buy Black Shire Energy Inc. for C$358 million ($345 million). Royal Bank of Canada, the nation’s largest lender, climbed 1.9 percent to close at a record.

The Standard & Poor’s/TSX Composite Index rose 164.08 points, or 1.3 percent, to 12,894.41 at 4 p.m. in Toronto, the best rally since July 11. The index is up 3.7 percent this year.

“It’s definitely a risk-on trade, less of a flight to safety, energy is popping higher on that,” said Kevin Headland, a fund manager with Manulife Asset Management Ltd. in Toronto.

He helps manage about C$250 billion ($241 billion) with the firm. “It’s a sentiment-driven market. Everybody’s believing there could be some resolution. Better prior to the 17th than on the eve of the 17th.”

House Republican leaders proposed a short-term increase in the debt ceiling, and Jay Carney, the White House press secretary, said that President Barack Obama would likely sign the plan. Both sides are weighing a potential solution to an impasse over raising the debt limit, set to be reached around Oct. 17.

Energy companies rallied 1.6 percent as a group, as nine of 10 industries in the S&P/TSX advanced. Trading volume was 16 percent higher than the 30-day average.

Canadian Natural Resources gained 4.5 percent to C$33.46 and Suncor Energy Inc. rose 2 percent to C$36.88 as the price of crude rebounded from a three-month low.

BlackBerry, the struggling smartphone maker looking to sell itself, advanced 0.6 percent to C$8.49. Lazaridis, a former co- chief executive, said in a regulatory filing that he and Fregin have hired Goldman Sachs Group Inc. and Centerview Partners LLC to help them study their options, including a possible takeover.

Lazaridis also disclosed an 8 percent stake in BlackBerry.

A bid for BlackBerry would compete with a $4.7 billion offer from Fairfax Financial Holdings Ltd., the company’s biggest shareholder, which is seeking partners to help finance a buyout.

Twin Butte Energy climbed 9.1 percent, the most in almost two years, to C$2.23. The company will pay C$3.45 in cash and stock for each share of Black Shire, and expects the deal to close by Nov. 5.

Royal Bank jumped 1.9 percent to a record C$67.69 to pace gains among Canada’s banks. Bank of Montreal rallied 1.2 percent to C$69.50 and Toronto Dominion Bank rose 1.3 percent to C$92.30.

Brookfield Asset Management Inc. gained 3.1 percent to C$40.03 and Manulife Financial Corp. rose 2.9 percent to C$17.61 as the S&P/TSX Financial Index advanced 1.5 percent to the highest in almost six years.

Pretium Resources increased 4.5 percent to C$5.09. The company plunged 31 percent yesterday after Strathcona Mineral Services Ltd. resigned as an independent evaluator of Pretium’s 10,000 metric-ton ore sample. Strathcona resigned due to a disagreement with another company hired to vet the ore, Pretium Chief Executive Officer Robert Quartermain said in an interview.

Air Canada, the nation’s largest airline, surged 4.3 percent to C$4.89 to extend a five-year high as industrial stocks rallied 1.5 percent as a group.

Air Canada is the best-performing stock in the S&P/TSX this year, soaring 179 percent after cutting costs and reporting better-than-forecast earnings. The airline said on Oct. 3 that costs for the third quarter and 2013 will decline more than anticipated.

Bombardier Inc. rose 1.9 percent to C$4.94. Egypt Air will evaluate Bombardier, along with several other brands as it considers a need for 60 more jet aircraft to replace and expand its existing fleet.

US

By Lu Wang and Aubrey Pringle

Oct. 10 (Bloomberg) — U.S. stocks jumped, with benchmark indexes rallying the most since January, as lawmakers moved toward an agreement to increase the debt ceiling and avoid a default.

Nike Inc., Boeing Co. and American Express Co. rose more than 3.4 percent, leading advances among large companies. Wells Fargo & Co. and JPMorgan Chase & Co. gained at least 2.7 percent before reporting earnings tomorrow, propelling financial shares to the biggest gain in 16 months. Gilead Sciences Inc. jumped 6.5 percent as the largest biotechnology company by market value said the cancer drug idelalisib improved survival times.

The Standard & Poor’s 500 Index surged 2.2 percent to 1,692.56 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 323.09 points, or 2.2 percent, to 15,126.07. Both gauges had their steepest climbs since Jan. 2. About 6.5 billion shares changed hands on U.S. exchanges, 12 percent higher than the three-month average.

“You’re taking the nuclear option off the table, the fact that we’ll blow through the debt ceiling, that’s not going to happen,” Dan Veru, the chief investment officer who helps oversee $4.5 billion at Palisade Capital Management LLC, said in a phone interview from Fort Lee, New Jersey. “This continues to put pressure on lawmakers to get a deal done because they’re seeing that just in fact talking is what markets want them to” do, he said.

All but 12 members of the S&P 500 index rose today, the broadest advance this year. The gauge’s rally was the biggest since a 2.5 percent surge on the first trading day of the year, when lawmakers passed a bill averting spending cuts and tax increases known as the fiscal cliff. The index has climbed 0.7 percent since the government shutdown began Oct. 1, and has trimmed its decline to 1.9 percent since closing at a record of 1,725.52 on Sept. 18.

Investors reacted to a House Republican proposal for a short-term increase in the debt ceiling that would reduce the prospects for a U.S. default. The plan would push the lapse of U.S. borrowing authority to Nov. 22 from Oct. 17. It wouldn’t end the 10-day-old partial shutdown of the federal government.

President Barack Obama would support a short increase in the U.S. debt limit with no “partisan strings attached,” though he prefers a longer extension, Jay Carney, the White House press secretary, said today. The proposal could come up for a vote on the House floor as soon as tomorrow.

U.S. Treasury Secretary Jacob J. Lew warned Congress today that “uncertainty” over the debt limit is starting to stress financial markets and trying to time an increase to the last minute “could be very dangerous.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, slumped 16 percent today to 16.48 for its biggest retreat since April. The gauge is down 8.6 percent in 2013.

“The market has been very emotional,” Paul Mangus, head of equity strategy and research for Wells Fargo Private Bank in Charlotte, North Carolina, said in a phone interview. His firm manages $170 billion. “You had days of positive, relief rallies followed by days of angst and concerns over the debt ceiling and government shutdown. Until we reach a period where we have clarity on that, we’d expect volatility to be elevated.”

A Treasury Department report on Oct. 3 said consequences would be “catastrophic” should the U.S. default, including higher interest rates, lower investment and slow growth for decades to come.

A partial federal government shutdown lasting through the end of this week would pare 0.2 percentage point from U.S. economic growth and cost as much as 0.5 point if it continues another two weeks, according to the median estimate in a Bloomberg survey of economists taken Oct. 4-9. The Claims for U.S. jobless benefits jumped last week to the highest level in six months, a Labor Department report today showed, providing the first statistical warning that the damage from the partial federal shutdown is starting to ripple through the economy.

Most Fed officials last month predicted drag from fiscal restraint would be a reason for them to hold the benchmark lending rate at 2 percent or lower until the end of 2016 to support growth and job creation.

Investors will watch financial reports as more companies release third-quarter results. Profits for companies in the S&P 500 probably increased 1.7 percent during the three months while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. The projections are down from 5.7 percent and 3.6 percent, respectively, from the end of June.

“There is not a pent-up expectation that this is going to be a gangbuster quarter,” Mangus said. “Consequently, you can have some positive surprises.”

All 10 S&P 500 industry groups jumped at least 1.4 percent.

Companies whose earnings are most tied to economic swings led the gains. The Morgan Stanley Cyclical Index jumped the most in a month, adding 1.9 percent.

Industrial shares surged 2.7 percent to pace gains. Boeing, the world’s largest planemaker, rallied 3.9 percent to $118.90 for the biggest gain in the Dow.

Nike advanced 3.6 percent to $73.44. DA Davidson & Co. raised its stock-price estimate for the world’s largest sporting-goods maker to $76 from $75 after the company said yesterday that annual sales will rise to $36 billion by the end of fiscal 2017.

Financial shares surged 2.9 percent as a group, the biggest rally since June 2012, as all 81 members of an S&P index advanced. American Express, the biggest U.S. credit-card issuer by purchases, jumped 3.4 percent to $74.66.

Wells Fargo gained 2.7 percent to $41.44 while JPMorgan added 3.5 percent to $52.52. JPMorgan is among lenders that said earnings will suffer from a bond-trading slump, while Wells Fargo guided analysts to expect mortgage originations to fall by almost 30 percent.

MetLife Inc. added 3.7 percent to $48.11 and Prudential Financial Inc. climbed 4.1 percent to $79.07, pacing gains among insurers as bond yields rose. The firms invest funds from clients in bonds and other assets to back future payouts.

Gilead Sciences jumped 6.5 percent to $62.74. The company said patients benefited enough from the cancer drug idelalisib to end a late-stage study early.

Netflix Inc. rose 5.4 percent to $303.99, snapping a three- day slide. Laura Martin, an analyst with Needham & Co., started coverage of the stock with a buy rating and said the video service provider has the ability to boost subscription prices.

While Netflix fell 12 percent this week through yesterday, the stock has more than tripled since the start of the year.

Time Warner Cable Inc. jumped 6.1 percent to $116.95. The cable company and Univision Communications Inc., a media group that caters to Hispanic Americans, agreed to extend their partnership and deliver more content to Time Warner subscribers.

UnitedHealth Group Inc. surged 3.6 percent to $73.98. The biggest U.S. insurer had the outlook on its credit rating raised to positive from stable by S&P on expectation that the company will strengthen its leadership in the industry.

Citrix Systems Inc. slumped 12 percent to $58.75 as the technology company reported preliminary third-quarter earnings of 68 cents to 69 cents a share. That missed the average analyst estimate compiled by Bloomberg of 73 cents.

Quest Diagnostics Inc. slipped 4.9 percent to $58.66. The biggest U.S. operator of medical laboratories said preliminary results showed that, excluding some items, it earned $1.02 a share in the third quarter. Analysts, on average, estimated $1.20, according to a Bloomberg survey.

Have a wonderful evening everyone.

 

Be magnificent!

 

The Upanishad tells us:  Know the soul that is your own.

In other words:  Realize the grand unique principle of the whole that is in all men.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

In three words I can sum up everything I’ve learned

about life:  it goes on.

-Robert Frost, 1874-1963

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

 

 

Dear Friends,

Tangents:

John Lennon’s birthday, October 9^th, 1940.

28 years ago today, Strawberry Fields, “a garden of peace” inspired by her late husband is donated to New York City’s Central Park by Yoko Ono.

Life is what happens to you while you’re busy making other plans.  –John Lennon.

Photos of the day

People look at a light installation at the Berlin Cathedral during the opening day of the ‘Festival of Light’ show in Berlin. Several landmarks and tourist spots will be illuminated in the German capital from October 9 to 20. Tobias Schwarz/Reuters

Rafael Nadal of Spain serves to Alexandr Dolgopolov of Ukraine during their men’s singles match at the Shanghai Masters tennis tournament in Shanghai. Carlos Barria/Reuters

Market Closes for October 9^th, 2013

Market  Index	Close	Change
Dow  Jones	14802.98	+26.45    +0.18%
S&P 500	1656.40	+0.95    +0.06%
NASDAQ	3677.776	-17.057    -0.46%
TSX	12730.33	+37.92
		+0.30%

International Markets

Market  Index	Close	Change
NIKKEI	14037.84	+143.23
		+1.03%
HANG  SENG	23033.97	-144.88
		-0.63%
SENSEX	20249.26	+265.65
		+1.33%
FTSE 100	6337.91	-27.92
		-0.44%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.578	2.564
CND.   30 Year Bond	3.127	3.110
U.S.   10 Year Bond	2.6631	2.6320
U.S.   30 Year Bond	3.7374	3.6899

Currencies

BOC Close	Today	Previous
Canadian $	0.96212	0.96536
US   $	1.03937	1.03589
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40568	0.71140
US  $	1.35243	0.73941

Commodities

Gold	Close	Previous
London Gold   Fix	1306.30	1318.58
Oil	Close	Previous
WTI Crude Future	101.61	103.49
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 9 (Bloomberg) — Canadian stocks rose from a five-week low as telephone companies jumped the most in a two weeks amid speculation that Janet Yellen won’t rush to withdraw stimulus when she takes over as Federal Reserve chairman.

BCE Inc. and Telus Corp. gained at least 1.4 percent as phone stocks gained for a fourth day. Wi-Lan Inc. added 1 percent after settling litigation with BlackBerry Ltd. Pretium Resources Inc. sank 31 percent as a company overseeing its gold project in northern British Columbia resigned. Jean Coutu Group PJC Inc. tumbled 4.2 percent after posting worse-than-estimated results.

The Standard & Poor’s/TSX Composite Index rose 37.92 points, or 0.3 percent, to 12,730.33 at 4 p.m. in Toronto, after earlier falling 0.1 percent. The index is up 2.4 percent this year.

“What we’re seeing today and all week is quite a bit of volatility and sensitivity to news headlines in the U.S.,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd. in Vancouver. Richardson GMP manages about C$16 billion ($15.4 billion). “There’s a little more certainty on the direction of monetary policy now that we know who’s going to be in charge and more details from the minutes. The market is responding well to that.”

Janet Yellen, the current Fed vice chairman, was nominated by U.S. President Barack Obama to succeed Ben S. Bernanke as chairman of the Federal Reserve. Yellen is expected to advocate for maintaining stimulus that has helped fuel a global rally in equities.

Most Fed policy makers said the central bank was likely to reduce the pace of its bond purchases this year, according to minutes released today of their last meeting, which took place before the government shutdown.

The S&P/TSX retreated 0.8 percent yesterday to the lowest since Aug. 30 as concern grew that U.S. lawmakers may fail to raise the federal debt ceiling in time to avoid a government default, expected on Oct. 17.

Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession.

Some possible paths out of the partisan impasse in Washington are starting to emerge. Each option is tentative and lawmakers remain far from an agreement amid verbal sparring between President Barack Obama and House Speaker John Boehner.

“The longer this thing goes on and the lower the market goes, the more bargains there will be,” said John Kinsey, fund manager with Caldwell Securities Ltd. in Toronto. He helps manage about C$1 billion ($962 million).

Eight of 10 industries in the S&P/TSX advanced, with telephone stocks adding 1.5 percent for a fourth day of gains.

Trading volume was 9.3 percent lower than the 30-day average.

BCE added 2.2 percent, the most in a month, to C$44.70.

Telus increased 1.4 percent to C$34.39 and Rogers Communications Inc. rose 0.9 percent to C$45.18.

The Canadian government on Oct. 7 rejected Manitoba Telecom Services Inc.’s proposed C$520 million sale of its Allstream business division to Accelero Capital Holdings Sarl Group, an investment firm co-founded by Egyptian billionaire Naguib Sawiris, due to national security concerns.

The decision raises questions about Canadian ownership policy in the wireless industry. Prime Minister Stephen Harper’s government has been trying to encourage competition in the nation’s wireless sector, while stepping up scrutiny of foreign investments.

Wi-Lan added 1 percent to C$3.90 after settling litigation with BlackBerry. The smartphone maker obtains licenses for some patents. Terms of the agreement were not disclosed.

Allana Potash Corp. jumped 11 percent to 47 Canadian cents after the fertilizer producer said it has been granted a mining license for the Danakhil potash project in Ethiopia.

Pretium Resources plunged 31 percent to C$4.87, the lowest since its initial offering in 2010. Strathcona Mineral Services Ltd., hired for an independent assessment of a 10,000-metric-ton ore sample, resigned, Pretium said today in a statement.

Jean Coutu, the drugstore chain operator, lost 4.2 percent to C$18.12, the biggest decline since July 2012. The company reported second-quarter adjusted earnings per share that fell short by 1 Canadian cent of analysts surveyed by Bloomberg.

Comparable pharmacy sales dropped 0.5 percent in the quarter.

US

By Lu Wang and Aubrey Pringle

Oct. 9 (Bloomberg) — U.S. stocks rose, rebounding from the benchmark index’s biggest two-day slump since June, amid optimism that Janet Yellen won’t rush to withdraw stimulus and signs that lawmakers could raise the debt ceiling.

Hewlett-Packard Co. rallied 8.9 percent after saying it expects to return more cash to shareholders and see revenue stabilize after a multiyear decline. Alcoa Inc. gained 2 percent amid better-than-forecast profit. Yum! Brands Inc. sank 6.7 percent after third-quarter income fell 68 percent on lower same-store sales in China.

The Standard & Poor’s 500 Index climbed 0.1 percent to 1,656.40 at 4 p.m. in New York. The Dow Jones Industrial Average added 26.45 points, or 0.2 percent, to 14,802.98. The Nasdaq Composite Index fell 0.5 percent to 3,677.78, extending its three-day slide to 3.4 percent, the most since June 24. About 7.1 billion shares exchanged hands on U.S. exchanges today, 15 percent above the three-month average.

“Today’s reaction is favorable based on Yellen’s nomination, and secondly there seems to be some thawing of the rhetoric which sets the stage for a resolution that could come before the deadline,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said in a phone interview from Minneapolis. He helps oversee $112 billion. “That’s positive for the broad equity market.”

The S&P 500 retreated 2.1 percent over the previous two days as concern grew that lawmakers may not raise the federal debt ceiling in time to avoid a government default. Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession.

The S&P 500 erased an earlier loss of as much as 0.5 percent today and the Dow rallied after touching its lowest level since June as some possible paths out of the partisan impasse in Washington started to emerge.

House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties who spoke on condition of anonymity to discuss strategy.

Republicans haven’t decided how long an extension they would support or whether it would include policy conditions and how to advance it through the House, a House Republican aide said. Republican leaders have been calling party members to talk about ideas and all House Republicans are scheduled to meet at 10 a.m. tomorrow.

The U.S. government is in the ninth day of a partial shutdown and just over a week before U.S. borrowing authority lapses Oct. 17.

President Barack Obama nominated Yellen, the current Fed vice chairman and an architect of its stimulus program, to succeed Ben S. Bernanke as chairman. As a top deputy to Bernanke, whose term expires Jan. 31, Yellen supported the central bank’s bond-buying programs that have helped propel the S&P 500 up as much as 155 percent from a 12-year low in March 2009.

“The market breathes a sigh of relief with Yellen’s appointment,” Chris Gaffney, senior market strategist at Everbank Wealth Management Inc., said in an interview from St. Louis. “The markets like the fact that Yellen is a known quantity. She has supported the stimulus program, in fact she’s largely thought to be the architect.”

Most Fed policy makers said the central bank was likely to reduce the pace of its bond purchases this year, according to minutes released today of their last meeting, which took place before the government shutdown.

At the Sept. 17-18 gathering, officials unexpectedly maintained the pace of its monthly purchases. That decision pushed the S&P 500 to a record close of 1,725.52. The gauge retreated 4.1 percent through yesterday since then.

“If you read the minutes with blinders on what’s going on in Washington, you might think the next meeting in October is on the table for tapering to start, but obviously given what we’re dealing with the debt ceiling, that likelihood is extremely thin,” Liz Ann Sonders, New York-based chief investment strategist at Charles Schwab Corp., said in a phone interview.

Her firm has $2.08 trillion in client assets.

The government shutdown has delayed the release of economic data, including the Labor Department’s monthly payrolls report, which was due Oct. 4. The lack of data is making it harder for Fed policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus.

Central bankers next convene Oct. 29-30.

Investors will turn to companies’ financial results for clues on the economy’s performance, as Alcoa yesterday became the first S&P 500 company to report earnings whose fiscal year follows the calendar. JPMorgan Chase & Co. and Wells Fargo & Co. will also report this week.

Profits for companies in the S&P 500 probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts forecast earnings growth will accelerate to 8.9 percent in the final three months of the year.

“It’s important to see how earnings are going to set up for 2014,” Russell Croft, who helps manage about $850 million as a fund manager at Croft-Leominster Inc. in Baltimore, said by phone. “They’re still going to be muted by the macro pressure out of Washington. The government shutdown and the debt ceiling will continue to drive the near-term volatility.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, fell 3.6 percent to 19.60 after closing yesterday at the highest level since June.

Investors’ appetite for risk has diminished this week. The Nasdaq Internet Index, which had risen 52 percent this year through Oct. 4, lost 0.7 percent today, extending its three-day slide to 6.6 percent. The gauge yesterday fell the most in almost two years. Netflix Inc., an online subscription-streaming service that’s is still more than three times higher than where it started 2013, dropped 4.6 percent to $288.43, the lowest since Aug. 30.

“Owners of star performers may well head to the exit doors to preserve gains,” Michael Purves, head of derivatives research at Weeden & Co., wrote in a note to clients today.

“This theme may extend to the broader market itself. Fear momentum takes time to start, but these can be early indications that a fear snowball may well be in the making.”

Six of 10 main S&P 500 groups advanced today. Phone stocks rose 1.3 percent for the biggest gain in a month. Makers of consumer-discretionary products dropped 0.4 percent to lead declines.

AT&T Inc. rallied 1.9 percent, the most in the Dow, to $33.75. The largest U.S. phone company is near an agreement to sell its wireless towers to Crown Castle International Corp., people familiar with the matter said. People with knowledge of the talks said in September the assets could fetch $5 billion.

Alcoa climbed 2 percent to $8.10. The aluminum producer reported better-than-forecast quarterly earnings after its smelting business returned to profitability and results improved at a unit that makes auto and aerospace parts.

Hewlett-Packard rallied 8.9 percent, the most since May 23, to $22.60. Meg Whitman, who enters her third year as CEO, is contending with declining sales from slack demand for personal computers and price cuts in the business-technology market.

While analysts are projecting a 3 percent drop in 2014 revenue to $107.6 billion, according to data compiled by Bloomberg, Whitman said she expects “total revenue to stabilize.”

Men’s Wearhouse Inc. jumped 28 percent to $45.03 after Jos. A. Bank Clothiers Inc. said it’s seeking to buy the apparel retailer for $2.3 billion in cash, or $48 a share. Men’s Wearhouse rejected the offer, saying the bid “significantly” undervalued the company and wasn’t in the best interest of shareholders. Jos. A. Bank gained 6.4 percent to $44.33.

Yum retreated 6.7 percent to $66.48, the lowest since April 23. The owner of the KFC fast-food chain cut its 2013 earnings forecast as third-quarter earnings trailed analysts’ estimates.

Family Dollar Stores Inc. dropped 1.1 percent to $68.71.

The discount retailer issued a forecast for fiscal 2014 profit that fell short of estimates and reported fourth-quarter revenues and same-store sales that missed forecasts.

Fastenal Co. sank 6.3 percent to $46.85. The largest U.S. retailer of nuts, bolts and other fasteners reported third- quarter revenue and profit that missed analysts’ estimates.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

Man is setting out to satisfy needs that mean more to him

than simply nourishment and clothing.

He is embarking on a rediscovery of himself.

The history of man is that of his voyage toward the unknown,

in the search for the realization of this immortal Self, of his soul.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

When your work speaks for itself,

don’t interrupt.

-Henry J. Kaiser, 1882-1967

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

 

 

Dear Friends,

Tangents:

Last Sunday afternoon I attended a lecture entitled The God Particle.  It was a discussion by a group of physicists, namely Brian Greene, Joseph Incandela, Lisa Randall and Lawrence M. Krauss about the Higgs boson, which was discovered last year.   On July 4, 2012, Dr. Incandela announced the discovery of the particle known as the Higgs Boson.  He is currently based at CERN, and he described the process as “aiming two needles from either side of the ocean accurately enough so that they eventually meet in the middle tip to tip.”  It was incredibly interesting, so I was thrilled to read this headline today:

Higgs boson work leads to one Nobel Prize. Two physicists won the 2013 Nobel Prize in Physics for their theories 50 years ago on the Brout-Englert-Higgs field and its particle, the Higgs boson, which scientists reported discovering last year. By Peter Spotts/October 8, 2013.

Francois Englert and Peter Higgs were awarded the Nobel physics prize today.

In announcing the award on Tuesday, the Royal Swedish Academy of Sciences cited Drs. Englert and Higgs for their work on what has become known as the Brout-Englert-Higgs field and its related particle, the Higgs boson.

In 1964, Englert and his colleague, the late Robert Brout, proposed that space was permeated by a field that imparted mass to particles moving through it. A particle’s mass depended on how strongly it interacted with this field – the stronger the interaction, the more massive the particle.

Higgs offered a similar explanation and predicted that the field would have a particle associated with it. The particle became known as the Higgs boson. The prediction triggered a nearly 50-year quest among experimental physicists to find the particle.

Find it they did. On July 4, 2012, two international teams of physicists at the European Organization for Nuclear Research announced that they had discovered the particle at the facility’s Large Hadron Collider (LHC). Last March, the teams announced a higher level of confidence in their detection based on additional data their cathedral-scale detectors at the collider had amassed in the interim.

Sifting through the debris of some 2,000 trillion collisions at the accelerator – an underground race-track for protons accelerated to nearly the speed of light – researchers uncovered evidence for 1,500 Higgs bosons fleetingly created by the collisions.

“I am overwhelmed to receive this award and thank the Royal Academy,” Higgs said in a prepared statement issued by the University of Edinburgh, where he is a professor emeritus.

In issuing the award, the Academy used a unique turn of phrase that suggested to some that the body might be open to issuing another prize at some point for the discovery of the Higgs boson.

The Academy noted that the prize was “for the theoretical discovery of a mechanism that contributes to our understanding of the origin of mass of subatomic particles,” and went on to mention the work at CERN confirming Higgs’s prediction.

“The term ‘theoretical’ has never been used before with discovery,” observes Lawrence Sulak, a physicist at Boston University whose team contributed key instruments for one of the two massive detectors at the LHC, known as the CMS detector.

Physicists say they have every indication so far that the particle discovered last year is the Higgs. “But we are not yet confident,” Dr. Sulak cautions.

This means that even though a Nobel prize has been awarded for the theory describing the Higgs phenomenon, questions still swirl around the particle associated with the Higgs field.

Start with the particle’s mass. No one knew what it would be. Theories presented a range of possibilities. The particle physicists detected has far less mass than some models predict and far more than others.

“It’s too heavy to be light and too light to be heavy. It’s in a mysterious place, and we don’t understand why that is,” says Tom LeCompte, a physicist at Agronne National Laboratory in Argonne, Ill., and the physics coordinator for the ATLAS experiment, the second of the two large detectors at the LHC.

For instance, the “standard model,” which describes subatomic particles and their interactions, predicts that the Higgs boson’s mass should be a quadrillion times higher than the particles detected at CERN, says Dr. Lincoln.

Still, with the discovery of the particle, “we have completed our understanding of the standard model,” he continues. But there are mysteries that may point to something beyond it. It’s still unclear where gravity fits into this model, for instance, as well as dark matter and dark energy. The discovery of dark energy, which is accelerating the expansion of the universe, garnered its discoverers their own Nobel Prize in Physics in 2011.

The discovery of the Higgs boson “gives us a little frayed thread sticking out of the quilt that we will, of course, tug at” hoping to unravel these mysteries, he says.

Higgs and Englert will split the prize’s $1.2 million purse and are slated to receive the award at a ceremony in Stockholm Dec. 10.

Photos of the day

The Brandenburg Gate and pedestrians are illuminated by laser light patterns during a light rehearsal for the Festival of Lights in Berlin, Germany. Until October 20, many buildings and landmarks in Berlin will be illuminated. Gero Breloer/AP

A man watches a sea of clouds as he stands on a side summit of the Saentis mountain in Urnaesch near Appenzell, Switzerland. Gian Ehrenzeller/Keystone/AP

Market Closes for October 8^th, 2013

Market  Index	Close	Change
Dow  Jones	14776.53	-159.71    -1.07%
S&P 500	1655.45	-20.67    -1.23%
NASDAQ	3694.833	-75.544    -2.00%
TSX	12692.41	-95.84
		-0.75%

International Markets

Market  Index	Close	Change
NIKKEI	13894.61	+41.29
		+0.30%
HANG  SENG	23178.85	+204.90
		+0.89%
SENSEX	19983.61	+88.51
		+0.44%
FTSE 100	6365.83	-71.45
		-1.11%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.564	2.570
CND.   30 Year Bond	3.110	3.111
U.S.   10 Year Bond	2.6320	2.6302
U.S.   30 Year Bond	3.6899	3.6978

Currencies

BOC Close	Today	Previous
Canadian $	0.96536	0.96968
US   $	1.03589	1.03127
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40754	0.71046
US  $	1.35878	0.73596

Commodities

Gold	Close	Previous
London Gold   Fix	1318.58	1322.74
Oil	Close	Previous
WTI Crude Future	103.49	103.03
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 8 (Bloomberg) — Canadian stocks fell to a five-week low as base metal producers retreated amid growing concern that a deadlock among U.S. lawmakers over the debt limit could lead to a government default.

Teck Resources Ltd. and First Quantum Minerals Ltd. dropped at least 2.2 percent as raw-materials producers plunged to a two-month low. Manitoba Telecom Services Inc. sank 8.5 percent after the Canadian government rejected the proposed sale of its Allstream unit. Saputo Inc., Canada’s largest dairy processor, jumped to a four-month high after agreeing to buy an Australian cheese producer.

The Standard & Poor’s/TSX Composite Index fell 95.84 points, or 0.8 percent, to 12,692.41 at 4 p.m. in Toronto, the lowest close since Aug. 30. Trading volume was in line with the 30-day average.

“The market is nervous about how entrenched the positions seem to be on both sides of the aisle,” said Matt Skipp, chief investment officer with Sw8 Asset Management Inc. in Toronto.

The firm manages about C$54 million ($52 million). “The irony is, it’s the market sell-off that generally gets Congress moving in the right direction. There’s always a moment of truth when the market starts to fear the excessive rhetoric being flung back and forth.”

U.S. President Barack Obama said the nation’s economy risks a “very deep recession” if Congress doesn’t raise the $16.7 trillion debt ceiling. Senate Majority Leader Harry Reid said the Republican-controlled House should vote to end the shutdown and drop demands to change the 2010 Affordable Care Act. House Speaker John Boehner said Reid and Obama should negotiate.

The U.S. government has been partially shut down since Oct. 1 and could default on its debt if lawmakers fail to reach an agreement to raise the borrowing limit by Oct. 17.

Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession that probably would become a depression.

U.S. equities retreated 1.2 percent, giving the S&P 500 the biggest two-day decline since June.

Eight of 10 groups in the Canadian benchmark equity gauge dropped, led by a 2.6 percent decline among health-care stocks.

Valeant Pharmaceuticals International Inc. lost 3.6 percent to C$109.80 for a third day of declines.

An S&P/TSX index of raw-materials producers plunged 2.4 percent to the lowest since Aug. 7. Fifty-four of the gauge’s 56 members fell.

Teck Resources, Canada’s largest diversified miner, lost 2.8 percent to C$26.56 and First Quantum retreated 2.2 percent to C$17.55 as copper futures dropped for a second day on concern demand will slow in the U.S. OceanaGold Corp. slumped 7.3 percent to C$1.40 after agreeing to acquire Pacific Rim Mining Corp. in a deal valued at C$10.2 million.

Manitoba Telecom plunged 8.5 percent to C$29.62, the biggest slide in three years and the most in the S&P/TSX. The Canadian government rejected the company’s planned sale of its Allstream fiber-optic network division to an investment firm co- founded by Egyptian billionaire Naguib Sawiris.

The decision raises questions about Canadian ownership policy in the wireless industry. Prime Minister Stephen Harper’s government has been trying to encourage competition in the nation’s wireless sector, while stepping up scrutiny of foreign investments.

Manitoba competitors, including Rogers Communications Inc., BCE Inc. and Telus Corp., advanced at least 0.2 percent to lift an index of phone stocks to the second-best performance in the S&P/TSX.

Saputo jumped 4.1 percent to C$51.50, the highest since May 30. The cheesemaker has agreed to pay about C$378 million for Warrnambool Cheese & Butter Factory Co., an Australian producer, topping a rejected bid from Bega Cheese Ltd.

The deal will allow Saputo to target rising demand in Asia for dairy products, Chief Executive Officer Lino Saputo said.

US

By Lu Wang and Alex Barinka

Oct. 8 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest two-day loss since June, as concern grew that a deadlock among U.S. lawmakers over the debt limit could lead to a government default.

An index of Internet stocks tumbled the most in almost two years, sinking 4.1 percent. Facebook Inc. and Yahoo! Inc. lost at least 3.5 percent. Xerox Corp. slid 2.5 percent after announcing the U.S. has been probing the accounting practices of its outsourcing division. Alcoa Inc. gained 1.5 percent in late trading after posting quarterly earnings that topped forecasts.

The S&P 500 fell 1.2 percent to 1,655.45 at 4 p.m. in New York, the lowest since Sept. 6. The Dow Jones Industrial Average lost 159.71 points, or 1.1 percent, to 14,776.53. The Nasdaq Composite Index tumbled 2 percent to 3,694.83. About 6.9 billion shares changed hands on U.S. exchanges, nearly 20 percent higher than the three-month average.

“The market is going to start to push the government,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an interview. “The longer it drags on, the more uncomfortable everyone gets because we will not rally until something gets done. Get out now and wait for the storm to pass to get back in.”

The S&P 500 slumped 0.9 percent yesterday to a four-week low as lawmakers remained deadlocked over extending the nation’s debt limit to avoid a default. Its two-day slide of 2.1 percent is the biggest since June 21. The gauge has fallen 4.1 percent since its latest record on Sept. 18.

President Barack Obama said the U.S. economy risks a “very deep recession” if Congress doesn’t raise the debt ceiling.

Obama spoke less than four hours after he called House Speaker John Boehner to “reiterate that he won’t negotiate on a government-funding bill or debt-limit increase,” said Brendan Buck, a Boehner spokesman.

Lawmakers began taking the first tentative steps toward a path to raising the limit even as the rhetoric grew more divisive. Senate Democrats are planning a test vote before the end of this week on a measure that would grant Obama authority to raise the ceiling, probably for a year, unless two-thirds of both chambers of Congress oppose.

The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government will run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

Even as the probability of a U.S. government default is “very, very small,” volatility in the markets will increase in coming days, Mohamed El-Erian, chief executive officer and co- chief investment officer at Pacific Investment Management Co. A U.S. default on its debt obligations would prove more unpredictable to financial markets than the 2008 collapse of Lehman Brothers Holding Inc., he said.

“What frightens us the most is what happens to the plumbing system of the global-financial system,” El-Erian said in an interview on Bloomberg Television’s “Bloomberg Surveillance” with Tom Keene. “You will have cascading failure, multiple defaults, and Treasuries that act as collateral would be very difficult to exchange and people will simply step back. It will be like Lehman, but more unpredictable.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 4.8 percent today to 20.35, its highest close in 2013.

From its intraday low of 12.52 on Sept. 20, the VIX jumped 68 percent to its highest level of today, 21.01. That’s the fifth time in 2013 that the index climbed more than 50 percent from trough to peak, according to data compiled by Bespoke Investment Group and Bloomberg. The gauge of options prices remains almost 58 percent below its 2011 high, the data show.

Volume on the VIX rose to a record 1.78 million contracts, according to data compiled by Bloomberg. About 1.14 million calls changed hands compared with more than 639,000 puts, data compiled by Bloomberg show.

“The VIX pit was nuts, all day, non-stop,” Mark Caffray, who brokers contracts on the VIX and the S&P 500 at Chicago- based PTR Inc., said in an interview. “Customers are hedging either side of the government gridlock outcome. We are assuming the trend continues as customers continue to use the VIX as a bigger part of their hedging strategy.”

Nine of the 10 S&P 500 main industries fell as telephone, materials, consumer-discretionary and technology stocks slipped more than 1.6 percent for the worst performance.

The Nasdaq Internet Index tumbled 4.1 percent for the biggest decline since November 2011, as all its 81 members dropped. The gauge had surged 49 percent this year through yesterday, almost triple the gain in the S&P 500. At 24 times reported income, the valuation in Internet shares has risen 67 percent this year.

Facebook, the operator of the world’s most popular social network, slumped 6.7 percent to $47.14. The stock had advanced 90 percent this year through yesterday. Yahoo declined 3.5 percent to $32.93, trimming its 2013 gain to 65 percent.

TripAdvisor Inc., an online travel agent that’s up 71 percent this year, sank 5.5 percent to $71.70.

“The debt ceiling is causing the fear over locking in returns,’” Ian Winer, director of equity trading at Wedbush Securities Inc., said in an interview. “Guys are looking at their portfolios and saying, ’These are up huge, maybe I sell some to lock in some gains and revisit post debt-ceiling resolution.’”

Stocks with the highest short interest were among the market’s biggest losers. A Goldman Sachs Group Inc.’s basket of stocks with the most bearish bets against them slid 2.3 percent, paring its rally in 2013 to 35 percent.

Xerox dropped 2.5 percent to $10.14. The U.S. Securities and Exchange Commission has been probing the accounting practices of Affiliated Computer Services Inc., an outsourcing company acquired in 2010, Xerox said in a regulatory filing. The SEC focused on whether revenue from ACS equipment and resale transactions should have been recorded on a net rather than gross basis, Xerox said in the filing.

Masco Corp. fell 5.3 percent to $19.40. The maker of home improvement and building products faces slowing growth amid a potential loss in the market share, Kenneth Zener, an analyst with Keybanc Capital Markets Inc., said in a note. He cut the stock’s rating to underweight from hold.

McKesson Corp. climbed 3.2 percent to a record $133.72. The largest U.S. drug distributor is in advanced talks buy German drug wholesaler Celesio AG, Dow Jones reported, citing unidentified people.

Alcoa gained 1.5 percent to $8.06 at 5:42 p.m. in New York.

The largest U.S. aluminum producer, reported third-quarter profit that surpassed analysts’ expectations after higher earnings from one of its divisions that turns the metal into auto and aerospace parts. The stock fell 0.4 percent during the regular session today.

The Alcoa release marks the unofficial start of the U.S. quarterly earnings season as it is the first S&P 500 company to report results whose fiscal year follows the calendar. JPMorgan Chase & Co. and Wells Fargo & Co. will also report this week.

Investors will look to companies’ financial results for clues on the economy’s performance as the government shutdown, in its eighth day, delays the publication of some data. The S&P 500 has declined 1.6 percent since the government began on Oct. 1 its first shutdown in 17 years after lawmakers failed to reach an agreement on budgets before the start of a new fiscal year.

Profits for the S&P 500 probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts anticipate earnings growth to accelerate to 8.9 percent in the final three months of the year, the data show.

“A lot of the S&P earnings for the year are fourth-quarter loaded,” Bernie Williams, chief investment officer of investment solutions who oversees $16.7 billion at USAA Investments in San Antonio, said in a phone interview. “It’s more of the commentary that counts.”

Garry Evans, global head of equity strategy at HSBC Holdings Plc, cut his recommendation on U.S. equities to neutral from overweight, saying valuations are “a little stretched.”

He advised investors to increase holdings in emerging markets because growth in China is stabilizing and stocks are cheap.

The S&P 500 has climbed 16 percent this year as earnings beat estimates and data from manufacturing to housing and the labor market improved. The benchmark gauge is trading at 15.9 times reported earnings, up 12 percent from the beginning of the year and compared with a multiple of 11.9 for the MSCI Emerging Markets index, data compiled by Bloomberg show.

The International Monetary Fund reduced its global outlook for this year and next as capital outflows further weaken emerging markets and warned that a U.S. government default “could seriously damage the global economy.”

Growth worldwide will be 2.9 percent this year and 3.6 percent next year, the IMF said in a report released today in Washington, compared with July predictions of 3.1 percent for 2013 and 3.8 percent for 2014. The IMF’s forecasts factor in a short U.S. government shutdown and an agreement on the nation’s debt-limit before the Oct. 17 deadline.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

To know our soul apart from our ego

is the first step toward accomplishing supreme deliverance.

It is necessary that we know with absolute certainty that in essence we are spirit.

And we can only arrive at this knowledge if we render ourselves masters of our ego,

if we rise above all pride, all appetite, all fear, by knowing that material losses and the

death of the body can never take away the truth and the greatness of our soul.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

It’s not what you look at that matters,

it’s what you see.

-Henry David Thoreau, 1817-1862

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

 

Dear Friends,

Tangents:

Just back from the annual World Business Forum in NYC.   Interesting discussions and learned lots and incessant buzz on the dysfunctional situation in Washington.  Lots to catch up on…

Of note:  On this day in 1849, American author and poet Edgar Allen Poe passed away at the age of 40.

But it’s World Smile Day today, and,

Laughter is the shortest distance between two people.  – Victor Borge.

Photos of the day

Three-year-old Eva Mahesan and her grandfather look at the brightly colored leaves in the autumn sunshine in Sheffield Park Gardens near Haywards Heath in Southern England. Luke MacGregor/Reuters

Beads of morning dew rest atop a fallen leaf near the intersection of Wallenberg and Court Streets in downtown Flint, Mich. Jake May/The Flint Journal/AP

Market Closes for October 7^th, 2013

Market  Index	Close	Change
Dow  Jones	14936.24	-136.34    -0.90%
S&P 500	1678.21	-12.29    -0.73%
NASDAQ	3770.377	-37.377    -0.98%
TSX	12788.54	+29.89
		+0.23%

International Markets

Market  Index	Close	Change
NIKKEI	13853.32	-170.99
		-1.22%
HANG  SENG	22973.95	-164.59
		-0.71%
SENSEX	19895.10	-20.85
		-0.10%
FTSE 100	6437.28	-16.60
		-0.26%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.570	2.543
CND.   30 Year Bond	3.111	3.096
U.S.   10 Year Bond	2.6302	2.6082
U.S.   30 Year Bond	3.6978	3.7083

Currencies

BOC Close	Today	Previous
Canadian $	0.96968	0.97123
US   $	1.03127	1.02962
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40023	0.71417
US  $	1.35778	0.73650

Commodities

Gold	Close	Previous
London Gold   Fix	1322.74	1310.39
Oil	Close	Previous
WTI Crude Future	103.03	103.84
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 7 (Bloomberg) — Canadian stocks rose, following a decline last week, after gold producers rallied as investors sought a store of value amid growing concern that the U.S. could default on its debt.

AuRico Gold Inc. and Osisko Mining Corp. jumped at least 5 percent as all 24 members of a gold index advanced with the price of the precious metal. Allied Nevada Gold Corp. surged 28 percent after saying it reached its production and sales targets for the third quarter. BlackBerry Ltd. rallied 4.1 percent after a Macquarie Group Ltd. analyst raised his rating on the smartphone maker to the equivalent of a hold amid a report the company was in new takeover discussions.

The Standard & Poor’s/TSX Composite Index climbed 29.60 points, or 0.2 percent, to 12,788.25 at 4 p.m. in Toronto. The index slipped 0.7 last week and has added 2.9 percent this year.

Trading volume was 13 percent lower than the 30-day average.

“It’s textbook, this is what should happen, gold should be going up so the market is responding rationally to this crisis,” said Jeffrey Burchell, co-chief investment officer with Aston Hill Financial Inc. in Toronto. The firm manages about C$7 billion ($6.8 billion). “Every time in the past when they’ve had these crises you have a situation where the market has sold off in advance. This time it hasn’t, the market is acting rationally because everyone knows at some point this is going to get solved.”

President Barack Obama said he would be willing to negotiate with Republicans on fiscal terms if they raised the debt limit by next week and restored government funding.

The U.S. government could default on its debt if lawmakers don’t reach an agreement to raise the borrowing limit by Oct. 17. Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession that probably would become a depression.

The benchmark U.S. equity gauge fell more than 11 percent in three days in August 2011 amid a stalemate over the debt limit. The losses were later reversed and the S&P 500 gained 25 percent in the 12 months through August 2012.

In Canada today, building permits tumbled 21.2 percent to C$6.34 billion in August from a revised 21.4 percent gain in July, on a decline in commercial projects such as retail stores and office buildings.

Seven of 10 main industries in the S&P/TSX rose today, with producers of raw materials and technology stocks rising 0.8 percent to lead advances.

The S&P/TSX Gold Index jumped 2.3 percent, with all 24 members rising. Gold added 1.2 percent in New York for the first gain in three sessions as the U.S. budget impasse stoked demand for the metal as a store of value.

Osisko Mining climbed 7 percent to C$5.35 and AuRico Gold gained 5 percent to C$4.02.

Allied Nevada jumped 28 percent to C$5, the biggest gain since April, after the company said it is on track to meet its 2013 forecasts for gold and silver production. The miner plans to report third-quarter results during the week of Nov. 4.

Rio Alto Mining Ltd. added 4.4 percent to C$1.89, snapping a five-day slide, after saying it will meet its forecast for gold output this year.

BlackBerry rallied 4.1 percent to C$8.20, halting a two-day losing streak, after Kevin Smithen, analyst with Macquarie, raised his rating for the stock with a price target of $7.

BlackBerry has six buys, 22 holds and 14 sells, according to data compiled by Bloomberg.

Reuters reported on Oct. 4 after the close that BlackBerry was in talks with six firms, including Google Inc. and Cisco Systems Inc. for a potential sale. The company has a conditional deal to sell itself to a group led by Fairfax Financial Holdings Ltd., its largest shareholder, for about $4.7 billion, or $9 a share.

Air Canada soared 4.3 percent to C$4.66. The nation’s largest airline extended a five-year high and has rallied 32 percent in the past five sessions. It said on Oct. 3 that costs for the third quarter and full year will decline more than anticipated. Air Canada has surged 166 percent in 2013 for the best performance in the S&P/TSX.

US

By Lu Wang and Aubrey Pringle

Oct. 7 (Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index dropping to the lowest level in a month, as lawmakers remained deadlocked over extending the nation’s debt limit to avoid a default.

Bank of America Corp. and Wells Fargo & Co. paced declines among banks, each slipping 1.7 percent. International Business Machines Corp. retreated 1.1 percent as Barclays Plc lowered its recommendation. Cooper Tire & Rubber Co. sank 13 percent as Apollo Tyres Ltd. is seeking to cut its $2.5 billion offer to buy the U.S. company. Apple Inc. gained 1 percent after Jefferies Group LLC upgraded the stock.

The S&P 500 fell 0.9 percent to 1,676.12 at 4 p.m. in New York, the lowest since Sept. 9. The Dow Jones Industrial Average declined 136.34 points, or 0.9 percent, to 14,936.24. About 5 billion shares changed hands on U.S. exchanges, the slowest trading since Aug. 29.

“The volume is very light so I do think investors are trying to feel their way through this,” Walter Todd, chief investment officer at Greenwood Capital Inc., said in a phone interview from Greenwood, South Carolina. He helps manage $950 million. “Each day that it goes by without any type of solution or any hope of a solution, the market gets more and more concerned about what the ultimate outcome is.”

Speaker John Boehner said yesterday in an interview on ABC’s “This Week” that the House of Representatives can’t pass a debt-ceiling increase without packaging it with other provisions. Boehner said the country could default if President Barack Obama doesn’t negotiate. Obama today challenged congressional Republicans to raise the U.S. debt limit by next week and said he’s willing to negotiate on fiscal terms once that is done and government funding is restored.

Without an increase to the debt limit, the U.S. will exhaust its borrowing authority on Oct. 17 and would run out of funds to pay all of its bills sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office. Senate Democrats could introduce legislation as soon as today that gives Obama the authority to raise the debt ceiling unless two- thirds of Congress disapproves, according to a Senate Democratic aide.

S&P stripped the U.S. of its AAA credit rating in August 2011 amid a stalemate between Obama and Congress over whether to raise the debt ceiling. The S&P 500 fell more than 11 percent in three days.

Moody’s Investors Service said it sees a “very low” chance the U.S. will default on its debt payments. The impact of the partial government shutdown on the economy may not be particularly damaging in the short term, and the effect would be seen gradually over time if it was an extended one, Chief Executive Officer Ray McDaniel said in a Bloomberg Television interview in Bali on Oct. 5.

The S&P 500 had its first back-to-back weekly decline since August as the government began on Oct. 1 its first shutdown in 17 years, placing as many as 800,000 federal employees on unpaid leave and closing some services, after lawmakers failed to reach an agreement on budgets before the start of a new fiscal year.

The action delayed the release of the Labor Department’s monthly payrolls report, due last week. Should the shutdown continue, economic data to be postponed this week include September retail sales and August trade.

The lack of data is making it harder for Federal Reserve policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus.

The S&P 500 jumped to a record on Sept. 18 as the central bank unexpectedly refrained from reducing its $85 billion monthly bond-buying program, saying it wants more evidence of an economic recovery before scaling back stimulus. The Fed will release the minutes of its Sept. 17-18 meeting on Oct. 9.

“The economy is too fragile if they push to the limit” on the debt ceiling, said Tom Stringfellow, president and chief investment officer of San Antonio-based Frost Investment Advisors LLC, which manages $9.3 billion. “I suspect the central bank will continue with the channels and volume they’ve been going through for the last several years.”

Three rounds of Federal Reserve stimulus have helped drive the S&P 500 up about 150 percent from a 12-year low in 2009. The benchmark index has rallied 18 percent this year on better-than- estimated earnings and as data from manufacturing to housing and the labor market improved.

The U.S. earnings season starts tomorrow with Alcoa Inc., America’s biggest aluminum producer, scheduled to release third- quarter results after the market closes.

Profits for the broad index probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts anticipate earnings growth to accelerate to 8.9 percent in the final three months of the year, the data show.

“Some people are a little nervous that companies are going to use the excuse of the uncertainty in Washington yet again as to why they don’t have to or why they’re not going to perhaps be as optimistic about the fourth quarter and 2014 as the estimates currently reflect,” Darren Bagwell, director of research at Thrivent Asset Management in Minneapolis, said in a phone interview. His firm oversees about $82 billion.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 16 percent today to 19.41, erasing its loss for the year and reaching the highest closing level since June 24.

All 10 industries in the S&P 500 declined except for telephone companies. Consumer-discretionary, financial and raw- materials stocks fell the most, sinking at least 1.2 percent.

The KBW Bank Index sank 1.9 percent as all its 24 members retreated. Bank of America dropped 1.7 percent to $13.81. Wells Fargo, the largest U.S. home lender, lost 1.7 percent to $40.62.

Cooper Tire tumbled 13 percent to $25.72. Apollo Tyres is seeking to cut offer to buy Cooper after U.S. and Chinese workers challenged the takeover plan. Cooper acknowledged the $35-a-share offer should be reduced and that “the issue now is by how much,” Gurgaon, India-based Apollo said.

IBM slipped 1.1 percent to $182.01. Barclays cut its rating on the world’s largest computer-services provider to equal- weight, or hold, from overweight, citing concern that IBM’s cash flow may be affected as customers move to online-based software.

Qualcomm Inc. dropped 1.2 percent to $67.19. Tal Liani, an analyst with Bank of America Corp., cut the rating on the largest U.S. wireless equipment maker to neutral from buy, citing a potential “significant deceleration” in revenue and earnings growth over the next two years amid a slowdown in the smartphone market.

Time Warner Cable Inc. fell 1.6 percent to $111.02. The second-largest U.S. cable company agreed to buy fiber-optic network provider DukeNet Communications LLC for $600 million in cash. Time Warner Cable plans to use DukeNet to expand its business services in seven Southeastern states, including North and South Carolina.

Apple climbed 1 percent to $487.75. Peter Misek, an analyst with Jefferies, raised the stock’s rating to buy from hold, citing suppliers becoming more lenient on price.

Demand for iPhone 5 remains solid and expectations for iPhone sales are “conservative,” Timothy Arcuri, an analyst with Cowen & Co., said in a note to clients.

Alcoa added 0.1 percent to $7.97, erasing a loss of as much as 1.5 percent in the final minute of trading. Alcoa’s profit probably doubled during the third quarter to 6 cents a share amid higher demand from the aircraft and automotive industries, according to analysts’ estimates compiled by Bloomberg.

Intuitive Surgical Inc. jumped 4.6 percent, the most in the S&P 500, to $380.99. The maker of robot surgery devices is seeing many general surgeons moving “aggressively” to learn the company’s da Vinci system, according to Ben Andrew, an analyst with William Blair & Co. who attended the Clinical Robotic Surgery Association meeting in Washington.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

The Hindu believes that he is a spirit.

He believes that the sword cannot pierce him, that fire cannot burn him,

that water cannot dissolve him, that air cannot dry him out.

He believes that the soul is a circle whose circumference has no limits, but whose center is situated in the body.

Death signifies the transference of this center of a body to another.

We are the children of God.

Matter is our servant.

Swami Vivekananda, 1863-1902

As ever,

 

Carolann

 

If all men were just, there would be no need

of valor.

-Agesilaus, 444-360 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

 

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.

The Greater Vancouver International Film Festival is running this year between September 26 and October 11.  The festival brings more than 340 films from 70 countries for audiences to view.  The Greater Vancouver International Film Festival Society was founded in 1982 as a non-profit cultural society whose flagship event is the Vancouver International Film Festival (VIFF), which takes place in early autumn in venues in and around downtown Vancouver. The festival has grown to become one of the five largest in North America, with a focus on documentaries and cinema from Canada and East Asia. Outside East Asia, no festival screens a wider selection of films from that region. If you are interested in attending the festival, tickets can be purchased online through the festival website at http://www.viff.org/.  Enjoy everyone!

Today in History:

1535 – The first complete English translation of the Bible was printed in Zurich, Switzerland.

1648 – The first volunteer fire department was established in New York by Peter Stuyvesant.

1881 – Edward Leveaux received a patent for the player piano.

1895 – The first U.S. Open golf tournament took place in Newport, RI. Horace Rawlins, 19 years old, won the tournament.

1909 – The first airship race in the U.S. took place in St. Louis, MO.

1915 – The Dinosaur National Monument was established. The area covered part of Utah andColorado.

1927 – The first actual work of carving began on Mount Rushmore. 

“You are never too old to set another goal or to dream a new dream.” – C. S. Lewis

Photos of the Day:

A decorated elephant stands at the Nandankanan Zoological park on the outskirts of the eastern Indian city of Bhubaneswar, India, Friday, Oct. 4, 2013. Wild life week is celebrated in India from October 2 to 8. Biswaranjan Rout/AP

Vehicles drive along the M54 Yenisei Federal Highway near the Yenisei River during sunset outside Russia’s Siberian city of Krasnoyarsk, October 3rd. Ilya Naymushin/Reuters

Market Closes for October 4^th, 2013

Market  Index	Close	Change
Dow  Jones	15072.58	+76.10    +0.51%
S&P 500	1690.50	+11.84    +0.71%
NASDAQ	3807.754	+33.412    +0.89%
TSX	12758.65	+23.53
		+0.18%

International Markets

Market  Index	Close	Change
NIKKEI	14024.31	-132.94
		-0.94%
HANG  SENG	23138.54	-75.86
		-0.33%
SENSEX	19915.95	+13.88
		+0.07%
FTSE 100	6453.88	+4.84
		+0.08%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.580	2.543
CND.   30 Year Bond	3.120	3.096
U.S.   10 Year Bond	2.6438	2.6082
U.S.   30 Year Bond	3.7180	3.7083

Currencies

BOC Close	Today	Previous
Canadian $	0.97123	0.96832
US   $	1.02962	1.03272
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39540	0.71664
US  $	1.35525	0.73787

Commodities

Gold	Close	Previous
London Gold   Fix	1310.39	1317.25
Oil	Close	Previous
WTI Crude Future	103.84	103.59
BRENT	109.360	109.360

Market Commentary:

Canada

By Cordell Eddings and John Detrixhe

The Canadian dollar fell against the majority of its most-traded peers this week as investors awaited the outcome of the U.S.’s budget standoff and Canadian crude oil prices dropped relative to a U.S. benchmark.

The currency rose versus its U.S. counterpart today as risk appetite improved on optimism that lawmakers in Washington would reach a deal to end its partial government shutdown and avoid a federal-debt default. The U.S. is Canada’s biggest trade partner. The price spread between Western Canada Select oil and West Texas Intermediate increased.

“The overall growth impact of the U.S. government shutdown is a factor” for the Canadian dollar, Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “The pricing of oil has moved against the Canadian dollar.”

The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, appreciated 0.4 percent to C$1.0294 per U.S. dollar at 5 p.m. in Toronto. One Canadian dollar buys 97.14 U.S. cents. The currency was little changed on the week against the greenback.

Canada’s government bonds fell for the first time in three days, pushing yields on the benchmark 10-year security up four basis points, or 0.04 percentage point, to 2.58 percent. The price of the 1.5 percent security due in June 2023 dropped 32 cents to C$90.85.

Stocks rose today, with the Standard & Poor’s 500 Index gaining 0.7 percent to 1,690.50.

The U.S. government began its first partial shutdown in 17 years on Oct. 1 as Republicans who control the House insisted on changes to the nation’s 2010 health-care law, President Barack Obama’s signature legislative achievement. The Senate, controlled by Democrats, refused. Congress also faces the statutory debt ceiling, which the Treasury has said will be reached Oct. 17.

“The shutdown is bad for growth in Canada, and as we get closer to the debt-ceiling deadline there is more concern manifesting, which is weighing on the U.S. dollar relative to the loonie,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto, said by phone. “We will probably continue to chop around in a range until this monumental uncertainty is cleared up. It’s all a question of waiting for Washington at this point.”

The discount Canada’s benchmark crude-oil grade, Western Canada Select, faces to West Texas Intermediate oil increased to $34.50 per barrel, the most since January. WTI futures traded at $103.56 a barrel today in New York.

Canada’s purchasing managers increased spending in September by less than economists forecast, according to a gauge released today by Western University’s business school.

The Ivey Purchasing Managers Index rose to 51.9 in September on a seasonally adjusted basis, following an August reading of 51.0, according to a statement on the London, Ontario university’s website. Readings of more than 50 indicate purchasing by governments and companies increased.

Economists projected a reading of 53.6, according to the median of a Bloomberg survey with 10 responses.

US

By Aubrey Pringle and Alex Barinka

U.S. stocks rose, paring a weekly decline in the Standard & Poor’s 500 Index, as optimism grew that lawmakers would reach a deal to end America’s budget standoff. Treasuries and gold fell while Italian bonds advanced.

The S&P 500 gained 0.7 percent at 4 p.m. in New York, while the Stoxx Europe 600 Index climbed 0.1 percent. The yield on 10- year Treasuries increased four basis points to 2.65 percent.

Italy’s 10-year bond yield dropped seven basis points to 4.30 percent. West Texas Intermediate oil added 0.5 percent as Tropical Storm Karen approached the U.S. coast, while gold futures slid 0.6 percent.

A partial U.S. government shutdown entered a fourth day amid wrangling by lawmakers over the budget and debt limit. Bill Gross of Pacific Investment Management Co. and BlackRock Inc.’s Larry Fink said the deadlock will be resolved soon, limiting damage to the economy. House Speaker John Boehner has been telling fellow Republicans that he won’t allow the U.S. to default on its debt, according to two Republican congressional aides.

“There’s a working presumption that this is fundamentally theater and it’s going to work itself out favorably,” Mackintosh Pulsifer, vice chairman and chief investment officer of Fiduciary Trust Co. International in New York, said in a phone interview. He helps oversee $15 billion. “There will not be a default, we’ll find some way to raise the debt ceiling. In a few weeks it’s not going to have any impact.”

The S&P 500’s rally today trimmed the weekly loss to 0.1 percent. The gauge had slumped as much as 1.3 percent for the week through yesterday. The Dow Jones Industrial Average ended the five days with a 1.2 percent drop.

President Barack Obama canceled plans to attend two economic summits in Asia next week as he remains in Washington to seek an end to the government shutdown. The Treasury Department said failure to raise the debt limit has the potential to freeze credit markets and cause the dollar to plunge.

Partially closing the U.S. government for one week would probably shave 0.1 percentage point from economic growth, according to the median of 40 estimates in a Bloomberg survey of economists. Federal Reserve Bank of San Francisco President John Williams estimated yesterday a two-week government halt would trim 0.25 percentage point off fourth-quarter economic growth.

The shutdown delayed the release of the Labor Department’s monthly payrolls report, which was due today. The lack of data is making it harder for Federal Open Market Committee policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus. Atlanta Fed President Dennis Lockhart said the shortage of economic news “would tend to make me somewhat more cautious” about reducing the pace of bond purchases.

“The taper is off the table for October, that is a silver lining for the market,” Phil Orlando, New York-based chief equity strategist at Federated Investors, said in a phone interview. His firm manages about $380 billion in assets.

“Given the fact that there is no jobs data and given the fact that we have triggered the potential breach of the debt ceiling, in my opinion there is zero chance that the Fed is going to commence the taper at the Oct. 29-30 FOMC meeting.”

The S&P 500 has rallied 19 percent this year. It has surged 150 percent from a March 2009 low amid three rounds of Fed stimulus and better-than-forecast corporate earnings.

Visa Inc. rose 1 percent today after a judge ruled the company didn’t infringe a SmartMetric Inc. patent. Facebook Inc. climbed 3.8 percent after the operator of the world’s most popular social network said it will sell advertising on its Instagram photo service. Union Pacific Corp. declined 1 percent after its earnings forecast missed projections.

Twitter Inc. released its S-1 prospectus for an initial public offering yesterday, with the document suggesting a valuation of $12.8 billion for the microblogging website.

Today’s gain for the Stoxx 600 trimmed its retreat for the week to 0.7 percent. Lindt & Spruengli AG jumped 3.6 percent to its highest since 2008 after saying it will buy back shares worth about 450 million Swiss francs ($498 million). Nokian Renkaat Oyj sank 7.6 percent, the most in almost a year, as the Finnish tiremaker cut its earnings forecasts.

The MSCI Emerging Markets Index added 0.3 percent, gaining for the fourth straight day. The gauge climbed 0.8 percent this week. Malaysia’s ringgit strengthened 0.4 percent after a report showed the trade surplus rose more than analysts estimated as exports jumped.

Treasuries snapped a two-day advance as the U.S. prepared to auction $64 billion of notes and bonds next week.

Money managers are getting out of Treasuries maturing closest to the debt-ceiling deadline on Oct. 17 and buying longer-maturity bills, yields indicate. One-month rates climbed as high as 0.16 percent yesterday, while rates on three-month bills were 0.02 percent, the biggest inversion of the spread since September 2008.

Corporate bond issuance slid 53 percent this week in Europe to the least in seven weeks, while U.S. sales tumbled 81 percent.

Unibail-Rodamco SE, Europe’s largest publicly traded property owner, and Banco Popular Espanol SA were among companies issuing 8.3 billion euros of notes this week, the least since the period ended Aug. 17, data compiled by Bloomberg show. Dollar-denominated offerings fell to $10.9 billion, the least since the period ended Aug. 30.

Italy’s 10-year securities climbed for the third time in four days as Prime Minister Enrico Letta won a confidence vote in parliament. Silvio Berlusconi’s future in Italian politics is hanging in the balance after a Senate panel voted today to recommend expelling the former prime minister from the upper house, following an August tax-fraud conviction.

Spain’s yield dropped four basis points to 4.20 percent today and Portugal’s declined 21 basis points to 6.34 percent, the lowest since Aug. 20.

Australia’s dollar rose 0.4 percent to 94.34 U.S. cents as traders bets reflected increased expectations the central bank won’t cut borrowing costs this year. The pound dropped against 15 of 16 of its major counterparts, falling 0.9 percent to $1.6014.

Gold fell for the fourth time this week in New York, sliding 0.6 percent, amid speculation that the impact of the federal shutdown will be limited. Holdings in global exchange- traded products yesterday reached the lowest since May 2010, wiping about $60.6 billion from the value of the assets this year. Bullion prices dropped 22 percent in 2013 as some investors lost faith in the metal as a store of value.

“Money seems to be chasing equities,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Gold does not seem to be attracting the safe-haven premium.”

Copper futures rose for the second time in three days, gaining 1 percent. Inventories tracked by the London Metal Exchange slid for a 22nd day, to 525,925 metric tons, the lowest since March 15.

West Texas Intermediate increased 0.5 percent to $103.84.

Tropical Storm Karen pushed through the Gulf of Mexico to the U.S. coast, threatening crude production in the region. Karen will make landfall early Oct. 6 on the southeastern tip of Louisiana, according to the National Hurricane Center.

Robusta coffee rallied as much as 3.1 percent after stockpiles in warehouses monitored by NYSE Liffe declined 19 percent in the past two weeks.

 

Have a wonderful weekend everyone!!!!

 

Be magnificent!

 

“Every great dream begins with a dreamer. Always remember, you have within you the strength, the patience, and the passion to reach for the stars to change the world.” – Harriet Tubman

 

As ever,

 

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

 

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5838

 

 

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.

This past weekend,  I was lucky enough to marry my best friend. With the wedding came a lot of advice from friends and family as to how to have a happy successful marriage, so I thought I would share the advice with you!

1)    Respect each other’s views at all times.

2)    Listen to one another.

3)    Give priority to your spouse over everything else in your life.

4)    Sincerely say “I love you” often.

5)    Take time out and spend a few moments together–just the two of you alone.

6)    Talk graciously to each other about your thoughts–especially things for the two of you to agree upon or do together

7)    Cook for each other, and show that you appreciate the thoughtfulness and the food.

8)    Don’t forget to do the little things that make each of you smile and feel loved.

9)    Be patient with each other as much as possible.

10)    Make sure your partner knows how much you appreciate the little every day things they do, like doing the washing up or making the bed.

“A successful marriage requires falling in love many times, always with the same person.” – Mignon McLaughlin

Also on this Day:

1955 – “The Mickey Mouse Club” premiered on ABC-TV.

1962 – The Sigma VII blasted off from Cape Canaveral for a nine-hour flight.

1988 – The space shuttle Discovery landed safely after its four-day mission. It was the first American shuttle mission since the Challenger disaster. .

1990 – The Berlin Wall was dismantled eleven months after the borders between East and West Germany were dissolved. The unification of Germany ended 45 years of division.

2001 – ESPN began its 10th season of National Hockey League (NHL) coverage.

2006 – The Dow Jones industrial average closed at a new high ending the day at 11,727.34. Earlier in the session, the Dow had risen to 11,758.95. Both previous records had been set on January 14, 2000.

“We must use time wisely and forever realize that the time is always ripe to do right.” – Nelson Mandela

Photos of the Day, October 3^rd:

Indians dressed in traditional attire practice Garba, a form of dance from the west Indian state of Gujarat, to celebrate the upcoming festival of Navratri, in Ahmadabad, India. Navratri, which literally means nine nights, is the festival when nine different forms of goddess Durga are worshiped on consecutive nights. Ajit Solanki/AP

The crescent moon over the mountains is visible from Highway 178, east of Bakersfield, Calif. Casey Christie/The Bakersfield Californian/AP

Market Closes for October 3^rd, 2013

Market  Index	Close	Change
Dow  Jones	14996.48	-136.66    -0.90%
S&P 500	1680.30	-13.57    -0.80%
NASDAQ	3774.343	-40.676    -1.07%
TSX	12744.25	-94.75
		-0.74%

International Markets

Market  Index	Close	Change
NIKKEI	14157.25	-13.24
		-0.09%
HANG  SENG	23214.40	+229.92
		+1.00%
SENSEX	19902.07	+384.92
		+1.97%
FTSE 100	6449.04	+11.54
		+0.18%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.543	2.532
CND.   30 Year Bond	3.096	3.079
U.S.   10 Year Bond	2.6082	2.6155
U.S.   30 Year Bond	3.7083	3.6987

Currencies

BOC Close	Today	Previous
Canadian $	0.96832	0.96749
US   $	1.03272	1.03360
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40651	0.71098
US  $	1.36200	0.73421

Commodities

Gold	Close	Previous
London Gold   Fix	1317.25	1317.05
Oil	Close	Previous
WTI Crude Future	103.59	104.10
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 3 (Bloomberg) — Canadian stocks fell, sending the benchmark index to a three-week low, as BlackBerry Ltd. slumped and the U.S. government shutdown extended to a third day.

BlackBerry, the smartphone maker looking to sell itself, lost 3.6 percent to pace declines among technology stocks.

WestJet Airlines Ltd. dropped 2.5 percent as load factor slipped in September. Valeant Pharmaceuticals International Inc. rose 1.4 percent after receiving approvals for products in the U.S. and Canada. Agrium Inc. added 0.7 percent after naming a successor for its retiring chief executive officer.

The Standard & Poor’s/TSX Composite Index fell 103.88 points, or 0.8 percent, to 12,735.12 at 4 p.m. in Toronto, the lowest close since Sept. 13. The index has gained 2.4 percent this year for the second-worst performance among developed markets, ahead of only Singapore.

“Markets are in a wait-and-see approach to see what’s happening in the U.S. and that really determines what happens in Canada,” said Anish Chopra, fund manager with TD Asset Management Inc. in Toronto. His firm manages about C$216 billion ($209 billion). “In the past they’ve been able to get to last- minute deals. In this case it might be more of a comprehensive package that includes the debt ceiling. The problem is the ceiling may not be exactly Oct. 17, it could be later and that’s a long way away.”

The first face-to-face talks between U.S. President Barack Obama and congressional leaders failed to break the budget logjam as a partial U.S. government shutdown entered its third day. The Oval Office meeting yesterday evening ended with both sides reiterating their positions and the points they’ve been making for days, increasing the possibility for a prolonged standoff over the government shutdown and raising the U.S. debt limit.

WestJet declined 2.5 percent to C$25.41 as industrial stocks retreated 0.9 percent as a group. Nine of 10 industries in the S&P/TSX fell. Trading volume was in line with the 30-day average.

WestJet, based in Calgary, reported a September load factor of 76.6 percent, compared with a record 79.1 percent in the same period last year, the company said in a statement. Load factor is a measure of airline efficiency relative to capacity.

BlackBerry dropped 3.6 percent to C$7.97, the lowest close in almost a year. Pierre Ferragu, analyst with Sanford C. Bernstein, cut hi rating for the stock to underperform, the equivalent of a sell.

Fairfax Financial Holdings Ltd., which has a tentative $4.7 billion offer in place for the struggling smartphone maker, is unlikely to get financing, as BlackBerry’s cash position is worse than expected, Ferragu said.

Imax Corp., the big-screen cinema company, slumped 8.7 percent to C$26.77, the worst decline since July 2011. Analyst David McFadgen of Cormark Securities Inc. lowered his rating for the stock to reduce, the equivalent of sell. Imax has jumped 20 percent this year.

Suncor Energy Inc. slipped 1.3 percent to C$36.32 and Talisman Energy Inc. lost 2.3 percent to C$12.52 as crude fell for a third day this week on concern the U.S. government shutdown will reduce fuel demand.

Valeant Pharmaceuticals gained 1.4 percent to C$114.91, a record high, after the drugmaker’s Bausch and Lomb unit won approval from the U.S. Food and Drug Administration for a monthly disposable contact lens product.

Valeant also secured regulatory approval in Canada for a topical treatment of nail infections caused by fungi.

Agrium, the largest U.S. farm products retailer, added 0.7 percent to C$88.87. The company named Chuck Magro, currently chief operating officer, as the successor to CEO Mike Wilson, effective at the beginning of next year. Wilson plans to retire at the end of the year after 10 years as CEO.

US

By Michael P. Regan and Alex Barinka

Oct. 3 (Bloomberg) — U.S. stocks tumbled as concern grew that a political impasse in Washington over the budget could lead to a recession. Treasuries gained, reversing losses, while gold pared an earlier slide.

The Standard & Poor’s 500 Index fell 0.9 percent to 1,678.66 at 4 p.m. in New York, trimming a loss of as much as 1.4 percent. Trading was about 6 percent higher than the 30-day average. Ten-year Treasury yields decreased one basis point to 2.61 percent after rising three points earlier, while the cost of insuring the debt climbed to an eight-month high. Gold fell for the third time in for days on concern demand is ebbing in China, while the MSCI Emerging Markets Index advanced 0.8 percent as growth in China’s service industries improved.

As a partial government shutdown entered a third day, the Treasury Department warned that a federal default could lead to a recession as bad as the 2008 financial crisis or worse.

President Barack Obama urged House Speaker John Boehner to hold a vote on funding federal operations without strings attached, saying the Republican’s refusal to do so is the only thing standing in the way of reopening of the government. The Institute for Supply Management’s U.S. non-manufacturing index fell to 54.4 last month, below the median economist estimate of 57.

“What we are starting to realize today especially is that this might go on for a while,” Mike Sorrentino, who helps oversee about $3 billion as chief strategist at Global Financial Private Capital LLC, said by phone from Sarasota, Florida. “The debt ceiling is a cause for concern. If we can get through that and we can get through the dysfunction with this government, there will be a much safer road ahead.”

Stocks recovered from their lows of the session after the New York Times reported that House Speaker John Boehner, an Ohio Republican, told colleagues he’s willing to pass bill to avoid default with combination of Republican and Democratic votes. The Times cited an unidentified House Republican.

The government will run out of borrowing authority Oct. 17, according to the Treasury, leaving only cash to pay the bills. A U.S. default caused by Congress failing to raise the $16.7 trillion federal debt limit could have catastrophic consequences that might last decades, Treasury said in a report today.

“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the Treasury said in the report.

“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth — with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the department said in the report.

Another report today showed fewer Americans than forecast filed applications for unemployment benefits last week. Jobless claims rose by 1,000 to 308,000 in the week ended Sept. 28, from a revised 307,000, the Labor Department said. The median forecast of 50 economists surveyed by Bloomberg called for a rise to 315,000.

Gauges of utility, industrial and technology stocks lost at least 1 percent to lead declines in all 10 of the main industry groups in the S&P 500. Boeing Co., Chevron Corp. and DuPont Co. fell at least 2 percent to lead declines in 29 of 30 stocks in the Dow Jones Industrial Average.

Eli Lilly & Co. dropped 3.4 percent after saying it would be “challenging” for the drugmaker to meet its 2014 sales target. United Technologies Corp., a supplier of helicopters and jet engines to the military, retreated 1.2 percent after saying the shutdown would lead to as many as 5,000 temporary layoffs.

The Chicago Board Options Exchange Volatility Index, the benchmark gauge of options prices known as the VIX, jumped 6.4 percent to 17.67, the highest level since June.

The yield on 10-year Treasury notes has retreated from a high for the year of 3.005 percent on Sept. 6. The 10-year average is 3.53 percent.

The cost of insuring against losses on Treasuries rose, with credit-default swaps linked to U.S. government debt increasing almost seven basis points to 42 basis points, the highest since February. That compares with a peak of 56 basis points in July 2011, when a political standoff threatened to shutter programs and delay bond payments.

The amount of debt protected by default swaps has fallen to $3.4 billion dollars from $5.6 billion two years ago and compares with $13 billion of outstanding insurance on German bunds. There are 886 credit-default swaps contracts linked to U.S debt outstanding, according to the Depository Trust & Clearing Corp. There were 56 trades covering a gross $2.1 billion of Treasuries in the week through Sept. 27, compared with 10 trades the week before.

Spain’s 10-year bond yield was little changed at 4.24 percent after jumping six basis points earlier. The government sold 1.18 billion euros ($1.6 billion) of 2023 bonds priced to yield 4.269 percent, the lowest since Sept. 10. Italy’s yield increased one basis point to 4.37 percent.

The dollar weakened against 10 of 16 major peers and the Bloomberg U.S. Dollar Index, a measure of the currency against 10 others, fell for a fifth straight day.

West Texas Intermediate oil slipped 0.8 percent to $103.31 a barrel. Copper, silver and nickel slid at least 0.7 percent to lead the S&P GSCI Index of commodities lower, while soybeans, lean hogs and coffee rose at least 0.8 percent. Gold futures slipped 0.2 percent to $1,317.60 an ounce after losing as much as 1.4 percent.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 1.8 percent, the most in three weeks, as China’s non-manufacturing index rose to the highest level since March last month, according to the National Bureau of Statistics and Federation of Logistics and Purchasing.

The non-manufacturing purchasing managers’ index rose to 55.4 in September from 53.9 in August, the report showed. A number more than 50 indicates an expansion. Benchmark equity gauges in Taiwan, India and Thailand added at least 1.4 percent.

The ringgit climbed 1 percent versus the dollar and the rupee strengthened 1.2 percent.

The Philippine peso advanced 0.7 percent and the main stock index added 0.4 percent, after falling as much as 0.9 percent.

Moody’s Investors Service upgraded the country’s debt rating to investment grade and said the outlook is positive. The yield on the government’s dollar debt due January 2021 fell six basis points to 3.37 percent.

Trading volume for shares in the Stoxx 600 was 11 percent below the 30-day average as Germany marked the German Unity Day holiday.

Finmeccanica SpA, Italy’s largest arms company, climbed 3 percent as Banca Akros upgraded the shares. The stock has rallied 14 percent this week.

 

Have a wonderful evening everyone!

 

Be magnificent!

 

“Education is the most powerful weapon which you can use to change the world.” – Nelson Mandela

As ever,

 

Amanda Bourke

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

 

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5838

 

 

 

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.  Today in history, in 1869, Mahatma Gandhi was born. He was well known for his advocacy of non-violent resistance to fight tyranny and he inspired movements for civil rights and movements for freedom across the world.

“Non-violence is not a garment to be put on and off at will. Its seat is in the heart, and it must be an inseparable part of our being.” – Mahatma Gandhi

Also on this Day:

1870 – Rome was made the capital of Italy.

1950 – “Peanuts,” the comic strip created by Charles M. Schulz, was published for the first time in seven newspapers.

1959 – “The Twilight Zone” debuted on CBS-TV. The show ran for 5 years for a total of 154 episodes.

2001 – The U.S. Postmaster unveiled the “Tribute to America” stamp. The stamp was planned for release the next month.

2001 – NATO, for the first time, invoked a treaty clause that stated that an attack on one member is an attack on all members. The act was in response to the September 11, 2001, terrorist attacks in the United States.

“Happiness is when what you think, what you say, and what you do are in harmony” – Mahatma Ghandi

Photo of the Day:

Indian children dressed like Mahatma Gandhi assemble at an event during Gandhi Jayanti in Ajmer, India. Gandhi Jayanti is the birth anniversary of Gandhi, the father of the nation. Deepak Sharma/AP

Market Closes for October 2^nd, 2013

Market  Index	Close	Change
Dow  Jones	15133.14	-58.56    -0.39%
S&P 500	1693.87	-1.13    -0.07%
NASDAQ	3815.019	-2.963    -0.08%
TSX	12839.00	-8.44
		-0.07%

International Markets

Market  Index	Close	Change
NIKKEI	14170.49	-314.23
		-2.17%
HANG  SENG	22984.48	+124.62
		+0.55%
SENSEX	19517.15	+137.38
		+0.71%
FTSE 100	6437.50	-22.51
		-0.35%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.532	2.556
CND.   30 Year Bond	3.079	3.085
U.S.   10 Year Bond	2.6155	2.6418
U.S.   30 Year Bond	3.6987	3.7083

Currencies

BOC Close	Today	Previous
Canadian $	0.96749	0.96789
US   $	1.03360	1.03317
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40390	0.71230
US  $	1.35826	0.73623

Commodities

Gold	Close	Previous
London Gold   Fix	1317.05	1288.66
Oil	Close	Previous
WTI Crude Future	104.10	102.04
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 2 (Bloomberg) — Canadian stocks fluctuated, after rising the most in almost two weeks yesterday, as gains in gold shares offset a slide in wireless carriers and investors watched for progress in efforts to end a U.S. budget impasse.

BlackBerry Ltd. erased losses after a report said investors have expressed interest in the smartphone maker. BCE Inc., Rogers Communications Inc. and Telus Corp. dropped more than 0.8 percent to pace declines among phone stocks. Semafo Inc. jumped 7.1 percent as gold rebounded. Paladin Energy Ltd. jumped 8.5 percent after reporting cost-cutting plans. Air Canada gained 4.3 percent after winning a pair of slots for flights to a Tokyo airport.

The Standard & Poor’s/TSX Composite Index fell 9.77 points, or 0.1 percent, to 12,837.67 at 2:24 p.m. in Toronto. The index has gained 3.3 percent this year for the third-worst performance among developed markets, ahead of only Hong Kong and Singapore. Trading volume was 12 percent higher than the 30-day average today.

“There was a lot of buying yesterday that was jumping the gun,” Bob Decker, a fund manager with Aurion Capital Management, said in a phone interview from Toronto. His firm manages about C$6 billion ($5.81 billion). “The obvious linkage is what’s happening in Washington isn’t friendly to the economic outlook.”

President Barack Obama summoned the top four leaders of Congress to the White House today for talks on re-opening the U.S. government and raising the debt ceiling.

The U.S. government began shuttering some operations yesterday because of a budget stalemate. Congress now faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17.

A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists, with the costs accelerating if the closing persists.

A private U.S. payrolls report said employment rose a less- than-forecast 166,000 in September, following a revised 159,000 gain in August that was also smaller than estimated, ADP Research Institute said.

BlackBerry was unchanged at C$8.19 after an earlier loss of as much as 5.4 percent. Dow Jones reported that Cerberus Capital Management LP and another investor have expressed interest in the company. Fairfax Financial Holdings Ltd., the largest shareholder of BlackBerry, announced Sept. 23 it was leading a group of investors planning a buyout of the money-losing smartphone maker.

BlackBerry tumbled earlier today after saying it will record costs of about $400 million, four times the amount it originally projected, as it reduces staff by 40 percent and sells off equipment and real estate.

Barrick Gold Corp. climbed 2.4 percent to C$19.04 and Semafo increased 7.1 percent to C$2.41 as gold rebounded from an eight-week low. Gold futures for December delivery rose 2.3 percent to $1,315.80 an ounce in New York, snapping two days of losses.

Canadian Natural Resources Ltd. declined 1.4 percent to C$32.36 and Suncor Energy Inc. slipped 1.2 percent to C$36.72 as energy stocks dropped 0.5 percent as a group.

The U.S. crude production rose last week, the Energy Information Administration said. Output rose to 7.8 million barrels a day in the week ended Sept. 13, the highest level since May 1989.

BCE lost 0.9 percent to C$43.85, Rogers Communications fell 0.9 percent to C$43.95 and Telus retreated 0.8 percent to C$33.93 as telephone stocks dropped the most in the S&P/TSX.

Paladin Energy jumped 8.5 percent to 51 Canadian cents. The company said yesterday it will cut cash costs for 2014 by $23 million, including a 10 percent reduction in board and management base salaries. The company is also pursuing joint venture partners for its undeveloped assets.

Air Canada soared 4.3 percent to C$3.91, headed for the highest close since November 2008. The company, Canada’s largest airline, will get one slot pair for flights to and from Tokyo’s Haneda airport, Japan’s transport ministry said in an e-mailed statement.

US

By Stephen Kirkland and Alex Barinka

Oct. 2 (Bloomberg) — Stocks slid around the world and gold rallied as the U.S. government shutdown entered a second day and a report showed American employers added fewer jobs than forecast. The dollar fell, while the yen and Treasuries rose.

The MSCI All-Country World Index dropped 0.1 percent at 4 p.m. in New York and the Standard & Poor’s 500 Index slipped 0.1 percent, paring an earlier drop of as much as 0.9 percent. Gold and silver jumped more than 2 percent to lead commodities higher, while oil rallied on speculation a pipeline expansion will fuel demand. The 10-year Treasury yield fell three basis points to 2.62 percent. The dollar weakened versus 11 of 16 major currencies, while the yen rose versus 14. The euro and Italian notes rallied.

President Barack Obama summoned the top four leaders of Congress to the White House today for the first high-level talks on reopening the partially shut U.S. government amid few signs of a resolution. Treasury Secretary Jacob J. Lew said the U.S. has begun final extraordinary measures that will be exhausted no later than Oct. 17 to avoid breaching its debt limit. The ECB kept its refinancing rate at 0.5 percent, matching economists’ estimates in a Bloomberg survey.

“It’s all about the lack of progress out of Washington and concerns about the debt ceiling and the government shutdown all being negotiated in one package,” Paul Zemsky, chief investment officer of multi-asset strategies for ING Investment Management, said by phone from New York. His firm oversees $190 billion. “If we fail to reach a debt-ceiling agreement, that could cause a global-type of concern and cause markets to sell off globally.”

The S&P 500 pared yesterday’s 0.8 percent gain as telephone, industrial and health-care shares led declines in six of the 10 main industry groups. The benchmark index has declined 2.3 percent after last reaching a record on Sept. 18 when the Federal Reserve refrained from reducing its stimulus program.

Companies that rely on government contracts helped lead losses today, with United Technologies Corp., Lockheed Martin Corp. and Raytheon Co. slipping at least 1.9 percent.

Monsanto Co. dropped 1 percent as the world’s largest seed company gave a full-year earnings forecast that trailed analyst estimates. Alcoa Inc. slumped 1.8 percent after Deutsche Bank AG lowered its rating on the aluminum producer. Global Payments Inc. rallied 11 percent after boosting its earnings forecast.

Companies increased payrolls by 166,000 in September, figures from ADP Research Institute showed today. The median forecast of 40 economists surveyed by Bloomberg called for an advance of 180,000.

U.S. stocks may reach a new high before dropping by as much as 4 percent in the next four to five weeks, as the S&P 500 forms a rising wedge, according to technical analysts at UBS AG.

While the S&P 500 doesn’t show any bearish divergence in trading indicators such as the NYSE McClellan Oscillator, which measures the moving average of net advancing shares in a market, or the number of stocks above their 20-day moving average, the index may reach another high by mid-October, before falling, Michael Riesner and Marc Mueller wrote in a note dated Oct. 1.

The Stoxx Europe 600 Index fell 0.7 percent for the third decline in four days.

Hochtief AG slumped 7.9 percent after the Sydney Morning Herald reported allegations of corruption at the company’s Australian business. KappAhl AB dropped 9.8 percent after the clothing retailer proposed paying no dividend this financial year. Portugal Telecom SGPS SA jumped 6.5 percent, the most in almost four months, after agreeing to merge with Brazil’s Oi SA to form a network operator with 100 million subscribers.

The MSCI Emerging Markets Index added 0.2 percent, a second straight gain. The Philippine Composite Index jumped 2.7 percent after the Asian Development Bank raised its economic growth forecast for the country, while gauges in Russia and Turkey fell more than 1 percent. Markets in India and China were shut for holidays.

Gold futures jumped 2.7 percent to $1,320.70 an ounce, the first gain in three days, and silver surged 3.4 percent to $21.88 an ounce. West Texas Intermediate oil added 2 percent to $104.10 a barrel after TransCanada Corp. said it expects to complete work on the southern portion of its Keystone pipeline expansion by the end of October.

The 10-year Treasury yield slid as low as 2.59, within one basis point of the lowest level since Aug. 12. The yield is down from the high this year of 3.005 percent on Sept. 6 and compares with the average of 3.53 percent over the past decade.

Treasury market volatility increased by the most in six weeks yesterday. Price swings as measured by the Merrill Lynch Option Volatility Estimate Index jumped 9 percent as the gauge advanced for a fifth day, the longest run of increases in four weeks. The index was at 87.37, versus the average of 69 for the past year.

The cost of insuring against losses on Treasuries fell, with credit-default swaps linked to U.S. government debt rose two basis points to 35.42 basis points, the highest since April.

That compares with a peak of 56 basis points in July 2011, when a political standoff threatened to shutter programs and delay bond payments.

The amount of debt protected by default swaps has fallen to $3.4 billion dollars from $5.6 billion two years ago and compares with $13 billion of outstanding insurance on German bunds. There are 886 credit-default swaps contracts linked to U.S debt outstanding, according to the Depository Trust & Clearing Corp. There were 56 trades covering a gross $2.1 billion of Treasuries in the week through Sept. 27, compared with 10 trades the week before.

Strategists from Bank of America Corp. to Wells Fargo & Co. predict dollar-denominated corporate bonds will outperform stocks this month if political gridlock persists with the government partially shut down this week.

Company debt in the U.S. has gained 1.1 percent since Sept. 17, the day before the Fed surprised investors with its decision to maintain unprecedented economic stimulus. In August 2011, the last time legislators approached a deadline to raise the debt limit, investment grade bonds returned 0.13 percent while U.S. stocks declined 5.4 percent.

Italy’s 10-year bond yield fell five basis points to 4.37 percent. Italian notes gained as Silvio Berlusconi said he’ll back Prime Minister Enrico Letta’s government. The yield on similar-maturity Portuguese notes jumped 18 basis points to 6.77 percent.

The yen appreciated for a second day, gaining 0.7 percent to 97.38 per dollar, while the euro gained 0.4 percent to $1.3586 after European Central Bank President Mario Draghi said the bank is attentive to exchange-rate developments.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

“Live as if you were to die tomorrow. Learn as if you were to live forever.” – Mahatma Ghandi

 

As ever,

 

Karen Parnham

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

 

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

 

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.  As the Thanksgiving weekend is approaching, many people have begun making plans with family and friends for the big turkey dinner! It is always nice to pair a delicious wine with the Thanksgiving feast.  According to an article in the Globe and Mail, here are a few examples of the best wines to toast a turkey with!

Cambria Julia’s Vineyard Pinot Noir 2009 (California)

This is a Pinot from California. It has a cinnoman taste behind the fruit with also a hint of dark chocolate. It is a very nice wine for turkey, with or without cranberry sauce.

San Pio Valpolicella Ripasso Classico Superiore 2010 (Italy)

This wine has a very fruity taste with a smooth texture, complemented by herbs and black pepper.

Château des Charmes Aligoté 2010 (Ontario)

This type of wine is light and medium bodied. It is dry and crisp, with flavours of green apple, orange and pear, with an almost spritzy finish.

Produttori Vini Manduria Riserva Salice Salentino 2008 (Italy)

This wine is southern-Italian red, it has a dark fruit and chocolate flavour set against juicy acidity and subtle spice. It would pair well with turkey or a lamb roast.

Sandhill Chardonnay 2010 (British Columbia)

This a medium-bodied and well-balanced wine. This white wine carries flavours of peach, lightly toasted oak and subtle brown butter with a fresh, lime acidity.

Enjoy!

Today in History:

1908 – The Model T automobile was introduced by Henry Ford. The purchase price of the car was $850.

1933 – Babe Ruth made his final pitching appearance. He pitched all nine innings and hit a home run in the 5th inning.

1962 – Johnny Carson began hosting the “Tonight” show on NBC-TV. He stayed with the show for 29 years. Jack Paar was the previous host.

1964 – The Free Speech Movement was started at the University of California at Berkeley.

1971 – Walt Disney World opened in Orlando, FL.

1994 – The U.S. and Japan avoided a trade war by reaching a series of trade agreements

“Challenges are what make life interesting and overcoming them is what makes life meaningful” – Joshua J. Marine

Photos of the Day:

The sun rises over Washington DC. Kevin Lamarque/Reuters

People board a US-made car, used as a private collective taxi, as it rains in Havana September 30th. Collective taxis, also known as “almendron” (big nutshell), have established routes around or near Havana, picking up and dropping off passengers along the way. Desmond Boylan/Reuters

Market Closes for October 1^st, 2013

Market  Index	Close	Change
Dow  Jones	15191.70	+62.03    +0.41%
S&P 500	1695.00	+13.45    +0.80%
NASDAQ	3817.982	+46.503    +1.23%
TSX	12847.44	+60.25
		+0.47%

International Markets

Market  Index	Close	Change
NIKKEI	14484.72	+28.92
		+0.20%
HANG  SENG	22859.86	-347.18
		-1.50%
SENSEX	19517.15	+137.38
		+0.71%
FTSE 100	6460.01	-2.21
		-0.03%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.556	2.543
CND.   30 Year Bond	3.085	3.072
U.S.   10 Year Bond	2.6418	2.6100
U.S.   30 Year Bond	3.7083	3.6847

Currencies

BOC Close	Today	Previous
Canadian $	0.96789	0.96960
US   $	1.03317	1.03135
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39738	0.71563
US  $	1.35251	0.73936

Commodities

Gold	Close	Previous
London Gold   Fix	1288.66	1329.00
Oil	Close	Previous
WTI Crude Future	102.04	102.33
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 1 (Bloomberg) — Canadian stocks rose, after the biggest quarterly advance in a year, as investors speculated the impact of the first U.S. government shutdown in 17 years would be limited.

Air Canada increased 3.4 percent to pace gains among industrial stocks. Valeant Pharmaceuticals International Inc. climbed 3.2 percent after one of its units agreed to a licensing deal for a skin product. Airboss of America Corp. surged 9.1 percent after agreeing to acquire Flexible Products Co. Semafo Inc. and Barrick Gold Corp. dropped more than 3.4 percent as the price of gold slumped below $1,300 to a seven-week low.

The Standard & Poor’s/TSX Composite Index rose 38.63 points, or 0.3 percent, to 12,825.82 at 2:05 p.m. in Toronto. The index rallied 5.4 percent in the last quarter, the best quarterly gain in a year. Trading volume was 19 percent higher than the 30-day average today.

“Part of it may be the market has priced in a short shutdown of the U.S. government, but if it’s extended and you run into the debt impasse as well it could get messy,” said Irwin Michael, portfolio manager with ABC Funds in Toronto. The firm manages about C$800 million ($775 million). “I’m a little surprised New York and Toronto are up because gold is down over $35 but the banks are up, so that may be a bit of an antidote. Investors want to get through one roadblock at a time so hopefully the shutdown will be short.”

The U.S. government started a shutdown that will idle as many as 800,000 federal workers as Republicans and Democrats failed to negotiate a resolution over spending legislation.

Congress now faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17.

“It would be political suicide for the Republicans to risk being seen as pushing the shutdown beyond October,” said Avery Shenfeld, chief economist with CIBC World Markets, in a note to clients. “Markets could still become more fretful if we actually cross the debt ceiling deadline, but ultimately any market moves would be reversed as the crisis passed.”

National Bank of Canada gained 0.7 percent to C$85.69 and Bank of Montreal rose 0.6 percent to C$69.14. The S&P/TSX Financials Index added 0.4 percent, headed for the highest close in more than five years.

Pacific Rubiales Energy Corp. climbed 4.5 percent to C$21.25 and Talisman Energy Inc. increased 3.6 percent to C$12.25 as energy stocks headed for the highest closing level since July.

Crude for November delivery slipped 1 percent to $101.29 a barrel in New York for a third day of declines.

“Crude remains above $100. Oil companies will do quite well in this environment if you believe the economy is slowly improving,” Michael said.

Encana Corp. rose 1.2 percent to C$18.01 after restructuring its senior management team. Greg Pardy, analyst with Royal Bank of Canada, said in a note the changes are “positive” as establishing senior leadership is important to Encana’s game plan.

Valeant Pharmaceuticals jumped 3.2 percent to C$110.83, a record high, after unit Obagi Medical Products said yesterday it has acquired a global exclusive license to market a skin lightening compound from Sirona Biochem Corp.

Air Canada, the top-performing stock in the S&P/TSX this year, climbed 3.4 percent to C$3.65 as industrial shares added 1.3 percent as a group. Air Canada, the nation’s largest airline, has jumped 109 percent this year.

Airboss, a rubber-based products maker, soared 9.1 percent to C$7.19, the highest since July 2011. The company said yesterday it will acquire Flexible Products in a deal worth about $51 million.

Semafo sank 8.9 percent to C$2.26 and Barrick Gold retreated 3.4 percent to C$18.61 as gold for December delivery tumbled 3 percent to $1,286.80 an ounce in New York. Gold has slumped 24 percent this year, headed for the first annual loss since 2000.

US

By Claudia Carpenter and Nikolaj Gammeltoft

Oct. 1 (Bloomberg) — Stocks rebounded from yesterday’s slide as investors speculated the economic impact from the shutdown of the U.S. government will be limited and counteracted by Federal Reserve stimulus. Treasuries fell as gold tumbled and the dollar recovered from early losses.

The Standard & Poor’s 500 Index advanced 0.8 percent to 1,695.02 at 4 p.m. in New York after the benchmark index retreated 2.6 percent from its last record on Sept. 18. The S&P GSCI gauge of 24 commodities declined 0.5 percent as precious and industrial metals led losses, with gold futures tumbling 3.1 percent to $1,286.10 an ounce. Treasury 10-year yields rose three basis points to 2.64 percent. The Bloomberg U.S. Dollar Index recovered from an early decline to trade little changed.

Congress’s failure to pass a budget closed the government for the first time in 17 years, setting the stage for a debate on raising the U.S. debt ceiling within three weeks. The Bank of Japan’s Tankan survey on business confidence rose to the highest level in almost six years. A report on U.S. manufacturing showed faster-than-forecast growth and factory output in the 17-nation euro area expanded for a third month.

“The Fed is looking at this too and seeing how it may hurt economic growth, so their tapering plans are getting delayed,” Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $16.6 billion, said by phone. “That would be a positive for stocks.”

The partial shutdown will put as many as 800,000 federal employees out of work today, halting some government services after Congress failed to break a partisan deadlock.  A government shutdown or failure to raise the debt limit “could have very serious consequences” for the economy and policy makers will have to take that into account, Fed Chairman Ben S. Bernanke said Sept. 18 after the central bank unexpectedly refrained from reducing its bond purchases.

An extended government stoppage may prevent the release of jobs data on Oct. 4 that is closely watched for clues to Fed policy.

The standoff that may be a buying opportunity for stock investors, if history is any guide. The S&P 500 has risen 11 percent on average in the 12 months following past government shutdowns, according to data compiled by Bloomberg on instances since 1976. That compares with an average return of 9 percent over 12 months. In all the cases, the U.S. equity benchmark was higher by the end of the next two years.

The S&P 500 rebounded today after falling in seven of the previous eight sessions and closing at the lowest level since Sept. 9 yesterday. The benchmark gauge rose 4.7 percent last quarter and closed at a record of 1,725.52 on Sept. 18. The MSCI All-Country World Index of global shares dropped 0.8 percent yesterday, the most since Aug. 27, to trim its quarterly gain to 7.4 percent.

Among stocks moving in the U.S., Merck & Co. jumped 2.4 percent after the company announced an overhaul that will eliminate 8,500 workers. Walgreen Co. rose 4.5 percent as profit increased 86 percent after its customer-loyalty card boosted sales. Under Armour Inc. increased 4.1 percent as JPMorgan Chase & Co. upgraded the maker of workout clothing. Ford Motor Co. added 1.9 percent after posting a surprise sales gain in September.

The Institute for Supply Management’s index unexpectedly rose to 56.2, the strongest since April 2011, from 55.7 a month earlier. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 55.

The Stoxx Europe 600 Index rose 0.8 percent after falling to the lowest level in almost three weeks yesterday. Telecom Italia SpA advanced 5.2 percent after surging a similar amount yesterday amid speculation Chief Executive Officer Franco Bernabe will resign. Goldman Sachs Group Inc. reinstated coverage of the phone company with a buy recommendation.

Unilever slid 2.8 percent after the second-largest consumer- goods maker said sales growth slowed in the last quarter.

In Japan, confidence among large manufacturers rose to the highest level since the early stages of the global credit crisis in 2007, with the quarterly Tankan index for big manufacturers rising to 12 in September from 4 in June, the BOJ said today. Euro-area manufacturing was 51.1 in September compared with 51.4 in August, London-based Market Economics said today. A reading above 50 indicates growth.

The dollar recovered after falling to the weakest level in 19 months against the Swiss franc, trading up 0.1 percent at 90.55 centimes after reaching 89.93. The U.S. currency was little changed at $1.3531 per euro after sliding to $1.3588, the weakest since Feb. 6. The pound erased almost all of this year’s 8.9 percent decline against the greenback and the yen strengthened 0.4 percent to 97.83 per dollar.

The Aussie surged 0.9 percent to 93.98 U.S. cents. Sweden’s krona jumped as a report showed manufacturing expanded at the fastest pace in more than two years.

Spain’s 10-year bond yield fell 13 basis points to 4.17 percent and Portugal’s dropped nine basis points to 6.59 percent.

The MSCI Emerging Markets Index rose 0.7 percent, increasing for the first time in six days after capping its first quarterly gain this year.

The Borsa Istanbul National 100 Index climbed 2.7 percent, the biggest gain in emerging markets, and Turkey’s two-year benchmark notes snapped six days of losses while the lira strengthened. The nation’s manufacturing PMI rose to 54 last month from 50.9 in August, according to data from HSBC Holdings Plc and Markit Economics today.

Indonesia’s JCI Index added 0.7 percent after the country reported an unexpected trade surplus in August, compared with the forecast $810 million deficit in a Bloomberg survey.

Gold, lead, silver and zinc each lost more than 2 percent to lead declines in 18 of the 24 commodities tracked by the S&P GSCI Index. Crude oil fell 0.3 percent to $102.04 a barrel in New York, the lowest level in almost three months. A government report tomorrow may show crude supplies rose last week as refineries idled units for seasonal maintenance, according to a Bloomberg survey.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

“Seven Deadly Sins
Wealth without work
Pleasure without conscience
Science without humanity
Knowledge without character
Politics without principle
Commerce without morality
Worship without sacrifice.”
― Mahatma Gandhi

 

As ever,

 

Karen Parnham

Assistant to Carolann Steinhoff

Queensbury Securities Inc.

 

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5828