Month: October 2013

Dear Friends,

Tangents:

As Carolann is out of the office this afternoon, I will be writing the newsletter on her behalf.  Storm season has arrived in Victoria! The last few days here have had high winds and heavy downpours! I thought I would share this poem called “Rainfall” as it is fitting to the type of day we are experiencing!

Rainfall

From out the west, where darkling storm-clouds float,

The ‘waking wind pipes soft its rising note’.

From out the west, o’erhung with fringes grey,

The wind preludes with sighs its roundelay,

Then blowing, singing, piping, laughing loud,

It scurries on before the grey storm-cloud;

Across the hollow and along the hill

It whips and whirls among the maples, till

With boughs upbent, and green of leaves blown wide,

The silver shines upon their underside.

A gusty freshening of humid air,

With showers laden, and with fragrance rare;

And now a little sprinkle, with a dash

Of great cool drops that fall with sudden splash;

Then over field and hollow, grass and grain,

The loud, crisp whiteness of the nearing rain.

Unknown

Today in History:

1947 – The World Series was televised for the first time. The sponsors only paid $65,000 for the entire series between the Brooklyn Dodgers and the New York Yankees.

1954 – The U.S. Navy commissioned the Nautilus submarine at Groton, CT. It was the first atomic-powered vessel. The submarine had been launched on January 21, 1954.

1982 – “Cheers” began an 11-year run on NBC-TV.

1984 – Mike Witt became only the 11th pitcher to throw a perfect game in major league baseball.

1994 – The space shuttle Endeavor took off on an 11-day mission. Part of the mission was to use a radar instrument to map remote areas of the Earth.

“Two roads diverged in a wood, and I took the one less traveled by, and that has made all the difference” – Robert Frost

Photos of the Day:

Russian sailing ship ‘Mir’ participates in a parade for the Mediterranean Tall Ships regatta in Toulon, France. About 37 tall ships have gathered for the competition which ended with a parade in the bay of Toulon. Jean-Paul Pelissier/Reuters

Flamingos stand in a lagoon near Messolongi, in western Greece. The lagoon is part of protected wetlands, that also includes marshes and ponds. The migratory flamingoes use the lagoon and salt evaporation ponds of Messolongi during the summer months before moving further south for the winter. Dimitri Messinis/AP

Market Closes for September 30^th, 2013

Market  Index	Close	Change
Dow  Jones	15129.67	-128.57    -0.84%
S&P 500	1681.55	-10.20    -0.60%
NASDAQ	3771.479	-10.115    -0.27%
TSX	12787.19	-56.89
		-0.44%

International Markets

Market  Index	Close	Change
NIKKEI	14455.80	-304.27
		-2.06%
HANG  SENG	22859.86	-347.18
		-1.50%
SENSEX	19379.77	-347.50
		-1.76%
FTSE 100	6462.22	-50.44
		-0.77%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.543	2.557
CND.   30 Year Bond	3.072	3.080
U.S.   10 Year Bond	2.6100	2.6245
U.S.   30 Year Bond	3.6847	3.6847

Currencies

BOC Close	Today	Previous
Canadian $	0.96960	0.97056
US   $	1.03135	1.03033
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39482	0.71694
US  $	1.35243	0.73941

Commodities

Gold	Close	Previous
London Gold   Fix	1329.00	1336.42
Oil	Close	Previous
WTI Crude Future	102.33	103.03
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam and Lu Wang

Canadian stocks fell, paring the biggest quarterly gain in a year, as a likely U.S. government shutdown weighed on global equities, overshadowing data showing a pickup in growth in the world’s 11th-largest economy.

Pacific Rubiales Energy Corp. fell 5.6 percent after agreeing to buy Petrominerales Ltd. for C$935 million ($912 million). Brookfield Office Properties Inc. jumped 14 percent after Brookfield Property Partners LP offered to buy the shares it doesn’t already own in the office landlord.

The Standard & Poor’s/TSX Composite Index declined 56.89 points, or 0.4 percent, to 12,787.19 at 4 p.m. in Toronto. The benchmark gauge for Canadian equities jumped 5.4 percent this quarter, its best performance since September 2012, and is up 2.8 percent in 2013. Trading volume was 10 percent above the 30- day average.

“No one expects the largest economy in the world to have a gridlock when it comes to the parliament and it’s unfortunate that it’s a very fractious environment,” Irwin Michael, portfolio manager with ABC Funds in Toronto, said in a phone interview. His firm manages C$800 million. “If there is no extended shutdown in the U.S. government, we expect the North American economy to start to become a little more positive in direction.”

The deadlocked U.S. Congress headed into the final hours before the first partial government shutdown in 17 years without any signs of averting widespread furloughs of government workers. The U.S. is Canada’s largest trading partner.

All 24 of the world’s developed stock markets retreated today, with the benchmark U.S. equity gauge sliding 0.6 percent.

A shutdown of the government would reduce fourth-quarter economic growth in the U.S. by as much as 1.4 percentage points depending on its length, economists at Moody’s Analytics Inc. estimated last week.

In Canada, gross domestic product grew 0.6 percent to an annualized C$1.58 trillion, the biggest gain since July 2011, as the economy recovered from a construction strike in Quebec and flooding in Alberta, Statistics Canada said today in Ottawa.

Consumer sentiment climbed to the highest in more than two years as employment rose and the housing market remained buoyant, according to the new Bloomberg Nanos Canadian Confidence Index.

All 10 main industries in the S&P/TSX fell. Health-care stocks slid 1.2 percent for the worst performance as Catamaran Corp. dropped 3.4 percent to C$47.32, its lowest close in 2013.

Pacific Rubiales slipped 5.6 percent to C$20.34. The company agreed to buy Petrominerales as the world’s fastest- growing major crude producer seeks to reduce transport costs.

Petrominerales shareholders will receive C$11 a share and one share in a newly formed exploration and production company, Pacific Rubiales said it will also take on C$640 million in debt, including convertible bonds.

Shares of Petrominerales surged 51 percent to C$11.70.

Brookfield Office paced the gains, surging 14 percent to C$19.74, a five-year high. Brookfield Property, which currently owns 51 percent of Brookfield Office, said it’s planning a tender offer of the landlord’s shares for stock or cash at a value of $19.34 each. The acquisition will create a combined entity with 330 million square feet (31 million square meters) of office, retail and industrial space on four continents, the company said.

SNC-Lavalin Group Inc. rose 2.4 percent to C$42.35.

Canada’s biggest engineering and construction company said it hired Morgan Stanley and Royal Bank of Canada to help sell an equity stake in its AltaLink power-transmission unit.

US

By Emma O’Brien and Nikolaj Gammeltoft

U.S. index futures rose, contracts on Asian equity gauges were mixed and crude oil held declines as investors awaited a potential shutdown of America’s government.

Global stocks fell the most in a month yesterday, paring the biggest quarterly jump since the start of 2012.

Standard & Poor’s 500 Index futures added 0.2 percent by 7:18 a.m. in Tokyo, after the measure lost 0.6 percent in the U.S. Contracts on Australia’s S&P/ASX 200 Index rose 0.1 percent, while Nikkei 225 Stock Average futures traded at 14,535 in Chicago after closing at 14,460 in Japan. The MSCI All Country World Index sank 0.8 percent yesterday. The Bloomberg U.S. Dollar Index lost 0.1 percent in New York and West Texas Intermediate oil held near an almost three-month low.

Hours before a midnight deadline to keep the U.S. government open, President Barack Obama urged lawmakers to pass a funding bill not tied to his health-care legislation for the sake of the economy. China may say manufacturing growth rose a third month today, after a smaller-than-expected increase in a private gauge cast doubt on the strength of the economic rebound. Japan issues data on manufacturing and employment, while Australia will probably keep key interest rates on hold.

“We are at the mercy of whatever develops in Washington,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in an interview. “An attempt to prevent a shutdown is not totally unexpected, but some agreement will be better than none.”

Republicans and Democrats remained at odds over whether to tie any changes to the 2010 Affordable Care Act to a short-term extension of government funding as the shutdown deadline approached. The Senate voted 54-46 yesterday to reject the House of Representative’s latest plan, in a party-line move that puts the pressure back on House Republicans.

Senate Republicans floated the idea to extend by one week the funding deadline to avert a shutdown. Senate Majority Leader Harry Reid said no. Democrats urged House Speaker John Boehner to allow a vote on a spending bill without conditions.

Even if the budget fight is resolved, lawmakers would immediately move to the next fiscal dispute over raising the $16.7 trillion debt ceiling. MSCI’s All-Country Index rose 7.4 percent last quarter, the most since the first three months of 2012.

Closing the government would cut fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, according to economists from Moody’s Analytics Inc. to Economic Outlook Group LLC. Obama said failing to fund government operations would “throw a wrench into the gears of the economy,” in comments from the White House.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York declined 0.6 percent to the lowest close since Sept. 12. Markets in Hong Kong are shut today, while trading in mainland China is closed until Oct. 8 for the National Day holiday break.

China’s official manufacturing purchasing managers’ index may deliver a reading of 51.6 for September, up from 51 in August, according to the median estimate in a Bloomberg survey of 30 economists. Fifty is the threshold between expansion and contraction. HSBC Holdings Plc and Markit Economics’ PMI rose to 50.2, from 50.1 in August, below a preliminary estimate of 51.2, according to data released yesterday.

Premier Li Keqiang said in a speech yesterday that the world’s second-largest economy can meet its main targets for this year. The economy is “stabilizing in a good trend” Li said, as cited by China National Radio in an address before the holidays. The economy probably grew 7.7 percent in the third quarter, according to the median forecast in a Bloomberg survey last month, up from an estimate of 7.5 percent in August.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails.  Explore, Dream, Discover” – Mark Twain

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

 

 

Dear Friends,

Tangents:

51 years ago today, on September 27^th, 1962, Rachel Carson’s book, Silent Spring, was published, spurring the environmental movement.

Today, The Wall Street Journal, featured this article:

U.N. Says Humans Are ‘Extremely Likely’ Behind Global Warming Report Says Long-Term Planetary Warming Trend Likely to Continue

By GAUTAM NAIK And JOHANNES LEDEL

A U.N. report on climate change said that while human activity is “extremely likely” to blame for global warming, temperatures aren’t expected to rise as quickly as previously thought. Gunnar Myhre, coordinating lead author for the IPCC, explains the details to WSJ’s Gautam Naik.

STOCKHOLM—A landmark United Nations report issued Friday reaffirmed the growing belief that human activity is the dominant cause behind a rise in global temperatures and reiterated that a long-term planetary warming trend is expected to continue.

The report could have a significant impact on policy-making because it underscores that human activity is pushing atmospheric carbon-dioxide concentrations toward levels whereby the surface temperatures may increase by 2 degrees Celsius. Many governments have pledged to try to keep the temperature rise below that level, which they believe is a threshold beyond which the consequences of climate change will be severe.

Between 1750 and 2011, human activity released 545 gigatons of carbon dioxide, the main greenhouse gas. If a total of 1,000 gigatons is emitted, there is a one-in-three chance that the 2-degree limit will be breached, said Corinne Le Quere, a geophysicist at the University of East Anglia in the U.K. and a lead author of a chapter in the U.N. report.

“We’re eating up our allocation very rapidly. At the current rate, we’ll hit the 1,000-gigaton-level sometime between 2040 and 2050,” she added.

Of all the carbon dioxide emitted so far, two-thirds comes from burning fossil fuels and one-third from land-use change and deforestation. However, in the last decade, 90% of the carbon dioxide released has come from burning fossil fuels, according to Dr. Le Quere.

A summary of the report, the work of more than 800 scientists working for the U.N.’s Intergovernmental Panel on Climate Change over several years, said there is a 95% likelihood that humans are behind global warming, up from the 90% level of certainty in a similar 2007 report.

Enlarge Image

An iceberg floats through the water on July 20, 2013, in Ilulissat, Greenland

Getty Images

The IPCC noted that air and oceans are getting warmer, ice and snow is less plentiful, and sea levels are rising.

“Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over the millennia,” the report says.

The IPCC said the past three decades have been successively warmer at the Earth’s surface that any preceding decade since 1850. That is “a robust signal of a changing planet,” said IPCC co-chair Thomas Stocker at a news conference in Stockholm.

At the same time, the IPCC has moderated projections of rising temperatures for the end of this century. The latest report outlines four scenarios, with the worst scenario predicting a possible increase of 4.8 degrees Celsius toward the end of the century. The prior report had outlined six scenarios, with the worst scenario peaking above 6 degrees Celsius.

Associated Press

Kali, an orphaned male polar bear cub from Point Lay, Alaska, explores the enclosure outside the infirmary at the Alaska Zoo, in a photo taken on March 22, 2013.

IPCC reports draw the attention of governments, environmentalists and key industries such as the oil, gas and coal sector because they provide the scientific backing for many policies on climate change. The narrower range of possible scenarios could help scientists and policy makers fine-tune their responses.

The summary previews a full report that will be issued next week as part of the group’s fifth assessment, which will come in several phases. It is considered a more definitive document than its predecessors because it incorporates more recent scientific findings, a larger set of satellite, oceanic and terrestrial measurements and more robust computer modeling.

“Observations of changes in the climate system are based on multiple lines of independent evidence,” said Qin Dahe, co-chair of the IPCC working group.

The IPCC’s credibility took a hit after some shoddy data made its way into the 2007 report, including a claim that Himalayan glaciers would melt by 2035.

More recently, climate change science has come under attack because of a flattening of temperatures over the past 15 years, even though greenhouse gas emissions have continued to rise.

Scientists at the IPCC played down the apparent slowdown, arguing that a 15-year period is too short to reflect long-term climate trends.

Among the factors that could be behind the apparent slowdown are a cooling of the Pacific Ocean, a natural change in the 11-year solar cycle and nearly a dozen volcanic eruptions since 2005, which can spew sunlight-blocking particles into the atmosphere.

“We couldn’t attribute exactly what was the contribution from each of these factors,” said Dr. Le Quere. “But the overall picture is that the earth is continuing to take up heat even when the surface is warming slowly.”

The newest measurements suggest that current carbon-dioxide concentration in the earth’s atmosphere is 40% above preindustrial levels. Such levels are “unprecedented in at least the last 800,000 years,” the report said. The 2007 report had calculated the same figure but only for the past 650,000 years.

Arctic sea-ice cover has been declining for several decades. The IPCC now says it is “very likely” that the ice cover will continue to shrink and thin, and there will be a reduction in glacier volumes and declines in spring snow cover in the Northern hemisphere. This past summer, Arctic sea ice levels registered an increase, but that partly reflected the record-low levels achieved a year earlier.

The U.N. report also concludes that the global mean sea level will “very likely exceed that observed during 1971 through 2010.”

Corrections & Amplifications
Thomas Stocker said the global surface temperature change for the end of the 21st century is projected to be likely to exceed 1.5 degrees Celsius, which is about 2.7 Fahrenheit. A previous version of this article gave an incorrect conversion of Celsius to Fahrenheit.

Those who dwell, as scientists or laymen, among the beauties and mysteries of the earth are never alone or weary of life. – Rachel Carson, 1907-1964

Market Closes for September 27^th, 2013

Market  Index	Close	Change
Dow  Jones	15258.24	-70.06    -0.46%
S&P 500	1691.72	-6.95    -0.41%
NASDAQ	3781.594	-5.833    -0.15%
TSX	12846.01	+4.39
		+0.03%

International Markets

Market  Index	Close	Change
NIKKEI	14760.07	-39.05
		-0.26%
HANG  SENG	23207.04	+82.01
		+0.35%
SENSEX	19727.27	-166.58
		-0.84%
FTSE 100	6512.66	-52.93
		+0.81%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.557	2.590
CND.   30 Year Bond	3.080	3.109
U.S.   10 Year Bond	2.6245	2.6498
U.S.   30 Year Bond	3.6847	3.6951

Currencies

BOC Close	Today	Previous
Canadian $	0.97056	0.96992
US   $	1.03033	1.03102
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39322	0.71776
US  $	1.35221	0.73953

Commodities

Gold	Close	Previous
London Gold   Fix	1336.42	1323.90
Oil	Close	Previous
WTI Crude Future	103.03	102.86
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Sept. 27 (Bloomberg) — Canadian stocks rose, with the benchmark gauge poised for the best quarterly performance in a year, as gains in consumer-staples companies and oil producers offset a decline in phone shares amid concern that a U.S. budget impasse may shut down the government.

Trilogy Energy Corp. soared 11 percent after providing an update on its operations in Alberta. Telus Corp. and Rogers Communications Inc. slipped at least 1 percent after an analyst with Canadian Imperial Bank of Commerce lowered his price targets for the nation’s largest wireless carriers due to regulatory risks. BlackBerry Ltd. increased 0.7 percent to snap three days of losses after reporting second-quarter earnings.

The Standard & Poor’s/TSX Composite Index rose 2.46 points, or less than 0.1 percent, to 12,844.08 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has jumped 5.9 percent this quarter, the biggest gain since September 2012, and is up 3.3 percent in 2013.

“There’s a lot of anxiety going into the weekend,” said Andrew Pyle, fund manager with ScotiaMcLeod Inc. in Peterborough, Ontario. He manages about C$210 million ($204 million). “Nobody should be naive out there, to think if we get a worst-case scenario with respect to the U.S. budget impasse that Canada comes out of this unscathed. You could see some very heavy losses in the TSX.”

The U.S. Senate voted to finance the government through Nov. 15, sending the bill to the House and setting up a weekend of negotiations and brinkmanship three days before federal spending authority runs out and a few weeks until the country reaches its borrowing limit.

President Barack Obama said in a televised statement that Congress’s failure to approve funding would have a destabilizing effect on the economy. Democrats and Republicans can’t agree on the inclusion of funds for Obama’s health-care law in the bill.

Energy stocks added 0.1 percent as a group, as six of 10 industries in the S&P/TSX rose. Trading volume was 20 percent below the 30-day average.

Trilogy Energy soared 11 percent to C$28.80 after reporting an operating update for its Montney and Duvernay oil projects.

The company said unexpected plant outages reduced third-quarter volumes to about 31,000 barrels of oil equivalent per day, and anticipates levels returning to normal in the fourth quarter.

Athabasca Oil Corp., which is seeking a joint-venture partner for its Duvernay holdings, jumped 9.3 percent to C$7.97, the most in seven weeks.

BlackBerry added 0.7 percent to C$8.28, the first increase in six days. The smartphone maker reported more complete second- quarter earnings, including a loss of 47 cents a share from continuing operations and a 45 percent plunge in sales to $1.57 billion, after disclosing preliminary results on Sept. 20.

“The slight upside likely reflects that there was nothing hidden in the results,” said Bill Kreher, an analyst with Edward Jones & Co., in a phone interview from St. Louis.

Jean Coutu Group Inc. rose 1.8 percent to C$18.29 to pace gains among consumer-staples companies.

Telus dropped 1.2 percent to C$34.52 and Rogers retreated 1 percent to C$44.64. Analyst Robert Bek with CIBC World Markets cut his price targets for the two wireless carriers by 11 percent and 17 percent, respectively, due to the Canadian government’s increasing attention to the space.

Canada’s largest carriers signaled on Sept. 23 their intent to bid in a wireless spectrum auction in January, with no sign of interest from major foreign companies after Verizon Communications Inc. said earlier this month it wouldn’t enter the Canadian market.

Teck Resources Ltd., Canada’s largest diversified miner, dropped 4.1 percent to C$28.10 following two days of gains.

Paretosh Misra, analyst with Morgan Stanley, said the company may move ahead with an oil sands project, as investing in energy assets is an “emerging trend” among miners.

Martinrea International Inc., a metal auto-parts maker, slumped 10 percent to C$10.96 after the company said it received a press release discussing a claim from Nat Rea, former vice chairman of the company. Martinrea has not received the claim or reviewed the allegations and will “respond appropriately in due course.”

Rea, who was fired in June 2012, said he filed a statement of claim alleging breaches of fiduciary duties related to several deals involving suppliers and customers and is calling for a new board of directors. The claims have not been proven in court.

US

By Lu Wang

Sept. 27 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its first weekly drop since August, as concern grew that the budget impasse will hurt economic growth in the world’s largest economy.

Accenture Plc slid 2.4 percent on a disappointing profit projection. United Continental Holdings Inc. dropped 9.3 as the world’s largest carrier cut its third-quarter forecast for a benchmark revenue gauge. J.C. Penney Co. sank 13 percent after the retailer began selling 84 million shares to raise as much as $932 million in cash. Nike Inc. surged 4.7 percent as fiscal first-quarter profit topped analysts’ estimates.

The S&P 500 fell 0.4 percent to 1,691.75 at 4 p.m. in New York. The Dow Jones Industrial Average lost 70.06 points, or 0.5 percent to 15,258.24. About 5.5 billion shares changed hands on U.S. exchanges, 5.7 percent below the three-month average.

“There is nothing in the economic data I can see that tells me I should worry about a recession,” Sam Wardwell, an investment strategist at Pioneer Investments in Boston, said in a phone interview. His firm oversees about $217 billion. “A government shutdown would be a fiscal cliff that’s big enough in this case to drive the economy into a recession and I think that the market is increasingly worried about that risk because the risk seems to be rising.”

The S&P 500 dropped six of the past seven sessions, including a 1.1 percent slide this week, amid the Congressional impasse over the budget that threatens to shut down the government. The index rose 0.3 percent yesterday, snapping its longest losing streak this year, after an unexpected drop in jobless-benefit claims.

The U.S. Senate voted today to finance the government through Nov. 15 after removing language to choke off funding for the health care law. The bill now returns to the House, setting up a weekend of negotiating and brinkmanship that could continue until spending authority expires on Sept. 30.

Congress must also reach a deal to avoid hitting the limit on the government’s ability to borrow. Treasury Secretary Jacob J. Lew said the extraordinary measures being used to avoid breaching the debt ceiling “will be exhausted no later than Oct. 17.” Failure to increase the debt cap could lead to a downgrade of the government’s credit rating.

President Barack Obama said that Congress’s failure to approve funding to keep the government open and an increase in the debt ceiling would have a destabilizing effect on the economy.

A federal shutdown would cut fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists said. The Office of Management and Budget estimated 30 days of shutdowns in 1995 and 1996 cost more than $1.4 billion, or $2.09 billion in today’s dollars.

Today’s slide trimmed the S&P 500’s third-quarter rally to 5.3 percent. That compared with a 0.7 percent loss in U.S. Treasuries, according to data compiled by Bloomberg and Bank of America Corp. Investors should expect $23.5 billion in selling of equities and buying of bonds as pension fund managers rebalance their portfolios at the end of the third quarter, Ramon Verastegui, head of engineering and strategy at Societe Generale SA in New York, wrote in a Sept. 25 note.

“The momentum isn’t terrible, but has basically been progressively weakening,” Jim Welsh, a market strategist who helps oversee $5.7 billion at Forward Management LLC in San Francisco, said in a phone interview. “The market is vulnerable to the largest correction so far this year, and it just comes down to what kind of news shows up, whether it turns out to be because of Congress, or whatever.”

The S&P 500’s biggest retreat in 2013 was the 5.8 percent slide that started May 21, when Federal Reserve Chairman Ben S.

Bernanke first suggested the central bank could cut monetary stimulus this year. The gauge is down 2 percent since closing at a record Sept. 18, after the Fed unexpectedly refrained from slowing its monthly bond purchases. The stimulus has helped the S&P 500 rally as much as 155 percent from its 2009 low.

Investors have been weighing data to determine whether economic growth is strong enough to prompt the Fed to begin tapering at its next meeting in October. Fed Bank of New York President William C. Dudley said today he wants to see more momentum in the economy before making cuts.

The showdown in Washington “creates uncertainty about the fiscal outlook and may exert a restraining influence on household and business spending,” he said.

A report today indicated consumer spending rose in August for a fourth consecutive month, as a pickup in incomes bolstered the biggest part of the economy. Separate data showed confidence among consumers declined to a five-month low in September as Americans’ views on the economy dimmed.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 10 percent to 15.46. The measure has advanced 18 percent this week.

Eight out of 10 S&P 500 main industries fell today as materials and telephone shares sank at least 1 percent for the worst performance.

International Paper Co. dropped 3.9 percent to $45.44, its eighth retreat in the past nine session to lead declines among raw-materials producers. The world’s largest maker of office paper could be forced to shut down some capacity as the industry faces an increasing supply amid sluggish demand, Mark Wilde, an analyst with Deutsche Bank AG, said in a note. He cut the stock’s rating to hold from buy.

Accenture slipped 2.4 percent to $74.09. The world’s second-largest technology-consulting company forecast earnings that may fall short of analysts’ estimates amid increasing competition from Indian providers.

International Business Machines Corp., the largest technology-services provider, lost 1.7 percent to $186.92.

United Continental slid 9.3 percent to $30.91. Revenue for each seat flown a mile will increase 2.5 to 3.5 percentage points, according to a filing yesterday, a range that the carrier said was about 1 percentage point less than previous projections. It cited lower fares on some overseas flights operated in conjunction with other airlines and rivals adding seats on China routes.

J.C. Penney lost 13 percent to $9.05, extending its weekly loss to 30 percent. The stock has plunged the past five days to its lowest since 2000 after a Goldman Sachs Inc. debt analyst said cash will be strained this quarter. J.C. Penney said today it will end the fiscal year with about $1.3 billion in liquidity, excluding the offer proceeds.

International Game Technology dropped 7 percent to $19.23.

The world’s largest maker of slot machines was cut to hold from buy at Deutsche Bank. The stock’s price has reflected expectations for increasing returns to shareholders while the gaming industry is likely to become “more challenged,” analyst Carlo Santarelli wrote in a note to clients.

Nektar Therapeutics tumbled 24 percent, its biggest slide in five years, to $10.54. The company said a study of the slow- release painkiller NKTR-181 showed it failed to meet the primary endpoint of a Phase 2 study, citing an “unusual lack” of a gain in pain scores for patients taking a placebo.

Nike gained 4.7 percent, the most in the Dow, to $73.64.

The world’s largest sporting-goods company posted fiscal first- quarter profit that topped analysts’ estimates after demand for running and basketball shoes helped North American sales.

Microsoft Corp. climbed 1.5 percent to $33.27 for the second-biggest gain in the Dow.

Cerner Corp. rallied 8 percent, the most in the S&P 500, to a record $52.61. The provider of electronic medical records said it reached a multiyear agreement to provide services to Intermountain Healthcare.

 

Have a wonderful weekend everyone.

 

Be magnificent!

 

Sleep is temporary death.  Death is longer sleep.

If the man dies while yet alive, he need not grieve over others’ death.

One’s experience is evident with or without the body, as in waking, dream, and sleep.

Then why should one desire continuance of the bodily shackles?

Let man find out his undying Self and die and be immortal and happy.

Sri Ramana Maharshi, 1879-1950

As ever,

 

Carolann

 

And that’s the way it is.

-Walter Cronkite, 1916-2009

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:

On this day in 1969, The Beatles released their last recorded album, Abbey Road.

And on September 26^th, 1960, the first presidential debate was broadcast – Richard Nixon and John F. Kennedy.  Polls indicated that those who listened to the debate on radio, thought Nixon won the debate and those who watched the debate on television thought Kennedy won.

Life imitates art far more than art imitates life.  –Oscar Wilde.

Spend time outdoors:  “Why?  We spend most of our time indoors.  Now researchers have found chemicals from indoor air someplace  we might not want it: our blood.  The research is in the journal Environmental Science and Technology.  A variety of the chemicals used to make everything from carpets to couches resist stains showed up in the serum of 31 Boston office workers.  The researchers found the highest levels of these chemicals in the air inside new buildings and, subsequently, in the blood of those who worked there.”  –from Scientific American.

Photos of the day

Bees fly between sunflowers at the Agricenter in Memphis, Tenn., Sept. 25. Jim Weber/The Commercial Appeal/AP

A man leaves ‘Flower Power,’ a vintage camping caravan that was converted into a hotel room at the Base Camp Bonn Young Hostel, the world’s first camping trailer and Pullman coach hostel, in Bonn, Germany, Sept. 20, 2013. Wolfgang Rattay/Reuters

Market Closes for September 26^th, 2013

Market  Index	Close	Change
Dow  Jones	15328.30	+55.04    +0.36%
S&P 500	1698.67	+5.90    +0.35%
NASDAQ	3787.427	+26.329    +0.70%
TSX	12841.62	+4.91
		+0.04%

International Markets

Market  Index	Close	Change
NIKKEI	14799.12	+178.59
		+1.22%
HANG  SENG	23125.03	-84.60
		-0.36%
SENSEX	19893.85	+37.61
		+0.19%
FTSE 100	6565.59	+14.06
		+0.21%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.590	2.574
CND.   30 Year Bond	3.109	3.101
U.S.   10 Year Bond	2.6498	2.6189
U.S.   30 Year Bond	3.6951	3.6585

Currencies

BOC Close	Today	Previous
Canadian $	0.96992	0.96929
US   $	1.03102	1.03168
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39074	0.71904
US  $	1.34890	0.74134

Commodities

Gold	Close	Previous
London Gold   Fix	1323.90	1333.50
Oil	Close	Previous
WTI Crude Future	103.03	102.76
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam and Aubrey Pringle

Sept. 26 (Bloomberg) — Canadian stocks rose for the third time in four days as data showing growth in the U.S. economy offset concern that a budget impasse in Washington could hurt the recovery.

Teck Resources Ltd., Canada’s largest diversified miner, gained 2.5 percent as copper rose the most in a week. Husky Energy Inc. climbed 4.1 percent after reporting “significant discoveries” in the Atlantic. Valeant Pharmaceuticals International Inc. added 0.7 percent after an analyst with Guggenheim Securities LLC initiated coverage of the stock with a buy rating. Alacer Gold Corp. dropped 6.1 percent as Credit Suisse reduced its rating on the shares and gold prices sank.

The Standard & Poor’s/TSX Composite Index rose 4.91 points, or less than 0.1 percent, to 12,841.62 at 4 p.m. in Toronto, trimming an earlier advance of as much as 0.5 percent. The benchmark Canadian equity gauge has surged 5.9 percent this quarter and is up 3.3 percent in 2013.

“The U.S. GDP and jobless claims data, those are the two reasons” for the market’s gains, said Ian Nakamoto, director of research with MacDougall MacDougall and MacTier Inc. in Toronto.

The firm manages about $4 billion. “The guys in Washington will find a compromise, the question is the impact on consumer confidence. My sense is the consumer will stay on.”

The U.S. economy grew at a 2.5 percent annualized pace in the second quarter, after expanding 1.1 percent in the first, a sign the country was weathering federal budget cutbacks and higher taxes. Fewer Americans applied for unemployment benefits last week, with claims dropping by 5,000 to 305,000.

Stocks pared an earlier rally as U.S. House Speaker John Boehner said President Barack Obama can’t avoid negotiations on raising the government’s debt limit, and he doesn’t expect his chamber to pass the stopgap spending bill anticipated from the Senate. The Senate likely will not vote on the bill until this weekend, leaving the House one full workday to act before spending authority for the federal government expires on Oct. 1.

Energy shares rose 0.4 percent as a group, as six out of 10 industries in the S&P/TSX advanced. Trading volume was 18 percent lower than the 30-day average.

Husky Energy climbed 4.1 percent to C$30.26 after the Calgary-based company said it discovered oil in the Flemish Pass Basin off the Atlantic coast of Canada.

Legacy Oil & Gas Inc. rose 1.8 percent to C$6.71 and Imperial Oil Ltd. gained 1.5 percent to C$45.54 as crude prices advanced for the first time in six days.

Teck Resources rose 2.5 percent to C$29.29 as copper jumped 1.1 percent, the most in a week.

Valeant, the biggest drugmaker in Canada, increased 0.7 percent to C$106.41. Louise Chen, analyst with Guggenheim, initiated coverage of Valeant with a buy rating.

Raw-materials companies had the biggest decline among the 10 main industries in the S&P TSX, dropping 1 percent as gold for December delivery sank 0.9 percent. Of 24 companies in the S&P/TSX Gold Index, 23 fell.

Semafo Inc. tumbled 6.9 percent to C$2.42. Alacer Gold sank 6.1 percent to C$3.21 after Credit Suisse cut the stock’s rating to underperform from outperform.

BlackBerry Ltd. lost 0.6 percent to C$8.22, the lowest close since November, for a third day of declines since agreeing to sell itself on Sept. 23 to a group led by Fairfax Financial Holdings Ltd. in a tentative deal worth $9 a share or $4.7 billion. The agreement is subject to securing financing and due diligence.

The smartphone maker has slumped 24 percent in the past five days and is scheduled to officially report second-quarter earnings tomorrow. The company on Sept. 20 disclosed worse-than- estimated earnings and smartphone sales and plans to fire 4,500 workers.

US

By Lu Wang and Sofia Horta e Costa

Sept. 26 (Bloomberg) — U.S. stocks rose, halting the longest slump this year for the Standard & Poor’s 500 Index, as an unexpected drop in jobless claims overshadowed concern that a budget impasse could hurt economic growth.

EBay Inc. jumped 4.5 percent after agreeing to buy Braintree for $800 million to expand its mobile-transactions business. Bed Bath & Beyond Inc. added 4.5 percent after raising the low end of its earnings forecast. Eli Lilly & Co. fell 3 percent as its experimental drug ramucirumab failed to meet its goals for treating breast cancer in a late-stage trial. Hertz Global Holdings Inc. sank 16 percent after cutting its forecasts.

The S&P 500 rose 0.3 percent to 1,698.67 at 4 p.m. in New York, extending its third-quarter rally to 5.8 percent. The Dow Jones Industrial Average climbed 55.04 points, or 0.4 percent, to 15,328.30. About 5.3 billion shares changed hands on U.S. exchanges, 8.6 percent below the three-month average.

“Economic news have been reasonably good,” Mark Foster, chief investment officer who oversees $620 million at Kirr Marbach & Co. in Columbus, Indiana, said in a telephone interview. “On the negative side, we have the short-term budget issues and debt ceiling. I don’t think that’ll end up being a major issue. People just get somewhat immune to all of that.”

The benchmark index declined 1.9 percent during a five-day losing streak through yesterday, retreating from an all-time high on Sept. 18, when the Federal Reserve refrained from reducing the pace of stimulus. Investors have been watching economic reports to help determine whether growth is sufficient for the central bank to begin cutting bond purchases at its next meeting in October.

A Labor Department report today showed the number of Americans filing applications for unemployment benefits unexpectedly fell last week, indicating further progress in the labor market. The economy expanded at faster pace in the second quarter from the previous three months, with gross domestic product rising at a 2.5 percent annualized rate, the Commerce Department said.

A separate report added to signs that rising mortgage rates may have slowed housing market momentum. Fewer Americans signed contracts in August to buy previously owned homes, figures from the National Association of Realtors showed. Data yesterday indicated purchases of new homes rose in August, capping the weakest two months this year.

Investors are also weighing whether lawmakers can avoid a looming government shutdown, with the S&P 500 paring an earlier gain of as much as 0.7 percent after House Speaker John Boehner, an Ohio Republican, said he doesn’t expect his chamber to pass a stopgap spending bill expected from the Senate. He also said he does not expect a government shutdown to happen.

The Senate likely will not vote on its version of the bill until this weekend, leaving the House just one full workday to act before spending authority for the federal government expires on Oct. 1. The House and Senate are at odds over language that withdraws funding for the 2010 health-care law.

The Office of Management and Budget estimated 30 days of shutdowns in 1995 and 1996 cost more than $1.4 billion, or $2.09 billion in today’s dollars.

On another fiscal front, Treasury Secretary Jacob J. Lew told Congress yesterday that the extraordinary measures being used to avoid breaching the debt ceiling “will be exhausted no later than Oct. 17.” Failure to increase the debt limit could lead to a downgrade of the U.S. government’s credit rating.

The S&P 500’s losing streak through yesterday was the longest since Dec. 28, when lawmakers wrangled over impending automatic spending cuts and tax increases known as the fiscal cliff. The index dropped as much as 3.4 percent over the last two weeks of 2012 and then jumped 5 percent in January for the best start to a year since 1997 after a last-minute budget deal was struck.

“Washington has been dragging their feet as of late but eventually they’ll be forced into action,” said Patrick Spencer, head of U.S. equity sales for Robert W. Baird & Co. in London. “We’ve been down this road before. It’s quite natural and healthy to have pull-backs in a bull market. We’ll shift into a stronger gear with a settlement on the budget and what I think will be a very positive earnings season.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, rose 0.4 percent to 14.06 today. The measure has fallen 17 percent this quarter.

Nine of 10 main groups in the S&P 500 advanced, with phone stocks and producers of consumer-discretionary products rising 0.9 percent. Nike Inc., which reported better-than-estimated quarterly earnings after the market’s close today, rose the most in the Dow, climbing 2.1 percent to $70.34. The stock added 5.6 percent to $74.30 at 4:34 p.m. in New York.

EBay climbed 4.5 percent to $56.64, its biggest rally since January. The owner of electronic-payments service PayPal said it will bolster that business by buying Braintree, a global payments platform that works with online and mobile-only startups such as room-rental service Airbnb and online restaurant-reservation company OpenTable Inc.

Bed Bath & Beyond gained 4.5 percent to $77.54. The retailer predicted full-year adjusted earnings per share of $4.88 to $5.01, up from a previous range of $4.84 to $5.01.

Air Products & Chemicals Inc. added 2.3 percent to $109.78.

The industrial gas producer said Chairman and Chief Executive Officer John E. McGlade will leave and it will add three independent directors, less than two months after investor William Ackman’s Pershing Square Capital Management LP became the company’s largest shareholder.

J.C. Penney Co. climbed 3 percent to $10.42, halting a six- day slide that peaked with a 15 percent plunge yesterday. The department-store chain repeated that it expects positive sales trends in the second half of the year, with some key items and sizes helping sales at stores and online. The shares have plunged 47 percent this year amid concern that it is running out of cash.

Eli Lilly fell 3 percent to $51.04. Lilly is counting on experimental drugs for Alzheimer’s, cancer and diabetes to revive growth as the company loses patent protection on some of its top products, including the antidepressant Cymbalta.

Hertz sank 16 percent, the most since May 2009, to $21.63.

The rental-car company trimmed its forecast for full-year revenue and profit, citing weaker than anticipated car rentals at U.S. airports.

Jabil Circuit Inc. lost 9.9 percent to $21.62 for the biggest retreat in the S&P 500. The electronics company that counts BlackBerry Ltd. as its second-largest customer said yesterday it will probably disengage from the struggling Canadian device maker in coming months. Jabil also forecast first-quarter profit below analyst estimates.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

All of our selfish impulses, all of our personal desires, obscure our true vision of the soul,

as they only point out our shabby ego.  When we are aware of our soul,

we perceive the inner life that surpasses our ego

and that has profound affinities with the Whole.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

The long arm of coincidence.

-Haddon Chambers, 1860-1921

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:

I just read the Dow News Wire that Oracle Team US won the America’s cup: this has to rank as one of the biggest comebacks in sports history.  Wow, when we were in San Francisco watching the races a couple of weekends ago, the Kiwis had only to win one more race for the cup, the Americans were down 10.  Just goes to show – never give up.

Getty Images

Oracle Team USA in action

I laughed at Yachtsman Jimmy Spithill’s endearing comment, “You’re a rooster one day; a feather duster the next.”

Every exit is an entry somewhere. – Tom Stoppard

Photos of the day

Britain’s Bradley Wiggins rides past the Basilica of Santa Maria del Fiore, on his way to clinching the silver medal in the men’s individual time trial event, at the road cycling world championships, in Florence, Italy. Fabrizio Giovannozzi/AP

Pittsburgh Pirates left fielder Starling Marte (l.), center fielder Andrew McCutchen (c.) and right fielder Marlon Byrd (r.) celebrate after beating the Chicago Cubs 8-2 during their MLB National League baseball game in Chicago. Jeff Haynes/Reuters

Baseball breaks your heart.  It is designed to break your heart.  The game begins in the spring, when everything else begins again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains come, it stops and leaves you to face the fall alone. – A. Bartlett Giamatti, Major League Baseball Commissioner, 1938-1989.

Market Closes for September 25^th, 2013

Market  Index	Close	Change
Dow  Jones	15273.26	-61.33    -0.40%
S&P 500	1692.77	-4.65    -0.27%
NASDAQ	3761.099	-7.155    -0.19%
TSX	12836.71	-12.18
		-0.09%

International Markets

Market  Index	Close	Change
NIKKEI	14620.53	-112.08
		-0.76%
HANG  SENG	23209.63	+30.59
		+0.13%
SENSEX	19856.24	-63.97
		-0.32%
FTSE 100	6551.53	-19.93
		-0.30%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.574	2.599
CND.   30 Year Bond	3.101	3.124
U.S.   10 Year Bond	2.6189	2.6552
U.S.   30 Year Bond	3.6585	3.6698

Currencies

BOC Close	Today	Previous
Canadian $	0.96929	0.97056
US   $	1.03168	1.03033
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39524	0.71672
US  $	1.35239	0.73943

Commodities

Gold	Close	Previous
London Gold   Fix	1333.50	1323.30
Oil	Close	Previous
WTI Crude Future	102.76	103.17
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Sept. 25 (Bloomberg) — Canadian stocks fell, after a two- day advance, as declines among telephone and consumer-staples companies offset a rally among raw-material shares amid the first gain in commodities prices in five days.

Torex Gold Resources Inc. and Yamana Gold Inc. gained at least 3 percent as the price of the metal snapped three days of losses. Teck Resources Ltd., Canada’s largest diversified miner, rose 1.4 percent as base metals prices advanced. Telus Corp. and BCE Inc. fell more than 1 percent as phone stocks retreated for the first time in nine days. BlackBerry Ltd. slumped 5.8 percent as investors continued to digest a potential $4.7 billion takeover by Fairfax Financial Holdings Ltd.

The Standard & Poor’s/TSX Composite Index fell 12.18 points, or 0.1 percent, to 12,836.71 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has surged 5.8 percent this quarter and is up 3.2 percent in 2013.

“Today, the market has gold going for it,” said Keith Richards, fund manager with ValueTrend Wealth Management in Barrie, Ontario. His firm manages about C$110 million ($107 million). “The banks have supported the TSX, but they’re maybe a bit overbought, so it’s time to take a pause. I don’t see what else could really drive the TSX. It needs a catalyst and there isn’t one right now.”

Raw-materials stocks gained 1.4 percent as a group, the only increase among 10 industries in the S&P/TSX. Trading volume was 2.8 percent lower than the 30-day average.

“From time to time you see rebounds there in commodities, but the prices are stuck in a range,” said Stephen Gauthier, chief investment officer with Fin-XO Securities Inc. in Montreal. His firm manages about C$550 million. “What you need to see that change is stronger growth worldwide. That’s what people are waiting for.”

Alongside improvements in Europe and China, economic data in the U.S. will need to show signs beyond growth in real estate, Gauthier said. A report today showed U.S. new home sales in August climbed 7.9 percent compared with a revised 14 percent plunge in July.

Alacer Gold Corp. surged 9.6 percent to C$3.42. The gold producer, which is selling mines in Australia, said yesterday it expects to decide on an expansion at its Copler operation in Turkey by the end of 2014.

Torex Gold added 4.3 percent to C$1.46 and Yamana Gold rose 3 percent to C$11.01. Gold for December delivery increased 1.5 percent to $1,336.20 an ounce in New York. The price had declined 3.9 percent in the past three sessions.

Endeavour Silver Corp. climbed 6.6 percent to C$4.71 as silver futures rose 1.4 percent, snapping a three-day, 7.3 percent slide.

Teck Resources rose 1.4 percent to C$28.58 and First Quantum Minerals Ltd. rallied 1 percent to C$19.27 as base metals including copper, aluminum, zinc, tin and lead advanced.

Stockpiles of copper monitored by the London Metal Exchange fell for a 15th session.

Telus lost 2.2 percent to C$34.78 and BCE Inc. fell 1 percent to C$44.13 as telephone stocks slumped 1.1 percent, the first decline since Sept. 12. Telus, BCE and Rogers Communications Inc. have signaled their intent to bid in a wireless spectrum auction that didn’t include any submissions from major foreign companies.

CGI Group Inc. rose 0.3 percent to C$36.85, a record high, after the technology services company said it has signed an eight-year deal worth 75 million British pounds ($121 million) with Smart DCC Ltd. to develop and operate a system to link gas and electricity meters for utility companies.

BlackBerry, the smartphone maker, slumped 5.8 percent to C$8.27, the lowest close since November 2012.

On Sept. 23, BlackBerry said it had agreed to a tentative deal to sell itself to a group led by Fairfax, the largest company shareholder. The sale, for $9 a share in cash, is still subject to several conditions including securing financing and due diligence.

BlackBerry has plunged 24 percent in the past four days, since announcing on Sept. 20 worse-than-estimated earnings and smartphone sales for its second quarter and plans to fire 4,500 employees.

Consumer-staples shares slid 0.7 percent. Maple Leaf Foods Inc., the Canadian food processor, retreated 2.3 percent to C$13 for its fifth straight loss. Alimentation Couche-Tard Inc., the largest public convenience-store operator in North America, tumbled 2.4 percent to C$63.77.

US

By Lu Wang

Sept. 25 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its longest slump this year, as Wal- Mart Stores Inc. retreated and concern grew that a political showdown over government spending poses a threat to growth.

Wal-Mart lost 1.5 percent after the retailer told suppliers it’s cutting orders this quarter and next to address rising inventories. J.C. Penney Co. slumped 15 percent as Goldman Sachs Group Inc. said the department-store chain’s liquidity will be strained. Stryker Corp. slipped 2.9 percent on an agreement to buy Mako Surgical Corp. for $1.65 billion. Noble Corp. added 1.8 percent after the offshore rig contractor said it plans to spin off about half its fleet.

The S&P 500 fell 0.3 percent to 1,692.77 at 4 p.m. in New York, its fifth straight losing session. The Dow Jones Industrial Average, which includes Wal-Mart, slid 61.33 points, or 0.4 percent, to 15,273.26. About 5.9 billion shares changed hands on U.S. exchanges, in-line with the three-month average.

“There is a lot of noise that’s disruptive to people doing anything with a great deal of confidence,” Don Hodges, founder of Dallas-based Hodges Funds, said in a phone interview,referring to budget negotiations. His firm manages about $1.3 billion. “Anytime the market is as strong as it’s been in the last few weeks, you just know that it’s capable of having a pullback that shakes off people a little bit.”

The S&P 500 has dropped 1.9 percent in the past five days as investors weighed whether a looming government shutdown will hamper economic growth. The current losing streak is the index’s longest since Dec. 28, when lawmakers wrangled over impending automatic spending cuts and tax increases known as the fiscal cliff.

The Senate likely will not vote on a stopgap spending bill until this weekend, leaving the House just one full workday to act before spending authority for the federal government expires on Oct. 1. The House and Senate are at odds over language that withdraws funding for the 2010 health-care law.

On another fiscal front, Treasury Secretary Jacob J. Lew told Congress that the extraordinary measures being used to avoid breaching the debt ceiling “will be exhausted no later than Oct. 17.” Failure to increase the debt limit could lead to a downgrade of the U.S. government’s credit rating.

The wrangling comes as Americans are losing faith in the nation’s economic recovery, according to a Sept. 20-23 Bloomberg National Poll. Forty-four percent of poll respondents say they expect the economy, which has expanded for nine consecutive quarters, to remain about the same over the next year, while 28 percent see it weakening.

Investors have also been scrutinizing data to determine whether economic growth is robust enough for the Federal Reserve to begin paring back its $85 billion in monthly bond purchases.

A report from the Commerce Department today indicated purchases of new homes rose in August, capping the weakest two months this year, showing the fallout from mortgage rates at a two-year high is cooling the real-estate rebound. Demand slumped 14 percent in July. Separate government data showed orders for equipment such as computers and machinery climbed less than forecast in August.

The central bank’s decision Sept. 18 to refrain from slowing stimulus sent the S&P 500 to a record close of 1,725.52.

The gauge has retreated every session since the decision, as policy makers send mixed signals on the timing of the central bank’s next move. Fed Bank of St. Louis President James Bullard said Sept. 20 that tapering could start in October. William Dudley, head of the New York Fed, said yesterday any cut would depend on the economy’s performance.

“There has been some push and pull on whether this is just a temporary waiting for the taper to actually start, or whether lower for longer is the new reality,” Diane Jaffee, the New York-based group managing director for U.S. equities who oversees about $6.4 billion in assets at TCW Group Inc., said in a phone interview.

The S&P 500 has rallied 5.7 percent in the third quarter while Treasuries retreated 0.1 percent through yesterday, according to data compiled by Bloomberg and Bank of America Corp. The divergence will cause some funds to sell stocks and buy bonds to rebalance asset allocations. UBS AG strategist Boris Rjavinski projects “significant” outflows from U.S. equities into Treasuries, with as much as $41 billion in stocks being sold and up to $22 billion of fixed-income investments purchased.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, lost 0.5 percent to 14.01. The measure has fallen 22 percent this year.

Eight of 10 S&P 500 main industries fell as consumer- staples and health-care stocks dropped at least 0.7 percent.

Wal-Mart lost 1.5 percent to $74.65, the steepest drop in the Dow. Last week, an ordering manager at the company’s Bentonville, Arkansas, headquarters described the pullback in orders in an e-mail to a supplier, who said others got similar messages.

Merchandise has been piling up because consumers have been spending less freely than Wal-Mart projected, and the company has forfeited some sales because it doesn’t have enough workers in stores to keep shelves adequately stocked.

“We’ve seen a little bit of weakening in the strength of the consumer recently and Wal-Mart could be a good example of that, where people are starting to pull back on marginal purchases,” James W. Gaul, a fund manager at Boston Advisors LLC, which oversees about $2.3 billion from Boston, said by phone.

J.C. Penney sank 15 percent to $10.12, the lowest since December 2000. The stock has tumbled 49 percent in 2013.

“Weak fundamentals, inventory rebuilding, and an underperforming home department will likely challenge J.C. Penney’s liquidity levels in the third quarter,” Kristen McDuffy, at New York-based analyst for Goldman, wrote yesterday in a note to clients.

Stryker fell 2.9 percent to $68.79. The second-largest seller of orthopedic devices agreed to buy Mako for $30 a share to add technology for robot-assisted surgeries. Mako surged 82 percent to $29.46.

Carnival Corp. lost 5.3 percent to $32.70, extending a 7.7 percent drop yesterday to put the stock at its lowest since June. The world’s largest cruise-ship operator forecast an unexpected loss for the fourth quarter, and Morgan Stanley cut its recommendation to underweight, similar to a sell rating, from equal weight. Bank of America Corp. lowered its rating to neutral from buy.

JPMorgan Chase & Co. rallied 2.7 percent, the most in the Dow, to $51.70, snapping a two-day losing streak that pushed the stock down 4.7 percent.

The lender resumed settlement talks with the U.S. after authorities prepared to sue the bank yesterday in California federal court alleging it misrepresented the quality of mortgage-backed securities it sold from 2005 to 2007, a person familiar with the matter said.

A settlement may include $7 billion in cash and $4 billion for consumer relief, the Associated Press reported, citing an official familiar with ongoing negotiations among federal and state officials.

Noble advanced 1.8 percent to $38.60. The contractor said the planned spinoff will let it focus on higher-priced rigs working in deeper waters. An initial public offering of as much as 20 percent of the new company’s shares may precede a tax-free distribution of the new stock to existing Noble investors.

Facebook Inc. rallied 2.1 percent to $49.46, the stock’s sixth gain in the past seven sessions, with each advance setting a fresh record. Canaccord Financial Inc. initiated coverage of the social media company with a buy rating. Facebook is “very early in generating revenue from its enormous user base,” Michael Graham wrote in a note, giving the stock a price target of $60.

U.S. stocks are delivering the best risk-adjusted returns among the world’s biggest developed markets as a third straight year of earnings growth produces steadier gains. The S&P 500 has risen 1.9 percent in 2013 when adjusted for price swings, the top advance among 24 of the largest developed nations, according to the data compiled by Bloomberg. The performance exceeds Japan, where prices have surged almost twice as much this year, as a measure of U.S. volatility reached a six-year low.

U.S. equities have provided more stable returns as China’s economy expands at the slowest pace in at least two decades and Europe faces record joblessness, prompting investors to seek safety in American companies. The Fed’s unprecedented bond purchases and five years of S&P 500 profit growth have helped rebuild investor confidence after the financial crisis and reduce price swings.

“The U.S. continues to be the most resilient economy across the world and its markets have reflected that with the least amount of volatility,” Joseph Tanious, global market strategist for J.P. Morgan Asset Management, said in a phone interview from New York. His firm oversees about $1.5 trillion.

“Earnings growth has continued to hit record highs. There is less skepticism about the long-term potential in U.S. markets.”

 

Have a wonderful evening everyone.

 

Be magnificent!

 

Death is extraordinarily like life,

when we know how to live.

You cannot live without dying.

You cannot live if you do not die

psychologically every minute.

Krishnamurti, 1895-1986

As ever,

 

Carolann

 

Reason only discovers the shortest way: it does not

discover the destination.

-George Bernard Shaw, 1856-1950

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