November 8, 2013 Newsletter

Dear Friends,

Tangents:

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

Remembrance Day

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place: and in the sky
The larks still bravely singing fly
Scarce heard amid the guns below.

We are the dead: Short days ago,
We lived, felt dawn, saw sunset glow,
Loved and were loved: and now we lie
In Flanders fields!

Take up our quarrel with the foe
To you, from failing hands, we throw
The torch: be yours to hold it high
If ye break faith with us who die,
We shall not sleep, though poppies grow
In Flanders fields

“For beautiful eyes, look for the good in others; for beautiful lips, speak only words of kindness; and for poise, walk with the knowledge that you are never alone.”

Audrey Hepburn

Photos of the Day:

The sun casts a shadow and spectral halo effect on clouds as US Secretary of State John Kerry’s aircraft departs Tel Aviv for Geneva. Kerry will meet with Iranian Foreign Minister Mohammad Javad Zarif in Geneva on Friday on the sidelines of the Iranian nuclear talks. Jason Reed/Reuters

The sun rises over the horizon, lighting up the surface of the Tidal Basin near the Jefferson Memorial in Washington at the start of a clear day in the Nation’s Capitol. J. David Ake/AP

Market Closes for November 8^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 8 (Bloomberg) — Canadian stocks rose the most in three weeks as Air Canada reported higher-than-estimated earnings and jobs data beat economists’ forecasts.

Air Canada, the nation’s largest airline, surged 7.2 percent after reducing costs. Manulife Financial Corp., Canada’s largest insurer, increased 2.6 percent for a fourth day of gains. Trilogy Energy Corp. plunged 9.8 percent after reporting a loss as sales declined. Detour Gold Corp. plunged 18 percent after saying it will not meet its 2013 production targets.

Centerra Gold Inc. and HudBay Minerals Inc. sank at least 3.7 percent as gold dropped to a three-week low in New York.

The Standard & Poor’s/TSX Composite Index rose 84.13 points, or 0.6 percent, to 13,378.33 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has advanced 7.6 percent this year, the third-worst performance among global developed markets, ahead of Hong Kong and Singapore.

“Canada’s job numbers were modestly better than expected, so that’s positive,” said Anish Chopra, a fund manager with TD Asset Management Inc. in Toronto. His firm manages about C$216 billion ($206 billion). “It looks like the U.S. economy, at least by employment, has weathered the shutdown quite well. The reaction gold investors are having is this is another data point the Fed will use for tapering.”

The U.S. added 204,000 workers in October, ahead of the median economists’ forecast of 120,000, according to a Labor Department report today. The Federal Reserve has said improvements in employment figures may prompt a reduction, or tapering, of its stimulus program.

Canada’s jobless rate remained at 6.9 percent, the lowest since 2008, as government workers led the third straight month of job gains. Employment rose by 13,200 in October, compared to a median forecast of 11,000 from a Bloomberg survey of economists.

Air Canada jumped 7.2 percent to C$5.99, the highest close in five years, as nine of 10 industries in the S&P/TSX rose.

Trading volume was 16 percent higher compared with the 30-day average.

Air Canada, the best-performing stock in the S&P/TSX in 2013 with a 242 percent advance, reported adjusted earnings of C$1.29 a share, ahead of the C$1.04 average analyst estimate in a Bloomberg survey. The company is working to reduce costs at the carrier by about 15 percent.

Royal Bank of Canada, the nation’s largest lender, rose 0.7 percent to C$70.31 and Toronto-Dominion Bank, the second- largest, increased 0.8 percent to C$96.96. The S&P/TSX Banks Index climbed 0.6 percent to a record.

Housing starts in Canada jumped to the highest level in five months in October, led by construction of multiple-unit projects such as condominiums.

Manulife climbed 2.6 percent to C$19.72 to pace gains among financial stocks. The company has advanced 6.7 percent in the past four days, and yesterday reported rising profit on higher sales of insurance and savings products.

Trilogy Energy sank 9.8 percent to C$26.76, the biggest drop since 2008 on a closing basis, after reporting a loss of 8 Canadian cents a share, compared with 17 cents of earnings a quarter ago. Sales volumes for the third quarter averaged 31,211 barrels of oil equivalent per day, a 16 percent drop from the previous quarter due to field maintenance.

Detour Gold plunged 18 percent to C$6.35, an almost five- year low. The company said in a statement it will not reach its 2013 production target of 270,000 ounces of gold and now forecasts 240,000 to 260,000 ounces.

Centerra Gold slumped 8.8 percent to C$3.54 and HudBay Minerals tumbled 3.7 percent to C$8.42. Gold futures for December delivery declined 1.8 percent to settle at $1,284.60 an ounce in New York, the lowest since Oct. 16.

US

By Lu Wang and Nick Taborek

Nov. 8 (Bloomberg) — U.S. stocks rose, pushing the Dow Jones Industrial Average to a record close, as a better-than- forecast jobs report added to signs growth is strong enough for the economy to withstand a stimulus reduction.

Priceline.com Inc. advanced 4.9 percent after reporting sales that topped analysts’ estimates and promoting Darren Huston to chief executive officer. Gap Inc. climbed 9.8 percent as its profit forecast beat expectations. Groupon Inc. jumped 6.4 percent after posting a narrower-than-estimated loss and agreeing to buy South Korean deals website Ticket Monster Inc. A jump in bond yields boosted insurers and weighed on homebuilders and dividend stocks.

The Standard & Poor’s 500 advanced 1.3 percent to 1,770.60 at 4 p.m. in New York, within two points of its all-time high.

The Dow Jones Industrial Average jumped 167.80 points, or 1.1 percent, to a record 15,761.78, capping its fifth week of gains in a row. About 7 billion shares changed hands on U.S. exchanges today, 15 percent above the three-month average.

“This is good news, this is what we’ve been looking for,” Erik Davidson, the San Francisco-based deputy chief investment officer for Wells Fargo Private Bank, which oversees $170 billion, said by phone. “The one thing that people have been waiting to see is an inflection point in terms of jobs and we’re starting to see that, which is great news.”

The S&P 500 dropped 1.3 percent yesterday as data showing faster-than-expected economic growth fueled speculation that the Fed may scale back stimulus soon. Equities rebounded today as the labor report added to evidence that growth in the world’s largest economy is strengthening.

American employers added 204,000 workers after a revised 163,000 gain in September that was larger than previously estimated, Labor Department figures showed today in Washington.

The increase in payrolls topped the most optimistic forecast in a survey of economists.

The benchmark equity gauge added 0.5 percent in the past five days for a fifth straight week of gains, the longest streak since February. The index has rallied 24 percent in 2013, heading for the best annual gain in a decade, as the central bank kept interest rates low to spur economic growth.

The Fed said last week it needs to see more evidence of sustained improvement before slowing its $85 billion monthly asset purchases. Economists predict the Fed will maintain bond purchases at the current pace until March, according to a Bloomberg survey conducted Oct. 17-18. Policy makers next meet on Dec. 17-18.

“The market is trying to deal with an improvement in the economy that may be offset by higher interest rates,” Greg Woodard, a strategist in Fairport, New York, at Manning & Napier Inc., which has $49.1 billion under management, said in a phone interview. “You see a pullback in some areas of the market that are most sensitive to higher interest rates.”

Benchmark 10-year yields reached the highest level in more than three weeks as the jobs data boosted bets that the Fed may begin paring its stimulus program at its December meeting.

Three rounds of monetary stimulus from the central bank and better-than-expected earnings have driven the S&P 500 up 162 percent from a 12-year low in 2009.

Among 449 S&P 500 companies that have announced results during the earnings season, 75 percent beat analysts’ estimates for profits, data compiled by Bloomberg show. Growth in fourth- quarter earnings will accelerate to 6.2 percent from 4.7 percent in the previous three months, analysts’ projections show.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, slipped 7.3 percent to 12.90. The measure dropped 2.9 percent in the past five days, halting a two-week winning streak.

Eight out of 10 S&P 500 industry groups rose as financial stocks surged 2.3 percent to lead gains. JPMorgan Chase & Co. rallied 4.5 percent to $53.96 for its fastest rise in a year and the biggest increase in the Dow.

Materials and consumer-discretionary companies rallied at least 1.2 percent as a group.

Priceline.com, the largest U.S. online travel agent, gained 4.9 percent to $1,073.20. Third-quarter sales rose 33 percent to $2.27 billion, topping analysts’ average estimate of $2.22 billion, according to data compiled by Bloomberg. Huston, head of Priceline’s Booking.com unit, will take the helm and join the board, ending Jeffery Boyd’s 11-year reign that saw the stock jump 100-fold.

Gap jumped 9.8 percent, the biggest gain since August 2012, to $41.43. The largest U.S. specialty-apparel retailer said it anticipates quarterly profit that surpassed analysts’ estimates, helped by gains in sales.

Groupon added 6.4 percent to $10.11. The e-commerce company reported a third-quarter net loss of $2.58 million, compared with the average $14.3 million loss predicted by analysts. The Chicago-based company also agreed to buy Ticket Monster for $260 million in cash and stock, transforming itself into a service offering thousands of discounts instead of daily deals.

Walt Disney Co. rallied 2.1 percent to $68.58. The world’s largest entertainment company said fiscal fourth-quarter profit rose 12 percent, beating analysts’ estimates as the company’s theme parks and consumer products boosted income.

Nvidia Corp. increased 7 percent to $15.56. The maker of graphics processors reported fiscal third-quarter profit that exceeded analysts’ estimates as revenue from new businesses helped make up for declining personal-computer demand.

MetLife Inc. rallied 5.4 percent to $50.14, the most since August, and Lincoln National Corp. jumped 5.7 percent to $48.76, leading gains among insurers. The firms invest funds from clients in bonds and other assets to back future payouts.

An S&P index of homebuilders slumped 2.7 percent amid concern rising borrowing costs may derail a housing recovery.

All but 10 members of the gauge retreated. Lennar Corp. dropped 4.2 percent to $32.79 while PulteGroup Inc. sank 3.8 percent to $16.85 for the two biggest declines in the S&P 500.

Utility and telephone shares, which offer the highest dividend yield among 10 S&P 500 main industries, were the only groups to decline, as rising bond yields threaten to undermine the demand for equity income. Utilities pay an average 4 percent of their stock prices as dividend while phone companies offer a yield of 4.7 percent.

Twitter Inc. slid 7.2 percent to $41.65 on the second day of trading. The microblogging service surged 73 percent in yesterday’s debut, the biggest day-one jump for an initial public offering of more than $1 billion since 2007, according to data compiled by Bloomberg.

Have a wonderful long 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.