November 13, 2013 Newsletter

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 travelled up to Parksville for a quick weekend getaway!  We stayed at Tigh-na-Mara Resort and at The Beach Club Resort; both beautiful places to stay!  The main attraction of Tigh-Na-Mara was definitely their spa. The Grotto Spa is the number 1 spa in Western Canada and after being there for the weekend, I can definitely see why.  With various relaxation packages, they also have a beautiful 2,500 square foot mineral pool that is designed to emulate a natural stone grotto and is infused with natural minerals and trace elements that help detoxify the body.  This was definitely the highlight in which I recommend.  The Beach Club Resort was equally as beautiful with more modernized rooms; whereas Tigh-Na-Mara was more of a cottage feeling. I encourage you all to check out both of these resorts next time you head up island!

Mineral Pool @ The Grotto Spa

“Old friends pass away, new friends appear. It is just like the days. An old day passes, a new day arrives. The important thing is to make it meaningful: a meaningful friend – or a meaningful day.”

Dalai Lama

Photos of the Day:

Malaysian air force personnel load relief supplies donated by the Malaysian government for victims of Typhoon Haiyan in the Philippines, at the Air Force base in Subang, Malaysia. Foreign governments and agencies have announced a major relief effort to help victims of the Philippine typhoon.

Gondoliers row in an empty Grand Canal in Venice, Italy. Drivers of taxi boats and shipping boats declared a strike against a new law regulating traffic on the Grand Canal, according to local media. Manuel Silvestri/Reuters

Market Closes for November 13^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 13 (Bloomberg) — Canadian stocks rose, halting two days of losses, as gains among lenders and energy producers overshadowed disappointing retailer results while investors weighed the timing of any Federal Reserve stimulus cuts.

Semafo Inc. rallied 8.9 percent after the miner said it received approval to develop two new deposits. Royal Bank of Canada climbed 1.7 percent to pace gains among financial stocks.

Suncor Energy Inc. added 2 percent as crude prices climbed.

Grocery retailers Loblaw Cos. and Metro Inc. tumbled at least 5.7 percent on disappointing earnings. CAE Inc. dropped 0.6 percent as the aviation training company faced declining revenue in its civil and military segments.

The Standard & Poor’s/TSX Composite Index rose 44.62 points, or 0.3 percent, to 13,370.66 at 4 p.m. in Toronto, after declining as much as 0.3 percent earlier. The benchmark Canadian equity gauge has advanced 7.5 percent this year, the third-worst performance among global developed markets, ahead of Hong Kong and Singapore.

“One of the main drivers around the market performance is the comments from the Fed,” said Anish Chopra, fund manager with TD Asset Management Inc. in Toronto. He helps manage C$216 billion ($206 billion) with the firm. “There’s always some uncertainty around tapering, but it looks like tapering could be earlier.”

Fed Bank of Atlanta President Dennis Lockhart said yesterday a paring of U.S. bond purchases “could very well take place” next month. Investors have been watching for clues on when the central bank will begin to reduce monetary support as the economy recovers. The stimulus has helped fuel a global rally in equities.

Eight of 10 groups in the benchmark Canadian index advanced today, with energy and financial shares adding at last 0.5 percent. Trading volume was 7.5 percent above the 30-day average at this time of the day.

Royal Bank rose 1.7 percent to C$71.06, a record close, on trading volume more than four times higher than the three-month average. Bank of Montreal gained 0.9 percent to C$73.44.

Suncor Energy added 2 percent to C$37.23, halting two days of declines. Oil rose 0.9 percent in New York on speculation that increasing refinery profits from making gasoline and heating oil will bolster use of the raw material.

Semafo surged 8.9 percent to C$2.95 for the biggest gain in the S&P/TSX. The company’s chief executive officer said today it would start production at one of the developments in 2014 and in 2015 at the other.

Loblaw sank 7.6 percent to C$44.23, the biggest slide in six years. The nation’s largest grocer now forecasts operating income for 2013 to be flat compared with 2012, due to higher spending amid increasing competition.

Metro retreated 5.7 percent to C$62, the most since November 2008. Revenue of C$2.61 billion fell short of analysts’ estimates of C$2.63 billion and same-store sales slid 1.8 percent.

Canadian grocers are under pressure as bigger U.S. rivals such as Target Corp. and Wal-Mart Stores Inc. expand grocery options in the country.

CAE, the St. Laurent, Quebec-based flight simulator and training company, fell 0.6 percent to C$11.96, paring earlier losses, after reporting second-quarter revenue of C$487.5 million, short of analysts’ estimates of C$536.5 million.

The company also increased its dividend 20 percent, to 6 Canadian cents a share from 5 cents.

First Quantum Minerals Ltd., a copper miner, declined 4.3 percent to C$18.56 as the price of the metal fell the most in 15 weeks. Copper output in China rose to a monthly record in October.

NuVista Energy Ltd. decreased 3.7 percent to C$7.05. The Calgary-based energy company yesterday said it will sell 11 million shares at C$7.10 a share to raise about C$78.1 million. It plans to use the cash to pay down debt and help fund its 2013 and 2014 capital program.

US

By Aubrey Pringle

Nov. 13 (Bloomberg) — U.S. stocks rose, sending benchmark indexes to records, as Macy’s Inc. led a rally among retailers and investors speculated the Federal Reserve’s Janet Yellen will continue the central bank’s stimulus policy as chairman.

Macy’s jumped 9.4 percent as better-than-estimated earnings fueled optimism about the holiday shopping season. Tesla Motors Inc. advanced 0.7 percent as co-founder Elon Musk said the company won’t recall its Model S after fires involving the electric sedan. Cisco Systems Inc. dropped 7 percent after the market close as revenue fell short of forecasts.

The S&P 500 gained 0.8 percent to 1,782 at 4 p.m. in New York, surpassing a previous high set on Oct. 29. The Dow Jones Industrial Average rose 70.96 points, or 0.5 percent, to a record 15,821.63. About 6 billion shares changed hands on U.S. exchanges today, in line with the three-month average.

“Macy’s and retail in general has pulled up the overall market,” Tim Ghriskey, who helps manage more than $1.5 billion as chief investment officer of Solaris Asset Management LLC, said by phone. “Expectations were very low for the holiday season, and perhaps now they’ve been raised a bit. The backdrop around stocks remains favorable, and the market is anticipating economic improvement, which will drive revenue and earnings.”

Investors have been weighing better-than-projected earnings and data to gauge whether the economy may be strong enough to withstand less stimulus from the central bank. This week will bring reports on U.S. jobless-benefit claims and manufacturing in the New York area.

Yellen, nominated to be the next chairman of the Fed, said the economy and labor market are performing “far short of their potential” and must improve before the central bank can begin reducing monetary stimulus.

“A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” Yellen, the Fed’s current vice chairman, said in testimony prepared for her nomination hearing tomorrow before the Senate Banking Committee.

“I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”

The remarks show Yellen is committed to the central bank’s strategy of attempting to boost the economy and lower 7.3 percent unemployment, more than four years after the economy began to recover from the longest and deepest recession since the Great Depression.

Central bank policy makers will probably scale back the monthly pace of bond buying at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8. Reducing bond purchases “ought to be on the table at upcoming meetings” by the Federal Open Market Committee, including Dec. 17-18, Fed Bank of Atlanta President Dennis Lockhart said yesterday.

In the U.K., Bank of England Governor Mark Carney signaled that officials may consider raising interest rates sooner than they previously forecast as the U.K. economy recovers “robustly” and inflation slows. The jobless rate as measured by International Labour Organisation standards declined to 7.6 percent in the third quarter, the lowest since 2009, the Office for National Statistics said today.

The S&P 500 has climbed to record levels this year as the Fed maintained its $85 billion in monthly asset purchases.

Central bank support has helped propel the index higher by more than 160 percent from its March 2009 low. The gauge has rallied 25 percent so far in 2013, poised for its best year in a decade, and is trading at 16 times projected earnings, more than the five-year average of 14 times profit, according to data compiled by Bloomberg.

Pessimism about U.S. stocks among newsletter writers is at the lowest level in at least 24 years. The percentage of newsletter writers classified as bears by Investors Intelligence dropped to 15.5 percent from 15.6 percent last week, the least since Bloomberg began tracking the data in February 1989.

Optimistic, or bullish, newsletter writers dropped to 52.6 percent from a seven-month high of 55.2 percent last week.

Macy’s, NetApp Inc. and Cisco Systems Inc. reported results today. Of the 455 S&P 500 companies that have announced so far, 75 percent have beaten analysts’ income forecasts, data compiled by Bloomberg showed. Profits for the gauge will rise 4.7 percent in the third quarter and 6.2 percent in the final three months of the year, estimates compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, which measures future volatility signaled by S&P 500 options, fell 2.3 percent to 12.52. The gauge has tumbled more than 31 percent this year.

Nine of 10 main S&P 500 groups advanced. Consumer discretionary stocks gained 1.6 percent for the best performance among the industries.

Macy’s jumped 9.4 percent to a record $50.68. The second- largest U.S. department-store company reported third-quarter earnings that beat analysts’ estimates as better local selections boosted sales, signaling stronger demand headed into the holidays.

Gap Inc. increased 1.2 percent to $41.36 while L Brands Inc. added 1.9 percent to $64.25. Ralph Lauren Corp. and Abercrombie & Fitch Co. gained at least 2.7 percent.

“People are starting to think about the implications of a positive holiday season,” Walter Todd, chief investment officer at Greenwood Capital Associates LLC, said in phone interview.

“Retail for a while had been underperforming, but just the past couple weeks we’ve gotten some positive data points from Gap, Limited Brands and now from Macy’s.”

Technology companies added 1 percent as Microsoft Corp. rose 2.1 percent to $38.16.

Tesla added 0.7 percent to $138.70. The stock tumbled 29 percent from Sept. 30 through yesterday amid several reports of battery-related fires in Model S cars, and as the Palo Alto, California-based company posted third-quarter results that disappointed some investors.

“We’re about five times less likely to have a fire than an average gasoline car,” Elon Musk, chief executive officer of the company and its biggest shareholder, said yesterday at a conference in New York. Reaction to the fires reported by some media was “extremely inaccurate and unreasonable,” Musk said.

General Motors Co. jumped 4.9 percent to $38.44 after the Detroit-based carmaker that counts China as its biggest market said it will open a new headquarters in Singapore to oversee markets including Southeast Asia and India.

Crocs Inc. surged 9.8 percent to $13.89, for its biggest gain since July 2012. The shoemaker known for its brightly colored clogs is considering its strategic options after talks to take the company private stalled, people with knowledge of the matter said.

The company held talks with private-equity firms including Blackstone Group LP and KKR & Co., two people said, asking not to be identified because the information is private. The chance of a deal is slim because of a gap in price expectations, said one of the people.

Office Depot Inc., which completed a merger with OfficeMax Inc. last week, rose 3.3 percent to $5.38. The company named Roland Smith as chief executive officer and chairman of the newly formed office-supply chain.

Cisco Systems dropped 7 percent to $22.32 as of 5:01 p.m.

After the close of regular trading, the company reported quarterly sales that fell short of analysts’ estimates amid a slowdown in government spending and increased competition for sales of low-cost networking equipment. Cisco’s board also authorized $15 billion in additional stock buybacks.

Nucor Corp. fell 2.6 percent to $52.39 in regular trading after Morgan Stanley analyst Evan Kurtz downgraded the steel producer’s stock. Kurtz upgraded his rating and raised the price target for U.S. Steel Corp., saying new management is taking a “serious and transformational approach.” U.S. Steel rose 2.2 percent to $27.60.

Have a wonderful evening everyone!!

Be magnificent!

“Coming together is a beginning; keeping together is progress; working together is success.”
Henry Ford

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