November 22, 2013 Newsletter

Dear Friends,

Tangents:

The poet, Robert Frost, recited his poem, The Gift Outright,  at John Fitzgerald Kennedy’s inauguration.  Caroline Kennedy wrote of that day , “By asking Frost to read that day, my father expressed his belief in the power of language and connected the inaugural ceremony to an enduring tradition of using poetry, in a sense, to sanctify an occasion.

A snowstorm had blanketed the Capitol the night before, but the morning was glistening bright.  When Frost stood to read the poem he had written for the occasion, the glare was so strong he couldn’t see the words on the page.  He recited ‘The Gift Outright’ from memory.  The contrast between his age and my father’s youth, the poet’s frailty and the power of his words gave the moment a special significance.

Three years later, at the dedication of a library named for Robert Frost, President Kennedy said, ‘The men who create power make an indispensable contribution to the Nation’s greatness, but the men who question power make a contribution just as indispensable, especially when that questioning is disinterested, for they determine whether we use power, or power uses us ….

When power leads man towards arrogance, poetry reminds him of his limitations.  When power narrows the area of man’s concern, poetry reminds him of the richness and diversity of his existence.  When power corrupts, poetry cleanses.  For art establishes the basic human truth which must serve as the touchstone of our judgment.’ ”

THE GIFT OUTRIGHT

–Robert Frost

The land was ours before we were the land’s.

She was our land more than a hundred years

Before we were her people.  She was ours

In Massachusetts, in Virginia,

But we were England’s, still colonials,

Possessing what we still were unpossessed by,

Possessed by what we now no more possessed.

Something we were withholding made us weak

Until we found out that it was ourselves

We were withholding from our land of living,

And forthwith found salvation in surrender.

Such as we were we gave ourselves outright

(the deed of gift was many deeds of war)

To the land vaguely realizing westward,

But still unstoried, artless, unenhanced,

Such as she was, such as she would* become.

*At my father’s request, Robert Frost substituted “would” to “will”  when he spoke at the inauguration.  Frost did not recite his poetry.   Believing that poetry should capture the speech of the common man, he told people that he “said” his poems.  –Caroline Kennedy.

Photos of the day

Tourists are reflected in the ceiling of Anish Kapoor’s stainless steel Cloud Gate sculpture in Chicago’s Millennium Park. Charles Rex Arbogast/AP

Women made up as La Catrina, a popular figure in Mexico known as ‘The Elegant Skull,’ stand together while participating in the Catrina Festival in Saltillo. Daniel Becerril/Reuters

Market Closes for November 22^nd, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 22 (Bloomberg) — Canadian stocks rose, paring earlier gains in the final minutes of trading that erased a weekly gain, as financial shares climbed amid higher-than-estimated consumer spending to offset declines among commodities producers.

Manulife Financial Corp. and Sun Life Financial Inc. each added 1.3 percent to lead insurers and banks higher. Bank of Montreal added 0.5 percent to a record. Pretium Resources Inc. surged 80 percent after saying gold recovered from an ore sample at its British Columbia project surpassed targets. Bombardier Inc. advanced 0.9 percent after reporting orders and commitments for as many as 38 aircraft from the Dubai Airshow.

The Standard & Poor’s/TSX Composite Index climbed 3.01 points, or less than 0.1 percent, to 13,478.34 at 4 p.m. in Toronto, paring an earlier gain of as much as 0.3 percent. The benchmark equity gauge fell 4.23 points in the past five days and is up 8.4 percent this year.

“There’s nothing negative in the market so this is a slow plodding upward,” said Kevin Headland, a fund manager with Manulife Asset Management Ltd. in Toronto. The firm manages about C$248 billion ($235 billion). “There’s still room to buy, especially those that have missed the run-up, so there’s some end-of-year buying.”

Canadian retail sales rose more than three times faster than economists forecast in September on the biggest gain at new car dealerships in more than four years. Sales rose 1 percent to a record C$40.7 billion, according to a Statistics Canada report.

Gildan Activewear Inc. increased 2.7 percent to C$50.94, the most since Aug. 1. Tim Hortons Inc. gained 1.1 percent to C$62.82 as consumer discretionary stocks were little changed, paring an earlier advance.

Manulife, the nation’s largest insurer, gained 1.3 percent to C$20.37, the highest since April 2010. Sun Life Financial rose 1.3 percent to C$38.04 as financial stocks climbed 0.2 percent as a group. Five of 10 industries advanced in the S&P/TSX on trading volume 16 percent lower than the 30-day average.

Bank of Montreal, the nation’s fourth-largest bank, added 0.5 percent to C$74.01, a record high.

Pretium soared 80 percent to C$5.53, its biggest gain on record. The Vancouver-based company said it produced 4,215 ounces of gold from 8,090 metric tons of rock, ahead of a target of 4,000 ounces from its Valley of the Kings project in British Columbia.

Bombardier advanced 0.9 percent to C$4.72 to pace gains among industrial stocks. The plane and train maker’s shares have risen five of the past six sessions and are up 26 percent this year.

Barrick Gold Corp., the world’s largest gold producer, lost 3.3 percent to C$17.21 and Turquoise Hill Resources Ltd. retreated 4.3 percent to C$4.47 as gold for December delivery was little changed in New York. Prices yesterday tumbled to $1,235.80, the lowest since July 9.

Legacy Oil & Gas Inc. fell 1.4 percent to C$6.34 and Canadian Natural Resources Ltd. dropped 1.3 percent to C$34.82 as crude for January delivery slid 0.6 percent in New York on rising inventories in the U.S.

“The softness in commodity prices were weighing on the TSX today,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd. in Vancouver. The firm manages about C$16 billion. “Investors are on hold until they see next month’s economic data.”

Martinrea International Inc., a maker of metal parts and assemblies in the automotive industry, slumped 13 percent, the most in four years, to C$9.20. The stock has plunged 18 percent in the past three days.

USA

By Nick Taborek

Nov. 22 (Bloomberg) — U.S. stocks rose, capping a seventh week of gains for the Standard & Poor’s 500 Index, after the pace of hiring increased and drugmakers rallied on favorable decisions by European regulators.

Health-care stocks in the S&P 500 jumped 1.2 percent as a group, led by Biogen Idec Inc. and Gilead Sciences Inc. Time Warner Cable Inc. surged 10 percent on renewed takeover speculation. United Continental Holdings Inc. climbed 3.9 percent after billionaire David Tepper said his “big play in the market” is airlines. International Business Machines Corp. slid 1.5 percent after billionaire Stan Druckenmiller said he’s shorting the shares.

The S&P 500 climbed 0.5 percent to a record 1,804.76 at 4 p.m. in New York. The advance pushed the U.S. equity benchmark to a 27 percent gain for the year, poised to be the biggest annual increase since 1998. The Dow Jones Industrial Average rose 54.78 points, or 0.3 percent, to 16,064.77. About 5.6 billion shares changed hands in the U.S., 8 percent below the three-month average.

“I don’t see any reason why the market shouldn’t go up,”  Karyn Cavanaugh, a vice president and market strategist at ING U.S. Investment Management in New York, said in a phone interview. Her firm oversees $196 billion. “There’s not really any bad news. We have a little bit of a pullback and then people jump in and say, ’Hey, I want a piece of this.’”

The Dow advanced 0.6 percent this week, finishing its seventh straight weekly gain, the longest streak since January 2011. The S&P 500 rose 0.4 percent during the past five days.

David Tepper, the hedge-fund manager who runs Appaloosa Management LP, said stock markets are not inflated as economies in the U.S., Europe and China are on “firm ground.” He said that while he remains bullish on U.S. stocks, markets may fall 5 percent to 10 percent when the Fed curbs its stimulus program.

“I know there’s talk about bubbles, this is not one,” Tepper said in an interview with Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference in New York yesterday.

Job openings in the U.S. climbed to a five-year high in September, indicating employers were confident about demand before the federal government shutdown. The Labor Department report showed the number of people hired increased to 4.59 million in September, the most since August 2008, from 4.56 million. The hiring rate rose to 3.4 percent from 3.3 percent in August.

The S&P 500 rallied yesterday after three days of losses as data showed weekly jobless claims fell to the lowest level since September and a confidence survey indicated American consumers became less pessimistic this month.

“It’s hard to ignore all the tailwinds to this market,” Chris Bouffard, chief investment officer of the Mutual Fund Store in Overland Park, Kansas, which oversees $8.5 billion, said in a phone interview. “We’ve got low oil, that’s definitely helping consumers, especially going into the key holiday spending period. Buybacks and dividends are doing very well.”

Economic stimulus from the Fed has helped the S&P 500 soar 167 percent since its March 2009 low. The gauge traded for about 17 times its companies’ reported earnings at its last record on Nov. 15, the highest valuation since May 2010.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, slid 3.2 percent today to 12.26. The measure is down 32 percent this year.

Biogen Idec surged 13 percent to $285.62, the biggest gain in more than two years. The company’s multiple sclerosis drug Tecfidera won designation as a “new active substance” in Europe, giving it added protection against generic copies and paving the way for approval there. The pill is projected to be the company’s top-seller by 2015.

Gilead rallied 3.7 percent to a record $74.27. The drug company received a positive recommendation for its hepatitis C treatment from the European Medicines Agency.

Regeneron Pharmaceuticals Inc. climbed 6.3 percent to $293.68. An experimental rheumatoid arthritis drug the company is developing with Sanofi eased symptoms and damage caused by the disease in a clinical trial, advancing its prospects to compete in the market.

United Continental rose 3.9 percent to $38.54. Goldman Sachs Group Inc. also lifted its rating on the world’s biggest airline to buy from neutral.

Time Warner Cable jumped 10 percent to $132.92. Comcast Corp. and Charter Communications Inc. have discussed a joint bid for the company to divide its assets between them, people with knowledge of the matter said. The talks between Comcast and Charter were preliminary, said the people, who asked not to be identified because the deliberations are private.

Foot Locker Inc. rallied 4.1 percent to $38.27. The largest U.S. athletic shoe retailer posted third-quarter earnings of 68 cents a share, exceeding the average analyst estimate by 2 cents.

Ross Stores Inc. tumbled 5.7 percent to $75.67 for the biggest decline in the S&P 500. The retailer of discount designer wear lowered its forecast for fourth-quarter earnings to no more than $1.01 a share, after previously predicting as much as $1.03. That fell short of the average analyst estimate of $1.08.

Gap Inc. fell 1.3 percent to $41.31. The biggest U.S. specialty-apparel retailer maintained its annual profit forecast range, signaling that the holiday-shopping quarter may fall short of analysts’ estimates.

Intel Corp. lost 5.4 percent to $23.87. The world’s largest maker of semiconductors said revenue will be approximately unchanged in 2014. The company predicts the personal-computer market, measured by units, to be down in the “low single- digit” percent, Chief Financial Officer Stacy Smith said.

IBM fell 1.5 percent to $181.30. Stan Druckenmiller, who boasts one of the hedge-fund industry’s best long-term track records of the past three decades, said he’s betting against the shares because the company’s business will be replaced by technology such as cloud computing.

Abercrombie & Fitch Co. slid 2.3 percent to $34.15. The retailer was cut to market perform from outperform at Wells Fargo Securities.

Have  a wonderful weekend everyone.

Be magnificent!

The phrase ‘to meditate’ does not only mean to examine, observe, reflect, question, weigh;

it also has, in the Sanskrit, a more profound meaning, which is ‘to become.’

Krishnamurti, 1895-1986

As ever,

Carolann

Conformity is the jailer of freedom and the enemy

of growth.

-John f. Kennedy, 1917-1963

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