October 2, 2014 Newsletter

Dear Friends,

Tangents:

October:

Birthdays: September 23 – October 22^nd, Libra

                October 23 –November 21, Scorpio.

October Flower: Cornflower

October Birthstone: Opal

Green becomes gold.  Orange pumpkins appear on the porches.  Tasseled, colored corn hangs mysteriously on the doorframe.  The world is on fire – it is becoming the sun!  The maples redden.  The poplars become flaming torches.  Leaves drift weightlessly across the lawn and city parks.  Twilight echoes with crows cawing.  It is time to turn over a new leaf.  Within us, summer’s gift of sun becomes a yearning to find ourselves.   No longer immersed in nature’s greenness, we find ourselves detached from her.  We want to think again, to find meaning in experience.  Thought-life seems to strengthen.  We want to understand.  Perhaps the dead can help us.  The month ends with Celtic Samhain, Christian All Souls and All Saints – Hallowe’en – when the veil between the worlds is thinnest and the spirits of the ancestors come with their gifts.  –by Christopher Bamford.

On this day in 1950, the comic strip Peanuts, written and illustrated by Charles M. Schulz, was first published. It predominately ran on Sundays up until Feb. 2000, and continued in reruns years later.

Birthdays today:

Singer Sting was born on this day in 1951.

Mahatma Gandhi was born October 2, 1869.

Groucho Marx on this day in 1890.

Writer Graham Green was born on this day in 1904.

Whatever you do will be insignificant, but it is very important that you do it. –Mahatma Gandhi.

PHOTOS OF THE DAY

Rescuers walk in line after their search operation near the peak of Mount Ontake in central Japan. Saturday’s eruption of the volcano was the worst fatal eruption in postwar history in Japan. Kimi Takeuchi/Mainichi Shimbun/AP

A Philadelphia Fire Department boat makes a water display as pedestrians and cyclists move along the newly-christened 2,000-foot concrete Schuylkill Banks Boardwalk in Philadelphia. Matt Rourke/AP

Butchers from the Chatsworth Estate wait for the funeral procession of Deborah, the Dowager Duchess of Devonshire at Chatsworth House in Derbyshire, central England. Deborah, the last of the Mitford sisters, who transformed Chatsworth into a popular tourist attraction, died aged 94 last week. Darren Staples/Reuters

Market Closes for October 2^nd, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Oct. 2 (Bloomberg) — Canadian stocks fell a fourth day, extending a four-month low, as energy producers dropped after Brent crude tumbled to the cheapest since 2012. Valeant Pharmaceuticals International Inc. sank the most in two months.

     Bankers Petroleum Ltd. and BlackPearl Resources Inc. tumbled at least 2.9 percent to pace declines among energy stocks. Valeant sank 3.7 percent to lead health-care shares lower. Sears Canada Inc. lost 1.1 percent after parent company Sears Holdings Corp. said it will offer shares of the unit to generate as much as $380 million. Canadian Pacific Railway Ltd. jumped 5.4 percent to a record as the company started talks on developing surplus lands.

     The Standard & Poor’s/TSX Composite Index fell 44.80 points, or 0.3 percent, to 14,760.64 at 4 p.m. in Toronto, retreating for a fourth straight day. The index lost 4.3 percent in September, the most since May 2012, and fell 1.2 percent in the third quarter.

     Canadian shares plunged as much as 1.8 percent, following a rout in European equities on speculation new stimulus measures won’t be enough to revive growth in the euro area. The S&P/TSX pared declines in late trading as U.S. crude reversed.     Six of 10 industries in the S&P/TSX retreated on trading volume 40 percent higher than the 30-day average.

     Crude in New York dipped below $90 a barrel for the first time in 17 months before rebounding, while Brent crude dropped to the lowest level since June 2012 amid signs that global supplies are outstripping demand.

     Bankers Petroleum fell 4.8 percent to C$5.01 and BlackPearl lost 2.9 percent as energy producers slid 0.7 percent as a group.

US

By Callie Bost and Jeremy Herron

     Oct. 2 (Bloomberg) — Most U.S. stocks rose, as small cap shares rebounded on speculation selling was overdone and as concern over Europe’s stimulus plan faded. Brent tumbled to the lowest since June 2012.

     The Standard & Poor’s 500 Index was little changed at 4 p.m. in New York, erasing an earlier slide of 1 percent. The Russell 2000 Index jumped 1 percent as small caps rebounded from a selloff yesterday. The Stoxx Europe 600 Index sank 2.4 percent, the most since June 2013. The euro rose as much as 0.6 percent, advancing for the first time in three days versus the dollar. Treasuries weakened after gaining the most in more than eight months yesterday.

     The European Central Bank left its main refinancing rate at 0.05 percent at its meeting today in Naples, Italy. Draghi said the central bank will buy assets for at least two years to boost inflation and economic growth in the euro area. U.S. jobless claims unexpectedly dropped last week. Pro-democracy leaders in Hong Kong said they will escalate protests if their demands aren’t addressed.

     “People will come back to the market once they realize Europe is not falling a cliff and the U.S. economy is still pretty strong, but not so strong as to get the Fed to raise interest rates early,” Gary Black, global co-chief investment officer for Calamos Investments in Naperville, Illinois, said by phone. The firm oversees $25.6 billion. “We’re using this weakness to buy into names that got beaten up over the last week or so.”

       The S&P 500 fell yesterday to its lowest level since Aug. 12, while the Russell 2000 Index of smaller shares sank 1.5 percent to close more than 10 percent below its record in March amid signs of economic weakness in Europe and geopolitical turmoil. The  S&P 500 has fallen 3.2 percent since a Sept. 18 record.

     While Europe is stepping up its stimulus efforts, the U.S. is on course to halt its monthly bond-buying program this month. Investors have been analyzing economic reports for clues on whether growth will withstand the end of quantitative easing and higher interest rates.

     The U.S. jobless claims data come before the government’s labor report on Oct. 3, which may show that payrolls added 215,000 workers in September after a 142,000 increase the month prior that was the smallest this year, according to the median estimate in a Bloomberg survey. The jobless rate probably held at 6.1 percent.

     The ECB’s asset-buying plan is part of a range of stimulus measures it has announced since June to fight the threat of falling prices in the 18-nation currency bloc. Inflation slowed to 0.3 percent last month, the least in almost five years, and the central bank’s preferred measure of medium-term inflation expectations has extended its decline.

     Today’s decline left the Stoxx 600 down 4.8 percent from an almost six-year high on Sept. 4. All 19 of the index’s main groups sank at least 1.5 percent. Oil and gas producers plunged 4 percent, the most in three years, while banks tumbled 3.2 percent.

     “Draghi did not bring out the big bazooka that the market had hoped for,” Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark, said by telephone. “Sentiment was already tilted to the downside on economic data and we are seeing an increasing likelihood of deflationary pressures. It seems that the market is interpreting Draghi’s words negatively and as not providing the salvation that was hoped for.”                          

     The euro rose as investors curbed bets the central bank’s purchases would expand the ECB’s balance sheet enough to weaken the currency.

     The euro added 0.3 percent to $1.2665 after touching $1.2571 on Sept. 30, the lowest level since September 2012. The yen appreciated 0.4 percent to 108.44 per dollar, having reached 110.09 yesterday, the weakest since Aug. 25, 2008.

     “The view is that what they’re doing is simply not enough with buying bond assets for the next couple of years,” Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management, said by phone. The firm oversees $5 billion in assets. “I wouldn’t want to underestimate them. I believe in Draghi and that he will do whatever it takes and I believe that will include some new tools.”

     The global economy needs bold policies to avoid a “new mediocre” period of sluggish growth as the world struggles with a disappointing recovery six years after the financial crisis, the head of the International Monetary Fund said.

     “We see continued weakness in the global economy,” IMF Managing Director Christine Lagarde said in a speech today at Georgetown University in Washington. She cited “some serious clouds on the horizon,” including high unemployment and low inflation in the euro area, financial excesses building in advanced economies, and market and liquidity risks that are migrating to less-regulated parts of the financial system.

     Treasuries gave back some of the biggest gain in eight months on speculation the performance of the U.S. labor market is strengthening. The benchmark 10-year yield rose five basis points, or 0.05 percentage point, to 2.43 percent.

     Developing-nation stocks fell 0.4 percent to the lowest since April. The MSCI Emerging Markets Index is now down 9.8 percent since a Sept. 3 high. The measure has fallen 0.9 percent in 2014 and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show.

     Argentine bond and stock markets deepened their losses after the resignation of Central Bank President Juan Carlos Fabrega dimmed the prospect of a second peso devaluation this year.

     The Merval stock index sank 7.1 percent, bringing losses to 15 percent since President Cristina Fernandez de Kirchner on Sept. 30 publicly criticized the bank for allegedly leaking inside information.

     The Micex Index tumbled 1.7 percent for a second day of losses. Russia’s central bank intervened for the first time since May to stem the world’s worst currency slide since June, ending the ruble’s five-day losing streak. The ruble gained 0.1 percent to 44.3072 against the central bank’s basket of dollars and euros.

     The Jakarta Composite Index declined the most since April and the rupiah depreciated 0.2 percent after Indonesia’s parliament chose a house speaker that may challenge President- elect Joko Widodo’s plans to boost economic growth.

     Equities in the Czech Republic, Poland and Hungary lost at least 1.1 percent. Hungary central bank Deputy Governor Adam Balog is set to speak at a conference on the nation’s economic outlook and banking sector.

     Markets in China and India are shut for holidays.

     West Texas Intermediate oil dropped below $90 for the first time in 17 months, before erasing losses, amid signs that global supplies are outstripping demand. WTI fell as much as 2.8 percent to $88.18 a barrel in New York, before settling 0.3 percent higher at $91.01.

     Brent for November settlement slipped 0.8 percent, to end the session at $93.42 a barrel in London. It’s the lowest close since June 28, 2012.
 

Have a wonderful evening everyone.

Be magnificent!
 

Water, you are the one that brings us life.  You are the source of nourishment that gives us strength.

We rejoice at your existence.

We drink you with joy, as babies drink their mothers’ milk.

And when we swallow you, we receive love.

Water, carry away all my sins and my failures, all that has been bad in my life.

I seek you today; I shall plunge into your wetness.

Drown me in splendor.

The Vedas

As ever,

Carolann

The best way to predict the future is to create it.

                           -Peter Drucker, 1909-2005

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7