December 16, 2014 Newsletter

Dear Friends,

Tangents:

As the year winds down, highlights of 2014 are being cited.  Following is one such list that was published today on Bloomberg:

The Top Ten Wines of the Year, as Tasted by Critic Elin McCoy

2014-12-16 14:30:00.0 GMT

By Elin McCoy

     (Bloomberg) — In my quest for the world’s most recommendable wines, I sampled more than 4,000 this year. My top ten most memorable bottles range from a great vintage of a Napa cult classic to a bargain from France’s snowy alps to a new, rare Italian collectible.  All say something about what’s hot in the wine world, and what’s in store for 2015. 

     2012 Antica Terra Angelicall rosé ($75)

     Made from pinot noir vines planted on a rocky pre-historic seabed in Oregon’s Willamette Valley, this unusual rosé — named for alchemy’s invisible Angelicall stone — is one of the most intriguing pink wines I’ve ever tasted. Over dinner in the Dundee Hills with talented winemaker Maggie Harrison, I savored its exotic mineral and spice character and perfumed aromas, the result of macerating the juice longer on the skins. The rosé craze is still with us, so expect more expensive experiments.

      2001 Harlan Estate ($900 to $1,300)

      When you’re invited to the first-ever tasting of 26 vintages of Napa’s Harlan Estate at the winery, you don’t say no. Founder Bill Harlan’s ambition has always been to create an American cabernet-based red that’s the equivalent of Bordeaux’s famous first growths. This dark, powerful stunner, my top wine of the tasting, comes pretty close. Its lush, sensual texture is a Harlan trademark.

      2000 Littorai  B. A. Thieriot Vineyard Pinot Noir (Auction)

      Ted Lemon, owner/winemaker at Sonoma’s Littorai winery is one of the leaders in California’s quest for pinot perfection.

      This 14-year-old red, from a single vineyard on the Sonoma Coast, has a wonderfully expansive bouquet and tastes of cherries and bright red fruit. The 2000 was my favorite at a retrospective of his wines performed at Manhattan’s Per Se restaurant; it shows how well Littorai’s pinots age. While this vintage is impossible to find, the superb 2011 and 2012 can be had for $75 to $150. 

      2007 Domaine du Comte Liger-Belair La Romanee ($1,800 to $2,800)

      One of Burgundy’s new stars, Vicomte Louis-Michel Liger- Belair started reviving his family’s domaine in 2000. La Romanee, his great grand cru vineyard, is just uphill from Romanee-Conti and the wine is already attracting attention at auction. I sampled the sumptuous, seductively spicy, ready to drink 2007 with him at his home in Vosne-Romanee, under the eyes of mounted antelope heads and ancestor portraits. 

      2010 Chateau La Fleur-Petrus ($275)

      I’ve always been a huge fan of this wine from Bordeaux’s tiny appellation of Pomerol, whose vineyards border the much more famous and expensive Petrus. So I grabbed the chance to compare six recent top vintages with Edouard Moueix, whose family owns the estate. The 2010 was the standout for me. Sophisticated, elegant and filled with voluptuous spicy fruit, it’s one more reason to rediscover Bordeaux.  

      1999 Avignonesi Vin Santo di Montepulciano ($200, ½ bottle)

      Thick yet silky, this neglected traditional Italian sweet wine is a complex mélange of flavors: candied orange peel, figs, dark chocolate, dried plums and nuts. I found it on a fall visit to Montepulciano, in Tuscany. This 1999 was perfect with salted caramels at the end of a long lunch at the winery’s restaurant with Avignonesi owner Virginie Saverys. Made from white trebbiano and malvasia grapes that are dried on straw mats for months, it’s fermented and aged in very small barrels for a decade before bottling.  

      2009 Matarocchio Tenuta Guado al Tasso Antinori  ($275 – $350)

      This 100 percent cabernet franc from Piero Antinori’s Guido al Tasso estate in Bolgheri on the Tuscan coast delivered major taste thrills as well as the excitement of discovery. Its rarity

      — only 250 to 500 cases in top vintages — and recent interest in “the other cabernet” guarantee Matarocchio will become a sought-after Italian collectible. So far there are just three vintages — 2007, 2009, and 2011. The 2009, which I sipped at a Zachys pre-auction tasting, is graceful, silky and sleekly elegant.

      1981 CVNE Vina Real Gran Reserva  ($275 – $400)

      Historic Rioja bodega CVNE has been releasing older vintages of its gran reservas, stored in the winery’s “cemetery,” since 2010. The concentrated, savory 1981 Vina Real is one of nine old vintages I tasted with fifth generation owner and winemaker Victor Urrutia at New York’s Alto restaurant. Its wonderfully soft texture and leathery, spicy aromas underscored how undervalued old Spanish wines are.

      2012 Domaine Belluard  Les Alpes  ($25)

      My hands-down bargain of the year is this white from an alpine vineyard near Chamonix, in the Haute-Savoie region of France, which a collector brought to a BYOB dinner during Oregon’s International Pinot Noir Celebration. I’d never heard of the rare gringet grape from which it’s made — and was immediately smitten with its lively, pure, fresh taste. It made me think of melting snow on rocks, a kind of alpine version of flinty Chablis – and served as a reminder that unfamiliar regions and grapes are the best source of top values. 

     1863 Taylor Single Harvest Very Old Tawny  ($3,700)

     Spice cake, ginger, vanilla and butterscotch – the heady, dense flavors of this time-defying 151-year rare tawny port from one of the Douro Valley’s great vintages unrolled on my tongue like some luxurious elixir. Tawnies, unlike vintage port, spend decades mellowing in wooden casks before bottling and Taylor, one of the best port houses, started the fashion for very old ones. No wonder demand for less expensive examples is growing by double digits. 

PHOTOS OF THE DAY

Sienna Thompson-O’Toole, 4, looks at a holographic video of Father Christmas in the window of a house in Derby, central England.Darren Staples/Reuters

Members of Hungary’s Jewish community gather to celebrate Hanukkah and to light the first candle on the menorah in downtown Budapest. Laszlo Balogh/Reuters

Market Closes for December 16^th, 2014     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Oliver Renick

     (Bloomberg) — Canadian stocks advanced as energy shares rallied the most in three years after Talisman Energy Inc. surged on deal news to offset further losses in crude oil prices.

     Talisman rallied 48 percent as Repsol SA agreed to buy the oil-and-gas explorer for $8.3 billion. Surge Energy Inc. and Crew Energy Inc. added at least 10 percent. Canadian National Railway Co. and Canadian Pacific Railway Ltd. jumped more than 2.4 percent to pace gains among industrial shares.

     The Standard & Poor’s/TSX Composite Index added 156.38 points, or 1.1 percent, to 13,861.52 at 4 p.m. in Toronto, for the biggest gain since Oct. 23. The equity gauge dropped 5.1 percent last week, its worst decline since September 2011. Trading in S&P/TSX stocks was double the 30-day average.

     Six of the 10 main groups in the S&P/TSX rose today. Energy shares surged 4 percent, the most since November 2011.

     Crude oil resumed losses, with Brent plunging through $60 a barrel for the first time in five years amid few signs that producers are ready to tackle a glut.

     Talisman soared 48 percent to C$8.84. Repsol SA, Spain’s largest energy company, agreed to buy the company for $8.3 billion, ending a months-long search for acquisitions to help boost crude reserves and production.

     Industrial shares advanced 1.9 percent, while materials producers reversed early gains to decline 1.2 percent to the lowest since Nov. 5. Argonaut Gold Inc. and Alacer Gold Corp. sank more than 7.5 percent as the metal slid.

     Non-resident investment in Canadian equities was $4.2 billion in October, marking a 14th straight month of investment. Since the beginning of the year, acquisitions of Canadian equities have totaled $32.8 billion, three times the amount recorded for the same period in 2013. Canadian stock prices were down 2.3% in October, but up 7.3% compared with December 2013.

US

By Callie Bost and Lu Wang

     (Bloomberg) — The Standard & Poor’s 500 Index tumbled, lashing investors with the biggest stock swings in two months, as companies from Microsoft Corp. to Google Inc. led a selloff in technology shares that overshadowed gains in oil producers.

     The S&P 500 fell 0.9 percent to 1,972.74 at 4 p.m. in New York, dropping below its average price for the past 100 days. The Nasdaq 100 Index tumbled 1.6 percent, the most in two months, and S&P 500 technology shares slumped to the lowest since Oct. 30. The Dow Jones Industrial Average dropped 111.97 points, or 0.7 percent, to 17,068.87. More than $9.3 billion shares changed hands on U.S. exchanges, the most since Oct. 16.

     “The whole global growth story is being called into question by this drop in oil, and the tech companies are most vulnerable as that’s one of the biggest sectors in terms of getting revenue from overseas,” Karyn Cavanaugh, the New York-based senior market strategist at Voya Investment Management LLC, said by phone. Voya oversees $215 billion. “Tech companies will be affected by that as they’re focused on growth.”

     For a second day, investors were whipsawed by stock swings. The S&P 500 fell 0.7 percent in the first 10 minutes of trading, then rebounded, surging as much as 1.4 percent as crude prices erased losses and energy shares rallied. The index reversed gains in the early afternoon, climbed again, only to sink in the final hour. The 44-point move from top to bottom is the biggest for any day since mid-October, when the index was ending its worst retreat in 2014.                       

     Global stocks fell earlier today, with emerging-market equities retreating as much as 1.8 percent, as the benchmark for U.S. oil slid below $54 a barrel. The ruble plunged past 70 to the dollar for the first time as investors shrugged off a surprise Bank of Russia decision to take its key interest rate to 17 percent from 10.5 percent. The iShares iBoxx $ High Yield Corporate Bond exchange-traded fund fell for a ninth day, to the lowest in more than two years. Treasuries and the yen rose.

     Equities also fell after a Chinese factory gauge declined to a seven-month low in December and an index of French manufacturing shrank more this month than estimated.

     “All the markets are incredibly volatile today from gold to Treasuries to junk bond spreads, stocks and currencies,” Jim Paulsen, who helps oversee $345 billion as chief investment strategist at Wells Capital Management, said by phone from San Francisco. “If oil shows some signs of support, which we did today, you have a lot of people coming in behind it. If it breaks down, you have people getting out not wanting to catch a falling knife.”                       

     The Chicago Board Options Exchange Volatility Index, also known as the VIX, added 15 percent to 23.57. The gauge jumped the most in four years last week. The VIX was at a three-month low on Dec. 5.

     The S&P 500 is down 4.6 percent for the month, heading for its first December loss since 2007, after reaching an all-time high on Dec. 5. The gauge is still up 6.7 percent for the year amid better-than-forecast earnings and economic data.

     While concern is growing about the strength of the global economy as tumbling oil prices hold down inflation, U.S. central bankers have reason to be upbeat about 2015 as they gather for a policy meeting today and tomorrow.

     The U.S. economy is forecast to expand at a 2.9 percent pace, the fastest in a decade, according to a survey by Bloomberg, while falling gasoline prices leave consumers more money to spend on other goods, boosting confidence and retail sales.

     Data in the U.S. today showed new-home construction exceeded a 1 million annualized pace in November for a third consecutive month, continuing a slow recovery in the housing market.

     The Fed will look past low inflation and drop a pledge to keep interest rates near zero for a “considerable time” as it seeks an exit from the loosest monetary policy in its 100-year history, economists said before the central bank’s policy decision tomorrow.

     “There continues to be a backdrop of the U.S. economy improving and we’ll probably see some confirmation from the Fed on that,” Jim Dunigan, chief investment officer at PNC Bank NA, which oversees $130 billion, said by phone from Philadelphia. “We’re trading a lot on headlines and much of that has been dominated by crude, credit and currencies, so not exactly the fundamentals to make good equity decisions.”

     Seven of 10 major groups in the S&P 500 declined today, with technology and consumer-discretionary shares slumping at least 1.5 percent.        
     Amazon.com Inc. and Google Inc. each declined 3.6 percent to lead losses in the Nasdaq 100. JPMorgan Chase & Co. analyst Douglas Anmuth cut his 12-month price-target on Google today to $600 from $670, while maintaining an overweight rating, the equivalent of buy.

     Netflix Inc. and Yahoo! Inc. slumped at least 2 percent. Apple Inc. lost 1.4 percent.

     Whirlpool declined 4.9 percent as the company revised its 2014 earnings projection to between $10.90 and $11.10, compared with an earlier estimate of between $11.50 and $12. The maker of home appliances cited “unfavorable” currencies and expenses related to two acquisitions.

     Energy shares in the S&P 500 gained 0.7 percent today. The group has lost 16 percent over the past month, and has plunged 26 percent from a June high. Crude fell about 45 percent this year as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale boom that’s exacerbating a global glut.                         

     Range Resources Corp., Transocean Ltd. and Diamond Offshore Drilling Inc. advanced more than 3.2 percent. Chevron Corp. added 0.8 percent.

     “The energy sector’s been hit so hard that it’s not going to take much for those stocks to turn around,” Ben Wallace, a portfolio manager at Westborough, Massachusetts-based Grimes & Co Inc., said by phone.

     Boeing Co. added 1.8 percent after boosting a stock buyback plan to $12 billion and raising its quarterly dividend by 25 percent. CVS Health Corp. jumped 2.7 percent to $92.31, the highest ever, after announcing a buyback plan of as much as $10 billion and increasing its dividend by 27 percent. 3M advanced 1.4 percent. The maker of Post-it notes and Scotch tape also boosted its dividend as it projected a gain in 2015 profit.

Have a wonderful evening everyone.

Be magnificent!

In nature, action and reaction are continuous.  Everything is connected to everything else.

No one part, nothing, is isolated.  Everything is linked, and interdependent.

Everywhere everything is connected to everything else.  Each question receives the correct answer.

Swami Prajnanpad

As ever,

Carolann

The greatest mystery of existence is existence itself.

                                     -Deepak Chopra, 1947-

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