Category: Newsletters

Dear Friends,

Tangents:

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

In the  Condé Naste Traveler’s 2013 Readers’ Choice Awards, Victoria has been rated number 17 as one of the top 25 cities in the world, tied with Sydney, Australia, and Sante Fe, New Mexico.  This year, almost 80,000 people took part in the survey, casting 1.3 million votes, resulting in our beautiful city being rated in the top 25!  Victoria is described by travelers in the magazine as a “beautiful harbor town with great food” and “a pocket of charm and beauty” on the southern end of Vancouver Island.  Some other results saw Victoria rank No. 3 in the Top 5 Cities in Canada, Vancouver Island voted No. 16 for Top 25 Islands in the world, and Vancouver Island voted No. 1 for top Islands in Canada.  Beautiful Tofino also had a number 1 ranking in this year’s award.  Wickaninnish Inn was ranked number 1 in the Top 15 resorts in Canada.  If you are looking for a getaway in the near future, you won’t be disappointed with this resort.

For more information on The Readers Choice Awards 2013, check out: cntraveler.com/ readers-choice-awards.

“The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.” – Vince Lombardi

Photos of the Day:

Small rubber ducks are released on a river during a donation drive in Shenzhen, Guangdong province, China. The organizer charged 10 yuan ($1.64) for the release of each duck and raised about 500,000 yuan ($82,050) for several of the cities’ charities on Sunday. China Daily/Reuters

Autumn leaves frame a view of Prague Castle at early morning in Prague, Czech Republic. David W Cerny/Reuters

Market Closes for October 21^st, 2013

Market  Index	Close	Change
Dow  Jones	15392.20	-7.45    -0.05%
S&P 500	1744.65	+0.15    0.01%
NASDAQ	3920.049	+5.771    +0.15%
TSX	13183.82	+47.73
		+0.36%

International Markets

Market  Index	Close	Change
NIKKEI	14693.57	+132.03
		+0.91%
HANG  SENG	23438.15	+98.05
		+0.42%
SENSEX	20893.89	+11.00
		+0.05%
FTSE 100	6654.20	+31.62
		+0.48%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.550	2.531
CND.   30 Year Bond	3.120	3.102
U.S.   10 Year Bond	2.5995	2.5795
U.S.   30 Year Bond	3.6664	3.6447

Currencies

BOC Close	Today	Previous
Canadian $	0.97080	0.97197
US   $	1.03008	1.02884
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40923	0.70961
US  $	1.36808	0.73095

Commodities

Gold	Close	Previous
London Gold   Fix	1315.93	1316.31
Oil	Close	Previous
WTI Crude Future	99.22	100.81
BRENT	109.360	109.360

Market Commentary:

Canada

By Aubrey Pringle

Oct. 21 (Bloomberg) —  Canadian stocks rose for a fifth day, the longest winning streak since May, as a rally among miners on speculation that economic growth will spur commodity demand overshadowed a drop among energy producers.

Detour Gold Corp. and Alacer Gold Corp. each added at least 6.8 percent to pace advances among producers of raw materials.

Maple Leaf Foods Inc. jumped 10 percent as the company said it might sell its 90 percent stake in Canada Bread Co. Athabasca Oil Co. slid 2.9 percent to the lowest since May to pace declines among energy producers.

The Standard & Poor’s/TSX Composite Index rose 50.44 points, or 0.4 percent, to 13,186.53 at 4 p.m. in Toronto.

Trading was 9.5 percent above the 30-day average.

“If you have global growth, companies can make longer-term decisions, which means expansion in production and employment, and therefore everyone’s using more commodities,” Paul Gardner, portfolio manager at Avenue Investment Management, said in a phone interview from Toronto. He helps manage C$300 million ($290 million). “If you have an economy back on track in the U.S., you will have normalized GDP growth, and that’s better for commodities.”

The benchmark Canadian equity gauge has rallied 2.3 percent in the past five sessions, giving it the longest string of gains streak since May that left the index at the highest level in more than two years.

U.S. equities jumped to a record last week after lawmakers ended a 16-day partial government shutdown and reached a debt agreement that averted a default. Data from China showed economic growth accelerated for the first time in three quarters, with gross domestic product gaining 7.8 percent in the third quarter. China and the U.S. are the biggest consumers of commodities and Canada’s largest trading partners.

The S&P/TSX Materials Index jumped 1.6 percent today, the most among 10 groups in the benchmark gauge. Gold producers rallied, as the metal’s price advanced for the third time in four days in New York. Speculation that the Federal Reserve would delay tapering monthly bond buying boosted gold’s appeal as a store of value.

Detour Gold rose 8.9 percent to C$8.08 and Alacer Gold added 6.8 percent to C$2.98.

Endeavour Silver Corp. gained 4.8 percent to C$4.60 as the price of the metal for December delivery jumped 1.7 percent.

Maple Leaf Foods, the Toronto-based maker of meats and packaged goods, surged 10 percent to C$14.63 for the biggest gain in 13 years. The company said it is considering selling its 90 percent stake in Canada Bread.

Bombardier Inc. jumped 4.3 percent to C$5.30, a two-year high, after the world’s third-largest airplane maker said it received 30 new firm orders for its Learjet 85 aircraft from Flexjet LLC.

Montreal-based Bombardier’s share price has risen for four straight sessions amid optimism that the company’s agreement to sell as many as 30 CSeries aircraft to a Chinese leasing company may prompt fresh deals with customers from the Asian nation.

Energy companies slid 0.1 percent as a group, halting a three-day advance, as the price of crude for November delivery dropped 1.6 percent. Inventories increased to the highest level in three months in the U.S., the world’s biggest oil-consuming country.

Athabasca Oil fell 2.9 percent to C$6.09 for its fifth straight drop. The oil-sands developer that began publicly trading in 2010 plunged last week following an Alberta court’s decision to allow an aboriginal group to appeal the provincial regulator’s approval of the company’s Dover project.

Atlantic Power Corp. dropped 5 percent to C$5.16 after the company was downgraded to underperform from neutral at Macquarie Group Ltd.

US

By Nick Taborek

Oct. 18 (Bloomberg) — U.S. stocks rose, giving the Standard & Poor’s 500 Index its best weekly gain since July, as results from Google Inc. topped estimates and speculation grew that the Federal Reserve will delay cutting monetary stimulus.

Google rallied 14 percent to surpass $1,000 a share for the first time after reporting third-quarter sales that beat analysts’ projections.

The S&P 500 added 0.7 percent to 1,744.40 at 4 p.m. in New York, extending an all-time high. The gauge has rallied 2.4 in the past five days, for its biggest weekly advance since July 12.

“People are looking at earnings but they’re also looking at what they think is going to happen next,” Sarah Hunt, an associate fund manager and analyst who helps oversee $4.5 billion at Purchase, New York-based Alpine Woods Capital Investors LLC,said in a phone interview. “After this political problem no one is expecting this to happen again in January. People are just looking for a little bit of a better economic backdrop to continue what’s been a pretty decent environment for stocks.”

The S&P 500 closed yesterday at a record of 1,733.15 after Congress ended the standoff over the federal budget and borrowing authority. The 16-day government shutdown government reduced growth by 0.3 percentage point this quarter, economists said in a Bloomberg News survey.

The slower growth and delayed reporting of economic data will prevent Fed policy makers from paring the monthly pace of asset buying until their March 18-19 meeting, according to the median of 40 responses by economists in the survey conducted yesterday and today. Economists had expected the central bank to reduce purchases to $80 billion last month, according to a Bloomberg survey before the September meeting.

The Fed stimulus has helped propel the S&P 500 up by more than 150 percent from its March 2009 low. The gauge has surged 22 percent this year and jumped to its previous intraday record of 1,729.86 on Sept. 19, a day after the Fed unexpectedly delayed tapering at its last policy meeting.

Investors will have to wait until Oct. 21 to get the next snapshot of economic activity, when data on sales of existing homes is released. The September U.S. jobs report, originally scheduled to be released on Oct. 4, will be issued on Oct. 22.

The report was delayed by the partial shutdown. October employment data will come out on Nov. 8, rather than Nov. 1.

In the absence of economic reports, investors have been watching third-quarter corporate earnings. Thirteen S&P 500 companies released results for the period today. Analysts have raised their forecasts for profits and now forecast an average increase of 2.5 percent for all companies in the gauge, according to estimates compiled by Bloomberg today. That compares with an expected gain of 1.4 percent as of Oct. 11.

Earnings at the 100 companies that have reported so far grew by an average of 4.4 percent, while sales gained 2 percent.

Some 70 percent of the companies have topped analysts’ profit estimates, while 56 percent have beaten on sales.

Gains in the S&P 500 have averaged 1.1 percent in the first four weeks of earnings seasons since 2003, according to data compiled by Bloomberg. That’s about twice the usual four-week gain in the index.

“My concern would be on a very short term basis that some companies are going to use the drama of the past couple of weeks as a pretext to lower the bar,” Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone. His firm oversees $363.8 billion. “Even if there is some weakness to forward guidance, I think that’s going to get shrugged off and we’re going to finish the year pretty strong.”

 

Have a wonderful evening everyone.

 

Be magnificent!

 

“Carry out a random act of kindness, with no expectation of reward, safe in the knowledge that one day someone might do the same for you.” – Princess Diana

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

Tel: 778-430-5808

Fax: 778-430-5838

 

Dear Friends,

Tangents:

Full moon tonight and an eclipse.

Today is Persons Day in Canada.  As hard as it is to believe, the fact is, until October 18^th, 1929, the Supreme Court of Canada did not consider women persons.  Britain’s Privy Council overruled the Supreme Court on this day in 1929 after five women, led by Alberta magistrate Emily Murphy challenged the rule.   Statues of the Famous Five, now stand outside the Senate.

There are no grades of vanity, there are only grades of ability in concealing it.  –Mark Twain, 1835-1910

Hitchcokean

-by Michael Symmons Roberts

The birds are taking over.  Not in rows on high wires,

chittering on roofs at passers-by, fixing a lone child

with their red-ringed, sink-hole eyes, not by massing

 

on our window-sills at dawn and tap-tap-tapping

with the urgency, hunger, blunt-sense of the wild,

not with a skirl and swoop like smoke cut loose from fire

 

but with a single egg inside each one of us,

lodged in the fold between lungs, not felt until the break, l

a petite mort when shell cracks and a song begins,

 

an airless, blood-borne trill, a pulse, a stretch of wing,

which may be dun wren, bird of paradise, dull rook,

and none of us can know what kind is ours,

 

nor even know for sure it’s there, this skitter,

this arrhythmia, this restlessness, this ache that makes

you walk out, mid-meal, steal a car and disappear.

 

From Drysalter, winner of this year’s Forward Prize for Best Collection.

Photos of the day

A flock of cranes flies past the rising moon in Nauen near Berlin, Germany. The cranes rest in the wetlands west of Berlin on their way from breeding places in the north to their wintering grounds in the south. Ferdinand Ostrop/AP

A cyclist rides past a mural on the side of a storage facility building in the Brooklyn borough of New York. Carlo Allegri/Reuters

Market Closes for October 18^th, 2013

Market  Index	Close	Change
Dow  Jones	15399.65	+28.00    +0.18%
S&P 500	1744.50	+11.35    +0.65%
NASDAQ	3914.278	+51.133    +1.32%
TSX	13136.00	+99.64
		+0.76%

International Markets

Market  Index	Close	Change
NIKKEI	14561.54	-24.97
		-0.17%
HANG  SENG	23340.10	+245.22
		+1.06%
SENSEX	20882.89	+467.38
		+2.29%
FTSE 100	6622.58	+46.42
		+0.71%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.531	2.561
CND.   30 Year Bond	3.102	3.118
U.S.   10 Year Bond	2.5795	2.5894
U.S.   30 Year Bond	3.6447	3.6585

Currencies

BOC Close	Today	Previous
Canadian $	0.97197	0.97161
US   $	1.02884	1.02922
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40810	0.71018
US  $	1.36863	0.73066

Commodities

Gold	Close	Previous
London Gold   Fix	1316.31	1319.91
Oil	Close	Previous
WTI Crude Future	100.81	100.67
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 18 (Bloomberg) — Canadian stocks rose for a fourth day, extending a two-year high, as Royal Bank of Canada soared to a record close and energy producers surged on accelerating economic growth in China.

Royal Bank gained 1.2 percent as the market value of the nation’s largest lender rose past C$100 billion for the first time. Bankers Petroleum Ltd. and Advantage Oil & Gas Ltd. climbed more than 2.7 percent as oil companies advanced. H&R Real Estate Investment Trust and Canadian Apartment Properties REIT added at least 2.5 percent to pace gains among financial stocks. Athabasca Oil Corp. tumbled 9.9 percent after an Alberta court decided to allow an aboriginal group to appeal an approval of the company’s Dover oil-sands project.

The Standard & Poor’s/TSX Composite Index rose 99.64 points, or 0.8 percent, to 13,136 at 4 p.m. in Toronto. The benchmark Canadian equity gauge rose each of the four sessions in a holiday-shortened week, gaining 1.9 percent in the period for the best weekly gain since July. The index finished the week at the highest level since July 2011.

“There’s a lot of positive news pushing the markets up,” said Stephen Gauthier, chief investment officer with Fin-XO Securities Inc. in Montreal. His firm manages about C$550 million ($534.8 million). “Commodities have been holding up. The China numbers are a big plus. It’s a good continuation of the rally we had since the U.S. reached an accord on raising the debt limit.”

China’s economic growth accelerated for the first time in three quarters, with gross domestic product gaining 7.8 percent in the third quarter, matching the median estimate in a Bloomberg survey. The country is Canada’s second-largest trading partner.

U.S. Congressional leaders agreed to a deal this week to end a government shutdown and avert the threat of a default following weeks of stalemate.

Royal Bank, the nation’s largest company, jumped 1.2 percent to C$69.53, the seventh straight gain that left the stock at a record. The market value for Royal Bank climbed to C$100.1 billion, the first bank in Canada to break that mark.

Bank stocks, which have been undervalued compared with other Canadian companies, are getting a lift from good housing data, according Peter Routledge, a National Bank Financial analyst.

Toronto-Dominion Bank, Bank of Nova Scotia and National Bank of Canada also reached record highs, while the Bank of Montreal soared 1 percent to C$71.76, the highest since April 2007.

Bankers Petroleum added 3.2 percent to C$4.17 and Advantage Oil & Gas increased 2.7 percent to C$4.19 as oil producers rallied 0.9 percent as a group, for the highest close since March 2012. Crude advanced as much as 1 percent in New York before paring gains.

Nine of 10 industries in the S&P/TSX rose as trading volume was 6.4 percent below the 30-day average.

H&R REIT jumped 2.6 percent to C$21.65 and Canadian Apartment REIT climbed 2.5 percent to C$21.87 as financial stocks increased 0.8 percent.

Investors are buying into higher-yielding stocks such as REITs as bond yields have fallen since the U.S. resolution to its budget impasse, Gauthier said.

“Bonds continue to rally in the post-shutdown environment,” said Mark Chandler, head of Canadian fixed income strategy with RBC Dominion Securities Inc., in a report to clients.

Telus Corp. rallied 2.1 percent to C$35.22 and Rogers Communications Inc. added 1.4 percent to C$46.39 as telephone stocks advanced 1.4 percent as a group, the most in the S&P/TSX.

Bombardier Inc. increased 1.8 percent to C$5.08 after disclosing CDB Leasing Co., a Chinese company, is a customer with a firm order of 15 CSeries jetliners and an option for another 15 of the aircraft. The contract is worth as much as $2.07 billion.

BlackBerry Ltd., the smartphone maker looking to sell itself, rose 2.4 percent to C$8.64 for a second day of gains.

Lenovo Group Ltd., the Beijing-based computer manufacturer, has signed a non-disclosure agreement with BlackBerry and is considering a bid for the company, Dow Jones reported yesterday, citing people familiar with the situation.

Athabasca Oil sank 9.9 percent to C$6.27, the most since May. The Alberta Energy Regulator on Aug. 6 approved the company’s Dover proposal, noting in its 40-page decision that the project won’t have a direct impact on the Moose Lake area, a traditional territory of the Fort McKay First Nation.

The aboriginal group, which is surrounded by oil sands operations, had requested a 20-kilometer (12-mile) buffer around the project to protect their traditional hunting territory.

US

By Nick Taborek

Oct. 18 (Bloomberg) — U.S. stocks rose, giving the Standard & Poor’s 500 Index its best weekly gain since July, as results from Google Inc. topped estimates and speculation grew that the Federal Reserve will delay cutting monetary stimulus.

Google rallied 14 percent to surpass $1,000 a share for the first time after reporting third-quarter sales that beat analysts’ projections. General Electric Co. added 3.5 percent as demand for industrial products boosted earnings. Chipotle Mexican Grill Inc. surged 16 percent to a record as customer traffic rose. UnitedHealth Group Inc. slumped 3.7 percent, extending yesterday’s 5.1 percent slide after the insurer reported sales that fell short of analyst estimates.

The S&P 500 added 0.7 percent to 1,744.50 at 4 p.m. in New York, extending an all-time high. The gauge has rallied 2.4 in the past five days, for its biggest weekly advance since July 12. The Dow Jones Industrial Average added 28 points, or 0.2 percent, to 15,399.65. About 6.6 billion shares changed hands on U.S. exchanges, 12 percent higher the three-month average.

“People are looking at earnings but they’re also looking at what they think is going to happen next,” Sarah Hunt, an associate fund manager and analyst who helps oversee $4.5 billion at Purchase, New York-based Alpine Woods Capital Investors LLC,said in a phone interview. “After this political problem no one is expecting this to happen again in January. People are just looking for a little bit of a better economic backdrop to continue what’s been a pretty decent environment for stocks.”

The S&P 500 closed yesterday at a record of 1,733.15 after Congress ended the standoff over the federal budget and borrowing authority. The 16-day government shutdown government reduced growth by 0.3 percentage point this quarter, economists said in a Bloomberg News survey.

The slower growth and delayed reporting of economic data will prevent Fed policy makers from paring the monthly pace of asset buying until their March 18-19 meeting, according to the median of 40 responses by economists in the survey conducted yesterday and today. Economists had expected the central bank to reduce purchases to $80 billion last month, according to a Bloomberg survey before the September meeting.

The Fed stimulus has helped propel the S&P 500 up by more than 150 percent from its March 2009 low. The gauge has surged 22 percent this year and jumped to its previous intraday record of 1,729.86 on Sept. 19, a day after the central bank unexpectedly delayed tapering.

Investors will have to wait until Oct. 21 to get the next snapshot of economic activity, when data on sales of existing homes is released. The September U.S. jobs report, originally scheduled to be released on Oct. 4, will be issued on Oct. 22.

The report was delayed by the partial shutdown. October employment data will come out on Nov. 8, rather than Nov. 1.

A report today from China showed the world’s second-largest economy grew by 7.8 percent in the July-September period, accelerating for the first time in three quarters, as Premier Li Keqiang spurred factory output and investment. Industrial production advanced in September by 10.2 percent as predicted by economists.

“The numbers out of China are supporting markets today after recent disappointing data,” Plassard said. “While sentiment is still positive, the rally may be short-lived as the debt-ceiling issue will come back to haunt us again soon.”

In the absence of U.S. economic reports, investors have been watching third-quarter corporate earnings. Thirteen S&P 500 companies released results for the period today. Analysts have raised their forecasts for profits and now forecast an average increase of 2.5 percent for all companies in the gauge, according to estimates compiled by Bloomberg today. That compares with an expected gain of 1.4 percent as of Oct. 11.

Earnings at the 100 companies that have reported so far grew by an average of 4.4 percent, while sales gained 2 percent.

Some 70 percent of the companies have topped analysts’ profit estimates, while 56 percent have beaten on sales.

Gains in the S&P 500 have averaged 1.1 percent in the first four weeks of earnings seasons since 2003, according to data compiled by Bloomberg. That’s about twice the usual four-week gain in the index.

“My concern would be on a very short term basis that some companies are going to use the drama of the past couple of weeks as a pretext to lower the bar,” Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone. His firm oversees $363.8 billion. “Even if there is some weakness to forward guidance, I think that’s going to get shrugged off and we’re going to finish the year pretty strong.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, sank 3.3 percent to 13.04 today, the lowest since August 14. The gauge plunged 17 percent in the past five days for the biggest weekly decline since March.

Nine out of 10 main industries in S&P 500 advanced, with technology and industrial companies rising at least 1.1 percent to pace gains.

Google surged 14 percent to a record $1,011.41. The owner of the world’s biggest search engine said revenue, excluding sales passed on to partner sites, of $11.92 billion exceeded the average analyst as the number of promotions sold via mobile, video and other services made up for shrinking advertising prices.

Google’s rally helped the Nasdaq 100 Index gain 3.7 this week, for its highest close since Oct. 23, 2000.

General Electric added 3.5 percent to $25.55 for the biggest gain in the Dow. The company’s earnings beat analysts’ estimates as industrial sales climbed, led by demand for jet engines and drilling equipment, and rising orders pushed its backlog to a record.

Morgan Stanley advanced 2.6 percent to $29.69. Earnings beat analysts’ estimates as equity-trading revenue jumped the most among the biggest Wall Street firms and the wealth- management profit margin climbed.

Chipotle Mexican Grill surged 16 percent, the most since May 2007, to a record $509.74. The chain is spending more on marketing and traditional advertising to help maintain revenue growth that was the fastest among restaurant chains in the S&P 500 last year.

Amazon.com Inc. rallied 5.8 percent to $328.93 to close at a record. UBS AG analyst Eric Sheridan raised his rating on the stock to buy from hold, saying he expects revenue growth to accelerate in the fourth quarter.

Schlumberger Ltd. gained 2.8 percent to $93.99 as the world’s largest oilfield-services provider said quarterly net income climbed to $1.7 billion, or $1.29 a share, from $1.4 billion, or $1.07, a year earlier.

Baker Hughes Inc. gained 7.3 percent to $55.55 as the oil services provider reported third-quarter profit that beat analyst estimates and said it expects “solid, profitable” international growth in 2014.

UnitedHealth dropped 3.7 percent to $68.76, a three-month low. Shares in the largest U.S. health insurer yesterday fell the most in more than two years after the company reported worse-than-forecast results.

Home Depot Inc. slid 1.4 percent to $74.69 and Lowe’s Cos. sank 2.8 percent to $47.66. Cleveland Research analyst Eric Bosshard cut his estimates for both retailers’ third-quarter same-store sales growth, citing moderating demand.

Intuitive Surgical Inc. slumped 5.7 percent to $376.52. The maker of surgical robots said third-quarter net income declined to $156.8 million, or $3.99 a share, from $183.3 million, or $4.46, a year earlier. Revenue dropped 7.2 percent to $499 million. That fell short of the average estimate of $525.9 million from 18 analysts compiled by Bloomberg.

 

Have a wonderful weekend everyone.

 

Be magnificent!

 

To expect something is to look for something pleasant.

Searching for the pleasurable is a form of denial.

You cannot expect anything, because the expectation is within you,

and what you are waiting for is dependent on external forces.

Swami Prajnanpad, 1891-1974

As ever,

 

Carolann

 

Leave the gun.  Take the cannoli.

-Mario Puzo and Francis Ford Coppola.

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

 

Dear Friends,

Tangents:

COUNTING THE YEARS

As usual, as in the earlier dreams

I come to the whistling shores

the voice of the high-domed

crab stilled

but a chorus remains of the water creatures

of earlier times, of the birth time

and the dying time, the pity,

when we resurrect the travellers

the anchorman on our singular boat

that will take us home

-Kofi Awoonor, 1935-2013

Photos of the day

A visitor photographs part of Robert Pruitt’s ‘Safety Cones’ at the Gavin Brown’s Enterprise from New York’s stand at the Frieze Art Fair in central London. Andrew Winning/Reuters

Fallen leaves in autumn colors lies on roots in Munich, southern Germany. Matthias Schrader/AP

Market Closes for October 16^th, 2013

Market  Index	Close	Change
Dow  Jones	15373.83	+205.82    +1.36%
S&P 500	1721.54	+23.48    +1.38%
NASDAQ	3839.431	+45.420    +1.20%
TSX	12957.21	+25.75
		+0.20%

International Markets

Market  Index	Close	Change
NIKKEI	14467.14	+25.60
		+0.18%
HANG  SENG	23228.33	-108.19
		-0.46%
SENSEX	20547.62	-59.92
		-0.29%
FTSE 100	6571.59	+22.48
		+0.34%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.615	2.649
CND.   30 Year Bond	3.156	3.181
U.S.   10 Year Bond	2.6633	2.7276
U.S.   30 Year Bond	3.7207	3.7891

Currencies

BOC Close	Today	Previous
Canadian $	0.96836	0.96380
US   $	1.03268	1.03756
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39754	0.71554
US  $	1.35332	0.73892

Commodities

Gold	Close	Previous
London Gold   Fix	1282.43	1282.03
Oil	Close	Previous
WTI Crude Future	102.29	101.21
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 16 (Bloomberg) — Canadian stocks rose a second day, extending a two-year high, as energy and bank shares rallied while U.S. Senate leaders reached an agreement to end the nation’s budget impasse and prevent a default on its debt.

Bankers Petroleum Ltd. and Legacy Oil & Gas Inc. climbed at least 4.1 percent as the price of crude advanced. Gran Tierra Energy Inc. added 4.7 percent after boosting its 2013 production forecasts. Bank of Montreal added 0.6 percent after naming a chief operating officer. Argonaut Gold Inc. dropped 6.5 percent to pace losses among metals miners. SNC-Lavalin Group Inc. sank 4.5 percent after cutting its earnings forecast for the year.

The Standard & Poor’s/TSX Composite Index rose 25.75 points, or 0.2 percent, to 12,957.21 at 4 p.m. in Toronto. The benchmark Canadian equity gauge rallied to the highest close since July 2011 yesterday and is up 4.2 percent in 2013.

“If you’re given the choice of being executed today or you can postpone it and talk about it some more three months down the road, you’re going to take the deal,” said Michael O’Brien, fund manager with TD Asset Management Inc. in Toronto. He helps manage C$216 billion ($208 billion). “For now, a lot of people are sitting on their hands. At least in the short term, once we do get a deal we will see a lift in the markets. At this point, any deal is a good deal and a sigh of relief.”

The bipartisan leaders of the Senate reached an agreement to end the fiscal impasse and to increase U.S. borrowing authority, and the Senate and House could vote on it as soon as today. The White House press secretary said President Barack Obama supports the deal.

The agreement also would end the 16-day-old government shutdown and allow the U.S. to continue borrowing, a day before its authority lapses. House Republicans today signaled that they will let it pass largely with Democratic votes.

“We fought the good fight,” House Speaker John Boehner, a Republican, said on WLW, a radio station in his home state of Ohio. “We just didn’t win.”

Nine of 10 industries in the S&P/TSX gained, with raw- materials stocks the only group to decline. Trading volume was 19 percent lower than the 30-day average.

Legacy Oil & Gas gained 4.5 percent to C$6.95 and Bankers Petroleum rose 4.1 percent to C$4.10 as energy producers advanced 0.6 percent as a group, closing at an 18-month high.

Crude for November delivery settled 1.1 percent higher in New York, reversing an earlier decline amid optimism for an end to the impasse in Washington.

Gran Tierra Energy added 4.7 percent to C$7.84 after the company increased its production forecast for the year to 21,500 to 22,500 barrels of oil equivalent a day, from 21,000 to 22,000 barrels.

Bank of Montreal, Canada’s fourth-largest lender, rose 0.6 percent to C$70.66. The stock has gained in four straight sessions and closed the highest since June 2007.

The bank named Frank Techar, formerly chief executive officer of personal and commercial banking in Canada, to the new role of chief operating officer as part of a plan to consolidate oversight of its retail businesses.

Royal Bank of Canada, the nation’s largest lender, increased 0.3 percent to C$68.40 and Toronto-Dominion Bank gained 0.3 percent to C$92.55.

Ivanhoe Mines Ltd. jumped 6.1 percent to C$2.26 after intersecting an “unprecedented” mineralization of platinum, palladium, rhodium and gold at a discovery in South Africa.

SNC Lavalin tumbled 4.5 percent, the most since August, to C$42.13. Canada’s largest engineering company cut its annual profit forecast for the second time amid costs related to projects in North Africa.

Materials stocks fell 1.2 percent as a group. Argonaut Gold fell 6.5 percent to C$5.31 and Alamos Gold Inc. lost 4.1 percent to C$14.64.

US

By Nick Taborek

Oct. 16 (Bloomberg) — U.S. stocks rallied, sending the Standard & Poor’s 500 Index toward a record, as the Senate crafted a deal to end the government shutdown and raise the debt ceiling before tomorrow’s deadline.

All 10 main industries in the S&P 500 gained at least 0.6 percent, with financial shares advancing the most. Bank of America Corp. jumped 2.3 percent as lower legal expenses and loan losses helped profit rebound. Mattel Inc. and PepsiCo Inc. increased at least 1 percent as earnings topped analyst estimates. International Business Machines Corp. fell 5.8 percent in extended trading after releasing quarterly results.

The S&P 500 rose 1.4 percent to 1,721.54 at 4 p.m. in New York. The Dow Jones Industrial Average gained 205.82 points, or 1.4 percent, to 15,373.83. The Nasdaq Composite Index climbed 1.2 percent to the highest level since 2000. The Chicago Board Options Exchange Volatility Index fell 21 percent, the most in two years. About 6.5 billion shares changed hands on U.S. exchanges, 11 percent above the three-month average.

“Investors are relieved that it looks like we’re not going to go over the cliff,” Ben Hart, a research analyst at Radnor, Pennsylvania-based Haverford Trust Co., which oversees about $6 billion, said by phone. “It takes the worst case scenario off the table.”

The S&P 500 dropped 4.1 percent from its all-time high of 1,725.52 reached Sept. 18 as Congress struggled to reach agreement on a federal budget, forcing the first partial government shutdown in 17 years. The gauge has recovered 4 percent of the decline as optimism grew that a deal would be reached, and is within about four points of its record. The S&P 500 is up 21 percent for the year.

The bipartisan leaders of the Senate reached an agreement to end the fiscal impasse and to increase U.S. borrowing authority. The Senate and House plan to vote on it later today, and the White House press secretary said President Barack Obama supports the deal.

The framework negotiated by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell would fund the government through Jan. 15, 2014, and suspend the debt limit until Feb. 7, setting up another round of confrontations.

The agreement concludes a four-week standoff that began with Republicans demanding defunding of Obama’s 2010 health-care law, and objecting to raising the debt limit and funding the government without policy concessions. House Speaker John Boehner said in a statement that Republicans won’t block the Senate compromise.

With no deal, the U.S. would exhaust its borrowing authority tomorrow and the government may start missing payments at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office. Fitch Ratings put the world’s biggest economy on watch for a possible credit downgrade yesterday, citing lawmakers’ inability to agree.

Investors from Pacific Investment Management Co. Co-Chief Investment Officer Bill Gross to BlackRock Inc. Chairman and Chief Executive Officer Laurence D. Fink, who oversee $5.76 trillion, consistently dismissed the likelihood of a default.

Investors should buy three-, four- and five-year Treasuries and inflation-protected securities, Gross said on Bloomberg Television on Oct. 1. The government shutdown will end “very rapidly,” BlackRock’s Fink said Oct. 3 at an event hosted by the UCLA Anderson School of Management in Beverly Hills, California.

The S&P 500’s advance over the past week has squeezed managers who borrowed and sold shares to bet on declines lawmakers would struggle to reach a deal. U.S. companies with the most short sales have climbed 4.7 percent since Oct. 9, compared with a 3.9 percent advance for the benchmark gauge, data compiled by Bloomberg and Goldman Sachs Group Inc. show.

Hedge funds, whose bearish bets on stocks have held their returns to half the Standard & Poor’s 500 Index in 2013, helped send a gauge of manager bullishness compiled by ISI Group LLC within 0.2 point of its lowest reading in 2013 last week.

Equities have surged in 2013 as the Federal Reserve maintained efforts to stimulate the economy by holding interest rates near zero percent and purchasing $85 billion of bonds each month under a program known as quantitative easing.

The rally in 2013 has been the broadest in at least 23 years, with S&P 500 companies extending the streak of quarters in which they have avoided an earnings contraction to 15 and valuations holding below historic averages. Of S&P 500 members, 443 are up so far in 2013, data compiled by Bloomberg show. The next-closest year was 1997, when 436 companies had advanced and the index was quadrupling.

Profits for companies in the index probably increased 1.4 percent during the third quarter while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg. Some 22 companies in the S&P 500 are due to post results today.

U.S. economic growth remained “modest to moderate” as consumer spending maintained gains and business investment grew, the Fed said today in its latest Beige Book business survey.

Four of the 12 Fed districts reported slower economic growth while eight others said the expansion held steady amid “uncertainty” stemming from the U.S. fiscal deadlock.

The report provides policy makers anecdotal accounts from the Fed districts two weeks before they meet to set monetary policy.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, dropped 21 percent to 14.71, the biggest decline since August 2011, after surging 16 percent yesterday. The gauge is down 18 percent for the year.

Financial, health-care and phone companies rallied more than 1.7 percent today. The Dow Jones Transportation Average climbed 1.4 percent to a record, as 19 of its 20 members advanced.

FedEx Corp. surged 2.7 percent to a record $123.26, adding to yesterday’s 4.1 percent advance. The operator of the world’s largest cargo airline authorized a buyback plan of as many as 32 million shares, its biggest repurchase program ever.

Bank of America jumped 2.3 percent to $14.56. Chief Executive Officer Brian T. Moynihan, 54, has said the “lion’s share” of costs tied to disputed mortgages are behind his bank after booking more than $45 billion tied to his predecessor’s 2008 takeover of Countrywide Financial Corp. after third-quarter profit beat estimates.

JPMorgan Chase & Co. surged 3.2 percent to $54 and Goldman Sachs Group Inc. advanced 2.9 percent to $162.25 for the biggest increases in the Dow.

KeyCorp gained 2.4 percent to $12.14 and PNC Financial Services Group Inc. advanced 1.9 percent to $73.87 after both banks beat third-quarter profit estimates. The KBW Regional Banking Index rose 1.3 percent as 48 out of 50 members gained.

Mattel climbed 1 percent to $41.97. The world’s largest toymaker topped estimates as sales of Barbie and American Girl gained. The company has been trying to boost sales amid lackluster growth of the toy industry in the U.S., the company’s largest market, as kids spend more time using electronic devices.

PepsiCo increased 2.1 percent to $82.27. The food and beverage company that investor Nelson Peltz wants to split up topped estimates as sales of snacks gained in the U.S. and Latin America.

Abbott Laboratories jumped 6.5 percent to $35.90 for the biggest gain in the S&P 500. The provider of health-care diagnostics and medical devices reported third-quarter results that surpassed analyst estimates and raised its dividend by more than half. Revenue rose 2 percent to beat company estimates on increased demand for diagnostic tests. Abbott spun off its drug business into a new company earlier this year.

Stanley Black & Decker Inc., the maker of power tools and electronic security systems, tumbled 14 percent to $76.75 for the largest drop in the S&P 500. The company cut its full-year earnings outlook on slower-than-anticipated improvement in margins in its security business and weakness in emerging markets, as well as uncertainty created by the U.S. government shutdown.

IBM fell 5.8 percent to $175.99 as of 5:01 p.m. in New York. After the close of trading, the largest technology consulting company reported its sixth straight quarter of falling sales amid sluggish demand for computer hardware and the decline of one-time growth markets.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

There is no master, there is no instructor,

there is no person to tell you what you must do.

Krishnamurti, 1895-1986

As ever,

 

Carolann

 

Peace is when time doesn’t matter

as it passes by.

–Maria Schell, 1926-2005

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

 

 

Dear Friends,

Tangents:

On this  day in 1993, 20 years ago, Nelson Mandela won the Nobel Peace Prize for his role in ending apartheid in South Africa.

Last night I finished reading a book entitled Summertime written by another Nobel laureate, J.M. Coetzee.  Coetzee is from South Africa and he won the Nobel prize for literature in 2003.  I’ve read a few of his books, Disgrace, Elizabeth Costello, are two that come to mind easily; I quite like his writing.  Apartheid is often an underlying theme in his work.  What makes Summertime remarkable is it is about the life of the writer Coetzee written by Coetzee but told through the fictional biographer he creates in this novel.  The chapters are interviews with people who knew him when he was alive, growing up in South Africa and afterwards, when he was an English Professor in South Africa.  This book was written in 2009 – a good read.  Now I can begin Jhumpa Lahiri’s  recently published novel Lowland.  I love her writing.

Photos of the day

Torch bearers Nataliya Golovina (l.) and Olga Puchkova hold Olympic torches during a relay in Ryazan, Russia. The relay for the Sochi Winter Games will pass through many cities that showcase the historical, cultural, and ethnic richness of Russia. Olympictorch2014.com/AP

A girl and a boy walk on the first day of the Eid al-Adha feast near the Saudi city of Tabuk. Mohamed Al Hwaity/Reuters

Market Closes for October 15^th, 2013

Market  Index	Close	Change
Dow  Jones	15168.01	-133.25    -0.87%
S&P 500	1698.06	-12.08    -0.71%
NASDAQ	3794.010	-21.264    -0.56%
TSX	12931.46	+39.35
		+0.31%

International Markets

Market  Index	Close	Change
NIKKEI	14441.54	+36.80
		+0.26%
HANG  SENG	23336.52	+118.20
		+0.51%
SENSEX	20547.62	-59.92
		-0.29%
FTSE 100	6549.11	+41.46
		+0.64%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.649	2.591
CND.   30 Year Bond	3.181	3.146
U.S.   10 Year Bond	2.7276	2.6871
U.S.   30 Year Bond	3.7891	3.7428

Currencies

BOC Close	Today	Previous
Canadian $	0.96380	0.96579
US   $	1.03756	1.03543
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40341	0.71255
US  $	1.35260	0.73932

Commodities

Gold	Close	Previous
London Gold   Fix	1282.03	1271.40
Oil	Close	Previous
WTI Crude Future	101.21	102.02
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 15 (Bloomberg) — Canadian stocks rose, after posting the biggest weekly gain in a month, as metal producers rallied with the price of gold to help erase earlier declines amid political brinkmanship in the U.S. over avoiding a debt default.

Miners accounted for the 10 biggest advances in the benchmark equity index, with AuRico Gold Inc. soaring 12 percent to pace gains among gold producers. BlackBerry Ltd. gained 1.6 percent after a report that private-equity firm Cerberus Capital Management LP is considering an offer for the company. Canadian National Railway Co. dropped 0.4 percent after the Teamsters Canada union threatened to strike over contract talks.

The Standard & Poor’s/TSX Composite Index rose 39.35 points, or 0.3 percent, to 12,931.46 at 4 p.m. in Toronto, erasing an earlier loss of as much as 0.4 percent. Canadian markets were closed yesterday for the Thanksgiving holiday. The gauge advanced 1.1 percent last week, most since Sept. 6.

“There continues to be pockets of attractiveness, and we continue to be favorable on stocks,” said Barry Schwartz, fund manager with Baskin Financial Services in Toronto. He helps manage about C$535 million ($516 million). “I don’t think anyone should be distracted by what’s going on. Don’t let it scare you.”

The fiscal showdown in Washington entered its final stages as the House and Senate prepared competing plans that would end the 15-day-old government shutdown and prevent the U.S. from missing promised payments.

The House and Senate plans would both fund the government through Jan. 15, 2014, and suspend the U.S. debt limit until Feb. 7. As the differences narrow between the parties, a House vote as soon as tonight would test whether Republicans are willing to raise borrowing authority and end the shutdown without major changes to the 2010 health-care law.

“The only thing you can’t model is crazy politicians,” Schwartz said. “You cannot put that into your formulas to come up with a value when you have nut cases running the asylum. I’m not concerned about global growth, or the economy.”

Five of 10 main industries in the S&P/TSX rose, with materials and technology stocks increasing the most. Trading volume was 16 percent lower compared with the 30-day average at this time of the day.

Materials producers rallied 2.1 percent as gold, silver and copper prices reversed earlier declines. The S&P/TSX Gold Index gained 2.9 percent, the most in almost a month.

AuRico Gold surged 12 percent to C$4.04, the most since Sept. 18, after the company reported third-quarter production of about 48,900 ounces of gold and reiterated its production forecast for the year.

Torex Gold Resources Inc. climbed 6.8 percent to C$1.26 and Silvercorp Metals Inc. added 3.9 percent to C$3.24 as gold and silver prices pared earlier losses in New York.

Teck Resources Ltd. rallied 2.7 percent to C$27.89 as copper rose for a fourth day.

BlackBerry gained 1.6 percent to C$8.48 as technology stocks climbed 1.3 percent as a group.

Cerberus Capital, the private-equity firm that focuses on distressed assets, has signed a nondisclosure agreement with BlackBerry and is in the early stages of considering an offer to acquire all of the company, a person with knowledge of the situation said.

Wi-Lan Inc., the patent licensing company, climbed 3.2 percent to C$4.25, the highest since July, after the company settled a patent case with Novatel Wireless Inc. Wi-Lan has jumped 10 percent in the past four sessions.

Canadian National Railway lost 0.4 percent to C$109.07 as industrial stocks slipped 0.2 percent as a group.

Teamsters Canada Rail Conference, which represents about 3,300 railway workers including conductors, said Canadian National Railway has rejected the union’s proposal for further mediation and warned there may be a strike or lockout on Oct. 28.

Talisman Energy Inc. dropped 1.5 percent to C$12.52 as the price of crude slipped to a three-month low amid talks with Iran over its nuclear program. Two days of negotiations with the U.S., U.K., France, Germany, Russia and China began today in Geneva.

US

By Nick Taborek

Oct. 15 (Bloomberg) — U.S. stocks dropped, following a four-day rally in the Standard & Poor’s 500 Index, as lawmakers failed to reach an agreement to extend the government’s borrowing limit less than two days before the deadline.

Citigroup Inc. dropped 1.5 percent as its profit fell short of analysts’ estimates. Teradata Corp. declined 18 percent after the computer-data storage company’s earnings missed projections.

Flir Systems Inc. dropped 14 percent after preliminary earnings fell short of analyst estimates. FedEx Corp. jumped 4.1 percent after the world’s largest cargo airline operator announced a share repurchase program.

The S&P 500 fell 0.7 percent to 1,698.06 at 4 p.m. in New York. The Dow Jones Industrial Average declined 133.25 points, or 0.9 percent, to 15,168.01. About 6.2 billion shares changed hands on U.S. exchanges today, 6.3 percent above the three-month average.

“Everyone is somewhat over-caffeinated and a bit jittery in part because of politicians not doing their job,” Chad Morganlander, a Florham Park, New Jersey-based portfolio manager at Stifel Nicolaus & Co., which oversees about $130 billion of assets, said by phone. “The markets are trading on every news clip and the uncertainty is increasing, which is having an unstabilizing effect in the markets.”

The benchmark index dropped as much as 0.8 percent after Senate Majority Leader Harry Reid rejected a House plan to halt the fiscal impasse and Senate leaders stopped talks on a bill that would fund the government through Jan. 15, 2014, and suspend the U.S. debt limit until Feb. 7. The Senate talks haven’t broken down, spokesmen for the chamber’s top leaders said.

The House later revised its plan, which would extend government funding through Dec. 15, rather than Jan. 15, 2014, in the Senate plan, said Representative Devin Nunes of California, who had been meeting with leaders. A vote could come as soon as tonight.

The new House proposal would bar government subsidies of health insurance for congressional staff members, along with lawmakers and high-ranking administration officials, Nunes said. A two-year delay in the medical-device tax was dropped, he said.

The Congressional impasse has left the government partially shut down since Oct. 1 and could lead to the U.S. reaching on Oct. 17 the limit on federal borrowing.

The S&P 500 closed at the highest since Sept. 19 yesterday after a four-day rally gave it the biggest advance since January, as optimism grew that lawmakers would reach a deal to prevent a government default. The rally pushed the gauge to within 16 points of its Sept. 18 record of 1,725.52.

“If we can get through this political mess, then we can really start to focus on more fundamental things like earnings,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said in a phone interview. His firm manages more than $90 billion. “The numbers that we are going to start to get for the last month, you might see a little bit of a slowdown from the government shutdown.”

A report today showed manufacturing in the New York region grew at a slower pace than projected in October as sales and hiring cooled. The government shutdown has delayed the publication of some closely watched economic data, including the Labor Department’s monthly jobs gauge.

Profits for companies in the S&P 500 probably increased 1.4 percent during the three months while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg. Intel Corp., Johnson & Johnson, Yahoo! Inc. and Coca-Cola Co. were are among nine companies in the S&P 500 that released third-quarter results today.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 16 percent to 18.66. the biggest gain since June 20.

All 10 main industries in the S&P 500 fell at least 0.4 today, as utility stocks dropped 1.4 percent to lead losses.

Industrial companies and producers of consumer-discretionary products sank more than 0.5 percent.

Home Depot Inc. retreated 1.5 percent to $75.18 and Procter & Gamble Co. sank 1.5 percent to $77.60 for the biggest slides in the Dow.

An S&P index of homebuilders fell 2.6 percent for a second day of losses. KB Home slid 3.2 percent to $16.09 and Lennar Corp. fell 2.8 percent to $33.34.

Teradata sank 18 percent to $42.91. The company said adjusted earnings per share amounted to 69 cents to 70 cents in the third quarter, compared with the average analyst estimate that called for 81 cents. Teradata cut its earnings forecast for the year to $2.70 to $2.80, down from a previous prediction of $3.05 to $3.20.

Flir Systems Inc. lost 14 percent to $28.59. The maker of surveillance and broadcast systems reported preliminary third- quarter profit below analyst estimates as exposure to the U.S. federal government hurt results.

Citigroup dropped 1.5 percent to $48.86. The third-biggest U.S. bank reported a $3.23 billion profit that missed estimates as bond trading slumped 26 percent and U.S. mortgage revenue declined.

Charles Schwab Corp. gained 4.6 percent to $23.03. The brokerage reported third-quarter profit that beat analyst estimates as average revenue per trade increased.

Coca-Cola increased 0.7 percent to $37.66. The world’s largest beverage company said third-quarter profit rose as sales volumes advanced in North America.

FedEx rallied 4.1 percent to $120.08, the highest since February 2007. The package delivery company said it would buy back 32 million shares, or about 10 percent of its outstanding stock as of Sept. 30. The repurchase program comes in addition to an existing plan to buy back 7.4 million shares.

Even with a deadline looming for the U.S. to avoid a debt default, it’s been a comparatively calm October for financial markets. Daily swings in the S&P 500 have averaged 0.78 percent so far this month through yesterday, down from 0.9 percent for Octobers over the last eight decades and less than a quarter the moves in 1929, 1987 and 2008, data compiled by Bloomberg show.

U.S. equities aren’t overpriced even though they have historically elevated valuations, Robert J. Shiller, a co-winner of this year’s Nobel Prize in economics, said today in a Bloomberg Television interview with Tom Keene and Sara Eisen.

Companies are “relatively high-priced” according to Shiller’s cyclically adjusted price-earnings ratio, or CAPE, which compares the S&P 500 with companies’ average profits during the past 10 years, he said.

“The U.S. market is still not that overpriced, not like it was in 2000,” even though “we’re pretty high” using the CAPE gauge, he said. “Looking at the alternatives, it should be a part of your portfolio.”

 

Have a wonderful evening everyone.

 

Be magnificent!

 

The very essence of the Hindu Philosophy

is that man is a spirit, and has a body,

and not that man is a body and

may have a spirit also.

Swami Vivekananda, 1863-1902

As ever,

 

Carolann

 

Do what you can, with what you have,

where you are.

-Theodore Roosevelt, 1858-1919

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

 

 

Dear Friends,

Tangents:

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

Thanksgiving Day (Jour de l’Action de grâce for French Canadians) is a national holiday celebrated primarily in the United States and Canada as a day of giving thanks for the blessing of the harvest and of the preceding year. Several other places around the world observe similar celebrations. It is celebrated on the fourth Thursday of November in theUnited States and on the second Monday of October in Canada. Thanksgiving has its historical roots in religious and cultural traditions, but has long been celebrated in a more secular manner as well.

As Thanksgiving approaches this weekend, take a moment out and think about what you are thankful for.  With busy schedules, work, children, etc, we often forget the small things that mean so much to us. This weekend take a minute and ask yourself the question, “what am I grateful for”?

Happy Thanksgiving Everyone!!!!!

Also on this Day:

1811 – The Juliana, the first steam-powered ferryboat, was put into operation by the inventor John Stevens. The ferry went between New York City, NY, and Hoboken, NJ.

1869 – Thomas Edison filed for a patent on his first invention. The electric machine was used for counting votes for the U.S. Congress, however the Congress did not buy it.

1881 – David Henderson Houston patented the first roll film for cameras.

1929 – JCPenney opened a store in Milford, DE, making it a nationwide company with stores in all 48 states.

1932 – In New York, the first telecast of a political campaign was aired.

1939 – U.S. President Roosevelt was presented with a letter from Albert Einstein that urged him to develop the U.S. atomic program rapidly.

1983 – The last hand-cranked telephones in the U.S. went out of service. The 440 telephone customers of Bryant Pond, ME, were switched to direct-dial service.

1984 – American Kathryn D. Sullivan became the first female astronaut to space walk. She was aboard the space shuttle Challenger. 

“The future belongs to those who believe in the beauty of their dreams.” – Eleanor Roosevelt

Photos of the Day:

A devotee of ‘Chao Pho Kuan U Shrine’ runs on burning charcoal as he performs a fire-walking ceremony during celebrations for the vegetarian festival in Phang Nga. Athit Perawongmetha/Reuters

Visitors are reflected in mirrors inside an installation at the contemporary design festival Designblok 2013 in Prague, Czech Republic. David W Cerny/Reuters

Market Closes for October 11^th, 2013

Market  Index	Close	Change
Dow  Jones	15237.11	+111.04    +0.73%
S&P 500	1703.20	+10.64    +0.63%
NASDAQ	3791.873	+31.126    +0.83%
TSX	12892.11	-2.30
		-0.02%

International Markets

Market  Index	Close	Change
NIKKEI	14404.74	+210.03
		+1.48%
HANG  SENG	23218.32	+267.02
		+1.16%
SENSEX	20528.59	+255.68
		+1.26%
FTSE 100	6487.19	+56.70
		+0.88%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.591	2.593
CND.   30 Year Bond	3.146	3.152
U.S.   10 Year Bond	2.6871	2.6814
U.S.   30 Year Bond	3.7428	3.7339

Currencies

BOC Close	Today	Previous
Canadian $	0.96579	0.96092
US   $	1.03543	1.04067
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40238	0.71307
US  $	1.35440	0.73833

Commodities

Gold	Close	Previous
London Gold   Fix	1271.40	1288.50
Oil	Close	Previous
WTI Crude Future	102.02	103.01
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 11 (Bloomberg) — Canadian stocks fell, after climbing the most since July yesterday, as the jobless rate unexpectedly slipped to a five-year low while gold producers sank amid speculation the U.S. will avoid a default.

Goldcorp Inc. and Barrick Gold Corp. slumped at least 3.1 percent as the price of the metal sank to the lowest since July.

Potash Corp. of Saskatchewan Inc. lost 1.6 percent after cutting its profit forecast after buyer estimates of lower prices delayed sales. Peregrine Diamonds Ltd. plunged 35 percent after De Beers told the company it wouldn’t exercise its right to acquire control of Peregrine’s Chidliak project in the Arctic.

Tricon Capital Group Inc. jumped 8 percent after being named a “top pick” by an analyst at RBC Capital Markets.

The Standard & Poor’s/TSX Composite Index fell 2.30 points, or less than 0.1 percent, to 12,892.11 at 4 p.m. in Toronto, for a weekly gain of 1.1 percent. The index is up 3.7 percent this year. Trading volume was 23 percent lower compared with the 30- day average.

“Now that the chances of a deal getting done have risen, the demand for actual gold is weakening,” said Anish Chopra, fund manager with TD Asset Management Inc. in Toronto. He helps manage C$216 billion ($208 billion). “They’re talking now, but we don’t know the details. If over a shorter time frame there are no announcements of anything concrete, the market will take that as a negative. There needs to be follow-through.”

Unemployment in Canada declined to 6.9 percent in September from 7.1 percent a month earlier, the lowest since December 2008, as young people dropped out of the labor market, Statistics Canada said. Job creation slowed to 11,900 from 59,200 in August. Economists surveyed by Bloomberg had projected a 10,000 job increase and an unchanged jobless rate.

U.S. President Barack Obama met with Senate Republicans today as the two sides move closer to a deal to raise the debt limit ahead of a potential default on Oct. 17. Senator Orrin Hatch of Utah said Obama is open to changing a tax on medical devices in the future. Both sides are weighing a potential short-term increase in the debt limit that would postpone a default to Nov. 22.

Barrick Gold dropped 3.9 percent to C$17.81 and Goldcorp lost 3.1 percent to C$24.48 as raw-materials producers sank 1.8 percent as a group, most in the S&P/TSX.

The S&P/TSX Gold Index retreated 3.4 percent to a three- month low as all 24 stocks in the measure declined. Gold for December delivery fell 2.2 percent to $1,268.20 an ounce in New York, the lowest since July 10. Gold, seen as a safe haven for investors in volatile markets, has plunged 24 percent this year and fell for a second straight week.

Potash Corp., North America’s largest producer of the fertilizer, slid 1.6 percent to C$32.46. The company said yesterday that third-quarter earnings would be about 41 cents a share, down from the 45 to 60 cents estimated in July. The company is expected to officially release its earnings on Oct. 24.

TMX Group Ltd., owner of the Toronto Stock Exchange, tumbled 6.2 percent to C$43.15, the most since at least September 2012. Jeff Fenwick, analyst with Cormark Securities Inc., lowered his rating for the stock to reduce, the equivalent of sell, on continued weak trading volumes and financing in the third quarter.

“We have yet to see evidence of any cyclical improvement in TMX’s various operating segments,” Fenwick said in a report.

Peregrine Diamonds sank 35 percent to 43 Canadian cents, its biggest loss ever, after being notified by De Beers of its decision not to form a joint venture at Chidliak, the company said. De Beers would have helped fund a feasibility study of the diamond project in Nunavut.

Tricon Capital, a residential real estate asset manager, soared 8 percent to C$7.27, its highest ever close, after Royal Bank analyst Geoffrey Kwan rated the stock a top pick with a price target of C$9.50. Tricon has four buys, according to data compiled by Bloomberg.

Air Canada, the nation’s largest airline, climbed 1.6 percent to C$4.97 for a third day of gains and extended a five- year high. Air Canada is the best-performing stock in the S&P/TSX this year, soaring 184 percent after cutting costs and reporting better-than-forecast earnings.

US

By Stephen Kirkland and Lu Wang

Oct. 11 (Bloomberg) — U.S. shares rallied for a second day following the biggest jump since January and gold plunged to a three-month low as lawmakers discussed a potential agreement to extend the nation’s borrowing authority. Treasuries erased early gains while the yen weakened and oil slid.

The Standard & Poor’s 500 Index added 0.6 percent to 1,703.20 at 4 p.m. in New York after jumping 2.2 percent yesterday. The Stoxx 600 Europe Index gained 0.4 percent and the benchmark index for emerging markets extended its two-day advance to 1.9 percent. U.S. 10-year Treasury yields climbed one basis point at 2.69 percent, reversing a four basis-point drop, while the dollar and yen weakened against major peers. Corn slid to a three-year low on concern demand may shrink if the government scales back the biofuel mandate. Gold futures fell 2.2 percent to $1,268.20 an ounce, while oil lost 1 percent on forecasts for rising North American production.

The S&P 500 erased losses since the partial government shutdown began on Oct. 1 and added 0.8 percent for the week.

Democrats and Republicans were moving toward an agreement to extend the nation’s borrowing authority before an Oct. 17 deadline even as they remained at odds over terms for reopening the government. JPMorgan Chase & Co. and Wells Fargo & Co.  began the earnings season for banks. Confidence among U.S. consumers fell to a nine-month low amid the budget impasse.

“We continue to look at the overall situation in Washington and see how that’s evolving,” Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors, said in a phone interview from Wilmington. His firm oversees about $20 billion. “I suspect we may still be at least several days away from getting any sort of final resolution and it may create some market volatility as we go forward.”

The Chicago Board Options Exchange Volatility Index, the benchmark gauge of options prices known as the VIX, slipped 4.6 percent to 15.72 today, extending its three-day retreat to 23 percent for its biggest decline over similar time frames since April.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index of decreased to 75.2 this month from 77.5 in September. Economists in a Bloomberg survey projected a drop to 75.3, according to the median estimate.

Gauges of energy, technology and consumer stocks rose at least 0.8 percent today to lead an advance in all 10 of the main industry groups in the S&P 500.

Johnson & Johnson advanced 1.9 percent as Goldman Sachs Group Inc. boosted the stock’s rating. An index of homebuilders climbed 2 percent amid analyst upgrades. Cognizant Technology Solutions Corp. climbed 5.5 percent after Infosys Ltd. raised its sales forecast. Gap Inc. dropped 6.7 percent, its worst loss of the year, after September sales missed analyst estimates.

JPMorgan closed down 1 cent after reporting its first quarterly loss under Chief Executive Jamie Dimon amid a $7.2 billion charge to cover the cost of litigation and regulatory probes. Earnings adjusted for one-time items were $1.42 a share, compared a $1.30 average of 20 analysts surveyed by Bloomberg.

Wells Fargo & Co. also closed little changed after its earnings results showed weakness in new mortgage lending.

With few government economic reports available during the shutdown, investors are watching third-quarter corporate earnings. Profits for companies in the S&P 500 probably increased 1.4 percent during the three months while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg.

House Republicans offered a plan to raise the U.S. debt limit and end a partial government shutdown that would require the president to accept policy conditions attached to a spending measure, said two congressional aides.

Republicans sent a list of policy options to the White House following a meeting yesterday, said the aides, who spoke on condition of anonymity. President Barack Obama has insisted that he won’t accept conditions for ending the shutdown, which is in its 11th day.

“The debt-ceiling debate will be resolved without major accidents,” Nicola Mai, senior vice president and sovereign credit analyst at Pacific Investment Management Co., the world’s biggest manager of bond mutual funds, said in an interview with Francine Lacqua on Bloomberg Television’s “The Pulse.”

“Politicians realize there are significant consequences to this and that’s why last night we saw some opening on the part of Republicans and Democrats in debt negotiations.”

The Stoxx 600 extended its two-day rally to 2.1 percent, its biggest gain since July. The index rose 0.6 percent this week.

Royal Mail Group Ltd., the U.K.’s 360-year-old postal service, jumped 38 percent on the first day of trading after its initial public offering. Swedish Match AB sank 4.2 percent as the maker of Longhorn snuff said full-year earnings at its U.S. cigars and chewing tobacco unit will decline.

The MSCI Emerging Markets Index gained 1 percent, extending this week’s advance to 1.6 percent. India’s S&P BSE Sensex jumped 1.3 percent after Infosys Ltd. raised its annual sales forecast. The Shanghai Composite Index added 1.7 percent as the Shanghai Securities News reported the city may reform state- owned enterprises. Benchmark gauges in Turkey, South Korea and the Philippines advanced at least 0.7 percent.

The yen declined 0.6 percent per euro and slipped 0.4 percent to 98.50 per dollar as it depreciated against all 16 major peers. Europe’s 17-nation common currency advanced 0.2 percent to $1.3550 as the U.S. dollar weakened against 12 of 16 major peers.

The rate on $93 billion in Treasury bills due Oct. 24 was at 0.26 percent, according to Bloomberg Bond Trader data, after climbing as high as 0.52 percent yesterday. It was zero as recently as Sept. 19. The rate on bills due Nov. 29 was at 0.17 percent, the highest since the security was issued.

“The fact that it’s far from a done deal and it seems that we’re only talking about a six-week delay means certainly for the bond markets it doesn’t amount to a great deal of relief,” said John Wraith, a fixed-income strategist at Bank of America Corp. in London. “You’ve seen a small decline in the distress in late October Treasury bills but it has just spilled over into those maturing in November and December.”

Credit-default swaps on U.S. Treasuries retreated for a second day after reaching a seven-month high. The contracts declined 0.8 basis points to 34.2 basis points, according to data compiled by Bloomberg. That compares with 21 basis points last month and 65 basis points in 2011, the last time Congress played brinkmanship over the nation’s debt limit.

Swaps on Treasuries were the ninth most traded of 1,000 entities tracked by the Depository Trust & Clearing Corp. in the week through Oct. 4, up from 147th two weeks before, with 87 trades covering a gross $2.3 billion of debt.

There are now 953 contracts covering a net $3.6 billion of Treasuries outstanding, the most in a year and up from a more than two-year low of $3.1 billion on Sept. 20.

Italy’s two-year note slipped six basis points to 1.59 percent as the nation sold 6 billion euros ($8.1 billion) of securities due between 2016 and 2028 today, its maximum target.

Spain’s 10-year yield dropped five basis points to 4.29 percent.

German bunds of similar maturity were little changed, leaving the yield at 1.86 percent.

Corn fell to the lowest level since August 2010, losing 1.1 percent to $4.3325 a bushel, as the U.S. Environmental Protection Agency is considering scaling back requirements on the use of ethanol next year. Corn is used to make ethanol in the U.S. Corn has already dropped 38 percent this year on a record U.S. harvest, heading for the biggest annual decline since at least 1960.

West Texas Intermediate crude oil retreated 1 percent to $102.02 a barrel, capping a fourth loss in five weeks. The International Energy Agency said that oil producers outside OPEC, led by the U.S., Canada and Kazakhstan, will probably bolster supplies next year by the most since the 1970s.

Gold capped a second straight weekly retreat.

Gold analysts have turned the most bearish in a month on increased confidence that U.S. lawmakers will avoid a sovereign default and evidence that Asian demand for physical bullion is weakening. Fifteen analysts surveyed by Bloomberg News expect prices to decline next week, eight are bullish and four neutral, the highest proportion of bears since Sept. 13.

 

Have a wonderful 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.

 

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5838

 

 

Dear Friends,

Tangents:

Canadian short-story writer Alice Munro has been awarded the Nobel Prize in literature!  The Swedish Academy, which announced the prize in Stockholm today, called the 82-year-old author the “master of the contemporary short story.”

I get a kick out of  reading David Tang’s column in the weekend Financial Times.  David Tang, entrepreneur and founder of ICorrect, offers advice on questions about property, interiors – and modern manners for globetrotters.  This past weekend, one of his readers inquired, “I am always interested to read your musical suggestions for certain situations – from accompaniment in morgues to how to irritate nuisance neighbours.  What are your favorite pieces of music to listen to while burning calories on the gym bicycle?”

A shortened version of Sir Tang’s reply,   “My exercise regime is rather erratic and mostly consists of running for cover, jumping to conclusions, and stretching my imagination….But when I’m indoors on, say a cross-trainer, I would do my daily cryptic crossword by taping it on to a board in front.  In the background, I would put on a bit of avant-garde music – quietly playing – to jar the grey cells into action.  Which explains why I don’t go to ‘professional’ gyms that pump through loud and monotonous music.  If I were ever to have control over their music, I would choose compound time signatures, such as 5/4s (as in Tchaikovsky’s extraordinary waltz in his last sympathy) or 7/8s (as in the last movement of Prokofiev’s 7^th sonata).  Or, for the less esoteric, Dave Brubeck’s rendition of ‘Take Five’, in 5/4s.  It will be interesting to see who, in their leotards, have rhythm and who have not!”

Photos of the day

The front facade of L’Eden cinema, the world’s first and oldest cinema, is illuminated during an inauguration of its reopening in La Ciotat, southeastern France, October 9. The theater, which screened in 1899 the first film in history made by the French Lumiere brothers, was closed in 1995 for security reasons and reopened today after its renovation. Jean-Paul Pelissier/Reuters

A model displays an outfit by Ukrainian designer Zalevskiy during a Fashion Week in Kiev, Ukraine. Sergei Chuzavkov/AP

Market Closes for October 10^th, 2013

Market  Index	Close	Change
Dow  Jones	15126.07	+323.09    +2.18%
S&P 500	1692.56	+36.16    +2.18%
NASDAQ	3760.747	+82.971    +2.26%
TSX	12894.41	+164.08
		+1.29%

International Markets

Market  Index	Close	Change
NIKKEI	14194.71	+156.87
		+1.12%
HANG  SENG	22951.30	-82.67
		-0.36%
SENSEX	20272.91	+23.65
		+0.12%
FTSE 100	6430.49	+92.58
		+1.46%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.593	2.578
CND.   30 Year Bond	3.152	3.127
U.S.   10 Year Bond	2.6814	2.6631
U.S.   30 Year Bond	3.7339	3.7374

Currencies

BOC Close	Today	Previous
Canadian $	0.96092	0.96212
US   $	1.04067	1.03937
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40768	0.71039
US  $	1.35267	0.73928

Commodities

Gold	Close	Previous
London Gold   Fix	1288.50	1.03937
Oil	Close	Previous
WTI Crude Future	103.01	101.61
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 10 (Bloomberg) — Canadian stocks rose the most in three months as energy companies rallied amid signs that U.S. lawmakers may reach an agreement to increase the debt ceiling and avoid a default.

Canadian Natural Resources Ltd. jumped 4.5 percent as energy stocks surged. BlackBerry Ltd. rose 0.6 percent after company co-founders Michael Lazaridis and Douglas Fregin said they are considering all options including an acquisition of the company. Twin Butte Energy Ltd. jumped 9.1 percent after agreeing to buy Black Shire Energy Inc. for C$358 million ($345 million). Royal Bank of Canada, the nation’s largest lender, climbed 1.9 percent to close at a record.

The Standard & Poor’s/TSX Composite Index rose 164.08 points, or 1.3 percent, to 12,894.41 at 4 p.m. in Toronto, the best rally since July 11. The index is up 3.7 percent this year.

“It’s definitely a risk-on trade, less of a flight to safety, energy is popping higher on that,” said Kevin Headland, a fund manager with Manulife Asset Management Ltd. in Toronto.

He helps manage about C$250 billion ($241 billion) with the firm. “It’s a sentiment-driven market. Everybody’s believing there could be some resolution. Better prior to the 17th than on the eve of the 17th.”

House Republican leaders proposed a short-term increase in the debt ceiling, and Jay Carney, the White House press secretary, said that President Barack Obama would likely sign the plan. Both sides are weighing a potential solution to an impasse over raising the debt limit, set to be reached around Oct. 17.

Energy companies rallied 1.6 percent as a group, as nine of 10 industries in the S&P/TSX advanced. Trading volume was 16 percent higher than the 30-day average.

Canadian Natural Resources gained 4.5 percent to C$33.46 and Suncor Energy Inc. rose 2 percent to C$36.88 as the price of crude rebounded from a three-month low.

BlackBerry, the struggling smartphone maker looking to sell itself, advanced 0.6 percent to C$8.49. Lazaridis, a former co- chief executive, said in a regulatory filing that he and Fregin have hired Goldman Sachs Group Inc. and Centerview Partners LLC to help them study their options, including a possible takeover.

Lazaridis also disclosed an 8 percent stake in BlackBerry.

A bid for BlackBerry would compete with a $4.7 billion offer from Fairfax Financial Holdings Ltd., the company’s biggest shareholder, which is seeking partners to help finance a buyout.

Twin Butte Energy climbed 9.1 percent, the most in almost two years, to C$2.23. The company will pay C$3.45 in cash and stock for each share of Black Shire, and expects the deal to close by Nov. 5.

Royal Bank jumped 1.9 percent to a record C$67.69 to pace gains among Canada’s banks. Bank of Montreal rallied 1.2 percent to C$69.50 and Toronto Dominion Bank rose 1.3 percent to C$92.30.

Brookfield Asset Management Inc. gained 3.1 percent to C$40.03 and Manulife Financial Corp. rose 2.9 percent to C$17.61 as the S&P/TSX Financial Index advanced 1.5 percent to the highest in almost six years.

Pretium Resources increased 4.5 percent to C$5.09. The company plunged 31 percent yesterday after Strathcona Mineral Services Ltd. resigned as an independent evaluator of Pretium’s 10,000 metric-ton ore sample. Strathcona resigned due to a disagreement with another company hired to vet the ore, Pretium Chief Executive Officer Robert Quartermain said in an interview.

Air Canada, the nation’s largest airline, surged 4.3 percent to C$4.89 to extend a five-year high as industrial stocks rallied 1.5 percent as a group.

Air Canada is the best-performing stock in the S&P/TSX this year, soaring 179 percent after cutting costs and reporting better-than-forecast earnings. The airline said on Oct. 3 that costs for the third quarter and 2013 will decline more than anticipated.

Bombardier Inc. rose 1.9 percent to C$4.94. Egypt Air will evaluate Bombardier, along with several other brands as it considers a need for 60 more jet aircraft to replace and expand its existing fleet.

US

By Lu Wang and Aubrey Pringle

Oct. 10 (Bloomberg) — U.S. stocks jumped, with benchmark indexes rallying the most since January, as lawmakers moved toward an agreement to increase the debt ceiling and avoid a default.

Nike Inc., Boeing Co. and American Express Co. rose more than 3.4 percent, leading advances among large companies. Wells Fargo & Co. and JPMorgan Chase & Co. gained at least 2.7 percent before reporting earnings tomorrow, propelling financial shares to the biggest gain in 16 months. Gilead Sciences Inc. jumped 6.5 percent as the largest biotechnology company by market value said the cancer drug idelalisib improved survival times.

The Standard & Poor’s 500 Index surged 2.2 percent to 1,692.56 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 323.09 points, or 2.2 percent, to 15,126.07. Both gauges had their steepest climbs since Jan. 2. About 6.5 billion shares changed hands on U.S. exchanges, 12 percent higher than the three-month average.

“You’re taking the nuclear option off the table, the fact that we’ll blow through the debt ceiling, that’s not going to happen,” Dan Veru, the chief investment officer who helps oversee $4.5 billion at Palisade Capital Management LLC, said in a phone interview from Fort Lee, New Jersey. “This continues to put pressure on lawmakers to get a deal done because they’re seeing that just in fact talking is what markets want them to” do, he said.

All but 12 members of the S&P 500 index rose today, the broadest advance this year. The gauge’s rally was the biggest since a 2.5 percent surge on the first trading day of the year, when lawmakers passed a bill averting spending cuts and tax increases known as the fiscal cliff. The index has climbed 0.7 percent since the government shutdown began Oct. 1, and has trimmed its decline to 1.9 percent since closing at a record of 1,725.52 on Sept. 18.

Investors reacted to a House Republican proposal for a short-term increase in the debt ceiling that would reduce the prospects for a U.S. default. The plan would push the lapse of U.S. borrowing authority to Nov. 22 from Oct. 17. It wouldn’t end the 10-day-old partial shutdown of the federal government.

President Barack Obama would support a short increase in the U.S. debt limit with no “partisan strings attached,” though he prefers a longer extension, Jay Carney, the White House press secretary, said today. The proposal could come up for a vote on the House floor as soon as tomorrow.

U.S. Treasury Secretary Jacob J. Lew warned Congress today that “uncertainty” over the debt limit is starting to stress financial markets and trying to time an increase to the last minute “could be very dangerous.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, slumped 16 percent today to 16.48 for its biggest retreat since April. The gauge is down 8.6 percent in 2013.

“The market has been very emotional,” Paul Mangus, head of equity strategy and research for Wells Fargo Private Bank in Charlotte, North Carolina, said in a phone interview. His firm manages $170 billion. “You had days of positive, relief rallies followed by days of angst and concerns over the debt ceiling and government shutdown. Until we reach a period where we have clarity on that, we’d expect volatility to be elevated.”

A Treasury Department report on Oct. 3 said consequences would be “catastrophic” should the U.S. default, including higher interest rates, lower investment and slow growth for decades to come.

A partial federal government shutdown lasting through the end of this week would pare 0.2 percentage point from U.S. economic growth and cost as much as 0.5 point if it continues another two weeks, according to the median estimate in a Bloomberg survey of economists taken Oct. 4-9. The Claims for U.S. jobless benefits jumped last week to the highest level in six months, a Labor Department report today showed, providing the first statistical warning that the damage from the partial federal shutdown is starting to ripple through the economy.

Most Fed officials last month predicted drag from fiscal restraint would be a reason for them to hold the benchmark lending rate at 2 percent or lower until the end of 2016 to support growth and job creation.

Investors will watch financial reports as more companies release third-quarter results. Profits for companies in the S&P 500 probably increased 1.7 percent during the three months while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. The projections are down from 5.7 percent and 3.6 percent, respectively, from the end of June.

“There is not a pent-up expectation that this is going to be a gangbuster quarter,” Mangus said. “Consequently, you can have some positive surprises.”

All 10 S&P 500 industry groups jumped at least 1.4 percent.

Companies whose earnings are most tied to economic swings led the gains. The Morgan Stanley Cyclical Index jumped the most in a month, adding 1.9 percent.

Industrial shares surged 2.7 percent to pace gains. Boeing, the world’s largest planemaker, rallied 3.9 percent to $118.90 for the biggest gain in the Dow.

Nike advanced 3.6 percent to $73.44. DA Davidson & Co. raised its stock-price estimate for the world’s largest sporting-goods maker to $76 from $75 after the company said yesterday that annual sales will rise to $36 billion by the end of fiscal 2017.

Financial shares surged 2.9 percent as a group, the biggest rally since June 2012, as all 81 members of an S&P index advanced. American Express, the biggest U.S. credit-card issuer by purchases, jumped 3.4 percent to $74.66.

Wells Fargo gained 2.7 percent to $41.44 while JPMorgan added 3.5 percent to $52.52. JPMorgan is among lenders that said earnings will suffer from a bond-trading slump, while Wells Fargo guided analysts to expect mortgage originations to fall by almost 30 percent.

MetLife Inc. added 3.7 percent to $48.11 and Prudential Financial Inc. climbed 4.1 percent to $79.07, pacing gains among insurers as bond yields rose. The firms invest funds from clients in bonds and other assets to back future payouts.

Gilead Sciences jumped 6.5 percent to $62.74. The company said patients benefited enough from the cancer drug idelalisib to end a late-stage study early.

Netflix Inc. rose 5.4 percent to $303.99, snapping a three- day slide. Laura Martin, an analyst with Needham & Co., started coverage of the stock with a buy rating and said the video service provider has the ability to boost subscription prices.

While Netflix fell 12 percent this week through yesterday, the stock has more than tripled since the start of the year.

Time Warner Cable Inc. jumped 6.1 percent to $116.95. The cable company and Univision Communications Inc., a media group that caters to Hispanic Americans, agreed to extend their partnership and deliver more content to Time Warner subscribers.

UnitedHealth Group Inc. surged 3.6 percent to $73.98. The biggest U.S. insurer had the outlook on its credit rating raised to positive from stable by S&P on expectation that the company will strengthen its leadership in the industry.

Citrix Systems Inc. slumped 12 percent to $58.75 as the technology company reported preliminary third-quarter earnings of 68 cents to 69 cents a share. That missed the average analyst estimate compiled by Bloomberg of 73 cents.

Quest Diagnostics Inc. slipped 4.9 percent to $58.66. The biggest U.S. operator of medical laboratories said preliminary results showed that, excluding some items, it earned $1.02 a share in the third quarter. Analysts, on average, estimated $1.20, according to a Bloomberg survey.

Have a wonderful evening everyone.

 

Be magnificent!

 

The Upanishad tells us:  Know the soul that is your own.

In other words:  Realize the grand unique principle of the whole that is in all men.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

In three words I can sum up everything I’ve learned

about life:  it goes on.

-Robert Frost, 1874-1963

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

 

 

Dear Friends,

Tangents:

John Lennon’s birthday, October 9^th, 1940.

28 years ago today, Strawberry Fields, “a garden of peace” inspired by her late husband is donated to New York City’s Central Park by Yoko Ono.

Life is what happens to you while you’re busy making other plans.  –John Lennon.

Photos of the day

People look at a light installation at the Berlin Cathedral during the opening day of the ‘Festival of Light’ show in Berlin. Several landmarks and tourist spots will be illuminated in the German capital from October 9 to 20. Tobias Schwarz/Reuters

Rafael Nadal of Spain serves to Alexandr Dolgopolov of Ukraine during their men’s singles match at the Shanghai Masters tennis tournament in Shanghai. Carlos Barria/Reuters

Market Closes for October 9^th, 2013

Market  Index	Close	Change
Dow  Jones	14802.98	+26.45    +0.18%
S&P 500	1656.40	+0.95    +0.06%
NASDAQ	3677.776	-17.057    -0.46%
TSX	12730.33	+37.92
		+0.30%

International Markets

Market  Index	Close	Change
NIKKEI	14037.84	+143.23
		+1.03%
HANG  SENG	23033.97	-144.88
		-0.63%
SENSEX	20249.26	+265.65
		+1.33%
FTSE 100	6337.91	-27.92
		-0.44%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.578	2.564
CND.   30 Year Bond	3.127	3.110
U.S.   10 Year Bond	2.6631	2.6320
U.S.   30 Year Bond	3.7374	3.6899

Currencies

BOC Close	Today	Previous
Canadian $	0.96212	0.96536
US   $	1.03937	1.03589
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40568	0.71140
US  $	1.35243	0.73941

Commodities

Gold	Close	Previous
London Gold   Fix	1306.30	1318.58
Oil	Close	Previous
WTI Crude Future	101.61	103.49
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 9 (Bloomberg) — Canadian stocks rose from a five-week low as telephone companies jumped the most in a two weeks amid speculation that Janet Yellen won’t rush to withdraw stimulus when she takes over as Federal Reserve chairman.

BCE Inc. and Telus Corp. gained at least 1.4 percent as phone stocks gained for a fourth day. Wi-Lan Inc. added 1 percent after settling litigation with BlackBerry Ltd. Pretium Resources Inc. sank 31 percent as a company overseeing its gold project in northern British Columbia resigned. Jean Coutu Group PJC Inc. tumbled 4.2 percent after posting worse-than-estimated results.

The Standard & Poor’s/TSX Composite Index rose 37.92 points, or 0.3 percent, to 12,730.33 at 4 p.m. in Toronto, after earlier falling 0.1 percent. The index is up 2.4 percent this year.

“What we’re seeing today and all week is quite a bit of volatility and sensitivity to news headlines in the U.S.,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd. in Vancouver. Richardson GMP manages about C$16 billion ($15.4 billion). “There’s a little more certainty on the direction of monetary policy now that we know who’s going to be in charge and more details from the minutes. The market is responding well to that.”

Janet Yellen, the current Fed vice chairman, was nominated by U.S. President Barack Obama to succeed Ben S. Bernanke as chairman of the Federal Reserve. Yellen is expected to advocate for maintaining stimulus that has helped fuel a global rally in equities.

Most Fed policy makers said the central bank was likely to reduce the pace of its bond purchases this year, according to minutes released today of their last meeting, which took place before the government shutdown.

The S&P/TSX retreated 0.8 percent yesterday to the lowest since Aug. 30 as concern grew that U.S. lawmakers may fail to raise the federal debt ceiling in time to avoid a government default, expected on Oct. 17.

Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession.

Some possible paths out of the partisan impasse in Washington are starting to emerge. Each option is tentative and lawmakers remain far from an agreement amid verbal sparring between President Barack Obama and House Speaker John Boehner.

“The longer this thing goes on and the lower the market goes, the more bargains there will be,” said John Kinsey, fund manager with Caldwell Securities Ltd. in Toronto. He helps manage about C$1 billion ($962 million).

Eight of 10 industries in the S&P/TSX advanced, with telephone stocks adding 1.5 percent for a fourth day of gains.

Trading volume was 9.3 percent lower than the 30-day average.

BCE added 2.2 percent, the most in a month, to C$44.70.

Telus increased 1.4 percent to C$34.39 and Rogers Communications Inc. rose 0.9 percent to C$45.18.

The Canadian government on Oct. 7 rejected Manitoba Telecom Services Inc.’s proposed C$520 million sale of its Allstream business division to Accelero Capital Holdings Sarl Group, an investment firm co-founded by Egyptian billionaire Naguib Sawiris, due to national security concerns.

The decision raises questions about Canadian ownership policy in the wireless industry. Prime Minister Stephen Harper’s government has been trying to encourage competition in the nation’s wireless sector, while stepping up scrutiny of foreign investments.

Wi-Lan added 1 percent to C$3.90 after settling litigation with BlackBerry. The smartphone maker obtains licenses for some patents. Terms of the agreement were not disclosed.

Allana Potash Corp. jumped 11 percent to 47 Canadian cents after the fertilizer producer said it has been granted a mining license for the Danakhil potash project in Ethiopia.

Pretium Resources plunged 31 percent to C$4.87, the lowest since its initial offering in 2010. Strathcona Mineral Services Ltd., hired for an independent assessment of a 10,000-metric-ton ore sample, resigned, Pretium said today in a statement.

Jean Coutu, the drugstore chain operator, lost 4.2 percent to C$18.12, the biggest decline since July 2012. The company reported second-quarter adjusted earnings per share that fell short by 1 Canadian cent of analysts surveyed by Bloomberg.

Comparable pharmacy sales dropped 0.5 percent in the quarter.

US

By Lu Wang and Aubrey Pringle

Oct. 9 (Bloomberg) — U.S. stocks rose, rebounding from the benchmark index’s biggest two-day slump since June, amid optimism that Janet Yellen won’t rush to withdraw stimulus and signs that lawmakers could raise the debt ceiling.

Hewlett-Packard Co. rallied 8.9 percent after saying it expects to return more cash to shareholders and see revenue stabilize after a multiyear decline. Alcoa Inc. gained 2 percent amid better-than-forecast profit. Yum! Brands Inc. sank 6.7 percent after third-quarter income fell 68 percent on lower same-store sales in China.

The Standard & Poor’s 500 Index climbed 0.1 percent to 1,656.40 at 4 p.m. in New York. The Dow Jones Industrial Average added 26.45 points, or 0.2 percent, to 14,802.98. The Nasdaq Composite Index fell 0.5 percent to 3,677.78, extending its three-day slide to 3.4 percent, the most since June 24. About 7.1 billion shares exchanged hands on U.S. exchanges today, 15 percent above the three-month average.

“Today’s reaction is favorable based on Yellen’s nomination, and secondly there seems to be some thawing of the rhetoric which sets the stage for a resolution that could come before the deadline,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said in a phone interview from Minneapolis. He helps oversee $112 billion. “That’s positive for the broad equity market.”

The S&P 500 retreated 2.1 percent over the previous two days as concern grew that lawmakers may not raise the federal debt ceiling in time to avoid a government default. Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession.

The S&P 500 erased an earlier loss of as much as 0.5 percent today and the Dow rallied after touching its lowest level since June as some possible paths out of the partisan impasse in Washington started to emerge.

House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties who spoke on condition of anonymity to discuss strategy.

Republicans haven’t decided how long an extension they would support or whether it would include policy conditions and how to advance it through the House, a House Republican aide said. Republican leaders have been calling party members to talk about ideas and all House Republicans are scheduled to meet at 10 a.m. tomorrow.

The U.S. government is in the ninth day of a partial shutdown and just over a week before U.S. borrowing authority lapses Oct. 17.

President Barack Obama nominated Yellen, the current Fed vice chairman and an architect of its stimulus program, to succeed Ben S. Bernanke as chairman. As a top deputy to Bernanke, whose term expires Jan. 31, Yellen supported the central bank’s bond-buying programs that have helped propel the S&P 500 up as much as 155 percent from a 12-year low in March 2009.

“The market breathes a sigh of relief with Yellen’s appointment,” Chris Gaffney, senior market strategist at Everbank Wealth Management Inc., said in an interview from St. Louis. “The markets like the fact that Yellen is a known quantity. She has supported the stimulus program, in fact she’s largely thought to be the architect.”

Most Fed policy makers said the central bank was likely to reduce the pace of its bond purchases this year, according to minutes released today of their last meeting, which took place before the government shutdown.

At the Sept. 17-18 gathering, officials unexpectedly maintained the pace of its monthly purchases. That decision pushed the S&P 500 to a record close of 1,725.52. The gauge retreated 4.1 percent through yesterday since then.

“If you read the minutes with blinders on what’s going on in Washington, you might think the next meeting in October is on the table for tapering to start, but obviously given what we’re dealing with the debt ceiling, that likelihood is extremely thin,” Liz Ann Sonders, New York-based chief investment strategist at Charles Schwab Corp., said in a phone interview.

Her firm has $2.08 trillion in client assets.

The government shutdown has delayed the release of economic data, including the Labor Department’s monthly payrolls report, which was due Oct. 4. The lack of data is making it harder for Fed policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus.

Central bankers next convene Oct. 29-30.

Investors will turn to companies’ financial results for clues on the economy’s performance, as Alcoa yesterday became the first S&P 500 company to report earnings whose fiscal year follows the calendar. JPMorgan Chase & Co. and Wells Fargo & Co. will also report this week.

Profits for companies in the S&P 500 probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts forecast earnings growth will accelerate to 8.9 percent in the final three months of the year.

“It’s important to see how earnings are going to set up for 2014,” Russell Croft, who helps manage about $850 million as a fund manager at Croft-Leominster Inc. in Baltimore, said by phone. “They’re still going to be muted by the macro pressure out of Washington. The government shutdown and the debt ceiling will continue to drive the near-term volatility.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, fell 3.6 percent to 19.60 after closing yesterday at the highest level since June.

Investors’ appetite for risk has diminished this week. The Nasdaq Internet Index, which had risen 52 percent this year through Oct. 4, lost 0.7 percent today, extending its three-day slide to 6.6 percent. The gauge yesterday fell the most in almost two years. Netflix Inc., an online subscription-streaming service that’s is still more than three times higher than where it started 2013, dropped 4.6 percent to $288.43, the lowest since Aug. 30.

“Owners of star performers may well head to the exit doors to preserve gains,” Michael Purves, head of derivatives research at Weeden & Co., wrote in a note to clients today.

“This theme may extend to the broader market itself. Fear momentum takes time to start, but these can be early indications that a fear snowball may well be in the making.”

Six of 10 main S&P 500 groups advanced today. Phone stocks rose 1.3 percent for the biggest gain in a month. Makers of consumer-discretionary products dropped 0.4 percent to lead declines.

AT&T Inc. rallied 1.9 percent, the most in the Dow, to $33.75. The largest U.S. phone company is near an agreement to sell its wireless towers to Crown Castle International Corp., people familiar with the matter said. People with knowledge of the talks said in September the assets could fetch $5 billion.

Alcoa climbed 2 percent to $8.10. The aluminum producer reported better-than-forecast quarterly earnings after its smelting business returned to profitability and results improved at a unit that makes auto and aerospace parts.

Hewlett-Packard rallied 8.9 percent, the most since May 23, to $22.60. Meg Whitman, who enters her third year as CEO, is contending with declining sales from slack demand for personal computers and price cuts in the business-technology market.

While analysts are projecting a 3 percent drop in 2014 revenue to $107.6 billion, according to data compiled by Bloomberg, Whitman said she expects “total revenue to stabilize.”

Men’s Wearhouse Inc. jumped 28 percent to $45.03 after Jos. A. Bank Clothiers Inc. said it’s seeking to buy the apparel retailer for $2.3 billion in cash, or $48 a share. Men’s Wearhouse rejected the offer, saying the bid “significantly” undervalued the company and wasn’t in the best interest of shareholders. Jos. A. Bank gained 6.4 percent to $44.33.

Yum retreated 6.7 percent to $66.48, the lowest since April 23. The owner of the KFC fast-food chain cut its 2013 earnings forecast as third-quarter earnings trailed analysts’ estimates.

Family Dollar Stores Inc. dropped 1.1 percent to $68.71.

The discount retailer issued a forecast for fiscal 2014 profit that fell short of estimates and reported fourth-quarter revenues and same-store sales that missed forecasts.

Fastenal Co. sank 6.3 percent to $46.85. The largest U.S. retailer of nuts, bolts and other fasteners reported third- quarter revenue and profit that missed analysts’ estimates.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

Man is setting out to satisfy needs that mean more to him

than simply nourishment and clothing.

He is embarking on a rediscovery of himself.

The history of man is that of his voyage toward the unknown,

in the search for the realization of this immortal Self, of his soul.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

When your work speaks for itself,

don’t interrupt.

-Henry J. Kaiser, 1882-1967

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

 

 

Dear Friends,

Tangents:

Last Sunday afternoon I attended a lecture entitled The God Particle.  It was a discussion by a group of physicists, namely Brian Greene, Joseph Incandela, Lisa Randall and Lawrence M. Krauss about the Higgs boson, which was discovered last year.   On July 4, 2012, Dr. Incandela announced the discovery of the particle known as the Higgs Boson.  He is currently based at CERN, and he described the process as “aiming two needles from either side of the ocean accurately enough so that they eventually meet in the middle tip to tip.”  It was incredibly interesting, so I was thrilled to read this headline today:

Higgs boson work leads to one Nobel Prize. Two physicists won the 2013 Nobel Prize in Physics for their theories 50 years ago on the Brout-Englert-Higgs field and its particle, the Higgs boson, which scientists reported discovering last year. By Peter Spotts/October 8, 2013.

Francois Englert and Peter Higgs were awarded the Nobel physics prize today.

In announcing the award on Tuesday, the Royal Swedish Academy of Sciences cited Drs. Englert and Higgs for their work on what has become known as the Brout-Englert-Higgs field and its related particle, the Higgs boson.

In 1964, Englert and his colleague, the late Robert Brout, proposed that space was permeated by a field that imparted mass to particles moving through it. A particle’s mass depended on how strongly it interacted with this field – the stronger the interaction, the more massive the particle.

Higgs offered a similar explanation and predicted that the field would have a particle associated with it. The particle became known as the Higgs boson. The prediction triggered a nearly 50-year quest among experimental physicists to find the particle.

Find it they did. On July 4, 2012, two international teams of physicists at the European Organization for Nuclear Research announced that they had discovered the particle at the facility’s Large Hadron Collider (LHC). Last March, the teams announced a higher level of confidence in their detection based on additional data their cathedral-scale detectors at the collider had amassed in the interim.

Sifting through the debris of some 2,000 trillion collisions at the accelerator – an underground race-track for protons accelerated to nearly the speed of light – researchers uncovered evidence for 1,500 Higgs bosons fleetingly created by the collisions.

“I am overwhelmed to receive this award and thank the Royal Academy,” Higgs said in a prepared statement issued by the University of Edinburgh, where he is a professor emeritus.

In issuing the award, the Academy used a unique turn of phrase that suggested to some that the body might be open to issuing another prize at some point for the discovery of the Higgs boson.

The Academy noted that the prize was “for the theoretical discovery of a mechanism that contributes to our understanding of the origin of mass of subatomic particles,” and went on to mention the work at CERN confirming Higgs’s prediction.

“The term ‘theoretical’ has never been used before with discovery,” observes Lawrence Sulak, a physicist at Boston University whose team contributed key instruments for one of the two massive detectors at the LHC, known as the CMS detector.

Physicists say they have every indication so far that the particle discovered last year is the Higgs. “But we are not yet confident,” Dr. Sulak cautions.

This means that even though a Nobel prize has been awarded for the theory describing the Higgs phenomenon, questions still swirl around the particle associated with the Higgs field.

Start with the particle’s mass. No one knew what it would be. Theories presented a range of possibilities. The particle physicists detected has far less mass than some models predict and far more than others.

“It’s too heavy to be light and too light to be heavy. It’s in a mysterious place, and we don’t understand why that is,” says Tom LeCompte, a physicist at Agronne National Laboratory in Argonne, Ill., and the physics coordinator for the ATLAS experiment, the second of the two large detectors at the LHC.

For instance, the “standard model,” which describes subatomic particles and their interactions, predicts that the Higgs boson’s mass should be a quadrillion times higher than the particles detected at CERN, says Dr. Lincoln.

Still, with the discovery of the particle, “we have completed our understanding of the standard model,” he continues. But there are mysteries that may point to something beyond it. It’s still unclear where gravity fits into this model, for instance, as well as dark matter and dark energy. The discovery of dark energy, which is accelerating the expansion of the universe, garnered its discoverers their own Nobel Prize in Physics in 2011.

The discovery of the Higgs boson “gives us a little frayed thread sticking out of the quilt that we will, of course, tug at” hoping to unravel these mysteries, he says.

Higgs and Englert will split the prize’s $1.2 million purse and are slated to receive the award at a ceremony in Stockholm Dec. 10.

Photos of the day

The Brandenburg Gate and pedestrians are illuminated by laser light patterns during a light rehearsal for the Festival of Lights in Berlin, Germany. Until October 20, many buildings and landmarks in Berlin will be illuminated. Gero Breloer/AP

A man watches a sea of clouds as he stands on a side summit of the Saentis mountain in Urnaesch near Appenzell, Switzerland. Gian Ehrenzeller/Keystone/AP

Market Closes for October 8^th, 2013

Market  Index	Close	Change
Dow  Jones	14776.53	-159.71    -1.07%
S&P 500	1655.45	-20.67    -1.23%
NASDAQ	3694.833	-75.544    -2.00%
TSX	12692.41	-95.84
		-0.75%

International Markets

Market  Index	Close	Change
NIKKEI	13894.61	+41.29
		+0.30%
HANG  SENG	23178.85	+204.90
		+0.89%
SENSEX	19983.61	+88.51
		+0.44%
FTSE 100	6365.83	-71.45
		-1.11%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.564	2.570
CND.   30 Year Bond	3.110	3.111
U.S.   10 Year Bond	2.6320	2.6302
U.S.   30 Year Bond	3.6899	3.6978

Currencies

BOC Close	Today	Previous
Canadian $	0.96536	0.96968
US   $	1.03589	1.03127
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40754	0.71046
US  $	1.35878	0.73596

Commodities

Gold	Close	Previous
London Gold   Fix	1318.58	1322.74
Oil	Close	Previous
WTI Crude Future	103.49	103.03
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 8 (Bloomberg) — Canadian stocks fell to a five-week low as base metal producers retreated amid growing concern that a deadlock among U.S. lawmakers over the debt limit could lead to a government default.

Teck Resources Ltd. and First Quantum Minerals Ltd. dropped at least 2.2 percent as raw-materials producers plunged to a two-month low. Manitoba Telecom Services Inc. sank 8.5 percent after the Canadian government rejected the proposed sale of its Allstream unit. Saputo Inc., Canada’s largest dairy processor, jumped to a four-month high after agreeing to buy an Australian cheese producer.

The Standard & Poor’s/TSX Composite Index fell 95.84 points, or 0.8 percent, to 12,692.41 at 4 p.m. in Toronto, the lowest close since Aug. 30. Trading volume was in line with the 30-day average.

“The market is nervous about how entrenched the positions seem to be on both sides of the aisle,” said Matt Skipp, chief investment officer with Sw8 Asset Management Inc. in Toronto.

The firm manages about C$54 million ($52 million). “The irony is, it’s the market sell-off that generally gets Congress moving in the right direction. There’s always a moment of truth when the market starts to fear the excessive rhetoric being flung back and forth.”

U.S. President Barack Obama said the nation’s economy risks a “very deep recession” if Congress doesn’t raise the $16.7 trillion debt ceiling. Senate Majority Leader Harry Reid said the Republican-controlled House should vote to end the shutdown and drop demands to change the 2010 Affordable Care Act. House Speaker John Boehner said Reid and Obama should negotiate.

The U.S. government has been partially shut down since Oct. 1 and could default on its debt if lawmakers fail to reach an agreement to raise the borrowing limit by Oct. 17.

Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession that probably would become a depression.

U.S. equities retreated 1.2 percent, giving the S&P 500 the biggest two-day decline since June.

Eight of 10 groups in the Canadian benchmark equity gauge dropped, led by a 2.6 percent decline among health-care stocks.

Valeant Pharmaceuticals International Inc. lost 3.6 percent to C$109.80 for a third day of declines.

An S&P/TSX index of raw-materials producers plunged 2.4 percent to the lowest since Aug. 7. Fifty-four of the gauge’s 56 members fell.

Teck Resources, Canada’s largest diversified miner, lost 2.8 percent to C$26.56 and First Quantum retreated 2.2 percent to C$17.55 as copper futures dropped for a second day on concern demand will slow in the U.S. OceanaGold Corp. slumped 7.3 percent to C$1.40 after agreeing to acquire Pacific Rim Mining Corp. in a deal valued at C$10.2 million.

Manitoba Telecom plunged 8.5 percent to C$29.62, the biggest slide in three years and the most in the S&P/TSX. The Canadian government rejected the company’s planned sale of its Allstream fiber-optic network division to an investment firm co- founded by Egyptian billionaire Naguib Sawiris.

The decision raises questions about Canadian ownership policy in the wireless industry. Prime Minister Stephen Harper’s government has been trying to encourage competition in the nation’s wireless sector, while stepping up scrutiny of foreign investments.

Manitoba competitors, including Rogers Communications Inc., BCE Inc. and Telus Corp., advanced at least 0.2 percent to lift an index of phone stocks to the second-best performance in the S&P/TSX.

Saputo jumped 4.1 percent to C$51.50, the highest since May 30. The cheesemaker has agreed to pay about C$378 million for Warrnambool Cheese & Butter Factory Co., an Australian producer, topping a rejected bid from Bega Cheese Ltd.

The deal will allow Saputo to target rising demand in Asia for dairy products, Chief Executive Officer Lino Saputo said.

US

By Lu Wang and Alex Barinka

Oct. 8 (Bloomberg) — U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest two-day loss since June, as concern grew that a deadlock among U.S. lawmakers over the debt limit could lead to a government default.

An index of Internet stocks tumbled the most in almost two years, sinking 4.1 percent. Facebook Inc. and Yahoo! Inc. lost at least 3.5 percent. Xerox Corp. slid 2.5 percent after announcing the U.S. has been probing the accounting practices of its outsourcing division. Alcoa Inc. gained 1.5 percent in late trading after posting quarterly earnings that topped forecasts.

The S&P 500 fell 1.2 percent to 1,655.45 at 4 p.m. in New York, the lowest since Sept. 6. The Dow Jones Industrial Average lost 159.71 points, or 1.1 percent, to 14,776.53. The Nasdaq Composite Index tumbled 2 percent to 3,694.83. About 6.9 billion shares changed hands on U.S. exchanges, nearly 20 percent higher than the three-month average.

“The market is going to start to push the government,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an interview. “The longer it drags on, the more uncomfortable everyone gets because we will not rally until something gets done. Get out now and wait for the storm to pass to get back in.”

The S&P 500 slumped 0.9 percent yesterday to a four-week low as lawmakers remained deadlocked over extending the nation’s debt limit to avoid a default. Its two-day slide of 2.1 percent is the biggest since June 21. The gauge has fallen 4.1 percent since its latest record on Sept. 18.

President Barack Obama said the U.S. economy risks a “very deep recession” if Congress doesn’t raise the debt ceiling.

Obama spoke less than four hours after he called House Speaker John Boehner to “reiterate that he won’t negotiate on a government-funding bill or debt-limit increase,” said Brendan Buck, a Boehner spokesman.

Lawmakers began taking the first tentative steps toward a path to raising the limit even as the rhetoric grew more divisive. Senate Democrats are planning a test vote before the end of this week on a measure that would grant Obama authority to raise the ceiling, probably for a year, unless two-thirds of both chambers of Congress oppose.

The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government will run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

Even as the probability of a U.S. government default is “very, very small,” volatility in the markets will increase in coming days, Mohamed El-Erian, chief executive officer and co- chief investment officer at Pacific Investment Management Co. A U.S. default on its debt obligations would prove more unpredictable to financial markets than the 2008 collapse of Lehman Brothers Holding Inc., he said.

“What frightens us the most is what happens to the plumbing system of the global-financial system,” El-Erian said in an interview on Bloomberg Television’s “Bloomberg Surveillance” with Tom Keene. “You will have cascading failure, multiple defaults, and Treasuries that act as collateral would be very difficult to exchange and people will simply step back. It will be like Lehman, but more unpredictable.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 4.8 percent today to 20.35, its highest close in 2013.

From its intraday low of 12.52 on Sept. 20, the VIX jumped 68 percent to its highest level of today, 21.01. That’s the fifth time in 2013 that the index climbed more than 50 percent from trough to peak, according to data compiled by Bespoke Investment Group and Bloomberg. The gauge of options prices remains almost 58 percent below its 2011 high, the data show.

Volume on the VIX rose to a record 1.78 million contracts, according to data compiled by Bloomberg. About 1.14 million calls changed hands compared with more than 639,000 puts, data compiled by Bloomberg show.

“The VIX pit was nuts, all day, non-stop,” Mark Caffray, who brokers contracts on the VIX and the S&P 500 at Chicago- based PTR Inc., said in an interview. “Customers are hedging either side of the government gridlock outcome. We are assuming the trend continues as customers continue to use the VIX as a bigger part of their hedging strategy.”

Nine of the 10 S&P 500 main industries fell as telephone, materials, consumer-discretionary and technology stocks slipped more than 1.6 percent for the worst performance.

The Nasdaq Internet Index tumbled 4.1 percent for the biggest decline since November 2011, as all its 81 members dropped. The gauge had surged 49 percent this year through yesterday, almost triple the gain in the S&P 500. At 24 times reported income, the valuation in Internet shares has risen 67 percent this year.

Facebook, the operator of the world’s most popular social network, slumped 6.7 percent to $47.14. The stock had advanced 90 percent this year through yesterday. Yahoo declined 3.5 percent to $32.93, trimming its 2013 gain to 65 percent.

TripAdvisor Inc., an online travel agent that’s up 71 percent this year, sank 5.5 percent to $71.70.

“The debt ceiling is causing the fear over locking in returns,’” Ian Winer, director of equity trading at Wedbush Securities Inc., said in an interview. “Guys are looking at their portfolios and saying, ’These are up huge, maybe I sell some to lock in some gains and revisit post debt-ceiling resolution.’”

Stocks with the highest short interest were among the market’s biggest losers. A Goldman Sachs Group Inc.’s basket of stocks with the most bearish bets against them slid 2.3 percent, paring its rally in 2013 to 35 percent.

Xerox dropped 2.5 percent to $10.14. The U.S. Securities and Exchange Commission has been probing the accounting practices of Affiliated Computer Services Inc., an outsourcing company acquired in 2010, Xerox said in a regulatory filing. The SEC focused on whether revenue from ACS equipment and resale transactions should have been recorded on a net rather than gross basis, Xerox said in the filing.

Masco Corp. fell 5.3 percent to $19.40. The maker of home improvement and building products faces slowing growth amid a potential loss in the market share, Kenneth Zener, an analyst with Keybanc Capital Markets Inc., said in a note. He cut the stock’s rating to underweight from hold.

McKesson Corp. climbed 3.2 percent to a record $133.72. The largest U.S. drug distributor is in advanced talks buy German drug wholesaler Celesio AG, Dow Jones reported, citing unidentified people.

Alcoa gained 1.5 percent to $8.06 at 5:42 p.m. in New York.

The largest U.S. aluminum producer, reported third-quarter profit that surpassed analysts’ expectations after higher earnings from one of its divisions that turns the metal into auto and aerospace parts. The stock fell 0.4 percent during the regular session today.

The Alcoa release marks the unofficial start of the U.S. quarterly earnings season as it is the first S&P 500 company to report results whose fiscal year follows the calendar. JPMorgan Chase & Co. and Wells Fargo & Co. will also report this week.

Investors will look to companies’ financial results for clues on the economy’s performance as the government shutdown, in its eighth day, delays the publication of some data. The S&P 500 has declined 1.6 percent since the government began on Oct. 1 its first shutdown in 17 years after lawmakers failed to reach an agreement on budgets before the start of a new fiscal year.

Profits for the S&P 500 probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts anticipate earnings growth to accelerate to 8.9 percent in the final three months of the year, the data show.

“A lot of the S&P earnings for the year are fourth-quarter loaded,” Bernie Williams, chief investment officer of investment solutions who oversees $16.7 billion at USAA Investments in San Antonio, said in a phone interview. “It’s more of the commentary that counts.”

Garry Evans, global head of equity strategy at HSBC Holdings Plc, cut his recommendation on U.S. equities to neutral from overweight, saying valuations are “a little stretched.”

He advised investors to increase holdings in emerging markets because growth in China is stabilizing and stocks are cheap.

The S&P 500 has climbed 16 percent this year as earnings beat estimates and data from manufacturing to housing and the labor market improved. The benchmark gauge is trading at 15.9 times reported earnings, up 12 percent from the beginning of the year and compared with a multiple of 11.9 for the MSCI Emerging Markets index, data compiled by Bloomberg show.

The International Monetary Fund reduced its global outlook for this year and next as capital outflows further weaken emerging markets and warned that a U.S. government default “could seriously damage the global economy.”

Growth worldwide will be 2.9 percent this year and 3.6 percent next year, the IMF said in a report released today in Washington, compared with July predictions of 3.1 percent for 2013 and 3.8 percent for 2014. The IMF’s forecasts factor in a short U.S. government shutdown and an agreement on the nation’s debt-limit before the Oct. 17 deadline.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

To know our soul apart from our ego

is the first step toward accomplishing supreme deliverance.

It is necessary that we know with absolute certainty that in essence we are spirit.

And we can only arrive at this knowledge if we render ourselves masters of our ego,

if we rise above all pride, all appetite, all fear, by knowing that material losses and the

death of the body can never take away the truth and the greatness of our soul.

Rabindranath Tagore, 1861-1901

As ever,

 

Carolann

 

It’s not what you look at that matters,

it’s what you see.

-Henry David Thoreau, 1817-1862

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

 

Dear Friends,

Tangents:

Just back from the annual World Business Forum in NYC.   Interesting discussions and learned lots and incessant buzz on the dysfunctional situation in Washington.  Lots to catch up on…

Of note:  On this day in 1849, American author and poet Edgar Allen Poe passed away at the age of 40.

But it’s World Smile Day today, and,

Laughter is the shortest distance between two people.  – Victor Borge.

Photos of the day

Three-year-old Eva Mahesan and her grandfather look at the brightly colored leaves in the autumn sunshine in Sheffield Park Gardens near Haywards Heath in Southern England. Luke MacGregor/Reuters

Beads of morning dew rest atop a fallen leaf near the intersection of Wallenberg and Court Streets in downtown Flint, Mich. Jake May/The Flint Journal/AP

Market Closes for October 7^th, 2013

Market  Index	Close	Change
Dow  Jones	14936.24	-136.34    -0.90%
S&P 500	1678.21	-12.29    -0.73%
NASDAQ	3770.377	-37.377    -0.98%
TSX	12788.54	+29.89
		+0.23%

International Markets

Market  Index	Close	Change
NIKKEI	13853.32	-170.99
		-1.22%
HANG  SENG	22973.95	-164.59
		-0.71%
SENSEX	19895.10	-20.85
		-0.10%
FTSE 100	6437.28	-16.60
		-0.26%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.570	2.543
CND.   30 Year Bond	3.111	3.096
U.S.   10 Year Bond	2.6302	2.6082
U.S.   30 Year Bond	3.6978	3.7083

Currencies

BOC Close	Today	Previous
Canadian $	0.96968	0.97123
US   $	1.03127	1.02962
Euro Rate  1 Euro=		Inverse
Canadian   $	1.40023	0.71417
US  $	1.35778	0.73650

Commodities

Gold	Close	Previous
London Gold   Fix	1322.74	1310.39
Oil	Close	Previous
WTI Crude Future	103.03	103.84
BRENT	109.360	109.360

Market Commentary:

Canada

By Eric Lam

Oct. 7 (Bloomberg) — Canadian stocks rose, following a decline last week, after gold producers rallied as investors sought a store of value amid growing concern that the U.S. could default on its debt.

AuRico Gold Inc. and Osisko Mining Corp. jumped at least 5 percent as all 24 members of a gold index advanced with the price of the precious metal. Allied Nevada Gold Corp. surged 28 percent after saying it reached its production and sales targets for the third quarter. BlackBerry Ltd. rallied 4.1 percent after a Macquarie Group Ltd. analyst raised his rating on the smartphone maker to the equivalent of a hold amid a report the company was in new takeover discussions.

The Standard & Poor’s/TSX Composite Index climbed 29.60 points, or 0.2 percent, to 12,788.25 at 4 p.m. in Toronto. The index slipped 0.7 last week and has added 2.9 percent this year.

Trading volume was 13 percent lower than the 30-day average.

“It’s textbook, this is what should happen, gold should be going up so the market is responding rationally to this crisis,” said Jeffrey Burchell, co-chief investment officer with Aston Hill Financial Inc. in Toronto. The firm manages about C$7 billion ($6.8 billion). “Every time in the past when they’ve had these crises you have a situation where the market has sold off in advance. This time it hasn’t, the market is acting rationally because everyone knows at some point this is going to get solved.”

President Barack Obama said he would be willing to negotiate with Republicans on fiscal terms if they raised the debt limit by next week and restored government funding.

The U.S. government could default on its debt if lawmakers don’t reach an agreement to raise the borrowing limit by Oct. 17. Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession that probably would become a depression.

The benchmark U.S. equity gauge fell more than 11 percent in three days in August 2011 amid a stalemate over the debt limit. The losses were later reversed and the S&P 500 gained 25 percent in the 12 months through August 2012.

In Canada today, building permits tumbled 21.2 percent to C$6.34 billion in August from a revised 21.4 percent gain in July, on a decline in commercial projects such as retail stores and office buildings.

Seven of 10 main industries in the S&P/TSX rose today, with producers of raw materials and technology stocks rising 0.8 percent to lead advances.

The S&P/TSX Gold Index jumped 2.3 percent, with all 24 members rising. Gold added 1.2 percent in New York for the first gain in three sessions as the U.S. budget impasse stoked demand for the metal as a store of value.

Osisko Mining climbed 7 percent to C$5.35 and AuRico Gold gained 5 percent to C$4.02.

Allied Nevada jumped 28 percent to C$5, the biggest gain since April, after the company said it is on track to meet its 2013 forecasts for gold and silver production. The miner plans to report third-quarter results during the week of Nov. 4.

Rio Alto Mining Ltd. added 4.4 percent to C$1.89, snapping a five-day slide, after saying it will meet its forecast for gold output this year.

BlackBerry rallied 4.1 percent to C$8.20, halting a two-day losing streak, after Kevin Smithen, analyst with Macquarie, raised his rating for the stock with a price target of $7.

BlackBerry has six buys, 22 holds and 14 sells, according to data compiled by Bloomberg.

Reuters reported on Oct. 4 after the close that BlackBerry was in talks with six firms, including Google Inc. and Cisco Systems Inc. for a potential sale. The company has a conditional deal to sell itself to a group led by Fairfax Financial Holdings Ltd., its largest shareholder, for about $4.7 billion, or $9 a share.

Air Canada soared 4.3 percent to C$4.66. The nation’s largest airline extended a five-year high and has rallied 32 percent in the past five sessions. It said on Oct. 3 that costs for the third quarter and full year will decline more than anticipated. Air Canada has surged 166 percent in 2013 for the best performance in the S&P/TSX.

US

By Lu Wang and Aubrey Pringle

Oct. 7 (Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index dropping to the lowest level in a month, as lawmakers remained deadlocked over extending the nation’s debt limit to avoid a default.

Bank of America Corp. and Wells Fargo & Co. paced declines among banks, each slipping 1.7 percent. International Business Machines Corp. retreated 1.1 percent as Barclays Plc lowered its recommendation. Cooper Tire & Rubber Co. sank 13 percent as Apollo Tyres Ltd. is seeking to cut its $2.5 billion offer to buy the U.S. company. Apple Inc. gained 1 percent after Jefferies Group LLC upgraded the stock.

The S&P 500 fell 0.9 percent to 1,676.12 at 4 p.m. in New York, the lowest since Sept. 9. The Dow Jones Industrial Average declined 136.34 points, or 0.9 percent, to 14,936.24. About 5 billion shares changed hands on U.S. exchanges, the slowest trading since Aug. 29.

“The volume is very light so I do think investors are trying to feel their way through this,” Walter Todd, chief investment officer at Greenwood Capital Inc., said in a phone interview from Greenwood, South Carolina. He helps manage $950 million. “Each day that it goes by without any type of solution or any hope of a solution, the market gets more and more concerned about what the ultimate outcome is.”

Speaker John Boehner said yesterday in an interview on ABC’s “This Week” that the House of Representatives can’t pass a debt-ceiling increase without packaging it with other provisions. Boehner said the country could default if President Barack Obama doesn’t negotiate. Obama today challenged congressional Republicans to raise the U.S. debt limit by next week and said he’s willing to negotiate on fiscal terms once that is done and government funding is restored.

Without an increase to the debt limit, the U.S. will exhaust its borrowing authority on Oct. 17 and would run out of funds to pay all of its bills sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office. Senate Democrats could introduce legislation as soon as today that gives Obama the authority to raise the debt ceiling unless two- thirds of Congress disapproves, according to a Senate Democratic aide.

S&P stripped the U.S. of its AAA credit rating in August 2011 amid a stalemate between Obama and Congress over whether to raise the debt ceiling. The S&P 500 fell more than 11 percent in three days.

Moody’s Investors Service said it sees a “very low” chance the U.S. will default on its debt payments. The impact of the partial government shutdown on the economy may not be particularly damaging in the short term, and the effect would be seen gradually over time if it was an extended one, Chief Executive Officer Ray McDaniel said in a Bloomberg Television interview in Bali on Oct. 5.

The S&P 500 had its first back-to-back weekly decline since August as the government began on Oct. 1 its first shutdown in 17 years, placing as many as 800,000 federal employees on unpaid leave and closing some services, after lawmakers failed to reach an agreement on budgets before the start of a new fiscal year.

The action delayed the release of the Labor Department’s monthly payrolls report, due last week. Should the shutdown continue, economic data to be postponed this week include September retail sales and August trade.

The lack of data is making it harder for Federal Reserve policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus.

The S&P 500 jumped to a record on Sept. 18 as the central bank unexpectedly refrained from reducing its $85 billion monthly bond-buying program, saying it wants more evidence of an economic recovery before scaling back stimulus. The Fed will release the minutes of its Sept. 17-18 meeting on Oct. 9.

“The economy is too fragile if they push to the limit” on the debt ceiling, said Tom Stringfellow, president and chief investment officer of San Antonio-based Frost Investment Advisors LLC, which manages $9.3 billion. “I suspect the central bank will continue with the channels and volume they’ve been going through for the last several years.”

Three rounds of Federal Reserve stimulus have helped drive the S&P 500 up about 150 percent from a 12-year low in 2009. The benchmark index has rallied 18 percent this year on better-than- estimated earnings and as data from manufacturing to housing and the labor market improved.

The U.S. earnings season starts tomorrow with Alcoa Inc., America’s biggest aluminum producer, scheduled to release third- quarter results after the market closes.

Profits for the broad index probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts anticipate earnings growth to accelerate to 8.9 percent in the final three months of the year, the data show.

“Some people are a little nervous that companies are going to use the excuse of the uncertainty in Washington yet again as to why they don’t have to or why they’re not going to perhaps be as optimistic about the fourth quarter and 2014 as the estimates currently reflect,” Darren Bagwell, director of research at Thrivent Asset Management in Minneapolis, said in a phone interview. His firm oversees about $82 billion.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, jumped 16 percent today to 19.41, erasing its loss for the year and reaching the highest closing level since June 24.

All 10 industries in the S&P 500 declined except for telephone companies. Consumer-discretionary, financial and raw- materials stocks fell the most, sinking at least 1.2 percent.

The KBW Bank Index sank 1.9 percent as all its 24 members retreated. Bank of America dropped 1.7 percent to $13.81. Wells Fargo, the largest U.S. home lender, lost 1.7 percent to $40.62.

Cooper Tire tumbled 13 percent to $25.72. Apollo Tyres is seeking to cut offer to buy Cooper after U.S. and Chinese workers challenged the takeover plan. Cooper acknowledged the $35-a-share offer should be reduced and that “the issue now is by how much,” Gurgaon, India-based Apollo said.

IBM slipped 1.1 percent to $182.01. Barclays cut its rating on the world’s largest computer-services provider to equal- weight, or hold, from overweight, citing concern that IBM’s cash flow may be affected as customers move to online-based software.

Qualcomm Inc. dropped 1.2 percent to $67.19. Tal Liani, an analyst with Bank of America Corp., cut the rating on the largest U.S. wireless equipment maker to neutral from buy, citing a potential “significant deceleration” in revenue and earnings growth over the next two years amid a slowdown in the smartphone market.

Time Warner Cable Inc. fell 1.6 percent to $111.02. The second-largest U.S. cable company agreed to buy fiber-optic network provider DukeNet Communications LLC for $600 million in cash. Time Warner Cable plans to use DukeNet to expand its business services in seven Southeastern states, including North and South Carolina.

Apple climbed 1 percent to $487.75. Peter Misek, an analyst with Jefferies, raised the stock’s rating to buy from hold, citing suppliers becoming more lenient on price.

Demand for iPhone 5 remains solid and expectations for iPhone sales are “conservative,” Timothy Arcuri, an analyst with Cowen & Co., said in a note to clients.

Alcoa added 0.1 percent to $7.97, erasing a loss of as much as 1.5 percent in the final minute of trading. Alcoa’s profit probably doubled during the third quarter to 6 cents a share amid higher demand from the aircraft and automotive industries, according to analysts’ estimates compiled by Bloomberg.

Intuitive Surgical Inc. jumped 4.6 percent, the most in the S&P 500, to $380.99. The maker of robot surgery devices is seeing many general surgeons moving “aggressively” to learn the company’s da Vinci system, according to Ben Andrew, an analyst with William Blair & Co. who attended the Clinical Robotic Surgery Association meeting in Washington.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

The Hindu believes that he is a spirit.

He believes that the sword cannot pierce him, that fire cannot burn him,

that water cannot dissolve him, that air cannot dry him out.

He believes that the soul is a circle whose circumference has no limits, but whose center is situated in the body.

Death signifies the transference of this center of a body to another.

We are the children of God.

Matter is our servant.

Swami Vivekananda, 1863-1902

As ever,

 

Carolann

 

If all men were just, there would be no need

of valor.

-Agesilaus, 444-360 BC

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

 

Dear Friends,

Tangents:

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

The Greater Vancouver International Film Festival is running this year between September 26 and October 11.  The festival brings more than 340 films from 70 countries for audiences to view.  The Greater Vancouver International Film Festival Society was founded in 1982 as a non-profit cultural society whose flagship event is the Vancouver International Film Festival (VIFF), which takes place in early autumn in venues in and around downtown Vancouver. The festival has grown to become one of the five largest in North America, with a focus on documentaries and cinema from Canada and East Asia. Outside East Asia, no festival screens a wider selection of films from that region. If you are interested in attending the festival, tickets can be purchased online through the festival website at http://www.viff.org/.  Enjoy everyone!

Today in History:

1535 – The first complete English translation of the Bible was printed in Zurich, Switzerland.

1648 – The first volunteer fire department was established in New York by Peter Stuyvesant.

1881 – Edward Leveaux received a patent for the player piano.

1895 – The first U.S. Open golf tournament took place in Newport, RI. Horace Rawlins, 19 years old, won the tournament.

1909 – The first airship race in the U.S. took place in St. Louis, MO.

1915 – The Dinosaur National Monument was established. The area covered part of Utah andColorado.

1927 – The first actual work of carving began on Mount Rushmore. 

“You are never too old to set another goal or to dream a new dream.” – C. S. Lewis

Photos of the Day:

A decorated elephant stands at the Nandankanan Zoological park on the outskirts of the eastern Indian city of Bhubaneswar, India, Friday, Oct. 4, 2013. Wild life week is celebrated in India from October 2 to 8. Biswaranjan Rout/AP

Vehicles drive along the M54 Yenisei Federal Highway near the Yenisei River during sunset outside Russia’s Siberian city of Krasnoyarsk, October 3rd. Ilya Naymushin/Reuters

Market Closes for October 4^th, 2013

Market  Index	Close	Change
Dow  Jones	15072.58	+76.10    +0.51%
S&P 500	1690.50	+11.84    +0.71%
NASDAQ	3807.754	+33.412    +0.89%
TSX	12758.65	+23.53
		+0.18%

International Markets

Market  Index	Close	Change
NIKKEI	14024.31	-132.94
		-0.94%
HANG  SENG	23138.54	-75.86
		-0.33%
SENSEX	19915.95	+13.88
		+0.07%
FTSE 100	6453.88	+4.84
		+0.08%

Bonds

Bonds	% Yield	Previous % Yield
CND.  10 Year Bond	2.580	2.543
CND.   30 Year Bond	3.120	3.096
U.S.   10 Year Bond	2.6438	2.6082
U.S.   30 Year Bond	3.7180	3.7083

Currencies

BOC Close	Today	Previous
Canadian $	0.97123	0.96832
US   $	1.02962	1.03272
Euro Rate  1 Euro=		Inverse
Canadian   $	1.39540	0.71664
US  $	1.35525	0.73787

Commodities

Gold	Close	Previous
London Gold   Fix	1310.39	1317.25
Oil	Close	Previous
WTI Crude Future	103.84	103.59
BRENT	109.360	109.360

Market Commentary:

Canada

By Cordell Eddings and John Detrixhe

The Canadian dollar fell against the majority of its most-traded peers this week as investors awaited the outcome of the U.S.’s budget standoff and Canadian crude oil prices dropped relative to a U.S. benchmark.

The currency rose versus its U.S. counterpart today as risk appetite improved on optimism that lawmakers in Washington would reach a deal to end its partial government shutdown and avoid a federal-debt default. The U.S. is Canada’s biggest trade partner. The price spread between Western Canada Select oil and West Texas Intermediate increased.

“The overall growth impact of the U.S. government shutdown is a factor” for the Canadian dollar, Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “The pricing of oil has moved against the Canadian dollar.”

The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, appreciated 0.4 percent to C$1.0294 per U.S. dollar at 5 p.m. in Toronto. One Canadian dollar buys 97.14 U.S. cents. The currency was little changed on the week against the greenback.

Canada’s government bonds fell for the first time in three days, pushing yields on the benchmark 10-year security up four basis points, or 0.04 percentage point, to 2.58 percent. The price of the 1.5 percent security due in June 2023 dropped 32 cents to C$90.85.

Stocks rose today, with the Standard & Poor’s 500 Index gaining 0.7 percent to 1,690.50.

The U.S. government began its first partial shutdown in 17 years on Oct. 1 as Republicans who control the House insisted on changes to the nation’s 2010 health-care law, President Barack Obama’s signature legislative achievement. The Senate, controlled by Democrats, refused. Congress also faces the statutory debt ceiling, which the Treasury has said will be reached Oct. 17.

“The shutdown is bad for growth in Canada, and as we get closer to the debt-ceiling deadline there is more concern manifesting, which is weighing on the U.S. dollar relative to the loonie,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto, said by phone. “We will probably continue to chop around in a range until this monumental uncertainty is cleared up. It’s all a question of waiting for Washington at this point.”

The discount Canada’s benchmark crude-oil grade, Western Canada Select, faces to West Texas Intermediate oil increased to $34.50 per barrel, the most since January. WTI futures traded at $103.56 a barrel today in New York.

Canada’s purchasing managers increased spending in September by less than economists forecast, according to a gauge released today by Western University’s business school.

The Ivey Purchasing Managers Index rose to 51.9 in September on a seasonally adjusted basis, following an August reading of 51.0, according to a statement on the London, Ontario university’s website. Readings of more than 50 indicate purchasing by governments and companies increased.

Economists projected a reading of 53.6, according to the median of a Bloomberg survey with 10 responses.

US

By Aubrey Pringle and Alex Barinka

U.S. stocks rose, paring a weekly decline in the Standard & Poor’s 500 Index, as optimism grew that lawmakers would reach a deal to end America’s budget standoff. Treasuries and gold fell while Italian bonds advanced.

The S&P 500 gained 0.7 percent at 4 p.m. in New York, while the Stoxx Europe 600 Index climbed 0.1 percent. The yield on 10- year Treasuries increased four basis points to 2.65 percent.

Italy’s 10-year bond yield dropped seven basis points to 4.30 percent. West Texas Intermediate oil added 0.5 percent as Tropical Storm Karen approached the U.S. coast, while gold futures slid 0.6 percent.

A partial U.S. government shutdown entered a fourth day amid wrangling by lawmakers over the budget and debt limit. Bill Gross of Pacific Investment Management Co. and BlackRock Inc.’s Larry Fink said the deadlock will be resolved soon, limiting damage to the economy. House Speaker John Boehner has been telling fellow Republicans that he won’t allow the U.S. to default on its debt, according to two Republican congressional aides.

“There’s a working presumption that this is fundamentally theater and it’s going to work itself out favorably,” Mackintosh Pulsifer, vice chairman and chief investment officer of Fiduciary Trust Co. International in New York, said in a phone interview. He helps oversee $15 billion. “There will not be a default, we’ll find some way to raise the debt ceiling. In a few weeks it’s not going to have any impact.”

The S&P 500’s rally today trimmed the weekly loss to 0.1 percent. The gauge had slumped as much as 1.3 percent for the week through yesterday. The Dow Jones Industrial Average ended the five days with a 1.2 percent drop.

President Barack Obama canceled plans to attend two economic summits in Asia next week as he remains in Washington to seek an end to the government shutdown. The Treasury Department said failure to raise the debt limit has the potential to freeze credit markets and cause the dollar to plunge.

Partially closing the U.S. government for one week would probably shave 0.1 percentage point from economic growth, according to the median of 40 estimates in a Bloomberg survey of economists. Federal Reserve Bank of San Francisco President John Williams estimated yesterday a two-week government halt would trim 0.25 percentage point off fourth-quarter economic growth.

The shutdown delayed the release of the Labor Department’s monthly payrolls report, which was due today. The lack of data is making it harder for Federal Open Market Committee policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus. Atlanta Fed President Dennis Lockhart said the shortage of economic news “would tend to make me somewhat more cautious” about reducing the pace of bond purchases.

“The taper is off the table for October, that is a silver lining for the market,” Phil Orlando, New York-based chief equity strategist at Federated Investors, said in a phone interview. His firm manages about $380 billion in assets.

“Given the fact that there is no jobs data and given the fact that we have triggered the potential breach of the debt ceiling, in my opinion there is zero chance that the Fed is going to commence the taper at the Oct. 29-30 FOMC meeting.”

The S&P 500 has rallied 19 percent this year. It has surged 150 percent from a March 2009 low amid three rounds of Fed stimulus and better-than-forecast corporate earnings.

Visa Inc. rose 1 percent today after a judge ruled the company didn’t infringe a SmartMetric Inc. patent. Facebook Inc. climbed 3.8 percent after the operator of the world’s most popular social network said it will sell advertising on its Instagram photo service. Union Pacific Corp. declined 1 percent after its earnings forecast missed projections.

Twitter Inc. released its S-1 prospectus for an initial public offering yesterday, with the document suggesting a valuation of $12.8 billion for the microblogging website.

Today’s gain for the Stoxx 600 trimmed its retreat for the week to 0.7 percent. Lindt & Spruengli AG jumped 3.6 percent to its highest since 2008 after saying it will buy back shares worth about 450 million Swiss francs ($498 million). Nokian Renkaat Oyj sank 7.6 percent, the most in almost a year, as the Finnish tiremaker cut its earnings forecasts.

The MSCI Emerging Markets Index added 0.3 percent, gaining for the fourth straight day. The gauge climbed 0.8 percent this week. Malaysia’s ringgit strengthened 0.4 percent after a report showed the trade surplus rose more than analysts estimated as exports jumped.

Treasuries snapped a two-day advance as the U.S. prepared to auction $64 billion of notes and bonds next week.

Money managers are getting out of Treasuries maturing closest to the debt-ceiling deadline on Oct. 17 and buying longer-maturity bills, yields indicate. One-month rates climbed as high as 0.16 percent yesterday, while rates on three-month bills were 0.02 percent, the biggest inversion of the spread since September 2008.

Corporate bond issuance slid 53 percent this week in Europe to the least in seven weeks, while U.S. sales tumbled 81 percent.

Unibail-Rodamco SE, Europe’s largest publicly traded property owner, and Banco Popular Espanol SA were among companies issuing 8.3 billion euros of notes this week, the least since the period ended Aug. 17, data compiled by Bloomberg show. Dollar-denominated offerings fell to $10.9 billion, the least since the period ended Aug. 30.

Italy’s 10-year securities climbed for the third time in four days as Prime Minister Enrico Letta won a confidence vote in parliament. Silvio Berlusconi’s future in Italian politics is hanging in the balance after a Senate panel voted today to recommend expelling the former prime minister from the upper house, following an August tax-fraud conviction.

Spain’s yield dropped four basis points to 4.20 percent today and Portugal’s declined 21 basis points to 6.34 percent, the lowest since Aug. 20.

Australia’s dollar rose 0.4 percent to 94.34 U.S. cents as traders bets reflected increased expectations the central bank won’t cut borrowing costs this year. The pound dropped against 15 of 16 of its major counterparts, falling 0.9 percent to $1.6014.

Gold fell for the fourth time this week in New York, sliding 0.6 percent, amid speculation that the impact of the federal shutdown will be limited. Holdings in global exchange- traded products yesterday reached the lowest since May 2010, wiping about $60.6 billion from the value of the assets this year. Bullion prices dropped 22 percent in 2013 as some investors lost faith in the metal as a store of value.

“Money seems to be chasing equities,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Gold does not seem to be attracting the safe-haven premium.”

Copper futures rose for the second time in three days, gaining 1 percent. Inventories tracked by the London Metal Exchange slid for a 22nd day, to 525,925 metric tons, the lowest since March 15.

West Texas Intermediate increased 0.5 percent to $103.84.

Tropical Storm Karen pushed through the Gulf of Mexico to the U.S. coast, threatening crude production in the region. Karen will make landfall early Oct. 6 on the southeastern tip of Louisiana, according to the National Hurricane Center.

Robusta coffee rallied as much as 3.1 percent after stockpiles in warehouses monitored by NYSE Liffe declined 19 percent in the past two weeks.

 

Have a wonderful weekend everyone!!!!

 

Be magnificent!

 

“Every great dream begins with a dreamer. Always remember, you have within you the strength, the patience, and the passion to reach for the stars to change the world.” – Harriet Tubman

 

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

Tel: 778-430-5808

Fax: 778-430-5838