December 1, 2014 Newsletter

Dear Friends,

Tangents:

December (Latin= 10^th month) was the tenth month in the Roman calendar when the year began in March with the vernal equinox.  The old English name was derra geola, “earlier Yule”.  In the French Revolutionary calendar it was Frimaire, hoarfrost month, from November 22^nd– December 21^st.

Went to Vancouver for my Mother’s birthday over the weekend and had the added bonus witnessing all the excitement and energy  in the city created by the  Grey Cup fans.  There were a lot of visitors from Calgary and some pretty wild costumes on fans headed to the game.  We had a wonderful birthday dinner at Oru, the restaurant in the Fairmont Pacific Rim.  There were twenty of us and everything was perfect – I cannot recommend it highly enough.  We had artichoke soup and ceviche  amon for a couple of the courses and they were amazing.  The service is first rate also.

PHOTOS OF THE DAY

Shepherdess Narcisa Cornelio (r.) and her daughter Nancy Condor rest in front of Hualcan glacier in Huascaran natural reserve in Ancash, Peru. Peru is home to 71% of the world’s tropical glaciers, which are a source of fresh water for millions, but 22% of the surface area of Peruvian glaciers has disappeared in the past 30 years. Mariana Bazo/Reuters

A long-tailed macaque naps on a religious statue after eating during the annual Monkey Buffet Festival at the Pra Prang Sam Yot temple in Lopburi, north of Bangkok, Thailand. The festival provides food and drinks to the local monkey population, which numbers more than 2,000, to thank them for drawing tourists to the town. Damir Sagolj/Reuters

Market Closes for December 1^st, 2014     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Dec. 1 (Bloomberg) — Canadian stocks fell a fourth day, sending the benchmark gauge to a three-week low, as railway shares tumbled and a gauge of Chinese manufacturing dropped more than economists forecast.

     Canadian Pacific Railway Ltd. and Canadian National Railway Co., which ship crude by rail, sank at least 3.6 percent after oil touched a five-year low before recovering. Penn West Petroleum Ltd. tumbled 6.6 percent after analysts at Bank of Montreal cut their rating for the stock. Surge Energy Inc. lost 9.4 percent to pace declines among energy producers. Iamgold Corp. and Argonaut Gold Inc. each jumped as gold and silver prices rebounded.

     The Standard & Poor’s/TSX Composite Index fell 119.38 points, or 0.8 percent, to 14,625.32 at 4 p.m. in Toronto, the lowest level since Nov. 6. The index has lost 3 percent in four days. The S&P/TSX is up 7.4 percent this year, the 12th-best performer among developed markets in the world.

     West Texas Intermediate rebounded after touching the lowest level in more than five years as the market selloff prompted by OPEC’s failure last week to curb production took a pause. Crude had the biggest monthly loss in November in almost six years after the Organization of Petroleum Exporting Countries signaled it will leave it to the market to curb a glut.

     Canadian Pacific declined 3.6 percent to C$212.68 and Canadian National tumbled 5.1 percent to C$77.09, the most in five years, as industrial stocks retreated 3.5 percent as a group. The industry has slumped 7 percent in the past two sessions.

      Westport Innovations Inc., which makes natural gas engines and components, sank 12 percent to C$4.62 after Jefferies LLC analyst Laurence Alexander lowered the stock’s rating to hold from buy. The stock has plunged 29 percent during an eight-day losing streak.

     Surge Energy lost 9.4 percent to C$4.54, the lowest since May 2013. The S&P/TSX Energy Index fell 1.8 percent. The gauge has retreated 12 percent in six days.

     Eight of 10 industries in the S&P/TSX fell on trading volume 51 percent higher than the 30-day average today.

     The Chinese government’s Purchasing Managers’ Index fell to an eight-month low of 50.3 in November, compared with the 50.5 median estimate of analysts in a Bloomberg survey and October’s 50.8. Readings above 50 indicate expansion.

     The government ordered factories in Beijing and surrounding regions to shut down during the Asia-Pacific Economic Cooperation forum to curb pollution.

     Iamgold jumped 18 percent to C$2.64, and Argonaut Gold surged 9.3 percent to C$2 after gold for February delivery rallied 3.6 percent in New York for the biggest gain in 14 months.

US

By Joseph Ciolli

     Dec. 1 (Bloomberg) — U.S. stocks fell for a second day as weaker data on Black Friday sales and China manufacturing overshadowed a rebound in oil and expansion in American factories.

     Retailers in the Standard & Poor’s 500 Index fell the most in a month as post-Thanksgiving holiday sales came in below forecasts. Apple Inc. fell as much as 6.4 percent in early trading  before paring the loss in half. Chevron Corp. and Exxon Mobil Corp. gained at least 2 percent as crude oil ended a four- day skid.

     The S&P 500 fell 0.7 percent to 2,053.44 at 4 p.m. in New York. The Dow Jones Industrial Average slumped 51.44 points, or 0.3 percent, to 17,776.8. The technology-heavy Nasdaq 100 Index lost 1.2 percent. About 7.6 billion listed shares changed hands in the U.S., 13 percent higher than the three-month daily average.

     “There’s a lot of rotation here in the market right now,” Gene Peroni, a fund manager at Advisors Asset Management Inc. in Conshohocken, Pennsylvania, said in a phone interview. His firm oversees $14.7 billion. “The market is holding up pretty well.  We’re just going through an intermediate consolidation.”

     The S&P 500 dropped as much as 0.8 percent in the first half hour of trading as Apple, the world’s largest company, posted its biggest intraday plunge since January. Equities briefly pared losses as Apple trimmed its declines and data from the Institute for Supply Management showed manufacturing in the U.S. grew in November at a faster pace than projected.                         

     The ISM’s factory index in the U.S. was little changed at 58.7 last month, the second-strongest level since April 2011, compared with 59 in October. It exceeded the median forecast of 80 economists surveyed by Bloomberg and readings greater than 50 indicate growth.

     China’s official factory index fell to 50.3 for November, below the 50.5 reading projected by economists, while a private gauge from HSBC Holdings Plc and Markit Economics came in at 50, the dividing line between expansion and contraction.

     “Chinese data is starting to give investors pause about global growth,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “If we can stabilize oil here, that would be a positive for the market.”

     Oil prices reversed earlier declines today, with West Texas Intermediate rebounding 4.3 percent after plunging 3.7 percent to $63.72 a barrel, the least since July 2009.

     That benefited Exxon Mobil and Chevron, which had the largest gains in the Dow. Occidental Petroleum Corp. increased 3.8 percent, while ConocoPhillips climbed 2.6 percent.

     A measure of energy-related stocks in the S&P 500 slid 9.5 percent last week, the most since September 2011, as oil slumped after the Organization of Petroleum Exporting Countries decided to keep its output limit unchanged. Oil has collapsed into a bear market as the U.S. pumps crude at the fastest rate in three decades while global demand growth slows.

     The Dow Jones Transportation Average slid 2.7 percent, the most since Feb. 3, with all 20 of its companies declining on the day. Southwest Airlines Co. and Delta Air Lines Inc. fell more than 2.2 percent as the Bloomberg U.S. Airlines Index retreated for the first time in five days. The group rallied 10 percent last week amid prospects for lower fuel costs.

     The S&P 500 climbed 2.5 percent in November, rising for a second month, as global central banks added stimulus, and data showed the U.S. economic recovery remained intact. The S&P 500 closed at an all-time high on Nov. 26.                         

     Investors will be watching other data this week for clues to the economy’s strength, with the focus on Friday’s labor statistics. Companies added 228,000 payrolls in November while the unemployment rate held at 5.8 percent, according to the consensus forecast by economists.

     A report from the National Retail Federation showed U.S. consumers spent an estimated 11 percent less than last year over the four days through November 30. It’s the second year in a row that Thanksgiving sales fell during a period famous for long lines and frenzied crowds.

     The slower foot traffic means retailers will have to wring more money from consumers in December, including during today’s Cyber Monday e-commerce blitz.

     “There were disappointing holiday sales over the weekend and now basically retail, online, anything Internet is really getting hit today,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said via phone.                       

     A group of retailers in the S&P 500 fell 1.5 percent. Best Buy Co. and GameStop Corp. were hit the hardest, falling more than 5.2 percent. Amazon.com Inc. and Macy’s Inc. also declined more than 2.6 percent.

     Apple shares plunged almost 5 percent during a 60-second swoon that started 20 minutes after trading began today, falling the most since January before paring half the loss almost as quickly. About $40 billion of market value was erased and then mostly restored as shares of the iPhone maker slumped along with other technology stocks.

     “Being as big and visible as it is, some people use Apple as a proxy for worldwide consumer technology,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “Little hiccups can be translated into rather large spasms from time to time.”

     Apple’s retreat was mirrored in technology stocks from Tesla Motors Inc. to TripAdvisor Inc. and Facebook Inc., which fell more than 3.3 percent.

     Industrial and technology shares had the biggest losses among 10 groups in the S&P 500, dropping more than 1.1 percent.  Energy stocks had the largest gain, rising 0.7 percent.

     The Chicago Board Options Exchange Volatility Index, the gauge of options prices known as the VIX, jumped 7.2 percent to 14.29. The benchmark gauge of price swings climbed 3.3 percent last week.

Have  a wonderful evening.

Be magnificent!

But if you are not connected with all living beings on earth,

you risk losing your relationship with humanity, with human beings.

We never truly look at a tree’s qualities; we never touch it to feel how solid it is, how rough its bark is,

to listen to the sound it makes.  Not the sound of the wind in the leaves,

nor the morning breeze that makes them rustle, but its own sound, the sound of the trunk,

the silent sound of the roots.  You have to be extremely sensitive to hear this sound.

It is not the noise people make, the chattering of thoughts, nor that of human quarrels and wars,

but the very sound of the universe.

Krishnamurti

As ever,

Carolann

You always pass failure on the way to success.

                        -Mickey Rooney, 1920-2014

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7