November 1, 2013 Newsletter

Dear Friends,

Tangents:

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

Reminder:  This Sunday, November 3 marks the end of Daylight Savings.  At 2am on Sunday morning, clocks will go back 1 hour.

When thinking about Daylight savings, I came across an article in the Globe and Mail:  “Are you a chipper early bird or narcissistic night owl? Find out before the clocks change”.  This article is very interesting and goes through different studies about early birds versus night owls.  Here is one I thought I would share:

EARLY BIRDS ARE PROACTIVE OPTIMISTS

In 2009, Harvard biologist Christoph Randler found that morning people are more likely to agree with statements like “I spend time identifying long-range goals for myself” and “I feel in charge of making things happen.” This helps explain why they are more successful in business, Randler said.

To read more on the studies visit: http://www.theglobeandmail.com/life/health-and-fitness/health/early-bird-or-night-owl/article15194058/

“Success is about creating benefit for all and enjoying the process. If you focus on this & adopt this definition, success is yours.” – Kelly Kim

Photos of the Day:

Spectators watch the second free practice at the Yas Marina racetrack in Abu Dhabi, United Arab Emirates. Hassan Ammar/AP

A woman takes a photograph of fish-shaped lanterns during the Seoul Lantern Festival 2013 at Cheonggye stream in central Seoul, South Korea. Kim Hong-Ji/Reuters

Market Closes for November 1^st, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 1 (Bloomberg) — Canadian stocks declined to a one- week low, after falling the most in three weeks yesterday, as investors assessed corporate earnings and gold producers slid after Barrick Gold Corp. said it will sell shares.

Barrick, the world’s largest producer of gold, dropped 7.5 percent as it plans to raise at least $3 billion to pay down debt. Taseko Mines Ltd. plunged 9.8 percent after a federal review panel said its project in British Columbia has significant adverse environmental effects. Norbord Inc. jumped 10 percent as the panelboard producer’s earnings topped estimates. Clearwater Seafoods Inc. climbed 8.2 percent after declaring an annual dividend.

The Standard & Poor’s/TSX Composite Index fell 23.80 points, or 0.2 percent, to 13,337.46 at 4 p.m. in Toronto. The benchmark Canadian equity gauge advanced 4.5 percent in October for a fourth month of gains.

“The commodities space is a little soft, and the explanation is the big Barrick deal yesterday,” said Michael O’Brien, fund manager with TD Asset Management Inc., in Toronto. He helps manage C$216 billion ($207 billion) with the firm. “That has an impact on the other gold names as well.”

Gold and energy producers also fell on signs of climbing supplies of raw materials at a time when the prospect of reduced U.S. Federal Reserve stimulus may cut demand.

Data from the U.S. showed an index of manufacturing rose last month to the highest level since April 2011. An earlier report from China indicated the nation’s official manufacturing Purchasing Managers’ Index rose more than estimated in October. The U.S. and China are Canada’s two biggest trading partners.

Barrick sank 7.5 percent to C$18.77, the most in four months. The company said yesterday it plans to raise at least $3 billion through a share offering in order to repay a portion of its $15 billion in debt. Barrick also said yesterday it will suspend construction at its $8.5 billion Pascua-Lama project to conserve cash.

Osisko Mining Corp. slumped 7.5 percent to C$4.71 and Silvercorp Metals Inc. retreated 5.9 percent to C$3.06 as gold and silver prices declined to two-week lows in New York.

Taseko Mines plunged 9.8 percent to C$2.31, the biggest drop since April, as a review panel said the company’s New Prosperity copper and gold project in British Columbia would affect water quality and grizzly bears in the area.

“The risks are modest and the social and economic benefits are enormous,” the company said in a statement. Taseko said it will challenge the report’s findings.

Legacy Oil & Gas Inc. dropped 4.5 percent to C$6.74 and Suncor Energy Inc. fell 2.9 percent to C$36.80 as crude tumbled below $95 a barrel for the first time since June.

Valeant Pharmaceuticals International Inc. advanced 5.4 percent to C$116.04, the biggest gain in five months, as seven of 10 industries in the S&P/TSX rose. Trading volume was 7.1 percent higher compared with the 30-day average at this time of the day.

Valeant agreed to sell its over-the-counter brand Caladryl in India to Piramal Enterprises Ltd. Terms of the deal were not disclosed. Caladryl is used for minor skin irritations.

Alex Arfaei, an analyst with BMO Capital Markets, separately said in a report a Valeant purchase of some Merck & Co. products would be logical for both companies.

Norbord added 10 percent to C$32.70 as it reported adjusted earnings of 33 cents a share, excluding a one-time income tax recovery, ahead of the 20 cent estimate of Bloomberg analysts.

Prices for wood particle oriented strand board, used in home construction, bottomed in September and is gradually improving, Chief Executive Officer Barrie Shineton said in a statement.

Clearwater Seafoods rallied 8.2 percent to C$6.33, for an eight-year high, after initiating an annual dividend of 10 cents a share.

US

Nick Taborek and Aubrey Pringle

Nov. 1 (Bloomberg) — U.S. stocks rose, halting the first two-day drop in the Standard & Poor’s 500 Index in three weeks, as optimism about corporate earnings offset concern that improving economic data could prompt the Federal Reserve to trim stimulus.

First Solar Inc. rallied 18 percent after the largest U.S. solar-panel manufacturer said third-quarter profit almost doubled. American International Group Inc. lost 6.5 percent after premium revenue fell at its property-casualty division.

Chevron Corp. slid 1.6 percent as it reported profit below estimates as weaker refining margins eroded gains from higher commodity prices and output from wells.

The S&P 500 climbed 0.3 percent to 1,761.64 at 4 p.m. in New York, after earlier falling as much as 0.2 percent. The equity gauge advanced 0.1 percent in the past five days, its fourth straight weekly gain. The Dow Jones Industrial Average rose 69.80 points, or 0.5 percent, to 15,615.55 today. About 6.8 billion shares changed hands on U.S. exchanges, 14 percent above the three-month average.

“Earnings drive the market, and earnings have been good,” Richard Sichel, the chief investment officer at Philadelphia Trust Co., where he helps oversee $1.9 billion, said by phone.

“Economic growth is slow but going in the right direction. Stocks definitely have shown that they’re the best place to be, and that can continue in spite of things going on in Washington.”

Better-than-forecast corporate results and Fed stimulus have helped the S&P 500 rally 24 percent this year as it challenges 2009 for the best annual gain in the past decade. The gauge jumped 4.5 percent in October for the biggest advance in three months and closed at a record Oct. 29.

Of the 368 S&P 500 companies that have reported results for the third quarter, 75 percent exceeded analysts’ predictions for profit, while 53 percent beat sales estimates, data by Bloomberg showed. Profits for members of the gauge probably increased 4.1 percent in the period as sales climbed 2.9 percent, according to analysts’ estimates compiled by Bloomberg.

Investors continued to shift money into stocks last month, as U.S. equity exchange-traded funds drew $18.2 billion in October, the most in three months and the third-highest amount since 2010, according to Bloomberg data. About $110.6 billion has been absorbed this year, putting the stock ETFs on pace for the highest flows since the records began in 2000.

Equities turned lower earlier today after improving manufacturing data raised concern that the Fed will cut its $85 billion in monthly bond buying sooner than expected. The Institute for Supply Management’s factory index rose at a faster pace than forecast in October, indicating U.S. manufacturing was a source of strength. An earlier report from China indicated the nation’s official manufacturing Purchasing Managers’ Index rose more than estimated in last month.

“There’s some concern clearly that the economic data is getting better and we might get tapering in December,” Eric Green, director of research and fund manager at Penn Capital Management, said by phone. The Philadelphia-based firm oversees about $7 billion. “As you get positive economic data points, those that were concerned about the taper get more concerned.”

Fed policy makers this week said the economy showed signs of “underlying strength” even as the bank maintained the pace of stimulus while awaiting further signs growth is strong enough to bring down 7.2 percent unemployment. Economists in a Bloomberg survey project that tapering will begin in March, based on the median estimate.

The data today came amid concern the 16-day U.S. government shutdown last month may have slowed growth in the fourth quarter. The economy will probably expand at a 2 percent annualized rate in the final three months of the year, less than economists projected at the start of the federal closure. The median projection of 71 economists surveyed by Bloomberg yesterday compares with a 2.4 percent forecast in an Oct. 4-9 survey.

Fed Bank of St. Louis President James Bullard said gains in the labor market since September 2012 could warrant a cut in the Fed’s monthly bond purchases. Charles Plosser, president of the Philadelphia Fed who has opposed the central bank’s current round of stimulus, said inflation will be a concern as the Fed unwinds its balance sheet.

The S&P 500’s rally has left the index trading at 15.9 times its companies’ estimated earnings, after slipping from the highest valuation since the start of 2010, according to data compiled by Bloomberg.

“We have gotten pretty overbought and we were due for some pause, which is what we have been getting since the Fed statement,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in an interview. “The market continues to be sloppy since.”

The Chicago Board Options Exchange Volatility Index, the gauge known as VIX that measures options traders’ estimate of future price swings in S&P 500, slid 3.4 percent, halting a four-day rally. The gauge dropped 17 percent in October.

Seven out of 10 main industries in the S&P 500 advanced today, as industrial stocks and utilities rose at least 0.7 percent to pace gains. Boeing Co. jumped 1.9 percent to a record $133.03 for the biggest gain in the Dow.

First Solar rallied 18 percent to $59.14 as sales of power plants and revenue from new projects boosted profit. Net income rose to $195 million, or $1.94 a share, from $87.9 million, or $1, a year earlier, according to a statement late yesterday. Analysts on average had predicted earnings of 83 cents.

J.C. Penney Co. advanced 8.5 percent to $8.14, a one-month high. ITG Investment Research analyst John Tomlinson boosted his third-quarter revenue estimate, citing “improved sales trends.”

Netflix Inc. rose 2.1 percent to $329.27. The online video- streaming service was upgraded to outperform from neutral at Robert Baird & Co.

Chevron slid 1.6 percent to $118.01. The second-largest U.S. energy producer by market value said profit from processing crude oil into fuels tumbled 45 percent during the third quarter to $380 million amid rising feedstock costs and repairs at a California plant that crimped gasoline and diesel output. The refining slowdown overshadowed a 2.7 percent rise in oil and gas production led by fields from Kazakhstan to Pennsylvania.

Energy companies lost 0.3 percent for the steepest decline among S&P 500 groups, as crude fell below $95 a barrel for the first time since June.

AIG, the insurer that repaid a U.S. rescue last year, declined 6.5 percent to $48.28, headed for the lowest close in a year. Premium revenue at the property-casualty division fell 3.7 percent to $8.43 billion in the third quarter, the company said in a statement late yesterday. Third-quarter net income rose to $2.17 billion, or $1.46 a share, from $1.86 billion, or $1.13 a year earlier, New York-based AIG said.

Tower International Inc., a maker of metal components for the automotive industry, fell 5.1 percent to $20.14 after saying an affiliate of Cerberus Capital Management LP plans to sell about 2.6 million shares in the company.

Have a wonderful weekend everyone!!

Be magnificent!

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.” – Steve Jobs

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