November 14, 2013 Newsletter

Dear Friends,

Tangents:

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

Every autumn, millions of Pacific salmon forge their way up the myriad streams of the Pacific northwest to spawn and die. Pacific salmon have always been fishes of mystery. We know them well as fine food, and as superb sport fish, but the details of how they spend their time in the ocean and of how they find their way back to their home pools in their parent streams are even today not fully understood. In Goldstream, salmon appear about mid-October, and may be seen for about nine weeks, the dates varying from year to year. Of the five kinds of North American Pacific salmon it is the Chum salmon that is most abundant in this river, though you may also see some Coho and Chinook salmon, as well as the Steelhead and the Cutthroat trout.  Grab a coffee, the kids and take a hike out to Goldstream Park!

“Always aim at complete harmony of thought and word and deed. Always aim at purifying your thoughts and everything will be well.”

Mahatma Gandhi

Photos of the Day:

A woman views autumn colors of a climbing plant across a wall in central London. Toby Melville/Reuters

One World Trade Center (l.) is reflected in the glass facade of its neighbor, 4 World Trade Center in New York. A ribbon-cutting was held to open the 978-foot (298-meter) 4 World Trade Center. Four World Trade is designed by Japanese architect Fumihiko Maki. Mark Lennihan/AP

Market Closes for November 14^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 14 (Bloomberg) — Canadian stocks rose to a two-week high, as precious metals producers rallied after U.S. labor data and comments from U.S. Federal Reserve Chairman nominee Janet Yellen signaled further stimulus.

B2Gold Corp. climbed 5.1 percent as the price of the metal halted a five-day losing streak. Pan American Silver Corp. jumped 7.8 percent as silver rallied. CGI Group Inc., the company that has come under scrutiny for its work on the Obamacare health exchange, surged 4.3 percent after reporting fourth-quarter earnings that topped estimates.

The Standard & Poor’s/TSX Composite Index climbed 60.72 points, or 0.5 percent, to 13,431.38 at 4 p.m. in Toronto, the highest since Oct. 30. The benchmark Canadian equity gauge has advanced 8 percent this year, the third-worst performance among global developed markets, ahead of Hong Kong and Singapore.

“It’s a green light, as that was the biggest fear, that the Fed would take away the punch bowl,” said Ian Nakamoto, director of research with MacDougall MacDougall & MacTier Inc. in Toronto. The firm manages about C$4 billion ($3.8 billion).

“Definitely, the testimony is positive for the markets. She does have to contend with some hawks, and we’ll see whether she’s a compromiser, but right now it looks like no tapering until March.”

The U.S. economy and the job market are performing “far short of their potential” and a strong recovery will ultimately enable the Fed to reduce its stimulus, Yellen said in testimony at her nomination hearing today.

Investors have been watching for signals on whether the Fed will taper its $85 billion a month in bond purchases. The stimulus has fueled a rally in equities this year.

Raw-materials stocks rallied 1 percent to pace gains in the S&P/TSX, as eight of 10 industries advanced. Trading volume was 11 percent higher than the 30-day average.

B2Gold gained 5.1 percent to C$2.46 and Agnico Eagle Mines Ltd. increased 4.5 percent to C$30.74. Gold surged 1.4 percent to settle at $1,286.30 an ounce in New York, halting a five-day slump that was its longest since August. The S&P/TSX Gold Index climbed 2 percent as 22 of 24 members advanced.

Pan American Silver jumped 7.8 percent to C$11.59 and Silvercorp Metals Inc. added 3.5 percent to C$2.99 as silver futures for December delivery increased 1.4 percent.

CGI Group climbed 4.3 percent to C$39.24, a record high after rising for a ninth time in 10 sessions. The company’s merger with Logica Plc and the resulting contracts have fueled profit and sales. Its contract developing the U.S. federal government’s health-insurance exchange is a small part of CGI’s revenue.

Linamar Corp. soared 14 percent to a record C$40.72 for the biggest gain in the S&P/TSX. The Guelph, Ontario-based auto parts maker reported third-quarter adjusted profit of 80 Canadian cents a share, topping analysts’ projections for 66 cents.

Tourmaline Oil Corp. increased 5.4 percent to C$42.62 and Canadian Natural Resources Ltd. rose 2.6 percent to C$33.11 as crude fluctuated after touching a five-month low in New York.

Encana Corp. climbed 2.3 percent to C$19.02 to snap a three-day slide.

Turquoise Hill Resources Ltd. slumped 7.8 percent to C$4.27, for a sixth day of declines. The miner disclosed it was unable to obtain project financing for its Oyu Tolgoi copper project in Mongolia. Potential investors balked at uncertainty over when the company will be able to resolve “issues” with the government.

US

By Aubrey Pringle

Nov. 14 (Bloomberg) — U.S. stocks rose, extending records for benchmark indexes, as comments from Janet Yellen signaled she will continue the Federal Reserve’s stimulus efforts.

PulteGroup Inc. jumped 4.9 percent as homebuilders surged.

Office Depot Inc. gained 4.5 percent after Bank of America Corp. recommended investors buy the stock. Cisco tumbled 11 percent, leading a decline among technology shares, after its profit forecast missed projections. Kohl’s Corp. dropped 8.1 percent after the retailer cut its forecast.

The Standard & Poor’s 500 Index rose 0.5 percent to a record 1,790.62 at 4 p.m. in New York. The Dow Jones Industrial Average increased 54.59 points, or 0.4 percent, to 15,876.22, also a record. The Nasdaq Composite Index added 0.2 percent to the highest level since September 2000. About 6 billion shares changed hands on U.S. exchanges today, in line with the three- month average.

“Clearly Yellen’s speech is really what’s driving the markets,” Joseph Tanious, a New York-based global market strategist for J.P. Morgan Asset Management, which oversees about $1.5 trillion, said by phone. “Hearing her comments, it reaffirms everyone’s belief that Yellen is unlikely to pull the plug on QE, at least in the next couple months. Investors are feeling a bit more comfortable.”

Yellen, nominated to be the next chairman of the Federal Reserve, said the central bank should take care not to withdraw stimulus, known as quantitative easing, too early from an economy that is operating well below potential.

“It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero,” she said in testimony to the Senate Banking Committee in Washington today.

Central bank policy makers will probably pare the $85 billion monthly pace of bond buying to $70 billion at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8. The group next meets Dec. 17-18.

Fed support has helped propel the S&P 500 to a 165 percent gain from its March 2009 low. The gauge has rallied 26 percent in 2013, on course for its best year in a decade, and is trading at 16.2 times projected earnings, more than the five-year average of 14 times profit, data compiled by Bloomberg show.

Yellen added that she sees no evidence of an asset-price bubble in the stock market. “Stock prices have risen pretty robustly, but if you look at traditional measures,” such as price-earnings ratios, “you would not see stock prices in territory that suggests bubble-like conditions,” she said.

Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc., said value remains in the U.S. stock market, pointing to price-earnings ratios that are lower now than the last time stocks were near these levels.

“Companies right now are increasingly enthusiastic about the dynamism in the economy,” Cohen said in a Bloomberg Radio interview with Tom Keene yesterday. “There’s value in the market right now. The U.S. economy will likely grow faster next year.”

Data today showed jobless claims in the week ended Nov. 9 declined 2,000 to 339,000 from a revised 341,000 the week before that was higher than initially reported. The median forecast of 51 economists surveyed by Bloomberg called for a drop to 330,000.

Fed Bank of Philadelphia President Charles Plosser, an opponent of Fed bond purchases, said the central bank should focus on price stability as its primary objective, and not worry as much about “fluctuations” in employment.

Of the 462 S&P 500 companies that have announced earnings so far, 75 percent have topped analysts’ income forecasts, data compiled by Bloomberg showed. Profits for the gauge increased 4.7 percent in the third quarter and will gain 6.2 percent in the final three months of the year, estimates compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, which measures future volatility signaled by S&P 500 options, fell 1.2 percent to 12.37. The gauge has tumbled 31 percent this year.

Nine of 10 main S&P 500 groups advanced. Utilities stocks increased 0.9 percent for the best performance among the industries.

The S&P Supercomposite Homebuilding Index gained 3 percent as all 11 members advanced. PulteGroup jumped 4.9 percent to $17.86 and Lennar Corp. climbed 2.7 percent to $34.22. D.R. Horton Inc. added 2.8 percent to $19.59.

Office Depot rose 4.5 percent to $5.62. Bank of America raised its rating on the stock to buy from underperform, similar to a sell recommendation, citing potential cost savings following its merger with OfficeMax Inc. and the appointment of Roland Smith as chief executive officer. The shares are up 12 percent for the week.

Tyco International Ltd. rose 2.4 percent to $37.60, its highest price since 2002. The fire detector and security company reported quarterly revenue that beat estimates.

Western Digital Corp. climbed 4.7 percent to a record $75.85 after the company late yesterday said it would pay a quarterly dividend of 30 cents a share. Western Digital had paid 25 cents a share for the previous five quarters.

Eli Lilly & Co., the biggest U.S. maker of insulin products, rose 1 percent to $51.03. The company said it will pour another $700 million into manufacturing capacity, more than tripling its investment in the expanding market for diabetes treatments.

Cisco, the world’s largest maker of computer-networking equipment, tumbled 11 percent to $21.37 after giving quarterly profit and sales forecasts that missed analysts’ estimates.

Chief Executive Officer John Chambers has cut prices to bolster sales of switches and routers, seeking to fend off competition from Huawei Technologies Co., Juniper Networks Inc. and Hewlett-Packard Co. Sales in developing regions were less than anticipated, and there was a “lack of confidence among business leaders” because of the outlook for the economy, as well as the shutdown of the U.S. government in October, Chambers said on a conference call.

Technology shares had the only decline among S&P 500 groups, with Hewlett-Packard losing 5.4 percent to $25.07 and Citrix Systems Inc. falling 5.3 percent to $54.96. Xilinx Inc. and Jabil Circuit Inc. retreated at least 3.9 percent.

Kohl’s plunged 8.1 percent to $53.55 for its biggest decline in almost a year. The retailer reported third-quarter earnings that missed analyst estimates and trimmed its full-year outlook.

Have a wonderful evening everyone.

Be magnificent!

“The value of experience is not in seeing much, but in seeing wisely.”
William Osler

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