November 15, 2013 Newsletter

Dear Friends,

Tangents:

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

I’ve heard of “Bring your child to work day”, but never “Bring your parent to work day”.  On November 7^th, LinkedIn launched international Bring your parents to work day at 17 of its international offices.  A studied showed that one in three Canadian parents don’t really know what their offspring do at the office.  For example, when asked “How was work”, the general response is “good”.  Bringing parents into the office is a way to bridge that gap.  Google, is another company in which has adapted to the “Bring your parent to work day”.  Danielle Restivo, employee of Linkedin was partly responsible for the launch of this and opened up the conversation in the LinkedIn offices.  It happened when her mother wrote a note to her saying: “I love you. You’re wonderful.  Can you write me one paragraph on what you do.”  Danielle Restivo, writes “From an employer perspective, this type of [parental engagement] event is a home run,” meaning that it makes employees happy, makes companies look good and ultimately results in, well, results, which is of course the point.  What are your thoughts on this new culture that seems to be adapting to offices?

“Don’t wait around for other people to be happy for you. Any happiness you get you’ve got to make yourself.”
Alice Walker

Photos of the Day:

A bald tree stands in front of autumnally colored vineyards near Ueberlingen at Lake Constance, southern Germany. Felix Kaestle/dpa/AP

Members of Brazilian indigenous ethnic groups dance during the XII Games of the Indigenous People, in Cuiaba November 14th. Paulo Whitaker/Reuters

Market Closes for November 15^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Lu Wang and Nick Taborek

Nov. 15 (Bloomberg) — Canadian stocks rose, capping a second week of gains for the benchmark index, on speculation the U.S. Federal Reserve will maintain monetary stimulus and as China’s ruling party announced changes to economic policy.

Potash Corp. of Saskatchewan Inc. added 0.8 percent amid speculation an agreement to sell OAO Uralkali by its owners may defuse a dispute between Russia and Belarus that roiled the global soil nutrient market. Bonavista Energy Corp. climbed 3.9 percent as Scotia Capital Inc. boosted the stock’s rating. West Fraser Timber Co. slipped 4.7 percent as RBC Capital Markets downgraded shares of the lumber producer.

The Standard & Poor’s/TSX Composite Index climbed 51.18 points, or 0.4 percent, to 13,482.56 at 4 p.m. in Toronto.

Trading in the benchmark gauge’s shares was 8.6 percent below the 30-day average. The index advanced 0.8 percent this week, its fifth weekly gain in six.

“Yellen is going to continue Bernanke’s policies of extremely low short-term rates and being very slow to pull back from quantitative easing, so that is stimulative for risk assets,” Todd Johnson, a portfolio manager at Winnipeg, Manitoba-based BCV Asset Management, said in a phone interview.

His firm oversees C$550 million ($526 million).

Equities rose yesterday after Janet Yellen, nominated to succeed Ben Bernanke as the next chairman of the Fed, said the central bank should take care not to withdraw stimulus, or quantitative easing, too early from an economy that is operating well below potential.

China’s government vowed to allow more private investment in the state sector, loosen its one-child policy and better protect farmers’ rights to land, according to the Communist Party policy decision published today by the official Xinhua News Agency today.

The document, covering 60 measures, follows a communique issued Nov. 12 after a four-day party conclave in Beijing that omitted detailed policies for the world’s second-largest economy.

“China’s growth is very positive for Canada, and liberalizing their financial sector and encouraging private sector consumption is a significant step forward for China’s normalization,” Johnson said.

Manufacturing in the New York region unexpectedly contracted in November, a report on the New York Fed’s general economic index showed today. In Canada, economic data were mixed, with factory sales rising in September to the highest in more than a year while existing home sales fell 3.2 percent in October from the previous month.

Potash Corp. rose 0.8 percent to C$33.85. Billionaire Suleiman Kerimov and his business partners in Uralkali, a rival potash producer, may reach an agreement to sell their joint 33 percent stake as soon as next week, according to four people with knowledge of their discussions.

A sale may defuse a dispute between Russia and Belarus sparked by Uralkali’s July withdrawal from a partnership that marketed 40 percent of global exports. The falling-out and Uralkali’s plan to boost output roiled the $20 billion market for the soil nutrient. Belarus has called for a change in the company’s ownership before a reconciliation is possible.

Bonavista Energy rallied 3.9 percent to C$12.71. The oil and natural gas producer was raised to sector outperform from sector perform at Scotia Capital by equity analyst Patrick Bryden. The 12-month target price is C$18 a share.

Finning International Inc. advanced 5.8 percent to C$25.54.

The seller of Caterpillar Inc. equipment was raised to outperform from sector perform at RBC Capital Markets by equity analyst Sara O’Brien after the company yesterday said third- quarter revenue beat estimates.

Raw-materials producers has the worst performance out of 10 groups in the S&P/TSX, falling 0.7 percent. OceanaGold Corp. dropped 5.2 percent to C$1.83 and Centerra Gold Inc. retreated 5.7 percent to C$3.15.

West Fraser Timber slid 4.7 percent to C$91.32. The lumber producer was cut to sector perform from outperform at RBC Capital Markets by equity analyst Paul Quinn.

US

By Lu Wang

Nov. 15 (Bloomberg) — U.S. stocks rose for the sixth straight week, sending benchmark indexes to all-time highs, after Janet Yellen signaled she will continue Federal Reserve stimulus efforts as the central bank’s chairman.

Macy’s Inc. jumped 11 percent for the week, leading a rally among retailers, as better-than-estimated earnings boosted optimism about the holiday shopping season. PulteGroup Inc. and D.R. Horton Inc. climbed more than 7.4 percent as homebuilders advanced. Exxon Mobil Corp. gained 2.7 percent as Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake. Cisco Systems Inc. tumbled 8.4 percent after forecasting its first quarterly sales decline in four years.

The Standard & Poor’s 500 Index rose 1.6 percent to 1,798.18 over the five days, extending the index’s longest weekly advance since February. The Dow Jones Industrial Average added 199.92 points, or 1.3 percent, to 15,961.70. Both gauges reached records on each of the last three days of the week.

“Janet Yellen induced euphoria for the market,” Kristina Hooper, a U.S. investment strategist at Allianz Global Investors in New York, said in a phone interview. The firm oversees $436 billion. “We certainly have seen more excitement about the stock market than we’ve seen in a long time.”

Equities rallied as Yellen, nominated to be the next chairman of the Fed, said the economy and labor market are performing “far short of their potential” and must improve before the central bank can begin reducing monetary stimulus.

The remarks show Yellen is committed to the Fed’s strategy of attempting to boost the economy and lower 7.3 percent unemployment, more than four years after the U.S. began to recover from the longest and deepest recession since the Great Depression.

Economic data during the five days showed more Americans than forecast filed applications for unemployment benefits during the week ended Nov. 9, while factory production picked up in October. A separate report showed manufacturing in the New York area unexpectedly contracted this month.

Fed policy makers will probably scale back the pace of $85 billion in monthly bond buying at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8. Fed Bank of Atlanta President Dennis Lockhart said reducing bond purchases “ought to be on the table at upcoming meetings” by the Federal Open Market Committee, scheduled Dec. 17-18.

Central bank support has helped propel the S&P 500 higher by 166 percent from its March 2009 low. The gauge has rallied 26 percent so far in 2013, heading for its best year in a decade, and is trading at 16.3 times projected earnings, above the five- year average of 14 times profit, according to data compiled by Bloomberg.

Bargains are hard to find nowadays, according to Sandy Villere III, a New Orleans-based fund manager at Villere & Co.

The firm’s $1.1 billion Villere Balanced Fund, which beat 99 percent of its peers over the past five years, is holding a maximum 15 percent in cash, he said.

“We’re finding many companies that are now getting a little bit over-extended, so we’re selling,” Villere said in an interview. His firm oversees $2.8 billion. “We can’t find good opportunities to buy.”

The Chicago Board Options Exchange Volatility Index, which measures future market swings implied by S&P 500 options, slipped 5.5 percent for the week to 12.19, a three-month low.

The gauge has retreated 32 percent this year.

Consumer-discretionary companies had the largest advance among groups in the S&P 500, climbing 2.5 percent, as all 10 industries increased. Health-care and consumer-staples shares added more than 1.6 percent. Utilities and telephone stocks had the worst performance, each with a 0.8 percent gain.

Macy’s jumped 11 percent to a record $51.09. The second- largest U.S. department-store company posted fiscal third- quarter profit that beat analysts’ estimates as better local selections boosted sales, signaling stronger demand headed into the holidays.

Of the 463 S&P 500 companies that have announced earnings so far, 75 percent topped analysts’ income forecasts while 54 percent beat revenue estimates, data compiled by Bloomberg show.

Profits for the gauge increased 4.9 percent in the third quarter and will gain 5.8 percent in the final three months of the year, estimates compiled by Bloomberg show.

J.C. Penney Co. surged 9.7 percent to $9.03. Jana Partners LLC, the $7 billion hedge-fund firm run by Barry Rosenstein, took a stake in the struggling retailer last quarter, according to a filing with the Securities and Exchange Commission. Gilford Securities analyst Bernard Sosnick said J.C. Penney likely achieved sales goals and “perhaps more” for Veterans Day weekend.

An S&P index of homebuilders rose 5 percent as all 11 members advanced. D.R. Horton rallied 8 percent to $19.59. The largest U.S. homebuilder by revenue reported a higher quarterly profit as it increased prices amid a nationwide housing recovery. PulteGroup rose 7.4 percent to $18.10.

Exxon, the world’s biggest oil company by market value, advanced 2.7 percent to $95.27. Berkshire Hathaway reported a stake valued at about $3.7 billion as of Sept. 30. Exxon has advanced 10 percent this year, trailing the S&P 500’s gain.

FedEx Corp. climbed 4.6 percent to $138.65. Billionaire investors George Soros and John Paulson joined Daniel Loeb in taking stakes last quarter in the operator of the world’s largest cargo airline. Soros Fund Management LLC owned a $173 million stake and Paulson & Co. held $73.8 million in the shares at the end of the third quarter. Loeb’s Third Point LLC acquired a stake valued at $228.2 million.

Office Depot Inc. climbed 9.7 percent to $5.53. Bank of America Corp. raised its rating on the stock to buy from underperform, citing potential cost savings following its merger with OfficeMax Inc. and the appointment of Roland Smith as chief executive officer.

Twitter Inc. added 5.6 percent to $43.98 in its second week of trading. Shares of the unprofitable microblogging service have soared 69 percent since being priced at $26 on Nov. 6 amid speculation profits will surge as the company expands in markets like mobile advertising.

Cisco tumbled 8.4 percent, the most since May 2012, to $21.54. The world’s largest maker of computer-networking equipment gave quarterly profit and sales forecasts that missed analysts’ estimates on sluggish emerging-market demand and weak corporate spending.

The outlook dragged down other technology shares. Hewlett- Packard Co. lost 2.8 percent to $25.21 while Xilinx Inc. and Jabil Circuit Inc. retreated at least 2.2 percent.

Kohl’s Corp. slid 5.4 percent to $53.95. The retailer reported third-quarter earnings that missed analyst estimates and trimmed its full-year outlook.

Have a wonderful weekend everyone!!!!

Be magnificent!

“Don’t walk behind me; I may not lead. Don’t walk in front of me; I may not follow. Just walk beside me and be my friend.” – Albert Camus

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