November 25, 2013 Newsletter

Dear Friends,

Tangents:

A Navajo Song, expressing the harmony of nature:

In beauty may I walk

From the Navajo

translated by Jerome K. Rothenberg

In beauty                                               may I walk

All day long                                            may I walk

Through the  returning seasons                may I walk

Beautifully will I possess again

Beautifully birds

Beautifully joyful birds

On the trail marked with pollen                may I walk

With grasshoppers about my feet             may I walk

With dew about my feet                          may I walk

With beauty                                           may I walk

With beauty before me                            may I walk

With beauty behind me                           may I walk

With beauty above me                            may I walk

With beauty all around me                      may I walk

In old age, wandering on a trail of beauty,

lively, may I walk

In old age, wandering

It is finished in beauty

It is finished in beauty

**********************************************

On this day in 1922, archaeologist Howard Carter opened and entered King Tut’s tomb for the first time in more than 3000 years.

Also on this day in 1952, Agatha Christie’s, The Mousetrap, the longest continuously running play in history, opened in London.

Photos of the day

A visitor looks at the art work titled ‘Dinosaur Skeleton,’ which is constructed out of 80,020 Lego bricks, during the ‘The Art of the Brick’ exhibition at the Brussels Stock Exchange. The exhibition features large Lego art works by US Lego artist Nathan Sawaya. Francois Lenoir/Reuters

Munich’s town hall is illuminated during the Christmas market at dusk before the official lighting of the Christmas tree. The first official record of this pre-Christmas market dates back to 1628. Michael Dalder/Reuters

Market Closes for November 25^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 25 (Bloomberg) — Canadian stocks fell for the first time in three sessions as oil slid after Iran and world powers reached an interim accord on the country’s nuclear program.

Detour Gold Corp., the worst-performing stock in the Standard & Poor’s/TSX Composite Index this year, plunged 12 percent after its chief executive officer resigned. Kirkland Lake Gold Inc. sank 17 percent to a 10-year low after saying second-quarter gold production was lower than previously reported. BlackBerry Ltd. gained 1.4 percent after the smartphone maker announced the departures of three top executives.

The S&P/TSX fell 6.12 points, or 0.1 percent, to 13,472.22 at 4 p.m. in Toronto. The benchmark equity gauge has risen 8.4 percent this year, the third-worst performer among developed markets, ahead of Hong Kong and Singapore.

“People are sitting on the fence, waiting to see whether some of the economic indicators turn more positive,” said David Cockfield, fund manager with Toronto-based Northland Wealth Management. The firm manages about C$225 million ($213.2 million). “There’s not enough enthusiasm on the other side of the market to drive things higher.”

Iran agreed to curtail its nuclear activities and in return won an easing of “certain sanctions” on oil, auto parts, gold and precious metals. The deal was announced yesterday after five days of talks in Geneva.

Energy stocks sank 0.4 percent as a group, one of five industries to decline among 10 in the S&P/TSX. Trading volume was 15 percent above the the 30-day average at this time of the day.

Suncor Energy Inc. decreased 1.9 percent to C$37.24 and Canadian Oil Sands Ltd. slipped 1.1 percent to C$20.15. Crude for January delivery retreated 0.8 percent to settle at $94.09 a barrel in New York for a second day of declines.

Detour Gold plunged 12 percent to C$3.77, the lowest since December 2008. Gerald Panneton, who had served as CEO since 2006, resigned and will be replaced by Chief Financial Officer Paul Martin on an interim basis while the board looks for a replacement.

Detour Gold faces “near-term challenges,” Michael Kenyon, the executive chairman, said in a statement. The stock has slumped 85 percent this year, the worst performer in the benchmark equity gauge.

Kirkland Lake Gold sank 17 percent to C$2.54, the lowest close since April 2003. The gold mining company, which is developing a project at Kirkland Lake, Ontario, said it produced 31,387 ounces of gold at the site in the second quarter, short of a Nov. 13 report of 34,935 ounces.

The correction came after a review of inventory procedures and mill protocols, the company said in a statement.

BlackBerry, the Waterloo, Ontario-based smartphone maker, added 1.4 percent to C$6.60. The company said Chief Financial Officer Brian Bidulka has been replaced by James Yersh, while Chief Operating Officer Kristian Tear and Chief Marketing Officer Frank Boulben are leaving the company.

Bidulka will stay on as a special adviser to Chief Executive Officer John Chen for the rest of the fiscal year, BlackBerry said in a statement. Chen took over BlackBerry on Nov. 4 after previous CEO Thorsten Heins stepped down following a failed attempt by Fairfax Financial Holdings Ltd. to acquire the company.

Sears Canada Inc. added 1.9 percent to C$18.25, the highest close since June 2011. A Sears spokesman said a New York Post report yesterday that Eddie Lampert, CEO of Sears Holdings Corp., was looking to sell Sears Canada was false.

Martinrea International Inc., a metal parts maker based in Vaughan, Ontario, slid 8.8 percent to C$8.39 for a fourth day of losses. The company on Nov. 22 said it had received a reply and statement of defense from Nat Rea, former vice chairman of Martinrea, and plans to respond in a filing this week.

The company has filed a counterclaim against an earlier lawsuit from Rea in September alleging breach of fiduciary duties by some directors and officers of the company related to transactions involving certain suppliers. The claims have not been proven in court.

USA

By Lu Wang

Nov. 25 (Bloomberg) — The Standard & Poor’s 500 Index fell, after seven consecutive weekly gains that lifted the gauge to a record, as energy shares retreated following Iran’s agreement to limit its nuclear program.

Schlumberger Ltd. and Noble Corp. declined more than 3.2 percent as crude oil slipped. An index of airlines reached an almost seven-year high amid optimism fuel costs may drop. Alcoa Inc. climbed 3.8 percent and Caterpillar Inc. rose 1.8 percent after analysts recommended buying the shares.

The S&P 500 dropped 0.1 percent to 1,802.48 at 4 p.m. in New York, erasing earlier gains of as much as 0.2 percent. The Dow Jones Industrial Average added 7.77 points, or 0.1 percent, to an all-time high of 16,072.54. The Nasdaq Composite Index rose 0.1 percent to 3,994.57, after briefly surpassing 4,000 for the first time since September 2000. About 5.6 billion shares changed hands on U.S. exchanges, about 7.8 percent below the three-month average.

“The market is not necessarily over-extended, but probably moderately rich,” Cam Albright, director of asset allocation at the investment advisory unit of Wilmington Trust, said by phone from Wilmington. The firm oversees about $79 billion. “It’s probably difficult to envision this market getting a lot more upside unless it has this continued success on earnings and economic growth. The deal with Iran takes some of the risk premium out of the marketplace for the moment at least.”

Iran agreed yesterday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, an accord that broke a decade-long deadlock.

The S&P 500 has rallied 26 percent this year, closing for the first time above 1,800 on Nov. 22, as the Federal Reserve continued to buy $85 billion of bonds a month to stimulate economic growth. The gauge is challenging 2003 for the best annual gain since 1998.

The index is trading for about 17 times its companies’ reported earnings. While the valuation reached the highest level since May 2010, it’s still below the multiples at the market’s two previous peaks, when the ratio reached 17.5 in October 2007 and 31 in March 2000, data compiled by Bloomberg show.

Minutes from the latest Fed meeting indicated the central bank may reduce monetary stimulus in coming months. Four out of five investors expect the Fed to delay a decision to begin reducing the stimulus until March 2014 or later, according to the Bloomberg Global Poll of investors, traders and analysts who are subscribers. Just 5 percent are looking for a move at its Dec. 17-18 meeting, the Nov. 19 poll showed.

“The most bullish thing you could have is the Fed says, ‘Hey, we feel comfortable enough to step away,’” Warren Koontz, the co-manager of the Loomis Sayles Value Fund in Boston, said in a phone interview. Loomis Sayles & Co. manages about $191 billion. “The underpinning of the stock market is probably pretty good.”

The S&P 500 last week capped its longest winning streak since February as reports showed retail sales beat estimates and fewer Americans than expected filed for jobless benefits.

Data today from the National Association of Realtors showed pending home sales fell 0.6 percent in October, a fifth month of declines, amid higher borrowing costs. The median projection in a Bloomberg survey of economists called for a 1 percent gain from the month before.

“The real strong rebound in housing that we saw between 2011 and the first quarter of this year has tapered off now,” Charlie Smith, chief investment officer of Pittsburgh-based Fort Pitt Capital Group Inc., said in a phone interview. His firm oversees $1.5 billion. “The question people have is, ‘Can the uptrend in housing be sustained by what classically has been growth in income and therefore the ability to get loans?’”

The Chicago Board Options Exchange Volatility Index rose 4.3 percent today to 12.79. The gauge of S&P 500 options known as the VIX trimmed its 2013 decline to 29 percent.

Seven of the 10 main S&P 500 groups fell. Energy shares slumped 0.8 percent for the worst performance, as prices for crude, gasoline and heating oil fell following the interim deal with Iran.

Schlumberger, the world’s largest oilfield services provider, dropped 3.2 percent to $89.81. Noble, an offshore rig contractor, slipped 4.1 percent to $37.94.

ADT Corp. slumped 5.8 percent to $41.46. The largest provider of home security agreed to buy back 10.2 million shares from Corvex Management LP for $44.01 each. Keith Meister, founder of Corvex, will resign from ADT’s board of directors.

The Bloomberg U.S. Airlines Index added 1.6 percent to the highest level since February 2007, on optimism a decline in fuel costs will help profit. Delta Air Lines Inc. rose 2 percent to a record $29.17 and United Continental Holdings Inc. gained 3.4 percent to $39.83.

Alcoa gained 3.8 percent to $9.59. Goldman Sachs Group Inc. upgraded the shares of the largest U.S. aluminum maker to buy from neutral. The brokerage said the stock may climb to $11.

“We believe that the market is not fully appreciating Alcoa’s solid position in growing value-added and high-margin aluminum products for the aerospace and automotive industries,” analysts Sal Tharani and Chelsea Bolton wrote.

Caterpillar added 1.8 percent to $84.40. Bank of America Corp. raised the world’s largest maker of mining equipment to buy from neutral, saying the power-systems business will help earnings next year.

Health-care companies rose the most among 10 S&P 500 industries, climbing 0.4 percent. Mylan Inc., a generic drugmaker, advanced 3.6 percent to $44.22. The stock has gained 11 of the past 12 sessions to close at a record. Biogen Idec Inc. increased 3.6 percent to $295.88.

DaVita HealthCare Partners Inc., a provider of kidney care services, jumped 8.9 percent to $61.55 for the biggest gain in the S&P 500. U.S. regulators scrapped a proposed 9.4 percent reduction in Medicare payments to dialysis providers.

Laszlo Birinyi, president of Birinyi Associates Inc., said the four-year bull market will keep going because optimism about the rally hasn’t overtaken concern about company earnings and valuations.

The lack of exuberance shows people aren’t fully invested and have money left to buy shares, according to Birinyi, one of the first money managers to advise clients to buy in 2009.

“We still haven’t heard the story about the barista in Starbucks who’s made a lot of money in the market,” he said in an interview on Bloomberg Television’s “Street Smart” with Trish Regan and Adam Johnson on Nov. 22. “We’re not there yet.”

Investors have added to options that provide protection in the event of a market plunge, based on the CBOE SKEW Index. The gauge uses the prices of short-term, out-of-the-money S&P 500 options to calculate the market’s perception of the probability for a tail-risk event.

The SKEW index rose to 137 on Nov. 18 as the Fed considered scaling back its bond-purchasing program and American lawmakers prepared for another round of budget talks.

Have a wonderful evening everyone.

Be magnificent!

Every day a man must solve the problem

of widening the field of his life and adjusting his burdens.

These are too complex and numerous for him to carry himself,

but he knows that by being methodical he can lighten the load.

When the burdens are too complicated and difficult to manage, he must understand the reason:

he has not found a system that will put everything in place and distribute the weight he carries more evenly.

The search for this system is actually the search for the whole, for synthesis;

it is our effort to create harmony, thanks to an interior adaptation,

in the heterogeneous complex of exterior material.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Willfully anticipating, in ignorance and in hope – this was how

most people lived.

-Jhumpa Lahiri, 1967-

The Lowland, 2013

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