November 26, 2013 Newsletter

Dear Friends,

Tangents:

An inspiring story for you from today’s Wall Street Journal:

A Pianist Who Survived Hitler Plays Today at 110

The world’s oldest living Holocaust survivor still plays Bach and Schubert.

By Caroline Stoessinger

That music can bring happiness is obvious. But is it also the key to a long life?

Pianist Artur Rubinstein retired from the concert stage after his 89th birthday. Mieczyslaw Horsowski played his final concert at age 99 and taught a lesson the week before he died in 2003, just one month before his 101st birthday. But the world’s oldest living Holocaust survivor, Alice Herz-Sommer, trumps both of these legendary artists.

On Tuesday, she turns 110. Ms. Herz-Sommer no longer plays Bach and Schubert at concert level. Some days, her arthritic fingers fail to cooperate. And she must rely on her prodigious musical memory, as she can no longer see to read a score. But the woman who made her debut as a soloist with the Czech Philharmonic before her 21st birthday in 1924 still plays.

Ms. Herz-Sommer was well on her way to an international career when the Nazis invaded Prague, the city of her birth, on March 15, 1939. Forbidden as a Jew from playing public concerts, she continued to practice long hours in her apartment until the day in July 1943 when she, her husband, Leopold Sommer, and Rafi, their 6-year-old son, were deported to the Theresienstadt concentration camp.

Having heard rumors of concerts in the camp from Leopold, who worked for the Prague Jewish Community Organization, she faced the imprisonment with cautious optimism. “How bad can it be if we can make music?” she remembers thinking.

But from the moment she was herded inside the camp’s gates at age 40, Ms. Herz-Sommer confronted the horrific reality of life in Hitler’s waiting room for Auschwitz. Thousands disappeared, only to be replaced with new shipments of human cargo. In September 1944, Leopold was shipped to Auschwitz. She would never see her husband again.

Before Hitler came to power, it had been a common practice in Germany to hold concerts in factories. Many of the managers in the factories were elevated to positions of authority in the Nazi regime, and so encouraging music in the concentration camps must have seemed a logical step—even if it meant being entertained by musicians slated to be murdered.

“Once one commandant had a prisoner orchestra and concerts, others proudly followed suit,” Anita Lasker Wallfisch, the only cellist in the Girls’ Auschwitz Orchestra, once told me. The Nazis exploited the concerts for publicity, most prominently in a 1944 propaganda film, “Hitler Gives the Jews a City.”

Yet Jewish prisoners were forbidden to bring sheet music or instruments into Theresienstadt. The one piano used for concerts was in extremely poor condition, the buildings were unheated, and the Nazis rarely permitted rehearsals. But as best they could, the performers shared the eternal sounds of Mozart, Bach and Dvorak with those trapped in Hitler’s “model” camp. Ms. Herz-Sommer played more than 100 concerts during her 21 months in Theresienstadt for an audience of fellow prisoners.

“Music was our food,” Ms. Herz-Sommer has said often since those days. “Through music we were kept alive.” She greets visitors today in her tiny London flat with the same radiant smile that must have given much comfort to her fellow inmates as she performed.

After the war, Ms. Herz-Sommer fled the Communist regime in Czechoslovakia to raise Rafi, who had also survived the camp, in the new state of Israel. She eked out a living teaching there at the Music Academy of Jerusalem, before settling in England in 1986. Despite all she has endured, Ms. Herz-Sommer seems joyful when practicing piano or listening to classical music programs on the radio. “I think, no I am sure,” she says, “I am one of the happiest people in the world.”

Ms. Stoessinger, a pianist, is the author of “A Century of Wisdom: Lessons From the Life of Alice Herz-Sommer” (Spiegel & Grau, 2012).

Photos of the day

A murmuration of starlings flies over the town of Gretna, Scotland. The starlings visit the area twice a year in the months of November and February. Owen Humphreys/PA/AP

Salam, 5, an African lion, stands on the branches of a tree at the Ramt Gan safari near Tel Aviv, Israel. Tree-climbing lions are relatively uncommon and are best known for their populations in Uganda’s Queen Elizabeth National Park and Tanzania’s Lake Manyara national Park. Ariel Schalit/AP

Market Closes for November 26^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 26 (Bloomberg) — Canadian stocks fell the most in two months, as gold producers dropped after Morgan Stanley cut its rating on Iamgold Corp. and Eldorado Gold Corp. and an investor sold shares of technology stock CGI Group Inc.

Iamgold and Eldorado Gold fell at least 4.2 percent. CGI Group declined 2.5 percent after investor Caisse de Depot et Placement du Quebec sold some of its shares. Detour Gold Corp. sank 7.4 percent for a seventh day of losses.

Alimentation Couche-Tard Inc. rose 3 percent after reporting higher-than- estimated earnings and boosting its dividend.

Royal Bank of Canada and the Bank of Nova Scotia lost more than 1.4 percent to pace declines among lenders.

The Standard & Poor’s/TSX Composite Index retreated 122.45 points, or 0.9 percent, to 13,349.77 at 4 p.m. in Toronto, for its steepest slide since September. The benchmark equity gauge has dropped 0.9 percent this month to trim its 2013 advance to 7.4 percent.

“It’s the commodities sector that’s hurt the most today, and it’s a continuing trend that Canada has been out of favor,” said Ian Nakamoto, director of research with MacDougall MacDougall & MacTier Inc. in Toronto. The firm manages about C$4.7 billion ($4.5 billion). “There’s uncertainty over energy in terms of Iran, and the potential for more supply is never good for a commodity. The mood and luster for gold just isn’t there.”

Raw-materials stocks slumped 1.4 percent as a group, the biggest decline in the S&P/TSX as nine of 10 industries retreated. Trading volume was 18 percent higher compared with the 30-day average at this time of the day.

Detour Gold sank 7.4 percent to C$3.49, the lowest close since December 2008. The stock has slumped 37 percent in the past seven days.

Chief Executive Officer Gerald Panneton resigned yesterday without providing a reason. He will be replaced by Paul Martin, the chief financial officer, on an interim basis. Detour Gold has plunged 86 percent this year.

Eldorado Gold fell 4.5 percent to C$6.11 and Iamgold lost 4.2 percent to C$4.32. The S&P/TSX Gold Index declined 2.3 percent, a four-month low.

Morgan Stanley reduced its ratings for Eldorado Gold to equal-weight, the equivalent of a hold, from overweight, and dropped Iamgold to underweight, the equivalent of a sell.

Gold for December delivery was little changed in New York.  The metal pared an earlier gain of as much as 1.3 percent after improving data on U.S. building permits and home prices.

Suncor Energy Inc. declined 1.8 percent to C$36.59 and Husky Energy Inc. lost 1.3 percent to C$29.89. Crude slipped 0.4 percent ahead of a report from the Energy Information Administration tomorrow that will probably say inventories rose 750,000 barrels last week, according to a Bloomberg survey.

Iran on Nov. 24 agreed to curtail its nuclear activities in return for easing some sanctions on oil, auto parts, gold and precious metals.

CGI Group, the information-technology company that worked on the Obamacare health exchange software, fell 2.5 percent to C$39.70. Caisse de Depot, the Quebec pension fund, will sell 9.96 million shares of CGI Group to rebalance its investment portfolio.

As part of the transaction, CGI Group will buy back C$100 million worth of the shares, or about 25 percent of those sold by the pension fund.

Royal Bank, the nation’s largest lender, decreased 1.4 percent to C$70.51 and Bank of Nova Scotia tumbled 1.6 percent to C$65.42. The S&P/TSX Banks Index slumped 1.1 percent, the most since June.

Alimentation Couche-Tard, the convenience store operator, climbed 3 percent to a record C$76.17 after reporting second- quarter adjusted earnings of $1.32 a share compared with analysts’ estimates of $1.23. The company also raised its quarterly dividend to 10 Canadian cents a share from 8.75 cents.

Chorus Aviation Inc. surged 29 percent to C$3.52, a record gain, after an arbitration panel ruled in favor of the company’s Jazz Aviation unit in a dispute with Air Canada, the nation’s largest airline.  Air Canada, the top-performing stock in the S&P/TSX this year with a 293 percent advance, slipped 0.3 percent to C$6.87.

USA

By Lu Wang and Aubrey Pringle

Nov. 26 (Bloomberg) — U.S. stocks pared gains in the final minutes of trading as investors rebalanced portfolios, offsetting a rally among homebuilders and technology shares. The Nasdaq Composite Index topped 4,000 for first time in 13 years.

Lennar Corp. and PulteGroup Inc. climbed at least 4.4 percent amid better-than-expected industry data. Apple rose 1.8 percent, pacing gains among technology companies. Tiffany & Co. jumped 8.7 percent after profit topped analysts’ estimates and the jeweler boosted its forecast. Jos. A. Bank Clothiers Inc. rose 11 percent after Men’s Wearhouse Inc. offered to buy the apparel company for about $1.54 billion. Take-Two Interactive Software Inc. fell 5.4 percent as the gaming company said it bought back all 12 million shares held by Icahn Group.

The Standard & Poor’s 500 Index gained less than 1 point to 1,802.75 after earlier rising as much as 0.3 percent. The Dow Jones Industrial Average was little changed at 16,072.80. The Nasdaq Composite jumped 0.6 percent to 4,017.75, the highest close since September 2000. About 6.1 billion shares changed hands, in line with the three-month average.

“We’ve been riding a pretty good wave of momentum that’s taken the market higher than most people had expected at the beginning of the year,” Jeff Layman, chief investment officer of BKD Wealth Advisors in Springfield, Missouri, said by phone.

His firm has $2.4 billion under management. “Much of that has been driven by multiple expansion, not underlying earnings growth. As we close out this year and get into 2014, that dynamic will probably change. We think it’ll be a return to focus on earnings growth.”

Stocks trimmed gains in the final 30 minutes of trading as investors sold U.S. equities to mimic changes in MSCI indexes that took effect at the close.

Apple, Oracle Corp. and Exxon Mobil Corp. are among companies that face the biggest decrease in weighting in the MSCI review, according to Societe Generale SA.

The S&P 500 traded higher for most of today’s session, touching an intraday record of 1,808.42, as data showed the housing market sustained progress even as borrowing costs climbed.

The S&P/Case-Shiller index of property values indicated home prices in 20 U.S. cities rose by the most since February 2006 in the 12 months through September. A Commerce Department report counted more applications for home construction issued in October than at any time in the past five years.

In a separate report, confidence among U.S. consumers unexpectedly declined in November to a seven-month low as Americans grew more pessimistic about the labor-market outlook.

“We’re tending to move in a positive direction,” Kate Warne, a St. Louis-based investment strategist at Edward Jones & Co., said by phone. Her firm oversees $746 billion. “We’re getting data in a sweet spot. It’s positive but not so positive as to raise worries about the Fed moving sooner and yet it continues to show that the economy is gaining some traction.”

Policy makers have been scrutinizing data to determine whether the economy is strong enough to withstand a reduction in their $85 billion a month in bond purchases.

Three rounds of Federal Reserve bond purchases have helped push the S&P 500 up more than 166 percent from a bear-market low in 2009. Four out of five investors expect the Fed to delay a decision to begin reducing the stimulus until March 2014 or later, according to a Bloomberg Global Poll on Nov. 19.

The S&P 500 has rallied 26.4 percent this year, challenging 2003 for the biggest annual gain since 1998, as economic data and corporate earnings have surpassed estimates. Companies in the gauge will report a 5.6 percent increase in profits for the current quarter and earnings will grow 9.9 percent next year, according to forecasts compiled by Bloomberg.

The index is trading for about 17 times its companies’ reported earnings. While the valuation is at 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.

The Chicago Board Options Exchange Volatility Index added 0.2 percent today to 12.81. The gauge of S&P 500 options known as the VIX is down 29 percent this year.

Three of 10 S&P 500 industries gained, with technology and consumer-discretionary companies climbing at least 0.4 percent.

Apple jumped 1.8 percent to $533.40, the highest since January. China Mobile Ltd.’s selling of iPhone will provide a tailwind to Apple’s 2014 earnings estimates, according to Peter Misek, an analyst with Jefferies LLC.

Shares of Apple trimmed an earlier gain of as much as 2.4 percent as investors anticipated MSCI changes. Exxon Mobil slipped 0.9 percent to $94.27 while Oracle added 0.4 percent to $34.93 after rising as much as 1.1 percent.

An S&P index of homebuilders surged 4.1 percent as all its 11 members gained. Lennar climbed 5.1 percent to $36.05.

PulteGroup advanced 4.4 percent to $18.95, the highest since July.

Tiffany rallied 8.7 percent to a record $88.02 for the biggest advance in the S&P 500. The world’s second-largest largest luxury jewelry retailer’s profit climbed and it boosted its annual earnings forecast as the rising U.S. stock market gave wealthy consumers the confidence to snap up higher-priced merchandise.

Jos. A. Bank jumped 11 percent to $56.29 and Men’s Warehouse added 7.5 percent to $50.60. Men’s Wearhouse is turning the tables on Jos. A. Bank, which last month made an unsolicited $2.3 billion offer for its larger rival. Men’s Wearhouse rejected that bid, saying it undervalued the company, and the offer expired after a Nov. 14 deadline.

Hormel Foods Corp., the maker of Spam and Jennie-O turkeys, advanced 5.9 percent to a record $44.95 after the company reported quarterly earnings that beat analysts’ estimates and boosted its dividend to 20 cents a share, up from 17 cents.

Workday Inc. surged 13 percent to $82.60 after the maker of online human-resources software said it expects fourth-quarter revenue of as much as $138 million, exceeding the average analyst projection for $129 million.

Take-Two Interactive dropped 5.4 percent to $16.01. The maker of the “Grand Theft Auto” games bought the shares at yesterday’s closing price of $16.93. The New York-based company also said Icahn representatives Brett Icahn and Nelson Cho have resigned from its board. Icahn Group was Take Two’s largest shareholder.

Hewlett-Packard Co. slipped 0.9 percent to $25.09. After the market’s close, the company reported quarterly revenue and profit that topped analysts’ estimates, boosted by corporate demand for servers, computers and networking equipment. The stock jumped 6.6 percent to $26.75 in extended trading.

Utilities dropped 1 percent for the worst performance among 10 S&P 500 industries. CenterPoint Energy Inc. slumped 5.2 percent to $23.58 and OGE Energy Corp. fell 6.9 percent to $35.32. The utility owners and partner ArcLight Capital Partners LLC said they plan to raise about $500 million next year in an initial public offering of Enable Midstream Partners LP.

Nuance Communications Inc. tumbled 18 percent to $13.10, the lowest in more than four years, after projecting full-year sales that missed analysts’ forecasts. The maker of speech- recognition software said it expects full-year 2014 adjusted revenue of $2.03 billion to $2.09 billion. Analysts on average had estimated $2.1 billion.

The S&P 500 will probably fall 10 percent in the next 12 months before rebounding to end 2014 at 1,900, according to Goldman Sachs Group Inc. The 1,900 forecast implies about a 5 percent advance from today’s level. The 25 months since the index’s last 10 percent drop is the longest stretch without such a decline since 2007, according to S&P.

“It will be less smooth sailing,” David Kostin, the bank’s chief U.S. equity strategist, said on Bloomberg Television’s “Market Makers” program. “The likelihood is we will have something that will prompt a reduction — a retreat in the market. But overall the market should be rising, and that’s because the U.S. economy will be getting better.”

Have a wonderful evening everyone.

Be magnificent!

To grow is to go beyond what you are today.

Stand up as yourself.  Do not imitate.

Do not pretend to have achieved your goal, and do not try to cut corners.

Just try to grow.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

The most powerful weapon on earth is the human soul

on fire.

-Ferdinand Foch, 1851-1929.

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