November 27, 2013 Newsletter

Dear Friends,

Tangents:

American Thanksgiving tomorrow and the financial world stands still.

Kitchen Chemistry: For the chemistry involved in creating holiday food, the American Chemical Society’s web site offers a collection of articles and videos discussing everything from why it’s safe to cook turkey for less time to the science behind thickening gravy.  Check it out at http://bit.ly/thanksscience.

Photos of the day

A male cardinal feeds on sunflower seeds at Frances Slocum State Park in Wyoming, Pa. Mark Moran/The Citizens’ Voice/AP

Colorful holiday lights glow from under the glass domes of the US Botanic Garden, with orange streaks from a passing city bus, on Capitol Hill in Washington. J. Scott Applewhite/AP

Market Closes for November 27^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Aubrey Pringle

Nov. 27 (Bloomberg) — Canadian stocks rose, after falling the most in two months yesterday, amid an unexpected increase in U.S. consumer confidence and a decline in U.S. jobless claims.

Novagold Resources Inc. jumped 7.9 percent, pacing gains among raw-materials producers. Canadian Oil Sands Ltd. and Lightstream Resources Ltd., both oil exploration companies, dropped at least 1.4 percent amid a report showing U.S. crude stockpiles continued to increase. Trinidad Drilling Ltd. fell 5.3 percent after reporting its plan to raise C$150 million ($142 million) through a stock sale.

The Standard & Poor’s/TSX Composite Index gained 12.29 points, or 0.1 percent, to 13,362.06 at 4 p.m. in Toronto. The benchmark equity gauge is little changed for the month, and up 7.5 percent so far in 2013. Trading volume today was 21 percent below the 30-day average.

“Any sort of data that points to consumers being more willing to spend is a positive for the markets,” Jeff Young, chief investment officer at NexGen Financial Corp., said in a phone interview. The Toronto-based firm manages about C$950 million. “If the consumer is more confident and starts to spend more, that translates into higher revenues for companies.”

The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment in November unexpectedly rose to 75.1 from 73.2 a month earlier. Fewer Americans than projected filed applications for unemployment benefits last week, a sign that the labor market is showing resilience.

Seven of 10 industries in the S&P/TSX advanced, led higher by raw-materials producers. The group added 0.8 percent, halting a five-day losing streak. Novagold Resources surged 7.9 percent to C$2.45, it’s biggest increase since Oct. 17, and Detour Gold Corp. rose 4 percent to C$3.63.

Iamgold Corp. added 2.1 percent to C$4.41, rebounding from a 4.2 percent slide yesterday. The company said it will build a 5-megawatt solar farm in Suriname to minimize energy costs. The project will cost as much $14 million and start producing energy in the third quarter of next year, Toronto-based Iamgold said.

Industrial stocks added 0.6 percent, as Air Canada rose 1.9 percent to C$7, its highest since June 2008. Canadian Pacific Railway Ltd. added 1 percent to C$161.18 and Canadian National Railway Co. climbed 1 percent to C$118.61.

Energy companies retreated for a third day, as the price of oil fell to the lowest level in almost six months after government data showed U.S. crude stockpiles climbed for a 10th week. Oil is Canada’s biggest export, while the U.S. is its largest trading partner.

Canadian Oil Sands fell 1.6 percent to C$19.81, while Lightstream Resources dropped 1.4 percent to C$5.41.

Trinidad Drilling fell 5.3 percent to C$9.92. The company plans to sell 15 million shares at C$10 each and use the proceeds to finance capital expenses and for general corporate purposes.

First Quantum Minerals Ltd. lost 3.4 percent to C$17.28 for its eighth retreat in nine sessions. The company said today it “strongly disputed” a claim by noteholders that a default has occurred on bonds issued by Inmet Mining Corp., a company it bought this year.

Slower growth in consumer debt and a cooler housing market will allow the Bank of Canada to wait until early 2015 to raise interest rates as it waits for a pick-up in exports, the International Monetary Fund said.

Bank of Canada Governor Stephen Poloz last month abandoned his bias to raise interest rates and issued a monetary policy report that said a forecast increase in exports and business investment had been delayed. Canada’s inflation was an annual 0.7 percent in October, Statistics Canada said Nov. 22, below the bottom of the central bank’s target band.

Policy makers “should remain focused on sustaining growth until the rotation to exports and business investment gains firmer momentum, while assuring that the gradual unwinding of domestic imbalances continues and that the fiscal position is maintained on a sustainable trajectory,” the IMF said today.

USA

By Lu Wang and Aubrey Pringle

Nov. 27 (Bloomberg) —  U.S. stocks rose, extending a third monthly gain for the Standard & Poor’s 500 Index, as Hewlett- Packard Co. led a technology rally while data on employment and consumer confidence boosted optimism in the economy.

Hewlett-Packard jumped 9.1 percent after the maker of personal computers posted revenue and profit that topped analysts’ estimates. Marathon Petroleum Corp. and Valero Energy Corp. rose at least 3.4 percent, leading a rally among refiners.

Schlumberger Ltd. and Noble Energy Inc. fell at least 1.7 percent as crude slid to the lowest level in almost six months.

The S&P 500 rose 0.3 percent to a record 1,807.23 at 4 p.m.

in New York. The Dow Jones Industrial Average added 24.53 points, or 0.2 percent, to 16,097.33, an all-time high. About 4.8 billion shares changed hands on U.S. exchanges, the slowest trading since Aug. 26. U.S. equity markets will be closed tomorrow for the Thanksgiving holiday.

Today’s data “is in some sense a re-affirmation that things are going along pretty decently,” Bill Schultz, chief investment officer who oversees about $1.1 billion at McQueen Ball & Associates in Bethlehem, Pennsylvania, said by phone.

“Are we going to get higher rates again? Is tapering still out there? The market is playing with what’s going to come next and how we position going forward given a number of uncertainty still sitting out there.”

The S&P 500 has climbed 2.9 percent in November as data on housing and retail sales exceeded economists’ forecasts, stoking optimism that the world’s largest economy will sustain growth when the Federal Reserve starts reducing its monetary stimulus.

Data today showed fewer Americans than projected filed applications for unemployment benefits last week, a sign that the labor market is showing resilience. The Thomson Reuters/University of Michigan final index of consumer sentiment in November unexpectedly rose to 75.1 from 73.2 a month earlier.

The median forecast of 65 economists surveyed by Bloomberg called for 73.1 after a preliminary reading of 72.

The Conference Board’s index of U.S. leading indicators, a gauge of the economic outlook for the next three to six months, rose for a fourth straight month in October, reflecting gains in factory orders and applications to begin new-home construction.

A separate report showed government shutdown hurt business confidence, with orders for U.S. durable goods dropping 2 percent in October, as projected by economists. The MNI Chicago Report business barometer fell less than expected in November.

“Things are slowly improving, confidence is coming back,” Eric Marshall, who oversees $1.5 billion as president and portfolio manager at Hodges Capital Management in Dallas, said in a phone interview. “Stocks may still be attractive relative to where the interest rate environment is now. Going forward, we can still get a little more multiple expansion, but not much. The real driver for stocks will be earnings.”

The S&P 500 has rallied 27 percent this year, heading for the biggest annual gain since 1998, as the Fed continued the pace of monetary stimulus. The rally pushed equity valuations near their highest level since the end of 2009, with the benchmark gauge trading for about 16.3 times its companies’ projected earnings, according to data compiled by Bloomberg.

Three rounds of Fed bond purchases have helped push the S&P 500 up 167 percent from a bear-market low in 2009. Fed 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.

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.

Former Fed Chairman Alan Greenspan said the U.S. economy probably will grow more slowly next year than some forecasters predict and indicated that a near-record U.S. stock market isn’t in a bubble.

“This does not have the characteristics, as far as I’m concerned, of a stock market bubble,” Greenspan said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “It could come out that way but I don’t see it at this stage.”

The Chicago Board Options Exchange Volatility Index, rose 1.1 percent today to 12.95. The gauge of S&P 500 options known as the VIX is down 28 percent this year.

Eight of 10 S&P 500 industry groups gained as technology companies rose the most, climbing 1 percent. The Nasdaq Composite Index jumped 0.7 percent for a fifth straight gain, after yesterday closing above 4,000 for the first time in 13 years.

Hewlett-Packard surged 9.1 percent to $27.36, the highest since February 2012. Chief Executive Officer Meg Whitman got a boost in her turnaround efforts last quarter as businesses snapped up technology products. Results were buoyed by corporate demand for servers, personal computers and networking equipment.

Apple Inc. advanced 2.4 percent to $545.96, the highest level since January. The waiting time for the company’s iPhone 5S smartphones has shortened as Foxconn Technology Co. boosted production, the Wall Street Journal reported. Apple is shipping iPhone 5S within three to five business days, down from a two- to-three week wait last month, the report said, citing the company’s online stores in China and U.S.

Marathon Petroleum advanced 3.4 percent to $84.34 and Valero increased 3.7 percent to $45.97, as refiners rallied. The contract for West Texas Intermediate traded at the widest discount since March to Brent oil in London, indicating U.S. companies may be able to maintain favorable prices for crude.

Falling crude prices weighed on other energy companies, dragging the group down 0.7 percent for the worst performance among 10 S&P 500 industries. Oil slumped as much as 2 percent in New York to the lowest level since June 3 after government data showed U.S. crude stockpiles climbed for a 10th week.

Schlumberger, the world’s largest oilfield services provider, declined 1.7 percent to $87.95. Noble Energy sank 4.5 percent to $69.87.

Analog Devices slipped 2.8 percent to $48.54. Adjusted earnings will be between 44 cents and 52 cents a share in the first quarter, the company said in a statement. That compares with the average analyst projection of 56 cents.

Have a wonderful evening everyone.

Be magnificent!

Never under any circumstances ask “how.”

When you use the word “how” you really want someone to tell you what to do,

some guide, some system, someone to lead you by the hand so that you lose your freedom,

your capacity to observe, your own activities, your own thoughts, your own way of life.

Krishnamurti, 1895-1986

As ever,

Carolann

Here’s a new day.  O pendulum

move slowly.

-Harold Monro, 1879-1932.

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