November 5, 2013 Newsletter

Dear Friends,

Tangents:

Autumn’s a preparation for renewal,

Yet not entirely shorn

Of tardy beauty, last and saddest jewel

Bedizening where it may not adorn.

Few of the autumn blooms are deeply dear,

Lacking the spirit volatile and chaste

That blows across the ground when pied appear

The midget sweets of Spring, and in their haste

The vaporous trees break blossom pale and clear,

-Carpet and canopy, together born…

-Vita Sackville-West, from The Garden

Photos of the day

Loch Dunmore reflects autumnal leaves, near Pitlochry, Scotland. Russell Cheyne/Reuters

Fallen leaves lie on a puddle of water during a rainy autumn morning at Parque da Cidade, in Porto, Portugal. The city park, opened in 1993, is the largest urban park in Portugal, occupying 205 acres near the Atlantic coast with about 6 miles of walking paths. Paulo Duarte/AP

Market Closes for November 5^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Nov. 5 (Bloomberg) — Canadian stocks erased losses in the final two hours of trading as declines among gold producers offset rallies in Paladin Labs Inc. and Open Text Corp., fueled by deal activity.

Iamgold Corp. dropped 3.9 percent as the metal’s price dropped to a two-week low. Paladin, a Canadian drug company, surged 49 percent to a record high after agreeing to be bought by Endo Health Solutions Inc. Open Text jumped 10 percent after agreeing to acquire a technology consulting firm. Encana Corp. rose 3 percent as it plans to cut its workforce, lower its dividend and sell shares in an initial offering for one of its assets to boost cash flow.

The Standard & Poor’s/TSX Composite Index was unchanged at 13,361.78, at 4 p.m. in Toronto, erasing earlier losses of as much as 0.4 percent.

“I think people are still searching for direction. We’re not going to get much on the calendar until Thursday,” said Brian Huen, managing partner with Red Sky Capital Management Ltd., on the phone from Toronto. His firm manages about C$225 million ($215.4 million). “Gold stocks had a pretty good relief rally yesterday, but there’s very little momentum in gold prices right now so with the volatility in the sector it’s not surprising to see it at a loss.”

The S&P/TSX rallied 4.5 percent in October and is trading near a two-year high. The benchmark Canadian equity gauge has advanced 7.5 percent this year, the third-worst performer in the world among developed markets, ahead of Hong Kong and Singapore.

Investors have been assessing global data to determine whether major economies are strong enough to generate faster growth. Data today from the U.S. showed service industries expanded in October at a faster pace than forecast. Reports later this week may show the U.S. economy slowed in the third quarter and employers hired fewer workers in October. Canada will report jobs data for last month on Nov. 7.

The European Union today cut its forecast for euro-area growth next year and raised its unemployment estimate. Investors are weighing whether the region’s central bank will cut interest rates on Nov. 7.

Five of 10 groups in the S&P/TSX slumped today. Raw- materials producers paced losses, sliding 0.5 percent. Trading volume was 12 percent higher compared with the 30-day average.

The S&P/TSX Gold Index slid 1.2 percent after advancing 3 percent yesterday. The gauge is down 40 percent this year. The price of gold slumped to the lowest in more than two weeks as the U.S. services data fueled bets the Federal Reserve may trim stimulus sooner than anticipated.

Alacer Gold Corp. fell 6.9 percent to C$2.68 and Iamgold dropped 3.9 percent to C$5.18.

Bombardier Inc., the world’s third-largest planemaker, lost 0.2 percent to C$4.53 for a fifth day of declines. The stock has slumped 14 percent since posting weaker-than-estimated quarterly profit on Oct. 31.

Canadian Western Bank lost 1.8 percent to C$32.94 and Royal Bank of Canada, the nation’s largest lender, slipped 0.4 percent to C$70.04. Seven of 10 members of the the S&P/TSX Banks Index retreated today.

Open Text gained 10 percent to C$85.32, an all-time high, after agreeing to buy closely held GXS Group Inc. in a $1.17 billion deal.

GXS is a business-to-business cloud integration company, marketing software that helps companies communicate and share data.

Paladin climbed 49 percent to a record C$95.43, after the drug company agreed to sell itself to Endo Health Solutions for about $1.6 billion. The purchase, to be made mostly through stock, values each Paladin share at C$77, a 20 percent premium to yesterday’s closing price.

Encana, Canada’s largest natural gas producer, rallied 3 percent to C$19.15, the most in almost two months. The company will focus spending in 2014 on five oil and liquids areas including the Duvernay, Montney, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale while cutting 800 jobs.

The Calgary-based company, which has maintained a 20-cent quarterly dividend since 2009, today lowered the payout to 7 cents.

USA

By Lu Wang

Nov. 5 (Bloomberg) — U.S. stocks declined, following two days of gains that sent the Standard & Poor’s 500 Index to within five points of a record high, as investors awaited this week’s data on economic growth and employment.

Homebuilders slumped 1.8 percent as a group as JPMorgan Chase & Co. said D.R. Horton Inc.’s order growth may trail analysts’ expectations. Delphi Automotive Plc dropped 5.2 percent after narrowing its profit projection. Tenet Healthcare Corp. tumbled 8.8 percent as the hospital chain’s earnings forecast missed estimates. GT Advanced Technologies Inc. surged 21 percent after agreeing to supply equipment to Apple Inc.

The S&P 500 fell 0.3 percent to 1,762.97 at 4 p.m. in New York. The Dow Jones Industrial Average lost 20.90 points, or 0.1 percent, to 15,618.22. About 6.2 billion shares changed hands on U.S. exchanges, 5 percent above the three-month average.

“The market is in a quandary right now,” Colleen Supran, a principal at San Francisco-based Bingham, Osborn & Scarborough, which manages about $3 billion, said in a phone interview. “For jobs, you’re just hoping you still see some steady traction, but it’s hard to predict, because a healthy jobs market might also mean that the Fed feels more comfortable with an earlier tapering date. It’ll be a little choppy.”

The S&P 500 climbed 0.4 percent yesterday, building on four straight weeks of gains that sent the index to a record 1,771.95 on Oct. 29, as Exxon Mobil Corp. and U.S. Steel Corp. led a rally among commodity shares. The benchmark gauge has surged 23.6 percent this year, poised for the best annual performance since 2003, as company earnings beat forecasts and the Federal Reserve maintained stimulus measures.

Investors are watching data to gauge the health of the U.S. economy after the central bank last week said it needs to see more evidence of sustained improvement before slowing the pace of its $85 billion monthly bond purchases. Economists in a Bloomberg survey project that tapering will begin in March, based on the median estimate.

The European Union cut its forecast for euro-area growth next year and raised its unemployment estimate as the economy struggled to regain momentum after a record-long recession. In the U.S., service industries unexpectedly accelerated in October, as the Institute for Supply Management’s U.S. non- manufacturing index rose to 55.4 from 54.4 the prior month.

Fed Bank of Richmond President Jeffrey Lacker said the U.S. economy will probably grow just 2 percent next year, with no new source of strength. The forecast is far below the 2.9 percent to 3.1 percent estimate among Federal Open Market Committee participants at a Sept. 17-18 meeting.

Economists in a Bloomberg survey last week predicted a report will show the economy expanded 2 percent in the third quarter, down from 2.5 percent the previous quarter. The Commerce Department plans to release its initial estimate of third-quarter growth on Nov. 7.

A report the next day may show employers hired fewer workers in October. Payrolls rose by 125,000 workers last month after a 148,000 gain in September, Labor Department figures may show.

“A lot of people are nervous by how strong the market has been this year,” Patrick Kaser, a managing director and portfolio manager at Brandywine Global Investment Management in Philadelphia, said by phone. His firm oversees about $45 billion. “There is still skepticism about how the economy is really doing and whether these gains are from artificial factors, like the Fed, or from real strength in company results.”

Of the 404 S&P 500 companies that have reported earnings so far, 75 percent have beaten analysts’ forecasts, according to data compiled by Bloomberg. Income for the broad index probably increased 4.1 percent in the third quarter, according to estimates compiled by Bloomberg.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, climbed 2.6 percent to 13.27. The measure is down 26 percent this year.

Eight out of 10 S&P 500 industries fell as telephone and energy companies fell more than 0.8 percent for the worst performance. Verizon Communications Inc. declined 1.9 percent to $50.10 and AT&T Inc. dropped 2.5 percent to $35.53 for the steepest losses in the Dow.

An S&P index of homebuilders declined 1.8 percent as all but one of its 11 members retreated. Michael Rehaut, an analyst with JPMorgan, said in a note that D.R. Horton’s quarterly order growth may miss his expectation, which is already below other analysts’ estimates. D.R. Horton, scheduled to announce results on Nov. 12, sank 2.2 percent to $18.41.

Delphi Automotive dropped 5.2 percent to $55.01. The auto- parts maker narrowed its earnings forecast, saying it expects to earn $4.25 to $4.35 a share this year. That trailed the average analyst estimate of $4.41 in a Bloomberg survey.

Tenet Healthcare declined 8.8 percent to $44 for the biggest loss in the S&P 500. The hospital chain’s fourth-quarter forecast was less than analysts’ estimates because of slow patient admissions.

Expeditors International of Washington Inc. dropped 6.2 percent to $43.41. The logistics company said it earned 45 cents a share in the third quarter. That trailed the average analyst estimate of 48 cents.

GT Advanced Technologies surged 21 percent to $10.10 after saying it will provide furnaces and related equipment to produce materials out of sapphire at a new Apple plant in Arizona.

Substances derived from sapphire are used in smartphones to cover camera lenses and home buttons. GT Advanced also forecast 2014 revenue exceeding analyst estimates.

Regeneron Pharmaceuticals Inc. jumped 7.3 percent, the most in the S&P 500, to $302.32. The drug maker reported third- quarter adjusted profit of $2.40 a share, compared with the average analyst estimate of $1.90 a share.

CVS Caremark Corp. gained 2 percent to $63.22. The pharmacy chain reported third-quarter profit that beat analyst estimates and raised its earnings forecast for the year.

AOL Inc. advanced 8.5 percent to $42.02, the highest level since November 2012. The online media company reported third- quarter sales and adjusted profit above forecasts.

Michael Kors Holdings Ltd. gained 5.8 percent to a record $79.13. The luxury-goods company predicted full-year earnings of $2.77 to $2.81 a share, compared with a previous estimate of $2.67 to $2.69. Analysts on average forecast $2.77 a share.

Endo Health Solutions Inc. soared 29 percent to an all-time high of $56.22. The maker of painkillers, facing declining revenue for its main treatments, agreed to buy Canadian drug company Paladin Labs Inc. for about $1.6 billion to expand in that country and emerging markets.

Marvell Technology Group Ltd. jumped 8.5 percent to $13.04.

KKR & Co. has acquired almost 5 percent of the computer chipmaker, two people with knowledge of the matter said.

Have  a wonderful evening everyone.

Be magnificent!

Where does the soul go after death?  Where could the earth fall to?

Where can the soul go?  Where is it not already?

The great cornerstone of Vedantism is the recognition of Self.

Man, have faith in yourself.  The soul is the same in every one.

It is all purity and perfection and the more pure and perfect we [you] are

the more purity and perfection you will see.

Swami Vivekananda, 1863-1902

As ever,

Carolann

No one can make you feel inferior

without your consent.

-Eleanor Roosevelt, 1884-1962.

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