November 5, 2014 Newsletter

Dear Friends,

Tangents:

November

Why do people spend so much time and energy with the leaf-sweeper?  Here we don’t make bonfires with the fallen leaves – this would be like burning gold dust.  They are gathered tidily into heaps contained by wire netting to make glorious leaf-mould all ready, a year hence, to be spread on the beds and borders.  Three nights ago we had our first hard frost.  The results next morning were beautiful carpets of colour under the horse chestnuts, the plane trees, the gingkos and red-leafed maples.  These carpets are transitory, staying only until the wind swirls them on or the leaf-sweeper gets busy, so I know I must enjoy them while they last, just like the summer scents.  Last night a great wind from the west woke me with the sound of rattling windows and in the morning I saw that the grey-leafed poplar was leafless and so were two willows and the walnut.  The top branches of the lime trees were bare but the oaks and beech and sorbus had managed to cling on to their leaves.  There must be a scientific reason why clipped beech hedges will often hang on to their leaves until springtime, while the beech trees will shed them.  Does the act of clipping reduce their stamina and food supply?  Each leaf cut off in its prime must be robbing the plant of some goodness, so it could be a natural protective measure to enable them to retain every possible remaining nutrient.  Whatever the reason the beauty of the brown beech leaves remains as a lovely bonus in our winter months.

                                                                                  -from a Countrywoman’s Notes  by Rosemary Verey, Forward by H.R.H. The Prince of Wales, Gryffon Publications, Barnsley, Gloucestershire, 1989.

One of my clients in Toronto sent me this photo of the view from his window this past week:

PHOTOS OF THE DAY

A man with his hair dyed bright red works near a giant poppy decoration for Remembrance Day at Kings Cross Station in London.Suzanne Plunkett/Reuters

An aerial view shows the French World War One Military Cemetery at Notre Dame de Lorette memorial in Ablain-Saint-Nazaire, northern France. The cemetery is the largest French military cemetery with more than 40,000 soldiers buried here. The ground was the place of a series of long and bloody battles between the French, the Allies and German armies, named as the Three Battles of Artois (September 1914- October 1915). Pascal Rossignol/Reuters

Market Closes for November 5^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Nov. 5 (Bloomberg) — Canadian stocks rebounded from a two- week low as TransCanada Corp. paced a rally in energy shares on speculation a Republican victory in U.S. elections enhances prospects for the Keystone XL pipeline.

     TransCanada advanced 3 percent as a top priority for Republicans will be to send President Barack Obama a bill to authorize the proposed $8 billion (C$9.11 billion) cross-border pipeline. Energy shares rebounded from a near one-year low. Linamar Corp. surged 11 percent after posting better-than- projected earnings. Avigilon Corp., the surveillance equipment maker, jumped 31 percent as profit improved.

     The Standard & Poor’s/TSX Composite Index rose 157.83 points, or 1.1 percent, to 14,548.26 at 4 p.m. in Toronto, for the biggest increase since Oct. 23. The index has rebounded 4.9 percent from a low on Oct. 15.

     Statistics Canada boosted its second-quarter economic growth estimate today to a 3.6 percent annualized pace from 3.1 percent in August, part of annual revisions dating back to 2011. The expansion in the quarter was the fastest since 2011.

     Republicans have picked up at least seven Senate seats after yesterday’s mid-term elections, positioning Mitch McConnell as the next majority leader.

     TransCanada, the pipeline operator, gained 3 percent to C$56.86, the highest close in a month. TransCanada has been waiting since 2008 for a U.S. decision on the pipeline that would carry crude from Alberta’s oil sands across the border to Gulf Coast refineries.

     While most senators support the proposed Keystone pipeline, the Senate under a Democratic majority hasn’t held a binding vote on the subject since 2012. The Republican-held House has repeatedly voted in favor of construction.

     Eight of the 10 industries in the benchmark Canadian equity gauge advanced today on trading volume 9.3 percent above the 30- day average.

     Whitecap Resources Inc. added 7.3 percent to C$14.83 and Canyon Services Group Inc. increased 9.3 percent to C$10.68 as the S&P/TSX Energy Index rebounded 2.9 percent. Lightstream Resources Ltd. rose 7.3 percent to snap eight days of losses. The stock plummeted 32 percent in that time.

     Keyera Corp. surged 5.1 percent to C$91.95 as earnings topped analysts’ estimates. The natural gas processing company said it will spend C$700 million to C$800 million in each of 2014 and 2015 on growth capital investment, excluding acquisitions.

     Linamar, the auto parts maker, jumped 11 percent to C$63.62, the biggest increase since May, to lead a 2.2 percent gain in consumer discretionary stocks. Competitors Magna International Inc. added 5.9 percent and Martinrea International Inc. rose 6.4 percent.

     Pretium Resources Inc. sank 6.8 percent to C$5.07 and Detour Gold Corp. dropped 13 percent to C$6.15. Gold extended a decline with silver to the lowest levels since 2010.

US

By Joseph Ciolli

     Nov. 5 (Bloomberg) — U.S. stocks rose, sending benchmark indexes to records, as Republicans won their first Senate majority in eight years and a report showed companies added more workers last month than economists forecast.

     Alpha Natural Resources Inc. and Peabody Energy Corp. paced gains in coal producers amid expectations that Republicans will oppose restrictions on the fuel. Utilities also rallied. TripAdvisor Inc. plunged 14 percent a day after an earnings report that fell short of analyst estimates. Biotechnology and Internet shares fell, dragging the Nasdaq Composite Index lower.

     The Standard & Poor’s 500 Index climbed 0.6 percent to 2,023.57 at 4 p.m. in New York, a record closing level. The Dow Jones Industrial Average added 100.69 points, or 0.6 percent, to an all-time high of 17,484.53.

     “With the election results, the strong ISM manufacturing result from the other day and today’s employment report, it continues to improve investor sentiment,” Robert Pavlik, who helps oversee $4.5 billion as chief market strategist at Banyan Partners LLC in New York, said in a phone interview. “The market also likes the fact that the ECB might deliver some additional quantitative easing-type measures.”

     Fourth quarters of midterm years have produced average equity gains of 8 percent in the past 65 years, according to the Stock Trader’s Almanac. They’ve been followed by rallies of almost that much in the next three months, making the average 16 percent two-quarter rally the best combination of the election cycles.                     

     The S&P 500 has risen an average 15.1 percent in calendar years when a Democratic president has been opposed by a Republican-controlled Congress since 1945, according to S&P Capital IQ equity strategist Sam Stovall.

     Stocks haven’t needed a united Congress to post gains during the bull market that began in March 2009. Since Nov. 2, 2010, when Republicans won a majority in the House while Democrats held the Senate, the S&P 500 has gained 69 percent, including a 30 percent rally in 2013 that was the biggest annual advance since 1997.

     Republicans retained control of the House and won enough seats to reclaim a Senate majority held by Democrats since 2006. Mitch McConnell, a Kentucky Republican, is poised to become the next Senate majority leader and set the legislative agenda for the final two years of Barack Obama’s presidency. McConnell has pledged to chip away at the 2010 health-care law and combat government efforts to curb carbon emissions. McConnell and President Barack Obama spoke today about moving forward on a tax-law revision and trade agreements.                       
    
    “There will be no government shutdowns and no default on the national debt,” McConnell, 72, told reporters today.  “Gridlock in Washington can be ended.”

     President Obama said that he’s committing to considering ideas “not by whether they are from Democrats or Republicans, but whether they work for the American people.”

     The S&P 500 fell 0.3 percent yesterday as energy companies led losses amid a drop in oil prices. The gauge has rebounded about 8.7 percent from a six-month low on Oct. 15 low. S&P 500 companies are beating analysts’ earnings estimates at the fastest pace in four years, while recent economic data have pointed to improvements in the U.S. labor market and consumer sentiment.                      

     Of the S&P 500 members that have reported their latest quarterly results, 82 percent topped profit projections, while 61 percent beat sales estimates, according to data compiled by Bloomberg.

     U.S. companies added 230,000 workers to payrolls in October, ADP Research Institute reported today. The median forecast of economists surveyed by Bloomberg called for an increase of 220,000. The report came before a Nov. 7 Labor Department report projected to show private payrolls rose by 225,000 last month, according to a Bloomberg survey. The jobless rate probably held at a six-year low of 5.9 percent, the survey showed.

     Separate data today showed service industries in the U.S. sustained a faster pace of expansion in October than in the first half of the year.

     While the Institute for Supply Management’s non- manufacturing index decreased to 57.1 from the prior month’s 58.6, readings greater than 50 signal growth and last month’s outcome exceeded the 54.4 average for the first six months of 2014.

     “There’s been a slight bump on the election result last night,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said in a phone interview. “The ADP number was in line with what people were expecting, which is helping, and we have the payroll data coming out on Friday.”

     Gauges of utility and energy shares increased more than 1.7 percent for the biggest gains among the 10 main industries in the S&P 500. Energy shares extended their advance as oil rebounded following a government report that showed a smaller- than-projected increase in U.S. supplies. West Texas Intermediate crude added $1.49 to $78.68 a barrel after yesterday touching the lowest price in three years.

     Alpha Natural Resources surged 17 percent and Peabody Energy increased 4.8 percent. McConnell has said that he wants to attach provisions to spending bills that would curtail coal plant regulations.

     TransCanada Corp.’s U.S. shares advanced 3.3 percent on speculation Republican victories will bolster support for the Keystone XL pipeline. The company has been waiting since 2008 for a U.S. decision on the pipeline, which would carry crude from Alberta’s oil sands across the border to Gulf Coast refineries. Victories by Republicans Joni Ernst in Iowa and Cory Gardner in Colorado boosted support for the project.

     Hospital operators Tenet Healthcare Corp. and Community Health Systems Inc. fell more than 3 percent amid speculation that Republicans will repeal Obamacare now that the party has taken control of the Senate.

     NRG Energy Inc. rallied 7.8 percent. The operator of power- generating facilities climbed after reporting third-quarter profits that exceeded analyst forecasts.

     Time Warner Inc. climbed 4 percent to $77.99. The company beat analysts’ profit estimates last quarter after collecting higher fees for its TV channels.

     TripAdvisor plummeted 14 percent, about three times more than any other stock in the S&P 500. The online travel research company reported third-quarter earnings that were 20 percent short of the average analyst estimate.                         

     The Nasdaq 100 Index reversed an earlier gain to close down 0.1 percent. Google Inc., Intel Corp. and Amazon.com Inc. fell at least 1.5 percent.

     Greenlight Capital Inc., the $10 billion hedge-fund firm run by David Einhorn, told investors it’s increasing wagers against a group of technology stocks, in a letter that discussed the lack of profitability at online retailer Amazon.com Inc.

     “AMZN’s recent disappointment is notable in that for years, the story has been that AMZN isn’t profitable because it is growing so fast,” Greenlight said in a quarterly letter to clients today, referring to the stock ticker for Amazon.com. “Now growth is slowing, but rather than unleashing higher profits, the slower growth is leading to even greater losses.”

Have a wonderful evening everyone.

Be magnificent!

Ours is beyond, and still beyond, beyond the senses, beyond space,

and beyond time, away, away beyond,

till nothing of this world is left and the universe itself

becomes like a drop in the transcendent ocean of the glory of the soul.

Swami Vivekananda

As ever,

Carolann

The music is not in the notes, but in the silence between.

                    -Wolfgang Amadeus Mozart, 1756-1791

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7