November 7, 2014 Newsletter

Dear Friends,

Tangents:

Life admits not of delays; when pleasure can be had, it is fit to catch it.  –Dr. Johnson.

An idea for an autumn day…from The Book of Idle Pleasures, edited by Tom Hodgkinson & Dan Kieran, (Ebury Press):

Leaf Catching

The first autumn leaves are beginning to flutter down around my house, signaling the start of a traditional family ritual.  To ensure good luck for the next twelve months it is important that, when autumn winds are blowing, we go outside and catch – or try to catch – twelve falling leaves.  It sounds easy, but twisting, spiraling, flying leaves are not easy to snatch out of the air.  And the competition for extra colourful or nice-shaped specimens can be fierce when a flurry of them whiz past, making for excellent and sometimes quite violent sport.

PHOTOS OF THE DAY

Strollers make their way through the vineyards near Fellbach, southern Germany. Sebastian Kahnert/AP

People walk between luminous white balloons along the former route of the Berlin Wall, in Berlin, Germany. They are part of the project ‘Lichtgrenze 2014’ on occasion of the 25th anniversary of the fall of the Berlin Wall on Nov. 9, 1989. Markus Schreiber/AP

Market Closes for November 7^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Nov. 7 (Bloomberg) — Canadian stocks rose a third day, to a one-month high, as unemployment rates in both Canada and the U.S. unexpectedly fell to a six-year low last month and gold and crude producers rallied.

     Kinross Gold Corp. and Detour Gold Corp. rallied at least 12 percent as gold producers increased the most in the Standard & Poor’s/TSX Composite Index. Raging River Exploration Inc. jumped 13 percent on better-than-projected earnings. Penn West Petroleum Ltd. and Enerplus Corp. gained as crude advanced.

     The S&P/TSX rose 127.45 points, or 0.9 percent, to 14,690.83 at 4 p.m. in Toronto, the highest close since Oct. 6. The index has rallied for four weeks, the longest streak since March, rebounding 5.9 percent from a low on Oct. 15.

     Canada’s unemployment rate dropped to 6.5 percent in October, compared with 6.8 percent the previous month, Statistics Canada said today in Ottawa. Employment rose by 43,100 after a jump of 74,100 in September on hiring led by retailers and financial companies.

     Employment gains in the U.S. exceeded 200,000 for a ninth straight month in October and the jobless rate declined to 5.8 percent, even as more people entered the labor force.

     Kinross jumped 12 percent to C$2.84 for a second day of gains and Detour Gold advanced 28 percent to C$8.27, the most in six years, as raw-materials producers climbed 4.7 percent as a group. Gold for December delivery rose 2.4 percent to $1,169.80 an ounce in New York, the most since June. The metal fell in the previous seven sessions.

     Four of 10 industries in the benchmark Canadian equity gauge advanced today on trading volume in line with the 30-day average.

     Raging River rose 13 percent to C$8.39, its biggest increase ever, after boosting its 2014 production guidance. Penn West added 5.8 percent to C$4.89 and Enerplus rallied 10 percent to C$16.74. The S&P/TSX Energy Index increased 2.3 percent.

     West Texas Intermediate increased 0.9 percent to settle at $78.65 in New York, paring a weekly decline to 2.3 percent.  Prices are down 20 percent for the year.

US

By Joseph Ciolli and Oliver Renick

     Nov. 7 (Bloomberg) — U.S. stocks held at all-time highs as a report showed companies hired fewer workers than forecast while the jobless rate dropped to a six-year low, supporting speculation the economy is withstanding an overseas slowdown.

     Energy stocks rallied as Diamond Offshore Drilling Inc. and Newfield Exploration Co. climbed more than 3 percent. Sears Holdings Corp. soared 31 percent on plans to explore the sale and leaseback of 200 to 300 stores. Walt Disney Co. slid 2.2 percent after it reported profit fell at TV networks. Salix Pharmaceuticals Ltd. tumbled 34 percent after its chief financial officer resigned.

     The Standard & Poor’s 500 Index added less than 0.1 percent to 2,031.92 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 19.46 points, or 0.1 percent, to 17,573.93. Both gauges closed at records. The Nasdaq Composite Index dropped 0.1 percent.

     “We’re moving toward pause mode and a period of digestion following the rally of the past few weeks,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $120 billion, said by phone. “The market rallied in expectation of a generally positive employment report, which occurred with non-farm payrolls over 200,000. But average wages being flat implies the pace of growth is somewhat slow, so valuations may increasingly become an issue.”

     While employment gains exceeded 200,000 for a ninth straight month in October, the 214,000 increase fell short of the 235,000 forecast by economists. The result followed a 256,000 advance the prior month that was more than initially estimated, Labor Department figures showed today.

     The jobless rate declined to 5.8 percent, even as more people entered the labor force, boosting the share of the population working to the highest in five years. Steadfast hiring signals employers are confident domestic demand will hold up in the face of struggling European and emerging economies.

     “We’ve seen a shift away from ‘will we grow?’ to one of ‘how fast will we grow?” Jeff Korzenik, the Chicago-based chief investment strategist at Fifth Third Bancorp., said a phone interview. The firm oversees $26 billion. Today’s payrolls report “is moderately disappointing in terms of the pace of growth, but there is no question that this is evidence of continued growth.”

     The S&P 500 rose 0.7 percent this week, a third straight gain, after election results shifted control of the Senate from Democrats to Republicans and the European Central Bank vowed to increase stimulus efforts if needed.                       

     Federal Reserve Chair Janet Yellen said central banks must do whatever it takes if governments won’t use the public purse to invigorate economies struggling with low growth and below- target inflation.

     “Central banks need to be prepared to employ all available tools, including unconventional policies, to support economic growth and reach their inflation targets,” Yellen said in the text to be delivered today at a Bank of France event in Paris.

     The S&P 500 has rebounded more than 9 percent from a six- month low on Oct. 15 as companies beat analysts’ earnings estimates at the fastest pace in four years. Of the S&P 500 members that have reported their latest quarterly results, 80 percent topped profit projections, while 60 percent beat sales estimates, according to data compiled by Bloomberg.

     The Chicago Board Options Exchange Volatility Index slipped 4 percent to 13.12, the lowest level since Sept. 19. The gauge of S&P 500 options prices dropped 6.5 percent this week.

     Seven out of the 10 major industries in the S&P 500 advanced today. Utilities shares rose the most, adding 1 percent. The energy sector rose 0.9 percent as oil prices climbed from near a three-year low. Health-care companies dropped 0.9 percent for the biggest losses.

     Sears soared 31 percent to $42.81. The selected outlets would be sold to a newly formed real-estate investment trust, the company said in a statement. The retailer last month announced a rights offering in a bid to raise capital that will give it time to return to profitability.

     King Digital Entertainment Plc rallied 4 percent to $13.72. While total sales fell 17 percent to $514.4 million from a year earlier, they beat analyst estimates for $491.1 million. Forty- nine percent of third-quarter bookings came from games other than Candy Crush, compared with 41 percent a year earlier.

     Disney dropped 2.2 percent to $90 after saying profit fell at TV networks, its biggest division. The world’s largest entertainment company said profit excluding some items rose to 89 cents a share, beating the 88-cent average of estimates compiled by Bloomberg.

     First Solar Inc. retreated 11 percent to $50.29. Profit slipped in the third quarter as the largest U.S. photovoltaic panel manufacturer seeks to land new orders for power plants to replace the giant desert projects that led to record sales last year.

     Salix tumbled 34 percent to $91.47. The drugmaker said Chief Financial Officer Adam Derbyshire resigned, and the audit committee will review the way the company characterized wholesale inventory. Salix also cut its profit and net product revenue forecasts for this year, according to an earnings report yesterday.

     Health-care companies had the largest declines today. The U.S. Supreme Court agreed to consider a challenge to the subsidies that are a linchpin of President Barack Obama’s health-care overhaul, accepting a case that suddenly puts the law under a new legal cloud.

     Health insurers, which have gained millions of new customers through the law, sank. UnitedHealth Group Inc., WellPoint Inc. and Aetna Inc. fell at least 2.7 percent. Hospitals, which must absorb costs when patients are uninsured, also dropped, with HCA Holdings Inc. and Tenet Healthcare Corp. sliding at least 4.7 percent.
 

Have a wonderful weekend everyone.

Be magnificent!

There is one God and He

is the enemy of no one.

Guru Nanak

As ever,

Carolann

A compliment is something like a kiss through a veil.

                                    –Victor Hugo, 1802-1885

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