October 21, 2014 Newsletter

Dear Friends,

Tangents:

ALMOST LIKE THE BLUES

I saw some people starving There was murder, there was rape Their villages were burning They were trying to escape I couldn’t meet their glances I was staring at my shoes It was acid, it was tragic It was almost like the blues

I have to die a little Between each murderous thought And when I’m finished thinking I have to die a lot There’s torture and there’s killing There’s all my bad reviews The war, the children missing Lord, it’s almost like the blues

I let my heart get frozen To keep away the rot My father said I’m chosen My mother said I’m not I listened to their story Of the Gypsies and the Jews It was good,  it wasn’t boring It was almost like the blues

There is no G-d in heaven And there is no Hell below So says the great professor Of all there is to know But I’ve had the invitation That a sinner can’t refuse And it’s almost like salvation It’s almost like the blues

         -Leonard Cohen

I found an easy listening radio station on SiriusXM Satellite radio that I love listening to in the car.  It is Ch. 31, The Coffee House, and it features just beautiful acoustic singer/songwriters – puts you in a much better mood than listening to the news – the blues – by the time you reach your destination.  Check it out.

On this date in 1879, Thomas Edison invented a commercially viable electric light bulb in a Menlo Park, N.J. laboratory, the first test of the light bulb lasted 13.5 hours.

QUOTE OF THE DAY

Tonight, fashion has lost not only a force but a friend in #OscardelaRenta. People pass. Impacts last forever. RIP.

Photographer Patrick McMullan tweeted on the death of Oscar de la Renta, a renowned American fashion designer famed for his glamorous red carpet gowns and smart suits for ladies who lunch.

PHOTOS OF THE DAY At a warehouse in Berlin, a journalist tosses a balloon into the air as he poses for his TV crew among stands for balloons that will be used in the installation ‘Lichtgrenze’ (Border of Light.) A part of the inner city of Berlin will be temporarily divided from November 7 to 9 with a light installation featuring 8000 luminous white balloons to commemorate the 25th anniversary of the fall of the Berlin Wall. Fabrizio Bensch/Reuters Raindrops cover a fallen autumn leaf in Vertou, France. Stephane Mahe/Reuters  Raindrops cover a fallen autumn leaf in Vertou, France. Stephane Mahe/Reuters People stand around ‘Umbrellas,’ a sculpture by Giorgos Zogolopoulos, as it is illuminated in pink light to mark Breast Cancer Awareness Month in Thessaloniki, Greece. Alexandros Avramidis/Reuters

Market Closes for October 21^st, 2014  

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Oct. 21 (Bloomberg) — Canadian stocks rose the most in more than a year, extending a rally to a fourth day, as commodity producers advanced after data showed China’s economy grew faster than forecast.

     RMP Energy Inc. and Surge Energy Inc. advanced at least 2.6 percent as energy shares rebounded for a fourth day. Canadian Pacific Railway Ltd. rose 1.3 percent after reporting an improving operating ratio. Air Canada soared 6.7 percent for a fourth day of gains.

     The Standard & Poor’s/TSX Composite Index jumped 209.94 points, or 1.5 percent, to 14,547.71 at 4 p.m. in Toronto, the biggest gain since July 2013. Canadian equities rallied as global stocks advanced on speculation the European Central Bank will boost stimulus and amid better-than-estimated corporate earnings in Europe and the U.S.

     The Canadian benchmark has rebounded 4.9 percent in the four days since slumping to an eight-month low on Oct. 15 after entering a correction. Trading volume today was 2.4 percent below the 30-day average, according to data compiled by Bloomberg.

     China’s gross domestic product rose 7.3 percent in the third quarter from a year earlier, exceeding the 7.2 percent median estimate of a Bloomberg News survey of analysts. It was also the slowest expansion since 2009.                           

     RMP Energy added 5.1 percent to C$6.59 and Surge Energy increased 2.6 percent to C$6.77. West Texas Intermediate and Brent crudes advanced after the China data signaling stronger fuel demand in the world’s second-biggest oil consuming country.

     The S&P/TSX Energy Index added 1.9 percent. The group has advanced 7.1 percent in four days after posting the longest losing streak since 1997.  Teck Resources Ltd., Canada’s largest diversified miner, increased 3.1 percent to C$18.07 and First Quantum Minerals Ltd. jumped 5.6 percent to C$19.80. Aluminum and copper prices advanced in London.

     Centerra Gold Inc. added 3.1 percent to C$5.73. Gold for December delivery climbed to a five-week high in New York, as traders pushed back estimates for when the U.S. Federal Reserve will raise interest rates and on concern the dollar will weaken.

     Canadian Pacific rallied 1.3 percent to C$224.58. The railroad’s operating ratio, an industry measure that compares expenses to revenue, improved 3.1 percentage points to 62.8 percent. A lower figure equals improving performance.     The S&P/TSX trades at 18.5 times reported earnings, down from a peak of 21 set in June, according to data compiled by Bloomberg.

US

By Namitha Jagadeesh and Oliver Renick

     Oct. 21 (Bloomberg) — U.S. stocks surged, sending the Standard & Poor’s 500 Index to its biggest gain in a year, as investors speculated the European Central Bank will boost economic stimulus and Apple Inc. forecast record sales.

     Apple advanced 2.7 percent, sending the Nasdaq 100 Index to its biggest rally since January 2013. Texas Instruments Inc. rose 5.3 percent and Harley-Davidson Inc. jumped 7.3 percent after reporting higher-than-estimated profit. Southwest Airlines Co. surged 5.3 percent as airlines led transportation stocks higher. Coca-Cola Co. fell 6 percent, the biggest drop in six years, after sales slumped.

     The S&P 500 climbed 2 percent to 1,941.28 at 4 p.m. in New York, its best gain since October 2013. The equity gauge is up 4.2 percent since Oct. 15 in the biggest four-day rally since January 2013. The Dow Jones Industrial Average climbed 215.14 points, or 1.3 percent, to 16,615 today. The Nasdaq 100 surged 2.6 percent, the most since January 2013, as about 7.2 billion shares traded hands in the U.S.      “We’re hearing about the ECB buying bonds,” Benjamin Dunn, president of Alpha Theory Advisors, which advises hedge funds with about $6 billion in assets, said in a phone interview from Crested Butte, Colorado. “The market’s a sugar addict and the sweet nectar of free money, any kind of incremental liquidity from a central bank, whether it’s Europe or China, is what the market’s looking for.”

     The ECB bought Italian covered bonds as it returned to the market for a second day under its asset purchase program, according to two people familiar with the matter. Debt issued by Intesa Sanpaolo SpA was included in the purchases, according to one of the people, who asked not to be identified because the information is private.

     The ECB entered the 2.6 trillion-euro ($3.3 trillion) covered bond market after President Mario Draghi unveiled plans last month to bolster companies’ and households’ access to financing. Draghi, who also included asset-backed securities in the program, intends to expand the bank’s balance sheet by as much as 1 trillion euros to stave off deflation in the euro area.

     U.S. stocks have rallied after St. Louis Federal Reserve Bank President James Bullard said on Oct. 16 that policy makers should consider delaying the end of bond purchases. He was the first Fed official to publicly suggest the central bank should extend its asset-purchase program when policy makers meet later this month.                      

     Bank of America Merrill Lynch strategists said in a report today that another 10 percent decline in U.S. stocks might spark speculation of a fourth round of quantitative easing from the Fed. That would mimic how the Fed acted following equity declines of 11 percent in 2010 and 16 percent in 2011.

     About 79 percent of S&P 500 companies that have reported quarterly results this season exceeded profit projections, while 61 percent beat revenue estimates. Profit for index members rose 5.9 percent in the third quarter and sales increased 4 percent, analysts projected. Broadcom Corp. and Yahoo! Inc. are among the 24 S&P 500 companies reporting today. Yahoo rallied 2.8 percent in late trading.

     “Now we can finally focus on earnings in the U.S.,” Kully Samra, who helps manage U.K. clients at Charles Schwab Corp. in London, said by phone. His firm oversees about $2.4 trillion globally. “Apple’s numbers were stunning, so that should help markets. So far, earnings numbers look OK.”

     The Chicago Board Options Exchange Volatility Index sank 13 percent to 16.08 for a fourth day of declines that has cut the gauge by 39 percent.                        

     All 10 of the S&P 500’s main groups advanced, led by a 2.9 percent rally among energy stocks as oil rose in New York and London.

     The Dow Jones Transportation Average surged 3.1 percent, boosted by gains in airline stocks. United Continental Holdings Inc. gained 4.7 percent and JetBlue Airways Corp. rose 2.9 percent.

     Apple gained 2.7 percent. The world’s most valuable company is the biggest by weighting in the S&P 500 and Nasdaq 100. Bigger-screen iPhones, refreshed and slimmer iPads and the introduction of the Apple Pay mobile-payments service are helping boost sales.

     Texas Instruments increased for the sixth straight session, adding 5.3 percent. The company forecast fourth-quarter profit and revenue that may exceed analysts’ estimates, as demand for chips used in cars, industrial equipment and mobile phone systems fueled sales growth.                                Encouraging releases also spurred shares of other companies. United Technologies Corp. added 0.5 percent after posting better-than-estimated earnings for the third quarter. Travelers Cos. advanced 1.1 percent as operating profit surpassed projections. Illumina Inc. rallied 9.2 percent after raising its annual profit projection, the most in a year.

     Harley-Davidson jumped 7.3 percent, the most since October 2012, after the biggest U.S. motorcycle maker reported third- quarter profit that topped analysts’ estimates.

     McDonald’s Corp. lost 0.6 percent. The world’s largest restaurant chain said third-quarter profit fell 30 percent as U.S. sales slumped for the fourth straight quarter. Global comparable-store sales will fall in October, Chief Executive Officer Don Thompson said in today’s statement.

     Coca-Cola tumbled 6 percent, the most since October 2008.  The company is struggling with sluggish international growth and mounting concerns over obesity and artificial sweeteners. Sales fell to $11.98 billion in the quarter from $12 billion a year earlier, Coca-Cola said. Analysts had estimated $12.1 billion on average, according to data compiled by Bloomberg.  

Have a wonderful evening everyone.

Be magnificent!

Humanity is not divided into airtight compartments

that inhibit going from one to the other.

And when one counts them in the thousands,

they will not be less linked one to the other.

Mahatma Gandhi

As ever,

Carolann

I always find it more difficult to say the things I mean than the things I don’t.

                                                        -W. Somerset Maugham, 1874-1965

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