October 22, 2014 Newsletter

Dear Friends,

Tangents:

The Economist recently published comments made by selected persons to whom the  question was posed:  What is the point?

The novelist, Philip Pullman answered:

  Here we are, alive and conscious, in a universe that seems to be made of material things like atoms and quarks and Higgs bosons and so on, which  are undoubtedly there but possess enigmatic, ghostlike properties that are hard to grasp, such as entanglement and the wave/particle duality.  What are we to make of it all?

  I start with consciousness.  I am certainly conscious, and I’m equally certainly made of matter; so I conclude that matter is capable of consciousness, and there’s no need to make up a thing called a soul to do the consciousness while the dull, inert, clod-like body does the carrying around.  I’m certain that animals are conscious, and I see no reason to deny a form of consciousness to plants too.  Don’t they sense where the sun is, and turn towards it?

  Humans and animals and plants are alive, though.  Perhaps consciousness depends on being alive, and not just on existing.  Surely stone, air and water aren’t conscious?

  I’m not so sure.  It’s not hard to imagine that consciousness might be a normal property of matter, like mass.  Thanks to the Higgs boson and its associated field, we  now know how mass exists.  Maybe there’s another field and another particle, as yet unsuspected, which deal with consciousness.  Maybe what we call dark matter and dark energy are aspects of that very field.  Or maybe not.  But when by chance complex structures like the human brain evolve, consciousness is able to think about itself, and reason, and imagine, and empathise.

  That sort of self-reflexive consciousness is a good thing.  The more of it there is, the better we’re able to understand and create and be kind.  So here I come to what the point is:  the point is to bring about more consciousness.  By teaching, or doing mathematics or science or philosophy, or writing novels and poems, or making music, or painting picture, or studying history, or healing the sick, or bringing up our children to be generous and kind, we leave the universe a little more conscious than we found it.  And that’s the point.

Ann Wroe, Biographer & Obituarist:  The point is love.

PHOTOS OF THE DAY

Passengers ride in a bus past a brightly-painted building in the King’s Cross area of central London. Toby Melville/Reuters

People visit the Great Temple of Ramses II to observe the sun sending a beam of light into the ancient temple’s dark inner chamber for ten minutes, in Abu Simbel, Egypt. Hundreds of people visited the temple to watch the sun illuminate the colossal statues, a rare 3,200-year-old astronomical ceremony that happens twice a year. Ibrahim Zayed/AP

At dawn, a stag stands in the long grass in Richmond Park, London, as the rutting season is in full swing. The rut, or breeding season, occurs in Britain from the end of September through November when stags compete by engaging in elaborate displays of dominance. Anthony Devlin/PA/AP

Market Closes for October 22^nd, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

     Oct. 22 (Bloomberg) — Canadian stocks fell the most since June 2013, halting a four-day rally after a shooting at the national legislature and as the central bank said the economy won’t reach full output until the second half of 2016.

     Commodity producers sank after the price of oil tumbled to a two-year low and silver led metals lower. Raw-material producers in the equities benchmark slid 2.5 percent, while energy stocks lost 2.9 percent. Pretium Resources Inc. fell 6.2 percent, while First Quantum Minerals Ltd. and Eldorado Gold Corp. slipped at least 3.4 percent. Canaccord Genuity Group Inc. declined 10 percent after TD Securities cut the stock’s rating to hold from buy.

     The Standard & Poor’s/TSX Composite Index fell 1.6 percent to 14,312.07 at 4 p.m. in Toronto. The equity gauge had rallied almost 5 percent in the past four days. Trading was in line with the 30-day average.

     “People are continuing to have a very dim view of global growth, and commodities are out of favor,” Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto. The firm manages about C$5 billion ($4.5 billion). “The sectors being hit the most are energy, mines and metals.”

     Canada is reeling after a day of violence in the nation’s capital, including a shootout in its main legislature building and the gunning down of a soldier guarding the country’s war memorial.

     Stores and office buildings in downtown Ottawa were locked down for about five hours after the unprecedented attack in Canada’s usually sleepy capital, raising terrorism concerns nationwide. Police are continuing to search for suspects after a gunman was killed by parliamentary security officials.                          

     The S&P/TSX dropped almost 14 points in the 10-minute period when the first headline said shots were fired in Ottawa.  It fell a further 60 points in the next 10 minutes.

     The Bank of Canada kept its policy interest rate at 1 percent today, as expected, and removed the word “neutral” from its statement, saying that it’s stopping the use of “forward guidance” on the future path of interest rates for now.

     Inflation will slow to an average of 1.4 percent in the second quarter of 2015, the bank said, compared with its July forecast for inflation to slow to 1.7 percent in the second quarter of 2015.

     All of the 10 main industries in the benchmark Canadian equity gauge decreased. Energy stocks plunged 2.9 percent after four days of gains. West Texas Intermediate crude slid to the lowest settlement in two years as U.S. inventories increased.

     The S&P/TSX Gold Index fell 3.4 percent, adding to a selloff that’s seen it fall 24 percent from a five-month high.

US

By Callie Bost

     Oct. 22 (Bloomberg) — U.S. stocks retreated, after the Standard & Poor’s 500 Index rose the most in a year yesterday, as energy shares led losses amid a drop in oil prices.

     Cimarex Energy Co. and Helmerich & Payne Inc. lost more than 4.6 percent to lead all 43 energy stocks in the S&P 500 lower. Biogen Idec Inc. slid 5.4 percent as sales of its top drug missed analyst estimates. Yahoo! Inc. added 4.5 percent after sales topped estimates. Broadcom Corp. jumped 5.5 percent after reporting earnings that beat estimates and giving a forecast that eased concern chip orders might be drying up.

     The S&P 500 slipped 0.7 percent to 1,927.11 at 4 p.m. in New York. The Dow Jones Industrial Average slid 153.49 points, or 0.9 percent, to 16,461.32. The Nasdaq Composite Index lost 0.8 percent. Crude oil slid 2.4 percent to $80.52 a barrel, the lowest level on a closing basis in more than two years, after a U.S. report showed inventories increased by 7.11 million barrels last week.

     “The market is driven primarily by trader and investor emotion and sentiment,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “All that’s going to remain consistent in the short term is that volatility is going to continue and that you’re going to have significant swings just based on trader sentiment, without any specific data points.”     Four consecutive advances in the S&P 500 through yesterday pushed the gauge up 4.2 percent since Oct. 15, recouping half the losses from a selloff that began in mid-September. The equity index surged 2 percent yesterday, its best day since October 2013, as speculation the European Central Bank will boost stimulus to spur growth in the region.

     The cost of living in the U.S. barely rose in September, leaving inflation below the Federal Reserve’s goal as fuel prices plunge this month. The consumer-price index climbed 0.1 percent after decreasing 0.2 percent in August, a Labor Department report showed.

     Canada’s S&P/TSX Composite Index fell 1.6 percent after a shooting at the national legislature in Ottawa. Stores and office buildings in downtown Ottawa were locked down for about five hours after the unprecedented attack in Canada’s usually sleepy capital, raising terrorism concerns nationwide. Police are continuing to search for suspects after a gunman was killed by parliamentary security officials.

     BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday the selloff last week in U.S. equity markets “weeded out the excesses,” making stocks a good investment for those who aren’t going to sell their positions soon.

     “As a long-term investor, yes, I’d be buying equities,” Fink said yesterday in an interview with Bloomberg Television’s Erik Schatzker. “This is just a market correction, and we need market corrections to clean the market out.”

     His remarks were echoed by billionaire hedge-fund manager Dan Loeb. Loeb, who runs Third Point LLC, told investors in a letter yesterday that “going forward, we expect that the U.S. will remain the best place to invest” and that “markets will resume an overall upward trajectory in the U.S. through year- end.”

     About 77 percent of S&P 500 companies that have released quarterly results this season beat profit projections, while 61 percent surpassed revenue estimates. Profit for index members rose 5.9 percent in the third quarter and sales increased 4 percent, analysts predicted.

     The Chicago Board Options Exchange Volatility Index added11 percent to 17.87. About 7 billion shares changed hands on U.S. exchanges, 12 percent higher than the three-month average.                        

     Eight of 10 main industries in the S&P 500 declined. Energy shares slipped 1.7 percent as a group for the biggest decline as crude oil slid. Utilities gained 0.6 percent for the biggest advance.

     Biogen Idec slumped 5.4 percent to $309.07. Revenue from Tecfidera was $787 million in the third quarter, falling short of the average analyst estimate of $794 million. A patient on the treatment died after developing a rare brain infection known as progressive multifocal leukoencephalopathy, or PML, Chief Executive Officer George Scangos said on a call.

     Boeing Co. dropped 4.5 percent to $121.45 for the biggest loss in the Dow. Investors signaled concern that the world’s largest planemaker isn’t moving fast enough to curb costs on the 787 Dreamliner, a carbon-fiber jet on which the company still loses money, after the company reported third-quarter earnings today. Per-share profit growth also was buoyed by expanding margins in the defense business, which is dwarfed by the commercial unit.

     Yahoo climbed 4.5 percent to $42. The Web portal reported third-quarter revenue, excluding sales shared with partner websites, that beat estimates and forecast sales of $1.14 billion to $1.18 billion for the current period, exceeding analysts’ average prediction of $1.17 billion.

     Chief Executive Officer Marissa Mayer detailed in a conference call after earnings results how Yahoo has bought back 24 percent of shares since late 2012 and said the company’s dealmaking has been “meaningful.” She added that Yahoo is making progress in mobile and the Web portal has been focused on cost efficiencies.

     Broadcom jumped 5.5 percent to $39.37. Excluding certain charges, profit last quarter was 91 cents, topping an average analyst estimate of 84 cents. The maker of communications chips also said revenue in the current period will be $2 billion to $2.15 billion, compared with an average estimate of $2.11 billion, according to data compiled by Bloomberg.

     Six Flags Entertainment Corp. soared 13 percent to $38.90 for its biggest one-day gain on record. The theme park operator reported adjusted earnings per share and revenue last quarter that beat analysts’ estimates.

Have a wonderful evening everyone.

Be magnificent!

We think as our ancestors did, away back in pre-historic ages.

Where even tradition cannot pierce the gloom of that past,

there our glorious ancestors have taken up their side of the problem

and have thrown the challenge to the world.

Our solution is renunciation, giving up, fearlessness, and love;

these are the fittest to survive.  Giving up the senses makes a nation survive.

Swami Vivekananda

As ever,
 

Carolann

Change your thoughts and you change your world.

                    -Norman Vincent Peale, 1898-1993

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