October 29, 2013 Newsletter

Dear Friends,

Tangents:

Gary and I were in  Vancouver this past weekend to assess what we have to do in order to clear out my Mom’s home before the closing date sale is completed on  November 15^th – it’s a lot- three floors of decades of a life of accumulation of memorabilia from a very sentimental person’s perspective – in addition to the standard – i.e., furniture, dishes, appliances and all the other de rigueur stuff that becomes our unbelievably blessed western standard of living  – contrast A Fine Balance, Rohinton Mistry, for instance….

I lifted the latch to the kitchen door and meandered along the long back lawn kept anonymous from the outside world by the towering leafy trees, to the back shed.  I opened the door, whereupon I learnt that raccoons had discovered this wonderful sanctuary in her absence, made it their home, and completely ripped to shreds all the stacked up upholstery for her outdoor furniture  – et alia.

Well, here’s something I have since learned and thought I’d share with you…

Racccoons Masked trickster, urban success story:

Clever and charismatic, the raccoon – from the Algonquin arukun, “he who scratches with his hands” – is as at home in the city as in the country.  In Native cultures, raccoon is the Trickster who uses his wits to lead enemies astray, leaving them stranded and bewildered.  The Cheyenne call him macho-an, “one who makes magic,” and his bandit’s mask lends him an aura of mischievousness and wily intelligence.  His scientific name, Procyon lotor, refers to the washing behavior thought to be instinctive.  In reality, what raccoons really like to do is experience their food, handling it a much as possible and dunking and soaking it in water when available.  Maybe it’s that human like behavior and their five-fingered “hands” that have always made raccoons seem subtly akin to us, or at least to the lost wild in ourselves.

Raccoons have lived on our continent, virtually unchanged, for more than a million years.  -exerpeted from The Humane Society of the United States.

Photos of the day

Elmo the cat sits amid poinsettias in a greenhouse in Barth, northern Germany. 50,000 plants in different colors and sizes are grown in these gardens. Bernd Wuestneck/dpa/AP

Camels are escorted to Radio City Music Hall for the first day of rehearsals for the 2013 Radio City Christmas Spectacular in New York. The animals will be a part of the ‘Living Nativity’ scene. Amanda Schwab/Starpix/AP

Market Closes for October 29^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

Oct. 29 (Bloomberg) — Canadian stocks rose to the highest level in two years, after U.S. economic reports fueled speculation Federal Reserve policy makers will continue stimulus measures as they begin two days of meetings.

Thomson Reuters Corp. climbed to a two-year high after disclosing it will buy back some of its shares and cut 3,000 positions in a bid to focus on growth. Sears Canada Inc. jumped 6 percent after deciding to terminate five leases, including its flagship location in Toronto. Bank of Nova Scotia and Toronto- Dominion Bank rose more than 1 percent to pace gains among the nation’s largest lenders as financial shares rallied.

The Standard & Poor’s/TSX Composite Index rose 68.77 points, or 0.5 percent, to 13,440.61 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has advanced 5.1 percent in October, for the biggest monthly gain in two years.

“The recent government shutdown and continued uncertainty about U.S. fiscal policy are expected to keep growth little changed through the end of the year,” said Paul Ferley, assistant chief economist with RBC Capital Markets, in a note today. “These recent developments weigh in favor of the Fed leaving the pace of asset purchases unchanged.”

Central bank policy makers meet today and tomorrow to consider whether to scale back the $85 billion a month of stimulative bond purchases. The Fed support has helped fuel a rally in global equities.

Retail sales in the U.S. declined 0.1 percent in September, restrained by the biggest decrease at auto dealers since October 2012. Confidence among U.S. consumers declined in October by the most since August 2011 as the 16-day government shutdown took a toll on outlooks.

President Barack Obama’s nomination of Janet Yellen, vice chairman of the Fed, to succeed Ben S. Bernanke as chairman at the end of January has added to speculation the central bank will not make any changes to its policy.

“When you have a new person coming in, they won’t do anything dramatic at all,” said David Cockfield, fund manager with Northland Wealth Management in Toronto. He helps manage C$225 million ($216 million) with the firm. “In times like these you do as little as possible and with the threat of further interparty fighting, you want to remain soft, accommodative and don’t introduce anything else that will cause stress or strain.”

Thomson Reuters gained 3.4 percent to C$38.60, the highest since April 2011, as consumer discretionary stocks added 1.2 percent as a group. Eight of 10 industries advanced on trading volume 7.2 percent lower compared with the 30-day average.

Thomson Reuters, a provider of news and information services, plans to cut 3,000 positions, or about 5 percent of the workforce, to focus on growth markets and boost profitability.

The company also reported higher-than-projected earnings of 48 cents a share in the third quarter, compared with 44 cents estimated by analysts.

Sears Canada increased 6 percent to C$14.35, the highest close in almost two years. The department store retailer is selling five store leases to Cadillac Fairview Corp. for C$400 million, including its flagship location in the Toronto Eaton Centre.

In the U.S., parent Sears Holdings Corp. is considering separating its Lands’ End and auto center units to raise cash.

Toronto-Dominion Bank rallied 1 percent to C$95.15 and Scotia Bank advanced 1.1 percent to C$63.54 as both lenders extended record highs. The S&P/TSX Banks Index climbed 1 percent, extending a record as it gained for the 13th time in the last 14 sessions.

Talisman Energy Inc. rose 2.6 percent to C$13.25 and Suncor Energy Inc. added 1.4 percent to C$38. Crude slipped for the first time in four days.

Imax Corp., the big-screen cinema technology company, gained 1.8 percent to C$30.94. Imax will develop and produce in- home theater systems in partnership with Hong Kong-based TCL Multimedia Technology Holdings Ltd. The first products will be introduced in China and other unspecified global markets in 2015.

US

By Nick Taborek and Michael P. Regan

Oct. 29 (Bloomberg) — Stocks rose in the U.S. and Europe as earnings beat analysts’ estimates at companies from BP Plc to Xylem Inc. The dollar gained and oil and gold paced losses in commodities, while Treasuries increased as the Federal Reserve began a two-day policy meeting.

The Standard & Poor’s 500 Index added 0.6 percent to 1,771.95 at 4 p.m. in New York, reaching a record for a third straight day. The Stoxx Europe 600 Index climbed 0.4 percent after BP raised its dividend and Spanish and Italian bonds gained. The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, strengthened 0.4 percent. West Texas Intermediate crude slipped from a one-week high and gold futures dropped 0.5 percent to $1,345.50 an ounce, retreating from the highest level in five weeks.

Earnings and Fed stimulus have helped extend the S&P 500’s advance to 24 percent in 2013, which would mark its best yearly rally in a decade. Per-share profit has beaten the average analyst estimate at three-quarters of the 284 companies in the index that have reported their latest results, data compiled by Bloomberg show. The Fed began a two-day meeting today after consumer confidence fell, an Oct. 22 report revealed growth in American jobs slowed in September and data yesterday showed factory output and home sales missed forecasts.

“It still seems that the Fed has created this good-news- is-bad-news, bad-news-is-good-news scenario,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by telephone.

“The anticipation is that the Fed will retain its purchasing of $85 billion in monthly Treasury and mortgage securities, which is going to continue to help the housing market. That will be taken fairly well by the market.”

Xylem, the water company whose pumps helped clean tunnels in New York flooded by Hurricane Sandy, surged 12 percent for the biggest gain in the S&P 500 and largest advance for the stock since it was spun off from ITT Corp. two years ago. The company posted earnings that beat estimates by 40 percent and raised annual profit and sales forecasts.

Pfizer Inc., the world’s biggest drugmaker, jumped 1.7 percent after profit beat analysts’ estimates on cost cuts and increased sales of its top vaccine and pain drugs. Masco Corp., which makes faucets and kitchen and bath cabinets, rose 2.6 percent as its sales topped forecasts.

Apple Inc., the world’s most valuable company, slipped 2.5 percent after earlier rallying as much as 1.8 percent. The maker of the iPhone said revenue in the current quarter will be $55 billion to $58 billion, compared with the $55.5 billion average of analysts’ estimates compiled by Bloomberg. Gross margins will be 36.5 percent to 37.5 percent, versus the 38 percent projection.

The Nasdaq Composite Index closed up 0.3 percent at 3,952.34, above its highest closing level in 13 years. Earlier, Nasdaq OMX Group Inc. indexes stopped updating for almost an hour starting at around 11:53 a.m. amid a data-feed error.

Commerce Department figures showed today that retail purchases excluding vehicles gained 0.4 percent following a 0.1 percent increase in August and matched the median forecast of economists surveyed by Bloomberg. Total sales dropped 0.1 percent. A report from S&P/Case-Shiller showed house prices climbed at a faster rate in August, jumping 12.8 percent from the previous year.

The Conference Board’s consumer confidence index fell to 71.2 in October from 80.2 the month prior, below the median forecast in a survey of economists for a reading of 75.

Two shares advanced for each that declined in the Stoxx Europe 600 Index. BP jumped 5.6 percent, the most in almost three years.

Oil, insurance, telephone and technology companies posted the biggest gains in Europe while banks and household products companies led losses. UBS AG lost 7.7 percent after saying it probably won’t be able to reach its profitability goal in 2015.

This year’s rally in equities has pushed valuations on benchmark indexes in the U.S. and Europe to the highest levels in more than three years. The S&P 500  trades for 16.8 times reported earnings, the most since May 2010. The Stoxx 600 is valued at 20.9 times reported earnings and 14.9 times projected profit, the most expensive valuations since the end of 2009, according to data compiled by Bloomberg. The European gauge has rallied 15 percent this year following a similar gain in 2012.

The MSCI Emerging Markets Index rose for a second day, advancing 0.1 percent. India’s S&P BSE Sensex index added 1.7 percent, snapping a five-day slump, after the central bank further eased emergency measures imposed in July to support the rupee. Brazil’s Ibovespa index slid 1 percent as Eike Batista’s OGX Petroleo e Gas Participacoes SA sank after ending talks with bondholders without an agreement, outweighing gains by lender Itau Unibanco Holding SA. Argentina’s Merval sank 4.6 percent, the most in two years.

The Czech PX Index rose 2.7 percent, the most since January, after parties pledging to increase company taxes failed to gain control of parliament in general elections over the weekend.

The Shanghai Composite Index fell 0.2 percent to a seven- week low after the People’s Bank of China’s first cash injection in two weeks failed to reduce money-market rates.

WTI oil fell 0.5 percent to $98.20 a barrel, its first drop in four days, before government data tomorrow that’s forecast to show crude stockpiles rose to a four-month high in the U.S., the world’s biggest consumer of the fuel.

Coffee futures capped the longest route in more than four decades as wet weather signaled bigger crops than forecast in Brazil, the world’s largest grower. Increasing precipitation in Brazil this week will improve conditions for crops that have been able to flower multiple times amid ample rain, MDA Weather Services in Gaithersburg, Maryland, said yesterday. Soil moisture will also gain in Colombia, the second-biggest producer, the forecaster said.

Arabica coffee for delivery in December fell 0.6 percent to $1.0695 a pound on ICE Futures U.S. in New York, after touching $1.066, the lowest since March 2009. A decline today would be the 11th straight, the longest slump since at least 1972.

Australia’s dollar slid to a two-week low after Reserve Bank Governor Glenn Stevens said the nation’s terms of trade are likely to worsen and its currency may be “materially lower” than current levels. The Aussie weakened 1 percent to 94.78 U.S. cents.

Spain’s government bonds rose for a second day, pushing 10- year yields to the lowest level since May, as a report showed retail sales rose in September, adding to evidence the nation’s recovery is gaining momentum. The rate dropped five basis points to 4.05 percent. Italy’s 10-year yield fell six basis points to 4.14 percent.

Ten-year Treasury yields were down two basis points at 2.50 percent. Treasury five-year notes were the most expensive in four months relative to two- and 10-year securities before the U.S. sells $35 billion of 2018 debt today.

The so-called butterfly spread measuring differences between the yields was negative 30 basis points, a level not seen since June 18, based on closing prices. The figure reflects increased demand for the middle security over the outliers.

The Treasury sold $32 billion of two-year securities yesterday with a bid-to-cover auction ratio, which gauges demand by comparing total bids with the amount of securities offered, at 3.32, the highest level since April.

Have a wonderful evening everyone.

Be magnificent!

When you believe that the truth is living, moving, that it does not have one home or rest in any temple,

mosque, or church, in any religion, master or philosopher – in short, that nothing can lead you to it –

you will see also that you are this living thing in every respect;

it is your anger, your brutality, your violence, your despair.

It is the agony and the pain that you live through.  The truth is in the comprehension of all of this;

you cannot comprehend it unless you are determined to see it in your life.

Krishnamurti, 1895-1986

As ever,

Carolann

I don’t know which is more discouraging,

literature or chickens.

-E.B. White, 1899-1985

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