October 30, 2013 Newsletter

Dear Friends,


What the Pollen Says

Humans are biological survivors, part of an unbroken genetic stream linked to the remote past.  Yet the history of civilizations – rising, flourishing, crashing – is episodic.

Why do prosperous civilizations vanish?  One team of scientists, studying ancient pollens in the Middle East, believes it can explain the sudden collapse of the grand cultures that flourished there some 3,200 years ago.  The cause – so the pollen says – was long-term drought.

The strength of those vanished civilizations – Egyptian, Hittite, Mycenaean, a dense network of trading culture in the eastern Mediterranean – can hardly be disputed.  Until now, no one has been certain what caused them to collapse.  As part of a new, comprehensive effort to reconstruct the nature of life in ancient Israel, a team of scientists in 2010 began studying core samples taken from beneath the Sea of Galilee.

They analyzed pollen samples from those cores at 40-year intervals, creating a fine-grained portrait of climatic changes during the period in question.  What the pollen samples showed was a broad shift in vegetation consistent with drought at its most intense around 1250 to 1100 BC.

Drought is both a cause of cultural disturbance and a cause of other causes.  It induces a cascade of changes, disrupting agriculture, trade and social cohesion.  The coherence that produces a civilization can swiftly fall apart under those pressures, whether it occurs in the Middle East in the Late Bronze Age or in the American Southwest in the 12th century, when the people known as the Anasazi reached their cultural peak and then collapsed.

The pollen findings from the Sea of Galilee are interesting in and of themselves, but now, in an era of intensifying drought in so many places, they require more attention as reminders of how vulnerable even the strongest human societies may be to natural forces.  –NY Times.

Education is not the filling of a pail, but the lighting of a fire. –William Butler Yeats.

Photos of the day

The 1987 mural titled ‘We The Youth’ by artist Keith Haring in the Point Breeze neighborhood of Philadelphia, has gotten a makeover. The city’s Mural Arts Program has worked for months to restore the only collaborative public mural by Haring that is still intact and at its original site. Matt Rourke/AP

A sculpture by Australian artist Ken Unworth is displayed during the world’s largest annual free-to-the-public outdoor art exhibition, ‘Sculptures By The Sea’ in Sydney in Australia. The exhibition features sculptures which were made by both Australian and overseas artists. Rob Griffith/AP

Market Closes for October 30th, 2013



Close Change


15618.76 -61.59 



S&P 500 1763.31 -8.64 



NASDAQ 3930.620 -21.718 



TSX 13455.33 +14.72




International Markets



Close Change
NIKKEI 14502.35 +176.37






23304.02 +457.48




SENSEX 21033.97 +104.96




FTSE 100 6777.70 +2.97





Bonds % Yield Previous % Yield

10 Year Bond

2.421 2.408

30 Year


3.015 3.007

10 Year Bond

2.5342 2.5034

30 Year Bond

3.6403 3.6127


BOC Close Today Previous
Canadian $ 0.95466 0.95525




1.04749 1.04685
Euro Rate 

1 Euro=




1.43885 0.69059


1.37361 0.72801


Gold Close Previous
London Gold  


1344.60 1344.12
Oil Close Previous 


WTI Crude Future 96.77 98.20
BRENT 109.360 109.360


Market Commentary:


By Eric Lam

Oct. 30 (Bloomberg) — Canadian stocks rose, erasing earlier losses, as earnings from Yamana Gold Inc. pushed gold shares higher and investors analyzed a statement from the U.S. Federal Reserve for clues on when it may scale back stimulus.

OceanaGold Corp. climbed 16 percent after raising its copper production target and cutting its cost estimates. Yamana Gold gained 4.8 percent as earnings topped forecasts. Wi-Lan Inc. jumped 6.5 percent as the company considers strategic options including a sale after losing a patent case. B2Gold Corp. fell 1.1 percent as third-quarter revenue declined amid rising costs.

The Standard & Poor’s/TSX Composite Index rose 14.72 points, or 0.1 percent, to 13,455.33 at 4 p.m. in Toronto, erasing earlier losses of as much as 0.6 percent. The benchmark Canadian equity gauge has advanced 5.2 percent in October, heading for the biggest monthly gain in two years.

“The tension is going to shift back to the economy and the Fed is clarifying further that what they do will be very dependent on economic data,” Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd., said from Vancouver. Richardson GMP manages about C$16 billion ($15.3 billion). “It seems like the Fed decision was being anticipated. Investors are going to be keeping an eye out for the data starting next week, which will likely be more important than this announcement.”

The U.S. central bank said it sees improvement in economic activity even as it maintained its $85 billion in monthly purchases. The Fed said it needs to see more evidence that the economy will continue to improve. The central bank will keep stimulus measures at the current level until March 2014, economists forecast in a Bloomberg survey this month.

OceanaGold soared 16 percent to C$1.71 and Yamana rallied 4.8 percent to C$10.71 to pace gains among raw-materials stocks as five of 10 industries in the S&P/TSX advanced. Trading volume was in line with the 30-day average.

OceanaGold raised its 2013 copper production guidance to 18,000 to 20,000 tons from 15,000 to 18,000 tons. The company produced 6,150 tons of copper in the third quarter and 74,697 ounces of gold.

The company also lowered its cash costs forecasts for the year to $550 to $650 an ounce from $650 to $800 an ounce earlier.

Yamana reported adjusted earnings of 9 cents a share in the third quarter, compared with analysts’ estimates for 8 cents.

Production climbed 4 percent from the second quarter and revenue increased, the company said.

Cameco Corp. increased 4.6 percent to C$19.87. The company said revenue this year is now forecast to grow 30 percent to 35 percent, compared with earlier projections of 25 percent to 30 percent.

Cameco reported third-quarter adjusted earnings of 53 Canadian cents a share, ahead of analysts’ estimates of 18 cents.

Copper Mountain Mining Corp. jumped 5.3 percent to C$1.78 as revenue climbed 42 percent compared with a year ago. Copper rose the most in five weeks in New York as inventories tracked by the London Metal Exchange shrank for a 40th straight session.

B2Gold dropped 1.1 percent to C$2.69 after reporting third- quarter revenue of $128.7 million, short of analysts’ estimates for $134.7 million. The company now forecasts 2013 cash costs of $675 to $690 an ounce, compared with $630 to $660 earlier.

Wi-Lan, the Ottawa-based patent licensing company, climbed 6.5 percent to C$3.30. Wi-Lan will consider changes to dividend policy or other forms of return of capital, as well as “the acquisition or disposition of assets, joint ventures, the sale of the company, alternative operating models or continuing with the current business plan,” it said today in a statement.

The company lost a patent-infringement trial against Apple Inc. on Oct. 23 in which Wi-Lan was seeking $248 million in royalties for wireless technology used in mobile devices.


By Nick Taborek and Aubrey Pringle

Oct. 30 (Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index halting a four-day winning streak, after the Federal Reserve fueled bets it will begin to cut stimulus even as it maintained the pace of monthly bond buying as expected.

LinkedIn Corp. lost 9.3 percent after its quarterly sales outlook missed analysts’ predictions. Western Union Co. tumbled 12 percent after saying costs tied to regulatory compliance will prevent operating profit from rising next year. General Motors Co. gained 3.2 percent as quarterly profit topped estimates.

Buffalo Wild Wings Inc. surged 9 percent after raising its full- year earnings forecast. Facebook Inc. jumped 10 percent after the market closed as it released results.

The S&P 500 fell 0.5 percent to 1,763.31 at 4 p.m. in New York after rising yesterday to a third straight record. The index has jumped 24 percent this year, on track for its best annual gain since 2003. The Dow Jones Industrial Average lost 61.59 points, or 0.4 percent, to 15,618.76 today. About 6.4 billion shares changed hands on U.S. exchanges, 7.4 percent above the three-month average.

“People are looking at it and saying, ‘OK it’s about what we expected, so there’s no real upside, and we’ve traded it up, so now let’s back off a little bit,’” Brad McMillan, chief investment officer for Waltham, Massachusetts-based Commonwealth Financial Network, said in a phone interview. His firm has more than $71 billion under management. “Everyone was buying in the anticipation of continued stimulus. That is more or less exactly what they’ve got.”

The Fed decided to press on with the $85 billion in monthly bond purchases that have helped propel the S&P 500 higher by more than 160 percent from a 12-year low in 2009. The gauge has surged 4.9 percent in October, heading for the biggest monthly gain in two years, as lawmakers ended a 16-day government shutdown and agreed to extend the U.S. borrowing authority, avoiding a possible debt default.

While Fed policy makers said fiscal policy is “restraining economic growth,” the central bank said it sees signs of “underlying strength.” The Fed removed a sentence from its previous policy statement that had said tighter financial conditions could slow the improvement in the economy, sparking speculation it could cut stimulus in the coming months.

“When you look at the reaction in the market, investors are really taking the opinion that the taper may actually come sooner than previously thought,” Chris Gaffney, senior market strategist at EverBank Wealth Management, said by phone from St. Louis. “Everything indicates that people, when they read that statement, they felt like the Fed continues to have a positive view on the economy and they would be starting to taper maybe before the expected March date.”

The central bank was expected to maintain the pace of assets purchases at the current level until March 2014, according to a Bloomberg survey this month.

The Fed left unchanged its statement that it will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent. A report today showed the cost of living in the U.S. rose 0.2 percent as projected in September, capping the smallest year-to-year gain in five months.

Separate data based on payrolls showed companies added fewer workers than projected in October, adding to signs that growth slowed in the weeks before the shutdown. The government closure will reduce economic growth by 0.3 percentage points this quarter at an annual rate, according to a Bloomberg News survey of economists.

While the S&P 500’s rally has lifted equity valuations to a four-year high, with the index trading at 16 times estimated operating earnings, that’s still below the multiples at the market’s two previous peaks, when the ratio reached 16.5 in October 2007 and 25.7 in March 2000, data compiled by Bloomberg show.

Investors have also been assessing better-than-expected corporate earnings from the third quarter. Profits have grown by an average of 5 percent among the 312 S&P 500 companies that have reported results so far, while sales have gained 2.9 percent. Profits for the broad equity gauge probably increased 3.7 percent during the quarter as sales climbed 2.4 percent, according to analysts’ estimates compiled by Bloomberg. Some 35 members of the S&P 500 reported results today.

Facebook, which is not in the gauge, rallied 10 percent to $54.11 at 4:34 p.m. in New York. The world’s largest social network reported third-quarter sales that topped analysts’ estimates as advertisers boosted spending on promotions targeting users on smartphones and tablets. The stock fell 0.8 percent to $49.01 in the regular session for a fourth day of losses. It closed at a record $54.22 on Oct. 18.

All 10 main S&P 500 groups dropped at least 0.2 percent today. Utilities and consumer-staples stocks fell the most, dropping more than 0.6 percent.

LinkedIn lost 9.3 percent, the most since May, to $224.11.

The world’s biggest professional-networking site said fourth- quarter revenue will be $415 million to $420 million. That trailed the average analyst estimate of $438.9 million.

Western Union Co. tumbled 12 percent to $16.85 for the biggest slide in the S&P 500 and its lowest level since July 2.

The largest money-transfer business reported a drop in third- quarter profit. Operating income won’t increase next year because of additional investments needed to comply with new and existing regulations, Chief Executive Officer Hikmet Ersek said.

U.S. Steel Corp. slid 2.9 percent to $24.72. The largest U.S. producer of the metal will permanently close parts of two plants as it cuts costs after four unprofitable quarters. The company was downgraded to hold from buy at Deutsche Bank by equity analyst David Martin.

General Motors gained 3.2 percent to $37.23. The largest U.S. automaker posted third-quarter profit that beat estimates as North American earnings, boosted by redesigned large pickups, helped buffer international losses.

Buffalo Wild Wings jumped 9 percent to $141.22 after saying late yesterday it expects full-year earnings growth of 28 percent, up from a previous estimate of 25 percent. That implies adjusted profit of $3.83 a share, surpassing the average analyst projection of $3.64.

Electronic Arts Inc. rallied 7.8 percent to $26 for the biggest gain in the S&P 500. The second-largest U.S. video-game publisher was raised to strong buy from hold by Needham & Co. by equity analyst Sean McGowan.

Sealed Air Corp. jumped 6.4 percent to $30.35. The manufacturer of packaging materials raised its full-year profit forecast above analyst estimates.

Gilead Sciences Inc. gained 4.6 percent to a record $72.67.

The drug maker reported third-quarter adjusted profit that beat analyst estimates as antiviral revenue rose 14 percent. The company raised its product sales forecast for the year.


Have  a wonderful evening everyone.


Be magnificent!


As long as there is division in any form

there must be conflict.

You are responsible, not only to your children,

but to the rest of humanity.

Unless you deeply understand this, not through words or ideas or the intellect,

but feel this in your blood, in your way of looking at life, in your actions,

you are supporting organized murder which is called war.

Krishnamurti, 1895-1986

As ever,




Don’t be too timid and squeamish about your actions.  All life is an experiment.

The more experiments you make the better.

-Ralph Waldo Emerson, 1803-1882.

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