October 30, 2014 Newsletter

Dear Friends,

Tangents:

I’ve been away attending a couple of investment conferences in New York and then San Francisco.  I headed to the airport in San Francisco last night to catch the flight back to Victoria (so wonderful there is now the non-stop SF- Victoria flight now) and every restaurant/bar in the airport that had television set had crowds gathered in front of the screens to watch the game.  It was so exciting when the Giants won 3-2 –their third world series win in 5 years – the noise throughout the airport sounded like thunder.

PHOTOS OF THE DAY

The San Francisco Giants celebrate after Game 7 of baseball’s World Series against the Kansas City Royals Wednesday night in Kansas City, Mo. The Giants won 3-2 to take the series. Jeff Roberson/AP

Hindu devotees pray while standing in the Arabian Sea as they worship the Sun god Surya during the Hindu religious festival ‘Chatt Puja’ in Mumbai, India. Hindu women fast for the whole day for the betterment of their family and the society during the festival. Danish Siddiqui/Reuters

Market Closes for October 30^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Oct. 30 (Bloomberg) — Canadian stocks fell a second day, as materials producers plunged to a six-year low after the price of gold erased its gain for 2014.

     Goldcorp Inc., the biggest producer of the precious metal by market value, tumbled 13 percent to the lowest since 2008 on missed estimates as costs rose. Yamana Gold Inc. sank 16 percent as gold futures fell below $1,200 an ounce in New York. Seven Generations Energy Ltd climbed 17 percent in its trading debut.

     The Standard & Poor’s/TSX Composite Index fell 68.88 points, or 0.5 percent, to 14,458.69 at 4 p.m. in Toronto, trimming its advance since a low on Oct. 15 to 4.3 percent.

     Six of the 10 industries in the benchmark Canadian equity gauge advanced today, with Valeant Pharmaceuticals International Inc. leading health-care stocks to a 3.5 percent gain. Trading volume in Canada was in line with the 30-day average.

     The S&P/TSX Materials Index sank 5 percent, its worst performance since June 2013. Gold producers led losses. The S&P/TSX Gold Index tumbled 9.3 percent to an April 2003 low. All 24 members of the gauge retreated.

     Gold slumped as a stronger dollar cut demand after the U.S. Federal Reserve ended its asset-purchase program because of an improving labor market.

     Goldcorp dropped 13 percent to C$20.85, the lowest since 2008, after the gold producer drifted to a loss as sales declined. The company’s average so-called all-in sustaining cost was $1,066 an ounce, compared with $995 a year earlier.

     Yamana Gold Inc. plunged 16 percent to C$4.99, the lowest since November 2008, after the company reported an unexpected third-quarter loss.

     Seven Generations jumped 8.7 percent to C$19.55 after pricing its initial offering at C$18 a share to raise about C$810 million. The oil and gas explorer began preliminary trading today ahead of the deal’s expected close the week of Nov. 5.

US

By Oliver Renick

     Oct. 30 (Bloomberg) — U.S. stocks rallied as a report showed faster-than-estimated growth in gross domestic product, fueling speculation the economy is strong enough to withstand higher interest rates.

     Visa Inc. and MasterCard Inc. added more than 9 percent each as the two largest U.S. payment networks reported results that topped estimates. Bristol-Myers Squibb Co jumped 8.9 percent after a drug improved survival rates for cancer patients. Energy shares retreated as oil resumed a selloff after U.S. production rose to the highest level since the 1980s.

     The Standard & Poor’s 500 Index rose 0.6 percent to a one- month high of 1,994.65 at 4 p.m. in New York, closing within 1 percent of its last record on Sept. 18. The Dow Jones Industrial Average rallied 221.11 points, or 1.3 percent, to 17,195.42. Visa is the Dow’s largest member by weighting. The Russell 2000 Index increased 0.8 percent and the Nasdaq Composite Index climbed 0.4 percent

     “It’s now about the economy and earnings, we’ve all over- analyzed the Fed,” Bob Doll, chief equity strategist at Nuveen Asset Management, said by phone. “Job growth has picked up and the GDP report was a little stronger than consensus and that buttresses the view that the economy’s getting a little better.  Stocks will continue to grind their way higher.”

     The computer system that carries prices for thousands of equities listed by the New York Stock Exchange malfunctioned today, sowing confusion among traders. The market operator later said the issue had been resolved.                          

     The oldest American exchange reported an “ongoing issue with the NMS SIP,” or the securities information processor for NYSE stocks, at about 1:40 p.m. in New York. Two NYSE venues were “experiencing issues publishing and receiving trades and quotes,” the alert said. A notice 10 minutes later said the markets were processing trades and quotes normally.

     The S&P 500 lost 0.1 percent yesterday after the Fed ended its quantitative easing program, indicating the U.S. economy is on a stable growth path. Officials said labor market conditions “improved somewhat further,” and that a range of indicators suggests that “underutilization of labor resources is gradually diminishing,” modifying earlier language that referred to “significant underutilization.”

     The central bank reiterated its commitment to keep interest rates low for a considerable time until inflation increases toward its goal.

     Data today showed fewer Americans filed applications for unemployment benefits over the past month than at any time in more than 14 years, a sign the strengthening U.S. economy is buoying the labor market.

     A separate report said the economy in the U.S. expanded 3.5 percent in the third quarter, capping its strongest six months in more than a decade, as gains in government spending and a shrinking trade deficit made up for a slowdown in household purchases. Economists on average had forecast growth of 3 percent.

     “The GDP number’s fine, not spectacular,” Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York, said by phone. “The inflation data isn’t great and the quality of the GDP beat isn’t great as a lot of it is from government and defense spending. It adds to dovishness.”

     Concerns that Europe will slip into a recession just as Fed bond buying ends sent the S&P 500 down 7.4 percent from an all- time high of 2,011.36 in mid-September through Oct. 15. The index has rebounded and is now about 0.8 percent below its record.

     Visa jumped 10 percent, the most in three years, to a record $236.65. The world’s largest payments network reported fiscal fourth-quarter profit that beat analysts’ estimates as customer spending abroad improved. The company also said it planned to charge some U.S. banks higher card-processing fees.

     MasterCard climbed 9.4 percent to $83.13 for its biggest gain since 2011. The second-largest U.S. payments network posted third-quarter profit that beat analysts’ estimates as customer spending climbed. Net income increased 15 percent to $1.02 billion, or 87 cents a share, from $879 million, or 73 cents, a year earlier.

     Bristol-Myers added 8.9 percent to $58.98 after its experimental cancer drug Opdivo improved survival rates for late-stage lung cancer patients.

     MetLife Inc. gained 1.3 percent to $53.01. The largest U.S. life insurer reported earnings per share of $1.60, topping analysts’ estimates of $1.38, on growth in its home market, fueled by investment results.

     Level 3 Communications Inc. gained 1.8 percent to $45.41 after S&P Dow Jones Indices said the provider of integrated communications services will replace Jabil Circuit Inc. in the equity benchmark after trading ends Nov. 4.

     Avon Products Inc. plunged 9 percent after the maker of beauty products reported revenue that missed analysts’estimates. Third-quarter revenue was $2.14 billion, compared with an average estimate of $2.15 billion.

Have a wonderful evening everyone.

Be magnificent!

A civilization must be judged and assessed, not by the level of power it has reached,

but by how it develops and expresses a love of humanity

through its laws and institutions.

The first and last criterion one must submit to is:

Is it recognizable, and to what level, that man is more a spirit than a machine?

Rabindranath Tagore

As ever,

Carolann

Work hard, be kind, and amazing things will happen.

                                       -Conan O’Brien, 1963-

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