January 30, 2015 Newsletter

Dear Friends,

Tangents:

SUPERBOWL WEEKEND!  HAVE A GREAT TIME!

February:  the month of purification among the ancient Romans  – Latin februum meaning purgation.

2^nd of February is known as Candlemas Day, and is the feast of the Purification of the Blessed Virgin Mary.  It is said that if the weather is fine and frosty at the close of January and the beginning of February, there is more winter ahead than behind.

The Dutch used to call the month Sokkelmaand meaning vegetation month.  The Anglo-Saxons knew it as solmonath meaning mud month.  In the French Revolutionary calendar its equivalent, from 21^st   

January to 19^th February, its equivalent was Pluviose meaning rain month.

PHOTOS OF THE DAY

Max Charlton and Jamie Morrison of team Cartier, in red, fight for the ball with Cedric Schweri and Pepe Riglos of team Trois Pommes, in green, from left, during the St. Moritz Polo World Cup on Snow on the frozen lake in St. Moritz, Switzerland, Friday. Gian Ehrenzeller/Keystone/AP

Brian Evensen, a teacher at Walla Walla, Washington Community College, gets the back of his head painted with the Seattle skyline Friday, at the hands of student Makiah Steen. The cosmetology department was busy, with school and community members coming by for free Hawkmania make-overs. Greg Lehman/Walla Walla Union-Bulletin/AP

Market Closes for January 30^th, 2015    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, erasing an earlier loss, as energy companies rallied on the biggest jump in crude- oil prices since 2012, overshadowing declines in bank shares.

     Canadian Oil Sands Ltd. and Lightstream Resources Ltd. soared. Bank of Montreal and Royal Bank of Canada fell more than 3.1 percent after Barclays Plc downgraded ratings for the nation’s largest banks amid concern the plunge in oil and a slowing economy will hobble lending. Canadian Imperial Bank of Commerce fell 3.5 percent, the most since 2011, after cutting about 500 jobs Thursday.

     The Standard & Poor’s/TSX Composite Index rose 36.20 points, or 0.3 percent, to 14673.48 at 4 p.m. in Toronto, erasing an earlier loss of as much as 0.8 percent. The benchmark equity gauge is up 0.3 percent for the month.

     Canadian Oil Sands rallied 21 percent and Lightstream Resources jumped 18 percent as energy and raw-materials shares each advanced 3 percent, the most in the S&P/TSX.

     Crude oil in New York jumped 8.3 percent, the biggest gain since June 2012, and gold posted the biggest monthly gain in three years as the Bloomberg Commodity Index climbed 2.1 percent.

     Bank of Montreal slumped 4.2 percent and Royal Bank of Canada retreated 3.1 percent as financials shares declined 2 percent. Trading volume was 20 percent higher than the 30-day average.

     John Aiken, analyst at Barclays Capital Inc., cut his ratings for Bank of Montreal, Royal Bank, Toronto-Dominion Bank and Laurentian Bank of Canada to underweight, the equivalent of sell. The Bank of Canada unexpectedly cut its key interest rate 25 basis points to 0.75 percent Jan. 21, which implies lower economic growth for Canada than reflected in the market, he said.

     Canada’s economy contracted 0.2 percent in November as manufacturing dropped the most since January 2009 and on declines in mining and oil and gas extraction. The median forecast in a Bloomberg survey of economists was for output to be little changed.

     “With low oil prices prompting a pullback in the energy sector, economic growth is likely to remain sluggish,” said David Madani, an economist with Capital Economics in Toronto, in a note to clients earlier today.

     Eldorado Gold Corp. sank 14 percent after Reuters reported Greece’s new government was opposed to the company’s mine in northern Greece.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index to its biggest monthly decline in a year, as weaker-than-forecast economic growth overshadowed a rally in energy shares sparked by a surge in the price of crude.

     The S&P 500 slid 1.3 percent to 1,994.99 at 4 p.m. in New York, extending its monthly loss to 3.1 percent. The index tumbled 2.8 percent in the week, the most since Dec. 12. The Dow Jones Industrial Average dropped 251.90 points, or 1.5 percent, to 17,164.95. The Russell 2000 Index of small caps tumbled 2.1 percent, the biggest slide since Dec. 10.

     More than 8.5 billion shares changed hands on U.S. exchanges today, the busiest trading since Dec. 19 and 26 percent above the three-month average.

     Energy shares in the S&P 500 gained 0.7 percent as U.S. oil surged 8.3 percent. Amazon.com Inc. and Biogen Idec Inc. soared at least 10 percent after reporting earnings.

     Broad equities gauges tumbled amid concern over economies in Europe and Russia as data showed slower growth in America. The U.S. economy expanded at a slower pace than forecast in the fourth quarter as cooling business investment, a slump in government outlays and a widening trade gap took some of the luster off the biggest gain in consumer spending in almost nine years.

     “All this data does is further cloud the entire investment picture,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “It confirms that there’s going to be continued uncertainty and continued significant volatility.”                         

     Gross domestic product grew at a 2.6 percent annualized rate after a 5 percent gain in the third quarter that was the fastest since 2003, Commerce Department figures showed Thursday in Washington. The median forecast of 85 economists surveyed by Bloomberg called for a 3 percent advance. Consumer spending, which accounts for almost 70 percent of the economy, climbed 4.3 percent, more than projected.

     A separate report showed American consumer confidence reached an 11-year high in January as a strengthening labor market and plunging gas prices kept households looking on the bright side.

     Federal Reserve officials are confronting divergent economic forces as they weigh the timing of the first interest- rate increase since 2006. Surprisingly strong job gains argue for tightening sooner, while inflation held down by a plunge in oil prices and a cooling global economy provides grounds for delay.

     “In the background of all of these reports is the Fed,”  Jim Paulsen, chief investment strategist at Wells Capital Management, said by phone. Paulsen helps manage $351 billion in assets. “It’s the big elephant in the room in terms of how fast they might raise rates.”

     The central bank boosted its assessment of the economy in a statement this week and downplayed low inflation readings, while repeating a pledge to remain “patient” on raising interest rates. It acknowledged global risks, saying it will take into account readings on “international developments” as it decides how long to keep rates low.     “Zero interest rates are not the right interest rates for this economy,” James Bullard, president of the Fed Bank of St. Louis, said in a Bloomberg Television interview with Betty Liu and Michael McKee. “Inflation is low, but not low enough to rationalize zero interest rates. There’s a lot of underlying momentum in the U.S. economy.”                         

     Equity futures fell earlier as Russia’s central bank unexpectedly cut its benchmark interest rate by two percentage points, letting the ruble slide as the economy sinks toward recession.

     Data showed consumer prices in the euro area fell more than economists forecast in January, underscoring the challenges facing European Central Bank President Mario Draghi. The ECB last week unveiled a 1.14 trillion-euro ($1.3 trillion) quantitative-easing program to combat deflation.

     The Chicago Board Options Exchange Volatility Index, known as the VIX, jumped 12 percent to 20.97, capping its biggest weekly gain since Dec. 12.

     Companies from Procter & Gamble Co. to DuPont Co. and Pfizer Inc. have said the U.S. currency’s strength is hurting profits. The strongest dollar in a decade is making American goods and services more expensive overseas, eroding sales.

     About 78 percent of the S&P 500’s more than 220 companies that posted earnings this season have beaten analyst estimates, while 56 percent have topped sales projections, data compiled by Bloomberg show.                       

     Nine of 10 primary industry groups in the S&P 500 declined, as energy stocks rebounded from a loss to post a 0.7 percent advance. Utilities paced losses with a decline of 2.2 percent.

     Chevron Corp. fell 0.5 percent after dropping as much as 4 percent. The energy company slashed its drilling budget by the most in 12 years and said it may delay some shale projects as energy producers around the world hoard cash and curtail ambitions in response to free-falling oil prices.

     PulteGroup Inc. slid 5.6 percent as Wells Fargo Securities analyst Adam Rudiger downgraded the stock to market perform from outperform.

     Microsoft Corp., Intel Corp. and Cisco Systems Inc. retreated more than 3.1 percent to pace losses among the biggest companies.

     Amazon.com Inc. surged 14 percent, the most since April 2012, after the online retailer posted a fourth-quarter profit following two straight quarters of losses.                        

     Google Inc. jumped 4.7 percent even as fourth-quarter sales and profit missed estimates.

     Visa Inc., the world’s largest payments network, climbed 2.8 percent as first-quarter profit beat analysts’ estimates and the company announced a 4-for-1 stock split. Goldman Sachs Group Inc. is poised to replace Visa as the most heavily weighted component of the Dow after the split.

     MasterCard Inc. added 0.8 percent after profit beat analysts’ estimates as customer spending climbed.

     Biogen Idec Inc. jumped 10 percent after the maker of multiple sclerosis drugs made a 2015 profit forecast that surpassed analysts’ estimates.

     “Certainly GDP was a pretty big miss but in the tech world we’ve got Amazon and Google higher and in the credit card world we’re up,” Todd Salamone, senior vice president at Cincinnati- based Schaeffer’s Investment Research Inc., said in a phone interview. “Also, the question going forward is whether bad data relieves the market in some way in terms of the Fed remaining on hold longer than expected with rates.”

Have a wonderful weekend everyone.

Be magnificent!

The divine music is incessantly going on within ourselves,

but the loud senses drown the delicate music,

which is unlike and infinitely superior to anything we can perceive with our senses.

Mahatma Gandhi

As ever,

Carolann

If winning isn’t everything, why do they keep score?

                             -Vince Lombardi, 1913-1970                    

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