September 29, 2014 Newsletter

Dear Friends,

Tangents:

We checked out the new incarnation of Chambar in Vancouver on Saturday night and highly recommend it.  So for all of you who live in Vancouver or travel there frequently as I do, it’s very good – nice décor as well.  Still on Beatty Street, just a few door away from the old local.  And what’s more, it’s walking distance to Rogers’ theatre if you are going to a show or the stadium for a game.  Food and service are excellent.  Russell Peters still very funny!

PHOTOS OF THE DAY

A calm and tranquil North Sea laps against the art installation, ‘The Couple’ by artist Sean Henery just off the coast at Newbiggin-by-the-Sea, in north east England, as the warmer than usual temperatures continue across the United Kingdom. Owen Humphreys/AP

Surfer Dog Tillman rides a wave at the Surf City surf dog contest in Huntington Beach, California. Lucy Nicholson/Reuters

Market Closes for September 29^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Sept. 29 (Bloomberg) — Canadian stocks fell, after rallying the most in five weeks, as markets around the world slumped after pro-democracy protests in Hong Kong added to geopolitical concerns.

     Toronto-Dominion Bank, the nation’s largest lender, tumbled 0.9 percent to pace declines among financial stocks. Pembina Pipeline Corp. and Talisman Energy Inc. retreated more than 1.8 percent. Encana Corp. rose 2 percent after agreeing to buy Athlon Energy Inc. for $5.93 billion to gain a foothold in Texas.

     The Standard & Poor’s/TSX Composite Index fell 49.85 points, or 0.3 percent, to 14,976.92 at 4 p.m. in Toronto. The benchmark equity gauge rose 0.9 percent on Sept. 26, paring a weekly loss to 1.6 percent. The index has plunged 4.2 percent so far in September, poised for its worst month in more than two years.

     The MSCI All-World Index, which tracks both developed and emerging markets, slumped 0.5 percent today to a seven-week low.

     Tens of thousands of pro-democracy protesters poured back into the streets of Hong Kong after a weekend of demonstrations, demanding free and open elections and the resignation of Chief Executive Leung Chun Ying. The benchmark Hang Seng stock index plunged 1.9 percent.

     Toronto-Dominion sank 0.9 percent to C$54.91 as financial stocks fell 0.7 percent as a group. Six of 10 industries in the S&P/TSX retreated on trading volume 4.7 percent lower than the 30-day average today.

     Pembina Pipeline dropped 2 percent to C$46.64 for a seventh day of losses, the worst streak since 2012, and Talisman Energy lost 1.8 percent to C$9.75.

     Encana gained 2 percent to C$24.06 after making its largest purchase since the Calgary-based company was formed in 2002. Encana, which split its oil production into a separate company in 2009, is returning to crude amid a supply glut that’s lowered natural gas prices 2.3 percent this year.

US

By Callie Bost and Oliver Renick

     Sept. 29 (Bloomberg) — U.S. stocks fell, after the worst week in almost two months for the Standard & Poor’s 500 Index, as Hong Kong protests added to geopolitical concern and a rebound in consumer spending fueled speculation the Federal Reserve may raise interest rates sooner than anticipated.

     Ford Motor Co. slid 7.5 percent after saying pretax profit this year will miss its goal amid weaker results in South America and Europe. An S&P index of homebuilders retreated 1 percent as U.S. contracts to buy existing houses fell in August. Las Vegas Sands Corp. and Wynn Resorts Ltd. dropped more than 2.9 percent as casino companies slid. Semiconductor stocks in the S&P 500 climbed as Micron Technology Inc. and Intel Corp. gained at least 1.8 percent.

     The S&P 500 lost 0.3 percent to 1,977.80 at 4 p.m. in New York, trading near its 50-day moving average after paring an earlier drop of 1 percent. The Dow Jones Industrial Average slid 41.93 points, or 0.3 percent, to 17,071.22. The Nasdaq Composite Index retreated 0.1 percent. About 5.9 billion shares traded hands on U.S. exchanges, 4.2 percent above the three-month average.

     “There’s this sense of foreboding in the stock markets that we’re almost deserving of at least a correction,” Drew Wilson, an investment analyst with Fenimore Asset Management in Cobleskill, New York, said in a phone interview. “Nobody wants to be in the way of that. We’ve had one tiger awaken in Russia and now we have a tiger awakening in China and that’s a little too much risk and uncertainty for U.S. stock market investors to have on their plates.”

     The S&P 500 is down 1.3 percent for the month, paring a gain for the quarter to 0.9 percent. It has not had a four-day losing streak this year and has not fallen more than 10 percent in three years.                          

     Swings in equities have widened at the end of the quarter, with the Dow alternating between gains and losses of more than 100 points the previous four days.

     The Chicago Board Options Volatility Index, a gauge of investor trepidation derived from options, averaged 14.5 last week, 12 percent above its mean level during the third quarter. The VIX added 7.6 percent to 15.98 today.

     The S&P 500 slid 1.4 percent last week, the biggest decline in almost two months, amid an escalation in the Middle East conflict and a selloff in small-capitalized stocks and technology shares. It jumped 0.9 percent on Sept. 26 after a report showed the U.S. economy expanded in the second quarter at the fastest rate since 2011.

     “We’re in a giant yo-yo the past six sessions but central banks are still accommodative, U.S. growth is decent, the grind higher is still intact,” Michael Block, chief equity strategist at New York-based Rhino Trading Partners LLC, said in a phone interview. “We’re just hitting some bumps with macro issues.”

     Data today showed consumer spending in the U.S. rebounded in August as further job gains encouraged households to loosen their purse strings. Purchases increased 0.5 percent last month after little change in July. Incomes increased 0.3 percent.

     A report from the National Association of Realtors showed contracts to purchase previously owned homes declined in August as tighter credit and limited wage growth weigh on potential buyers. The pending home sales index dropped 1 percent after a 3.2 percent increase in July.

     KB Home dropped 2.4 percent to $15.19, while PulteGroup Inc. slid 0.8 percent to $17.74.

     Investors are analyzing reports to assess whether economic growth is strong enough to withstand higher interest rates. The S&P 500 reached a record on Sept. 18 as the Fed maintained a commitment to keep interest rates near zero for a considerable time after completing asset purchases. The central bank also said that the timing could move forward if data continue to exceed expectations.

     The Fed mustn’t “fall behind the curve” as it weighs when to start raising interest rates, Dallas Fed President Richard Fisher said in a Fox News interview, citing strengthening U.S. growth and building wage-price pressures.

     U.S. data on employment and output from the manufacturing and services industries are due this week, and companies next month will begin to report earnings for the third quarter. Alcoa Inc. unofficially kicks off the earnings season when it reports quarterly results on Oct. 8.

     Stock markets overseas slumped today as tens of thousands of pro-democracy protesters poured back into the streets of Hong Kong to press demands for free and open elections. Pro-democracy protesters in Hong Kong pledged to continue demonstrations unless the city’s top official steps down.

     The turmoil added to the crises around the globe that have weighed on equities. Ukraine’s army endured its deadliest day since signing a cease-fire with pro-Russian militants 3 1/2 weeks ago, straining efforts to find a lasting settlement to the six-month conflict in the nation’s east. Investors are also watching the situation in Syria, where the U.S. and its allies are carrying out strikes against Islamic State positions.

     Brazilian shares retreated 4.5 percent after a poll showed increased support for President Dilma Rousseff’s re-election bid. Traders are paring bets on the chances a new government will be elected next month and jump-start economic growth after the country fell into a recession in the first half of the year.

     “Although we saw strong GDP numbers for the second quarter last week, there’s still a suspicion that unrest outside of our borders will impact economic growth here,” Jim Dunigan, chief investment officer at PNC Bank NA, which oversees $130 billion, said by phone from Philadelphia.

     Nine of 10 main industries in the S&P 500 slumped today. Consumer-discretionary shares had the biggest loss among the group, sliding 0.6 percent.

     Ford Motor tumbled 7.5 percent, the most since 2011, to $15.11. The second-largest U.S. automaker said it will earn a pretax profit of $6 billion this year, missing its goal of $7 billion to $8 billion. Ford told investors it will lose $1 billion in South America as inflation and other currency problems hurt operations there. Ford also forecast a loss of $1.2 billion in Europe this year and a loss of $250 million there in 2015.

     Casino companies with operations in Macau slid amid the protests in Hong Kong. Las Vegas Sands Corp. tumbled 2.9 percent to $60.15, while Wynn Resorts Ltd. dropped 3 percent to $178.99. Melco Crown Entertainment Ltd. fell 2.9 percent to $25.73 and MGM Resorts International slipped 1.9 percent to $22.16.                        

      Civeo Corp. sank 50 percent to $12.84 after saying it won’t convert to a real estate investment trust and will re-domicile to Canada. The provider of workforce accommodation said it expects 2015 revenues and margins to be “materially lower” than in 2014.

     Semiconductor stocks climbed 0.8 percent for the best performance among 24 S&P 500 groups. Micron jumped 2 percent to $34.50, while Intel rose 1.9 percent to $34.90.

     DreamWorks Animation SKG Inc. surged 26 percent to $28.18 as people familiar with the matter said SoftBank Corp. is in talks to buy the company. An acquisition hasn’t been formally discussed by senior executives at SoftBank, and the chances of reaching a final agreement are low, said another person familiar with matters at Tokyo-based SoftBank.

     Computer Sciences Corp. jumped 5.3 percent to $59.62. The technology consultant for governments and companies has contacted private-equity firms including Blackstone Group LP and Bain Capital LLC to gauge their interest in a leveraged buyout, people with knowledge of the matter said.

     Athlon Energy Inc. jumped 25 percent to $58.32 after Encana Corp. agreed to buy it for $5.93 billion in cash, gaining a foothold in the most-prolific U.S. oil producing region.
 

Have a wonderful evening everyone.

Be magnificent!

Between me and the smallest animal,

the difference is only in manifestation,

but as a principal he is the same as I am,

he is my brother, he has the same soul as I have.

Swami Vivekananda

As ever,

Carolann

Intelligence without ambition is a bird without wings.

                                  -Salvador Dali, 1904-1989

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM, FCSI

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7