August 20, 2013 Newsletter

Dear Friends,

Tangents:

On this day, August 20th, 1882, Russian composer Tchaikovsky’s 1812 Overture debuted; he wrote it to commemorate Russia’s defense of Moscow against Napoleon.

The best way to keep one’s word is not to give it. -Napoleon Bonaparte, 1769-1821.

And I must be off to finish an assignment due  tomorrow for an estate planning course I am enrolled in.

Photos of the Day –August 20th, 2013

Mayflies are pictured above a river at dusk in Heihe, Heilongjiang province, August 19, 2013. The nuptial flight of mayflies takes place in evening time during spring and summer every year, as the insect mates and reproduces. China Daily/Reuters

Lightning forks over downtown San Francisco on Monday, Aug. 19, 2013. Noah Berger/AP

Market Closes for August 20th, 2013

Market 

Index

Close Change
Dow 

Jones

15002.99 -7.75 

 

-0.05%

S&P 500 1652.35 +6.29 

 

+0.38%

NASDAQ 3613.590 +24.504 

 

+0.68%

TSX 12670.11 +82.09

 

+0.65%

 

International Markets

Market 

Index

Close Change
NIKKEI 13396.38 -361.75

 

-2.63%

 

HANG 

SENG

21970.29 -493.41

 

-2.20%

 

SENSEX 18246.04 -61.48

 

-0.34%

 

FTSE 100 6453.46 -12.27

 

-0.19%

 

Bonds

Bonds % Yield Previous % Yield
CND. 

10 Year Bond

2.681 2.745
CND.  

30 Year

Bond

3.161 3.209
U.S.  

10 Year Bond

2.8142 2.8804
U.S.  

30 Year Bond

3.8529 3.8995

Currencies

BOC Close Today Previous
Canadian $ 0.96202 0.96672

 

US  

$

1.03948 1.03443
Euro Rate 

1 Euro=

Inverse 

Canadian  

$

1.39500 0.71685
US 

$

1.34206 0.74512

Commodities

Gold Close Previous
London Gold  

Fix

1369.38 1365.83
Oil Close Previous 

 

WTI Crude Future 104.96 107.10
BRENT 109.359 109.359

 

Market Commentary:

Canada

By Eric Lam

Aug. 20 (Bloomberg) — Canadian stocks rose, following the biggest drop since June yesterday, as gold producers advanced to a four-month high to overshadow data showing a decline in the nation’s wholesale sales.

Semafo Inc. soared 13 percent to pace gains among gold producers. Kinross Gold Corp. and B2Gold Corp. rose at least 3.9 percent. Silver Wheaton Corp. climbed 3.2 percent as silver trimmed earlier losses. Bombardier Inc. fell 1.5 percent, dropping for a second day. Paladin Energy Ltd. slumped 5.1 percent after analysts lowered their ratings for the stock.

The Standard & Poor’s/TSX Composite Index rose 82.09 points, or 0.7 percent, to 12,670.11 at 4 p.m. in Toronto. The index has gained 1.9 percent this year. Trading volume was 5.1 percent lower than the 30-day average.

“The gold sector is stronger and energy names are mixed, although crude at $105 a barrel isn’t what I’d call disastrous either,” said John O’Connell, chief executive officer with Davis Rea Ltd. in Toronto. The firm manages about C$600 million ($577 million). “You’re seeing some flow back into gold because it’s one of those areas that has been beaten up a lot.”

Gold gained for the fourth time in five sessions, rising 0.5 percent to $1,372.60 an ounce in New York. Gold stocks in Canada have slumped 28 percent this year as the price of the metal heads for the worst annual drop since 1997.

Semafo jumped 13 percent to C$2.49, the most since May 2012, Kinross Gold rallied 3.9 percent to C$6.14 and B2Gold jumped 6.1 percent to C$3.13 as 23 of 24 members of the S&P/TSX Gold Index increased. The index climbed 3.5 percent to the highest close since April 11.

Silver Wheaton advanced 3.2 percent to C$28.36 and Silvercorp Metals Inc. rose 4 percent to C$3.90 as the price of silver fell 0.4 percent after paring earlier losses of as much as 3.9 percent.

Canadian wholesale sales fell in June from a record the previous month with declines in every major category, adding to signs of a mid-year slowdown in the world’s 11th largest economy.

“Growth is forecast to recover over the second half of the year in tandem with a stronger outlook for the United States,” said David Tulk, Chief Canada macro strategist with TD Securities Inc. in Toronto, in a note after the report.

“Allowing net exports to take over the mantle of growth will take some of the pressure off of the fatigued domestic economy and provide comfort to the Bank of Canada that, even if sluggish by historical standards, the recovery remains on track.”

The Canadian economy is forecast to slow to 1.6 percent in the second quarter from 2.5 percent in the first before accelerating to 2.1 percent growth in each of the next two quarters, according to economists’ estimates.

Royal Bank of Canada, the nation’s largest lender, added 1 percent to C$64.67, for the highest close in three weeks. The S&P/TSX Financials Index climbed 0.7 percent.

Bombardier, based in Montreal, lost 1.5 percent to C$4.72.

The stock has lost 3.3 percent in the past two days, after National Bank analyst Cameron Doerksen said in a note yesterday the company’s CSeries jet may have its entry into service delayed to early 2015 from September 2014. The CSeries jet has yet to take its maiden flight.

Paladin Energy, which explores for uranium in Australia and Southern Africa, sank 5.1 percent to 56 Canadian cents, a record low according to data compiled by Bloomberg, after Matthew Keane, analyst with Argonaut Securities Pty Ltd. and Glyn Lawcock, analyst with UBS AG, both lowered their ratings for the stock to hold.

US

By Alex Barinka and Nikolaj Gammeltoft

Aug. 20 (Bloomberg) — Most U.S. stocks rose, with the Standard & Poor’s 500 snapping a four-day losing streak, as retailers’ results surpassed estimates and investors awaited signals on stimulus measures from the Federal Reserve.

Best Buy Co. rallied 13 percent after posting quarterly sales that exceeded projections. TJX Cos. added 6.9 percent as profit beat forecasts. Urban Outfitters Inc. jumped 8.2 percent as Wedbush Securities Inc. raised its rating on the stock.

Zillow Inc. dropped 4.8 percent after the operator of the largest U.S. real-estate website announced a share sale.

The S&P 500 rose 0.4 percent to 1,652.35 at 4 p.m. in New York. The Dow Jones Industrial Average fell 7.75 points, or less than 0.1 percent, to 15,002.99, erasing earlier gains of as much as 0.4 percent. Almost 5.3 billion shares changed hands on U.S. exchanges today, 16 percent below the three-month average, as more than three stocks rose for each that fell.

“We had some pretty good retail earnings, it just shows the consumer is not dead and that things are moving in the right direction,” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a phone interview. His firm manages about $1.7 billion. “Everyone is still focused on Fed tapering. We remain cautiously bullish with pretty full exposure to stocks.”

The S&P 500 lost 2.9 percent in the previous four sessions, dropping each day for the longest losing streak this year, as speculation mounted that the Fed will start to taper its quantitative-easing program. The Dow extended its longest losing streak since December to five days.

The central bank will publish the minutes from the Federal Open Market Committee’s July 30-31 meeting tomorrow. Investors will scrutinize the discussions for anything that may indicate when the Fed will reduce the pace of its monthly asset purchases. Officials meet in Jackson Hole, Wyoming this week to discuss monetary policy.

They will start to scale back bond buying next month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13. The median estimate suggested the first move will be to reduce purchases to $75 billion a month.

The Fed has said it will weigh economic data to decide the timing and pace of any reduction. A report tomorrow will show sales of existing homes rose in July and data Aug. 22 will indicate initial jobless claims increased last week, according to estimates compiled by Bloomberg.

Data today showed U.S. same-store sales rose 0.2 percent month over month in the Aug. 17 week. Sales at stores open at least a year rose 3.4 percent compared to a year earlier, according to the latest data released by Johnson Redbook Research.

The Fed stimulus has helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. The gauge closed at a record on Aug. 2, and dropped 3.7 percent through yesterday.

“It’s just been a pretty down couple of weeks,” Craig Goryl, a portfolio manager at Cabot Money Management Inc., which oversees $500 million in Salem, Massachusetts, said by telephone. “Sentiment just went a little bit too far in one direction, and this tends to happen that we have a bounce back.”

Investors have also been watching corporate earnings for signs of strength in the economy. Of the 467 companies in the S&P 500 that have reported results this period, 72 percent have posted earnings that surpassed estimates.

The Chicago Board Options Exchange Volatility Index, or VIX, fell 1.3 percent to 14.91. While the gauge has advanced 22 percent since a low on Aug. 5, it remains 20 percent lower for the year.

Eight of 10 main industries in the S&P 500 advanced.

Utility stocks jumped 0.8 percent, snapping a seven-day losing streak that erased 5.8 percent from the S&P 500 Utilities Sector Index. Sempra Energy rallied 1.4 percent.

Shares in producers of consumer discretionary items jumped 0.9 percent as a group, with retailers pacing the gains.

Best Buy surged 13 percent to $34.80, the highest level in six months. The world’s largest consumer-electronics retailer posted its biggest quarterly profit since the period ended February 2011 after the company $65 million in annual costs.

Best Buy also expanded store space for Samsung Electronics Co.’s gadgets and devices running Microsoft Corp.’s Windows 8 operating system.

TJX jumped 6.9 percent to $54.24. The retailer raised its full-year profit forecast after reporting second-quarter earnings and sales that surpassed analysts’ estimates.

Urban Outfitters rallied 8.2 percent to $43.19. The retailer posted second-quarter earnings of 51 cents a share, beating the average analyst estimate by 3 cents. The Philadelphia-based company also said comparable sales during the period rose 9 percent, more than the 8.1 percent increase projected by analysts.

J.C. Penney added 6 percent to $14.01. The department-store chain posted second-quarter sales that fell more slowly than a year earlier, showing Chief Executive Officer Mike Ullman is making progress in arresting the department-store chain’s slide.

Hedge-fund manager J. Kyle Bass, the founder of Hayman Capital Management LP in Dallas, is betting on a J.C. Penney comeback, accumulating a long position in the stock over the past two weeks, according to a person, who asked not to be named because the information is private. J.C. Penney had slumped 33 percent this year through yesterday as an overhaul failed to attract new shoppers, while alienating existing customers.

Bob Evans Farms Inc. rose 10 percent to a record $52.48.

The maker of pork sausages reported first-quarter earnings that beat analysts’ estimates and boosted its dividend.

Dick’s Sporting Goods Inc. slid 7.8 percent to $46.64. The retailer posted second-quarter earnings and sales that missed analysts’ estimates as the company said it faced a “sluggish consumer environment” and cut its profit forecast for the year.

Zillow retreated 4.8 percent to $80.71. The Seattle-based company said it will sell $411.9 million in stock, with Zillow and some holders offering 5.02 million shares at $82 each. The company agreed yesterday to buy StreetEasy, a residential real- estate site with about 1.2 million monthly unique users, for $50 million in cash.

Barnes & Noble Inc. plunged 12 percent to $14.61, the lowest since Feb. 22. Founder Leonard Riggio suspended his efforts to bid for the company’s retail business, the company said in a filing today.

Riggio, who’s also the company’s chairman and largest shareholder, said in February that he planned to make an offer to buy the company’s retail assets, which include its 680 stores and website.

Medtronic Inc. fell 2.4 percent to $52.83. The world’s biggest maker of heart-rhythm devices posted fiscal first- quarter sales that missed analysts’ estimates on weaker-than- expected demand for defibrillators and the InFuse bone-growth product.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

Knowledge relieves all suffering.  Knowledge liberates.

Which knowledge?  Chemistry?  Physics?  Astronomy?  Geology?

They help a little, but only a little.  The true knowledge is the knowledge of our own nature.

Know yourself.  You must know who you are, understand your inner nature.

You must become conscious of this infinite nature in yourself.  Then you will break free of your shackles.

-Swami Vivekananda, 1863-1902


As ever,

 

Carolann

 

In three words I can sum up everything I’ve learned about life:  It Goes On.

–Robert Frost, 1874-1963

 

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