March 5, 2014 Newsletter

Dear Friends,

Tangents:

On this day in 1946, Winston Churchill delivered his famous “Iron Curtain” speech at Westminster College in Fulton, Mo., marking the beginning of the Cold War.

The Vancouver Sun reported today that Chinese artist Ai Weiwei will be among the major names contributing to the third public art exhibition known as the Vanouver Biennale.  Starting later this month, about 20 sculptures will be installed in parks and open spaces in Vancouver, more in New Westminster, North Vancouver and Squamish.  Art works created by a roster of 92 major international artists and 12 Canadian artists will be showpieced.  The first public event will take place on March 12^th at Emily Carr University.  Should be exciting…

Photos of the day

Wayne Garrett of Canada makes some final touches to his art installation ‘CLOUD,’ made up of 5000 new and recycled lightbulbs, along the Marina Bay in Singapore. Garrett and compatriot Caitlind Brown are part of the 28 groups of local and international artists who are taking part in the i Light Marina Bay biennial sustainable light art festival. Edgar Su/Reuters

A giant storm cloud can be seen in the sky above swimmers near Mollymook Beach, south of Sydney, Australia. The storm generated heavy rain and high gusts of wind. David Gray/Reuters

Market Closes for March 5^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam

March 5 (Bloomberg) — Canadian stocks rose, extending a five-year high for the benchmark index, as gains among raw- material producers offset a decline in oil prices amid negotiations over the Ukraine crisis.

NovaGold Resources Inc. and Iamgold Corp. increased more than 2.2 percent to pace gains among gold companies. Avigilon Corp. jumped 5.8 percent after an analyst at Raymond James Ltd. raised his rating for the stock. TransGlobe Energy Corp. sank 1.3 percent as net income slumped on writedowns.

The Standard & Poor’s/TSX Composite Index rose 14.31 points, or 0.1 percent, to 14,304.17, the highest level since June 2008, at 4 p.m. in Toronto. The index has gained 5 percent this year.

“The environment we’re in right now is a mix, you can argue we’re recovering but we have also seen mixed economic data so the market is taking a pause to see which argument has more weight,” said Kash Pashootan, portfolio manager at First Avenue Advisory of Raymond James Ltd. in Ottawa. He manages about C$200 million ($181 million).

The Institute for Supply Management’s non-manufacturing index fell to 51.6 in February, the slowest pace in four years, reflecting a plunge in hiring that shows the biggest part of the U.S. economy is struggling with a combination of limited income gains and harsh weather impacting consumers. Readings greater than 50 indicate expansion.

The S&P/TSX jumped 0.5 percent yesterday after comments from Russian President Vladimir Putin spurred speculation that the Ukraine crisis won’t immediately worsen. U.S. Secretary of State John Kerry met Russian Foreign Minister Sergei Lavrov in Paris today to discuss the crisis. The U.S. has considered sanctions against Russia and aid to the government in Kiev.

NovaGold climbed 6.4 percent to C$4.48 and Iamgold increased 2.2 percent to C$4.27. Gold futures rose 0.2 percent.

Sherritt International Corp., which owns interests in nickel mines, jumped 6.5 percent to C$3.29 for a fourth gain in five days. Nickel advanced to a nine-month high in London, after China retained its goal for economic growth of 7.5 percent in 2014.

Avigilon, the surveillance equipment maker, rallied 5.8 percent to C$32.38, the biggest increase since November. Steven Li, analyst at Raymond James, raised his rating for the stock to outperform from market perform and increased his price target to C$35.

“We expect strong revenue growth to continue in 2014,” Li said in a note to clients. He forecasts a 57 percent increase in year-over-year sales as the company increases its sales force and introduces new products.

Torstar Corp., the print publishing company, surged 13 percent to C$5.67 after posting fourth-quarter revenue and adjusted earnings ahead of analyst projections.

Lightstream Resources Ltd. declined 3.9 percent to C$5.67 to pace losses among energy stocks as six of 10 industries in the S&P/TSX retreated. Trading volume was 16 percent below the 30-day average.

TransGlobe Energy lost 1.3 percent to C$8.56. The company reported net income fell to $58.5 million last year, from $87.7 million a year earlier, as results were hurt by $30.1 million in impairment losses.

Cenovus Energy Inc. slipped 0.6 percent to C$29.12 as natural gas for March delivery fell 3.1 percent in New York.

Trican Well Service Ltd. slipped 2.9 percent to C$13.50 and Trilogy Energy Corp. retreated 2.5 percent to C$28.11 as crude for April delivery dropped 1.8 percent to $101.45 a barrel in New York.

Valeant Pharmaceuticals International Inc. lost 1.3 percent to C$160.08 to snap two days of gains. Health-care stocks dropped 1.3 percent, the most in the S&P/TSX.

Magna International Inc. fell 1.7 percent to C$104.94 to retreat from a record. The stock climbed 12 percent over the previous five days. The auto-parts maker posted better-than- forecast earnings on March 3.

USA
By Trista Kelley and Callie Bost

March 5 (Bloomberg) — U.S. stocks were little changed, after the Standard & Poor’s 500 Index rose the most this year yesterday, as investors assessed the Ukraine crisis and weaker- than-estimated data on payrolls and services.

Exxon Mobil Corp. dropped 2.8 percent, the most since 2012, to lead energy producers lower. Target Corp. fell 1.2 percent after the retailer’s chief information officer resigned. Smith & Wesson Holding Corp. jumped 16 percent after the gun maker raised its profit forecast. GameStop Corp. added 3.8 percent after boosting its quarterly dividend.

The S&P 500 fell less than one point to 1873.81 at 4 p.m. in New York after yesterday closing at a record. The Dow Jones Industrial Average fell 35.70 points, or 0.2 percent, to 16,360.18. About 6.5 billion shares changed hands on U.S. exchanges, in line with the 30-day average.

“I think Ukraine is certainly on the market’s radar screens and certainly still in the headlines,” Jeffrey Kleintop, chief market strategist at LPL Financial LLC, which manages $414.7 billion, said by phone from Boston. “Markets are continuing to give a free pass to any weak economic number because of the weather. That could be the case for much of the data we’re going to get through February. Stocks will ignore the data if it’s bad and rally on the number if it’s good.”

The S&P 500 jumped 1.5 percent yesterday after comments from Russian President Vladimir Putin spurred speculation that the Ukraine crisis won’t immediately worsen. The index had dropped the most in a month on March 3 and a gauge of volatility spiked 14 percent on concern that Russia’s military presence in the Crimea region could lead to a larger conflict.

Secretary of State John Kerry met Russian Foreign Minister Sergei Lavrov in Paris today to discuss the crisis. Lavrov said the western-backed government in Kiev no longer rules over Crimea and control has shifted to armed “self-defense” groups.  Kerry warned Russia against violating “very clear legal obligations” to uphold Ukraine’s unity.

The U.S. has considered sanctions against Russia and aid to the government in Kiev. Putin said yesterday he saw no immediate need to invade Ukraine, though he reserved the right for military action to defend ethnic Russians in the region.

“Markets globally are very resilient to these types of events,” Patrick Spencer, head of equity sales at Robert W. Baird & Co. in London, said in a phone interview, referring to the tensions in Ukraine. “The volatility certainly for this geopolitical situation is noisy but I don’t think it’s the key. Far more important is policy on interest rates. The macro direction and economic growth environment has been strong.”
U.S. companies added 139,000 workers in February, fewer than the 155,000 advance estimated by economists, a sign that employers were waiting for a pickup in demand before boosting headcount, a report from the ADP Research Institute in Roseland, New Jersey showed today.

Separate data indicated that service industries in the U.S. expanded in February at the slowest pace in four years, reflecting a plunge in hiring that shows the biggest part of the economy is struggling as harsher weather weighs on consumers and businesses. The Institute for Supply Management’s non- manufacturing index slipped to 51.6 in February from 54 the previous month.

Investors have been speculating that recent weakness in data from housing to jobs was caused by inclement weather. The Labor Department will release its February jobs report on March 7. Economists estimate employers increased the pace of hiring to 150,000 workers after adding 113,000 in January, according to a Bloomberg survey.

The Federal Reserve said the economy in most regions grew last month even as harsh winter weather impeded hiring, disrupted supply chains, and kept customers away from stores and auto dealerships. Eight of the Fed’s 12 districts “reported improved levels of activity, but in most cases the increases were characterized as modest to moderate,” the central bank said today in its Beige Book business survey.

The Fed has been slowing its monthly asset purchases while pledging that it will keep interest rates near zero percent. Three rounds of stimulus have helped push the S&P 500 up 177 percent from a 12-year low, as U.S. equities are set to enter the sixth year of a bull market that started March 9, 2009.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, fell 1.5 percent to 13.89 today. The gauge plunged 12 percent yesterday.

Investors have added $4.8 billion to U.S. equity exchange- traded funds in the past five days and withdrawn $5.8 billion from bond ETFs, data compiled by Bloomberg show. Energy and real-estate stocks absorbed the most money among industry ETFs, with each taking in more than $700 million during the past week.

Five of 10 S&P 500 groups retreated today, with energy stocks falling 1.1 percent to pace declines. Financial shares rallied 0.7 percent for the biggest gain.

Exxon lost 2.8 percent to $93.80 for the steepest drop in the Dow. The company’s biggest international exploration opportunity may be imperiled by Russian President Vladimir Putin’s Ukrainian foray, as U.S.-based companies could face restrictions on doing business in Russia.

Exxon, under the terms of a 2011 contract with state- controlled OAO Rosneft, owns drilling rights across 11.4 million acres of Russian land, its biggest exploration holding outside the U.S.

Target fell 1.2 percent to $60.60. The retailer, still reeling from a security breach that exposed the personal information of tens of millions of customers, is seeking a new top technology executive to help prevent future attacks after Beth Jacob resigned today.

Smith & Wesson added 16 percent to $13.74 for its biggest advance since June 2012. The maker of handguns forecast annual earnings will be between $1.39 a share and $1.42, up from a previous projection of as much as $1.35.

GameStop jumped 3.8 percent to $38.75. The video-game retailer said it will raise its quarterly payout to 33 cents from 27.5 cents.

Brown-Forman Corp. rose 3.7 percent to a an all-time high of $87.11. The maker of whiskey and other spirits raised its full-year profit forecast after third-quarter earnings surpassed estimates.

Facebook Inc. advanced 4 percent to a record $71.57 for the biggest gain in the S&P 500. Stifel Nicolaus & Co analyst Jordan Rohan raised his 12-month price target on the social-networking company to $82 from $72, citing Facebook’s growing share of marketing spending. Rohan has a buy rating on the stock.

Have a wonderful evening everyone.

Be magnificent!

The healing of the mind takes place gradually on contact with nature,

with the orange on the branch, the blade of grass eating its way into the cement,

and the hills hidden by the clouds.

Krishnamurti,1895-1986

As ever,

Carolann

If I see an ending, I can work backward.

-Arthur Miller, 1915-2005

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7