March 14, 2014 Newsletter

Dear Friends,

Tangents:

Today is Pi  day, 3/14:

The number π is a mathematical constant, the ratio of a circle’s circumference to its diameter, approximately equal to 3.14159. I heard on the car radio this morning that many places will be serving free pie.

It is also Albert Einstein’s birthday.  He was born on this day in 1879.

It is a full moon this weekend too! Enjoy.

It would be possible to describe everything scientifically, but it would make no sense; it would be without meaning, as if you described a Beethoven symphony as a variation of wave pressure.  –Albert Einstein, 1879-1955.

Photos of the day

Local artists paint a two-meter-high Easter egg in the traditional naive art style in the northern Croatian town of Koprivnica, March 13. The eggs are sent to cities in the country and abroad to be displayed in public squares. This year, three giant eggs will be painted and sent to Montenegro, Paris, and Riga, the 2014 European Capital of Culture. Antonio Bronic/Reuters

A bee sits on an almond blossom on the almond blossom panorama path in Gimmeldingen, western Germany. This weekend the Neustadt district of Gimmeldingen will greet the spring with the almond blossom festival. Uwe Anspach/dpa/AP

Market Closes for March 14^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam

March 14 (Bloomberg) — Canadian stocks fell a second day, posting the first weekly decline since January, as the nation’s lenders and industrial companies fell and investors watched developments in the conflict in Ukraine.

Royal Bank of Canada and Bank of Montreal dropped more than 0.6 percent for a second day of declines. Novagold Resources Inc. and OceanaGold Corp. rallied at least 4.3 percent as gold rose to a six-month high. Silver Standard Resources Inc. climbed 2.3 percent as silver prices jumped. Quebecor Inc. increased 2 percent after analysts with Desjardins Securities raised their rating for the stock.

The Standard & Poor’s/TSX Composite Index fell 17.48 points, or 0.1 percent, to 14,227.66 at 4 p.m. in Toronto. The index sank 0.5 percent this week, its first drop in the past six periods.

“Clearly, with the current political environment people are looking for protection in gold,” said Brian Huen, managing partner at Red Sky Capital Management Ltd. in Toronto. He helps manage about C$225 million ($203 million). “People will want to protect their portfolios” before the weekend vote in Crimea, he said.

Global equities markets slumped on concern the conflict in Ukraine is escalating, with the MSCI World Index slipping 0.6 percent to a one-month low. The U.S. and the European Union are threatening sanctions against Russia if it doesn’t back down from annexing Crimea, which is holding a referendum in two days to join Ukraine’s former Soviet-era master.

Four of the 10 main industries in the S&P/TSX declined on trading volume 18 percent lower compared with the 30-day average.

Royal Bank, Canada’s second-largest lender, sank 0.9 percent to C$71.17, a one-month low, and Bank of Montreal retreated 0.6 percent to C$71.98 to pace declines in the S&P/TSX Banks Index.

Canada’s household debt ratio fell to 163.97 in the fourth quarter from a revised record of 164.20 in the prior three-month period as families slowed the pace of borrowing.

OceanaGold climbed 4.3 percent to C$2.94 and Novagold Resources gained 5.4 percent to C$5.05 as raw-materials stocks increased 0.4 percent as a group. Gold jumped 0.5 percent to settle at $1,379 an ounce in New York.

Fortuna Silver Mines Inc. rose 3.4 percent to C$5.23 and Silver Standard Resources increased 2.3 percent to C$12.81 as the price of silver jumped 1 percent to $21.413 an ounce in New York.

Teck Resources Ltd., Canada’s largest diversified miner, increased 0.7 percent to C$22.86. Copper for delivery in May added 0.9 percent to $2.9505 a pound in New York to pare a weekly decline to 4.3 percent, the biggest since April. Copper slumped this week as weaker-than-expected economic data in China fueled concern growth was slowing in the world’s second-largest economy and biggest consumer of metals.

Bankers Petroleum Ltd. rose 2.1 percent to C$5.43 and Bellatrix Exploration Ltd. jumped 1.4 percent to C$8.69 as crude rose for a second day in New York.

Quebecor, the media company that acquired wireless spectrum in the most recent government auction, increased 2 percent to C$25.29. Maher Yaghi, analyst at Desjardins Securities, raised his rating for the stock to buy from hold due to the recent pullback in the share price.

The stock fell 2.8 percent in the past three days before today after former vice-chairman Pierre Karl Peladeau resigned from the board to run in the Quebec provincial election. Quebecor also reported fourth-quarter adjusted earnings of 55 Canadian cents, ahead of analysts’ forecasts for 52 cents.

US
By Callie Bost and Joseph Ciolli

March 14 (Bloomberg) — U.S. stocks fell, after the Standard & Poor’s 500 Index lost the most in five weeks yesterday, as talks with Russia failed to end a standoff over the Crimea ahead of Sunday’s referendum.

Bank of America Corp. dropped 2.1 percent amid a rate- rigging lawsuit by the U.S. Federal Deposit Insurance Corp. Aeropostale Inc. tumbled 20 percent after mounting losses and a $150 million loan raised concern the company is running out of cash. Yahoo! Inc. climbed 1 percent, increasing for the first time in six days.

The S&P 500 lost 0.3 percent to 1,841.13 at 4 p.m. in New York. The equity gauge had its biggest weekly decline since January, after closing at an all-time high on March 7. The Dow Jones Industrial Average fell 43.22 points, or 0.3 percent, to 16,065.67. About 6.7 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“I think we’ve been kind of expecting volatility right now,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said in a phone interview. His firm manages $1.1 billion. “There’s a lot of different stuff going on in the world.”

The S&P 500 erased its gain for the year yesterday as weaker-than-forecast economic data from China and escalating tension in Ukraine overshadowed reports showing an improving U.S. economy. The index fell 2 percent for the week, and is down 0.4 percent for 2014.

U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov failed to make progress on ending the Ukraine crisis in six hours of talks in London, as the Crimea peninsula prepared to vote on joining Russia.

Russian President Vladimir Putin “is not prepared to make any decision regarding Ukraine until after the referendum on Sunday,” Kerry told a news conference today. Russia “will respect the will of the Crimean peoples” when the peninsula votes in two days on seceding from Ukraine, Lavrov told a separate news conference, in which he said there was “no common vision” on resolving the crisis.

The U.S. and the European Union are threatening sanctions against Russia if it doesn’t back down from annexing Crimea. Ukraine’s Kiev-based cabinet says Russia has taken over the southern region and is massing troops on its border.

“Everyone is watching this Ukraine situation, not knowing what to make of it,” John Carey, a fund manager at Pioneer Investment Management Inc., a Boston-based firm that manages about $220 billion worldwide, said by phone. “Consumer confidence was a little low, although I think people still need to coincide what the weather has done to the data. People are realizing the market is OK if we don’t have a real setback internationally.”

Consumer confidence in the U.S. unexpectedly dropped in March to a four-month low, data showed today, indicating household spending may be slow to pick up from a weather-related setback earlier this year. The Thomson Reuters/University of Michigan preliminary index of sentiment fell to 79.9 this month from 81.6 in February.

A separate report showed producer prices dropped in February, held back by the biggest decrease in the cost of services in almost a year.

The Federal Reserve is trying to determine how much recent economic data has been affected by weather. Chair Janet Yellen said last month the U.S. economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases.

The Federal Open Market Committee, which meets March 18-19, has cut monthly bond buying to $65 billion from $85 billion in December. Policy makers have indicated they plan to taper by $10 billion at each meeting absent a weakening in the economy.

Three rounds of Fed stimulus have helped push the S&P 500 up 172 percent from a 12-year low, as U.S. equities 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, rose 9.9 percent to 17.82 today, capping a 26 percent gain for the week. The measure has advanced 30 percent this year. Four of 10 main industries in the S&P 500 fell today, as technology and financial shares erased more than 0.5 percent.

Bank of America slipped 2.1 percent to $16.80. The lender, Citigroup Inc. and Credit Suisse Group AG were among more than a dozen banks sued by the FDIC for allegedly manipulating the London Interbank Offered Rate from 2007 to 2011.

Credit Suisse decreased 2.5 percent to $30.25 in U.S.trading and Citigroup fell 1 percent to $46.88.

Aeropostale tumbled 20 percent to $5.83, the lowest level since 2003. The teen apparel retailer forecast a loss of as much as 75 cents a share for its first quarter, more than the 17-cent loss estimated by analysts. The company also said it has entered a strategic partnership with Sycamore Partners, which will provide the $150 million loan.

Yahoo rose 1 percent to $37.60, rebounding after five days of losses. Alibaba Group Holding Ltd., in which Yahoo owns a 24 percent stake, is preparing to file for an initial public offering in the U.S. as soon as April, according to people with knowledge of the matter.

Boston Scientific Corp. climbed 2.1 percent to $13.01 after the company’s Ingevity pacemaker wires received European approval as they met certain product standards.

Have a wonderful weekend everyone.

Be magnificent!

No one can understand the sound of a drum,

without understanding both the drum and the drummer.

No one can understand the sound of a conch shell,

without understanding the shell and the one who blows it.

No one can understand the sound of a lute,

without understanding both the lute and the one who plays it.

As there can be no water without the sea, no touch without the skin,

no smell without the nose, no taste without the tongue, no sound without the ear,

no thought without the mind, no work without hands, and no walking without feet,

so there can be nothing without the soul.

Brihadaranyaka Upanishad

As ever,

Carolann

Common sense is not so common.

-Voltaire, 1694-1778

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