March 17, 2014 Newsletter

Dear Friends,

Tangents:

Happy St. Patrick’s Day.

Irish Cuisine:  On St. Patrick’s Day on the Emerald Isle, families gather for a typical meal of roast leg of lamb, Chef Cathal Armstrong informs us in his just released book, MyIrish Table (Random House).  Take a look at the beautiful features of this new publication at myirishtable.com.

A best friend is like a four leaf clover: hard to find and lucky to have. –Unknown.

When I was young I thought that money was the most important thing in life; now that I am old I know that it is. – Oscar Wilde

Photos of the day

A woman entertains the public during the St Patrick’s day parade in Dublin, Ireland. The world’s largest parade celebrating Irish heritage set off on a cold and gray morning, the culmination of a weekend of St. Patrick’s Day revelry. Peter Morrison/AP

A man smears the face of a woman with colors during celebrations marking Holi, the Hindu festival of colors, in Mumbai, India. The holiday, celebrated mainly in India and Nepal, marks the beginning of spring and the triumph of good over evil. Rajanish Kakade/AP

Market Closes for March 17^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam and Gerrit De Vynck

March 17 (Bloomberg) — Canadian stocks were little changed as precious metal producers slipped after Crimea voted to leave Ukraine for Russia and energy stocks rose amid takeovers in the industry.

TransGlobe Energy Corp. added 1.8 percent after agreeing to sell itself to Caracal Energy Inc. in a C$696.2 million ($626.9 million) deal. Whitecap Resources Inc. climbed 7 percent after agreeing to buy western Canada conventional oil and natural gas assets from Imperial Oil Ltd. and raising its dividend. Bombardier Inc. jumped 4.9 percent after winning a contract in South Africa. Ensign Energy Services Inc. dropped 3 percent after reporting lower-than-estimated profit on weaker demand for drilling services.

The Standard & Poor’s/TSX Composite Index rose 4.23 points, or less than 0.1 percent, to 14,231.89 at the close in Toronto.  The index has risen 4.5 percent this year.

“What investors were anticipating last week was worse than what’s actually happening this morning, so as a result of that people are more comfortable in the market,” said Anish Chopra, fund manager at TD Asset Management Inc. in Toronto. He helps manage C$218.3 billion with the firm. “Investors were concerned about what was going to happen with the vote in Crimea and what the repercussions would be in terms of sanctions.”

U.S. President Barack Obama imposed sanctions on seven top Russian government officials and added four others from the Ukraine, including the former president Viktor Yanukovych.

Global equity markets rose after Ukraine’s Crimea voted to return to Russia in a referendum deemed illegal by the U.S. and the European Union. The MSCI World Index rose 0.8 percent for the first increase in seven days. Global stocks lost $1.4 trillion in value last week on investor concern over the conflict between Russia and Ukraine and China’s slowing economy.

With the Parti Quebecois, which advocates for Quebec to leave Canada, in a position to win its first majority government in 15 years next month, the market may start pricing in concern of a possible separation referendum, David Doyle, a Toronto- based analyst at Macquarie Capital Markets, wrote in a note to clients. The last separation vote, in 1995, hurt financial and industrial companies in the S&P/TSX, he said.

Investors wary of political risk should decrease their investments in Quebec-based companies that make most of their revenue in Canada, Doyle said. These include the country’s third-largest wireless operator BCE Inc. and National Bank of Canada, the country’s sixth-biggest lender, he said.

Bombardier rallied 4.9 percent to C$4.11, the highest in a month, as industrial stocks added 0.9 percent, the most in the S&P/TSX.

Bombardier won a contract to supply electric engines to Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, part of a larger $4.7 billion investment from the company. Bombardier’s contract is worth about 10 billion rand ($930 million), Transnet Chief Financial Officer Anoj Singh told reporters.

Foreign investors bought Canadian stocks and sold government debt in January, Statistics Canada data show. Purchases totaled a net C$1.09 billion, including C$2.84 billion in stock purchases. Non-Canadians also sold a net C$1.42 billion of money-market paper in January and C$330 million of the country’s bonds.

TransGlobe Energy added 1.8 percent to C$8.56. after agreeing to be acquired in an all-stock deal with Caracal Energy. Caracal will pay 1.23 shares for each share of Calgary- based TransGlobe.

The two companies, which have operations in countries including Chad, Egypt and Yemen, said they will have combined oil production of 25,100 barrels a day with a target average of 31,000 to 34,000 barrels this year.

Whitecap Resources rose 7 percent to C$12.34, the biggest gain in almost two and a half years. Imperial Oil, the Canadian energy company majority owned by Exxon Mobil Corp., agreed to sell some assets to Whitecap Resources Inc. for about C$855 million ($774 million) as it focuses on larger oil-sands projects.

Whitecap also increased its monthly dividend by 10 percent to 6.25 Canadian cents a share. Imperial Oil added 0.2 percent to C$51.17.

Ensign Energy Services sank 3 percent to C$16.36. The oil drilling services company said adjusted earnings was 18 Canadian cents a share in the fourth quarter, short of analysts’ estimates of 28 cents.

USA
By Callie Bost

March 17 (Bloomberg) — The Standard & Poor’s 500 Index rose, rebounding from its worst week since January, as data showing a gain in industrial production boosted optimism over the economy and investors watched developments in Ukraine.

Yahoo! Inc. jumped 4 percent after Chinese e-commerce company Alibaba Group Holding Ltd. began the process for listing shares in the U.S. Hertz Global Holdings Inc. added 4.8 percent after a report that the company will spin off its equipment- rentals unit. Adobe Systems Inc. climbed 1.5 percent after RBC Capital Markets LLC raised the stock’s 12-month price target. VeriSign Inc. tumbled 5.8 percent as Cowen and Co. analysts downgraded the shares.

The S&P 500 rose 1 percent to 1,858.83 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 181.55 points, or 1.1 percent, to 16,247.22. About 5.7 billion shares changed hands on U.S. exchanges, 15 percent lower than the three-month average.

“The data helped to give some evidence to the fact that some of the weak-ish numbers were clearly evidenced by the weather,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which oversees $63 billion in assets, said by phone. “We may be seeing that trend fade and the better numbers are on their way.”

The equities benchmark dropped 2 percent last week, the most since January, and erased its 2014 gains amid mounting tension in Ukraine and signs of an economic slowdown in China.  The gauge is now 0.6 percent higher this year.

Factory production in the U.S. rose in February by the most in six months, indicating the industry started to recover from severe winter weather. The 0.8 percent gain at manufacturers followed a revised 0.9 percent slump in the prior month that was the biggest since May 2009, figures from the Federal Reserve showed today.

A separate gauge of manufacturing in the New York area rose less than forecast last month, climbing to 5.61 from 4.48.  Analysts estimated 6.50.

The Fed begins a two-day meeting tomorrow that analysts said will see policy makers further scale back bond-purchase stimulus. The Federal Open Market Committee 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.

Fed 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. Three rounds of Fed stimulus have helped push the S&P 500 up 175 percent from a 12-year low, as U.S. equities enter the sixth year of a bull market that started March 9, 2009.

The U.S. and European Union slapped sanctions on Russia in the worst dispute between former Cold War foes in more than two decades after a referendum paved the way for President Vladimir Putin to annex Crimea from Ukraine.

EU foreign ministers agreed today to freeze assets and impose visa travel bans on 21 Russians, Crimeans and former Ukrainian officials. U.S. measures were aimed at the wealth of Russia’s supporters, the White House said in a statement. While Western leaders left open the option of extending the sanctions, they kept more punitive steps in reserve.

“The market was bracing for potential volatility with the vote this weekend and now you’re seeing a lot of unwinding,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “There was a vote coming and nobody knew which way it was going to go or what would happen. There was a lot of fear.”

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, plunged 12 percent to 15.64 today. The measure has advanced 14 percent this year.

All 10 main industries in the S&P 500 advanced at least 0.6 percent. Industrial and technology companies added more than 1.2 percent. International Business Machines Corp. rose 2 percent and 3M Co. gained 1.9 percent for the biggest advances in the Dow.

Adobe added 1.5 percent to $68.17. RBC Capital Markets analyst Matthew Hedberg increased his price target on the computer software developer to $75 from $58.

Options trading in Adobe suggests the market’s infatuation with Internet stocks is alive and well. Even after a year of falling profit, calls on Adobe shares are the most expensive relative to puts in three years, according to data compiled by Bloomberg.

Yahoo added 4 percent to $39.11. The company owns 24 percent of Alibaba, which could go public in the U.S. as soon as next month, according to people with knowledge of the matter. The online store’s market value is estimated at $153 billion, bigger than 95 percent of the S&P 500.

Hertz climbed 4.8 percent to $27.22. The company may announce details of the separation this week, the Financial Times reported, citing people familiar with the matter. The deal would probably value the division at about $4.5 billion, the FT said.

VeriSign tumbled the most in the S&P 500, losing 5.8 percent to $51.68. Cowen analyst Gregg Moskowitz cut the stock’s rating to market perform from outperform and reduced his 12- month target price to $49. VeriSign might be negatively affected by U.S. plans to hand over control of an Internet address system, Moskowitz said.

Have a wonderful evening everyone.

Be magnificent!

The state of mind is a vicious circle.  It creates problems for itself, and then tries to resolve them.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

You’ve got to do your own growing, no matter how

tall your grandfather was.

-Irish Proverb.

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