March 18, 2014 Newsletter

Dear Friends,

Tangents:

Exciting report in the news today about the origins of the universe:

Researchers say they have spotted evidence that a split second after the Big Bang, the newly formed universe ballooned out at a pace so astonishing that it left behind ripples in the fabric of the cosmos. On Monday they reported that they had found the evidence by peering into the faint light that remains from the Big Bang of nearly 14 billion years ago.

Photos of the day

A couple wearing traditional Japanese kimono pose for wedding photos in Hamarikyu Gardens, in Tokyo. Eugene Hoshiko/AP

An employee arranges pricetags for vegetables during the opening day of upmarket Eataly’s flagship store in downtown Milan. Alessandro Garofalo/Reuters

Market Closes for March 18^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

March 18 (Bloomberg) — Canadian stocks rose to a five-year high as Russian President Vladimir Putin signaled he wouldn’t invade eastern Ukraine and the U.S. reported home construction data that showed the industry was stabilizing.

Alimentation Couche-Tard Inc., which operates convenience stores, rose 2.1 percent after saying third-quarter earnings increased and naming a new chief executive officer. NovaCopper Inc. rose 5.5 percent after reporting increased resources at a copper deposit in Alaska. Ivanhoe Energy Inc. dropped 10 percent after suspending its Tamarack oil sands project.

The Standard & Poor’s/TSX Composite Index rose 137.09 points, or 1 percent, to 14,368.98 at 4 p.m. in Toronto, the highest level since June 30, 2008. The index has risen 5.5 percent this year.

“This is a headline-driven market,” said Barry Schwartz, fund manager at Baskin Financial Services Inc. in Toronto. He helps manage C$600 million ($541 million) with the firm. “Last week the headlines on Russia and Ukraine were bad news, this week the headlines are good news.”

Canadian Finance Minister Jim Flaherty, dean of the Group of Seven finance ministers, resigned to pursue work in the private sector. Flaherty, 64, said there is “no doubt” Canada will balance its budget as promised in the year starting April 2015.

Putin called on the Russian parliament to approve the annexation of Crimea after the Black Sea peninsula voted over the weekend to leave Ukraine. 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.

Housing starts in the U.S. were little changed in February after declining less than previously estimated a month earlier, indicating the home-building industry is stabilizing after bad winter weather curbed construction.

The MSCI World Index rose 0.7 percent as global equity markets advanced for a second day. Bank of Canada Governor Stephen Poloz said he can’t rule out an interest-rate cut if the economy worsens, following a speech where he blamed harsh winter weather for mainly sparking weaker-than-forecast growth.

First-quarter economic growth may be a bit “softer” than forecast in January, and the global economy may experience a “secular stagnation” that holds down output gains and interest rates, Poloz said in a speech in Halifax, Nova Scotia.

Alimentation Couche-Tard added 2.1 percent to $86.70 after saying third-quarter earnings increased 28 percent and announcing Chief Operating Officer Brian Hannasch would replaced Alain Bouchard as chief executive officer. Hannasch joined Couche-Tard in 2001 and helped the company through a 10-fold increase in the number of stores it has, according to a statement.

NovaCopper rose 5.5 percent to C$1.54 after reporting increased resources at its Bornite copper deposit in Alaska. Drilling samples returned results that might allow the company to build an open-pit mine at the site, NovaCopper said in a statement.

Canfor Corp. dropped 1.9 percent to C$26.38 and West Fraser Timber Co., another wood producer, fell 0.5 percent to C$50.13. Pulp mills in northern Alberta may be forced to suspend operations as early as this week because a labor dispute by truckers at Canada’s largest port is causing lumber to pile up.

The strike has stopped products from reaching Port Metro Vancouver, said James Gorman, chief executive officer of the Council of Forest Industries, an industry group that represents companies doing business in British Columbia. About 2,000 trucks move items to and from the Vancouver Fraser Port Authority’s facility, which handled 135 million tons of cargo in 2013, up 9 percent from a year earlier, according to its website.

Ivanhoe Energy dropped 10 percent to 63 Canadian cents after suspending activity on the Tamarack oil sands project, citing a delay in the approval process with regulators.

US
By Callie Bost

March 18 (Bloomberg) — U.S. stocks climbed, extending the best two-day gain for the Standard & Poor’s 500 Index in five weeks, as housing data bolstered confidence in the economy and Vladimir Putin said Russia isn’t seeking to split Ukraine.

Microsoft Corp. rallied to the highest since 2000 as the company plans to debut a version of Office for Apple Inc.’s iPad. Hewlett-Packard Co. added 3.7 percent after Barclays Plc lifted its rating on the computer maker. Nasdaq OMX Group Inc. fell 3.1 percent as New York’s attorney general started an investigation into whether stock exchanges provide high- frequency traders with improper advantages. GameStop Corp. dropped 3.4 percent after Wal-Mart Stores Inc. said it will start selling pre-owned video games later this year.

The S&P 500 gained 0.7 percent to 1,872.25 at 4 p.m. in New York to extend its two-day rally to 1.7 percent. The Dow Jones Industrial Average added 88.97 points, or 0.5 percent, to 16,336.19. Less than 5.9 billion shares changed hands on U.S. exchanges, 12 percent below the three-month average.

“We’ve got a more congenial Russian message this morning and we got better economic reports here in the States,” John Augustine, chief market strategist at Cincinnati-based Fifth Third Bancorp, said in a phone interview. His firm oversees $28.2 billion. “The building permits report was very bullish for the spring and summer housing season. Today, we move back to better economic reports and focusing on the Fed.”

The S&P 500 rallied 1 percent yesterday for its biggest increase in almost two weeks as a measure of industrial production grew more than forecast. The gauge dropped 2 percent last week, the most since January, amid mounting tension in Ukraine and signs of an economic slowdown in China.

A Commerce Department report showed housing starts were little changed in February after declining less than previously estimated a month earlier, indicating the home-building industry is stabilizing after bad winter weather curbed construction. Permits filed for future projects increased 7.7 percent to a 1.02 million pace in February, the most since October.

Separate data indicated the cost of living was little changed in February, showing inflation remains well below the Federal Reserve’s goal. Low inflation makes it likely that Fed policy makers meeting today and tomorrow will maintain a pledge to keep interest rates low, even as unemployment declines.

The Federal Open Market Committee will announce a $10 billion cut to monthly bond purchases tomorrow, according to the median of responses in a Bloomberg survey. The central bank will continue to slow the program at that pace at every meeting before ending it at the Oct. 28-29 gathering, the survey showed.

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 177 percent from a 12-year low, as U.S. equities enter the sixth year of a bull market that started March 9, 2009.

Economic data “was sort of little-changed to us, but at least it wasn’t a lot worse,” Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors, said in a phone interview. His firm oversees about $82 billion. “People have been looking at a lot of negatively influenced numbers and thinking we may starting to get a little past that.”

Equity futures jumped this morning after Putin said Russia won’t attempt to further split up Ukraine. Crimea voted on March 16 to leave Ukraine and become a part of Russia. The regional parliament called the plebiscite after Ukrainian President Viktor Yanukovych fled the country following protests against his rule.

“We don’t want to split up Ukraine, we don’t need that,” the Russian president said in a speech to parliament. “Don’t believe those who scare you with Russia, who yell that Crimea will be followed by other regions.”

U.S. and European leaders condemned Putin’s push to annex the region and promised further sanctions as early as this week.  Ukraine’s government said the conflict has entered a military phase as clashes in Crimea intensified, killing at least one Ukrainian serviceman.

Investors have added $352.1 million to U.S. equity exchange-traded funds in the past five days and $463.4 million to bond ETFs, data compiled by Bloomberg show. Materials stocks absorbed the most money among industry ETFs, taking in $670 million during the past week.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, plunged 7.2 percent to 14.52 today. The gauge has fallen 19 percent in the past two days, the biggest slide since Feb. 7.

Nine of the 10 main S&P 500 industries advanced today.  Technology stocks rallied 1.4 percent as a group to lead the gains.

Microsoft jumped 3.9 percent to $39.55, the highest since July 2000. CEO Satya Nadella will begin unveiling his vision for the company when he debuts a version of Office for the iPad and offers some features of the application for free at an event next week, said people with knowledge of the announcement.

Hewlett-Packard added 3.7 percent to $30.56, closing at the highest level since August 2011. Barclays said HP’s servers may gain market share from International Business Machines Corp. and Lenovo Group Ltd.

General Motors Co. climbed 1.6 percent to $35.17. Chief Executive Officer Mary Barra promoted 40-year engineering executive Jeff Boyer to a new global vehicle safety position, as scrutiny intensifies on a flaw linked to 12 deaths.

An S&P index of homebuilders rose 1.5 percent, with all 11 members advancing. D.R. Horton Inc. added 1.8 percent to $22.45 and Lennar Corp. gained 1.4 percent to $40.60.

GameStop plunged 3.4 percent to $38.39. Wal-Mart announced that customers can trade in video games for credit that can be used on any kind of merchandise. The world’s largest retailer will also sell pre-owned video games later this year.

Michael Kors Holdings Ltd. slipped 1.8 percent to $96.77.  Barclays initiated coverage of the luxury retailer with an underweight, or sell, rating and a price forecast of $85, 14 percent below yesterday’s closing price.

Nasdaq OMX fell 3.1 percent, the most since August, to $38.50. IntercontinentalExchange Group Inc., parent of the New York Stock Exchange, lost 1.5 percent to $205.94. New York Attorney General Eric Schneiderman is examining the sale of products and services that offer faster access to data and richer information on trades than what’s typically available to the public.

“We publicly file with the SEC for each and every one of these services, and we’re always engaged with government officials around the world,” Robert Madden, a spokesman for New York-based Nasdaq, said in a phone interview, referring to the U.S. Securities and Exchange Commission. He and Eric Ryan, a spokesman for NYSE, declined to comment on Schneiderman’s investigation.

Have a wonderful evening everyone.

Be magnificent!

Thought is crooked

because it can invent anything

and see things that are not there.

It can perform the most extraordinary tricks,

therefore it cannot be depended upon.

Krishnamurti, 1895-1986

As ever,

Carolann

Passion is energy.  Feel the power that comes from

focusing on what excites you.

-Oprah Winfrey, 1954-

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