April 3, 2014 Newsletter

Dear Friends,

Tangents:

Clear blue skies, comfortable temperatures (typically 50º to 60º F), and fall foliage make March and April two of the best months to walk the paths less traveled in Australia’s smallest state. Tasmania’s walking routes range from easy strolls along Cornelian Bay in the capital city of Hobart, to challenging bushwalks in remote Southwest National Park, part of the 3.46-million-acre Tasmanian Wilderness World Heritage Area. “Expect stunning scenery in every direction,” says Hobart-based writer Tania Horne. “Whether you choose to walk the countless pristine coastline tracks, across mountains of wilderness sprinkled liberally with dense rain forests, or through the breathtaking patchwork of rural countryside, you’ll be assured of a kaleidoscope of riotous color.”  National Post names Tasmania one of the 10 best spots to visit in the spring time!

“Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship”

Buddha

Photos of the day

Raindrops on a car window reflect a man walking past a stock index board in Tokyo. Toru Hanai/Reuters

Two strollers and a dog walk past blooming cherry trees during nice and sunny spring weather in Cologne, Germany. Federico Gambarini/dpa/AP

Market Closes for April 3^rd, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

Canadian stocks fell, snapping a four-day rally, as raw-material shares paced declines amid losses in copper and gold while Hudson’s Bay Co. said its Lord & Taylor stores’ sales didn’t rebound as expected.

Hudson’s Bay retreated 5.1 percent after reporting that Lord & Taylor’s same-store sales declined 1.3 percent in the latest quarter. UrtheCast Corp. added 4.9 percent after the space imaging company released its first picture from a new camera on the International Space Station.

The Standard & Poor’s/TSX Composite Index lost 56.90 points, or 0.4 percent, to 14,402.21 at 4 p.m. in Toronto. The drop ended a four-day rally that moved the index up 2 percent, including a 0.6 percent advance yesterday.

“We had a very strong day yesterday in the markets, particularly in Canada where you saw the resource sector rally,” said Brian Huen, managing partner at Red Sky Capital Management Ltd. in Toronto. He helps manage about C$225 million ($204 million). “People are not seeing the follow-through from yesterday so they’re taking some money off the table.”

Materials companies fell 0.9 percent as eight of 10 industries in the benchmark index retreated. Phone companies lost 1.3 percent as a group after CIBC World Markets cut its rating on the Canadian cable and telecommunications industry to the equivalent of a sell from the equivalent of a hold, saying government hearings may bring new regulation to the industry.

Richmont Mines Inc. tumbled 6.8 percent to C$1.51 after the gold miner said it would issue 7 million new shares for C$1.45 each, a 10 percent discount to yesterday’s closing price of C$1.62.

Hudson’s Bay declined 5.1 percent, the most since Dec. 11, to C$17.86 after reporting its fourth-quarter results and saying the Lord & Taylor stores didn’t rebound as the company expected. The retailer also forecast lower earnings than analyst had predicted.

UrtheCast rose 4.9 percent to C$2.15 after posting its first image from a camera mounted on the International Space Station to its website. The company also said that it was not affected by the National Aeronautics and Space Administration’s decision to cut ties with the Russian space agency.

Rogers Communications Inc., Canada’s largest wireless company, fell 0.9 percent to C$45 after the industry downgrade from CIBC. Telus Corp. fell 2.7 percent to C$38.10 while Shaw Communications Inc. fell 2.9 percent to C$25.94. Phone companies have gained 12 percent as a group since the beginning of August 2013.

Goldcorp Inc. fell 1.7 percent to C$27.14 after the company said it was pushing back the expiry date of its hostile offer to buy Osisko Mining Corp. to April 15. Yesterday, Yamana Gold Inc. offered to buy half of Osisko for C$1.47 billion, out-pricing Goldcorp’s bid.

West Fraser Timber Co. rose 1.3 percent to C$52.04 as Statistics Canada said the country’s trade balance swung to a surplus in February. Three-quarters of Canada’s 2013 exports went to the U.S.

US
By Joseph Ciolli and Sofia Horta e Costa

U.S. stocks fell, after benchmark indexes climbed to records, while Treasuries rose before the government releases its monthly jobs report. The euro weakened as the region’s central bank said it’s prepared to take action to head off deflation.

The Standard & Poor’s 500 Index slipped 0.1 percent to 1,888.77 at 4 p.m. in New York. The Dow Jones Industrial Average was little changed, closing within five points of its record after reaching an intraday high. Treasury 10-year yields slid for the first time in three days. The euro weakened against 10 of its 16 major peers. Italy’s 10-year yield fell to an eight- year low and Spain’s rate dropped 4 basis points. The Stoxx Europe 600 Index added 0.1 percent. An index of developing- nation shares dropped 0.6 percent, ending the longest run of gains since January 2013.

Initial jobless claims rose more than forecast last week, according to the Labor Department, before the monthly payrolls data due tomorrow. A separate report today showed service industries in the U.S. expanded at a faster pace in March. European Central Bank President Mario Draghi said the ECB would use unconventional policy if required, after leaving the main refinancing rate at an all-time low of 0.25 percent today.

“The market still wants to be positive and has this feeling of goodwill, but at times it runs into a little bit of resistance,” Robert Pavlik, chief market strategist at Banyan Partners LLC, which manages $4.5 billion, said in a phone interview. “People are a little bit more cautious. As we get closer to the payroll report, we’ll be in wait-and-see mode.”

The S&P 500 index rose 0.3 percent yesterday to close at a record. The gauge has climbed 2.2 percent this year, with utilities gaining the most among 10 industry groups. The index now trades at 17.4 times reported earnings. That’s the highest level since 2010 and 11 percent above its five-year average, according to data compiled by Bloomberg.

The Institute for Supply Management’s U.S. non- manufacturing index increased to 53.1 in March from 51.6 a month earlier, the Tempe, Arizona-based group said today. The median forecast in a Bloomberg survey of 77 economists called for a gain to 53.5.

Jobless claims increased 16,000 in the period ended March 29 to a five-week high of 326,000, the Labor Department said. A revised 310,000 applications were filed in the previous week, the fewest since Sept. 7. The median forecast of 52 economists surveyed by Bloomberg called for 319,000 claims.

The government’s monthly jobs report due tomorrow will show that hiring increased in March, according to forecasts compiled by Bloomberg.

Fed Chair Janet Yellen said last week that “considerable slack” in the labor market is evidence that the central bank’s unprecedented accommodation will be needed for “some time” to put Americans back to work.

Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.

Investors have added $1.7 billion to U.S. equity exchange- traded funds in the past five days and put $984 million in bond ETFs, data compiled by Bloomberg show. Health-care stocks saw the most money added among industry ETFs, increasing $571 million during the past week. Industrial ETFs took in $459 million in the period.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, rose 2.1 percent to 13.37 today. The gauge closed yesterday at its lowest since January after five straight declines.

Google Inc. Class C shares rose 0.5 percent to $569.74 while the Class A shares added 0.6 percent to $571.50. The company issued 330 million nonvoting C class shares as part of a move that cements control for founders Sergey Brin and Larry Page. The A shares carry one vote, while non-trading B shares, mostly owned by the founders, have 10 votes.

Treasuries rose, pushing 10-year yields down from almost the highest levels since January, before tomorrow’s jobs report. The U.S. 10-year yield fell one basis point to 2.79 percent.

Italy’s 10-year yield dropped five basis points to 3.25 percent. It touched 3.249 percent, the lowest since September 2005. The yield on 10-year German bunds fell one basis point to 1.60 percent and the Spanish 10-year yield declined four basis points to 3.22 percent.

Draghi said policy makers debated large-scale asset purchases among a range of measures to head off the threat of deflation in the euro region. ECB officials are discussing a new departure as inflation slows to a level that’s just a quarter of their 2 percent goal. With a rising euro and stubbornly high unemployment also threatening the region’s recovery, other options include further rate cuts, which would take the deposit rate into negative territory.

“Draghi tends to speak vaguely and just reiterate earlier speeches but he was more specific and aggressive this time round,” Steven Santos, a broker at X-Trade Brokers DM SA, said by phone from Lisbon. “It looks like the ECB is increasingly pondering cutting the main interest rate and that the central bank might even come up with new measures soon. Markets clearly want more intervention from Draghi.”

The euro weakened for a second day against the dollar, and dropped for the first time in five days versus the yen. The 18- nation currency slipped 0.4 percent to $1.3719 and lost 0.3 percent to 142.57 yen. The dollar was little changed at 103.92 yen.

The Stoxx Europe 600 Index advanced for an eighth day, extending its longest winning streak since October. The equity benchmark has gained 4 percent since March 24.

The MSCI Emerging Markets Index, which rallied 6.8 percent in the previous nine days, lost 0.5 percent amid concern that the crisis in Ukraine will escalate after NATO leaders warned Russia has troops on a high state of readiness on its neighbor’s border.

The ruble lost 0.4 percent against the dollar, and the Micex Index of Russian stocks slid 0.5 percent. Russia ratcheted up pressure on Ukraine with a 26 percent increase in the price of natural gas after Foreign Minister Sergei Lavrov said NATO shouldn’t expand its presence in eastern Europe.

NATO leaders warned yesterday that they haven’t seen signs of a significant reduction in Russian military forces along Ukraine’s border and any incursion would be a “historic mistake.”

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong gained 0.7 percent, while the Shanghai Composite Index dropped 0.7 percent. China outlined a package of measures including tax relief to support the economy and create jobs after a slowdown endangered Premier Li Keqiang’s target of 7.5 percent growth this year.

“We are starting to see more positive talk from officials in terms of the potential for stimulus” in China, said Angus Gluskie, managing director at White Funds Management in Sydney, who helps oversee about $550 million.

U.S. natural gas jumped 2.4 percent as an unusually cold start to spring sent stockpiles to an 11-year low. The Energy Information Administration said stockpiles fell 74 billion cubic feet in the week ended March 28 to 822 billion, the least since 2003. Analyst estimates compiled by Bloomberg showed an expected withdrawal of 75 billion.

Gold fell for the sixth time in seven session as signs of quickening U.S. economic growth bolster forecasts for the Fed to increase interest rates, crimping demand for the metal as a store of value. Futures declined 0.5 percent to $1,284.60.

Brent crude rose the most in a month amid concern that talks between the Libyan government and rebels won’t restore oil exports. Brent gained 1.3 percent to $106.15 a barrel, while West Texas Intermediate crude climbed 0.7 percent to $100.29 a barrel.

The rebels’ Executive Office for Barqa, representing the region of Cyrenaica, denied a report that the group will cede one of the four ports that have been under its control since July to the government in a few days. Libya’s oil output dropped to 250,000 barrels a day in March from 1.4 million a year earlier, according to data compiled by Bloomberg.

Have a wonderful evening everyone.

Be magnificent!

“Success is not final, failure is not fatal: it is the courage to continue that counts”

Winston Churchill

As ever,

Amanda Parnham

Assistant to Carolann Steinhoff

Queensbury Securities

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7