May 1, 2014 Newsletter

Dear Friends,

Tangents:

SPRING

Spring, the sweet spring, is the year’s pleasant king;
Then blooms each thing, the maids dance in a ring,
Cold doth not sting, the pretty birds do sing:
Cuckoo, jug-jug, pu-we, to-witta-woo!

The palm and may make country houses gay,
Lambs frisk and play, the shepherds pipe all day,
And we hear aye birds tune this merry lay:
Cuckoo, jug-jug-, pu-we, to-witta-woo!

The fields breather sweet, the daisies kiss our feet,
Young lovers meet, old wives a-sunning sit;
In every street these tunes our ears do greet:
Cuckoo, jug-jug, pu-we, to-witta-woo!
Spring, the sweet spring!

-Thomas Nashe

Photos of the day

A tame fox approaches revellers gathering at the summit of Broken mountain in the Harz regions during celebrations of the Walpurgisnacht pagan festival. Legend has it that on Walpurgisnacht or May Eve, witches fly their broomsticks to meet the devil at the summit of the Brocken Mountain in Harz. In towns and villages scattered throughout the mountain region, locals make bonfires, dress in devil or witches costumes and dance into the new month of May. Thomas Peter/Reuters

A Leicester Morris Man plays an accordion as they dance at Bradgate Park in Newtown Linford, central England. The May Day Morris celebration is a traditional rite thought to be connected to changing seasons and fertility. Darren Staples/Reuters

Market Closes for May 1^st, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

May 1 (Bloomberg) — Canadian stocks rose, sending the benchmark index to an almost six-year high, as Catamaran Corp. and Detour Gold Corp. gained on earnings while other commodity producers fell.

Catamaran rose 12 percent and Detour added 9.1 percent after both companies reported first-quarter earnings that outstripped analyst estimates. Bombardier Inc. fell 5.9 percent after saying profit fell in the first quarter as the Montreal- based company poured cash into developing its new CSeries jet plane.

The Standard & Poor’s/TSX Composite Index gained 12.20 points, or less than 0.1 percent, to 14,664.07 at 4 p.m. in Toronto. The equity gauge climbed 2.2 percent in April for a 10th month of gains, the longest streak since 1983.

“We had a good April and people are saying, ’well things aren’t too bad,’” said John Kinsey, a fund manager at Caldwell Securities Ltd. in Toronto. As economic numbers keep coming out, investors will have a clearer idea of what kind of effect winter had on the economy, he said by phone.

“We may be ready for another run over the next couple of months depending on what kind of knee-jerk reactions we get,” said Kinsey. His firm oversees about C$1 billion ($900 million).

Health-care stocks in the index rose 4.7 percent as a group, buoyed by Catamaran, which makes software for the medical industry.

Catamaran rose 12 percent to C$46.56. The software company raised its 2014 earnings guidance and said cash flow from operations was up 114 percent year over year.

Detour Gold Corp. rose 9.1 percent to C$11.90 as Scotia Capital Inc. said the miner’s first quarter results, released last night, were “very solid.”

Bombardier fell 5.9 percent to C$4.15 as it said it consumed cash twice as fast as it did a year earlier. The maker of planes and trains has faced repeated delays in the development of the CSeries jet.

Manulife, Canada’s largest life insurer, rose 0.8 percent to C$20.74. The company posted a 51 percent gain in first- quarter profit as sales in Asia grew. Sun Life Financial Inc., another life insurer, rose 0.5 percent to C$37.27.

Energy companies fell 0.1 percent as a group today. They have rallied 14 percent this year, leading all other industries in the benchmark index except for health-care.

CCL Industries Inc. rose 8.2 percent to C$107.80 after the packaging maker reported first-quarter earnings that beat analyst estimates.

Resolute Forest Products fell 7.9 percent to C$18.06 after reporting first quarter revenue of $1.02 billion, down $58 million year over year.

US
By Inyoung Hwang and Joseph Ciolli

May 1 (Bloomberg) — U.S. stocks ended little changed, with the Dow Jones Industrial Average falling from a record, as data showed an increase in jobless claims before the government’s monthly labor report tomorrow.

Avon Products Inc. tumbled 10 percent to lead losses in the Standard & Poor’s 500 Index after earnings trailed analysts’ estimates by almost half. T-Mobile US Inc. rallied 8.1 percent after adding 1.3 million new monthly subscribers last quarter. Sprint Corp. surged 2.7 percent after meeting with banks to make debt arrangements for a bid for T-Mobile. Yelp Inc. gained 9.8 percent after raising its forecast for 2014 revenue.

The S&P 500 closed down 0.27 point, or less than 0.1 percent, at 1,883.68 at 4 p.m. in New York. The benchmark gauge swung between a gain of 0.2 percent today and loss of 0.3 percent. The Dow average lost 21.97 points to 16,558.87 while the Nasdaq Composite Index added 0.3 percent. The 30-stock equity gauge rose 0.3 percent yesterday, topping the previous record it reached on Dec. 31. Government data on employment is due tomorrow.

“The market has had a nice little run here, and you’ve got a number coming tomorrow, so there may be some hesitation,” Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110 billion, said in a phone interview. “As long as the Fed is going to remain friendly to the markets and rates are not going to go up, that’s going to be bullish for stocks.”

The S&P 500 posted a 0.6 percent gain in April for a third monthly advance, as better-than-estimated economic data and corporate results offset escalating tensions between the U.S. and Russia over Ukraine.

The index closed yesterday within seven points of its all- time high from April 2. Its 8.1 percent recovery from a low of 1,741.89 on Feb. 3 has been led by a 14 percent rally in energy stocks and increases of about 11 percent each in industries least tied to economic growth: utilities and home-product makers.

Investors have added almost $10 billion to U.S. equity exchange-traded funds this year, data compiled by Bloomberg show. Energy stocks absorbed the most money among industry ETFs yesterday, taking in $460 million, more than twice that of any other group. Technology ETFs saw inflows of $185 million.

The Federal Reserve yesterday said it would continue to trim the pace of bond purchases as the economy gains momentum.  The central bank cut its monthly asset purchases to $45 billion and said further reductions in “measured steps” are likely.  Fed Chair Janet Yellen is winding down record stimulus as the world’s largest economy shows signs of rebounding from a first-quarter standstill.

Data today showed applications for U.S. unemployment benefits unexpectedly climbed to a nine-week high last week, while consumer spending surged in March by the most in almost five years as warmer weather brought shoppers back to auto- dealer lots and malls.

The Institute for Supply Management’s factory index rose to 54.9 in April from 53.7 in the prior month, the Tempe, Arizona- based group’s report showed today. Readings above 50 indicate expansion. The median forecast of 84 economists surveyed by Bloomberg called for 54.3, with estimates ranging from 53 to 56.2. The ISM’s factory gauge averaged 53.9 for all of last year.

A Labor Department report tomorrow may show employers added 215,000 workers in April, the most since November, according to economists’ projections. A private payrolls report yesterday showed companies added more workers last month than at any time in the previous five.

Forty-seven companies in the S&P 500 including Mylan Inc. and MasterCard Inc. release their financial results today. Some 75 percent of the 352 companies that have reported earnings have beaten estimates for profit, while 52 percent topped revenue projections, according to data compiled by Bloomberg.

Avon sank 10 percent to a 14-year low of $13.72. The world’s largest door-to-door seller of cosmetics agreed to pay $135 million to resolve U.S. probes into whether it paid bribes in China and other countries. Separately, Avon posted a wider first-quarter loss as sales declined in all of its regions.

T-Mobile jumped 8.1 percent to $31.65. The company added more subscribers in the first quarter than AT&T Inc. and Verizon Communications Inc. combined, heightening the carrier’s allure as Sprint pursues a merger.

Sprint rallied 2.7 percent to $8.73. The company, led by CEO Dan Hesse, had a net loss of monthly subscribers in the first quarter.

DirecTV advanced 4.1 percent to $80.76. The Wall Street Journal reported that AT&T, the second-biggest U.S. mobile-phone carrier, made an approach to buy DirecTV. The status of the talks is unknown though DirecTV would be open to a deal, the report said, citing an unidentified person. The deal may be worth at least $40 billion, the Journal said.

The Dow Jones Internet Composite Index increased 1.4 for its third day of gains after tumbling 18 percent from March 5 to April 28. Netflix Inc. rose 4.5 percent to $336.52, while Pandora Media Inc. climbed 5.5 percent to $24.71.

Yelp gained 9.8 percent to $64.02 for its biggest gain in almost three months. The service for online local-business reviews boosted its forecast for revenue this year to at least $363 million, exceeding its previous prediction of no more than $358 million.

Facebook Inc. moved up 2.3 percent to $61.15. Mark Zuckerberg, chief executive officer of the world’s biggest social-networking service, said yesterday at a conference that Facebook is offering improved tools and a more streamlined experience for logins, including the option to sign in anonymously.

LinkedIn Corp. climbed 5.1 percent to $161.22 in the regular session, then fell 2.5 percent in extended trading at 4:34 p.m. in New York. After U.S. exchanges closed, the company gave a second-quarter sales forecast that missed analysts’ estimates as the professional-networking service struggles to reignite growth.

Jeremy Grantham, chief investment strategist at Grantham Mayo Van Otterloo & Co., said the S&P 500 will climb above 2,250 before collapsing after the next U.S. presidential election. Grantham, best known for his bearish calls on U.S. stocks in 2000, is a long-time critic of Federal Reserve policy, which he blames for creating asset bubbles by holding interest rates at artificially low levels.

“Around the election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse,” Grantham, 75, wrote in a quarterly letter released today.

Have a wonderful evening everyone.

Be magnificent!

The real ornament of woman is her character, her purity.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

The game of life is not so much in holding

a good hand as playing a poor hand well.

-H. T. Leslie

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7