May 23, 2014 Newsletter

Dear Friends,

Tangents:

Swiftsure race this weekend – should be lots of action in the inner harbor in Victoria.

A lot happened on  this day in history:

On May 23, 1934, bank robbers Bonnie Parker and Clyde Barrow were shot to death in a police ambush as they were driving a stolen Ford Deluxe along a road in Bienville Parish, La.

1915 – Italy declared war on Austria-Hungary in World War I.
1937 – Industrialist John D. Rockefeller died at age 97.
1945 – Nazi official and SS chief Heinrich Himmler committed suicide while imprisoned in Luneburg, Germany.
1949 – The Federal Republic of Germany (West Germany) was established.
1960 – Israel announced it had captured former Nazi official Adolf Eichmann in Argentina.
1969 – The Who’s rock-opera album “Tommy” was released.

Listen to many, speak to a few. –William Shakespeare.

Photos of the day

Several sailboats participate in a regatta on the Lake Constance during the ‘International week at the Lake Constance’ in Constance, southern Germany. Around 1000 participants enter various sailboat competitions. Patrick Seeger/dpa/AP

Visitors wonder around a large rabbit objective with the Opera House and Harbour Bridge in the background during the annual Sydney Vivid Light and Music festival in Sydney Australia. Rob Griffith/AP

Market Closes for May 23^rd , 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

May 23 (Bloomberg) — Canadian stocks were little changed after three straight days of increases as Valeant Pharmaceuticals International Inc. shares rose, offsetting a loss among precious metals producers.

Valeant climbed to a two-week high. Bankers Petroleum Ltd. and Enerplus Corp. rose at least 1.3 percent as crude prices climbed. New Gold Inc. and Silvercorp Metals Inc. declined more than 2.9 percent as gold prices slumped. Bombardier Inc. dropped 2.1 percent for a third day of losses.

The Standard & Poor’s/TSX Composite Index rose 5.81 points, or less than 0.1 percent, to 14,708.10 at 4 p.m. in Toronto. The S&P/TSX index has increased 0.4 percent in May, an 11th straight month of gains for its longest streak since 1983. The price- earnings ratio for the benchmark equity gauge has climbed to 19.6, the highest level since 2011.

“Money’s not moving,” said Philip Petursson, director of institutional equities at Manulife Asset Management Ltd. in Toronto. “Market participants are actually waiting for evidence that the Q1 slower economic growth which everyone  believes is weather-related does prove out to be weather-related and follows with a nice Q2 rebound,” he said by phone. Manulife manages about C$292 billion ($269 billion).

Valeant increased 1.8 percent to C$145.01, the highest close since May 7, as health-care stocks rose 1.3 percent as a group. Seven of 10 industries in the S&P/TSX advanced on trading volume 33 percent lower compared with the 30-day average.

Prices for West Texas Intermediate crude oil rose to a five-week high after violence flared in Ukraine ahead of the country’s presidential election and U.S. crude inventories tumbled. Crude for July delivery rose 0.6 percent to settle at $104.35 a barrel in New York, the highest close since April 21.

Gold declined in New York as the U.S. dollar strengthened, making the greenback an attractive alternative to gold for a safe-haven investment.

Bankers Petroleum added 2.2 percent to C$6.56 and Enerplus gained 1.3 percent to C$23.92. New Gold retreated 2.9 percent to C$5.63 and Silvercorp dropped 3.9 percent to C$1.97.

Chinook Energy Inc. increased 6.6 percent to C$2.25 after providing drill results for a new well it brought online in April in the Montney shale area.

Kelso Technologies Inc., which makes valves for the transportation industry, lost 3.4 percent to C$6.54 on its second day of trading after listing on the Toronto Stock Exchange. It was previously listed on the TSX Venture Exchange.

Bombardier sank 2.1 percent to C$3.75. Shares of the aircraft manufacturer have dropped 4.6 percent in the past three days since Bombardier’s biggest customer, Republic Airways Holdings Inc., said its order for 40 CSeries jet aircraft was no longer a top priority.

US
By Jeremy Herron and Callie Bost

May 23 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index closing above 1,900 for the first time, after an increase in home purchases boosted confidence in the economy. The euro weakened to a three-month low and oil advanced, while copper led industrial metals higher.

The S&P 500 added 0.4 percent to 1,900.53 at 4 p.m. in New York, capping its first weekly advance in three. The Nasdaq Composite Index jumped 0.8 percent to erase its loss for 2014. Trading volume was near the lowest level of the year as investors headed into a three-day weekend. Treasuries rose for the first time in three days, while Europe’s shared currency depreciated 0.2 percent to $1.3631, after touching a three-month low. Copper rose 0.7 percent and aluminum climbed to a three- week high.

Purchases of new U.S. homes rose in April for the first time in three months as buyers took advantage of falling mortgage rates. Business sentiment in Germany, the euro area’s largest economy, declined more than analysts forecast, fueling speculation the European Central Bank will boost stimulus. Russian President Vladimir Putin said his government will work with the next president of Ukraine, even though the election won’t meet international standards.

“The equity market is on autopilot with an upward bias,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $120 billion, said by phone. “Housing adds to consumer confidence, net worth and consumer spending. That is positive for sentiment and should be a positive for the broader markets.”

The S&P 500 rose three straight days to cap a 1.2 percent advance this week. The yield on the 10-year Treasury note slid three basis points to 2.53 percent. The bond markets closed at 2 p.m. in New York and will, along with U.S. equities markets, remain shut Monday for Memorial Day.

A Commerce Department report showed home sales increased 6.4 percent last month, the most since October. Declining borrowing costs and greater employment opportunities raise the prospects for an industry that has struggled to build on gains made earlier last year.

Central bank officials have been gauging the strength of the economy to help determine the pace of cuts to stimulus efforts that have sent the S&P 500 up as much as 180 percent from a 12-year low in 2009.

The Russell 2000 Index of smaller companies added 1.1 percent today and rallied 2.1 percent this week. The index tumbled as much as 9.3 percent from a record on March 4 amid concern that prices have outrun earnings. It is down 3.2 percent this year. Small-caps and Internet shares were among the biggest victims of the market retreat as investors fled last year’s best-performing equities.

Among stocks moving today, GameStop Corp. rose 4.2 percent after reporting first-quarter earnings that topped analysts’ estimates. Hewlett-Packard Co. surged 6.1 percent after the company announced plans to cut as many as 16,000 additional jobs. Aeropostale Inc. tumbled 25 percent after forecasting a bigger loss than analysts had estimated.

About 75 percent of S&P 500 companies that have reported results this season beat analysts’ estimates for profit, while 53 percent exceeded sales projections, data compiled by Bloomberg show.

The U.S. stock market is trading in the tightest range in eight years, according to data from Bespoke Investment Group LLC. In the last three months, the difference between the S&P 500’s intraday high and low has been less than 5 percent, the Harrison, New York-based research group said in a report yesterday.

The Bloomberg Dollar Spot Index rose 0.1 percent for a fourth day of gains. The stronger greenback sent gold lower as demand for a haven waned. The metal settled 0.3 percent lower at $1,291.90 an ounce in New York. Silver retreated 0.5 percent to $19.418 an ounce.

Copper rose to $6,918.75 a metric ton. Construction generates about 40 percent of demand for the metal, according to the Copper Development Association. Aluminum advanced as much as 1.6 percent to $1,824 a ton, the highest since April 29. It closed higher by 1 percent at $1,814.50.

West Texas Intermediate crude advanced 0.6 percent to $104.39, the highest in five weeks with futures headed for a third weekly gain, as violence flared in Ukraine. An attack yesterday by pro-Russian rebels left 16 servicemen dead, the highest death toll for government forces since the separatist conflict in the eastern part of the country began in March.

In Russia, the ruble strengthened 0.4 percent against the dollar. The Micex Index of stocks rebounded, adding 0.6 percent to close the week higher by 3.4 percent. The gauge’s fourth weekly advance is the longest run of gains since July.

The euro declined against most of its 16 major counterparts. The 18-nation currency slid beneath its 200-day moving average at $1.3638, according to data compiled by Bloomberg. The euro also declined as concern grew euro-skeptic parties will gain ground in elections this weekend for the European Parliament.

The business climate index from Germany’s Ifo institute, based on a survey of 7,000 executives, fell to 110.4 in May from 111.2 the prior month. Economists predicted a drop to 110.9, according to the median of 38 estimates in a Bloomberg News survey.

“The Ifo survey is the trigger for more euro weakness today,” said John Hardy, the head of foreign-exchange strategy at Saxo Bank A/S in Copenhagen. “The worry now is that momentum is waning in the core and that strengthens the case for the ECB to move in June. There is some nervousness around the European election results too.”

The yield on 10-year Spanish bonds dropped seven basis points to 2.99 percent and Italy’s rate slid nine basis points to 3.16 percent.

Following a rally in euro-area bond markets that swept yields from Ireland to Italy to record lows this month, Standard & Poor’s added its endorsement, raising Spain’s rating one level to BBB. Benchmark German 10-year yields were little changed at 1.41 percent. percent.

Europe’s Stoxx 600 Index added 0.2 percent. The gauge has gained 0.8 percent in the past five days, capping a sixth week of gains, the most since November.

Thailand’s SET Index fell 0.6 percent while the baht was little changed against the dollar, paring earlier gains.  Thailand’s army staged its 12th coup in eight decades as the army chief said he was seizing control to restore peace.

Schools were shut, international television stations were off air and channels broadcast military logos and patriotic music, a day after the military seized control following a six- month political stalemate.

After the last coup was announced on Sept. 19, 2006, the baht dropped 1.4 percent the next day before rebounding 1 percent in the following trading session.

Have a wonderful weekend everyone.

Be magnificent!

In your veins, and in mine, there is only one blood,

The same life that animates us all!

Since one unique mother begat us all,

Where did we learn to divide ourselves?

Kabir, 1440-1518

As ever,

Carolann

You know you’re right when the other side starts to shout.

-I.A. O’Shaughnessy, American oilman, 1885-1973

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