June 16, 2014 Newsletter

Dear Friends,

Tangents:

James Joyce set his masterpiece, Ulysses on June 16, 1904.  Now the date is known as Bloomsday and it has been celebrated in Ireland since 1954, the book’s original 50th anniversary.   Joyceans around the world party today with readings, costumed re-enactments and countless Gorgonzola sandwiches. (from Jared Bland, Globe & Mail).

In honor of James Joyce, The Afterword Reading Society today launches its Special Editions – classic ebooks published twice: once for free to all its members, and a second time for sales around the world with an afterword by its readers.  Today the National Post published the first story in its entirety, The Sisters,  from Dubliners, Joyce’s collection of short stories published 100 years ago.  Join and read at theafterword.ca.

I saw this poem in the Financial Times this weekend, appropriately coinciding with Father’s Day, and I rather liked it…

Father

-by Jenny Lewis

My face is made from yours –
your jaw, your weak right eye:
my shin bone’s from your leg,
shattered in the moonlight
as you supervised the digging
of the trench at Kut-al-Amara.

Years on, your long-dead smile
us from walls, sideboards:
from our mother’s dressing table
casting a shadow around her heart
like your shadow in the album
as you pointed the Box Brownie
towards the Bridge of Boats

at Qurna, the army camp at Kut:
Father, those splinters of bone
were your salvation, hard shards
from which I sprang with shared
ancestry, looking for you.

From “Taking Mesopotamia” (Carcanet).

June 16th, 1967 : The three-day Monterey International Pop Music Festival – which catapulted Jimi Hendrix, the Who and Janis Joplin to stardom – opened in northern California.

Photos of the day

Britain’s Queen Elizabeth II travels by carriage after the annual Order of the Garter Service at St George’s Chapel at Windsor Castle in Windsor, southern England. The Order is the senior and oldest British Order of Chivalry, founded by Britain’s King Edward III in 1348. Chris Jackson/Reuters

A rainbow is seen from the Argentine side of the Iguazu River at the Iguazu Falls. Forming a border between Argentina and Brazil, Iguazu Falls, South America’s largest, attracts more than 1 million visitors a year. Jorge Adorno/Reuters

Market Closes for June 16th, 2014

Market  

Index

Close Change
Dow  

Jones

16781.01 

 

 

 

+5.27
+0.03%
S&P 500 1937.78 

 

+1.62 

 

+0.08%

NASDAQ 4321.105 

 

 

+10.452 

 

+0.24%

TSX 15040.43 +38.82 

 

+0.26% 

 

International Markets

Market  

Index

Close Change
NIKKEI 14933.29 -164.55 

 

-1.09% 

 

HANG  

SENG

23300.67 -18.50 

 

-0.08% 

 

SENSEX 25190.48 -37.69 

 

-0.15% 

 

FTSE 100 6754.64 -23.21 

 

-0.34% 

 

Bonds

Bonds % Yield Previous % Yield
CND.  

10 Year Bond

2.292 2.313 

 

 

CND.  

30 Year

Bond

2.813 2.832
U.S.  

10 Year Bond

2.5970 2.6033 

 

 

U.S.  

30 Year Bond

3.3958 3.4134 

 

 

Currencies

BOC Close Today Previous
Canadian $ 0.92228 0.92113 

 

US  

$

1.08426 1.08563
Euro Rate  

1 Euro=

Inverse  

Canadian  

$

1.47162 0.67951
US  

$

1.35728 0.73677

Commodities

Gold Close Previous
London Gold  

Fix

1272.67 1276.89
Oil Close Previous  

 

WTI Crude Future 106.90 106.91
BRENT 109.360 109.360 

 

Market Commentary:

Canada
By Eric Lam and Gerrit De Vynck

June 16 (Bloomberg) — Canadian stocks rallied, sending the Standard & Poor’s/TSX Composite Index briefly above its record close, as energy shares advanced on speculation the violence in Iraq will boost oil prices.

Veresen Inc. and BlackPearl Resources Inc. added 2.6 percent to lead gains among oil and natural gas companies. A measure of energy stocks in the S&P/TSX has advanced in 13 of the past 14 days and soared 20 percent this year. Consumer staples had the biggest advance among Canadian industries today, increasing 0.7 percent.

The S&P/TSX added 38.82 points, or 0.3 percent, to 15,040.43 at 4 p.m. in Toronto. The index climbed as high as 15,075.70, surpassing its previous closing record of 15,073.13 in June 2008. The equity benchmark is up 10 percent this year, the fifth-biggest advance among 24 developed markets.

“We’re seeing money rotate back into Canadian energy in a big way,” said Martin Pelletier, a fund manager at TriVest Wealth Counsel Ltd. on the phone in Calgary. “Clearly there’s momentum, the TSX is playing catch-up. A lot of the rally in the TSX has been primarily due to a strong recovery in energy.”

Mounting violence in Iraq threatens to plunge one of the world’s largest oil producers into a sectarian civil war like the one raging in neighboring Syria. Iraq’s army said it killed more than 279 rebels yesterday as the prospect of civil war in OPEC’s second-largest producer intensified with Sunni Muslim insurgents controlling territory north of Baghdad.

West Texas Intermediate crude was little changed today at $106.90 a barrel, near a nine-month high. Oil pared gains today after Bank of America Corp. said the complete halt of Iraqi output, concentrated at the opposite end of the country, is “highly unlikely.”

The S&P/TSX has rallied 99 percent from a five-year low in March 2009. The advance has been led by a more than 800 percent surge in Valeant Pharmaceuticals International Inc. Financial services companies jumped 168 percent during the bull market and the nation’s largest lenders including Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia touched records this year.

The equity benchmark trades at 20.1 times reported earnings, the highest level in three years, according to data compiled by Bloomberg.

In today’s trading, Veresen, an pipeline operator, added 2.6 percent to C$18.30. BlackPearl, which explores and develops oil and gas fields, climbed 2.6 percent to C$2.40

Valeant Pharmaceuticals dropped 1.6 percent for a 10th day of losses, its longest losing streak since 2004. Allergan Inc. said the company’s business model is unsustainable because it “relies on serial acquisitions and cost reductions.”

USA
By Joseph Ciolli

June 16 (Bloomberg) — U.S. stocks rose, after equities posted their first weekly drop in a month, as corporate deals and growth in American manufacturing overshadowed escalating tension in Iraq.

Covidien Plc surged 20 percent after Medtronic Inc. agreed to buy the Irish company for $42.9 billion. Williams Cos. Jumped 19 percent after agreeing to buy control of Access Midstream Partners LP for $6 billion. General Electric Co. dropped 0.8 percent after a group led by Siemens AG made a joint bid to carve up the energy unit of France’s Alstom SA. Yahoo! Inc. slid 5.8 percent, halting an eight-day rally, after Alibaba Group Holding Ltd. reported a slowdown in quarterly revenue growth.

The Standard & Poor’s 500 rose 0.1 percent to 1,937.78 at 4 p.m. in New York after fluctuating between gains and losses throughout the session. The Dow Jones Industrial Average added 5.27 points, or less than 0.1 percent, to 16,781.01. The Russell 2000 Index of small companies added 0.4 percent. About 5.4 billion shares changed hands today on U.S. exchanges, 13 percent below the three-month average.

“The market’s looking for a direction,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “The data wasn’t really robust. Some of it points to a more positive direction, but underlying, there’s still more to be proven. People are keeping an eye on Iraq and the broader geopolitical situation.”

The S&P 500 dropped 0.7 percent last week, snapping a three-week rally that had pushed equities to all-time highs, as Sunni insurgents in Iraq occupied more territory and oil prices jumped to an eight-month high.

Iraq’s sectarian violence showed no sign of abating, with Sunni Muslim militants and government forces fighting to control Tal Afar. Prime Minister Nouri al-Maliki, a Shiite, is fighting to reverse the advance of ISIL militants, who captured Iraqi’s largest northern city and other towns last week.

West Texas Intermediate crude erased gains, as Bank of America Corp. said the complete halt of Iraqi output, concentrated at the opposite end of the country, is “highly unlikely.” The price remained near a nine-month high.

Ukraine said Russia cut natural gas supplies after demanding fuel payments be made in advance, the first time shipments have been affected in this year’s crisis in relations between the two countries. Tensions escalated at the weekend with 49 servicemen killed when pro-Russia fighters shot down an aircraft.

“Investors are just trying to work the Iraqi situation through their mind and keep an even keel at this point,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “Numbers have been slightly better than consensus all the way through. We’re not exactly jumping, but there’s a little bit of optimism out there.”

Data today showed industrial production climbed more than forecast in May, a sign gains in manufacturing are supporting growth as the U.S. economy picks up. Output at factories, mines and utilities rose 0.6 percent after a revised 0.3 percent drop in April that was smaller than previously estimated, a report from the Federal Reserve showed.

The New York Fed’s Empire manufacturing report rose to 19.28, exceeding the average estimate of 15 in a Bloomberg survey of economists, a separate report indicated.

The Fed is watching economic data as it moves to complete a monthly stimulus program late this year. Policy makers meet this week, with a decision on rates and bond buying due June 18. The stimulus has helped propel the S&P 500 higher by as much as 188 percent from its bear-market low in March 2009.

The International Monetary Fund cut its growth forecast for the U.S. economy this year and said the Fed may have scope to keep interest rates at zero for longer than investors expect. The institution now sees the world’s largest economy growing 2 percent in 2014, down from an April estimate of 2.8 percent.

For the Fed, the forecast means “policy rates could afford to stay at zero for longer than the mid-2015 date currently foreseen by markets,” the fund said in its annual assessment of the U.S. economy.

Investors also considered equity valuations after the S&P 500 closed at an all-time high on June 9. The measure trades at 16.4 times the projected earnings of its members as of June 13, up from a multiple of 14.8 at the start of February. The Dow closed at a record on June 10.

A measure of volatility posted the biggest gain since April last week, rebounding from a seven-year low on June 6, as the Chicago Board Options Exchange Volatility Index surged 14 percent to 12.18. The gauge known as the VIX rose 3.9 percent to 12.66 today, the highest since May 20.

Seven of the 10 main S&P 500 groups retreated today, with financial companies dropping 0.4 percent to pace declines.  Utilities rallied 0.7 percent for the biggest advance.

GE lost 0.8 percent to $26.82. Siemens and Mitsubishi Heavy Industries Ltd. made a joint bid to carve up Alstom’s energy unit, challenging a $17 billion offer by GE. The planned bid may put pressure on GE to improve the terms of its offer for the French company’s energy assets.

Yahoo, which owns 22.6 percent of Alibaba, dropped 5.8 percent to $34.81. China’s largest e-commerce company reported a slowdown in quarterly revenue growth. Alibaba’s revenue rose 38.7 percent in the quarter ended March 31, down from 62 percent in the December quarter.

Vertex Pharmaceuticals Inc. plunged 8.7 percent to $67.12 for the steepest slide in the S&P 500. The drugmaker slid after an analyst Sanford C. Bernstein said phase three trials for the company’s VX809 Cystic Fibrosis drug have a “high” probability of failure, citing conversations with scientists.

Level 3 Communications Inc. fell 4.1 percent to $42.30. The Web content delivery company will pay a 12 percent premium to TW Telecom Inc.’s closing price last week, giving the company a direct connection to business customers. TW Telecom shares surged 7.3 percent to $38.99.

Covidien rallied 20 percent to a record $86.75. Medtronic will pay about 29 percent more than Covidien’s closing price on June 13, the companies said. The combined entity, called Medtronic Plc, will be based in Ireland for tax purposes.

Medtronic dropped 1.1 percent to $60.03 for a sixth day of losses, the longest streak in a year. Sanford C. Bernstein & Co. said the deal will allow it to challenge Johnson & Johnson as the world’s biggest medical-device company.

Williams Cos. climbed 19 percent to a record $56.02. The purchase would create one of the biggest U.S. transporters of fuel at a time of increased natural-gas exploration. Access Midstream rose 1.9 percent to $66.57.

Fusion-io Inc. soared 22 percent to $11.36. SanDisk Corp. agreed to purchase the maker of flash-memory technology for about $1.1 billion. The all-cash offer of $11.25 a share is 21 percent higher than Fusion-io’s closing price on June 13.  SanDisk shares added 3.6 percent to $102.

Home Depot Inc. rose 1.1 percent to $78.90 for the biggest gain in the Dow. The largest U.S. home-improvement retailer advanced as the homebuilder confidence report provided a sign the residential real estate market is stabilizing after reeling from severe winter weather earlier this year.

 

Have a wonderful evening everyone.

 

Be magnificent!

 

The connection of love is total.

In love, difference disappears and the human soul accomplishes

its object in perfection,

exceeding its own boundaries

and traversing the threshold of infinity.

Rabindranath Tagore,1861-1901


As ever,

 

Carolann

 

 

You only live once – but if you work it right, once is enough.

–Joe E. Lewis, 1902-1971


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