July 23, 2014 Newsletter

Dear Friends,

Tangents:

Summer Tip:

Wild Swimming: visit www.outdoorswimmingsociety.com for safety advice for swimming outdoors.

Photos of the Day

A bee is seen on a flower in a forest near the village of Berezhok, north of Minsk, Belarus. Vasily Fedosenko/Reuters

German pianist Stefan Aaron plays an orange piano on a ‘flying carpet’ platform suspended from a helicopter, over the Munich airport. The concert is the fourth station of the ‘Orange Piano Tour’, which brings the artist to places around the world. Lukas Barth/Reuters

Market Closes for July 23^rd, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Jacob Barach

July 23 (Bloomberg) — Canadian stocks reached a record for a second day as BCE Inc. agreed to buy the remainder of Bell Aliant Inc. and oil producers advanced amid increasing tensions between government and rebel forces in Ukraine.

Bell Aliant rose 12 percent after BCE agreed to pay C$3.95 billion ($3.68 billion) for the shares it didn’t already own. BCE already controls the Halifax-based phone, TV and Internet service provider through a 44 percent stake. Talisman Energy Inc. advanced 13 percent after saying it has been approached about “various transactions” by Repsol SA.

The Standard & Poor’s/TSX Composite Index rose 79.25 points, or 0.5 percent, to 15,394.38 at 4 p.m. in Toronto. The equity index has rallied 13 percent this year.

The S&P/TSX Health Care Index rose 1.4 percent to lead gains as eight of 10 industries in the benchmark equity gauge advanced.

Encana Corp. and Crew Energy Inc. rose at least 2.5 percent as Brent crude oil climbed 0.7 percent to $108.03 a barrel.

Pro-Russian separatists shot down two Ukrainian fighter jets in the same eastern region where Malaysian Air Flight MH17 was destroyed, a Defense Ministry spokesman, Oleksiy Dmytrashkovsky, said by phone.

Canadian retail sales rose 0.7 percent in May, led by record automobile purchases, exceeding the 0.6 percent median forecast of in a Bloomberg economist survey with 16 responses.

US
By Oliver Renick

July 23 (Bloomberg) — The Standard & Poor’s 500 index rose to an all-time high, as Apple Inc. boosted technology companies and health-care shares rallied amid earnings. Boeing Co.’s results dragged the Dow Jones Industrial Average lower.

Apple surged to the highest since 2012 after signaling the wait for new products is nearing an end. Biogen Idec Inc. rallied 11 percent after raising its full-year forecast, while Intuitive Surgical Inc. jumped 18 percent as results topped estimates. Boeing sank 2.3 percent as a cost for a tanker rekindled concern the planemaker would struggle with a new aircraft program. Facebook Inc. rose 0.8 percent in late trading after reporting profit that topped estimates.

The S&P 500 added 0.2 percent to a record 1,987.19 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 25.63 points, or 0.2 percent, to 17,087.91. Boeing is the sixth- largest component of the Dow by weighting at 4.8 percent.

“The general tone of earnings has been positive not just on the bottom line but also top-line, and we’ve seen inflation numbers that gave comfort to those who believe the market will be supported by the Fed,” Russ Koesterich, chief investment strategist at New York-based BlackRock Inc., said via phone.

The S&P 500 rose yesterday after inflation data signaled the Federal Reserve won’t be compelled to raise interest rates in the near future and earnings reports boosted optimism about the economy. Chair Janet Yellen has said rates will stay low for a “considerable time” after the central bank stops its monthly bond purchases. It is on track to end them in October.

The Fed may have scope to keep interest rates at zero for longer than investors anticipate as inflation stays muted and a 2014 slowdown prolongs the labor-market recovery, the International Monetary Fund said in a conference call today.

The IMF cut its U.S. growth forecast for this year to 1.7 percent from 2 percent predicted in June, citing a first-quarter contraction.

The S&P 500 has advanced 7.5 percent this year amid better- than-estimated corporate earnings and central bank stimulus, as the U.S. economy shows signs of recovering from a 2.9 percent contraction in the first quarter. The gauge trades at 18.4 times the reporting earnings of its members, the highest since 2010.

Investors are also watching developments in Ukraine, where the Defense Ministry today said rebels in the eastern part of the country downed two government fighters.

The European Union yesterday threatened to restrict Russia’s access to capital markets and sensitive energy and defense technologies unless President Vladimir Putin expedites a probe into the downing of the Malaysia Airlines plane.

In the Middle East, Israeli Justice Minister Tzipi Livni said the nation doesn’t plan to stop its Gaza Strip offensive as long as the Palestinian territory’s Hamas rulers continue to pose a threat. U.S. Secretary of State John Kerry flew to Israel in pursuit of an elusive truce deal.

“Usually we have a lot lighter of volume in this time of year and negative geopolitical news would drive the market down more than it has, but the economy is better fundamentally than most people think it is,” Kurt Cambier, senior partner at Littleton, Colorado-based Centennial Capital Partners, said in a phone interview.

Thirty seven companies on the S&P 500 including PepsiCo Inc., Dow Chemical Co., Boeing Co. and Facebook Inc. will post earnings today. Profits at S&P 500 members probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, according to analyst estimates compiled by Bloomberg.

Of the members of the gauge that have reported results so far, 78 percent have exceeded analysts’ estimates for profit and 65 percent have beaten revenue projections, according to data compiled by Bloomberg.

“There may be some times when the geopolitical landscape hogs the spotlight but it’s always about earnings, and they’re coming in better than expected,” Karyn Cavanaugh, senior market strategist at New York-based Voya Investment Management LLC, said by phone. Voya oversees about $220 billion. “People say we’re at all-time highs and that we have to come down, but we’re not out of the ball park with valuations yet.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, fell 6 percent to 11.51.

Five of the 10 main S&P 500 groups advanced today, led by a0.8 percent gain among health-care stocks. The Nasdaq Biotechnology Index jumped 2.2 percent.

Intuitive Surgical rallied 18 percent, the biggest gain in the index and its steepest rise in five years. The maker of robotics used in surgeries reported profit that surpassed analysts’ estimates.

Biogen Idec jumped 11 percent. The world’s biggest maker of multiple sclerosis drugs raised its 2014 profit forecast after quarterly results beat forecasts.

Puma Biotechnology Inc. surged 295 percent. The company said a clinical trial of its experimental drug blocked the return of breast cancer in women with a type of early-stage disease.

The Nasdaq 100 Index of technology stocks added 0.6 percent to the highest level since September 2000, with Biogen and Intuitive leading gains. Yahoo! Inc. jumped 3.3 percent.

Apple added 2.6 percent to $97.19, the highest since September 2012. The company stoked anticipation for new devices on a conference call, with Chief Executive Officer Tim Cook talking about an “incredible pipeline” that “we can’t wait to show you.” Apple earlier reported a drop in iPad demand and projected third-quarter revenue below analysts’ predictions.

Microsoft Corp. was little changed near a 14-year high. The company’s ’s main software business topped estimates, benefiting from improving corporate demand for computers and software delivered over the Web.

Facebook rose 0.8 percent to $71.89 in late trading. The operator of the world’s biggest social networking website reported quarterly results that surpassed estimates. Facebook closed the regular session up 2.9 percent to the highest in four months.

PepsiCo Inc. climbed 1.9 percent. The softdrink maker reported better-than-projected profit and raised its annual forecast after reducing costs.

Delta Air Lines Inc. rose 3.9 percent. The company benefited from strong domestic demand to post profit that topped estimates. Delta is the first U.S.-based carrier to report earnings for the traditionally strong second quarter.

Boeing sank 2.3 percent for the steepest decline in the Dow. The world’s biggest plane maker took the after-tax charge related to development of the KC-46A military tanker. It also raised its full-year profit forecast, as it reaps gains from faster production that is driving jetliner deliveries to record levels.

Broadcom Corp. slipped 1.6 percent. The chipmaker reported earnings that surpassed estimates.

Juniper Networks Inc. dropped 9.6 percent. The network- infrastructure company gave a forecast for third-quarter revenue and profit that fell short of analysts’ estimates amid a slowdown in sales of networking equipment to phone companies.

Xilinx Inc. tumbled 14 percent for the biggest drop in the S&P 500. The maker of microprocessors use in phone networks said it expects sales to remain little changed or fall as much as 4 percent in the quarter through September.

Have a wonderful evening everyone.

Be magnificent!

For me, nonviolence is not a mere philosophical principle.

It rules my life.  It is the rule and breath of my life.

It is a matter not of the intellect but of the heart.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Champions keep playing until they get it right.

-Billie Jean King, 1943-

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7