August 25, 2014 Newsletter

Dear Friends,

Tangents:

I finished reading a wonderful book on the weekend entitled The Night Circus by Erin Morgenstern.  If you are looking for a good read, I highly recommend it.  From the Globe & Mail review of this book on the paperback edition:

A book that stops you in your tracks, a book [that]…tears you open and leaves you gasping….A book that makes the hair ojn your arms stand on end, and that has you picking up the phone or sending a text to tell everyone you know, “You have to read this”…One of those rare, wonderful, transcendent books that, upon finishing, you want to immediately start again….The Night Circus welcomes all visitors.

Our revels now are ended.  These our actors
As I foretold you, were all spirits, and
Are melted into air, into thin air:
And, like the baseless fabric of this vision,
The cloud-capp’d tow’rs, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit, shall dissolve,
And, like this insubstantial pageant faded,
Leave not a rack behind.  We are such stuff
As dreams are made on;  and our little life
Is rounded with a sleep.

                 -Prospero, The Tempest, Act IV, Scene I.

We saw Woody Allen’s latest, Magic in the Moonlight at the theatre  yesterday.  Colin Firth is a terrific actor; story a bit weak, but a cute movie….Allen keeps churning them out at quite a pace.

August 25^th, 2009:  Ted Kennedy dies, a  great loss to the world.

And on this date in 1975, Bruce Springsteen unveiled the album “Born to Run.”

Photos of the Day
Musicians perform as the sun sets at Arpoador Beach in Rio de Janeiro. Pilar Olivares/

Riders pass the Príncipe de Asturias aircraft carrier, the only one in the Spanish navy’s possession, at the start of the third stage of the Vuelta, tour of Spain cycle race, in Cadiz, Spain. Miguel Angel Morenatti/AP

Owen Wright of Australia competes in the Billabong Pro surfing competition in Tahiti. Will Hayden-Smith/ASP/AP

Market Closes for August 25^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Callie Bost

     Aug. 25 (Bloomberg) — Canadian stocks rose to a record amid optimism that central banks worldwide will keep interest rates low. Tim Hortons Inc. surged on merger talks.

     Consumer-discretionary stocks rallied the most in the benchmark index as Tim Hortons soared 19 percent on discussions of a merger with Burger King Worldwide Inc. First Quantum Minerals Ltd. climbed 2.2 percent as copper rallied to a two- week high. Semafo Inc. and B2Gold Corp. dropped more than 3.7 percent as gold futures declined.

     The S&P/TSX advanced 63.19 points, or 0.4 percent, to a record 15,598.74 at 4 p.m. in Toronto. The benchmark equity gauge climbed 1.5 percent last week for the best gain since June.

     Trading in S&P/TSX stocks was 29 percent below the 30-day average. Canadian stocks have surged 15 percent this year, making the S&P/TSX the second-best performer among developed equity markets behind Denmark.

     Global central bankers last week led by Federal Reserve Chair Janet Yellen said labor markets still have further to heal before their economies can weather higher interest rates. Comments by Mario Draghi fanned speculation the European Central Bank is closer to quantitative easing.                         

     Bank of Canada Governor Stephen Poloz said in an interview Aug. 22 that persistent slack in the country’s labor market and a tendency toward part-time job creation has restrained income growth in the world’s 11th-largest economy. Economists surveyed by Bloomberg forecast policy makers to keep the benchmark rate at 1 percent, where it’s been for almost four years, until the third quarter of next year.

     Seven of 10 industries in the S&P/TSX advanced. Consumer- discretionary shares rallied 2 percent, while industrials gained 0.6 percent.

     Tim Hortons soared 19 percent to C$82.03. Burger King would create the world’s third-largest fast-food chain by merging with Canada’s bigger seller of coffee and doughnuts, the companies said in a statement.

     The combined business would have about $22 billion in sales and more than 18,000 restaurants in 100 countries, according to the statement. The deal is subject to negotiation, and Burger King and Tim Hortons don’t plan to comment further until an agreement is reached or discussions are discontinued.

     First Quantum Minerals advanced 2.2 percent to C$25.05 to a three-week high as copper futures rose 0.4 percent to settle at $3.237 a pound in New York.

     The S&P/TSX Gold Index fell 1.5 percent to a one-month low as gold futures slipped 0.1 percent. Semafo slumped 4.1 percent to C$4.87, while B2Gold dropped 3.7 percent to C$2.63. Alamos Gold Inc. fell 2.2 percent to C$9.71.

US

By Elena Popina

     Aug. 25 (Bloomberg) — U.S. stocks rose, briefly sending the Standard & Poor’s 500 Index above 2,000 for the first time ever, as corporate dealmaking and prospects for economic stimulus in Europe bolstered confidence in the bull market.

     The S&P 500 rallied 0.5 percent to 1,997.92 at 4 p.m. in New York, paring gains in the afternoon after holding above 2,000 for less than two hours and reaching a record 2,001.95. The Dow Jones Industrial Average increased 75.65 points, or 0.4 percent, to 17,076.87. About 4.3 billion shares changed hands in the U.S. today, 23 percent below the three-month average.

     “This number, 2,000, is a pretty significant number from psychological and financial points,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said in a phone interview. “Perhaps we might reach a little bit overbought status, and it looks like the index is going to take a breather there.”

     Merger and acquisition activity led to some of the biggest moves in the market today. Burger King Worldwide Inc. added 20 percent after saying it’s in talks to buy Tim Hortons Inc. and move its headquarters to Canada. InterMune Inc. surged 35 percent after Roche Holding AG purchased the biotechnology company for $8.3 billion.  Morgan Stanley climbed to the highest since 2009 and JPMorgan Chase & Co. and Goldman Sachs Group Inc. climbed more than 1.3 percent.

     The S&P 500 has recovered almost 100 points since its low during trading on Aug. 7, climbing on nine of 12 days to erase the 3.9 percent drop that began on July 24. The U.S. equity benchmark has advanced for the past three weeks and more than $900 billion has been added to the value of American equities.

     The Stoxx Europe 600 Index jumped 1.1 percent today as comments by Mario Draghi fanned speculation the European Central Bank is closer to quantitative easing. ECB policy makers “stand ready to adjust our policy stance further” and will use all available instruments to “ensure price stability over the medium term,” Draghi said on Aug. 22.

     Futures trading on the Chicago Mercantile Exchange halted for as long as four hours yesterday because of a technical problem, affecting contracts from U.S. stock indexes to Treasuries, oil and gold. CME Group Inc. suspended all of its Globex electronic-trading markets except for Malaysian equity- index derivatives, according to its website. Trading, which was scheduled to start at 5 p.m. Chicago time for some products, began at 9 p.m.

     The Chicago Board Options Exchange Volatility Index, the gauge of S&P options prices known as the VIX, added 2 percent to 11.70, the most in 10 days. The gauge has lost 15 percent this year.                       

     All 10 main S&P 500 groups advanced today, with financial, energy and healthcare stocks rising at least 0.7 percent for the best performances. Morgan Stanley added 2.2 percent to $34.20. Goldman Sachs increased 1.4 percent to $177.87 and JPMorgan Chase advanced 1.5 percent to $59.34 for the biggest gains in the Dow.

     Burger King, the burger chain that is majority-owned by 3G Capital, added 20 percent to a record $32.40. U.S. shares of Canada’s Tim Hortons jumped 19 percent to $82.03.

     Burger King would create the world’s third-largest fast- food chain by merging with Canada’s bigger seller of coffee and doughnuts, the companies said in a statement. Canada’s corporate tax rate is 26.5 percent, compared with 40 percent in the U.S., according to audit, tax and advisory firm KPMG.

     InterMune surged 35 percent to $72.85. Roche will buy the unprofitable company that’s awaiting U.S. approval of its biggest drug, for $74 a share, the Basel, Switzerland-based company said yesterday in a statement.

     Ann Inc., the owner of the Ann Taylor chain, rose 6.5 percent to $39.94, the highest in six weeks. The company could be valued at $50 to $55 a share to a potential acquirer, such as a private-equity buyer, according to a letter today from investment firms Engine Capital LP and Red Alder LLC.

Have a wonderful evening everyone.

Be magnificent!

When restraint and courtesy are added to strength, the latter becomes irresistible.

Mahatma Gandhi

As ever,

Carolann

I not only use all the brains that I have, but all that I can borrow.

                                               -Woodrow Wilson, 1856-1924

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