August 27, 2014 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office today, I will be writing the newsletter on her behalf.

Photos of the Day
A boogie boarder rides a wave at the wedge in Newport Beach, Calif. Southern California beachgoers experienced much higher than normal surf brought on by Hurricane Marie spinning off the coast of Mexico. Chris Carlson/AP

People take part in ‘Yoga On The Hill’ on Parliament Hill in Ottawa, Canada. Sean Kilpatrick/The Canadian Press/AP

Market Closes for August 27^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Aug. 27 (Bloomberg) — Canadian stocks fell, retreating from a record, as declines in gold producers and Tim Hortons Inc. overshadowed gains at National Bank of Canada after it reported better-than-estimated third-quarter profit.

     Tim Hortons lost 2.6 percent to snap a three-day rally. Talisman Energy Inc. fell 5.1 percent after a Wall Street Journal report said talks to sell some of its assets to Repsol SA have stalled. National Bank of Canada jumped to a record after reporting rising profit on gains in its capital markets and wealth-management businesses.

     The Standard & Poor’s/TSX Composite Index lost 16.56 points, or 0.1 percent, to 15,602.65 at 4 p.m. in Toronto. The benchmark equity gauge closed at a record 15,619.21 yesterday.

     Trading in S&P/TSX stocks was 3.9 percent higher than 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.

     Yamana Gold Inc. dropped 1.5 percent to C$9.02 and Eldorado Gold Corp. lost 1.3 percent to C$8.85 as raw-materials producers retreated 1 percent as a group. Six of 10 industries in the S&P/TSX fell.

     Gold for December delivery slipped 0.1 percent to settle at $1,283.40 an ounce in New York, after rallying the most in three weeks yesterday.

     National Bank of Canada jumped 3.1 percent to C$50.91, the biggest gain in three years, after the nation’s sixth-largest lender by assets bolstered its wealth-management business in the third quarter through takeovers including Winnipeg-based Wellington West Holdings Inc.

     Bank of Montreal, which reported rising profit yesterday, advanced 1.2 percent to C$83.14, a record. The stock is up 17 percent this year, the best performer among the nation’s largest banks.

     Tim Hortons lost 2.6 percent to C$86.42, retreating from a record. Some investors are either considering or already have sold their stakes in the coffee-and-doughnut chain after the stock’s 33 percent rally in the past three days on talks for a tie-up with Burger King.

     “The easy money’s been made on this stock,” said Brian Huen, managing director at Red Sky Capital Management Ltd. in Toronto. His firm sold its Tim Hortons shares yesterday.

US

By Lu Wang

     Aug. 27 (Bloomberg) — The rally that propelled the Standard & Poor’s 500 Index above a record 2,000 lost a little bit of momentum today.

     The S&P 500 rose 0.1 point to 2,000.12 at 4 p.m. in New York with about the same number of stocks rising as falling. About 4.2 billion shares changed hands across U.S. exchanges, the lowest volume since July 3, data compiled by Bloomberg show.

     “The market is not overly expensive, not cheap either,” Ethan Anderson, senior portfolio manager at Rehmann Financial in Grand Rapids, Michigan, said by phone. His firm oversees $1.5 billion. “In the absence of strong corporate earnings, you are not necessarily going to see a huge surge in equities over the next 12 months. But the little notch up, on a regular basis, you’re likely to see continue.”

     Global markets are surmounting crises in Ukraine, the Gaza Strip and Iraq as investors renew bets that stimulus will revive growth. Rallies from Brazil to Japan and the U.S. gauge’s first trip above 2,000 have sent the value of global equities to a record $66 trillion.

     The S&P 500 is up almost 5 percent since Aug. 7, boosted by speculation the Federal Reserve will keep interest rates low as the economy strengthens. European Central Bank President Mario Draghi has also signaled policy makers may consider introducing an asset-buying plan.

     The U.S. equity benchmark has seen gains in 11 of the past 14 days. It trades at 18 times the reported earnings of its companies, near the highest level since 2010.

     The Dow Jones Industrial Average added 15.31 points to 17,122.01 today. The Nasdaq Composite Index was little changed after a four-day rally. Among industries in the S&P 500, telephone and utility stocks had the biggest gains, while energy, financial and technology shares fell the most.

     “In the U.S., you’re seeing businesses do very well,” Doug Foreman, chief investment officer at Kayne Anderson Rudnick Investment Management in Los Angeles, said in a telephone interview. His firm oversees about $9 billion. “We’re in a situation where there are still some macro risks, but they’re overwhelmed by the micro, which is surprisingly good.”

      Tiffany & Co. added 1 percent after posting second-quarter profit that topped analysts’ estimates and raised its earnings forecast for the year as higher prices boosted revenue.

     Smith & Wesson Holding Corp. tumbled 14 percent after the gunmaker cut its full-year sales and profit forecast amid declining demand. Chico’s FAS Inc., a women’s clothing retailer, slumped 4.6 percent on lower-than-estimated sales.

     Michaels Cos. jumped 9.3 percent as the arts and crafts retailer reported second-quarter earnings that topped analysts’ estimates. Express Inc. increased 13 percent after the apparel chain raised its full-year profit forecast.

     Best Buy Co., the world’s largest electronics chain, rose 6.3 percent after posting second-quarter profit that topped analysts’ estimates, helped by lower costs.

     “U.S. markets continue to defy geopolitical worries,” Richard Hunter, the head of equities at Hargreaves Lansdown Plc in London, wrote in an e-mail. “Many of the blocks are in place for the equity markets to make further progress.”

Have a wonderful evening everyone.

Be magnificent!

“In order to succeed, your desire for success should be greater than your fear of failure.” – Bill Cosby 

As ever,

Karen

 “The most wasted of all days is one without laughter” – e.e. cummings

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