September 2, 2014 Newsletter

Dear Friends,

Tangents:

Keith Jarrett and Charlie Haden released a CD in June entitled Last Dance.  It is was recorded at Jarret’s home studio and features Jarrett on piano and Charlie Haden on double bass.  It is very beautiful with intimate renderings of classics such as It Might As Well Be Spring, Every Time We Say Goodbye, Round Midnight, Goodbye.  More poignant because Charlie Haden died on July 11^th, 2014,in Los Angeles, only a month after the release of this inspired creation.  Pick it up, you’ll be happy that you did, I’m sure.

James Adams, in today’s Globe & Mail,  reminds us of an historic event that took place on this day:

A Moment In Time: September 2, 1666, Great Fire of London Starts In A Bakery

Great events often arise from small causes.  Take the Great Fire of London: It began on a warm, dry Sunday morning when embers from the ovens of the King’s baker ignited a stretch of houses tightly packed along Pudding Lane near London Bridge.  Most houses in the city of 500,000 were made of wood and there was no fire department, so when a strong east wind arose, the flames spread rapidly, consuming more than 70 per cent of the city before being extinguished on Sept. 5.  Tens of thousands were left homeless, yet the official death toll was fewer than 10 people.  Hopes that the conflagration would result in a new grid street system were dashed when Charles II decided the old, convoluted routes should be retained.  But Christopher Wren got to design 52 churches, including St. Paul’s Cathedral completed in 1711.

Photos of the Day
Fountains of lava up to 200 feet high spurt from a fissure in the ground on the north side of the Bardarbunga volcano in Iceland. The alert warning for the area surrounding Iceland’s Bardarbunga volcano remained at orange, indicating that it is showing increased unrest with high potential for an explosive eruption. Stefano Di Nicolo/AP

A Hindu devotee carries an idol of elephant-headed god Ganesha for immersion in the Arabian Sea, during the Ganesh Chaturti festival in Mumbai, India. The 10-day-long festival celebrates the birthday of the Hindu god. Rajanish Kakade/AP

Market Closes for September 2^nd, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Sept. 2 (Bloomberg) — Canadian stocks were little changed, after closing at a record on Aug. 29, as a slump in gold and crude producers offset a rally among banks.

     Detour Gold Corp. and Goldcorp Inc., the largest gold producer by market value, retreated at least 4.1 percent as gold fell to a two-month low with a stronger dollar. Suncor Energy Inc. and Canadian Natural Resources Ltd. declined more than 1.5 percent. Bank of Montreal and National Bank of Canada climbed to all-time highs as financial stocks advanced a second day.

     The Standard & Poor’s/TSX Composite Index fell 6.65 points, or less than 0.1 percent, to 15,619.08 at 4 p.m. in Toronto, paring a steeper decline in afternoon trading. The market was closed yesterday for the Labor Day holiday.

     Detour Gold dropped 5 percent to C$13 and Goldcorp tumbled 4.1 percent to C$29.27, the biggest drop in five months. Raw- materials shares slumped 1.6 percent as a group to the lowest in seven weeks. The Canadian equities benchmark has surged 15 percent this year, making it the second-best performer among developed equity markets behind Denmark. Trading volume in the S&P/TSX was 9.8 percent above the 30-day average today.

     Gold for December delivery decreased 1.7 percent to settle at $1,265 an ounce in New York, the lowest since June. The dollar reached a seven-month high against 10 major currencies.

     Athabasca Oil Corp. sank 4 percent to C$7.60, snapping a six-day gain after closing an agreement with PetroChina Co. Aug. 29 to sell the rest of its Dover oil-sands project for C$1.18 billion ($1.08 billion). The deal ended weeks of speculation about whether the Chinese company would pay.

     Suncor lost 1.5 percent to C$43.67 and Canadian Natural Resources fell 2.6 percent to C$46.17 as crude for October delivery declined 3.2 percent to $92.88 a barrel in New York.

     The Purchasing Managers’ Index in Europe fell to 50.7 in August from 51.8 in July, London-based Markit Economics said yesterday. China’s manufacturing slowed more than estimated last month, while in the U.S., the Institute for Supply Management’s index showed expansion at the fastest pace in three years.

     Canadian National Railway Co. advanced 1.3 percent to C$79.10, as the railway operator’s market capitalization of C$64.7 billion eclipsed Suncor’s C$64 billion for the fourth- largest in Canada.

     Bombardier Inc. decreased 0.6 percent to C$3.64, the lowest level in a month, after Goldman Sachs Group Inc. analyst Noah Poponak said the aircraft manufacturer may see “inevitable” delays for its CSeries jet.

US

By Joseph Ciolli

     Sept. 2 (Bloomberg) — U.S. stocks fell, after the Standard & Poor’s 500 Index had its best month since February, as energy producers sank with the price of crude to offset data showing U.S. manufacturing expanded at the fastest pace in three years.

     Newfield Exploration Co. slid 2.1 percent as energy companies dropped 1.3 percent as a group. Delta Air Lines Inc. and Southwest Airlines Co. rallied at least 2.8 percent to lead carriers higher. Home Depot Inc. dropped 2 percent after saying it was investigating a possible data breach. Staples Inc. jumped 8.1 percent after Credit Suisse Group AG raised its rating on the stock.

     The S&P 500 lost 0.1 percent to 2,002.28 at 4 p.m. in New York, trimming earlier losses of 0.4 percent in afternoon trading. The Dow Jones Industrial Average slipped 30.89 points, or 0.2 percent, to 17,067.56. The Nasdaq Composite Index rose 0.4 percent, extending its highest level since March 2000. More than 5.7 billion shares changed hands on U.S. exchanges today, snapping an nine-day streak of volume below 5 billion shares.

     “The 2,000 area is still in play, and we’ve yet to move past it convincingly as it remains a speed bump in the short- term,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “The manufacturing index was better than expected, but after that strong rally we had through much of August, the market is taking a bit of a breather.”

     The Institute for Supply Management’s manufacturing index unexpectedly climbed to 59, the highest level since March 2011, from July’s 57.1, the Tempe, Arizona-based group reported today. Readings greater than 50 indicate growth. The median forecast in a Bloomberg survey of economists was 57.

     The news on manufacturing was less positive overseas as U.K. factory growth slowed more than forecast last month and Italian manufacturing shrank as Europe suffered the fallout from weakening demand and mounting geopolitical risks. Output growth in China also slowed.

     The S&P 500 jumped 3.8 percent in August, climbing above 2,000 for the first time, amid improving economic data and speculation the Federal Reserve will keep interest rates low even as the economy shows signs of strengthening. The gauge has advanced 8.1 percent in 2014.

     The economy expanded more than previously forecast in the second quarter, propelled by the biggest gain in business investment in more than two years, the Commerce Department reported last month. A Labor Department report on Sept. 5 will show payrolls rose by more than 200,000 in August for a seventh- straight month, a Bloomberg survey of economists showed.

     “Overall, data supports the idea that the economy is accelerating going into the second half of the year, which certainly helps the equity markets,” Kevin Caron, who helps oversee $170 billion at Stifel Nicolaus & Co. in Florham Park, New Jersey, said in a phone interview. “You’ve had investors who have been increasingly encouraged by the direction of the data in the economy. They’ve been discouraged from holding assets in low-yielding, safer assets.”

     The S&P 500’s rally isn’t over and the gauge could jump 50 percent more by 2020 as the U.S. economic recovery heads for a record winning streak, according to Morgan Stanley.

     A slower though sustained period of growth could help the equity benchmark gauge peak near 3,000, according to a report today. The world’s largest economy, which began recovering in July 2009, may continue growing for five years or more, making it the longest period of expansion, Morgan Stanley said.

     In Ukraine, the government warned of an escalating conflict in its easternmost regions, even as U.S. President Barack Obama headed to eastern Europe to reassure NATO members. Ukraine and its allies in the U.S. and Europe accuse Russia of dispatching troops and backing separatist militias to open a new front in the conflict. Russia has repeatedly denied involvement in the unrest.

     “U.S. investors will try to focus on the economic agenda of the day, while geopolitical issues remain in the background,” Stephane Ekolo, chief European strategist at Market Securities in London, wrote in an e-mail.

     The Chicago Board Options Exchange Volatility Index, the gauge of S&P options prices known as the VIX, rose 2.3 percent to 12.25. The gauge lost 29 percent in August, the biggest monthly drop in almost three years.                         

     Five of the 10 main S&P 500 groups retreated, with energy stocks falling 1.3 percent to pace declines. Newfield Exploration and Noble Corp. slid at least 2.1 percent as the price of West Texas Intermediate crude slumped. Chevron Corp. lost 1.5 percent.

     Home Depot sank 2 percent to $91.15, halting a five-day rally. The largest home-improvement chain said it was working with banks and law enforcement to investigate the possible breach.

     The Nasdaq 100 Index rose 0.3 percent to a 14-year high as Regeneron Pharmaceuticals Inc., Staples and Tesla Motors Inc. rallied.

     Regeneron gained 2.6 percent to $359.50, an all-time high.  The cholesterol drug that the company is developing with Sanofi cut levels of heart disease-causing fat in four studies, according to results released over the weekend.

     Staples climbed 8.1 percent to $12.63, the highest since May. The world’s largest office-supply chain was raised to outperform from neutral at Credit Suisse.

     Tesla rose 5.4 percent to $284.12, an all-time high. A Stifel Nicolaus & Co. report cited the electric-car maker’s increasing production and said it may be worth $400 a share even before it starts making a lower-priced model.

     Dollar General Corp. added 0.6 percent to $64.36. The retailer said today that it raised its offer for smaller rival Family Dollar Stores Inc. to $80 a share in cash, compared with an initial $78.50 bid. Family Dollar Stores rose 0.5 percent to $80.22.

     Norwegian Cruise Line Holdings Ltd. surged 11 percent to $36.99 after agreeing to acquire Prestige Cruises International Inc. for about $3.03 billion. Prestige is owned by private equity firm Apollo Global Management LLC, which also holds a 20 percent stake in Norwegian.

     Compuware Corp. shares climbed 13 percent to $10.59. The company will be acquired by private equity firm Thoma Bravo LLC in a deal valued at $2.5 billion.

     Exelixis Inc. slumped 55 percent to $1.85. A trial for its cabozantinib treatment for prostate cancer failed to meet its aim of showing an increase in survival rates compared with another drug. The company said it will reduce its workforce by about 70 percent to focus its financial resources on other clinical trials for cabozantinib.

Have a wonderful evening everyone.

Be magnificent!

The noblest moral law

is that we should unremittingly work

for the good of mankind.

Mahatma Gandhi

As ever,

Carolann

A moment’s insight is worth a lifetime of experience.

          -Justice Oliver Wendell Holmes, 1841-1935

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