February 6, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1952, Elizabeth became Queen of England. She succeeded her father King George VI of the United Kingdom and the Dominions of the British Commonwealth who died in his sleep after a long illness. She was crowned Queen Elizabeth II on June 2, 1953, at 27.

February 6^th, 1842, Edward  Fitzgerald wrote to Frederick Tennyson, elder brother of the poet:

You enter Drury Lane at a quarter to seven: the pit is already nearly full: but you find a seat, and a  very pleasant one.  Box doors open and shut: ladies take off their shawls and seat themselves: gentlemen twist their side curls: musicians come up from under the stage one by one:  ‘tis just upon seven.  Macready [the manager] is very punctual: Mr. T, Cooke is in his place with his marshal’s baton in his hand: he lifts it up:  and off they set with old Handel’s noble overture…Do you know the music [to Acis and Galatea]?  It is one of Handel’s best: and as classical as any man who wore a full-bottomed wig could write.  I think Handel never gets out of his wig: that is, out of his age: his Hallelujah chorus is a chorus not of angels, but of  well fed earthly choristers, ranged tier above tier in a Gothic cathedral, with princes for audience, and their military trumpets flourishing over the full volume of the organ.  Handel’s gods are like Homer’s, and his sublime never reaches beyond the region of the clouds.  Therefore I think that his great marches, triumphal pieces, and coronation anthems, are his finest works.   –from The Book of Days.

PHOTOS OF THE DAY

A man poses in a flooded St. Mark’s Square during a period of seasonal high water in Venice, Friday. Manuel Silvestri/Reuters

A woman poses for a photograph amongst decorations to celebrate the upcoming Chinese Lunar New Year in Hong Kong, Friday.Kin Cheung/AP

Market Closes for February 6^th, 2015    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks retreated from a four-month high, as gold and silver prices dropped after data showed hiring is accelerating.

     Agnico Eagle Mines Ltd. and Yamana Gold Inc. slipped at least 6.6 percent. Sierra Wireless Inc. slumped 12 percent after posting first-quarter earnings that missed expectations. Lightstream Resources Ltd. surged 17 percent as Brent crude capped the biggest two-week gain in 17 years.

     The Standard & Poor’s/TSX Composite Index fell 41 points, or 0.3 percent, to 15,083.92 at 4 p.m. in Toronto, erasing an earlier advance of as much as 0.5 percent. The equity gauge rallied 2.8 percent this week. Trading volume was 3.9 percent lower than the 30-day average.

     Yamana Gold lost 6.6 percent and Agnico Eagle retreated 7.7 percent as raw-materials shares plunged 2.7 percent as a group, the most in the S&P/TSX. Gold futures for April delivery fell 2.2 percent to settle at $1,234.60 an ounce in New York. The latest jobs data boosts speculation the U.S. Federal Reserve will increase its benchmark interest rate, lowering demand for gold as a hedge against inflation.

     BCE Inc. sank 3.7 percent, retreating from a record, and Telus Corp. slipped 1.3 percent as telephone stocks sank 2.5 percent as a group.

     Canada added 35,400 jobs in January and the unemployment rate fell close to a six-year low. Economists surveyed by Bloomberg News expected no change in the unemployment rate and 5,000 new jobs. The actual employment gain exceeded all 21 forecasts.

     Employers in the U.S. added more jobs than forecast in January, capping the biggest three-month gain in 17 years, and workers’ earnings jumped. Payrolls advanced 257,000 last month, following a revised 329,000 gain in December that was bigger than previously reported. The unemployment rate rose to 5.7 percent as the labor force increased.

     Lightstream Resources surged 17 percent to a two-month high and Legacy Oil & Gas Inc. gained 5.3 percent. Energy producers have jumped 4.9 percent this week.

     Brent crude jumped 18 percent in the past 10 trading days, the most since March 1998. A measure of price volatility for the U.S. benchmark rose this week to the highest since 2009.

US

By Joseph Ciolli and Callie Bost

     (Bloomberg) — U.S. stocks fell as benchmark indexes pulled back after climbing toward all-time highs on data showing stronger-than-forecast jobs growth.

     The KBW Bank Index rose 1.8 percent as Regions Financial Corp. and Bank of America Corp. added more than 3.2 percent on the prospect of higher interest rates. Utility companies, which have the second-highest dividend yield among 10 groups in the S&P 500, plunged 4.1 percent for the biggest loss since August 2011. Energy stocks reversed an earlier advance, even as oil continued to rally.

     The Standard & Poor’s 500 Index fell 0.3 percent to 2,055.47 at 4 p.m. in New York. The Dow Jones Industrial Average fell 60.59 points, or 0.3 percent, to 17,824.29. The gauges came within 1 percent of records reached in December before retreating. Almost 7.8 billion shares changed hands on U.S. exchanges, 14 percent above the three-month average.

     “The market is still near all-time highs and there are big unanswered questions out there, whether it be Greece, Ukraine, oil prices or when rates will rise,” Matt Maley, an equity strategist at Miller Tabak & Co LLC in Newton, Massachusetts, said by phone. “Maybe that’s why people are not as enthusiastic to pile in here.”

     Stocks retreated after the S&P 500 earlier pushed its gain since Jan. 30 to 3.9 percent during intraday trading, good at the time for the biggest weekly advance since October. More than 400 of the gauge’s companies have risen in the past four days as the index erased a 2015 decline that exceeded 3.2 percent on Jan. 15 and Jan. 30, data compiled by Bloomberg show.

   The S&P 500 rose as much as 0.5 percent after the government’s report showed the U.S. added more jobs than forecast in January, capping the biggest three-month gain in 17 years, and workers’ earnings jumped.

     The 257,000 advance in payrolls last month followed a 329,000 gain in December that was bigger than previously reported, figures from the Labor Department showed. The median forecast in a Bloomberg survey of economists called for a 228,000 increase. The unemployment rate climbed to 5.7 percent as the improving job market lured more Americans into the labor force.

     A stronger economy has encouraged companies to boost hiring, creating a virtuous cycle of growth as Americans spend newfound incomes on goods and services. Sustained job growth will probably help assure Federal Reserve policy makers that the expansion is well-rooted and can withstand an increase in interest rates later this year.                      

     “This is a very positive number,” said Lisa Hornby, a fixed income portfolio manager at Schroders in New York. The firm manages about 276 billion pounds ($447 billion) globally. “The market is starting to price the Fed back into 2015, we’d seen the market price out the Fed all year, now it looks like we’ll have a Fed hike at least priced into the tail end of the year now.”

     The yield on 10-year Treasuries jumped 13 basis points while the Bloomberg Dollar Spot Index gained 1 percent after the report.

     Fed Bank of Philadelphia President Charles Plosser said stronger U.S. economic data had him “at the cusp” of thinking the time to raise interest rates was now.

     “We’re fast approaching” a point where it’s hard to justify not raising rates, Plosser told CNBC in an interview on Friday.                          

      More than $1.3 trillion has been added to the value of global equities this week as higher oil prices boosted energy shares and companies including Pfizer Inc. and Staples Inc. announced more than $20 billion in deals. The S&P 500’s 3 percent weekly gain was its biggest since December.

     The benchmark gauge on Thursday erased its losses for 2015, after posting its worst month in a year. Stocks fell in January amid concern that slowing growth overseas will hurt the U.S. economy, while tumbling crude oil and the strengthening dollar weighed on earnings at multinational corporations.

     Oil rallied for a second straight day on Friday, capping the biggest two-week gain since March 1998. Brent crude climbed9.1 percent this week, adding to an 8.6 percent gain last week. It’s still about half the price it was in June.

     About 77 percent of the gauge’s companies that have posted earnings this season have beaten analyst estimates, while 56 percent have topped sales projections, data compiled by Bloomberg show.

     With 322 of the 500 companies in the S&P having already reported, earnings last quarter are projected to have grown 4.1 percent, with revenue gaining 1.4 percent. That’s up from 2.4 percent and 0.8 percent at the beginning of the year, respectively.

     All 24 lenders in the KBW Bank Index rose as investors anticipated higher interest rates, with JPMorgan Chase & Co., Comerica Inc. and SunTrust Banks Inc. among the leaders.

     Interest rates have set new lows in the six years since the financial crisis, crimping lending margins for banks. Sustained job growth probably will help assure Fed policy makers that the expansion is well-rooted and can withstand an increase in interest rates this year.

     The Fed’s decision to raise rates will be the biggest story for banks this year, Fred Cannon, a KBW Inc. analyst,  said in December. Cannon, who predicts the Fed will begin raising rates in the middle of 2015, said he would have to cut average earnings estimates for all banks by 5 to 6 percent if the central bank leaves rates unchanged this year.                       

     The Chicago Board Options Exchange Volatility Index rose 2.6 percent to 17.29. The gauge, know as the VIX, fell more than 17 percent this week after rising 26 percent last week.

     Moody’s gained 5.1 percent, its strongest advance since April 2013, after reporting quarterly profit that beat analysts’ estimates, even as the owner of the second-largest ratings company faces lawsuits over its grades leading up to the financial crisis. Insurance providers Lincoln National Corp. and Prudential Financial Inc. gained more than 3.2 percent.

     Twitter surged 16 percent, the most since July, after posting quarterly revenue that topped estimates and forecast that the number of new users will pick up. LinkedIn rose more than 10 percent to its highest level ever as the professional- networking service issued a profit forecast for 2015 that topped estimates.
 

Have a wonderful weekend everyone.

Be magnificent!

In this world there are two orders of being,

the perishable and the imperishable.

The perishable is all that is visible.  The imperishable

is the invisible substance of all that is visible.

The Bhagavad Gita

As ever,

Carolann

Self-expression must pass into communication for its fulfillment.

                                                 -Pearl S. Buck, 1892-1973

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7