February 10, 2015 Newsletter

Dear Friends,

Tangents:

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

PHOTOS OF THE DAY

Artist Anat Ronen works on a mural featuring a gorilla Monday in Houston. The mural is one of five commissioned by the Houston Zoo to celebrate the arrival of seven western lowland gorillas. Pat Sullivan/AP

A herdsman takes a rest with his goats in a corn field at Dashiwo village, on the outskirts of Beijing. The Chinese Lunar New Year on Feb. 19 will welcome the Year of the Sheep (also known as the Year of the Goat or Ram.) Kim Kyung-Hoon/Reuters

Market Closes for February 10^th, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, erasing an earlier loss, as gains among health-care and industrial shares offset a drop in commodities producers as oil snapped a three-day rally.

     Uni-Select Inc. surged 15 percent after agreeing to sell its U.S. automotive parts distribution business to Icahn Enterprises LP. Valeant Pharmaceuticals International Inc. climbed to a record after Barclays Plc recommended the stock. Pacific Rubiales Energy Corp. and Legacy Oil & Gas Inc. sank at least 10 percent as energy producers slumped. Amaya Inc. slipped 1.8 percent after a Globe and Mail report said regulators are probing the online gambling company over its acquisition of PokerStars last year.

     The Standard & Poor’s/TSX Composite Index rose 11.82 points, or 0.1 percent, to 15,112.52 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has climbed 3.3 percent this year. Trading volume was 15 percent below the 30-day average.

     Pacific Rubiales sank 16 percent and Eldorado Gold plunged 3.5 percent as energy and raw-materials producers were the only two industries among 10 to decline in the S&P/TSX. The two industries account for about 34 percent of the broader equity gauge.

     Air Canada, the nation’s largest airline, soared 3.7 percent to C$13.29, the highest since 2007, to pace gains among industrial stocks. Air Canada, which reports earnings Wednesday in Toronto, has benefited from cheaper fuel costs amid oil’s plunge.

     The Bloomberg Commodity Index slipped 1.4 percent, snapping a three-day rally as prices for commodities from copper to oil fell.

     West Texas Intermediate crude for March delivery dropped 5.4 percent in New York. The U.S. will contribute most to global growth in oil supplies through 2020, the International Energy Agency said. U.S. inventories probably rose last week, according to analyst estimates in a Bloomberg survey before government data on Wednesday.

     First Quantum Minerals Ltd. lost 3 percent for a second day of declines as copper dropped the most in a week. China reported consumer prices rose at the slowest pace in more than five years, deepening concerns about demand from the world’s biggest consumer of metals. China is also Canada’s second-largest trading partner after the U.S.

US

By Joseph Ciolli

     (Bloomberg) — The Standard & Poor’s 500 Index erased losses for 2015, closing above a level where previous rallies fizzled out this year, as companies from Coca-Cola Co. to General Motors Co. surged and optimism grew over Greece talks.

     Coke gained 2.8 percent as profit benefited from cost- cutting efforts, while GM rose 4.2 percent on buyback speculation. Apple Inc. climbed to an all-time high, with its market capitalization closing above $700 billion for the first time. Health-care and utility stocks rebounded after falling at least 0.9 percent Monday.

     The S&P 500 climbed 1.1 percent to 2,068.59 at 4 p.m. in New York, the highest level since Dec. 30. The gauge is 1.1 percent away from its all-time high. The Dow Jones Industrial Average added 139.55 points, or 0.8 percent, to 17,868.76. The Nasdaq 100 Index rallied 1.5 percent to the highest since December. About 6.6 billion shares changed hands on U.S. exchanges today, 3.6 percent below the three-month average.

     “You’re seeing a continuation of the short-term momentum we experienced for most of last week,” Joe Bell, a Cincinnati- based senior equity analyst at Schaeffer’s Investment Research Inc., said in a phone interview. “We’ve been pretty choppy throughout most of 2015 — a lot of volatility but not a lot of net direction. You had some positive news out of Greece. Most people expect that somehow, someway there will be some sort of settlement.”

     The S&P 500 closed above a level where previous rallies have failed. Since the start of the year, three separate advances in the benchmark gauge have fizzled out just above 2,060, data compiled by Bloomberg show.

     U.S. stocks have traded for the last two months in one of the tightest ranges since 2007, marked by a record high of 2,090.57 and Dec. 16 low of 1,972.74. Even as swings in the index become more violent, the gauge failed to break out, rising above then falling below its 50-day average four times since December.

     The Chicago Board Options Exchange Volatility Index fell 7.1 percent to 17.23. The gauge, know as the VIX, fell more than 17 percent last week.

     “We had a breakout here recently,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said in a phone interview. “In addition to the favorable fundamentals that are pulling investor dollars into the market from a trading standpoint, the turnaround we saw has brought in some high-frequency momentum trading.”

     Equities rose early in the day as speculation grew that Greece will reach an agreement at a Feb. 11 emergency meeting of euro-area finance ministers in Brussels. U.S. and European stocks briefly pared gains after German Financial Minister Wolfgang Schaeuble said reports that Greece would get six months to work out a debt deal are “wrong.”

     Greek Finance Minister Yanis Varoufakis told lawmakers on Monday the country will implement about 70 percent of reforms already included in the current bailout accord. He is also seeking support for a bridge funding plan.

     “If this Greece compromise comes about, that will be a clear positive,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “On the domestic front, you have some nice moves on earnings like Coca-Cola.”

     Eighteen S&P 500 companies release quarterly results today. PepsiCo Inc., Time Warner Inc. and Kraft Foods Group Inc. follow later this week. About two-thirds of the S&P 500 companies have reported results so far, with 77 percent beating profit estimates and 56 percent topping sales projections, data compiled by Bloomberg show.

     Earnings rose 4.1 percent last quarter, while sales gained 1.4 percent, according to analysts’ forecasts compiled by Bloomberg. That’s up from projections at the start of the year.

     Coke gained 2.8 percent. Chief Executive Officer Muhtar Kent, coping with currency challenges and sluggish growth worldwide, is trimming expenses and selling more premium-priced beverages. He aims to pare $3 billion from Coca-Cola’s annual costs.

     GM rose 4.2 percent as Harry J. Wilson, a member of President Barack Obama’s auto team that restructured GM and Chrysler, intends to nominate himself for a seat on GM’s board and propose an $8 billion stock buyback. He is acting in concert with four investment funds, including Appaloosa Management LP, which together own about 2.1 percent of GM’s stock.

     Health-care companies in the benchmark equity gauge increased 1.4 percent. Pfizer Inc., Tenet Healthcare Corp. and HCA Holdings Inc. rose more than 2.6 percent.

     The S&P 500 Consumer Services Index climbed 2.6 percent, led by a pair of hotel operators that exceeded earnings expectations. Starwood Hotels & Resorts Worldwide Inc. jumped 6.6 percent after reporting fourth-quarter profit that beat projections and saying it will spin off its vacation-ownership unit into a publicly traded company. Hotel rival Wyndham Worldwide Corp. rose 8.7 percent after its results were better than forecast and the company raised its profit outlook.

     Qualcomm Inc. advanced 4.7 percent, helping to drive the S&P 500 information technology group up 1.6 percent, after Chinese regulators ended an antitrust probe with a $975 million fine on the chipmaker. Micron Technology Inc. rose 9.7 percent, the best gain in more than a year, and Apple Inc. climbed 1.9 percent to an all-time high. The company sold 1.25 billion Swiss francs ($1.35 billion) of bonds in its debut offering in the currency.

     Sealed Air Corp. shares jumped more than 10 percent, their biggest advance since 2012, and reached a record after the company raised its 2015 profit outlook.

     Oil prices snapped a three-day streak of gains, falling 5.4 percent amid speculation that increasing U.S. supply is exacerbating a global glut.

     Energy stocks in the S&P 500 slipped 0.2 percent as Transocean Ltd., Denbury Resources Inc. and Nabors Industries Ltd. all slipped more than 4.9 percent.

     Halliburton Co. slid 2.1 percent to $42.60 after announcing it’s cutting as much as 8 percent of its global workforce of more than 80,000 as it confronts the collapse of oil prices and brings job reductions more in line with its largest competitors.

Have a wonderful evening everyone.

Be magnificent!
 

“Happiness doesn’t depend on how much you have to enjoy, but how much you enjoy what you have.” Tom Wilson

As ever,

Karen

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7