February 23, 2015 Newsletter

Dear Friends,

Tangents:

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

Photos of the Day

 A stagehand sweeps the stage during at the 87th Academy Awards show in Hollywood, Calif., on Sunday. Mike Blake/Reuters

 A bird flies in front of city sky scrapers covered by fog in the center of Warsaw on Monday. Kacper Pempel/Reuters

 Market Closes for February 23^rd, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, snapping a three-day loss, as Valeant Pharmaceuticals International Inc. rallied after agreeing to acquire a U.S.-based drugmaker, offsetting a drop among the nation’s lenders.

     Valeant jumped 15 percent after reaching a deal to buy Salix Pharmaceuticals Ltd. for $10.1 billion. Parkland Fuel Corp. gained 2.6 percent after agreeing to buy 11 Chevron- branded service stations in British Columbia. Royal Bank of Canada retreated 1.2 percent to pace declines among financials stocks. Ballard Power Systems Inc. surged 7.5 percent after signing technology solutions contracts.

     The Standard & Poor’s/TSX Composite Index rose 28.87 points, or 0.2 percent, to 15,201.11 at 4 p.m. in Toronto. The guage erased losses in the final 30 minutes of trading to extend its gain this  year to 3.9 percent. Trading volume Monday was 24 percent below the 30-day average.

     West Texas Intermediate crude dropped 2.7 percent amid speculation excess supply will increase as Libya restarted a pipeline halted by a fire and the U.S. idled fewer drilling rigs than in previous weeks.

     Prices pared earlier losses after Nigeria’s oil minister was reported by the Financial Times to have said that OPEC members have discussed an emergency meeting. A delegate from the group later denied there are plans for such a meeting. OPEC’s next regular gathering is on June 5.

     Energy shares in the S&P/TSX nearly erased a drop of 1.7 percent on the OPEC report before closing down 0.6 percent. Parkland Fuel added 2.6 percent while Lightstream Resources Ltd. tumbled 10 percent.

     Banks in the Canadian benchmark fell 0.7 percent as a group. The lenders account for about one-third of the broader index by weighting.

     Canadian Western Bank, the lender based in oil-rich Alberta, tumbled 2.8 percent. Royal Bank, the nation’s second- largest lender, retreated 1.2 percent. Bank of Montreal, the first of the big banks to report earnings this week on Tuesday, slipped 0.7 percent.

     Valeant soared 15 percent for the biggest gain since January 2011, extending an all-time high. Shares of the company have surged 20 percent in the past five sessions.

     Valeant’s acquisition of Salix values the company at about $14.5 billion including net debt, and will provide a “modest” addition to earnings this year, according to Bridgewater, New Jersey-based Valeant. The drugmaker expects to win regulatory approval for Salix’s Xifaxan drug for treating irritable bowel syndrome with diarrhea.

US

By Stephen Kirkland and Jeremy Herron

     (Bloomberg) — U.S. stocks were little changed, with benchmark indexes near all-time highs, as Apple Inc. rallied to send the Nasdaq Composite Index to its ninth straight gain. Oil fell below $50 a barrel, while gold dropped to a seven-week low. The dollar strengthened and Treasuries rose.

     The Standard & Poor’s 500 Index fell less than 0.1 percent in New York after closing at an all-time high on Friday. The Nasdaq Composite added 0.1 percent to cap its longest rally since September 2010. The yield on 10-year Treasury notes fell five basis points to 2.06 percent. The euro weakened to $1.1336 at 5:15 p.m. in New York, as a Greek official said the nation was working to finalize a list of pledges to the European Union. U.S. oil fell 2.7 percent, and gold slipped to $1,200.80 an ounce.

     Apple Inc. jumped 2.7 percent to pace gains among technology shares, while energy shares slid 0.4 percent as oil resumed declines. Greece had agreed on Feb. 20 to complete by midnight Monday in Athens a list of policies in return for continued funding. An official said the list would be presented Tuesday. Federal Reserve Chair Janet Yellen addresses Congress in two days of testimony starting Tuesday, with investors watching for clues on the timing of an interest-rate increase.

     “In this market, there’s more just a case of waiting and watching Europe, Greece, OPEC, and waiting to hear from Janet Yellen,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a telephone interview. “You put all that together, you get a market that doesn’t really have much of a direction. It’s more a case of waiting to hear what the next part of that news will be.”

     Six of the 10 main S&P 500 groups retreated today, with phone shares losing 0.6 percent to pace declines.

     Health-care shares advanced 0.4 percent. Valeant Pharmaceuticals International Inc. climbed 14 percent to the highest ever after saying it will purchase Salix Pharmaceuticals Ltd. for $10.1 billion.

     U.S. stocks posted their longest streak of weekly gains since the beginning of December as Greece reached a deal on Feb. 20 to extend its bailout program and investors speculated the Fed will keep rates lower for longer even as the economy shows signs of picking up speed.

     The Nasdaq Composite Index ended last week on an eight-day winning streak that took the gauge to 4,955.97, less than 2 percent away from a record. The S&P 500 climbed 0.6 percent last week and the Dow rose to its first record of the year.

     Sales of previously owned U.S. homes fell more than expected in January as a tight supply forced up prices, showing the residential real-estate market faces an uneven recovery. Purchases slowed 4.9 percent to a 4.82 million annualized rate, the least since April, according to figures from the National Association of Realtors.

     Strife over Greece’s debt was among risks to the U.S. economy cited by Fed officials as an argument for keeping rates low for longer, according to minutes from the group’s latest meeting released on Feb. 18. Policy makers said after the gathering that they “can be patient” as they consider when to raise borrowing costs, even as they described the labor market as “strong.”

     The Greek reform measures are still subject to validation by the International Monetary Fund, the European Central Bank and the European Commission, the institutions collectively known as the troika which Prime Minister Alexis Tsipras vowed not to recognize.

     “Markets have reacted positively in terms of risk sentiment and we’re seeing the periphery doing very well” because of the Greek deal, said Owen Callan, a fixed-income strategist at Cantor Fitzgerald LP in Dublin. “It takes away the big short-term event risk, even if a medium-term risk is still there.”

     The nascent agreement to extend Greece’s bailout funding re-energized bonds from the euro-region’s most indebted nations, sparking their best day since the European Central Bank announced a 1.1 trillion euro ($1.2 trillion) stimulus plan.

     Italian and Spanish securities surged, and Portuguese 10- year yields touched a record low, as the accord avoided a cash crunch that threatened to push Greece out of the currency bloc.

     The Stoxx 600 advanced for a fifth day to extend the highest level since 2007. The U.K.’s FTSE 100 Index surpassed a record close in intraday trading before closing little changed as lower-than-projected profit at HSBC Holdings Plc pushed the stock lower.

     Greece’s ASE Index slipped 4.5 percent last week. The market was closed on Monday for a holiday. Spain’s IBEX 35 Index climbed 1 percent for one of the biggest rallies among 18 western-European markets.

     Greek government bonds rose for a fourth day, with the three-year note yield dropping 156 basis points, or 1.56 percentage point, to 15.062 percent.

     “Greece will still be an issue for the market for some time,” said Kevin Lilley, who helps manage 15 billion pounds ($23 billion) as head of European equities at Old Mutual Global Investors U.K. in London. “If we can get the agreement made in the next couple of days, which is necessary for this extension, then hopefully the market can pop that to one side for a few months and focus on the underlying economy, which is steadily improving.”

     The Swiss franc weakened with core government bonds on reduced demand for haven assets, depreciating 0.8 percent to 1.07701 per euro. The dollar strengthened 0.4 percent to $1.13327 per euro and the Bloomberg Dollar Spot Index advanced 0.2 percent.

     West Texas Intermediate crude oil for April delivery settled at $49.45 a barrel. Brent was down 2.2 percent at $58.90 in London.

     Oil fell as fields in eastern Libya resumed pumping to Hariga port after a pipeline was repaired, according to state- run National Oil Corp. Oman, the biggest Middle Eastern oil producer that’s not a member of OPEC, is boosting crude output to as much as possible with the global price rout over, said Salim Al Aufi, undersecretary of the oil and gas ministry.

     Copper futures fell for a second straight session on signs that supply is plentiful as demand slows in Europe and China, the world’s biggest user. The metal for  May delivery slid 0.2 percent to settle at $2.5865 in New York.

     Gold futures slid 0.3 percent to settle at $1,200.80 in New York. Prices Monday touched $1,190.60, lowest since Jan. 5.

Have a wonderful evening everyone.

Be magnificent!

“Do not go where the path may lead, go instead where there is no path and leave a trail.” Ralph Waldo Emerson

As ever,

Karen

“The journey of a thousand miles begins with one step.” Lao Tzu

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