March 2, 2015 Newsletter

Dear Friends,

Tangents:

Why the “City of Light”?

Paris has long been known as la Ville Lumière, the City of Light, but its inhabitants can’t quite agree why.  One theory is that the nickname derives from the 18^th century – not from any physical lights, but from the city’s leading role during the Age of Enlightenment, when philosophers including Montesquieu, Voltaire, Rousseau, and Diderot spread bold ideas through its salons.

  An alternative explanation relates to the century before, when thieves stalked Paris’s narrow, pre-Haussman streets at night.  To curb the rising crime rate, Gabriel Nicolas de la Reynie, Paris’s first lieutenant-general of police, ordered a public lighting program that saw 6,500 lanterns put up in the streets.

  The third story is simply that, in the 19^th century, Paris was one of the earliest and most enthusiastic adopters of gas-powered street lighting.  The boulevards were first lit with gas in the 1820s and, by the end of the 1860s, there were almost 60,000 gas lamps.  In 1867, Julius Rodenberg wrote : “The whole of Paris is studded with golden dots as closely as a velvet gown with golden glitter.” –Theo Leanse, The Financial Times.

On this day in 1904, famed author and illustrator Theodor Geisel, better known as Dr. Seuss, was born in Springfield, Mass. Mr. Geisel, who used his middle name, which was also his mother’s maiden name, as his pen name, wrote 48 books, including beloved stories like “The Cat in the Hat” and “Green Eggs and Ham.” His books sold well over 200 million copies and have been translated into several languages.

-By Kristen Scholer, Wall Street Journal.

PHOTOS OF THE DAY

French actor Frank Samson, dressed as French Emperor Napoleon, reviews his troops during a reenactment of Napoleon’s landing in Golfe-Juan, southeastern France, Sunday. This commemoration celebrates the bicentenary of the Emperor’s landing after his exile on the island of Elba in 1815. Lionel Cironneau/AP

Children ring giant cowbells during the “Chalandamarz” parade down a snowy lane in Ardez, Switzerland, Sunday. The “Chalandamarz” is an ancient early-spring tradition that aims to drive out winter’s evil spirits with cowbells, whips, and singing. Gian Ehrenzeller/Keystone/AP

Market Closes for March 2^nd,  2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, extending the biggest monthly rally in more than a year, as health-care and technology shares advanced.

     BlackBerry Ltd. rallied to a six-week high as the smartphone maker expands into cloud computing. Eldorado Gold Corp. dropped 6.8 percent after it said the Greek government blocked construction at its mine in the country. Mitel Networks Corp. retreated 12 percent after agreeing to acquire technology company Mavenir Systems in a deal worth about $560 million.

     The Standard & Poor’s/TSX Composite Index rose 29.71 points, or 0.2 percent, to 15,264.05 at 4 p.m. The benchmark Canadian equity gauge has advanced 4.3 percent this year. The index rose 3.8 percent in February, the most since October 2013.

     BlackBerry climbed 2.4 percent to the highest since Jan. 14, pacing gains as technology stocks rallied 2 percent as a group. Six of the 10 main industries in the S&P/TSX advanced on trading volume 3.7 percent below the 30-day average.

     BlackBerry is making its mobile device management service, known as BES12, available on the cloud, a concept that allows users to access the software from the Internet instead of off computers in their offices.

     Valeant Pharmaceuticals International Inc. added 3.5 percent to a record to lead health-care shares to a 3.2 percent advance. The stock is up 53 percent this year after agreeing to buy Salix Pharmaceuticals Ltd. for about $10.1 billion.

     Commodity producers slipped.

US

By Oliver Renick

     (Bloomberg) — The Nasdaq Composite Index closed above 5,000 for the first time in 15 years while the Dow Jones Industrial Average and Standard & Poor’s 500 Index reached records as gains in consumer purchases signaled strength in the biggest part of the economy.

     Whirlpool Corp., Walt Disney Co. and Tiffany & Co. added more than 1.4 percent, bolstering gains in discretionary stocks.

Energy companies in Standard & Poor’s 500 Index fell 0.7 percent as the price of Brent crude oil lost more than 4 percent.

     The Nasdaq Composite added 0.9 percent to 5,008.10 at 4 p.m. in New York. The S&P 500 climbed 0.6 percent to a record 2,117.39, and the Dow advanced 155.93 points, or 0.9 percent, to 18,288.63, also an all-time closing high. The Russell 2000 Index rose 0.8 percent to a record 1,242.62.

     “There’s a lot to digest after the market snapped back with a good month after January was horrible,” Larry Peruzzi, the Boston-based director of international trading at Cabrera Capital Markets LLC, said by phone. “The end result is these markets are near or at all-time highs so it’ll be interesting to see if people look at that as an opportunity to take profit or if they say it’s recovered and time to jump back in.”

     The S&P 500 reached fresh records four times in February, while the Dow average climbed 5.6 percent for its best month since January 2013. The index also topped its record from December for the first time in 2015.

     Unlike the dot-com era, when investors snapped up Internet companies with promise but little profit, today’s gains are built on earnings driven by demand for products such as Apple Inc.’s iPhone and Google Inc.’s web-search services.                     

     Momentum is building in stocks that have the fastest profit growth, with companies from Apple to Intel Corp. spending more money than anybody else to buy back shares. While the advance has brought the Nasdaq close to new highs, valuations are only a fraction of where they were 15 years ago.

     The Nasdaq Composite “is not going to make me change my investment strategy, but it makes me feel good about staying overweight stocks,” Paul Zemsky, the head of multi-asset strategies at Voya Investment Management LLC, which oversees

$213 billion, said by phone from New York. “It’s a confidence booster, both for the market and consumers and it’ll make some good headlines.”

     It has taken two bull markets and more than 4,500 days for the Nasdaq to get close to making up all the ground lost in the dot-com collapse. The index surged 7.1 percent in February, its best month since 2012, and is within 1 percent of a record reached in 2000.                         

     The S&P 500 increased 5.5 percent last month, rebounding from its worst month in a year with the biggest gain since October 2011, while the Dow rose 5.6 percent.

     Accommodative central-bank policy from Europe to Japan has spurred gains in global equities even as the U.S. has ended its bond-buying program. The S&P 500 has more than tripled during a six-year bull run on the back of Fed stimulus and a doubling in corporate profits.

     Consumer purchases adjusted for inflation rose in January, a sign the plunge in gasoline prices is helping boost the biggest part of the U.S. economy. The 0.3 percent increase followed a 0.1 percent drop the prior month, a Commerce Department report showed Monday.

     The Institute for Supply Management data showed manufacturing in February expanded at the slowest pace in a year as weaker growth abroad limited orders for American-made products.

     Cardinal Health Inc. rose 1.7 percent to an all-time high after agreeing to buy Johnson & Johnson’s Cordis business for$1.94 billion in cash, gaining a global manufacturer of cardiology and endovascular devices. J&J added 0.7 percent.

     NXP Semiconductors NV surged 17 percent after agreeing to buy Freescale Semiconductor Ltd. for about $11.8 billion.  Freescale rallied 12 percent.

     Visa Inc. rose 2.6 percent to an all-time high and Citigroup Inc. gained 2 percent after the two companies struck a deal to replace American Express Co. in 2016 as the exclusive issuer for Costco Wholesale Corp.’s credit cards in the U.S. and Puerto Rico. Costco added 0.7 percent.

     Eight of 10 main industries in the S&P 500 gained, led by consumer discretionary companies’ 1.2 percent advance. Utilities fell for a fourth day, down 2 percent, and energy lost 0.7 percent.

     Lumber Liquidators Holdings Inc. tumbled 25 percent after a television report said the company sold flooring that didn’t meet California health and safety standards. In a response to the allegations, the company said its products have been tested and are safe.

     Noble Corp. lost 4.2 percent after Guggenheim Securities equity analyst Darren Gacicia cut the stock to a neutral rating from buy. The shares have lost 48 percent since June amid the decline in the price of oil.                       

     Navient Corp. lost 8.8 percent for the biggest decline in the S&P 500 after the U.S. Department of Education announced the termination of a debt collection contract with Navient subsidiary Pioneer Credit Recovery. The stock was cut to neutral from buy by Compass Point equity analyst Michael Tarkan.

     Genworth Financial Inc. slid 5.4 percent after disclosing a material weakness in its internal accounting controls related to long-term care insurance claim reserves.

     The Chicago Board Options Exchange Volatility Index fell 2.3 percent to 13.04. The gauge, know as the VIX, lost 36 percent in February for its biggest monthly drop on record.

     Best Buy Co. and Staples Inc. are among 13 S&P 500 companies posting results this week. Some 97 percent have reported earnings so far, with 74 percent of those beating projections and 57 percent topping sales estimates.

     Analysts predict profit at S&P 500 companies will drop 4.9 percent in the current quarter after a 4.6 percent increase in the final three months of 2014, data compiled by Bloomberg show.

Have a wonderful evening everyone.

Be magnificent!

Like the silkworm you have built a cocoon around yourself.  Who will save you?

Burst your own cocoon and come out as the beautiful butterfly, as the free soul.

Swami Vivekananda

As ever,
 

Carolann

A champion is afraid of losing.  Everyone else is afraid of winning.

                                                         -Billie Jean King, 1943-

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