April 21, 2015 Newsletter

Dear Friends,

Tangents:

I found a new CD release recently that is absolutely wonderful.  It is by Malian singer/guitarist Samba Touré and is called Gandadiko.  The review I read which impelled me to order it on Amazon said “if bluesman John Lee Hooker had been raised in Mali he might have made music like this….hypnotic, soulful, groovy, and captivating.  These 10 songs are more upbeat than his previous album ‘Albala,’ reportedly recorded while radical Islamists punished any musicmaking in his village with public stoning.  ‘Gandadiko’ is the sound of joy and release.”  I agree – it’s terrific.

I’ve been reading The Essays of Warren Buffet ( Lawrence A. Cunningham, 3rd Edition) lately.  Last night I was reading  these sage passages and thought I’d share them with you:

A short quiz:  If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef?  Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices?  These questions, of course, answer themselves.

But now for the final exam:  If you expect to be a net saver during the next five years, should you hope for a higher or stock market during that period?  Many investors get this one wrong.  Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.  In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying.  This reaction makes no sense.  Only those who will be sellers of equities in the near future should be happy at seeing stocks rise.  Prospective purchasers should much prefer sinking prices….So smile when you read a headline that says “Investors lose as market falls.”  Edit it in your mind to “Disinvestors lose as market falls – but investors gain.”  Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other.  (As they say I golf matches:  “Every putt makes someone happy.”) –Warren Buffet, Finance And Investing, the Essays of Warren Buffett.

PHOTOS OF THE DAY

Woman wearing sevillana dresses stand during the traditional Feria de Abril (April fair) in the Andalusian capital of Seville, southern Spain on Tuesday. Marcelo del Pozo/Reuters


Tourists take pictures of a floral arrangement depicting Dutch master Vincent van Gogh at Keukenhof, a spring park with approximately seven million flower bulbs, in Lisse, Netherlands, Tuesday. Peter Dejong/AP

Market Closes for April 21st, 2015

Market

Index

Close Change
Dow

Jones

17949.59 -85.34

 

-0.47%

 

S&P 500 2097.29

 

-3.11

 

-0.15%

 
NASDAQ 5014.102

 

+19.500

 

+0.39%

 
TSX 15346.44 -66.16

 

-0.43%

 

International Markets

Market

Index

Close Change
NIKKEI 19909.09 +274.60

 

+1.40%

 

HANG

SENG

27850.49 +755.56

 

+2.79%

 

SENSEX 27676.04 -210.17

 

-0.75%

 

FTSE 100 7062.93 +10.80

 

+0.15%

 

Bonds

Bonds % Yield Previous  % Yield
CND.

10 Year Bond

1.445 1.424
 
 
CND.

30 Year

Bond

2.039 2.035
U.S.   

10 Year Bond

1.9070 1.8896
 
 
U.S.

30 Year Bond

2.5814 2.5624
 
 

Currencies

BOC Close Today Previous  
Canadian $ 0.81418 0.81781
 
 
US

$

1.22823 1.22278
     
Euro Rate

1 Euro=

  Inverse
Canadian $ 1.31847 0.75845
 
 
US

$

1.07347 0.93156

Commodities

Gold Close Previous
London Gold

Fix

1195.30 1196.50
     
Oil Close Previous
WTI Crude Future 55.26 56.38

 

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, after halting a two- day slide yesterday, as Canadian National Railway Co. and Teck Resources Ltd. dropped amid earnings reports.

     Teck Resources plunged 6.4 percent after slashing its dividend for the first time since the financial crisis. Canadian National Railway declined 3.1 percent after the rail operator lowered its 2015 forecast for commodity shipments. Pason Systems Inc. sank 5.9 percent after analysts at CIBC World Markets cut their rating for the stock.

     The Standard & Poor’s/TSX Composite Index lost 66.16 points, or 0.4 percent, to 15,346.44 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has advanced 4.9 percent this year, one of the worst performers among developed markets tracked by Bloomberg.

     Canadian National Railway tumbled 3.1 percent to pace declines as industrials shares lost 2.2 percent as a group, the most in the S&P/TSX. Five of 10 industries in the equity gauge fell on trading volume that was 11 percent lower than the 30-day average.

     The railway said it now forecasts customer shipments of energy-related commodities, including crude, will increase by 40,000 carloads in 2015, compared with its January projection of a 75,000 gain.

     Trican Well Service Ltd. dropped 9.1 percent and Pacific Rubiales Energy Corp. lost 7.3 percent as energy producers retreated 1.2 percent as a group.

     Oil dropped the most in two weeks as crude inventories probably increased by 2.5 million barrels last week, a Bloomberg survey showed before an Energy Information Administration report Wednesday.

     Teck Resources sank 6.4 percent to the lowest since January. The second-largest exporter of coal used in steelmaking cut its biannual dividend 67 percent, the first reduction since Teck halted its payout in November 2008. First-quarter adjusted profit fell short of analysts’ estimates.

     Valeant Pharmaceuticals International Inc. jumped 3.3 percent, halting a five-day slide, and Concordia Healthcare Corp. rose 2.8 percent. Teva Pharmaceutical Industries Ltd. made an unsolicited $40.1 billion offer to buy Mylan NV, the drug industry’s largest takeover attempt this year.

     Brookfield Asset Management Inc. lost 3.6 percent, the biggest drop since October 2011. The company is issuing shares to raise about $1 billion for “general corporate purposes” including future investments.

US

By Oliver Renick

     (Bloomberg) — The Dow Jones Industrial Average fell as DuPont Co. and Travelers Cos. slumped after reporting results, while a takeover offer for Mylan NV pushed the Nasdaq Composite Index higher.

     DuPont tumbled 3 percent after saying the dollar is putting pressure on full-year profit. Travelers tumbled 4 percent as first-quarter profit fell 21 percent. Biotechnology shares rallied as Teva Pharmaceutical Industries Ltd. proposed to buy Mylan for about $40.1 billion.

     The S&P 500 fell 0.2 percent to 2,097.29 at 4 p.m. in New York. The Nasdaq Composite Index climbed 0.4 percent, to within 0.7 percent of its all-time high. The Dow fell 85.34 points, or 0.5 percent, to 17,949.59.

     “Earnings have been a little better than reduced expectations, and with interest rates as low as they are, corporations like Teva are able to continue issuing debt at basically free levels,” Andrew Brenner, the head of international fixed income for National Alliance Capital Markets, said by phone.

     The S&P 500 is 1 percent away from a record reached on March 2, the same day the Nasdaq Composite Index topped 5,000 for the first time in 15 years. The S&P 500 climbed 0.9 percent yesterday amid a rally in technology shares, recovering nearly all of Friday’s selloff.

     While equity indexes from Asia to Europe have climbed to multiyear highs in the past week, the S&P 500 has struggled to reach its March 2 record amid two drops of more than 2.5 percent. While an energy rally took the gauge to within 10 points of an all-time high Wednesday, it has stalled short of the mark 35 straight days, the longest streak since June 2013.                         

     The S&P 500 fell as much as 3.6 percent through March 11 amid concerns that a stronger dollar and lower oil prices would hurt corporate earnings as the Fed considers raising rates. Signals by central-bank officials that they are in no rush to boost borrowing costs propelled the gauge to within 0.4 percent of its record by March 20, before it retreated again.

     The Nasdaq Composite has jumped 5.9 percent this year, coming within 7 points of its all-time high on March 20 as biotechnology and Internet stocks have rallied. The Nasdaq Internet Index has increased for 12 of the past 13 days.

     More than 140 S&P 500 companies report earnings this week, including Yahoo! Inc. and Amgen Inc. today. While analysts predict a slump through September, they have moderated how steep that will be.

     Yahoo slid 2 percent at 4:25 p.m. in New York, while Amgen added 2.2 percent in late trading after reporting results.

     Analysts now forecast first-quarter earnings for S&P 500 companies will drop 4.3 percent, better than April 10 estimates for a 5.6 percent decline. Of those that have reported so far, 84 percent beat profit projections and 51 percent topped sales estimates.

     “People have gone too far in cutting their profit estimates for U.S. companies,” Francois Savary, chief investment officer at Reyl & Cie. said by phone from Geneva. “This may give the market a short-term rebound as more earnings reports come in. I’m still cautious regarding growth in the next few quarters because of the impact of the economic slowdown and the surging dollar.”

     With data due this week on housing and jobs, investors are seeking clues on the economic recovery after reports pointed to weaker growth and the dollar strengthened.

     Seven of 10 main groups in the S&P 500 declined, led by energy companies, which lost 1 percent amid a 2 percent slump in crude. Transocean Ltd. slid 5.5 percent and Chesapeake Energy Corp. dropped 4.8 percent.

     DuPont lost 3 percent. The company, which is facing a proxy showdown with activist shareholder Trian Fund Management, warned that the stronger dollar is putting pressure on full-year profit as first-quarter sales missed analyst estimates.                      

     Travelers tumbled 4 percent. First-quarter profit fell as investment income declined and the pace slowed for rate increases to commercial clients.

     Harley-Davidson Inc. slid 9.8 percent after lowering its growth estimates on motorcycle shipments.

     Under Armour Inc. dropped 4.8 percent after forecasting sales for the year that trailed analysts’ estimates as growth in its core apparel business cools off.

     Mylan soared 8.9 percent amid the drug industry’s largest takeover attempt this year. A purchase of the company by Teva would create a generic powerhouse with more than $27 billion in revenue and re-establish Teva as the predominant giant in the generic drug industry.

     In late trading Perrigo Co. climbed 0.7 percent. The company’s board unanimously rejected an unsolicited bid proposal from Mylan.

     Lam Research Corp. jumped 8.1 percent after profit exceeded projections and the company forecast fourth-quarter earnings above analysts’ estimates.

     Kimberly-Clark Corp. added 5.4 percent. First-quarter profit topped analysts’ estimates as the maker of Kleenex tissue and Huggies diapers benefited from product innovation and $100 million worth of cost cuts last quarter.

 

Have a wonderful evening everyone.

 

Be magnificent!

Yoga is concerned with freedom from spiritual disturbance.

The first step in yoga is to engage in introspection,

and thereby understand the inner obstacles that must be overcome.

The purpose of yoga is to weaken the hindrances which obstruct knowledge of the soul.

There are five hindrances: ignorance, egoism, attachment, aversion and tenacity.

 

Patanjali

As ever,

 

Carolann

 

Every noble work is at first impossible.

             -Thomas Carlyle, 1795-1881

 

 

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