April 27, 2015 Newsletter

Dear Friends,

Tangents:

Spent this past weekend in magical Tofino; and left wondering what took me so long to return.  It’s been many years since I last visited – when we sailed up the west coast of the island.  This time we drove up…it hasn’t really changed so much – it is so quintessentially west coast.  Seafood, actually all the food prepared in The Point restaurant at Wickininish Inn is first rate.  Loved speaking with the waiters, most of whom are young adults on their “scout around the world before settling down” travels.  Many from Europe.  Also tried the restaurant that is garnishing rave reviews – The Wolf in the Fog.  Certainly deserves all the hype it is creating – amazing food.  I’ll definitely be back before long.

PHOTOS OF THE DAY

Steam rises from a horse as it gets a bath after morning workouts at Churchill Downs Monday, in Louisville, Ky. Charlie Riedel/AP

A man poses for a photograph under artwork of a large hand on a wall in central London, Britain, Monday. Stefan Wermuth/Reuters

Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count.  Everything else is noise. –Martin J. Whitman, b. 1924-

Market Closes for April 27^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, after posting a weekly advance, as drug companies and energy producers declined to offset a gain in gold.

     Valeant Pharmaceuticals International Inc. and Concordia Healthcare Corp. tumbled at least 4.4 percent to pace declines among health-care stocks. Suncor Energy Inc. fell 0.9 percent as oil reversed an earlier gain. Barrick Gold Corp. added 1.8 percent as the company prepares to release earnings results after the market close. BlackBerry Ltd. dropped 1.9 percent.

     The Standard & Poor’s/TSX Composite Index fell 64.25 points, or 0.4 percent, to 15,344.08 at 4 p.m. in Toronto. The benchmark Canadian equity gauge is up 4.9 percent for the year.

     Valeant dropped 4.5 percent, the biggest decrease since August, and Concordia Healthcare sank 5.2 percent, its worst one-day performance in 10 months.

     Teva Pharmaceutical Industries Ltd. will take its $40.1 billion takeover offer for Mylan NV to shareholders after the company rejected its advances, according to people with knowledge of the matter.

     Pacific Rubiales Energy Corp. lost 7 percent and Torc Oil & Gas Ltd. retreated 4 percent as energy producers dropped 0.4 percent as a group. Eight of 10 industries in the S&P/TSX dropped on trading volume 4.3 percent higher than the 30-day average at this time of the day.

     BlackBerry dropped 1.9 percent, trimming its gain for the month to 9.7 percent.

     Alacer Gold Corp. gained 6 percent and Barrick Gold rose 1.8 percent. Gold futures for June delivery jumped 2.4 percent, the most since January. The S&P/TSX Materials index climbed 0.8 percent for the best performance among groups in the broader gauge.

     Silver Standard Resources Inc. jumped 4.9 percent as silver rallied 4.8 percent in New York. First Quantum Minerals Ltd. surged 6.6 percent.

     Resverlogix Corp. added 6.7 percent after agreeing to a licensing deal with a Chinese drugmaker.

US

By Jennifer Kaplan and Callie Bost

     (Bloomberg) — U.S. stocks fell, retreating from records, as declines in biotechnology companies overshadowed a rally in commodities stocks before Apple Inc.’s results.

     Mylan NV fell 5.7 percent after rejecting Teva Pharmaceutical Industries Ltd.’s $40 billion takeover offer. The Nasdaq Biotechnology Index lost 4.1 percent. Applied Materials Inc. sank 8.4 percent after dropping its takeover bid for Tokyo Electron Ltd. Freeport McMoRan Inc. and DuPont Co. rose more than 4.6 percent. Apple added 1 percent in late trading after topping forecasts and boosting its capital-return program by $70 billion.

     The Standard & Poor’s 500 Index slipped 0.4 percent to 2,108.92 at the close in New York, after earlier rising as much as 0.4 percent. The Dow Jones Industrial Average fell 42.17 points, or 0.2 percent, to 18,037.97. The Nasdaq Composite Index declined 0.6 percent, snapping a five-day winning streak, while the Russell 2000 Index lost 1.3 percent.

     “You’ve got biotechnology down here now, leading everything lower,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “The market obviously wants to go higher, but it’s struggling to make its way, to get that breakout and confirm it.”

     The Nasdaq Composite Index topped its dot-com-era high last week, extending a record on Friday, and the S&P 500 closed at an all-time high as Google Inc., Microsoft Corp. and Amazon.com Inc. rallied after posting financial results. Unlike the dot-com era, the gains are built on earnings that have almost tripled in the past decade and a half, driven by demand for products such as Apple’s iPhone and Google Inc.’s web ads.                          

     Apple added 1 percent as of 4:48 p.m. in New York. Booming demand for the larger-screened iPhone 6 and 6 Plus is putting Apple on pace for its highest annual profit since 2012 — a record — and the company also forecast sales in the current period that will exceed analysts’ estimates.

     Pfizer Inc., Exxon Mobil Corp. and Ford Motor Co. are among companies reporting quarterly results this week. While analysts predict a profit slump through September, they have moderated how steep that will be. They now forecast first-quarter earnings for S&P 500 companies will drop 2.9 percent, better than April 10 estimates for a 5.6 percent decline.

     Of the S&P 500 members that have already released results this season, 77 percent beat profit projections and 49 percent topped sales estimates.

     Investors are also awaiting the outcome of the Federal Reserve’s two-day meeting, which begins tomorrow, for more hints on the timing of interest-rate increases. None of the 43 economists in a Bloomberg poll expects the U.S. central bank to lift borrowing costs this week.                         
     Boston Fed President Eric Rosengren said this month the U.S. economy isn’t ready for a rate increase. Fed Chair Janet Yellen and her colleagues last month opened the door to an increase as soon as June, while also suggesting in forecasts that September may be more likely.

     Economic data have been mixed, with the March jobs report showing new hires fell below 200,000 for the first time in more than a year, and capital-goods orders showed a surprise drop last month. Meanwhile, weekly jobless claims are near the lowest levels in almost 15 years, and consumer confidence improved in April to the second-highest level in more than eight years.

     Gross domestic product is set to grow by 2.8 percent this year, the most since 2005, according to economists surveyed by Bloomberg.

     The Chicago Board Options Exchange Volatility Index advanced 6.8 percent Monday to 13.12. The gauge, known as the VIX, fell almost 12 percent last week to its lowest level in almost five months. About 6.8 billion shares changed hands on U.S. exchanges, about 3 percent above the three-month average.

     Seven of the S&P 500’s 10 main groups fell, led by a 1.8 percent drop in health-care shares. Mylan lost 5.7 percent, the most since August 2011, after its board unanimously rejected a $40.1 billion takeover offer from Teva Pharmaceutical, saying it’s too low and doesn’t address the difficulties of combining companies with different cultures. Teva slipped 4.3 percent, the most since Oct. 2013.

     The Nasdaq Biotech index tumbled 4.1 percent, the most since March 25. Vertex Pharmaceuticals Inc. lost 4 percent, and Biogen Inc. dropped 3.1 percent.                      

     Applied Materials slid 8.4 percent, the biggest drop in six years. The supplier of machines used to make computer chips scrapped its $9.39 billion takeover bid for rival Tokyo Electron Ltd. on opposition by the U.S. Department of Justice.

     A Bloomberg gauge of U.S. Airlines fell 1.7 percent.  Southwest Airlines Co. lost 2.8 percent, leading the decline.  Allegiant Travel Co. and United Continental Holdings Inc. dropped at least 2.3 percent after both companies’ ratings were cut by Sterne Agee CRT.

     Consumer companies also slid, with McDonald’s Corp. losing 2.3 percent, Starbucks Corp. down 1.9 percent and Royal Caribbean Cruises Ltd. dropping for a fourth consecutive day, off 2.8 percent to a five-month low.

     Raw-material companies climbed 0.9 percent as futures on gold, copper and silver rallied. Freeport-McMoRan jumped to a three-month high, adding 4.8 percent to Friday’s 3.7 percent gain. Newmont Mining Corp. rose 2.4 percent to a nearly two- month high. Alcoa Inc. advanced 1.7 percent.

     DuPont added 4.6 percent, the most since September, after activist investor Trian Fund Management won the backing of Institutional Shareholder Services Inc. for two board nominees in its proxy fight for seats on the chemical maker’s board.

     Technology shares were up 0.4 percent, after earlier rising 0.8 percent, as Apple gained before earnings. Qualcomm Inc., Texas Instruments and Oracle Corp. added at least 1.2 percent.

     Apple climbed 1.8 percent before the company will probably show that earnings jumped by more than 20 percent when it reports results for the second fiscal quarter, which ended in March. While Apple doesn’t break out shipments by country, the world’s biggest company may have sold 18 million to 20 million iPhones in greater China during the period.
 

Have a wonderful evening everyone.

Be magnificent!

The whole universe is bound by the law of causation,

There cannot be anything, any fact – either in the internal or in the external world –

that does not have a cause; and every cause must produce an effect.

Swami Vivekananda

As ever,

Carolann

Be as you wish to seem.

 -Socrates, 470 BCE-399 BCE

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