May 13, 2015 Newsletter

Dear Friends,

Tangents:

I’ve been in Toronto the past few days visiting my clients who live there.  I have been so amazed over the past ten years or so at how vibrant the culinary landscape has evolved to be in that city.  The Daniel Boulud restaurant  in the new Four Seasons Hotel is absolutely fantastic, as is the food served at  his DB Bar.  One of my clients suggested we meet for lunch yesterday at a restaurant near his office on King Street, named Ovest Cucina, where a Sicilian chef prepares an impressive Italian cuisine.  The hospitality industry was hosting their annual Terroir conference, featuring several chefs and food industry notables, and I ducked in for a few of the  sessions.  I especially wanted to see Natalie Crenn, whose Atelier Crenn in San Francisco rates as one of my favorite restaurants in the world.  When she first opened a few years ago, and I had my first sampling of her culinary talent, I suggested to her that she’ll be a 3 Michelin-starred chef some day soon.  It didn’t take long – she now has two Michelin stars, the first female chef in the USA to garner the honor. 

It is wonderful to hear chefs embracing and emphasizing sustainability in food sourcing, which can only occur if farmers, fishers are paid fairly and profitably. 

Chef Gavin Kaysen, formerly of Café Boulud in NYC and now Chef-owner of Spoon and Stable in Minneapolis showed an inspiring  video of winning the Bocuse d’Or.  After placing “an embarrassing 14^th” in the 2007 Bocuse d’Or, he vowed to get US chefs on the podium at this world chef championship for the first time ever.  Along with Thomas Keller, Daniel Boulud and Jerome Bocuse, Kaysen co-launched the Ment’Or Foundation – a support system offering rigorous training and financial assistance for future contenders – and he served as head coach for 2011, 2013, and 2015.  The food shown in the video that they prepared to cinch the award was sublime – unlike anything I’ve ever seen.

The game is lost only when we stop trying. –Mario Cuomo.

PHOTOS OF THE DAY

Worshipers release doves during a mass at the Our Lady of Fatima shrine, in Fatima, central Portugal, Wednesday. Every year on May 12 and 13 tens of thousands of Catholic believers go on pilgrimage to the Fatima sanctuary to pray and attend masses where the apparitions of the Virgin Mary were witnessed by three shepherd children Lucia, Jacinta and Francisco in 1917. Francisco Seco/AP

Sunlight sparkles off the water’s surface as pink flamingos gather in the Camargue regional natural park near Arles, southern France. Situated in the delta of the Rhone River on the French Mediterranean coast, classified by UNESCO, the Camargue Biosphere Reserve is made up of a mosaic of lagoons of fresh, brackish, and saline wetlands, one of the most important in Europe. Jean-Paul Pelissier/Reuters

Market Closes for May 13^th, 2015

International Markets

Bonds

Currencies

Commodities

The first human who hurled an insult instead of a stone was the founder of civilization.  –Sigmund Freud, 1856-1939.

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell to a six-week low as the nation’s largest railways tumbled and energy producers declined, overshadowing a rally among precious metals producers.

     Canadian National Railway Co. and Canadian Pacific Railway Ltd. retreated more than 2.3 percent to pace declines among industrial shares. Pipeline operators Enbridge Inc. and TransCanada Corp. slipped at least 0.7 percent. Encana Corp. tumbled 2.3 percent after analysts at RBC Capital Markets lowered the stock’s rating to the equivalent of a hold.

     The Standard & Poor’s/TSX Composite Index fell 62.43 points, or 0.4 percent, to 14,980.72 at 4 p.m. in Toronto. The index has dropped 1.3 percent in three days to the lowest since April 1.

     Canadian National Railway declined 3.2 percent and Canadian Pacific Railway lost 2.4 percent as industrial stocks fell lost 1.8 percent as a group, most in the S&P/TSX. Eight of 10 industries in the benchmark equity gauge retreated on trading volume 6.5 percent higher than the 30-day average.

     Railway commodity carloads tumbled 7.5 percent in the week ended May 9 from year-ago levels according to AAR data, Bloomberg Intelligence analysts Talon Custer and Lee Klaskow said in a report. Canadian Pacific Railway traffic dropped 13 percent amid weakness in coal and agriculture shipments, the report showed.

     Trican Well Service Ltd. plunged 14 percent after the company cut 2,000 jobs, suspended its dividend and said there is significant doubt the company can “continue as a going concern” after forecasting a potential breach of an interest coverage ratio covenant.

     Gold futures for June delivery jumped to a five-week high as stalling U.S. retail sales revived speculation a sputtering economy will spur the Federal Reserve to delay raising interest rates.

     Kirkland Lake Gold Inc. added 1.9 percent after meeting its 2015 output guidance and raised its forecast for 2016.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks closed little changed as corporate deal activity was overshadowed by concern a fixed- income selloff is not done, and weaker-than-forecast retail sales disappointed investors who were expecting a rebound from a winter slowdown.

     Owens-Illinois Inc. climbed 9.2 percent after a pact to buy the food-and-beverage glass business of Vitro SAB. Williams Cos. rallied 6.2 percent as it plans to buy the 40 percent of Williams Partners LP it doesn’t already own. Pall Corp. added 4.4 percent after its $13.8 billion deal with Danaher Corp. Retailers’ shares slipped after the sales data, led lower by Macy’s Inc.

     The Standard & Poor’s 500 Index fell less than 0.1 percent to 2,098.48 at 4:00 p.m. in New York, as the benchmark dropped for a third day, its longest losing streak in six weeks. The Dow Jones Industrial Average declined 7.74 points, or less than 0.1 percent, to 18,060.49. The Nasdaq Composite Index increased 0.1 percent. About 6.2 billion shares traded hands Wednesday, 3.7 percent below the three-month average.

     “We’ve been at the mercy of the bond market because of a news vacuum with corporate earnings finished and a light economic calendar, but equities have been remarkably resilient in the face of yields and uncertainty about when the Fed will pull the trigger,” said Kelly Bogdanov, the San Francisco-based vice president and portfolio analyst at RBC Wealth Management.

     The S&P 500 slid Tuesday as a rout in fixed-income markets spread to equities, with the 10-year Treasury note’s yield reaching the highest since November before slipping. Yield on the benchmark notes rose three basis points to 2.28 percent Wednesday.

     The unchanged April retail sales reading followed a revised 1.1 percent gain in March that was the biggest in a year and larger than previously estimated. Economists surveyed by Bloomberg called for a 0.2 percent gain in April. Data are also due later this week on consumer sentiment, jobless claims and industrial production.

     Concern the Federal Reserve would raise interest rates even with worsening economic data and predictions for an earnings slump have whipsawed stocks between gains and losses in the past five weeks. The S&P 500 fell for the past two days after jumping the most since March on Friday amid data that showed hiring bounced back in April from a winter slowdown.

     “We had a couple down days and now all this bad data just pushes out the Fed longer to tighten,” said Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC. NorthCoast has $3 billion under management. “It’s going to be range-bound trading until we get something that will break us through.”

     The S&P 500 is trading within its tightest trading range to start a year in almost a decade: roughly 125 points. The peak- to-trough move of 6.3 percent is the smallest at this point of any year since 2006. The gauge is 0.9 percent below its April 24 record.

     Most companies in the benchmark have already reported results this earnings season, with 72 percent beating estimates. Analysts now project profit at S&P 500 members grew 0.2 percent in the first quarter, reversing earlier predictions for a decline. Their March estimates called for a 5.8 percent drop.

     The Chicago Board Options Exchange Volatility Index fell 0.7 percent to 13.76, after ending little changed Tuesday. The gauge, known as the VIX, is on track for its third straight weekly gain for the first time since September. Six of the S&P 500’s 10 main groups declined Wednesday, led by energy, consumer discretionary and utilities shares. Technology companies advanced the most, up 0.5 percent.                      

     Semiconductors rebounded from a 0.9 percent drop Tuesday, lifting tech shares. Micron Technology Inc. and Intel Corp. rose more than 1.1 percent. Microsoft Corp. added 0.6 percent after Deutsche Bank analyst Karl Keirstead upgraded shares to buy from hold, citing “relatively cheap” valuation with more positive than negative catalysts.

     Qualcomm Inc. advanced 1.4 percent as the chipmaker plans to tap the corporate bond market for the first time, with proceeds to be used for general corporate purposes, including financing a capital return program and acquisitions.

     Owens-Illinois rallied 10 percent, the biggest jump since 2009, after the world’s largest maker of glass containers agreed to buy Vitro’s business for about $2.15 billion to extend its reach in Mexico.

     Pall Corp. added 4.4 percent to its 19 percent rally Tuesday after Danaher agreed to buy the water-systems maker for $13.8 billion. It’s Danaher’s biggest-ever acquisition, and it plans to split itself into two dependent, publicly traded companies.

     Williams Partners jumped 21 percent, the most ever, after Williams Cos. agreed to buy the 40 percent of the pipeline company it doesn’t already own for $13.8 billion, simplifying its corporate structure in a bid to reduce taxes, increase payouts and accumulate cash for expansion.

     “There’s an awful lot of M&A and it’s certainly helping from a confidence level,” said Mark Spellman, a portfolio manager who helps oversee $4.2 billion at Alpine Funds in Purchase, New York. “If they thought there was a recession or profit problem in the near-term they probably wouldn’t do that.”

     Macy’s slumped 2.5 percent after the largest U.S. department-store chain reported first-quarter earnings that trailed analysts’ estimates as bad weather in Northeastern states and product delays at the West Coast ports hurt sales. Ralph Lauren Corp. sank 3 percent, the most in three months, and Fossil Group Inc. fell 2.1 percent to its lowest since 2012 to pace a retreat in consumer discretionary shares.                          

     DuPont Co. lost 7.4 percent, the biggest drop since 2012, as investors rejected investor Nelson Peltz’s attempt to get on the chemical maker’s board, the first failure for an activist campaign mounted by his firm Trian Fund Management since it was founded a decade ago.

     Union Pacific Corp., CSX Corp. and Kansas City Southern declined more than 1.5 percent, leading a 1 percent retreat in the Dow Jones Transportation Average which fell to a six-month low. Union Pacific slid to its lowest level since October as Wolf Research LLC analyst Scott Group cut second-quarter profit estimates for railroads, citing lower coal and grain volumes.

     The utilities group fell 1.1 percent to a two-month low as rising yields on Treasuries make the sector’s 3.7 percent dividend payout less attractive. Edison International Inc. sank 1.1 percent to an almost seven-month low.

Have a wonderful evening everyone.

Be magnificent!

All the responsibility of good and evil is on you.  This is the great hope.

What I have done, that I can undo.

Swami Vivekananda

As ever,

Carolann

Adventure is worthwhile in itself.

          -Amelia Earhart, 1897-1937

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