May 21, 2015 Newsletter

Dear Friends,

Tangents:

It is with sadness that I greeted the news this morning that the ancient site of Palmyra had fallen into ISIS hands.  I visited this archeological wonder when visiting Syria a few years ago and it truly is one of the most well preserved ancient wonders in existence on planet Earth.  We can only pray that it is not destroyed as so many of Iraq’s vestiges of antiquity were forever destroyed by ISIS.

FYI…

INSIDE ABBEY ROAD

The London landmark made famous by the Beatles is still a busy and functioning studio as the recording home of the London Symphony Orchestra and pop stars Adele, Coldplay and Kanye West, among others.  Google has created a VIP pass at insideabbeyroad.withgoogle.com; you can take a guided tour with host Giles Martin, a house producer and son of the so-called Fifth Beatle, producer George Martin.  Listen to interviews and live clips, and try your hand at production.

PHOTOS OF THE DAY

Photographers work during a photocall for the film ‘Youth’ in competition at the 68th Cannes Film Festival in Cannes, southern France, Wednesday. Yves Herman/Reuters

A koala feeds on eucalyptus leaves in its new enclosure at the Singapore Zoo Wednesday. Four koalas, originating from Brisbane’s Lone Pine Koala Sanctuary, will stay at the zoo until January 2016 before returning to Australia. The Singapore Zoo is known for its efforts to promote and educate the public about the importance of wildlife conservation through its educational programs and through the breeding of endangered species in captivity. Koalas are considered ‘vulnerable’ and are threatened by habitat loss and encroachment. Wong Maye-E/AP

Market Closes for May 21^st, 2015

International Markets

Bonds

Currencies

Commodities

The ideas of debtor and creditor as to what constitutes a good time never coincide. –P.G. Wodehouse.

Market Commentary:

Canada

By Jennifer Kaplan

     (Bloomberg) — Canadian stocks rose the most in two months as energy producers jumped with the price of crude and health- care companies rallied with railroads.

     Penn West Petroleum Ltd. gained 7.2 percent to lead a rise in energy shares as oil advanced 3 percent in New York. Valeant Pharmaceuticals International Inc. jumped 2.4 percent, contributing to a 2 percent gain for health-care companies. Canadian Pacific Railway Ltd. climbed 1.8 percent.

     The Standard & Poor’s/TSX Composite Index rose 130.78 points, or 0.9 percent, to 15,203.61 at 4 p.m. in Toronto, for the best rally since March 16.

     Seven of 10 industries in the S&P/TSX gained on trading volume 7.3 percent lower than the 30-day average. Crescent Point Energy Corp. and Trinidad Drilling Ltd. rose more than 5.2 percent, as energy shares gained 2 percent as a group.

     Oil rose for a second day as U.S. crude stockpiles shrank, indicating the supply glut may be easing. Futures advanced 3 percent in New York.

     Valeant Pharmaceuticals added to annual gains that together with Concordia Healthcare Corp. have boosted total returns for the members of the S&P/TSX Composite Health Care Index to almost six times that of its U.S. counterpart, according to data compiled by Bloomberg.

     ATS Automation Tooling Systems, Inc. soared 8.2 percent, the most in the S&P/TSX after reporting first quarter earnings that outpaced analysts’ estimates.

US

By Callie Bost

     (Bloomberg) — U.S. stocks advanced, with the Standard & Poor’s 500 Index rising to an all-time high, amid better-than- forecast results from Salesforce.com Inc. and Best Buy Co. while gauges on the strength of economic growth were mixed.

     Best Buy and Salesforce surged 3.9 percent. Energy shares rallied with oil and Transocean Ltd. gained after reaching a settlement from BP Plc on issues related to the 2010 disaster in the Gulf of Mexico. CVS Health Corp. added 2.4 percent after saying it will acquire the nursing-home pharmacy Omnicare Inc. NetApp Inc. tumbled 10 percent after forecasting sales that missed analysts’ projections.

     The S&P 500 rose 0.2 percent to 2,130.82 at 4 p.m. in New York, its fourth all-time high in the last six sessions. The Dow Jones Industrial Average added 0.34 points, or less than 0.1 percent, to 18,285.74. The Nasdaq Composite Index climbed 0.4 percent. Both the Dow and Nasdaq briefly rose above their record closing levels. About 5.7 billion shares changed hands on U.S.

exchanges, 12 percent below the three-month average.

     “We’re locked in this environment where we’re more trendless than trending,” said Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68 billion. “There’s enough buying power to keep a bid in equity prices. We’re in this trendless, sideways trading range, maybe grinding higher but no breakout one way or the other.”

     Investors are keeping a close watch on the Federal Reserve as policy makers debate the timing on their first interest rate increase since 2006. Meanwhile, the data they’re dependent on for their rate decision continues to provide mixed signals.                           

     Purchases of previously owned homes unexpectedly fell in April, a sign the industry’s recovery remains uneven. Contract closings dropped 3.3 percent, after a 6.5 percent gain in March which was the strongest in almost two years. Economists in a Bloomberg survey called for a 0.8 percent rise. Prices jumped as the number of houses for sales declined from the same time last year.

     Other reports showed the index of leading economic indicators rose in April by the most in nine months, manufacturing in the Philadelphia region grew less than economists forecast in May and the four-week average for jobless claims decreased to a 15-year low.

     Fed officials last month didn’t expect to raise rates at their June meeting even as they concluded that a first-quarter economic slowdown was unlikely to persist, the April minutes showed yesterday. Fed Chair Janet Yellen is due to give a speech tomorrow on the economic outlook.                         

     “Investors in the U.S. are sitting on all-time highs,” said Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich. “They’re experiencing some vertigo once in a while, looking down and asking, will it hold? The June rate hike was off the table a long time ago, but there’s some relief the Fed acknowledged this. It’s not good enough to drive markets much higher.”

     The Chicago Board Options Exchange Volatility Index fell 6 percent to 12.11, the lowest level of 2015. The gauge, known as the VIX, is on track for its second straight weekly decline.

     Seven of the S&P 500’s 10 main groups gained, with energy and phone company shares leading the way. Noble Corp. and Transocean rose at least 4.3 percent as oil rallied for a second day.

     Bank of America Corp. analysts led by Savita Subramanian recommended in a note today that investors increase their allocations to the energy group to more than their weighting in the S&P 500, citing a better outlook for commodity prices and a likely trough in earnings revisions.

     Financial companies slipped 0.2 percent. Insurer Aflac Inc. sank 2.8 percent after the chief executive said the company is seeking to replace Kriss Cloninger as chief financial officer by the end of June.

     Best Buy climbed 3.9 percent, its best gain of the year, after posting first-quarter profit that topped analysts’ estimates after large-screen televisions and the new iPhone helped boost U.S. sales.

     Salesforce rallied 3.9 percent after raising its revenue forecast as large enterprises signed up for the company’s products, underscoring its potential appeal as a takeover target.

     Joining Salesforce in pacing gains in technology, Hewlett- Packard Co. climbed 2.3 percent after selling a majority stake in its Chinese server, storage and technology assets for $2.3 billion to Tsinghua University. Qualcomm Inc. advanced 1.2 percent as it began an accelerated $5 billion share buyback. Apple Inc. increased 1 percent.                       

     CVS gained 2.4 percent, the most since December after its deal valued at $12.7 billion to acquire Omnicare, which adds services for the elderly to bolster its position as the biggest U.S. retailer of prescription drugs. Competitor Walgreens Boots Alliance Inc. increased 2.7 percent, and pharmacy benefit manager Express Scripts Holding Co. advanced 1.7 percent.

     Transportation companies rebounded as railroads rallied. An airlines selloff Wednesday sent S&P 500 transports to their worst drop in two months. Kansas City Southern, Union Pacific Corp. and Norfolk Southern Corp. rose at least 1 percent Thursday.

     The Dow Jones Transportation Average jumped 0.6 percent to rebound from a 2 percent rout Wednesday. The gauge has fallen 6.4 percent this year, trailing the Dow’s 2.6 percent gain.

     “Transportation stocks are more reflective of how our economy is starting to show significant cracks,” said Yousef Abbasi, the global market strategist at JonesTrading Institutional Services LLC in New York. “The market making news highs while TRAN is making new lows is never a good sign.”                         

     NetApp Inc. slumped 10 percent, the most in three years, after quarterly earnings and revenue missed analysts’ estimates and the data management company cut its full-year forecast.

     Lumber Liquidators Holdings Inc. plunged 17 percent to its lowest level in more than three years after saying Chief Executive Officer Robert Lynch will step down as the company grapples with the fallout of a report that it sold flooring with toxic levels of formaldehyde.

     Real-estate companies in the S&P 500 fell for a fourth day, their longest losing streak this month. CBRE Group Inc. and Iron Mountain Inc. declined more than 1.1 percent.

Have a wonderful evening everyone.

Be magnificent!

Contemplation is seeing the here and now.

Swami Prajnanpad

As ever,

Carolann

I believe that every person is born with talent.

                         -Maya Angelou, 1928-2014

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Senior Portfolio Manager &

Senior Vice-President

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7