April 14, 2014 Newsletter

Dear Friends,

Tangents:

The week ahead…

Tonight Passover begins for Jews around the world, while for the world’s Christians, Passion Week, which began yesterday with Palm Sunday concludes on Holy Saturday, followed by Easter next Sunday.

Markets are closed on Friday.

On this day in 1865, Abraham Lincoln was assassinated by John Wilkes Booth  while he attended a performance of the comedy “Our American Cousin” at Ford’s Theater in Washington, D.C. He died the next day.

The first Webster’s dictionary was published on this day in 1828.

Tonight, a total lunar eclipse and blood moon could wow sky watchers across the country . The eclipse is scheduled to start at 10:58 PM as the moon moves into Earth’s shadow.  The total lunar eclipse – when the entire moon is shaded by Earth – begins just over an hour later at 12:07 AM Tuesday and lasts until 1:25 AM.  The moon will be fairly high in the sky tonight so we should be able to see it anywhere.

A total lunar eclipse happens when the moon passes completely into the shadow of the Earth, taking on a reddish color, which has come to be called a “blood moon.”  The red color occurs because even when the Earth moves directly between the moon and the sun, filtered sunlight still shines through Earth’s atmosphere, making the moon appear red.  The last total lunar eclipse was December 10^th, 2011.  Tonight’s is the first of four that will happen over the next year and a half.  NASA says the series is unique because they will all be visible from all parts of North America.  The next one will be October 8^th, followed by April 4^th, 2015 and September 28^th, 2015.

We were in Seattle this past weekend and on the recommendation of one of my clients, attended a performance of Little Shop of Horrors at the Act theatre.  It was fantastic!  So, if you want something to do that you will thoroughly enjoy, I suggest you see it before it ends, which is June 15th.  We were able to go to the 5^th Avenue theatre box office on Saturday and scored two excellent seats for the evening performance with no advance reservation.  www.5thavenue.org.

Photos of the day

A woman and a boy look from a window as a penitent of San Gonzalo brotherhood walks past them during Holy Week in the Andalusian capital of Seville, southern Spain. Holy Week is celebrated in many Christian traditions during the week before Easter. Marcelo del Pozo/Reuters

A Bangladeshi girl sits on the shoulder of her father and participates in a parade to celebrate the first day of the Bangla New Year or Pahela Baisshakh, in Dhaka, Bangladesh. Thousands of Bangladeshi people celebrated their new year with fairs, concerts and rallies. A.M. Ahad/AP

Market Closes for April 14^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Callie Bost

April 14 (Bloomberg) — Canadian stocks rose, rebounding from the worst weekly loss since January, as U.S. retail sales grew the most since 2012 and gold reached a three-week high.

Torex Gold Resources Inc. surged 4.8 percent to lead an advance in gold mining companies. Air Canada’s Class B shares jumped 3.4 percent after Cowen and Co. LLC analysts gave the stock a buy rating. Telus Corp. declined 0.5 percent, helping lead phone company shares lower.

The Standard & Poor’s/TSX Composite Index rose 26.74 points, or 0.2 percent, to 14,284.43 at 4 p.m. in Toronto. The gauge slipped 0.9 percent last week and is up about 4.9 percent for the year. Trading in S&P/TSX stocks was about 7.8 percent below the 30-day average at the close.

“It wasn’t the greatest week in the markets last week,” Jeff Young, who oversees about C$900 million ($820 million) as chief investment officer of NexGen Financial Corp., said by phone from Toronto. “Retail sales were a little bit better. People are worried about growth really slowing down with the weakness in the first quarter and there are questions on how much of it is weather. Clearly, this is a positive for the market.”

The 1.1 percent advance in U.S. retail sales exceeded the median projection in a Bloomberg survey and followed a 0.7 percent gain in February that was bigger than previously reported, Commerce Department figures showed today.

Both Brent and West Texas Intermediate crude oil rose to five-week highs as tension escalated between Ukraine and Russia, the world’s biggest energy exporter. Brent futures advanced 1.6 percent to $109.07 a barrel in London and WTI added 0.3 percent to $104.05 in New York.

Gold bullion for June delivery added 0.6 percent to $1,327.50 an ounce on the Comex in New York, the highest on a closing basis since March 21. The metal has rallied 10 percent in 2014, rebounding from the biggest annual drop since 1981.

Eight of 10 main industries in the S&P/TSX advanced. Energy shares jumped 1.3 percent, while technology shares rose 0.9 percent.

The S&P/TSX Gold Index jumped 1 percent. Torex added 4.8 percent to C$1.09 for the biggest gain among bullion producers.  Iamgold Corp. surged 3.4 percent to C$3.98 and Oceanagold Corp. increased 2.8 percent to C$2.56.

Oil and gas explorers in the S&P/TSX added 0.2 percent as a group. Surge Energy Inc. surged 3.5 percent to C$6.82 and Transglobe Energy Corp. climbed 2.9 percent to C$8.12. Penn West Petroleum Ltd. jumped 2.8 percent to C$9.72.

Air Canada rose 3.4 percent to C$7.39. Cowen analyst Helane Becker initiated the carrier’s rating at outperform, the equivalent of buy, with a C$10.50 target price. Air Canada shares are down 0.3 percent this year after gaining 323 percent in 2013, the most among stocks in the S&P/TSX.

Sherritt International Corp. soared 9.3 percent to C$4.70, the highest level since May 2013. Scotia Capital Inc. analyst Orest Wowkodaw upgraded the nickel producer to sector outperform, the equivalent of buy, from sector perform, the equivalent of hold.

Telus dropped 0.5 percent to C$37.85. Scotia analyst Jeffrey Fan downgraded the stock to sector perform from sector outperform. Telus shares have gained 3.5 percent this year.

US
By Lu Wang

April 14 (Bloomberg) — U.S. stocks rebounded from the worst weekly losses in two years, weathering a selloff at the start of the final hour, after data showed retail sales increased the most since 2012 and Citigroup Inc. earnings unexpectedly rose.

Citigroup advanced 4.4 percent as the company recouped funds previously set aside for bad loans and cut losses at a division holding unwanted assets. Edwards Lifesciences Corp. gained 11 percent, the most in the Standard & Poor’s 500 Index, after a court ruled to limit U.S. sales of peer Medtronic Inc.’s CoreValve system. Energy producers, technology stocks and consumer companies led the recovery from last week’s slump.

The S&P 500 jumped 0.8 percent to 1,830.61 at 4 p.m. in New York. The gauge briefly erased an earlier rally of 1 percent before surging at the end of the day. The Dow Jones Industrial Average gained 146.49 points, or 0.9 percent, to 16,173.24 today. The Nasdaq Composite Index of technology stocks rose 0.6 percent and the Russell 2000 Index added 0.4 percent.

“When you have a market down so much over the past few weeks, people are getting a little bit worried,” Brent Schutte, senior investment strategist at BMO Global Asset Management in Chicago, said in a phone interview. The firm runs over $128 billion. “Any time you get incrementally better U.S. data and decent earnings, you have a backdrop to go higher.”

A retreat in so-called high-beta stocks including  Facebook Inc. dragged the Nasdaq Composite down as much as 0.3 percent during the day. Internet stocks and biotechnology companies are considered to have higher beta, or volatility, than the market because their earnings potential is hard to predict. The Nasdaq Biotechnology Index was little changed today after rallying as much as 2.7 percent. It’s fallen 21 percent from a February high.

“Right now everyone is watching beta to figure out whether or not the beta flush trade is over,” Yousef Abbasi, a market strategist at JonesTrading Institutional Services LLC in New York, said in an interview. “That is dictating overall market sentiment.”

About 6 billion shares changed hands on U.S. exchanges today, the slowest trading in a month.

The S&P 500 slid 2.6 percent last week amid disappointing results at JPMorgan Chase & Co. and signs hedge funds were dumping the bull market’s best performers. The benchmark index dropped as much as 4 percent from an all-time high on April 2 as concern grew that valuations may be too high as earnings season begins.

Coca-Cola Co., Goldman Sachs Group Inc., Yahoo! Inc., Google Inc. and General Electric Co. are among companies scheduled to report later this week. Profit for members of the S&P 500 probably fell 0.9 percent in the first quarter, analysts now forecast, after anticipating a 6.6 percent rise in January.  Sales increased 2.6 percent, according to projections.

Consumer discretionary stocks in the S&P 500 added 0.8 percent as a group. Retail sales increased in March as Americans bought more cars, clothing and garden supplies, helping the economy recover from a weather-depressed start to the year. The 1.1 percent advance exceeded the median projection in a Bloomberg survey, Commerce Department figures showed.

While U.S. stocks have tumbled as investors bought companies with stable earnings and dumped Internet and biotechnology shares, it doesn’t mean the bull market is over, according to Goldman Sachs Group Inc.

Stocks tend to recover after similar rotations, with the S&P 500 rising an average 5 percent over the next six months, according to a study by Goldman Sachs on 46 instances of momentum reversals since 1980. Low interest rates and reasonable equity valuations will help prevent the market from crashing like 2000, said strategists led by David Kostin.

“The recent momentum drawdown is unlikely to precipitate a more extensive fall in share prices,” they wrote in an April 11 note.

The S&P 500 trades at about 17 times earnings. While that’s near the highest level in four years, it’s close to the average since 1937, data compiled by Bloomberg and S&P show. since 1937, data compiled by Bloomberg and S&P show.

Hedge funds are saying goodbye to the calm that blanketed U.S. stocks for the past two years. Large speculators have reduced bets on lower volatility and were net short about 1,000 contracts on VIX futures last month, the fewest since 2011, according to a report from the Commodity Futures Trading Commission. The action amounts to speculation equities will keep falling since the Chicago Board Options Exchange Volatility Index moves in the opposite direction of the S&P 500 about 80 percent of the time.

The VIX, a benchmark gauge for equity options, slipped 5.4 percent to 16.11 today.

All 10 S&P 500 main industries climbed. Commodity and technology shares advanced more than 1.1 percent.

Citigroup jumped 4.4 percent to $47.67. The third-biggest U.S. bank reported an unexpected profit increase, beating analysts’ estimates. The firm also plans to eliminate at least 4,000 jobs at its global consumer bank by the end of this year, according to a slide show accompanyng its results.

Edwards Lifesciences gained 11 percent to $81, the highest n a year. The company won a court order limiting U.S. sales of Medtronic’s CoreValve system following a 2010 ruling that the device infringed Edwards patents. Medtronic fell 1.9 percent to $58.08.

Aspen Insurance Holdings Ltd. jumped 11 percent to $43.77. Endurance Specialty Holdings Ltd., a Bermuda-based provider of property and casualty insurance, announced a $3.2 billion offer after the target company turned down its proposal.

Boston Scientific Corp. climbed 4.9 percent to $13.31. The maker of heart-rhythm aids was raised to buy from neutral at Bank of America Corp.

Herbalife Ltd. jumped 4.4 percent to $53.75, recovering from a 14 percent drop on April 11. The company that hedge fund manager Bill Ackman has accused of being a pyramid scheme is being probed by the Federal Bureau of Investigation.

Have a wonderful evening everyone.

Be magnificent!

In the search for the Truth, for dharma, the real effort does not preclude action

(does not consist in neglecting action), but by trying to accord oneself more and more exactly

with the exterior harmony.  The currency of this effort is in becoming:

whatever work you take on, dedicate it to Brahman.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

Injustice anywhere is a threat to justice everywhere.

-Martin Luther King Jr., 1929-1968

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7