April 16, 2014 Newsletter

Dear Friends,

Tangents:

On this day in 1912, one day after the Titanic sank, WSJ ran a headline: “Liner Titanic Struck By Berg But Passengers Are Saved.” The Journal wasn’t alone in getting it totally wrong, at first. Check out a version of the 102-year-old article. –By Steven Russolillo, WSJ

The greatest good you can do for another is not just to share your riches, but to reveal to him his own. –Benjamin Disraeli, 1804-1881.

Photos of the day

Russian artist Vasily Slonov stands near a tree after attaching wooden starling houses during a presentation of his artwork called ‘Total Spring’ on an island in the middle of the Yenisei River in Russia’s Siberian city of Krasnoyarsk. Ilya Naymushin/Reuters

Snow covers a log cabin off Highway 36 in the City of Kawartha Lakes in central Ontario April 15. Most of the province saw snow this morning one of the latest spring snowfalls in recent history. Fred Thornhill/Reuters  Women look as a penitent of San Bernardo brotherhood walks on her way to a church before taking part in a procession during Holy Week in the Andalusian capital of Seville, southern Spain. Marcelo del Pozo/Reuters

Market Closes for April 16^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam

April 16 (Bloomberg) — Canadian stocks rose the most since February as commodity producers rallied on a jump in copper and crude prices on concern the crisis in Ukraine is escalating and better-than-expected economic growth in China.

Canadian Natural Resources Ltd. and Calfrac Well Services Ltd. paced gains that sent energy shares to a three-year high. Osisko Mining Corp. added 7 percent, reaching the highest in more than a year, after announcing a joint sale to Agnico Eagle Mines Ltd. and Yamana Gold Inc. in an effort to fend off a hostile Goldcorp Inc. bid. Torex Gold Resources Inc. increased 13 percent after securing financing for a mining project.

The Standard & Poor’s/TSX Composite Index rose 142.60 points, or 1 percent, to 14,446.52 at 4 p.m. in Toronto, the biggest increase since Feb. 6. The equity benchmark is up 6.1 percent this year and has recovered most of a 1.4 percent dip between April 2 and April 11.

“The market has acted very well for Canada this year and we had been due for a correction, hopefully we’ve had it now,” said John Kinsey, a fund manager at Caldwell Securities Ltd. in Toronto. The firm manages about C$1 billion ($909 million). “We think it will be a good year for the Canadian market. Energy has been consistent and any prices over $100 is very good for Canadian companies.”

Brent crude climbed above $110 a barrel for the first time in six weeks and West Texas Intermediate traded near $104 a barrel as Ukraine’s government began an offensive against separatists in its east.

First Quantum Minerals Ltd. added 1.7 percent to C$20.99.  Copper rose the most in two weeks as China’s economy grew 7.4 percent in the first quarter, ahead of the median economists’ estimate of 7.3 percent.

Canadian Natural Resources rose 0.7 percent to C$44.08 and Calfrac Well Services gained 2.6 percent to C$35.73 as the S&P/TSX Energy Index climbed 1.4 percent for the highest close since May 2011.

Precision Drilling Corp. jumped 6.6 percent to C$13.76 after analysts at Morgan Stanley raised their rating for the stock to overweight, the equivalent of a buy, as the company is positioned to “capture outsize share” of natural gas drilling activity in the coming years.

Metro Inc. increased 2.5 percent to C$65.86 as consumer staples shares rose 1.4 percent as a group. All 10 industries in the S&P/TSX advanced on trading volume about 17 percent higher compared with the 30-day average.

Metro, the grocery store retailer, reported second-quarter adjusted earnings of C$1.07 a share, ahead of analysts’ estimates of C$1.03 as same-store sales rose 1 percent.

Osisko jumped 7 percent to C$7.94, the highest since January 2013. Agnico Eagle and Yamana’s C$3.9 billion cash-and- stock offer, valuing Osisko at C$8.15 a share, trumps a hostile bid from Goldcorp for C$7.43 a share. Osisko and Yamana had first agreed to a friendly deal on April 2. The fight for Osisko is focused on its Canadian Malartic gold mine.      Agnico Eagle slumped 8.2 percent to C$30.71, the biggest decrease in a year, Yamana sank 4 percent to C$8.83, while Goldcorp added 0.8 percent to C$26.22.

Torex Gold soared 13 percent to C$1.13. The Toronto-based company said it has signed a commitment letter with a series of banks for a $375 million project finance facility, enough to fully finance the development of its El Limon-Guajes project in Mexico.

USA
By Lu Wang and Callie Bost

April 16 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index capping its best three-day rally in two months, as Yahoo! Inc. earnings topped estimates and industrial production gained more than forecast.

Yahoo jumped 6.3 percent after sales surged at Alibaba Group Holding Ltd., where it holds a stake. Bank of America Corp. retreated 1.6 percent after reporting a quarterly loss. Google Inc. sank 5.7 percent in extended trading after the company reported sales that missed estimates. International Business Machines Corp. dropped 3.5 percent after the close as its sales fell an eighth straight quarter.

The S&P 500 added 1.1 percent to 1,862.31 at 4 p.m. in New York, bringing its three-day advance to 2.6 percent. The Dow Jones Industrial Average rose 162.29 points, or 1 percent, to 16,424.85. About 6 billion shares changed hands on U.S. exchanges, the slowest trading in one month.

“The macro data continues to come in reasonably firm and we don’t think valuations on the stock side suggest we’re overdone,” Jim Russell,  a senior equity strategist at U.S. Bank Wealth Management, said by phone. “The market is finding some sort of natural trading level to bounce out of and we’re seeing slightly better-than-expected earnings and second-quarter outlooks from management that seem to be encouraging.”

The S&P 500 erased its loss for the year today. The gauge had dropped as much as 4 percent from its April 2 record as investors sold Internet and biotechnology stocks, the best performers during the five-year bull market, amid concern valuations had become too expensive before earnings.

Federal Reserve Chair Janet Yellen, speaking to the Economic Club of New York, told investors to pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee’s decisions on the policy rate. The Fed has a “continuing commitment” to support the economic recovery, she said.

The central bank said the U.S. economy continued to expand in most regions as businesses benefited from a bounce back from harsh winter weather earlier in the year. Eight of 12 Fed districts characterized growth as “modest or moderate,” the Fed said today in its Beige Book business survey, based on reports gathered before April 7.

Economic data today showed gains in manufacturing are helping power the U.S. out of the winter doldrums, while homebuilding shows signs of lagging behind. Industrial production rose more than forecast in March after a February gain that was twice as big as previously estimated. A Commerce Department report showed the pace of U.S. home construction rebounded less than forecast in March.

Seventeen companies in the equities benchmark report earnings today. Profit per share for the index’s constituents probably dropped 0.9 percent in the first quarter, according to analyst estimates compiled by Bloomberg. Revenue climbed 2.6 percent from a year earlier, the projections show.

Russell Investments, the U.S. asset manager that oversees $257 billion, bought protection against a drop in equities shortly before last week’s selloff. The firm acquired puts on the S&P 500 last week’s 2.7 percent slide, Alain Zeitouni, head of multi-management at Russell Investments France said.

“Protection is cheap and we’re a bit cautious,” Zeitouni said in Paris on April 10. “We don’t see a big rally in equities in the U.S. We’ve been expecting a correction.”

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, fell 9.2 percent to 14.18.

All 10 main S&P 500 industries advanced today, with raw- material producers and industrial companies each adding 1.5 percent to pace gains. 3M Co. and United Technologies Corp. jumped at least 1.9 percent among the biggest gains in the Dow.

Yahoo rallied 6.3 percent to $36.35. The Web portal posted first-quarter earnings of 38 cents a share, more than the 37- cent average estimate of analysts. Sales excluding some items of $1.09 billion also beat projections. Alibaba reported that net income more than doubled in the last quarter of 2013 and revenue surged 66 percent. Yahoo owns 24 percent of the Chinese e- commerce company.

Southwest Airlines Co. advanced 2.8 percent to $23.54. The largest discount carrier will freeze the size of its jet fleet through 2015, a year longer than Chief Executive Officer Gary Kelly’s stated goal of holding the number of planes — now about 680 –steady through 2014.

Delta Air Lines Inc. climbed 5.4 percent to $33.62.

Johnson Controls Inc. rose 1.7 percent to $46.73. The largest U.S. auto-parts maker agreed to buy Air Distribution Technologies for $1.6 billion, seeking to lessen its reliance on the cyclical auto industry by adding ventilation products by purchasing Air Distribution Technologies from the Canada Pension Plan Investment Board.

Moelis & Co. climbed 4.6 percent to $26.15 in its trading debut after raising less than it planned in the first U.S. initial public offering of an investment bank since the financial crisis.

Bank of America declined 1.6 percent to $16.13. The second- largest U.S. lender swung to a quarterly loss after settling claims on mortgage bonds. The first-quarter loss of $276 million compared with a profit of $1.48 billion a year earlier, the lender said.

The Philadelphia Semiconductor Index fell 0.2 percent and a gauge of semiconductors dropped the second-most among 24 S&P 500 groups. Linear Technology Corp. slipped 4.4 percent to $45.07 for the biggest retreat in the equities benchmark. Analog Devices Inc. lost 1.9 percent to $52.15 and NetApp Inc. dropped 2 percent to $36.24.

CSX Corp. declined 1.8 percent to $27.79. The largest railroad in the eastern U.S. said it expects “modest” earnings growth for 2014 and it’s unclear if 2015 will be “strong enough” to deliver a two-year compound annual growth rate of 10 percent to 15 percent.

Google’s Class C shares sank 5.7 percent to $524.79 in after-hours trading. The operator of the largest Internet search engine said sales fell short of estimates as advertising prices declined. The stock closed the regular session 3.8 percent higher at $556.54.

IBM lost 3.5 percent to $189.50. Revenue fell 3.9 percent from a year earlier to $22.5 billion in the first quarter as sales continued to tumble in its hardware unit and in developing countries, IBM said today in a statement. That compared with analysts’ average estimate of $22.9 billion. The stock closed today 0.3 percent lower at $196.40.

Have  a wonderful evening everyone.

Be magnificent!

The word duty indicates compulsion.

The word responsibility indicates freedom.

Duties lead one to demand rightfully.

Responsibilities lead one to command respectfully.

Sense of duty is out of attachment.

Sense of responsibility is out of love.

Duties can be thrust upon others.

Responsibilities are taken up by oneself.

There can be unwillingness in performing one’s duty.

Responsibility is always taken up willingly.

Maa Purnananda, 1440-1518

As ever,

Carolann

Happiness is part of who we are.  Joy is

the feeling.

-Tony De Liso

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