April 24, 2014 Newsletter

Dear Friends,

Tangents:

It was a bright cold day in April, and the clocks were striking thirteen. –George Orwell, Nineteen Eighty-Four, 1949.

April’s the busy month, the month that grows
Faster than hand can follow at its task;
No time to relish and no time to bask,
(Though when indeed is that the gardener’s lot,
April’s the month for pruning of the rose,
April’s the month when the good gardener sows
More annuals for summer, cheap and quick,
Yet always sows too thick
From penny packets scattered on a patch
With here a batch of poppy, there a batch
Of the low candytuft or scabious tall
That country children call
Pincushions, with their gift
Of accurate observance and their swift
Naming more vivid than the botanist.
So the good gardener will sow his drift
Of larkspur and forget-me-not
To fill blank space, or recklessly to pick;
And gay nasturtium writhing up a fence
Splotching with mock of sunlight sunless days
When latening summer brings the usual mist…

-V. Sackville-West, The Garden, Spring.

Photos of the day

US President Barack Obama (2nd l.) bows to ‘Asimo’ the robot while visiting Miraikan or the National Museum of Emerging Science and Innovation, in Tokyo.  Larry Downing/Reuters

Spanish bullfighter Paco Urena enters the arena during the traditional Easter Feria in Arles, Southern France, April 2, 2014. The four-day Easter Feria opens the French bullfight season in April and is held in the Roman-built arena. Jean-Paul Pelissier/Reuters

Market Closes for April 24^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

April 24 (Bloomberg) — Canadian stocks rose as Valeant Pharmaceuticals International Inc. rebounded from yesterday’s decline and auto-parts makers and technology companies climbed.

Valeant rose 2 percent in Toronto, after dropping 2.8 percent yesterday. Linamar Corp., which makes engines and transmissions for cars, climbed 3 percent as General Motors Co. beat analysts’ estimates for first-quarter profit. Magna International Inc. jumped 2 percent. Pacific Rubiales Energy Corp. lost 11 percent after RBC Capital Markets downgraded it to the equivalent of a hold from the equivalent of a buy.

The Standard & Poor’s/TSX Index advanced 20.86 points, or 0.1 percent, to 14,554.25 at 4 p.m. in Toronto.

“This market continues to surprise on the upside in terms of it’s been fairly stable and now you’re getting some M&A,” said Irwin Michael, who helps manage C$850 million ($770.9 million) at ABC Funds in Toronto. “If you’re sitting on a lot of cash, you would like to selectively get that money invested, so the market seems to have got a good grounding here,” he said by phone.

Valeant added 2 percent to C$148.17 in Toronto trading.  Valeant this week offered to buy Allergan Inc., maker of the Botox wrinkle treatment, in a cash-and-stock deal valued at $45.7 billion in the latest step of the company’s plan to become one of the world’s largest drugmakers.

Linamar rose 3 percent to C$56.33 while Magna added 2 percent to C$110.90.

Pacific Rubiales fell 11 percent to C$17.87. The company produces oil and gas in Colombia, where rebel attacks have disrupted a pipeline in March. Pacific Rubiales has fallen 19 percent in the last four days.

Potash Corp. of Saskatchewan Inc. rose 1.5 percent to C$39.02. The largest North American producer of its namesake fertilizer posted better-than-estimated first-quarter earnings and sales as the market for the commodity began to recover following last year’s price plunge.

Nautilus Minerals, which is planning to mine copper and gold from the sea floor, rose 74 percent to 40 Canadian cents, the most since 2006, after it said it had resolved a dispute with Papua New Guinea and that its Solwara 1 project can now proceed.

Imax Corp., the maker of giant video screens and projectors, fell 4.9 percent to C$29.62 after reporting first- quarter revenue that missed analyst estimates.

US
By Joseph Ciolli and Callie Bost

April 24 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index trading near a record, as technology companies rallied after Apple Inc. results topped estimates to offset a slump in phone shares.

Apple jumped 8.2 percent, the most in two years, after selling more iPhones than analysts predicted. Verizon Communications Inc. led declines in the Dow Jones Industrial Average, and AT&T Inc. sank a second day, amid concerns that price competition is shifting wireless revenue. Qualcomm Inc. sank 3.5 percent as results fell short of forecasts. Zimmer Holdings Inc. surged 12 percent after it agreed to buy Biomet Inc. in a deal valued at $13.4 billion.

The S&P 500 rose 0.2 to 1,878.61 at 4 p.m. in New York. The Dow Jones Industrial Average was unchanged at 16,501.65. The Nasdaq 100 Index, which includes Apple, climbed 1 percent. About 6.2 billion shares changed hands on U.S. exchanges, 10 percent below the three-month average.

“The earnings were decent overnight, especially from the tech sector, but we’re facing the headwind of strong momentum the six days before yesterday,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said in a phone interview. “We’re facing an overbought situation and a bit of profit-taking mid-day.”

U.S. stocks have repeatedly failed to climb from the S&P 500’s current level. The gauge earlier this week rose to within six points of the all-time high of 1,890.9 reached April 2. It fell 0.2 percent yesterday, snapping a six-day rally that was the longest since September, and trades at 17 times reported earnings, near its highest valuation in four years.

The Dow average fluctuated today, rising as much 0.2 percent and sinking 0.3 percent during the session, as investors weighed earnings from Caterpillar Inc., Verizon and 3M Co.

Broader gauges briefly turned lower earlier today amid reports of escalating violence in Ukraine. President Vladimir Putin warned the country against continuing its anti-separatist offensive after government troops killed five rebels and prompted Russia’s military to begin new drills on the two nations’ border.

An agreement to disarm rebels signed last week in Geneva by Ukraine, Russia, the European Union and the U.S. is on the brink of collapse. President Barack Obama said today the U.S. and its allies have additional sanctions against Russia ready to go because Putin’s government has yet to abide by the accord.

Data from the Commerce Department today showed orders for durable goods such as cars and computers rose more than forecast in March, pointing to faster production that will help spur the economy. Separate data showed more Americans than forecast filed applications for unemployment benefits last week.

Of the 204 companies in the S&P 500 that have released earnings this season, 76 percent have exceeded analysts’ profit estimates, while 53 percent have beaten sales projections, according to data compiled by Bloomberg. Some 64 S&P 500 members report today making it the busiest of the period.

Analysts predict companies on the benchmark gauge will collectively report a 0.7 percent increase in first-quarter profit and a 2.6 percent increase in revenue.

“There’s no question earnings numbers were good, but there was some anticipation of it to a certain degree,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “I still tend to think, at the end of the day, that we’re going to see earnings be the more important thing that drives the market.”

The Chicago Board Options Exchange Volatility Index, a measure of stock volatility known as the VIX, rose 0.4 percent to 13.32 for a second day of gains.

Six of the 10 main S&P 500 groups retreated today, with phone stocks sinking 1.7 percent, adding to a 2.2 percent slide yesterday. Technology shares jumped 1.1 percent to pace gains.

Apple surged 8.2 percent to $567.77, the highest this year.  The world’s most valuable company reported surging sales of iPhones after the handset became available through China Mobile Ltd. Apple also said it will increase its share repurchase authorization by $30 billion, boost its dividend and split its stock seven for one.

Apple’s first split in nine years would cut the stock price to roughly $75 a share, removing an obstacle to its inclusion in the Dow average. The shares currently trade for so much that putting it in the Dow would have given Apple too much influence in the 118-year-old equity gauge, which ranks companies by the level of their shares rather than market value.

Verizon Communications plunged 2.4 percent for the biggest slide in the Dow. The company is preparing for a surge of customers opting to pay for smartphones on installment plans, threatening to shrink monthly wireless bills. The looming shift in revenue cast a shadow today over first-quarter earnings and subscriber gains that beat analysts’ estimates.

AT&T shares fell 3.8 percent yesterday after investors grew concerned that a boost in profits from sales of unsubsidized phones would be short-lived. The stock dropped another 1.2 percent today to a one-month low.

3M declined 1 percent. The maker of products from Scotch tape to auto insulation reported first-quarter earnings that trailed analysts’ estimates as Latin America demand slowed and foreign currencies weakened.

Caterpillar rose 1.8 percent. The largest maker of mining and construction equipment posted first-quarter earnings and sales that beat analysts’ estimates as it boosted its full-year outlook on improved expectations for the building industry.

Zimmer Holdings jumped 12 percent. The maker of artificial joints agreed to acquire rival orthopedic-device maker Biomet Inc. in a cash-and-stock deal valued at $13.4 billion. Closely held Biomet’s parent, Biomet Group Inc., will withdraw its plans for an initial public offering, Zimmer said.

Facebook Inc. slipped 0.8 percent. The world’s largest social-networking site reported first-quarter profit and revenue yesterday that blew past analysts’ estimates. The company today said it bought fitness application Moves for an undisclosed amount, as the social network jumps into the increasingly popular fitness-tracking market.

An S&P index of homebuilders rallied 3.8 percent, the most since January, as all 11 members advanced. D.R. Horton increased 8.3 percent after the largest U.S. homebuilder by revenue reported earnings that beat estimates as prices and orders climbed. PulteGroup Inc. rose 2.3 percent as profit exceeded forecasts.

General Electric Co. added 0.2 percent. People with knowledge of the matter said the company is in talks to buy France’s Alstom SA in what would be its biggest-ever acquisition. The U.S. maker of jet engines and locomotives may pay more than $13 billion for Alstom, one of the people said.

Aetna Inc. gained 5.9 percent. The third-largest U.S. health insurer reported profit that beat analyst estimates and raised its forecast as membership rose for the eighth consecutive quarter.

Qualcomm dropped 3.5 percent. The largest mobile-chip maker forecast third-quarter profit and revenue that fell short of some analysts’ estimates, citing weaker phone sales in China as the rollout of a fast new data network takes longer than Qualcomm expected.

The company also said it received a Wells notice from the U.S. Securities and Exchange Commission last month that the agency recommended enforcement action related to bribery allegations in China.

Xilinx Inc. plunged 9.1 percent, the most in the S&P 500 today and the stock’s biggest slide since 2005. The maker of programmable chips used in mobile-phone based stations as Credit Suisse Group AG lowered its rating on the company to neutral from outperform.

Have a wonderful evening everyone.

Be magnificent!

Though there is repulsion enough in Nature, she lives by attraction.

Mutual love enables Nature to persist.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

You who seek an end to love, love will yield to business: be busy,

and you will be safe.

-Ovid, 43 BC-18 AD

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