April 28, 2014 Newsletter

Dear Friends,

Tangents:

New moon in Taurus tonight.

On this day in 2003, Apple launched the iTunes store.

The Abu Dhabi government spent 1.38 billion to open what looks like a fantastic unique and universal museum – The Louvre Abu Dhabi.  Check out  www.louvreabudhabi.ae.

If everybody is thinking alike, then somebody isn’t thinking. –General George S. Patton, Jr. US Army field commander, WWII, 1885-1945.

Photos of the day

South African President Jacob Zuma (2nd l.) talks with Mandla Mandela (l.) after they and other dignitaries unveiled a bust of former South African President Nelson Mandela, right, at the South African Parliament in Cape Town, South Africa. Schalk van Zuydam/AP

Exercise rider Abel Flores takes Kentucky Derby hopeful Tapiture for a morning workout in the rain at Churchill Downs in Louisville, Ky. Morry Gash/AP

Market Closes for April 28^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam

April 28 (Bloomberg) — Canadian stocks fell a second day, with the benchmark index paring losses in the final hour, as technology companies slumped amid a selloff in U.S. Internet shares and Barrick Gold Corp. sank on failed merger talks.

Avigilon Corp. and Constellation Software Inc. retreated more than 3.4 percent to pace declines among computer shares. Barrick Gold lost 3.1 percent after Newmont Mining Corp. broke off talks to merge the world’s two largest gold producers. Saputo Inc. added 3.5 percent after an analyst at TD Securities Inc. projected increasing fourth-quarter earnings. Capital Power Corp. lost 1.8 percent after analysts at National Bank Financial lowered their rating for the stock. Teck Resources Ltd. retreated 2.3 percent to snap four days of gains.

The Standard & Poor’s/TSX Composite Index fell 2.66 points, or less than 0.1 percent, to 14,530.91 at 4 p.m. in Toronto, paring earlier losses of as much as 0.5 percent. The equity gauge has climbed 1.4 percent in April for a 10th month of gains, the longest streak since 1983.

“There seemed to be an overemphasis in a lot of portfolios last year on the growth segment of the market so that’s caught everybody a little flat-footed,” said Bob Decker, fund manager at Aurion Capital Management Inc. in Toronto. His firm manages about C$6.6 billion ($5.99 billion). “The rotation has been abrupt and caught people by surprise.”

The Nasdaq 100 Index has fallen in four of the past five weeks amid concern earnings growth is too slow to justify equity valuations.

The Obama administration imposed sanctions on seven Russian officials and 17 companies linked to Russian President Vladimir Putin’s inner circle involved in banking, energy and infrastructure. The European Union added 15 names to a list of sanctioned persons.

Avigilon, which manufactures surveillance equipment, sank 4.3 percent to C$24.84, the lowest level since November. Constellation Software retreated 3.4 percent to C$253.03, a seven-week low. The S&P/TSX Information Technology Index slid 0.8 percent, the most since April 11.

Three of 10 industries in the S&P/TSX retreated on trading volume 10 percent lower compared with the 30-day average. Materials producers sank 1.2 percent.

Barrick Gold retreated 3.1 percent to C$19.12 after Newmont Mining criticized the company’s Co-Chairman John Thornton as a factor in breaking off discussions to merge the two companies, the latest of several failed attempts over more than two decades.

Newmont Chairman Vincent Calarco said in an April 25 letter to the Barrick board, published today, that Thornton was not constructive during talks and also cited press reports that quoted Barrick Chairman Peter Munk describing Newmont as “not shareholder-friendly.” Newmont slumped 6.7 percent to $24.67 in New York, the most since January.

Teck Resources lost 2.3 percent to C$24.26, the first loss in five days, as copper prices slipped after a four-day rally.

Capital Power declined 1.8 percent to C$24.84, a five-week low. Patrick Kenny, analyst at National Bank Financial, lowered the stock’s rating to sector perform, the equivalent of a hold, as the company’s shares have rallied 22 percent since Oct. 16.

Saputo added 3.5 percent to C$57.52 after Michael Van Aelst, analyst at TD Securities, raised his target price for the stock to C$61 from C$55 on a projected 17 percent increase in fourth-quarter earnings per share. Saputo is scheduled to report results on June 5.

Nautilus Minerals Inc. soared 40 percent to 67 Canadian cents, the highest level since January. Nautilus, which won the first lease to mine the ocean floor for gold and copper, has rallied 191 percent in the past three days after resolving a dispute with Papua New Guinea.

US
By Callie Bost

April 28 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index erasing an earlier slide, as Internet and smaller companies pulled back from a selloff amid optimism over merger activity.

Pfizer Inc. added 4.2 percent after proposing to buy AstraZeneca Plc for about 58.8 billion pounds ($98.7 billion).

Microsoft Corp. and Apple Inc. rallied more than 2.4 percent, leading gains among the largest technology companies. Bank of America Corp. dropped 6.3 percent after suspending its planned buybacks and dividend increase because of an error in its capital planning.

The S&P 500 rose 0.3 percent to 1,869.43 at 4 p.m. in New York, reversing an earlier loss of 0.7 percent. The Dow Jones Industrial Average increased 87.28 points, or 0.5 percent, to 16,448.74. The Nasdaq Composite Index declined less than 0.1 percent after tumbling as much as 1.5 percent, and the Russell 2000 Index of smaller companies slid 0.5 percent. About 7.5 billion shares changed hands on U.S. exchanges, 9.3 percent above the three-month average.

“It’s remarkable how volatile the market can be on an intraday basis,” John Carey, a Boston-based fund manager at Pioneer Investment Management Inc., which oversees $220 billion worldwide, said by phone. “Most of the companies that have reported so far have exceeded expectations and there’s M&A that’s bubbling along and that could be causing some optimism, with big deals and restructuring.”

U.S. equities began higher as large companies rallied on optimism about merger activity. Stocks turned lower as the U.S. and European Union imposed new sanctions on Russia, while selling in Internet and small-cap stocks spread to the broader market. Major indexes recovered in the afternoon, turning positive during the final hour of trading.

The Nasdaq Composite declined 0.5 percent last week, including a 1.8 percent tumble on April 25, as disappointing results from Amazon.com Inc. triggered a selloff in technology shares and tensions over Ukraine intensified. The technology- heavy gauge has fallen in four of the past five weeks amid concern valuations have outpaced estimates for earnings growth.  Nasdaq companies trade at 34 times reported earnings, about double the level of S&P 500 members.  The frequency of selloffs has increased even as technology makers are forecast to post the second-fastest profit growth in the S&P 500 this year and members of the Nasdaq 100 Index are beating analyst estimates by almost 10 percent this earnings season.

Increases among larger stocks helped push technology companies in the S&P 500 higher as a group. Microsoft surged 2.4 percent to $40.87 and Apple climbed 3.9 percent to $594.09 to extend its three-day rally to 13 percent, the most since 2009. International Business Machines Corp. added 1.9 percent to $193.14.

The Dow Jones Internet Index fell 1.9 percent, extending a 4.1 percent decline on April 25. The index has dropped 18 percent from a 13-year high on March 5. Only four of 41 members in the gauge rose today. Yahoo! Inc. dropped 1.4 percent to $33.99. Amazon slumped 2.4 percent to $296.58. Netflix tumbled 2.4 percent to $314.21.

A report by the National Association of Realtors showed contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season. The pending home sales index rose 3.4 percent, the first gain in nine months, after a 0.5 percent drop in February that was smaller than initially reported.

A busy calendar this week will give investors more clues about the strength of the economy and the pace of the Federal Reserve’s stimulus program.

The government’s initial tally of first-quarter gross domestic product on April 30 may show the slowest expansion in a year. Federal Reserve policy makers, who on the same day conclude their third meeting of the year, will probably reduce the pace of assets purchases designed to stoke the economy.

Three rounds of monetary stimulus have helped fuel economic growth, sending the S&P 500 surging as much as 180 percent from its 2009 low.

Payroll growth probably accelerated in April as companies remained upbeat about the economy’s prospects after a setback in demand caused by snowstorms and colder temperatures earlier this year. Employers added 215,000 workers, the most since November, economists project a May 2 report from the Labor Department will show.

Investors are also watching developments in Ukraine. The Obama administration imposed sanctions on seven Russian officials and 17 companies linked to Russian President Vladimir Putin’s inner circle involved in banking, energy and infrastructure.

The sanctions, announced by the White House today, are being imposed in conjunction with the European Union, which said today it is adding 15 names to its list of previously sanctioned individuals.

The Chicago Board Options Exchange Volatility Index, a gauge of options prices on the S&P 500, dropped 0.6 percent for its first loss in four days. The gauge jumped 5.6 percent on April 25.

Consumer-staples and phone companies had the biggest gains among 10 groups in the S&P 500, climbing more than 1.1 percent.  Financial and raw-materials shares declined the most, dropping at least 0.5 percent.

Pfizer added 4.2 percent to $32.04. The world’s largest drugmaker is still interested in a deal after AstraZeneca spurned its earlier offer. Pfizer proposed buying the London- based company on Jan. 5 for 46.61 pounds a share in cash and stock, and AstraZeneca declined to pursue negotiations, the New York-based company said in a statement today. The bid was about 14 percent above AstraZeneca’s closing price on April 25.

General Electric Co. gained 0.7 percent to $26.78 after Chief Executive Officer Jeffrey Immelt met with France’s President Francois Hollande over the company’s offer for Alstom SA. Immelt may be moving closer to pulling off his largest-ever acquisition, even after French officials over the weekend urged Alstom to consider a rival offer from Germany’s Siemens AG.

The government doesn’t oppose GE’s proposal, and the meeting in Paris today focused on protecting jobs and maintaining the independence of France’s nuclear industry, according to a person with knowledge of the discussions. The state doesn’t favor either bid, the person said, asking not to be named as the talks weren’t public.

NorthStar Realty Finance Corp. soared 7.3 percent to a record $17.20. American Realty Capital Properties Inc., the largest owner of single-tenant U.S. buildings, is interested in acquiring NorthStar for about $20 a share, according to a person with knowledge of the matter. That’s a premium of 25 percent to NorthStar’s closing price of $16.03 last week and would value the New York-based company at about $6.5 billion. American Realty fell 3 percent to $12.62.

Newmont Mining Corp. dropped 6.7 percent to $24.67. Barrick Gold Corp. said Newmont ended discussions about a takeover, which would have combined the world’s two largest gold producers. Talks between Newmont and Toronto-based Barrick broke down on April 18 over a disagreement about a proposed spinoff of some of the combined company’s assets, people familiar with the situation said the following day.

Bank of America lost 6.3 percent to $14.95. The bank said it will suspend its planned buybacks and dividend increase because of an error in its capital planning. The lender will resubmit its proposal to the Federal Reserve, the Charlotte, North Carolina-based bank said in a statement. The company said it incorrectly adjusted for cumulative realized losses on structured notes issued by Merrill Lynch.

Have a wonderful evening everyone.

Be magnificent!

What is it exactly that hurts you?

Open your heart and speak.  Open your eyes and see.

At the moment that you look with your eyes wide open,

everywhere you will find differences, an infinite variety.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Study nature, love nature, stay close to nature.  It will never fail you.

-Frank Lloyd Wright, 1867-1959

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