April 29, 2014 Newsletter

Dear Friends,

Tangents:

Comedian Jerry Seinfeld turns 60 years old today.

-from Dorothy Wordsworth’s Journal, entry on April 29^th, 1802:

The lake was still; there was a boat out.  Silver How reflected with delicate purple and yellowish hues, as I have seen spar; lambs on the island, and running races together by the half-dozen, in the round field near us.  The copses greenish, hawthorns green.  Came home to dinner, then went to Mr Simpson – we rested a long time under a wall, sheep and lambs were in the field – cottages smoking.  As I lay down on the grass, I observed the glittering silver line on the ridge of the backs of the sheep, owing to their situation respecting the sun, which made them look beautiful, but with something of a strangeness, like animals of another kind, as if belonging to a more splendid world.

Photos of the day

A bald eagle hovers above the Manchester Dock with Seattle in the background, April 28. Larry Steagall/Kitsap Sun/AP

Kentucky Derby hopeful Candy Boy gets a bath after a morning workout at Churchill Downs in Louisville, Ky. Charlie Riedel/AP

Market Closes for April 29^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

April 29 (Bloomberg) — Canadian stocks rose, led by oil companies as Suncor Energy Inc. rallied on earnings and crude prices increased.

Suncor added 3 percent after reporting record earnings. Cameco Corp., which mines uranium, fell 3.6 percent after first- quarter profit missed analyst estimates. Encana Corp. rose 2.5 percent after the oil company said it would sell some of its Texas properties for $530 million.

The Standard & Poor’s/TSX Index rose 52.20 points, or 0.4 percent, to 14,583.11 at 4 p.m. in Toronto. The gauge is up 1.7 percent for the month, and is trading at the highest level since 2008.

“There’s no doubt there’s a geopolitical risk premium in place in driving oil and gas on some of the supply disruption concerns, but I think that is on the back of a fundamental improvement in the global economy,” said Stephen Lingard, managing director and portfolio manager at Franklin Templeton Solutions in Toronto. He helps manage C$8.5 billion ($7.75 billion).

Energy companies climbed 1.3 percent as a group today, extending a yearly gain to 15 percent. West Texas Intermediate advanced 0.4 percent and Brent crude rose 0.8 percent.

Oil strengthened after the U.S. and European Union imposed additional sanctions against Russia yesterday, while Libya suspended a vote on the country’s premiership after gunmen opened fire in parliament today.

Suncor, Canada’s largest oil company by market value, rose 3 percent to C$42.60. The Calgary-based producer said first- quarter profit rose, helped by higher crude prices and shipments of North American oil to the Gulf and Atlantic coasts.

Cameco fell 3.6 percent to C$23.27. The uranium miner said its McClean Lake mill will not be processing ore in the second quarter as the company reported first-quarter adjusted earnings that fell short of estimates.

Encana rose 2.5 percent to C$25.68. The oil and gas producer is selling some of its Texas properties to an undisclosed buyer as part of its plan to get value out of its “massive” set of assets, Chief Executive Officer Doug Suttles said in a statement.

AutoCanada Inc. rose 5.7 percent to C$65.44 after the car seller signed a purchase agreement for eight dealerships.

Quebecor Inc. fell 2.3 percent to C$26. The telecommunications company said its chief executive officer Robert Depatie was stepping down for health reasons.

Canadian Pacific Rail Ltd. fell 1.7 percent to C$165.48. A 3.2 million block trade priced at $150 a share was executed today, said Bobby Verrier of Zacks & Co.

Meg Energy Corp. rose 3.1 percent to C$40.10, its highest since September 2012. Meg will report its first quarter earnings tomorrow.

US
By Callie Bost and Trista Kelley

April 29 (Bloomberg) — U.S. stocks rose as Internet stocks rallied for the first time in five days and results from Merck & Co. to Sprint Corp. topped estimates before a Federal Reserve decision on monetary policy.

Yahoo! Inc. and TripAdvisor Inc. jumped at least 4.6 percent to pace gains in Internet shares. Merck rose 3.6 percent as earnings were helped by cuts in spending on promotions and research. Sprint added 11 percent after sales beat estimates as the company held onto more subscribers than forecast. Coach Inc. fell 9.3 percent after sales at its North American stores plunged 21 percent amid increased competition and bad weather.

The Standard & Poor’s 500 Index climbed 0.5 percent to 1,878.33 at 4 p.m. in New York. The Dow Jones Industrial Average increased 86.63 points, or 0.5 percent, to 16,535.37. The Nasdaq Composite Index advanced 0.7 percent. About 6.3 billion shares changed hands on U.S. exchanges, 7.3 percent above the three- month average.

“Earnings have been strong and for the most part, companies have been upbeat with their full-year earnings outlooks,” Steven Rees, head of U.S. equities at JPMorgan Private Bank, which oversees $992 billion in assets, said in a phone interview. “Data on earnings and today’s data on consumer confidence means you won’t hear much change from the Fed. The next catalyst in the market will be Friday’s jobs report.”

The S&P 500’s advance today left it 0.3 percent higher for the month. It remains 0.7 percent below its all-time high from April 2. The Nasdaq Composite is down 2.3 percent for the month, as technology stocks have sold off amid concern valuations have outpaced estimates for earnings growth. Nasdaq companies trade at 35 times reported earnings, about double the level of S&P 500 members.

The Dow Jones Internet Composite Index jumped 2.2 percent today, paring its drop for April to 7.3 percent. TripAdvisor Inc. rallied 4.6 percent to $80.83. Yahoo advanced 5.4 percent to $35.83 after saying it will start two comedy shows to attract viewers to its website. The shares lost 6.6 percent over the previous five sessions.

Twitter Inc. climbed 4.6 percent to $42.62 during regular trading. After the market close, the shares lost 8.7 percent after the microblogging service said membership in the first quarter reached 255 million, with user growth slowing to 25 percent from 30 percent in the previous period.

EBay Inc. slumped 3.1 percent as of 4:33 p.m. in New York as the world’s biggest online marketplace said sales in the current period will be $4.33 billion to $4.43 billion while adjusted profit will be 67 cents to 69 cents a share. Analysts on average projected revenue of $4.4 billion and profit of 70 cents. The shares rose 1.7 percent to $54.54 earlier in the day.

Other technology stocks that have been the focus of selling rallied during regular trading. Facebook Inc. climbed 3.6 percent to $58.15, ending an 11 percent drop over four days. Google Inc. Class C shares gained 2.6 percent to $536.33, snapping a 4.1 percent drop over the same period.

“It is healthy to see some profit-taking and rotation into other parts of the market,” Rees said. “We’re starting to see some bottoming in higher quality growth stocks. It’s a selective buying opportunity.”

Some 37 companies on the S&P 500 were scheduled to report earnings today. Profits for members of the S&P 500 climbed 3.4 percent in the first quarter, according to analyst estimates compiled by Bloomberg. They had predicted an increase of 0.7 percent as recently as April 17. Revenue for the index’s members probably rose 2.8 percent in the quarter.

About 74 percent of the 279 S&P 500 members that have reported earnings so far this season have posted profit that exceeded analysts’ estimates, data compiled by Bloomberg show. FedEx Corp., General Motors Co. and McDonald’s Corp. have all blamed weather for poor earnings performance as snow storms during the first three months of the year slowed shipments and kept shoppers indoors.

The Fed’s policy makers began a two-day meeting in Washington today. At the conclusion, they will probably announce a fourth consecutive reduction to their monthly bond-buying program designed to stoke the economy, according to economists polled by Bloomberg. Policy makers will likely keep their target interest rate for overnight bank lending in a range of zero to 0.25 percent.

At its March meeting, the Federal Open Market Committee decided to reduce monthly bond purchases by $10 billion, to $55 billion, and said it would continue to cut them in “measured steps.” 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.

“The economy is in a sweet spot,” Patrick Spencer, who helps oversee more than $100 billion as London-based head of equity sales at Robert W. Baird & Co., said in a telephone interview. “Growth isn’t so exuberant that the Fed needs to withdraw their support quickly, and not so anemic that they need to be concerned about further weakening.”

A report today showed home prices in 20 U.S. cities rose at a slower pace in the year ended February as the residential real-estate market cooled. The S&P/Case-Shiller index of property values increased 12.9 percent from February 2013, the smallest 12-month gain since August, after rising 13.2 percent in the year ended in January, a report from the group showed today in New York.

The Conference Board’s index of U.S. consumer confidence decreased to 82.3 in April from 83.9 a month earlier, the New York-based private research group said today. The median forecast in a Bloomberg survey of 78 economists called for a reading of 83.2.

Data later this week will give investors more clues about the strength of the economy. The government’s initial tally of first-quarter gross domestic product tomorrow may show the slowest expansion in a year.

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.

The Chicago Board Options Exchange Volatility Index, a gauge of options prices on the S&P 500, dropped 1.9 percent to 13.71. The measure is down 1.2 percent for the month.

Eight of 10 major industries in the S&P 500 advanced today, with technology and financial shares climbing more than 0.7 percent for the biggest gains. Consumer-staples companies and utilities declined.

Merck rose 3.6 percent to $58.72. The second-biggest U.S. drugmaker posted first-quarter profit excluding certain items of 88 cents a share, 9 cents above the average of 16 analysts’ estimates compiled by Bloomberg. Sales were $10.3 billion, down from $10.7 billion a year earlier.

Sprint jumped 11 percent, its biggest gain since at least July, to $8.27. Sales topped analysts’ estimates as the company held onto more subscribers than forecast in the face of cheaper wireless plans from T-Mobile US Inc. and AT&T Inc. The carrier raised its full-year forecast.

Coach lost 9.3 percent, the most since January 2013, to $45.71. U.S. retailers of all stripes have been hampered by repeated winter storms and weak store traffic, while Coach also faces stepped-up competition in the handbag segment from the likes of Michael Kors Holdings Ltd.

Gogo Inc. plunged 29 percent to $13.12 after AT&T Inc. said it will offer Internet access on airplanes in a direct challenge to the inflight Wi-Fi provider.

Have a wonderful evening everyone.

Be magnificent!

Wherever there is a touch of color,

a note of a song, grace in a form,

this is a call to our love.

Rabindranath Tagore, 1861-1901

As ever,

Carolann

In great attempts it is glorious even to fail.

-Vince Lombardi, 1913-1970

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