December 2, 2014 Newsletter

Dear Friends,

Tangents:

THE Man of December:  Napoleon III (1808-1873).  He was elected president of the Second French Republic on December 10, 1848;  made his coup d’état on December 2^nd, 1851, and became emperor on December 2^nd, 1852.

Blow, blow, thou winter wind.  Thou art not so unkind.  As man’s ingratitude.  –William Shakespeare.

OWL POEM

One has to say this for the rounds of life
     that keep coming and going; it has worked so far.
The rabbit, after all, has never asked if the grass
     wanted to live.
Any more than the owl consults with the rabbit.

Acceptance of the world requires
     that I bow even to you,
Master of the night.

                         -Mary Oliver

PHOTOS OF THE DAY

Free range Christmas geese run to their free-stall barn on a farm in Pfarrkirchen, southern Germany. Roasted goose is one of the traditional German Christmas feasts. Matthias Schrader/AP

A Macy’s Santa Claus visits with 8-month-old Brystal Logsdon at Hoops Family Children’s Hospital in Huntington, W.Va. Lori Wolfe/The Herald-Dispatch/AP

Market Closes for December 2^nd, 2014     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Dec. 2 (Bloomberg) — Canadian stocks were little changed, at a three-week low, as losses among gold producers and banks offset a rebound in energy and industrials shares.

     Semafo Inc. and Iamgold Corp. retreated with the price of bullion. Bank of Montreal dropped 2.3 percent, the most since October, as profit missed estimates. Air Canada, the nation’s largest airline, advanced a fourth day to extend a six-year high. Keyera Corp. and Trilogy Energy Corp. climbed at least 3.6 percent as crude pared an earlier loss.

     The Standard & Poor’s/TSX Composite Index fell 5.25 points, or less than 0.1 percent, to 14,620.07 at 4 p.m. in Toronto, erasing earlier gains of as much as 0.6 percent. The equities benchmark has fallen five straight days to pare its gain this year to 7.3 percent.

     Telus Corp. tumbled 3.3 percent to C$41.83, the most since June 2013, as telephone stocks lost 1.6 percent as a group. Telus has reportedly struck a deal to share its network with Wind Mobile customers to hep the wireless carrier expand its service across Canada.

     Canadian Pacific Railway Ltd. rallied 3.7 percent to C$220.51 and Canadian National Railway Co. gained 1.5 percent to C$78.23 as industrial companies rebounded 1.4 percent, the most in the S&P/TSX. The group had slumped 7 percent in the previous two days.

     Air Canada added 0.8 percent to C$11.51, the highest close since January 2008. WestJet Airlines Ltd. jumped 1.9 percent to C$34.19, an all-time high. Shares of the Calgary-based carrier have soared 14 percent in five days.

     Keyera jumped 5 percent to C$82.18 and Trilogy Energy rallied 3.6 percent to C$10 as the S&P/TSX Energy Index rebounded 0.8 percent to snap a six-day losing streak. Seven of 10 industries rose on trading volume 34 percent higher than the 30-day average today.

     West Texas Intermediate fell 3.1 percent to $66.88 a barrel in New York. Brent dropped in London. Crude had the biggest monthly loss in November in almost six years after the Organization of Petroleum Exporting Countries signaled it will leave it to the market to curb a glut.

US

By Callie Bost

     Dec. 2 (Bloomberg) — U.S. stocks rose, sending the Dow Jones Industrial Average to a record, as biotechnology and energy companies rallied and data on construction spending boosted confidence in the economy.

     Biogen Idec Inc. led gains in health-care shares after its Alzheimer’s drug showed promising early results. Energy shares climbed 1.3 percent even as oil resumed a selloff, while railroads surged the most in a month. Genworth Financial Inc. slid 5.9 percent as JPMorgan Chase & Co. cut its price target on the shares.

     The Standard & Poor’s 500 Index rose 0.6 percent to 2,066.55 at 4 p.m. in New York, for the largest gain since Oct. 31. The Dow Jones Industrial Average added 102.75 points, or 0.6 percent, to an all-time high of 17,879.55. The Russell 2000 Index of small companies jumped 1.3 percent after dropping 1.6 percent yesterday. About 6.6 billion shares changed hands on U.S. exchanges, in line with the three-month average.

     “The economy seems to be fine and nothing is changing that narrative,” James W. Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.8 billion, said by phone. “The energy sector is up while oil is down. Maybe the thought is the sector fell too far, too fast. Health-care is being led by biotechnology stocks, mainly Biogen Idec.”

     The S&P 500 fell 0.7 percent yesterday, the most since Oct. 22, as weaker data on Black Friday sales and China manufacturing overshadowed a rebound in oil prices and expansion in American factories.

     Data today showed construction spending grew more than estimated in October. The government’s labor report later this week may show companies added 230,000 payrolls in November while the unemployment rate held at 5.8 percent, according to the consensus forecast by economists.

     Two of the Federal Reserve’s most influential policy makers said sharply lower crude prices will boost spending and aid U.S. growth. Fed Vice Chairman Stanley Fischer and New York Fed President William C. Dudley, speaking at separate events yesterday in New York, both stressed the positive economic impact from the steepest decline in oil prices for five years.

     “I’m not very worried,” Fischer told an audience at the Council on Foreign Relations. “The lower inflation that we’ll get from the lower price of oil is going to be temporary.”

     Oil resumed its declines today, as West Texas Intermediate fell 3.1 percent. Crude has collapsed into a bear market amid the highest U.S. output in more than three decades and signs of slowing global demand growth. The Organization of Petroleum Exporting Countries may hold an emergency meeting in the first quarter, Venezuela’s Foreign Minister Rafael Ramirez said in an interview with Panorama newspaper.                         

     The S&P 500 closed at an all-time high on Nov. 26. The gauge has climbed for six Decembers in a row, posting an average return of 2.2 percent.

     “Yesterday’s action shows we might see near-term weakness, but that’s healthy,” Matt Maley, equity strategist for Miller Tabak & Co. in Newton, Massachusetts. “With what seems to be dovishness from central banks globally and chatter about China getting more dovish, unless a central bank really changes its stance, it would seem that the month of December should continue on its historic stance as a positive month.”

     Global equities rose earlier today as the People’s Bank of China, which reduced interest rates on Nov. 21, refrained from draining funds from the financial system, fueling speculation it may be preparing stimulus measures after data yesterday showed manufacturing slowed.

     The European Central Bank is set to review monetary policy later this week. ECB council member Jens Weidmann said last week that the drop in energy costs is like a mini stimulus package, suggesting no need for the ECB to expand its current measures. The opposing view, previously argued by President Mario Draghi and ECB Chief Economist Peter Praet, is that temporary price shocks can deliver lasting harm to an economy as feeble as the euro area’s.

     The Chicago Board Options Exchange Volatility Index slid 10 percent to 12.85 for its biggest drop since Oct. 28. The S&P 500 options gauge rose 7.2 percent yesterday and 10 percent on Nov. 28.

     Nine of 10 main industries in the S&P 500 advanced. Health- care companies increased 1.1 percent as the Nasdaq Biotechnology Index surged 2.1 percent to a record. Financial-services companies rose 1 percent, with JPMorgan Chase climbing 1.8 percent.

     Energy shares rallied 1.3 percent for the largest gains. The group has surged 2.1 percent in the past two days after closing at a 15-month low last week. Marathon Petroleum Corp. surged 3.7 percent and Valero Energy Corp. climbed 4.1 percent.

     Chevron Corp. and Exxon Mobil Corp. increased more than 1.9 percent, pacing gains in the Dow for a second straight day.

     Railroad companies in the S&P 500 surged 3.6 percent, advancing the most since Oct. 23 to rebound from a 7.6 slide over the previous two trading sessions. CSX Corp. rallied 4 percent, while Union Pacific Corp. increased 3.8 percent. Norfolk Southern Corp. rose 2.8 percent.

     Biogen Idec soared 6.4 percent. In a small, early stage trial, Biogen’s drug BIIB037 reduced beta amyloid in the brain, said Doug Williams, executive vice president of research and development, at a Deutsche Bank conference in Boston today.

     Beta amyloid, a protein fragment that creates plaque tangles in the brain, is thought to be a key component in Alzheimer’s disease.

     Avanir Pharmaceuticals Inc. jumped 13 percent. Japan’s Otsuka Holdings Co. agreed to buy the Aliso Viejo, California- based drugmaker for about $3.54 billion to gain treatments for neurological conditions.                    

     Spansion Inc. increased 22 percent. Cypress Semiconductor Corp. is acquiring it for about $1.6 billion in stock, creating a company that will supply chips for products including cars and consumer electronics.

     Apple slid 0.4 percent after losing 3.3 percent yesterday. The stock dropped almost 6.4 percent during a 60-second swoon that started 20 minutes after trading yesterday, before paring the decline. Apple’s retreat was mirrored in technology stocks from Tesla Motors Inc. to TripAdvisor Inc. and Facebook Inc.

     TripAdvisor rebounded 7.9 percent today for the largest advance in the S&P 500, while Facebook added 0.5 percent. Tesla slipped less than 0.1 percent.

     Genworth slumped 5.9 percent for the worst performance in the S&P 500. Jimmy Bhullar, an analyst at JPMorgan, lowered his price target for Genworth shares to $11 from $18 today, citing a “cautious” outlook for the insurer’s main businesses such as mortgage guaranties and life coverage. Genworth has plunged 39 percent since Nov. 5.
 

Have a wonderful evening everyone.

Be magnificent!

When the life of a man, freed from all distractions, finds its unity in the spirit,

the knowledge of the infinite comes to him immediately and naturally,

like light from a flame.

Rabindranath Tagore

As ever,
 

Carolann

Both following and leading are skills to be learned.

                     -David Zane Fleisher, 1894-1979 

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7