December 23, 2014 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAY
 

Wishing everyone a very Merry Christmas and a very joyous holiday season!!

Market Closes for December 23^rd, 2014     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose to a three-week high as energy shares rallied on higher oil prices and data showed the U.S. and Canadian economies grew faster than forecast last quarter.

     Pacific Rubiales Energy Corp. jumped 6.1 percent after a well test found offshore oil. Veresen Inc. gained 15 percent, its biggest-ever advance, after agreeing to a joint venture with KKR & Co. to expand pipeline and natural gas infrastructure in British Columbia. MEG Energy Corp. rose 5 percent as crude advanced in New York. Teck Resources Ltd., the nation’s largest diversified miner, jumped 4.2 percent.

     The Standard & Poor’s/TSX Composite Index rose 161.65 points, or 1.1 percent, to 14,594.03 at 4 p.m. in Toronto, the highest close since Dec. 3. The index has gained 7.1 percent for the year, on pace for a third straight annual advance, the longest streak since 2007.

     Nine of the 10 main industries in the S&P/TSX advanced on trading 35 percent lower than the 30-day average today.

     Manulife Financial Corp. climbed 1.2 percent to C$22.41, a two-week high, after agreeing to buy New York Life Insurance Co.’s retirement plan services business in a deal that will boost the insurer’s assets under administration by about $50 billion. Terms of the deal were not disclosed.

     Energy shares in the index climbed 2.2 percent to the highest since Dec. 3. West Texas Intermediate oil advanced 3.4 percent in New York while London Brent climbed 2.3 percent.

     U.S. gross domestic product grew at a 5 percent annual rate from July through September, the biggest advance since the third quarter of 2003, as consumers and businesses spent more than previously estimated.

     Canada’s economy rose 0.3 percent in October on gains in the public sector and commodity production, ahead of economists’ estimates. The highest forecast was 0.2 percent.

     The S&P/TSX surged 5.4 percent last week, the most since July 2009, as equities worldwide climbed as oil prices stabilized and Federal Reserve Chair Janet Yellen said the U.S. central bank will probably hold rates near zero at least through the first quarter.

US

By Joseph Ciolli and Callie Bost

     (Bloomberg) — The Dow Jones Industrial Average rose above 18,000 for the first time as faster-than-forecast growth in gross domestic product boosted confidence in the economy and overshadowed declines in health-care companies.

     The Dow average added 64.73 points, or 0.4 percent, to a record 18,024.17 at 4 p.m. in New York. The Standard & Poor’s 500 Index rose 0.2 percent to 2,082.17, also reaching an all- time high. Both gauges have advanced five straight days. The Nasdaq Biotechnology Index slipped 4.6 percent for the biggest decline since April.

     “The market was roaring yesterday, and going into the end of the year it keeps pushing higher,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “The Fed is part of the fueling of everything, and you have to couple that with the year-end push.”

     It’s been 172 days since the Dow closed above 17,000 on July 3, data compiled by Bloomberg show. That’s the fifth- fastest trip between thousands, with the record being 35 days to 11,000 in May 1999. It took the index almost 5,200 days to go from 1,000 to 2,000 between 1972 and 1987, according to Howard Silverblatt, an index analyst at the New York-based S&P Dow Jones Indices.

     The Dow closed at an eight-month low on Oct. 16 before rallying more than 1,882 points, or 12 percent, to to top 18,000.

     The gauge has risen 175 percent during the five-year bull market that began in March 2009, propelled by better-than- estimated corporate results and three rounds of Fed bond purchases. The S&P 500 has more than tripled in that time.

     Technology companies have had some of the biggest gains in the Dow this year, with Intel Corp. rising more than 44 percent and Microsoft Corp. jumping 29 percent. Consumer companies such as Home Depot Inc., Walt Disney Co. and Nike Inc. have also risen at least 22 percent to lead the 30-stock gauge’s advance.

     Nike, UnitedHealth Group Inc., Visa Inc., Home Depot and Intel have paced gains during the gauge’s run to 18,000 in the second half of the year, with each rallying more than 20 percent from July 3. Caterpillar Inc., International Business Machines Corp. and Chevron Corp. have been the worst performers, with slumps of more than 14 percent in that period.

     The industrial gauge has climbed 8.7 percent this year, almost three times more than the Russell 2000 Index of small-cap companies.

     “I think it’s a testament to where the economy is,” John Canally, a Boston-based economic strategist at LPL Financial Corp., which oversees $464.8 billion, said in a phone interview. “The underlying trend in the economy is still there, we’re still in the middle of the business cycle  and earnings look solid. That’s adding up to a lot of people saying ‘hey, I’m missing this, I better get involved in the stock market.’”

     Equity benchmarks have rallied to records, with the S&P 500 rebounding 12 percent from a low in October, amid speculation the U.S. economy is strong enough to withstand a slowdown overseas.

     Data today showed the world’s largest economy expanded at the fastest pace in more than a decade, as U.S. consumers and businesses spent more than previously estimated.

     Gross domestic product grew at a 5 percent annual rate from July through September, the biggest advance since the third quarter of 2003, and up from a previously estimated 3.9 percent, revised figures from the Commerce Department showed today in Washington. The median forecast of 75 economists surveyed by Bloomberg projected a 4.3 percent increase.

     Consumer spending rose more than forecast in November as incomes increased and gasoline prices dropped, indicating the biggest part of the U.S. economy is strengthening as the year ends.

     Stocks started to rally last week, with the S&P soaring the most in four days since 2011, after the Fed said it will be patient on the timing of a rate increase even as U.S. growth shows signs of accelerating. Chair Janet Yellen said any spillover from the situation in Russia is likely to be small, while the central bank’s policy statement didn’t mention turmoil sparked by tumbling oil prices.

     The S&P 500 is now up 0.7 percent for December and 13 percent this year.

     “Part of the rebound we’re now witnessing has to do with the realization that the selloff was overdone,” said David Wartenweiler, chief investment officer at Habib Bank AG in Zurich. “The U.S. economy is really on track to continue to grow at a healthy pace. It’s also important that the Fed said they’re going to increase interest rates but be patient.”

     The Chicago Board Options Exchange Volatility Index fell 3 percent to 14.8. The gauge known as the VIX has dropped five straight days, its longest streak in a month.

     Nine out of 10 industries in the S&P 500 rose today, with health-care companies posting the only losses as a group, tumbling 2.2 percent.

     The Nasdaq Biotechnology Index fell for a second day, with losses beginning after a drug-benefit manager blocked Gilead Sciences Inc.’s $1,000 hepatitis treatment.

     Gilead dropped 3.7 percent today, after tumbling 14 percent yesterday. Biogen Idec Inc. lost 4.7 percent and Celgene Corp. slipped 6.5 percent.

     Health companies accounted for the biggest losses in the Dow as Johnson & Johnson, Pfizer Inc. and Merck & Co. fell more than 2 percent.

     “Health-care is definitely underperforming today, specifically in biotechnology names,” Joe Bell, a Cincinnati- based senior equity analyst at Schaeffer’s Investment Research Inc., said by phone. “Gilead is really dragging down the biotechnology sector.”

Have a wonderful evening everyone!

Be magnificent!

”Christmas is the spirit of giving without a thought of getting. It is happiness because we see joy in people. It is forgetting self and finding time for others. It is discarding the meaningless and stressing the true values.”Thomas S. Monson

As ever,

Karen

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7