December 29, 2014 Newsletter

Dear Friends,

Tangents:

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

PHOTOS OF THE DAY
Fishermen unload their catch in the port of Sabang in Pulah Weh, Indonesia. ‘The fishermen often unload their catch before dawn. It’s a messy, chaotic flurry of activity that smells strongly of fish and is a blast to watch.’ Ann Hermes

 Iranian laugh instructor Mahro Sameni (wearing red scarf) leads a laughing class in Tehran, Iran. More than 250 Iranian instructors have been trained in ‘laughing yoga’ in the past decade, and work privately and in venues such as state banks, health clinics, and addiction centers to ease the modern stresses of urban living.  Scott Peterson

Market Closes for December 29th, 2014     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose for a third day, extending a three-week high, as banks posted the longest winning streak in more than a year while energy producers pared gains as crude slumped to a five-year low.

     Bank of Nova Scotia and Canadian Western Bank climbed at least 1 percent to pace gains among financial stocks. TransCanada Corp. rose 1.4 percent after buying a solar power plant from Canadian Solar Inc. for C$60 million ($51.6 million).  Bombardier Inc. gained 1.5 percent after winning an order to sell 42 double-deck trains to France for about $484 million.  BlackBerry Ltd. added 2.1 percent to C$12.67, a six-week high.

     The Standard & Poor’s/TSX Composite Index rose 54.67 points, or 0.4 percent, to 14,663.92 at 4 p.m. in Toronto. The index has gained 7.7 percent for the year, on pace for a third straight annual advance, the longest streak since 2007.

     Canadian Western Bank added 1.3 percent to C$33.21 and Bank of Nova Scotia rallied 1 percent to C$66.96. Nine of 10 industries increased in the S&P/TSX on trading volume that was 50 percent lower than the 30-day average today.

     The S&P/TSX Banks Index increased 0.7 percent for a ninth straight day of gains, the longest streak since October 2013. Toronto-Dominion Bank, the nation’s largest lender, added 0.6 percent to C$55.70.

     Bellatrix Exploration Ltd. rose 3.9 percent to C$4.25 as energy stocks increased 0.3 percent, paring an earlier gain of as much as 1.6 percent. West Texas Intermediate crude sank 2.1 percent in New York to the lowest level in more than five years, erasing an advance spurred by an escalating conflict in Libya.

     Financials, raw-materials and energy stocks are the three biggest laggards in Canada for the first time since at least 1988, fueling concerns about the nation’s economic recovery as crude prices plunged into a bear market this year, gold fluctuated and bank earnings slowed.

     The three groups, which account for about two-thirds of the S&P/TSX, are the worst performers among 10 groups, led by a 7.4 percent drop in energy shares.

     Greek Prime Minister Antonis Samaras failed in a third and final attempt to get his presidential candidate, Stavros Dimas, confirmed. The vote will trigger a general election in late January or early February, a few weeks before the nation’s 240- billion-euro ($293 billion) bailout expires.

US

By Joseph Ciolli and Inyoung Hwang

     (Bloomberg) — The Standard & Poor’s 500 Index rose, approaching a third straight yearly advance and extending gains after equity gauges climbed past milestones last week.

     Gilead Sciences Inc. increased 3.7 percent as biotechnology shares rebounded for a third day. Energy companies rose despite a drop in crude prices. Losses in Microsoft Corp., Intel Corp. and International Business Machines Corp. weighed down the Dow Jones Industrial Average.

     The S&P 500 rose 0.1 percent to 2,090.57 at 4 p.m. in New York. The Dow fell 15.48 points, or 0.1 percent, to 18,038.23.  The Russell 2000 Index gained 0.3 percent. More than 4.7 billion shares changed hands on U.S. exchanges, 32 percent below the three-month average. Volume for U.S. exchanges on Dec. 26 was the lowest this year for a full day of trading.

     Equities are approaching the end of the year at record levels, bolstered by the fastest expansion for the American economy in more than a decade. The Federal Reserve’s pledge on Dec. 17 to be patient in raising interest rates helped the S&P 500 fully recoup a 5 percent loss in the first half of the month.

    “There’s lots for investors to digest going into 2015,”said James Buckley, who helps oversee about $47 billion as a portfolio manager at Baring Asset Management Ltd. in London. “The focus will likely be on more macro-type events immediately. The U.S. economy is the one real bright spot. That economy is doing phenomenally well. That in itself is reason to be optimistic.”

     The S&P 500 has gained 13 percent this year, while the Dow is up 8.8 percent in 2014 after climbing above 18,000 for the first time last week. The Russell 2000 of small-cap stocks climbed to an all-time high on Dec. 26. The Nasdaq Composite Index reached its highest since March 2000 that same day, closing about 5 percent below its record.

     U.S. stocks have overcome upheavals in 2014 that threatened to derail a bull market in its sixth year, ranging from violence in the Ukraine to an Ebola outbreak and a bear market in oil prices. The S&P 500’s worst retreat was only 7.4 percent, and the gauge recovered from each of its declines of 4 percent or more within one month.

     The S&P 500 has not seen a four-day decline since December 2013. The benchmark gauge has declined for four consecutive trading sessions at least once every year since at least 2000.

     The Chicago Board Options Exchange Volatility Index, a measure of demand for options on the S&P 500, dropped 12 percent last week. It gained 3.9 percent to 15.06 today. The gauge, also known as the VIX, has tumbled 36 percent from a two-month high on Dec. 16.

     The S&P 500 trades at 18.5 times profits, the highest level since 2010 and compares with the average of 16.3 over the past decade.

     Analysts forecast earnings for the S&P 500 to increase 6.4 percent next year. Consumer-discretionary, technology and raw- materials companies are expected to post the fastest growth, with profits rising at least 13 percent, estimates compiled by Bloomberg show.

     Stock futures slumped earlier today after Greek Prime Minister Antonis Samaras failed in his third and final attempt to persuade parliament to back his candidate for head of state. Concern that anti-austerity party Syriza will win snap elections next month roiled stocks in Athens, as such an outcome risks the European Union’s common currency and the start of the European Central Bank’s bond-buying plan.

     “We’re seeing if people will try to add to performance before the year is over,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “There might be some trading around the edges by people looking for a little more performance. It’s more of a stock-picker way of looking at it at this point.”

     Economic reports this week may show consumer confidence climbed in December, pending home sales rose in November, while an Institute for Supply Management index of manufacturing slipped this month, according to economists surveyed by Bloomberg.

     Six out of 10 major group in the S&P 500 increased today. Utilities and consumer-discretionary companies gained the most, while technology and phone shares had the worst performance.

     Gilead Sciences Inc. rose 3.7 percent as biotechnology shares gained for a third day after the biggest two-day drop since February 2012.

     Biotech shares slumped last week amid concern health insurers and companies that manage patient’s drug benefits will put new pressure on how much the industry can charge for breakthrough treatments. The selloff was prompted by Express Scripts Holding Co.’s announcement that it would block its U.S. patients from getting Gilead’s $1,100-a-pill hepatitis C medicine.

     Energy shares rose 0.3 percent, even as oil erased an early rally. Crude reached a five-year low on speculation that a global supply glut that’s driven crude into a bear market will continue through the first half of 2015.

     IBM, Intel, Microsoft and Red Hat Inc. lost more than 0.9 percent. While Red Hat, Intel and Microsoft have rallied at least 25 percent this year, IBM is down 14 percent for 2014, heading for the worst performance in the Dow for a second straight year.

Have a wonderful evening everyone!

Be magnificent!

“ True happiness… is not attained through self-gratification, but through fidelity to a worthy purpose”.   Helen Keller

As ever,
 
Leyla
 

“Imagine all the people living life in peace. You may say I’m a dreamer, but I’m not the only one. I hope someday you’ll join us, and the world will be as one”. John Lennon
 

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