February 18, 2015 Newsletter

Dear Friends,

Tangents:

Finally went to see the movie The Theory of Everything last night at the theatre.  Excellent acting for the character of Stephen Hawking.  Highly recommend the movie if you haven’t seen yet. We hope to see all the nominees before the Oscars on Sunday night.  There are just so many brilliant movies this year.

Ash Wednesday today – the first day of Lent, when Roman Catholics sprinkle the foreheads of penitents with the consecrated ashes of palms remaining from the previous Palm Sunday.  This custom is of uncertain date but is commonly held to have been introduced by Pope Gregory The Great.  The fast of Lent was introduced in the 4^th century, but it did not become fixed at 40 days until the early 7^th century, thus corresponding with Christ’s fast in the wilderness.  It usually fell in March and the Saxons called March lenctenmonath because in this month the days noticeably lengthen.

PHOTOS OF THE DAY

The American Falls is partially frozen during sub-freezing temperatures in Niagara Falls, Ontario, Canada. Temperatures dropped to 6 degrees Fahrenheit (-14 Celsius) on Tuesday. Lindsay DeDario/Reuters

A churchgoer holds a rosary during an Ash Wednesday Mass in Baltimore, Md. Ash Wednesday marks the start of Lent, a season of prayer and fasting for Christians before Easter. Patrick Semansky/AP

Market Closes for February 18^th, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, snapping the longest winning streak since November, as energy shares sank after crude retreated from a seven-week high ahead of the latest U.S. supply figures.

     Cenovus Energy Inc. dropped 4.9 percent after the company said it plans to sell C$1.5 billion ($1.2 billion) of shares to fund spending amid the slump in crude. Baytex Energy Corp. and Canadian Natural Resources Ltd. slipped at least 3.4 percent as oil prices reversed Tuesday’s gain. Sherritt International Corp. and First Quantum Minerals Ltd. rallied more than 3.6 percent as copper rose on speculation lower production will reduce oversupply.

     The Standard & Poor’s/TSX Composite Index fell 71.86 points, or 0.5 percent, to 15,212.75 at 4 p.m. in Toronto, halting a six-day rally that added 1.3 percent to the gauge. Trading volume was 11 percent below the 30-day average.

     Cenovus sank 4.9 percent for a seventh straight decline, the worst streak since October. The oil producer, Canada’s fifth-largest by market value, will sell 67.5 million shares at C$22.25 each.

     Canadian Natural Resources lost 3.4 percent, snapping a four-day rally, and Baytex slipped 5.6 percent as energy shares retreated 1.7 percent as a group, most in the S&P/TSX. Five of 10 industries declined.                         

     West Texas Intermediate crude dropped 2.6 percent, declining from its highest closing price in seven weeks in New York on estimates U.S. inventories advanced from a record level last week.

     U.S. stockpiles probably climbed 3 million barrels through Feb. 13, according to analysts’ estimates ahead of a report Thursday.

     Financial shares slid 0.9 percent as Toronto-Dominion Bank and Bank of Nova Scotia fell at least 1.4 percent. Canadian Western Bank, based in Edmonton, slumped 1.9 percent.

     Lumber producer Western Forest Products Inc. tumbled 4.2 percent after U.S. housing starts fell in January on declines in single-family projects as demand cooled.

     Gold rebounded from a six-week low after minutes from the Federal Reserve’s last meeting showed some officials argued for keeping interest rates near record lows for longer.

     Eldorado Gold Corp. climbed 6 percent and Iamgold Corp. surged 7 percent.

US

By Callie Bost and Joseph Ciolli

     (Bloomberg) — The Standard & Poor’s 500 Index erased a loss, after climbing to a record on Tuesday, as speculation that the Federal Reserve will keep rates lower for longer overshadowed a drop in energy shares.

     The S&P 500 slipped less than 1 point to 2,099.68 at 4 p.m. in New York, after losing as much as 0.4 percent. The Dow Jones Industrial Average lost 17.73, or 0.1 percent, to 18,029.85.  About 6.2 billion shares changed hands on U.S. exchanges, 11 percent below the three-month average.

     Equities pared losses as minutes from the Fed’s latest meeting showed some policy makers argued for keeping rates low for longer amid risks facing the economy.

     “The fact that they’re staying slow on moving up rates makes you think that the economy might not be as strong as we think it is,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “We still haven’t gotten to the point where a stronger economy and the Fed considering moving rates is an explicit positive for the market.”

     The  Federal Open Market Committee, while considering risks to be “nearly balanced,” pointed to a strengthening dollar, international flash points from Greece to Ukraine, and slow wage growth as weakening the case for the first rate rise since 2006, according to a record of the Jan. 27-28 meeting.

     The FOMC said after its last meeting it “can be patient” as it considers when to raise the benchmark interest rate, even as it described the labor market as “strong.” A report the following week showed payrolls rose more than forecast in January to cap the strongest three-month gain in 17 years.

     “It’s evident that they’re going to stick with the patient theme,” Jeff Sica, president and CEO of advisory firm Circle Squared Alternative Investments, which oversees $1.5 billion, said in a phone interview. “This was a status quo message. They’re playing their cards very close to the vest because of the vulnerability in Europe and the potential of this Greek crisis getting worse.”

     Speculation that a Greek debt impasse is easing helped the S&P 500 reach an all-time high yesterday, while European equities today rallied to their highest in seven years. A government official, speaking on condition of anonymity, said Greece will submit its request for a loan extension tomorrow.                     

     Data today showed factory production in the U.S. rose less than forecast in January, held back by a decline in motor vehicle assemblies and weaker demand for construction materials.

     A separate report on housing starts showed builders broke ground on fewer U.S. residential construction projects in January as demand for single-family homes cooled from an almost seven-year high. Wholesale prices in the U.S. fell more than forecast in January, led by plunging energy costs and signaling inflation remains tame even as the economy is expanding.

     The route for stocks this year has been uneven — a 5.3 percent rally in February after the worst month in a year in January has evened out to a 2 percent gain for 2015, trailing most developed markets.

     Energy companies in the S&P 500 dropped 1.5 percent, led by Diamond Offshore Drilling Inc.’s 7.5 percent retreat, as oil prices resumed a decline after three days of gains. West Texas Intermediate slipped 2.6 percent. Crude lost more than 3 percent Tuesday before rebounding to a 1.4 percent gain.

     Exxon Mobil Corp. declined 2.2 percent after Warren Buffett’s Berkshire Hathaway Inc. exited a $3.7 billion investment in the company.

     Some big hedge fund managers have cut their holdings in U.S. stocks in the fourth quarter and shifted assets globally as the slide in oil prices hammered energy holdings.

     Greenlight Capital’s David Einhorn said he’s scaled back bets on stock gains after markets climbed and as a stronger dollar threatens to limit earnings of U.S. companies from operations overseas.

     David Tepper’s Appaloosa Management had $2.74 billion less in U.S. stocks in the fourth quarter, a 40 percent drop from the previous quarter. Soros Fund Management, the family office of billionaire hedge fund manager George Soros, moved about $2 billion into companies in Asia and Europe, according to a person familiar with the strategy.

     Some managers, such as Leon Cooperman, 71, remain bullish on the U.S., while predicting bigger gains elsewhere.

     “We expect the European and Japanese equity markets to outperform the U.S. in the coming year,” Cooperman, who runs Omega Advisors, wrote in an investor letter last month.                        

     The Chicago Board Options Exchange Volatility Index fell 2.2 percent to 15.45. The gauge, know as the VIX, fell 15 percent last week.

     Fossil Group Inc. tumbled 16 percent. The maker of watches, handbags and other accessories posted fourth-quarter sales and an annual forecast that trailed analysts’ estimates. Earnings this year won’t exceed $6.05, the company said. Analysts estimated $7.52.

     Bank stocks fell, with the KBW Bank Index’s 1.4 percent drop marking its biggest decline this month, after Fed minutes signaled interest rates will remain low for longer. Bank of America Corp. slid 2 percent and Comerica Inc. lost 2.3 percent.

     Boston Scientific jumped 12 percent. The company said it will pay $600 million to Johnson & Johnson to settle a lawsuit over its $27.5 billion acquisition of Guidant Corp. almost a decade ago.

     Deere & Co. climbed 3.2 percent after Berkshire Hathaway more than doubled its stake in the company in the fourth quarter, to 17.1 million shares.

     Utility companies were the S&P 500’s best performers Wednesday, rising 2.4 percent after falling 4.5 percent over the previous four sessions.
 

Have a wonderful evening everyone.

Be magnificent!

Does  a flower, full of beauty, light and loveliness say, “I am giving, helping, serving?”

It is!  And because it is not trying to do anything it covers the earth.

Krishnamurti

As ever,

Carolann

It’s not what you look at that matters, it’s what you see.

                             -Henry David Thoreau, 1817-1862

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