February 26, 2015 Newsletter

Dear Friends,

Tangents:

–from The Wall Street Journal today:

Rhymes for Dimes 
Immense odds tend to be against poets. The publisher of Poetry magazine, for example, receives more than 100,000 poems a year and publishes only 300 of them. But as with most endeavors in life, persistence can go a long way. We tell the story of one Pittsburgh poet who seems to embody the meaning of the word. Billie Nardozzi, 58 years old, writes for love, not money. “I do pretty much one a day—like the vitamins,” he said. For eight years, as often as once a week, he has paid more than $50 for a few inches of space in the Pittsburgh Post-Gazette. “In a period of declining revenue, it’s always nice to have someone pay us,” said the paper’s executive editor. Some of his poems pay tribute to individuals, and several allude to the breakup of his marriage. He once also penned an ode to the people of the U.K. “I think you’re the coolest people/Living on this earth…” The poem goes on, but that’s my favorite part.

 
PHOTOS OF THE DAY

The Solar Impulse 2, a solar-powered plane, flies over the Sheikh Zayed Grand Mosque in Abu Dhabi, UAE, Thursday, during preparations for next month’s round-the-world flight. Swiss pilots Bertrand Piccard and Andre Borschberg will attempt to fly around the world in a bid to prove that such a flight is possible without the use of fossil fuels. The solar-powered plane has a wingspan of 72 metres, larger than that of a Boeing 747, but weighs only 2.3 tons, about as much as a family car. Solar Impulse/Revillard/Rezo.ch/Reuters

A bald eagle flies with a dead chicken plucked from a farmer’s field Thursday near Sheffield Mills, Nova Scotia, Canada. The carcass was from the die-offs of local chicken farms that are put out every year for a variety of hawks and eagles to feast on. Tim Krochak/Halifax Chronicle-Herald/AP

Market Closes for February 26^th, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks were little-changed, trading at a one-week high, as Canadian Tire Corp. advanced on earnings while banks rallied after two lenders raised their dividends, offsetting a decline among oil producers.

     Canadian Imperial Bank of Commerce, the fifth-largest lender in the nation, gained 3.3 percent on better-than-forecast profit. Toronto-Dominion increased 0.7 percent as profit rose on gains in its Canadian and U.S. retail businesses. Royal Bank of Canada increased 0.4 percent after reclaiming the top spot as the nation’s largest lender. Canadian Tire Corp. jumped 8.9 percent as revenue topped analysts’ estimates on rising same- store sales.

     The Standard & Poor’s/TSX Composite Index rose 12.59 points, or 0.1 percent, to 15,241.16 at 4 p.m. in Toronto, the highest close since Feb. 17. The benchmark Canadian equity gauge has advanced 4.2 percent this year. Trading volume was 20 percent below the 30-day average.

     CIBC jumped 3.3 percent, the most since November 2011, to pace gains as financials stocks rose 0.5 percent as a group. The industry accounts for about a third of the benchmark Canadian equity gauge. Seven of 10 industries in the S&P/TSX advanced.

     Toronto-Dominion rose 0.7 percent as the nation’s second- largest lender raised its dividend 8.5 percent. CIBC boosted its dividend 2.9 percent.                          

     Royal Bank rose 0.4 percent. The firm, with C$1.09 trillion in total assets as of Jan. 31, has retaken the top spot as the nation’s largest lender ahead of Toronto-Dominion at C$1.08 trillion, which held the lead for 15 months. Royal Bank had been the leader for much of the last century. The firms are also the first in Canada to pass the C$1 trillion milestone.

     Loblaw Cos. increased 0.5 percent after posting fourth- quarter earnings at the top end of analysts’ estimates.

     Canadian Tire jumped 8.9 percent to a record close of C$133.44. The shares have climbed 13 percent in six days. The retailer posted fourth-quarter revenue of C$3.65 billion, ahead of consensus estimates of C$3.53 billion.

     Capstone Mining Corp. soared 8.9 percent and First Quantum Minerals Ltd. increased 4.4 percent as copper rallied to a six- week high on signs China will take steps to boost economic growth. Iamgold Corp. rose 2.8 percent as gold climbed the most in more than three weeks.

     Trican Well Service Ltd. sank 12 percent and Penn West Petroleum Ltd. lost 9.6 percent as energy producers dropped 1.7 percent as a group. West Texas Intermediate for April delivery declined 5.5 percent as U.S. crude traded at the biggest discount to the global price in 13 months.

US

By Jeremy Herron and Michelle F. Davis

     (Bloomberg) — The benchmark U.S. stock gauge retreated as energy producers slid with crude oil, while a rally in technology shares sent the Nasdaq Composite Index back to a 15- year high. The dollar climbed and Treasuries fell as prices data supported the case for higher interest rates.

     The Standard & Poor’s 500 Index lost 0.2 percent by 4 p.m. in New York, as energy stocks sank the most in a month. U.S. crude fell for the sixth time in seven days, trading at its biggest discount to Brent oil in 13 months amid record American supplies. Gains in Apple Inc. and Microsoft Corp. sent the Nasdaq Composite up 0.4 percent to its highest level since March 2000. The Bloomberg Dollar Spot Index rallied 0.9 percent, the most in three weeks, while 10-year Treasury yields rose six basis points to 2.03 percent. Copper and gold advanced.

     The S&P 500 extended its retreat from an all-time high reached on Tuesday as New York-traded crude fell below $50 a barrel, erasing its February rebound. Core inflation in the U.S., which excludes food and fuel, rose more than economists projected last month, even as overall consumer prices tumbled. Federal Reserve Chair Janet Yellen told U.S. lawmakers this week that inflation and wage growth remain too low for the central bank to consider raising key rates at its next meeting.

     “Oil’s selling off pretty heavily but we also have a very strong move in the dollar today and that’s going to have an impact on oil prices,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees $2.8 billion, said by telephone. “Some of the bigger technology names are rallying, finally catching up with the rest of the market.”

     The Dow Jones Industrial Average dropped 0.1 percent from a record, reducing its February advance to 6.1 percent. The Nasdaq Composite is up 7.6 percent this month, after climbing 11 of the past 12 days. The MSCI All-Country World Index touched an intraday record Thursday, eclipsing its 2014 peak before falling 0.2 percent as energy companies led declines.

     Among U.S. stocks moving Thursday, Chevron Corp. and Exxon Mobil Corp. lost more than 1 percent as S&P 500 energy stocks slipped 1.8 percent. Salesforce.com Inc. soared 12 percent after raising its revenue forecast. Avago Technologies Ltd. rallied 15 percent after agreeing to buy Emulex Corp.

     Monetary stimulus has spurred equity gains from Europe to Japan this year, even after the U.S. ended its bond-buying program. The S&P 500 has more than tripled during a six-year bull run on the back of accommodative central-bank policies and a doubling in corporate profits. The index has gained 5.8 percent in February, set for its best month since October 2011.

     “Sentiment’s fairly positive when we look at the market’s bounce last week and all of February,” Tim Dreiling, a portfolio manager with the Private Client Reserve at U.S. Bank Wealth Management in Kansas City. “The equity increase has been broad-based — domestically, Europe, some of the growth showed up in emerging markets. Domestically it’s broad-based across almost all of the economic sectors.”

     The dollar surged 1.5 percent to $1.1195 per euro, approaching its strongest level against the 19-nation currency since 2003. The greenback added 0.5 percent to 119.48 yen, appreciating versus all but two of its 16 major peers. The Bloomberg dollar gauge, which tracks the U.S. currency against 10 major counterparts, is up 0.5 percent in February, on track for its smallest advance amid an eight-month rally.

     Ten-year Treasury yields are higher than rates on similar maturity securities issued by 19 other developed nations, according to data compiled by Bloomberg. That advantage is also burnishing the dollar’s allure. Yields on two-year Treasury notes climbed five basis points, or 0.05 percentage point, to 0.65 percent.

     Data Thursday showed the U.S. consumer-price index declined 0.7 percent in January after dropping 0.3 percent in the previous month. The median of economists’ forecasts compiled by Bloomberg called for a 0.6 percent decrease. Core inflation rose 0.2 percent from December, exceeding the 0.1 percent projected increase.

     Bookings for goods meant to last at least three years increased 2.8 percent after a revised 3.7 percent decrease the prior month, data from the Commerce Department showed. Investors are scrutinizing U.S. economic data for clues on the timing of any increase in borrowing costs. The Fed has kept rates near zero since 2008.

     Fed Bank of St. Louis President James Bullard said Thursday that the Fed Open Market Committee should remove its pledge to be “patient” in raising rates in March to give it flexibility to tighten policy as soon as June.

     “If we take it out, then we can move at any of the meetings during the summer,” Bullard, a non-voting member of the FOMC this year, said in an interview with CNBC. “But we don’t have to. We can make it be data dependent, which is what I’d like.”

     Feb Bank of San Francisco President John Williams, who votes on policy this year, expects inflation to return to the central bank’s target level of 2 percent by the end of 2015, and advocated for raising borrowing costs before then.

     “We can’t wait until inflation is back to 2 percent and we’re at full employment before we start removing accommodation,” Williams said in a Fox Business Network interview.

     In Europe, the Stoxx 600 gauge extended a seven-year high, gaining 1 percent. The index has rallied 6.4 percent in February, pushing its climb this year to 14 percent, after Greece clinched a bailout deal and the European Central Bank announced plans to embark on quantitative easing.

     In Germany, the DAX Index rose 1 percent as data showed unemployment in February fell twice as much as forecast.

     Among stocks moving after reporting results, Bayer AG added 3.7 percent after it forecasted an increase in 2015 sales. GDF Suez SA gained 1 percent after saying it will cut costs and posting annual net income in line with estimates. Solvay SA rallied 3.8 percent after reporting quarterly net income that was more than double the average analyst projection.

     The MSCI Emerging Markets Index rose 0.1 percent. The gauge has added 3.4 percent this month, the most since October 2013 as signs of stability in oil prices and progress in talks between Russia and European leaders to resolve the Ukraine crisis boosted sentiment.

     Gold futures advanced the most this month, climbing 0.7 percent to $1,210.10 an ounce as Chinese buyers returned from the Lunar New Year holidays and investors assessed the outlook for Fed rate rises. Copper rose to a six-week high on speculation China will increase government support to boost economic growth and commodity demand.

     West Texas Intermediate crude for April delivery tumbled 5.5 percent to $48.17 a barrel on the New York Mercantile Exchange, while Brent for April settlement slid to $60.05 a barrel in London. Brent is up 13 percent this month, while WTI has gained 1.5 percent. Brent’s premium to WTI stood at $11.39 on the ICE Thursday.

     A report Wednesday showed U.S. crude supplies rose to 434.1 million last week, the highest level in weekly estimates from the Energy Information Administration beginning in 1982.

     Both grades sank about 50 percent in 2014 amid an increasing global oversupply as Saudi Arabia led a decision in November by the Organization of Petroleum Exporting Countries to maintain the group’s output.
 

Have a wonderful evening everyone.

Be magnificent!

Do we still not know that the appearance of a seed is in direct contradiction to its true nature?

If you submit the seed to a chemical analysis, you would find in it perhaps some carbon, protein

and many other things, but never the hint of the leaf of a tree.

Rabindranath Tagore

As ever,

Carolann

Success is finding satisfaction in giving a little more than you take.

                                             -Christopher Reeve, 1952-2004

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