January 14, 2015 Newsletter

Dear Friends,

Tangents:

Something interesting I learned during our time in the Maldives over the holidays; thought you might find it interesting too:

Charles Anderson, a British marine biologist working and living in the Maldives for 26 years, reports on how him noticing the sudden emergence of dragonflies in the Maldives at certain times of the year led him to discover the world’s longest migratory journey taken by any insect.  It is a truly riveting story of curiosity and scientific discovery.

Each year, millions of dragonflies arrive on the Maldive Islands, an event which is well known to people living there.  But no one knew where they came from.  Their appearance is especially peculiar because the 1200 islands that make up the Maldives lie 500 to 1000km from the mainland of southern India, and all are coral cays with almost no surface freshwater, which dragonflies need to complete their lifecycle.  Anderson noticed the dragonflies after he first arrived in the Maldives in 1983.  He started keeping detailed records each year from 1996 and now collates data collected by local observers at other localities in the Maldives, in India and on vessels at sea.

When Anderson compared these observations with those in southern India, he found a clear progression of arrival dates from north to south, with dragonflies arriving first in southern India, then in the Republic of the Maldives’ capital Male, and then on more southern atolls.  Each year, dragonflies first appear in Male between 4 and 23 October, with numbers peaking in November and December, before the insects then disappear  once more.  The insects arrive in waves, with each staying for no more than a few days.

The dragonflies are clearly migrating from India across the open sea to the Maldives, says Anderson.  “That by itself is fairly amazing, as it involves a journey of 600 to 800 km across the ocean,” he says.  Quite how they do it was a bit of a mystery, as in October they appear to be flying against the prevailing winds.  However, in October, and continuing into November and December, a weather system called the Inter-tropical Convergence Zone moves southwards over the Maldives.  Ahead of the ITCZ the wind blows towards India, but above and behind it the winds blow from India.  So it seems that the dragonflies are able to reach Maldives by flying on these winds at an altitude above 1000m.

Large numbers of dragonflies also start appearing in the northern Seychelles, some 2700km from India, in November, and then in Aldabra in the Seychelles, 3800km from India, in December.

It is also known that dragonflies appear in large numbers through eastern and southern Africa.  In Uganda, they appear twice each year in March or April and again in September, while further south in Tanzania and Mozambique they appear in December and January.

Anderson says the migratory paths of a number of insect-eating bird species, including cuckoos, nightjars, falcons and bee-eaters, follow that of the dragonfly migration, form southern India to their wintering grounds in Africa.  That suggests the birds feed on the dragonflies as they travel.

PHOTOS OF THE DAY

People light a paper lantern during the celebrations to mark the Makar Sankranti festival, in the western Indian city of Ahmedabad on Wednesday. Amit Dave/Reuters

Thousands of starlings fly over marshes as they return to roost at dusk near Glastonbury in Somerset, south west England on Wednesday. The daily display at dawn and dusk during winter months, known as ‘murmurations’, is particularly spectacular in this part of the south west of England and on the England-Scotland border near Gretna. Toby Melville/Reuters

Market Closes for January 14^th, 2015   

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell a fourth day, posting the longest slide in six weeks, as consumer shares declined and metal miners plunged after copper slid to a three-year low.

     Equities pared declines in afternoon trading as oil surged the most in 2 1/2 years and BlackBerry Ltd. rallied after Reuters reported Samsung Electronics Co. recently proposed acquiring the company for as much as $7.5 billion.

     First Quantum Minerals Ltd. and Teck Resources Ltd. plunged more than 6.5 percent as base metals producers tumbled with copper. Magna International Inc., the autoparts maker, slumped 6.1 percent after disclosing 2015 sales forecasts short of analyst estimates.

     The Standard & Poor’s/TSX Composite Index fell 102.73 points, or 0.7 percent, to 14,084.43 at 4 p.m. in Toronto, the lowest level since Dec. 16, after falling as much as 2.1 percent earlier.

     The benchmark equity gauge has dropped 3.8 percent this year, tied with Japan as the second-worst performer among developed markets in the world according to data collected by Bloomberg.

     A volatility index of S&P/TSX 60 options jumped 5.7 percent to 24.85, the highest since June 2012. The gauge has surged 31 percent in four days.

     Seven of 10 industries in the S&P/TSX retreated on trading volume 17 percent higher than the 30-day average. Global stocks slid 0.7 percent as the World Bank cut its growth forecast.

     The world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June, according to the World Bank’s semiannual Global Economic Prospects report, released yesterday. The U.S. is the only bright spot as the lender lowered its projections for the euro area, Japan and China.

     Retail sales in the U.S. slumped 0.9 percent in December, the biggest in almost a year as consumers chose to save rather than spend their savings from cheaper gas prices.

     Consumer shares in Canada tumbled as a gauge of producers of discretionary products sank 2.7 percent, the most in three years. Magna International led the slide, while Corus Entertainment Inc. slid 3.7 percent.

     Copper for delivery in three months plunged 5.3 percent, the most in almost six years.

     Banks led losses on U.S. equities markets as the first of the country’s six largest lenders reported results. JPMorgan Chase & Co.’s earnings retreated, while Wells Fargo & Co. reported an increase in expenses.                        

     Toronto-Dominion Bank, the largest lender in Canada, dropped 2.8 percent to C$50.54, a March low, and Royal Bank of Canada retreated 1.3 percent. The S&P/TSX Banks Index lost 1.6 percent for a fourth day of declines.

     The S&P/TSX Energy Index rose 1.7 percent, reversing an earlier loss of as much as 2.1 percent as crude rebounded from a 5 1/2 year low.

     The group has fallen 8.4 percent this year for the worst performance in the S&P/TSX. The group accounts for about 20 percent of the broader index’s weighting.

     BlackBerry, the Waterloo, Ontario-based smartphone maker, surged 34 percent to C$15.51 for the biggest gain since December 2003.

     Samsung recently proposed acquiring the Canadian company for as much as $7.5 billion, based on an offer price of $13.35 to $15.59 a share, Reuters reported citing an unnamed person familiar with the matter and documents.

US

By Michelle F. Davis, Oliver Renick and Joseph Ciolli

     (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index to a fourth straight loss, as a decline in American retail sales and slump in copper prices spurred concern that global growth is slowing.

     Equities pared losses during the afternoon after oil prices wiped out a drop of 1.9 percent and proceeded to rally, while the Federal Reserve’s Beige Book said the U.S. economy continued to expand last month.

     The S&P 500 dropped 0.6 percent to 2,011.27 at 4 p.m. in New York, trimming an earlier decline of 1.7 percent. The Dow Jones Industrial Average lost 186.59 points, or 1.1 percent, to 17,427.09. About 8.1 billion shares traded hands on U.S. exchanges, 18 percent above the three-month average.

     Freeport-McMoRan Inc., the largest publicly-traded copper producer, dropped 11 percent as the metal’s price plunged 5.3 percent, the most in almost six years. JPMorgan Chase & Co. lost 3.5 percent after fourth-quarter profits slumped, while an index of banks tumbled 10 percent from a December high. Wal-Mart Stores Inc. retreated 3 percent as the World Bank lowered its outlook for the global economy.

     “People are starting to get very nervous as commodity prices are faltering and we know it’s because the global growth rate has been brought down,” Tom Stringfellow, president and chief investment officer of San Antonio-based Frost Investment Advisors LLC, which manages about $10 billion, said in a phone interview. “The U.S. alone can’t support the world and the retail sales are a warning shot across the bow.”                      

     After going through all of 2014 without a losing streak of more than three days, the S&P 500 today completed its second slide of at least four straight days. The gauge has tumbled 3.8 percent since Dec. 29.

     The Chicago Board Options Exchange Volatility Index, known as the VIX, rose for a fourth straight day, climbing 4.5 percent to 21.48. It has rallied 26 percent over the four-day period to the highest in almost a month.

     Concern about the impact of plunging oil on investment and what falling yields signal about economic growth are testing the resilience of U.S. stocks that have tripled since 2009.

     The recent plunge in crude is spreading to the metals market, as copper tumbled amid speculation that demand for raw materials won’t be enough to eliminate a supply glut. The World Bank cut its forecast for global growth this year, as an improving U.S. economy and low fuel prices fail to offset disappointing results from Europe to China.

     Retail sales in the U.S. slumped in December by the most in almost a year, reflecting a broad-based retreat that will probably prompt economists to cut growth forecasts.

     “The retail sales are disappointing because there were expectations for better numbers based on what we’ve seen with lower oil prices, and that didn’t materialize,” Ed Hyland, an Atlanta-based global investment specialist at JP Morgan Private Bank, said by phone. The firm oversees about $1 trillion.

     Stocks pared losses in the afternoon after the Fed’s release of its Beige Book report and as energy shares erased declines. The U.S. economy continued to expand from mid-November through late December, bolstered by higher consumer spending and expanded manufacturing in most places as prices “increased slightly” on balance, the report said.

     Oil surged the most in more than 2 1/2 years, climbing  5.6 percent after dropping 1.9 percent earlier. Energy shares rose 0.1 percent after tumbling as much as 2.6 percent.

     The market volatility comes as investors are heading into a U.S. earnings season that has seen analysts cut estimates at the fastest rate since the bull market began. Profit is forecast to have grown 2 percent in the final three months of 2014 and increase 2.8 percent for the current quarter, down from analysts’ October estimates of 8.1 percent and 9.2 percent, respectively.

     JPMorgan Chase declined 3.5 percent, the most since October. The biggest U.S. bank said fourth-quarter profit fell 6.6 percent as fixed-income trading revenue dropped 23 percent and legal costs were about twice as high as some analysts estimated.

     Wells Fargo & Co. slumped 1.2 percent. Expenses rose to the highest level in two years as the lender paid employees more and increased spending on risk-monitoring.

     The KBW Bank Index, a gauge of 24 banks, declined for a fourth day to the lowest since October. The gauge is down 10 percent from a December peak. Goldman Sachs Group Inc. slid 2.5 percent. Bank of America Corp. and Citigroup Inc., which post earnings tomorrow, lost at least 1.9 percent.

     Freeport-McMoRan, the largest publicly-traded copper producer, fell 11 percent, after plunging 8.8 percent yesterday. Southern Copper Corp. retreated 3.7 percent. Alcoa Inc. lost 5.4 percent.                       

     Eight of 10 major groups in the S&P 500 declined. Financial, raw-material and consumer-discretionary shares had the biggest losses, slumping more than 1.1 percent. Merck & Co., Pfizer Inc. and UnitedHealth Group Inc. were the only three stocks in the Dow to advance.

     Utilities had the best performance among the S&P 500 industries, gaining 1 percent, as investors gravitated toward safety amid plunging Treasury yields. The group has the second- highest dividend yield among the 10 industries.

     “There’s a lot of nervousness out there,” James Liu, a global market strategist at JPMorgan Asset Management in New York, said by phone. The firm oversees about $1.7 trillion. “Utilities represent defensiveness and a search for income.”

     Tesla Motors Inc. fell 5.7 percent. Chief Executive Officer Elon Musk said the electric-car maker might become profitable by 2020 when annual sales reach 500,000, and that business has slowed in China on charging concerns.

     GameStop Corp. surged 11 percent, posting the largest advance in the S&P 500, after it said increased sales of new games during the holiday period helped counter waning demand for consoles. The biggest video-game also reaffirmed its earnings forecast as new software sales rose 5.8 percent.

     “It’s a lot of little factors here that add up to one big mess, frankly,” said Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York. “Think about it like little tremors indicating an earthquake – crude price, copper price, overall index volatility, weakening data, retail sales data. Global growth is threatened.”
 

Have a wonderful evening everyone.

Be magnificent!

Unity in diversity is the order of the universe.  Just as we are all human, we are all distinct.

As a human being, I am like you.  As Mr. X, I am different from you.

As a man, you are different from a woman, but in being all humans, we are one.

In that you are alive, you are as the animals and all that lives, but as a human being, you are distinct.

Swami Vivekananda

As ever,

Carolann

Deep in their roots, all flowers keep the light.

                 -Theodore Roethke, 1908-1963

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