January 16, 2015 Newsletter

Dear Friends,

Tangents:

Today is poet Robert Service’s birthday, whose indelible words are always with me:

“Ah! The clock is always slow; it is later than you think.”

Also on this day, in 1919, Prohibition took effect, outlawing the “manufacture, sale, or transportation of intoxicating liquors for beverage purposes.” It wasn’t until 1933 that the 21^st Amendment to the Constitution was passed and ratified, repealing the ban on alcohol.  The speakeasies then went out of business ha!

The Vancouver Sun featured Vancouver’s best new restaurants in 2014; they are:

-by Mia Stainsby

1. Au Comptoir, aucomptoir.ca; 2278 West 4^th Ave; 604-569-2278.
2. The Abbey, abbeyvan.com; 17 West Pender St; 604-336-7100.
3. Blacktail, blacktailflorist.ca; 332 Water ST; 604-699-0249.
4. Boulevard, restaurant_bar.htm; 845 Burrard St;604-642-2900.
5. Bufala, bufala.ca; 5395 West Boulevard; 604-267-7499.
6. Café Medina, medinacafe.com; 780 Richards St; 604-879-3114.
7. Canyon, thecanyon.ca; 3135 Edgemont Boulevard; 604-987-8812.
8. Cinara, cinara.ca; 350 West Pender St; 604-428-9694.
9. The Fat Badger, fatbadger.ca; 1616 Alberni St; 604-336-5577.

10. Jamjar, jamjaronthedrive.com; 604-252-3957.

11. My Shanti, myshanti.com; 15869 Croyden Dr; 604-560-4416.

12. Temper, temperpastry.com; 2409 Marine Dr; 604-281-1152.

PHOTOS OF THE DAY

American Yoga teacher Dashama poses on a Yoga-board during a preview of the 46th International Boat Fair in Duesseldorf on Friday.Ina Fassbender/Reuters

A woman rides her electric bicycle along a street amid thick haze in Chiping county, Shandong province, China on Friday. China Daily/Reuters

Market Closes for January 16^th, 2015   

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Michelle F. Davis and Eric Lam

     (Bloomberg) — Canadian stocks advanced the most in a month, halting the longest slide in six weeks, as raw-materials and energy shares rose with the price of oil.

     Suncor Energy Inc. and Canadian Natural Resources Ltd. increased more than 5.2 percent as oil jumped 5.3 percent to erase a weekly loss. Valeant Pharmaceuticals International Inc. rallied 1.8 percent after selling $1 billion of junk bonds.

     The Standard & Poor’s/TSX Composite Index jumped 267.59 points, or 1.9 percent, to 14,309.41 at 4 p.m. in Toronto, the most since Dec. 17. The gauge fell 2.9 percent over the previous five days.

     Nine of 10 industries in the S&P/TSX rallied on trading volume 19 percent above the 30-day average.

     Energy shares advanced 5 percent, the biggest gain in four weeks, as oil capped the first weekly advance since November amid news the International Energy Agency lowered forecasts for supplies from outside OPEC and said prices could recover.

     Suncor Energy increased 5.2 percent and Canadian Natural Resources gained 8.8 percent. Surge Energy Inc. jumped 9.9 percent.

     Valeant Pharmaceuticals increased 1.8 percent after it said yesterday it sold $1 billion of junk bonds, its first sale since 2013. After being outbid last year for Allergan Inc. by Actavis Plc, Valeant Chief Executive Officer Mike Pearson said last week on a conference call he predicts a steady flow of acquisitions.

     U.S. economic data today showed consumer confidence jumped in January to the highest level in 11 years as steady job gains and plunging gas prices brightened the outlook for U.S. households.

     Capstone Mining Corp. jumped 6.5 percent, snapping a four- day losing streak, as it entered into an up to $500 million corporate credit facility with Bank of Nova Scotia and Canadian Imperial Bank of Commerce.

     Bombardier Inc. plunged 5.9 percent, bringing its two-day decline to 31 percent, the most since at least 1988. The air and railway technology company said yesterday it’s halting work on its Learjet 85 business aircraft, amassing $1.4 billion in pretax fourth-quarter costs and cutting jobs.

     Moody’s Investors Service placed Bombardier’s debt ratings under review for a possible downgrade due to “materially lowered” earnings and cash flow forecast for 2014. Raymond James analyst Steve Hansen today cut the company to market perform from outperform, citing concerns over its deteriorating financial position.

US

By Joseph Ciolli and Callie Bost

     (Bloomberg) — U.S. stocks rallied, with the Standard & Poor’s 500 Index advancing for the first time in six days, as gains in energy shares and a jump in consumer confidence overshadowed fallout from the Swiss currency shock.

     Eight of the 10 best performers in the S&P 500 were energy companies, as the group rebounded with oil. Exxon Mobil Corp. and Chevron Corp. rallied more than 2.4 percent. Goldman Sachs Group Inc. lost 0.7 percent, declining for its sixth straight session, as it posted the lowest annual trading revenue since 2005.

     The S&P 500 rose 1.3 percent to 2,019.42 at 4 p.m. in New York, climbing above its average price for the past 100 days. The benchmark index pared its loss for the week to 1.2 percent. The Dow Jones Industrial Average added 190.86 points, or 1.1 percent, to 17,511.57. The Russell 2000 Index of smaller companies gained 1.9 percent, the most in a month. More than 7.7 billion shares changed hands on U.S. exchanges, 14 percent above the three-month average. U.S. markets will be closed Monday for Martin Luther King Day.

     “Momentum is ruling the day,” Jeff Sica, president and CEO of advisory firm Circle Squared Alternative Investments, which oversees $1.5 billion, said in a phone interview. “The market is so zeroed in on oil prices right now. We’re seeing an oversold bounce amid oil momentum and optimism over ECB QE.”

     The S&P 500 slid 3.4 percent from Jan. 8 to Jan. 15, posting its second slide of five straight days after going through all of 2014 without a losing streak of more than three days. The gauge is 3.4 percent below a Dec. 29 record.

     Data today showed consumer confidence jumped in January to the highest level in 11 years as steady job gains and plunging gas prices brightened the outlook for U.S. households.

     Another report showed the cost of living declined by the most in six years amid the plunge in energy costs, increasing speculation the Federal Reserve will remain patient in its plans to raise interest rates. The biggest drop in clothing costs since 1998 combined with falling air fares and cheaper new and used cars signal the deceleration in inflation is spreading beyond energy as Japan and Europe are in or near a recession and some emerging markets cool.

     “We’ve traded with oil tick for tick all week, and until we get news from the ECB next week, that’s going to continue,” Matt Maley, an equity strategist at Miller Tabak & Co LLC in Newton, Massachusetts, said in a phone interview. “You also have more fears that it’s going to be very difficult for the economy to grow fast enough for the Fed to raise rates sooner rather than later. Expectations for a rate hike are starting to get pushed out.”                        

     All 10 groups in the S&P 500 advanced today, with energy companies rallying 3.2 percent to pace gains. Crude surged 5.3 percent as the International Energy Agency lowered forecasts for supplies from outside OPEC and said prices could recover.

     Exxon jumped 2.4 percent, while Chevron added 2.4 percent.  Newfield Exploration Co. soared 10 percent, the most in two months, while Cimarex Energy Co. surged 7.7 percent.

     U.S. stock futures fell earlier amid fallout from the Swiss currency shock. Switzerland’s central bank surprised markets Thursday by removing its cap on the franc versus the euro, sending the franc surging as much as 41 percent versus the regional currency.

     FXCM Inc., the largest U.S. retail foreign-exchange brokerage, tumbled more than 90 percent in premarket trading after saying clients owe $225 million on their accounts.

     Trading halted during the day pending an afternoon announcement that Leucadia National Corp., which owns Jefferies Group, gave FXCM a $300 million cash infusion, extending a lifeline to the currency brokerage. The transaction allows FXCM to “continue normal operations,” according to a statement.                         

     The Swiss National Bank decided to drop its currency cap, set in September 2011 to shield the economy from the euro area’s debt crisis, because it was no longer “sustainable,” central bank President Thomas Jordan said. The move is preempting possible pressure on the franc should the European Central Bank announce a government-bond purchase program, or quantitative easing, at its Jan. 22 meeting.

     ECB Executive Board member Benoit Coeure said in an interview with the Irish Times that there is no decision on quantitative easing yet though “the only thing I can say is that, for it to be efficient, it would have to be big.”

     The Chicago Board Options Exchange Volatility Index fell 6.4 percent to 20.95, after five days of gains. The gauge, which surged 19 percent this week, reached a one-month high yesterday.

     Yesterday was the 36th day since Oct. 7 that the S&P 500 incurred an intraday move of more than 1 percent. Such frequent spurts of volatility last hit the market in 36 of the 70 days through Sept. 10, 2012, data compiled by Bloomberg show.                        

     Investors are also assessing earnings reports to determine the impact of plunging oil on corporate profits. About 200 companies in the S&P 500 are scheduled to report earnings through the end of the month.

     Profit for companies in the gauge expanded 0.8 percent in the fourth quarter, according to analysts surveyed by Bloomberg Jan. 16. Analysts’ expectations have declined since Nov. 14, when they predicted earnings growth of 4.1 percent for S&P 500 stocks.

     Goldman Sachs dropped 0.7 percent to the lowest since October. The decline in revenue helped push fourth-quarter net income 7.1 percent lower to $2.17 billion, or $4.38 a share, from $2.33 billion, or $4.60, a year earlier.

     The three largest U.S. banks — JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. — have posted their worst combined quarterly trading revenue since 2011, led by a 23 percent drop in fixed-income, currencies and commodities, or FICC.

     Precision Castparts Corp. declined 9.1 percent, the most in six years, after reporting disappointing fiscal third-quarter earnings amid a drop in demand from the energy industry.

     Home Depot Inc. rose 3.1 percent after the company said its Chief Executive Officer Craig Menear will add the chairman role to his duties next month when Frank Blake retires on Feb. 2.
 

Have a fantastic weekend everyone!

Be magnificent!

The universe is not ruled by arbitrary, temporary martial law.

No force exists that is powerful enough to derail it, or to continue indefinitely on its own path unregulated,

like an outlaw who disrupts all harmony around him.  On the contrary, every force must return

to a state of equilibrium along a preordained curve.  Waves rise, each to its own level,

with an apparent attitude of relentless  rivalry, but only up to a certain point.  We can thus understand

the vast serenity of the sea, to which all the waves are connected,

and to which they must all subside in the rhythm of marvelous beauty.

Rabindranath Tagore

As ever,

Carolann

A single lie destroys a whole reputation for integrity.

                             -Baltasar Gracian, 1601-1658

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Senior Vice-President &

Senior Investment Advisor