January 23, 2015 Newsletter

Dear Friends,

Tangents:

Literary birthdays this weekend:

January 25^th, 1759, Poet Robert Burns
January 25^th ,1874, writer W. Somerset Maugham.

January 25^th, 1882, Virginia Woolf.

Virginis Woolf once said that “fiction is liked a spider’s web, attached ever so lightly perhaps, but still attached to life at all four corners.”  One of the 20^th century’s great literary innovators, she and her sister Vanessa formed the core of the intellectual Bloomsbury group.

In 1917, Woolf and her husband Leonard Woolf, bought an old hand press and set two stories on it, one by each of them, which sold out almost immediately.  Hogarth Press, as they called it, continued to publish, preferring young and unknown writers including Katherine Mansfield and T.S. Eliot. 

She wrote this in her diary on January 25^th, 1915:

My birthday – and let me count up all the things I had.  Leonard had sworn he would give me nothing, and like a good wife, I believed him.  But he crept into my bed, with a little parcel, which was a beautiful green purse. and he brought up breakfast, with a paper which announced a naval victory (we have sunk a German battleship) and a square brown parcel, with The Abbot [by Sir Walter Scott] – a lovely first edition.  So I had a very merry and pleasing morning – which indeed was only surpassed by the afternoon.  I was then taken up to town, free of charge, and given a treat, first at a picture palace, and then at Buszards [Tea Rooms].  I don’t think I’ve had a birthday treat for ten years; and it felt like one too – being a fine frosty day, everything brisk and cheerful, as it should be, but never is.  We exactly caught a non-stop train, and I have been very happy reading father [Sir Leslie Stephen] on Pope, which is very witty and bright, without a single dead sentence in it.  In fact I don’t know when I have enjoyed a birthday so much – not since I was a child anyhow.

She ended her life on March 28, 1941, at age 59, when she filled her pockets with stones and walked into the River Ouse.

“As an experience, madness is terrific…and in its lava I still find most of the things I write about.”

“A woman must have money and a room of her own if she is to write fiction.”

PHOTOS OF THE DAY

An expanding shell of debris called SNR 0519-69.0 is left behind after a massive star exploded in the Large Magellanic Cloud, a satellite galaxy to the Milky Way, as seen in this undated NASA handout image released on Friday. Multimillion degree gas is seen in X-rays from Chandra, in blue. The outer edge of the explosion (red) and stars in the field of view are seen in visible light from the Hubble Space Telescope. NASA/Reuters

Danish artist Olafur Eliasson poses next to ‘Big Bang Fountain’, as part of his exhibition ‘Contact’ at the Louis Vuitton Foundation in Paris, Friday. Olafur Eliasson said in the presentation that ‘Contact is not a picture, it is not a representation; it is about your ability to reach out, connect, and perhaps even put yourself in another person’s place’. Francois Mori/AP

Market Closes for January 23^rd, 2015   

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose a third day, capping the biggest weekly advance in a month, as energy companies rose and banks extended gains amid a wave of central bank stimulus in the week.

     Home Capital Group Inc. added 3.5 percent as financial stocks surged 3.2 percent this week, the most in three years, after the Bank of Canada cut its key lending rate. BlackBerry Ltd. rose 1.8 percent for a third day of gains. First Quantum Minerals Ltd. sank 10 percent as copper posted a sixth weekly drop in London. Eldorado Gold Corp. and Alamos Gold Inc. retreated at least 10 percent as gold fell.

     The Standard & Poor’s/TSX Composite Index rose 15.37 points, or 0.1 percent, to 14,779.35 at 4 p.m. in Toronto, the highest level since Nov. 27. The Canadian benchmark rallied 3.3 percent this week, halting a two-week slide.

     Six of the 10 main groups in the benchmark index advanced today, led by 1.1 percent gains in technology and energy shares. Financial shares advanced 0.6 percent for a third day to cap the best week since December 2011.

     Home Capital rallied 3.5 percent. Royal Bank of Canada gained 1 percent and National Bank of Canada added 1.7 percent to pace gains among the lenders.

     Canada’s inflation slowed to 1.5 percent in December, less than the consensus 1.6 level forecast by economists in a Bloomberg News survey, as cheaper gasoline countered accelerating prices on most other items.

     The Bank of Canada unexpectedly cut interest rates Jan. 21, joining a stimulative push with other central banks around the world. The European Central Bank on Thursday announced a 1.1 trillion euro ($1.2 trillion) bond-buying plan to combat deflation.

     Alimentation Couche-Tard Inc. gained 1.3 percent as consumer-staples stocks rose 0.9 percent as a group.

US

By Michelle F. Davis

     (Bloomberg) — U.S. stocks fell, trimming the first weekly gain of 2015, as weaker-than-forecast results at companies from United Parcel Service Inc. to Kimberly-Clark Corp. offset confidence that central banks will support global growth.

     UPS slumped 9.9 percent as it said preliminary 2014 earnings were lower than previously forecast, after an over- expanded program to handle a deluge of holiday shipments. Bank of New York Mellon Corp. and State Street Corp. led financial shares lower after both said the falling euro hurt revenue from the region. Kimberly-Clark dropped 6.1 percent after forecasting 2015 earnings that missed estimates.

     The Standard & Poor’s 500 Index lost 0.6 percent to 2,051.82 at 4 p.m. in New York, paring a weekly gain to 1.6 percent. The Dow Jones Industrial Average dropped 141.38 points, or 0.8 percent, to 17,672.60. The Nasdaq Composite Index gained 0.2 percent. The Stoxx Europe 600 Index rallied 1.7 percent a day after the European Central Bank expanded its stimulus plan.

     “The bigger picture is that we had a pretty sizable move in the market the day before,” Kevin Caron, who helps oversee $170 billion at Stifel Nicolaus & Co. in Florham Park, New Jersey, said in a phone interview. “The market is still assessing the recent actions by the ECB, trying to figure out how much of that action was already priced into markets going into the meeting and what it might mean for markets going forward.”

     About 6.5 billion shares changed hands on U.S. exchanges today, in line with the three-month average. Selling accelerated in the final 30 minutes of trading as materials producers extended declines to 1.6 percent and investors anticipated the results of an election in Greece on Sunday. Opinion polls show the anti-austerity party may win enough votes to take power.

     Equities had earlier pared declines after ECB Executive Board member Benoit Coeure told Bloomberg TV that policy makers are prepared to extend asset purchases beyond September 2016 if the inflation outlook warrants it. The ECB on Thursday unveiled a plan to buy 60 billion euros ($69 billion) a month in bonds through that time.

     The S&P 500 gained 1.6 percent this week and briefly erased its losses for the year following two retreats that lasted five days amid tumbling oil prices and concerns that the global economy is slowing. The index is about 1.9 percent from its all- time high reached Dec. 29.

     U.S. stocks rose for a fourth day on Thursday, extending the longest rally of the year, as the ECB expanded an asset- purchase program to include government bonds. Banks and transportation companies also pushed benchmark gauges higher on better-than-forecast earnings.                          
     ECB President Mario Draghi said the central bank plans to buy up to 1.14 trillion euros ($1.3 trillion) of private and public securities. A near-stagnant economy and the risk of deflation forced Draghi’s hand six years after the Federal Reserve took a similar step to inject cash into the U.S.

     “The ECB is still going to be at the forefront over the next few trading days,” Matt Maley, an equity strategist at Miller Tabak & Co LLC in Newton, Massachusetts, said in a phone interview. “People are still trying to digest this bazooka blast. Obviously earnings will become more of a focus as well but the key is we need follow-through. It was a nice rally yesterday, but we’ve had a lot of one-day rallies that didn’t really pan out.”

     In the U.S., three rounds of Fed stimulus helped the S&P 500 more than triple from a bear-market low in March 2009. The central bank ended its quantitative easing program three months ago.

     Among data today, the Conference Board’s index of U.S. leading economic indicators, a gauge of the outlook for the next three to six months, increased 0.5 percent in December.

     Purchases of previously owned U.S. homes rose less than forecast in December as higher prices limited sales to first- time buyers. The Markit Economics preliminary index of U.S. manufacturing cooled in January to a one-year low of 53.7 from a final reading of 53.9 a month earlier. A figure greater than 50 for the purchasing managers’ measure indicates expansion.

     The Chicago Board Options Exchange Volatility Index, known as the VIX, rose for the first time in five days, dropping 1.6 percent to 16.66 after closing Thursday at the lowest level of the year.

     Eight of the 10 main groups in the S&P 500 retreated today, with raw materials companies declining 1.6 percent to pace declines.

     Freeport-McMoRan Inc. retreated 3.9 percent to halt a four- day rally as copper capped its third straight weekly drop amid signs of slowing growth in China. Freeport has fallen 18 percent this year.

     The Dow Jones Transportation Average slipped 1.8 percent to halt a four-day streak after rallying the most since October on Thursday.

     UPS fell the most since 2006 after it said 2014 earnings were below prior forecasts as an overexpanded program to handle a deluge of holiday shipments left its network underutilized on some other days.

     FedEx Corp. lost 3 percent even after reaffirming its 2015 forecast in the wake of UPS’s outlook.

     Eight companies listed on the S&P 500 posted results Friday. Of the companies that have reported quarterly earnings so far, 77 percent have exceeded projections after analysts reduced their estimates. Profit at S&P 500 companies climbed 1.1 percent in the last three months of 2014, analysts predict, down from an October estimate of 8.1 percent.

     The S&P 500 is trading at about 17 times the projected earnings of its members, according to data compiled by Bloomberg. Valuations reached a five-year high at the end of last year.

     Currency fluctuations roiled banks, as the euro tumbled to an 11-year low and the Bloomberg Dollar Spot Index rallied to the highest close on record. Bank of New York Mellon and State Street said today that a failing euro is cutting revenue from the region and may increase fees for excess deposits in Europe if rates there fall further. State Street plunged 6.1 percent, while Bank of New York dropped 4.7 percent.

     Kimberly-Clark lost 6.2 percent as it lowered its outlook for the full year, citing “significant headwinds” from foreign-exchange rates. Difficulty exchanging U.S. dollars for Venezuelan bolivars will cost the company $462 million as falling oil prices increase pressure on Venezuela’s economy and amplify the currency’s lack of liquidity.                         

     Ford Motor Co. said it will also take a charge, causing its fourth quarter profits to decrease by $700 million, in order to revalue its bolivar-denominated assets. Ford fell 0.8 percent.

     Avon Products Inc. declined 7.9 percent, retracing part of a 19 percent rally yesterday following a report by Dealreporter that the company held talks with TPG Capital about a possible transaction.

     Starbucks climbed 6.6 percent to a record. The world’s biggest coffee-shop chain is expanding its lunch offerings and bringing beer and wine to more stores, aiming to draw more customers after the morning hours.

     Honeywell International Inc. added 3.1 percent to an all- time high after it posted fourth quarter profits that surpassed analysts’ estimates. A strong U.S. economy drove sales of the technology and manufacturing company’s security systems and thermostats.

     E*Trade Financial Corp. jumped 8.4 percent to a 10-month high, increasing the most among companies on the S&P 500. The company said yesterday afternoon it will be allowed to run its bank with a more favorable leverage ratio.

     General Electric Co. led the Dow, rising 0.8 percent for a fifth consecutive day, as rising sales in its power and water business helped fourth-quarter profit beat analysts’ estimates.
 

Have a wonderful weekend everyone.

Be magnificent!

It is through you that the sun shines and the stars shed their luster, and the earth becomes beautiful.

It is through your blessedness that they all love and are attracted to each other.

You are in all, and you are all.

Swami Vivekananda

As ever,

Carolann

Hope is being able to see that there is light despite all of the darkness.

                            -Desmond Tutu, 1931-

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