January 27, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1888, the National Geographic Society is founded “to increase and diffuse geographic knowledge.”

Today marks the 70^th anniversary of the liberation of the Auschwitz concentration camp.  Visiting the camp when I was in Poland a few years ago will forever be one of the most moving and spiritual experiences of my life.  You can really still feel the ghosts of those who died there, their souls still linger.  Very profound.  Hallowed ground.

I AM NOT I

 -Juan Ramon Jimenez, translated by Robert Bly

I am not I
I am this one
walking beside me whom I do not see,
whom at times I manage to visit,
and whom at other times I forget;
who remains silent when I talk.
The one who forgives sweet, when I hate.
The one who takes a walk when I am indoors.
The one who will remain standing when I die.

 
Epitaph for a Child of the Nakba (“Catastrophe”)

by Michael R. Burch

I lived as best I could, and then I died. 
Be careful where you step: the grave is wide.

PHOTOS OF THE DAY

Survivor Juda Widaski, 96, poses for a picture inside a tent on the site of former Nazi German concentration and extermination camp Auschwitz-Birkenau, Poland, Tuesday. Ceremonies marked the 70th anniversary of the liberation of the camp by Red Army soldiers. Laszlo Balogh/Reuters

At the Jewish cemetery in the former Nazi concentration camp in Terezin, Czech Republic, a child places a candle during a commemoration ceremony for the 70th anniversary of the liberation of Auschwitz death camp. David W Cerny/Reuters

Market Closes for January 27^th, 2015    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose a fifth day, after erasing an earlier loss, as gold producers rallied to offset disappointing U.S. economic data and earnings. The U.S. is Canada’s largest trading partner.

     Metro Inc. rallied to a record after announcing a three- for-one stock split and dividend increase. Torex Gold Resources Inc. and Detour Gold Corp. jumped at least 5.6 percent as gold snapped a two-day decline. Finning International Inc., which sells Caterpillar Inc. equipment, lost 3.8 percent after the U.S.-based heavy equipment company forecast profit that missed estimates.

     The Standard & Poor’s/TSX Composite Index rose 36.05 points, or 0.2 percent, to 14,833.88 at 4 p.m. in Toronto, erasing an earlier loss of as much as 1 percent. The benchmark Canadian equity gauge has rallied 3.7 percent during its five- day streak, the longest since November. It is up 1.4 percent this year and trades at a two-month high.

     U.S. markets are running normally as a potentially life- threatening blizzard ended up as a mundane winter snowfall. New York City may get no more than a foot by the time the nor’easter tapers off Tuesday evening, compared with a forecast of as much as 23.8 inches, while Boston may top out at two feet.

     Caterpillar, the world’s largest manufacturer of mining and construction equipment, reported profit short of estimates while Microsoft Corp.’s software-license sales to businesses trailed estimates. Both shares tumbled.                        

     U.S. orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies.

     Four of the 10 main groups in the S&P/TSX advanced today as consumer staples shares increased 2 percent to pace gains. Metro advanced 4.1 percent to a record.

     Detour Gold gained 5.6 percent as raw-materials producers rallied 1.8 percent. Finning International tumbled 3.8 percent and heavy-equipment company Wajax Corp. lost 4.3 percent. Trading volume was 12 percent lower than the 30-day average.

     Royal Bank of Canada slipped 0.3 percent after lowering its prime lending rate to 2.85 percent, the first of Canada’s largest banks to do so after the Bank of Canada last week unexpectedly cut its key rate.

     CGI Group Inc. lost 2.7 percent while Sierra Wireless Inc. retreated 2.1 percent, for a six-week low, as the S&P/TSX Information Technology Index lost 0.5 percent.

     First Quantum Minerals Ltd. lost 1.5 percent for a fourth day of declines and Teck Resources Ltd. lost 1.3 percent as copper fell toward a five-year low after data showed China’s industrial profits grew at the slowest pace on record. Copper futures for March delivery fell 3.2 percent to settle at $2.4625 a pound in New York. On Monday the metal dropped to $2.419, the lowest since 2009.

US

By Lu Wang, Joseph Ciolli and Callie Bost

     (Bloomberg) — U.S. stocks tumbled, with the Nasdaq 100 Index falling the most since April, as a drop in durable-goods orders and disappointing results from Caterpillar Inc. to Microsoft Corp. heightened concern about the economy’s strength.

     Technology shares in the Standard & Poor’s 500 Index plunged 3.3 percent for the biggest drop since November 2011. Microsoft lost 9.3 percent, the most in 18 months, as software- license sales to businesses were below forecasts. Caterpillar plunged 7.2 percent after forecasting 2015 results that trailed estimates as plunging oil prices signal lower demand from energy companies. Procter & Gamble Co. slid 3.5 percent as a surging U.S. dollar cut into its earnings.

     Apple Inc. jumped more than 6 percent in after-market trading after reporting revenue that topped estimates. Yahoo! Inc. surged 6 percent in late trading after announcing a tax- free spinoff of its stake in Alibaba Group Holding Ltd.

     “Currency headwinds, as well as evidence of a continual deceleration of global growth, is having a major impacts on quarterly results,” Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion, said in a phone interview. “Coupled with that, durable goods orders were somewhat disappointing, which scotches any optimism for today’s trading session.”

     The Standard & Poor’s 500 Index slipped 1.3 percent to 2,029.55 at 4 p.m. in New York, below its average price for the past 50 days. The Dow Jones Industrial Average declined 291.49 points, or 1.7 percent, to 17,387.21, after losing almost 400 points earlier in the day. The Nasdaq 100 Index tumbled 2.6 percent for the biggest drop since April.

     About 6.5 billion shares changed hands on U.S. exchanges, 3.6 percent below the three-month average, as exchanges opened for a full day despite a snow storm that shut down travel around New York City overnight and during part of the morning.                       

     A travel ban came to an end on Tuesday morning after the storm brought less snow than had been forecast. The National Weather Service downgraded its assessment to a winter storm from a blizzard. The last time snow prompted the New York Stock Exchange to shut down was in 1996, according to the exchange’s website.

     The S&P 500 is trading at 17.1 times the projected earnings of its members, about 16 percent above its 10-year average. The multiple reached a five-year high at the end of last year, according to data compiled by Bloomberg. The measure rallied 1.6 percent last week after the European Central Bank announced a 1.1 trillion-euro ($1.2 trillion) bond-buying plan.

     Yahoo! Inc. and Apple Inc. are among 27 companies releasing quarterly results on Tuesday.

     Of the S&P 500 members that have reported profit so far, 75 percent have exceeded projections that analysts have lowered since late last year. Analysts predict profit at S&P 500 companies climbed 1.1 percent in the final three months of 2014, down from an October estimate of 8.5 percent.

     “Everybody is aware of weakness in crude oil, but you’re seeing spillover into large, industrial companies like Caterpillar and that may be giving people pause,” Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC., said in a phone interview. “And certainly Microsoft is a bellwether of the tech industry, and that’s another cause that’s having people pulling back.”

     Multinational corporations flooded the market with fourth- quarter results as Federal Reserve officials gather in Washington for a two-day policy meeting. The central bank is trying to determine whether declining oil prices, a slowdown in European growth and any fallout from the Greek elections will threaten the U.S. recovery as it considers raising interest rates. Chair Janet Yellen told reporters after the last meeting not to expect higher borrowing costs before the end of April.

     Orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies. Bookings for non-military capital goods excluding aircraft dropped 0.6 percent for a second month, data from the Commerce Department showed. Demand for all durable goods — items meant to last at least three years — declined 3.4 percent, the worst performance since August.

     Slackening demand from Europe and some emerging markets is probably weighing on orders, making companies less willing to invest in new equipment.

     Purchases of new homes in the U.S. increased 12 percent in December to a 481,000 annualized pace from a 431,000 rate in the prior month, figures from the Commerce Department showed Tuesday in Washington. Consumer confidence in the U.S. increased this month as declining unemployment and lower fuel costs lifted Americans’ outlooks.

     The Chicago Board Options Exchange Volatility Index, known as the VIX, jumped 14 percent to 17.74. The gauge is down 7.6 percent for the year.

     Nine of 10 main industries in the S&P 500 declined. Consumer staples and industrials shares lost more than 1.2 percent.

     Technology companies in the S&P 500 dropped 3.3 percent for their biggest one-day loss since Nov. 9, 2011. Intel Corp. and Hewlett-Packard Co. sank more than 3.4 percent.

     Microsoft plunged 9.3 percent, the most since July 2013. Revenue slumped in China and Japan and a stronger U.S. dollar curbed sales of business-software licenses. Unearned revenue, a measure of future sales, missed analysts’ estimates.

     Caterpillar lost 7.1 percent for its biggest drop since August 2011. The world’s largest mining and construction equipment maker forecast lower-than-estimated earnings and revenue for 2015.

     Crude’s slump of more than 40 percent in the past six months is the latest headwind for Caterpillar, which had already seen declining orders from the mining industry for its signature yellow machines.

     DuPont Co. fell 1.3 percent. The chemical maker posted an unexpected drop in fourth-quarter sales and forecast 2015 earnings below analysts’ estimates as a stronger dollar cuts into its profit.

     P&G slid 3.5 percent, the most since April 2013. The world’s biggest consumer-products maker reported profit that missed analysts’ estimates in the quarter ended Dec. 31 after what Chief Executive Officer A.G. Lafley called “unprecedented” foreign-exchange rate fluctuations reduced sales by 5 percentage points.

     Apple rallied in late trading after falling 3.5 percent during the regular session. Sales of iPhones during the quarter ended Dec. 27 rose 46 percent to 74.5 million units, topping analysts’ average estimate of 64.9 million, according to a company statement on Tuesday.

     That helped push Apple’s fiscal first-quarter profit to a record $18 billion, or $3.06 a share, on sales of $74.6 billion. Analysts had predicted profit of $2.60 a share, and revenue of $67.5 billion.

     Yahoo advanced in extended trading after sliding 2.9 percent during the day. The Web company announced a tax-free spinoff of its entire stake in Alibaba Group Holding Ltd., seeking to maximize its return of cash to shareholders and minimize taxes on the sale.

     The deal with the Chinese e-commerce company will put Yahoo’s Alibaba shares into a newly registered company called SpinCo, which will own all of Yahoo’s remaining 384 million shares of Alibaba valued at $40 billion, the Sunnyvale, California-based company said in a statement Tuesday. SpinCo will be distributed to existing Yahoo shareholders as a separate public company.

Have a wonderful evening everyone.

Be magnificent!

Our consciousness is not actually yours or mine; it is the consciousness of man,

evolved, grown, accumulated through many, many centuries…

When one realizes this our responsibility becomes extraordinarily important.

Krishnamurti

As ever,

Carolann

The whole of science is nothing more than a refinement of everyday thinking.

                                                                  -Albert Einstein, 1879-1955

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