January 28, 2015 Newsletter

Dear Friends,

Tangents:

On this day, January 28^th in 1817, Lord Byron wrote to Thomas Moore:

I tremble for the ‘magnificence’, which you attribute to the new Childe Harold.  I am glad you like it; it is a fine indistinct piece of poetical desolation, and my favourite.  I was half mad during the time of its composition, between metaphysics, mountains, lakes, love unextinguishable, thoughts unutterable, and the nightmare of my own delinquencies.  I should, many a good day, have blown my brains out, but for the recollection that it would have given pleasure to my mother-in-law; and, even then, if I could have certain to haunt her – but I won’t dwell upon these trifling family matters.
                                                                                            -from The Book of Days

Also on this day in 1986, the space shuttle Challenger exploded 73 seconds after lifting off from Cape Canaveral, Florida. All seven crew members died: flight commander Francis R. “Dick” Scobee, pilot Michael J. Smith, Ronald E. McNair, Ellison S. Onizuka, Judith A. Resnik, Gregory B. Jarvis, and schoolteacher Christa McAuliffe.

It is good to have an end to journey toward, but it is the journey that matters in the end. – Ursula K. le Guin

PHOTOS OF THE DAY

Waiters present a dish to jury members during the ‘Bocuse d’Or’ (Golden Bocuse) trophy at the 15th World Cuisine contest in Lyon, central France, Wednesday. The contest, a sort of world cup of cuisine, was started in 1987 by Lyon chef Paul Bocuse to reward young international culinary talents. Laurent Cipriani/AP

Sotheby’s employees pose with ‘Le Grand Canal,’ painted by Claude Monet, at Sotheby’s preview in London Wednesday. The art piece is expected to fetch between 20 and 30 million pounds ($30.4 and $45.6 million) at the upcoming Impressionist & Modern Art Evening Sale on Feb. 3.Stefan Wermuth/Reuters

Market Closes for January 28^th, 2015    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell the most in three weeks, halting a five-day rally, as energy producers sank with the price of crude and Statistics Canada lowered its estimate of jobs creation in 2014.

     Legacy Oil & Gas Inc. and Bellatrix Exploration Ltd.plunged more than 14 percent as U.S. oil tumbled 3.9 percent. Cenovus Energy Inc. fell 6.9 percent after cutting capital spending this year due to the drop in oil. OpenText Corp. sank 8.3 percent on the Toronto Stock Exchange after reporting second-quarter revenue short of analysts’ estimates on Tuesday. Iamgold Corp. retreated 8.6 percent as gold declined for a third time in four sessions.

     The Standard & Poor’s/TSX Composite Index fell 231 points, or 1.6 percent, to 14,602.88 at 4 p.m. in Toronto, the biggest drop since Jan. 5. The benchmark Canadian equity gauge had rallied 3.7 percent during the past five sessions, the longest streak since November. The S&P/TSX’s slide today erased its gain for 2015.

     Eight of the 10 main groups in the benchmark index retreated. Energy producers fell 3.8 percent as a group, the most in the S&P/TSX. Trading volume was 5.3 percent lower than the 30-day average.

     Crude futures slid 3.9 percent in New York to the lowest in almost six years as a U.S. inventory report showed stockpiles expanded a three-decade high.

     Statistics Canada reduced its estimate of job creation last year by about a third, to 121,300 jobs from 185,700 with the unemployment rate at 6.7 percent. The latest jobs report also now shows a 11,300 job loss in December, compared with the initially reported loss of 4,300.

     “In light of the magnitude of the changes, the Bank of Canada’s decision to cut rates may now look slightly less surprising,” said Nick Exarhos, an economist with CIBC World Markets Inc. in a report.

     The Bank of Canada unexpectedly cut its key interest rate to 0.75 percent from 1 percent on Jan. 21 amid concern the slump in oil prices is threatening economic growth.

     Sun Life Financial Inc. slipped 0.3 percent after agreeing to buy Ryan Labs Inc., which manages about $5.1 billion in assets in the U.S. Terms were not disclosed.

US

By Michelle F. Davis and Callie Bost

     (Bloomberg) — U.S. stocks fell, sending the Dow Jones Industrial Average to its biggest two-day loss in a year, as energy shares plunged and concern grew about international risks to the American economy and weakness in multinational earnings.

     Energy companies slumped 3.9 percent as a group after oil retreated. Apple Inc. climbed 5.7 percent after reporting a record $18 billion in quarterly profit, one of the biggest in corporate history. Boeing Co. advanced 5.4 percent as it posted a quarterly profit that beat analysts’ estimates.

     The Standard & Poor’s 500 Index fell 1.4 percent to 2,002.16 at 4 p.m. in New York. The Dow Jones Industrial Average lost 195.84 points, or 1.1 percent, to 17,191.37. The gauge fell 2.8 percent over two days, the most since February 2014. The Nasdaq 100 Index dropped 0.6 percent, erasing an earlier rally of 1.7 percent. The Chicago Board Options Exchange Volatility Index, known as the VIX, added 19 percent to 20.44, its biggest jump of the year.

     “People smell no growth,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an interview. “Currency problems are affecting revenues for multinationals. Greece is becoming a much bigger worry for the markets right now,” he said. “Think about where the market would be today without Apple and Boeing.”

     U.S. stocks turned lower after the Fed boosted its assessment of the economy and downplayed low inflation readings while repeating a pledge to remain “patient” on raising interest rates. Losses accelerated in the final hour, pushing declines in the Dow and S&P 500 beyond 1 percent and wiping out gains in the Nasdaq.                        

     Fed officials are confronting divergent economic forces as they weigh the timing of the first interest-rate increase since 2006. Surprisingly strong job gains argue for tightening sooner, while inflation held down by a plunge in oil prices and a cooling global economy provides grounds for delay.

     The Fed acknowledge global risks, saying that it will take into account readings on “international developments” as it decides how long to keep rates low.

     “The Fed continued to emphasize that any rate hike decisions will be very data-dependent, which has been the norm for quite some time,” Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc., said in a phone interview. “People are looking closely at earnings, which has been the story of the volatility in the past week or two. Oil and the strong U.S. dollar are also creating a drag on large multinational companies.”

     U.S. futures pared early gains amid concerns over Greece’s new government. New Prime Minister Alexis Tsipras named a cabinet yesterday that includes a foreign minister who raised questions over European Union sanctions against Russia and a finance minister who has called Greece’s bailout a trap, while new ministers said they will cease the sale of some state assets and increase the minimum wage.

     The S&P 500 has more than tripled from its March 2009 low, buoyed by three rounds of stimulus from the Fed. The index is down 4.2 percent from an all-time high reached in December.

     As the U.S. has ended its bond-buying program, the European Central Bank is expanding its stimulus plan. The ECB announced last week it would spend 60 billion euros ($68 billion) a month starting in March on purchases of debt to ward off the threat of deflation in the euro area.

     Equities opened higher on Wednesday as Apple and Boeing rallied amid quarterly results, a day after benchmark indexes tumbled on concern that a stronger dollar is eroding profits at large companies.                        

     While the dollar’s climb is reducing profits at U.S. companies from Procter & Gamble Co. to Pfizer Inc. and Microsoft Corp., more than 77 percent of Standard & Poor’s 500 Index members have still beaten analysts’ estimates so far this earnings season, according to data compiled by Bloomberg.

     All 10 main industries in the S&P 500 fell.

     Energy shares lost 3.9 percent, the most in three weeks, after oil tumbled as U.S. inventories rose to a three-decade high. Exxon Mobil Corp., Chevron Corp. and Schlumberger Ltd. fell at least 3.3 percent.

     Yahoo! Inc. fell 3.2 percent, erasing an earlier rally of 4.9 percent. The company said Tuesday it will spin off its remaining stake in Alibaba Group Holding Ltd. The tax-free spinoff will place Yahoo’s holding in the Chinese e-commerce company into a new firm called SpinCo.

     Apple jumped 5.7 percent. Net income surged 38 percent, fueled by sales of larger-screened iPhones and refreshed Mac computers that Apple had unveiled in September, part of a barrage of new products from Chief Executive Officer Tim Cook as he sought to revitalize the company’s revenue.

     Boeing gained 5.4 percent, the most since 2011, as it beat analysts’ estimates and predicted it would make good in 2015 in converting a record jetliner-order backlog into cash. Investors have been waiting to see Boeing start generating more cash from its plane orders and stem losses on the 787 Dreamliner.
 

Have a wonderful evening everyone.

Be magnificent!

There are thousands of lives in one single life.

Swami Prajnanpad

As ever,

Carolann

Our character is what we do when we think no one is looking.

                                           -H. Jackson Brown, Jr., 1940-

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