July 3, 2014 Newsletter

Dear Friends,

Tangents:

Dog days of summer begin today ~ hottest days of the year, July 3^rd-August 11^th.

Tomorrow’s July 4^th spectacular: NBC will televise Macy’s 4^th of July Fireworks Spectacular live from New York City.  Before the pyrotechnics begin, Nick Cannon will host an all-star show, featuring Ariana Grande, Hunter Hayes, Miranda Lambert, and Lionel Richie.  The Brooklyn Bridge provides a stunning backdrop for the US’s largest Fourth of July fireworks show.  The show airs tomorrow at 8 PM and will be rebroadcast at 10 PM.

Also this week on the National Geographic channel, the miniseries The ‘90s: The last Great Decade?  Runs for three consecutive nights, beginning July 6^th at 9 PM.  The series explores the events of that decade, such as the Gulf War, the Rodney King riots, the Anita Hill hearings, the Bill Clinton presidency, and the rise of reality TV,  The miniseries will include interviews with people such as Gen. Colin Powell and “Friends” star Matthew Perry.

Good investment:  5.6 million= the price (in British pounds; $9.5 million US) brought at auction by a rare 1856 British Guiana One-Cent stamp.

Photos of the Day 07/03

Joseph Rojas and Abigail Zolotarsky embrace as lightning strikes One World Trade Center in Manhattan during sunset after a summer storm in New York. Lucas Jackson/Reuters

Sloan Hollis leads his class as kids march during First Baptist Church Weekday Education’s annual 4th of July parade, in Oxford, Miss. Bruce Newman/Oxford Eagle/AP

Market Closes for July 3^rd, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

July 3 (Bloomberg) — Canadian stocks were little changed, paring earlier gains, as mining and energy stocks fell with the price of gold and oil.

ShawCor Ltd. and Arc Resources Ltd. fell at least 1.7 percent, pacing losses among energy companies in the benchmark index. Calfrac Well Services Ltd. jumped 5.3 percent after more than doubling its budget for new investments. Tekmira Pharmaceuticals Corp. lost 17 percent after U.S. regulators put one of its drug studies on hold.

The Standard & Poor’s/TSX Composite Index fell 2.44 points, or less than 0.1 percent, to 15,207.35 at 4 p.m. in Toronto, after climbing as much as 0.3 percent earlier in the day. The gauge is up 12 percent this year, and closed at a record yesterday.

West Texas Intermediate crude fell for a sixth day, it’s longest falling streak in more than two years. Gold futures fell the most in almost five weeks after the U.S. added more jobs in June than analysts had predicted, stemming demand for the haven asset.

Alacer Gold Corp. and OceanaGold Corp. fell at least 3 percent to lead losses among gold miners in the index.

Unemployment in the U.S. fell to 6.1 percent, the lowest since September 2008, as the economy added 288,000 jobs in June. Analysts surveyed by Bloomberg had predicted an average increase of 215,000 new jobs.

“The numbers were good across the board, and surprisingly so,” Lawrence Creatura, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone. He helps manage $366 billion. “So this is a clear positive surprise.”

Calfrac Well Services gained 5.3 percent to C$21.29 after saying it would increase its capital spending to C$360 million from C$150 million because of growing demand in the U.S.

Tekmira fell 17 percent to C$12.18 after the U.S. Food and Drug Administration told the Burnaby, British Columbia-based company its study into the safety of a prospective anti-Ebola drug was being put on hold.

Cathedral Energy Services Ltd. gained 1.4 percent to C$4.99 as National Bank Financial raised its rating on the stock to outperform from the equivalent of a hold.

Terrace Energy Corp. fell 2.4 percent to C$2.05 after saying it would sell 10.8 million new shares for C$1.85 million to fund new exploration and development.

USA
By Stephen Kirkland and Jeremy Herron

July 3 (Bloomberg) — Declining unemployment and a pledge that European interest rates will stay low jolted the Dow Jones Industrial Average above 17,000 for the first time, lifted the dollar and sent bonds lower.

The Standard & Poor’s 500 Index added 0.6 percent to extend an all-time high, while the Dow average climbed 0.5 percent to 17,068.26. The Stoxx Europe 600 Index added 0.9 percent, capping the biggest three-day rally in 10 weeks. The Bloomberg Dollar Spot Index rose 0.2 percent and the yield on 10-year Treasuries increased one basis point to 2.64 percent at 2:10 p.m. in New York. Gold fell the most since May and corn entered a bear market.

The U.S. unemployment rate fell to an almost six-year low of 6.1 percent, underscoring a brighter U.S. labor market that will help spur the economy. ECB President Mario Draghi said the central bank sees rates at current levels for an extended period after policy makers left borrowing costs unchanged at record lows. Sweden’s currency tumbled the most since 2011 after the central bank cut borrowing costs by more than analysts estimated. U.S. equities markets closed at 1 p.m. ahead of the Independence Day holiday.

“This is a pretty strong report,” said Jim Paulsen, chief investment strategist at San Francisco-based Wells Capital Management, in a phone interview. “This is stuff that is going to lead to upward revisions of second quarter growth rates and it starts off the third quarter in a real positive momentum place.”

The U.S. added 288,000 jobs following a 224,000 gain the prior month that was bigger than previously estimated, Labor Department figures showed. The median forecast in a Bloomberg survey of economists called for a 215,000 advance. The jobless rate is the lowest since September 2008.

Another report from the Institute for Supply Management showed services industries, which make up almost 90 percent of the world’s largest economy, expanded last month at slower pace than economists in a Bloomberg survey estimated.

Benchmark 10-year yields reached 2.69 percent, the highest since May 2, based on Bloomberg Bond Trader prices. Traders pushed the odds up to almost even that Federal Reserve Chair Janet Yellen and policy makers will lift borrowing costs by next June, while Wall Street economists moved up their estimated dates for the Federal Reserve’s first interest-rate increase since 2006.

“The stellar jobs report hits the Fed right between the eyes on how good labor market conditions out there truly are,” said Chris Rupkey, chief financial economist for Bank of Tokyo- Mitsubishi UFJ in New York. “It shows how far behind the curve they are,” he said, adding that he now expects the first rate increase in March next year instead of June.

Yellen said on June 18 that policy makers planned to hold interest rates near zero for a “considerable time” as slack in the jobs market kept inflation below its 2 percent target. The central bank has kept its benchmark rate near zero since December 2008.

U.S. benchmark indexes have extended a rebound from a selloff earlier this year that started with biotechnology and small-cap stocks. The S&P 500 has rallied 9.3 percent since reaching a two-month low in April as central bank stimulus spread from Europe to Japan and the U.S.

Among stocks that moved today, financial firms jumped 0.8 percent, led by online brokers and insurers. Life insurers such as Lincoln National Corp. and No. 1 MetLife Inc. benefit from higher bond yields, which allow them to invest clients’ premiums at higher rates.

Paccar Inc. added 5.4 percent amid speculation that the maker of Kenworth and Peterbilt trucks may receive takeover interest from Volkswagen AG, which denied it. PetSmart Inc. jumped 13 percent after Jana Partners LLC disclosed a new activist stake and urged the retailer to explore strategic options including a sale.

The ECB left its benchmark interest rate at 0.15 percent as predicted by all economists surveyed by Bloomberg News. Stocks rallied on June 5 after Draghi announced new measures to stimulate lending and said the central bank would begin preparations related for an asset-purchase plan.

Draghi reiterated that he’ll keep interest rates low as officials try to revive the region’s economy with a new round of emergency measures.

The Stoxx 600’s gain today pushed its three-day advance to 2.1 percent, the most since April. Five shares rose for every one that declined.

Gold futures retreated 0.8 percent to settle at $1,320.60 an ounce while silver slid 0.8 percent as demand for haven assets declined.

West Texas Intermediate crude fell 0.7 percent, a sixth day of losses that would be its longest losing streak since 2012.

Corn for December delivery fell 0.7 percent to $4.1525 a bushel in Chicago, on expectations farmers will produce a record crop in the U.S., the world’s largest grower and exporter. That leaves prices down 20 percent from this year’s settlement high of $5.215 in April, meeting the common definition of a bear market.

Have a wonderful evening everyone.

Be magnificent!

“If I change, will the world have any value?”

That is a wrong question, if one may point out.  It is wrong because you are the rest of humanity.

Krishnamurti, 1895-1986

As ever,

Carolann

We all have the ability.  The difference is how we use it.

-Stevie Wonder, 1950-

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7