June 3, 2014 Newsletter

Dear Friends,

Tangents:

June – the sixth month, probably named from the Roman gens or clan name Junius, related to juvenis, “young.”  Some sources take the name from Juno, however.  Its old Dutch name was Zommermaand – “summer month” – while the Anglo-Saxons called it Seemonath – “dry month” –In the French Revolutionary calendar, the equivalent month was Prairial –“meadow month” – corresponding to the period 21 May to 19 June.

The Glorious First of June: June 1, 1794, when the Channel Fleet under Lord Howe gained a decisive victory over the French under Admiral Villaret de Joyeuse.  Off Ushant, six French ships were captured and one sunk, but the convoy of corn ships, which they were escorting, got through to Brest.

Number of the Day
$1 Billion

The size of a fund that U.S. President Barack Obama has proposed to bolster European security, part of his latest attempt to reassure allies in the region that the U.S. would act if Russia’s aggression in Ukraine spreads.

Photos of the day

A black bear lies in a hammock in a residential backyard in Daytona Beach, Fla., on Friday evening. The bear used the hammock for more than 15 minutes before being startled when the lights were turned on. Rafael C. Torres/Reuters

Instruments are left on the ground during a break as members of the Royal Marines Band rehearse for The Beating Retreat in London. The Beating Retreat, traditionally a celebration of Prince Philip’s birthday, will be held on Horse Guards Parade on Wednesday. Neil Hall/Reuters

Market Closes for June 3^rd, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

June 3 (Bloomberg) — Canadian stocks rose for a third day, sending the benchmark index to a one-month high, as energy shares advanced with the price of oil and Dollarama Inc. helped lead a gauge of consumer stocks higher.

Centerra Gold Inc. jumped 6.5 percent after Bank of Nova Scotia raised its rating on the stock. Enerflex Ltd. added 7.8 percent for a second day of gains following an acquisition. Toronto-Dominion Bank paced gains among financial firms. Dollarama rose to the highest since its 2009 initial public offering.

The Standard & Poor’s/TSX Composite Index added 53.93 points, or 0.4 percent, to 14,734.69 at 4 p.m. in Toronto. The gauge fell 0.3 percent in May to snap a 10-month winning streak, the longest since 1983. The price-to-earnings ratio for the benchmark equity gauge is 19.7, the highest since 2011.

“It’s a grinding-out type of atmosphere today,” said Greg Eckel, fund manager at Morgan Meighen & Associates Ltd. in Toronto. His firm manages C$1.4 billion ($1.28 billion). “In an atmosphere of calm it keeps grinding higher. It’s got that momentum until there’s an event that changes that or clear data that changes that sentiment.”

Birchcliff Energy Ltd. rose 2.7 percent to C$14.04 and Advantage Oil & Gas Ltd. increased 1.8 percent to C$6.85 as natural gas futures advanced for a second day in New York. Gas rose 0.4 percent to settle at a four-week high on speculation bursts of hotter U.S. weather will stoke demand.

Enerflex, an oilfield services company, jumped 7.8 percent to a record C$18.99. Enerflex has rallied 16 percent in two days since agreeing to acquire some units of Axip Energy Services LP for $430 million.

Maple Leaf Foods Inc. gained 1.2 percent to C$18.87 as consumer staples stocks added 0.6 percent as a group. Dollarama rose 0.2 percent to C$93.08 for a fifth day of gains.

Six of 10 industries rose today on trading volume 15 percent higher than the 30-day average.

Toronto-Dominion, the nation’s largest lender by assets, added 0.7 percent to C$54.35, extending a record high with a third day of gains.

Centerra Gold climbed 6.5 percent to C$3.94. Scotia analysts upgraded the stock a day after it sank 20 percent as the company threatened to shut a Kyrgyzstan mine if it did not receive government permits this month. Analyst Trevor Turnbull said he expects the company to get the approval.

Iamgold Corp. jumped 12 percent to C$3.71, the most since August. The company said it had no news pending and didn’t know why the shares rose.

First Quantum Minerals Ltd. sank 1.7 percent to C$22.56 and Teck Resources Ltd. slipped 1.2 percent to C$24.19. Copper fell 1.1 percent in New York, the most in four weeks.

B2Gold Corp. lost 3.4 percent to C$2.53, the lowest since January, after agreeing to buy Papillon Resources Ltd. for about $570 million to gain access to a project in Mali. The Vancouver- based company is looking to gain control of Papillon’s Fekola gold project in Mali. The combined company may produce more than 900,000 ounces from five mines by 2017, B2Gold said in a statement.

USA

By Joseph Ciolli

June 3 (Bloomberg) — U.S. stocks were little changed, following all-time highs for benchmark indexes yesterday, as investors awaited a European Central Bank decision on stimulus measures and a report on American employment in May.

Krispy Kreme Doughnuts Inc. dropped 15 percent after cutting its earnings forecast because of mounting costs and slow first-quarter sales. Quiksilver Inc. slumped 41 percent after the surfwear retailer posted a wider loss than analysts had predicted. Hillshire Brands Co. jumped 9.5 percent after confirming that Pilgrim’s Pride Corp. has increased its bid for the food producer.

The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,924.24 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 21.29 points, or 0.1 percent, to 16,722.34. Both gauges reached records yesterday. The Russell 2000 Index of smaller companies dropped 0.2 percent. About 5.2 billion shares changed hands today on U.S. exchanges, 18 percent below the three-month average.

“Traders are sitting on their hands, waiting for the response from the ECB before setting their bets up,” Chad Morganlander, a fund manager at Stifel Nicolaus & Co., which oversees $160 billion, said by phone from Florham Park, New Jersey. “There’s an overall anticipation that the ECB will be aggressive and that the jobs numbers on Friday will be better than expected.”

Data today showed euro-area inflation slowed more than economists forecast in May, cranking up pressure on the ECB to deploy measures as soon as this week to kindle prices and drive growth. With ECB President Mario Draghi warning about the risk of a negative price spiral, the Governing Council is considering measures from negative interest rates to conditional liquidity for banks.

Draghi is likely to signal that any interest-rate cut won’t necessarily be the final one, according to two euro-area central bank officials. The ECB president will probably reiterate his commitment to keep borrowing costs at present or lower levels, the people said, asking not to be identified because the talks aren’t public. While a final decision won’t be made until June 5, policy makers are debating a cut of 10 or 15 basis points in both the benchmark and deposit rates, the people said.

A Commerce Department report showed U.S. factory orders climbed 0.7 percent in April. Economists estimated a rise of 0.5 percent.

A release tomorrow may show companies added fewer workers in May, while the Labor Department’s report on Friday will probably show the unemployment rate remained near its lowest level since September 2008.

“Between the ECB on Thursday and the non-farm payroll on Friday, people are pretty much set in their positioning,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said a phone interview. “We’ve been having a nice run and we’re down small. There’s nothing that’s going to happen before Thursday that’s going to get people to change one way or the other.”

The S&P 500 has continued to climb to records even as the U.S. economy contracted for the first time in three years during the first quarter, amid optimism that a recovery is under way. Federal Reserve policy makers said at their April meeting that the economy has strengthened after adverse weather took its toll. Central-bank stimulus has helped propel the S&P 500 higher by as much as 184 percent from its bear-market low in March 2009.

The S&P 500 has rebounded 6 percent since a selloff in small-cap and Internet shares spread to the broader market, dragging the index to a two-month low in April. It advanced 2.1 percent in May for a fourth consecutive monthly increase. The measure trades at 16.3 times the projected earnings of its members, up from a multiple of 14.8 at the start of February.

Analysts predict that profit for S&P 500-listed companies will increase 7.5 percent this year, while sales will climb 3.3 percent, according to estimates compiled by Bloomberg.

“The market bounces back and forth, but fundamentally nothing much has changed,” Ivo Weinoehrl, a fund manager at Deutsche Asset & Wealth Management, said by telephone from Frankfurt. “The economy is definitely improving after a disappointing first quarter, and we’re still expecting earnings growth of 7 to 8 percent. We’re in a stable environment, but it’s nothing to get excited about and I don’t see the real pick- up coming through just yet.”

The Chicago Board Options Exchange Volatility Index rose 2.5 percent to 11.87 today. The gauge of U.S. equity volatility known as the VIX dropped to 11.36 on May 23, its lowest level since March 2013.

Six out of 10 major industries in the S&P 500 declined, with phone, consumer-staples and raw-materials companies dropping the most.

Krispy Kreme dropped 15 percent to $16.19 after predicting earnings of 69 cents to 74 cents a share for the current financial year. It had forecast as much as 79 cents. Costs related to executive compensation and new business management software exceeded its estimates, according to a statement. First-quarter sales rose 0.8 percent to $121.6 million, less than the $125.8 million estimated by analysts.

Quiksilver tumbled 41 percent, its biggest slide ever, to $3.41. The company posted an adjusted loss of 15 cents a share in the fiscal second quarter, wider than the 2-cent loss projected by analysts. Sales of $408 million missed estimates by about $40 million. Quiksilver predicted that sales in North America and Europe would drop during the six months through October.

Casino companies declined as May revenue from Macau rose 9.3 percent, falling short of the average analyst estimate for growth of 14.5 percent. Wynn Resorts Ltd. and Las Vegas Sands Corp. decreased more than 2.6 percent.

Hillshire rallied 9.5 percent to $58.65. The maker of Jimmy Dean sausages and Ball Park hot dogs said it will hold talks with Pilgrim’s Pride and rival bidder Tyson Foods Inc. after the former raised its offer to $55 a share from $45. Tyson, which fell 3 percent to $42.08 today, offered $50 a share last week.

Pilgrim’s Pride slid 2.2 percent to $25.34.

Applied Materials Inc. increased 4.4 percent to $21.42, the highest since 2008. Jefferies & Co. initiated coverage yesterday on the largest supplier of semiconductor-manufacturing equipment, rating it a buy with a price target of $28.

Dollar General Corp. rose 3.9 percent to $56.41. The discount retailer said in a conference call that it plans to spend $1.1 billion on share buybacks. The company earlier reported quarterly earnings that fell short of analyst estimates.

Have a wonderful evening everyone.

Be magnificent!

The key to an easy relationship with other people is not to impose your ego,

nor to crush the ego of others.

Swami, Prajnanpad, 1891-1974

As ever,

Carolann

I pray that you all put your shoes way under the bed at night so that you gotta get on your knees in the morning

to find them.  And while you’re down there, thank God for grace and mercy and understanding.

We all fall short of the glory, we all got plenty.

-Denzel Washington, 1954-

Telling a group of young actors his lessons for success, which included remembering to be thankful.

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7