March 20, 2014 Newsletter

Dear Friends,

Tangents:

Today is the first day of spring!

It is also the United Nations International Day of Happiness, established to promote the theory that cheerfulness improves mental and physical wellness and also fosters economic prosperity.

But winter passes.  March is not yet done
Before the solace of a warmer sun
Strokes on our hands and takes us by surprise
With a forgotten touch on naked skin
The almond breaks to pink against the skies;
Then do we start, and with new-opened eyes
See the true Spring begin.
It flowers in the grass beneath our feet
Where yesterday the colour sparse and thin
Of some rathe daffodil blew here, or there,
Not more than two or three,
Like slender tinkle of a clevecin
In a light sprinkle, single, stray, and rare,
That overnight has flowed into a fleet
Of yellow sails to ride the grassy sea…

-V. Sackville-West, from The Garden

Spring is when life’s alive in everything. –Christina Rosetti

Photos of the day

A slackline walker enjoys the sunny and warm weather in a park at the river Rhine bank in Duesseldorf, Germany. Frank Augstein/AP

Romeo, humanoid robots from Aldebaran, are seen during the Innorobo European summit, an event dedicated to the service robotics industry, in Lyon, central France. Laurent Cipriani/AP

Market Closes for March 20^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

March 20 (Bloomberg) — Canadian stocks rose, with energy and financial shares leading gains, as the market rebounded after a drop yesterday triggered by concern the U.S. central bank may raise interest rates by the middle of next year.

Verde Potash Plc rose 14 percent after the fertilizer miner increased its resource estimate at its Cerrado Verde project in Brazil. Knight Therapeutics Inc. rose 12 percent after winning approval from the U.S. Food and Drug Administration for its Impavido drug. AirBoss of America Corp., which makes rubber products, fell 6.7 percent after reporting a fourth-quarter loss.

In a press conference at the end of a two-day meeting yesterday, Fed Chair Janet Yellen said the central bank’s stimulus program could end this fall and benchmark interest rates could rise six months later. The Fed had not previously given a time frame for the rate raise. Selling sped up in equities and bond yields jumped in U.S. markets just after 3 p.m. New York time yesterday when Yellen spoke about the timing of a potential interest rate raise.

“People are parsing her comments too much, but she was pretty consistent that they are working on a forecast,” said John O’Connell, chief executive officer at Davis Rea Ltd. in Toronto, which manages about C$600 million. “If you’re upset the rates target has been pushed forward by 90 days, then you shouldn’t be investing in stocks in the first place.”

The Standard & Poor’s/TSX Composite Index rose 27.79 points, or 0.2 percent, to 14,361.83 at the close in Toronto. The index has risen 5.4 percent this year.

Verde Potash rose 14 percent to C$1.68 after increasing resource estimates at its project in Brazil. Potash is used as a fertilizer to strengthen plant roots. The company said it plans to build an open-pit mine at the site and sell directly to the Brazilian agricultural market.

Knight Therapeutics rose 12 percent to C$5.55 after the U.S. Food and Drug Administration approved the company’s Impavido drug, which is used to treat a tropical disease called leishmaniasis.

AirBoss of America fell 6.7 percent to C$7.98 after reporting a fourth-quarter loss of 3 cents a share, compared with a gain of 8 cents a share for the same period in the previous year. The Newmarket, Ontario-based company also said Stephen Richards, who served as chief financial officer and chief operating officer, had resigned.

Coal miner Walter Energy Inc. fell 20 percent to C$8.13 after Bank of America Corp. said the commodity will be “depressed” for the next several years. Benchmark contract prices for metallurgical coal, which is used to make steel, are at the lowest since 2010.

Westshore Terminals Investment Corp. fell 6.4 percent to C$33.21. The company stores and loads coal at the Port Metro Vancouver, where a strike by truckers is affecting cargo shipments.

Concordia Healthcare Corp. rose 7.9 percent to C$17.08 after announcing an agreement to buy the drug Donnatal, a treatment for irritable bowel syndrome, from Revive Pharmaceuticals.

US
By Joseph Ciolli and Callie Bost

March 20 (Bloomberg) — U.S. stocks rose for the third time this week as reports on leading indicators and regional manufacturing fueled optimism in the economy, overshadowing concern that interest rates may rise in the middle of next year.

Microsoft Corp. gained 2.7 percent after Morgan Stanley said the company’s anticipated Office software for Apple Inc.’s iPad could deliver $1.2 billion a year in billings. AT&T Inc. jumped 3.4 percent to lead a rally in phone stocks. Guess? Inc. slipped 3.4 percent after its full-year earnings projection trailed analysts’ predictions.

The Standard & Poor’s 500 Index gained 0.6 percent to 1,872.01 at 4 p.m. in New York. The Dow Jones Industrial Average added 108.88 points, or 0.7 percent, to 16,331.05. Both gauges erased most of yesterday’s declines. About 6.4 billion shares changed hands on U.S. exchanges, 3.2 percent less than the three-month average.

“People assessed what Yellen said yesterday during her press conference, which allowed clearer heads to prevail,” Robert Pavlik, chief market strategist at Banyan Partners LLC, which manages $4.5 billion, said in a phone interview. “There was an overreaction to the market yesterday, and you’re essentially getting it all back today. Plus you’ve seen a slight improvement in the economic news from this morning.”

The equities benchmark fell 0.6 percent yesterday after Federal Reserve Chair Janet Yellen said the central bank’s stimulus program could end this fall and benchmark interest rates could rise about six months later. The Fed had previously said it would not raise rates for a considerable period, without specifying a time frame.

Quarterly Fed forecasts also showed more officials predicting that the benchmark rate, now close to zero, will rise to at least 1 percent at the end of 2015 and 2.25 percent a year later. The central bank said it would trim its monthly bond purchases by $10 billion to $55 billion.

Three rounds of Fed stimulus and low interest rates have helped boost the equity gauge as much as 178 percent from a 12- year low as U.S. stocks enter the sixth year of a bull market. The S&P 500 has climbed back to within about six points of a record close reached March 7.

Yellen also said harsh winter weather was a significant reason for weakness this year in economic data from housing to jobs.

Data today showed the world’s largest economy will strengthen after the weather-induced slowdown in the first quarter, as the index of leading indicators rose more than forecast in February.

Another report indicated the number of Americans filing applications for unemployment benefits held last week near the lowest level in almost four months, a sign the labor market continues to strengthen.

The Philadelphia Fed’s manufacturing gauge rose to 9.0 in March from minus 6.3 the prior month. The average estimate was for an increase to 3.2. Separate data showed purchases of previously owned homes declined in February to the lowest level since July 2012.

“The market has digested and even discounted a bit what Yellen said, and put things into perspective,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “We have to see how the economy continues to move along. People are back focusing on signs of economic growth.”

Investors also watched the situation in Ukraine, where the government in Kiev said yesterday it plans to reinforce its eastern border with Russia and withdraw troops from Crimea, ceding control of the Black Sea peninsula as tensions remained high over Russian moves to annex the breakaway region.

President Barack Obama said today the U.S. is imposing financial sanctions on a wider swath of Russian officials and a Russian bank as he authorized further penalties that would directly target sectors of the economy.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, fell 4 percent to 14.52.

Nine of the 10 main industries in the S&P 500 advanced, with phone and bank stocks rising at least 1.7 percent. AT&T jumped 3.4 percent, the most since January 2013, to $34.09 to lead gains in the Dow.

The KBW Bank Index jumped 2.2 percent before the results of annual reviews known as stress tests. After the market close, the Fed said 29 of the 30 largest banks subjected to the tests have sufficient capital to withstand a deep recession while continuing to pay dividends. Zions Bancorporation is the only lender that came in below one of the Fed’s main capital thresholds.

All 30 banks, including Zions, exceeded the minimum in a separate scenario of rising interest rates, a sign of improved capital levels in the banking system since the 2008 financial crisis.

JPMorgan Chase & Co. rallied 3.1 percent to $60.11, the highest since 2000, during regular trading. After the close of markets, Zions fell 0.8 percent to $32.72 as of 4:39 p.m. in New York.

“You’re getting leadership from some of the areas that are going to benefit from the eventual rise in interest rates, such as financials,” Banyan’s Pavlik said.

Nike Inc. jumped 0.6 percent to $79.71 in late trading.  After the market close, the world’s largest sporting-goods company posted third-quarter profit that topped analysts’ estimates as shoe sales gained in North America.

Teradata Corp. had the biggest advance in the benchmark S&P index during regular hours, rising 4.6 percent to $48.20. The Dayton, Ohio-based company said it has been selected by NTT Docomo Inc., Japan’s largest wireless operator, to implement a marketing operations platform for its consumer credit-services business.

Microsoft increased 2.7 percent to $40.33, the highest since July 2000. Chief Executive Officer Satya Nadella is expected to debut a version of Office for the iPad at an event next week. Morgan Stanley maintained its equalweight view on the stock.

Guess declined 3.4 percent to $27.78 after forecasting earnings for fiscal-year 2015 of $1.40 to $1.60 a share, missing the average analyst estimate of $2.03 a share. The apparel maker predicted a first-quarter net loss of 5 cents to 9 cents a share.

Have a wonderful evening everyone.

Be magnificent!

How can we be free to look and learn when our minds from the moment we are born

to the moment we die are shaped by a particular culture

in the narrow pattern of “me?”

For centuries we have been conditioned by nationality, caste, class, tradition,

religion, language, education, literature, art, custom, convention,

propaganda of all kinds, economic pressure, the food we eat, the climate we live in,

our family, our friends, our experience – every influence you can think of –

and therefore our responses to every problem are conditioned.

Are you aware that you are conditioned?

Krishnamurti, 1895-1986

As ever,

Carolann

As you grow older, you’ll find that you enjoy

talking to strangers far more than to your friends.

-Joy Williams, 1944-

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7