March 20, 2015 Newsletter

Dear Friends,

Tangents:

First day of Spring!

Innumerable, the small flow’rs that stitch
Their needlework on canvas of the ground.
In the low foreground of their tapestry
They startle and exceedingly enrich.
There’s a profusion hardly to be counted
When flow’r from bulb appears with each new
       Spring,
Like to a spring of water newly founted,
Breaking the earth, and each an Easterling.

              -V. Sackville-West, The Garden.

On this day in 1852, John P. Jewett & Co. publishes a novel by a Connecticut schoolteacher, adapted from a serial that had appeared in a magazine beginning the year before. It was an instant success, catapulted its author to international fame, and become a rallying point for the anti-slavery movement. It even helped drive the conflict that led to the Civil War. But in 1852, its author, Harriet Beecher Stowe, wasn’t sure that anybody would even want to read her novel, “Uncle Tom’s Cabin.”

PHOTOS OF THE DAY

A dog wears protective glasses prior to the solar eclipse in Regent’s Park in London Friday. Unfortunately, due to heavy cloud cover, the eclipse was not visible in London. Kirsty Wigglesworth/AP

A total solar eclipse is seen in Longyearbyen on Svalbard, Norway. A partial eclipse was visible on Friday, the first day of northern spring, across parts of Africa, Europe, and Asia. The total eclipse of the sun was only visible in the Faroe Islands and the Norwegian archipelago of Svalbard in the Arctic Ocean. Jon Olav Nesvold/NTB scanpix/Reuters

Market Closes for March 20^th, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, capping the biggest weekly advance in six weeks, as commodity producers rallied after the dollar tumbled.

     First Quantum Minerals Ltd. jumped 10 percent to pace gains among raw-materials producers as copper surged 3.8 percent.  Legacy Oil & Gas Inc. and Pacific Rubiales Energy Corp. increased at least 5.9 percent as New York crude rallied. Valeant Pharmaceuticals International Inc. slid 2.3 percent. Corus Entertainment Inc. slumped 11 percent after Canadian regulators mandated “a la carte” cable television options.

     The Standard & Poor’s/TSX Composite Index rose 67.62 points, or 0.5 percent, to 14,941.55 at 4 p.m. in Toronto. The benchmark gauge advanced 1.4 percent this week, the most gain since Feb. 6.

     Trading volume was 65 percent higher than the 30-day average amid a quarterly event known as quadruple witching day, when futures and options contracts on indexes and individual stocks expire.

     The members of the S&P/TSX were been revised after the market close, with stocks including Lightstream Resources Ltd. and Legacy Oil & Gas removed and replaced with Concordia Healthcare Corp. and Pure Industrial Real Estate Trust, according to a release from S&P Dow Jones Indices LLC.

     Corus Entertainment slumped 11 percent and DHX Media Ltd. lost 2.8 percent after Canada’s communications regulator said cable companies must let customers choose the channels they want, one of the first countries in the world to mandate a la carte pay-TV.

     Legacy Oil & Gas rallied 6 percent and Pacific Rubiales increased 11 percent as energy producers gained 0.7 percent as a group. Four of 10 industries advanced.

     West Texas Intermediate crude jumped 4 percent to $45.72 a barrel in New York, the biggest gain since Feb. 12. The dollar retreated from its strongest level in at least a decade after the U.S. Federal Reserve cut its forecast for interest rates amid moderating economic growth.

     First Quantum Minerals climbed 10 percent and Teck Resources Ltd. rose 7.1 percent as raw-materials shares gained 1.9 percent, the most in the S&P/TSX. Copper jumped the most in 22 months after Freeport-McMoRan Inc.’s Grasberg mine in Indonesia remained shut for a fifth day due to worker protests.  The mine is the world’s second-largest for the metal by capacity.

US

By Callie Bost and Lu Wang

     (Bloomberg) — Global stocks powered to their best weekly rally in nearly two years, sending two of the biggest equity benchmarks to the brink of records, on speculation the U.S. Federal Reserve will leave interest rates at zero past mid-year while European policy makers press stimulus.

     The MSCI All-Country World Index surged 3.2 percent for the five days, pushing the Nasdaq Composite Index to within 7 points of wiping out all its losses since the Internet bubble. The Stoxx Europe 600 Index soared 1.9 percent to close 0.4 percent from its March 2000 high.

     Global equities added more than $1.5 trillion this week as the Fed acknowledged that economic growth has moderated, indicating it is in no rush to raise interest rates. Equities also benefited as pressure eased from a surging dollar and plunging oil. A gauge of the U.S. currency had the steepest weekly slide in three years while crude rebounded for its first gain in five weeks.

     “The animal spirit is starting to heat up,” Jim O’Donnell, who oversees about $6 billion as chief investment officer at Forward Management LLC in San Francisco, said in a phone interview. “You’ve got the combination of three very large, meaningful central banks easing, that’s lighting up the fire under those equity markets.”

     Other benchmark indexes also gained during the week. The Standard & Poor’s 500 Index rose 2.7 percent to 2,108.10 in the five days, 0.4 percent away from a record. In London, the FTSE 100 Index hit a fresh record, climbing above 7,000 for the first time. The Russell 2000 Index gained 2.8 percent to an all-time high.                         

     The Nasdaq Composite jumped 3.2 percent to 5,026.42, approaching an all-time high of 5,048.62 reached in March 2000. The gauge of predominantly technology stocks has rebounded 3.6 percent since March 11. It crossed 5,000 earlier this month before losing 3.2 percent in nine days.

     The index was bolstered by a rally in health-care stocks. The Nasdaq Biotechnology Index jumped 6.2 percent for its biggest weekly gain since October, closing at an all-time high. Regeneron Pharmaceuticals Inc. soared 14 percent, while Amgen Inc. jumped 10 percent and Biogen Idec Inc. increased 15 percent to a record.

     The Nasdaq Composite approached an all-time high the same week that its biggest member, Apple Inc., entered a much older gauge, the Dow Jones Industrial Average. At 44, the Nasdaq has been around less than half as long as the Dow, and has spent about one-third of its life trying to claw back from the dot-com crash.

     As the Nasdaq has closed in on its record over the last few years, gains have been much more spread out than they were during the 1990s Internet bubble. Since the start of 2012, the Nasdaq 100 Index, a basket of the gauge’s biggest stocks, is up96 percent, compared with 93 percent for the broader measure.

     Over the same period at the end of the Internet bubble, the Nasdaq 100 climbed 450 percent — 208 percentage points more than the Nasdaq Composite. That happened because gains were concentrated in the biggest companies, with Cisco Systems Inc. climbing 844 percent over the interval and Microsoft Corp. rising 383 percent. Since 2011, the biggest gainer in the Nasdaq 100 is Regeneron, at 782 percent.

     The current rally has also hewn much closer to the advance in broader benchmarks. Since the start of 2012, the Nasdaq Composite has risen at a 24.3 percent annualized rate, compared with 19.9 percent over that stretch for the S&P 500. Over the same interval of days ending on March 10, 2000, the Nasdaq rose at a yearly rate of 53.3 percent, compared with 23.1 percent in the S&P 500.

     The S&P 500 seesawed between gains and losses every day during the week. The gauge has gone 23 consecutive sessions without back-to-back advances, the longest since a 23-day stretch in June 2010. In 2014, gains came much easier as the measure never fell four days in a row.

     The S&P 500 added 1.2 percent March 18 after the Fed said higher interest rates in April are unlikely and it won’t tighten until it is “reasonably confident” inflation will return to its target and the labor market improves further.

     The U.S. central bank also dropped an assurance it will be “patient” in raising interest rates and lowered its assessment of the economy, saying growth has “moderated somewhat.”

     Data during the week reinforced the Fed’s view: manufacturing output nationally and in the New York area was below forecast and beginning home construction plunged in February.

     “Clearly the impetus this week started with Janet Yellen,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said by phone. “With that came a weaker dollar and a turnaround in oil as well, so these things that had worked against the market so much up until this week are correcting or stabilizing.”

     The Chicago Board Options Exchange Volatility Index dropped 19 percent to 13.02, the lowest since Dec. 5. The gauge of S&P 500 options prices climbed 20 percent in the first two weeks of March.

     As the Fed has wound down its quantitative easing program and signaled a rate increase, the European Central Bank and Bank of Japan are expanding their stimulus programs.

     The euro has fallen versus the U.S. currency for eight straight months as monetary policies worldwide have diverged. The Bloomberg Dollar Spot Index sank 2.2 percent in the latest week, the most since October 2011.

     The MSCI gauge of emerging-market stocks jumped 3.2 percent, while Asian-Pacific equities added 2.5 percent. The Nikkei 225 rallied 1.6 percent to the highest since 2000 and Japan’s Topix gained 1.3 percent to touch a seven-year high.

     Nine out of 10 main industries in the S&P 500 advanced as health-care and utilities added more than 4.2 percent.

     Energy stocks rose 3.4 percent in their best week since Feb. 6 as crude prices advanced 2 percent. Chevron Corp. surged 5.3 percent and Transocean Ltd. jumped 10 percent.

     Technology shares added 2.9 percent. Facebook Inc. climbed 7.4 percent in five consecutive days of gains, while Salesforce.com Inc. increased 4.8 percent and Yahoo! Inc.climbed 5.1 percent.

     Apple increased 1.9 percent. The company joined the Dow on March 19 with the fifth-highest weighting in the index at 4.6 percent. The company accounts for 15 percent of the Nasdaq 100 Index and 3.9 percent of the S&P 500.

     Even with Apple in the average, Goldman Sachs Group Inc. is now the biggest weighting in the 118-year-old gauge after a stock split this week by Visa Inc. Goldman Sachs rose 2 percent.

     “It’s nice,” Forward Management’s O’Donnell said of the equity market’s advance toward records. “It makes everybody feel good. A lot of times, you get a spring-time rally, snow melts, flowers start blooming and the animal spirit just makes you want to buy stocks.”

Have a wonderful weekend everyone.

Be magnificent!

When a man is  deprived of the foundation that provides him everything,

his poverty loses its best virtue, simplicity, to become no more than disgraceful and sordid.

His wealth is no longer splendid, but becomes merely extravagant.

His appetites no longer remain within natural limits; they no longer have the one goal

of meeting the needs of his life; they become an end in themselves,

setting fire to his existence, and dancing madly by the light of the flames.

Rabindranath Tagore

As ever,

Carolann

Givers have to set limits because takers rarely do.

                                                   -Irma Kurtz

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