March 25, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1982, former Canadian professional ice hockey player Wayne Gretzky became the first player in National Hockey League history to pass 200 points in a season. He finished the season with 92 goals and 120 assists for a total of 212 points.

Birthdays:

Aretha Franklin, March 25, 1942
Elton John, March 25^th, 1947
Sarah Jessica Parker, March 25^th, 1965

Old New Year’s Day was on this date until 1751:  The Buddhist Magha Puja.
Christianity celebrates the Feast of the Annunciation.

PHOTOS OF THE DAY

Social activists participate in a rally in Dhaka, Bangladesh, Wednesday in remembrance of those killed on the night of March 25, 1971, a day ahead of the country’s declaration of independence from Pakistan. A.M. Ahad/AP

Andrea Bunar delivers the mail by boat in the village of Luebbenau, Germany, Wednesday during a media event. For 118 years, the German mail service, Deutsche Post, has delivered the mail by boat from March to October in this area. The Spreewald landscape is irrigated with more than 200 small canals and is an official UNESCO biosphere reserve. Markus Schreiber/AP

Market Closes for March 25^th, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell the most in two weeks, following a three-day rally, as a decline in banks and Valeant Pharmaceuticals International Inc. overshadowed gains in energy shares.

     Valeant dropped 3.4 percent for a second straight decline after unit Bausch & Lomb Inc. was among a group of contact lens makers accused of price fixing. Royal Bank of Canada lost 1.3 percent to pace declines among financials shares, which account for one-third of the broader index. Bombardier Inc. jumped 2.8 percent after the aircraft maker said it is in talks with Asian and North American carriers that may lead to more orders in the coming months.

     The Standard & Poor’s/TSX Composite Index fell 151.89 points, or 1 percent, to 14,929.37 at 4 p.m. in Toronto, the biggest drop since March 10. The benchmark gauge rallied 1.4 percent in the previous three sessions and is up 2 percent in the quarter.

     Nine of 10 industries in the S&P/TSX retreated on trading volume 2.5 percent above the 30-day average.

     Royal Bank, the nation’s largest lender, sank 1.3 percent and Bank of Nova Scotia lost 1.6 percent to lead declines in the S&P/TSX Banks Index. The group fell 1.3 percent, halting a three-day rally.

     Valeant notched its biggest decline since October. Bausch & Lomb, along with Johnson & Johnson Vision Care Inc. and two other makers of disposable contact lens, curtailed price competition by conspiring to set minimum resale prices for their products, according to a consumer lawsuit. The claims in the antitrust class action, filed in a U.S. court in San Francisco, have not been proven.

     Energy shares in the S&P/TSX rose added 0.5 percent as West Texas Intermediate crude climbed 3.6 percent to $49.21 a barrel in New York.

     Dollarama Inc. jumped 2.7 percent after posting fourth- quarter earnings ahead of analysts’ expectations and raising its quarterly dividend.

     Bombardier added 2.8 percent. The company plans to upgrade its regional jets that have been neglected as Bombardier struggles to build its CSeries jet. Changes such as new winglets and a modified wing would improve the jets’ fuel efficiency, the company said.

US

By Joseph Ciolli

     (Bloomberg) — Stringing together gains in the American stock market has become next to impossible.

     Knocked down 1.5 percent Wednesday, the Standard & Poor’s 500 Index has now gone 26 days without posting gains in back-to- back sessions, the longest stretch since 1994, data compiled by Bloomberg show. Losses in biotechnology and chip companies dragged U.S. stocks to a third day of declines, interrupting another run at a record for the Nasdaq Composite Index as investors sold the year’s best-performing equities.

     “You have markets that are pretty gun-shy,” Michael Ball, who oversees about $800 million as president of Weatherstone Capital Management Inc. in Denver. “Whatever the news story of the day, it seems to counteract a lot of what we saw the prior day.”

     The S&P 500 slipped 1.5 percent to 2,061.05 on Wednesday. The gauge hasn’t increased for two straight days since Feb. 17, including a three-day retreat of 2.2 percent since closing within 10 points from a record high on Friday.

     Flat for the year, the benchmark U.S. equity index sits at a level it first reached on Nov. 21. Since then, stocks in the gauge rose as much as 2.6 percent to an all-time peak of 2,117.39 before sliding back to the current price.

     Investors never came close to a streak like this one last year. The longest stretch without back-to-back gains in 2014 was 11 days, data compiled by Bloomberg show.                        

     Wednesday’s losses, the worst for the Nasdaq since April, were spurred by selloffs in semiconductor and biotechnology companies. The Philadelphia Stock Exchange Semiconductor Index dropped 4.6 percent, the most since October amid decreases of more than 2.9 percent in Nvidia Corp., Micron Technology Inc., Broadcom Corp. and Intel Corp.

     The first quarter’s best performing stocks are the ones falling the most now. Biogen Inc. and First Solar Inc., which surged more than 35 percent in 2015 through last Friday’s trading, slipped more than 3.8 percent. The iShares Nasdaq Biotechnology ETF, which increased 21 percent year-to-date through Friday, fell 4.1 percent.

     “We’re seeing a loss of momentum from last week,” Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110 billion, said in a phone interview. “The market is priced for perfection in terms of valuations. Perhaps it has to go through some kind of consolidation period to get through this next earnings period.”

     The S&P 500 trades at 18.36 times earnings, compared with a trailing five-year average of 15.64 times, according to data compiled by Bloomberg. Wednesday’s biggest decliners are also marked by historically elevated valuations, with both the Philadelphia Semiconductor and Nasdaq Biotechnology Indexes trading above their five-year profit multiples.

     Companies will start to report first-quarter earnings next month, and profits are forecast to decline for the first time since 2009. S&P 500 results will see a contraction of 5.6 percent for the three-month period, according to economist estimates compiled by Bloomberg. Earnings growth forecasts for the quarter were positive as recently as January, the data show.

     Stocks are also entering a stretch of the year when companies customarily suspend share repurchases before reporting quarterly results, according to Goldman Sachs Group Inc. While the data isn’t conclusive, owning stocks during those periods has generated a return that trails the market average over the past two years, according to data compiled by Bloomberg.                       

     Technology stocks could have the most to lose in the absence of buybacks. Computer and software makers repurchased more shares than any other industry in 2014 at $122 billion, according to data compiled by Barclays.

     Orders for durable goods unexpectedly dropped in February, according to data released at 8:30 a.m. on Wednesday, a sign the slowdown in global growth may be weighing on American manufacturers. Still, the S&P 500 fluctuated around little changed after the market opened until around 11:30 a.m., when it began its decline.

     “This market has less to do with data dependence and a lot to do with asset prices and volatility,” Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York, said in a phone interview. “Earnings season is going to be important.”

Have a wonderful evening everyone.

Be magnificent!

The absurd denial of the truth is natural in man.

Man does not want to be, but to appear to be.

He does not want to see what he is, but tries only to see himself as the person

other people take him for, when they talk about him.

Swami Prajnanpad

As ever,

Carolann

Force is all-conquering, but its victories are short-lived.

                               -Abraham Lincoln, 1809-1865

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